§ 178. Application of payments to barred debts.

If a debtor owes several debts to his creditor and when a payment is made gives no direction as to its application, the creditor may apply it as partial payment of a debt barred by the Statute of Limitations; but as it is not a partial payment as such but the new promise implied from it which revives a barred debt, such an application by the creditor without the debtor's direction or assent will not remove the bar of the Statute. Even though all the debts are barred, the application of the payment by the creditor will not remove the bar; for though in such a case a new promise by the debtor may be inferred, it does not identify the debt to which it relates.34 Nor will an appropriation by the law without the debtor's volition revive a debt.35 But, as has been seen, a payment may be so applied by the creditor as to renew all obligations not already barred.36 It seems possible, moreover, for a partial payment to be made with the intent manifested in acts and circumstances if not in words that it shall be applied generally on account of the debtor's total indebtedness, although that may be represented by several notes or due on more than one account. If the part payment, under the circumstances, involves such an acknowledgment of the whole indebtedness,

Eureka &c. Shingle Co. v. Knack, 95
Wash. 339, 163 Pac. 753.

33 Mills v. Fowkes, 5 Bing. (N. C.) 455; Burn v. Boulton, 2 C. B. 476; Nash v. Hodgson, 6 DeG. M. & G. 474 (cf. Friend v. Young, [1897] 2 Ch. 421); Becker v. Oliver, 111 Fed. Rep. 672, 49 C. C. A. 533; Royston v. May, 71 Ala. 398; Armistead v. Brooke, 18 Ark. 521; McBride v. Noble, 40 Col. 372, 90 Pac. 1037; Blake v. Sawyer, 83 Me. 129, 21 Atl. 834, 12 L. R. A. 712, 23 Am. St. Rep. 762; Pond v. Williams, 1 Gray, 630; Ramsay v. Warner, 97 Mass. 8; Anderson v. Nystrom, 103 Minn. 168, 114 N. W. 742, 12 L. R. A. (N. S.) 1141, 123 Am. St. Rep. 320; Wilden v. McAllister, 91 Mo. App. 446, affd. 178 Mo. 732, 77 S. W. 730; Shafer v. Pratt, 79 N. Y. App. Div. 447, 80 N. Y. S. 109. In a few States, however, it is

held that the barred debt is revived by such an application of payment by the creditor. Youmans v. Moore, 11 Ga. App. 66, 74 S. E. 710; Leach v. Curtin, 123 N. C. 85, 31 S. E. 269; Hopper v. Hopper, 61 S. C. 124, 39 S. E. 366; Ayer v. Hawkins, 19 Vt. 26; Sanborn v. Cole, 63 Vt. 590, 22 Atl. 716, 14 L. R. A. 208; Rowell v. Lewis' Est., 72 Vt. 163, 47 Atl. 783; compare Austin v. McClure, 60 Vt. 453, 15 Atl. 161.

34 Anderson v. Nystrom, 103 Minn. 168, 114 N. W. 742, 13 L. R. A. (N. S.) 1141. But see contra, Miller v. Miller, 169 Mo. App. 432, 155 S. W. 76. The question involved seems identical with that considered, supra, § 165. 35 Anderson

105.

v. Baxter, 4 Oreg.

36 See supra, § 174.

all will be revived.37 The balance due on an account stated is one debt, and a payment thereon interrupts the running of the statute as to all items.38

$179. Conditional promises.

It has already been said 39 that a conditional promise to pay a debt coupled with evidence that the condition has been performed, will revive the debt. It may be said more broadly, "If the admission be conditional, limited or qualified in any way or to any extent, the new promise will have a like quality, and the statute will operate so far as it may in view of the condition, limitation, or qualification. In case there is a condition, the creditor must show that it has been fulfilled or complied with, to entitle himself to the implication of a new promise." 40 A new promise may be to pay "on request, or at a future time, or on a condition." 41 Instances of conditional and limited promises may be found in the following sections.

As no immediate liability arises from a conditional obligation the statute runs afresh, not from the making of the new

37 Walker v. Butler, 6 E. & B. 506; Pond v. French, 97 Me. 403, 54 Atl. 920; Taylor v. Foster, 132 Mass. 30; Brafford v. Reed, 125 N. C. 311, 34 S. E. 443. In Taylor v. Foster, supra, the court said (at page 33): “But where the identity of the debt sued on with the debt on which the payment is made is established, such payment will take the whole debt out of the statute, whether it is represented by one note or by more than one note. For instance, suppose a debtor owing a man three thousand dollars, evidenced by three notes of one thousand dollars each, says to the creditor, I owe you this three thousand dollars, I cannot pay you the whole debt, but I now pay you fifteen hundred dollars on account of it. This is clearly an acknowledgment of the whole debt, and would take it out of the operation of the statute of limitations, although neither party should at any time make any specific

application of the money paid to either of the promissory notes." Compare the statement in Pond v. Williams, 1 Gray, 630, 635, quoted with approval in Kennedy v. Drake, 225 Mass. 303, 114 N. E. 310, 312. "To effect" the revival of the barred debt "the payment must be specifically made or directed by the defendant."

