National Bank of Cleveland v. Erskine & Sons, Inc.
158 Ohio St. 450, 110 N.E. 2D 598
-The note contains a default clause which states if the chattel mortgage securing the note is breached in any respect, the note shall immediately become due at the holder's option without demand or notice.
-Trial court: holds note is a negotiable instrument and submitted to the jury an issue of good faith of the plaintiff.
-Court of appeals reversed. D appeals.
-Is the note negotiable?
Yes, the note is negotiable.
-If the note is not negotiable, than the endorsee takes it subject to all equities and defenses between the original parties.
-An instrument that is payable at a fixed date or before then at the option of the holder, or automatically payable conditioned upon the occurrence of specified acts or events that represent a kind of express or implied default by the obligor of such a nature as to indicate an increased risk to the holder that the instrument may not be paid at the date of ultimate maturity is negotiable.
-A promissory note that contains provisions stating that the holder of the note is empowered to declare the note due and payable before maturity in exercising his unrestrained option is non-negotiable.
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