There is only one question raised by this appeal. By the agreement of these parties these securities were dedicated to pay the part of the $55,000 shortage which was not discharged by the Alonzo Thomas estate. The defendant bank, after crediting the $10,000 received from the surety company on the $71,000 shortage, took the two items involved in this controversy without the consent of any person connected with it and applied them to the excess over the $55,000 unpaid after crediting the bond proceeds.
The defendant bank, instead of applying the trust security as required by the contract, without authority from any of the parties of that instrument, applied the two items in controversy to a shortage over and above the $55,000 secured by the agreement.
*511It is settled law tbat where a debtor owes two or more debts and makes a payment, it must be applied according to bis direction made at or before tbe time it was made. French v. Richardson, 167 N. C., 41; Stone v. Ritch, 160 N. C., 161; Young v. Alford, 118 N. C., 215; Moose v. Barnhardt, 116 N. C., 785; Vick v. Smith, 83 N. C., 80. Tbe judgment must be modified by crediting tbe total amount of wbicb tbe plaintiffs were charged with 5/9, with tbe said items, of $2,664 and $5,076.81 set out in plaintiff’s exception.
It would seem a hardship tbat as Thomas Thomas is bound for tbe unpaid part of tbe excess of $55,000, tbat these funds should not be credited thereon, but tbe plaintiffs and tbe defendant, by tbe agreement of 13 March, 1917, agreed tbat these five papers should be applied to said sum of $55,000, and it is agreed therein tbat tbe proceeds thereof are to be devoted to tbe purpose of securing to tbe bank tbe sum not exceeding $55,000 to be reduced by tbe application by tbe administrators of said Alonzo Thomas’s estate as far as tbe assets of said estate coming into their bands for such purpose; and it was further provided: “It being agreed tbat tbe said notes and mortgages shall be held by said bank only for such sum as may be due to said bank by said Thomas Thomas, not exceeding $55,000, after tbe payment to said bank of all such sums as said administrators shall realize from said estate of said Alonzo Thomas for such purpose.”
Tbe bank could not, therefore, take tbe principal debtor’s securities under this hypothecation and apply them to outside shortage. It is true tbat Thomas Thomas is liable for tbe excess over $55,000, but by this agreement these two securities hypothecated by him were to be applied to tbe $55,000 debt only, and if not so applied, it would increase to tbat extent tbe sum to be collected out of tbe plaintiffs, tbe other parties to tbe agreement of 13 March, 1917, under wbicb tbe securities were hypothe-cated.
Reversed.