ACCELERATION PROVISIONS IN TIME PAPER 763 equities.^^ Otherwise, the marketability of convertible securities would be considerably impaired. However, the promise to deliver documents cannot bind indorsers, and even the maker is sometimes discharged from the conversion obUgation by subsequent events, though still liable to pay money .^^ Probably the exchange of the instrument for the securities before maturity has no more effect than premature payment ^ if the instrument gets into circulation again before the stated maturity, and a bond fide purchaser can recover its value. However, indorsement of the election to convert upon the instrument operates as cancellation and terminates nego- tiabihty thenceforth, even if the indorsement is fraudulently and totally erased.^* A note convertible into merchandise at maturity is negotiable,^^ and the conversion can doubtless be permitted before maturity if the instrument must thereupon be surrendered. However, if goods or labor can be demanded from time to time, the instrument be- comes httle more than a running charge-account with unlimited room for disputes as to the value of the part performances, and should not be considered negotiable.^^ All conversions must be at the option of the holder, and not of the obligor.^ judgment at maturity on behalf of "holder": National Exchange Bank v. Wiley, 195 U. S. 257 (1904), and cases cited. The authorities are divided as to guarantees written on the instrument, 2 Daniel, Negotiable Instruments, 6 ed., § 1776^.
- ^ Citations in preceding note. Contra, Lisman v. Milwaukee, L. S. & W. Ry. Co.,
161 Fed. 472, 475 (Wis. 1908), semble, cited in Gay v. Burgess Mills, 30 R. I. 231, 242, 74 Atl. 714 (1909), semble. But a strong analogy for complete negotiability of the conversion privilege is found in mortgages, which pass with the notes free from equities. See W. E. Britton, "Assignment of Mortgages Securing Negotiable Notes," 10 III. L. Rev. 337. 52 Lisman v. Milwaukee, L. S. & W. Ry. Co., supra; Gay v. Burgess Mills, supra; and Massachusetts cases cited therein. " State V. Wells, Fargo & Co., 15 Cal. 336 (i860). The cases conira are certainly imsoimd. Board of Education v. Sinton, 41 Ohio St. 504 (1885); Branch v. Commis- sioners of Sinking Fund, 80 Va. 427 (1885). " Dinsmore v. Duncan, 57 N. Y. 573 (1874). «* Mosely v. Walker, 84 Ga. 274, 10 S. E. 623 (1889); Preston v. Whitney, 23 Mich. 260 (1871); Hosstatter v. Wilson, 36 Barb. (N. Y.) 307 (1862); McDonell v. Holgate, 2 Revue de L^slation et de Jurisprudence, 29 (Quebec, 1818).
- Dennett v. Goodwin, 32 Me. 44 (1850); contra, Owen v. Bamum, 7 111. 461 (1845).
" Merriwether v. Saline County, 5 Dill. (U. S.) 265 (Mo. 1878).
