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CHAPTER
XV.

After action brought.

Payment by bankers' notes and checks.

payment.

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defence, even against an indorsee for value without notice (e) ; for the statute, which imperatively prohibits the re-issuing of such a note, dispenses with notice.

A payment after action brought will not prevent the holder from proceeding for his costs (ƒ).

If the bill be paid, the payer has a right to insist on its being delivered up to him; but if it be not paid, the holder should keep it. Yet it has been held, that an agent is justified, by the usage of trade, in delivering it up on receiving a check, though that check is afterwards dishonoured (g). But the drawers or indorsers, in such a case, would be discharged, for they have a right to insist on the production of the bill, and to have it delivered up on payment by them (h). If the holder of a check receive bank notes instead of cash,

and the banker fail, the drawer is discharged (i). (57
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What amounts to A set-off does not amount to payment, unless it be mutually agreed that one demand shall be set off against the other. Such an agreement amounts to payment (k). And an agreement, even by one of several partners, with a debtor to the firm, that a separate debt due from the partner shall be set off against a joint debt due to the firm, binds the firm (7). Credit given to the holder of a bill by the party ultimately liable is tantamount to payment (m). Where a banker takes from a customer and his surety a promissory note, intended to secure a running balance, and makes advances on the faith of the note, it is not discharged by subsequent unappropriated repayments made by the customer to the banker, but still continues as a security for the existing balance (n).

Legacy.

There are many circumstances under which a legacy by a debtor to his creditor, of equal or greater amount than the debt, will be considered a satisfaction of the debt.

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N. 884.

But a

(k) Callander v. Howard, 19 L. J., C. P. 312; 10 C. B. 290, S. C.

(1) Wallace v. Kelsall, 7 M. & W. 264; see Gordon v. Ellis, 7 M. & G. 607; 2 C. B. 821, S. C.

(m) Atkins v. Owen, 4 Nev. & Man. 123; 2 Ad. & El. 35, S. C.; Bell v. Buckley, 11 Exch. 631.

(n) Pease v. Hirst, 10 B. & C. 122; 5 M. & Ry. 88, S. C.

legacy to the holder of a negotiable bill or note can never be considered as a satisfaction of the debt on that instrument. For a legacy is a satisfaction when it may be presumed to have been the intention of the testator that it should so operate; but that cannot be presumed, when, from the assignable nature of the debt, the testator could not tell whether or no the legatee was at the time of the bequest his creditor (o).

CHAPTER
XV.

Where a man is indebted to another in several items, Appropriation of and makes a partial payment, it often becomes a question, payments. important not only to the parties themselves, but to third persons, to which of the items the payment shall be imputed. The rule of the Roman law, and therefore in general of Continental law, is, that a payment shall be appropriated, first, according to the intention of the debtor at the time of making it (p); but if that be unknown, then, secondly, at the election of the creditor (q), signified to the debtor at the time of receiving it (r). If the intention of neither be known, payment must then be appropriated according to the presumed intention of the debtor, and it will be presumed that he meant to discharge such debts as were most burdensome: as, a debt carrying interest, rather than one which carries none; a debt secured by a penalty, rather than one resting on a simple stipulation; a debt, on which he may be made a bankrupt, rather than one which will not subject him to such a liability. If all the debts are equal in degree, the payment must then be imputed to them according to their respective priority in the order of time (s). Such is the rule of the civil law, from which, in some particulars, the common law differs.

Wherever, according to the English law, the transactions between the two parties form one general account current,

(0) Carr v. Eastabrook, 3 Ves.

561.

(p) Quotiens quis debitor ex pluribus causis unum debitum solvit, est in arbitrio solventis dicere quod potius debitum voluerit solutum, et quod dixerit, id erit solutum. D. 46, 3, 1. Vide etiam Cod. 8, 43, 1.

(g) Quotiens vero non dicimus ad quod solutum sit, in arbitrio est accipientis cui potius debito acceptum ferat. D. 46, 3, 1. Cod. 8, 43, 1.

(r) Dum in re agenda (in re præsenti hoc est statim atque solu

B.

tum est) hoc fiat; ut vel creditori
liberum sit non accipere vel debi-
tori non dare, si alio nomine
exsolutum quis eorum velit :
cæterum postea non permittitur.
D. 46, 3, 1, 2, 3.

