Sec 928

A debtor who makes a payment to a creditor to whom he owes several debts, has the right, according to the Roman law, to determine the debt to which the payment is to be appropriated. If he omits to do this, the tests are as follows: (1) The most pressing debt is to be first paid. (2) If all the debts are equally pressing, the oldest has the preference. (3) If all are of the same date, then there is to be an equal apportionment. The reasoning is that a debtor who leaves it to the creditor under such circumstances, creates thereby an agency, and the creditor is bound in such matters by the ordinary rules of agency, and must adopt the mode of appropriation that would be most beneficial to the debtor. Hence, by this view, when the payment is made on account of principal and interest, the appropriation goes first to interest and then to principal.1 The German code takes another view of this vexed question, rejecting the theory that the creditor in such cases is to act as the debtor's agent, and making the creditor's interest the test. If, therefore, there is no designation by the debtor, the payment is to be appropriated as follows: (1) The debt first called in to be first paid. 2) If all are of the same date, then the debt which has the least security is to be first paid. (3) If all stand in this respect on the same footing, then that bearing the highest interest is to be first extinguished. (4) If all are in this respect alike, then the oldest has priority. (5) If these tests all fail, then the debts are to be paid -pari passu.2 The Austrian code, on the other hand, follows the Roman law as above given.3

By Roman law creditor is regarded as the debtor's agent in appropriation.

1 L. 1-8, D. h. t.; L. 1, C. h. t.; L.

48, 94, sec 3; L. 97, 103, D. h. t. Several learned treatises have been published on this topic: Mittag, specimen de solu-tione, quae fit ab eo, qui ex pluribus causis debitor alterius existit. 1795. Gmelin, diss.degravior causa, in quam a debitore ex pluribus causis solutio facta praesumitur. Tub. 1801. See Story's Eq. Jur. 12th Am. ed. sec 459 a; Poth. Pand. Lib. 46, tit. 43, art. 1. An analysis of the positions of Pothier will be found in Story, ut supra.

2 Koch, sec 155.

3 The Roman law is thus correctly stated by Tindal, C. J.: " In the absence of any express declaration by either, the inquiry was what application would be most beneficial to the debtor." Clayton's case, 1 Mer. 606. An exposition of the Roman law will be found in the Am. Law Mag. for April, 1843, and in Pattison V. Hull, 9 Cow. 773 et seq.; see, also, 1 Am. Lead. Cas. 123 et seq.

Sec 929

The English rule is that when there is no designation by the debtor, the creditor, as we have seen, has the right of appropriation. " According to the law of England, the debtor," it is said by Tindal, C. J., "may, in the first instance, appropriate the payment, solvitur in modum solventis; if he omit to do so, the creditor may make the appropriation, recipitur in modum red-pientis."1 He may appropriate the payment, therefore, in the way most favorable to himself and least favorable to his debtor.2 If he has a security for several debts, he may appropriate the proceeds to any one of the debts he may desire first to extinguish.3 But funds arising from a security for a particular debt, must be appropriated to pay that debt.4 On the other hand, where the debts consisted in a mortgage and a book account, it was held that an undesignated payment should be given to the mortgage, as most conducive to the interests of the debtor;8 and on the same principle undesignated payments will be applied to debts bearing interest in preference to debts not bearing interest.6 •