When the debtor loses his right to make an application of a payment, the creditor acquires such right.1 Upon the question of the extent of his right there is a conflict of authority. The common-law rule as enforced in the majority of American states is that the creditor may apply the payments so as to protect his own interests, as long as he does not inflict positive injustice on the debtor.2 The creditor may apply a payment to the oldest claim,3 so as to prevent it from being barred subsequently by the Statute of Limitations,4 or a later claim in preference to an earlier claim,5 or he may pro rate the payment among a number of items.6 The creditor is not bound to apply the payment to the debts in the order in which they have become due.7 If A sold his business to B under a contract by which A was to retain all unpaid accounts, and C, who was indebted to A before such sale, and who has also become indebted to B after such sale, sends a check to B without direction as to its application, B may apply such check to the payment of the account which is due to B, leaving A unpaid.8 The creditor may apply payments thus made to an open account in preference to one evidenced by a note;9 to an unsecured debt in preference to one secured,10 such as a debt secured by a mortgage,11 or a lien;12 or by personal security;13 or to a debt insufficiently secured in preference to one fully secured,14 or to a debt against the debtor alone in preference to one secured by additional personal security.15 A bank which holds A's note for a debt which B has guaranteed, may apply A's deposits to the payment of checks drawn by A.16 The creditor may appropriate one payment among two or more debts.17

1 Florida. Petroutsa v. H. C. Schrader Co., - Fla. - , 80 So. 486 (obiter).

Missouri. State v. Blakemore, 275 Mo. 695, 205 S. W. 626.

New York. California Bank v. Webb, 94 N. Y. 467.

North Carolina. Long v. Miller, 93 N. Car. 233; Stone Co. v. Rich, 160 N. Car. 161, 75 S. E. 1077.

North Dakota. Fargo First National Bank v. Roberts, 2 N. D. 195, 33 Am. St. Rep. 768, 49 N. W. 722.

Virginia. Culpeper National Bank v. Walter, 114 Va. 522, 77 S. E. 484.

2 Dent v. Bank, 12 Ala. 275; Risher v. Risher, 194 Pa. St. 164, 45 Atl. 71.

3 Field v. Holland, 10 U. S. (6 Cranch) 8, 3 L. ed. 136.

4 In re American Paper Co., 255 Fed. 121; Raymond v. Newman, 122 N. Car. 52, 29 S. E. 353.

5Herzog v. Purdy, 119 Cal. 99, 51 Pac. 27.

6 Moss v. Adams, 39 N. Car. (4 Ired. Eq.) 42.

1 United States. United States v. Kirkpatrick, 22 U. S. (9 Wheat.) 720, 6 L. ed. 199 (obiter).

Connecticut. American Woolen Co. v. Maaget, 86 Conn. 234, 85 Atl. 583.

Florida. Petroutsa v. H. C. Schrader Co., - Fla. - , 80 So. 486 (obiter).

Iowa. Mitchell v. Wheeler, 122 la. 368, 98 N. W. 152.

Michigan. Grace Harbor Lumber Co. v. Ordman, 190 Mich. 429, 157 N. W. 96.

Missouri. State v. Blakemore, 275 Mo. 695, 205 S. W. 626.

Washington. B. F. Sturtevant Co. v. Fidelity & Deposit Co., 92 Wash. 52, L. R. A. 1917C, 630, 158 Pac. 740; Simpson v. Combes, - Wash. - p 182 Pac. 566 (obiter).

West Virginia. Farr v. Weaver, - W. Va. - , 99 S. E. 395 (obiter).

Wisconsin. Johnston v. Northwestern Live Stock Ins. Co., 107 Wis. 337, 83 N. W. 641.

2 Alabama. pearce v. Walker, 103 Ala. 250, 15 So. 568.

California. Murdock v. Clarke, 88 Cal. 384, 20 Pac. 601.

Illinois. Wellman v. Miner, 179 111. 320, 53 X. E. 609.

Iowa. Heaton v. Ainley, 108 la. 112, 78 X. W. 798 [superseding, 74 X. W. 766]; Keairnes v. Durst, 110 la. 114, 81 X. W. 238.

Kansas. First Presbyterian Church v. Santy, 52 Kan. 402, 34 pac. 974.

Michigan. Shelden v. Bennett, 44 Mich. 634, 7 X. W. 223; Wood v. Geiictt, 120 Mich. 222, 79 N. W. 199; Harper v. Concrete Publishing Co., 166 Mich. 429, 131 N W. 1112; Van Sceiver v. King, 176 Mich. 605, 142 N. W. 10G9 (obiter).

Missouri. Cox v. Sloan, 158 Mo. 411, 57 S. W. 1052; Thorn & Hunkins Lime & Cement Co. v Citizens' Bank, 158 Mo. 272, 59 S W. 109.

Nebraska. Lenzen v. Miller, 53 Neb. 137, 73 X. W. 460 [modifying on rehearing, 51 Neb. 855, 71 N. W. 715].

New Jersey. Turner v. Hill, 50 X. J. Eq. 293, 39 Atl. 137.

