duration of this particular existence. And the value of paper with uncertain maturity is rendered still more speculative by the objections about to be considered, which make it possible that the promise though unconditional in terms will never be performed because of unknown defenses to which the purchaser will be subject when he sues.

2. If the time of payment is uncertain it may have already occurred. If so, the paper is in fact overdue and affected by the equitable defenses of prior parties. On business paper, maturity should be definite, so that any one who buys after maturity will do so with eyes open.

3. If the maturity has occurred six years before (less in some states), the Statute of Limitations will defeat recovery, even if there are no other defenses. The statute may have run before the purchase or before the holder can ascertain the date of the critical event, such as some one's death, which fixed maturity.

4. Even if maturity has not yet arrived, it is essential for the holder to know in advance just when it will come, so that he may present the instrument to the primary party and give notice of dishonor to the secondary parties in order to make them liable to him. If a note is payable at the death of the maker's father, he must, to be safe, maintain telegraphic communication with his deathbed.16 If it is payable at the end of the war, does this mean November 11, 1918, or the signing of the peace treaty, or its ratification by the Senate, or the President's proclamation of peace? The holder's failure to determine the critical date correctly and act at once will forfeit his rights against indorsers.17

5. A less serious difficulty is, that the obligors on the instrument ought to know the time of payment definitely, so that the primary party may have funds ready as the day approaches, and the secondary parties may watch him and protect themselves if he appears unprepared to pay. Good business policy requires that men shall foresee the maturity of their obligations and adjust their affairs accordingly.

6. Because of these specific objections, the paper is unsuited to

16 Yet such instruments are always held negotiable. Colchan v. Cooke, Willes, 393 (1743); McClenathan v. Davis, 243 Ill. 87, 90 N. E. 265 (1909); 1 Daniel, op. cit. § 46

note 22.

17 For cases upholding Civil War notes, see I DANIEL, op. cit., § 49.

rapid circulation in the legitimate money market. Its speculative value, the need of inquiry into outside facts, and the risk of hidden defenses make business men fight shy of it and prevent it from being a substitute for money at all. It should be classed as an ordinary simple contract, and not as a circulating instrument.

Notwithstanding these objections, American decisions have gone very far in upholding instruments with no certain time for payment.18 Our problem is different, for it concerns paper with a certain maturity and provisions for a contingent earlier payment. However, the judicial attitude toward acceleration clauses has been affected by the widespread disregard of the requisite of certainty of time in the decisions just mentioned, and the prevalence of the maxim that an instrument is good so long as the day of payment must ultimately arrive, a maxim which would logically validate all acceleration paper. On the other hand, the recognition of the time requisite in the Negotiable Instruments Law 19 has brought a general stiffening of standards, which has reacted upon acceleration

cases.

Before examining the decisions upon the various forms of acceleration provisions, including those in collateral and chattel notes, I shall present the principles which seem to me controlling.

There are two broad classes of negotiable instruments without acceleration provisions, each of which has its own distinctive method of satisfying the formal requisite of certainty of time. (a) In time paper, "the time of payment of a bill or note must be obvious from the bare inspection of the instrument." (b) In demand or sight instruments, the time is not certain at the outset, but is fixed "by the performance of an act regularly incident to the collection of the paper. " 20 Thus, a demand note becomes payable by the maker's act of tender of money, or the holder's act of presentment for payment.21 A sight bill is made certain by the

19 84.

20 2 AMES, CASES ON BILLS AND NOTES, 831. THE NEGOTIABLE INSTRUMENTS LAW presents the two methods in a little different way. § 1 (3) says the instrument "must be payable on demand, or at a fixed or determinable future time." §4 (1) says the time is "determinable" in sight bills.

21 In demand notes presentment for payment does determine maturity if payment is thereupon made. If, however, payment is not made, maturity is determined regardless of demand. For purposes of suit or the Statute of Limitations, the note matures

holder's act of presentment for acceptance. Apart from the wellestablished exception of instruments payable after some one's death, which is perhaps commercially justifiable because of the prevalence of life-estates which are anticipated by borrowing, maturity cannot properly be fixed by an extrinsic event, which is not closely connected with the collection of the instrument. In other words, business men should not be affected by facts which are not on the instrument or part of the business methods of collection and payment.

Now, the effect of the ordinary acceleration provision is to combine these two classes of paper in one instrument. A note payable on or before July 1 is like Class (a) in having a definite maturity, and like Class (b) in having a movable time of payment fixed by the maker's tender or the holder's demand. My contention is that the law merchant recognizes only the two methods of satisfying the formal requisite of certainty of time. An instrument may use either or both of these two methods of stating its maturity, but it cannot regulate its maturity by some outside event. An acceleration provision is analogous to a demand note. The business world allows paper with a movable time of payment, but it cannot bother with it unless the time is eventually fixed by a business fact. This applies just as much to paper with an ultimate definite maturity and an acceleration provision, as to paper with no stated date for payment at all and maturing at an uncertain time. Consequently, I would state my first principle as to acceleration provisions thus:

I. An instrument with an acceleration provision in order to be negotiable must conform to the following requirement. The ultimate time of payment must be obvious from the bare inspection of the instrument; and payment can be accelerated only by the performance of an act regularly incident to the collection of the paper.22

To this I would add two other principles, leaving the argument in their support till later:

when it is written. For purposes of charging secondary parties and letting in equities, it matures after a reasonable time. Thus it might be said that the maturity of a demand note is in fact certain from the outset, being either its issue or the end of a reasonable time. From this point of view, no act is necessary to fix maturity.

