Case Name: JOHANNESSEN v. MUNROE et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-10-23
Citations: 41 N.Y.S. 586
Docket Number: 
Parties: JOHANNESSEN v. MUNROE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 41
Pages: 586–593

Head Matter:
(9 App. Div. 409.)
JOHANNESSEN v. MUNROE et al.
(Supreme Court, Appellate Division, First Department.
October 23, 1896.)
Letter op Credit—Transper—Estoppel to Deny Validity.
Defendants are estopped to deny that a letter of credit issued by them was for valuable consideration, where plaintiff accepted it from a third person in payment of a debt after defendants had informed him that it was duly issued, and was good for the full amount. Ingraham, J., dissenting.
Appeal from trial term, New York county.
Action by Johannes H. Johannessen against John Munroe and others on a letter of credit. There was a judgment in favor of plaintiff, and defendants appeal. Affirmed.
Argued before VAN BRUNT, P. J., and WILLIAMS, O’BRIEN, and INGRAHAM, JJ.
George A. Strong, for appellants.
Wilhelmus Mynderse, for respondent.

Opinion:
O'BRIEN, J.
In considering this case upon the former appeal, I reached a conclusion, as shown by the opinion (84 Hun, 594, 32 N. Y. Supp. 866). that:
"As to instruments other than promissory notes, particularly instruments in writing, such as special letters of credit, which are neither negotiable nor assignable, in order to charge the maker or withdraw the liability, it is necessary to prove that such instruments were made for a consideration, unless such liability cán be supported by an estoppel. Applying these principles to the case at bar, we 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 Boe's indebtedness,, thus becoming 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 marshaling 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. :S_ 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 house; that it was a good and genuine letter of credit. "
The jury has found that the representations were made to the plaintiff before acceptance of the letter of credit, and that thereafter, and as a consequence, he 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, Neg. Inst. (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. I therefore dissent from the opinion in favor of reversal.
VAN BRUNT, P. J., and WILLIAMS, J., concur.