Shogyo Intern. Corp. v. First Nat. Bank of Clarksdale, 54857
| Citation | 475 So.2d 425 |
| Decision Date | 24 July 1985 |
| Docket Number | No. 54857,54857 |
| Parties | SHOGYO INTERNATIONAL CORPORATION v. FIRST NATIONAL BANK OF CLARKSDALE, Mississippi. |
| Court | United States State Supreme Court of Mississippi |
R. Conner McAllister, Jackson, for appellant.
William Cliff Heaton, Fincher G. Bobo, Neblett, Bobo, Chapman & Heaton, Shelby, for appellee.
Before WALKER, P.J., PRATHER and SULLIVAN, JJ.
Co-Products Unlimited, Inc., a manufacturer, acting through Gus Roessler, its general manager, ordered 100,000 plastic wheel casters in August, 1979, from Shogyo International Corporation, a New York import company. Gene Rubin, sales manager of Shogyo, required Co-Products, as a new customer, to provide Shogyo with a letter of credit from a bank. The First National Bank of Clarksdale, Mississippi, declined to issue a letter of credit but after conversations between Wayne Winter, executive vice-president of the Bank, Roessler and Rubin, the Bank agreed to give a guarantee and did send a letter of guarantee to Shogyo guaranteeing the first shipment of casters to Co-Products.
Shogyo then issued a letter of credit to its foreign suppliers and when the casters were shipped to Co-Products the invoice was supplied to the Bank and the Bank forwarded a cashier's check to Shogyo.
This system was used twice in 1979. Its internal operation consisted of Roessler telling his principals that he needed to order materials and Roessler would then notify the Bank. The principals and the Bank would then arrange credit at the Bank. Winter, on behalf of the Bank, would then write the letter of guaranty to Shogyo.
On February 5, 1980, Co-Products ordered 150,000 wheel casters from Shogyo. The purchase order stated that it was placed under the "usual" terms. To both Rubin, of Shogyo, and Roessler, of Co-Products, this meant a guarantee from the Bank, just as the other transactions had done.
The crux of this case is the letter sent by Wayne Winter from the Bank to Shogyo International on February 19, 1980. This letter said:
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
Shogyo considered this letter as confirmation of their conversation with the Bank. Winter, of the Bank, testified that the letter was merely to thank Shogyo for extending credit to Co-Products. Winter further testified that this was not a letter of guarantee because at the time this letter was written the Bank was no longer satisfied with its financial dealings with Co-Products, had had difficulty communicating with its principal, and knew that Co-Products was in bad financial condition. Furthermore, at the time the letter was mailed to Shogyo, Co-Products had not made financial arrangements with the Bank.
On March 4, 1980, Shogyo again wrote the Bank, asking Winter to initial his approval of the letter outlining Shogyo's understanding that the Bank was guaranteeing payment for the casters. Winter did not return this letter and testified that it was the Bank's position that it had no duty to Shogyo to guarantee the payment, nor did it have a duty to Shogyo to inform that corporation that the Bank had canceled any credit arrangements between the Bank and Co-Products. In due course, all three shipments of the casters arrived and were not paid for when the invoices were presented to the Bank. Shogyo then filed suit against the Bank for $64,500 in the Circuit Court of Coahoma County. This cause by agreement was transferred to the County Court of Coahoma County. After trial before the county judge, sitting without a jury, the trial court found that the letter of February 19, 1980, was not a letter of credit under the Uniform Commercial Code, Sec. 75-5-101, et seq., and the Mississippi Statute of Frauds, Mississippi Code Annotated Sec. 15-3-1 (1972), prevented the enforcement of the parol contract. Therefore, the suit by Shogyo was dismissed.
The trial court was correct in its finding that the letter of February 19, 1980, was not a letter of credit. Nothing, however, turns on this. Shogyo clearly acted in reliance upon the Bank's letter of February 19, 1980. The representation that Co-Products had made financial arrangements with the Bank for the purchase of the casters, followed by the statement that the Bank understood that the first shipment would arrive in June, made it...
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