How addressed.

Liability of the writer.

Letter of credit

ral or

special.

latter to give credit to the person in whose favor it is drawn.

S1574. A letter of credit may be addressed to several persons in succession.

S1575. The writer of a letter of credit is, upon the default of the debtor, liable to those who gave credit in compliance with its terms.

S 1576. A letter of credit is either general or spe either gene- cial. When the request for credit, in a letter, is addressed to specified persons by name or description, the letter is special. All other letters of credit are general.

Nature of general Tetter of credit.

Extent of general letter of credit.

A letter of

credit may be a continuing guaranty.

That the mere fact of the letter being addressed to a

particular person does not make it a special letter see Benedict v. Sherrill (Hill & D. Supp., 219); where a letter guarantying the payment of such debts as the bearer might contract for the purchase of goods, was held a general letter, though addressed to a particular person.

3 Union Bank v. Coster, 3 N. Y, 203; affirming S. C., 1 Sand., 563.

S 1577. A general letter of credit gives any person to whom it may be shown, authority to comply with its request, and by his so doing it becomes, as to him, of the same effect as if addressed to him by name.

$1578. Several persons may successively give credit upon a general letter.

Union Bank v. Coster, 3 N. Y., 203; aff'g S. C., 1 Sandf., 563.

S1579. If the parties to a letter of credit appear by its terms to contemplate a course of future dealing between the parties, it is not exhausted by giving a credit, even to the amount limited by the letter, which is subsequently reduced or satisfied by payments made by the debtor; but is to be deemed a continuing guaranty.

Gates v. McKee, 13 N. Y., 232; and compare Fellows
Prentiss, 3 Denio, 512.

notice to

necessary.

$1580. The writer of a letter of credit is liable for when credit given upon it without notice to him, unless the writer its terms express or imply the necessity of giving notice.

Whitney v. Groot, 24 Wend., 82; Union Bank v. Coster,

3 N. Y., 203; aff'g S. C., 1 Sandf., 563; Douglass v.
Howland, 24 Wend., 35; Smith v. Dann, 6 Hill, 543.

S1581. If a letter of credit prescribes the persons by whom, or the mode in which, the credit is to be given, or the term of credit, or limits the amount thereof, the writer is not bound except for transactions which, in these respects, conform strictly to the terms of the letter.

Birckhead v. Brown, 5 Hill, 634, affirmed, 2 Denio, 375.
No other person than the one to whom a special letter
of credit is addressed, can, by acting upon it, create
any obligation against the writer (Birckhead v. Brown,
5 Hill, 634; affirmed, 2 Denio, 375; Robbins v. Bing-
ham, 4 Johns., 476; Walsh v. Bailie, 10 id., 180). If
a special letter is addressed to several jointly, the
credit must be given by all, or the writer is not liable
(Penoyer v. Watson, 16 Johns., 100). The person
to whom a special letter is addressed cannot render
the writer liable upon it by procuring strangers to give
credit to the holder of it (Robbins v. Bingham, 4 Johns.,
476; Walsh v. Bailie, 10 id., 180). A guaranty for six
months' credit does not cover a four months' credit
(Leeds v. Dunn, 10 N. Y., 475).

The credit agree with

given must

the terms of

the letter.

TITLE XIV.

LIEN.

CHAPTER I. Liens in general.
II. Mortgage.

III. Pledge.

IV. Bottomry.

V. Respondentia.
VI. Other liens.

VII. Stoppage in transit.

Although the arrangement of this subject is novel, the commissioners believe that its propriety and advantages will be perceived at a glance. Mortgages are liens, and, under the provisions of this Code, nothing more. They are subject therefore to all the general rules of liens.

CHAPTER I.

LIENS IN GENERAL.

ARTICLE I. Definition of liens.

II. Creation of liens.

III. Effect of liens.

IV. Priority of liens.

V. Redemption from liens.

VI. Extinction of liens.

Lien, what

ARTICLE I.

DEFINITION OF LIENS.

SECTION 1582. Lien, what.

1583. Liens, general or special.

1584. General lien, what.

1585. Special lien, what.

1586. Contracts subject to provisions of this chapter.

1582. A lien is a charge imposed upon specific property, by which it is made security for the performance of an act.

A lien is commonly defined as a right to retain posses-
sion of a specific thing, until some charge attached
to it is satisfied (Story Eq. Jur., § 506; 3 Pars.
Cont., 5th ed., 234). This definition is a very narrow
one, and applicable only to common law liens, exclusive
of mortgages, bottomry and respondentia bonds, &c.
In equity, possession was not essential. There might be
au equitable lien upon a fund or subject in the hands
of another, which could be maintained and enforced
without the lienor's having possession, if the identity
of the subject could be distinctly traced (Grinnell v.
Suydam, 3 Sandf., 132). The commissioners wish to
preserve, under one name, both the common law and
the equitable liens, and have sought to bring under
one head all the general principles which affect liens
by possession or mortgage.

$1583. Liens are either general or special.

Liens, general o special.

lien, what.

S1584. A general lien is one which the holder General thereof is entitled to enforce as a security for the performance of all the obligations, or all of a particular class of obligations, which exist in his favor against the owner of the property.

See McFarland v. Wheeler, 26 Wend., 467; Houghton v.
Matthews, 3 Bos. & P., 485.

lien, what.

S 1585. A special lien is one which the holder Special thereof can enforce only as security for the performance of a particular act or obligation,' and of such obligations as may be incidental thereto."

'McFarland v. Wheeler, 26 Wend., 467.

"Where the holder of a special lien is compelled to satisfy
a prior lien for his own protection, he may enforce
payment of the amount so paid by him, as a part of
the claim for which his own lien exists (Robinson v.
Ryan, 25 N. Y., 320; Bates v. Johnson, H. R. V.
Johns., 304.)

subject to

§ 1586. Contracts of mortgage, pledge, bottomry Contracts or respondentia, are subject to all the provisions of provisions this chapter.

of this chapter.

Lien, how created.

No lien for claim not due.

Lien on future interest.

Lien may be created

ARTICLE II.

CREATION OF LIENS.

SECTION 1587. Lien, how created.

1588. No lien for claim not due.

1589. Lien ou future interest.

1590. Lien may be created by contract.

S 1587. A lien is created:

1. By contract of the parties; or,
2. By operation of law.

S 1588. No lien arises by mere operation of law until the time at which the act to be secured thereby ought to be performed.

Foster v. Colby, 3 H. & N., 705, 718.

S 1589. An agreement may be made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence. In such case the lien agreed for attaches from the time when the party agreeing to give it acquires an interest in the thing, to the extent of such interest.

Seymour v. Canandaigua & Niagara Falls R. R. Co., 25 Barb., 284: but compare Conderman v. Smith, 41 Barb., 404.

S 1590. A lien may be created by contract, to take by contract. immediate effect, as security for the performance of obligations not then in existence.

Robinson v. Williams, 22 N. Y., 380; Murray v. Barney, 34 Barb., 336; Truscott v. King, 6 N. Y., 147; see Fassett v. Smith, 23 N. Y., 252.

ARTICLE III.

EFFECT OF LIENS.

SECTION 1591. Lien, or contract for lien, transfers no title.

1592. Certain contracts, void.

1593. Creation of lien does not imply personal obligation.
1594. Extent of lien.

1595. Existence of lien does not affect the right of creditor.
1596. Holder of lien not entitled to compensation.