Page:Harvard Law Review Volume 32.djvu/817

781 ACCELERATION PROVISIONS IN TIME PAPER 781 In short, the provisions for a speedy sale of collateral do not create uncertainty in amount, but make it more certain that the holder will receive the full face value of the instrument, without reduction by either the insolvency of the maker, or the deprecia- tion of the collateral, or the cost of collection. Uncertainty in Time. — The acceleration provisions in these collateral notes do undoubtedly render the time of payment un- certain, but not more so than the other types of provisions already considered. It is objected that a note "which carries with it the probability, or even the possibility, that it may be partially or wholly extinguished before maturity" is not suitable for negotia- tion.^^^ Every "on or before" note, every installment note which falls due at once upon default, every note which gives the holder or maker an option to make part payments is open to just the same objection. This argument would wipe out acceleration provisions altogether. Another objection advanced to these collateral notes is that the acceleration is not caused by the maker, but "there is an uncer- tainty in the time of payment within the determination of the payee or his assignee." ^^* This attempted distinction between holder's option and maker's option has already been considered,^^" and found to be baseless. Also, the instrument in question "is no more uncertain for practical purposes than a bill drawn, for ex- ample, *at sight,' or 'on demand,' neither of which phrases has ever been held to diminish negotiabiKty. Yet, with regard to bills so drawn, the holder exercises the unquestioned option of fixing the time when the direction to pay becomes absolute." "^ And, finally, the maker does participate in the acceleration in these collateral notes by his refusal to furnish more collateral, so that they would seem analogous to installment notes which are accelerated at the option of the holder after default by the maker. It may be argued, however, that the analogy is not sound, because the holder has unlimited discretion to determine when the security has depre- ciated, so that for all practical purposes maturity is within his sole 138 Thayer, J., in Lincoln National Bank v. Perry, 66 Fed. 887, 893 (C. C. A. 8th, 189s). 139 Benny v. Dunn, 26 Pitts. Leg. J. 382, 384 (1896). "° See page 774, supra. 1*1 Barclay, J., in First National Bank v. Skeen, loi Mo. 683, 688, 14 S. W. 732 (1890).