North Carolina. Burnett v. Sledge, 129 N. Car. 114, 39 S. E. 775; Stone Co. v. Rich, 1C0 X. Car. 161, 75 S. E. 1077.

Oklahoma. Jackson v. Moore, 39 Okla. 234, 134 Pac. 1114.

South Carolina. Pelzer v. Stead man, 22 S. Car. 279.

South Dakota. Fargo v. Jennings, 8 S. D. 99, 65 N. W. 433.

Vermont. Jotters v. Pease, 74 Vt. 215, 52 Atl. 422.

Virginia. Tope v. Transparent Ice Co., 91 Va. 79, 20 S. E. 040.

Washington. Kelso v. Russell, 33 Wash. 474, 74 Pac. 501; Crane Co. v. United States Fidelity & Guaranty Co., 74 Wash. 91, 132 Pac. 872; B. F. Sturtevant Co. v. Fidelity & Deposit Co., 92 Wash. 52, L. R. A. 1917C, 030, 158 Pac. 740.

West Virginia. Buster v. Holland, 27 W. Va. 510.

Wisconsin. Nelson v. Davison, 152 Wis. 567, 140 X. W. 334.

3Holloway v. White-Dunham Shoe Co., 151 Fed. 210, 10 L. R. A. (N.S ) 704; Lowenstein v. Meyer, 114 Ga. 709, 40 S. E. 720; Bourne v. Repass, 2 Va. Dec. 694, 34 S. E. 623.

4 Blair v. Carpenter, 75 Mich. 167, 42 X. W. 790.

5 Nelson v. Davison, 152 Wis. 567, 140 N. W. 334.

6 Bishop v. T. Ryan Construction Co., - Wash. - , 180 Pac. 126.

7 Nelson v. Davison, 152 Wis. 667, 140 N. W. 334.

8 Harper v. Concrete Publishing Co., 166 Mich. 429, 131 N. W. 1112. See to the same effect, Holloway v. White-Dunham Shoe Co., 151 Fed. 216, 10 L. R. A. (N.S.) 704.

9Whittaker v. Groover, 54 Ga. 174; Bell v. Bell, 20 S. Car. 34; Fargo v. Jennings, 8 S. D. 99, 65 N. W. 433.

10 Connecticut. Sagal v. Mann, 89 Conn. 576, 95 All. 6.

Indiana. M. A. Sweeney Co. v. Fry, 151 Ind. 178, 51 N. E. 234.

Massachusetts. Henry Bill Publishing Co. v. Utley, 155 Mass. 366, 29 N. E. 635.

Michigan. Gardner v. Le Fevre, 180 Mich. 219, 146 N. W. 653.

Washington. Kelso v. Russell, 33 Wash. 474, 74 Pac. 561; Puget Sound State Bank v. Gallucci, 82 Wash. 445, 144 Pac. 608; B. F. Sturtevant Co. v. Fidelity & Deposit Co., 92 Wash. 52, L. R. A. 1917C, 630, 158 Pac. 740.

Wisconsin. Northern National Bank v. Lewis, 78 Wis. 475, 47 N. W. 834.

11Lewis v. Hartford Silk Mfg. Co., 56 Conn. 25, 12 Atl. 637; Bird v. Davis, 14 N. J. Eq. 467; Wadlingcr v. Washington German Building & Loan Association, 153 Pa. St. 622, 26 Atl. 647; Johnston v. Northwestern Live Stock Ins. Co., 107 Wis. 337, 83 N. W. 641.

12 Bean v. Brown, 54 N. II. 305; North v. La Flesh, 73 Wis. 520, 41 N. W. 633.

13 People v. Powers, 108 Mich. 339,

66 N. W. 215; Coxe v. Milbrath, 110 Wis. 499, 86 N. W. 174.

14 Hanson v. Manley, 72 la. 48, 33 N. W. 357.

15 Illinois. Plain v. Roth, 107 111. 588.

Iowa. Hanson v. Manley, 72 la. 48, 33 N. W. 357.

Kentucky. Burks v. Albert, 27 Ky. (4 J. J. Mar.) 97, 20 Am. Dec. 209.

Michigan. Wood v. Callaghan, 61 Mich. 402, 1 Am. St. Rep. 597, 28 N. W. 162.

New York. Harding v. Tifft, 75 N. Y. 461.

Vermont. Fair Haven First National Bank v. Johnson, 65 Vt. 382, 26 Atl. 634.

16 London & San Francisco Bank v. Parrott, 125 Cal. 472, 73 Am. St. Rep. 64, 58 Pac. 164.

17Beck v. Haas, 111 Mo. 264, 33 Am. St. Rep. 516, 20 S. W. 19; Young v. Alford, 118 N. Car. 215, 23 S. E. 973.

Contra, in Vermont. Wheeler v. House, 27 Vt. 735.

As where such debts are barred by limitations. Ayer v. Hawkins, 19 Vt. 26.

If the debtor has treated all the notes as equivalent to a single debt (as where the notes are all written on the same sheet of paper), the creditor may pro-rate the payment among the different notes. Sanborn v. Cole, 63 Vt. 590, 14 L. R. A. 208, 22 Atl. 716.