U.S. Supreme Court
Bell v. Bruen, 42 U.S. 1 How. 169 169 (1843)
Bell v. Bruen
42 U.S. (1 How.) 169
A letter of guarantee, written in the United States, and addressed to a house in England, must be construed according to the laws of that country.
Extrinsic evidence may be used to ascertain the true import of such an agreement, and its construction is matter of law for the court.
In bonds, with conditions for the performance of duties, preceded by recitals, the undertaking, although general in its terms, is limited by the recital.
Commercial letters are not to be construed upon the same principles as bonds, but ought to receive a fair and reasonable interpretation according to the true import of the terms, to what is fairly to be presumed to have been the understanding of the parties, and the presumption is to be ascertained from the facts and circumstances accompanying the entire transaction.
The court will not express an opinion upon a matter of defense which was not brought to the consideration of the court below. chanroblesvirtualawlibrary
The plaintiffs in this Court, who were also plaintiffs below, were merchants and partners, trading under the name and firm of Bell & Grant, and resided in London. The action was brought to recover the value of five several sets of bills of exchange, amounting respectively to £385, £318 12s. 6d., £1,500, £140, and £3,500, which, it was alleged, were guaranteed by the defendant.
At the trial of the case in the circuit court, the defendant pleaded nonassumpsit and the statute of limitations; but the questions arising under the latter plea were not argued, as the opinion of the court, upon the guarantee, was against the plaintiffs.
The facts of the case, according to the evidence, were as follow:
Prior to the year 1830, George W. & H. Bruen, two sons of the defendant, had been carrying on commercial business under the partnership name of G. W. & H. Bruen, in the City of New York. In that year, they failed, and William H. Thorn succeeded to the business of the house, George W. Bruen, one of the former partners, being interested in the business of the said Thorn.
In the year 1831, George W. Bruen also transacted business at New York in the name of his father, the defendant. There was no regular established house in the name of the defendant, although subsequently adventures were conducted in his name. This agency was carried on under two very extensive powers of attorney, which were duly recorded, in New York, throughout the years 1831-1834 and part of 1835, when the defendant was preparing to go to Europe, and the powers of attorney were revoked.
Early in the year 1831, Thorn had credits furnished to him by Bell & Grant upon houses in Trieste, Messina, Leghorn, and Marseilles. On 23 February, 1831, he wrote to Bell & Grant, and among other things said
"My friends in Marseilles might secure many consignments for me if I could put them in a situation to make the necessary advances, and I therefore hope you will oblige me by opening the credit I ask for, and if you require it, Mr. M. Bruen will give you his guarantee. I enclose a letter for Messrs. Archias & Co., which you will forward to
them, should you think proper to open the credit; otherwise I do not wish you to send it, as it relates entirely to this credit, and the manner in which the advances are to be made; it is understood that no more than £2,000 are to be drawn for at anyone time, and that the credit is then to be considered at an end, until your advances are covered by remittances from me, when you will again renew it."
On 22 March, 1831, Bell & Grant acknowledged the receipt of the above by a letter from which the following is an extract:
"We have received, since the above, your letter of the 23d ult., with an enclosure for Messrs. Archias & Co., of Marseilles, which we forward to them today, with a confirmation of the credit you give them upon us to the amount of £2,000, for the purpose of making advances on consignments, and which we will accordingly thank you to have guaranteed to us, as you propose, by Mr. Matthias Bruen."
On 23 April, 1831, Mr. Matthias Bruen, the defendant, wrote the following letter to Bell & Grant:
"New York, 23 April 1831"
"DEAR SIR -- Our mutual friend, Mr. Wm. H. Thorn, has informed me, that he has a credit for £2,000, given by you in his favor with Messrs. Archias & Co., to give facilities to his business at Marseilles. In expressing my obligations to you for the continuation of your friendship to this gentleman, I take occasion to state, that you may consider this, as well as any and every other credit you may open in his favor, as being under my guarantee."
On the same day, 23 April, Thorn wrote to Bell & Grant a letter, from which the following is an extract:
"Enclosed you will find Mr. M. Bruen's guarantee, and as you are now fully secured in any credit you may open for me, I hope you will consider on the propriety of allowing me to make insurance here on any goods that may be shipped for my account."
