Franklin Bank v. Lynch

Bartol, C. J., delivered the opinion of the Court. This suit was brought by the appellant against the ap — 277 — pellee. The facts of the case were admitted, and so far as material may be thus stated. The appellee, living in Westminster, Maryland, sent to Baer & Co., of Baltimore, the following telegram: Westminster, Md., April 27, 1878. To A. P. Baer & Co., 7 Cheapside, Baltimore: “ You may draw on me for seven hundred dollars.” “Edward Lynch.” The same was received about 2 o’clock p. m. the same day, being Saturday. On the Monday following Baer & Co. drew their draft on the appellee as follows: ($700.) Baltimore, April 29, 1878. “ At sight, pay to the order of ourselves, seven hundred dollars, value received, and charge the same to account of Arthur P. Baer & Co.” To Edward Lynch, Esq., Westminster, Md. On the day of its date, the draft endorsed by Arthur P. Baer & Co., was received by the appellant, and the amount thereof placed to the credit of the drawers, upon the faith of the telegram and the authority thereby given, the same being shown to the appellant. The draft was sent to a Bank in Westminster for collection, and on the 7th day of May, 1878, was presented to the appellee, who refused to pay the same, whereupon it was protested for non-payment. ■ Upon this state of facts, the Circuit Court instructed the jury “ that if they find that the draft was never presented to the defendant for acceptance, and that there was no acceptance of the same by him otherwise than that to be inferred, or implied fr.om the telegram; and that he refused to pay the same when presented to him for that — 278 — purpose, on the 7th of May, 1878, then the plaintiff is. not entitled to recover under the pleadings in this cause, even though the jury may find the telegram was sent by the defendant and received by Baer & Go., and that- the plaintiff knew of the telegram and received the draft and credited the firm of Baer & Go., with the amount thereof, on the faith of the telegram, and of the authority thereby given by the defendant to said firm.” To the granting of this instruction, and also to the refusal of the prayer offered by the plaintiff, the latter excepted. .The plaintiff’s prayer need not now be particularly noticed, as the questions for our consideration arise upon the Court’s instruction. And,y?reL Was the telegram equivalent to an accept^ anee of the draft, entitling the plaintiff to maintain a suit thereon, as on an accepted hill ? It was decided by the Supreme Court in Coolidge vs. Payson, 2 Wheaton, 66, (affirming S. C., 2 Gallison, 233,) “ that a letter written within a reasonable time before or after a bill of exchange is drawn, describing it in terms not to be mistaken, and promising to accept, is if shown to one who takes the bill on the credit of the letter, a virtual acceptance binding the person who makes the promise.” That decision was based upon the cases of Pillans & Rose vs. Von Mierop & Hopkins, 3 Burr., 1663; Pierson vs. Dunlop, Cowper, 571, and Mason vs. Hunt, 1 Doug., 296, decided by Lord Mansfield. ■ It would seem that this is not the law in England at this time, as appears from the opinions of the eminent counsel, Sir Wm. Follett, Sir John Bayley, Sir Frederick Pollock and Mr. M. D. Hill, in 2 Story, C. C. R., 219, 220, and from the case of Bank of Ireland vs. Archer, 11 Mees. & Welsby, 384 m. , But the rule laid down in Coolidge vs. Payson was after-wards re-asserted in Shimmelpenick, et al. vs. Bayard, et al., — 279 — 1 Peters, 264, 288, and in Boyce & Henry vs. Edwards, 4 Peters, 111, 121. It was recognized and approved by this Court in Lewis vs. Kramer & Rahn, 3 Md., 289, and seems to be well established in this country, by the general current of judicial decisions, many of which are cited in Hare & Wallis’ note to the case of Bank of Ireland vs. Archer, 11 Mees. & Welsby, 390, (Am. Ed.) The rule was laid down in Coolidge vs. Payson with great strictness and precision. To construe a promise to accept as equivalent to an actual acceptance, it must be one “ describing the bill in terms not to be mistaken.” In Boyce & Henry vs. Edwards, supra, it was said that “ Courts have latterly leaned very much against extending the doctrine of implied acceptances, so as to sustain an action upon the hill,” and in the same-case it was said that “ the rule laid down in Coolidge vs. Payson requires the authority to draw, to point to the specific bill or hills to which it is intended to he applied, in order that the party who takes the bill may not be mistaken in its application ; ” or in the words of Chief Justice Shaw, the authority to draw, or the promise to accept, ought “ specifically to describe or designate the bill, so as to identify it, and distinguish it from all others,” in order to bring it within the American "cases. Carnagie, &c., vs. Morrison, &c., 2 Metcalf, 406. We refer also to Wildes vs. Savage, 1 Story, 22. Upon the authorities we think it very clear that the telegram of April 27th cannot be deemed and treated as an acceptance of the draft. The telegram does not point to or designate the draft; only the amount for which Baer & Co. were authorized to draw is mentioned, hut in all other respects the telegram is silent, not specifying on what time the draft is to be drawn. • In Wildes vs. Savage, 