Bounty Trading Corp. v. S.E.K. Sportswear, Ltd.

Judgment, Supreme Court, New York County, entered on December 3, 1974, in favor of plaintiff-respondent in this declaratory judgment action, after a nonjury trial, unanimously reversed, on the law and the facts, and vacated, and judgment granted to the defendant-appellant, declaring that plaintiff is not entitled to any funds under the letter of credit. Appellant shall recover of respondent $60 costs and disbursements of this appeal. The single issue presented is whether plaintiff complied with an irrevocable letter of credit obtained from defendant-appellant Bank Leumi Trust Company of New York (Bank) by the latter’s now defunct customer S.E.K. Sportswear, Ltd. (S.E.K.) and issued in plaintiff’s favor. Under the terms of the letter of credit payment of $11,000 was to be made upon presentment of plaintiff’s sight draft and a written statement that S.E.K. had not paid a promissory note it had given to plaintiff. At the same time that defendant-appellant was advised the note had not been paid, it received from plaintiff’s bank, Century National Bank and Trust Company (Century), a document entitled "collection letter” containing the following instructions: "We enclose for collection item listed below, deliver documents only on payment unless otherwise instructed, documentary drafts are not to be returned unless so ordered, wire non-payment on all items $1000 or over unless otherwise instructed. Do not hold for convenience of parties.” Despite allusion to an accompanying draft, none was enclosed and the collection letter should not have been considered its equivalent. The collection letter could not qualify as plaintiff’s sight draft for it was not an unconditional order to pay money and it was burdened with additional instructions (Uniform Commercial Code, § 3-104). Moreover, Century’s typed name was the only "signature” thereon. Since the terms and conditions of a letter of credit must be strictly adhered to, plaintiff is not entitled to the funds secured thereby. (Anglo-South Amer. Trust Co. v Uhe, 261 NY 150, 156-157 .) Settle order on notice. Concur—Markewich, J. P., Lupiano, Capozzoli, Nunez, and Yesawich, JJ.