Court Opinion

ID: 6575790
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:10.090588+00
Date Added: 2024-06-11T15:57:01.408785
License: Public Domain

The opinion of the court was delivered, at the circuit session in September, 1856, by
Redpield, Ch. J.
This is an action by which the plaintiffs seek to recover of the defendants, the amount of certain acceptances of H. W. Catlin, upon a guaranty signed by Catlin and themselves, and addressed to C. C. Trowbridge, President, Detroit, Michigan, in these words, “ Dear Sir — Messrs. Roelofson, Hatch & Co., of Detroit, are hereby authorized to value upon us, or either of rs to the amount of $25,000, in such amount and on such time, *206as they may require, which will be duly honored, and we hereby jointly and severally hold ourselves accountable for the acceptance and payment of such drafts,” signed by the defendants, and by Catlin.
The person to whom this letter was addressed, was, at the time, president of the plaintiffs’ bank. The letter was given to the hands of Roelofson, Hatch & Co., and by them delivered to the plaintiffs, who, upon its credit, discounted the paper in question.
I. The first question made in the case is, that the guaranty does not appear, upon its face, to be intended for the plaintiffs, and that it is not competent to show that such was the intention of the signers, by extraneous evidence. But contracts of this kind have never been held subject to the same rules of construction, in this respect, as negotiable paper. And in regard to such paper, even in this state, it has been decided that it may be sued in the name of the real party to the contract, although his name does not appear upon the note or bill; but the general rule of the commercial law is undoubtedly otherwise.
But in regard to a guaranty of this kind, it follows the general rule of the law in regard to simple contracts, which is, that they may be sued either in the name ot the nominal, or of the real party. And in the case of oral contracts, it has been considered, that it is not important whether the agency of the promissee were known to the promissor, at the time of entering into the contract. And perhaps the rule may be equally applicable to written simple contracts. At all events, there can be no question that where the agency or trust appears upon the face of the contract, thus indicating, an abbreviation or imperfection, so to speak, being, as it were, a call for proof aliunde, that such proof may be introduced as .the basis of giving effect to the contract, by showing the sense in which the terms are used. And, in the present case, the letter of credit being addressed to the person as president, and the proof showing him president of the plaintiffs’ bank, and of no other institution, it renders it certain that it was intended for the plaintiffs’ benefit. If any doubt had arisen upon the proof upon this point, as if he had been president of two banks at Detroit, such doubt might perhaps, properly enough have been solved by further proof upon the point, as to which particular bank the letter *207was in fact addressed. But no such question arises here. The ease of Walton v. Dodson, 3 C. & P. 162, so far as it can be regarded as any authority, being a mere nisi prius case, is certainly in favor of the views we take. A guaranty addressed to one partner, was allowed to enure to the benefit of both, upon the ground that they had acted upon the faith of it, and that it obviously was intended for both. So, too, in this case, a general guaranty, addressed to no one in particular, was allowed to enure to the plaintiff’s use; Gasdee, J., saying, “ Such.a guaranty will enure to the benefit of those to whom, or for whose use it is delivered.” The other cases cited do not seem applicable. The case of Grant v. Naylor, 4 Crunch 224, was where the guaranty was, on the face of it, by mistake, probably, addressed to some other persons than the plaintiffs, and the court held that this mistake could not be set right in a court of law, by oral proof of the intention of the guarantors to address their letter of .credit to the plaintiffs. This is in conformity to the long-established rule of law upon the subject. The case of Hall v. Rand, 8 Conn. 560, 574, does not seem to have any application to this subject. Hossier, Ch. J., there argues against the admission of oral proof as the basis of construction of the written contract, upon the ground that there is no necessity for any such resort, the contract being explicit upon its face, and the proof being offered to give an operation beyond, and inconsistent with its terms. And the case of Walsh v. Bailie, 10 Johns. 180, is where the guaranty was attempted to be applied to transactions altogether one side of its scope.
II. The question whether the guaranty was intended to bind the signers to the payment of drafts and acceptances to which they were not parties, in form, is one of some nicety, and, upon the terms used, not free from difficulty. But, it seems to us that to give effect to all the terms used, which is ordinarily to be done when it can be, we must conclude that something more was intended than an agreement to accept such bills as were drawn upon both, or either of them, and pay such as they had themselves accepted. If this had been all which was intended, it is scarcely supposable that business men, such as those concerned seem to have been, or, indeed, that any one, should have resorted to so much unnecessary verbiage. The last clause of the guaranty *208evidently goes beyond tbe 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.
HI. 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 Eoelofson, 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 pf evil example to allow wy such thing, in courts of justice, that *209we 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 par-: ties shows very clearly that the bills were drawn in conformity to the expectation of the parties, and tKat is such a practical construction of tlpe meaning of the contract as will bind the defendants, the same as if they had accepted these very bills.
Judgment for the sum due.