dissenting.
Although I .freely concede that this case is a difficult one and that I agree with much the Court has to say, I must dissent from the Court’s judgment for the reasons noted below.
I agree with the Court that the mere fact that a letter of credit serves a guaranty function does not necessarily render it an ultra vires instrument under Illinois law for the Illinois Banking Act now authorizes state banks to issue certain types of letters of credit and, as the Court observes, every letter of credit is in one sense or another a “guaranty.” Moreover, I agree that, absent a definition of “letters of credit” in the Illinois Banking Act, the definition thereof contained in the Illinois Commercial Code governs the legal characterization of Rock Island’s instrument.
I part company with the Court’s judgment, however, for two reasons. First, Illinois banks draw their authority to issue letters of credit from the Illinois Banking Act and not the Illinois Commercial Code. Accordingly, even assuming that Rock Island’s instrument meets the definition of a “letter of credit” under the Code, it remains an ultra vires obligation unless it is a “letters of credit authorizing the holders thereof to draw drafts upon [the issuer] or its correspondents” within the meaning of the Illinois Banking Act, Ill.Stat.Ann. ch. 161/2, § 105(13) (Smith Hurd Cum.Supp.1975). I would not lightly assume, as the Court does, that the language quoted above was not intended to restrict the types of letters of credit an Illinois bank may issue. Certainly the legislature must have been aware when it enacted this amendment to the Banking Act that the definition of a “letter of credit” contained in the existing Commercial Code encompassed a wider range of instruments than those authorizing their holders to draw “drafts” upon their issuers. If that assumption is a valid one, it is reasonable to assume further that the legislature may well have had strong policy reasons for restricting the types of letters of credit issuable by Illinois banks to those that authorize their holders to draw “drafts” upon their issuers. I would not treat that limiting language as superfluous, as does the Court, but would rather construe it restrictively, in accordance with the rule that the Illinois Banking Act should be strictly construed so as to confine the activities of Illinois banks within the limits expressly authorized by the legislature. State Bank of Blue Island v. Benzing, 383 Ill. 40, 48 N.E.2d 333, 339 (1943); Knass v. Madison & Kedzie State Bank, 354 Ill. 554, 561, 188 N.E. 836 (1933), appeal dismissed, 292 U.S. 599, 54 S.Ct. 632, 78 L.Ed. 1463 (1934). Having done so, I would hold that the issuance of Rock Island’s instrument was not authorized by the Illinois Banking Act because, even if it is a “letter of credit” under the Commercial Code, it is not one authorizing its holder to draw “drafts” upon its *209issuer. Whatever else it is, the mere presentation of the promissory note required by Rock Island’s instrument is not a “draft” within the meaning of the Commercial Code.1
Secondly, I disagree with the Court’s conclusion that Rock Island’s instrument falls within even the liberal definition of a “letter of credit” contained in the Commercial Code. What troubles me at the outset is that the issuer is unable to determine the extent of its liability under its instrument without going outside the documents required as a condition of the honor of the instrument. The letter commits the issuer to honor presentation of a promissory note “in an, amount not to exceed unpaid balance of principal and interest due on presentation.” Unfortunately, that amount is not ascertainable from the face of the note alone, and no other “document” is required by the letter to affirmatively settle what the/“unpaid balance of principal and interest” is. Accordingly, because the issuing bank cannot ascertain the extent of its liability under the letter by relying on the required documents alone and must ascertain facts extrinsic to the documents in which it is dealing, this instrument cannot be deemed a “letter of credit,” at least in its normative commercial sense. E. g., Wichita Eagle & Beacon Pub. Co. v. Pacific Nat’l Bank, 493 F.2d 1285, 1286 (9th Cir. 1974). Moreover, I am disturbed by the Court’s conclusion that the mere act of presenting the promissory note constitutes a “documentary demand for payment” bringing this instrument within Article 5. Ul.Stat. Ann. ch. 26, § 5-102(1)(a). This is certainly not the basis upon which the Bank of North Carolina argued that Rock Island’s instrument fell within Article 5.2 In any event, a “documentary demand for payment” is “one [the] honor of which is conditioned upon the presentation of a document or documents.” Ill.Stat.Ann. ch. 26, § 5-103(1)(b). Concededly, the promissory note is a “document.” Id. However, it seems to me that the act of presenting the promissory note cannot be both a “demand for payment” and a condition of the honor of the demand at one and the same time. Like the requirement that the holder of the note give notice of intent to sell prior to tendering the note itself, the act of presenting the note is merely a condition precedent to the bank’s duty to purchase the note. It is not, in my opinion, a “documentary demand for payment” whose honor is conditioned upon itself. If I am wrong about that and the Court is right, then there is nothing to prevent a letter from a bank ordering typing paper from being deemed a “letter of credit” if the letter conditions payment for the paper upon its delivery. If one accepts the Court’s view of what a “documentary demand for payment” is, then the act of delivering the paper would constitute a “documentary demand for payment,” for the paper is a “document or documents” by virtue of the fact that it is paper, and the act of delivery or tender constitutes a “demand for payment.” The letter becomes a letter of credit because it is
“an engagement by a bank or other person made at the request of a customer3 and of a kind within the scope of this Article4 . . . that the issuer will honor drafts or other demands for payment upon compliance with the condi*210tions specified in the credit.” Ill.Stat. Ann. ch. 26, § 5-103(1)(a).
Maybe no harm will befall banks whose orders of typing paper are deemed “letters of credit,” but I doubt that the draftsmen of the Code had any such instruments in mind when they defined letters of credit.
Perhaps even more troubling than the Court’s substantive result is the manner in which the Court arrived at it. The Court is reversing a district court judgment on the basis of an argument presented neither below nor on appeal, and that is an unusual practice for this Court. Desert Palace, Inc. v. Salesburg, 401 F.2d 320, 324 (7th Cir. 1968). Perhaps the Court is straining to do what it perceives as equity. If so, it does so in an inequitable manner, for I have no doubt that the Bank of Rock Island will be surprised to learn that it has been deprived of a judgment won below on the basis of a ground that it has never had an opportunity to address.
I respectfully dissent. I would characterize Rock Island’s instrument as simply a contract to purchase a promissory note containing express conditions precedent, and not as a letter of credit. As such, the instrument is an ultra vires obligation under the controlling authority of Knass v. Madison State Bank, 354 Ill. 554, 188 N.E. 836 (1933). Moreover, the Illinois Banking Act, as amended, does not authorize Rock Island to issue this instrument, even if it is a letter of credit as defined in the Illinois Commercial Code. Accordingly, I would affirm the district court’s judgment.
. Nor, as the Bank of North Carolina argues, is the notice of intent to sell a “draft.” By definition, a notice of intent cannot be an unconditional order to pay. See Ill.Stat.Ann. ch. 26, §§ 3-102(1)(b), 3—104(2)(a); cf. Bounty Trading Corp. v. S.E.K. Sportswear, Ltd., 48 A.D.2d 811, 370 N.Y.S.2d 4 (1st Dept. 1975).
. The Bank contended that the notice of intent to sell required by Rock Island’s letter was a “draft,” that the promissory note was a “document,” and thus that the two together were a “documentary draft” required as a condition of honoring the letter. But see note 1 supra.
. A “customer” is simply a “person who causes an issuer to issue a credit.” Ill.Stat.Ann. ch. 26, § 5-103(g). That could simply be the salesman who procures or solicits the bank’s order.
. The letter falls within the scope of Article 5 because it requires a “documentary demand for payment.” Ill.Stat.Ann. ch. 26, § 5-102(1)(a).