Pollock v. Helm

Sime.all, C. J., delivered the opinion of the court. W. A. Pollock brought his action against Helm and Ode-neal, bankers and brokers, doing business under the name of the Capitol State Bank, for failure to accept and pay a draft of $150, drawn by Mrs. Willie G. Wills in his favor, and upon which he advanced the money. The declaration avers that the defendants were under obligation to honor the draft, because of their letter of the following tenor, addressed to Mrs. Wills: “Dear Madam, — Your favor of the 19th inst. just received. You are authorized to draw on Mr. N. G. Nye for the sum of three hundred dollars, placed with Judge Nye for your account by M. W. Richardson. Any amount you may wish to draw on N. G. Nye we will pay you the money for it here, with usual exchange. Yery respectfully, “ Tnos. E. Helm, Brest. “ Mrs. Willie G. Wills, at home.” On the trial of the case (before the judge alone, the jury being dispensed with), the defendants were permitted by the testimony of Mr. Helm, against the plaintiff’s objection, to prove not merely the circumstances attending the issuance of the letter, to aid in its interpretation, but that it was not given or intended to be a letter of credit, nor as authority to Mrs. Wills to draw any bill or draft, &c.; but was written to give Mrs. Wills information received from Mr. Nye, in response to an inquiry which the defendants had made at her request; and that it was a mere matter of accommodation, and was not intended by Mrs. Wills and the defendants, at the time, to be any thing more than matter of information. [5] The witness was also permitted to prove by the letters of Judge Nye, written subsequently to the letter of credit, that Mrs. Wills did not have funds in his hands to the amount of $300. A letter of credit is a paper well understood in the business and commercial world. If 'addressed to a particular person, who advances goods or money upon it in accordance with, its tenor, then the letter becomes an available promise in favor of the person making the advance. The question has been agitated, especially in the English courts, whether, if the letter is a general one, not addressed to a particular person, it becomes, as it were, a floating contract, designed to circulate as a sort of negotiable contract, for the benefit of any one, who will act upon it and advance money or goods ; or whether the remedy is confined exclusively to the original parties,— the writer of the letter, and the party for whose use it was given. In this country, it has become settled law that such general letter, when acted upon and advances have been made in accordance Avith it, creates a contract between the party loaning money, credit, or property, and the writer of the letter, AAdfieh will be the subject of direct suit and remedy. If the engagement be to accept and pay bills of exchange, the party to Avhom such bills are negotiated, and who cashes them on the faith of such letter, if he cannot treat the promise of the writer of the letter as an acceptance of the bills, may regard it as a promise direct to himself to accept and pay, and upon Avhieh he may maintain an action. A general letter of credit is, on the part of the writer, a proposal to come under certain obligations Avith any person Avho will deal with the party for whose use it is given. It is intended to be shown and offered to one and another; and, whenever it is accepted and advances are made on its faith, there springs up at once a direct privity between the writer and him who advances, so that the former is bound to the latter to comply with its terms or answer in damages. Russell v. Wiggin, 2 Story C. C. 213; Adams v. Jones, 12 Pet. 207, 212; Story on Bills, § 462. When the letter is addressed to all persons, it is an open proposal to everybody to accept and act on the proposal; and when an individual dues accept the [6] offer, and. parts • with money or property in accordance with its tenor, there is a consensio mentium and a direct contract between these parties. Birckhead v. Brown, 5 Hill, 634, 642 ; Watson v. McLaren, 19 Wend. 557; s. c. 26 Wend. 425. The advances are made on the credit of the writer of the letter, and not of him for whose use it was given, f Any one to whom such letter might be shown in the course of business, as the predicate of a transaction, would infer, and would be justified in the belief, that the writer had agreed to be bound for the usee of it, either for his accommodation or because he was indemnified by effects in hand, or upon some good consideration, and would not entertain the thought that it was incumbent on him to inquire into the state of dealings between the writer and the usee of the letter, for the purpose of learning whether there was any contingency about it, or whether any change of circumstances between the date of the letter and the advances under it would affect the liability of the writer. Russell v. Wiggin, ubi supra. Is the letter of Mr. Helm, president of the Capitol State Bank, a general letter of credit within