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Michigan State Bank v. Estate of Leavenworth.

The objection which has been taken to the allowance of these bills of exchange, on the ground that Roelofson, Hatch & Co., were not authorized, by that letter of credit, to draw them, payable in the city of New York, is, I think, well taken. This objection affects not only the two last bills referred to, but it equally affects all the bills presented for allowance against the estate. There is no doubt as to the general principle which governs this subject. In 2 Amer. Lead. Cas. 213, 214, it is said that, “nothing is better “ settled than that a promise of acceptance must fail altogether, both “ as an executory contract, and as a virtual acceptance, whenever " the bill to which it is sought to be made applicable falls without “its limits in any material fact; and that the only safe guide is a “scrupulous adherence to the letter of the contract ;” and when the promise of the defendant is put in the form of a guaranty of future drafts, it will give no right of action unless minutely adhered to ; Dobbin v. Bradley, 17 Wend. 422; Birkhead v. Brown, 5 Hill 634; Walworth v. Thompson, 6 Hill 540 ; Murdock v. Mills, 11 Met. 5.

The letter of credit, on the authority of which these bills were drawn, specifies no place at which the bills were to be made payable. They simply agreed to accept and pay such bills as should be drawn on them individually, or otherwise. If the bills were drawn on them jointly, it was a joint agreement to accept and pay them; if they were drawn on either one of them, it was a joint and several engagement, that they should be accepted and paid as they were drawn. It is unnecessary, in this case, to say whether the parties to that instrument were bound to accept and pay bills of exchange drawn payable at the Michigan State Bank, or whether they should be made payable at the place where the drawees resided and had their place of business. Roelofson, Hatch & Co. were authorized to draw through that bank, and probably the parties contemplated that the money was there to be advanced upon

J. observed," where a general authority is given to draw bills “ from a certain place, on account of advances there made, the un“ dertaking is to replace the money at that place.” But, on the other hand, it is clear that, if the bills themselves had been drawn, like the letter of credit, without specifying any place of payment, they

Michigan State Bank v. Estate of Leavenworth.

would have been payable at Burlington, in this state, where all the parties who signed that letter of credit resided ; Chitty on Bills, 172 ; Mitchell v. Baring, 10 B. & Cress. 4. But however that may be, it is sufficient in this case to observe that the drawees were not bound by the terms of that contract to accept bills payable in the city of New York. If Roelofson, Hatch & Co. had authority to draw bills payable in that manner, they had equal authority to designate Baltimore or New Orleans as the place of payment. That is not the legal effect of the contract of acceptance, or letter of credit. If these bills had been drawn on Mr. Leavenworth and presented to him for acceptance during his life, he might have refused his acceptance without any violation of his contract. In the language of Bronson, J. in Birchard v. Brown, 5 Hill 642, he might have said ; " That is not my contract, and so long as he can “ give this answer truly, he cannot be charged with the debt of his “ principal.” The acceptance of those bills would have imposed on him the performance of a duty, and a risk in the transmission of funds, and a liability to damages in case they were protested, which by his agreement he had not assumed. The case of Lanuse v. Baker is an authority on this question. In that case the defendant, who resided in New York, guaranteed the payment of such bills as should be drawn on Tabor & Son, Portland, or himself, at sixty days sight. The bills were drawn on Tabor & Son, Portland, payable in New York. Justice Johnson observed; “ we are of opin“ion that these bills were not drawn in conformity to the assump“tion of the defendant. Merchants well understand the difference 6 between drawing bills upon a specified place, and drawing them “upon one place payable in another. We are not to inquire into “the reasons which govern them in forming such contracts.” The place where Tabor & Son resided, was named in that letter of credit and guaranty, but the place where the bills were to be made payable was not specified; and if making those bills payable in New York, was unauthorized, it was equally without authority that these bills were so drawn. In the case of Ulster County Bank v. McFarlan, 5 Hill 432, it was held that a bill at ninety days after date, was not authorized by a letter of credit giving authority to draw at ninety days. The legal effect of the letter of credit was an authority to draw at ninety days sight, and as the bill created a

Michigan State Bank v. Estate of Leavenworth.

