This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
When the interests of the debtor require one application and those of the creditor require another, we have again a conflict between the Common Law rule and the Civil Law rule.1 The Common Law rule requires the law to apply payments for the benefit of the creditor in accordance with his presumed intention, where this can be done without injustice to the debtor.2 Where this rule is followed a payment will be applied to an unsecured debt in preference to one which is secured,3 and to the debt secured by the more precarious and less valuable of different securities.4 Thus a general payment will be applied to an unsecured debt in preference to one secured by mortgage,5 or by a laborer's lien,6 or a vendor's lien,7 or by collateral personal security,8 and to a debt inferior to homestead rights in preference to one superior to them.9 Some states that hold that a general payment will be appropriated to an unsecured debt in preference to one which is secured, recognize an exception in case of debts secured by personal security only. It is held that a surety may insist on the appropriation of payments to debts in order of maturity irrespective of the security afforded by his liability thereon.10
18 Kuker v. Mclntyre, 43 S. C. 117; 20 S. E. 976.
19 Sheldon v. Loan Association, 121 Ala. 278; 25 So. 820.
1 " The difference between the Common Law and the .Roman Law is to be found in the application which the law makes in the appropriation of a payment in the absence of any made by either the debtor or the creditor. The Common Law appropriates the payment most beneficially for the creditor; the civil law appropriates the payment most beneficially for the debtor." McLaughlin v. Green. 48 Hiss. 175, 2057
2 Poling v. Flanagan. 41 W. Va. 191; 23 S. E. 685.
3 Sanborn v. Stark. 31 Fed. 18; otickney v. Moore. 108 Ala. 590; 19 So. 76; Offutt v. Devine's Ex'r (Ky.). 55 S. W. 428: 53 S. W. 816: Bell. etc.. Co. v. Glass Works Co.. 106 Ky. 7; 50 S. W. 2. 1002: 51 S. W. 180: reversing on rehearing 48 S. W. 440; Wood v. Callnghan. 61 Mich. 402; 1 Am. St. Rep. 597; 28 X. W. 162: Lester v. Houston. 101 X. C. 605; 8 S. E. 366; First Xational Bank v. Johnson. 65 Vt. 382: 26 Atl. 634; Still v. Buz-zell. 60 Vt. 478; 12 Atl. 209; Publishing Co. v. Harris. 11 Wash. 500: 39 Pac. 965; Xorth v. La Flesh, 73 Wis. 520; 41 X. W. 633.
4 McCurdy v. Middleton. 82 Ala. 131; 2 So. 721; California, etc.. Bank v. Ginty, 108 Cal. 148: 41 Pac. 38; Hanson v. Manley. 72 la. 48; 33 N. W. 357; Blanton v. Rice. 5 T. B. Mon. (Ky.) 253: Turner v. Hill. 56 N. J. Eq. 293; 39 Atl. 137; Leeds v. Gifford. 41 N. J. Eq. 404: 5 Atl. 795; Ramsour v. Thomas, 32 N. C. 165: Richard's Estate. 185 Pa. St. 155; 39 Atl. 1117; Pardee v. Markle. Ill Pa. St. 548: 56 Am. Rep. 299; 5 Atl. 36; Pope v. Ice Co.. 91 Va. 79: 20 S. E. 940; Smythe v. Trust Co.. 12 Wash. 424: 41 Pac. 184: Poling v. Fhinagnn. 41 W. Va. 191: 23 S. E. 685.