Also known as: maturity dates · date of maturity · due date
Written by attorneys — see sources below.
The date specified in a debt instrument on which the principal amount becomes due and payable. In instruments payable in installments without acceleration, default on an installment causes the instrument to become overdue on that date until cured. Absent acceleration or installment structure, the instrument becomes overdue the day after the stated date.
Monarch Pharmaceuticals issued a promissory note to Meridian Motors for laboratory equipment, payable in twelve equal monthly installments. After Monarch missed the sixth installment, Meridian treated the note as overdue. Meridian then refused to accept a later tender of only the missed payment plus interest, insisting the full balance had matured.
Mustafa Mahmoud borrowed from Matrix Technologies under a note requiring monthly interest payments with principal due in a lump sum at the end of three years. When Mahmoud missed two interest payments but remained current on principal, Matrix could not declare the note overdue. Matrix therefore could not accelerate or enforce remedies based solely on the interest shortfall.
Nathaniel Norton signed a promissory note to Northern Bank with principal due in a single lump sum on a fixed date and no installment payments. When the due date passed without payment or acceleration, the note became overdue the next day. Northern Bank could then pursue enforcement remedies available only on an overdue instrument.
The Farmers Cooperative of Arkansas and Oklahoma operated as an agricultural cooperative with roughly 23,000 members prior to its 1984 bankruptcy filing. To fund its general business operations, the Co-Op issued promissory notes payable on demand by the holder. These notes carried no collateral or insurance but featured a variable interest rate reset monthly to remain above rates offered by local banks and savings institutions. The Co-Op promoted the notes to both members and nonmembers as part of an "Investment Program," with newsletter advertisements highlighting more than $11 million in assets backing the investments and describing them as safe, secure, and available when needed. After the Co-Op filed for bankruptcy in 1984, more than 1,600 holders possessed notes valued at $10 million in total. Petitioners, a class of these note holders, brought suit against Arthur Young & Co., the accounting firm that had audited the Co-Op's financial statements and the predecessor to respondent Ernst & Young. Petitioners asserted that Arthur Young deliberately deviated from generally accepted accounting principles when valuing one of the Co-Op's principal assets, a gasohol plant, in an effort to overstate the entity's assets and net worth. They further claimed that accurate treatment of the plant in the audits would have disclosed the Co-Op's insolvency and deterred their purchases of the notes. Petitioners succeeded at trial on both their federal claims under the Securities Exchange Act of 1934 and their state securities claims, resulting in a $6.1 million judgment. On appeal, Arthur Young contended that the demand notes did not qualify as securities under either the federal statute or Arkansas law, rendering the antifraud provisions inapplicable. The Eighth Circuit agreed and reversed the judgment. The Supreme Court granted certiorari to consider the federal issue.
View caseMalcolm McKinley held a mortgage note with a fixed maturity date that had passed. When he tendered the full principal plus accrued interest, the lender refused and proceeded with foreclosure. McKinley argued the tender occurred after maturity and therefore satisfied the obligation in full.
Mosinee Paper Corp. is a Wisconsin company engaged in the manufacture and sale of paper, paper products, and plastics with its principal place of business in Mosinee, Wisconsin. Its only class of equity security is common stock registered under the Securities Exchange Act of 1934, with slightly more than 800,000 shares outstanding at all times relevant to the litigation. In April 1971 Francis A. Rondeau, a Mosinee businessman, began making large purchases of the company's common stock in the over-the-counter market, some in his own name and others in the name of businesses and a foundation known to be controlled by him. By May 17, 1971, he had acquired 40,413 shares, more than five percent of those outstanding, but did not file a Schedule 13D. He continued purchasing and by July 30, 1971, had acquired more than 60,000 shares. On July 30, 1971, the chairman of the board informed Rondeau by letter that his activity had given rise to numerous rumors and seemed to have created problems under the Federal Securities Laws. Rondeau immediately stopped placing orders and consulted his attorney. On August 25, 1971, he filed a Schedule 13D disclosing among other things his purpose to seek to acquire additional stock to obtain effective control of the company, possibly through a public cash tender offer. He amended the form one month later to reflect more accurately the allocation of shares. On August 27, 1971, the company sent a letter to its shareholders informing them of the disclosures in the Schedule 13D and stating that by his tardy filing Rondeau had withheld information for more than two months in violation of federal law. Six days later the company initiated suit in the United States District Court for the Western District of Wisconsin against Rondeau, his companies, and two banks that had financed some of his purchases. The complaint alleged that they were engaged in a scheme to defraud the company and its shareholders in violation of the securities laws and prayed for an injunction prohibiting voting or pledging stock, requiring divestiture, and for damages. After three months of pretrial proceedings, Rondeau moved for summary judgment. He conceded the violation of the Williams Act but contended it was due to lack of familiarity with the securities laws and that neither the company nor its shareholders had been harmed. The District Court found no material issues of fact regarding his lack of willfulness, concluded that any anxiety suffered was not irreparable harm, and entered summary judgment against the company. The Court of Appeals reversed. It remanded with instructions to enjoin Rondeau and his codefendants from further violations and from voting the shares purchased between the due date and the filing date for a period of five years. The Supreme Court granted certiorari.
