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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
1997 LC CASE SUMMARIES 1997 U.S. Dist. LEXIS (E.D. N.C. Feb. 5, 1997)
Topics:
Clean bill of lading.
Type of Lawsuit:
Applicant against beneficiary and carrier for damage to goods during shipment.
Principals:
Plaintiff/Applicant: Tiposan Harf Ve Matbaa Gerecleri A.S.;
Defendant/Beneficiary: Masonite Corporation;
Defendant/Carrier: Ayers Maritime Services, Inc.
Counsel:
For Tiposan Harf Ve Matbaa Gerecleria A.S.: R. Stephen Camp of Ward& Smith.
For Masonite Corporation: David A. Nash of Hogue, Hill, Jones, Nash& Lynch.
For Ayers Maritime Services, Inc.: Alan E. Toll of Stevens, McGhee, Morgan, Lennon& O'Quinn.
Underlying Transaction:
Purchase of medium density fiberboard by a Turkish corporation.
LC:
Commercial credit. No indication in opinion of its amount or whether it was issued subject to the UCP.
Decision:
The U.S. District Court for the Eastern District of North Carolina denied t h e carrier's motions to dismiss and for summary judgment, and granted summary judgment in favor of the beneficiary.
Rationale:
The beneficiary of a letter of credit, unless otherwise obligated pursuant to the underlying contract, is not responsible for the goods once they are delivered to the carrier.
Article
Factual Summary: In order to finance the purchase of a quantity of medium density fiberboard under a C & F contract by a Turkish corporation, the buyer caused a letter of credit to be issued in favor of the seller. The goods sustained water damage en route to Turkey because they were stowed on deck, contrary to the statement in the bill of lading that it was 'clean'. Insurance did not cover the damage. The applicant brought suit against the beneficiary and the carrier.
The applicant sued the beneficiary on the theory that it was negligent and in breach of the terms of the letter of credit by allowing a clean bill of lading to be issued by the carrier when the goods were loaded on the deck and not stowed in the hold of the vessel. It sued the carrier on the theory that its agent failed to instruct the carrier to stow the goods below deck in order to avoid water damage. The carrier motioned to dismiss and for summary judgment. The beneficiary also moved for summary judgment. The trial court granted the beneficiary's motion to dismiss but denied the other motion.
Legal Analysis:
1. Carrier's Motion for Summary Judgment:The court denied the carrier's motion to dismiss and motion for summary judgment because it concluded there was and that a question of material fact remained outstanding: specifically, whether the carrier properly discharged its duty to the applicant in arranging shipment of the goods could not be determined based on the pleadings.
2. Beneficiary's Motion for Summary Judgment:Under the C&F contract, the beneficiary was not responsible for the goods once they were delivered to the carrier. Once the beneficiary placed the goods in possession of the carrier, obtained a bill of lading - whether a clean bill of lading or not - and forwarded the invoice and bill of lading to the applicant, its obligations under the contract were fully and completely performed. The court found no indication in the contract that the parties intended that the beneficiary should be held accountable for the goods once they were delivered to the carrier. On that ground, the court granted summary judgment in favor of the beneficiary.
Comment:
It is hard to understand what the clean B/L has to do with where the goods are stored. While UCP 500 Article 31 provides that a transport document indicating carriage on deck is non compliant, Article 32 addresses clean transport documents, which relates to notations on face of the B/L.
In any event, the LC provides the applicant with no separate course of action against the beneficiary not available under the underlying contract.
©1998 INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.