Samuel Rappaport Family Partnership v. Meridian Bank

In May 1985, McKlan, Inc. (McKlan) entered into a lease for property that required McKlan to sign a $100,000 letter of credit. Three months later, Marvin Orleans purchased the property and was assigned the former landlords’ interest in the lease. Meridian Bank (Meridian) (defendant) issued the required letter of credit upon McKlan’s instruction. The letter of credit conditioned payment upon Meridian’s receipt of (1) a draft from escrow agent David Pincus, (2) certification that McKlan had received notice of the draft presentment, and (3) a certificate signed by Orleans. Shortly thereafter, Orleans died. Pincus subsequently presented a draft to Meridian, including the required documents. However, because Orleans had died, the required certificate was instead signed by Samuel Rappaport (plaintiff), who had bought the property from Orleans’s estate. Meridian refused to issue payment on the letter of credit, because the draft was not presented with a certificate signed by Orleans as required. Rappaport brought suit against Meridian, arguing that Orleans’s death called into question the continued validity of the letter-of-credit provision requiring a certificate bearing Orleans’s signature. The trial court found in Meridian’s favor, concluding that dishonor of the draft was proper based on insufficient compliance with the conditions for the letter of credit. Rappaport appealed.