IMPUTATION OF PAYMENT. In Civil Law. The application of a payment made by a debtor to his creditor.
The debtor may apply his payment as he pleases, with the exception that in case of a debt carrying interest it must be first applied to discharging the interest.
The creditor may apply the funds by in forming the debtor at the time of payment.
The law imputes in the neglect of the par ties to do so, and in favor of the debtor. It directs that imputation which would have been best for the debtor at the time of pay ment. Hence it applies the funds to obliga tions most burdensome to the debtor : e.g. to a mortgage rather than to a book-ac count, and to a debt which would render the debtor insolvent if unpaid, rather than to any less important one. If nothing else appears to control it, the rule of priority prevails.
In Louisiana the preceding civil law rules are in foree. The statutory enactment, Civ.
Code, art. 2159 et seq., is a translation of the Code Napoleon, art. 1253-1256, slightly al tered. See Pothier on Obligations, n. 528, trans. by Evans, and the notes. Payment is imputed first to the discharge of interest. 1 Mart. La. N. s. 571 ; 10 Rob. La. 51; 5 La. Ann. 738. But if the interest was not binding, being usurious, the payment must go to the principal. , 2 La. Ann. 363 ; 5 id. 616. The law applies a payment to the most burden some debt. 6 Mart. La. N. s. 28; 10 La. 357 ; 10 id. 1; 2 La. Ann. 405, 520. A creditor's receipt is an irrevocable imputation, except in cases of surprise or fraud. 2 La. Ann. 24; 3 id. 351, 810. See, also, late cases of impu tation in 6 La. Ann. 774 ; 9 id. 455 ; 12 id. 20. The cases arise under the Civil Code, art. 2159-2162. See APPROPRIATION OF PAY