1 Story, 22, the learned Judgé said that the rule laid down in Coolidge vs. Payson has — 280 — never been held to apply to a bill drawn at sight, or after sight; and assigns very satisfactory reasons why a promise to accept a draft of that kind cannot he deemed or treated as an actual acceptance. We hold, therefore, that this suit cannot he maintained as an action upon an accepted draft, and for the same reason the appellant is not entitled to recover upon the general money counts. The instruction of the Circuit Court refers to the pleadings, this requires us to examine them and to determine the nature and ground of the present suit. This depends upon the construction to he put upon the first count in the narr. If it is to be understood as declaring upon an acceptance of the draft by the appellee, it is clear from what has been said, that the plaintiff cannot recover upon it. But is that the true intent and meaning of the count ? It does not allege an acceptance by the defendant actual or implied, but the ground of the action, as there stated, is that the defendant authorized Baer & Co. to draw a draft on him for $100, and promised that he would pay the said sum to the holder of the draft on the presentation thereof to him, the defendant. It then alleges that in pursuance of said authority, Baer & Co. drew the draft, payable at sight; that the same was endorsed by Baer & Co., and passed to the plaintiff for value, and was received by the plaintiff upon the faith of the authority given to Baer & Co. by the defendant. It further alleges the presentation of the draft to the defendant and his refusal to pay the same. This is not a count upon an accepted draft, hut for the breach by the defendant of his contract to accept and pay a draft, drawn on him by his authority. The declaration would be more technically accurate, if it had averred in terms, the refusal of the appellee to accept the draft when it was presented, and his failure to pay the same at maturity; but we think it is sufficient — 281 — and substantially avers a breach by the appellee of his implied promise to accept and pay the draft according to its tenor and effect. The telegram authorized Baer & Co. to draw on the defendant for $700. The authority did not specify or limit the terms of the draft, or the time upon which it was to he drawn. It is an authority without condition or qualification. There is no evidence of any commercial usage, or other testimony showing that such an authority imports that the draft shall be drawn payable at or after any particular time; nor is there any reason for saying that it did not authorize a draft payable at sight, this is left to the discretion or convenience of Baer & Co., and as the defendant did not impose any limitation or restriction in this respect, we think it must he construed as an authority' to draw the draft in question. Such an authority implies a promise to accept the draft upon presentation, and to pay it at maturity, that is to say, at the expiration of the days of grace, viz., three days after sight. Now the question arises, has the plaintiff a right of action for the breach of that promise ? The only objection that could he urged to the plaintiff's right to sue, would arise from the supposed want of privity between it and the defendant. The promise was made to Baer & Co. , not to the plaintiff. But this objection cannot he supported. It has often been decided that such an authority to draw and promise to accept and pay, inures to the benefit of any bona fide holder of the bill who takes it on the faith of the promise. In such case the import and meaning of the promise is that it is not made exclusively to the drawer of the hill, but is a promise made to any person into whose hands the bill may come bona fide for value; that the same shall he accepted and paid according to its tenor and effect; and such person may maintain an action for the breach of the promise. — 282 — (Decided 15th July, 1879.) ■ This question was ably considered and decided by Judge Story in Russell, &c. vs. Wiggin, 2 Story, 213, and. by the Supreme Court of Massachusetts in Carnagie vs. Morrison, 2 Metcalf, 381, where the subject is treated with great ability in the opinion of Ch. J. Shaw. The doctrine of the liability of a party, giving authority to draw, to any bona fide holder of the bill drawn'pursuant to such authority, lies at the foundation of the law governing “ letters of credit ” in the commercial world, and is well considered in the two cases last cited. In this case the plaintiff was a holder of the draft for Value; Swift vs. Tyson, 16 Pet., 1; Maitland vs. the Citizens’ National Bank, 40 Md., 540, and is not affected byr the state of accounts between Baer & Co. and the defendant; the evidence mentioned in the first bill of exceptions was therefore immaterial, and ought to have been rejected. There is no evidence of fraud, collusion or bad faith on the part of Baer & Co. and the plaintiff, in respect to.the endorsement and delivery of the draft; nor is there -any ground for imputing laches to the plaintiff in presenting the draft for acceptance. ' . For the reasons stated, we think the Circuit Court erred in giving its instruction to the jury, and that the plaintiff’s prayer ought to have been granted. Judgment reversed, and new trial ordered.