Schimmelpennich v. Bayard - 26 U.S. 264 (1828)
U.S. Supreme Court
Schimmelpennich v. Bayard, 26 U.S. 1 Pet. 264 264 (1828)
Schimmelpennich v. Bayard
26 U.S. (1 Pet.) 264
In this case the Court confirms the principle established in the case of Coolidge v. Payson, 2 Wheat. 75, that a letter written within a reasonable time before or after the date of a bill of exchange describing it in terms not to be mistaken and promising to accept it is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise.
If the drawees of a bill of exchange who refuse to honor the hill, and thus deny the authority of the drawer to draw upon them, were bound in good faith to accept or pay the bill as drawees, they will not be permitted to change the relation in which they stood to the parties on the bill by a wrongful act. They can acquire no right as the holders of the bill paid supra protest if they were bound to honor it in the character of drawees.
A bill of exchange was drawn against shipments made to the drawee, but no letter of advice was written by the shipper to the consignees of the property and drawees of the bill, ordering the proceeds of the shipment to be applied to the discharge of the bill, but directions were given to charge the bill, generally to the account of the shipper; held that the drawees were not bound to accept or pay the bill in consequence of the proceeds of the shipment being received by them.
A merchant has a right by the usage of trade to draw on effects placed in the hands of the drawee by shipment, and the consignee must pay the bills if the shipment places funds in his hands.
It is believed to be a general rule that an agent with limited powers cannot bind his principal when he transcends his power. It would seem to follow that a person transacting business with him on the credit of his principal is bound to know the extent of his authority; yet if the principal has, by his declaration or conduct, authorized the opinion that he had given more extensive powers to his agent than were in fact given, he would not be permitted to avail himself of the imposition and to protest bills the drawing of which his conduct had sanctioned.
This action was instituted in the Circuit Court of the United States, for the Southern District of New York, upon nine several bills of exchange drawn at Baltimore at sixty days sight by John C. Delprat on the plaintiffs, carrying on business under the firm of N. & J. & R. Van Staphorst, merchants in Amsterdam, and endorsed by the defendants.
The cause was tried in April, 1825, and a verdict taken for the plaintiffs for $32,275.95, being for the whole amount of their claim, subject to the opinion of the court upon a case agreed.
The judges of the court below, having divided in opinion
on the following points, the same were certified to this Court, and the cause was argued upon the case agreed and the points upon which there was a division of opinion by the judges of the circuit court.
1. Whether the authority of J. C. Delprat to draw upon the plaintiffs did or did not amount to an acceptance of the bills.
2. Whether the bills paid by the plaintiffs, supra protest, for the honor of the defendants, were drawn and negotiated in conformity to the authority and instructions of the plaintiffs to John C. Delprat.
3. Whether the plaintiffs were bound to accept and pay the bills in question, and whether the same having been paid by the plaintiffs, supra protest, for the honor of the defendants, the plaintiffs are entitled to recover the amount of the defendants.
4. Whether J. C. Delprat was a competent witness.
5. Whether the letter, offered by the plaintiffs in evidence and rejected, ought to have been admitted.
6. Whether the plaintiffs are entitled to a judgment on the verdict of the jury.
All the facts, with the correspondence between the parties, which were considered by the court as necessarily connected with a full development of the case are stated in the opinion of the Court.