And it has also been held, that in such case payment is not to be presumed from a receipt indorsed on the bill, unless the receipt be shown to be in the handwriting of a person entitled to demand payment (ƒ).

The mere circumstance of the defendant having drawn a check on his banker, payable to the plaintiff or bearer, affords no proof of payment, unless, in addition to the production of the draft by the defendant, it be also shown by him that the plaintiff or his agent actually received money thereon; or unless the defendant indorsed his name on, or had transferred it: proof of either of these facts would be prima facie evidence of payment, and entitle the defendant to call upon the plaintiff to show that the draft was paid on some other account than the debt sued for (g).

A check, however, to operate as a payment, must be unconditional in its terms, and must be shown to have been paid; or to have been accepted as cash. A creditor is not bound to take a check as cash, and may, unless he has agreed to do so, commence an action, though the check remain in his hands (h).

The effect of taking a bill of exchange on a third person, instead of cash, upon a banker's draft given in payment of a debt, will be hereafter considered (i).

If money be sent by the post in a letter properly directed to the creditor (k), and be lost, the debtor is discharged, if he were directed so to transmit the money, or that were the usual course between the parties (1 ).

A payment may be in goods as well as in money; as, for instance, if a party delivers goods as for a particular amount, together with a balance in money, then the goods would clearly

(f) Pfiel v. Vanbatenberg, 2 Camp. Rep. 436.

(g) Egg v. Barnett, 3 Esp. R. 196; Boswell v. Smith, 6 Car. & P. 60; and see Pearce v. Davis, 1 Moo. & Rob. 365. Although payment of a debt may be established by a check drawn by the debtor in favour of a creditor, if supported by the above-mentioned evidence, yet the mere proof of the delivery and payment of a check is not sufficient to establish a debt from the person to whom it is delivered and paid, unless it be also shown upon what consideration and under what circumstances it was given; Cary v.

Gerrick, 4 Esp. R. 9; Aubert v. Walsh, 4 Taunt. 293; Lloyd v. Sandilands, Gow, R. 15. When payment of the check must be distinctly proved, although it came back into the hands of the maker; Bleasley v. Crossley, 3 Bing. 430; 11 Moore, 327, S. C.

(h) Hough v. May, 4 Ad. & E. 954; 6 Nev. & Man. 535.

(i) Post, 751, and division 4. (k) See Walter v. Haynes, Ry. & M. 149.

(1) Warwicke v. Noakes, Peake's R. 67. See Hawkins v. Rutt, id. 186. As to sending by a carrier, see ante, 439, 484.

be delivered as a payment pro tanto; whether they were so delivered would be a question for the jury (m).

If a payment be made in forged Bank of England notes, the creditor may treat them as a nullity, and sue his debtor for the demand.

In some cases the debt, as we have seen, is in law paid or extinguished by the creditor's order upon his debtor to pay the money to a third person, to whom such creditor was indebted. Clearly the debt is absolutely discharged, if the order be acted upon, and the third party receive the amount in pursuance thereof; and the creditor cannot rescind the order after the debtor has pledged himself to the third person, with the concurrence of the creditor, to obey it. In such case, the right of the third party to receive the money from the debtor is complete; and consequently the debt is extinguished as against the creditor (n).

In Smith v. Ferrand (0), Bayley, J. observed, "If a creditor refer a third person to his debtor for payment, intending the third person to take payment in money, and the latter, instead of taking payment in money, takes payment in any other way, he does it at his peril. In a case before Lord Kenyon in 1796, it was decided, that if a debtor refer a creditor to a third person for payment, and the creditor give that third person indulgence, without the knowledge and consent of the debtor, and the third person becomes insolvent, the loss must fall on the creditor; because, as between himself and the debtor, the giving indulgence without notice operates as an agreement on his part to look to the third person and discharges the debtor."

In Smith v. Ferrand, the creditor, instead of taking cash from a banker, as he might have done, upon the debtor's order upon the banker, elected to take from the latter a bill upon a third person, payable at a future day, and it was decided that this discharged the debtor, although the bill were afterwards dishonoured (p).

