a ‘The Weekly Law Reports, February 21, 1975 315 WLR. In re Collins, decd. (Ch.D.) Pennycuick VC. It seems to me, however, that the short answer to that contention is that the Act of 1952 does not confer on the surviving spouse an option to purchase, What the Act does, read in conjunction with the Act of 1925, is to confer a right on the surviving spouse to have the matrimonial home appropriated in or towards satisfaction of a fixed sum charged on the estate, that fixed sum being in the nature of an absolute interest. That being the position, I can see no valid reason for departing from the general rule applicable to appropriation under section 41 of the Act of 1925. If Parliament had intended that the appropriation should take effect retrospectively as at the date of death, one would have expected this result to be achieved by plain words. The words actually used are quite inept to achieve such a result. No injustice is involved in this conclusion. There is no reason that I can see why the widow rather than the other next of kin should benefit from rising house prices, or indeed, in the contrary case, less familiar in circumstances of today, suffer from a fall in house prices. T conclude that I must answer question 3 of the summons in accordance with alternative (0), ic. the value thereof at the date when the personal representatives appropriate the same, Declaration accordingly. Solicitors: Caporn, Campbell, Clare & Clare for George Shelton & Co. Hucknall, Notts.: Peacock & Goddard for H. J. Hallam & Co., Nottingham. KN. B. [cHaNcERY Division] * DISCOUNT RECORDS LTD. v. BARCLAYS BANK LTD. AND ANOTHER [1974 D. No. 1992] 1974 July 16 Megarry J. Injunction—Interlocutory—Irrevocable credit—Purchasers of goods instructing bankers to provide irrevocable confirmed credit for vendors—Goods supplied defective—Allegation that vendors guilty of fraud—Whether court should restrain bankers from paying on presentation of draft ‘The plaintiffs ordered a specific quantity of records and cassettes from a French company and gave signed instructions to the first defendant bank for an irrevocable confirmed docu- mentary credit with full cash cover available until a stated date. ‘The credit was made to the second defendant bank which instructed a third bank, in Paris, which in turn directed the opening of an irrevocable credit with a fourth bank, also in Paris, ‘The goods were not shipped until 12 days after the latest date for shipment. Between those two dates the first defendant bank had notified an official of the plaintiffs of discrepancies between the goods described in the advice of presentation and the plaintiffs’ instructions but, after making inquiries from the French company, the bank had been able to reassure the official concerned. The second defendant bank [Reported by Mrs. F. ALten McLean, Barrister-at-Law]‘The Weekly Law Reports, February 21, 1975 316 Discount Records v. Barclays Bank (Ch.D.) {9751 instructed the third bank in Paris to accept bills and the first defendant bank debited the plaintiffs and placed the full credited sum in a new deposit account in the joint names of the plaintiffs and the first defendant bank. The plaintiffs’ evidence ‘was that on arrival -the cartons -containing the goods were found to be empty or half empty, or filled with rubbish, or containing, mostly, goods not ordered. On a motion for an injunction restraining the two defendant banks until judgment or further order from paying the draft or any sum pursuant to the irrevocable credit opened on the plaintiff company's request Held, dismissing the motion, that the court would not grant an interlocutory injunction to interfere with bankers’ irrevocable credits unless a sufficiently grave cause was shown; that as the evidence stood the fraud, though alleged, had yet to be established, and the draft might be in the hands of a holder in due course; that as regards the two defendants the plaintiffs’ real claim, if justified, was against the first defendant for breach of contract; and that nothing in those circumstances constituted a sufficiently grave cause for granting the injunc- tion claimed, Sztein v. J. Henry Schroder Banking Corporation (1941) 31 N-Y.S, 2d 631 distinguished. The following case is referred to in the judgment. Sztejn v. J. Henry Schroder Banking Corporation (1941) 31 N.Y.S. 2d 631. No additional cases were cited in argument. , Discount Records Ltd., ordered, on April 6, 1974, a quantity of records and cassettes from a French company, Promodise S.A./BYG Records. On May 17, 1974, they signed instructions to the first defendants, Barclays Bank Ltd., for a documentary credit with full irrevocable cash cover of 44,175 French francs through the second defen- dants, Barclays Bank International Ltd., the beneficiaries being Promodisc. The credit was available for negotiation or payment abroad until June 7, 1974, the maturity date being July 20, 1974, and the shipment date May 30. The second defendants sent instructions to Barclays Bank S.A. directing the opening of an irrevocable credit with the Discount Bank of Paris. The goods were not shipped until June 12, but on June 5, the first defen- dant informed Mr. Golovner, an official of the plaintiffs, that there were discrepancies between the documents and the