Doelger v. Battery Park National Bank

Laughlin, J. (concurring in part and dissenting in part):

I am of opinion that the trial court erred in construing the extension agreement with respect to the letter of credit as requiring the plaintiff to present on or before the date specified in the extension agreement order bills of lading dated on or before November 1, 1918, representing shipments of the quantity, quality and class of steel specified in the contract by which the plaintiff agreed to sell the steel to the Machinery and Metals Sales Company, and consigned to Seattle. Under this erroneous construction of the extension agreement, opinion evidence was received with respect to whether such bills of lading could have been purchased by the plaintiff after the defendant repudiated its contract on the 25th of November, 1918. The jury realized that this testimony had but little probative force as evidence and so reported to the court, and were instructed that they must render a verdict for the defendant unless they found that the plaintiff could have purchased such bills of lading. They again retired and found in favor of the plaintiff, and evidently assessed the damages in accordance with the final instructions of the court, which were to award to the plaintiff, in the event they found he was entitled to recover, the difference between the contract price of $81.76 and the market price of the steel in the Pittsburgh district, from which it was to be shipped, between the twenty-fifth of November, when the defendant repudiated its contract, and the first of December, when the plaintiff was obligated, under the extension of the letter of credit, to present the documents to the defendant. Plaintiff presented evidence tending to show that the market value of this class of steel in the Pittsburgh district between *525the twenty-fifth of November and December first was from $20 to $25 per ton. The jury in the first instance understood the instructions of the court to require them to determine the damages on the basis of the difference between the contract price and what such order bills of lading bearing date on or before the first of November would have cost the plaintiff between November twenty-fifth and December first; and in reporting a verdict on that theory, they stated, among other things, that they found that the market price of the steel between November twenty-fifth and December first was $24 per ton. They were instructed by the court to add interest to any recovery by the plaintiff and to compute it from the 1st day of December, 1918, down to the date of the trial. It is quite clear that this is the theory on which the amount of the verdict was determined by the jury, for the difference between the market price of $24 per ton and the contract price of $81.76 per ton is $57.76, and on that basis the difference between the cost of the 800 tons and the market price thereof would have been $46,208, and the interest on that amount for the period for which the jury were directed to add interest was $6,546.13, making an aggregate amount of $52,754.13. Evidently through some inadvertence or miscalculation the verdict was for $38.51 more than this amount, but it is not claimed that this discrepancy presents any ground for reversal.

I think the court should have ruled as matter of law that the extension of the time for the presentation of the documents from November third to December first likewise extended the time for making the shipments and obtaining the bills of lading. The defendant’s original irrevocable letter of credit issued to the plaintiff authorized him to draw on it, for the account of the purchaser, for the invoice cost, not to exceed a specified amount, of 800 tons of steel, conforming to the purchaser’s specified orders, by sight drafts accompanied by railroad bill of lading, commercial invoice (in duplicate), shipment from Pittsburgh district to Seattle, Washington; ” and it was provided that the bills of lading should be order bills of lading and indorsed in blank and dated not later than November 1, 1918, and the defendant agreed to honor drafts so drawn on presentations at its office on or before November 3,1918. The letter of credit was issued October 14, 1918, by the defendant by request of its customer, the Machinery and Metals Sales Company. On the 25th of October, 1918, that company requested the defendant to increase the letter of credit by $600 and to extend it until December 1, 1918, and following this request, the letter of the Machinery and Metals Sales Company closed as follows: All other terms and conditions are to remain unchanged.” On the twenty-*526ninth of October plaintiff received from the defendant a letter bearing date October twenty-eighth, referring to the letter of credit and notifying him that it had been increased, by $600, and informing him that the credit ” had been extended to expire December 1, 1918, and that all documents pertaining to the above must be in our possession on or before this date,” and closing with the sentence already quoted, to the effect that all other conditions and terms of the letter of credit were to remain the same as theretofore. Defendant contended that, notwithstanding the exten - sion of the letter of credit, it was incumbent upon the plaintiff to present bills of lading dated on or before November first, and the court so held. I deem this ruling plainly erroneous. If the extension had not been granted until after November first, there might be ground for contending that its purpose was to afford the plaintiff, who had failed to make the shipments in time to obtain bills of lading dated on or before November first, an opportunity to purchase bills of lading which had already been issued within the period required by the original letter of credit, and which would correspond with the plaintiff’s contract for the sale thereof; but since the extension appears to have been voluntarily granted by the defendant before the plaintiff’s time to make the shipments and obtain bills of lading had expired, it would be, I think, a most unreasonable construction of the extension agreement to hold that it was merely intended to afford the plaintiff an opportunity, if he failed to ship the goods and obtain bills of lading before November first, to go into the market and endeavor to buy bills of lading that would fulfill his contract obligations with the purchaser, and under the letter of credit in time to present them to the defendant on or before December first. On the 15th of November, 1918, the Machinery and Metals Sales Company wrote the defendant, referring generally to a conversation by telephone on the subject, and stating, in substance, that the plaintiff had canceled the order for the sale of the steel by a letter to it dated November 7, 1918, and requesting the defendant to revoke the letter of credit and to make no further disbursements thereunder. It is unnecessary to consider the claim thus asserted in the letter from the purchaser to the defendant for it is not contended in behalf of the appellant that there was any justification for the cancellation of the letter of credit. On the twenty-fifth of November the defendant wrote the plaintiff, advising him that payment of a draft which he had presented against the letter of credit was declined in accordance with instructions contained in said letter of the Machinery and Metals Sales Company to it, a copy of which was annexed. This was an unqualified repudiation in toto of the defendant’s agreement, evi*527denced by its letter of credit, to pay the drafts. It will be observed that the ground assigned on the trial and urged on the appeal, viz., that bills of lading issued on or before November first should have been presented, was not then suggested by the defendant. It placed the entire responsibility for its repudiation of its letter of credit upon its principal, which had taken the untenable position that the plaintiff had canceled the contract for the purchase of the steel. This complete repudiation by the defendant of its obligations to the plaintiff under the letter of credit relieved the plaintiff from making the shipments between that date and the first of November, and from tendering documents, and warranted this action for the damages sustained by the plaintiff, which was not brought until after December first, predicated on the difference between the contract price and the market price at which he could have purchased the steel between the date of the repudiation by the defendant and December first. (Urquhart, Lindsay & Co., Ltd., v. Eastern Bank, Ltd., L. R. [1922] 1 K. B. 318; 35 Harvard Law Review [March, 1922], 539, 574.)

As I view the case, therefore, there was nothing for the consideration of the jury but the assessment of damages; and since the report of the jury shows that they determined, within the bounds of the testimony, the market price of the steel between the 25th of November and the 1st of December, 1918, plaintiff as matter of law was entitled to a recovery on that basis, and. in this view the errors of the trial court are immaterial. Although the point is not raised, since the verdict is excessive by thirty-eight dollars and fifty-one cents, the recovery should be reduced by that amount, and the judgment, as so modified, affirmed, with costs.