Bril v. Suomen Pankki Finlands Bank

• Decision Date: 06 April 1950
• Citation: 199 Misc. 11
• Parties: Ephraim Bril, Doing Business as Trans-American Commodity Exchange, Plaintiff,<BR>v.<BR>Suomen Pankki Finlands Bank, Defendant.
• Court: New York Supreme Court

199 Misc. 11

Ephraim Bril, Doing Business as Trans-American Commodity Exchange, Plaintiff,

v.Suomen Pankki Finlands Bank, Defendant.

April 6, 1950.

Maurice Lutwack, Louis Borins and Isadore Snitzer for plaintiff.

John D. Kernan, Jr., for defendant.

HALPERN, J.

This action was brought to recover damages for anticipatory breach of an irrevocable letter of credit alleged to have been issued by the defendant bank in favor of the plaintiff.

The action was commenced by the attachment of the defendant's property in this State. After the defendant had appeared and answered, the plaintiff moved under rule 103 of the Rules of Civil Practice to strike out certain denials in the answer as sham and the defendant made a cross motion for a dismissal of the complaint under rule 106 for insufficiency on its face.

Upon the argument of the motions, the attorneys for both parties agreed that the whole transaction was evidenced by written documents and that the only questions in the case were questions of law for determination by the court. At the suggestion of the court and upon the agreement of counsel, supplemental motions were made by each of the parties seeking summary judgment under rule 113 in his or its favor.

The facts, as they appear from the affidavits and the exhibits attached thereto, are as follows:

The plaintiff, through his agent in Finland, Valtameri, Ltd., negotiated a contract with the Ministry of Supply of Finland for the sale of 7,500 metrical tons of Cuban raw sugar at £ 29 per 1,000 net kilograms, to be shipped from Cuba to Helsinki, Finland. The contract named the Hampton Timber Co., Ltd., as the seller but it is undisputed that the plaintiff was the true seller and that the Hampton Co. was his nominee. The contract was evidenced by a memorandum signed by the Ministry of Supply and by the plaintiff's Finnish agent, dated September 16, 1948. The memorandum provided that the manner of payment should be as follows: "Confirmed, irrevocable letter of credit, in freely transferable sterling, to be opened in the name of Hampton Timber Co., Ltd., London, beneficiary, Marine Trust Company, Foreign Dept., Buffalo, N. Y., or Cuba, valid for Sept./Oct. shipping." The memorandum of the contract sent to the plaintiff by the plaintiff's agent contained substantially the same terms and stated specifically that the letter of credit was "to be opened in London".

The Ministry of Supply instructed the defendant bank to cause the appropriate credit to be opened and, on September 21, 1948, the defendant bank cabled to its correspondent bank in London, Hambros Bank Limited, as follows: "OPEN CONFIRMED

IRREVOCABLE TRANSFERABLE CREDIT 30411 ORDER MINISTRY SUPPLY HELSINKI FAVOUR HAMPTON TIMBERCO CASTLE HO HIGSTR HAMPTON MIDDX EXPIRY 21/12 UPTO 215325 POUNDS AGAINST INVOICE INSURANCEPOLICY FULLSET ONBOARD BLADINGS ORDER BUYER CERTIFICATE INSPECTION GENERAL SUPERINTENDENCE 2 BROADWAY R-201 TRODEXCH BLDG NEWYORK 4 COVERING 7500 TO CUBAN RAWSUGAR POLARIZATION 96 DEGREES NEW JUTEBAGS 325 LBS NET EACH AT 29 POUNDS PER 1000 KG NET CIF HELSINKI INCLUDING AGENTS COMMISSION 1 PERCENT SHIPMENT CUBANPORT PARTDELIVERIES ALLOWED TRANSSHIPMENTS NOT TRANSFERABLE BENEFICIARY MARINE TRUSTCO FOREIGN DEPT BUFFALO NY/CUBA."

On the same day, the defendant bank confirmed the cable by filling in and sending to the Hambros Bank, a printed form which it used for transactions of this type. The face copy was sent to the Hambros Bank. The fact that it was intended for the bank, was indicated by an arrow opposite its name on the form. It gave the credit number which had been used in the cablegram (30411), it gave the name of the beneficiary and the amount of the credit and it specified the documents which were to accompany drafts under the credit, and it described the merchandise to be covered by the documents, in substantially the same terms as had been used in the cable.

Opposite the printed legend "Kind of credit" in the printed form, the defendant bank wrote "confirmed irrevocable and transferable, not confirmed on your part." In the lower left hand corner of the printed form there appeared: "We request you kindly to open the above mentioned credit." In the lower right hand corner were the words: "Opening of Doc. Credit." The printed form concluded: "Yours faithfully, Suomen Pankki-Finlands Bank." Presumably, the original sent to the Hambros Bank was signed by an officer of the defendant bank, although the photostatic copy supplied upon the present motions is unsigned.