plaintiffs’ instructions. Some discrepancies he accepted but on others he required, and received, reassur- ance. The plaintiffs’ evidence was that on arrival the cartons alleged to contain the goods were opened and found to contain very little of what had been ordered. ‘The facts are stated in the judgment of Megarry J. Peter Pain Q.C. and Michael Burton for the plaintiffs. Neville Thomas for the first and second defendant banks. Mecarry J. This is a motion for an injunction brought by the plaintiffs, Discount Records Ltd., for whom Mr. Pain appears. He moves against the two defendants, Barclays Bank Ltd., the first defendants, and Barclays Bank International Ltd., the second defendants; and Mr. Thomas appears for them both. As will appear, the case involves two other banks, who are not parties. The motion arises out of an order given by the plaintiffs by a letter dated April 6, 1974, to a French company, Promodise‘The Weekly Law Reports, February 21, 1975 317 IWLR. Discount Records v. Barclays Bank (Cb.D.) Megarry 5. S.A./BYG Records: I shall refer to it as “Promodise.” The order was for 8,625 dises (meaning thereby, I understand, gramophone records) and 825 cassettes, specified by their numbers in accompanying lists. On May 17, the plaintiffs signed instructions to the first defendants for a docu- mentary credit with full cash’ cover, the credit being made through the second defendants. The beneficiaries stated in the credit were Promodisc, and the amount of the credit was 44,175 francs. The credit was expressed to be irrevocable, and was stated to be at the “ urgent rate.” . The numbers of dises and cassettes were stated as in the order, and they were to be shipped not later than May 30. The document stated “This credit to be available for negotiation or payment abroad until 7.6.1974.” I under- stand this expression to mean that June 7, 1974, was the last date on which a draft could be presented by Promodisc for acceptance. The maturity date under the credit became July 20, 1974. On the day on which the credit was taken out, May 17, the second defendants sent telex instructions to the third bank which comes into the picture, Barclays Bank S.A., a French bank, directing the opening of an irrevocable credit with the fourth bank, the Discount Bank of Paris, and giving the necessary details as to invoices, and so on. On May 20, Promodisc made out an invoice for 825 cartridges (and not cassettes) and 8,625 records, and also a packing list showing 91 cartons and indicating the contents of each by numbers. On May 21 the shippers received the goods and invoice in their Paris agent’s warehouse. May 30, the latest date for shipment stated in the credit, then came and went. Barclays Bank S.A. sent the second defendants an “advice of presenta- tion,” asking the second defendants to authorise the Discount Bank to accept a draft due on July 20 and to authorise Barclays Bank S.A. to debit Barclays Bank, London, at maturity. The document described the goods as “Records Cartridges.” On June 12, the goods were at last shipped; there is some evidence of delays by Promodisc in releasing the goods. ‘In the meantime, it appears from the evidence that on June 5 the first defendants had told Mr. Goloyner, an official of the plaintifis, of dis- crepancies between the goods in the documents and his instructions. ‘The differences were between records and discs, which is of no importance, between cartridges and cassettes, which is a matter of substance, and between there being 91 cartons instead of 94. The evidence is that Mr. Golovner accepted all of these discrepancies except that between cartridges and cassettes; and he asked the first defendants to inquire about this. The first defendants were assured by Promodisc that cassettes would be delivered. There may at this time have been some discussion about some indemnity being provided. There is also evidence that the first defendants telephoned Mr. Golovner about this state of affairs, and he accepted it. ‘On June 6, the second defendants cabled instructions to Barclays Bank S.A. to accept bills, and on June 7 the first defendants debited the plain- tiffs with £4,000, which was placed in a new deposit account in the joint names of the plaintiffs and the first defendants. On June 12, as I have already mentioned, the goods were shipped: and by June 16 they had arrived and were opened by the plaintiffs in the presence of a representa tive of the first defendants. The plaintiffs’ evidence is that there were 94 cartons, but of these two were empty, five were filled with rubbish or packing, 25 of the record boxes and three of the cassette boxes were only partly filled, and two boxes labelled as cassettes were filled with records; instead of 825 cassettes, as ordered, there were only 518 cassettes and 25 cartridges. Out of the 518 cassettes delivered, 75 per cent. were not as‘The Weekly Law Reports, February 21; 1975 318 Megarry J. Discount Records v. Barclays Bank (Ch.D.) t97s} ordered; instead -of 112 different records as ordered, only 12 different records were despatched; and, in toto, out of the 8,625 records ordered, only 275 were delivered as per order. The rest were not as ordered and were cither rejects or unsaleable. There was some evidence from the state of the boxes, one