246 Mass. 139 | Mass. | 1923
• This is an action of contract by merchants resident in Buenos Aires, Argentina, who seek to' recover damages against the defendant, a banking institution of this Commonwealth, arising from its refusal to accept and pay four drafts aggregating over $2,000,000 drawn by them on the defendant under a letter of credit issued by it in their favor. The conditions out of which the case arises were the great • scarcity of sugar in the United States dining a part of 1920, with consequent exceptionally high prices. During that period purchases or contracts for the purchase and import of sugar from countries from which hitherto sugar had not been procured were made. After the middle of that year there was a great drop in the price of sugaf and resultant loss to those who had it on hand bought at the earlier prices.
The case was tried before a judge without a jury, who made a general finding for the defendant and also full and complete findings of facts covering many aspects of the conflicting contentions of the parties. The evidence, which was both documentary and oral, is reported in full. The case comes before us on numerous exceptions to rulings of law refused and granted.
There was a request for a general finding for the plaintiffs for the full amount claimed. This presents purely the question of law whether the finding for the defendant can be supported on any reasonable interpretation of the evidence with legitimate inferences therefrom. The general and special findings of the judge in an action at law are to stand if warranted in law upon any possible view of the evidence. It is not the function of this court in an action at law to pass upon the weight of the evidence even though reported in full The only question for us to decide on that phase of the case is whether upon the evidence, with all rational inferences which might be drawn therefrom, the findings can be sustained. The general finding is conclusive if there is any evidence to support it." Sparhawk v. Sparhawk, 120 Mass. 390, 392. Bailey v. Marden, 193 Mass. 277, 279. Vahey v. Bigelow, 208 Mass. 89, 92. Seager v. Drayton, 217 Mass. 571, 572, Timberlake v. United Order of the
The rule in equity is different, where on appeal with full report of the evidence it is the duty of this court to decide the case upon its own judgment of the evidence, giving only due weight to the findings theretofore made, and not reversing them unless plainly wrong except in instances where the evidence is documentary, in which cases this court stands in the place of the trial judge in respect to drawing inferences of fact from the evidence. Lindsey v. Bird, 193 Mass. 200, 201. Harvey-Watts Co. v. Worcester Umbrella Co. 193 Mass. 138, 143. Porter v. Howes, 202 Mass. 54, 56. Hayes v. Penn Mutual Life Ins. Co. 222 Mass. 382, 386. Attorney General v. American Legion of Honor, 206 Mass. 158, 160. Rioux v. Cronin, 222 Mass. 131, 134. Glover v. Waltham Laundry Co. 235 Mass. 330, 333, 334. Knowles v. Knowles, 205 Mass. 290, 294. That principle has no application to the case at bar because this is an action at law and not a suit in equity.
The letter of credit on which this action is founded was in the form of a cable message from the defendant to the British Bank of South America at Buenos Aires, dated June 15, 1920, and delivered on June 16, 1920, copy being transmitted by the latter to the plaintiffs. The copy, differing in a few slight and immaterial details from the cable, was in these words: “ Advise Moss & Co. we open irrevocable credit No. 1475 their favour $2,150,000. U. S. Currency account E. R. Sherburne Company Boston available sight drafts on ourselves covering shipment from Buenos Aires during June July of 5000 tons sugar net shipping weights price $430.u/s/Currency per 10.000 Kilos C. I. F. New York export duty and all taxes payable by shippers credit expires 30th. October. Documents required commercial and consular invoices inspection certificate of United States Chamber of Commerce Buenos Aires certifying sugar equal to fine American Standard granulated sugar, negotiable B/Ladings showing Argentine Government Export License marine war
Antecedent facts in this connection were that the plaintiffs had on June 4, 1920, obtained from the Argentine
Moss, on June 16, 1920, after the receipt of the letter of credit, had conversation with each of the managers of the sugar refineries, with which his firm had contracts, purporting to take up the “ options.” No evidence was offered as to the law of Argentina. The judge did not find that the “ options ” and the acts thereunder imposed any liability on the plaintiffs before the title to specific lots of sugar was transferred to the plaintiffs. He did find that after such transfer the plaintiffs became liable to pay the stipulated price to the refineries.
This finding of fact as an inference from what was said and done by Moss cannot be pronounced as matter of law without foundation in the evidence.
It is manifest that the letter of credit did not conform to the expectations of the plaintiffs. In the essential particular of price the difference between $430 per ten thousand kilos and $430 per one thousand kilos cannot be thought to have been regarded as negligible. It was of the highest importance. That apparently was a mistake and was
It is elementary law that an offer must be accepted in the terms in which it is made in order to become a binding contract, and that a conditional acceptance or one that varies from the offer in any substantial respect is in effect a rejection and is the equivalent of a new proposition. Wheaton Building & Lumber Co. v. Boston, 204 Mass. 218, 224. Kehlor Flour Mills Co. v. Linden, 230 Mass. 119, 123. Stroock Plush Co. v. New England Cotton Yarn Co. 213 Mass. 354. Lawrence v. Rosenberg, 238 Mass. 138, 141.
