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23 F.(2d) 118

N. Y. S. 162, aff'd 231 N. Y. 616, 132 N. E. 911; Bank of Montreal v. Recknagel, 109 N. Y. 482, 17 N. E. 217; Bank of Italy v. Merchants' National Bank, 236 N. Y. 106, 140 N. E. 211. Where, however, several documents are called for, the bank issuing the letter of credit is not entitled to restrict its inspection to one or more documents, and to insist that one or more of them comply literally and word for word with the call of the letter of credit. If all of the documents, read together, show compliance with the call of the letter of credit, the bank is not justified in rejecting the drafts because the documents are not in order.

unusual or extraordinary. Where the question of strict compliance is one to be decided by bank officials, they are held to the duty of good faith in forming an honest judgment as to whether the papers attached to a draft correspond to the letter of credit. The integrity of foreign drafts or like bills of exchange, accompanied by commercial bills of lading and other documents drawn against letters of credit, should not be embarrassed or made difficult through technical or inconsequential reasons raised against payment. The holders of these drafts have the right to expect that, when drafts conform in all essential requirements to the letter of credit, they will be paid by the drawee bank."

Any other construction of the letter of credit is strained and contrary to the spirit The courts, when called upon to decide of common sense controlling commercial whether or no the documents tendered with transactions. Such a situation was consid- drafts on letters of credit were sufficient, ered by the Supreme Court of Pennsylvania have repeatedly and as a matter of course, in Camp v. Exchange National Bank, 285 Pa. without discussion, examined all of the docu337, 132 A. 189. There the letter of credit ments. Where rejections have been justified, was for 100 tons of sugar from Java "ship- it has been because some essential provision ments during July, 1920; the of the letter of credit was lacking from all shipments must be completed and drafts of the documents. Banco Nacional Ultramadrawn on or before August 15, 1920." The rino v. First National Bank (D. C.) 289 documents were a bill of lading, consular in- F. 169; International Banking Corp'n v. voice, declaration by shipper of food and Irving National Bank (C. C. A.) 283 F. 103. drug products, certificate of origin, and policies of insurance. The bill of lading was a "received for shipment" bill, and it was contended that the bill of lading made no showing as to time of shipment. The court

says:

"If the bill of lading had been the only document accompanying the draft, the bank officers, who were to examine only the papers before them, when the draft was presented, with the sugar not in port, would place the bank in a serious position by payment. But some of the documents accompanying the bill of lading did state sufficient to show shipment as a fact. The seller's declaration, being a part of the documents, speaks of the 'shipment' covered by the invoice as being 'exported from Pasoeroean,' and the contracts of insurance, likewise a part of the same documents, characterize the sugar as being 'in the ship or vessel called Arcturus.' With this information, the bank could very properly regard the sugar as on board the vessel. This would justify the conclusion by the bank that the goods sold were 'shipped' within the letter of credit." 285 Pa. 347, 132 A. 192.

Turning then to the documents presented with the drafts in the present case, the question to be determined is whether these docu

ments, construed together, and without re-
sort to parole or extrinsic evidence, showed
that the goods called for by the letter of cred-
of credit called for "500 tons (2,000 pounds
it had been shipped. The original letter
each) net, "white Java refined granulated
sugar, 97/98 deg. polarization, at 2012 cents
per pound, gross shipped weight c. i. f. San
ing May/June, 1920."
Francisco; shipment from Hongkong dur-

There has been extensive argument as to whether the amendment cabled May 29, 1920, changed this call entirely, or merely amended the original description as to granulation. Since it is my view that these documents were sufficient under the original call, it is not necessary to hold that the amendment did more than specify a change in the degree of granulation, the remainder of the original call remaining in force.

