Thornbury v. Morris Oil Co., Inc., No. 18005
| Decision Date | 28 January 1993 |
| Docket Number | No. 18005 |
| Citation | 846 S.W.2d 238 |
| Parties | 20 UCC Rep.Serv.2d 1041 Wilford THORNBURY and Ruby Thornbury, Plaintiffs, v. MORRIS OIL COMPANY, INC., Defendant-Respondent, and Metropolitan National Bank, Defendant-Appellant. |
| Court | Missouri Court of Appeals |
D. Patrick Sweeney, Hall, Ansley, Carmichael & Gardner, Springfield, for defendant-appellant.
C. Ronald Baird, Mark J. Millsap, Dorr, Baird and Lightner, P.C., Springfield, for defendant-respondent.
The trial court entered summary judgment, Rule 74.04, 1 for $30,000 plus interest in favor of Morris Oil Company, Inc. ("Morris Oil") and against Metropolitan National Bank ("Metropolitan") on a letter of credit. Metropolitan appeals, insisting the letter is invalid because it was never "issued." A narrative of the unique facts is essential in addressing the legal issues.
Because the trial court heard no evidence, we glean the facts from the pleadings, depositions, and affidavits presented to the trial court, supplemented by the facts agreed on by Metropolitan and Morris Oil in their respective briefs. 2 In marshaling the facts, we are mindful we must scrutinize the record in the light most favorable to Metropolitan, the party against whom judgment was entered. Cavin v. Kasser, 820 S.W.2d 647, 649 (Mo.App.1991); Barnes v. City of Lawson, 820 S.W.2d 598, 599 (Mo.App.1991); Missouri Board for Architects, Professional Engineers and Land Surveyors v. Earth Resources Engineering, Inc., 820 S.W.2d 505, 507 (Mo.App.1991).
As its name suggests, Metropolitan is a bank chartered under the laws of the United States. Morris Oil, a Missouri corporation, is a distributor of petroleum products.
In July, 1988, Larry Thornbury and his wife, Roberta, were operating a business, Thornbury's So-Lo Service Station. They negotiated with Morris Oil for it to supply petroleum products to them, on credit, for sale at retail. Morris Oil agreed, provided the Thornburys furnished a $30,000 letter of credit.
About August 16, 1988, Plaintiffs, Wilford Thornbury and Ruby Thornbury, parents of Larry Thornbury, signed a $30,000 note to Metropolitan, together with certain deeds of trust securing the note. The purpose of these documents was to provide security for Metropolitan for a $30,000 letter of credit to be issued by it to Morris Oil for the account of Larry and Roberta Thornbury. The note and deeds of trust were prepared for the signatures of not only Plaintiffs, but also those of Larry and Roberta. Larry, like his parents, signed all the documents, but Roberta signed none of them.
Nonetheless, William P. Maddy, an employee of Metropolitan authorized to sign letters of credit on its behalf, signed the following instrument:
IRREVOCABLE LETTER OF CREDIT NO. 1202
Date: August 16, 1988
Springfield, Missouri
U.S. Dollars
Amount $30,000.00
To: Morris Oil Co.
AND
Wilford & Ruby Thornbury
4139 Tilden, Springfield, MO 65802
Gentlemen:
At the request of Larry W. & Roberta L. Thornbury AND Wilford & Ruby Thornbury and for the account of Thornbury's So-Lo Service Station, we hereby establish our irrevocable letter of credit in favor of Morris Oil Company for the account indicated above, for sums not exceeding $30,000.00, drawn at sight.
This irrevocable letter of credit covers all charges for services originated from or charges billed to the above indicated account from August 16, 1988.
Drafts drawn under this letter of credit must be accompanied by your statement for services. Each draft drawn relative hereto must be marked: "Drawn Against Irrevocable Letter of Credit No. 1202."
We hereby agree to honor each draft drawn under and in compliance with the terms of this credit, if duly presented (together with the document herein specified) on or before: August 16, 1989.
William P. Maddy
Title: ____________________
Approximately a year later, about August 15, 1989, Morris Oil presented Metropolitan a $30,000 draft signed by Jerry Carroll, vice president of Morris Oil, against the above letter of credit. The draft was accompanied by (1) a photocopy of the letter, and (2) unpaid bills for petroleum products delivered by Morris Oil to Thornbury's So-Lo Service Station.
Banker Maddy noted the documents appeared to be "in proper form." He told Carroll and John DeWeese, a Morris Oil employee, "it looked like a legitimate letter of credit." However, Maddy wanted to review the matter with Metropolitan's president. Maddy informed Carroll and DeWeese they "could come back [later] and get their check."
