Matthew Smith Tea, Coffee & Grocery Co. v. Lamborn

HOUGH, Circuit Judge

(after stating the facts as above). Lamborn sold Java sugars f. o. b. Philadelphia to many persons, and apparently exacted as many irrevocable credits covering payment to him for the same. When the sugars on the West Cheswald arrived, goods for which buyers were willing to pay 22 cents a pound at contráet date would fetch no more than 11 cents.

This fact does not affect the legal questions involved, but it does explain why consignments of sugar on the Chifuku, Washington, and Cheswald gave rise to a rather remarkable mass of litigation. Efforts to avoid accepting and/or paying for these sugars have taken several forms: First, suit by the vendee to get back from Lamborn the sale price obtained by him from the banks issuing the irrevocable credits. This ease is of that sort, and so were Wilbur & Sons, Inc., v. Lamborn, 276 Pa. 479, 120 A. 478, 27 A. L. R. 160, and Lamborn v. Hardie Co. (C. C. A.) 1 F.(2d) 679. The second form of attack consisted in a vendee’s suing to prevent his own bank paying under its own irrevocable letter of credit. J. Hungerford Smith Co. v. Lamborn (Sup.) 200 N. Y. S. 292, and Williams Ice Cream Co. v. Chase, etc., Bank, 210 App. Div. 179, 205 N. Y. S. 446, are such cases. In a third form of litigation Lamborn brought suit against the credit-issuing bank, which on varying grounds had refused the promised payment. Such eases are Lamborn v. Lake Shore, etc., Co., 196 App. Div. 504, 188 N. Y. S. 162, and National Bank, etc., v. Lamborn (C. C. A.) 2 F.(2d) 23, 36 A. L. R. 509.

, In every instance, except the last, Lam-born has prevailed. In that case the credit, according to the report, required “shipment to be made during August-September, 1920, at option of the sellers from J ava by steamer or steamers to Philadelphia.” There, as here, the sugar tendered f. o. b. Philadelphia was ex West Cheswald, but as that steamer had originally sailed from Java for'New York, and been diverted to Philadelphia by radio, the Fourth Circuit held that the crediLgiving bank was justified in refusing payment, because there had been no shipment from Java to Philadephia. .

There is also a report of the present litigation, on plaintiff’s motion to strike out certain defenses. Matthew Smith, etc., Co. v. Lamborn (D. C.) 276 F. 325. On the present writs we are urged, first, to construe the contract between vendor and vendee as the Fourth Circuit did that between vendor and bank; and, second, to sustain the contention pleaded below by the plaintiffs in error — i. e., that after shipment of sugar satisfying shipment on the Chifuku, Lamborn was powerless to tender sugars shipped on the Cheswald.

As to the first point, we could not yield to the argument, even if we wished to. This is not a suit between the vendor and the credit-issuing bank; the existence of that credit is immaterial to the present action. We note, however, that the credit letter in this record does not contain the proviso above quoted from the Fourth Circuit ease; and, even if it were there, we could not consider it as a defense, because it was not pleaded nor suggested as a reason for Smith’s refusing the sugar.

This suit does not rest on the credit in any way. It is not denied that Lamborn was entitled to his money under the credit, but he is alleged to have gotten it only after he had broken his sales contract. There were two quite distinct contracts, one for the sale and one for payment by another person. As was said in Lamborn v. Lake Shore, etc., Co., supra, at page 506, 188 N. Y. S. 163: “The authorities are uniform to the effect that this letter of credit constitutes the sole contract with the shipper, and that the hank issuing the letter of credit has no concern with any question which may arise between the vendor and vendee of the merchandise for the purchase price for which the letter of credit was issued.” Consequently we are not required to express assent or disagreement with the opinion of the Fourth Circuit.

On the other question, the single issue arising on the pleading, we are of opinion that Lamborn had good right to tender sugar ex West Cheswald, and have little to add to the opinion of Hand, J., in 276 F. 325. The sale contract was mercantile, is to be construed according to the intent of the parties, and we must discover by the language used what warranties or conditions precedent were created. Dorrance v. Barber & Co. (C. C. A.) 262 F. 489.

There was no warranty that the same steamer would carry Smith’s sugar all the way from Java to Philadelphia. By express agreement it might have gone on several vessels, and,by reasonable construction been forwarded by another steamer from an intermediate port; e. g., the Chifuku could have transhipped at Port Said. Harrison v. Fortlage, 161 U. S. 57, 16 S. Ct. 488, 40 L. Ed. 616. The naming of the Chifuku as the carrying vessel bore no resemblance to the naming of a vessel to fulfill a charter party, where the vessel itself was the subject-matter of agreement. Texas Co. v. Hogarth, etc., Co., 256 U. S. 619, 41 S. Ct. 612, 65 L. Ed. 1123, has no application.

In short, the provision of the sales contract, “names * * * of steamers to be declared later,” was for the seller’s benefit only, and he could waive it. The cases were-cited below; but see, also, Borrowman v. Free, 4 Q. B. D. 500. Reduced to its lowest terms, Smith Company was entitled to a certain quantity of Java sugar f. o. b. Philadelphia, and shipped in August-September; that agreement was fulfilled.

Judgment affirmed, with costs.