Examination of the documents shows that the surveyor's and polarization certificates and the consular invoice add "No. 24" to the description "white Java granulated (or 'fine') sugar." It is not necessary to dis

The basic principle is stated (285 Pa. 342, cuss the significance of this phrase. It is not 132 A. at page 191) in this case:

"Banks are liable for the unauthorized payment of drafts, but this liability is not

claimed to be inconsistent with any of the requirements of the letter of credit as to the kind of sugar to be shipped, and may be dis

regarded as being at the most surplusage. After eliminating this phrase it appears that the elements required by the call of the letter of credit are all present; not in any one document, it is true, but within the four corners of the entire set. Reading of all of the documents leaves no doubt that the sugar shipped corresponds to the call.

It is claimed that none of the documents show the sugar to be "refined" sugar. There is ground for the contention that the descriptions already quoted, although nowhere using the word "refined," do show that the sugar was refined sugar. But the point is put at rest by the seller's declaration, which is part of the consular invoices, was the basis of issuance, and appears on the reverse side. In it the seller makes declaration that "the sugar was refined at Java from raw sugar produced in Java." This is sufficient.

[5] It is also claimed that the documents are insufficient, in that the 350-ton lot of sugar is nowhere described as "fine granulated"; the word "granulated" being omitted from all of the documents referring to this lot. This lot was described as "white Java fine sugar No. 24" in the polarization and surveyor's certificates and in the consular invoice. If this description as "fine sugar" is as a matter of common knowledge synonymous with the description "fine granulated sugar," the description complies with the call of the letter of credit. Bank of Italy v. Merchants' National Bank, 236 N. Y. 106, 140 N. E. 211; First Nat. Bank of Decatur v. Home Savings Bank, 21 Wall. 294, 22 L. Ed. 560. As said by Judge Hand in McNeil & Higgins v. Czarnikow-Rienda Co. (D. C.) 274 F. 397: "It is argued that 'fine' means 'excellent,' 'superior,' or 'pure'; but that, I should say, was not so. 'Fine granulated' normally would mean 'finely granulated,' and refer to the size of the granules. At least, that would be its meaning, unless the trade means something else."

There is no evidence in this case that the trade refers to anything but the fineness of granulation in using the phrase "fine granulated." The natural inference would therefore be that sugar described as "fine sugar" would be "fine (granulated) sugar." The evidence shows that this was the understanding of the trade. The broker who negotiated the sale and the amendment of the call of the letter of credit with reference to the granulation, when asked, "And of course, where it says '350 tons fine' and the word 'granulated' is not in it, it evidently meant fine granulated"? answered, "I took it to mean that." An expert called on behalf of inter

veners to testify as to the quality of the sugar received was asked, "Is there a distinction between a fine sugar and a fine granulated sugar?" and answered, "I do not think there is." In other words, the record shows affirmatively that the trade applied the descriptive word "fine" to sugar in the same sense that the ordinary man would use it; i. e., referring to granulation, and meaning "fine granulated," even though the latter word was omitted. The description in the documents must be considered as synonymous with that called for by the letter of credit.

The insistence on technical accuracy by the bank has placed it in the position of rejecting drafts which should have been accepted. Plaintiffs are entitled to recover.

Two points remain to be settled; the measure of damages, and the rights of the intervener in the premises.

[6] It is argued that plaintiff is entitled to recover only the difference between $208,000 and the gross resale price of the sugar, on the theory that the bank was buying documents, not sugar, and that customs duties, warehouse, hauling, weighing, and brokerage charges incident to the resale could be recovered only against the buyers, Hind, Rolph & Co. With this theory I disagree. Plaintiff is entitled to use the net resale price—i. e., the price received, less the proper expenses of sale-in computing damages. O'Meara Co. v. National Park Bank, 239 N. Y. 386, 146 N. E. 636, 39 A. L. R. 747; Border National Bank v. American National Bank (C. C. A.) 282 F. 73. Accordingly, plaintiff is entitled to recover damages in the sum of $53,969.59, with interest from July 19, 1920, the date of the rejection of the drafts. [7] In considering this case I have confined myself to the issues made by De Sousa & Co. and the bank, upon the contract embodied in the letter of credit. Interveners sought to broaden the issues by introducing evidence to show that the sugar received was of poor quality and did not comply with the terms of the contract between De Sousa & Co. and Hind, Rolph & Co. Whatever the rule may be, where the intervention is antagonistic to both plaintiff and defendant, and allowed because intervener claims an interest in the subject-matter of the suit, where the intervener joins either plaintiff or defendant in resisting the claims of the other side, he is not entitled to enlarge the issues. Boskowitz v. Thompson, 144 Cal. 724, 78 P. 290; Leaver v. K. & L. Box & Lumber Co. (D. C.) 6 F. (2d) 666. In the present case evidence of breach of the contract of sale between