(8) D. 46, 3. If all the debts
were equal and alike in every re-
spect, the sum paid was applied to
a rateable reduction of them all.
A rateable appropriation is also
sometimes made by the English
law. See an example in Faveno
v. Bennett, 11 East, 36. See
further, post, 227.

CHAPTER
XV.

or are treated by them as such, payments are to be imputed to debts in the order of time, and the balance is to be struck at the foot of the account (t). But, if an unappropriated payment be made on account of several distinct insulated debts, which cannot be considered in the light of a running account between the parties, the common law then differs from the civil law and gives the creditor a right of appropriating it at any time before action (u), as he pleases (x), provided a prior appropriation have not been communicated to the debtor.

An appropriation which would have the effect of paying one man's debt with another man's money will not be allowed (y). Nor can there be an appropriation which would deprive a debtor of a benefit, such as the taxation of costs (z).And it seems that an appropriation by the creditor, without the knowledge or consent of the debtor, will not of itself afford sufficient ground for raising against the debtor a new promise to pay (a).

A payment may be imputed to a demand for which the creditor could not recover at law (b). But where a payment is made by a debtor on account generally, the court will not refer it to a debt barred by the statute, if it can be attributed to any debt not so barred (c). The law will ascribe a payment to a legal debt, rather than to an illegal one (d). A party receiving money for the use of another from a third person, which is not properly a payment but a set-off,

(t) Clayton's case, 1 Meriv.
604; Geake v. Jackson, 36 L. J.,
C. P. 108.

(u) Simson v. Ingham, 2 B. &
C. 65; 3 D. & Ry. 249; Mills v.
Fowkes, 5 Bing. N. C. 455; 7
Scott, 444, S. C.

(x) Clayton's case, 1 Meriv.
604; Bodenham v. Purchas, 2
B. & Ald. 39; Stoveld v. Eade,
4 Bing. 12; 12 Moo. 370; Field
v. Carr, 2 Moo. & P. 46; 5 Bing.
13; Goddard v. Cox, 2 Stra.
1194; Bosanquet v. Wray, 6
Taunt. 597; 2 Marsh, 319, S. C.;
Kirby v. Duke of Marlborough,
2 M. & Sel. 18; Plomer v. Long,
1 Stark. 153; Woodroffe v.
Hayne, 1 C. & P. 600; Shaw v.
Picton, 4 B. & C. 715; 7 Dowl.
& R. 201, S. C.; Marsh v. Houl-
ditch, Chitty, 9th ed. 404;
Hammersley v. Knowlys, 2 Esp.
666; Birch v. Tebbutt, 2 Stark.
74; Marryatts v. White, 2 Stark.

101; Meggott v. Mills, 1 Ld.
Raym. 286; Dane v. Holdsworth,
Peake, 64; Peters v. Anderson, 5
Taunt. 596; Wright v. Laing, 3
B. & C. 165; 4 Dowl. & R. 783;
Gough v. Davis, 4 Price, 200,
Strange v. Lee, 3 East, 484:
Simpson v. Ingham, 2 B. & C. 65;
3 Dowl. & R. 249; Mills v.
Fowkes, 5 Bing. N. C. 455; 7
Scott, 444, S. C.

(y) Thompson v. Brown, 1 M. & M. 40.

(z) James v. Child, 2 Tyrwh. 735; 2 C. & J. 252, S. C.

(a) Nash v. Hodgson, 6 De G. M. & G. 474; 25 L. J., Chan. 186; 23 L. J., Chan. 780, S. C.

(b) Crookshanks v. Rose, 1 M. & R. 100; 5 C. & P. 19, S. C.

(c) Nash v. Hodgson, 6 De G. M. & G. 474; 25 L. J., Chan. 186; 23 L. J., Chan. 780, S. C.

(d) Wright v. Laing, 3 B. & C. 165; 4 Dowl. & R. 783.

cannot appropriate the money without the knowledge or consent of him for whom it has been received (e). It has been held, that a payment may be appropriated to a disputed debt, if it be really a good debt (f).

CHAPTER
XV.

There are cases where a payment is appropriated by law Rateable approto several debts proportionally.

Thus where a principal debtor has assigned his effects to a trustee for his creditors, a creditor who has a guarantee for part of his debt will be forced, even at law, to apply in discharge thereof a rateable part of any payment that he may receive from the trustee (g).

priation.

