National Diamond Syndicate, Inc. v. United Parcel Service, Inc.

• Decision Date: 07 March 1990
• Docket Number: 88-2687,Nos. 88-2620,s. 88-2620
• Citation: 897 F.2d 253
• Parties: NATIONAL DIAMOND SYNDICATE, INC., Plaintiff-Appellee, Cross-Appellant, v. UNITED PARCEL SERVICE, INC., Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 253

897 F.2d 253

58 USLW 2542

NATIONAL DIAMOND SYNDICATE, INC., Plaintiff-Appellee, Cross-Appellant, v. UNITED PARCEL SERVICE, INC., Defendant-Appellant, Cross-Appellee.

Nos. 88-2620, 88-2687.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 30, 1989.

Decided March 7, 1990.

Alvin R. Becker, Steven Garmisa, Timothy M. Kelly, Beermann, Swerdlove, Woloshin, Barezky & Berkson, Chicago, Ill., for Nat. Diamond Syndicate, Inc.

James D. Crawford, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., and Robert E. Arroyo, and Michael J. Sreenan, Keck, Mahin & Cate, Chicago, Ill., for United Parcel Service, Inc.

Before CUDAHY, EASTERBROOK and MANION, Circuit Judges.

CUDAHY, Circuit Judge.

Our decision in this case turns on the meaning of "cash" in a c.o.d. delivery contract. National Diamond Syndicate ("NDS") hired United Parcel Service ("UPS") to deliver three c.o.d. parcels, choosing UPS's "cash only" collection option. UPS collected three facially valid cashier's checks, which were subsequently discovered by NDS to be counterfeit. NDS claims that UPS breached the parties' contract by collecting the cashier's checks in lieu of currency without first verifying their validity or informing NDS of the "suspicious circumstances" surrounding the deliveries; UPS defends on the thesis that the commercial world and NDS accept cashier's checks as "cash." On cross motions for summary judgment, the district court ruled that UPS had breached the parties' contract by failing to collect "cash," but found that NDS had partially ratified UPS's breach. UPS now appeals from the district court's interpretation of the "cash only" term, and NDS cross-appeals from the district court's ruling on ratification. We reverse on UPS's appeal and affirm on NDS's cross-appeal.

I. Factual Background

The parties' summary judgment submissions establish the essential facts of this case. See Joint App. at 2-43. In late June and early July of 1986, NDS, a diamond wholesaler located in downtown Chicago, received three orders for diamonds from two individuals in California, Michael Conto and Paul Ryan. Conto and Ryan represented themselves as retail jewelry store owners. On June 25, 1986, Kumar Rampersad, one of NDS's shipping clerks, telephoned UPS to request pickup of a package of diamonds for c.o.d. delivery to Michael Conto. UPS was instructed to collect $15,644.75; Rampersad further instructed the UPS customer service representative with whom he placed the order to mark the shipment "cash only." UPS's shipper receipt for that package indicates that the package was so marked.

On July 2, Rampersad again telephoned UPS and requested pickup of two packages to be delivered c.o.d. to Paul Ryan. UPS was instructed to collect $15,559.00 for one package and $5,590.00 for the second. UPS's shipper receipt for the latter demonstrates that UPS was to collect "cash only" for that parcel. However, the shipper receipt for the more valuable Ryan package does not indicate that UPS was to accept "cash only" upon delivery. NDS charges UPS with this omission, but UPS has asked us to assume, for purposes of this appeal only, that all three parcels carried a "cash only" instruction. ¹

UPS delivered the Ryan packages on July 3 and collected a cashier's check for each in the proper amounts. The UPS deliveryperson determined that the checks were facially valid. Following its usual practice, UPS forwarded the checks to NDS on or about July 10, 1986. ² NDS's bookkeeper, Ruppert Cotey, posted the payments on the company's computerized account records and deposited the cashier's checks, along with the rest of the payments received that day, in NDS's account at LaSalle National Bank.

The Conto package was delivered by UPS on June 25, and the UPS driver again accepted a facially valid cashier's check from the recipient. UPS sent the check to NDS, but NDS did not deposit that check because it had already learned from LaSalle that the Ryan cashier's checks were counterfeit. Since the Conto cashier's check was written against the same bank as were the Ryan checks, NDS telephoned that bank and learned that the Conto check, too, was counterfeit.

NDS sued UPS for the value of its three shipments, claiming breach of contract because UPS had collected counterfeit cashier's checks when it was instructed to deliver the packages for "cash only." NDS concedes that all three cashier's checks were facially valid, but argues that UPS should not have accepted the cashier's checks without verifying their validity or informing NDS of the "suspicious circumstances" surrounding the Ryan and Conto deliveries. UPS asserts in its defense that cashier's checks are the commercial equivalent of currency and, thus, are "cash." Further, UPS contends that NDS understands cashier's checks to be an authorized form of payment for "cash only" deliveries, since NDS accepted cashier's checks for such shipments before receiving the counterfeit instruments and has continued to do so since that time.

