Kann v. Kann

Citations

• 259 Pa. 583
• 103 A. 369
• 1918 Pa. LEXIS 453

Syllabus

<p>Contracts — Debt and interest — Payment on account — Application of payment to principal — Case for jury.</p> <p>1. Except where otherwise agreed a payment made on an indebtedness consisting of principal and interest, not applied by either the debtor or creditor, will be applied first to interest due and then to principal.</p> <p>2. A debtor paying money to his creditor has the primary and paramount right to direct the application of his money to such items or demands as he chooses, provided the payment is a voluntary one.</p> <p>3. While a debtor, after making payments, may not demand their application to principal as against interest, yet he may so stipulate in making a payment, and if it is accepted without immediate protest such acceptance will be tantamount to an agreement to apply the money as directed, the. creditor being bound accordingly. After an appropriation has been made by the debtor and expressly or impliedly assented to by the creditor, the law will not interfere on behalf of the latter, upon equitable or other grounds, for such circumstances constitute a contractual situation, and courts will not set aside agreements, unless they are without consideration, illegal, against public policy, made without contractual capacity, or induced by fraud, accident or mistake of fact.</p> <p>4. Not decided whether a creditor, when partial payment is made on a debt, coupled with a request or direction to apply the amount to the principal rather than to the accrued interest, has a right at once to refuse so to do.</p> <p>5. Defendant was indebted to plaintiff and made two payments, one $4,000 and the other $1,000, on account. When defendant paid plaintiff the latter sum he explicitly directed in writing that it should be applied to the principal and in the same letter expressed the wish that the sum of $4,000, previously paid, should be likewise applied. Plaintiff acknowledged receipt pf the $1,000, noting that it was to be appropriated to the principal; but obj