28 Nunn v. McKnight, 79 Ark. 393, 96 S. W. 193. See also Pond v. French, 97 Me. 403, 54 Atl. 920.

39 See supra, § 162.

40 Barker v. Heath, 74 N. H. 270, 272, 67 Atl. 222. See also Big Diamond Milling Co. v. Chicago &c. Ry. Co., (Minn. 1919), 171 N. W. 799; MacDiarmid v. Steele, 176 N. Y. App. D. 313, 162 N. Y. S. 263, and cases in § 162 and this section, passim.

41 Rackham v. Marriott, 2 H. & N. 196. See to the same effect the passage quoted from Philips v. Philips, 3 Hare, 281, 299, infra, § 196.

promise but from the time when it was to be performed,-thus on a new promise to pay when the creditor should make demand, only from the time when such demand was made, 42 and on a promise to pay when the debtor should be able, only from the time of such ability.43

§ 180. When a conditional new promise needs acceptance.

A debtor may make an offer to compromise any claim against him, and a new conditional promise to pay a debt will be such an offer if some performance or promise is requested as the consideration or exchange for the debtor's promise. Such an offer, like any other offer to contract, will require acceptance according to its terms within a reasonable time in order to make it binding.44 On the other hand, just as a promise where there is no antecedent debt may be conditional in its terms without requesting a performance of the condition or a counter-promise in return, 45 so a new promise by a debtor may be conditional in its terms and yet gratuitous, except for the antecedent indebtedness. In determining to which of these two classes a given promise belongs, it is important to consider both the terms of the promise, and all surrounding circumstances.46 If the new promise by the debtor, though

42 Rankin v. Anderson, 24 Ky. L. Rep. 647, 69 S. W. 705. It will be noticed that the happening of this condition is wholly within the power of the creditor, and the decision of the court apparently gives him power to postpone indefinitely the period of limitation. As to this, see infra, § 183.

43 Tebo v. Robinson, 29 Hun, 243; Scott v. Thornton, 104 Tenn. 547, 58 S. W. 236.

44 Philp v. Hicks, (Miss. 1917), 73 So. 610.

45 See supra, § 112.

46 In Woolwine v. Storrs, 148 Cal. 7, 82 Pac. 434, 113 Am. St. Rep. 183, the debtor requested the creditor for an extension of time for one year, and accompanied the request with a written promise by the guarantor to pay the note at the expiration of the year.

It was held that this promise of the guarantor's was conditional upon the acceptance by the creditor of the proposition for a year's extension. So a letter from the debtor stating in substance that he is unable to pay the note in question, but offering to buy it if the holder would sell it for some small sum which the debtor could afford to pay is merely an offer, and if unaccepted does not extend the debtor's liability. Connecticut Trust Co. v. Wead, 172 N. Y. 497, 65 N. E. 261, 92 Am. St. Rep. 756. Somewhat similar in its facts is Throop v. Russel, 145 Mich. 482, 108 N. W. 1013. In Gray v. Day, 109 Me. 492, 84 Atl. 1073, 43 L. R. A. (N. S.) 535, a debtor replying to a request for part payment to keep the creditor's claim good, replied "I don't see how I can pay anything, but I will

conditional, is not an offer there seems no reason on principle why an acceptance should be required. Nothing is asked from the creditor. Like a new absolute promise, the new conditional promise is a pure gratuity, and the fact that it is a less extensive gratuity than it would have been if unconditional seems no reason for denying it effect accordingly to its terms. 48

§ 181. New promise to pay a debt in part or in instalments. A promise to pay a specified part of a debt or to pay the debt in instalments or without interest or in any other way than that for which the debtor at the time stands bound, if made upon condition that the creditor shall agree to accept the payment in satisfaction of his claim is an offer to compromise, and by its terms conditional on that agreement, that is, it is conditional on acceptance by the creditor. Though it may indicate that the debtor acknowledges a debt (an offer to compromise will not necessarily admit even this) no new promise to pay can be inferred except on the terms stated. The promise therefore can be binding only if the condition is complied with. If the offer is unaccepted the debtor's liability is not extended or removed.49

give a new note which will amount to the same thing you mentioned. Will you let me know if that will do?" The creditor refused to take a new note unless at a higher rate of interest. The statute was held not tolled by the defendant's letter. Other offers to compromise held to have no effect unless accepted by the creditor may be found in Buckmaster v. Russell, 10 C. B. (N. S.) 745 (an offer to pay in annual instalments if creditor agreed); Cawley v. Furnell, 12 C. B. 291; Andrew v. Kennedy, 4 Okl. 625, 46 Pac. 485.