The district court concluded that the term "cash only" is unambiguous and held that UPS breached its contract with NDS by accepting payment in a form other than "cash" (i.e., currency). Since NDS deposited the Ryan cashier's checks without qualification, however, the court ruled that NDS had ratified UPS's breach as to those checks. UPS was found liable for the amount of the Conto check. Each party appeals from the portion of the district court's judgment decided adversely to it.

II. The Meaning of "Cash Only"

We review de novo a district court's grant or denial of summary judgment. Santiago v. Lane, 894 F.2d 218, 220 (7th Cir.1990); Dribeck Importers, Inc. v. G. Heileman Brewing Co., 883 F.2d 569, 573 (7th Cir.1989). Under Illinois law, ³ if a contract is "in writing, is unambiguous and contains no uncertain terms, interpretation of the contract is a question of law for the court," Nerone v. Boehler, 34 Ill.App.3d 888, 890-91, 340 N.E.2d 534, 536 (5th Dist.1976), and no evidence outside the four corners of the contract may be employed to construe its terms. A.A. Conte, Inc. v. Campbell-Lowrie-Lautermilch Corp., 132 Ill.App.3d 325, 329, 87 Ill.Dec. 429, 432, 477 N.E.2d 30, 33 (1st Dist.1985). Whether a contract is ambiguous is a question of law, and "ambiguity can be found only if the language [of the contract] is reasonably or fairly susceptible of more than one construction." Id., 132 Ill.App.3d at 328, 87 Ill.Dec. at 432, 477 N.E.2d at 33; accord W.H. Lyman Constr. Co. v. Village of Gurnee, 131 Ill.App.3d 87, 96, 86 Ill.Dec. 276, 283, 475 N.E.2d 273, 280 (2d Dist.1985); see also Fields v. Franklin Life Ins. Co., 115 Ill.App.3d 954, 958, 71 Ill.Dec. 776, 778, 451 N.E.2d 930, 932 (5th Dist.1983) (ambiguity in meaning of contract may be created by language used, or by some disputed extrinsic facts, such as peculiar meaning attached to words by parties). Thus, we must decide as an initial matter whether the term "cash only" in the c.o.d. shipping contracts at issue here is ambiguous.

Cashier's checks fall within the dictionary definition of "cash." Webster's Third New International Dictionary (1976) defines cash as

ready money (as coin, specie, paper money, an instrument, token, or anything else being used as a medium of exchange) ...; broadly: bank deposits and certain readily negotiable paper (as checks, drafts, notes, bearer bonds, coupons) ... money or its equivalent paid immediately or promptly after purchasing.

Similarly, the entry on "cash" in Black's Law Dictionary (5th ed. 1979) states: "Money or the equivalent; usually ready money. Currency and coins, negotiable checks, and balances in bank accounts. That which circulates as money." Ballantine's Law Dictionary (3d ed. 1969) makes the following addition to the definition of cash: "... the antonym of credit; it includes coins, currency, a cashier's check, and a certified check."

Court definitions of cash vary with the circumstances presented by a particular case. E.g., Flower v. Dort, 260 S.W.2d 685, 687-88 (Tex.Civ.App.1953) (construing "cash" broadly in context of will); Lane v. Railey, 280 Ky. 319, 133 S.W.2d 74, 78-79 (App.1939) (in context of will, "cash" included "stocks, bonds, bank credits, and such other personal intangible property as might be readily converted into 'cash' or 'money.' "); compare A.W. Cullum & Co. v. Calvert, 450 S.W.2d 419, 423 (Tex.Civ.App.1970) ("Cash has been defined as that which circulates as money ...," but trading stamps are not cash for purposes of sales tax laws.) (citing Flower v. Dort ), with Lee v. State Dept. of Public Health and Welfare, 480 S.W.2d 305, 309-10 (Mo.App.1972) ("Cash" is "money or currency issued by lawful authority intended to pass and circulate as such, ..." and prearranged burial contracts were not "cash" for purposes of terminating old-age benefits.).

Only a few courts, however, have directly addressed the question whether a cashier's check constitutes cash for a specific transaction. E.g., Greenberg v. Alter Co., 255 Iowa 899, 124 N.W.2d 438, 441 (1963) (in context of public auction sale advertisement, cash included cashier's check); Leenet Jewelry Corp. v. United Parcel Service, Inc., Index No. 64051/86 (N.Y.Civ.Ct. Apr. 22, 1987), reprinted in Joint App. at 141-42 (interpreting c.o.d. delivery contract and holding that "commercially a cashier's check has always been deemed the equivalent of cash.") (citations omitted). But see Streiff Jewelry Co. v. United Parcel Service, Inc., 670 F.Supp. 341, 343 (S.D.Fla.1987) ("[A] cashier's check is not the equivalent of 'cash only' [in a c.o.d. delivery contract]...."), opinion withdrawn and judgment vacated at parties' request pursuant to settlement agreement, 679 F.Supp. 7 (S.D.Fla.1988); Perry v. West, 110 N.H. 351, 266 A.2d 849 (1970) (in context of public auction, "cash" did not include cashier's checks). The only Illinois case we have discovered on the topic dates back to 1895 and adopts a narrow definition of "cash"...