Great Western Electro Chemical Co. v. Weisenthal

THACHER, District Judge (after stating the facts as above). The phrase in the contract of sale, “net cash against shipping documents prior to establishment of irrevocable letter of credit for 25 per cent, of purchase price with bank here,” is undoubtedly the product of stenographic error arising from the misuse of the word “prior” in place of the word “buyer.” If the contract had read “buyer to establish” instead of “prior to establishment of,” the manifest intention of the parties would have been accurately and precisely expressed; but in this ease it is not necessary to correct what appears to be a manifest clerical error, as was done in O’Brien v. Miller, 168 U. S. 287, 297, 18 S. Ct. 140, 42 L. Ed. 469. Taking the words as written, the clause, “prior to establishment of irrevocable letter of credit,” simply limits the preceding clause, “net cash against shipping documents,” thus leaving the agreement silent as to the terms of payment if payment be made after the establishment of the credit. In such case, with respeet to 25 per cent, of the purchase price, payment was provided for under the letter of credit. With respeet to the balance, there being no agreement that the buyer was to have credit, the law requires payment to be made on delivery. Pond Creek Mill & Elevator Co. v. Clark (C. C. A.) 270 F. 482; Guarantee T. & T. Co. v. First Nat. Bank, 185 F. 373, 107 C. C. A. 429; In re Pittsburgh Industrial Iron Works (D. C.) 179 F. 151; Canadian Northern R. Co. v. Northern Mississippi R. Co., 209 F. 758, 126 C. C. A. 482; Williston on Sales, §§ 447 and 448. In this case the delivery contemplated was f. o. b. at point of shipment, and the shipping documents were required to be “surrendered” to the Crocker National Bank. Under these circumstances the seller adopted the only course open to it in order to carry out the agreement. Having made delivery in accordance with the agreement (Rosenberg Bros. & Co. v. Buffum Co., 234 N. Y. 338, 137 N. E. 609), it presented the documents with two drafts to the Crocker National Bank — one for approximately 25 per cent, of the purchase price, payment of which was demanded under the credit; the other for the balance of the purchase price, requesting the bank to surrender the shipping documents to the buyer only upon payment of the latter draft. The bank, however, refused to pay the drafts or to accept the documents with any strings, probably mindful of the provision of the .letter of credit requiring “surrender” of the documents against payment under the credit. If the bank could thus rightfully refuse payment under the credit in the absence of an unconditional surrender of the documents, the primary duty of the buyers to make payment upon presentation of the documents nevertheless remained. Rosenberg Bros. & Co. v. Buffum Co., supra. Under these circumstances the office of the bank, being the only place where the documents could be. presented, in view of the contract provisions and the terms of the credit, must be regarded as the place of payment, and by failing to provide payment there the buyers failed to pay for the merchandise as they were obligated to do. For this breach of the agreement the seller elected to regard the contract as at an end and sue for its damages. A verdict in favor of the plaintiff is directed for $4,225, with interest on $1,325 from January 31,1921, on $1,450 from February 28, 1921, and on $1,450 from March 31,1921.