Opinion ID: 876899
Heading Depth: 1
Heading Rank: 3

Heading: letter of instruction and joint assignment of funds

Text: TO _________________ _________________ _________________ I (We) the undersigned have placed an order for one (1) Boise Cascade Home in the amount of Twenty-six Thousand & no/100 ________ dollars (See Attached Contract). As an inducement to Mountain Sales, as Seller and Boise Cascade Corporation as Manufacturer, hereinafter referred to as Assignees, to begin production and to further secure Assignees' ability to collect sums owing pursuant to the above-mentioned order, you are hereby authorized and instructed to allocate and, on or before thirty (30) days following the date of delivery of said home, to set aside from my (our) funds on deposit and/or allocated by you, the sum of Eighteen Thousand Three Hundred Forty-one dollars ($18,341.00). I (We) in further consideration of Assignees' beginning production of the above-mentioned house, do hereby assign, transfer, and set over to Assignees the above-mentioned set-aside funds and do hereby instruct you to deliver such set-aside funds to Assignees as joint payees upon presentation to you by Assignees of an invoice and a Completion Certificate signed by the undersigned purchasers. It is specifically understood and agreed that neither the giving not accepting of this letter by Assignees, with or without security, shall in any way affect or constitute a waiver of the right of either Assignee to file or enforce any mechanic's or materialman's lien or maintain any action to which it would otherwise be entitled. ________________________________ (s) David M. McLean Purchaser Purchaser APPROVED: SELLER: Mountain Sales, Inc. By (s) James J. Spring Title V-P MANUFACTURER: Boise Cascade Corporation By __________________________________ Title _______________________________ ACKNOWLEDGEMENT AND ACCEPTANCE As per the foregoing instructions, we have allocated and will set aside on or before 30 days after delivery of the above-mentioned house the sum of Eighteen Thousand Three Hundred Forty-one dollars ($18341.00) and payment of the hereinbefore described invoice will be made by us to Assignees as joint payees from said funds upon presentation by Assignees of the above-mentioned invoice accompanied by an appropriate Completion Certificate. Accepted this 25th day of July , 1974. FIRST SECURITY BANK Anaconda, Montana 59711 (Lending Institution) By (s) F.R. Bennett Title F.R. BENNETT, PRESIDENT Chapter 5 of the Uniform Commercial Code relates to letters of credit. Section 30-5-102 MCA states: (1) This chapter applies: (a) to a credit issued by a bank if the credit requires a documentary draft or a documentary demand for payment; and (b) to a credit issued by a person other than a bank if the credit requires that the draft or demand for payment be accompanied by a document of title; and (c) to a credit issued by a bank or other person if the credit is not within subparagraphs (a) or (b) but conspicuously states that it is a letter of credit or is conspicuously so entitled. (2) Unless the engagement meets the requirements of subsection (1), this chapter does not apply to engagements to make advances or to honor drafts or demands for payment, to authorities to pay or purchase, to guarantees or to general agreements . .. (Emphasis added.) Further, under the UCC, a letter of credit and a documented demand for payment are defined as follows: (a) `Credit' or `letter of credit' means an engagement by a bank or other person made at the request of a customer and of a kind within the scope of this chapter (30-5-102) that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. A credit may be either revocable or irrevocable. The engagement may be either an agreement to honor or a statement that the bank or other person is authorized to honor. (b) A `documentary draft' or a `documentary demand for payment' is one honor of which is conditioned upon the presentation of a document or documents. `Document' means any paper including document of title, security, invoice, certificate, notice of default and the like. Section 30-5-103(a) & (b) MCA. If the instrument of July 25, 1974 is truly a letter of credit, as contended by Boise Cascade, then that letter of credit would become a primary obligation between the issuer, First Security Bank of Anaconda, and Boise Cascade as beneficiary. Asociacion de az. de Gua v. United States Nat. Bank of Ore. (9th Cir.1970), 423 F.2d 638, 641; Fidelity Bank v. Lutheran Mutual Life Insurance Co. (10th Cir.1972), 465 F.2d 211. Lack of consideration is not a defense to a documentary demand on a letter of credit, section 30-5-105 MCA, and the issuer must honor a draft for payment which complies with the relevant terms of the credit regardless of conformance with the underlying contract between the customer and the beneficiary. We conclude, upon consideration, that the written acceptance by the bank in the instrument of July 25, 1974 does not constitute a letter of credit for two reasons: (1) the acceptance contained in the instrument of July 25, 1974 is not a letter of credit within the meaning of the Uniform Commercial Code; and, (2) in any event there has been no compliance with the terms of the instrument of July 25, 1974 so as to make the issuer liable. The contention that the bank's obligation was a letter of credit was not raised by the pleadings, Milne v. Leiphart (1946), 119 Mont. 263, 174 P.2d 805; Sonnek v. Universal C.I.T. Credit Corporation (1962), 140 Mont. 503, 374 P.2d 105, nor raised in briefs or argument before the entry of summary judgment, State ex rel. Sol. v. Orcutt (1979), Mont., 588 P.2d 996, 36 St.Rep. 1; State v. Voyich (1963), 142 Mont. 355, 384 P.2d 765. We will not consider such issues for the first time on appeal. Without waiving that ground for rejection of Boise Cascade's contention, we are constrained to note that this instrument does not constitute a letter of credit. The instrument does not evince a clear intention on the part of the bank to be primarily liable to Boise Cascade upon Boise Cascade's compliance with the terms of the instrument, irrespective of the underlying agreements between Boise Cascade and McLean. Sections 30-5-101 et seq., MCA apply essentially to a letter of credit arrangement, and not to a contract between the issuer and his customer, nor to a contract between the customer and the beneficiary. The instrument here, prepared by Boise Cascade, is no more than its title indicates: a letter of instruction and joint assignment of funds. The bank does not agree to be primarily liable. For that reason the engagement of the bank does not meet the requirements of section 30-5-102(1) MCA, and accordingly that portion of the UCC does not apply, under section 30-5-102(2) to engagements to make advances or to honor drafts or demands for payment, to authorities to pay or purchase, to guarantees or to general agreements. Finally, whether the instrument is regarded as a letter of credit, or a simple assignment, Boise Cascade has made no showing that it has complied or could comply with the terms of the engagement, that it supply an invoice and a completion certificate signed by McLean. The purchaser of the mobile home is Mountain Sales, Inc.; therefore, the dealer was Boise Cascade's customer and not McLean.