§ 1792. Conflict of laws. The legality of a contract depends upon the law of the place where it is made. 84 If the contract was illegal (as distinguished from merely unenforceable) where made it is invalid everywhere 85 and if valid where made it is generally enforceable everywhere.86 The latter rule, however, is qualified by the doctrine that no State will enforce a contract though valid where made, if its enforcement is contrary to the policy of the forum.87 If tract before it is executed. It is essential to both classes that the contract be merely malum prohibitum. malum in se the courts will in no case interfere to relieve either party from any of its consequences." Whatever may be said in regard to any absolute distinction between a bargain which is malum prohibitum, and one which is malum in se, it is certainly true that some consequences flow from the comparative enormity of illegal transactions. 84 The Miguel Di Larrinaga, 217 Fed. 678; Illustrated Postal Card, etc., Co. v. Holt, 85 Conn. 140, 81 Atl. 1061; Altland v. Atchison, T. & S. F. R. Co., 151 Ill. App. 291; Western Life Indemnity Co. v. Rupp, 147 Ky. 489, 144 S. W. 743; Bond v. Cummings, 70 Me. 125; Tremain v. Dyott, 161 Mo. App. 217, 142 S. W. 760; Lovell v. Boston & M. R. Co., 75 N. H. 568, 78 Atl. 621, 34 L. R. A. (N. S.) 67; Williamson v. Postal Telegraph-Cable Co., 151 N. C. 223, 65 S. E. 974; Carpenter v. Hanes, 167 N. C. 551, 83 S. E. 577; Marx v Hefner, 46 Okla. 453, 149 Pac. 207, Ann. Cas. 1917 B. 656; Davis v. Chicago, M. & St. P. Ry. Co., 93 Wis. 470, 67 N. W. 16, 33 L. R. A. 654, 57 Am. St. Rep. 935. 85 Orr's Adm. v. Orr, 157 Ky. 570, 163 S. W. 757; Standard Fashion Co. v. Grant, 165 N. C. 453, 81 S. E. 606; and see cases in the preceding note. 86 The Miguel Di Larrinaga, 217 Fed. 678; International Harvester Co. v. McAdam, 142 Wis. 114, 124 N. W. 1042, 26 L. R. A. (N. S.) 774; and see cases cited supra, n. 84. 87 Union Trust Co. v. Grosman, 245 U. S. 412, 38 S. Ct. 147, 62 L. Ed. 368; Vandalia R. Co. v. Kelly (Ind., 1918), 119 N. E. 257; Corbin v. Houlehan, 100 Me. 246, 61 Atl. 131, 70 L. R. A. 568; Emery v. Burbank, 163 Mass. 326, 39 N. E. 1026, 28 L. R. A. 57; Thompson v. Taylor, 66 N. J. L. 253, 49 Atl. 544, 54 L. R. A. 585, 88 Amer. St. Rep. 485; People v. Martin, 175 N. Y. 315, 67 N. E. 589, 96 Am. St. Rep. 628; Marx v. Hefner, 46 Okla. 453, 149 Pac. 207, Ann. Cas. 1917 B. 656. The creditor may direct the application if the debtor does not. 1796 Effect of allowing creditor indefinite time to make application. 1802 Payment with money derived from a particular source, but not held in trust 1806 § 1793. Methods of discharge. A contract may be discharged in the following ways: 1. Performance according to its terms. 2. A breach of such a nature as to justify the innocent party in treating the contract as rescinded or as giving rise to a right of action for breach of the entire contract. 1814 1815 1816 1817 1818 1819 3. Rescission of a voidable contract, at the will of one party, as for fraud, mistake, duress. 5. Rescission or renunciation by parol agreement. 6. Accord and satisfaction, including accounts stated and novation. 7. Cancellation and surrender. To these may be added two defences which generally are held merely to bar the remedy on the contract. 11. Bankruptcy. 