Also known as: promissory notes · note
Written by attorneys · grounded in primary & secondary sources — see below
A written promise by one party to pay a specified sum of money to another party, either on demand or at a definite time, often including interest and other terms such as acceleration or security provisions. The instrument creates an enforceable obligation that may stand alone or serve as the underlying debt secured by a mortgage or other device. Payment or satisfaction of the note discharges the obligation and any related security interest.
Pamela Phillips borrows funds from Peak Performance to purchase land and executes a promissory note promising repayment in monthly installments. She also grants a mortgage on the land to secure that note. When Pamela defaults on an installment, the lender may accelerate the full balance under the note and foreclose on the mortgage because the note supplies the required underlying obligation.
Progressive Healthcare needs capital and its board authorizes issuance of new shares to Penelope Price in exchange for her promissory note promising payment over three years. The board determines the note constitutes adequate consideration. Once Progressive receives the note, the shares are fully paid and nonassessable under the governing statute.
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Pablo Perez signs a promissory note promising to pay Paragon Construction for construction services on a fixed schedule. A sudden regulatory ban prevents Paragon from performing the work. Because the supervening event makes performance impracticable, Pablo's duty to pay under the note is discharged even though the note language did not expressly condition payment on the services.
Parker Phillips executes an international will directing that his estate pay a promissory note he issued to Pioneer Energy before distributing the residue. When Parker cannot sign due to injury, he directs another person to sign his name on the will and the authorized person notes the reason. The will remains valid and the note obligation is treated as a claim against the estate.
Philip Powell pays the final installment on a promissory note held by Perry Pratt that is secured by a mortgage on Philip's warehouse. Upon full payment, Perry must execute and record a satisfaction of the mortgage. The recorded satisfaction clears title because the underlying note obligation has been extinguished.
Peak Performance and Pamela Phillips reach an oral agreement under which Pamela will deliver goods in exchange for a promissory note. Before the agreement is formed, Peak signs a written offer that states the essential terms including the note amount. That signed writing later satisfies the statute of frauds even though it was created before the final contract.
A mortgage or other security device requires a valid underlying obligation, which is typically a debt evidenced by a promissory note. The note may be existing or future and may be defined in the mortgage or by separate instrument. If the note is void or discharged, the mortgage is extinguished or unenforceable.
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Yes. The board of directors may authorize issuance of shares for consideration that includes a promissory note. The board must determine that the consideration is adequate, and once the note is received the shares are fully paid and nonassessable.
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Payment of the full debt, including prepayment when permitted, discharges the note and entitles the mortgagor to a release or satisfaction of the mortgage. Recording the satisfaction clears the public records.
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…U. S. 82 (1971); and Byrne v. Karalexis , 401 U. S. 216 (1971). See also Dombrowski v. Pfister , 380 U. S. 479 (1965). We note, in passing, that Younger and its companion cases were decided after the three-judge District Court decision in this case. Dr. Hallford's complaint in intervention, therefore, is to be…