Page:Harvard Law Review Volume 32.djvu/800

764 764 HARVARD LAW REVIEW Acceleration by Default of Installments or Interest Another type of provision generally recognized as valid at com- mon law, and under the Bills of Exchange Act ^^ and the Negotiable Instruments Law ^^ accelerates payment on default of an install- ment of principal ^° or even an interest payment.®^ Sometimes, several notes are issued, arranged to fall due on successive dates, and each stating that if one note is dishonored the whole series is payable at once.^^ It is clear that such instruments are not entirely certain as to amount or time, but the law plainly holds that they do not pHDssess the kind of uncertainty which renders the paper unsuitable for circulation. While the Negotiable Instruments Law recognizes such paper as negotiable, it does not decide certain difiSicult questions which arise about the operation of the acceleration clause. The first problem involves its meaning, whether or not it gives the holder an option to waive default. I. Automatic Acceleration on Default. — Several cases hold that by its definite language the instnunent automatically becomes due upon default, although the holder might prefer to overlook the failure to pay. The provision is said to exist for the benefit of obligor as well as obligee, and the courts refuse to make a new con- tract different from the expressed words of the parties.^ If this " § 9 (i) (c) ; like the N. I. L., except for the omission of the words "or of interest." "' § 2 (3) : "The sum payable is a svmi certain within the meaning of this act, although it is to be paid ... by stated installments, with a provision that upon default in pay- ment of any installment or of interest the whole shall become due." The act does not expressly allow acceleration by default of interest in noninstail- ment notes, or acceleration of series notes, but they are clearly negotiable imder the act. See cases in notes 61 and 62. «o Carlon v. Kenealy, 12 M. & W. 139 (1843); Miller ». Biddle, 13 L. T. R. 334 (1895). The American cases are in notes 63^., infra. 81 Gillette v. Hodge, 170 Fed. 313 (Minn., C. C. A. 8th, 1909); Belloc v. Davis, 38 Cal. 242 (1869); and many cases in notes 63^., infra. Contra, Meyer v. Weber, 133 Cal. 681, 65 Pac. iiio (1901), 3 JJ. dissenting; Bell v. Riggs, 34 Okla. 834, 127 Pac. 427 (1912), statutes prior to N. I. L. Under N. I. L., held vaUd, First National Bank v. Garland, 160 111. App. 407 (191 1); Newbem v. Duffy, 153 N. C. 62, 68 S. E. 915 (1910). Oklahoma now has N. I. L., also California. ^ Chicago Ry. Equipment Co. v. Merchants' Bank, 136 U. S. 268 (1890), is an example. Under N. I. L., Schmidt v. Pegg, 172 Mich. 159, 137 N. W. 524 (1912); Bright V. Offield, 81 Wash. 442, 143 Pac. 159 (1914), semble. <» Moline Plow Co. v. Webb, 141 U. S. 616 (1891), semble, construing Texas Statute of Limitations in view of Texas State case infra; Ryan v. Caldwell, 106 Ky. 543, 50