Carrollton Bank v. Tayleur

Morphy, J., delivered the opinion of the court. The defendants,residing in Liverpool,are sued for a balance on four bills of exchange, drawn on them by James Grimshaw, drawn to the order of and endorsed by U. Bouligny. The plaintiffs allege, that they were induced, shortly after the date and before the maturity of said bills, to purchase and negotiate them upon the faith of a certain letter of credit given to Grimshaw by defendants, exhibited to and deposited with them at the time of such purchase and negotiation; that defendants were bound, under the faith and virtue of said letter of credit, to accept and pay the said bills, but that they refused acceptance and payment of them, although they did afterwards pay certain sums on account of the same ; that they, (the plaintiffs,) have been obliged to pay and take up these bills, which they had negotiated to third persons, together with damages, interest and charges, and that by virtue of said letter of credit, defendants have become bound and liable unto them for the balance due on said four bills, and for damages and interest thereon. The defendants answer, that on the 7th December, 1838, they did by letter addressed to James Grimshaw, give him an open credit for ten thousand pounds sterling,available asoften as his bills drawn on said credit should be covered by satisfactory remittances in bills, specie or produce, so that the defendants should not at any time be brought under acceptance for more than ten thousand pounds sterling beyond the value they [497] might have on hand, and with the understanding that at, or before the close of the season, the probable balance against him, should be remitted for; that they have faithfully complied with all their obligations entered into with the said Grimshaw; that at the time when plaintiffs’ bills were dishonored, defendants were already under acceptance for a sum exceeding ten thousand pounds sterling beyond the value they then had on hand on account of said Grimshaw, and consequently were not bound to accept them. They conclude, by calling for strict proof that plaintiffs did take these bills on the faith of said letter of credit. Upon these pleadings and the evidence adduced under them, there was a judgment below for the defendants. Plaintiffs appealed. The letter upon which the defendants are sought to be made liable as acceptors of the bills sued on, is in the following words, to wit: “Liverpool, 7lh December, 1838.” “James Grimshaw, Esq., New-Orleans.” “Dear Sir. — We have received your letter of the 16t.h of November, advising your safe arrival at New-York.” “We annul the open credit we before gave you for ten thousand pounds, which you did not think sufficiently explicit, and in lieu thereof, we now give you an open credit for ten thousand pounds sterling, available as often as your drafts drawn on said credit shall be covered by satisfactory remittances in bills, specie or produce, so that we be not at any time brought under acceptances for more than ten thousand pounds beyond the value we have on hand on said account; and with the understanding, that at or before the close of the season, the probable balance against you shall be remitted for. We hope this will be sufficient to enable you to do any business to this port which may be likely to turn out to your advantage.” “ We are, dear Sir, yours truly, (Signed) Charles Tayleur, Sons & Co.” It is contended, on the part of the appellants, that when one merchant makes to another such a promise to accept, as that contained in the foregoing letter, it amounts to an ac~ [498] ceptance, and inures to the benefit of third persons, taking bills upon the faith of it, within a reasonable time after the promise is made. It is further contended, that although such a promise to accept be conditional, and though a third person takes the bills, subject to the condition, yet, if the condition be fulfilled, the implied acceptance is as absolute as though never coupled with a condition. In support of these positions, the counsel for the appellants has cited a number of respectable authorities, both English and American. The contract of the defendants was made in England, and the bills were to be made payable there, although drawn in Louisiana ; they were drawn, so far as respects the defendants, with a view to England; for the execution of the contract it should seem, therefore, that their liability should be tested by the laws of that country, but it is a matter of no moment, whether our laws or those of Great Britain are applied, for the Law Merchant of the two countries, is not materially variant on this subject; if there be a difference, we believe that the doctrine of implied acceptances has been carried further in America. In England, it was for some time a matter of doubt, whether a promise to accept a bill not in esse, could be received as an acceptance; subsequent adjudications seem, however, to have done away with the old distinction between bills drawn before and bills drawn after the date of (he promise to accept, but in all the adjudged ‘ ’ , . . cases to which we have been referred, the promise to accept contemplates a specific bill or bills, whether drawn or to be drawn, and no where do we find a general authority to draw 5 to a certain amount without any description by which the bills drawn can be identified, construed into such an acceptance 0f