Mellon Bank, N.A. v. General Electric Credit Corp.

724 F. Supp. 360 (1989)

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Mellon Bank, N.A. v. General Electric Credit Corp.

United States District Court for the Western District of Pennsylvania
724 F. Supp. 360 (1989)

SC

Facts

Woodings Consolidated Industries, Inc. (Woodings) sold General Electric Credit Corporation (GECC) (defendant) a piece of machinery that GECC leased back to Woodings. Together with this lease agreement, Woodings secured a standby letter of credit with Mellon Bank, N.A. (Mellon) (plaintiff) for $600,000. GECC was the beneficiary. GECC was permitted to draw on the letter of credit with a statement that the amount demanded by GECC was due and owed by Woodings. Subsequently, Woodings failed to make a monthly payment of approximately $15,000 to GECC under the lease agreement. GECC sought to collect the $600,000 under the letter of credit and presented the required documentation to Mellon, including a statement that the amount was due and owing. GECC did not declare Woodings to be in default, which would have triggered the lease agreement’s acceleration clause. Mellon paid GECC the $600,000. Mellon then sued GECC, claiming that Woodings was not in default of the lease agreement and the $600,000 was not due and owing. Both parties moved for summary judgment.

Rule of Law

Issue

Holding and Reasoning (Cohill, C.J.)

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