American National Bank of Macon, Georgia v. Pillman
| Decision Date | 05 July 1913 |
| Citation | 158 S.W. 433,176 Mo.App. 430 |
| Parties | AMERICAN NATIONAL BANK OF MACON, GEORGIA, Respondent, v. JOSIAH PILLMAN et al., Appellants |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. Charles Claflin Allen, Judge.
Judgment affirmed.
Dawson & Garvin for appellant.
(1) The letter sued on is not a direct promise, but merely a prospective or contingent guaranty and required a distinct notice of acceptance by the bank. The judgment should be reversed for error of the trial court in holding the latter to a binding contract whenever acted upon by plaintiff without regard to whether defendants were ever apprised of that fact or not. Bank v. Goldstein, 86 Mo.App. 516; Bank v. Shine, 48 Mo. 456; Brown v. Rice, 29 Mo. 322; Mfg. Co. v. Isaacs, 144 Mo.App. 58; Plow Co. v. McCullough, 102 Mo.App. 458; Harvester Co. v. Sulser, 78 Mo.App. 670; Sewing Mach. Co. v. Richards, 115 U.S. 524. (2) Defendants' refusal to pay the draft dated July 17, 1909, before plaintiff had cashed it, is equivalent to a withdrawal of defendants' letter of request and promise. Cashing the draft after notice of such refusal did not give plaintiff any cause of action against defendants for refusing to pay said draft. Brown v. Rice, 29 Mo. 322; Weaver v Wood, 9 Pa. 220. (3) In the absence of subsequent agreements the rights and liabilities of parties to any contract become and are fixed when the contract is breached by either party; and the other party cannot recover any damages which could be reasonably avoided by him after knowledge of the others' breach, and evidence of such facts should be admitted. Peck & Co. v. Roofing & Corrugating Co., 96 Mo.App. 212; State ex rel. v McCarthy, 134 Mo.App. 632; Taussig v. M. & L Co., 124 Mo.App. 209; Ice Co. v. Tamm, 90 Mo.App. 189; Vencill v. Railroad, 132 Mo.App. 722; Douglass v. Stephens, 18 Mo. 362; Kansas City v. Morton, 117 Mo. 446; State ex rel. v. Harrington, 44 Mo.App. 297; Coal Co. v. Brick Co., 66 Mo.App. 296; Lewis v. Ins. Co., 61 Mo. 534; 8 Am. & Eng. Ency. of Law (2 Ed.), 605.
Thos. D. Cannon for respondent.
(1) (a) Appellants' letter (Exhibit A) dated July 7, 1909, to the respondent is a letter of credit, of frequent use in commerce, and while not possessing all of the characteristics of negotiability which pertain to bills and notes, partakes of them to such extent as to be necessarily classed as a negotiable instrument. Liggett v. Bank, 233 Mo. 590-598. (b) Appellants' letter of credit dated July 7, 1909, was an original, absolute and direct obligation of the appellants, and no notice of acceptance by the bank was required; it was not such a commercial guaranty as required acceptance. The act of respondent in cashing the drafts of H. T. Montgomery & Co. in reliance upon the letter of credit was an acceptance of appellants' proposal which made a binding contract. Bank v. Stewart, 152 Mo.App. 314; Bank v. Shea, 57 Minn. 180; Lonsdale & Gray v. Bank, 18 Ohio 126, 142; Bank v. Commission Co., 139 Mo.App. 110; Bank v. Bank, 105 Mo.App. 722. (2) The appellants' letter of credit dated July 7, 1909, did not define the quality of the peaches to be shipped, and no duty devolved upon the respondent bank to ascertain before receiving and cashing the drafts drawn by H. T. Montgomery & Co., whether the peaches actually shipped in the six cars, corresponded in quality with those ordered. The contract of respondent bank and appellants must depend upon what took place between them and cannot be affected by the dealings between appellants and Montgomery & Co. Valle v. Cerre's Adm'r, 36 Mo. 575; Bank v. Tayleur, 16 La. 490; Posey v. Bank, 24 Colo. 199; Hall v. Bank, 133 Ill. 234; Union Bank v. Shea, 57 Minn. 180, 187; Lonsdale v. Bank, 18 Ohio 126, 138; In re Agra & Bank, 4 Eng. R. Cas. 612; Beneckle v. Habbler, 58 N.Y.S. 16; Russell v. Wiggins, 2 Story, 213. (3) In the case at bar, the appellants received and accepted the whole six carloads of peaches referred to in their letter of credit, shipped by Montgomery & Co., with full knowledge that drafts had been drawn upon them against the shipment. The letter of credit was never revoked; respondent had a right to reply upon it, and cash the six drafts; appellants cannot be permitted to return the six carloads of peaches or the proceeds thereof, and repudiate their letter of credit by dishonoring the last draft. Hall v. Bank, 133 Ill. 234, 243; Nutting v. Sloan, 57 Ga. 397; 1 Parsons on Bills, 291; Riggs v. Lindsay, 7 Cranch, 500. (4) The court properly denied the appellants the right to introduce evidence to support their counterclaim; it stated no cause of action against the respondent; the appellants well knew that the respondent was a national bank only, and knew that it was not engaged and could not engage in the produce business either as a partner or otherwise. Bank v. Baird, 160 F. 642; Cooper v. Hill, 94 F. 582; Bank v. Wehrmann, 202 U.S. 295; State ex rel. v. Bank, 157 Mo.App. 557; Littleton v. Bank, 63 N.W. 666.
