Crocker First Nat. Bank v. De Sousa

• Decision Date: 20 August 1928
• Docket Number: No. 5456.,5456.
• Citation: 27 F.2d 462
• Parties: CROCKER FIRST NAT. BANK OF SAN FRANCISCO (substituted for CROCKER NAT. BANK OF SAN FRANCISCO), v. DE SOUSA et al.
• Court: U.S. Court of Appeals — Ninth Circuit

27 F.2d 462 (1928)

CROCKER FIRST NAT. BANK OF SAN FRANCISCO (substituted for CROCKER NAT. BANK OF SAN FRANCISCO), v. DE SOUSA et al.

No. 5456.

Circuit Court of Appeals, Ninth Circuit.

June 25, 1928.

Rehearing Denied August 20, 1928.

Morrison, Hohfeld, Foerster, Shuman & Clark and J. F. Shuman, all of San Francisco, Cal., for appellant and plaintiff in error.

T. T. C. Gregory and C. J. Goodell, both of San Francisco, Cal., and Frank V. Cornish, of Berkeley, Cal., for appellees and defendants in error.

Before RUDKIN, DIETRICH, and HUNT, Circuit Judges.

RUDKIN, Circuit Judge.

Early in May, 1920, De Sousa & Co., a copartnership, as vendors, entered into a contract with Hind, Rolph & Co., a copartnership, as purchasers, for the sale of 500 tons of sugar. On May 20, 1920, in compliance with the contract of sale, the purchasers procured from the Crocker National Bank of San Francisco a letter of credit in the sum of $208,000 in favor of the vendors, in which the bank agreed that it would accept upon presentation, and pay in 60 days, drafts not to exceed $208,000 against a shipment of 500 tons, net, white Java refined granulated sugar, 97/98° polarization, at 20½ cents per pound, gross shipped weight, c. i. f. San Francisco; shipment from Hongkong during May/June, 1920, accompanied by full sets of invoices, consular invoices, marine and war risk insurance certificates, surveyor's certificate of quality, weight certificate, and negotiable ocean bills of lading made out to order of shipper and indorsed in blank. Later, on May 29, 1920, the letter of credit was amended so as to cover 500 tons of sugar as follows: 150 tons granulated, 350 tons fine granulated. Early in July, 1920, drafts were presented to the bank for acceptance, accompanied by commercial invoice, consular invoices, marine and war risks insurance certificate, surveyor's certificates of quality, weight certificates, certificates of polarization, and bills of lading, but acceptance was refused on the ground that the documents accompanying the drafts were not in order. The present action was thereupon commenced by De Sousa & Co. against the Crocker First National Bank of San Francisco, as successor to the Crocker National Bank, to recover the amount of the drafts, less the net proceeds derived from the sale of the sugar. A judgment in favor of the plaintiff (23 F. 2d 118) is now before us for review.

In the court below there was apparently some controversy between the parties as to the description of the sugar called for by the letter of credit in the light of the amendment of May 29, but it seems to be now conceded that the amendment made no change in the description of the smaller lot of 150 tons and simply added the word "fine" before the word "granulated" as to the larger lot of 350 tons, so that the description in the letter of credit as amended read: 150 tons white Java refined granulated sugar and 350 tons white Java refined fine granulated sugar.

In an early stage of the case the plaintiff in error likewise contended that it was under no legal obligation to accept or pay the drafts unless each and every of the documents accompanying them described the sugar word for word as the same was described in the letter of credit as amended. But it seems to have receded from that extreme position, and now apparently concedes that it is perhaps sufficient if what it terms the essential documents so describe the sugar, and that the essential documents are the consular invoices, certificates of quality, and certificates of polarization. We think this latter view is the correct one, because it is hardly to be expected that ordinary insurance certificates, bills of lading, and certificates of weight will describe a commodity with greater particularity than is required by the nature of the documents and the purpose for which they are executed. And, without expressing any opinion as to the particular documents that must describe the commodity with precision, we will confine ourselves to the consular invoices and the certificates of quality, because in these the most complete description is found. The consular invoices described the smaller lot as "white Java granulated sugar No. 24," and the other lot as "white Java fine sugar No. 24," and the certificates of quality describe the two lots in the same words. It will thus be seen that the descriptive word "refined" is omitted from the description of the smaller lot, and the descriptive words "refined" and "granulated" from the description of the larger lot and that the figures "No. 24" are added to the description of both lots.

There was considerable discussion on the argument as to the rule of construction applicable to contracts of this kind. In Wells Fargo Nevada Nat. Bank of San Francisco v. Corn Exchange Nat. Bank (C. C. A.) 23 F.(2d) 1, the court said:

"Letters of credit in large numbers for vast sums are used in oversea commercial transactions by people whose laws, language, and customs are often different from those of the people where the letter is issued. The safety of the issuing bank, of the buyer for whose account it is issued, and of the seller who often expends much and risks much on the faith of the promise in the letter, require that the terms of the letter shall be sharply defined and strictly complied with in all respects."

We think this view is in harmony with the decisions of the Supreme Court. Thus, in Harrison v. Fortlage, 161 U. S. 57-63, 16 S. Ct. 488, 489 (40 L. Ed. 616), it is said:

"The court is not at liberty, either to disregard words used by the parties, descriptive of the subject-matter, or of any material incident, or to insert words which the parties have not made...