strument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him, so as to make them liable to him is conclusively presumed,' etc.

"Applying to the borough the conclusive presumption which this lastcited section of the statute prescribes for the protection of a holder in due course, it must be held to have made a valid delivery of these bonds, so far as the defendant bank is concerned, and the latter is therefore entitled to retain possession of

them as outstanding obligations of the municipality."

In the instant case the president, who negotiated the loans to the bank, testified, without contradiction, that he believed the bonds belonged to Stone, and made the loans upon the faith of the bonds.

We are, therefore, of the opinion that the bank was a holder in due course, pledgee from Bonds-right of and that the decree one without authority. of the Chancellor should be affirmed.

On the question outlined in the title to this annotation, there is comparatively little authority. The authority there is on the question agrees with the decision in the reported case (NICKEY BROS. v. LONSDALE MFG. CO. ante, 1383) that private corporate bonds are negotiable under the provisions of the Negotiable Instruments Act. Pratt v. Higginson (1918) 230 Mass. 256, 1 A.L.R. 714, 119 N. E. 661; Higgins v. Hocking Valley R. Co. (1919) 188 App. Div. 684, 177 N. Y. Supp. 444; Nickey Bros. v. Lonsdale Mfg. Co. (1924) Tenn. 258 S. W. 776.

Bonds issued by a corporation were, without discussion, treated as negotiable instruments in Brown v. Southwestern Farm Mortg. Co. (1922) 112 Kan. 192, 210 Pac. 658.

Corporate bonds were assumed to be negotiable in Chavelle v. Washington Trust Co. (1915) 141 C. C. A. 230, 226 Fed. 400, where the question was whether the bonds were taken by a bona fide holder free from defenses that existed against them in the hands of the original party.

So for as appears in the reports of the cases, the bonds involved in the above cases were payable to bearer. The bond involved in Higgins v. Hocking Valley R. Co. (1919) 188 App. Div. 684, 177 N. Y. Supp. 444, supra, contained a promise by the corporation,

for value received, to pay to the bearer the sum of the bond in gold coin of the United States of the present standard of weight and fineness, on a stated date, at a stated place, and to pay interest thereon at a stipulated rate until the bond should be finally paid, said interest to be paid semiannually at the office of the corporation in like gold coin on the 1st day of February and the 1st day of August in each year, upon presentation and surrender of the coupons therefor annexed to the bonds. By the terms of the bond, the principal and interest were payable without deduction for taxes or stamp duties under existing or future laws of the United States or any state, county, or municipality therein. The court cites § 1 (§ 20 of the New York law) of the Negotiable Instruments Act, and says that the bonds answer every requirement prescribed by the law; that they were in writing signed by the corporation, that each contained an unconditional promise to pay a specified sum, with interest, in gold, that they were made payable on a stated date, and were payable to bearer; hence, every requirement of the above section was met.

The question in Pratt v. Higginson (Mass.) supra, was as to the liability of a stockbroker who had sold the bond, to the owner thereof, for conversion. In Higgins v. Hocking Val

ley R. Co. (N. Y.) supra, the question was as to the liability of a guarantor of the bonds to a bona fide holder. It being held that the bonds were negotiable, the bona fide holder was protected under the provisions of the Negotiable Instruments Act, and held entitled to enforce the agreement of guaranty entered into by the defendant, as against the defense that the guaranty was given in pursuance of an agreement to enter into an unlawful combination. The guaranty involved was "to the several and successive holders" of the bonds.

The bond of a joint stock association was held negotiable under the Negotiable Instruments Act in Hibbs v. Brown (1907) 190 N. Y. 167, 82 N. E. 1108. The question arose between an owner of the bonds from whom they were stolen and a brokerage house which purchased them in good faith and without knowledge of the theft.

In two English cases, bonds issued by companies and corporations were held negotiable on the theory that, by usage, such instruments were treated as being negotiable. Bechuanaland Exploration Co. v. London Trading Bank [1898] 2 Q. B. (Eng.) 658; Edelstein v. Schuler & Co. [1902] 2 K. B. (Eng.) 144. In the Bechuanaland Exploration Co. Case it is stated: "Now it is, I think, unquestionable, and it was not disputed at the bar, that such a debenture as this, if viewed according to its tenor merely, and without regard to mercantile usage, does not belong to the class of negotiable instruments which the law has recognized as such by virtue either of the ancient law merchant or by virtue of statute (such as bills of exchange, promissory notes, and exchequerand exchequerbills), and the delivery of which con fers a good title to the person who acquires them in good faith and for value, notwithstanding a defect in the title to the transferrer. . . Evidence, however, was adduced by the defendants of a usage of the mercantile world in recent times to treat 'debentures to bearer' of this kind as negotiable instruments; and the defendants contend that if I am of opinion

that the usage has been proved, I ought to recognize and give effect to it by upholding their title to these debentures." In the Edelstein Case, the court, after referring to the decision in the Bechuanaland Exploration Co. Case, says: "I go, perhaps, further than Kennedy, J., intended to go, for I think that it is no longer necessary to tender evidence in support of the fact that such bonds are negotiable, and that the courts of law ought to take judicial notice of it." The court further says: "In my opinion, the time has passed when the negotiability of bearer bonds, whether government bonds or trading bonds, foreign or English, can be called in question in our courts. The existence of the usage has been so often proved and its convenience is so obvious that it must be taken now to be part of the law; the very expression 'bearer bond' connotes the idea of negotiability, so that the moment such bonds are issued to the public they rank themselves among the class of negotiable securities."

