Beathard v. Chicago Football Club, Inc., 75 C 3339.
Decision Date | 30 August 1976 |
Docket Number | No. 75 C 3339.,75 C 3339. |
Citation | 419 F. Supp. 1133 |
Parties | Peter BEATHARD et al., Plaintiffs, v. CHICAGO FOOTBALL CLUB, INC., et al., Defendants. |
Court | U.S. District Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
Richard W. Hillsberg, Northfield, Ill., for plaintiff.
Daniel A. Clune and Thomas R. Remick, Winston & Strawn, Chicago, Ill., for defendant The Mid-City National Bank.
Stephen Feinberg, Charles Pressman, Ronald Futterman and Aram A. Hartunian, Pressman & Hartunian, Chicago, Ill., for Chicago Football Club, Inc., Eugene Pullano and Frank Mariani.
In this diversity action, two former football players for the Chicago Football Club, Inc. (Club)1 seek payment of the salaries which the Club refused to pay after it was terminated as the holder of the Chicago franchise in the World Football League (WFL). Plaintiffs, Peter Beathard and Lawrence Jameson, signed player contracts with the Club in June 1975. Under the contracts Beathard was to receive a $12,000 bonus for signing and $70,000 for the 1975 season. Jameson was to receive a bonus of $10,500 and $25,000 for the 1975 season. The compensation for the season was to be paid in 18 installments—one after each game then scheduled to be played by the Club. For reasons which are now obvious, plaintiffs were concerned with the possibility that the Club or the WFL would not succeed, and they would not be paid their salaries. Accordingly, each contract contained a provision obligating the Club to either pay into escrow at an established bank of the Club's choice the amount of the player's 1975 compensation, or to secure a "domestic letter of credit" in that amount.
The Club elected to obtain letters of credit. On August 15, 1975, the Mid-City National Bank issued "Domestic Letter of Credit No. 160" to Beathard and "Domestic Letter of Credit No. 161" to Jameson.
Beathard's letter was as follows:
Jameson's letter, No. 161, was identical except for the name and the amount.
On September 1, 1975, the WFL revoked the franchise of the Chicago Football Club, Inc., and cancelled all games scheduled between the Club and other members of the World Football League. From that date to the present, the Club has paid no salary to either plaintiff. When the Club failed to pay them their salaries, plaintiffs presented drafts under their letters of credit to the Mid-City National Bank. Plaintiffs were informed that the letters of credit had been revoked and the drafts were dishonored. This lawsuit is the product of plaintiffs' inability to collect their agreed salaries from either the Club or Mid-City. Beathard claims that he is entitled to $50,555.55 under the contract and the Letter of Credit and Jameson claims $19,440.00.
Though plaintiffs assert claims against a number of parties on a variety of theories,2 the motions presently before the court concern only their claim against Mid-City National Bank based on Letters of Credit Nos. 160 and 161.
The two plaintiffs and the Bank have moved for summary judgment on this claim. The Bank asserts that, as a matter of law, the letters are revocable, and that as a matter of undisputed fact, the letters were properly revoked. Plaintiffs assert that, as a matter of law, the letters are irrevocable and that, as a matter of undisputed fact, they have fulfilled all of the conditions of the letters of credit and are entitled to judgment in the full amount of their claims. For the reasons set forth below, the court finds that the Bank is correct and its motion for summary judgment must be granted.
Clearly, if these letters of credit are found to be revocable, plaintiffs have virtually no rights under them, and they cannot succeed in their claim against the Bank.3
If the letters of credit are found to be irrevocable, plaintiffs have only to show that they have complied with all of the terms of the letters to prevail on their claim against the Bank.
Both sides agree that by virtue of the incorporation of the Uniform Customs into the letters of credit, the language of Article I is determinative of the question of the letters' revocability.
Plaintiffs argue that although the letters of credit do not expressly state that they are irrevocable, the language of the letters "clearly indicates" that they are. They first point to the statement in the first sentence that "This letter of Credit is to guarantee payment for services rendered to the Club." Plaintiffs assert that this language shows the letters to be irrevocable because only an irrevocable letter constitutes any sort of guarantee. A revocable letter, they argue, gives the beneficiary such attenuated rights that it cannot properly be called a guarantee. This argument is not correct. All letters of credit, both revocable and irrevocable, are guarantees of a sort. To be sure, the guarantee of a revocable letter of credit is considerably less valuable than that of an irrevocable letter, but a guarantee does not have to be complete and absolute to be worthy of the name. The use of this single word does not constitute a "clear indication" of irrevocability.
Neither does the sixth sentence of the letters, alone or in conjunction with the use of the word "guarantee" in the first sentence, indicate irrevocability. Plaintiffs argue that this...
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