Maurice O'Meara Co. v. Nat'l Park Bank of New York

• Decision Date: 27 January 1925
• Citation: 146 N.E. 636,239 N.Y. 386
• Parties: MAURICE O'MEARA CO. v. NATIONAL PARK BANK OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

239 N.Y. 386

146 N.E. 636

MAURICE O'MEARA CO.

v.NATIONAL PARK BANK OF NEW YORK.

Court of Appeals of New York.

Jan. 27, 1925.

Action by the Maurice O'Meara Company against the National Park Bank of New York. From an order of the Appellate Division (209 App. Div. 501, 205 N. Y. S. 199), unanimously affirming an order of the Special Term, denying plaintiff's motion for summary judgment, plaintiff appeals. Question certified.

Orders reversed, motion granted, and question answered.

See, also, 209 App. Div. 874, 205 N. Y. S. 937.

The following question was certified: ‘Should the motion of the plaintiff for summary judgment herein have been granted?’

Cardozo and Crane, JJ., dissenting.Appeal from Supreme Court, Appellate Division, First department.

Carl A. Mead and Philip W. Lowry, both of New York City, for appellant.

Archibald R. Watson, John M. Harrington, and Louis F. Doyle, all of New York City, for respondent.

McLAUGHLIN, J.

This, action was brought to recover damages alleged to have been sustained by the plaintiff's assignor, Ronconi & Millar, by defendant's refusal to pay three sight drafts against a confirmed irrevocable letter of credit. The letter of credit was in the following form:

‘The National Park Bank of New York.

‘Our Credit No. 14956

October 28, 1920.

‘Messrs. Ronconi & Millar, 49 Chambers Street, New York City, N. Y.-Dear Sirs: In accordance with instructions received from the Sun-Herald Corporation of this city, we open a confirmed or irrevocable credit in your favor for account of themselves, in amount of $224,853.30, covering the shipment of 1,322 2/3 tons of newsprint paper in 72 1/2? and 36 1/2? rolls to test 11-12, 32 lbs. at 8 1/2¢ per pound net weight-delivery to be made in December, 1920, and January 1921.

‘Drafts under this credit are to be drawn at sight on this bank, and are to be accompanied by the following documents of a character which must meet with our approval:

‘Commercial invoice in triplicate.

‘Weight returns.

‘Negotiable dock delivery order actually carrying with it control of the goods.

‘This is a confirmed or irrevocable credit, and will remain in force to and including February 15, 1921, subject to the conditions mentioned herein.

‘When drawing drafts under this credit, or referring to it, please quote our number as above.

‘Very truly yours,

‘R. Stuart, Assistant Cashier.

‘(R. C.)’

The complaint alleged the issuance of the letter of credit; the tender of three drafts, the first on the 17th of December, 1920, for $46,301.71, the second on January 7, 1921, for $41,416.34, and the third on January 13, 1921, for $32,968.35. Accompanying the first draft were the following documents:

‘1. Commercial invoice of the said firm of Ronconi & Millar in triplicate, covering three hundred (300) thirty-six and one-half (36 1/2) inch rolls of newsprint paper and three hundred (300) seventy-two and one-half (72 1/2) inch rolls of newsprint paper, aggregating a net weight of five hundred and forty-four thousand seven hundred and twenty-six pounds (544,726), to test eleven (11), twelve (12), thirty-two (32) pounds.

‘2. Affidavit of Elwin Walker, verified December 16, 1920, to which were annexed samples of newsprint paper, which the said affidavit stated to be representative of the shipment covered by the accompanying invoices and to test twelve (12) points, thirty-two (32) pounds.

‘3. Full weight returns in triplicate.

‘4. Negotiable dock delivery order on the Swedish American Line, directing delivery to the order of the National Park Bank of three hundred (300) rolls of newsprint paper seventy-two and one-half (72 1/2) inches long and three hundred (300) half rolls of newspring paper.’

The documents accompanying the second draft were similar to those accompanying the first, except as to the number of rolls, weight of paper, omission of the affidavit of Walker, but with a statement: ‘Paper equal to original sample in test 11/12-32 pounds;’ and a negotiable dock delivery order on the Seager Steamship Company, Inc. The complaint also alleged defendant's refusal to pay, a statement of the amount of loss upon the resale of the paper due to a fall in the market price, expenses for lighterage, cartage, storage, and insurance amounting to $3,045.02, an assignment of the cause of action by Ronconi & Millar to the plaintiff, and a demand for judgment.

