J & D EINBINDER ASSOCIATES, INC., et al., Respondents-Appellants, v. ICC PERFORMANCE 3 LIMITED PARTNERSHIP, Respondent, Key Bank of Southeastern New York, N.A., Appellant-Respondent.
In an action to enjoin the enforcement of a letter of credit, (1) the defendant Key Bank of Southeastern New York, N.A., appeals, as limited by its brief, from so much of an order and judgment (one paper) of the Supreme Court, Suffolk County (Tanenbaum, J.), entered March 21, 1996, as (a) upon granting the motion of the defendant ICC Performance 3 Limited Partnership for summary judgment on its cross claim against Key Bank of Southeastern New York, N.A., to recover damages for its wrongful dishonor of a letter of credit, is in favor of the defendant ICC Performance 3 Limited Partnership and against it in the sum of $77,720.54, and (b) denied its cross motion for summary judgment dismissing the cross claim, (2) the plaintiffs cross-appeal, as limited by their brief, from stated portions of the same order and judgment which, inter alia, awarded summary judgment in favor of Key Bank of Southeastern New York, N.A., and against the plaintiff Joseph Einbinder in the sum of $77,720.54, pursuant to a personal guarantee executed by the plaintiff Joseph Einbinder, and (3) Key Bank of Southeastern New York, N.A., appeals, and the plaintiffs cross-appeal, from stated portions of an amended order and judgment (one paper) of the same court, entered May 23, 1996, which, inter alia, vacated the judgments in favor of the defendants ICC Performance 3 Limited Partnership and Key Bank of Southeastern New York, N.A., respectively, each in the sum of $77,720.54, and substituted therefor judgments in favor of each of these defendants in the sum of $47,720.54.
ORDERED that the appeal and cross appeal from the order and judgment are dismissed, as that order and judgment was superseded by the amended order and judgment; and it is further,
ORDERED that the amended order and judgment is affirmed insofar as appealed and cross-appealed from; and it is further,
ORDERED that the defendant ICC Performance 3 Limited Partnership is awarded one bill of costs payable by the plaintiffs and the defendant Key Bank of Southeastern New York, N.A.
“Under a letter of credit, the issuer must honor a draft or demand for payment from the beneficiary so long as the documents presented conform to the terms of the letter of credit” (Gillman v. Chase Manhattan Bank, 73 N.Y.2d 1, 12, 537 N.Y.S.2d 787, 534 N.E.2d 824; see, United Commodities-Greece v. Fidelity Intl. Bank, 64 N.Y.2d 449, 455, 489 N.Y.S.2d 31, 478 N.E.2d 172; Wood v. State Bank of Long Is., 203 A.D.2d 278, 279-280, 609 N.Y.S.2d 665; UCC 5-114). The “issuer's obligation to honor a properly presented draft is independent of any underlying contractual arrangement between the account party (i.e., its customer) and the beneficiary. Thus, the issuer must honor the draft irrespective of whether the underlying contract has been properly performed” (Gillman v. Chase Manhattan, supra; see, First Commercial Bank v. Gotham Originals, 64 N.Y.2d 287, 294, 486 N.Y.S.2d 715, 475 N.E.2d 1255; United Bank v. Cambridge Sporting Goods Corp., 41 N.Y.2d 254, 259, 392 N.Y.S.2d 265, 360 N.E.2d 943; Phibro Distribs. Corp. v. Fidelity Intl. Bank, 175 A.D.2d 777, 779, 573 N.Y.S.2d 617).
The parties do not dispute that the documents that ICC Performance 3 Limited Partnership (hereinafter ICC), as the beneficiary, presented to Key Bank of Southeastern New York, N.A. (hereinafter Key Bank), as the issuer, were in compliance with the terms of the letter of credit. Thus, Key Bank was obligated, as a matter of law, to honor the demand for payment, and its failure to do so subjects it to damages in the amount that ICC was entitled to receive pursuant to the terms of the letter of credit.
Moreover, we are not persuaded that the court erred in interpreting the terms of a stipulation entered into by J & D Einbinder Associates, Inc., Joseph Einbinder, Key Bank, and ICC's predecessor in interest. The court's determination that a final judgment was entered in the underlying foreclosure proceeding, as that term was defined in the stipulation, was in accord with the purpose of the stipulation, which was to protect the rights of ICC's predecessors in the event a deficiency judgment were entered after the property in issue was foreclosed upon and sold. The construction the court adopted carried out the plain purpose and object of that stipulation (see, 22 N.Y.Jur.2d, Contracts, § 225, at 273-274). To have found otherwise would have rendered the provision concerning final judgment “substantially without force or effect”, and such interpretations should be avoided (Joseph v. Creek & Pines, 217 A.D.2d 534, 535, 629 N.Y.S.2d 75; see, Partrick v. Guarniere, 204 A.D.2d 702, 612 N.Y.S.2d 630).
The court did not err in awarding summary judgment in favor of Key Bank and against Joseph Einbinder on the written personal guaranty that he executed to Key Bank as security for the letter of credit. “[A] motion for summary judgment, irrespective of by whom it is made, empowers a court * * * to search the record and award judgment where appropriate” (Grimaldi v. Pagan, 135 A.D.2d 496, 521 N.Y.S.2d 736; McDougal v. Apple Bank for Sav., 200 A.D.2d 418, 606 N.Y.S.2d 215; CPLR 3212[b] ). Here, the plaintiffs failed to raise any issues of fact in response to Key Bank's cross motion for summary judgment concerning the validity of the personal guaranty executed by the plaintiff Joseph Einbinder.
DECISION & ORDER ON MOTION
Motion by the respondent on appeals from an order and judgment (one paper) and an amended order and judgment (one paper) of the Supreme Court, Suffolk County, entered March 21, 1996, and May 23, 1996, respectively, to dismiss the appeals on the ground that the appeals are abandoned, and to dismiss the appeal from the amended order and judgment on the additional ground of collateral estoppel, and separate cross motions by the appellant-respondent and the respondents-appellants to enlarge the time to perfect their separate appeals from the order and judgment and to consolidate the appeals with their separate appeals from the amended order and judgment. By decision and order on motion of this court dated January 9, 1997, that branch of the motion which was to dismiss the appeals from the amended order and judgment on the ground of collateral estoppel was held in abeyance and referred to the justices hearing the appeals for determination upon the argument or submission of the appeals.
Upon the papers filed in support of the motion and the cross motions, and the papers filed in opposition thereto, and upon the argument of the appeals, it is
ORDERED that the branch of the motion which was to dismiss the appeals from the amended order and judgment on the ground of collateral estoppel is denied.
MEMORANDUM BY THE COURT.