will not afterward apply it to the payment of a judgment, even though older than the account, and more particularly is this so where the creditor has security for the payment of the judgment, and none for that of the open account." 19. The law never makes an application of payment when the parties have already done so. And this rule governs even in the case of an application of money to the payment of an item in an account current which is not recoverable in an action at law. The law, where there has been no application by the parties, applies the payment in conformity with established and recognized rules. Thus, it prefers a debt due or past due to one not due." So, the court will generally apply the payment in discharge of the oldest debt. In cases of long-running accounts, where debts and credits are perpetually occurring, and no balances are otherwise adjusted than for the mere purpose of making rests, the law applies the payments to extinguish the debts according to the priority of time." The law will apply an unappropriated payment to a demand arising out of a contract recognized by the law, one which the debtor is legally bound to pay, and not to an illegal demand, one which arises out of an unlawful contract, and which the debtor is not bound to pay." In the absence of any conditions of the contract to the contrary, where partial payments are made on an interest-bearing obligation, the payment must be first applied to the liquidation of the interest accrued to the date of such payment, and the balance, if any, applied upon the principal." The rule for casting interest, when partial payments have been made, is to apply the payment, in the first place, to the discharge of the interest then due. If the payment exceed the interest, the surplus goes toward discharging the principal, and the subsequent interest is to be computed on the balance of the principal remaining due. If the payment be less than the interest, the surplus of interest must not be = 76 25 Pa. 411 (1855). 77 63 Md. 171 (1884). 789 Wheat. (U. S.) 737 (1824). 794 Dowl. & Ry. (Eng.) 783 (1824). taken to augment the principal; but interest continues on the former principal until the period when the payments, taken together, exceed the interest due, and then the surplus is to be applied toward discharging the principal; and interest is to be computed on the balance of principal as aforesaid."1 20. Effect of Partial Payments. - A partial payment, even though expressed to be in full of all demands, is no satisfaction in the case of a liquidated debt, such as a specific sum due by a contract or a judgment; but where the debt is unliquidated, such as a claim for materials furnished, or work and labor done, the amount due being disputed, a partial payment will extinguish the debt, if such be the agreement of the parties at the time of payment." In the case of a liquidated debt, a partial payment will only operate as a release where there is some consideration for the relinquishment of the residue; something collateral, to show a possibility of benefit to the party relinquishing his further claim." Thus, if the debtor pay a less sum than is due, either before the day specified, or at another place than is required in the contract, and the creditor receive it in satisfaction of his whole claim, this will discharge the debt."* That a partial payment will not discharge a liquidated debt is only true where the payment is of money merely. It is otherwise where a chattel of any kind, by the agreement of both parties, is given and accepted in satisfaction of a debt. The chattel need not be of equal value, for the party receiving it is taken to be the best judge of that in matters of uncertain value." So, a bill of exchange of third persons, or any security higher than that which the creditor holds for the payment of the original debt, if given and accepted in satisfaction of the debt, would be a good discharge. If a creditor, by express agreement, take the separate bill of exchange of one debtor in satisfaction of a joint debt owing to him by that debtor together with one or more 811 Johns. Ch. (N. Y.) 17 (1814). 821 Ad. & Ell. (Eng.) 106 (1834). 835 East (Eng.) 232 (1804). 843 Hawks (N. C.) 580 (1825). 855 B. & Ad. (Eng.) 932 (1834). others, either his partners or joint debtors, the debt is discharged as to those debtors who are not parties to the bill.** Where a debtor gives, and the creditor receives, in full satisfaction of the debt, a note indorsed by a third person for a less sum than the amount of the debt, the original debt is discharged." A subsequent promise to pay the balance is not binding. The only rights which the creditor enjoys subsequent to the receipt of the note are those which are founded upon the note itself. The agreement of a creditor with a third person not a party to the debt, that if he will pay a part of the debt for the debtor, the whole debt shall be discharged, and such third person so pays the same, the debt is canceled, even though the demand be liquidated." So, also, where the creditor, in accepting from his debtor a part payment in satisfaction of the debt, gives him a release from the entire debt under seal."* Where a general composition is agreed upon between the creditors and their debtor, and the creditors agree to release their claims upon payment of less than the whole amount due to each respectively, and, in pursuance of such agreement, such payment is made, the debt is discharged." 865 B. & Ad. (Eng.) 925 (1834). 87 77 Me. 527 (1885). 881 Car. & P. (Eng.) 557 (1824). 891 Hilt. (N. Y.) 515 (1857). 90 66 S. C. 534 (1872). TENDER 21. Keeping in view the meaning of the words payment and debtor, as we have developed them, tender may be defined as the offer of payment by the debtor. A debtor who makes a valid tender of his debt thereby protects himself, even though the creditor refuse to accept the same, from any further penalties which might accrue against him by continued non-payment. 22. Requisites of Tender. - To make a legal tender there must be either an actual offer of the money produced or the production of it must be dispensed with by express declaration, or equivalent act, of the creditor. The mere expression of willingness on the part of the debtor to pay the debt when due is not a sufficient tender." The production of the money, however, is dispensed with if the party be ready and willing to pay the same, but be prevented by the creditor declaring that he will not receive it, or by his making any declaration or doing any act equivalent to a refusal to accept it if tendered. In such cases it is not necessary to produce and count the precise sum due, but the party must have the money about him wherewith to make the tender." Tender may be made in anything that is legal money. Where the contract calls for goods, the specific articles called for must be tendered; and tender must be in all respects as to time, place, and persons, of such character that, if accepted, it would constitute a valid payment and final discharge of the debt under what we have seen to be the requirements of such payment." When the party by his 91 10 East (Eng.) 101 (1808). 926 Pick. (Mass.) 356 (1828); see The Law of Contracts: Discharge of Contracts. Tender of Performance, The Law of Property: Sales of Personal Property. Tender and Payment. 9361 Mo. 19 (1875); see The Law of Property: Chattels Personal, Money. own contract creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract. Payment, therefore, must be tendered when it is due. But a premature tender is of no effect: a creditor is not bound to accept money until it is due." A tender of part of an entire debt is inoperative." A tender, accompanied with conditions which the party has no right to impose, is not a legal tender. It must be absolute and unconditional. A tender of money is presumed sufficient if not objected to. Where the creditor's refusal to accept is placed upon a specific ground, all other objections to the sufficiency of the tender are thereby waived; for example, when a tender of a sum, admitted by the creditor to be the amount then due, is refused solely because the time for payment has expired." Where there is a contract for the delivery of specific articles at a time and place specified, the presence of the creditor is not necessary to enable the debtor to fulfil his contract. If the debtor make a tender of specific articles, at the proper time and place, according to contract, and the creditor do not come to receive them or refuse to accept them, the debtor is thereby discharged. He must, however, in addition to producing the articles at the specified time and place, so set apart and designate them that the creditor may distinguish them from others; and, property so tendered, vests in the creditor, and is at his risk." 23. A party who is, by contract, to pay money, or to do a thing transitory, to another, anywhere, on a certain day, has the whole of the day, or if on one or several days, the whole of the days, for the performance of his part of the contract; and until the whole day, or the whole of the last day, has expired, no action will lie against him for the breach of such contract. In such a case the party bound 94 113 Ind. 487 (1887). 9557 E. C. L. (Eng.) 365 (1848); 10 So. Rep. 222 (1891). 22 111. 127 (1859). |