The answer denied, upon information and belief, many of the allegations of the complaint, and set up (a) as an affirmative defense, that plaintiff's assignor was required by the letter of credit to furnish to the defendant ‘evidence reasonably satisfactory’ to it that the paper shipped to the Sun-Herald Corporation was of a bursting or tensile strength of 11 to 12 points at a weight of paper of 32 pounds; that neither the plaintiff nor its assignor, at the time the drafts were presented, or at any time thereafter, furnished such evidence; (b) as a partial defense, that, when the draft for $46,301.71 was presented, the defendant notified the plaintiff there had not been presented ‘evidence reasonably satisfactory’to it, showing that the newsprint paper referred to in the documents accompanying said drafts was of the tensile or bursting strength specified in the letter of credit; that thereupon an agreement was entered into between plaintiff and defendant that the latter should cause a test to be made of the paper represented by the documents then presented, and, if such test showed that the paper was up to the specifications of the letter of credit, defendant would make payment of the draft; (c) for a third separate and distinct defense that the paper tendered was not, in fact, of the tensile or bursting strength specified in the letter of credit; (d) for a fourth separate and distinct defense that on or about January 15, 1921, and after the respective drafts referred to in the complaint had been presented to defendant for payment and payment refused, and at a time when the paper was owned and possessed by plaintiff or Ronconi & Millar, the Sun-Herald Corporation, in accordance with whose instructions and for whose account the letter of credit was issued, offered to the plaintiff that it would accept the newsprint paper referred to and pay for the same at a price of 8 1/2 cents per pound, provided the plaintiff or its assignor would promptly and reasonably satisfy the Sun-Herald Corporation that the newsprint paper tested as much as 11 points to 32 pounds as specified in the letter of credit, and was of the sizes specified therein; that the plaintiff refused to accept said offer; and (e) as a fifth separate and partial defense, all of the allegations of the fourth defense were repeated.

After issue had been joined the plaintiff moved, upon the pleadings and affidavits, pursuant to rule 113 of the Rules of Civil Practice, to strike out the answer and for summary judgment.

The claim for damages for the nonpayment of the third draft was, apparently, abandoned at or prior to the time the motion was made. It is unnecessary, therefore, to further consider that and it will not be again referred to in the discussion as to the first two drafts.

The motion for summary judgment was denied and the defendant appealed to the Appellate Division, where the order denying the same was unanimously affirmed, leave to appeal to this court granted, and the following question certified:

‘Should the motion of the plaintiff for summary judgment herein have been granted?’

[1] It is unnecessary to consider the denials contained in the answer, since in the answering affidavits defendant raised no issue as to any of the facts alleged in the complaint and in the plaintiff's affidavits upon which the motion was based. Defendant's affidavits used in opposition to the motion merely repeat the various denials contained in the answer. These denials were insufficient to raise an issue on a motion for summary judgment, since, under the rule, facts must be presented rather than mere general or specific denials in order to defeat a motion. Rules Civ. Prac. rule 113; General Inv. Co. v. Interborough Rapid Transit Co., 235 N. Y. 133, 139, 139 N. E. 216.

I am of the opinion that the order of the Appellate Division and the Special Term should be reversed and the motion granted. The facts set out in defendant's answer and in the affidavits used by it in opposition to the motion are not a defense to the action.

[2] The bank issued to plaintiff's assignor an irrevocable letter of credit, a contract solely between the bank and plaintiff's assignor, in and by which the bank agreed to pay sight drafts to a certain amount on presentation to it of the documents specified in the letter of credit. This contract was in no way involved in or connected with, other than the presentation of the documents, the contract for the purchase and sale of the paper mentioned. That was a contract between buyer and seller, which in no way concerned the bank. The bank's obligation was to pay sight drafts when presented if accompanied by genuine documents specified in the letter of credit. If the paper when delivered did not correspond to what had been purchased, either in weight, kind or quality, then the purchaser had his remedy against the seller for damages. Whether the paper was what the purchaser contracted to purchase did not concern the bank and in no way affected its liability. It was under no obligation to ascertain, either by a personal examination or otherwise, whether the paper conformed to the contract between the buyer and seller. The bank was concerned only in the drafts and the documents accompanying them. This was the extent of its interest. If the drafts, when presented, were accompanied by the proper documents, then it was absolutely bound to make the payment under the letter of credit, irrespective of whether it knew, or had reason to believe, that the paper was not of the tensile strength contracted for. This view, I think, is the one generally entertained with reference to a...