136 Tenn. 634 | Tenn. | 1916
delivered the opinion of the Court.
Is the negotiability of a note destroyed by a provision on the part of the obligors that:'
“We authorize the holder thereof to extend- the payment of the same, or any part thereof, without imparing our joint and several liabilities, and the sureties agree to waive notice of any extension of time. ’ ’
The contention in behalf of the appellant is based upon section 1, subsec. 3, of the Negotiable Instruments Act, 1899, chapter 94:
“An instrument, to be negotiable, must conform to the following requirements:
“ * * # (3) Must be payable on demand, or at a fixed or determinable future time.” , .
We construe the clause in the note, quoted above, to relate and to give, assent to extensions that may be granted at or after maturity, the date of which is set forth with certainty in the note; or to an extension which, if made prior to maturity, has operative effect as from the time when the note falls due according to tenor; and we are of opinion that when so construed the clause should not render the note
Principle: As already observed, the note as executed is stipulated to mature on a date fixed and certain. The provision for extension does not put it in the power of the holder to extend the note without the concurrence of the maker, and the latter may not force an extension on the holder. When they concur, a new date of maturity is fixéd, and one no less certain than the original date. The sureties merely assent in advance thereto and bind themselves to waive the right of defense that might otherwise accrue; or to be bound by the supplemental contract which fixes the later maturity date. There is no agreement embodied in the note operating to bind the holder, to extend. There is incorporated no promise to do anything that would, of its force, affect the unconditional promise' to pay on the date named in instrument. There is nothing in the note that looks towards an indefinite extension of time of payment.
Precedent: Cases that pass on this question may be found collated in 8 Corp. Juris., 140, and in notes to First Nat. Bank v. Buttery, 17 Ann. Cas., 55 and 16 L. R. A. (N. S.), 878; Longmount Nat. Bank v. Loukonen, Ann. Cas., 1914B, 210; Anniston Loan, etc., Co. v. Stickney, 31 L. R. A., 234; Rossville State Bank v. Heslet, 33 L. R. A. (N. S.), 738; State Bank of Halstad v. Bilstad, 49 L. R. A. (N. S.), 132. The cases which have appeared since the preparation of the last of these notes demonstrate that the above is,
Policy: Such a provision for extension not infrequently operates to the advantage of a surety in permitting the bolder, at bis option, safely to give grace to the maker, on the latter’s application; when otherwise, pressure for payment might come inconveniently upon both maker and surety. It is common practice to embody sucb a provision in notes; the clause tends to give currency to the note, and the policy of the law should be in furtherance of the negotiability of such widely used instruments when they fairly fall within the spirit of the provisions of the uniform act. White v. Hatcher, 135 Tenn., 609, 188 S. W., 61; Pemiscot County Bank v. Bank, 132 Tenn., 152, 177 S. W., 74.
