Bank of Taiwan v. Union Nat. Bank of Philadelphia

• Decision Date: 16 October 1924
• Docket Number: No. 3142.,3142.
• Citation: 1 F.2d 65
• Parties: BANK OF TAIWAN, Limited, v. UNION NAT. BANK OF PHILADELPHIA.
• Court: U.S. Court of Appeals — Third Circuit

1 F.2d 65 (1924)

BANK OF TAIWAN, Limited, v. UNION NAT. BANK OF PHILADELPHIA.

No. 3142.

Circuit Court of Appeals, Third Circuit.

August 26, 1924.

Rehearing Denied October 16, 1924.

Frederic L. Clark and John Franklin Shields, both of Philadelphia, Pa. (Franklin H. Mills, of New York City, of counsel), for plaintiff in error.

John Arthur Brown, Henry Spalding, and Henry P. Brown, all of Philadelphia, Pa., for defendant in error.

Before WOOLLEY and DAVIS, Circuit Judges, and BODINE, District Judge.

DAVIS, Circuit Judge.

The Gorgas-Pierie Company of Philadelphia, hereafter called the Gorgas Company, entered into a contract on August 7, 1920, with the Nanyo Boyeki Kaisha, Limited, of Tokio, Japan, hereafter called the Nanyo Company, for the purchase of 300 tons of copra at 7 7/8 cents per pound, to be shipped "from the Orient by steamer during September or October, 1920." The contract provided that the Gorgas Company should furnish a confirmed irrevocable banker's letter of credit for the full amount of the contract in favor of Nanyo Company, payable 95 per cent. of the value of the shipping weight against invoice, or certificate of origin, insurance policy, or certificate including war risk, and balance on verification of weights in Philadelphia. Pursuant to this provision, the Union National Bank of Philadelphia issued its letter of credit on August 13, 1920, to the Nanyo Company for $47,250.00, providing, among other things, that "drafts to be accompanied by invoice, consular invoice, and full set of bills of lading to be dated during September or October, 1920, in an Oriental port, for shipment to Philadelphia." On the side of the letter of credit was the statement that "the Union National Bank of Philadelphia hereby agrees with the drawers, indorsers, and bona fide holders of bills, drawn in compliance with the terms of this credit, that the same shall be duly honored on presentation to us."

Upon the authority of that letter of credit, the Nanyo Company shipped the copra by bill of lading dated "October 30, 1920," in an Oriental port and drew its draft in favor of the Bank of Taiwan, Limited, on the Union National Bank for $42,843.13. This draft, together with the letter of credit, bills of lading, and the other documents required, were, on November 26, 1920, presented to the defendant for payment. This was refused on the ground that the copra was not "shipped in September or October, 1920." By agreement of the parties, the copra was sold, without prejudice to their rights, and the proceeds of the sale were applied to the original purchase price and suit was brought for the difference which, after some adjustments, amounted to $18,086.83.

At the conclusion of the testimony, a verdict was directed for the plaintiff. Defendant filed a motion for a new trial and after consideration the learned trial judge concluded that the question of whether or not plaintiff was a bona fide holder of the draft for value should have been submitted to the jury and so granted a new trial. On the second trial, the jury rendered a verdict for the defendant, and the case is here on plaintiff's writ of error based on the admission and rejection of evidence.

The first three assignments of error relate to the admission in evidence of the contract of purchase and sale of the copra between the Gorgas Company and Nanyo Company, to the testimony relating to it, and to the failure of the Nanyo Company to give to the Gorgas Company declaration of steamer and routing at the time of shipment, as called for by the contract, but not mentioned in the letter of credit.

The relations between the parties to this litigation grew out of the letter of credit, and they should be confined to it. It contains the limits of their undertaking, and their obligations should be measured by its provisions. It constituted the contract between them, and so far as this litigation is concerned it is independent of the contract between the buyer and seller. American Steel Co. v. Irving National Bank (C. C. A.) 266 Fed. 41; Bank of Taiwan v. Gorgas-Pierie Mfg. Co. (C. C. A.) 273 Fed. 660; Second National Bank v. Columbia Trust Co. (C. C. A.) 288 Fed. 18, 30 A. L. R. 1299; Banco Nacional Ultramarino v. First National Bank (D. C.) 289 Fed. 169; Frey & Sons, Incorporated, v. Sherburne Co. and City National Bank, 193 App. Div. 849, 184 N. Y. Supp. 661; Lamborn v. Lake Shore Banking & Trust Co., 196 App. Div. 504, 188 N. Y. Supp. 162.

The terms of the contract were not identical with those of the letter of credit, and therefore they should not have been admitted in evidence. The examination as to some of these, which were apparently not performed by the Nanyo Company, was prejudicial to the plaintiff. In effect, the trial was on the contract of sale, not the letter of credit, and this gave the defendant bank the benefit of defenses to which it was not entitled in this case.

The new trial was granted, in order to submit to the jury the question of whether or not the Bank of Taiwan was a bona fide holder of the...