call upon the maker for additional security when the value of the security given at the time of the execution of the writing becomes impaired, and if the maker fails to respond with additional security the holder may declare the debt due.

*

* *

The adjudications assignable to this class are divided in their views; but the majority of the cases decided under the provisions of the negotiable instruments law, as well as the majority of those decided in jurisdictions where the negotiable instruments law had not yet been adopted, have ruled that this kind of a condition in an acceleration clause renders the instrument nonnegotiable. * * Holliday State Bank v. Hoffman, 85 Kan. 71, 116 Pac. 239, 35 L. R. A. (N. S.) 390, Ann. Cas. 1912D, 1. * * * Contra: Empire National Bank v. High Grade Oil Refining Co., 260 Pa. 255, 103 Atl. 602; Finley v. Smith, 165 Ky. 445, 177 S. W. 262, L. R. A. 1915F, 777. * The cases holding that an instrument is not negotiable if it contains a clause giving the holder the right to declare the debt due if he deems himself insecure are based primarily upon the objection that the date of maturity is placed wholly under the control of the holder, is completely dependent upon his whim or caprice, and is independent of any act done or omitted by the maker; and, if there is the further stipulation that the maker will furnish added security when called upon, then there is, of course, an affirmative promise of the maker to do an act in addition to his promise to pay money..

* *

*

It is apparent from what has already been said that some jurisdictions go further than others in their approval of acceleration clauses; and consequently a rule containing language as broad as the rule in some jurisdictions would be too broad for others, and a formula which is only broad enough for the latter would not be broad enough for the former. In this jurisdiction the holding in Reynolds v. Vint, 73 Or. 528, 144 Pac. 526, and in Western Farquhar Mach. Co. v. Burnett, 82 Or. 174, 161 Pac. 384, condemns acceleration clauses which are entirely under the control of the holder and completely dependent upon his whim or caprice independent of any act of the maker; but, since neither of those decisions condemns all acceleration clauses, we have no hesitancy in declaring that we prefer to keep company with the majority of the other jurisdictions by giving approval to certain kinds of acceleration clauses.

What we deem to be the better rule is best expressed by language found in Ernst v. Steckman, 74 Pa. 13, 15 Am. Rep. 542, where a note, payable "twelve months after date (or before, if made out of the sale of W. S. Coffman's Improved Broadcast Seeding Machine)," was held to be negotiable. In concluding the opinion the court there said: "The principle to be deduced from the authorities is this: To constitute a negotiable promissory note, the time, or the event, for its ultimate payment, must be fixed and certain; yet it may be made subject. to contingencies, upon the happening of which, prior to the time of its absolute payment, it shall become due. The contingency depends upon some act done or omitted to be done by the maker, or upon the occurrence of some event indicated in the note; and not upon any act of the payee or holder, whereby the note may become due at an earlier day."

* * *

The respondent has argued that the debt represented by the note automatically became due when the conveyance was made to Frederick

T. Lewis on January 18, 1913; but the answer is that the thoroughly -established and indeed almost universal, if not the universal, rule is that the acceleration clause is not self-executing, but it merely confers an option upon the holder to treat the debt as due.

To summarize the situation with respect to the requirement of certainty in the time of payment, the actual state of the law is open to a double criticism. In the first place, it may well be urged that section 4, subsection 3, is too great a relaxation of the requirement of certainty in the time of payment. This section has merely codified existing law. Even if the case of an instrument made payable within a specified time after the death of a designated person be regarded as sufficiently certain-and the policy of this rule may be doubted-still the opportunity thus afforded to hold that other events such as the arrival of a ship or the maturing of a crop operate as continual temptations to override the requirement of certainty in the time of payment. As has been well said by Professor Chafee,1 with reference to this class of commercial instru"* * * ments, 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. Because of these specific objections, the paper is unsuited to rapid circulation in the legitimate money market."

A second criticism may be directed at the view that an instrument bearing a fixed maturity but subject to acceleration into an earlier maturity upon the happening of some event, in form extrinsic, but in reality conferring an option on the holder to demand payment, is payable at an uncertain time. Where the instrument is made to mature before the fixed date (a) when the holder deems himself insecure, or (b) when the obligor does any act calculated to impair the security, or (c) upon the depreciation of collateral deposited by the obligor with the holder, the event is not so far contingent as to require the holding that the time of payment is uncertain. In legal effect the instrument is payable at the fixed date but subject to earlier maturity at the option of the holder. As far as the holder is concerned, the instrument is demand paper. Of course an instrument which bore a fixed date of maturity, but was subject to an earlier maturity upon the happening of some event wholly contingent, as for example, an instrument payable at a fixed date but subject to an earlier payment if the price of cotton on the exchange dropped below a specified figure, may be regarded as uncertain in the time of payment, though even here it is possible to take the view that the existence of the fixed

1 Acceleration Provisions in Time Paper, 32 Harvard Law Review, 754.

date saves the instrument from the perils of uncertainty. Indeed, under the Negotiable Instruments Law as in force in Wisconsin, such an instrument would be negotiable. The Wisconsin statute contains the following clause which is not found in the Uniform Act: "An instrument is payable at a determinable future time, within the meaning of this act which is expressed to be payable at a fixed period after date or sight, though payable before then on a contingency."

Professor Chafee, in the same article, has suggested the following rules with respect to acceleration provisions:

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.

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.

SECTION 6.-THE INSTRUMENT MUST BE PAYABLE IN MONEY

N. I. L., Section 1, subsec. 2. An instrument to be negotiable must contain an unconditional promise or order to pay a sum certain in money.

N. I. L., Section 132. The acceptance of a bill must not express that the drawee will perform his promise by any other means than the payment of money.

N. I. L., Section 6, subsec. 5. The validity and negotiable character of an instrument are not affected by the fact that it designates a particular kind of current money in which payment is to be made.

What is money? Until recently this question was frequently litigated, and its solution occasioned considerable difficulty. The courts were by no means agreed as to what kinds of media of exchange were to be included in the term "money." To-day the question is of much less practical importance; but it still exists, and, inasmuch as the Negotiable Instruments Law has not attempted a definition, the old question is occasionally presented. How may the question be presented? Suppose we take the case of a promissory note. The promise therein may read: (1) I promise to pay A. or order one hundred bushels of wheat, or (2) one hundred dollars, or (3) one hundred dollars in current funds

or in currency, or (4) particular kind of media in circulation, such as national bank notes, Federal Reserve notes, gold certificates, Federal Reserve Bank notes, gold coin, United States notes, Liberty bonds, or (5) one hundred dollars in British pounds sterling, or (6) one hundred British pounds sterling. Do any or all of these things fall within the meaning of the word "money"? Where the instrument is payable in dollars, the problem is easy, for whatever constitutes a dollar will be money, and the instrument will be negotiable, although it may not be clear what sort of media of exchange may be validly tendered in satisfaction of the debt. In that question we are not interested here. We are interested only in determining what language used in description of a particular kind of medium of exchange when expressly incorporated in the instrument will have the effect of taking away the important characteristics of negotiability.

The cases which gave rise to the greatest difficulty were those where the instrument provided that the debt evidenced thereby was to be paid in currency, or current funds or in some specified kind of circulating media such as national bank notes. Professor Greely, in reviewing these early cases, has said: "Prior to federal legislation virtually prohibiting the issue of state bank notes. much litigation arose involving the negotiability of instruments payable in 'current funds,' 'current bank notes,' 'currency,' etc. At that time the money in actual use was, in many places, state bank notes which were depreciated, and had largely or completely displaced legal tender. When instruments were drawn payable in 'current funds' or 'currency' the question whether (a) they were payable in the local depreciated currency, or in legal tender, or in legal tender and bank notes circulating at par therewith, and (b) whether they were negotiable or not, were important and difficult. Different rules were laid down in different jurisdictions. In Illinois it was held that such instruments were payable only in legal tender or funds circulating at par therewith, and not in the depreciated local currency. That so regarded, the instruments were negotiable. In Iowa it was held that instruments so payable were prima facie payable in the depreciated local, currency, and were not negotiable (not being payable in money), but became negotiable if it were shown by evidence that the word 'currency' or current funds' actually designated legal tender or funds the practical equivalent thereof. In some states such instruments were held to be payable in the local depreciated money, and not in legal tender or its equivalent and so regarded, were by some courts held to be negotiable and by others not. The tendency of the authorities was to regard as negotiable, paper payable in legal tender or in funds passing current at par therewith."

Where an instrument is payable in currency, the word "currency" may mean legal tender only or it may include other media. of exchange circulating at par therewith. A court may hold that

2 Uniform Negotiable Instruments Law, 10 Illinois Law Review, 267.

nothing is money unless it is legal tender, or a court may hold that any medium of exchange is money which, although it is not legal tender, circulates at par with legal tender. Most courts held that in order for circulating media to constitute money they must be legal tender. With respect to this controversy Professor Oliphant concludes that "anything which for a substantial period of time and throughout any important commercial community is by general consent used and treated in common payments as cash in the ordinary course and transaction of business is money."3 Professor Oliphant aptly observes that any other rule would result in the extraordinary situation that a repeal of our legal tender laws would leave us without negotiable instru

ments.

Professor Brannan has argued that the section should be amended by providing that instruments payable in currency, current funds and the like should be deemed negotiable and that these added words should be defined in the act to mean legal tender and circulating media circulating at par therewith.*

The following cases illustrate various situations that involve the sections above quoted.

ROBERTS v. SMITH et al.

(Supreme Court of Vermont, 1886. 58 Vt. 492, 4 Atl. 709,

56 Am. Rep. 567.)

VEAZEY, J. Although it has long been settled in this state that a written contract having the usual form of a promissory note, but payable in some specific article, may be treated as a promissory note as to the form of declaring upon it, and the necessity of proof of consideration, and in some other respects, * *** yet such an instrument is not negotiable because not payable in money. * * * The instru

ment declared upon was not even a promise to pay a given sum in specific articles, but only to pay "one ounce of gold." It stands, for consideration, upon the question of the sufficiency of the declaration, under the demurrer thereto, as though it were a promise to pay one bushel of wheat. This suit is by a purchaser from the payee. The plaintiff cannot stand upon the first count, as the instrument declared upon is not negotiable, and no promise by the defendant to the plaintiff is alleged. *

* *

It is but a promise to pay, that is, deliver, a certain article of merchandise definite in amount. Because gold enters into the composition of money we cannot assume that "an ounce of gold" is money, or that it has a fixed and unvarying value. The contract in question lacks, not only the quality of negotiability, but certainty and precision as to the amount to be paid. Upon failure to perform, there would be no definite specified sum due, as in case of a promissory note. The declaration is drawn upon the theory that the instrument was a promissory

3 The Theory of Money in the Law of Commercial Instruments, 29 Yale Law Journal, 606.

4 Some Necessary Amendments of the Negotiable Instruments Law, 26 Harvard Law Review, 493.

B.& B.BUS.LAW-43