The next day, August 16, 1989, Plaintiffs commenced this action by suing Metropolitan and Morris Oil. Although a copy of Plaintiffs' petition is not in the record, 3 we are told by the briefs that it sought injunctive relief barring Metropolitan from honoring the letter of credit and Morris Oil's draft.
Metropolitan filed a cross-claim for declaratory judgment against Morris Oil, averring Metropolitan never delivered the "original" letter of credit to Morris Oil. The cross-claim pled Metropolitan "still retains the original in its file," and inasmuch as Roberta Thornbury failed to sign the note, deeds of trust and "other loan documents," Metropolitan never "issued or established" the letter of credit. The cross-claim prayed the trial court to determine, among other issues, whether Metropolitan was obliged to honor Morris Oil's $30,000 draft.
Morris Oil filed a five-count first amended cross-claim against Metropolitan. Count I--the only count involved in this appeal--prayed for judgment against Metropolitan for $30,000 plus interest from the date Morris Oil presented the draft to Metropolitan.
Morris Oil moved for summary judgment against Metropolitan. Metropolitan moved for summary judgment against Morris Oil. Pertinent to these motions, the record yields the following additional facts.
Metropolitan never mailed or otherwise delivered the original letter of credit to Morris Oil. The original letter remains in Metropolitan's "closed files." However, vice president Carroll of Morris Oil received, by mail, a photocopy of the letter of credit about August 17, 1988. The identity of the mailer is unrevealed.
Before receiving the photocopy, Morris Oil sold Larry and Roberta Thornbury petroleum products on a "cash only" basis. After receiving the photocopy, Morris Oil allowed Larry and Roberta to buy petroleum products on credit. During the latter part of 1988 and early 1989, Larry and Roberta became delinquent in payment of their account with Morris Oil. Inferably, the delinquencies exceeded $30,000 when Morris Oil presented the draft to Metropolitan.
On January 7, 1992, the trial court entered judgment on Count I of Morris Oil's first amended cross-claim against Metropolitan, and on Metropolitan's cross-claim against Morris Oil. The trial court found, inter alia:
....
3. The photocopy of ... Letter of Credit No. 1202 ... is a duplicate original of the letter of credit and is a valid, issued and established letter of credit and was executed by the appropriate bank official;
4. The letter of credit was received in the United States Mail by ... Morris [Oil];
....
6. The terms and conditions of the letter of credit were fulfilled by ... Morris [Oil];
7. ... Metropolitan has failed and refused, and continues to fail and refuse, to pay the sight draft drawn against ... Letter of Credit No. 1202; and
8. ... Morris [Oil] is entitled to damages ... of Thirty Thousand Dollars ... together with interest at the legal rate of nine percent ... from the date of demand of August 15, 1989, and for its costs incurred as to Count I of [its] First Amended Cross-Claim against ... Metropolitan.
In addition to awarding Morris Oil the money judgment on Count I of its first amended cross-claim against Metropolitan, the trial court ruled in favor of Morris Oil and against Metropolitan on the latter's cross-claim against Morris Oil, declaring the letter of credit must be honored by Metropolitan. The judgment further provided: "[T]he court designates and certifies the ... judgment as to Count I of ... [Morris Oil's] First Amended Cross-Claim against ... Metropolitan to be final for purposes of appeal and finds that there is no just reason for delay in granting a final judgment as to the letter of credit ... on Count I of ... [the] First Amended Cross-Claim." See: Rule 74.01(b).
This appeal followed.
Metropolitan's brief presents one point relied on, which reads:
The trial court erred in granting summary judgment for ... Morris [Oil] and against ... Metropolitan on Count I of the first amended cross-claim of ... Morris [Oil] in which the court found that the photocopy of the Irrevocable Letter of Credit No. 1202 was a valid, issued and established letter of credit because:
(A) The trial court deemed the photocopy a "duplicate original" in that such term is not applicable in the law of commercial transactions, but in the rules of evidence.
(B) The plain language of Article 5 of the Uniform Commercial Code indicates that the original letter of credit must be received by the beneficiary to be a valid, issued and established letter of credit.
(C) The banking customs and usage of trade set forth standards mandating that the original letter of credit must be received by the beneficiary to be a valid, issued and established letter of credit.
Missouri's version of the Uniform Commercial Code ("UCC") is chapter 400, RSMo 1986, as amended. Article 5 of the UCC is designated: "Uniform Commercial Code--Letters of Credit." Section 400.5-103, a part of Article 5, reads:
(1) In this article unless the context otherwise requires
(a) "Credit" or "letter of credit" means an engagement by a bank ... made at the request of a customer ... that the issuer will honor drafts ... upon compliance with the conditions...
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