(m) Per Alderson, B., Cannan v. Wood, 2 M. & W. 467; and see Hooper v. Stevens, 4 Ad. & E. 71; 5 Nev. & Man. 635; Hart v. Nash, 2 C., M. & R. 337; Williams v. Griffiths, id. 45. Payment by allowance in account and receipt as for cash; Waller v. Andrews, 3 M. & W. 312.

(n) See ante, 613 to 616.

(0) Smith v. Ferrand, 7 B. & C. 24; 9 Dowl. & Ry. 803.

(p) But the taking a check payable immediately, instead of cash, from the debtor's agent, does not discharge the debtor if the check be dishonoured, although the agent fail with funds of the debtor in his hands; Everett v. Collins, 2 Camp. 515.

A debtor directed his bankers, who had a balance in his favour in their hands, to place to the credit of his creditor (who was a customer of and debtor to the bankers) a certain sum so as to make the same as a bill at one month. The bankers consented to this, and communicated their assent to the creditor, who also acquiesced. It was held that this did not amount to a payment; and that on the bankruptcy of the bankers, before the expiration of the time when credit was to have been given, the creditor might sue for his demand (9). But an actual transfer of the amount of a debt in a banker's books from the account of a debtor to that of the creditor, with the assent of both, is equivalent to a payment. This was decided in Eyles v. Ellis (r). In that case the plaintiff and defendant each kept an account with a banker at M. In October the plaintiff desired the defendant to pay in to his account a sum due to him for rent. The defendant wrote to the plaintiff, stating that he had caused the amount to be transferred to his account, and the plaintiff sent him a receipt by return of post. The sum, however, was not actually transferred until the 8th of December. On the 9th notice of the transfer was sent to the plaintiff by post, which did not reach him till the 11th. On the 10th the banker stopped payment. It was held that the transfer was equivalent to pay

ment.

So there may be a payment to the creditor through his agent, by the debtor's giving the agent credit in account for the amount due, at least where a custom can be shown to accept such credits as payments, as is the case between brokers and underwriters (s).

4. Of the Appropriation of a Payment where there are distinct

Accounts.

If a creditor have two distinct debts due to him from his debtor, and the latter make a general payment on account, without specifying at the time to which account he intends the payment to apply, it is optional in the creditor to appropriate the payment to which account he pleases. But if at the time the

(q) Pedder v. Watt, Peake's Add. Cas. 41; 2 Chitty's R. 619, S. C. It will be remarked that there was no remittance or actual transfer on account of the debt; but a mere direction to place money to account at a future day.

(r) 4 Bing. 112; 12 Moore, 306,

S. C.; and see Bodenham v. Purchas, 2 B. & Ald. 39; post, 757.

(s) Stewart v. Aberdein, 4 M. & W. 211; and per Lord Abinger, id. 228; and see Gibson v. Winter, 5 B. & Ad. 96; 2 Nev. & Man. 737; ante, 745, note (o), S. P.

debtor makes the payment, he declare that it is specifically made in discharge or part liquidation of a particular account, or the circumstances show or raise an inference that such was his intention, the creditor is bound thereby, and cannot ascribe it to his other demand (t).

This doctrine holds, although one of the debts be due on a bond or other specialty, or on a judgment, and the other be due on simple contract (u). So if the defendant owe the plaintiff money in respect of a debt contracted by the defendant's wife dum sola, and also in respect of a debt incurred by the defendant on his own account, and pay money generally on account, the plaintiff may apply the payment to either demand (x). And where a creditor has two several demands against his debtor, one barred by the Statute of Limitations, the other not, and the debtor makes a part-payment without expressly appropriating it at the time of payment, the creditor is at liberty to apply the payment towards satisfaction of that part of the demand which the statute would bar, though such part-payment not being expressly made on account of the older debt, would not operate as a partpayment to take it out of the statute (y).