View caseMeredith Maxwell structured a series of transactions to avoid reporting requirements on funds due at the maturity date of several certificates of deposit. Prosecutors charged her with structuring to evade the reporting obligation that arose once the maturity date passed. The court considered whether her knowledge of the maturity date established the required mental state.
Waldemar Ratzlaf incurred a substantial gambling debt while playing blackjack at the High Sierra Casino in Reno, Nevada, in October 1988. The casino extended him one week to settle the $160,000 obligation. On the payment date, Ratzlaf returned with $100,000 in cash, prompting a casino official to explain the reporting requirements for cash transactions exceeding $10,000 and to recommend using a cashier's check. The casino arranged transportation and an escort to nearby banks for Ratzlaf. At the banks, Ratzlaf acquired several cashier's checks in amounts below $10,000 from different institutions to prevent the filing of currency transaction reports. He completed payment to the casino using these checks. The Ratzlafs engaged in additional similar transactions two months later, purchasing cashier's checks totaling $98,500 with cash and casino chips. Federal prosecutors charged Waldemar Ratzlaf and his wife Loretta with conspiracy and multiple counts of structuring currency transactions. Following a trial where the jury received instructions on the elements of the offense, the Ratzlafs were convicted on all counts. The Court of Appeals for the Ninth Circuit affirmed the convictions in 1992. The Supreme Court of the United States granted certiorari to consider the proper interpretation of the willfulness element in 31 U.S.C. § 5322(a).
View caseMiles Montgomery granted a mortgage on his commercial property with a fifteen-year term containing an acceleration clause. After default the lender accelerated the full balance, making that date the new maturity. When Montgomery later tendered the full balance, the lender could not refuse payment on grounds the original maturity date had not yet arrived.
In November 1969 the City Bureau of Buildings declared the single-family residence rented on a month-to-month basis for $100 per month by appellants Donald and Edna Lindsey and other tenants from appellee Normet unfit for habitation because of substandard conditions including rusted gutters, broken windows, broken plaster, missing rear steps, and improper sanitation. The tenants requested repairs which the landlord refused except for one minor item. After paying the November rent they withheld the December rent. On December 15 the landlord's attorney sent a letter threatening court action unless the accrued rent was paid immediately. On January 7, 1970, before any state eviction proceedings had begun, the tenants filed suit in the United States District Court for the District of Oregon under 42 U.S.C. § 1983 seeking a declaratory judgment that the Oregon Forcible Entry and Wrongful Detainer Statute, Ore. Rev. Stat. §§ 105.105-105.160, was unconstitutional on its face and an injunction against its continued enforcement. A three-judge district court was convened. It issued a temporary restraining order and ordered the tenants to pay rent into an escrow account during the proceeding. The parties entered a lengthy stipulation of facts, submitted exhibits and depositions, and the district court granted the landlord's motion to dismiss the complaint. The Oregon statute established a summary procedure for resolving disputes over possession of real property. Service of the complaint on the tenant must be not less than two nor more than four days before the trial date. A tenant may obtain a two-day continuance, but grant of a longer continuance is conditioned on the tenant's posting security for the payment of any rent that may accrue if the plaintiff ultimately prevails. The suit may be tried to either a judge or a jury, and the only issue is whether the allegations of the complaint are true. A defendant who loses such a suit may appeal only if he obtains two sureties who will provide security for the payment to the plaintiff, if the defendant ultimately loses on appeal, of twice the rental value of the property from the time of commencement of the action to final judgment. The district court upheld the validity of the statutes under both the Due Process and Equal Protection Clauses of the Fourteenth Amendment. The tenants appealed directly to the Supreme Court, which noted probable jurisdiction.
View caseThe instrument becomes overdue upon default in payment of an installment. It remains overdue until the default is cured. This rule applies when the principal is payable in installments and the due date has not been accelerated.
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No. Unless the due date of principal has been accelerated, an instrument does not become overdue if there is default in payment of interest but no default in payment of principal.
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A contractual provision that cuts off the borrower's right to redeem six months before the maturity date is treated as a clog on the equity of redemption. Courts invalidate such clauses as void against public policy, preserving the right to redeem until foreclosure occurs.
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…a maternity leave policy that required pregnant schoolteachers to take unpaid leave beginning five months before their expected due date. The school board argued that some teachers became physically incapable of performing adequately in the latter stages of their pregnancy, and we accepted this justification for purposes of…