915 F.2d 1575 (7th Cir. 1990), 89-1517, Utica Mut. Ins. Co. v. Great Lakes Coal Co.
|Citation:||915 F.2d 1575|
|Party Name:||UTICA MUTUAL INSURANCE CO., Plaintiff-Appellant, v. GREAT LAKES COAL COMPANY and Lafayette Bank & Trust Company, Defendants-Appellees.|
|Case Date:||October 05, 1990|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA7 Rule 53 regarding use of unpublished opinions)
Argued Feb. 13, 1990.
Appeal from the United State District Court for the Southern District of Indiana, Terre Haute Division, No. 87 C 28, Larry J. McKinney, Judge.
Before RIPPLE and MANION, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.
Utica Mutual Insurance Company brought this action to enforce a letter of credit which partially secured a reclamation bond. The district court found that the letter had expired and was no longer enforceable. We affirm.
Great Lakes Coal Company (Great Lakes) was obligated to reclaim any land it disrupted by its mining operations. Underwriters Safety & Claims, Inc. (Underwriters) wrote reclamation bonds for the coal industry on behalf of plaintiff Utica Mutual Insurance Co. (Utica). Great Lakes sought to obtain a bond from Utica through Underwriters to guarantee reclamation to the Indiana Department of Natural Resources. Utica agreed to write the bond in the amount of $261,860, but required as collateral a letter of credit in the amount of $100,500. Great Lakes had a banking relationship with defendant Lafayette Bank & Trust Co. (Lafayette) to provide such letters of credit. Lafayette agreed to provide the letter of credit upon return of other letters of credit it had previously issued to the state of Indiana on behalf of Great Lakes. In reliance on Lafayette's promise, Utica issued the bond to Indiana for the benefit of Great Lakes on November 10, 1983.
On February 10, 1984 and March 7, 1984, Underwriters by letter requested that Lafayette issue the promised $100,500 letter of credit. On both occasions Underwriters attached to its letter a sample letter of credit with wording it claimed Utica required. Prior to March 7 Underwriters discovered Lafayette was a state bank rather than a national bank; Utica usually accepted letters of credit only from national banks. In the March 7 letter, Underwriters informed Lafayette that letters of credit from state banks needed to be accompanied by two additional items: an audited financial statement, and a letter from the bank's attorney verifying that the terms of the letter of credit did not violate state banking laws. On March 12, 1984, Lafayette issued Letter of Credit No. 128, naming Utica as the beneficiary. The letter was effective immediately. Although it listed an expiration date of March 12, 1985, it also contained an automatic renewal clause that provided for the letter to renew each year unless Lafayette provided advance notice of cancellation.
Underwriters in a March 28, 1984 letter advised Lafayette that the letter of credit should list the state of Indiana as beneficiary rather than Utica. Underwriters also reminded Lafayette that it still needed a copy of the audited year-end financial statements of the bank along with a letter from Lafayette's counsel verifying the bank's compliance with state laws. On...
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