A carbon copy of this letter was sent to the Ministry of Supply, Helsinki. The printed form used for the carbon had blank spaces arranged to correspond with the spaces upon the face copy and the printed legends were the same except that there was an arrow opposite the place for the name of the bank's customer on the carbon copy, whereas there was an arrow opposite the place for the name of the correspondent bank on the face copy. Also, in the lower left hand corner of the printed form used for the carbon copy, instead of the sentence quoted above, there appeared: "We confirm the opening of the above mentioned credit", thus advising the customer of the defendant bank, the Ministry of Supply, that it had taken steps in accordance with its instructions to open the requested credit.

No copy of the letter was sent to the plaintiff by the defendant or by anyone else by authority of the defendant. However, the plaintiff's agent in Finland, Valtameri, Ltd., cabled the plaintiff on September 21st, in part, as follows: "SUPPLY MINISTRY CABLED TODAY ACCORDING YOUR INSTRUCTIONS LETTERCREDIT 30411 HAMBROSBANK LONDON POUNDS-STERLING 215321."

Further cables and correspondence followed between the plaintiff and his agent with respect to requests for change of the transferable beneficiary and these requests were transmitted by the agent to the defendant and, in turn, by the defendant to the Hambros Bank so that the request in its final form was for a letter of credit with the plaintiff personally named as transferable beneficiary.

Upon the receipt of the request form from the defendant bank for the opening of the credit, the Hambros Bank applied to the Bank of England on September 22, 1948, for permission to "establish" an irrevocable bankers' credit in the amount of £ 215,325 on behalf of the defendant bank for the account of the Ministry of Supply, in favor of the Hampton Timber Co. of England. The application stated that the drafts were to be drawn on the Hambros Bank, that the merchandise would consist of Cuban raw sugar to be shipped from Cuba to Finland and that payment was to be made to an American account with reimbursement from a Finnish transferable account. The application was signed by a rubber stamp bearing the name of the defendant bank, followed by a rubber stamp bearing the name of the Hambros Bank, and it was verified by an officer of the Hambros Bank.

The Bank of England refused to grant the requested permission and stamped the application "Not allowed Bank of England 23 Sep 1948". Thereafter, upon the receipt of word that the plaintiff desired to have the transferable beneficiary changed from the Marine Trust Co. to himself, the application form was accordingly changed and was resubmitted to the Bank of England and permission was again refused on September 29, 1948.

On September 24, 1948, the Hambros Bank cabled the defendant bank as follows: "YOURS TWENTYFIRST TRANSFERABLE CREDIT 30411 FAVOUR HAMPTON TIMBER NOT ALLOWED STOP AUTHORITIES WILL NOT PERMIT TRANSFER STERLING TO USA OR CUBA."

Word of this refusal was apparently communicated to the plaintiff's agent in Finland and it cabled to the plaintiff on September 27, 1948: "BANK OF ENGLAND DOES NOT ALLOW TRANSFERRING TRANSFERABLE STERLING TO USA AND CUBA PLEASE INVESTIGATE CABLE."

On September 26, 1948, the plaintiff had cabled to the Hambros Bank as follows: "RECREDIT FINLAND 30411 IN ORDER NEGOCIATE HERE PLEASE CABLE OUR EXPENSES DETAIL TERMS C/C EPHRAIM BRIL PURCHASE AGENT TRANSAMERICA COMMODITY EXCHANGE 1176 MAIN STR BUFFALO NY CABLE ADDRESS." The Hambros Bank replied on September 29, 1948, by letter, which quoted the plaintiff's cablegram and, in reply thereto, stated: "but must inform you that the Exchange Control Authorities here will not permit this Credit to be opened so we cannot proceed further in the matter."

Thereafter, in view of the action of the English authorities, the defendant bank, at the ministry's suggestion, cabled the Hambros Bank, canceling its request that a letter of credit be issued.

This was, in substance, the end of the transaction. Correspondence by cable and letter followed between the plaintiff and his agent in Finland and also between the plaintiff and his agent on the one hand and the defendant bank and the Ministry of Supply on the other, but nothing was accomplished.

The plaintiff's agent, the ministry and the defendant bank sought to explain why they could not go forward with the matter. On the other hand, the plaintiff repeatedly complained in his letters that no letter of credit had ever been issued in accordance with the Ministry's contract. He made various suggestions, without prejudice, as to how the transaction might be revived and the contract carried out. Finally, the plaintiff advanced the theory which is the basis of the present action, that the letter of instructions sent by the defendant bank to the Hambros Bank, of itself, constituted a letter of credit in favor of the plaintiff and that the defendant's subsequent conduct amounted to an anticipatory breach of the letter of credit. The plaintiff accordingly brought this action to recover damages for the breach (Foglino & Co. v. Webster, 217 App. Div. 282, mod. 244 N.Y. 516, 563). The defendant denies that any letter of credit had ever been issued to the plaintiff.

It appears that, in the course of its effort to explain the history of the transaction to the plaintiff's Finnish agent, the defendant bank sent him a copy of all the...