The opinion of the court was delivered by: HAIGHT
MEMORANDUM OPINION AND ORDER
In a Memorandum Opinion and Order dated April 23, 1985, familiarity with which is assumed, the Court granted Austracan's motion for summary judgment and directed the entry of judgment against NOL in a stated amount. The Clerk complied on May 2, 1985. Defendants NOL and Conrail now move for reargument of the opinion and order of April 23, 1985. Austracan moves pursuant to Rule 59(e), F.R.Civ.P., to amend the judgment so as to make it enforceable against NOL and Conrail jointly and severally. This opinion resolves those motions.
On the motion of NOL and Conrail to reargue, oral argument is denied. Upon consideration, I adhere to the prior opinion and order, except as modified in response to Austracan's motion under Rule 59(e).
I reject Conrail's argument that the reasonableness of the acceptance of the bill of lading in this case presents a triable issue of fact. Still less does it require as a matter of law, as Conrail also contends, a judgment in favor of NOL and Conrail.
I accept in principle the contention that reliance upon the descriptions contained in a bill of lading must be "reasonable." In practice, what is "reasonable" depends upon the circumstances of each case.
In the case at bar, the party which accepted the bill of lading and caused payment to be made to the consignor was not the plaintiff consignee. Rather, it was the Hong Kong & Shanghai Banking Corp., with whom plaintiff had established a letter of credit in favor of the seller-consignor, Judric. Thus the reasonableness of the reliance to be evaluated is that of the bank. The distinction is important because a considerable body of law has grown up concerning the rights and obligations of banks which participate in that important facilitator of commercial transactions, the letter of credit. In Marino Industries v. Chase Manhattan Bank, N.A., 686 F.2d 112, 115 (2d Cir. 1982), the Second Circuit said generally:
"The parties to the commercial contract being in a third party -- the bank -- to finance the transaction for them. The bank's sole function is the financing; it is not concerned with or involved in the commercial transaction. This restriction simplifies the bank's role and enables it to act quickly and surely. Because the bank is not involved in the commercial transaction, however, all its rights and duties are set out in and defined by the letter of credit. The bank is not expected or required to be familiar with or to consider the customs of, or the special meaning or effect given to particular terms in, the trade. " (emphasis added).
The bank's obligation under the letter of credit is to pay out if the documents presented comply strictly with the specification in the letter of credit. The letter of credit at bar specified a number of documents. I am concerned with what the letter said about the bill of lading. On that subject, the letter of credit said this:
"Shipment to be effected in 20 foot pier to house containers onboard ocean bladings our order notify accountee indicating the number of this credit freight prepaid special instructions forming integral part this instrument partshipments not permitted palletized shipment prohibited."
The bill of lading presented to the bank complied with these requirements. It recited that the cargo had been shipped in a 20 foot, pier to house container. It was an onboard bill of lading. The notify party was correct. Freight was marked prepaid. There were no partial or palletized shipments.
Conrail and NOL make much of the point that, through the error of NOL's agent, the bill of lading also included the phrases "said to contain" and "shipper's load count and seal." This is said to be inconsistent with the meaning of the required phrase "pier to house." So it is. See April 23, 1985 opinion at slip op. 13-16. But it does not follow that this inconsistency, created by NOL's own fault, brands the bank's acceptance of the bill of lading as unreasonable. The bill of lading conformed to the letter of credit, in the sense that it said what the letter required. The bill of lading can be said to be non-conforming only by reason of the additional language inserted by NOL. The bank acted unreasonably only if it was required in law to consider and understand the inconsistencies inherent in these particular ocean transportation terms, and, on the basis of such consideration and understanding, to decline payment under the letter of credit. I decline to reach such a conclusion because, as Marino Industries instructs, the bank issuing a letter of credit "is not expected or required to be familiar with or to consider the customs of, or the special meaning or effect given to particular terms in, the trade."
I need not reach a contrary result because the letter of credit was made subject to the Uniform Customs and Practices for Documentary Credits (1974 revision). It is true that Article 17 of the UCP provides:
"Shipping documents which bear a clause on the face thereof such as 'shipper's load and count' or 'said by shipper to contain' or words of similar effect, will be ...