Sec 934

Where there is no running account, and no designation by either debtor or creditor, then, according to Judge Story, " if there are various debts due to the creditor, the court will make the application according to its own view of the law and equity of the case."2 If we take the theory of the Roman law, that the creditor in such cases acts as the agent of the debtor, then we would appropriate the payment in such a way as to best promote the interests of a debtor. If we are obliged to reject this view, then, in default of designation on either side, the court must appropriate in such a way as best to carry out their common intention as developed in the transactions between them.3 Hence, as we have already seen, a mortgage-debt will be paid in preference to a book-account debt;4 and interest will be extinguished before principal is reduced.* - Where an agent who has mingled his principal's accounts with his own, receives a remittance from a debtor to both, it has been held that it should be divided pro rata between the two;6 though the better view would be that where the agent is in the wrong in mingling the accounts, the whole payment should go to the principal.7