Mount Carmel Energy Corp. v. Marine Midland Bank

82 A.D.2d 729, 439 N.Y.S.2d 387, 31 U.C.C. Rep. Serv. (West) 652, 1981 N.Y. App. Div. LEXIS 14351

Opinion

Order, Supreme Court, New York County (Alexander, J.), entered March 18,1981, granting plaintiffs’ motion for preliminary injunction, is unanimously reversed, on the law, so far as appealed from, and plaintiffs’ motion for preliminary injunction is denied, with costs. An irrevocable letter of credit must be honored, and its payment is not to be enjoined at the suit of the customer who procured the letter of credit to be issued, if the documents presented appear on their face to comply with the terms of the irrevocable letter of credit, unless it appears that the documents are forged or fraudulent or there is fraud in the transaction. (Uniform Commercial Code, § 5-114; United Bank v Cambridge Sporting Goods Corp., 41 NY2d 254, 259; Sztejn v Schroder Banking Corp., 177 Misc 719; Foreign Venture Ltd. Partnership v Chemical Bank, 59 AD2d 352, 355-356.) There is no suggestion here that the documents are forged or fraudulent. The dispute as to whether plaintiffs’ agent had actual or apparent authority to enter into the contract with the beneficiary of the letter of credit does not make the documents fraudulent nor does it constitute fraud in the transaction within the meaning of these rules. Concur — Kupferman, J. P., Sullivan, Carro, Markewich and Silverman, JJ.