Galotti v. U.S. Trust Co.
| Decision Date | 01 March 1957 |
| Citation | 335 Mass. 496,140 N.E.2d 449 |
| Parties | Rocco C. GALOTTI et al. v. UNITED STATES TRUST COMPANY. UNITED STATES TRUST COMPANY v. Rocco C. GALOTTI et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
James L. Kenney, Boston (Joseph P. Collins, Cambridge, with him), for Rocco C. Galotti and others.
John N. O'Donohue, Boston, for U. S. Trust Co.
Before WILKINS, C. J., and SPALDING, WILLIAMS, WHITTEMORE and CUTTER, JJ.
Galotti and others (hereinafter callled the partners) were partners in a fruit company and made a contract (which was not offered in evidence) to purchase bananas from a Costa Rican company called Agencias Americanas (hereinafter called Agencias). Two of the partners called at the office of United States Trust Company (hereinafter called the trust company) to obtain a letter of credit required in the transaction. They there executed in triplicate an application for the letter of credit addressed to the Chase National Bank (hereinafter called the Chase Bank).
There was conflicting evidence whether, when the application was signed, it was fully made out. On of the partners testified that there was no typewriting on the blank when it wa signed because no stenographer was available during the lunch hour to fill it out. In both actions here involved, over objection made in behalf of the trust company, this partner was permitted to testify (a) that he had requested that there be inserted in the application a statement in considerable detail of the specifications with respect to the bananas and certain terms of the sale, and (b) that a representative of the trust company had said that the partners 'could rest assured' that, if they signed the application in blank, all that had been requested 'would be put in.'
The partners 'had a fairly good knowledge of the printed provisions which were in the application when they signed it' and the partner who testified stated that he had participated in over one hundred 'transactions involving letters of credit and importation of foreign merchandise.' The jury (in the deceit action mentioned below brought by the partners against the trust company and in the original trial of a cross action brought by the trust company against the partners) found, in answer to two special questions submitted by the trial judge, that the application was not complete when signed and that an employee of the trust company told one of the partners 'that it would be filled out with the complete description of the bananas' which that partner had testified he furnished to the trust company for insertion.
When the application for the letter of credit was forwarded by the trust company (with its own guaranty) to the Chase Bank the application referred briefly to 'fresh bananas @ $1.65 per bunch of 55 lb. per average bunch' and did not contain the somewhat more complete, detailed description which the partners contended they had requested. The application also (a) contained (in small but legible capital letters), under the blank in which the brief description just quoted had been inserted, the printed instruction '(Please mention commodity only, omitting details as to grade, quality, price, etc.)' (b) indicated under the heading 'Documents required' that there would be needed three commercial invoices and consular invoices and an 'Inspection certificate issued by Max Plansa or T. Laundre' together with a 'Full set on Board Bills of Lading to order of The Chase * * * Bank'; and (c) included a provision that 'The users of the Credit shall be deemed our [the partners'] agents and we [the partners] assume all risks of their acts or omissions' and further that neither Chase Bank nor its 'correspondents shall be responsible * * * for the * * * character, quality * * * or delivery of the property purporting to be represented by documents.' There were also included an indemnity agreement and an exculpatory provision that any action taken by the Chase Bank or any correspondent of that bank 'under or in connection with the Credit or the relative drafts, documents or property, if taken in good faith, shall be binding on us [the partners] and shall not put you [the Chase Bank] or your correspondent under any resulting liability to us.' It was stated that the bananas were to be shipped to Mobile, Alabama.
The Chase Bank then issued its irrevocable letter of credit in conformity with the application. This letter of credit, like the application, contained only a brief description of the bananas, and not the more lengthy description which the partners claimed they had requested.
Bananas were delivered to Mobile, but there was testimony that they did not conform to the specifications. One of the partners requested the trust company and later the Chase Bank to stop payment on the letter of credit. The partners also brought a bill in equity (not one of the cases now before us) in the Superior Court in this Commonwealth against the trust company to restrain payment on the letter of credit. This bill alleged no fraud, breach of contract or misconduct by either the trust company or the Chase Bank.
An assignee of Agencias, the shipper of the bananas, also brought an action in the New York courts against the Chase Bank based upon the letter of credit and a draft drawn under it. The partners were allowed to intervene in the New York action and filed a cross action against the Chase Bank, but in this action also there was no allegation that the trust company or the Chase Bank 'had committed any breach of duty toward' the partners 'in connection with the application or the letter of credit.' In these proceedings summary judgment was recovered by the assignee of Agencias in the sum of $16,495.37. The Chase Bank paid this judgment and also, in connection with the New York action, incurred legal fees of $1,002.30. The cause of action of the Chase Bank against the partners was then assigned to the trust company, which had theretofore collected $15,000 from the partners which was available for application against the trust company's claim as assignee, leaving a balance of $2,497.67 claimed by the trust company.
The first of the present actions is an action by the partners in tort for deceit alleging that the trust company promised to insert, and fraudulently represented that it would insert, in the letter of credit the full specifications of the bananas and certain related terms of sale; that the partners relied on these representations, which the trust company knew were untrue; that the trust company intended to deceive, and did deceive, the partners by failing to insert the specifications in the letter of credit; and that, as a result of the failure, money was paid on the letter of credit. The trust company filed a cross action to recover the balance ($2,497.67) of its claim as assignee of the Chase Bank.
In the action for deceit brought by the partners, the trial judge, under leave reserved, entered a verdict for the trust company. The jury had found for the partners in the sum of $15,000. The trial judge did not act upon the trust company's motion for a new trial in this case, but in the cross action, in which the jury found for the partners, the trial judge ordered a new trial on the ground that the verdict was against the weight of the evidence. A consolidated bill of exceptions presents for our review exceptions saved by the partners to these ruling by the trial judge.
A new trial of the action by the trust company against the partners took place before a judge of the Superior Court, sitting without a jury. He found for the trust company, having denied certain requests for rulings, hereinafter mentioned, presented by the partners. A separate bill of exceptions, relating solely to the second trial of the cross action, presents the question of the correctness of the trial judge's denial of these requests.
1. In the action of deceit against the trust company the gist of the action was the alleged promise or representation of...
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