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MARINE MIDLAND GRACE TRUST CO. v. BANCO DEL PAIS

December 7, 1966

MARINE MIDLAND GRACE TRUST COMPANY OF NEW YORK, Plaintiff,
v.
BANCO DEL PAIS, S. A., Defendant


McLean, District Judge.


The opinion of the court was delivered by: MCLEAN

McLEAN, District Judge.

Both plaintiff and defendant move for summary judgment in this action. The complaint seeks recovery of $256,153.84 upon an overdraft resulting from the fact that plaintiff paid checks drawn by defendant upon its account with plaintiff, although there were no funds on deposit in the account to cover the checks. Defendant's answer alleges that there were sufficient funds on deposit. It is apparent from the motion papers that defendant means that there should have been adequate funds, but that plaintiff wrongfully failed to credit defendant's account with the amount of certain drafts presented by defendant to plaintiff under four letters of credit issued by plaintiff. The question thus turns upon whether plaintiff properly refused to honor the drafts.

 Many of the facts are undisputed. They may be summarized as follows:

 On August 26, 1965, August 30, 1965, September 3, 1965 and September 7, 1965, plaintiff issued its letters of credit numbered respectively 146531, 146576, 146723 and 59425, in the respective amounts of $26,738, $51,000, $53,382 and $120,000, each in favor of Ricardo Nevares Ocampo, Mexico, D.F. Each letter of credit stated that the credit was transferable by Ocampo. In each letter of credit plaintiff undertook to pay drafts presented under it when accompanied by certain specified documents pertaining to shipments of mercury. Three letters of credit specified that the documents should include "full set clean on board truckers bills of lading." The fourth letter of credit, No. 146576 dated August 30, 1965, specified "Full Set Clean On board ocean bills of lading issued to the order of MARINE MIDLAND GRACE TRUST COMPANY OF NEW YORK, N.Y., marked notify: - J. CLETON & CO. N.V., P.O. BOX 193, ROTTERDAM, HOLLAND." This letter of credit specified that the goods were to be shipped "PER S/S 'SCHAVENBURG' (OZEAN STINNES LINES)."

 Three of the letters of credit stated that the credit was subject to the "Uniform customs and practice for Commercial Documentary Credits fixed by the Thirteenth Congress of the International Chambers of Commerce" ("Thirteenth Congress Rules"). One, No. 59425, dated September 7, 1965, stated that it was subject to "THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS 1962 REVISION INTERNATIONAL CHAMBER OF COMMERCE BROCHURE NO. 222" ("1962 Revision"). *fn1"

 These two sets of rules for letter of credit transactions contain two provisions which are pertinent here. The first relates to the procedure to be followed by the issuing bank when a draft drawn under its letter of credit is presented to it for payment and the issuing bank claims that the documents accompanying the draft do not conform to the terms of the credit. Article 10 of the Thirteenth Congress Rules provides:

 
"If such claim is to be made, notice to that effect, stating the reasons therefor, must be given by cable or other expeditious means to the Bank demanding reimbursement and such notice must state that the documents are being held at the disposal of such Bank or are being returned thereto. The issuing Bank shall have a reasonable time to examine the documents."

 Article 8 of the 1962 Revision contains a substantially identical provision.

 The second relates to on board bills of lading. Article 23 of the Thirteenth Congress Rules provides:

 
"When a shipment is stipulated 'On Board', the loading on board can be evidenced by means of a notation signed or initialed on behalf of the carrier. If the Bill of Lading is presented after the ultimate shipment date specified in the credit, the said notation must be dated and this date shall be considered as the date of loading on board and shipment."

 The 1962 Revision sets forth under the heading "Marine Bills of Lading" the following under Article 18:

 
"Loading on board may be evidenced by an on board Bill of Lading or by means of a notation to that effect dated and signed or initialled by the carrier or his agent, and the date of this notation shall be regarded as the date of loading on board and shipment."

 The 1962 Revision also contains another section headed "Other Shipping Documents etc." under which Article 22 provides, in pertinent part, as follows:

 
"Banks will consider * * * Trucking Company Bill of Lading or any other similar document as regular when such document bears the reception stamp of the carrier ...

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