The opinion of the court was delivered by: LASKER
The issue presented is whether Irving Trust Company ("Irving") acted properly in refusing to honor a letter of credit issued on behalf of plaintiff Dessaleng Beyene. Irving moves for summary judgment to dismiss the complaint against it on the grounds that it complied with the obligations which apply under the Uniform Customs and Practice for Documentary Credits ("UCP") of the International Chamber of Commerce,
and the plaintiff Jean Hanson lacks standing to maintain this action.Beyenne and Hanson oppose the motion on the grounds that there exist material questions of fact which cannot be resolved on a motion for summary judgment. For the reasons set forth below, Irving's motion is granted.
In March of 1978 Beyenne, executive director of the Lynx International Group, Inc., a general merchandising and exchange corporation located in Arlington, Virginia, agreed to sell and to export to Mohammed Sofan, a resident of the Yemen Arab Republic, two prefabricated houses known as "O'Domes." Sofan attempted to finance the purchase through the use of a letter of credit in the amount of $62,400 which was issued by the Yemen Bank for Reconstruction and Development ("YBRD") in August of 1978 in favor of Beyene. YBRD designated Irving as the confirminig bank for the letter of credit and Irving subsequently notified Beyene of the letter's terms and conditions. The letter's expiration date was initially set as October 19, 1978, but it was ultimately extended until May 31, 1979. During the intervening period, Beyene designated the National Bank of Washington ("NBW") as the collecting bank and he notified Irving that he had made assignments to NBW from the letter's proceeds totaling $50,000. The complaint alleges that Irving was also aware that Hanson was entitled to receive $40,000 of the credit, although Irving disputes this proposition and contends that it was unaware until July of 1979, that Hanson played a role in any of these transactions after the letter had expired.
On May 4, 1979 NBW mailed to Irving all of the documents required under the terms of the letter of credit. According to a summary of events prepared in October 1979 by Paul D. Shaffer, the NBW official responsible for submitting these documents, Ragai S. Nasser, an employee in Irving's letter of credit section, telephoned Shaffer on May 10, 1979 to inform him of five discrepancies in the submitted documents. The two which are relevant in resolution of the issues presented here were (1) that the bill of lading for the O'Domes issued on April 16, 1979 was not presented to Irving within 21 days from that date as required under UCP Article 42 and (2) that the bill of lading listed the party to be notified as Mohammed Soran instead of Mohammed Sofan.
Shaffer's summary states that Nasser agreed to waive the late presentment of the bill of lading discrepancy because he could not confirm the actual date of the bill's receipt by Irving. However, Nasser's affidavit in support of the summary judgment motion makes no mention of any waiver.
Shaffer also testified at his deposition that both he and Nasser discussed the fact that the Soran-Sofan misspelling was "an extremely minor discrepancy,"
that Nasser was going to look into the possibility that Irving might honor the credit in spite of the discrepancy but that Irving never waived the discrepancy and continued to maintain that one existed,
and that Irving would send to YBRD a cable noting the single misspelling discrepancy and requesting authorization to pay the letter of credit.
As to three remaining discrepancies noted by Irving, NBW mailed to Irving corrected documents on May 25, which Irving claims it did not receive until June 4, after the letter of credit had expired. On June 5, 1979, Irving cabled YBRD for authorization after noting the late presentation of the bill of lading, a discrepancy which Shaffer claims Irving waived, and the misspelling of Sofan's name. Irving subsequently sent three follow up cables to the Yemen bank on June 8, 13, and 21.
According to Shaffer's prepared summary, he spoke with Irving's Nasser on June 25 and was told, in effect, that Sofan had refused to pay due to the discrepancies in the documents presented by NBW to Irving. In an effort to cure the misspelling discrepancy, NBW sent to Irving a corrected bill of lading -- identifying Sofan as the party to be notified -- on July 25, although the buyer continued to refuse to authorize payment.Subsequent efforts by Beyene to obtain payment proved unrewarding. Beyenne and Hanson then filed suit against Irving and NBW for wrongful dishonor of the letter of credit in the District of Columbia Superior Court but after that case was dismissed as to Irving for lack of personal jurisdiction, they instituted this action against Irving alone in this district.
Irving argues that it is entitled to summary judgment on the grounds that, inter alia, it complied with its obligations under the UCP as a confirming bank and that it was under a duty to pay the proceeds of the letter of credit only if Beyene fully complied with the credit's terms and conditions. Irving contends that three discrepancies in the documents presented by NBW each support its decision not to honor the letter of credit: (1) some corrected documents were received by Irving after the May 31, 1979 expiration date for the letter of credit; (2) NBW presented documents to Irving more than 21 days after the bill of lading was issued on April 16, 1979, contrary to UCP Article 41; and (3) the misspelling of Sofan's name in the bill of lading was a material discrepancy.
Plaintiffs respond that the deposition testimony of Paul Shaffer establishes material facts in dispute, as to whether documents were timely presented to Irving and concerning the misspelling of Sofan's name, and that the disputed facts bar an award of summary judgment in Irving's favor.
Plaintiffs are correct that Shaffer's deposition and summary of events differ sharply from Irving's statement of facts and raise questions of fact with regard to whether Irving waived the timeliness discrepancies and whether it is estopped from raising the untimely presentment of the documents in support of its motion. See Voest-Alpine International Corp. v. Chase Manhattan Bank, 707 F.2d 680, 684-85 (2d Cir. 1983); Barclays Bank D.C.O. v. Mercantile National Bank, 481 F.2d 1224, 1237 (5th Cir. 1973), cert. denied, 414 U.S. 1139, 39 L. Ed. 2d 96, 94 S. Ct. 888 (1974).However, review of the Shaffer deposition does not reveal any factual dispute between the parties as to whether the Sofan-Soran misspelling was a material discrepancy. Inasmuch as this discrepancy alone supports granting Irving's motion, plaintiffs' arguments pertaining to this issue are examined in detail.
The plaintiffs contend that Irving implicitly waived the misspelling discrepancy because Shaffer testified at his deposition that he expected Irving to honor the letter of credit because he considered the misspelling to be "an extremely minor discrepancy." Plaintiffs also assert it is possible to infer that Irving did not believe the misspelling warranted dishonoring the letter of credit because the cable which Irving sent to the YBRD on June 5, 1979 noted not only the misspelling but the fact that the bill of lading was not presented within the 21 days required under UCP Article 41. Shaffer testified that Irving's Nasser waived the latter discrepancy and that he and Nasser agreed that the Soran-Sofan misspelling was the only discrepancy to be included in Irving's cable to YBRD. Plaintiffs go on to argue that late presentment of the bill of lading was included in the Irving cable to YBRD because Irving "felt foolish about cabling Yemen for authorization to pay" due to the misspelling discrepancy alone. Plaintiffs also dispute the materiality of the misspelling discrepancy by relying upon Beyenne's affidavit ...