23 F.(2d) 123

De Sousa & Co. and Hind, Rolph & Co. is not admissible under the issues framed by the main action, on the letter of credit. Bank of Taiwan v. Union National Bank (C. C. A.) 1 F. (2d) 65. The indemnity agreement between the bank and Hind, Rolph & Co. furnished a basis for permitting Hind, Rolph & Co. to assist in the defense, but defensive matter arising out of the breach of another contract than the one sued upon is not available to assist the bank's case, whether introduced by the bank or by the intervener.

Each of the parties has requested special findings. In view of the discussion of the facts herein contained, special findings will be denied, and exception noted.

Let judgment be entered for plaintiffs in the sum of $53,969.59, with interest from July 19, 1920.

So ordered.

ARCHIBALD MCNEIL & SONS CO., Inc.,
UNITED STATES (two cases).

District Court, E. D. Pennsylvania. December
15, 1927.

Nos. 10898, 10900.

War 14-Shipper of coal, diverted by gov. ernment as war measure, held limited in action for compensation to nominal damages by acceptance of settlement.

The United States, in the exercise of the power of eminent domain, diverted to others than the consignees coal shipped by plaintiff, a dealer, under contracts of sale. The government refused to pay for the coal, and plaintiff billed it to the divertees at a fair price, who also refused to pay, but offered to pay a smaller price in full settlement, which plaintiff was compelled to accept or suspend its business. Held, that such acceptance was not through legal duress, and, though it did not preclude a suit against the government for just compensation, it limited recovery therein to nominal damages.

At Law. Actions by the Archibald McNeil & Sons Company, Inc., against the United States. On hearing to the court on waiver of jury trial. Judgments for plaintiff for nominal damages.

See, also, 1 F. (2d) 39.

George Demming, of Philadelphia, Pa., for plaintiff.

Howard Ameli, Asst. Atty. Gen., Mark Thatcher, Asst. U. S. Atty., of Perkasie, Pa., and George W. Coles, U. S. Atty., of Philadelphia, Pa., for the United States.

DICKINSON, District Judge. These two cases were tried together and may be disposed of by one ruling.

Conclusion.

The conclusion reached is that the plaintiffs can recover no more than a nominal

sum.

Fact Findings.

The general fact findings made in the course of the discussion present adequately the whole case and defense, but leave is granted to either party to present requests for fact findings and conclusions of law, which, if presented, will be later answered and incorporated herewith.

Discussion.

The plaintiffs were extensive dealers in coal, but were not miners. Coal shipments made in fulfillment of contracts entered into by them were, for public purposes, diverted by the United States to users other than the consignees, without the consent of the plaintiffs as owners of the coal, and without payment for the coal thus taken.

Theory of the Case.

The plaintiffs' theory of their case is that, their private property having been thus taken for public use, they have a constitutionally conferred right to "just compensation" therefor, and hence a cause of action.

The Defenses.

The defense is fourfold:

(1) This court has no jurisdiction to determine the cause.

(2) The coal had not been "taken," but merely "diverted" from its destined course of travel, and hence the plaintiffs have no cause of action, as what was done was that contemplated by the twenty-fifth section of the Lever Act (Comp. St. § 3115sq), not the tenth section (Comp. St. § 3115ii).

(3) The plaintiffs have at the most an alternative cause of action. One is against the United States; the other against the divertees. Either might be asserted at the election or option of the plaintiffs, who elected to pursue their right of action against the divertees, and have thus lost all right of action against the United States.

