of one of them; it was held to be evidence of an agreement betwen them to appropriate the items on the one side, item by item, to the satisfaction pro tanto of the items on the other side, notwithstanding some of the earlier items were barred by the Statute of Limitation, so that the balance remained due and unaffected by the statute (a). Where the several debts form the separate items of one general account, as a banking account, "there is no room for any other appropriation than that which arises from the order in which the receipts and payments take place and are carried into the account; presumably it is the sum first paid in that is first drawn out; it is the first item on the debit side of the account which is discharged or reduced by the first item on the credit side; the appropriation is made by the very act of setting the two items against each other. Upon that principle, all accounts current are settled and particularly cash accounts" (b).

The plaintiff, having taken bills for goods sold to the defendants which were dishonoured, afterwards sold other goods to them and delivered up the dishonoured bills, receiving in exchange good bills, more than sufficient to cover the first debt, but not sufficient to cover the new one in addition; it was held that the delivery up of the dishonoured bills was evidence of an appropriation of the new bills in payment of the debt for which they had been given, and that one of the defendants who was originally a partner with the others, but had ceased to be so when the new debt was incurred, was discharged from liability by the payment (c). Where one of several partners dies, and the surviving partners continue their dealings with a particular creditor, and the latter joins the transactions of the old and new firm in one entire account, the payment subsequently made by the surviving partners without specific appropriation are presumptively applicable to the debts of the old firm, because it

(a) Ashby v. James, 11 M. & W. 542; and see Worthington v. Grimsditch, 7 Q. B. 479.

(b) Per Sir W. Grant, Clayton's case, 1 Merivale, 572; Bodenham v. Purchas, 2 B. & Ald. 39; Simson v.

Ingham, 2 B. & C. 65; and see Stoveld v. Eade, 4 Bing. 154; Field v. Carr, 5 Bing. 13; Henniker v. Wigg, 4 Q. B. 792.

(c) Newmarch v. Clay, 14 East, 239.

Right of creditor to appro

is to be presumed that all the parties have consented that it should be considered as one entire account, and that the death of one of the partners has produced no alteration (a).

If the debtor makes a payment generally on account of his debts, without appropriating it, expressly or impliedly, priate pay- in payment of a particular debt, the creditor has the right

ment.

of appropriation :-" Quidquid recipitur, recipitur in modum recipientis" (b). The defendant, being indebted for goods delivered to his wife dum sola, and also for goods delivered to himself after his marriage, made a payment without any specific appropriation; it was held the plaintiff might apply the payment to the discharge of the debt contracted by the defendant's wife dum sola (c).

The plaintiff, who had acted as the attorney for a corporate body, without an appointment under the corporate seal, had claims against the corporation for costs, some of which he could enforce, and some of which he could not enforce by reason of the want of a valid appointment; it was held that he might appropriate money, which had been paid to him generally on account, to the latter claims (d). But where the plaintiff had claims against a corporation for building works done for them under a contract under seal, some of which he could recover under the contract, but some, being for extra work, he could not recover for want of a written authority by the architect as required by the contract, although the architect had authorized such extra works, it was held that he could not appropriate a payment to the claim for extra works; and the Court laid down that" the doctrine as to the appropriation of indefinite payments did not authorise a creditor to apply a payment to what did not constitute any legal or equitable demand against the party making the payment" (e). So, where an attorney delivered a

(a) Per Bayley, J., Simson v. Ingham, 2 B. & C. 65, 72.

(b) Goddard v. Cox, 2 Strange 1194; Newmarch v. Clay, 14 East, 239, 243 (a); per Bayley, J., Simson, v. Ingham, 2 B. & C. 65, 72 ; per Abbott, C. J., Mayfield v. Wadsley, 3 B.

& C. 357, 362.

(c) Goddard v. Cox, 2 Strange, 1194; see ante, p. 492.

(d) Arnold v. Mayor of Poole, 4 M. & G. 860.

(e) Lamprell v. Billericay Union, 3 Ex. 283, 307.

bill containing some items which were taxable and some not taxable, and the client made a payment on account, it was held that the attorney could not appropriate the payment to the taxable items, leaving the balance due for the non-taxable items, so as to avoid taxation on all (a).

The creditor may appropriate such payment to the debt for which he has inferior security; as, of two debts, one by contract under seal and the other by simple contract, he may appropriate the payment to the debt by simple contract, preserving his remedies for the specialty debt (b). So, of two debts, one guaranteed and the other not, he may appropriate the payment to the latter; and that, although at the time of taking the guarantee he did not inform the surety of the existence of the other debt (c).

The creditor may apply such unappropriated payment in discharge of a purely equitable debt, as a debt arising out of a partnership transaction, in preference to a legal debt, and may then sue his debtor at law for the legal debt (d).

