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(12 F. (2d) 963.)

informed that full opportunity to make such inspection would be given. It also advised him that the successful bidder would be required to furnish an irrevocable letter of credit in an amount equal to 90 per cent of his bid.

The defendant on November 17, 1922, applied to the Irving National Bank of the city of New York for a letter of credit in the sum of $28,527.12 in favor of G. S. Lavin, then the commanding officer of the Ordnance Reserve Depot at Toledo, against drafts to be drawn by said commanding officer at sight within 60 days from the date thereof, upon invoices in payment of the purchase price of the 1,880 gross tons of scrap, the letter of credit to expire on January 17, 1923. On the day following this application the Irving National Bank issued the letter of credit found in the margin.1

On November 23, 1922, the War Department accepted the defendant's bid and awarded to it the shells scrap and fuse bodies at the agreed price of $16.86 per gross ton. Thereupon defendant paid to the War Department $3,169.68 and also delivered to it the letter of credit above mentioned, and thereafter from time to time defendant took over and disposed of the material which had been awarded to it. The Irving National Bank, acting under direction of defendant, extended the expiration date of the letter of cred

1"Irving National Bank, New York. "Organized 1851. "Cable Address:

""Irvingbank New York.' "Commercial Credit-Import. "November 18, 1922. "Irrevocable Letter of Credit No. 27,439. “Mr. G. S. Lavin, Captain Ordnance Dept., Commanding Officer, Toledo Ordnance Reserve Depot, Toledo, Ohio.

"Dear Sir:-You are hereby authorized to draw on the Irving National Bank, New York, at sight, before sixty (60) days from date, for account of M. Samuel & Son, Inc., New York City, for any sum or sums, not exceeding in all twentyeight thousand five hundred twenty-seven and 12/100 dollars ($28,527.12). Your drafts to be accompanied by invoice covering one thousand eight hundred eighty

it from January 17, 1923, to and including February 1, 1923. It at the same time notified the commanding officer at the Ordnance Reserve Depot at Toledo of the fact of the extension.

The defendant, having received a large quantity of the scrap which had been delivered to it by the commanding officer at the Reserve Depot at Toledo, drew a draft for $20,049.52 in accordance with the terms of the letter of credit, which was purchased by plaintiff at its par value, forwarded to the Irving National Bank for payment, and paid. On January 31, 1923, all the scrap contracted to be sold to defendant had been delivered, and the commanding officer at the Toledo depot presented to plaintiff his draft, dated that day, for $8,038.73, drawn on the Irving National Bank in accordance with the letter of credit, and requested plaintiff to purchase the same, which the plaintiff did, paying him the face amount thereof.

Upon the same day plaintiff purchased the draft it forwarded by mail to the Irving National Bank at New York in a sealed, stamped, and properly addressed envelope, which it deposited prior to 5:30 o'clock in the afternoon in the general postoffice at Toledo. Mail so deposited was, as plaintiff knew, due to arrive in New York at 9:40 o'clock in the morning of the following day, and (1,880) gross tons Stokes trench mortar shells scrap and trench mortar fuse bodies scrap sale No. T D 33, and must be presented in New York not later than January 17, 1923.

"All drafts must be marked: 'Drawn under Irving National Bank, New York, irrevocable credit No. 27,439, dated November 18, 1922,' and the amounts drawn indorsed on the reverse hereof by the negotiating bank. We hereby agree with the drawers, indorsers, and bona fide holders of the drafts, drawn under and in compliance with the terms of this credit, that the same shall be duly honored by the above-named drawees on presentation and surrender of the documents.

"Very truly yours,
"[Signed] "C. Wolff"

for Assistant Manager."

was customarily delivered to the bank and paid prior to 3 o'clock in the afternoon of the same day; but on this occasion it happened that the draft was not delivered to the bank until the morning of February 2, 1923, which was the day after the letter of credit expired. It is alIt is alleged that on receipt of the draft on February 2d the Irving National Bank at once communicated with defendant and requested its authority to pay the amount thereof to the plaintiff, but that defendant declined to consent thereto, and it was returned unpaid to the plaintiff, and is now held by it.

The plaintiff thereupon commenced this suit, alleging that it had no adequate remedy at law, and that a court of equity should compel the defendant either to deliver up and surrender to it the merchandise covered by the invoice accompanying the draft at the time the draft was presented to the Irving National Bank for payment, and which was of the value of $8,038.73, which merchandise defendant would not have obtained, except for the purchase of the draft by the plaintiff, or in the alternative the defendant should be required to account to the plaintiff for the proceeds of the sale in the sum of $8,038.73, with interest thereon from January 31, 1923.

