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109 - Case laws - Applicant Vs. Beneficiary
J. & D. Einbinder Associates v. ICC Performance 3 Limited Partnership 661 N.Y.S. 2d 287 (N.Y. App. Div. 1997) Applicant sued beneficiary and issuer to enjoin the enforcement of the letter of credit. The beneficiary cross claimed against the issuer for wrongful dishonor. |
| Parties: Defendant/Issuer Key Bank of Southeastern New York, N.A. Defendant/Beneficiary ICC Performance 3 Limited Partnership. Plaintiff/Applicant J & D. Einbinder Associates, Inc. Decision: The Supreme Court of New York, Appellate Division, Second Department affirmed the amended order of the Supreme Court, Suffolk County (Tanenbaum, J.) which awarded the beneficiary damages for wrongful dishonor. Justification: The issuer must honor a complying presentation regardless of any dispute concerning the underlying contract. History: The applicant provided the issuer with a personal guaranty to secure the issuance of a letter of credit. When a dispute erupted concerning the underlying contract, the applicant sought to enjoin enforcement of the letter of credit. The beneficiary, having presented conforming documents, cross claimed against the issuer for wrongful dishonor. The trial court denied injuncture relief and awarded summary judgment to the beneficiary on its wrongful dishonor claim and awarded the issuer summary judgment and the same amount, pursuant to the personal guaranty, against the applicant. On appeal, affirmed. Briefing: Issuer's Obligation. Given the absence of letter of credit fraud and since none of the parties claimed that the presented documents did not comply with the terms of the letter of credit, the issuer is obligated to honor and had wrongfully dishonored when it failed to pay. |