APPROPRIATION, a term denoting a specific sum set apart by the legislative power for a designated purpose. In the United States no money can be drawn from the Treasury excepting by appropriations made by law (Con stitution, Art. 1). See APPROPRIATIONS, AMER ICAN SYSTEM OF.
Appropriation of payments refers• to the application of a payment made to a creditor by his debtor, to one or more of several debts. The debtor has the first right of appropriation. No precise words are required of him, his in tention when made known being sufficient, but such facts must be proved as will lead a jury to infer that he did intend to make the specific appropriation claimed. An entry made by the debtor in his own book at the time of payment is an appropriation if made known to the creditor, but otherwise if not made known to him. The same rule applies to a creditor's entry communicated to his debtor. If the debtor does not apply the payment, the creditor may do so. There are, however, some restrictions upon this right. The debtor must have known and waived his right to appropriate. Hence an agent cannot always apply his principal's pay ment. He cannot, upon receipt of money due his principal, apply the funds to debts due him self as agent, selecting those barred by the statute of limitations. A creditor having sev eral demands may apply the payments to a debt not secured by sureties, where other rules do not prohibit it. The court will direct the appli cation of a payment upon the failure of both debtor and creditor to do so. Payments made on account are first to be applied to the interest due thereon at the time of payment, and if the payment exceed the amount of interest, the bal ance goes to extinguish the principal. 3 Sandf.
Ch. (N. Y.) 608; 11 Paige Ch. (N. Y.) 619. Funds must be applied by the creditor to a judg ment bearing interest, in preference to an un liquidated account. When no other rules of appropriation intervene, the law applies part payments to debts in the order of time, dis charging the oldest first. The general rule is that neither debtor nor creditor can so apply a payment as to affect the liability of sureties without their consent. Where a principal makes general payments the law presumes them, prima facie, to be made upon debts guaranteed by a surety rather than upon others, although cir cumstances and intent will control this rule, as they do other rules of appropriation. 5 Leigh (Va.) 329. Payments upon continuous accounts are applied to the earliest items of account un less a different intent can be inferred. 5 Metc. (Mass.) 268; 23 Me. 24; 3 Sumn. C. C. 98. Where a creditor of an old firm continues his account with the new firm, payments by the latter will be applied to the old debt, prima facie, the preceding rule of continuous accounts guiding the appropriations. A different intent, however, clearly proved, will prevail. The ap propriation cannot be changed, when once made, but by common consent, and rendering an ac count and bringing suit declaring in a particular way is evidence of an appropriation. 9 Paige Ch. (N. Y.) 165.