(4) The plaintiffs billed the diverted coal to the divertees, and have by them been paid in full, thus having no further cause of action, or one for nominal damages only.

The first two defenses we think to have been foreclosed by the rulings in the other cases between the same parties. The third defense is, we think, disposed of by the fact finding that the plaintiffs made no election to bring their action against the divertees,

but, on the contrary, have elected to sue and have sued the United States. The whole defense centers upon its fourth branch. Upon this the fact finding is made that the plaintiffs did bill the coal to the divertees, and the bills were paid in full.

Reply.

The plaintiffs deny that under the pleadings the defendant is in a position to interpose this defense. This is based upon the proposition (for which many authoritative cases are cited) that under the Pennsylvania Practice Act of 1915 (Pa. St. 1920, $$ · 17181-17204) the statement of claim and affidavit of defense constitute the pleadings by which the case is put at issue, and that upon the issues thus raised the case must be tried. This proposition of procedural law we accept, but we are of opinion that the averments to the effect that the moneys paid by the divertees, and accepted by the plaintiffs

was "a settlement" of the whole of the plaintiffs' claim, made this an issue presented by the defense as clear as a plea of "payment with leave," etc., would have presented it under the old practice. We in consequence find that this defense has been pleaded.

The further reply of the plaintiff starts with the proposition (with which we are in full accord) that, in a suit upon the cause of action of private property taken for public use, the action is to all intents and purposes one upon a quantum meruit, in which the plaintiffs have the right to recover just compensation, which is measured by the fair value of the property taken. The second proposition is one of fact, to wit, that what was paid was less than this value.

In view of the final conclusion we have reached, there is no need to go into the question of values, further than to find (as we do) that the sum received by the plaintiffs is less than what we find the value of the coal to have been when taken. If counsel desire it, we will make a specific finding of this value, so that, if it is ruled that the plaintiffs should have judgment for more than nominal damages, the appropriate judgment may be entered by stipulation.

The final proposition is that the accept ance of the sums of money paid was due to the duress to which the plaintiffs were subjected. This latter is what is sometimes called a mixed question of fact and law, or one in which fact and law are mingled. It is essentially a fact finding, consisting of evidentiary facts, from which the ultimate fact or truth of duress or no duress is deduced. The evidentiary facts are many. We

group a sufficient number of them as found facts, from which the conclusion of duress can be drawn, if at all:

The plaintiffs, as we have already found, were dealers in coal. They dealt on a large scale. The number of their customers was likewise large. They had sold coal to a number, which, although not absolutely accurate, may be called for present purposes a thousand or more. This coal had been bought at a price and sold at a price subject to delivery: They must pay for what they bought, and they could not receive payment until they delivered. delivery, and hence their whole business inThe United States stopped the

come. Had the United States taken for its own direct use, the coal would have been paid for when taken, if there was agreement upon its value, or in any event 75 per cent. of its assumed value would have been paid at the time. No dealer would by such a taking have been driven out of business. As, however, the position of the United States not "taken," it repudiated all liability to pay, was that it had merely "diverted," but had or at all events refused to make any payment This meant nothing less than complete paeither in full or any percentage on account. business demise. ralysis of plaintiffs' activities and an early

Failing in their efforts to get anything out of the United States, the plaintiffs turned (because they could do nothing else) to the divertees, finally offering to bill the coal to them at a price which we find to be no more than the price they had the right to charge. This offer was rejected. The plaintiffs then offered to accept any sum the divertees were willing to pay on account, reserving the right to recover whatever additional sum might be due them. The divertees refused to make any payment, with such condition or reservation attached to its acceptance. They did offer, however, if the coal was billed to them at a price which represented the cost of the coal to the plaintiffs plus 15 cents per ton advance, to pay this price in settlement for the coal. The plaintiffs felt forced to accept this, as the consequence of a refusal and the only alternative was business death.

