Page:Harvard Law Review Volume 32.djvu/815

ACCELERATION PROVISIONS IN TIME PAPER 779 " The law governing such paper is the outgrowth of the usages of com- merce. In determining disputed questions in its appHcation it is often useful to recur to the objects and purposes of the law and to observe how far they may be promoted or defeated by the acceptance of any proposed construction of it. The reason of any law is its life, and a correct con- ception of its reason is oftentimes essential to a proper understanding of the meaning and tendency of the law itself." The real question, therefore, is not whether a formal requisite is violated in theory, but whether it is violated in such a way as to raise serious objections; whether the acceleration provisions render the instrument more or less suitable for circulation among business meii as a substitute for money. Uncertainty of Amount. — If the holder is authorized to sell the collateral before maturity, he must properly apply the proceeds of the sale toward the debt. Only the balance is then recoverable, and it is uncertain what that balance will be. The amount payable by the maker, either under a judgment or otherwise, is therefore said to be uncertain.^^° A further uncertainty is created by words authorizing the holder to pay all expenses of the sale out of its proceeds.^^^ A similar uncertainty as to the size of the deficiency is caused by a power to sell collateral at maturity, yet this is clearly valid.^^^ A distinction has been suggested in that the power to sell after ma- turity operates when the instrument has become "an ordinary contract for the payment of money" subject to equities, while the power to sell before maturity operates while the bill has negotiable privilege and value. ^^ This distinction overlooks the point, that the acceleration does cause maturity and render the note overdue as to persons with notice that it has occurred. Also, if the note mentions the collateral, all purchasers are put on notice that the collateral should accompany the note,^^^ and, if it is missing, that it has been sold. A prior holder could have sold it anyway without express power to do so — a wrongful act, of course, but affecting a later purchaser with notice of the existence of the collateral and not 1'" Lincoln National Bank v. Perry, 66 Fed. 887, 892 (1895); Continental National Bank v. McGeoch, 73 Wis. 332, 337, 41 N. W. 409 (1889). I'l Continental National Bank v. McGeoch, 73 Wis. 332, 338, 41 N. W. 409 (1889). "2 Arnold v. Rock River, etc. R. R. Co., 5 Duer (N. Y.) 207 (1856); N. I. L. § 5 (i). ^^ Commercial National Bank v. Consumers' Brewing Co., 16 App. D. C. 186, 203 (1900). ^^ Holmes v. Kidd, 3 H. & N. 891 (1858).