The defendant in its answer alleged that it paid the government of the United States for the merchandise purchased from it by the payment of $3,169.68 cash and the delivery of the letter of credit in the amount of $28,527.12. It further alleged that the purchase by plaintiff of the draft of $8,038.73 was solely for plaintiff's own use and accommodation in the course of its own business, and for its own profit, and not for the defendant's accommodation. It specifically denied that it refused to permit the Irving National Bank to pay the draft herein involved, and alleged that the said bank was at liberty to pay it, if it chose so to do, and it alleged that the plaintiff's remedy, if any, is against the Irving

National Bank, which issued the letter of credit.

The letter of credit was issued, not to the defendant, but to the commanding officer of the Toledo Ordnance Reserve Depot. It authorized him to draw at sight on the Irving National Bank for any sum or sums not exceeding the amount named therein, and the bank thereby expressly agreed "with the drawers, indorsers, and bona fide holders of the drafts, drawn under and in compliance with the terms of this credit, that the same" would be duly honored by it on presentation and surrender of the documents.

The plaintiff is a bona fide holder of a draft drawn by the commanding officer of the Toledo Ordnance Reserve Depot. He had the right to draw it, and the plaintiff purchased it from him, paying him the face amount thereof. It thereby acquired good title to the draft and was entitled to the payment thereof from the Irving National Bank on its presentation to it under the conditions specified in the letter of credit, as modified subsequently by extending the credit "until February 1st." The draft was not presented to the bank, however, until the morning of February 2d, although it was deposited in the mail on January 31st, and would have been delivered to the bank on the following day, before the close of banking hours on February 1st, and so within the time specified in the contract, had it not been for the unusual and unexpected delay in the transmission of the mail, and for which the plaintiff was in no way responsible.

The question which this state of facts raises is whether this unexpected and unforeseen delay in the transmission of the draft by mail, and which was not occasioned by the plaintiff's negligence, and for which it was in no way responsible, excuses the failure to make presentment of the draft on February 1ct.

In Windham Bank v. Norton, 22 Conn. 213, 56 Am. Dec. 397, a case decided in 1852, a bill of exchange was drawn at Norwich, Connecticut,

(12 F. (2d) 963.)

on the defendants, and was payable at a bank in Philadelphia, Pennsylvania. The bill had been accepted by defendants, and they procured the plaintiff bank to discount it, and they had indorsed and delivered it to the bank. The bank deposited the draft in the post office, to be forwarded to Philadelphia. The officials at the post office, by mistake, deposited the mail intended for Philadelphia in mail bags marked for Washington, and while the mail arrived in Philadelphia in time, it was not delivered. there, but was carried on to Washington. Then the mistake was discovered, and the Philadelphia mail was sent back to that city. It arrived too late to permit the presentation of the draft on the day it was due. The court held that the failure to make presentment in time was due to an accident not attributable to the holder, and that presentment on the day following was therefore sufficient, and that plaintiff was entitled to judgment. This was an action at law the plaintiff having sued in assumpsit.

In 8 C. J. 682, the law is stated as follows: "The general rule is that the failure to present a bill or note in due time for payment and to give notice of its nonpayment will be excused by accident or misfortune not attributable to the fault or voluntary act of the holder, that makes it impracticable or impossible to perform such acts, provided the holder makes presentment or gives notice as soon afterward as he is able. However, an accident, a mistake, or an unwarranted interference by mail authorities with a notice passing through their hands in due course of mail is a good excuse for delay, as where by mistake a postmaster misdirects the package of mail matter containing the bill or the note; but if the delay is caused in part by the holder's mistake in addressing the drawee, presentment in proper time will not be excused."

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The rule as above laid down is supported by the authorities. Windham Bank v. Norton, 22 Conn.

213, 56 Am. Dec. 397; Young v. Exchange Bank, 152 Ky. 293, 153 S. W. 444, Ann. Cas. 1915B, 148; Labadiole v. Landry, 20 La. Ann. 149; Jex v. Tureaud, 19 La. Ann. 64; Harp v. Kenner, 19 La. Ann. 63; Moody v. Mack, 43 Mo. 210; Morrison v. McCartney, 30 Mo. 183; Linville v. Welch, 29 Mo. 203; Adams v. Darby, 28 Mo. 162, 75 Am. Dec. 115; Carter v. Jennings, 134 Miss. 263, 98 So. 687.

