218 F.2d 831 (10th Cir. 1955), 4855, Liberty Nat. Bank & Trust Co. v. Bank of America Nat. Trust & Sav. Ass'n

Docket Nº:4855, 4856.
Citation:218 F.2d 831
Party Name:LIBERTY NATIONAL BANK & TRUST COMPANY, a national banking association, Appellant, v. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national banking association, Appellee. BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national banking association, Cross-Appellant, v. LIBERTY NATIONAL BANK & TRUST COMPANY, a national banking assoc
Case Date:January 15, 1955
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 831

218 F.2d 831 (10th Cir. 1955)

LIBERTY NATIONAL BANK & TRUST COMPANY, a national banking association, Appellant,

v.

BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national banking association, Appellee.

BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national banking association, Cross-Appellant,

v.

LIBERTY NATIONAL BANK & TRUST COMPANY, a national banking association, Cross-Appellee.

Nos. 4855, 4856.

United States Court of Appeals, Tenth Circuit.

January 15, 1955

Rehearing Denied Feb. 11, 1955.

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[Copyrighted Material Omitted]

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V. P. Crowe and John W. Swinford, Oklahoma City, Okl. (Embry, Crowe, Tolbert, Boxley & Johnson, Oklahoma City, Okl., on the brief), for appellant and cross-appellee.

Richard Wl Fowler, Oklahoma City, Okl. (Kenneth M. Johnson, San Francisco, Cal., and Cochran, Dudley, Fowler, Rucks, Baker & Jopling, Oklahoma City, Okl., on the brief), for appellee and cross-appellant.

Before BRATTON, HUXMAN and PICKETT, Circuit Judges.

BRATTON, Circuit Judge.

This is an action instituted by Bank of America National Trust and Savings Association, hereinafter referred to as Bank of America, against Liberty National Bank and Trust Company, hereinafter referred to as Liberty National, to recover judgment upon two commercial drafts, or in the alternative, judgment for such lesser sum as it might be entitled to under the facts alleged in the complaint.

Bank of America is engaged in the banking business at San Francisco, California, and Liberty National is engaged in a like business at Oklahoma City, Oklahoma. The controversy between the parties arose out of a certain commercial letter of credit issued by Liberty National to Bank of America, a like letter of credit issued by Bank of America to

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Union Bank of Switzerland, hereinafter referred to as Bank of Switzerland, and the acts occurring thereafter in relation to a transaction involving the purchase of certain oil well casing and tubing and the shipment thereof from Antwerp, Belgium, to Houston, Texas. Anderson-Prichard Oil Corporation, hereinafter referred to as the Anderson-Prichard Company, negotiated with a broker in San Francisco to purchase the casing and tubing then located in Europe. It became necessary for the Anderson-Prichard Company to furnish a letter of credit covering the amount of the purchase price. Liberty National furnished the letter of credit under date of December 15, 1950. The letter was amended several times. As finally amended, it expressly obligated Liberty National to honor upon presentation drafts drawn on that bank not to exceed in the aggregate $480,749.00, provided certain documents were attached to the drafts, and provided the drafts were negotiated on or before March 31, 1951. The letter provided that it was issued against the shipment of a specified quantity of described casing and tubing meeting American Petroleum Institute specifications; that partial shipments were to be permitted; that all material shipped should be inspected by Moody & Company or Lloyd's agent; that a certificate of inspection should accompany all drafts; that a specified type of insurance should accompany the drafts; that ocean freight, insurance, duties, and taxes, if any, should be paid by the seller from funds which the Bank of America should derive from the broker and payment of such charges should be evidenced by vouchers attached to each draft; that drafts must be accompanied by a full set of clean on board ocean bills of lading evidencing shipment from foreign port to Houston and must also be accompanied by commercial invoices, consular invoices, and railroad weight certificates; that the drafts must bear on their face certain language indicating that they were drawn under the letter of credit; that shipments thereunder must be made not later than March 20, 1951; and that the expiration date of the letter of credit was March 31, 1951. Relying upon the letter of credit issued to it by Liberty National, Bank of America issued to Bank of Switzerland its letter of credit for the benefit of the seller of the casing and tubing. That letter of credit was dated December 20, 1950, and it was amended from time to time to correspond to the amendments made in the letter issued by Liberty National. In particular, it called for the same documents to accompany drafts drawn thereunder as did the letter of credit issued by Liberty National. Within a few days after the issuance of the two letters of credit, Bank of America wrote Liberty National outlining the procedure which would be followed in handling the negotiations under the credit. It was stated in the letter that upon receipt from Bank of Switzerland of the drafts and documents called for in the letter of credit, Bank of America would pay the drafts drawn by the seller of the merchandise and would procure from the broker vouchers covering the duties which would be paid in Houston; and that it would then have the broker draw drafts on Liberty National, would attach to such drafts the documents called for in the letter of credit, and would forward such drafts to Liberty National for payment. And it was further stated that, in addition to the amount of the drafts, Liberty National would be requested to remit an amount of one-eighth of one per cent of such drafts which would constitute the commission due Bank of America. By prompt reply, Liberty National stated that the plan outlined for handling the negotiations was acceptable.

Subsequently, the broker, Bank of America, Liberty National, and the Anderson-Prichard Company learned that in order to effect shipment of the casing and tubing it would be necessary to make payment therefor in Europe before the materials moved. The broker talked with Blake, assistant cashier of Bank of America; the broker also talked on long distance telephone with Rodman, president

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of the Anderson-Prichard Company; Rodman and Blake talked on long distance telephone; and after these conversations, Liberty National-- with the approval of the Anderson-Prichard Company-- sent to Bank of America a telegram in which it was stated among other things that Liberty National authorized payment in Geneva on receipt of cable advice from Bank of Switzerland that it held the documents required by the letter of credit issued by Bank of America to Bank of Switzerland, but with rail weight certificate instead of mill weight certificate and American Petroleum Institute monogram waived. Upon receipt of such telegram, Bank of America cabled the Bank of Switzerland in part that 'upon receipt your authenticated cablegram advising amount negotiated quantity shipped credit terms met we will reimburse you accordance your instructions.' And Bank of America informed Liberty National that it had advised Bank of Switzerland that payment would be made upon such cable advice from the latter bank. On February 2, 1951, Bank of Switzerland cabled Bank of America. The latter construed the cablegram to mean that the former held the documents required by the letter of credit and to request that the account of the former with the latter be credited with $90,834.15; Bank of America credited the account of Bank of Switzerland with that amount; and on the same day it advised Liberty National that payment had been made for the materials included in the first shipment. A representative of the Anderson-Prichard Company inspected the shipment upon its arrival in Houston. The inspection disclosed the fact that at least some of the casing and tubing was not new but was used or secondhand, and for that reason acceptance was refused. On February 27, Bank of Switzerland dispatched a second cablegram to Bank of America. The latter construed the communication to mean that the former held the documents called for in the letter of credit for a second shipment of casing and tubing and to request that its account be credited with the sum of $51,640.70; and...

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