On 14 June, 1831, Bell & Grant acknowledged the receipt of Bruen's letter as follows:
"MATTHIAS BRUEN, ESQ., New York. -- We are in receipt of your favor of 23 April, guaranteeing the credit opened on behalf of Mr. W. H. Thorn, with Messrs. Archias & Co., of Marseilles, for £2,000, for the purpose of facilitating his business
with that place, and moreover, desiring us to consider, as under your guarantee, also, all credits existing, or that we may hereafter open for said friend, of which we take due note. And we trust that Mr. Thorn, as well as your good self, will have every reason to be satisfied with the confidence which we feel a pleasure in assigning to both of you."
It was given in evidence that from 1831 to 1837, Thorn, by means of the credits opened for him at various places, received consignments from those places, upon which advances had been made, and sent remittances, from time to time, to Bell & Grant, in London.
On 3 March, 1834, Thorn wrote to Bell & Grant as follows:
"I have informed Messrs. R. Anderson & Co. and Messrs. Archias & Co. that the times are such as to render consignments no longer desirable, which I hope will reach them in time to prevent any further draft on you."
On 7 March, 1834, Bell & Grant wrote to Thorn,
"We beg your reference to the foregoing copy of our letter of yesterday, and have only at present to add thereto an extract of what we write today (while communicating with them on other business) to Messrs. Archias & Co., of Marseilles, recommending their refraining from pressing shipments to you on consignment until the State of commercial matters in the United States shall make business more acceptable than under the recent circumstances we may presume it would be to you."
"We trust that the next accounts from your side will be less gloomy, and may enable us, as we shall most readily do in such case, to place business for you on its former footing."
On 24 April, 1834, Thorn wrote to Bell & Grant:
"I have read what you have been pleased to write to Messrs. Archias & Co. on the subject of consignments under advances, which meets my warmest approbation, as you will have seen by my letter of March 3."
On 21 of October, 1834, Bell & Grant wrote to Thorn:
"Messrs. Archias & Co., of Marseilles, having inquired of us, under date 9th inst., whether you had opened a credit in their favor upon us to make advances on shipments to your address, as you had mentioned to them as your intention of doing, and adding that they did so in consequence of the prospect they then
had of influencing a consignment to you; we told them by return of post that although we should be ready at any time to confirm any such arrangement and were yet without your authority to that effect, they might consider themselves at liberty to value upon us for your account to the extent of £2,000 sterling on handing us the customary shipping documents (as we would have been sorry to see such business pass your door for want of the facilities in question), expressing a hope at the same time that they would only grant such advances on property the sale of which, they felt assured by their latest advices, would be of ready sale in the New York market, all of which we trust will meet your entire approbation. We should have extended the credit in question to the former sum of £3,000, but that for the present we conceived you would be better pleased with the lesser amount; you have, however, only to let us know your wishes in this respect to insure our conformity thereto."
On 31 October, 1834, Thorn wrote to Bell & Grant:
"I have to request that you will open the following credits for my account: To Messrs. R. Anderson & Co., Gibraltar, for the purpose of making advances, per my account, £4,000, to Messrs. Archias & Co. for the same purpose, £4,000; to Messrs. Francia, Brothers and Co., of Gibraltar, £2,500."
On the 3d of December, 1834, Bell & Grant wrote to Thorn:
"We have now the pleasure of acknowledging the receipt of your much esteemed favor of 31 October, in compliance with which we have immediately increased the credits already opened for your account with Messrs. Robert Anderson & Co., of Gibraltar, and Messrs. Archias & Co., of Marseilles, to the sum of £4,000 each, and opened fresh ones of £2,500, say two thousand five hundred pounds, in favor of Messrs. Francia, Brothers and Co., of Gibraltar, to enable them to grant advances on consignments to you from thence and from Malaga."
"And it is moreover understood that so soon as the credits in favor of the three first-named houses have been used and remitted for by you, we are to reopen the same accordingly, which shall be attended to."
