International Banking Corp. v. Irving Nat. Bank

283 F. 103, 1922 U.S. App. LEXIS 2249

• Court: Court of Appeals for the Second Circuit
• Decided: May 8, 1922
• Docket: Nos. 204, 205
• Status: Published

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). This litigation complements the matters discussed in American Steel Co. v. Irving Bank (C. C. A.) 266 Fed. 41, and Harper v. Hochstim (C. C. A.) 278 Fed. 102, opinion filed December 14, 1921. The facts at bar, considered with those of the cases cited, illustrate quite thoroughly a modern method of business, and some possible and important variants thereof.

Kobayashi evidently agreed to sell to Liberman certain silks c. i. f. New York. Therefore, as shown in the Harper Case, supra, Kob-ayashi agreed in performing his contract, not only to physically deliver the goods to a carrier, but to deliver certain documents constituting the evidence of title to the goods. As a part of the same business scheme, and undoubtedly as part of the consideration moving to Kobayashi, Liberman made wifh or procured from the Irving Bank a letter of credit in favor of Kobayashi. This transaction, however, as shown in the American Co. Case, supra, was an entirely separate, distinct, and independent contract. That credit letter established an obligation on the part of the bank to Kobayashi wholly distinct from any obligation that the latter had to furnish to Liberman or for his account, both goods and documents.

But, in the making of this independent contract between the bank and Kobayashi, any particular terms, conditions, or agreements might be inserted, if consented to by the parties. If Kobayashi did not like the form of the credit offered to him, he was entirely at liberty to decline it; and this is true, though it be also true (as it certainly is) that Liberman, as the customer of the bank, could dictate, and probably did dictate, the terms of the letter of credit at bar. The bank, of course, had also a contract with Liberman; i. e., an agreement to issue and abide by such letter of credit as he approved and the bank agreed to give.

[1] The letter of credit might have taken the form shown in the American Co. Case, supra, where the promise of the bank to pay was conditioned solely upon the production with draft of certain specified documents, without descending into the particulars of any one of them. But there is no legal objection to the credit letter’s requiring the shipping documents to declare on their face compliance with the commercial or manufacturing details of' the underlying agreement between the recipient of the credit letter and the buyer of the goods, in this instance between Liberman and Kobayashi. The conditions may be onerous, but, whether light or heavy, they were agreed to, and must be complied with.

[2] Therefore! no court can do more than examine the written agreement, and declare whether any given requirement is a condition precedent to recovery, whether any words or phrases are ambiguous, or whether any word or words have a trade meaning requiring evidence for their elucidation. Vide Vietor v. National, etc., Bank, 200 App. Div. 557, 193 N. Y. Supp. 868. In other words, we must apply the ordinary rules governing the construction and interpretation of writings and especially commercial contracts.

[3] In this case Kobayashi in effect agreed with defendant that any draft he drew against the credit at bar would, by itself or the accompanying documents, assert plainly and substantially that the goods shipped c. i. f. were silk, in so many pieces, each piece of such a size, made as per certain designs¹ and having no more than 50 per cent, of its width taken up with stripes.

About this there is nothing ambiguous; it is not pleaded, nor even suggested, that patterns or designs include stripes, nor is any trade usage relied on. Therefore we must take the writing according to the ordinary meaning of the ordinary words used; and, so read, it-is plain that there was a total failure on the part of Kobayashi in preparing shipping documents to accompany draft, to show, certify, declare, or represent that the goods were in respect of stripes as described in the letter of credit.

This burden Kobayashi had undertaken; his failure therein was as patent to the plaintiff bank when it bought the draft and supporting documents as it has ever since been; and the consequence of that failure was rightly measured below.

Judgment affirmed, with costs.

1 The word “our” before “designs” in the letter of credit admittedly refers to Liberman’s designs furnished to Kobayashi.

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