Pastor v. National Republic Bank

Plaintiff, Louis Pastor, procured the issuance of an irrevocable letter of credit by defendant, National Republic Bank of Chicago, in favor of Summit Insurance Company of New York (Summit). Pastor is affiliated with Associated Surety Agents, Inc. (Associated), which is in the business of acting as insurance agent, and in that capacity sought to represent Summit. Pastor procured the issuance of the letter of credit as stated therein to facilitate authorization of Associated Surety Agents, Inc. to act as agent for Summit * * *. The credit authorizes Summit to draw on the defendant bank by sight draft from time to time, up to an aggregate amount of $25,000, for the recovery of any deficit balance existing between Summit and Associated. On May 25, 1975, Summit was placed in liquidation by a court order in New York. The Superintendent of Insurance of the State of New York was appointed liquidator and vested with title to all property, contracts and rights of action of Summit. Thereafter, the liquidator drew a sight draft for $25,000 on the defendant bank under the irrevocable credit it issued to Summit. Pastor filed a suit against the bank in the circuit court of Cook County seeking to enjoin payment of the sight draft. A temporary restraining order and later a preliminary injunction were issued enjoining the payment of the draft drawn against the credit. Thomas A. Harnett, Superintendent of Insurance for the State of New York, petitioned the court for leave to intervene. On March 2, 1976, the circuit court of Cook County denied Harnett's petition, ordered the circuit court orders to remain in full force, and found that the denial of the motion to intervene was a final order and that there was no just reason to delay enforcement or appeal. The appellate court reversed and remanded. (56 Ill. App.3d 421.) We granted Pastor's petition for leave to appeal. The terms used with relation to letters of credit are those defined in section 5-103 of the Uniform Commercial Code (Ill. Rev. Stat. 1975, ch. 26, par. 5-103).