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 directs the application of the payments, the effect of such payment upon the bar of the statute depends on whether such payment is to be applied in whole or in part to the debt in question. If two separate notes are given by the debtor to the same creditor, secured by the same mortgage, the payment of one of such notes does not toll the statute of limitations as to the other note or as to the mortgage.1 Where, however, two notes were written upon the same sheet of paper, and payments were made generally upon the two, the debtor not making separate applications of them, and the creditor noting the payments upon the back of the paper on which the notes were written without applying them to either note specifically, such payments operate to prevent both notes from being barred by limitations.2 If the debtor owes several distinct notes on separate pieces of paper and he makes a payment to be applied generally upon all the notes,3 as where he directs his creditor, referring to a credit in the debtor's favor to "Let it go on the notes,"4 or directs a payment to be applied to pay the notes as far as it would go,5 such payment starts limitations anew upon all the notes. A continuing account which amounts in law to a single legal demand will be revived as a whole by a payment made to be credited thereon generally.6 So payment upon an entire account if made before limitations has run against it, starts limitations to running afresh, and no part thereof is barred until the statutory period from the date of such payment has elapsed.7 If, however, distinct debts exist between the parties, payment of one debt does not extend the period of limitations as to other debts.8
10 Taylor v. Foster, 132 Mass. 30; Sornberger v. Lee, 14 Neb. 193; 45 Am. Rep. 106; 15 N. W. 345.
1 McManaman v. Hinchley, 82 Minn. 206: 84 N. W. 1018.
2Brafford v. Reed, 125 N. C. 311; 34 S. E. 443. As where the payments were indorsed on the " within notes." Sanborn v. Cole, 63 Vt,
590; 14 L. R. A. 208; 22 Atl. 716.
3 Rowell v. Lewis's Estate, 72 Vt. 163; 47 Atl. 783.
4 Young v. Alford, 118 N. C. 215; 23 S. E. 973.
5 Taylor v. Foster, 132 Mass. 30.
6 Friend v. Young (1897), 2 Ch. 421.