National City Bank v. Seattle Nat. Bank

• Decision Date: 10 October 1922
• Docket Number: 17283.
• Citation: 121 Wash. 476,209 P. 705
• Parties: NATIONAL CITY BANK v. SEATTLE NAT. BANK.
• Court: Washington Supreme Court

209 P. 705

121 Wash. 476

NATIONAL CITY BANK v. SEATTLE NAT. BANK.

No. 17283.

Supreme Court of Washington

October 10, 1922

Department 1.

Appeal from Superior Court, King County; Boyd J. Tallman, Judge.

Action by the National City Bank against the Seattle National Bank. From a judgment of dismissal, plaintiff appeals. Affirmed.

Guie &amp Halverstadt and Poe & Falknor, all of Seattle, for appellant.

Bausman Oldham, Bullitt & Eggerman, of Seattle, for respondent.

TOLMAN J.

By this action appellant as plaintiff sought a judgment against respondent as defendant, upon a letter of credit issued by a Chicago bank, and from a judgment dismissing the action with prejudice, after a trial on the merits, the plaintiff has appealed.

There is little dispute regarding what we consider the main and governing facts involved, which are substantially as follows On May 20, 1920, the Corn Exchange National Bank of Chicago telegraphed to respondent as follows:

'Please advise International Trading Company we are opening irrevocable credit in their favor seventy two thousand eight hundred fifty dollars account John Sexton Company for one hundred fifty five tons standard white granulated sugar at twenty three dollars fifty cents net per hundred pounds FOB cars Seattle immediate shipment from Hongkong certificates by Hongkong Government and Lloyds covering quality net shipping weights inspection and analysis to accompany draft credit expiring August twentieth. Corn Exchange Natl. Bank.'

The respondent, as requested, informed the International Trading Company of the receipt of the wire and of its contents. On the same day the Corn Exchange National Bank issued its letter of credit, mailing a copy thereof to respondent enclosed with a letter, the letter of credit and letter of transmission reading as follows:

'Commercial Credit for Domestic Use.

'The Corn Exchange National Bank of Chicago.

'Capital and Surplus $10,000,000.

'$72,850.00 U. S.

No. 1627.

'Chicago, May 20, 1920.

'To International Trading Company of America, Inc. Seattle, Washington--Gentlemen: We hereby authorize you to draw on the Seattle National Bank, in Seattle, at sight for any sum or sums not exceeding in all seventy-two thousand eight hundred fifty dollars, U.S. gold, for account of John Sexton & Co., Chicago, for invoice cost of one hundred fifty-five tons standard white granulated sugar at $23.50 net per 100 pounds, packed in double sacks f. o. b. cars Seattle, Washington, to be shipped to John Sexton & Co., Chicago. Immediate shipment from Hongkong, China.

'Railroad bills of lading issued to the order of the shipper and indorsed in blank, together with invoices, certificates by Hongkong government, and Lloyd's covering quality, net shipping weights, inspection, and analysis, must accompany drafts. The shipment must be completed and the drafts drawn by August 20, 1920.

'We hereby agree with the drawers, indorsers, and bona fide holders of drafts drawn under and in compliance with the terms of this credit that the same shall be duly honored upon presentation at the office of the Seattle National Bank, Seattle, Washington.

'Drafts under this credit must bear upon their face the words: 'Drawn under Corn Exchange National Bank of Chicago Credit No. 1627, dated May 20, 1920.' This credit is irrevocable up to and including August 20, 1920.

'We are, gentlemen, yours faithfully,

'Owen S. Reeves, Jr., V. P.

'John S. Cook, Asst. Cash.'

'The Corn Exchange National Bank of Chicago.

'Capital and Surplus $15,000,000.

'Chicago, May 20, 1920.

'Seattle National Bank, Seattle, Washington--Dear Sirs: We confirm our wire to you of to-day as follows: 'Please advise International Trading Company we are opening irrevocable credit in their favor seventy two thousand eight hundred fifty dollars account John Sexton Company for one hundred fifty five tons standard white granulated sugar at twenty three dollars fifty cents net per hundred pounds f. o. b. cars Seattle immediate shipment from Hongkong certificates by Hongkong government and Lloyd's covering quality net shipping weights inspection and analysis to accompany draft credit expiring August twentieth'--and in connection with this letter of credit we hand you herewith copy of same No. 1627 which we have made available with your good selves.

'Would you kindly notify the beneficiaries that you have received a copy of this credit and advise us if you make any charge for negotiating drafts drawn under this credit. Of course if you do not it is understood that we will credit your account here in Chicago on arrival of the drafts under date of the day in which you made payment in Seattle.

'Yours very truly,

'John S. Cook, Assistant Cashier.'

On May 28, 1920, respondent replied thereto as follows:

'May 28, 1920.

'Corn Exchange National Bank, Chicago, Ills.--Gentlemen: This will acknowledge receipt of your favor of May 20, confirming your wire of that date and enclosing copy of your letter of credit No. 1627 in favor of the International Trading Company of America. We will be pleased to negotiate drafts drawn under this credit without charge, with the understanding that you will credit our account on the day that payment is made by us.

'Yours very truly,

'CLLaG--B C L. La Grave, Assistant Cashier.'

The letter of credit called for delivery at Seattle, but its terms were subsequently modified so as to permit the delivery of 85 tons of sugar f. o. b. Seattle, and 70 tons f. o. b. San Francisco. No other change or modification of the terms of the letter of credit was ever made. It is not claimed that there was any communication either oral or written between the litigants here until about July 10, 1920, when, upon the arrival in San Francisco of the sugar to be delivered there, which was the first shipment to arrive, appellant received a telegram from its San Francisco correspondent advising it of the arrival of the sugar there, stating that certain documents with drafts drawn on the National City Bank were being presented, and asked appellant to pay them. This wire was taken by appellant's cashier to an officer of the respondent, who was then requested to wire the Corn Exchange National Bank for authority to make payment for the San Francisco shipment, under the letter of credit hereinbefore set out. This telegram was sent and a reply received refusing to authorize payment for the San Francisco shipment under the letter of credit here involved, for the reason that the documents did not conform to the terms of the letter of credit. This refusal being communicated to defendant, it in turn refusal to make payment of the drafts drawn on it covering the San Francisco shipment, so that all parties refused to accept the documents, or to pay any drafts drawn on account of the San Francisco shipment, on the ground of nonconformity of the documents with the terms of the respective letters of credit. Thereafter the Seattle shipment of 85 tons of sugar arrived, preceded by the documents relating to the same.

About July 21 appellant's cashier again saw an officer of the respondent, showed him the documents accompanying the Seattle shipment, and informed him that the same would be presented with draft for payment on the following day. After the refusal to accept the San Francisco shipment and the failure to secure authority from the Corn Exchange National Bank to pay drafts drawn against its letter of credit in payment for the same, respondent's officers advised appellant's officers that any drafts drawn against the Seattle shipment would not be paid by respondent without telegraphic advices from the Corn Exchange National Bank authorizing such payment. This authority being refused, respondent declined to pay the drafts, and, after some attempt to induce the Corn Exchange National Bank to recede from its position, this action was begun.

The letter of credit, which is the basis of this action authorizes the payment of drafts for standard white granulated...