The opinion of the Court was by
WhitmaN C. J.
Where a creditor calls in question a conveyance made by his debtor, upon the ground of fraud, in an action between him and the grantee, the demand of the creditor must be subject to examination, in order to see whether he has a right, as such, to question the validity of the conveyance. If judgment has been obtained by him, still, as between him and the grantee, who is no party to it, it will not be regarded as precluding the latter from an examination of the grounds of *24it. The grantee may be allowed to show, that it was obtained by fraud, or that the cause of action accrued under circumstances, which would not give the creditor a right to impeach the conveyance. For this purpose the defendant, the grantee in this case, calls upon the plaintiff, the creditor, to show that his debt accrued before the purchase by the defendant. And this he has a right to do, unless the conveyance were merely colorable, so that the beneficial interest was not intended to pass to the grantee, or unless the object should appear to be to defraud future as well as prior creditors. The plaintiffs’ claim appears to have consisted of a demand arising on an account, and by note, the whole of which accrued before the conveyance, with the exception of one item in the account; and there being a credit in the account more than sufficient to balance that item, it is contended that that item may be considered as paid. Seymour & al. v. Van Slyck, 8 Wend. 403" court="N.Y. Sup. Ct." date_filed="1832-01-15" href="https://app.midpage.ai/document/seymour--bouck-v-van-slyck-5513825?utm_source=webapp" opinion_id="5513825">8 Wend. 403, is cited in support of the position. In the case at bar there does not appear to have been any appropriation of the payment by either party. In such case the Court may make the appropriation ; but, in doing so we must be governed by general, and as far as may be practicable, by established principles. In the case cited it is laid down, that in the absence of appropriation expressly or impliedly made by the parties, the rule is to apply payments in extinguishment of the oldest debt. And this, as a general rule in such cases, must be deemed to be reasonable, and in accordance with the presumed intention of the parties, and should be adhered to. The Court cannot be at liberty to adopt its own notion of what may be equitable in each particular case. The credit, then, in this case must be applied to extinguish the earlier items in the account, which will leave the last item uncancelled, and according to the cases of Reed v. Woodman, 4 Greenl. 400, and Usher v. Hazeltine, 5 ib. 471, this must prevent the plaintiff from setting up the statute of frauds against the defendant.
The verdict therefore must be set aside and a new trial be granted.