make it conditional. If, on a fair construction of the circumstances, the debtor has given no indication how a payment voluntarily made by him should be applied the presumption is made that he thereby assents to such application as the creditor may desire to make, the creditor may then apply the payment to any debt which is due, or he may distribute it among all or several of such debts or items. The creditor is allowed to make the appropriation in the way most advantageous for himself without regard to the interest of the debtor. Thus the payment may be applied to an unsecured claim, 10 or & Wilkinson v. Sterne, 9 Mod. 427; Hall v. Wood, 14 East, 243, note; Mills v. Fowkes, 5 Bing. N. C. 455, 461; Bosanquet v. Wray, 2 Marshall, 319; Williams v. Griffith, 5 N. & W. 300; United States v. Kirkpatrick, 9 Wheat. 720, 6 L. Ed. 199; Marye v. Strouse, 6 Sawyer, 204; Hendricks v. Schmidt, 68 Fed. 425, 15 C. C. A. 504; Holloway & Bro. v. White-Dunham Shoe Co., 151 Fed. 216, 80 C. C. A. 568, 10 L. R. A. (N. S.) 704; Cremer v. Higginson, 6 Fed. Cas. No. 3,383; Callahan v. Boazman, 21 Ala. 246, 251; McCurdy v. Middleton, 82 Ala. 131, 2 So. 721; Lyon v. Bass, 76 Ark. 534, 89 S. W. 849; Byrnes v. Claffey, 69 Cal. 120, 10 Pac. 321; Petroutsa v. H. C. Schrader Co. (Fla.), 80 So. 486; Horne v. Planters' Bank, 32 Ga. 1; Lowenstein v. Meyer, 114 Ga. 709, 40 S. E. 726; Shull v. Lawrence (Ida.), 186 Pac. 246; Wellman v. Miner, 179 Ill. 326, 53 N. E. 609; Keairnes v. Durst, 110 Iowa, 114, 81 N. W. 238; First Presb. Church v. Santy, 52 Kans. 462, 34 Pac. 974; Henry Bill Pub. Co. v. Utley, 155 Mass. 366, 29 N. E. 635; People v. Grant, 139 Mich. 26, 102 N. W. 226; Hawver v. Ingalls, 93 Minn. 371, 101 N. W. 604; Cox v. Sloan, 158 Mo. 411, 430, 57 S. W. 1052, 1134; Bean v. Brown, 54 N. H. 395; Mack v. Colleran, 136 N. Y. 617, 32 N. E. 604; Long v. Miller, 93 N. C. 233; Swisher v. McWhinney, 64 Ohio St. 343, 350, 60 N. E. 565; Chest 9 nut St. Trust, etc., Co. v. Hart, 217 Pa. St. 506, 66 Atl. 870; Sanborn v. Cole, 63 Vt. 590, 22 Atl. 716, 14 L. R. A. 208; Simpson v. Combes (Wash.), 182 Pac. 566; Hanly v. Potts, 52 W. Va. 263, 43 S. E. 218; Farr v. Weaver (W. Va.), 99 S. E. 395; Coxe v. Milbrath, 110 Wis. 499, 86 N. W. 174; McDonald v. Peck, 17 U. C. Q. B. 270; Mayberry v. Hunt, 34 N. Brunsw. 628. In Louisiana the appropriation made by the creditor will not be binding on the debtor unless it has been accepted by him. Slaughter v. Milling, 15 La. Ann. 526. Blackman v. Leonard, 15 La. Ann. 59; Kennedy v. Drake, 225 Mass. 303, 114 N. E. 310; Beck v. Haas, 111 Mo. 264, 20 S. W. 19, 33 Am. St. Rep. 516; Young v. Alford, 118 N. C. 215, 23 S. E. 973; Bishop v. T. Ryan Const. Co. (Wash.), 180 Pac. 126. But see Sanborn v. Cole, 53 Vt. 590. 10 Re Sherry, 25 Ch. D. 692; Smith v. Vaughan, 78 Ala. 201; Lewis v. Hartford Silk Mfg. Co., 56 Conn. 25, 12 Atl. 637; Koch v. Roth, 150 Ill. 212, 37 N. E. 317; Wilkes v. Kitchen (Ky.), 218 S. W. 718; Upham v. Lefavour, 11 Metc. 174; Harding v. Tifft, 75 N. Y. 461; Vick v. Smith, 83 N. C. 80; Wagner's Appeal, 103 Pa. 185; Wardlaw v. Troy Oil Mill, 74 S. Car. 368, 54 S. E. 658, 114 Am. St. Rep. 1004; Jeffers v. Pease, 74 Vt. 215, 52 Atl. 422; Stephens v. Boisseau, 26 Can. Sup. Ct. 437. to one which is unenforceable because of the Statute of Frauds,' or the Statute of Limitations. 