The opinion of the court was delivered by: NEAHER
Plaintiff has moved for summary judgment in this diversity action to recover the unpaid balance of the purchase price for goods sold and delivered to defendant, asserting that all facts requisite for judgment stand admitted or are incontrovertible.
Plaintiff, a Brazilian corporation maintaining its principal office in Rio de Janeiro, is engaged in world-wide operations in all phases of the petroleum industry. It also has a branch office in New York City. Defendant, a New York corporation based in Syosset, Long Island, is engaged in buying, selling and trading of petroleum products in domestic and world-wide trades, sometimes acting as a principal and at other times as a broker.
The claim in suit arises out of a transaction negotiated by defendant, acting on its own behalf as buyer,
with Gambinifuel (cable code "Gadoil"), a cargo broker in Milan, Italy, who was then acting for plaintiff as seller. Defendant's answer and affidavit unqualifiedly admit that those negotiations ripened into an agreement between the parties evidenced by an exchange of telex cable communications between defendant and Gambinifuel, copies of which are annexed as exhibits to the parties' affidavits on the instant motion. The essential terms were that plaintiff would sell and deliver to defendant in December 1972 a cargo of approximately 33,000 metric tons of low sulphur fuel oil of specified quality at U.S. $3.52 per barrel "CIF New York", the valid weights to be those "of the bill of lading." Defendant agreed to make payment in "cash against documents at 30 days date of the arrival of vessel in New York."
There is no question that plaintiff substantially -- if not fully -- performed the above agreement. Defendant admits receiving delivery of the purchased fuel oil in New York on or about December 23, 1972. The tanker bill of lading and loading inspection documents establish that when the vessel left Brazil on December 4, 1972, it carried 35,028 metric tons of fuel oil, equivalent to 34,475 long tons or 245,856 barrels.
Defendant also admits that when plaintiff presented its demand for payment of the agreed price of $865,415.16 thirty days after the delivery, defendant failed and refused to pay, although acknowledging here that that was the amount due.
Subsequently, about June 4, 1973, defendant paid plaintiff $225,000 on account, leaving a balance of $640,415.16 which still remains unpaid even though it now appears that defendant resold the shipment to its customer, Hessoil.
It should be noted that defendant later tendered a check for $304,570.35, which plaintiff rejected and returned because defendant's transmittal letter described it as payment of "a balance held to your account in the sum of $304,570.35."
This so-called "balance" was derived from defendant's subtraction of the monetary value it placed upon two alleged counterclaims asserted in its answer, which it urges here in bar of the summary judgment plaintiff seeks. To that contention we now turn.
Defendant's first counterclaim, while alleging unspecified "extra cost and expense incurred" owing to the tanker's delay in arrival and slow discharge, really focuses on a claimed delivery shortage of 8,787 barrels of cargo valued at $30,927.67.
Although such a counterclaim might be maintained in appropriate circumstances under N.Y. Uniform Commercial Code (UCC) § 2-714, it would provide no excuse for defendant's failure to pay the substantial balance due for the fuel oil actually accepted, id. § 2-607(1). Nor, in light of the terms of purchase and sale here, would it constitute a valid set-off for the claimed deficiency of oil upon delivery.
The documentation supporting plaintiff's motion permits of no doubt that the oil shipment in question was consigned directly to defendant on a C.I.F. basis upon a tanker bill of lading issued in defendant's name. Title to the oil thus passed to defendant at the point of shipment together with the risk of any loss in transit. N.Y. UCC § 2-320, Official Comment 1. If loss occurred as claimed, defendant's recourse was to make claim under the "All Risks" insurance certificate issued in its name,
which it did not attempt to do until eight months afterwards.
Even then defendant withheld submission of proofs of claim to the insurer despite its assertion here that the shortage "can be fully documented by the reports of independent petroleum inspectors, Saybolt & Company, who attended the loading and discharging of this vessel."
Moreover, defendant's contention that a true C.I.F. contract did not exist here because (1) payment was not to be made until thirty days after delivery, (2) plaintiff retained the original bill of lading for several days after delivery, and (3) plaintiff continues to retain the original certificate of insurance, is wholly without merit. As to (1), while a C.I.F. term normally requires defendant to make payment upon tender of the required documents, a variation in the contract as to date of payment, even if after delivery, is permitted and does not destroy its essential meaning; i.e., that this was "a contract for proper shipment rather than one for delivery at destination." N.Y. UCC § 2-320, Official Comment 14. Since the term is so well understood, any commercially reasonable variation should not be allowed to destroy that meaning. Id. As to (2) and (3), defendant cites no authority for the remarkable proposition that an alleged breach of the contract alters its terms. Such an argument is patently frivolous; a breach may modify obligations under the contract, or even terminate it, but it does not operate to change the meaning to be given to an unambiguous term.
From an evidentiary standpoint, defendant has presented nothing but its bare assertion that shortage documentation does in fact exist. That does not suffice to controvert the Saybolt inspection documents plaintiff submitted, which verified the exact quantity of fuel oil loaded aboard the tanker in Brazil.
"A party opposing a motion for summary judgment simply cannot make a secret of his evidence until the trial, for in so doing he risks the possibility that there will be no trial." Donnelly v. Guion, 467 F.2d 290, 293 (2 Cir. 1972). If there was documentary evidence to support the assertion, Rule 56 required defendant to come forward with it. In the absence of such contradicting evidence, which should clearly be available to defendant, its opposing affidavit reveals no genuine issue of material fact which would bar summary judgment for the balance due plaintiff on the latter's first cause of action.
There remains the question whether defendant's second counterclaim must be tried on the merits before plaintiff may have a judgment for the unpaid price of goods admittedly sold and delivered in December 1972. The claim in substance is that plaintiff breached an alleged subsequent agreement between the parties to ship defendant a second cargo of fuel oil upon the same terms as the first. Judgment for damages on that claim is sought in the amount of $248,000, which includes the identical $31,000 shortage claim alleged in the first counterclaim.
The respective affidavits and documentary exhibits on the present motion show the second counterclaim to be of equally dubious merit. Its underpinnings are (1) Gambinifuel's telex statement to defendant "We will probably have another cargo";
and (2) defendant's receipt of a tanker bill of lading and import and cargo manifests naming defendant as consignee of a shipment of 26,138 metric tons of fuel oil leaving Brazil on December 27, 1972 aboard the tanker "Presidente Getulio."
The statement in (1) above was made in Gambinifuel's final telex of November 13, 1972, confirming the terms on which the first cargo was to be sold to Hessoil, for whom defendant was then acting as agent, and before plaintiff agreed to the substitution of defendant as buyer of the first cargo.
The second cargo, referred to in (2) above, appears to be a quite different situation. Upon receipt of the "Getulio" bill of lading documents, defendant sent Gambinifuel a ...