payment made to a person to whom a debtor paying the money owes several debts will be applied to that which first ac- [419] crued.1 This rule is especially applicable to items of debt and terest from 1st January, 1824; on the 1st of July, 1824, the obligor pays $207; the $7 should be applied to pay the six months' interest accrued on $200, and the $200 extinguishes so much principal." There is dictum in Jencks v. Alexander apparently in conflict with the text and in conflict with Righter v. Stall. The conclusion arrived at is not in conflict. If the payment of $500 had been ratably applied to the five instalments, they would have been severally reduced to $30, and interest on each annually payable would be the same, and due at the same time, as upon a like amount in the two past instalments. When the payment of $3 was made no interest or principal was due. It being paid on the mortgage generally was applicable ratably towards paying the entire principal and interest. In Turner v. Pierce, 31 Wis. 342, there was a land contract made October 22, 1863, upon which the purchase-money was $5,600, due in six annual instalments, payable August 1, 1865, to 1870, with interest on the whole sum unpaid, payable at the time each instalment became due the purchaser having the option to make the payments on or before the times mentioned, and then to pay interest only to the time of such payment. Before any of the principal became due the purchaser made a large payment, receipted to apply on the land contract. On the 5th of March, 1866, an action for strict foreclosure of the contract was begun on the ground that the purchaser was in default. The title had failed to a part of the lands, and the court held that each instalment VOL. I-32 should be reduced in the proportion that the value of that part ($1,832) bore to the whole value, and that the defendant was entitled to have the payment applied to the instalments first becoming due at such decreased rates, and that therefore nothing was due when the suit was commenced. See Starr v. Richmond, 30 Ill. 276. 1 Thompson v. St. Nicholas Nat. Bank, 113 N. Y. 325; Northwestern L. Co. v. American Exp. Co., 73 Wis. 656; The Mary K. Campbell, 40 Fed. Rep. 906; Sanford v. Van Arsdall, 53 Hun, 70; Duncan v. Thomas, 81 Cal. 56; Jefferson v. Church of St. Matthew, 41 Minn. 392; Moses v. Noble, 86 Ala. 407; Ashby v. Washburn, 23 Neb. 571; Marks v. Ledyard, 82 Ala. 69; State v. Chadwick, 10 Ore. 423; Mackey v. Fullerton, 7 Colo. 556; Bennett v. McGillan, 28 Fed. Rep. 411; McGillin v. Bennett, 132 U. S. 445; Pardee v. Markle, 111 Pa. St. 548; Kline v. Ragland, 47 Ark. 111; Brown v. Shirk, 75 Ind. 266; McCurdy v. Middleton, 82 Ala. 131; Hammett v. Dudley, 62 Md. 154; Hersey v. Bennett, 28 Minn. 86; Helm v. Commonwealth, 79 Ky. 67; Bancroft v. Holton, 59 N. H. 141; Frost v. Mixsell, 38 N. J. Eq. 586; Wagner's Appeal, 103 Pa. St. 185; Wiesenfeld v. Byrd, 17 S. C. 106; Miliken v. Tufts, 31 Me. 497; Fairchild v. Holly, 10 Conn. 475; Smith v. Loyd, 11 Leigh, 512; Robinson's Adm'r v. Allison, 36 Ala. 526; Howard v. McCall, 21 Gratt. 205; Wendt v. Ross, 33 Cal. 650; Seymour v. Sexton, 10 Watts, 255; Shedd v. Wilson, 27 Vt. 478; St. Albans v. Failey, 46 Vt. 448; Langdon v. Bowen, 46 Vt. 512; Upham v. Lefavour, 11 Met. 174; Dows 1 [420] credit in a general account current. When both parties concur in the entry of the payments upon general account, without specific application, the law infers an intention on the part of both that they shall satisfy the charges therein in the order of their entry; and they will be so applied unless some controlling equity requires a different disposition.2 . It has been held that this rule should apply without reference to the fact that one item may be better secured chan another, since the particular parts, being blended together in one common account, have no separate existence; the balance only is considered as due; and a payment made on such account without a more specific appropriation is treated by a majority of the cases as applied to the earliest items, although for some of these the creditor has a lien or other security and has none for the others. Where there is a single open account v. Morewood, 10 Barb. 183; Allen v. In the case of mutual accounts the credits on one side are applied to the extinguishment of the debts on the other as payments intentionally made thereon, and not as the set-off of one independent debt against another. Sanford v. Clark, 29 Conn. 457. 1 Goetz v. Piel, 26 Mo. App. 634; Swett v. Boyce, 134 Mass. 381; Crompton v. Pratt, 105 id. 255. 