12 § 1797. Limitations of the creditor's right. " 13 11 "Where one debt is due to the creditor in his own right and another to him as trustee or agent for another, and neither is secured, the creditor cannot apply the whole of a general payment to his own debt, but must apply it pro rata to both debts; for this is a part of his duty as trustee, to take the same care of the debts of his cestui que trust as of his own.' And if the non-payment of one debt (as rent due under a lease) will cause a forfeiture, the creditor cannot appropriate a payment to other claims.14 Of course, application cannot be made by the creditor to a claim which has no validity, 15 and while it is unnecessary to prove that the debtor in terms admitted the validity of the claim to which the creditor applied a payment, 16 it seems clear that since the debtor, though not directing the exact application of a payment, may exclude a particular application; and since it should be the primary principle that no violence is done to the intention of the debtor as expressed to the creditor by words or acts or circumstances, the creditor cannot appropriate the payment to a claim which he knows is disputed however little ground there may be for the dispute." Appropriation cannot be made by the creditor to an illegal claim.189 11 Mayfield v. Wadsley, 3 B. & C. 357, 362, per Abbott, C. J.; Murphy v. Webber, 61 Me. 478; Haynes v. Nice, 100 Mass. 327, 1 Am. Rep. 109; Mueller v. Wiebracht, 47 Mo. 468. See also Arnold v. Mayor, Man. & G. 860. 12 Mills v. Fowkes, 5 Bing. N. C. 455; Williams v. Griffith, 5 M. & W. 300; Armistead v. Brooke, 18 Ark. 521; Ramsay v. Warner, 97 Mass. 9; Leach v. Curtin, 123 N. C. 85, 31 S. E. 269; Moore v. Kiff, 78 Pa. 96; Hopper v. Hopper, 61 S. Car. 124, 39 S. E. 366; Rowell v. Lewis' Est., 72 Vt. 163, 47 Atl. 783. As to the effect of such an application in removing the bar of the statute, see supra, § 178. 13 2 Parsons on Contracts, *631, notę (s) citing Scott v. Ray, 18 Pick. 360; Barrett v. Lewis, 2 Pick. 123; Cole v. Trull, 9 Pick. 325. Of course if there is appropriation by the debtor to the individual claim the payment is applicable to that. Artificial Ice Co. v. Pratt (S. Dak.), 176 N. W. 45. 14 Lowther v. Heaver, 41 Ch. D. 248. 15 Scheffer v. Tozier, 25 Minn. 478. 16 McLendon v. Frost, 57 Ga. 448. 17 Burn v. Boulton, 2 C. B. 476; Perot v. Cooper, 17 Col. 80, 28 Pac. 391, 31 Am. St. Rep. 258. See also Stone v. Talbot, 4 Wis. 442. 18 Armour Packing Co. v. Vinegar Bend Lumber Co., 149 Ala. 205, 42 So. 866; Phillips v. Moses, 65 Me. 70; Nor can the creditor apply a payment to a debt not matured if other debts to which the payment might be applied are due. 19 Neither debtor nor creditor can direct the application of involuntary payments, such as those enforced by judicial proceedings.20 § 1798. Time allowed the creditor to make application. Unlike the debtor, the creditor is not confined to the time when the payment is made for his appropriation. It is well settled that he is not required to make his choice immediately except in a few jurisdictions where the rule of the Civil law is applied, which requires the creditor to make an immediate election or lose his choice. 21 The length of time allowed him varies, however, in different jurisdictions. In some, no delay seems excessive; 22 in others, he may make his choice before controversy arises; 23 in others, before the bringing of an ac Rohan v. Hanson, 11 Cush. 44; Bondy v. Hardina, 216 Mass. 44, 102 N. E. 935; First Nat. Bank of North Bend v. Miltonberger, 33 Neb. 847, 51 N. W. 232; Dunbar v. Garrity, 58 N. H. 575; Adams v. Mahnken, 41 N. J. Eq. 332, 7 Atl. 435; Greene v. Tyler, 39 Pa. 361; Backman v. Wright, 27 Vt. 187, 65 Am. Dec. 187. But see Philpott v. Jones, 2 Ad. & El. 41. 