Page:Harvard Law Review Volume 32.djvu/805

769 ACCELERATION PROVISIONS IN TIME PAPER 769 have to enforce the instrument in order to charge secondary parties and avoid the Statute of Limitations. Leniency now might be unexpectedly used against him years hence, unless the law per- mits it.^^ Consequently, the provision should be construed as optional. If the acceleration clause is impliedly or expressly op- tional, the time or times for payment remain as fixed by the instru- ment despite the default, unless the holder exercises his option. Therefore, the obligor cannot pay up the whole amount of the in- strument at once against the holder's consent; ^^ and the Statute of Limitations does not begin to run until the date fixed. '^'^ And the rules as to equitable defenses and notice to secondary par- ties are in this situation the same as if no acceleration clause existed. At this point, however, special difiiculties arise with installment paper. If a note is payable in several installments without any acceleration provision, and one installment is known to be overdue, then a purchaser, though ignorant of equitable defenses, will be barred by such a defense from recovering subsequent installments,^* because he had ground to suspect some valid reason for the default. If due notice of the dishonor was not given to indorsers, this is an equitable defense which would prevent the purchaser who knew of the dishonor from charging them at all.^^ Therefore an install- ment note with an acceleration provision is in these respects over- due on default, even though the option has not been exercised, and a holder with notice of the default is affected.*" The same result would follow if the option had been exercised, and a subsequent purchaser knew of the default, but not of the holder's election. In all these situations, the holder must have notice of the default. The absence of any indorsement on the instrument that install- ments have been paid is not per se notice and does not subject a ^^ Belloc V. Davis, 38 Cal. 242, 249 (1869); Lowenstein v. Phelan, 17 Neb. 429, 431, 22 N. W. 561 (1885). ™ Cox V. Kille, 50 N. J. Eq. 176, 24 Atl. 1032 (1892). ^^ See the cases in note 73, supra, except Cox v. Kille; and also Kennedy v. Gibson, 68 Kan. 612, 617, 75 Pac. 1044 (1904), semble. The authorities are reviewed in notes in 12 L. R. A. (n. s.), 1190; 51 L, R. A. (n. S.), 151- ^* Vinton v. King, 4 All. (Mass.) 562 (1862). ^' Noell V. Gaines, 68 Mo. 649 (1878). This would also follow from the analogy of nonacceptance of bills of exchange. Whitehead v. Walker, 9 M. & W. 506 (1842). 80 Hall V. WeUs, 24 Cal. App. Rep. 238 (1914).