Since the offer contained in the defendant’s original letter of credit of June 15, 1920, has been found not to have been accepted but in effect to have been rejected, the defendant then had the right to add to the terms of the first letter of credit the further condition that the certificate from the
It has been earnestly argued that the letter of credit of June 15, 1920, was accepted by the plaintiffs and thus became binding on the defendant. The case is considered also on that assumption. The vital question then is whether the plaintiffs conformed to its terms in every essential particular. The plaintiffs drew on the defendant two drafts with accompanying documents covering the shipment of sugar on the Balzac, one draft with accompanying documents covering a shipment on the Nile, and a fourth draft with accompanying documents covering a shipment on the Siddons. The shipments were all made to New York and aggregated five thousand tons. In due course the four drafts were seasonably presented to the defendant and payment was refused. When the first of these drafts was presented to the defendant, it wrote to the New York bank through which payment was sought that it refused payment “ inasmuch as these documents were not as specified in our Letter of Credit ” and that the merchandise did not conform to contract. When the second and third drafts were presented to the defendant, it wrote to the New York banks through which collection was sought in substance that it refused payment because the letter of credit on which the drafts were drawn by the plaintiffs specified sugar equal to fine American standard granulated sugar without lumps, and certificate to that effect by the United States Chamber of Commerce of Buenos Aires must accompany the drafts. The notarial certificates protesting these three drafts for nonpayment stated that payment was refused as to the first because it was “ not drawn according to credit,” and as to the second and third because “ Documents not in order.” The fourth draft does not appear to have been presented to the defendant until presented for acceptance by the notary and by him protested. His notarial certificate of protest on the last draft stated that he was answered that payment was “ refused on account of certificate of United States
There was ample time for the plaintiffs to ascertain the precise grounds on which the defendant asserted that the drafts and accompanying documents did not comply with the requirements of the letter of credit before its expiration, but no effort to that end was made.
The judge found that there was no estoppel against the defendant which confined it to the reason stated as to insufficiency of the certificates of the United States Chamber of Commerce of Buenos Aires. The general finding for the defendant imports also a finding that there was no waiver of other valid reasons.
There was no error of law in these findings nor in the denial of the plaintiffs’ request to the effect that the defendant cannot now rely upon reasons for declining to honor the drafts not given when the drafts were presented. When one in stating objections consciously fails to disclose a ground which can easily be remedied, and which misleads another to his harm, and which is contrary to justice and good morals, then an estoppel may be found. But one is not prevented from relying upon good defences not inconsistent one with another simply because he has not always put them all forward, when it does not appear that he has acted dishonestly or that the other party has been injured thereby in such circumstances as to render it manifestly inequitable for him to assert such defences. Brown v. Henry, 172 Mass. 559, 567. Price v. Rosenberg, 200 Mass. 36, 43. Bates v. Cashman, 230 Mass. 167. Randall v. Peerless Motor Car Co. 212 Mass. 352, 376. Railway Co. v. McCarthy, 96 U. S. 258, 267.
There is nothing in this record which as matter of law shows bad faith on the part of the defendant or prevents it from defending its refusal to accept the drafts on all available grounds existing on the face of the papers. Rollins v. Bay View Auto Parts Co. 239 Mass. 414, 421, 422.
Waiver is the intentional relinquishment of a known right.
The question for decision upon this branch of the case is whether the plaintiffs conformed to the requirements of the letter of credit in respect to the documents accompanying the letter of credit. This involves consideration of the nature of a letter of credit and its essential characteristics.
A letter of credit is a well known instrumentality of commerce. No particular form is prescribed for it. It is a contract in writing. It is governed by the same general principles of law as are all other contracts in writing. To attempt a comprehensive definition applicable to all appropriate cases and not exclusive of others in use or likely to come into use with changes in commercial and banking methods would be difficult. It has been said that it is not “ the business of practical jurisprudence to give definitions or lay down abstract propositions, but to give the rule applicable to the facts proved.” Lee v. Kilburn, 3 Gray, 594, 599. Moreover, letters of credit are extensively used in commerce. Their nature and use ought to be kept as free as possible from narrowing statements of limitations and from judicial dicta not necessary to a particular decision. They should not be bound by definition so as to become incapable of growth and change in accordance with the development of legitimate business practices.
It is sufficient for present purposes to say that a letter of credit is an offer by a bank or other financial agency to be bound to the person to whom it is directed, when accepted and acted upon by the latter according to its stipulations. It commonly is issued at the request of a third person who in some way indemnifies the bank against its obligations incurred or to be incurred under the letter of credit, and who gives directions to the bank as to its terms. Although not a party to the letter of credit, he is the one behind the transaction. It is in his interest or for his benefit that the business or other financial adventure is to be undertaken, to which
It is contended that there are several particulars in which there was failure on the part of the plaintiffs to meet the conditions stated in the letter of credit. The first of these is conclusive against the plaintiffs.