the purview of these authorities ? The fair import is, You, Mrs. Wills, have authority to draw on N. G. Nye for $800. For any part of this sum you may wish to draw for on Mr. Nye, we will pay you the money for it here. It is as if he had said, Wherever you may be, and to whatever banker or capitalist you may show this, we agree, if any party will buy a bill or bills drawn on Mr. Nye, we will pay it or them, at our bank, to the extent of $300. The proposal is without contingency or condition. The only inquiry that would be made is, whether Helm and Odeneal are solvent and in good credit. If satisfied on that point, a party advancing monej'- to Mrs. Wills would take the bill without regard to her solvency, even if she were known to be insolvent. It does not differ at all from the case of a drawee assuring the payee that he will accept and pay the drawer’s bill or bills, in his favor, for $300. If that answer were returned to a verbal inquiry, it would not be controverted that the drawee would be' bound by it. Nor is this letter distinguishable from that where a party writes to a banker to know [7] whether he will pay a bill for $150, which W. offers to sell him, and the banker replies that he will. In such case, the banker will not be relieved by proof that after the answer had been given the circumstances had entirely changed, and that the fund to which he looked for reimbursement had been exhausted. There is no foundation for the suggestion of counsel that there was no consideration for the promise in the defendants’ letter, which was accepted and relied on by Pollock. There was a benefit conferred upon Mrs. Wills by giving her credit to obtain the money at any place that suited her convenience; and this advantage to her is a sufficient consideration. It is just as good if the benefit inures to a third person interested in the subject-matter as if it accrues to the promisor, as the promise of A. to pay B.’s debt to C. if he will forbear to sue, and the promise of a party who undertakes as surety for another. Russell v. Wiggin, ubi supra, per Story, J., arguendo. Pollock is not remitted, for the consideration of the defendants’ promise in the letter of credit, to the motives, inducements and dealings between them and Mrs. Wills; with that he has no privity or connection. And though it were true (and we doubt not that Mr. Helm gave a correct version of the affair) that the defendants intended to do Mrs. Wills a kindness and accommodate her, yet a party who has advanced money under their letter is affected by none of those things. Mrs. Wills might not be able to sustain an action against Helm and Odeneal on the facts deposed to by Mr. Helm ; but Pollock occupies a different position, and his rights are to be measured by the fair meaning of the writing on the credit of which he acted. It is not admissible, by verbal testimony, to give to a written contract an import different from the plain and ordinary meaning of its words. Especially ought this rule to apply where the paper is of the nature of a commercial negotiable instrument, to be read, construed and acted upon by strangers, who have no other means of learning its terms and scope except the language which the subscriber uses. We do not think that § 2228, Code 1871, extends to a case like this. Pollock does not stand in the relation of an assignee or indorsee of a bill, bond or note; but, as we have attempted [8] to sbow, is a party direct in the contract with the defendants, which is not controlled or affected by the equities existing between the defendants and Mrs. Wills. We are of opinion, for these reasons, that the circuit judge should not have received the testimony of Mr. Helm, explaining the letter of credit, and giving to it a meaning which its text did not admit of; nor should he have allowed testimony as to circumstances occurring after the letter was issued, tending to show that Mrs. Wills did not have money in the hands of Nye at all, or equal in amount to the bill. We have had some difficulty on the point made by the counsel for the defendants in error, whether the judgment should not stand, although this testimony ought to have been excluded. The very pith and marrow of the plaintiff’s right to recover is, that he was induced to put out his money on Mrs. Wills’ bill, on the faith of the defendants’ letter of credit; and it does not appear by direct evidence that the letter was shown to Pollock, or its contents reported to him. The testimony on this point is not direct and positive, or fully satisfactory. There are two circumstances, however, from which it may be deduced that Pollock bought the bill on the faith of the letter. The first is, that he had possession of it, set it out in his declaration in his verbis, and produced it on the trial. The other is, that the bill is directed to N. G. Nye, care of Capitol State Bank at Jackson, thus connecting itself with, and conforming to, the directions of the letter. For the error indicated the judgment is reversed, and the cause remanded for a new trial.