## Facts

- A commercial lease required the tenant to replace a cash deposit with an irrevocable $100,000 letter of credit payable upon documentary conditions, including certifications tied to a default.
- Central Penn National Bank (later Meridian Bank by merger) issued a letter of credit requiring: (1) the escrow agent’s sight draft, (2) the escrow agent’s certification of ten days’ notice to the tenant, and (3) a certificate “signed by Mr. Orleans” stating an event of default occurred, notice was given, and the default was not timely cured.
- Marvin Orleans (the named signatory in the letter of credit) later died, and Samuel Rappaport Family Partnership acquired the property from Orleans’s estate, becoming the landlord/beneficiary.
- The escrow agent presented a sight draft and accompanying documents that otherwise matched the letter of credit, except the default certificate was signed by Rappaport rather than Orleans.
- The tenant refused to waive the “Mr. Orleans” signature condition, and Meridian dishonored the draft for failure of strict documentary compliance.
- Rappaport sued for wrongful dishonor; a jury found for Rappaport, but the trial court entered judgment notwithstanding the verdict for Meridian.

## Issues

1. Whether Orleans’s death created an ambiguity allowing the issuer to accept a default certificate signed by the successor landlord rather than by the named individual.
2. Whether, under the strict compliance rule for letters of credit, the issuer properly dishonored the draft because the presentment lacked the required signature of “Mr. Orleans.”

## Decision

- The Superior Court of Pennsylvania affirmed the judgment notwithstanding the verdict for Meridian.
- The court held that Orleans’s death did not create ambiguity in the letter of credit; it made the specified certification condition impossible to satisfy.
- Applying strict compliance, the issuer was entitled to insist on the exact documentary requirement that the certificate be signed by “Mr. Orleans,” and could dishonor when it was signed by Rappaport instead.

## Legal Principles

- A letter of credit is an independent, documentary undertaking; the issuer’s duty is determined by facial conformity of the presented documents to the credit’s stated conditions, not by the underlying transaction.
- Pennsylvania applies a strict compliance standard to documentary conditions in letters of credit; even small variances authorize dishonor.
- When a letter of credit unambiguously requires a document signed by a specific named person, a substitute signature by a successor or related party does not satisfy the condition.
- The death of a named certifier does not relax strict compliance; it renders the condition impossible and leaves the credit effectively undrawable unless the parties amend or waive the requirement.

## Conclusion

The court affirmed that an issuing bank may dishonor a letter of credit when presented documents fail to match an explicit requirement that a default certificate be signed by a named individual; the individual’s death does not create ambiguity but makes the condition impossible to perform under strict compliance.


Samuel Rappaport Family Partnership v. Meridian Bank, 657 A.2d 17 (Pa. Super. Ct. 1995)