One great difficulty found in all controversies over the appropriation of a partial payment, is in determining within. what time the privilege of election must be exercised by a debtor or creditor. In general, the period allowed is a reasonable time; but such a statement indicates no precise limit; and this only remains certain, that after a controversy has arisen between the parties, the power to appropriate a past payment is gone from both, and the law must determine the appropriation for them.1 § 372. Composition or Extension Agreement. a private creditor would. United States, 7 How. 681. Jones v. 1 United States v. Kirkpatrick, 9 Wheat. 720. The subject of payment, and the appropriation of payments, finds incidental consideration in vol. ii. post, in connection with the subject of sales. And see Benj. Sales, § 746 et seq. The result as between buyer and seller is substantially as stated here in the text. Presumptions may be overcome by proof of the facts. Thus, where a debtor has directed payment to be applied to the satisfaction of an invalid or even illegal claim, he cannot afterwards require a different appropriation. Hubbell v. Flint, 15 Gray, 550; Dorsey v. Wayman, 6 Gill, 59. Contra, as to illegal claims. Kidder v. Norris, 18 N. H. 532; Bancroft v. Dumas, 21 Vt. 456. By express agreement, partpayments may be applicable to instalments not yet due. Shaw v. Pratt, 22 Pick. 305. But the creditor alone is not allowed such a discretion. Bobe v. Stickney, 36 Ala. 482. A creditor with the right to elect may apply, of course, as a court would have applied, conformably to the text above. See 7 Allen, 270; 8 Allen, 42. See also 58 Me. 59; 47 Mo. 468; 43 Cal. 586. General payments may be applied by a creditor to such debts as are already barred by statutes of limitations or are obnoxious to the - It was once Statute of Frauds. Haynes v. Nice, 100 Mass. 327; Ramsay v. Warner, 97 Mass. 8. An agent with a demand for himself and also acting for a principal with a demand, must, if he blends the two accounts, apply payment ratably to both demands. Barrett v. Lewis, 2 Pick. 123. And money received under instructions to apply in a particular manner is received in trust accordingly. Libby v. Hopkins, 104 U. S. 303. And see 101 U. S. 306. The rule that a debtor may appropriate as he pleases applies only to voluntary payments, not to those made by process of law. Blackstone Bank v. Hill, 10 Pick. 129. Liens are not to be thus overridden. 59 Miss. 61. By the Roman law, payment could be made by any one in discharge of the debtor. But as to the common law, qu.; and the inclination appears to be to the contrary where payment is made by a stranger to the debtor without the latter's knowledge. Cook v. Lister, 13 C. B. N. s. 543; Walter v. James, L. R. 6 Ex. 724; Benj. Sales, § 756. Otherwise, as to extinguishment by a third person at the debtor's request. 63 Cal. 56. No one can make another his debtor without the latter's express or implied assent. Alton v. Mulledy, 21 Ill. 76; Watkins v. Richmond College, 41 Mo. 302. thought that the case where a debtor induced a number of his creditors to accept a compromise amounting to less than their respective demands was one of nudum pactum; but the later rule is, as already suggested,1 that if such a compromise -or rather a composition agreement-be bona fide entered into, each creditor acting on the faith of the engagement of the others, it will bind them all; since each has the undertaking of the rest as consideration for his own.2 And the same may be said of an agreement for extension of time.3 But engagements of this sort are to be strictly construed; and not only is the debtor bound to fulfil his own stipulations, but each creditor has the right to make his signature expressly conditional, and to insist that such condition be carried out. Those who sign on the faith of other names are released if those names cannot be obtained; while on the other hand, one creditor cannot induce others to sign because he has done so, and then withdraw and leave them bound. The debtor should be in embarrassed circumstances, and should duly have performed or tendered the terms of the composition, in order to render it enforceable by suit.4 A secret understanding, by which one creditor is to derive undue advantage from the debtor, in consideration of signing, beyond the just terms expressed in the composition agreement, may render the latter voidable as a fraud upon the 1 Supra, § 366. 2 Cumber v. Wayne, in 1 Smith Lead. Cas. 443; U. S. Dig. 1st series, Debtor and Creditor, 633-714. See Brown v. Spofford, 95 U. S. 474; 132 U. S. 318. 3 Goode v. Cheeseman, 2 B. & Ad. 328. 4 Alchin v. Hopkins, 1 Bing. N. C. 99; Reay v. Richardson, 2 C. M. & R. 422; Cutler v. Reynolds, 8 B. Monr. 596. That consideration is sufficient, one creditor on strength of another, unless the condition be that all creditors shall come into the arrangement, see Devon v. Ham, 17 Ind. 472; Daniels v. Hatch, 1 Zabr. 391; Doughty v. Savage, 28 Conn. 146. That such condition must be complied with, however, if expressed, see ib. And see Gifford v. Allen, 3 Met. 255. A composition may consist in acts, such as surrendering debts and taking composition notes. Fellows v. Stevens, 24 Wend. 294. And as to an extension agreement, see Loomis v. Wainwright, 21 Vt. 520; Palmer v. Williams, 13 Gray, 338. An agreement to forbear to sue, if not expressed to be for a stated time, is presumed to intend a reasonable time. 23 Vt. 231. Concerning what is novation or substitution, see Bouv. Dict.; U. S. Dig. 1st series, Debtor and Creditor, 48-58. other creditors; yet this case should be distinguished from that