Source: https://caselaw.findlaw.com/us-supreme-court/276/469.html
Timestamp: 2019-04-23 22:09:10+00:00

Document:
[276 U.S. 469, 470] Messrs. Louis O. Van Doren, of New York City, Edward R. Baird, Jr., of Norfolk, Va., H. G. Connor, Jr., of Wilson, N. C., and Edward S. Bentley, of Lawrence, N. Y., for petitioners.
Mr. Tazewell Taylor, of Norfolk, Va., for respondent.
The sugar tendered had been shipped on the West Cheswald, a steamer which sailed from Java on September 30, [276 U.S. 469, 471] and by a continuous voyage arrived in Philadelphia on December 16. Then followed promptly the discharge of 1,000 bags of sugar; the ascertainment of the net landed weight; the payment of the duty; the shipment free on board railroad cars at Philadelphia of the specified quantity of sugar to T. S. Southgate & Co.; the drawing against the letter of credit of a sight draft for the purchase price, $48,009.81, its presentation, together with the appropriate shipping documents, for payment; and the refusal to honor. All this was done long before the expiration of the letter of credit. Between April 23, 1920, the date of the contract, and the tender of the sugar, the market price had fallen 11 cents.
The bank claimed that the sugar tendered failed to satisfy the requirements of the contract, because it had come, not on a steamer which had been continuously destined from Java to Philadelphia, but upon one which, originally destined from Java 'to Port Said, option New York,' was diverted by the charterers to Philadelphia, while on the high seas. The West Cheswald had sailed by a direct route from Java to Philadelphia, the diversion having been made while she was near Bermuda, about three days from port, so that she could pursue the same route to Philadelphia as if she had at all times been destined for that port. In fact, another steamship bearing sugar shipped by plaintiffs-the Washington Maru-which sailed from Java two days earlier, and had at all times been destined to Philadelphia, arrived there three days after the West Cheswald. The case was tried twice before a jury. The only question in serious controversy was one of contruction-the meaning to be given to the clause in the letter of credit quoted above. At the first trial both parties requested a directed verdict. The verdict was directed for the plaintiffs. The Court of Appeals reversed the judgment entered thereon and ordered a new trial. National Bank of Commerce of Norfolk v. Lamborn, 2 F.(2d) 23, 36 A. L. R. 509. At the second trial, the presiding [276 U.S. 469, 472] judge, applying the rule declared by the appellate court, directed a verdict for the defendant. The judgment entered thereon was affirmed by the Court of Appeals, 15 F.(2d) 473. This court granted a writ of certiorari ( 273 U.S. 688 , 47 S. Ct. 457), because of conflict with cases decided by the Circuit Court of Appeals for the Second Circuit (Matthew Smith Tea, Coffee & Grocery Co. v. Lamborn (and other cases), (D. C.) 276 F. 325, 10 F.(2d) 697, certiorari denied, Kines v. Lamborn, 271 U.S. 683 , 46 S. Ct. 634; Brenner v. Lamborn, 271 U.S. 685 , 46 S. Ct. 638; Matthew Smith Tea, Coffee & Grocery Co. v. Lamborn, 271 U.S. 686 , 46 S. Ct. 638).
The defendant is obviously not liable, unless there was a tender of sugar which met the requirements of the letter of credit as to amount and quality of the sugar, as to the time (Norrington v. Wright, 115 U.S. 188 , 6 S. Ct. 12), and the place (Filley v. Pope, 115 U.S. 213 , 6 S. Ct. 19) of shipment; and as to the manner of shipment and the ultimate destination. 1 The clause 'shipment by steamer or steamers to Philadelphia' states the manner of shipment and the ultimate destination. Compliance with its provisions was confessedly a condition of liability. The bank contends that there was not a compliance because the sugar tendered did not come by a steamer which at all times leaving Java was destined to Philadelphia.
The plaintiffs were entitled to a directed verdict. The conclusion which we have reached is in accord, not only with that reached by the Circuit Court of Appeals for the Second Circuit, but also with that of the state courts which have had occasion to construe the same provision [276 U.S. 469, 474] in other contracts of Lamborn & Company made under like circumstances. 2 As the letter of credit is complete in itself, we have no occasion to consider the terms of the contract between Lamborn & Co. and T. S. Southgate & Co., or the circumstances which led to the diversion of the West Cheswald to Philadelphia, which counsel have discussed.
