Court Opinion

ID: 3625754
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:06:23.385788+00
Date Added: 2024-06-11T14:07:38.121413
License: Public Domain

The affidavits in the present case show no dispute as to the circumstances under which the defendant paid the draft. If there is any issue between the parties it is only as to whether payment made under these circumstances is payment in accordance with the terms of the letter of credit. Whether or not it was in accordance with the terms of the letter of credit depends solely upon the proper interpretation of these terms. The letter of credit authorized Grande-Di Paola, Inc., to draw upon the defendant "against shipment * * * of one fifteen ton car of Alicante Bouchez grapes, * * * invoice and negotiable railroad bill of lading showing destination to Eighth Street Yard, Long Island Railroad, Long Island City, to accompany drafts." A draft was presented, accompanied by a bill of lading and an invoice. The bill of lading was for "grapes" shipped from California, but without any description of the grapes. The invoice was made in New York by the seller, who was not the shipper. The question which the court must decide before it grants judgment is whether the bill of lading and invoice actually presented is in accordance with the intent of the parties as expressed in the letter of credit. The courts below have decided this *Page 245 
question against the defendant, even though the defendant has made affidavit that "generic terms are generally used to describe merchandise in bills of lading, and when making payments under letters of credit it is customary for banks to rely upon the description of the merchandise contained in the invoice accompanying the other documents." I agree with the decision of this court that the interpretation placed upon the terms of the letter of credit by the courts below is not justified, but I reach that conclusion only because of this allegation in the defendant's affidavit. I, therefore, concur in the decision of the court in so far as it reverses the judgment in favor of the plaintiff, but I dissent from the dismissal of plaintiff's complaint.
The letter of credit contains no description of the bill of lading and invoice which in terms precludes the bank from urging that the bill of lading and invoice presented were in accordance with the intent of the parties. To determine that intent we must endeavor to place ourselves in the same position as the parties and apply the same knowledge of surrounding circumstances as we may presume the parties to have. I can see no reason to doubt that the parties contemplated that the invoice would be made out by the seller rather than the shipper, and that it might be made out at the place of business of the seller even though that place of business was in New York and not in California, the State from which the grapes were to be shipped. It purports to cover grapes of the kind named in the letter of credit. Both logic and authority seem to show that no other invoice was required by the letter of credit and certainly in the absence of evidence which would justify us in believing that the parties contemplated some other invoice we should so hold. On the other hand, the bill of lading contains only a generic description of the goods shipped as "grapes," and under the terms of the letter of credit drafts could be drawn only against shipment of "Alicante *Page 246 
Bouchez" grapes, and, of course, the parties intended that the documents which were to accompany the draft should cover "Alicante Bouchez" grapes. It is said that in fact such grapes were not shipped. That fact is irrelevant if the bank paid against the documents against which the parties provided that payment should be made, but though the bank was not called upon to determine whether the goods were in fact shipped, it was called upon to determine whether the documents tendered were in accordance with the intent of the parties as set forth in the letter of credit. The question then narrows itself down to the point of whether a bill of lading purporting to show a shipment of "grapes" is such a bill of lading as the parties contemplated when they provided for drafts against shipment of "Alicante Bouchez" grapes. In the absence of special circumstances showing such intent, I do not think that such an interpretation of the contract would be reasonable. The opinion of the court seems to me to indicate that such construction may be based upon the fact that bills of lading usually contain a clause "contents and condition of contents of packages unknown;" that under a letter of credit reliance is placed upon the good faith of the seller of goods who draws the drafts and especially upon the fact that the contract embodied in the letter of credit provided for both a bill of lading and an invoice so that both might be read together and the statement contained in one might supplement the statement contained in the other. While all these circumstances must be given weight, I do not regard any, or all of them together, as sufficient to lead to a conclusion that the documents presented were sufficient without further proof that the bill of lading presented was in the usual form. We hold that the invoice made by the seller in New York is sufficient, but a seller in New York cannot be presumed to have knowledge of the shipment made by another from California. He might in entire good faith make an invoice describing the grapes as Alicante Bouchez grapes *Page 247 
upon the mistaken and perhaps unfounded belief that such grapes had been shipped and were covered by the bill of lading. The shipper may not even have been under any obligation to ship Alicante Bouchez grapes and may never have intended to ship such grapes, and the invoice is not a representation that such grapes have been shipped by one knowing the facts; it is at most a representation by the seller that he intends to transfer title to such grapes. It rested with the parties to determine whether they should provide that such a representation was sufficient. The general trend of the decisions in regard to commercial letters of credit has been to provide protection for the banker and its customers by giving a rather strict interpretation to their contracts. In all cases that I have been able to find the courts have interpreted such contracts as not implying an obligation to pay unless the documents clearly on their face are a compliance with the contract and carry out its intent so that at least in the absence of bad faith they evidence a transfer of title to the goods described in the letter of credit. The invoice in this case carries out what I may presume was the purpose of requiring an invoice, viz., it evidences a transfer, or willingness to transfer, from seller to buyer of the grapes described therein for the price named. The bill of lading only partially fulfills the purpose for which it was required. It is a shipping document and document of title, but it does not completely show the nature of the goods shipped and transferred. We may assume that the parties intended that these documents should be read together if the usual bill of lading contains only similar generic terms which describe only incompletely the goods shipped. We may not insert in the letter of credit an implied term that an unusual bill of lading was required even though we may think that prudence should have dictated such a term. The parties have chosen to use the term "bill of lading" without further description and that means under the *Page 248 
circumstances of this case a bill of lading such as is usually employed. Since the affidavits of the defendant show that the bill of lading presented was the bill of lading generally employed, the judgment against it is erroneous.
We may not take judicial notice of the existence of banking customs one way or the other, nor may we take judicial notice of the usual contents of a bill of lading except perhaps as to the general form of the uniform bill. We do know, however, that bills of lading are intended to show the shipment of goods; we know that the terms of the letter of credit were intended to preclude payment unless the bank received documents purporting to transfer title to described goods, and when a bill of lading fails to show the kind of goods shipped, we may not hold such bill of lading sufficient without some evidence that the parties intended no other bill of lading. The rule now apparently laid down that even without such evidence all the required documents may be read together, and though made by different parties in different places, presents sufficient evidence to satisfy the terms of the letter of credit that the draft is drawn against the shipment of Alicante Bouchez grapes, is I think not in accordance with the definiteness and certainty required in such commercial transactions. It should be employed only in a case where the intent of the parties is reasonably clear, confined to specific cases and not made a general rule.
Judgments reversed, etc.