different obligation, the party was not liable for its payment. In that case, as in this, the legal effect of the letter of credit was different from that created by the bill. In the case of Dobbin v. Bradley, 17 Wend. 425, it was held that a party who was liable as surety or guarantor for the payment of the paper of another, when payable at a particular bank, is not liable when no place of payment is specified, though the paper was deposited in that bank, and notice given to the surety. The legal effect of a note payable at a particular place, is different from one where no place is specified, and for that reason the surety was not liable for its payment. Bronson, J. observed that "it was immaterial whether the qual“ification which the party placed upon his liability was reasonable “or unreasonable, or whether it was beneficial to him or not. He “ has a right to judge of that matter for himself. The cases,” he observed, “ speak a uniform language on the subject.”

The acceptance of these bills by Catlin would probably be considered a waiver of this objection, so far as these bills and he personally are concerned. It would not be competent for him to raise that objection after having, by his accceptance, promised to pay them. But that acceptance can have no such effect against the estate of Leavenworth, as he was not a party to those bills, nor is the estate bound by any act of those persons who signed the contract of acceptance with him, to which no assent on their part has been given. The fact that, upon the authority of the same letter of credit, bills had been previously drawn, payable in New York, which were accepted by Catlin, and paid at maturity, will have no effect to render even him liable upon bills subsequently drawn in that manner, whenever on that account he sees fit to refuse acceptance; much less will it have the effect to charge other persons who stand as sureties. The express provisions of that contract cannot, nor can its legal effect be changed or altered by such considerations. The contract is specific in its provisions, and in making the bills payable in New York, it is clearly at variance with its legal effect. Where there is no ambiguity in the language of the contract, the law settles its construction, and defines its legal effect. In such cases, the contract is not open to evidence of extrinsic circumstances for explanation, nor can its legal effect be changed by any practical construction of the parties. This very

Michigan State Bank v. Estate of Leavenworth.

point, as applied to letters of credit, under the authority of which bills of exchange had been drawn, was determined in the case of Ulster County Bank v. McFarlan, 5 Hill 436. In that case, McFarlan had accepted bills at ninety days after date, when he was bound, by the legal effect of his letter, to accept only bills at ninety days sight. Justice Bronson observed, “it would be giv“ ing a new application to the doctrine of estoppel in pais, to hold " that it may govern the construction, or control the legal effect of “ a written instrument. He might accept bills, whether they were " in conformity to the authority or not, or although they might have “ been without the shadow of an authority. The actual acceptance of the bill produced did not furnish any evidence that he deemed " it such a bill as he was bound, by the letter of credit, to pay.In a note to that case it is also observed that even an admission of the party, that the bill was drawn within the letter of credit,

would only go to the construction or legal effect of the letter, and " therefore ought not to operate.” The same doctrine was recognised in Mendock v. Mils, 11 Met. 14. In that case, bills were drawn, under the authority of a letter of credit, which the defendant agreed to accept when accompanied by a bill of lading and an order of insurance. Several bills had been accepted when no such bills of lading or orders of insurance had been forwarded. HUBBARD, J., observed that, “the instructions were limited and express, " and though they accepted most of the bills, on the belief that con“ signments would cover them, yet such acts laid them under no obligation to accept other bills not drawn agreeable to the directions given.” See, also, Parsons v. Armor, 3 Peters 430. Leavenworth bound himself to accept and pay such bills only as were drawn in conformity with the letter of credit, and his estate is liable for any breach of that contract. But it is not competent for those who stood in that contract as principals, by any declaration or by any course of dealing, to vary the terms or legal effect of that letter of credit. But, if it could be done, so far as to bind the principals in that contract, that fact of itself would discharge Leavenworth, or any other person who stood upon that contract in the relation of surety.

We are all agreed that the judgment of the county court must be affirmed.











CIRCUIT Session, in SEPTEMBER, 1856.




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A party is entitled to a charge as to the legal result of such a state of facts as he

claims exists, and his testimony tends to prove.

The recognition, by the proprietors of adjoining lots, of a particular line as their division line, and their acquiescence in it for a period of fifteen years, will establish it and make it thereafter binding, if, during that time, either proprietor had 4 continued, though it was only a constructive possession of his lot.

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