of which is before me in evidence, that the numbers indicating the serial number of the records inside which appear on the outside of the box had been pasted over with some semi-transparent material and different numbers had been put on the outside, the outside numbers corresponding with the order and the covered-up numbers not corresponding with the order. In those circumstances, the plaintiffs allege that Promodise has been guilty of fraud. On the next day, June 17, the plaintiffs instructed the first defendants not to pay on the credit, and on June 19 Promodise wrote a somewhat curious letter to the plaintiffs. The signatory of the letter says that he had just returned from the U.S.A., “and am very surprised to hear of a delivery of records and cassettes to you and a price quoted for this sale. I wish to point out that I did not come to an agreement with you about the selling price of our products and I am extremely shocked by your action jeopardising a future co-operation between our firms.” The next word in the letter is the word “sincerely.” On June 21, the plaintiffs’ solicitors wrote a letter to the first defendants setting out the matters complained of, and on June 24 the first defendants replied, saying that the letter was being forwarded to their legal advisers, but also saying that in view of the fact that the credit was an irrevocable confirmed credit it appeared that there was no way that the first defendants could avoid making payment. The first defendants refused to give any under- taking not to pay, and on July 11 the writ and notice of motion were issued. The writ seeks an injunction substantially in the terms of the notice of motion, though there are variations. It also seeks the return of. the sum of £4,000 as well as damages for breach of contract. ‘The injunction sought by the notice of motion prior to being amended was an injunction restraining the two defendants until judgment or further order from “ (i) Paying a draft drawn upon them or either of them in the sum of 44,175 French francs being equivalent to or alternatively £4,000 sterling by Promodise S.A./BYG Records their servants or agents and/or (ii) paying out either to Promodisc S.A./BYG Records or to Discount Bank or to any party at all any sums pursuant to the irre- vocable credit requested by the plaintiffs to be opened on their behalf by the first and/or second defendants in favour of Promodisc S.A./ BYG Records.” Mr. Pain puts his claim for an injunction on two grounds. First of all, he says that this is a case where Promodisc has been guilty of fraud, and that fraud is one of the instances in which the court will intervene even in the case of bankers’ irrevocable confirmed credits. He told me that there was no English authority directly on the point or anywhere near it, but he did put before me Sztejn v. J. Henry Schroder Banking Corporation (1941) 31 N.Y.S. 2d 631, a case which is summarised in Gutteridge and Megrah, The Law of Bankers’ Commercial Credits, 4th ed. (1968), pp. 133, 134. There, it was alleged that the seller had shipped rubbish and then passed his draft for collection, At p. 633 Shientag J. referred to the well- established rule that a letter of credit is independent of the primary con-The Weekly Law Reports, February 21, 1975 319 1 WLR. Discount Records v. Barclays Bank (Ch.D.) ‘Megarry 3. tract of sale between the buyer and the seller, so that unless the letter of credit otherwise provides, the bank is neither obliged nor allowed to enter into controversies between buyer and seller regarding the quality of the merchandise shipped. However, the learned judge (and I use the phrase as no empty compliment) distinguished mere breaches of warranty of quality from cases where the seller has intentionally failed to ship any of the goods ordered by the buyer. In relation to the latter case, at p. 634 the judge uttered a sentence (quoted in the book) upon which Mr. Pain placed great reliance: “In such a situation, where the seller’s fraud has been called to the bank’s attention before the drafts and documents have been presented for payment, the principle of the independence of the bank’s obliga- tion under the letter of credit should not be extended to protect the unscrupulous seller.” During the argument on this point before me, the familiar English phrase “ Fraud unravels all” was also discussed. However, it is important to notice that in the Szfejn case the proceedings consisted of a motion to dismiss the formal complaint on the ground that it disclosed no cause of action. ‘That being so, the court had to assume that the facts stated in the complaint were true. The complaint alleged fraud, and so the court was dealing with a case of established fraud. In the present case there is, of course, no established fraud, bit ‘merely an allegation of fraud. The defendants, who were not concerned with that matter, have under- standably adduced no evidence on the issue of fraud. Indeed, it seenis unlikely that any action to which Promodisc was not a party would contain the evidence required to resolve this issue. Accordingly, the matter has to be dealt with on the footing that this is a case in which fraud is alleged but has not been established. I should also add that on the facts required to be assumed