Hoodless v. Reid

Citations

• 112 Ill. 105
• 1 N.E. 118

Syllabus

<p>1. Payment—giving a promissory note—whether regarded as a payment of the original demand. The giving of a 'promissory note for an open account is prima facie a payment of the account. In such case the original demand is merged in the higher form of security, but it is no actual payment. The note may be returned, and an action maintained on the original cause of action. But this principle as to the giving of the higher security being regarded in any sense as payment, has no application to the giving of a promissory note for borrowed money.</p> <p>2. Same —giving of interest coupon notes—whether a payment of the interest, in respect to power of sale under trust deed as for interest due and unpaid. A borrower of money gave his promissory note for the principal, payable five years after date, with eight per cent interest, payable semi-annually, until the principal sum should be fully paid. The several installments of the interest during the period of five years were further evidenced by ten interest notes or coupons, of even date with the principal note, and attached thereto, and bearing interest after maturity. The principal note was secured by trust deed containing a power of sale in case of default in the payment of any installment of interest, and on default a sale was made by the trustee. It was contended that the giving of the coupon notes, bearing interest, was a payment of all the interest for five years, and hence no sale could be made, under the power, until the principal note matured; Held, that the giving of the interest notes could not be regarded as any payment of the installments of the interest.</p> <p>3. Sale under trust deed—accelerating maturity of debt by nonpayment of installments of interest. Parties may, by contract, make the time given for payment of the principal debt depend upon the prompt payment of the several installments of interest when due, and provide, either in the note, or mortgage securing the same, that a failure to make payment o