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Michigan State Bank v. Pecks.

evidently goes beyond the mere acceptance and payment of such drafts as were addressed to the parties signing ; else why stipulate for payment, since the acceptances by themselves bound them to pay. It is obvious that this portion of the contract was intended to bind both signers to the payment of all acceptances made by either. And the conduct of both parties shows very fully that they so understood the contract, else the bills would probably have been drawn jointly, so as to secure the responsibility of both; and, if not so drawn, and the defendants did not expect to be responsible for the acceptances of Catlin, it is altogether incomprehensible that they should, upon the first application, without objection, have executed their notes for $12,000 of such acceptances.

III. The question whether this was intended to be a continuing or standing guaranty, to the amount of $25,000, if it were not that the parties have so treated it, would certainly be attended with difficulty. The terms used would certainly more naturally incline me to regard it as a single guaranty for $25,000, and there to end. The provision, in allowing Roelofson, Hatch & Co. to draw for such amounts, and on such time as they might require, seems to me entirely consistent with that view. It is simply saying, it need not all be in one draft. But when we find the plaintiffs acting upon it as a continuing guaranty, and the defendants assuming the drafts, without objection, it is impossible to doubt that it was so intended by all the parties. And, as the terms used are altogether consistent with such construction, we think the practical construction given it by the parties must be held binding upon them. It would be strange if it were not so, under the circumstances. After the defendants had given their notes for $12,000, and one of the partners and their cashier had given the fullest assurance that the remainder should be provided for in ten days, without any query or claim of exemption, and the plaintiffs had thus been quieted by such a practical construction of their guaranty, it would be little less than a fraud to allow the defendants to now stand upon the strict and literal construction of the letter. We have found no case where the parties have been allowed to repudiate any such long standing and unequivocal practical construction of their contract. And we are so fully persuaded that it could not fail to be of evil example to allow any such thing, in courts of justice, that

Michigan State Bank v. Estate of Leavenworth.

we shall be slow to adopt any such conclusion without precedent. Douglass v. Reynolds, 7 Peters 113, is a full authority for allowing the practical construction of this contract to define the extent of the terms used.

IV. If it be true that, upon the face of this letter of credit, the drafts were naturally to be made payable at the counting-house of the drawees, which is certainly the common course of business, it is what the parties themselves might surely waive, or they might, in the acceptance, limit the place of payment if they chose so to do. But, having made a general acceptance of the bills, and then executed their notes for $12,000, and given assurance of paying the remainder in ten days, it would certainly now be a remarkable defense to prevail, that the bills were made payable in New York. In practice, it is, I think, not uncommon, where paper is negotiated through banks to assist merchants in making extensive country purchases of produce, to remit funds to the cities where such purchases become available, and where the banks often require most of their funds, which may explain the present case consistently with the understanding of all concerned. The conduct of the parties shows very clearly that the bills were drawn in conformity to the expectation of the parties, and that is such a practical construction of the meaning of the contract as will bind the defendants, the same as if they had accepted these very bills.

Judgment for the sum due.



Letter of credit. Revocation by death of signer. Discharge of


A person holden as surety on a letter of credit will be discharged if, without his consent, after the maturity of the paper, for the payment of which he is holden, the


Michigan State Bank v. Estate of Leavenworth.

holder receive as collateral security for its payment another obligation with other sureties payable at a future time.

The death of a person who has given a letter of credit authorizing another to value

on him to a certain amount for a limited period, and agreeing to accept the drafts drawn, and pay them if not paid by the drawer at maturity, will operate as a revocation of all authority to thereafter draw on him, though the person to whom, and for whose security the letter was given, has no notice of the death, and the period for which the authority was given is unexpired.

Such a letter of credit dated and given in this state to a person in Michigan, speci

fying no place at which the drafts are to be made payable, will not bind the signer to the acceptance, or payment of drafts payable in New York; ISHAM J. (But see same plaintiff v. Pecks ante p. 200.)

APPEAL from the decision and report of the commissioners appointed to examine and adjust claims against the intestate's estate. The facts in the case were agreed upon, and were as follows. A paper of which the following is a copy

Burlington, Vt., 24th December, 1853. " To the President and Directors of the Michigan State Bank.

“ Gents :—We authorize Messrs. Roelofson, Hatch & Co., of “Detroit, to value on us or either of us, through your bank, at any “time before 1st Jan. 1855, for such sum or sums, as they may see “fit, not exceeding in the aggregate at any one time thirty thous“and dollars, and on such times as they may find necessary; and “such drafts, drawn upon us individually or otherwise, we, for val“ue received, jointly and severally agree to accept and pay if not “paid by the drawers at maturity.”