This is a suit on a contract of guaranty. Plaintiff recovered and defendant prosecutes the appeal.
Plaintiff, incorporated for that purpose, conducts a general banking business at Macon, Georgia, and defendants are engaged in the fruit business in the city of St. Louis, under the firm name of Pillman Bros. H. T. Montgomery & Co. were engaged in purchasing peaches in the vicinity of, and shipping them from, Macon, Georgia, to fruit dealers throughout the country. In order to prosecute this business and have constantly on hand available funds, H. T. Montgomery & Co. arranged with plaintiff bank to cash such drafts as might be drawn by them on solvent customers who agreed in advance to honor the drafts when presented for peaches shipped by H. T. Montgomery & Co. to such customers.
H. T. Montgomery & Co. negotiated a sale of six carloads of first-class, merchantable peaches to defendants, Pillman Bros., in St. Louis, and, to the end of receiving immediate compensation therefor, required Pillman Bros. to assure plaintiff bank that they would accept drafts drawn by Montgomery & Co. upon them for the peaches when laden in the cars in Georgia. In accordance with this arrangement, Pillman Bros. wrote plaintiff bank instructing it to honor such drafts as were drawn by Montgomery & Co. on them for $ 1.25 per crate, to the extent of six cars of peaches. This letter contained the further assurances on the part of Pillman Bros. that "We shall protect same at this end and in case we do further business, we will advise you later." The letter was dated July 7th and received by plaintiff bank on July 9th. Though the plaintiff bank immediately acknowledged receipt of the letter, it made no formal acceptance, as if a proposition were contained therein calling for such. A few days thereafter, Montgomery & Co. shipped a carload of peaches to Pillman Bros., and drew a draft with bill of lading attached on Pillman Bros. for the amount due thereon through plaintiff bank, which draft was paid by the bank and the proceeds passed to the credit of Montgomery & Co. On presentment, the draft was duly paid by Pillman Bros. in St. Louis. Subsequent to this and within a few days thereafter, H. T. Montgomery & Co. shipped four other cars of peaches to Pillman Bros. in St. Louis and drew drafts likewise on them for the respective amounts due on each shipment. A bill of lading was attached to each of the drafts. Plaintiff bank paid these several drafts and passed the proceeds thereof to the credit of Montgomery & Co. in their account. Each of these drafts was promptly paid by defendants when presented in St. Louis.
The sixth and last car of peaches contemplated in the original contract of purchase between Pillman Bros. and H. T. Montgomery & Co. was shipped on July 17th. At the time the contract of purchase was made between the parties, Pillman Bros. paid Montgomery & Co. thereon $ 300, which, according to the contract, was to be applied on the purchase price of the last or sixth car of peaches shipped. Upon the shipment of the last car, there remained due, however, to Montgomery & Co. the amount of $ 316.25 from Pillman Bros. Such, together with $ 2.50 protest fee, is the amount involved in the present controversy, for upon the shipment of the last or sixth car, July 17th, H. T. Montgomery & Co. drew their draft, with bill of lading attached, on Pillman Bros. for such balance due, $ 316.25. Plaintiff bank accepted this draft, in accordance with the letter of Pillman Bros. of date July 7th, and passed the proceeds thereof to the credit of H. T. Montgomery & Co. In due course, the draft was presented to Pillman Bros. in St. Louis but dishonored by them and went to protest. Pillman Bros. having declined to pay the draft, though it appears they actually received and accepted the carload of peaches against which it was drawn, plaintiff bank instituted this suit against them to recover the amount paid out by it to Montgomery & Co. at defendants' instance and request.
It is argued that plaintiff is not entitled to recover for the reason it did not formally accept the proposition of Pillman Bros. to protect and pay the drafts which might be drawn against them by Montgomery & Co. through the bank. There can be no doubt that where the instrument relied upon as a guaranty is merely an offer or proposition to make good the default of another with respect to the payment of future advances to be made by the proposed guarantee to the principal of the guarantor, an acceptance of such proposition should be signified within a reasonable time, to the end that a meeting of the minds touching the subject-matter may be revealed. Such, it is said, is a reasonable rule, for it enables the guarantor...
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