It is not, as we have observed, always essential that there should have been an express declaration by the debtor at the time of payment to which of two accounts he intends the payment to be made. The creditor's right of election may be obviated, if it can be clearly collected from other circumstances than an express declaration that the debtor intended, at the time of payment, to

(t) See Mills v. Fowkes, 7 Scott, 444, 455; 5 Bing. N. C. 455; Frazer v. Bunn, 8 Car. & P. 704; per Tindal, C. J., Waller v. Lucy, 1 Scott's N. R. 186; 8 Dowl. P. C. 573, S. C.; Anonymous, Cro. Eliz. 68; Goddard v. Cox, Stra. 1194; Newmarch v. Tealby, 14 East, 239, 243, note (a); Peters v. Anderson, 5 Taunt. 596; 1 Marsh. 238, S. C.; Shaw v. Picton, 4 B. & C. 715; 7 D. & R. 201, S. C. The French law is to the same effect as ours in regard to the right of the debtor to direct at the time he pays to what account the money shall be applied; except that when a payment is made on account of a debt bearing interest, the money must be placed to the account of interest then due, and not to the account of the capital, they

being distinct; Code Civil, Bk. 3, Tit. 3, Art. 1253, 1254. See 1 Pothier, by Evans, 368; and per Sir W. Grant, Clayton's case, 1 Meriv. 605. Where a payment is made on a general account by a vendee to the broker of several vendors, sufficient to cover either demand, but not all, and the broker stops payment, the sum paid is to be proportionally allotted to all the parties, and each vendor must look to the vendee for the difference only; Favenc v. Bennett, 11 East, 36.

(u) Id.; and Brazier v. Bryant, 2 Dowl. P. C. 477.

(x) Goddard v. Cox, Stra. 1194; post, 754, note (b).

(y) Mills v. Fowkes, 7 Scott, 444; 5 Bing. N. C. 455, S. C.; and Waters v. Tompkins, 2 C., M. & R. 723.

appropriate it to a specific account. And therefore, where A., having large demands against B., upon bill transactions with himself, and also as agent for several persons to whom B. had granted annuities, secured by C., caused an attorney to make application to B. and C. on behalf of these annuitants; and B., in consequence of that application, and the remonstrances of C., paid to A. certain sums of money, without making any specific appropriation of them at the time of payment; it was held, that A. must be considered as having received them on account of the annuitants, and that the latter were entitled to have those monies divided amongst them, in proportion to the amount of their respective demands (z). And if a debtor at the time of making a payment make an entry in a book, stating such payment to be on a particular account, and show such entry to the creditor, that would be evidence of an appropriation by the debtor (a).

And there are cases in which, although the payment be general, the creditor is not allowed to ascribe his receipt of the money to which account he pleases.

As where one account is with the debtor as executor, and the other in his own right, the law will apply the payment to the money due from himself individually, and will not allow the creditor to appropriate it to the other demand (b).

It has been decided, that a general payment must be applied to a prior legal debt; and not to a subsequent equitable demand, as for instance, a sum claimable by a partner against his copartner (c).

(z) Shaw v. Picton, 7 D. & R. 201; 4 B. & C. 715, S. C.; and see Waters v. Tompkins, 2 C., M. & R. 723; 1 Gale, 323, S. C.

(a) Frazer v. Bunn, 8 C. & P. 704. (b) Goddard v. Cox, Stra. 1194. In this case it appeared that one Owen was indebted to the plaintiff for coals. He died, and made his wife executrix. She continued to deal with the plaintiff on her own account; then she married the defendant, who dealt with the plaintiff, and paid him monies generally on account. The action was against the defendant, for his own debt. The Chief Justice held, that the defendant being, by the marriage, equally a debtor for what his wife received dum sola, as for what

was after, the plaintiff might apply the money received to discharge the wife's own debt; but as to the demand against her, as executrix, the validity of which depended upon the question of assets and manner of administering them, he was of opinion the plaintiff could not apply any of the money paid by the defendant to the discharge of that demand.

(c) Goddard v. Hodges, 1 C. & M. 33. But in Bosanquet v. Wray, 6 Taunt. 597, where the equitable demand accrued before the legal debt, it was held that the general payment might be placed to the account of the equitable claim; sed. qu.; and see Birch v. Tebbutt, 2 Stark. 74.