LETTERS OF CREDIT 19 Sumining up the Anglo-American cases, may we not say: First: The orthodox theory undoubtedly is one of an ofifer, becoming a contract when the addressee complies with its terms. This theory meets most of the cases of the past well enough, but fails in those cases in which the issuer has been held although he revoked before the terms had been complied with or although they had not been complied with. Second: The guarantee theory involves too many difficulties and is unsatisfactory, so that courts have inclined not to use it even when the instrument in form called for it. Third: The theory of a contract between issuer and holder for the benefit of addressee has only been suggested in the cases and involves so many difficulties and uncertainties as to be unsatisfactory. Fourth: The theory of estoppel may be made to meet all the cases if we treat the letter as a representation to the addressee that the issuer has money of the holder to his use, and say that he is estopped to deny this representation when the addressee has acted upon it. This is the only view advanced in the books that will meet the cases where recovery was allowed, although there was revocation before the doing of the act prescribed by the letter, or although the pre- scribed acts were not done at all. Fifth: Throughout the cases we may note the courts feeling, more or less subconsciously, that we entertain the thought that it was incumbent on him to inquire into the state of deal- ings between the writer and the usee of the letter, for the purpose of learning whether there was any contingency about it, or whether any change of circumstances between the date of the letter and the advances imder it would affect the liability of the writer." Pollock V. Helm, 54 Miss. 6 (1876). Is not this what is meant by the "guaranty of the credit" of the holder in Lafargue V. Harrison, supra ? "The doctrine of the liability of a party, giving authority to draw, to any bond fide holder of the bill drawn pursuant to such authority, lies at the foundation of the law governing "letters of credit" in the commercial world. ... In this case the plaintiff was a holder ... for valiie, and is not affected by the state of accounts between (holder) and (issuer)." Franklin Bank of Baltimore v. Lynch, 52 Md. 270, 282 (1879). The analogy of money had and received to use of a third person is employed by Marshall, C. J., in Lawrason v. Mason, 3 Cranch (U. S.) 494 (1806). See also Krakauer V. Chapman, 16 App. Div. 115, 45 N. Y. Supp. 127 (1897). There the letter provided for bills at thirty days. One was drawn and paid. Before a bill could be drawn for the remainder of the indebtedness incurred on the faith of the letter, the holder ab- sconded so that the drawing of a further draft became nugatory. The addressee was allowed to recover directly from issuer the amount of the unpaid indebtedness. Here the offer had not been accepted according to its terms; but the issuer had represented that he held funds of the holder to the use of the addressee and the latter was allowed to recover those fimds fo the extent of his interest.