Part-payment of the debt by the party liable is no dis- Part-payment. charge of the whole debt (h), but part-payment by a stranger may be (i). And it has been held, that where a promissory note is due and unpaid, so that not only the principal, but

(e) Waller v. Lacy, 1 M. & Gr. 54; 1 Scott, N. R. 186, S. C. (f) Williams v. Griffith, 5 M. & W. 300.

(g) Baidwell v. Lydall, 7 Bing. 489; see Raikes v. Todd, 1 P. & D. 138; 8 Ad. & E. 846, S. C.; Paley v. Field, 12 Ves. Jun. 435. See other instances of rateable appropriation in Favenc v. Bennett, 11 East, 36; and Perris Roberts, 1 Vernon, 34; 2 Chan.

V.

Mediona 83, 8. C. Thomsion v The following rules as to approChenoriation of payment have been established in America :

The debtor has the first right to direct the application of any payment he may make.

The rule that a debtor may apply payment as he pleases, applies only to voluntary payments, and not to those made by process of law.

If no appropriation be made by him, it then devolves upon the creditor to make it.

Yet the creditor must make such an application as the debtor could not reasonably or justly object to.

A debtor or creditor cannot appropriate a payment in such manner as to affect the relative liability or rights of sureties without

their consent.

When a debtor makes payments without specifying the application, the creditor cannot apply them to debts not due, if there are other debts which are due.

If application be directed by neither, then the law will make the application according to equity.

It has been held that such application by the law shall be made as the debtor may be presumed to have done-in other words, as would be most for his interest at the time.

The law will make the application first to interest, and then to principal.

To the debt which is prior in date.

To that debt which is least secured.

To make an application of a payment the person paying must give directions before, or at the time of payment.

See the authorities in Byles on Bills, 5th American edition.

(h) Fitch v. Sutton, 5 East, 230. When a bill or note may be satisfaction. See post, Chap.

XVI.

(i) Welby v. Drake, 1 C. & P.

557.

CHAPTER
XV.

When payment

will be presumed.

Evidence of payment.

Of delivering up the bill.

interest (at least to a nominal amount) is due also, the principal may be taken in satisfaction of the debt and damages (k).

As the lapse of twenty years (1) is sufficient to raise a presumption that a bond has been paid, so it has been held to be a good defence to an action on a promissory note payable on demand (m). But if during this period the plaintiff was an alien enemy, and payment to him would consequently have been illegal, such a presumption would not, it seems, arise (n).

The production of a check drawn by the defendant on his banker, and indorsed by the plaintiff, is evidence of payment (o); but not if there have been several transactions between the parties, without evidence to connect the delivery of the check with the payment in question (p). A bill or note once in circulation overdue, and coming out of the hands of the acceptor or maker, is presumed to be paid. Thus, it is a maxim of the Scotch law, chirographum apud debitorem repertum presumitur solutum. But the mere production of a bill from the custody of the acceptor is not primâ facie evidence of his having paid it, without proof of its having been once in circulation after it had been accepted (q).

The party paying a bill or note has a right to insist on its being delivered up to him (r). But, where the bill or note is not negotiable, he cannot refuse to pay it till it is delivered up (s).

(k) Beaumont v. Greathead, 3
D. & L. 631; 2 C. B. 494, S. C.
(7) See now 3 & 4 Will. 4, c.
42, s. 3.

52.

(m) Duffield v. Creed, 5 Esp.

(n) Du Beloix v. Lord Waterpark, 1 D. & R. 16.

(0) Egg v. Barnett, 3 Esp. 196.

(p) Aubert v. Walsh, 4 Taunt. 293.

(q) Pfiel v. Vanbatenberg, 2 Camp. 439.

In America it is held that if a bill be sent to the drawee and he be directed to pass it to the credit of the holder, and do so credit it, the bill is functus officio, and cannot be further negotiated.

Where a promissory note that

has been negotiated comes into the possession of one of the parties liable to pay it, such possession is primâ facie evidence of payment by him, and he is to be treated as the bona fide holder unless the contrary is made to appear.

The possession of a bill by the drawee after maturity is primá facie evidence of payment. See Byles on Bills, 5th American ed. 364.

(r) Hansard v. Robinson, 7 B. & C. 90; 9 Dowl. & R. 860; Powell v. Roach, 6 Esp. 76; Alexander v. Strong, 9 M. & W. 733; Cornes v. Taylor, 10 Exch. 441.

(8) Wain v. Bailey, 10 A. & E. 616; 2 P. & D. 507, S. C.

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