Page:Harvard Law Review Volume 32.djvu/822

786 786 HARVARD LAW REVIEW article ^^^ clear up any further difficulties attending the negotiability of these collateral notes. The first principle required the accelera- tion of a negotiable instrument to be by an act incidental to the collection of the instnunent by business methods. It is clear that security is closely related to the life of a negotiable instrument. The return of collateral is a kind of impHed condition of the promise to pay a note or the order to pay a bill.^^^ The demand upon the maker to keep the collateral adequate or its sale upon depreciation may fairly be considered a part of its collection, as modern business goes, as much as presentation for acceptance or the demand for payment. Consequently acceleration by such acts or the accom- panying default of the maker is as permissible as acceleration by nonacceptance or failure to pay on demand. As a result the second and third principles govern these notes. Since there are not two coequal maturities, but one main maturity, the fixed date of payment, with a merely incidental provision for acceleration, a purchaser can rely on the fixed date, and regard the instnunent as not overdue until then,^^^ without troubling to in- quire whether any act of acceleration has taken place. This is once more analogous to the rule of Dunn v. O'Keefe ^^° regarding the acceleration of ordinary bills of exchange by nonacceptance, which does not affect subsequent purchasers without notice. On the other hand, holders having notice of the fact of acceleration, e. g., from the absence of collateral which ought to be attached to the instrument, are bound to regard it as overdue from the day the act of acceleration occurred, for purposes of the Statute of Limitations, letting in equitable defenses, and charging indorsers. Thus, no difficulties about uncertainty of time arise. It is worth noting that even when there is a duty to inquire about acceleration, the facts to be investigated are not truly extrinsic but part of the history of the instnunent, very different from such events as the death of the maker's father, which is a permissible means of fixing payment. Furthermore, the collateral notes lack the uncertain value of the death notes, or those payable "on or be- fore" a day at the maker's option, or installment notes absolutely 1" See page 756, supra. 158 See note on produce bills of exchange in 32 Harv. L. Rev. 560; also, 30 Harv. L. Rev. 514. 159 Mackintosh v. Gibbs, 79 N. J. L. 40, 74 Atl. 708 (1909). «o 5 M. & S. 282 (1816); see page 671, supra.