12. Statutes of Limitation. A right of action upon a contract may be discharged in any of these ways except the second and the eleventh. § 1794. Treatment of these methods. The first three methods here specified have been treated with more or less fulness in earlier parts of this work, but something may here be added regarding a division of the first method-payment so far as concerns application of payments and tender; and it then remains to consider the other methods. A distinction may be taken between the discharge of a contract and the discharge of a right of action that has arisen from breach of a contract, but as the principles applicable to the two cases are in general the same, it has been thought simpler to treat the questions together. Where the requirements of law differ according as the contract has or has not been broken, attention is called to the difference. § 1795. Application of payments; debtor has primary right. When a debtor owes money on several accounts and makes a payment of less than the total amount due from him, it becomes important to determine to which debt or to which item the payment is to be credited. This determination is called the application or the appropriation or sometimes the imputation of payments. If the debtor specifies the application which is to be made of 1 3 his payment, this direction must be followed. The creditor's assent is immaterial; if he takes the payment he must apply it as directed. The debtor may direct the application to the principal of a debt, though interest is overdue; 3 and to a particular debt though the application is in violation of a contract previously made by him that the money should be otherwise applied. He may even direct the application of the payment to an illegal and unenforceable claim. It is not essential that the debtor's intent shall be manifested in express words. Here, as elsewhere in the law of contracts, a manifestation of intent deduced from acts or from the circumstances of the case is as effective as if expressed in words; and the fact that one 4 Bois v. Cranfield, Styles, 239; Anonymous, Cro. Eliz. 68; Manning v. Westerne, 1 Vernon, 606, 607; Buchanan v. Findlay, 9 B. & C. 738; Waugh v. Wren, 9 Jur. (N. S.) 365; United States v. Kirkpatrick, 9 Wheat. 720, 6 L. Ed. 199; Lynn v. Bean, 141 Ala. 236, 37 So. 515; Atkinson v. Cox, 54 Ark. 444, 16 S. W. 124; Augusta Cooperage Co. v. Parham (Ark.), 213 S. W. 737; Petroutsa v. H. C. Schrader Co. (Fla.), 80 So. 486; Massengale v. Pounds, 108 Ga. 762, 33 S. E. 72; Graff v. Fox, 204 Ill. App. 598; Robson v. McKoin, 18 La. Ann. 544; Treadwell v. Moore, 34 Me. 112; Hussey v. Manufacturers' &c. Bank, 10 Pick. 415; Spinney v. Freeman, 230 Mass. 356, 119 N. E. 798; Lincoln v. Lincoln St. R. Co., 67 Neb. 469, 93 N. W. 766; Bean v. Brown, 54 N. H. 395; Herold v. Hill (N. Dak.), 169 N. W. 592; Patterson v. Van Loon, 186 Pa. 367, 40 Atl. 495; Kann v. Kann, 259 Pa. 583, 103 Atl. 369; Pindall v. Bank of Marietta, 10 Leigh, 481; Simpson v. Combes (Wash.), 182 Pac. 566; Farr v. Weaver (W. Va.), 99 S. E. 395; Miles v. Ogden. 54 Wis. 573, 12 N. W. 81; Hassard v. Tomkins, 108 Wis. 186, 84 N. W. 174, The rule is applicable only to voluntary payments. The effect of payments made in judicial proceedings is not governed by the debtor's wishes. 6 Wetmore & Morse Granite Co. v. Ryle (Vt.), 107 Atl. 109. 2 The Memnon, 62 Fed. 482, 10 C. C. A. 502; Lynn v. Bean, 141 Ala. 236, 37 So. 515; Hanson v. Cordano, 96 Cal. 441, 31 Pac. 457; Massengale v. Pounds, 108 Ga. 762, 33 S. E. 72; Mitchell v. Dall, 4 Gill & J. 361; Wetherell v. Joy, 40 Me. 325; Reed v. Boardman, 20 Pick. 441; Rosenbaum v. Meridian Nat. Bank, 73 Miss. 267, 18 So. 549; Goodman v. Snow, 81 Hun, 225, 30 N. Y. S. 672; Reid v. Wells, 56 S. Car. 435, 34 S. E. 401, 939; Rugeley v. Smalley, 12 Tex. 238; Eylar v. Read, 60 Tex. 387. The situation is the same as that arising when a debtor sends a check as full payment for an unliquidated or disputed account. The creditor if he accepts the check is bound by the terms of the debtor's offer. See infra, §§ 1854 et seq. Kann v. Kann, 259 Pa. 583, 163 Atl. 369; Pindall v. Bank of Marietta, 10 Leigh, 481. 