Sec. 2844. Source Of Payment As Affecting Appropriation

Description

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.

Sec. 2844. Source Of Payment As Affecting Appropriation

If a payment is made from a given fund or from a given source, such payment must be applied to a debt which is a lien upon such fund or which is a liability against such source as against other debts, unless the parties who would be prejudiced by a different application acquiesce therein.1 If collateral security has been given to secure a debt upon which a surety is also liable, the proceeds of such collateral security must be applied to the discharge of the principal debt as between the creditor and the surety.2 If material which has been delivered under a contract is returned in part, credit for such material must be a credit upon the contract under which it was delivered, and not a general credit upon ail accounts of the party who returned such material, as far as the rights of a property owner whose property is subject to a lien for such material are concerned.3 If the loss under an insurance policy has been paid to a mortgagee for whose benefit such insurance was effected, such proceeds must be applied to the mortgage indebtedness as it falls due.4 The proceeds of the sale of a mortgaged property must be applied to the discharge of the mortgage debt.5 If a contractor makes a payment to a materialman out of funds paid to him by a given property owner, the materialman can not apply such payment to an indebtedness of the contractor growing out of another transaction.6