712. General principle as to application of money received by virtue of mortgage.

When a mortgagor makes a payment, he has the first right to appropriate it between different secured liabilities including interest and capital. If he does so, then the mortgagee is bound to apply the monies in that way; but if he does not do so, then the mortgagee is entitled to appropriate the funds in such a way as it may choose1.

Where the mortgagor is indebted to the mortgagee on accounts other than the mortgage, the mortgagee is not at liberty to appropriate sums received by virtue of the mortgage to those other accounts