2 Id.; Jones v. United States, 7 How. (U. S.) 681; Sanford v. Clark, 29 Conn. 457; Souder v. Schechterly, 91 Pa. St. 83. If a trustee pays trust money on his account at his banker's and mixes it with his own funds and draws checks against it in the usual manner for his personal use he will be presumed to have drawn his own and not the trust money. Knatchbull v. Hallett, 13 Ch. Div. 696, overruling earlier cases. 3 Harrison v. Johnston, 27 Ala. 445. 4 Worthley v. Emerson, 116 Mass. 374; Truscott v. King, 6 N. Y. 147; The A. R. Dunlap, 1 Low. 350; Moore v. Gray, 22 La. Ann. 289; Cushing v. Wyman, 44 Me. 121; Hersey v. Bennett, 28 Minn. 86; Miller v. Miller, 23 Me. 22. But see Pierce v. Sweet, 33 Pa. St. 151; Thompson v. Davenport, 1 Wash. (Va.) 125; Schuelenberg v. Martin, 2 Fed. Rep. 747, The last case is distinguishable because the and a general payment is made by the debtor at full age, it is presumed to be in satisfaction of the earliest items although they accrued during his minority.1 The rule under consideration for applying an indefinite payment to the debts which first accrued applies not only to the first items of an account but to distinct debts contracted at different times. The rule is not unjust or prejudicial to a debtor; it operates, however, more beneficially to the creditor; for it often saves a debt from the bar of the statute of limitations, and closes the door to the older transactions which it may be presumed are more difficult of proof. But the rule ap- [421] plies the payments in the natural and logical order of the transactions. It is not supported, however, by reasons so cogent but that it will yield when there is evidence of a contrary intention, or where some superior equity requires a different application.* § 244. General payment applied to a debt bearing interest, and first to interest. As between debts bearing and those not bearing interest, the law directs an indefinite payment to be applied to the former. The reason generally assigned is that of relieving the debtor in respect to the debt which is most burdensome, or the presumed choice of the debtor. This may be conceded to be sufficient for this appli payment was not a voluntary one; a fact which the court failed to ob serve. 1 Thurlow v. Gilmore, 40 Me. 378. 2 Parks v. Ingram, 22 N. H. 283; Thompson v. Phelan, id. 339; McDaniel v. Barnes, 5 Bush, 183; Robinson's Adm'r v. Allison, 36 Ala. 526; Byrne v. Grayson, 15 La. Ann. 457; Upham v. Lefavour, 11 Met. 174; Langdon v. Bowen, 46 Vt. 512; Smith v. Loyd, 11 Leigh, 512; Jones v. United States, 7 How. (U. S.) 681; McKinzie v. Nevius, 22 Me. 138; Allstan v. Contee, 4 Har. & J. 351; Draffen v. Boonville, 8 Mo. 395; Copland v. Toulmin, 7 Cl. & F. 349; Simson v. Ingham, 2 B. & C. 72; Hooker v. Keay, 1 Q. B. Div. 178. payments made by a reorganized partnership without the consent of its new members. St. Louis Type Foundry Co. v. Wisdom, 4 Lea (Tenn.), 695; Burland v. Nash, 2 F. & F. 687; Thompson v. Brown, 1 Mood. & M. 406; Roakes v. Bailey, 55 Vt. 542. 3 City Discount Co. v. McLean, L. R. 9 C. P. 692; Langdon v. Bowen, 46 Vt. 512. 4 Upham v. Lefavour, 11 Met. 174. 5 Heyward v. Lomax, 1 Vern. 24; Scott v. Fisher, 4 T. B. Mon. 387; Blanton v. Rice, 5 id. 253; Bacon v. Brown, 1 Bibb, 334; Scott v. Cleveland, 33 Miss. 447; Bussey v. Gant's Adm'r, 10 Humph. 238. 6 Id. See Neal v. Allison, 50 Miss. This rule will not be applied to 175. cation, and some others, where a particular one is specially beneficial to a debtor without being attended with a corre sponding loss to the creditor which the law is equally solic itous to prevent. Interest due is first to be satisfied when a general payment is made; and if there be a surplus it is to be applied to the principal. If the payment falls short of the interest, the balance of the interest is not to be added to the prin cipal, but remains to be extinguished by the next payment, if it is sufficient.1 Where a debt bearing interest remains unpaid until interest is due on the interest, where it is permitted, general payments [422] are to be applied, first, to such interest on interest; sec ondly, to interest on the principal; and lastly, to the princi pal.2 And in applying payments on a sum secured by a penal bond, they will be applied to the interest in the first instance, although their sum exceeds the penalty. A payment of usury will be applied in law to discharge the amount legally due.' Payments received on a debt bearing interest before either is 1 Monroe v. Fohl, 72 Cal. 568; Morgan v. Michigan Air Line R. Co., 57 Mich. 430; Bradford Academy v. Grover, 55 Vt. 462; Case v. Fish, 58 Wis. 56; Hurst v. Hite, 