Action on Note — Application of Payments.
1. Where a creditor holds two or more claims against a debtor, the latter may direct the application of a payment to either of the debts; if he does not do so, the creditor may make the application; if the latter fails to do it, the law will apply it to the debt with the least security.
2. Where a creditor holding two notes against the defendant, one as executor and the other as assignee in his individual right (the latter without defendant's knowledge) and in answer to a request for a remittance made on the ground that "one of the heirs" needed it, defendant sent a check saying, "I send you this amount to relieve the heir in distress": Held, that the payment should be applied on the note held by plaintiff as executor.
FAIRCLOTH, C. J.
It is agreed all around that the debtor may direct the application of his payment, and on his failure to do so the creditor may make the application, and if he fails then the law will make it to the debt with least security.
Here, the plaintiff held a note for $600 in his right as executor against defendant and another for a less amount as assignee in his individual right; the latter holding, however, was unknown to the defendant. The plaintiff applies by letter for $75 "as one of the heirs is in a strain and needs it very much." The defendant answers, "Find check for $57.50. I will send you some more as soon as I can raise it," which was equivalent to saying, "I send you this amount to relieve the heir in distress," and in legal effect was a request to apply it on the $600 note, and good faith required that it be done.
Judgment Reversed.
Cited: Young v. Alford, 118 N.C. 220; French v. Richardson, 167 N.C. 44.
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