See further, supra, §§ 157, 158. Big Diamond Milling Co. v. Chicago &c. Ry. Co., (Minn. 1919), 171 N. W. 799.

Cawley v. Furnell, 12 C. B. 291; Buckmaster v. Russell, 10 C. B. (N. S.) 745; Bell v. Morrison, 1 Pet. 351, 7

If, however, the debtor merely

L. Ed. 174; Edwards v. Bates County, 55 Fed. 436; Duffie v. Phillips, 31 Ala. 571; Pearson v. Darrington, 32 Ala. 227, 258; Brenneman v. Edwards, 55 Iowa, 374, 7 N. W. 621; Marcum's Adm. v. Terry, 146 Ky. 145, 142 S. W. 209, 37 L. R. A. (N. S.) 885; Lackey v. MacMurdo, 9 La. Ann. 15 (cf. Kohn v. Davidson, 23 La. Ann. 467); Smith v. Eastman, 3 Cush. 355; Weston v. Hodgkins, 136 Mass. 326; Morris v. Hazlehurst, 30 Md. 362; Throop v. Russell, 145 Mich. 482, 108 N. W. 1013; Chambers v. Rubey, 47 Mo. 99, 9 Am. Rep. 318; Atwood v. Coburn, 4 N. H. 315; Weare v. Chase, 58 N. H. 225; Conn. Trust Co. v. Wead, 172 N. Y. 497, 65 N. E. 261; Hartley v. Requa, 17 N. Y. Misc. 74, 39 N. Y. S. 846; Heaton v. Leonard, 69 Hun, 423, 23 N. Y. S. 469; Matter of Narganes,

50

promises to pay a specified part of his indebtedness, implying that he will pay no more but making no request that the payment shall be accepted as full satisfaction, or that any other agreement or performance be made by the creditor, the promise is unconditional and no acceptance by the creditor is necessary.5 Again, the debtor's promise to pay a barred debt on a fair construction may mean simply that the debtor will pay part at once without any implication that he will not pay more ultimately. Such a promise, unless the facts warrant the positive inference that the debtor acknowledges the balance as a continuing debt, will not have the effect of reviving the whole debt.51 If such an inference is justified the whole debt will be revived, though the debtor's liability for the remainder should not arise until the

161 N. Y. App. D. 563, 565, 146 N. Y. S. 922, affd. 213 N. Y. 659, 700, 107 N. E. 1082, 108 N. E. 1101; Andrew v. Kennedy, 4 Okla. 625, 46 Pac. 485; Wolfe v. Fleming, 1 Ired. 290; Gest v. Heiskell, 5 Rawle, 134; Farley v. Kustenbader, 3 Pa. St. 418; Reynold Iron Works v. Mitchell (Tex. Civ. App.), 27 S. W. 508; Goldstein v. Gans (Tex. Civ. App.), 32 S. W. 185; Aldridch v. Morse, 28 Vt. 642; Slack v. Norwich, 32 Vt. 818. In jurisdictions where it is not requisite that an admission of indebtedness shall imply a new promise (see supra, § 167), in order to make it effective, an offer to compromise coupled with an admission of indebtedness is sufficient. Pracht v. McNee, 40 Kans. 1, 18 Pac. 925; Disney v. Healey, 73 Kans. 326, 85 Pac. 287. (Cf. Brenneman v. Edwards, 55 Iowa, 374, 7 N. W. 621; Walker v. Cruikshank, 23 La. Ann. 252; Graham v. Keys, 29 Pa. 189.) See also Austin v. Bostwick, 9 Conn. 496, 25 Am. Dec. 42.

50 In Strong v. Andros, 34 Dist. Col. App. 278, the debtor promised to pay small monthly instalments until the debt should be liquidated. This was held to prevent the bar of the statute. In Foster v. Smith, 52 Conn. 449, the court said: "A promise to pay may be

absolute although it be to pay on time or in instalments." So in McDonald v. Grey, 29 Tex. 80, the court said: “An unconditional acknowledgment of a part of the debt, although coupled with a denial of liability for the remainder and a refusal to pay it, if not made as a qualification of the admission, will take so much of the debt as is acknowledged out of the statute. The law will imply a promise to pay the amount admitted to be due. It is not incumbent upon the creditor to show that he has admitted the validity of the objections of the debtor to that part of the debt which he repudiates, or to show that he had relinquished his claim to it." But see Weare v. Chase, 58 N. H. 225. In North Carolina it is held that a new promise to be effectual must be to pay the whole amount of the debt. Greenleaf v. Norfolk Southern R. Co., 91 N. C. 33; Wells v. Hill, 118 N. C. 900, 24 S. E. 771.

51 In Lambert v. Doyle, 117 Ga. 81, 43 S. E. 416, where the debtor wrote to the creditor "It will be impossible to pay you anything until after the first of June. I will send you a check for something then. Hope to be able to clear your account quick” the debt was held not revived.