20 W. Va. 183; Frazier v. Hyland, 1 Har. & J. 98; Gwinn v. Whitaker, id. 754; Bond v. Jones, 8 Sm. & M. 368; Spires v. Hamot, 8 W. & S. 17; Peebles v. Gee, 1 Dev. L. 341; Hampton v. Dean, 4 Texas, 455; Hearn v. Cutberth, 10 id. 216; McFadden v. Fortier, 20 Ill. 509; Hart v. Dorman, 2 Fla. 445; Lash v. Edgerton, 13 Minn. 210; Hammer v. Nevill, Wright, 169; Estebene v. Estebene, 5 La. Ann. 738; Union Bank v. Lobdell, 10 id. 130; Bird v. Lobdell, id. 159; Johnson v. Robbins, 20 id. 569; Moore v. Kiff, 78 Pa. St. 96; Williams v. Houghtaling, 3 Cow. 86; Righter v. Stall, 3 Sandf. Ch. 608; State v. Jackson, 1 Johns. Ch. 13; People v. County of New York, 5 Cow. 331; Jencks v. Alexander, 11 Paige, 619; Starr v. Richmond, 30 Ill. 276; Johnson v. John son, 5 Jones' Eq. 167; De Bruhl v. Neuffer, 1 Strobh. 426. See Mercer's Adm'r v. Beale, 4 Leigh, 189. If part of the interest is barred by the statute of limitations an unappropriated payment will not be applied to its discharge because it is not wholly due. In re Fitzmaurice's Minors, 15 Irish Ch. 445. 2 Anketel v. Converse, 17 Ohio St. 11. 3 Smith v. Macon, 1 Hill Ch. (S. C.) 339. 4 Burrows v. Cook, 17 Iowa, 436: Parchman v. McKinney, 12 Sm. & M. 631; Stanley v. Westrop, 16 Texas, 200; Bartholomew v. Yaw, 9 Paige, 165. See ante, § 236. In a suit under the national bank act to recover usurious interest and the forfeiture provided for, if occasional settlements have been made by the parties, payments deducted from the principal and interest then due and new notes given for the balances, the payments will be applied due should be applied to pay the principal and the interest accrued on that part of the principal so extinguished.' The rule which applies a general payment first to interest due, rather than principal, is directly opposite to that which applies a payment on an interest-bearing debt in preference to one not bearing interest; it does not favor the debtor, but the creditor; for the law in some states allowing interest due to bear interest is exceptional. § 245. General payments applied to the debt least secured. If one debt be secured and another not, and a general payment is made, the prevailing rule is that the court will apply it to the debt which is not secured, or that for which the security is most precarious. pro rata to the principal and interest due at the time. Kinser v. Farmers' Nat. Bank, 58 Iowa, 728. 1 Righter v. Stall, 3 Sandf. Ch. 608; Jencks v. Alexander, 11 Paige, 619; Williams v. Houghtaling, 3 Cow. 86; Miami Exporting Co. v. United States Bank, 5 Ohio, 260. In Starr v. Richmond, 30 Ill. 276, Walker, J., said: "It appears to be more equitable and just that when the holder receives money before it is due, on a demand drawing interest, it should be applied, in the absence of an agreement to the contrary, to the principal. Otherwise, by loaning the sum thus received, he would, in effect, compound the interest, or have placed at interest before its maturity a larger sum than his original claim. In other words, he would receive interest on the maker's money as well as his own. After the principal and interest.both become due it would be otherwise. The court below, we think, erred in applying any portion of the payment made before the maturity of the note to the extinguishment of interest, but should have appropriated the whole of the payment to the principal." McElrath v. Dupuy, 2 La. Ann. 520; Fay v. Lovejoy, 20 Wis. 407. If, however, the se 2 Garrett's Appeal, 100 Pa. St. 597; Goetz v. Piel, 26 Mo. App. 634, 643; Nichols v. Knowles, 3 McCrary, 477; S. C., 17 Fed. Rep. 494; Sanborn v. Stark, 31 Fed. Rep. 18; McCurdy v. Middleton, 82 Ala. 131; Poulson v. Collier, 18 Mo. App. 583; The D. B. Steelman, 5 Hughes, 210; Hare v. Stegall, 60 Ill. 380; Wilhelm V. Schmidt, 84 id. 183; Plain v. Roth, 107 id. 588; Frazier v. Lanahan, 71 Md. 131; Lester v. Houston, 101 N. C. 605; North v. La Flesh, 73 Wis. 520; McDaniel v. Barnes, 5 Bush, 183; Thomas v. Kelsey, 30 Barb. 268; Blanton v. Rice, 5 T. B. Mon. 253; Field v. Holland, 6 Cranch, 8; Burks v. Albert, 4 J. J. Marsh. 97; Hammer v. Rochester, 2 id. 144; Foster v. McGraw, 64 Pa. St. 464; Pattison v. Hull, 9 Cow. 747; Dows v. Morewood, 10 Barb. 183; Johnson's Appeal, 37 Pa. St. 268; Pierce v. Sweet, 33 id. 151; Langdon v. Bowen, 46 Vt. 512; Wilcox v. Fairhaven Bank, 7 Allen, 270; Hempfield R. Co. V. Thornburg, 1 W. Va. 261; Gaston v. Barney, 11 Ohio St. 510; Moss v. Adams, 4 Ired. Eq. 42; Ransour v. Thomas, 10 Ired. L. 164; State v. Thomas, 11 id. 251; Jenkins v. Beal, 70 N. C. 440; Sprinkle v. Martin, 72 id. 92; Chester v. Wheelwright, 15 |