Opinion ID: 1250307
Heading Depth: 1
Heading Rank: 7

Heading: Whether the Suppliers are Entitled to Sue Under the Letter of Credit.

Text: Bank argues that since the letters of credit were issued to Tribe, the suppliers of Tribe's subcontractor are not entitled to sue thereon. Furthermore, Bank states that the letters of credit were never issued by it to the suppliers nor did the suppliers receive an assignment of the right to receive proceeds under the letters of credit. We find this argument to be without merit. These letters of credit were admittedly ambiguous. However, the trial court properly received evidence to explain the ambiguities. Subsurfco, Inc. v. B-Y Water Dist., 337 N.W.2d 448 (S.D.1983); Jensen v. Pure Plant Food Int'l, Ltd., 274 N.W.2d 261 (S.D.1979). It is abundantly clear that the sole purpose for requiring the letters of credit was to replace the payment bond. This fact was found by the court and, as earlier stated, was not appealed by Bank. The obvious beneficiaries of the letters of credit were Midstates and Water Products and other suppliers. Thompson Yards, Inc. v. Van Nice, 59 S.D. 306, 239 N.W. 753 (1931). Even though not named as a beneficiary, Midstates and Water Products have standing to maintain an action against Bank as the issuer of the letters of credit. Beckman Cotton Co. v. First Nat'l Bank, 666 F.2d 181 (5th Cir.1982).