The record-union., 1891-03-31

Leigh, OIL; Alien VS.. culver, j Demo, ~,
Story's Eq. Jur. 459 b: 2 Greenleaf on Ev.
Sec. 533.)
One ofthe elements underlying the rule
for the protection of each party in his
rights is that the burden shall be made as
light upon The debtor as is consistent with
giving to the creditor all that the debtor
has bound himself to pay. If the cred
ltor by any application that may be made
for him can receive ali for which the
debtor is under an obligation to him, it is
but equity that it should be applied i'll
such mode as will be least onerous to
the debtor. On the other hand, when the
interest of the debtor cannot be promoted
by any particular application of the pay
ment, or when it is a matter OF indiffer-
ence to him in which mode the appiica-
ton is made, the law raises presump-
ton that the payment was actually re-
ceived in tthe way that WIS Of most adj
vantage to the creditor. If the applica-
ton can be so made as to discharge all the
obligations of the debtor without increas-
ing his burden, it will be deemed indiffer-
ent to him upon which obligation the pay
ment shall be applied. The principles of
this rude find their application in cases
where it is held that payment is to be
applied to interest, instead of principal;
TO an INTEREST," bearing debt in preference
to one bearing no interest; to the
payment of legal interest instead of that
tured rather than to one not yet due; to
the payment of legal items i'll an account,
rather than those which are illegal; and,
on the other hand, for the purpose of
protecting the rights Of the creditor, Il
payment will be applied to the earlier
items Of an account in preference to later
ones; to an unsecured debt, i'll preference
to one FOR which he holds security;
and, when he has more than one security,
to that debt for which the security is the
most precarioCs. No specific rule can be
laid down that viii embrace all the cases
that may arise for its application, ,inasmuch
as the infinite variety Of human trans
actions cannot be included within the
limits OF formulated rule; and, there
fore, courts must be governed by princi-
pies, rather than by fixed rules. In this
State all attempt has been made for the
guidance of courts in this matter, but the
rules there prescribed are insufficient for
all occasions, and do not embrace even
the conditions of the present case. Sec.
1879, c. c., provides: -
''3. If neither party makes such appli
cation within the time prescribed herein,
the performance must be applied to The
extinction OF obligations III the following
order; and, if there be more than one obli-
CATION of particular class, to the extinc-
tion Of all in that class, ratably:
so OF interest due at the time Of the
performance; :
"(2.) Of principal due at that time;
''(3.l Of the obligation earliest in date
of maturity;
''(4.) OF an obligation not secured by a
lien or collateral undertaking;
$50 OF an obligation secured by a lien
or collateral undertaking."
Neither OF these subdivisions is directly
applicable to the facts i'll this case. All Of
the obligations OF Murdoch are equally
secured, and the moneys received by the
defendants were at no time sufficient to
extinguiSh all of the interest then due
upon the principal obligations. The OBJ
legations also bear different rates of in
terest, and upon one of them the interest
! is to be compounded semi-annually, while
| the others bear only simple interest
| Hence, instead of having the Civil Code
rs a guide, the court was compelled to
take as its guide the equitable principles
! found III the above rule. Under these
principles it was it's duty to apply the
| payments that had been from time to time
| received by the defendants to those obli-
| cations which were most OnerOuS to the
! plaintiff, so long as none of those obliga-
tions were impaired. Ordinarily this
rule would require the payment to be ap-
| piled in the eXtinguishment of the inter-
est upon that obligation which bore the
highest rate; but, inasmuch as in the
present case the obligation which bore a
lower rate of interest provided for COM
pounding that interest, that became the
most onerous, and, within the principles
above stated, was the first to be eXtin-
guiShed, especially since thereby the de
PENDANTS would suffer no loss, but receive
all that Murdoch had obligated himself to
pay to them.
The findings show that from the time
the defendants took possession of the
property they were in the annual receipt
! Of an income therefrom far in excess of
q VI for ifS n
ervation, and that from that date until
| the time ofthe accounting they had in their
hands moneys belonging TO the plaintiff,
| which, added to the amount of annual
benefit which they derived from the
property, and for which the court found
| they were indebted to the plaintiff,
greatly exceeded the interest accruing
upon the $500 note. It would be con-
| trary to all principles of equity and JUS
tice for them to retain this money in
their hands and at the same time insist
that the interest upon the $500 note
which they held against Murdoch should
accumulate by being compounded ac-
cording to its terms. 1t was their duty
| to apply these moneys, as fast as they
were received, to keeping down the in
terest upon the obligations for which
they held the property as security, and
| upon that obligation which was most on
erous to Murdoch, and upon which the
| tended the. application, as being most
! beneficial to him. In applying money
that had been received by the defendants,
| first TO the discharge OF the interest upon
the obligation which provided for its
! compounding, and whatever surplus
| there might be to the reduction of the in
| tereSt upon the other obligation, the court
acted in accordance with the principles of
| the above rule, making the burden upon
| the plaintiff the least onerous consistent
with the obligations that had been made
by Murdock, and at the same time giving
to the defendants all the money. that they
could have received had Murdoch paid
them from time to time the semi-annual
! interest as it fell due, with the moneys
which they held in their hands for him.
This application of the money in the
! hands of the defendants to the discharge
| OF the interest upon the $500 note, in
| stead of being "a modification OF the con-
! tract entered into between the parties, >"
as is stated in appellants points, is in re-
tract. In this mode the interest on the
note that was payable semi-annually''
was discharged in exact accordance with
| the terms of the note. The defendants
received all that Murdock had agreed to
pay them, and at the very time that such
payment was to be made, and at the same
/ time the burden of the different obliga-
tions was made lighter upon the plaintiff
| than it would have been had the other
course been followed.
The findings do not show the tabulation
or stating OF the account between the
parties, but merely give the amount of
the receipts and disbursements for each
! year and the result of the accounting,
without making any allowance for COM
/ pound interest" This result is consistent
with the rule we have above stated In
asmuch as the evidence upon which the
| findings were made is not before us, and
] the findings fhnnn Snlx-nS do not Shn,r- Il q