where each creditor makes his own bargain and gets the best terms he can.1 False material representations by the debtor may be shown to vitiate the contract as to creditors; 2 but not fraud of which the creditor was cognizant at the time of the composition. And at all times it should be remembered that a debtor who is unable to effect a compromise of his debts with his creditors may usually take advantage of the bankrupt or insolvent laws; and that a single creditor refusing to accede to the proposed composition may force him into legal insolvency, and thus render the agreement with the other creditors worthless.4 § 373. Demands and Claims. - Reference should here be added to "demands" and "claims," words which, though often lightly used as synonymous with "debts," take in reality a much wider sweep. For we are to remember that the right to sue and recover money may grow out of a wrong suffered; not, as in debts proper, out of a contract alone.5 Our preceding discussion indicates the legal principles which apply to the settlement of all such money rights. § 374. Rules of Set-off; Recoupment, etc., in Modern Practice. In modern practice, litigation is frequently simplified by the introduction of rules which permit a person sued upon some debt, claim, or demand, to avail himself in defence of what is known as the right of "set-off," "recoupment," or "counter-claim;" the effect being that the party sued may balance off his own demands against those of the party who sues him, and suffer judgment for the difference only. CHAPTER IV. DEBTS SECURED BY LIEN. § 375. Various Securities for Debt enumerated. Keeping the general definition of a debt in view, let us now examine in order the various securities for a debt; with this general observation at the outset, that while the name usually applied to each species of property is the name of the security alone, the property in fact consists of that incorporeal thing called a debt, and a security besides by way of better enforcing its payment. "There are," to use the recent words of an eminent English judge with reference to personal property, "three kinds of security: the first, a simple lien; the second, a mortgage passing the property out and out; the third, a security intermediate between a lien and a mortgage, viz., a pledge, where by contract a deposit of goods is made a security for a debt and the right to the property vests in the pledgee so far as is necessary to secure the debt."1 We shall consider in this and the two following chapters the lien, the pledge, and the mortgage accordingly; thus adopting judicial indications and the most natural order of progression. § 376. What is a Lien. A lien, in general language, may be defined as that hold or claim which one person has upon the property of another as a security for some debt or demand due him. The right of a person to hold property by lien lasts in theory until the debt or demand so secured has been satisfied; it is not incompatible with a right on his part to sue for the same debt or demand; but the lien constitutes a collateral security, more available often than the debt itself, and certainly a ready means of enforcing payment, so long as the property held by lien is worth anything. The goods, 1 See Willes, J., in Halliday v. Holgate, L. R. 3 Ex. 302. 2 Bouv. Dict. "Lien;" Somes v. British Empire Shipping Co., 8 H. L. while they continue in possession of a person entitled to a lien, cannot be seized in execution for the real owner's debt.1 And a lien is found available even where the debt for which the creditor claims to hold the goods is of more than six years' standing, and the remedy by action at law is barred by the Statute of Limitations. But the title to property held by lien, so far as the common law recognizes it, and irrespective of all statute remedies, is quite imperfect; for the mere right of lien is not understood to carry with it any right of sale to secure indemnity. And hence we say that there is a progression from liens to pledges, in the matter of title; for the contract of pledge carries an implied understanding, at least, that the security shall be made effectual to discharge the obligation; while in the case of a lien nothing is given, unless under special circumstances, but the right of retaining or detaining the property which serves as security.2 Whenever, indeed, the sum for which the lien attaches is paid up, the lien is gone. A lien, too, attaches as something incidental to the debt or demand; and usually by mere act of the law without any act of the party. Yet so many kinds of liens exist, besides the mere common-law lien, that, as we shall see in the course of this chapter, the word "lien" has acquired quite an extensive and rather a vague legal significance.. § 377. Various Kinds of Liens stated. There are many kinds of liens recognized at law, some of which attach to real estate alone, some to certain kinds of personal property alone, and some to property in general. And, in a large and rather indefinite sense, we are accustomed to speak of the equitable lien, a creature of equity; of the maritime lien, which constitutes an important feature of the jurisprudence of shipping; of the statutory lien, a designation applied to liens either expressly conferred or largely regulated by statute; besides the common-law lien, which is the primitive lien in its simplest Cas. 338; Oakes v. Moore, 24 Me. 214; Montagu Liens, 1. 1 Legg v. Evans, 6 M. & W. 36; Smith Merc. Law, 553. VOL. I. 31 2 Spears v. Hartly, 3 Esp. 81; Higgins v. Scott, 2 B. & Ad. 413. 3 Story Bailm. § 311; Holt N. P. 383; Doane v. Russell, 3 Gray, 382; 2 Kent Com. 642. 481 |