## Facts

- Borrowers executed three promissory notes payable in monthly installments from April 28, 1958 through April 28, 1963, with the remaining balance due at the end of that term.
- The notes were secured by real estate and chattel mortgages conditioned on payment “according to [the notes’] terms.”
- Each note included an acceleration clause providing that sixty days’ default in any principal or interest payment would make the entire unpaid balance “due and payable.”
- On February 13, 1959, borrowers tendered the unpaid principal plus accrued interest to the payees before the stated maturity date; the payees refused the tender.
- After the refusal, borrowers intentionally stopped making the monthly payments due February 28, March 28, and April 28, 1959, asserting that their own default automatically accelerated the notes and entitled them to pay off the entire debt early.
- The case came to the state supreme court on transferred questions of law concerning prepayment by tender and the effect of the acceleration clause.

## Issues

1. Whether a borrower may, absent an express contractual provision, compel a lender to accept prepayment of principal (with accrued interest) before the note’s stated maturity, thereby discharging the notes and mortgages.
2. Whether an acceleration clause triggered by a specified period of default is self-executing on default or instead grants the lender an option that requires affirmative exercise.

## Decision

- The court held that, absent a contractual right to prepay, the lender could refuse tender of principal not yet due; the tender did not discharge the notes or the mortgage security.
- The court held the acceleration clause was not self-operating; it conferred an option on the creditors, and the debt did not automatically accelerate solely because the borrowers defaulted.
- The borrowers’ deliberate nonpayment could not be used to force early maturity and compel acceptance of full payment.

## Legal Principles

- A negotiable instrument is payable at the time fixed by its terms; absent agreement, a debtor has no unilateral right to pay principal before maturity.
- Mortgage security is discharged by payment according to the obligation’s terms, or by a legal tender of amounts then due; a tender of amounts not yet due is not a legally effective tender to compel discharge.
- An acceleration clause providing that default “makes” the entire balance due is ordinarily construed as optional for the creditor unless the contract clearly states automatic acceleration; creditor action is required to accelerate.

## Conclusion

The court rejected the borrowers’ attempt to force early payoff: without an express prepayment term, a lender may refuse pre-maturity tender of principal, and a default-based acceleration clause generally requires creditor election rather than operating automatically upon the debtor’s default.


Peter Fuller Enters., Inc. v. Manchester Sav. Bank, 152 A.2d 179 (N.H. 1959)