Page:Harvard Law Review Volume 32.djvu/803

767 ACCELERATION PROVISIONS IN TIME PAPER 767 interim ten per cent interest in his judgment. Even jurisdictions which ordinarily allow only the legal rate after maturity on the ground that the contract simply fixed a rate until maturity, ought in the installment cases to use the contract rate as the measure of damages, since the instrument provided for that rate until the ma- turity of the last installment. The loss of the stipulated high in- terest is an element of the damage caused by the maker's breach of contract which ought to be included in the judgment. The accel- eration provision in installment notes is like a clause in a contract for the delivery of goods by installments, agreeing that on non- delivery of any installment, the whole contract may be canceled. The. buyer can then recover for the loss of the future benefit which he would have received, if it had not been for the breach of con- tract.^^ If this reasoning be sound, the holder of the ten per cent note of which the first installment is defaulted will recover just as much interest in his judgment as he would have received if all installments had been regularly paid, subject of course to discount if the judgment is obtained before the date of the last installment. Consequently, he is not really deprived of his investment by the default, and the value of the note is certain. Therefore, automatic acceleration on default does not impair negotiability. 2. Optional Acceleration on Default. — The weight of authority and the better view construe the acceleration provision as giving the holder an option to declare the whole sum due, which he can exercise by demand, suit, foreclosure, and similar acts. Since the provision is primarily for his benefit, he can waive it if he wishes. Waiver may be shown by the subsequent acceptance of interest or by mere inaction. The obligor cannot take advantage of his own wrong and cause an automatic change of maturity, which would subject the paper to equitable defenses and start the Statute of Limitations running. ^^ Such reading of an option into the instru- ''^ 2 Sedgwick on Damages, 9 ed., § 636 b; Cherry Valley Iron Works v. Florence Iron River Co., 64 Fed. 567 (C. C. A., 6th, 1894). Another analogy is damage for failure to accept a draft: 2 Sedgwick, Ih., § 707. '' Chicago V. Merchants' Bank, 136 U. S. 268, 284 (1889), semhle; Nebraska, etc. Bank v. Nebraska, etc. Co., 14 Fed. 763 (Neb. 1883); Gillette v. Hodge, 170 Fed. 3x3 (C. C. A. 8th, Minn., 1909); Belloc v. Davis, 38 Cal. 242 (1869); Watts v. Hoffman, 77III. App. 411 (1898). A similar provision in the mortgage was construed as giving only an option in Rich- ardson V. Warner, 28 Fed. 343 (Neb. 1886); Keene Five Cent Savings Bank v. Reid, 123 Fed. 221 (C. C. A., 8th Kan., 1903), certiorari denied, 191 U. S. 567 (1903); Mason v.