I think the judgment below should be affirmed. I cannot agree that a condition in a commercial letter of credit, that drafts are to be drawn against merchandise 'shipment ... from Java by steamer or steamers to Philadelphia' is satisfied by a shipment 'from Java to Port Said, option New York,' even though the cargo ultimately reaches Philadelphia. I had supposed, as the opinion below seems to me to show, that the character of a shipment is fixed at the time it is made, and hence that language in a mercantile contract indicating that a shipment is to be made from one point to another could only mean that the point of destination is to be known and specified at the time of shipment. Hansson v. Hamel & Horley, Ltd., (1922) 2 A. C. 36; Landauer & Co. v. Craven & Speeding Brothers, ( 1912) 2 K. B. 94; Mora y Ledon v. Havemeyer, 121 N. Y. 179, 24 N. E. 297, 8 L. R. A. 245, Iasigi v. Rosenstein, 141 N. Y. 414, 417, 36 N. E. 509.
But even if this were doubtful as a general proposition, there would seem to be no room for doubt in the present [276 U.S. 469, 475] case. Here the letter of credit specified that drafts when presented should be accompanied by 'copy of ocean bill of lading covering shipment Java to Philadelphia.' Obviously such a bill of lading would be impossible unless the shipment were continuously destined for Philadelphia. It is true that, for the convenience of the seller the bank, at the buyer's direction, later waived physical presentation of a copy of the ocean bill of lading. But the record does not show that the bank had any reason to suppose that the requirement had originally been inserted in the letter of credit by mere inadvertence; so far as it was aware, there was still to be an 'ocean bill of lading covering shipment Java to Philadelphia,' but the seller was to be excused from presenting it. The clause 'shipment ... from Java by steamer or steamers to Philadelphia' was not waived, and its meaning on the date of presentation of the draft remained the same as when the credit was issued. The provision in the letter of credit that 'conditions embodied in this credit must be adhered to, otherwise payment will not be effected.' only expresses the rule, with which we all agree, that liability upon a mercantile contract may be established only by strict compliance with its conditions. Filley v. Pope, 115 U.S. 213 , 6 S. Ct. 19; Norrington v. Wright, 115 U.S. 188 , 6 S. Ct. 12; Bowes v. Shand, 2 App. Cas. 455.
Mr. Justice McREYNOLDS, Mr. Justice SUTHERLAND, and Mr. Justice SANFORD join in this dissent.
[ Footnote 1 ] Compare Bowes v. Shand, 2 App. Cas. 455; Ashmore & Son v. Cox & Co ., (1899) 1 Q. B. 436; Landauer & Co. v. Craven & Speeding Bros., (1912) 2 K. B. 94; Hansson v. Hamel & Horley, Ltd., (1922) 2 A. C. 36; Merchants' Bank v. Griswold, 72 N. Y. 472, 28 Am. Rep. 159; Bank of Montreal v. Recknagel, 109 N. Y. 482, 17 N. E. 217; Mora v. Ledon v. Havemeyer, 121 N. Y. 179, 24 N. E. 297, 8 L. R. A. 245; Iasigi v. Rosenstein, 141 N. Y. 414, 36 N. E. 509.
[ Footnote 2 ] H. O. Wilbur & Sons, Inc., v. Lamborn, 276 Pa. 479, 487, 120 A. 478, 27 A. L. R. 160; Williams Ice Cream Co., Inc., v. Chase National Bank, 120 Misc. Rep. 301, 199 N. Y. S. 314; Id., 210 App. Div. 179, 205 N. Y. S. 446; J. Hungerford Smith Co. v. Lamborn (Sup.) 200 N. Y. S. 292; Telling Belle Vernon Co. v. Lamborn, N. Y. Law Journal, December 22, 1920; Pennsylvania Milk Products Co. v. Lamborn (and other cases), N. Y. Law Jurnal, January 4, 1921. See Also, Central Sugar Co. v. Lamborn (Sup.) 200 N. Y. S. 499; Id., 195 App. Div. 909, 186 N. Y. S. 936; Lamborn & Co. v. Log Cabin Products Co. (D. C.) 291 F. 435; Lamborn v. Hardie Co. (C. C. A.) 1 F.(2d) 679.

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