Homestate Savings Ass'n v. Westwind Exploration, Inc.

RALEIGH BROWN, Justice,

dissenting.

I dissent. The essential purpose of a letter of credit is to insure payment to the beneficiary. This obligation of the issuer to pay upon presentment of conforming documents is independent of the underlying contractual relationship between the customer and the beneficiary. The issuer deals in documents and not goods, and when conforming documents are presented, payment must be made. Republic National Bank of Dallas v. Northwest National Bank of Fort Worth, 578 S.W.2d 109 (Tex.1978); TEX.BUS. & COM.CODE ANN. sec. 5.114(a) (Vernon 1968). Further, a letter of credit and underlying contract giving rise to the transaction cannot be construed together for the purpose of adding obligations in addition to those specifically set out in the letter of credit. Summit Insurance Company of New York v. Central National Bank of Houston, 624 S.W.2d 222 (Tex.Civ.App.—Houston [1st Dist.] 1981, no writ); Dulien Steel Products, Inc., of Washington v. Bankers Trust Company, 298 F.2d 836 (2nd Cir.1962); Siderius, Inc. v. Wallace Company, Inc., 583 S.W.2d 852 (Tex.Civ.App.—Tyler 1979, no writ).

A fair and reasonable reading of paragraph one in the letter of credit reflects that the purpose of said letter was to insure payment of balances due Westwind Exploration, Inc. from International Crude Corporation which had been outstanding for more than 24 hours and not received. There is no limitation in that paragraph restricting Homestate’s obligation for payment of balances due for August only. Further, the expiration date was significantly extended which expresses an intention on Homestate’s part to extend its liability.

Paragraphs two and three set forth additional accompanying documents to be furnished by Westwind. Such documents do require evidence of runs for August 1982 but do not suggest an improper presentment if other documents are furnished. Whether Westwind strictly complied with requirements of the letter of credit was a question for the jury. H. Ray Baker, Inc. v. Associated Banking Corp., 592 F.2d 550 (9th Cir.1979); Chase Manhattan Bank v. Equibank, 550 F.2d 882 (3rd Cir.1977). The jury found that Westwind did strictly comply with the terms of the letter of credit.

Construing the letter of credit most strictly against the issuer as we must, I would hold that Homestate’s obligation to Westwind is not restricted to payments of balances for August only. Republic National Bank of Dallas v. Northwest National Bank of Fort Worth, supra. The majority concludes that as a matter of law the objective intent of the parties was that only payment for August oil was guaranteed by the letter of credit. I do not agree with such conclusion. I would affirm the judgment.