Warner Brothers & Co. v. Israel

101 F.2d 59 (1939)

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Warner Brothers & Co. v. Israel

United States Court of Appeals for the Second Circuit
101 F.2d 59 (1939)

Facts

Warner Brothers & Co. (Warner) (plaintiff), a seller of sugar, executed a written contract for sale of 1,000 tons of sugar with A. C. Israel (defendant), a resident of New York. The sugar was in the Philippines. The contract was headed C.I.F. Terms, standing for cost, insurance, and freight (CIF). Under a CIF contract, the seller first received the purchase price, then arranged for the transport of the goods and insured the goods for the buyer’s benefit, covering the costs of transport and insurance. At this point, the seller was deemed to have fully performed and was owed payment upon delivery of the appropriate documents. The Warner-Israel contract stated that the price would be adjusted depending on factors such as the final weight of the sugar and stipulated that the carrier should take the sugar to a place designated by Israel. The contract also provided that if the sugar did not arrive from loss of vessel or “any other cause,” payment based on the original shipping weight was due. Warner insured and shipped the sugar to Israel in New York, sending a draft and appropriate documentation to a bank where the buyer had credit. The draft was paid. The sugar entered New York harbor. Before the sugar could travel further, however, the 1934 Jones-Costigan Act (act) took effect, imposing quotas on sugar imports. The act’s sugar quota was filled, so the sugar from Warner had to be warehoused by Israel. Israel refused to pay the remainder of the purchase price, asserting that Warner had failed to complete delivery. Warner sued in district court. Israel counterclaimed for damages resulting from a fall in the price of the sugar while it was stored. Israel argued that the details of the contract meant that Warner was required to complete delivery, regardless of the CIF designation.

Rule of Law

Issue

Holding and Reasoning (Chase, J.)

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