Page:Harvard Law Review Volume 32.djvu/807

771 ACCELERATION PROVISIONS IN TIME PAPER 771 if made out of the sale of a machine"; ^^ "one year after date. . . this to be paid when any dividends shall be declared on. . . shares " ;^^ "Dec. I, 1905; if crop ... is below 8 bushels per acre this note shall be extended one year." ^^ If such a clause clearly does no more than give the maker a limited option to accelerate payment, then it is like the cases which permit him to pay a note ofif on any interest date. However, most of these instruments must be con- strued as making the instrument automatically due, if the machine is sold or the dividends declared or the crop sufl&ciently large, etc. Such instruments are not suitable for circulation. They violate the first principle of this article, because maturity is fixed by an act not incidental to the collection of the instrument. The "on or be- fore" and installment cases do involve such an incidental act. Here we cannot say that there is a principal maturity with accel- eration as an optional means of enforcing the principal obligation. There are two[maturities of coequal importance, and one of them is uncertain and could not stand alone. The holder is under no duty to inquire into dishonor by nonacceptance or refusal to pay on demand, but here is an outside fact which obviously affects payment. Since purchasers of negotiable paper should not be required to investigate outside facts, these instruments are not properly negotiable. Also the value is speculative, for no one can tell in advance whether the con- tingent event will occur, yet if it does the investment is destroyed. Such an instrument has consequently been held in England not to be a valid note,®" but numerous decisions in this country repudi- ate the English case and uphold negotiabihty.®^ The Negotiable Instruments Law provides that "instnunents payable on or before a fixed or determinable future time specified therein" are negotiable.®^ It has been held in Iowa that thisvahdates acceleration by a contingent event, ®^ since the instrument is payable 523 (1877); Charlton v. Reed, 61 la. 166, 16 N. W. 64 (1883). 9° Alexander v. Thomas, 16 Q. B. 333 (1851). " Cases in the preceding notes; and those collected in i Daniel, Negotiable In- struments, § 43 /.; 8 Corpus Juris, 138, note 75. See, also, Van Arsdale-Osbome Brokerage Co. v. Martin, 8i Kan. 499, 106 Pac. 42 (1910). « § 4 (2). ^ State Bank of Halstad v. Bilstad, 136 N. W. 204 (Iowa, 1912). Contra, Bright v. Offield, 81 Wash. 442, 448, 143 Pac. 159, 162 (1914, N. I. L.).
 * ' Held good in Ernst v. Steckman, 74 Pa. St. 13 (1873); Cisne v. Chidester, 85 111.
 * Held bad in Brooks v. Hargreaves, 21 Mich. 254 (1870).
 * ' Held good in State Bank of Halstad v. Bilstad, 136 N. W. 204 (Iowa, 1912, N. I. L.)