In 4 Am. & Eng. Enc. Law, p. 365, the law is stated as follows: "Presentment for payment within the regular time will be excused, where it is prevented by circumstances interrupting intercourse, or by unavoidable accident not referable to the negligence of the holder." And on page 366 it is said: "Also where a bill or note is transmitted through the mails for payment, a delay caused by the mistake of a postmaster, as where he misdirects the package of mail matter containing the bill or note, will be excused."

And the Negotiable Instruments Law of the state of New York (Consol. Laws, chap. 38, § 141) reads as follows:

"When Delay in Making Presentment Is Excused.-Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct misconduct or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence."

And in Daniel on Negotiable Instruments, 6th ed. vol. 1, § 654a, in speaking of the transmission of bills of exchange for presentment by mail, it is said to be "undoubtedly legal, customary, and proper to forward them by mail to correspondents or other agents at the place where the drawee is addressed, to be by them presented in due course; and in such cases if by accident or default in the postal service they are not received in due time to be presented at maturity, the delay occasioned is excused, and the drawer

and indorsers are held liable, provided that, when the delay is over, due diligence is exercised in making the presentment afterward."

The delay in making presentment in this case was caused by circumstances beyond the control of the plaintiff, and was not imputable to its default, misconduct, or negligence, and was therefore excusable. In accordance with the authorities, and upon principle, we are alike satisfied that the presentment made to the Irving National Bank was under the circumstances in time, the delay in presentment not being due to the negligence of the plaintiff.

Bills and notes-letter of credtimeliness of draft.

Moreover, if this draft was entitled to days of grace, its presentment on February 2d was in due time in any event. In Daniel on Negotiable Instruments, 6th ed. vol. 1, § 617, in discussing what instruments are by the law merchant entitled to grace, it is said: "And we have no hesitation in saying, in concurrence with the doctrine expressly stated, or to be derived from what is said by Chitty, Byles,

Maxwell, Roscoe, Edwards, Story, Parsons, Kent, and others, that negotiable instruments payable at sight are, and should be, entitled to grace, though there is respectable authority and opinion to the contrary. The weight of authority in the United States is to this effect."

-letter of credit-sight draft

We have no doubt that the draft herein involved is a negotiable instrument, and Mr. Daniel in the secdays of grace. tion above quoted says: "It seems clearly reasonable that bills at sight should have grace, as they are never presented for acceptance but for payment and the theory of indulgence to the drawee, upon which grace is allowed upon drafts payable at a specified time after date, or after sight, would apply with greater force to those payable at sight."

A letter of credit is a letter whereby one person requests some other person to advance money or

give credit to a third person, and promises to repay

Letter of cred

the same to the per- It-what is. son making the advancement. It partakes of the nature of a negotiable instrument. See Liggett v. Levy, 233 Mo. 590, 136 S. W. 299, Ann. Cas. 1912C, 70; 7 C. J. 594, § 237.

The law regarding the sanctity of contracts has been long established and rests upon "a solid foundation of reason and justice." As was said in Dermott v. Jones (Ingle v. Jones) 2 Wall. 1, 8, 17 L. ed. 762, 764, the law requires parties to do what they have agreed to do. "If unexpected impediments lie in the way, and a loss must ensue, it leaves the loss where the contract places it. If the parties have made no provision for a dispensation, the rule of law gives none. It does not allow a contract fairly made to be annulled, and it does not permit to be interpolated what the parties themselves have not stipulated." We shall not depart from that principle.

In this case the contract which the defendants made with the plaintiff's assignor has been fully performed by the latter, but remains in part unperformed by the Irving National Bank, inasmuch as the bank, which issued the letter of credit, acting under defendant's instructions, declined to pay the draft drawn and presented pursuant to its terms. In other words, the defendant wrongfully induced the Irving National Bank to break its contract, which was to pay to the bona fide holder of the draft the amount thereof when presented in accordance with the terms of the aforesaid letter of credit.

The plaintiff has not seen fit to sue the Irving National Bank at law, which it might have done. Instead it has seen fit to bring suit against the defendant, who induced the bank not to comply with its contract. This, in our opinion, it could do, but not in equity, and we will proceed to state our reasons therefor. "Property rights, public and private morality, and liberty itself are inse

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use of a designated perso who may act upon the lett the conditions of liability the letter, if any, are co The primary purpose of s is to assure anyone dea faith of the letter of cr payment, upon complian conditions set forth in the annotation in 30 A.L.R. of Credit, § 1], as to wha a letter of credit. As here specifically pointed out, credit is either special or

In order that a letter of be binding upon the issue must describe the bill to in terms not to be mistake

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