The question in both of the English cases was one of title; that is, whether a purchaser of the bonds in good faith and without knowledge of their theft held good title as against the true owner.

The effect upon negotiability of certain provisions in the bonds involved in the foregoing cases has been considered.

It was held in Pratt v. Higginson (1918) 230 Mass. 256, 1 A.L.R. 714, 19 N. E. 661, that a corporate bond was not rendered non-negotiable by the fact that it might, at maturity, be converted by the holder into stock of the corporation.

A bond issued by a joint stock association is not rendered non-negotiable by the fact that the members of the association are expressly exempted from any personal liability on the bond. Hibbs v. Brown (N. Y.) supra. Such a provision does not make the instrument payable out of a special fund within the meaning of the provision of the Negotiable Instruments Law that an order or promise to pay out of a

particular fund renders the instrument non-negotiable.

The negotiability of interest coupons attached to bonds issued by a joint stock association is not affected by a clause in the trust deed securing the bond, enabling a certain proportion of the bondholders to waive default and postpone the time of payment of coupons; such a provision does not prevent the coupons from complying with the requirement in the Negotiable Instruments Act of an unconditional promise to pay on demand, or at a fixed and definite time. Ibid.

The mere fact that in bonds issued by a corporation, reference is made to the mortgage or deed of trust securing the bonds for a description of the property and franchises thus mortgaged, the nature and extent of the rights of the holders of the bonds under the same, and the terms and conditions upon which the bonds were issued, does not affect their negotiability. Higgins v. Hocking Valley R. Co. (1919) 188 App. Div. 684, 177 N. Y. Supp. 444, supra.

The fact that under the terms of a mortgage securing the bonds, the holder's claim, upon default in making payment with interest as provided in the bonds, accelerated the due day for the payment of the principal secured and foreclosed the mortgage, does not destroy the negotiability. Ibid.

In Chavelle v. Washington Trust Co. (1915) 141 C. C. A. 230, 226 Fed. 400, appeal dismissed for want of jurisdiction in (1918) 248 U. S. 545, 63 L. ed. 414, 39 Sup. Ct. Rep. 135, it was held that corporate bonds were not rendered non-negotiable by a provision that all payments on the bonds, both the principal and interest, should be made without deduction for any tax or taxes that the corporation might be required to pay or to retain therefrom by any present or future laws of the United States or of the state of Washington, the corporation covenanting and agreeing to pay any and all such tax or taxes.

On the effect of various provisions in the bonds such as those above mentioned, the annotation does not purport to be exhaustive. W. A. E.

The power to sell was absolutely limited to five years, and as a conse

quence the executors cannot now execute a binding deed.

Pratt v. Miller, 23 Neb. 496, 37 N. W. 263; Barney v. Hayes, 11 Mont.

571, 28 Am. St. Rep. 495, 29 Pac. 282; Stewart v. Stewart, 61 N. J. Eq. 25, 47 Atl. 633; Weber v. Bryant, 161 Mass. 400, 37 N. E. 203; Philadelphia's Appeal, 112 Pa. 470, 4 Atl. 5; Taylor v. Martin, 6 Sadler (Pa.) 125, 20 W. N. C. 27, 8 Atl. 920; Oyster v. Knull, 137 Pa. 448, 21 Am. St. Rep. 890, 20 Atl. 624; Brasher v. Marsh, 15 Ohio St. 111; Cabeen v. Gordon, 10 S. C. Eq. (1 Hill) 51; Bouknight v. Brown, 16 S. C. 155; McCreary v. Burns, 17 S. C. 45.

Mr. R. B. Herbert, for respondents: The executors had the power, after five years' administration of the estate, to make sale of such of the estate as had not been sold by them.

Burton v. Burton, 113 S. C. 227, 102 S. E. 282; Arnold v. Arnold, 41 S. C. 298, 19 S. E. 673; Bouknight v. Brown, 16 S. C. 155; McCreery v. Burns, 17 S. C. 45.

