STATE NAT. BANK OF LINCOLN, N:&BRASKA,
v.
YOUNG.
889
STATE NAT. BANK OF LINCOLN, NEBRASKA,
v. YOUNG and others.
(Oircuit Oourt, D. liebraska. 1883.\ 1. LETTER OF OIlEDlT-WHA1' 18 NOT.
A letter such as the one following, written by/the defendants to the plaintiff, does not constitute a letter of credit: .. CHlCAGQ,
7-23-1880.
"State National Bank, Lincoln, Nebraska-GENTLEMEN: Mr. Dawson, of Dawson & Young, has been to see us, and has explained their business to our satisfaction, and we wish them to continue with us, and we expect to take care of them and pay drafts as heretofore. " Respectfully, W ILLLUI YOUNG & CO." 2. CONTRACT,-AGREEHENT TO ACCE"T DRAFT.
Nor does the same amount to an agreement to aecept any draft's which Dawson & Young, or either of them, might draw on William Young & Co., the defendants. T.o constitute a valid and binding promise to accept the draft .of another, the draft must be described in terms not to be mistaken. 3. S.um-DEPARTURE FROM T.ERM'S. Any departure from the terms of an agreement to acceptthe bill or draft 0 another, will not bind the party sought to be charged as acceptor.
Demurrer to Petition. Mason &; Whedon, for plaintiff. Bisbee, Ahrens et Hawley and Field ct Holme" for defendants. DUNDY, D. J. It is stated in the petition that Dawson & Young were largely dealing in and shipping live-stock to Chicago; that generally they consigned the same to William Young & Co., the def(lndants, at Chicago, who were then doing business as commission merchants; that Dawson & Young were in the habit of drawing their drafts on Young & Co. for the stock shipped, and that the same were cashed by the plaintiff at the request of Dawson & Young, and that the same, with one exception, were paid by the defendants; the payment of one was refused, and that the same was afterwards paid by Dawson; that subsequently Dawson went to Chicago and saw the defendants, and arranged with them for future acceptances, and, pursuant to the arrangement then made, the defendants wrote , to the plaintiff a letter, of which the following is a copy; "CHICAGO, 7-23-1880. "State National Bank, Lincoln, Nebraska-GRNTLEMEN: Mr. Dawson, of Dawson & Young, has been to see us, and has explained their business to our satisfaction, and we wish them to continue with us, and we expect to take care of them and pay drafts as heretofore. "Hespectfully, YOUNG &" Co."
890
FEDERAL REPORTER.
That the said letter was placed in the hands of the officers of the banks; that after the letter had been so received by the plaintiff, Dawson, on the thirty-first of July, 1880, drew two drafts on the defendants, each for the SUIU of $2,000, and on the third of August Dawson drew another draft for the sum of $1,000, all of which were payable at sight; that the said drafts were cashed by the plaintiff, and that. the !3ame went to protest and were never accepted or paid by the .defendants. To this the defendants interpose a general demurrer. , If the letter iri questiot{'''catmot be regarded as an agreement to accept the bills or drafts thereafter to be drawn by Dawson & Young, of -action stated nor as a letter of credit, thentha:re is no good in'thepeti'tion. It lacks the usual fClrmalities, and the indispensable requisites of an ordinary letter'of .so that it is altogether unnecessary to consider it iJ;l that The plaintiff treats the letter a,s an agreement to accept the bills to be drawn by Dawson Young, and as'sucl). we will consider it, because there is nothing of the letter, that would in any stated int,he petition, way tend to fix any liability on the defendants. Questions of this sort were quite frequently discussed in theaeveral courts of this Uni.on down to the year 1817, when a decision of the first importance a:J;l.dpy the hIghest authority was finally made. The English cases upon the subject in hand were fully by the, court, a.nd, though perhaps not uniform, the prin.ciple .settled thereby was adC?pted by our own court, to which it has ever since adhered. The rule deduced from those cases, and which and applied in the first of the leading cases decided in this was country, isH 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,ifshown to the person who afterwards takes the bill on the credit ofthe1etter, a virtual acceptance binding the person who makes the promise." Coolidge v. Payson, 2 Wheat. 66.
The rule here enunciated has been repeatedly recognized and followed by the supreme court, and its soundness is now believed to be unquestioned. Schimmelpcnnich v. Bayard, 1 Pet. 264; Boyce v. Edwards, 4 Pet. 111. This being the rule, it follows that a letter, to bind the writer in such cases, be written within a reasonable time before or after the date of the bill to be accepted. The letter must describe the bill in
STATE NAT. BANK OF LINCOLlil' NEBRASKA, V. YOUNG.
