Case Name: Johannes A. Johannessen, Master of the Norwegian Steamship " Raylton Dixon," Respondent, v. John Munroe and Others, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896
Citations: 9 A.D. 409
Docket Number: 
Parties: Johannes A. Johannessen, Master of the Norwegian Steamship “ Raylton Dixon,” Respondent, v. John Munroe and Others, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 9
Pages: 409–419

Head Matter:
Johannes A. Johannessen, Master of the Norwegian Steamship “ Raylton Dixon,” Respondent, v. John Munroe and Others, Appellants.
Special letter of credit—consideration, in its transfer, to pay a past indebtedness and stop suit thereon — estoppel.
Carston Boe obtained a letter oí credit from John Munroe & Co., upon representations which, as between them, would have entitled John Munroe & Co. to .cancel it, and turned over the same and §500 in cash in payment of an indebtedness to one Johannessen, then about to be put in suit against him, which suit, by reason of such payment, was stayed. Johannessen, before accepting the letter of credit, went to John Munroe & Co., and was informed that it was a good and genuine letter of credit, and then accepted it, and thereupon gave Boe a receipt for his indebtedness.
Held, that since, in consequence of the representation made by the defendant to him, the plaintiff had accepted the letter of credit in payment of an indebtedness for which he had receipted in full, and had thereupon relinquished his then right to legally enforce his claim for such indebtedness, lie Was entitled to recover upon the letter of credit.
Ingraham, J., dissented.
Appeal by the defendants, John Munroe and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 4th day •of November, 1895, upon the verdict of a jury rendered after- a trial at the New York Circuit.
The facts are more fully stated in the dissenting opinion of Ingraham, J.
George A. Strong, for the appellants.
Wilhelmus Mynderse, for the respondent.

Opinion:
O'Bbieií, J.:
In considering tins case upon the former appeal I reached a conclusion, as shown by the opinion (84 Hun, 594), that " as to instruments other than promissory notes, therefore, particularly instruments in writing, such as special letters of credit, which are neither negotiable nor assignable, in order to. charge the maker or drawer with liability,, it is essential to prove that such instruments were made for a consideration, unless such liability can be supported by an estoppel. Applying, these principles to the case at bar, wé think that unless the plaintiff states a good cause of action upon the theory that, as the result of the representations made by the defendants, he accepted the letter in payment of Bo'e's indebtedness, thus bécom-. ing a holder for value and so entitled to avail himself of the terms of the letter of credit, then the dismissal of the complaint was right," (See cases cited.)
Upon the trial evidence was offered, tending to- show that the claim of Johannessen had been placed in attorneys' hands for collection, and upon the strength of the letter of credit, which ' was accepted in payment, legal, proceedings were stayed. And in mar- . shalling the evidence the learned trial judge in his- charge to the jury, to which no exception was taken, said: "*. That, then, Captain Johannessen, having this claim against Boe, came to Butler, Stillman & Hubbard's office and consulted them with reference to his matter with Boe, and that these attorneys, acting for him, wrote a letter to Boe with reference to an indebtedness, and intimated that proceedings would be taken unless the indebtedness was paid. Thereupon Boe .offered $500 in-cash, if I remember the amount right, and this- letter of credit .in payment of the indebtedness then existing, and which was- about to be. enforced, ' that being the difference between the amount of two charter parties of the same- ship, and for which difference Boe was liable. That they (referring to those representing Johannessen) went to the office of John Munroe and had a conversation with Mr. Munroe, in which Munroe stated and. represented that this letter of credit was issued by his housethat it was a good and genuine letter' of credit;
The jury: has found that' the representations were made tó the plaintiff before acceptance of the letter of credit, and that thereafter and as a consequence lie agreed that his attorneys should not proceed legally to enforce the claim, and he thereupon discharged Boe from his indebtedness by- receipt in full. It thus appears that the plaintiff did forego his then right to enforce his claim by legal proceedings and accepted the letter of credit in payment of an indebtedness.
Mr. Justice Ingraham concedes that if this were a promissory note and received under like circumstances by the plaintiff in payment of an indebtedness, which was receipted for and discharged, the plaintiff could recover. Daniels on Negotiable Instruments (3d ed. § 1790) says, with respect to letters of credit: " While not possessing all the characteristics of negotiability which pertain to bills and notes, (they) partake of them to such an extent as to be necessarily classed as negotiable instruments."
The jury having concluded that the representations were made, and it now appearing that the plaintiff, in whose favor the draft was made, received it in payment of an indebtedness, for which plaintiff receipted in full and gave up his then right to enforce it legally, it seems to me that, under the law as expressed upon the former appeal, the judgment should be affirmed.
Van Brunt, P. J., and Williams, J., concurred; Ingraham, J., dissented.