J. Zeevi and Sons v. Grindlays Bank (Uganda)
New York Court of Appeals
37 N.Y.2d 220, 371 N.Y.S.2d 892, 333 N.E.2d 168 (1975)
J. Zeevi and Sons, Ltd. (Zeevi) (plaintiff), incorporated in Israel, deposited about $407,000 United States dollars’ worth of Ugandan currency in an account with Grindlays Bank Ltd. in Uganda (Grindlays) (defendant). Grindlays issued a letter of credit for Zeevi. The terms of the letter of credit guaranteed that about $41,000 in United States dollars would be payable to Zeevi per month, starting on April 15, 1972, and ending in January 1973. Between March 28 and April 13, 1972, the Bank of Uganda, acting on behalf of the Ugandan government, told Grindlays to cancel foreign exchange contracts with Israelis and to stop foreign exchange payments on Zeevi’s letter of credit. In December 1972, Chemical Bank, acting as negotiating bank under the letter of credit, asked Citibank for reimbursement of 10 payments made in reliance on the letter of credit, totaling about $407,000. Citibank declined to pay. Zeevi sued in the New York Supreme Court to force Grindlays to honor the letter of credit. Applying New York law, the trial court awarded Zeevi partial summary judgment. The Appellate Division affirmed. Grindlays appealed.
Rule of Law
Holding and Reasoning (Cooke, J.)
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