There was requirement of “ inspection certificate of United States Chamber of Commerce Buenos Aires certifying sugar equal to fine American Standard granulated sugar.” The finding in this respect is that none of the certificates furnished by the plaintiffs describe sugars which are in fact equal to fine American standard granulated sugar or equal in quality and description to standard American granulated sugar. There is a further finding that “ There is no standard for American granulated sugar in the same sense that there exist legally established standards of weight and measure, nor is there an exact sameness of shades of color and size of grain among the sugars made respectively by refiners of the United States and regarded unquestioningly by the sugar trade in the United States as standard, but there are certain well understood limits of variation of color, shade, size of grain, polarization and freedom from lumps within which any given sample must come in order to be regarded as standard American granulated sugar. If a sample of sugar is described, and the terms of the description taken all together-show that the sample is within those well understood limits, then the sample can be fairly said to be of standard American granulated sugar. The word ‘ American ’ as here used does not, I find on all the evidence, connote anything relating to the continent of South America, but relates only to granulated sugars as they are regarded in the United States. Polarization is the term used to express
All the sugar shipped by the plaintiffs was known as pile sugar. Pile sugar in some respects has the same terms of description as American standard granulated sugar and in other respects has different terms of description. The differences are due to differences in the process of manufacture. The pile sugar is in lumps of irregular size and shape and of considerable hardness and not friable. The breaking of the lumps and attrition due to shipping produce “ a detritus made up of separated grains and fragments of grains which is not the same as American standard granulated sugar in respect of the size and shape of its constituent parts.” American standard granulated sugar is made up of grains which do not cohere and “ make a free running mass, free from lumps.” It has been found that “ In the Spring of 1920, pile sugar was not widely known in the United States, and until that time little or no sugar had been imported from Argentina. On account of its characteristic lumps, and of its being comparatively unknown here, pile sugar was not as marketable here at the times in 1920 when the various Chamber of Commerce certificates were made, as was American standard granulated sugar, nor could it properly be marketed under the designation ‘ American standard granulated sugar.’ If American standard granulated sugar is exposed to moisture, lumps are likely to form in it. If these lumps are friable, their presence does not reduce the mass below standard requirements; but if the lumps are not friable, the mass is no longer standard, but is damaged sugar and is so called. The characteristics of being free running and having grains of approximately uniform size, and of being free from hard lumps, are ipaportant to granulated sugars intended for use in the United States.”
Whether the finding and ruling were right, that the true meaning and construction of the words of the letter of credit requiring a certificate to the effect that “ sugar equal to fine American Standard granulated sugar ” is that the certificate “ must state in so many words, and leaving nothing to
There is nothing in the record to require the conclusion that these words of the letter of credit were used in a technical or trade sense or in any other meaning than according to the common and approved usage of the language.
The preceding correspondence and transactions between the parties does not render necessary a finding that they were used in any other than their obvious signification. When a contract is so phrased as to leave its meaning uncertain, obscure or doubtful, evidence of the conditions attendant upon its execution are admissible to ascertain the true meaning of its language, but not to enlarge or vary its terms. Jennings v. Puffer, 203 Mass. 534, 538. Derby Desk Co. v. Conners Brothers Construction Co. 204 Mass. 461, 470. Waldstein v. Dooskin, 220 Mass. 232, 235. Linton v. Noonan, 238 Mass. 31, 40. Eustace v. Dickey, 240 Mass. 55, 72. Giving full weight to this principle, no error is disclosed in the findings or rulings. So far as light is thrown upon the transaction by the earlier dealings of the parties, it tends rather to support the contentions of the defendant than of the plaintiffs.
Even if the principle that a written instrument is construed most strongly against the person writing be applied, no difference is made in the result. Bascom v. Smith, 164 Mass. 61, 76. Koshland v. Columbia Ins. Co. 237 Mass. 467, 472. The words of this contract are not ambiguous nor open to two constructions.
The finding that none of the certificates describe sugar equal in quality or description to standard American granulated sugar is decisive against the plaintiffs on this branch of the case. It was fully warranted by the evidence. The
The conclusion that the plaintiffs did not conform to the letter of credit in procuring certificate that the sugar shipped was “ equal to fine American Standard granulated sugar ” is strongly supported by Murdock v. Mills, 11 Met. 5; Lamborn v. Lake Shore Banking & Trust Co. 196 App. Div. (N. Y.) 504, affirmed in 231 N. Y. 616; International Banking Corp. v. Irving National Bank, 274 Fed. Rep. 122, affirmed in 283 Fed. Rep. 103; National City Bank v. Seattle National Bank, 121 Wash. 476.
The letter of credit also required that there be bills of lading “ showing Argentine Government Export License.” Confessedly there was no literal compliance with this stipulation. It is not enough that the sugar could not in fact be exported without such a license. When the writer of the letter of credit makes compliance with that requirement a condition precedent to the establishment of its liability, there must be such compliance before it can be held liable. Filley v. Pope, 115 U. S. 213.
Other grounds of defence need not be examined.
In view of the principles already stated and the conclusions reached, it is not necessary to recite the various exceptions one by one. They all are comprehended in what has been said. No error of law vital to the plaintiffs’ contentions is disclosed.
Exceptions overruled.