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Appropriation of Payments

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APPROPRIATION OF PAYMENTS. 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 appropri ation ; 2 B. & C. 72. No precise declaration is required of him, his intention (Terhune v. Colton, 12 N. J. Eq. 233 ; id. 312), when made known, being sufficient; Bayley v. Wynkoop, 5 Gilman (Ill.) 449 ; Randall v. Parramore, 1 Fla. 409; 7 Beay. 10; King v. Andrews, 30 Ind. 429 ; Jones v. Williams, 39 Wis. 300 ; Hansen v. Rounsavell, 74 Ill. 238 ; Levystein v. Whitman, 59 Ala. 345 ; Adams Exp. Co. v. Black, 62 Ind. 128 ; Bean v. Brown, 54 N. H. 395. Still, such facts must be proved as will leacLa jury to infer that the debtor did purpose the specific ap propriation claimed ; 4 Ad. & E. 840 ; Self ridge v. Bank, 8 W. & S. (Pa.) 320 ; Pindall's Ex'r v. Bank, 10 Leigh (Va.) 481; Rackley v. Pearce, 1 Ga. 241; Hall v. Marston, 17 Mass. 575 ; Runyon v. Latham, 27 N. C. 551; Mil ler v. Trevilian, 2 (Va.) 2, 27; Boutell v. Mason, 12 Vt. 608 ; Franklin Bank v. Cooper, 36 Me. 222 ; Bosley v. Porter, 4 J. J. Marsh. (Ky.) 621; Mitchell. v. Dall, 4 Gill & J. (Md.) 361. An entry made by the debt or 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 cred itor's entry communicated to his debtor; 2 B. & C. 65; Van Rensselaer's Ex'rs v. ;Rob erts, 5 Denio (N. Y.) 470 ; Seymour v. Mar vin, 11 Barb. (N. Y.) 80. The appropriation must be made by the debtor at or before the time of payment; suit fixes the appropria tion ; Haynes v. Waite, 14 Cal. 446; Frazer v. Miller, 7 Wash. 521, 35 Pac. 427. The intention to appropriate may be referred to the jury on the facts of the transaction ; West Branch Bank v. Moorehead, 5 W. & S. (Pa.) 542.

The creditor may apply the payment, as a general rule, if the debtor does not; Jones v. U. S., 7 How. 681, 12 L. Ed. 870; Presi dent, etc., of Washington Bank v. Prescott, 20 Pick. (Mass.) 339; Watt v. Hoch, 25 Pa. 411; Forretier v. Guerrineau's Creditors, 1 McCord (N. C.) 308 ; Blinn v. Chester, 5 Day (Conn.) 166 ; Brady's Adm'r v. Hill, 1 Mo. 315, 13 Am. Dee. 503 ; Arnold v. Johnson, 1 Scam. (Ill.) 196; Whitaker v. Groover, 54 Ga. 174 ; Jones v. Williams, 39 Wis. 300;

Bell v. Radcliff, 32 Ark. 645 ; Burbank v. McCluer, 54 N. H. 345; Frazer v. Miller, 7 Wash. 521, 35 Pac. 427 ; Farren v. McDon nell, 74 Hun 176, 26 N. Y. Supp. 619; North ern Nat. Bank v. Lewis, 78 Wis. 475, 47 N. W. 834 ; Green v. Ford, 79 Ga. 130, 3 S. E. 624. In the absence of directions, the cred itor may apply credits to the least secure items of his claim ; Hildreth v. Davis, 6 Kulp (Pa.) 336. But there are some restric tions upon this right. The debtor must have known and waived his right to appropriate. Hence an agent cannot always apply his principal's payment. He cannot, on receipt of money due his principal, apply the funds to debts due himself as agent, selecting those barred by the statute of limitations; 1 Mann. & G. 54; Colby v. Cressy, 5 N. H. 237. A prior legal debt the creditor must prefer to a posterior equitable debt. Where only one of several debts is valid, all the pay ments must be applied to this, irrespective of its order in the account; Backman v. Wright, 27 Vt. 187, 65 Am. Dec. 187. Wheth er, if the equitable be prior, it must first be paid, see Baker v. Stackpoole, 9 Cow. (N. Y.) 420, 18 Am. Dec. 508; 1 C. & M. 33.

If the creditor is also trustee for another creditor of his own debtor, he must apply the unappropriated funds pro rata to his own claims and those of his cestui quo trust; Scott v. Ray, 18 Pick. (Mass.) 361. But if the debtor, besides the debts in his own right, owe also debts as executor or administrator, the unappropriated funds should first be applied to his personal debt, and not to his debts as executor ; Fowke v. Bowie, 4 Harr. & J. (Md.) 566 ; Sawyer v. Toppan, 14 N. H. 352 ; 2 Dowl. Parl. Cas. 477. A creditor cannot apply unappropriat ed funds to such of his claims as are illegal and not recoverable at law ; 3 B. & C. 165; 4 M. & G. 860 ; 4 Dowl. & R. 783 ; 2 Deac. & C. 534 ; Rohan v. Hanson, 11 Cush. (Mass.) 44; Caldwell v. Wentworth, 14 N. H. 431. But in the case of some debts illegal by statute—namely, those contracted by sales of spirituous liquors—an appropriation to them has been adjudged good ; 2 Ad. & E. 41; Treadwell v. Moore, 34 Me. 112. And the debtor may always elect to have his payment applied to an illegal. debt.

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