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.
If the debtor voluntarily makes a payment which he intends to be applied upon a debt owing by him, ir partial satisfaction thereof, leaving a balance due, such payment is the clearest form of acknowledgment of such debt as a valid and subsisting liability. If such part payment is made before the time fixed by the statute of limitations has expired, it operates to create a new point from which the statute of limitations begins to run afresh.1 In South Carolina, where the cause of action is held to be the new promise, an allegation of the original cause of action and the payments made thereon before limitations has run is not a statement sufficient to avoid the bar of the statute if the action is brought after the statutory period has elapsed since the maturity of the contract.2 Recovery can be had in such cases by alleging the new promise as the cause of action, and using the payment to prove the promise.3 If such part payment is made after the statute of limitations has run, it operates as a waiver of the bar of the statute, and revives the liability of the debtor.4 Payment of interest upon a note, part payment after limitations have once run amounts to a part payment.5 Tims A assigned to B a mortgage note executed by X and guaranteed its payment. X made default in interest, but A paid such interest and sued in B's name, though without B's consent, to foreclose the mortgage, and bought the property in at such sale. It was held that such conduct suspended the running of the statute of limitations on A's guaranty.6 Part payment does not create a new cause of action. Hence part payment made on a note after a surety thereon has died and before an administrator has been appointed makes limitations run anew from the date of such payment, and does not postpone the running until such administrator is appointed.7 Since the theory underlying the doctrine of part payment is that such payment is an implied admission that more is due, it follows that if the circumstances of the payment are such as to rebut the inference of a promise to pay the residue of the debt, the statute of limitations is not thereby prevented from running.8 If the payment is not intended to apply upon the liability in question at all, it does not affect the running of the statue.9 Thus a payment of interest made directly by a mortgagor to the cestui que trust of the fund for life does not prevent limitations from running in favor of the trustees for an innocent breach of trust in making such mortgage loan upon insufficient security.10
3 Parker v. Remington, 15 R. I. 300; 2 Am. St. Rep. 897; 3 Atl. 590.
1 Less v. Arndt, 68 Ark. 399; 59 S. W. 763; Abner v. York (Ky.), 41 S. W. 309; In re Leeds, 49 La. Ann. 501; 21 So. 617; Neilands v. Wright, - Mich. - ; 95 N. W. 997; Miner v. Lorman. 56 Mich. 212; 22 N. W. 265; Clarkin v. Brown, 80 Minn. 361; 83 N. W. 351; Barnes v. Hardware Co., 203 Pa. St. 570; 53 Atl. 378. In Tennessee part payment does not as a matter of law affect the running of the statute. Lock v. Wilson, 10 160
Heisk. (Tenn.) 441; 9 Heisk. (Tenn.) 784.
2 Fleming v. Fleming, 33 S. C. 505; 26 Am. St. Rep. 694; 12 S. E. 257; Walters v. Kraft, 23 S. C. 578; 55 Am. Rep. 44.
3 Jacobs v. Gilreath, 45 S. C. 46; 22 S. E. 757.
4 Neish v. Gannon, 198 111. 219; 64 N. E. 1000; Findlay Brewing Co. v. Brown, 19 Ohio C. C. 612; 10 Ohio C. D. 100; Ewbank v. Ewbank, 64 S. C. 434; 42 S. E. 194; Lyle v. Esser, 98 Wis. 234; 73 N. W. 1008. Under Louisiana statutes,