t|ie future bills drawn under it, as to authorize suit against the drawee by third persons. We see, on the contrary, most of the judges in England expressing the regret, t'3at any otb®r act than a written acceptance on the bill itself, has ever been deemed an acceptance. After many decisions in both countries on these collateral acceptances, predicated on the facts of each particular case, the rule has been laid down and settled by the Supreme Court of the United States, [499] in Coolidge vs. Payson, 2 Wheaton 75, it is, “ that a letter written within a reasonable time, before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise.” But this is said by the counsel to be an obiter dictum of the judge, who on that occasion was the organ of the court. We believe, on the contrary, as in fact is expressed in the opinion itself, that this question being considered of much importance to merchants, it was intended to be put at rest, hence the remarkable precision with which the rule was laid down. This question received again the particular attention of the same tribunal in Schimmelpennick et al. vs. Bayard et al., 1 Peters, 284; and in Boyce Henry vs. Edwards, 4 Peters 118, the same rule was again laid down and sanctioned. In speaking of these collateral acceptances, as recognized by frequent decisions in England, justice Lawrence is said to have remarked, “ we should be doing great mischief, if we were to overturn this doctrine.” It is the opinion of this court, that the mischief would be still greater, were we to carry it to the length we are called upon to do in the present case. The injurious effects which would flow from such an indefinite extention of the doctrine, would not be counterbalanced by the pretended mercantile convenience, in which it is said to have originated. When a general authority to draw is given, without any description of the bills to be drawn, the drawee is without the means of distinguishing those which are taken on the credit of his promise from those which are not, and even when the bills have been described, there is still some danger, for the purchaser must take the, risk of the bad faith of the drawer, who may have previously drawn in favor of another person. The rule then, even as laid down, is not free from objection, but such as it is, we are disposed to hold to it, strictly, the purchaser of a bill, who seeks to charge a drawee as acceptor upon a collateral or implied undertaking. 3 Burrows, 1663; 1 East, 105; 4 Idem., 70; 4 Campbell, 393; 2 Wendell, 545; 5 Idem., 414; 3 Peters, [500] 426; Chitty's Ed. of 1839, p. 311-12-13; Bayley Ed. of 1836, p |0g A promise tl accept, content-plates a specific bill or bills, OThtobbe draw™ and not a general authority to draw to a certain a^°UdLcription ofthe bills. In the latter case,it will not be such ceptance'or pro-win t0binde£>the drawee. , * So a letter of credit, within a reasonable time beforeorafterthe date of the bill, describing and promising to accept it, if shown to a person who takes the bill on the faith of the letter,is a virtual acceptance. areUVráwtíe bjind sold to a third person, on a letter of the drawee drawer,allowing itedlilttei available on tionsi'the drawee js under no ob- or implied, to accept the bills, ditshonidbe°addressed to the vanee the funds drawn lheun<ier tiie^ mandatedrawee"'or wr¡ajjh •nandtol’aJ° -with the equities tween'the dráwer and drawee. R 00 action can be maintained on these bills, upder the doctrine of implied acceptances, although carried, perhaps, beyond the proper boundary as remarked by Lord Kenyon, it is difficult to perceive on what principle of law the plaintiffs can sue for the breach of a promise not made to them. No communication is alleged to have passed between them and defendants at the time of their taking these bills. If defendants have broken their promise, they are liable in damages to Grimshaw, but clearly not to every purchaser of his bills, with or without communication of defendant’s engagement or promise to him. Grimshaw, in one of his letters, states to defendants in relation to this letter of credit, “ it does not enable me to sell in bank. The banks require all letters of credit on which they act, to be addressed to themselves, and requests (y,e defendants to send him several credits in blank, which - , might be filled up in favor of particular banks; this the defendants refused to do. It is to be regretted that the simple and, our opinion, only safe course alluded to by Grimshaw, is not always followed. When a letter of credit is thus addressed to the person or bank who advances funds on (he bills jrawn under it., the latter becomes the mandatory of the signer of the letter, and has nothing to do with the equitable circumstances between the drawer and drawee. The plain-d° r)0t ahege dr show any assignment of Grimshaw’s nghts under this letter of credit, nor does any transfer of them result from the sale of these bills or the deposit of the letter; even were *-he plaintiffs allowed to avail themselves of the for the evidence shows him to be indebted to the defendants, hi a sum far exceeding the amount sued for. The opinion just expressed on the plaintiffs’ right of action, supersedes the necessity of examining the other points in this case, which have been so elaborately and ably argued gefore us< It is, therefore, ordered, that the judgment of the Parish Court be affirmed, with costs.