Before CLARK, Chief Judge, and MEDINA and LUMBARD, Circuit Judges.
This is an appeal from an order of the District Court for the Southern District of New York, by Dimock, J., dismissing plaintiff's action at the close of its case for failure to prove damages in an action for fraud and previous orders by Walsh, J., denying plaintiff's applications for summary judgment.
The principal question is whether the plaintiff in this fraud action may recover the $74,438.30 it advanced in reliance on defendant's fraudulently issued bills of lading which represented that certain newsprint was on board its vessel on a certain date when in fact it was not, without proving that by so doing it had suffered any loss.
Under the law of New York which governs this action, one who has been defrauded is entitled only to be indemnified for his injury and consequently may not recover if he has already recouped his actual pecuniary loss from others. Further, the plaintiff has the burden of establishing that he suffered an actual loss. On this record we find that although plaintiff has been defrauded it has not shown that it suffered any loss. Accordingly we affirm the orders of the district court.
Plaintiff is a corporation organized under the laws of Japan. On October 20, 1951 plaintiff entered into a contract in New York with Trans-America Industries, Inc., to finance and arrange for the importation into Japan of 3,300 short tons of newsprint which, under simultaneously executed contracts, two other Japanese companies had agreed to purchase from Trans-America.
Plaintiff, as required by its contract with Trans-America, had established two irrevocable letters of credit through the Irving Trust Company in New York in favor of Trans-America. These letters provided for payment against certain documents including on board ocean bills of lading dated on or before January 31, 1952. Payment against bills of lading dated thereafter was to be made only if a letter of credit establishing counter-credits in the amount of 2% of the credits opened by plaintiff were established in Japan by Trans-America in favor of the plaintiff. These counter-credits were to be drawn against by plaintiff in the event Trans-America failed to perform its contract. The letters of credit opened by plaintiff did not require that the newsprint shipped under the required bills of lading conform to the specifications of the underlying purchase contracts. In fact it is undisputed that the shipments did not conform to the contracts, the contracts were cancelled and much litigation has followed, all of which is immaterial to our disposition of this case.
On January 31, 1952, the last date bills could be negotiated against plaintiff's letters of credit without the opening of counter-credits by Trans-America, defendant's New York freight manager, at the request of Trans-America's freight forwarder, authorized the issuance of ten bills of lading certifying that certain newsprint was aboard defendant's vessel. In fact, as defendant's freight manager knew, the newsprint covered by the ten bills was not then aboard the ship but was still on the dock in New York. The falsely dated bills were subsequently presented with accompanying drafts totalling $74,438.30 by Trans-America and its assignee and they were honored by Irving Trust. In turn plaintiff was required to reimburse the Japanese banks which had requested Irving Trust to establish the letters of credit.
Plaintiff's basic position, both at trial and here, is that it is entitled to recover the $74,438.30 from defendant regardless of the amount of consideration it received from the sale of the newsprint or the amount of indemnification it recovered from Trans-America.
During plaintiff's case it was developed on cross-examination of Yasuhiro Ishii, an employee of plaintiff, that the newsprint covered by the ten bills of lading came into plaintiff's possession sometime after it reached Japan and that plaintiff sold it to various concerns. The plaintiff offered no admissible evidence as to the proceeds of these sales.
It was also established during the plaintiff's case that the plaintiff had secured a judgment against Trans-America and certain individuals in the New York courts relating to this shipment and others. The plaintiff offered no proof regarding the satisfaction of this judgment.*fn1
As the plaintiff failed to show that it had suffered any loss because of the fraudulently issued bills of lading, Judge Dimock dismissed the complaint when the plaintiff had completed its proof.
Plaintiff maintains that defendant, as a tortfeasor, cannot avail itself of indemnification plaintiff has received from collateral sources. We do not agree.
Since the misrepresentation in this case occurred in New York, a common law fraud action is governed by the law of New York. Klaxon Co. v. Stentor Electric Manufacturing Co., Inc., 1941, 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477, M. Salimoff & Co. v. Standard ...