Sheerbonnet, Ltd. v. American Express Bank, Ltd.

951 F. Supp. 403 (1995)

From our private database of 45,900+ case briefs, written and edited by humans—never with AI.

Sheerbonnet, Ltd. v. American Express Bank, Ltd.

United States District Court for the Southern District of New York
951 F. Supp. 403 (1995)

Facts

Sheerbonnet, Ltd. (Sheerbonnet) (plaintiff) sold troop carriers to Hady Establishment (Hady), a Saudi Arabian company, for use during the Persian Gulf War. Hady obtained a $14,080,000 letter of credit from a Swiss bank and made a 10 percent downpayment to Sheerbonnet. Upon completion of its contractual obligations, Sheerbonnet requested that the remaining funds be paid through a wire transfer to its account at Bank of Credit and Commerce, S.A. (BCCI) in London. Considering the contract provided for payment in United States dollars, on July 3, 1991, the Swiss bank instructed its correspondent bank in New York, Northern Trust International (Northern Trust), to wire the funds to American Express Bank, Ltd. (AEB) (defendant) for credit to the BCCI-London account at AEB in New York on July 5. However, BCCI began to collapse on the morning of July 5, which resulted in a suspension of operations in London and a halt of BCCI’s operations in New York. The Federal Reserve Bank advised AEB of the situation before AEB received the wire transfer from Northern Trust. Nevertheless, AEB credited the funds to BCCI’s account. Thereafter, AEB claimed the funds in BCCI’s account as a setoff against debts owed to AEB by the insolvent BCCI. Consequently, Sheerbonnet never received payment. Sheerbonnet brought common-law and equitable claims of conversion, tortious interference with contract, and unjust enrichment, against AEB for crediting the funds to the BCCI-London account while knowing the situation surrounding BCCI’s collapse. AEB moved to dismiss Sheerbonnet’s claims for failure to state a cause of action and argued that Uniform Commercial Code (UCC) Article 4A provided the exclusive remedy for Sheerbonnet’s injury and, even if Article 4A did not preempt Sheerbonnet’s claims, the claims were legally insufficient because AEB merely followed the Swiss bank’s instructions.

Rule of Law

Issue

Holding and Reasoning (Preska, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 733,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 733,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 45,900 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 733,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 45,900 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership