13 P.2d 518 | Cal. Ct. App. | 1932
This is an action brought to recover $7,922.81, upon a promissory note. Judgment was rendered in favor of plaintiff. The appeal is prosecuted from the judgment.
The note was executed by F.H. Zook, who died and whose estate is being administered by defendant, and it reads as follows:
"No. 12315 Due 9-5-24
"Des Moines, Iowa, September 5, 1923.
"Twelve months after date, for value received, I or we jointly and severally as principals, promise to pay to the order of The United State Bank, Des Moines, Iowa, Six *20 Thousand and no/100 Dollars, payable: $500.00 Dec. 4, 1923, $500 on Mar. 4, 1924, $500.00 on June 2, 1924, $4500. on Sept. 5, 1924, at its office in Des Moines, Iowa, with interest at the rate of eight per cent per annum, from date payable semi-annually until paid. Overdue principal or interest shall draw interest at the rate of eight per cent per annum, payable semi-annually. Sureties, endorsers and guarantors hereon severally waived demand, notice of non-payment, notice of protest and protest of this note, and consent that time of payment may be extended without notice. Upon default of payment of this note we agree to pay attorney fees and all expenses of collection. Any Justice of the Peace may have jurisdiction hereon to the amount of $300.00. If payments are not made on dates specified above, entire amount of note becomes due and payable at once.
"C.W. GRAHAM. "Address LLOYD WADDELL. L.B. KIRKPATRICK. "Address E.L. LLOYD. F.H. ZOOK."
On March 24, 1928, F.H. Zook died in Los Angeles County, and defendant was appointed administrator of his estate. On September 11, 1928, plaintiff filed his duly verified claim against said estate, and on March 9, 1929, the claim was rejected by the administrator. On April 13, 1929, this action, based upon the claim, was instituted. The only payment made by the makers of said note was the sum of $240, which represented interest on the principal sum for the first six months, and which was paid March 11, 1924. Defendant pleaded the statute of limitations — section 337 of the Code of Civil Procedure. This was the only defense offered.
[1] The note contains the following acceleration clause: "If payments are not made on dates specified above, entire amount of note becomes due and payable at once." It is the contention of appellant that "the right of action on a promissory note providing for payment in installments and containing a positive non-optional acceleration clause is barred in four years after default in any installment". Or, more specifically, appellant contends that the cause of action for the full amount arose on the fifth day of December, 1923, and was barred four years thereafter. *21
In the conclusions of law the following appears: "That in arriving at this judgment the court has found as a conclusion of law that the $500.00 principal payment due on December 4, 1923, and the $500.00 principal payment due on March 4, 1924, under the terms of the above-mentioned promissory note, are barred by the provisions of section 337 of the Code of Civil Procedure of the State of California, but that the additional $5,000.00 principal of said promissory note and the interest accrued thereon from March 4, 1924, are not barred by the provisions of section 337 of the Code of Civil Procedure or any other provision in the laws of the State of California. . . ." It will thus be seen that the judgment did not include the first two installments of $500 each, which the trial court held were barred by the statute of limitations. As to the other two installments, the maker died before the four-year period had expired, and the action as to them was commenced in time (Code Civ. Proc., sec. 353), if the contention of appellant, based upon the acceleration clause, does not prevail.
While the precise point here involved does not appear to have been decided in California, a very analogous adjudication has been made in this state respecting the payment of interest upon a promissory note. This question was first presented in the case ofBelloc v. Davis,
The foregoing rule has been followed in Congregational Church,etc., v. Osborn,
We are aware that a number of text-books support the contention of appellant, but we regard the rule as having been settled to the contrary in this state by decisions above cited. Appellant also cites Perkins v. Swain, 35 Idaho, 485 [34 A.L.R. 894, 207 P. 585]. While that case is authority for the position taken by appellant, it clearly indicates that there is a conflict of authority upon this question throughout the United States. In the list of authorities which hold that the acceleration clause is for the benefit of *24 the creditor and that while not therein so expressed, it is purely optional to declare the whole amount due, we find Belloc v. Davis, supra, from our own jurisdiction.
Appellants attempt to distinguish the California cases upon the ground that they apply to interest payments only, and not toinstallments. While this is true, a careful reading of the Belloc case and those cases following it indicates that our courts have adopted the broad principle that acceleration clauses of like character are not absolute or self-operative; that they are for the benefit of the creditor, and that failure to pay an installment of principal when due cannot be taken advantage of by the debtor to mature the entire indebtedness.
We therefore conclude that the trial court properly held that the amounts for which judgment was given were not barred by the statute of limitations.
The judgment is affirmed.
Knight, Acting P.J., and Cashin, J., concurred.
A petition for a rehearing of this cause was denied by the District Court of Appeal on August 20, 1932, and an application by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on September 19, 1932.