Fertico Belgium, S.A. v. Phosphate Chemicals Export Association, Inc.

100 A.D.2d 165 (1984)

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Fertico Belgium, S.A. v. Phosphate Chemicals Export Association, Inc.

New York Supreme Court, Appellate Division
100 A.D.2d 165 (1984)

Facts

In October 1978, Phosphate Chemicals Export Association, Inc. (PhosChem) (defendant) sold fertilizer to Fertico Belgium, S.A. (Fertico) (plaintiff). The fertilizer was to be shipped to Antwerp, Belgium on a cost and freight (C&F) basis. The parties did not specify a delivery deadline, but shipment had to occur by November 8. Fertico arranged for the Banque de Paris et des Pays-Bas Belgique, S.A. (Paribas) to open an irrevocable letter of credit in PhosChem’s favor. Paribas so notified PhosChem’s bank, Irving Trust (Irving). Irving confirmed that payment would be due upon the presentment of certain documents, including onboard bills of lading dated no later than November 8 and a copy of PhosChem’s telex to Fertico specifying the cargo ship’s name and estimated arrival. The fertilizer was loaded by November 8, and an onboard bill of lading dated November 8 was issued. Also on November 8, PhosChem telexed Fertico that the ship sailed on November 8 and was expected in Antwerp on December 4. However, the ship—which subsequently loaded additional cargo—did not sail until November 11. Fertico did not notify Paribas or Irving of any problem or request that the banks withhold payment. On November 17, PhosChem requested payment from Irving and submitted, among other things, a copy of its telex to Fertico stating that the ship sailed on November 8. PhosChem received payment soon thereafter. The ship arrived in Antwerp on December 17 after first stopping in Germany. In October 1981, Fertico sued PhosChem for, among other things, fraud and conversion. Fertico alleged that the fertilizer was delivered too late because the ship sailed after November 8 and made a stop before Antwerp and that PhosChem fraudulently induced Irving to pay PhosChem via the telex that falsely claimed a November 8 sailing. The trial court granted partial summary judgment to Fertico, ruling that the letter of credit required that the ship sail by November 8 and travel directly to Antwerp, neither of which occurred.

Rule of Law

Issue

Holding and Reasoning (Sullivan, J.)

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