22 This combines Ames' alternative requirements in one. 2 AMES, CASES ON BILLS AND NOTES, 831.

II. The ultimate time of payment is the maturity of the instrument for all purposes with respect to persons who have not received notice that the fact which was to accelerate payment has occurred.

III. The time fixed by the acceleration provision is the maturity of the instrument for all purposes with respect to persons who have received notice that the fact which was to accelerate payment has occurred.

We can now proceed to the authorities on the various types of acceleration provisions.

INSTRUMENTS PAYABLE "ON OR BEFORE" A SPECIFIED DAY This is the simplest form of acceleration provision, and is valid on principle, because the acts causing acceleration are incidental to collection of the instrument. At common law, it did not impair negotiability, except in Massachusetts,23 and it is expressly permitted by the Negotiable Instruments Law.24 With regard to the objections involved in uncertainty of time, the cases say very little, so that some discussion of this question is needed.

If the maker alone has the option of accelerating payment, the matter is simple. "The legal rights of the holder are clear and certain; the note is due at a time fixed, and it is not due before. . . This option if exercised, would be a payment in advance of the legal liability to pay, and nothing more." 25 "For all purposes of negotiation it is to be regarded as a note payable solely on the day therein named." 26 If the maker's tender is accepted and payment made, no further question will arise, unless the note is left in circulation. In that event, a bonâ fide purchaser before the ultimate date of maturity will be free from equities and can oblige the maker to pay a second time.27 He is like the purchaser of a demand note, paid but wrongfully kept by the owner and renegotiated to an 23 See cases in notes 25, 26, 27, 29, and 32.

24 § 4 (2): "An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable . . . on or before a fixed or determinable future time specified therein."

25 Cooley, J., in Mattison v. Marks, 31 Mich. 421 (1875), construing "on or before" to give only the maker an option.

26 Jordan v. Tate, 19 Ohio St. 586 (1869); Helmer v. Krolick, 36 Mich. 37 (1877); Harrison v. Hunter, 168 S. W. 1036 (Tex. Civ. App. 1914); Bates v. Leclair, 49 Vt. 229 (1877).

27 Fogg v. School District of Sedalia, 75 Mo. App. 159 (1898); contra, Hubbard v. Mosely, 11 Gray (Mass.) 170, 172 (1859) semble; but see note 32 for later Massachusetts

statute.

innocent buyer before equities are let in.28 If his tender is refused, there can be no dispute about the time equities are let in or notice of dishonor should be given, for there is no dishonor. The Statute of Limitations begins to run at the specified date.29 One difficulty is that tender stops the running of interest; 30 if the holder after his refusal negotiated the paper to a purchaser without notice of the tender, could that purchaser collect interest? On principle, the tender, like actual payment, should affect only holders who know of it.31 A similar question might arise on an ordinary demand note, negotiated after tender but before equities are let in. Another difficulty is that the holder may be deprived of his investment at any time if the maker pays up, so that the value is uncertain. The objection, while real, applies also to a demand note. Therefore, an instrument payable on or before a certain date at the option of the maker is negotiable,32 including such securities as Liberty

28 Nash v. De Freville, [1900] 2 Q. B. 72 (C. A.); State v. Wells, Fargo & Co., 15 Cal. 336 (1860).

29 In Ackley v. Hall, 113 U. S. 135, 140 (1885), Harlan, J., said: "The debtor incurred no legal liability for nonpayment until that day passed."

30 Wright v. Robinson, 84 Hun (N. Y.) 172, 177, 32 N. Y. Supp. 463 (1895); Chapman v. Wagner, 1 Neb. Un. 492, 496 (1901).

31 This was apparently Dean Ames' opinion, 2 CASES ON BILLS AND NOTES, 831: "The option of the maker seems indeed to be of no significance, except in the case of interest-bearing instruments, and even in these the fact that the maker may by a tender bar the right of him to whom the tender is made to claim interest accruing subsequent to the tender seems hardly to render the instrument uncertain in the commercial sense of the term."

But in Pemberton v. Hoosier, 1 Kan. 108, 114 (1862), Bailey, J., in upholding an "on or before" note, seems to think that a purchase before the ultimate date must inquire as to the possible prior payment: "The defendants promise to pay a sum certain on a day certain, provided only, that it is not paid before that time. The condition is only such as the law annexes to all promises to pay, and the effect of expressing such a condition is simply to charge third parties with notice."

32 Cases cited in notes 25, 26, 27, 29, supra; also the following cases out of a large number. Union Loan & Trust Co. v. Southern California Motor Road Co., 51 Fed. 840 (Cal. Code, 1892); Cowing v. Cloud, 16 Colo. App. 326, 65 Pac. 417 (1901); Leader v. Plante, 95 Me. 339, 50 Atl. 54 (1901). First National Bank of Springfield, Ohio v. Skeen, 29 Mo. App. 115 (1888)—if negotiability is denied, lenders will refuse the concession of earlier payment, and "thus ensues oppression of the debtor class," affd. 101 Mo. 683; 14 S. W. 732 (1890); Curtis v. Horn, 58 N. H. 504 (1878); National Bank v. Kenney, 98 Texas, 293, 83 S. W. 368 (1904) semble; Cunningham v. McDonald, 98 Texas, 316, 83 S. W. 372 (1904); Lovenberg v. Henry, 104 Texas, 550, 140 S. W. 1079 (1911), "on or before" construed as maker's option. Contra, Hubbard v. Mosely, 11 Gray (Mass.) 170 (1858); Way v. Smith, 111 Mass. 523 (1873); Stults v. Silva, 119 Mass. 137 (1875); Farmers' Loan & Trust Co. v. McCoy, 32 Okla. 277, 122