Ivers & Pond Piano Co. v. Peckham

The trial court found that Robert H. Hoyman, agent for the piano company, knew that the $2,000 paid on May 12, 1961, originating with the defendant, Ellsworth L. Peckham, was for the purpose of satisfying the guaranty contract and, therefore, held that the defendant discharged his guaranty by payment. We deem that the court applied the correct rule of law. Where a creditor accepts payment from a third person knowing it came from the guarantor, the payment must be applied in satisfaction of the guaranty.

“. . . if the creditor is aware of the source of the payment, he should apply it to the…