One of the bills upon which the suit was brought was drawn under the above credit by R. Anderson & Co. upon the plaintiffs, chanroblesvirtualawlibrary
dated on 16 December, 1836, for £318 12s. 6d., at ninety days after date, which bill was paid by the plaintiffs.
On 31 March, 1836, Thorn wrote to Bell & Grant:
"I have sold a large parcel of San Lucas wine, consigned to me by Messrs. La Cave & Echicopar, per Lurin, which may lead to further shipments, and as they will require a credit opened to enable them to make advances, you will please authorize them to draw on you, on the usual conditions, to the extent of £2,500, say two thousand five hundred pounds."
Another of the bills upon which the suit was brought was drawn under this credit by La Cave & Echicopar upon the plaintiffs, dated on 22 November 1836, for £385 sterling, which was paid by the plaintiffs at maturity.
On 15 August, 1836, Thorn wrote to Bell & Grant:
"I intend to send a vessel to Smyrna for an assorted cargo, and will thank you to open a credit to Messrs. G. Amac, Zipcey and Co., to that place, to the extent of £3,500."
Two other of the bills upon which the suit was brought, were drawn upon the credit thus opened, by Amac, Zipcey and Co. upon the plaintiffs, dated on 7 January, 1837, one for £1590, and the other for £140, which were paid at maturity.
In November, 1836, the defendant went to Europe, and did not return until the following August. During his absence he was in London, where he saw the plaintiffs several times.
On 16 February, 1837, G. F. Darby, the agent of the plaintiffs residing in New York, drew bills of exchange upon them to the amount of £4,000 sterling, which bills he loaned to Thorn, upon collateral security and the guarantee of G. W. Bruen.
On 8 March, 1837, Thorn wrote to Bell & Grant:
"As this remittance will very nearly balance my old account, I have prevailed on Mr. Darby to open me a credit similar to the last, and on the same conditions, for £3,500, which shall be punctually provided for on 8 May next, if not sooner."
On the same day, four of the bills upon which the suit was brought were drawn upon the credit thus opened, which amounted, in the whole, to £3,500, and were accepted and paid when due by the plaintiffs. These bills were guaranteed by George W. Bruen, the same person who had guaranteed the loaned bills for chanroblesvirtualawlibrary
£4,000, and who at this time was in good credit and could have raised £4,000 on his notes.
On 10 April, 1837, Thorn failed and was insolvent and the means of his house exhausted.
On 26 November, 1839, Grant, then in New York, wrote to the defendant, applying to him for the balance due to his London firm and saying
"Any further explanation you may require I am ready to give, but I must request your attention in the meanwhile to the above claim, which I make under your letter of guarantee to Bell & Grant, for any credits they might open in favor of Mr. Thorn, and of which letter I sent you a copy, at your request, last February twelve-month."
In the trial of the cause in the court below, the plaintiffs proved by the evidence of one Schenck that he was for many years the cashier of Bell & Grant, and greatly in their confidence; that he was well acquainted with their daily mercantile operations; that as well from his perusal at the time of the letters which were received and written by them on the subject of their account and transactions with Thorn as also from various conversations which he had with them and the directions which he received with regard to the bills, he had no doubt whatever but that the credits given to the various houses who drew the bills were given by Bell & Grant in full reliance on the letter of guarantee which had been written to them by the defendant.
The evidence being closed in the court below, the counsel of the defendant prayed the court to instruct the jury, among other things, as matter of law that the letter of guarantee of April 23, 1831, was void, as not expressing a consideration; that the said letter of guarantee was confined to credits to be opened to the house of Archias & Co. or other houses with whom Thorn might deal at Marseilles, and therefore could not cover the advances upon the bills of exchange given in evidence. And thereupon the judges did declare their opinion and decide as matter of law that by the true construction of the said letter of guarantee of April 23, 1831, the same only embraced credits which should be opened for account of William H. Thorn to the house of Archias & Co. of Marseilles, and that the evidence chanroblesvirtualawlibrary
of the other matters in that behalf proved did not give the said letter of guarantee a more enlarged application, and therefore that the jury ought to find a verdict for the defendant.
To this instruction the plaintiffs' counsel excepted. chanroblesvirtualawlibrary