in the Szfejn case the collecting bank there was not a holder in due course, who would not be defeated by the fraud, but was merely an agent for the fraudulent seller. Mr. Pain’s second ground: was that there was a lack of correspondence between the documents and the goods, and that whatever might be said about the allegation that the plaintiffs had in some way waived the lack of conformity there remained the fact that the goods were shipped 13 days after the latest day for shipment stated in the documents establishing the credit. However, in claiming the relief before me, Mr. Pain accepted that the first head of the notice of motion might not be entirely appropriate. He relied primarily on the second head, but preferred to leave the precise formulation of that claim until he had heard Mr. Thomas. For his part, Mr. Thomas did not seek to deal with the points on fraud or a lack of correspondence between the goods and the documents. His case was that the claim for an injunction was misconceived. He said that what would happen was this. Somewhere there is a bill of exchange which has already been accepted by the Discount Bank. That bill may well have been negotiated; it may indeed have passed into the hands of a holder in due course. That bill will be presented for payment, and the Discount Bank is bound to pay it on July 20. The Discount Bank will then debit Barclays Bank S.A. Barclays Bank S.A. will then debit the second defendants and the second defendants will then debit the first defendants. The injunction against the two defendants, if granted, would not achieve Mr. Pain’s avowed purpose, which was to prevent Promodise from being paid. Promodisc, indeed, may already have obtained payment‘The Weekly Law Reports, February 21, 1975 320 Megarry J. ‘ount Records v. Barclays Bank (Ch.D.) [1975] by discounting the bill. All that the injunction would do would be to , prevent the banks concerned from honouring their obligations. As regards the two defendants (as distinct from whatever claim there may be against Promodise), the plaintiffs’ only real claim, Mr. Thomas said, was against the first defendants, and the first defendants alone, and there was, and could be, no suggestion that the first defendants were not good for the money. Faced with that, and with an invitation from the Bench to reconsider the terms of the injunction, Mr. Pain, after a certain amount of hesitation, accepted that a revised form of injunction against the first defendants alone would sufficiently protect him. He amended his notice of motion so as to claim an injunction restraining the first defendants from paying out of the £4,000 deposited on or about June 7, 1974, in the joint names of the plaintiffs and the first defendants, to any party at all, any sums pursuant , to the irrevocable credit requested by the plaintiffs to be opened in favour of Promodisc, and so on. He accepted that he had a money claim against, the bank for breach of contract, but asserted that it was better to have a proprietary claim against the £4,000 as well. When invited to explain why this was better, he said that he could not explain it exactly, but that he felt in his bones that it was better; and he said that in particular he was not satisfied that the same matters must be determined however his 1 case was put. I would not dismiss Mr. Pain’s contentions merely because he failed to particularise them. The sense of litigation of an experienced silk is not something to be cast lightly overboard. Nevertheless, I do not think that this is a case for an injunction at all. It cannot harm the plaintiffs in any way if Promodise is paid, so long as the money does not come out of the plaintiffs? funds; and the revised form of injunction is, I think, the most that the plaintiffs should ever have sought, Even in that form I cannot see any real justification for it. If the first defendants have acted in breach of contract, the plaintiffs will have their claim against them. As I have said, there is no question of them not being good for the money. I see no need to keep the £4,000 in any state of security, nor have adequate grounds been put before me for doing anything except leaving the plain- tiffs to their claim in contract. I would be slow to interfere with bankers? irrevocable credits, and not least in the sphere of international banking, unless a sufficiently grave cause is shown; for interventions by the court that are too ready or too frequent might gravely impair the reliance which, quite properly, is placed on such credits. ‘The Sztejn case, 31 N.Y.S. 2d 631, is plainly distinguishable in relation both to established fraud and to the absence there of any possible holder in due course. I do not say that the doctrine of that case is wrong or that it is incapable of extension to cases in which fraud is alleged but has not been established, provided a sufficient case is made out. ‘That may or may not be the case. What T do say is that the present case falls far short of establishing any ground upon which it would be right for the court to intervene by granting the interlocutory injunction claimed, even in its revised form. ‘The motion } accordingly fails and will be dismissed. « Motion dismissed. Defendants costs in cause. Solicitors: Slowes; Durrant Piesse.