Cothran, J., delivered the opinion

of the court:

Action by the executors of the will of Abraham Stork for the specific performance of a contract for the sale of a certain piece of real estate, a part of his estate, entered into by the executors and the defendants on February 10, 1923. The executors claim the right to sell the land under said will, and in compliance with the contract tendered a deed conveying the land to the defendants. The defendants declined to accept the deed upon the ground that the executors were without the power to convey. This action was then instituted for the purpose of determining that question, which obviously involves the construction of the will.

The will, in item 3, after certain directions and devises not in question or pertinent to the present inquiry, gives and bequeaths all the residue of the testator's property, of all kinds, to the executors to "sell as hereinafter directed" and to distribute as therein directed. Item 4 contains specific directions as to the sale referred to in item 3, providing "that they sell and dispose of the rest and residue of all my property, real and personal, at public or private sale, at such time within five years from my decease, and upon

31 A.L.R.-88.

such terms and in such manner as they may deem most advantageous."

The will is dated in 1911; a codicil was added in November, 1912, which does not affect the present issue, and the testator died in December, 1912.

The contention of the defendants is that item 4 contains a limitation of five years after the death of the testator within which time the executors were authorized to sell the real estate, and that, not having exercised that power within that period, they are, after the expiration, powerless to do so.

It is significant that there is no provision in the will directing the devolution of the estate in the event that the power of sale should not be executed within the period of limitation; and it is obvious that if the fixing of that period was intended to be an absolute limitation upon the power of sale by the executors, the failure of the executors to execute it within the period would annihilate the entire scheme of the will and convert the legacies and devises into intestate property-a result which could not have been intended by the testator, and a result which might have been consummated by the intentional procrastination of the executors.

In Shalter's Appeal, 43 Pa. 83, 82 Am. Dec. 552, the testator directed that all the rest of his real estate should be sold at public sale by his executors "as soon after my decease as may be, according to their best discretion, so that it be done within one year after my decease." More than a year after the testator's death, the administrator c. t. a. sold a part of the real estate under the authority contained in the will. Attack was made upon the validity of this sale and the court held: "The sale of the real estate by the administrator, George Fox, was as effectual as if it had been made by the executors, who undoubtedly had the power to sell, although the year had expired, for that was only directory, and not a condition precedent."

In Hale v. Hale, 137 Mass. 168,

it is held that, where testator directs that within a year from the time of his death his land shall be sold and the proceeds remain with the executors for specific purposes, the power to sell may be exercised by the executors after the expiration of the year.

In Waldron v. Schlang, 47 Hun, 252, it was held that where a testatrix empowered her executor, at any time within five years, to sell all her estate, both real and personal, and divide the same into equal portions, to be paid to certain legatees, such power to sell did not become inoperative by the lapse of the five years without its exercise, and that sale made by the executor after the expiration of that time passed a valid title to the property to the purchaser.

In Wells v. Sloyer, 1 Clark (Pa.) 516, it was held that a power to sell within a limited period, where it is coupled with or is in the nature of a trust, may be executed after the lapse of the period prescribed.

In Fahnestock v. Fahnestock, 152 Pa. 56, 34 Am. St. Rep. 623, 25 Atl. 313, it was held that where the will empowered executors to sell all of the property, execute deeds for the real estate, and invest the proceeds, the executors to have four years within which to settle the estate, such power was not destroyed by a failure to exercise it within the time allowed in the will for the settlement of the estate.

In Kidwell v. Brummagim, 32 Cal. 444, it was held that, when testator directs executor to sell real estate within one year, the power to sell is not limited to one year unless there be express words in the will to show that such was the testator's intention.

In Grove v. Willard, 280 Ill. 247, 117 N. E. 489, it is held that the power of sale was not destroyed by the failure of the executrix to exercise it as directed by the will.

In Molten v. Sutphin, 66 N. J. Eq. 20, 57 Atl. 974, it was held that, where testatrix directed that certain real estate be sold by her executrix "within five years from my decease," and the proceeds divided between two beneficiaries, the provision was merely directory in respect to the limit of time for sale, and that the executrix retained the power of sale after the expiration of the limited period.

In Spitzer v. Spitzer, 38 App. Div. 436, 56 N. Y. Supp. 470, it was held that under a will directing that the executor sell within two years from its admission to probate, failure to sell within that time does not terminate the power of sale.

In Frederick v. Kerr, 219 Pa. 365, 68 Atl. 835, it was held that, where the executor was empowered at any time within five years, in his discretion, to sell certain real estate, a sale within that period was discretionary and that a sale thereafter conveyed a good title. See also Union Trust Co. v. Cole, 198 App. Div. 534, 190 N. Y. Supp. 855; Grove v. Willard, 280 Ill. 247, 117 N. E. 489.

Our conclusion is in accord with the foregoing authorities, that the executors, notwithstanding the expi- executors to sell Will-power of ration of the five limitation of years, were vested with full power to convey the real estate.

time.

The judgment of this court is that the judgment of the lower court be affirmed.

Gary, Ch. J., and Watts, Fraser, and Marion, JJ., concur.