Bank of Italy v. Merchants' Nat. Bank

• Decision Date: 29 May 1923
• Citation: 140 N.E. 211,236 N.Y. 106
• Parties: BANK OF ITALY v. MERCHANTS' NAT. BANK.
• Court: New York Court of Appeals Court of Appeals

236 N.Y. 106

140 N.E. 211

BANK OF ITALY

v.MERCHANTS' NAT. BANK.

Court of Appeals of New York.

May 29, 1923.

Action by the Bank of Italy against the Merchants' National Bank. From a judgment of the Appellate Division (-- App. Div. --, 197 N. Y. Supp. 897), affirming a judgment for plaintiff, defendant appeals.

Reversed, with directions to dismiss complaint.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Murle L. Rowe, of Dunkirk, for appellant.

Albert E. Nugent, of Dunkirk, for respondent.

ANDREWS, J.

By telegram addressed to the Bank of Italy at San Francisco, the Merchants' National Bank of Dunkirk guaranteed payment for two carloads of ‘dried grapes' bought by local merchants of one Rossi, stating that ‘payment will be made on presentation original bill lading here.’ Thereupon Rossi presented to the respondent bills of lading for two carloads of ‘raisins,’ consigned to the purchaser, and the bank advanced upon them some $22,000. In due course these bills of lading were then presented to the appellant for payment, but payment was refused. The sole question before us is whether such refusal was justified, because the bills of lading were for ‘raisins,’ and not for ‘dried grapes.’ We hold that it was.

[1] In making such a guaranty as the present the Merchants' National Bank might limit its liability to such an extent and subject it to such conditions as it thought wise. It is to be held upon the contract which it elected to make-not upon some different contract, which it might have made, or which the jury thinks it should have made. Evansville Nat. Bank v. Kaufmann, 93 N. Y. 273, 45 Am. Rep. 204;Germania Nat. Bank of New Orleans v. Taaks, 101 N. Y. 442, 5 N. E. 76;Bank of Montreal v. Recknagel, 109 N. Y. 482, 17 N. E. 217. One relying upon its guaranty is bound by such limitations and conditions.

[2] As we have seen in the case before us, the Merchants' Bank agreed to make payment upon bills of lading of cars of ‘dried grapes.’ The bills presented to it were for ‘raisins.’ It is said that the two expressions are identical; that the trial court so found upon evidence which permitted that inference. It may be so. That, however, is not sufficient. We agree that, if the words used in the guaranty and in the bill of lading were as a matter of common knowledge synonymous, or if the guaranty covered a certain class of objects and the bill was for one species of that class, no question could arise. If the guaranty covered automobiles, and the bill was for motor cars; if the guaranty was for grain, and the bill for wheat-the variance would be immaterial. So, too, if the course of dealing between the parties had been such that they might be held as a matter of law to have affixed their own meaning to the terms employed. Decatur Bank v. St. Louis Bank, 88 U. S. (21 Wall.) 294, 22 L. Ed. 560. But, where there is a question of fact as to whether the terms used in the guaranty and in the bill of lading are in truth identical, the risk of determining for itself this question is not to be placed upon the guarantor. Common words are by trade usage frequently given a particular meaning. ‘Hudson seal’ is the skin of muskrats. Unquestionably ‘raisins' are dried grapes. It does not follow that in commercial usage ‘dried grapes' are ‘raisins.’ ‘Dried grapes' may be a technical term describing a distinct product. Indeed, there is considerable evidence before us tending to show that this is so. Raisins we are told are dried white grapes. ‘Dried grapes' is the trade-name of dried black grapes. The articles, it is said, are distinct. Their prices are quoted separately in trade journals. If this be so ; if there be a...