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Rheinberg Kellerei GmbH v. Brooksfield National Bank of Commerce Bank

United States Court of Appeals for the Fifth Circuit
901 F.2d 481 (1990)


J & J Wine (J&J) ordered a shipment of wine from Rheinberg Kellerei GmbH (Rheinberg) (plaintiff). Rheinberg’s bank, Edekabank (Edeka), issued an international letter of collection and sent the letter to J&J’s bank, Brooksfield National Bank of Commerce Bank (NBC). Under the terms of the letter of collection, payment was due upon the arrival of the goods in a harbor in Houston, Texas. The letter also required NBC to notify Rheinberg’s agent of any difficulty in payment. NBC presented the letter to J&J before the wine arrived and before payment was due. J&J asked NBC to hold the letter of collection while J&J worked to raise money for payment. NBC did not notify Edeka or Rheinberg’s agent of J&J’s failure to pay on presentment. NBC did not receive notice of the wine’s arrival. The wine sat at the harbor and deteriorated. U.S. Customs sold the unclaimed wine at auction. Rheinberg sued NBC for negligence for failing to notify Rheinberg that J&J failed to pay on presentment. The district court entered judgment in favor of NBC, finding that because payment was not due until the wine’s arrival, and because NBC had no notice of the arrival, NBC had no knowledge that J&J was in breach of the payment terms and therefore had no duty to notify. Rheinberg appealed.

Rule of Law


Holding and Reasoning (Garza, J.)

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