4 Stewart v. Hopkins, 30 Ohio St. 502. Rohan v. Hanson, 11 Cush. 44; Williamson v. New Jersey Southern R. Co., 28 N. J. Eq. 277. Peters v. Anderson, 1 Marshall, 238; Newmarch v. Clay, 14 East, 239; Shaw v. Picton, 4 B. & C. 715; Nash application is obviously more advantageous to the debtor than another, may itself be some evidence (but not of itself sufficient) that the former was intended. If the debtor always directed the application of his payments there would be no occasion for rules of law peculiar to the subject-elementary principles of contractual law would suffice; but debtors frequently do not define their purpose in making a payment and as some disposition must be made of the credit, the law has devised rules which are more or less artificial that are applicable in the absence of an expression of intention by the debtor. § 1796. The creditor may direct the application if the debtor does not. The right of the debtor to direct the application ceases as soon as the payment is made,' because having once made payment unconditionally he cannot thereafter revoke his act and v. Hodgson, 6 D. M. & G. 474; Thompson v. Hudson, L. R. 6 Ch. 320; Korbly v. Springfield Inst. for Sav., 245 U. S. 330, 38 S. Ct. 88, 62 L. Ed. 000; Manning v. The Peerless, 80 Fed. 942; Pearce v. Walker, 103 Ala. 250, 15 So. 568; Hanson v. Cordano, 96 Cal. 441, 31 Pac. 457; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. Rep. 258; Cavanaugh v. Marble, 80 Conn. 389, 68 Atl. 853, 15 L. R. A. (N. S.) 127; Plain v. Roth, 107 Ill. 588; Terhune v. Colton, 12 N. J. Eq. 232; Koehler v. Bierbaum (Ky.), 122 S. W. 524; Lauten v. Rowan, 59 N. H. 215; Stone v. Seymour, 15 Wend. 19; Moose v. Marks, 116 N. C. 785, 21 S. E. 561; Pardee v. Markle, 111 Pa. 548, 5 Atl. 36, 56 Am. Rep. 299; Mulherin v. Stansell, 70 S. Car. 568, 50 S. E. 497; Robinson v. Doolittle, 12 Vt. 246; Roakes v. Bailey, 55 Vt. 542. In Adams Express Co. v. Black, 62 Ind. 128, it was held that the fact that the debtor's payment was the exact sum due on one account was not of itself sufficient to show a direction by the debtor to apply the payment to that account. But this coincidence between the amount of the payment and one of the debts is certainly a strong circumstance tending to show the debtor's intention. Marryatts v. White, 2 Stark. 102; Tayloe v. Sandiford, 7 Wheat. 13, 5 L. Ed. 384; Boyd v. Watertown Agricultural Ins. Co., 20 Col. App. 28, 76 Pac. 986; Robert v. Garnie, 3 Caines, 14. 7 Anonymous, 8 Mod. 236; Goddard v. Cox, 2 Strange, 1194; Manning v. Westerne, 1 Vernon, 606; Holloway v. White-Dunham Shoe Co., 151 Fed. 216, 80 C. C. A. 568, 10 L. R. A. (N. S.) 704; In re Lindau, 183 Fed. 608; McCurdy v. Middleton, 82 Ala. 131, 2 So. 721; Pearce v. Walker, 103 Ala. 250, 15 So. 568; Lazarus v. Freidheim, 51 Ark. 371, 11 S. W. 518; Cal. Civ. Code, § 1479; Mont. Rev. Codes (1908), § 4928; California Bank v. Webb, 94 N. Y. 467; Wanamaker v. Powers, 102 N. Y. App. D. 485, 93 N. Y. S. 19; Long v. Miller, 93 N. C. 233; S. Dak. Comp. L. (1913), § 1150; St. John v. Rykert, 10 Can. Sup. Ct. 278, and cases in this section passim. But see Petty v. Dill, 53 Ala. 641; Huffman v. Cauble, 86 Ind. 591. |