9. Composition kith we have al ready seen, a debtor may come to an arrangement with his creditors by which they accept less than the full amount of their claims on a compromise settle ment. If such an agreement is made, the creditors have no claim for any balance. In the case of each creditor, the consideration for accepting less than is due to him is the fact that the other creditors also forbear to exact performance in full. If each for bears for part of his claim, each receives a benefit, because if one or more exacted full payment, some would be sure to lose thereby. In making such a composition with his creditors, however, a debtor can not benefit one creditor over another, and an agree ment to do so would be an agreement in fraud of his creditors and would be void.
10. Application or imputation of debtor of several debts may, when paying, declare what debt he means to discharge, and his wishes in this respect must be observed. His intention may be discovered from his conduct, or from the circum stances under which he pays. If the debtor does not indicate what debt he means to discharge, the cred itor may apply the payment toward any debt due to him by the person paying, provided the debt is not illegal. Having made his choice, he will be held to it, unless the debtor consents to another application of the payment. If the debtor has accepted a receipt by which the creditor has imputed the payment in dis-, charge of a special debt, the debtor cannot afterward require the imputation to be made upon another debt, except upon the ordinary grounds for the avoidance of contracts.
If neither party makes a choice as to which of sev eral debts shall be discharged by the payment, the payment will be imputed in discharge of the debt actually payable which the debtor has at the time the greatest interest in paying. This is the rule under the English law, as also in the Province of Quebec. Following this rule, it was held in a New York case 1 that the amount paid will be applied to a debt se cured by a mortgage in preference to a debt which is not secured.
The Supreme Court of the United States has made decision, in a sense contrary to this rule, namely, that: "If the application is made by neither party, it be comes the duty of the court, and in its exercise a sound discretion is to be exercised. It cannot be conceded that this application is to be made in a manner most advantageous to the debtor. It would seem reason able that an equitable application should be made; and, it being equitable that the whole debt should be paid, it cannot be inequitable to extinguish first those debts for which the security is most precarious."
In Quebec, also, it is laid doWn that, if only one of several debts is actually payable, the payment must be imputed in discharge of such debt, altho it be less burdensome than those which are not actually payable; if the debts are of like nature and equally burdensome, the imputation is made upon the oldest; all things being equal, it is made proportionately on each.
11. Tender._WThen a creditor refuses to receive payment, the debtor may make an actual tender of the money or other thing due. By making a tender, the debtor offers to carry out his bargain. 'When the tender is a sum of money and it is refused, it becomes equivalent to a payment on the date of the first tender, provided the tender was unconditional and was made at a reasonable time and place, and that since making it the debtor has remained ready and willing to pay the money. If the debtor is sued, after making his tender, he should plead his former tender, renew it and deposit the money in court. The tender must be in money—a check or note would not be sufficient. The tender must be made by a person legally capable of paying to a, creditor legally capable of receiving payment, or to some one having authority to receive payment for him. If the obligation of the debtor is to deliver goods, or to perform an obligation other than the payment of money, and the creditor refuses the tender made to him, the debtor is discharged. Moreover, if the creditor sues him for breach of his contract, he may plead his tender as a good defence.
The Civil Code of Quebec lays down certain rules for the tender of specific things.' Thus if a certain specific thing is deliverable on the spot where it is, the debtor must, by his tender, require the creditor to come and take it there. If the thing is not so deliv erable and from its nature it is difficult of transpor tation, the debtor must indicate by his tender the place where it is, the day and hour when he is ready to deliver it, and the place where payment ought to be made. If the creditor fails, in the former case, to take the thing away, or in the latter, to signify his willingness to accept, the debtor may, if he thinks fit, remove the thing to any other place for safe keeping at the risk of the creditor. These rules are of general application also under the English law.