If there be debts, some barred by the Statute of Limitation and some not, and the debtor makes a payment without appropriating it, the creditor may appropriate it to the debts barred by the statute (e). The appropriation by the creditor of an indefinite payment to a debt barred by the statute does not constitute such a part payment of that debt as will take it out of the operation of the statute; for in order to have that effect the payment must be specifically appropriated by the debtor in discharge of part of a larger debt, so as to operate as an admission of the balance remaining due (f). A debtor being indebted upon three promissory notes, two of which were barred by the Statute of Limitation, the creditor applied for interest, and the debtor paid a sum on that account generally, which the cre

(a) James v. Child, 2 Cr. & J. 678. (b) Peters v. Anderson, 5 Taunt. 596.

(c) Kirby v. Duke of Marlborough, 2 M. & S. 18; Plomer v. Long, 1 Stark. 153; Williams v. Rawlinson, 3 Bing. 71.

(d) Bosanquet v. Wray, 6 Taunt. 597; Mills v. Fowkes, 5 Bing. N. C.

455, 462; but see Goddard v. Hodges, 1 C. & M. 33.

(e) Mills v. Fowkes, 5 Bing. N. C. 455; Williams v. Griffith, 5 M. & W. 300.

(f) Mills v. Fowkes, 5 Bing. N. C. 455; Waugh v. Cope, 6 M. & W. 824; see "Statutes of Limitation," post, p. 540.

creditor to

payment.

Right of ditor applied to the note not barred by the statute; it was appropriate held that though the mere appropriation by the creditor did not revive the latter note against the debtor, yet the circumstances of the payment showed that the debtor paid the interest on account either of all three notes, or of the latter only, and therefore that the latter note was revived by the payment (a).

Appropria tion of payment by

law.

The defendant, being indebted to the plaintiff for goods sold, and also for spirits supplied in quantities not amounting to 20s. at a time, for which the plaintiff was prohibited. from suing by the Tippling Act, 24 Geo. II. c. 40, s. 12, paid the plaintiff a sum without any specific appropriation; it was held the plaintiff might apply the unappropriated payment to the claim for spirits (b). In such case, if neither debtor nor creditor appropriated the payment, the law would appropriate it to the valid debt (c).

The right of the creditor to appropriate only arises upon the debtor omitting to exercise the right on his part; so that when the money comes into the hands of the creditor from another source without the knowledge of the debtor, and without his having had any option of appropriating, the creditor has no right to appropriate (d). Thus, an attorney having received money on account of his client for damages recovered in an action, it was held that he had no right to appropriate the sum in payment of demands against his client which were barred by the Statute of Limitation (e). The creditor may make the appropriation at any time after receiving the money, and is not bound by an intended appropriation, until it has been communicated to the debtor (ƒ).

If neither the debtor nor the creditor make any appropriation, the law, in general, appropriates the payment to

(a) Nash v. Hodgson, 6 De G. M. & G. 474; 25 L. J. C. 186.

(b) Philpott v. Jones, 2 A. & E. 41; Crookshank v. Rose, 5 C. & P. 19; see ante, p. 393.

(c) See Wright v. Laing, 3 B. & C. 165; post, p. 497.

(d) Waller v. Lacy, 1 M. & G. 54, 70.

(e) Waller v. Lacy, 1 M. & G. 54.

(f) Simson v. Ingham, 2 B. & C. 65; per Tindal, C.J., Mills v. Fowkes, 5 Bing. N. C. 455, 462; per Taunton, J., Philpott v. Jones, 2 A. & E. 41, 44. According to the civil law,

the election was to be made at the time of payment; as well in the case of the creditor as in that of the debtor:" per Sir W. Grant, M.R., Clayton's case, 1 Mer. 572.

the earlier debt (a). A buyer, being indebted to the same broker for two parcels of goods sold for different principals, made a payment to the broker to an amount greater than either debt, but not equal to the sum of both, and without any specific appropriation to either; the broker having become insolvent before payment over, it was considered that the justice of the case required that the payment should be apportioned between the two principals, leaving them respectively entitled to recover only the balance of their debts from the buyer (b). As between two debts, one arising out of a lawful contract, the other out of a contract void for illegality, a payment not specifically appropriated by either party, will be appropriated by law to the debt recognized by law; thus, there being two distinct debts, one for goods sold, the other for money lent on a usurious contract, and a payment having been made without a specific appropriation to either debt by debtor or creditor, it was held that the law would afterwards appropriate such payment to the debt for goods sold (c).

THE right of action for a breach of contract may be dis. Release of right of charged by release under seal. The term release is generally action. applied to the discharge of the right of action, after a breach of contract; it is also sometimes applied to the discharge of a contract by consent before a breach; but the discharge of a contract by consent before a breach may be more correctly termed a rescission of the contract (d). A generai release of all actions and demands was held not to

(a) Per Tindal, C.J., Mills v. Fowkes, 5 Bing. N. C. 455, 461. The civil law, it is said, applies the payment to the more burdensome of two debts where one is more burdensome than the other, and to the earlier debt only where they are of equal

burden; Ib., per Sir William Grant
M.R., Clayton's case, 1 Mer. 572.

(b) Favenc v. Bennett, 11 East, 36.
(c) Wright v. Laing, 3 B. & C.
165; see Philpott v. Jones, 2 A. & E.
41, ante, p. 496.

(d) See ante, p. 413.