“ W. H. WILKINS, Jr.
“H. W. Catlin,

“H. LEAVENWORTH.” was, at its date, executed by the persons whose names are annexed to it, and sent by the said Catlin to the said Roelofson, Hatch & Co., at Detroit, Michigan, by whom it was duly received, and by them it was, soon after its date, at said Detroit, delivered to and accepted by the plaintiffs. The intestate was only a surety on said paper, and this was known to the plaintiffs at the time they received it. Upon the faith and credit of said paper, the plaintiffs, at the request of Roelofson, Hatch & Co., discounted and paid to them, at Detroit, bills of exchange according to the following table ; Michigan State Bank v. Estate of Leavenworth.

Date of bills. Drawers.

Drawees. Am't.
Mar. 4. Roelofson, Hatch & Co. J. & J. H. Pecks & Co $5,000
May 2.

5,000 Feb. 11.

H. W. Catlin, 2,500 Feb. 25.

4,500 Mar. 10.

2,500 Mar. 10.

2,500 Mar. 11.


Due. When paid,

if paid at all. 1854. - 1854. May 7. May 6. July 5. July 5. May 14. May 16. May 28. May 27. Apr. 12. Apr. 12. Apr. 27. Apr. 27. June 14. June 14.

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$ 25,000

1854 May 8. May 26. June 3. June 3. June 3. June 19. June 18.

$5,000 July 11.

1,000 July 29.
2,000 July 16.
2,000 July 26.
2,000 Aug. 5.
3,000 Aug. 22.

5,000 Aug. 16.
$ 20,000. Not Paid.

The last mentioned seven bills were dated at Detroit, Michigan, made payable at the Empire City Bank, New York, and were duly accepted by Catlin, and were presented for payment when due, and payment thereof demanded, and refused, and were duly protested therefor, and all the parties thereto were duly notified of the dishonor thereof; and said bills had ever been and were still owned and held by the plaintiffs, and were unpaid, On the 10th day of May, 1854, the intestate died at Burlington, where he had theretofore resided and done business, but the plaintiffs had no knowledge or notice thereof, until after the discount of all of said bills.

On the 15th of August, 1854, the plaintiffs applied to Catlin and to the firm of J. & J. H. Peck & Co., who had signed a similar writing in reference to these same drafts, (see ante p. 200)for security in respect of the said bills then overdue and unpaid, when said Catlin executed, and said Pecks & Co. endorsed and delivered to the plaintiffs, (who accepted them,) four notes, for the purposes, and on the terms stated in the receipt executed by the plaintiffs' agent at the time, which notes had ever since been held by the plaintiffs duly protested and unpaid ; said receipt being as follows,

“ Received, Burlington, Vt., August 15, 1854, from H. W. Cat“lin, Esq., 4 notes of $3,000 each, payable at the Bank of the Re"public in the city of New York, “ September, 14-17

$3,000. 24-27

3,000. “October, 4-7

3,000. * 14-17


Michigan State Bank v. Estate of Leavenworth.

“ endorsed by Messrs. J. & J. H. Peck & Co., and W. H. Wilkins,

as collateral security to the payment of certain papers drawn by “Roelofson, Hatch & Co., of Detroit, upon said Catlin and now under protest."

During the time of these transactions, the plaintiffs were located and doing business at Detroit, in the State of Michigan, and the other parties resided at, and did business in said Burlington.

The said Roelofson, Hatch & Co., J. & J. H. Peck & Co., W. H. Wilkins and H. W. Catlin, were jointly interested and co-partners in the business for which the


said bills was used, and were principals, and the intestate was the only surety.

Upon these facts, the plaintiffs claimed to recover the amount due on said seven bills of exchange ; but the county court, November Term, 1855,-Peck, J., presiding, -rendered judgment for the defendant. Exceptions by the plaintiffs.

obtained upon

G. F. Edmunds for the plaintiffs.

I. An open guaranty is binding until notice of its recall is actually given to the party who is acting under it.

Death does not revoke an agency, when that agency is coupled with an interest. If it be not necessary to do the act in the name of the principal, it may as well be done after his death as before. Story on Agency $ 488, et seq.

Suppose a banker in New York issues a letter of credit to a person going abroad, and therein agrees to accept his bills, can it be said that a banker in St. Petersburgh must first ascertain whether the signer of the letter is living, before he can advance money upon it? Such a rule would make an end of commerce between distant places; 12 Mass. 206, Cutts v. Perkins.

II. The taking of the notes mentioned in the case, “as collateral,” did not amount to, or imply, any agreement to extend the time of payment; 2 L. C. in Eq., pt. 2, 385–6; 6 How. 279, U. S. v. Hodge; Ripley v. Greenleaf, 2 Vt. 129.

III. To the objection, that these bills do not come within the contract, on the ground that they were made payable in New York, we answer:

I. There is no limitation in the contract itself; it is a general au

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