19 McWhorter v. Bluthenthal, 136 Ala. 568, 33 So. 552, 96 Am. St. Rep. 43; Kline v. Ragland, 47 Ark. 111, 14 S. W. 474; Schwartz v. Dashiff, 92 Conn. 135, 101 Atl. 580; Richardson v. Coddington, 49 Mich. 1, 12 N. W. 886; Missouri Central Lumber Co. v. Stewart, 78 Mo. App. 456; Parks v. Ingram, 22 N. H. 283, 55 Am. Dec. 153; Niagara Bank v. Rosevelt, 9 Cow. 409; Law v. Sutherland, 5 Gratt. 357. A payment cannot be appropriated to advances not then made. Petroutsa v. H. C. Schrader Co. (Fla.), 80 So. 486. 20 Citizens & Southern Bank บ. Armstrong (Ga. App.), 95 S. E. 729; Wetmore & Morse Granite Co. v. Ryle (Vt.), 107 Atl. 109. 21 See Gass v. Stinson, 3 Sumner, 98; Pattison v. Hull, 9 Cow. 747; Gaston v. Barney, 11 Ohio St. 506, 512. 22 Peters v. Anderson, 5 Taunt. 596; Philpott v. Jones, 2 A. & É. 41; Cory v. Steamship Mecca, [1897] A. C. 286; Seymour v. Pickett, [1905] 1 K. B. 715; Pearce v. Walker, 103 Ala. 250, 15 So. 568; California Bank v. Webb, 94 N. Y. 467; Brice v. Hamilton, 12 S. Car. 32. 23 United States v. Kirkpatrick, 9 Wheat. 720, 6 L. Ed. 199; National Bank v. Mechanics' Nat. Bank, 94 U. S. 437, 439, 24 L. Ed. 176; In re American Paper Co., 255 Fed. 121; Lazarus v. Freidheim, 51 Ark. 371, 11 S. W. 518; Battle v. Jennings Naval Stores Co. (Fla.), 75 So. 949; Austin v. Southern Home Building, etc., Assoc., 122 Ga. 439, 50 S. E. 382; Applegate v. Koons, 74 Ind. 247; Conduitt v. Ryan, 3 Ind. App. 1, 29 N. E. 160; Milliken v. Tufts, 31 Me. 497; Grasser &c. Brewing Co. v. Rogers, 112 Mich. 112, 70 N. W. 445, 67 Am. St, Rep. 389; Benson v. Reinshagen, 75 N. J. Eq. 358, 72 A. 954; Chapman v. Commonwealth, 25 Gratt. 721, 21 Am. Rep. 320; Norris v. Beaty, 6 W. Va. 477. tion 24 In California and a few States which have copied its legislation the creditor must act within a "reasonable time." 24 After application has once been made, neither party can change it without the assent of the other, 25 which may be given by ratifying an application theretofore unwarranted, 26 and the debtor's long continued silence after receiving notice from the creditor of such an application may amount to ratification.27 § 1799. What amounts to an appropriation by the creditor. What constitutes a final appropriation by the creditor is not wholly clear. There is no doubt that if the creditor communicates to the debtor in any way a decision to make a particular appropriation, his right is completely and finally exercised. So bringing an action on the remaining debts or items necesarily is an election to appropriate a payment to the claims omitted from the suit.29 But where the creditor makes a book entry which is not communicated to the debtor, the matter is not so clear. The English law is well settled that in such a case the creditor is not bound by his own entry and may, if it subsequently is for his interest so to do, make a different applica 24 Haynes v. Waite, 14 Cal. 446 (Cf. Cal. Civ. Code, § 1479); Plummer v. Erskine, 58 Me. 59; People v. Grant, 139 Mich. 26, 28, 102 N. W. 226; Sanford v. VanArsdall, 53 Hun, 70, 6 N. Y. S. 494; Jenkins v. Beal, 70 N. C. 440; Thatcher v. Tillory, 30 Tex. Civ. App. 327, 70 S. W. 782; Pierce v. Knight, 31 Vt. 701; Frazer v. Miller, 7 Wash. 521, 35 Pac. 427. 24a Cal. Civ. Code, § 1479; Los Angeles Trust & Sav. Bank v. Forve (Cal. App.), 187 Pac. 438; Mont. Rev. Codes (1908), § 4928; S. Dak. Comp. L. (1913), § 1150. 25 Hutchinson v. Heyworth, 9 A. & E. 375; Yates v. Hoppe, 9 C. B. 541; The Asiatic Prince, 108 Fed. 287, 47 C. C. A. 325; Pearce v. Walker, 103 Ala. 250, 15 So. 568; Flynn v. Seale, 2 Cal. App. 665, 84 Pac. 263; Plummer v. Erskine, 58 Me. 59; People v. Grant, 139 Mich. 26, 102 N. W. 226; Pond v. O'Connor, 70 Minn. 266, 73 N. W. 159, 248; Louis v. Bauer, 33 N. Y. App. D. 287, 53 N. Y. S. 985; Kann v. Kann, 259 Pa. 583, 103 Atl. 369; Wait v. Homestead Bg. Assoc. (W. Va.), 95 S. E. 203. 