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 parties have made an agreement as to the application of a payment before such payment is made, the parties are bound thereby.1 If by a provision in a mortgage, payments from a specified source are to be applied upon the mortgage debt, payments from such source must be so applied unless the parties modify such provision by a later agreement.2 If a mortgage coutains a provision securing to the mortgagee the right to elect what application of payments shall be made as between a number of notes secured by the mortgage in case the proceeds of the mortgaged property prove insufficient to pay all of the notes in full, such provision secures an election to the mortgagee which he may exercise up to the time of the trial.3 If a bank accepts a deposit under an agreement that it is to be used for a certain specified purpose, the bank foregoes the right which it otherwise would have had to apply such deposit as a set-off against a debt which is due from the depositor to the bank.4 If a debtor owes debts to two different creditors, one of whom is the agent of the other, and if he makes a payment which he declares to be in satisfaction of a certain debt, such payment can not be appropriated to the other debt by reason of the fact that it was the personal claim of the creditor to whom such payment was made; and that it was not to be applied on the debt which he had authority to collect as agent for the other creditor.5
1 Artificial Ice Co v Pratt, - S D. - , 176 N. W. 45
2 Artificial Ice Co v Pratt. - 8. D. - , 176 N W 45
1 Alabama. Bell v Southern Home Building & Loan Association. 140 Ala 371, 103 Am St Rep. 41, 37 So 237.
Ohio. Advance Thresher Co. v. Ho-gan, 74 O. S 307, 78 N E 436
South Dakota. Artificial Ice Co v. Pratt, - S D. - 176 N. W. 45.
Washington. Simpson v. Combes, - Wash - , 182 Pac. 566.
West Virginia. Lutz v. Williams, 79 W Va. 609, L. R. A 1918A, 76, 91 S. E. 460.
2 Simpson v. Combes, - Wash. - , 182 Pac 566
3 Advance Thresher Co. v. Hogan, 74 O. S. 307, 78 N. E. 436.