C-ART, Ltd. v. Hong Kong Island Lines America

940 F.2d 530 (1991)

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C-ART, Ltd. v. Hong Kong Island Lines America

United States Court of Appeals for the Ninth Circuit
940 F.2d 530 (1991)

Facts

C-ART, Ltd. (plaintiff) was a Hong Kong-based exporter. From January 1986 to March 1986, C-ART sold multiple shipments of goods to New York Merchandising Company (NYMCO) using Hong Kong Island Lines America, S.A. (HKIL) (defendant) as the carrier. When C-ART transferred goods to HKIL for shipment, HKIL issued a bill of lading that described the goods being shipped and stated that the goods would be released to NYMCO only when NYMCO presented the original bill of lading to HKIL at the point of delivery. C-ART would give the original bills of lading to a bank in exchange for NYMCO’s payment, and the bank would send the original bills of lading to NYMCO, so that NYMCO could claim the goods at the point of delivery. However, the parties’ course of dealing differed from the written terms of the bills of lading in that NYMCO would not wait for the original bills of lading and would instead present bank guarantees to HKIL, which would then release the goods to NYMCO. In a final instance in March 1986, HKIL released the goods to NYMCO after receiving only a corporate guarantee from NYMCO instead of a bank guarantee. Shortly afterward, NYMCO went bankrupt, and C-ART never received payment for the final shipment. C-ART sued NYMCO to recover damages, claiming misdelivery. The trial court awarded damages to C-ART, and NYMCO appealed.

Rule of Law

Issue

Holding and Reasoning (Scudder, J.)

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