Bank of Illinois v. Sloo

| La. | Dec 15, 1840

Martin, J.,

delivered the opinion of the court.

This suit was instituted to recover the amount of ten bills of exchange, accepted by the defendants Sloo & Byrne, the payment of which was guarantied by the other defendants, Shields, Turner & Renshaw, and A. W. & R. M. Haines.

There was judgment against the acceptors, and for ihe other defendants. The acceptors and the plaintiffs appealed.

Acceptors of dra^m^on'fhcir addressed to ttie payees or pm-bills,^are absolute acceptors, tors. ■Where guarantorsreceive no notice of the £ic— ceptanee of the l!e'varióus°l':uivinces made, or bills drawn on it until after their charged1,’by6 the holders or crecT itors.

The facts of the case are these. Sloo & Byrne wrote a jette[. to piajntifis, promising to accept and pay bills drawn on them by A. G. Sloo & Co. of Alton, Illinois, and discounted by plaintiffs, to the amount of fifty thousand doliars_ The other defendants, by an endorsement on said letter, guarantied the payment of such bills as might be drawn in pursuance thereof. Bills to the amount of thirty-seven thousand six hundred and thirty dollars were accordingly drawn, discounted and accepted, but protested for non-pay-merit. The defence of the acceptors is, that they are guarau(,ol's onty’ Ibe bills being drawn with the knowledge of the plaintiffs, for the accommodation of the drawers, and that the plaintiffs having doubts of the solvency of the drawers, preyapeci on M'Clintock, one of the partners of A. G. Sloo & Co. to give a power of attorney, on which judgment was confessed for the firm to the plaintiffs, in one of the District Courts of the state of Illinois, for a sum exceeding the amount of the liabilities of the firm to them. That on this judgment property of the firm to the amount of sixty-five thousand dollars, was seized and sold, and afterwards, A. G. Sloo, the partner of M'Clintock, who was then absent, returned and obtained the reversal of the judgment as far as it concerned him; that consequently the debt of the firm, as far as it related to M‘Clintock, was merged in the judgment, and so far as it concerned A. G. Sloo, extinguished by the judgment obtained against his co-partner, which released the latter from ° ' * the original debt, and operated a release of his joint debtor.

The power of attorney under which judgment was confessed, bears date the 20th April, 1837. At that period, all ; r 1 the bills sued upon, bad been accepted, and none of them bad yet become payable. The first was at maturity the 4th an<^ lbe last on the 6th of August; and judgment was confessed the 4th of May, 1837; so that at neither of these two periods, had the plaintiffs any claim against the firm, on ‘ the bills sued on, which at that time, as far as they could be, were duly honored. There can be no discharge, unless the debt was included in the judgment. The plaintiffs should have shown this clearly ; and the facts proven, present a violent presumption that the judgment did not include the amount of these bills. Judgment was, therefore, correctly given against the acceptors.

It is the duty of creditors or holders of bills drawn under guaranty, within a reasonable time after the advances are actually made, to give notice there of to the guarantors, informing them that reliance is placed on their guaranty to insure repayment. A party giving a letter of guaranty, has a right to know whether it is accepted, and whether the person to whom it is addressed, means to give credit or make advances on it or not. It is always with reluctance the court pronounces on the unconstitutionality of laws, and especially those of a sister state, and where the judicial tribunal of the state have pronounced on their validity, this court will recognize them as constitutional.

As to the guarantors, they claimed a discharge on account of the laches of the plaintiffs, who neglected to give them any notice of their acceptance of the guaranty, or of the advances made thereon, until after the dishonor of the bills. Judge Story, in the case of Cremer vs. Higginson et al., 1 Mason 340, expressed his opinion, “ that it was the duty of the plaintiffs within a reasonable time after the advances ivere actually made, to give notice thereof to the defendants, and that reliance was placed upon their guaranty to insure repayment, and if notice was not given in a reasonable time, nor until after a material change in the circumstances of the debtors, such laches of the plaintiffs, was a complete discharge of the defendants from their guaranty.” In the case of Douglas et al. vs. Reynolds et al., 7 Peters, 113, judge Story, in delivering the opinion of the court, said, “a party giving a letter of guarant}', has a right to know whether it is accepted, and whether the person to whom it is addressed, means to give credit on the footing of it or not. It may be most material not only as to his responsibility, but as to future rights and proceedings. It may regulate, in a great measure, his course of conduct, and his exercise of vigilance in regard to the party in whose service it is given.” In the present case, no notice had been given of the acceptance of the guaranty, or of any advances made on it at the lime they were made, nor until the circumstances of the debtors were materially changed by the dishonor of the bills. Judgment was consequently, properly given against the plaintiffs, as regards the guarantors.

An objection was made to the right of the plaintiffs to sue, on the ground of the unconstitutionality of their charter. It was granted after the territory of Illinois became a state, the constitution of which, prohibits the legislature from chartering any bank, except one “State Bank.” The plaintiffs were incorporated under the style of the “ President, Direcors and Company of the State Bank of Illinois.” It is contended that they are not a state bank, because their capital is not wholly the property of the state. It is always with great reluctance that courts of justice pronounce on the unconstitutionality of an act of the legislature. And this reluctance is much increased, when they are called upon to review an act of the legislature of a sister state. The state of Illinois has reserved an interest in this bank. They have styled it “the State Bank.” They do not appear to have chartered any other. The legislature has construed the clause of the constitution referred to, as authorizing the plaintiffs’ charter. A state court has entertained suits under it, the Supreme Court of that state has affirmed the judgment. It does not appear to us that the judge a quo erred in overruling this objection.

It is, therefore, ordered, adjudged and decreed, that the judgment of the inferior court be affirmed, with costs.