Benecke v. Haebler

1. Guaranty—What Constitutes—Letters of Credit. Plaintiffs were requested by prospective consignees to issue a letter of credit to the shipper, by the terms of which they obligated themselves to pay drafts not exceeding a certain amount when drawn by the shipper in payment for the goods, accompanied by bills of lading and original invoice. ' Heidi that plaintiffs were not mere guarantors of the drafts. 2. Banks and Banking—Letters of Credit—Drafts—Acceptance. Neither the request to plaintiffs nor the letter of credit defined the quality of goods to be shipped. The shipper attached a bill of lading and original invoice to a draft, which was accepted by plaintiffs. The consignees received the bill of lading and original invoice from plaintiffs, and issued to them a letter of lien, wherein they agreed to hold the merchandise or its proceeds as the property of plaintiffs until they were repaid the amount of the acceptance. The consignees thereafter refused to accept the goods because the quality was. inferior. Plaintiffs thereafter paid the draft, and took possession of the goods under them letter of lien, and caused the same to be sold after notice to the consignees; failing to realize as much as they had paid out on the draft. Held, that plaintiffs were under no obligation to examine the merchandise before accepting the draft, and hence they might recover the deficiency from the consignees. . 3. Contracts—Breach—Accrual of Cause of Action. A statement made by one who is liable to pay a debt at a future day to the creditor that he will not pay the debt when it becomes due is not such a breach of contract as will support an action before the debt becomes due. 4. Pledge—Sales—Liability of Pledgee. One who holds merchandise as collateral may determine when it shall-be sold, and he is not liable for a depreciation in its market value occurring while it is in his hands.

Appeal from judgment on report of referee. Action by Charles Victor Benecke and another against Theodore Haebler and another. From a judgment in favor of plaintiffs entered on the report of a referee, defendants appeal.