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Appropriation

debt and payment

APPROPRIATION of payments.—The law as to this comes into operation in a case where a person owes another several debts. It he makes a payment, the question may arise : to which of those debts 'shall such payment be appropriated ? The question is often of considerable importance. To an action by the creditor on one of those+ debts, the debtor might be able to successfully set up as a defence the Statute of Limitations, whereas to another debt there would be no defence. Again, in respect of one debt, there may be a surety. If, therefore, that debt were paid, 'the surety would be released ; but if not, the creditor could be paid his unsecured debt. Briefly, the law is that the debtor has the right in the first instance to declare in respect to which debt the payment is made ; failing this, the creditor has the right, and in default of either so doing, the law considers the payment to be made in respect of the debt earliest in point of date. A creditor may appropriate a payment to a

debt barred by the Statute of Limitations. In Scots law, the same thing is referred to under the general subject of Indefinite Payments ; and generally the same rules apply as in England. If, however, the creditor's appropriation would be penal to the debtor, as by suffering the legal of an adjudication to expire, then the payment would be made so as to prevent such circumstances. There can be no appropriation by a creditor against a disputed legal or a trust debt. Where a cautioner has been bound for a debt, equity will divide the payment between the cautioner's debt and the others. In sequestration, a dividend might be applied to the whole debt. And see PRESCRIPTION and LIMITATION.