## Facts

- A New York bank issued four letters of credit in favor of a Mexican beneficiary; the letters incorporated the Uniform Customs and Practice for Commercial Documentary Credits (UCP).
- A Mexican bank maintained a correspondent account with the New York bank and drew checks that the New York bank paid, creating an overdraft of about $256,153.84.
- The Mexican bank presented drafts and documents under the letters of credit; required documents included truckers’ bills of lading, and three credits expressly required “on board” truckers’ bills of lading.
- The New York bank refused to honor certain drafts, asserting the truckers’ bills of lading lacked an “on board” notation and carrier signature/initials indicating the goods were on board.
- The Mexican bank argued the documents matched Mexican commercial practice, where truck bills of lading typically do not include “on board” notations.
- The parties disputed whether the New York bank examined the documents within a reasonable time and gave prompt, specific notice of discrepancies and disposition of the documents as required by the UCP.
- Additional contested matters included alleged forgeries and whether the Mexican bank was a holder in due course as to some drafts.

## Issues

1. Whether the presented documents, particularly truckers’ bills of lading without “on board” notations, strictly complied with the letters of credit.
2. Whether the issuing bank rejected within a reasonable time and gave timely, sufficient notice of discrepancies under the UCP, and whether deficient notice would bar reliance on discrepancies.
3. Whether trade usage and Mexican banking/commercial custom could affect the compliance analysis for the required shipping documents.
4. Whether alleged forgery and holder-in-due-course questions affected any duty to honor the drafts.
5. Whether the record permitted summary judgment for either party.

## Decision

- Both parties’ summary judgment motions were denied.
- The court held that genuine disputes of material fact existed as to document conformity, timeliness and adequacy of notice under the UCP, the relevance/content of asserted customs, and forgery/holder-in-due-course matters.
- The case was left for trial because resolving the disputes required credibility determinations and fuller factual development.

## Legal Principles

- Letters of credit generally require strict documentary compliance; an issuing bank may insist on the precise documents and notations specified by the credit.
- When the UCP is incorporated, the issuing bank must examine documents within a reasonable time and, upon rejection, promptly give specific notice of discrepancies and indicate whether documents are held or returned.
- Whether notice was given within a “reasonable time” and whether it was sufficiently specific are commonly fact-dependent determinations.
- Trade usage and banking/commercial custom may be relevant to interpreting documentary requirements, but conflicting evidence on custom can prevent judgment as a matter of law.
- Summary judgment is improper where material facts are disputed in a way that could affect liability under letters of credit, including disputes involving fraud/forgery and holder-in-due-course status.

## Conclusion

The court refused to resolve the parties’ overdraft and letter-of-credit disputes on summary judgment because key factual questions remained about strict compliance, UCP notice obligations, the role of asserted Mexican trade practice, and potential forgery-related defenses.


Marine Midland Grace Tr. Co. of N.Y. v. Banco del País, S.A., 261 F. Supp. 884 (S.D.N.Y. 1966)