891 . .
terms not to be mistuken. The letter must contain a p'l'olnise to Buch a bill. The letter must be shown, 0'1' its contents made known to, the p!t'l'ty for whom it was intended. And the party for whom the letter , was intended must have taken the bill 0'1' advanced his money on the CREDIT OF THE LETTER, and not otherwise. We must apply this rule
to the letter described in the plaintiff's petition, and determine the character and value 'and efficacy of the letter by that standard.
The letter bears date the twenty-third of July, 1880, and was, placed in the hands of the officers of the plaintiff bank soon afterwards, and before the bank cashed any of the drafts. The drafts were drawn on the thirty-first of July and the third of August, re,spectively. That would seem to be within a reasonable time after the receipt of the letter by the bank, and it is not made to appear how any injury could result to the defendants by mere lapse of time be-, tween the date of the letter and the cashing of the drafts. But this is not where the real difficulty is to be found. It is stated that "Mr. Dawson, of Dawson & Young, has been to see us, and has explained their business to our satisfaction, and we wish them' to continue with U8." SO far there is nothing about the letter of a dubious or uncertain character, or that could deceive or mislead anyone. But it is further stated, "and we expect to take care of them and pay drafts as heretofore." Just how they were to be taken care of does ,not appear by the letter, nor by averment in the petition. The letter states that they ,expect to pay drafts as heretofore. But how did they treat them "heretofore?" As stated in the petition, by paying pari, and by refusing to accept or pay the other part. If, then, the letter had contained an unequivocal promise to pay "drafts as heretofore," would a prudent man be likely to rely on suoh a promise, knowing at the time that a part only of such drafts had been paid, and that at least one theretofore had been repudiated by the drawee. Would he be likely to part with his money on the faith of such a letter? Ordinary prudence, it seems to me, would stop short of ma.king advances under such circumstances. But the great trouble and inherent difficulty about this letter is, it contains no agreement or promise to payor acceJ.'lt the drafts of Dawson & Young. It is simply stated: "We expect to · · · pay drafts ss heretofore." That is not enough. There is no promise to pay any drafts "as heretofore." There is no draft or drafts described in "terms not to be mistaken." In the absence of such description and a promise to pay, no liability attaches. To say, "We expect to pay drafts as heretofore," is not equivalent to saying, "We agree to pay drafts as heretofore." -To hold other-
892
wise would be doing violence to language and principle a.like. There may have been many and good reasons for expecting to pay the arafts, while in reality the apparent reasons were unreal and i]usory. However this may be, I am of opinion that the defendants did not promise to accept or pay the drafts described in the petition, and t!J1l t they incurred no liability by writing the said letter; and that they reserved to themselves the right to refuse payment or acceptance of all the drafts described in plaintiff's petition. There is another point which might be fatal to the plaintiff's right to recover, even if we could regard the letter as an absolute promise to pay the drafts of Dawson & Young. The fair construction to be placed on the letter would lead us to conclude that the writer had in his mind the drafts of Dawson & Young, which they expected to "pay asheretofore." The drafts actually repudiated by the defendants were not drawn on them by Dawson & Young, but by Dawson alone. So if the letter had fully described the drafts to be drawn by Dawson & Young, and the defendants had promised to accept and pay them when so drawn, still I think even then they would be under no sort of legal obligation to accept and pay the drafts drawn by Dawson alone. It seems unnecessary to elaborate, as the correctness of this proposition, it is submitted, cannot be controverted. The demurrer is sustained.
DoTY,and others
'l'.
LAWSON,
Jr., and others, Adm'rs, etc.
(Oircuit Oourt, E. D. Wisconsin.)
L
COUNTER-CLAm-BREAOH OF CoVENANT-ACCEPTANCE OF CONTRACT WITH KNOWLEDGE OF COVENANTEE.
A party who purchases property by aD instrument of Bale under seal, in which it is covenanted that a corporation from whom the seller acquired the propcrty should fulfill its certain covenant in regard to the construction of a canal as therein specified, cannot, in an action for the unpaid installments of the purchase money, set up as a counter-claim the failure of such corporatIOn to construct the canal according to specification, if such canal had been accepted by the seller, previous to the time of entering into the contract of sale, with the full knowledge of the purchaser. 2. OF UNITED STATES,
The erection by the United States of a dam injuriously affecting a 'Waterpower conveyed by an instrument in which it is covenanted that the corporation from whom the seller acquired the property" should not construct, or allow to be c'onst/'Ucted, a dam or other improvement" below such water.