The logic of the pleadings and trial thus comes to this:

1. The plaintiffs made out a prima facie case for a sum which measures just compensation.

2. The defendant proves a billing of the coal by the plaintiffs to the divertees at a price, and the payment of that sum to the plaintiffs, the receipt for which is set up as the equivalent of a release for all damages caused by the taking of the coal.

23 F.(2d) 123

3. The plaintiffs reply that the release was given under duress, which the defendant denies. Hence the issue.

Duress.

The issue thus becomes the one of duress. There is an analogy between society and the life of an individual. In childhood we are objective, and live with the things outside of us, real or imagined. When we are older, we live more and more subjectively, and are concerned more with our own thoughts than with objects outside of ourselves, and more with concepts of real or imagined things than with real things. There has been a like change as our civilization has grown older. Duress is not restricted and limited, as it once was, to the pressure of what partakes more or less of the physical.

The trend of the modern cases, some of which we have listed, is that a threat or menace of evil of such character as would induce a man of ordinary firmness to do an act, because of the threatened evil, which he would not otherwise do, is legal duress. It is to be noted, however, that there is always present the threat of an evil proceeding from the one to be benefited by the act done, or the threat of a refusal on his part to remove the menace of an evil which he is in duty bound to remove.

The fact situation here, when analyzed, fairly presents other elements:

1. The "taking" of the coal was in the exercise of the power of eminent domain, and in itself lawful.

2. The right of the owner is to just compensation, not to its immediate adjustment and payment. Most of the state Constitutions phrase the right as that of the owner to have payment or security. The Constitution did not use the security phrase, doubtless for the reason that it was not anticipated, or even thought possible, that the United States would ever exercise the power of eminent domain, otherwise than for itself directly, or the responsibility of the United States was deemed to be a sufficient security.

3. The plaintiffs, by the act of the United States in taking, but refusing payment, in whole or part, were put wholly at the mercy of the divertees to get money, or in the certainty of a business death after a very short interval.

The summary of all this is that the plaintiffs were put in the position of being so hard up for ready money as to be compelled to accept any terms on which it might be offered them or "to go broke." In the present case they elected to take the offered price for their coal. We are fully prepared to find

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that they would have preferred a higher and to them better price, and were in a real and very practical sense coerced into taking the lower price by the unrelenting pressure of the need of ready money. The history of mankind and the common experience prove that no better illustration of an instrument of real duress could be found. Tyranny has no weapon to force a people into helplessness equal in effectiveness to the power to control the volume of ready money to be had for the use of the people. So fully is this power, when wielded by one individual to the hurt of another, deemed to be a public menace, that the law has intervened to prevent its abuse by regulating rates of interest.

We in consequence make the finding, for whatever it may be worth, but to the full extent of its meaning, that the plaintiffs, by the taking of their property, were put into a position of the need of ready money so strong that the only alternative open to them was to make the best terms they could with the divertees or submit to business ruin. They made their election in the form of the acceptance of the sums paid, and it was in this sense a voluntary act, because the offer was of the "take it or leave it" variety.

We make the fact findings as broadly favorable to the plaintiffs as the evidence warrants, in order to squarely face the question which, as we view it, is presented. That question is whether the acceptance of a price because of the pressure exerted by the condition of being "hard up" is legal duress, giving the seller the legal right to recover, in addition to the sum paid, the difference between "a fair price" and what was paid. We assume the answer to be negative, when the pressure of need is the only pressure exerted. The question here, however, must be answered, of course, with the thought in mind that the sale is not voluntary, but is essentially a legal fiction. A case may be imagined in which a taking under the exercise of the power of eminent domain does a real damage to the owner. We thus qualify the statement, because ordinarily an owner gets his best price when he sells to the public. We put these plaintiffs within the exception, because we have found as a fact that what was paid them was less than "just compensation."

In passing upon the general question arising out of this cause, we must first bring what may be called the natural feeling of right and of injury into consonance with what the law pronounces to be a legal right or legal injury. If private property be tak en for public use without just compensa tion, this "natural judgment" would pro

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