Page:Harvard Law Review Volume 32.djvu/816

780 78o HARVARD LAW REVIEW impairing negotiability. There is no reason why the expression of the power should alter the result. In other words, sale before maturity has the same practical effect upon later purchasers as sale after maturity. If the note provides that the collateral also secures other obli- gations/^^ then it may be that the absence of any collateral at- tached to the instrument would not be suspicious and would not throw a duty upon the purchaser to find out what had become of the collateral. Consequently, even though a prior holder had sold the collateral and applied the proceeds upon this very note, a sub- sequent purchaser ignorant of the rule would be able to recover in full. This is hard upon the maker, but ought not to prove fatal to negotiability. The same hardship might result in notes which give the maker or the holder an option for payment of the principal in parts before maturity. Such part p^ayments would not affect a subsequent bond fide purchaser. Yet, as we have seen, such in- struments are negotiable.^^^ The obligation of the maker to pay the expenses of sale does not create objectionable uncertainty in amount. The sum which the holder of the note at the time of the sale receives is not rendered uncertain, for he obtains only the face of the note. Indeed, the clause makes the value of the note more certain, for it is not liable to diminution by unforeseen expenses. It is indeed true that the maker will pay more than the face of the note, but this also happens if he agrees to pay exchange or attorney's fees, yet such agreements do not impair commercial certainty.^^^ ^^ Held fatal to negotiability, as an order to do an act in addition to the payment of money; and as showing an intention not to have the note transferable, since this prom- ise nms to the payee alone. Hibemia Bank v. Dresser, 132 La. 532, 543, 61 So. 561 (1913). Contra, Commercial Bank of Selma v. Crenshaw, 103 Ala. 497, 15 So. 741 (1893); Empire Nat. Bank v. High Grade Oil Refining Co., 260 Pa. 255, 103 Atl. 602 (1918). Difficult questions might arise about priority as to the collateral, should the payee hold several notes, and transfer them to different persons; but these might also arise if the agreement were oral and not on the instrument. This particular provision should not defeat negotiability, if the acceleration provisions do not. It does not per se put a purchaser on inquiry. For recent cases on such provisions see Torrance v. Third National Bank, 210 Fed. 806 (C. C. A. 3d, 1914); Mulert v. National Bank of Tarentiun, 210 Fed. 857 (C. C. A. 3d, 1913). 1^ This analogy is pointed out in Commercial National Bank v. Consimiers' Brewing Co., 16 App. D. C. 186, 203 (1900). See pages 759 and 761, note 47, supra. 1" N. I. L. § 2; Cudahy v. Bank, 134 Fed. 538 (C. C. A. 8th, 1904), quoted on page 751, supra.