Page:Harvard Law Review Volume 32.djvu/48

14 14 HARVARD LAW REVIEW antee.*^ In other cases what seem on their face to be contracts of guarantee or offers to become guarantor have been treated on the offer theory of letters of credit.^" But courts have not consistently treated such cases as cases of letters of credit.^^ The disadvantages of a guarantee theory are the doctrine as to notice to the guarantor when his offer is accepted by giving credit to the principal/^ re- quirements of the statute of frauds as to the contents of the memo- randum on which one secondarily liable may be charged,^ and the danger of releasing parties secondarily liable in the course of deal- ings with the principal debtor.^ Because of these, the value of letters of credit as instruments of credit would be seriously im- paired if a guarantee theory were to be adhered to, arid the courts Taylor v. Wetmore, supra; cf. Birckhead v. Brown, supra. In Lafargue v. Harrison, the court's proposition that the letter of credit w£is "a guaranty by them of the credit to Mel and Sons during the time and for the amount specified" seems to be an awk- ward recognition of the instrument as a transaction of the law merchant. In effect, the court says to the issuer "you can't say the holder did not have funds with you be- cause you guaranteed to the addressee that he had." A better way of putting it would be that the letter could reasonably be so interpreted, and after the addressee had acted on it, the issuer was estopped. But in this particular case, as the letter was drawn, there is no such representation, nor are there any words amounting to a guarantee of anything. If the court means that the legal effect of the letter was that of a guar- antee, it is holding the letter of credit a self-sufficing instrument without seal or con- sideration. ogous to a general letter of credit"); Lawrason v. Mason, 3 Cranch (U. S.) 492 (1806) ("We will become your security for 130 barrels of com payable in 12 months"); McLaren v. Watson, 26 Wend. (N. Y.) 425 (1841), affirming 19 Wend. (N. Y.) 557 (1838) ("I hereby guarantee payment"); London Bank c. Parrott, 125 Cal. 472, s8Pac. 164 (1899) ("and these presents shall be deemed to be, and shall constitute to you, a continuing guaranty by each of us"); Northumberland v. Eyer, 58 Pa. St. 97 (1868) (written guarantee indorsed on a note, which, said Sharswood, J., "is not distinguish- able from a general letter of credit"); Cheever v. Schall, 87 Hun (N. Y.) 32 (1895) ("I will see you paid"). If Judge Sharswood's proposition is weU taken, does the gen- eral letter of credit stand as a transaction of the law-merchant, requiring no common- law consideration? " Adams v. Jones, 12 Pet. (U. S.) 207 ("I will be security for the pajrment"); Scribner v. Rutherford, 65 Iowa, 551, 22 N. W. 670 (1885) ("if you want anyone on the note I will fix it when I come in"). As to the effect of issuer's death where letter is treated as a guarantee, see Michigan State Bank v. Estate of Leavenworth, 28 Vt. 209 (185s). credit in London Bank v. Parrott, supra. " Cheever v. SchaU, 87 Hun (N. Y.) 32 (1895). " London Bank v. Parrott, supra.
 * ' Lafargue v. Harrison, supra; Walsh v. Bailie, lo Johns. (N. Y.) i8o (1813);
 * " Boyd V. Snyder, 49 Md. 342 (1878) ("This contract of guaranty . . . anal-
 * 2 Adams v. Jones, supra. This led the court to hold the instrument a letter of