26 Steiner v. Jeffries, 118 Ala. 573, 24 So. 37; Bird v. Benton, 127 Ga. 371, 56 S. E. 450; Flarsheim v. Brestrup, 43 Minn. 298, 45 N. W. 438. 27 Sweeney v. Pratt, 70 Conn. 274, 39 Atl. 182, 66 Am. St. 101; Baker v. Smith, 44 La. Ann. 925, 11 So. 585; and see cases in the preceding note. 28 Simson v. Ingham, 2 B. & C. 65; Hooper v. Keay, 1 Q. B. D. 178; Cory Bros. & Co. v. The Mecca, [1897] A. C. 286, 292; United States v. Bradbury, 2 Ware, 146; People v. Grant, 139 Mich. 26, 102 N. W. 226; Reynolds v. Patten, 10 N. Y. Misc. 155, 30 N. Y. S. 1050. 29 Haynes v. Waite, 14 Cal. 446; Starrett v. Barber, 20 Me. 457. tion; 30 but this principle, though also stated in one or two American cases, 31 does not seem to be universally admitted. 32 Though the creditor may not be conclusively bound by an entry not communicated to the debtor, it does not follow that such an entry may not be evidence in the creditor's favor that he made an application before controversy.33 § 1800. Where neither debtor nor creditor directs application. If neither party has manifested an intention concerning the application of a payment, the court is compelled to make the application itself. In doing this the court endeavors to reach an equitable result, and if there were no inconsistency in the interests of the debtor and of the creditor, there would be no difficulty in reaching a conclusion. Generally, however, the interests of the parties are diverse, and in considering what is just the court is compelled to choose between what is most favorable for the debtor and what is most favorable for the creditor. In the Civil law, the interest of the debtor is preferred; 34 and the rule of the Civil law influenced some of the earlier English decisions, which are quite contradic 39 Simson v. Ingham, 2 B. & C. 65; Cory Bros. & Co. v. The Mecca, [1897] A. C. 286, 292. In the latter case Lord Herschell said: "It is clear that if the appellants had merely entered in their own books an account such as was transmitted, it would not have amounted to any appropriation by them, and they would still have been at liberty to appropriate the payment as they pleased. It is equally clear, however, that when once they had made an appropriation and communicated it to their debtors, they would have no right to appropriate it otherwise." 31 Lau v. Blomberg, 3 Neb. (Unof.) 124, 91 N. W. 206; Allen v. Culver, 3 Denio, 284. See also Wanamaker v. Powers, 102 N. Y. App. Div. 485, 492, 93 N. Y. S. 19. 32 In Missouri Central Lumber Co. v. Stewart, 78 Mo. App. 456; Grasser, etc., Brewing Co. v. Rogers, 112 Mich. 112, 70 S. W. 445, 67 Am. St. Rep. 389; Chapman v. Commonwealth, 25 Gratt. 721, 21 Am. Rep. 320, it was decided or assumed that an entry by a creditor uncommunicated to the debtor was evidence against the creditor of an election. 33 In New York though it was held in Allen v. Culver, 3 Denio, 284, that the creditor was not bound by an uncommunicated entry, it was decided in Van Rensselaer v. Roberts, 5 Denio, 470, that the creditor's books were evidence in his favor that an application had been made. So also in Johnson v. Thomas, 77 Ala. 367, it is said that the creditor need not give the debtor any notice of the act by which an appropriation is made. See also Jones v. The United States, 7 How. 681, 12 L. Ed. 870; Wanamaker v. Powers, 102 N. Y. App. Div. 485, 93 N. Y. S. 19. 34 See infra, § 1803. |