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WORLDWIDE SUGAR CO. v. ROYAL BANK OF CANADA

July 9, 1984

WORLDWIDE SUGAR CO., Plaintiff, against ROYAL BANK OF CANADA, Defendant.


The opinion of the court was delivered by: SOFAER

MEMORANDUM OPINION AND ORDER

ABRAHAM D. SOFAER, D.J.:

This case involves an alleged breach of contract. The parties filed cross-motions for summary judgment, and an oral opinion granting judgment for the defendant was delivered on March 7, 1984. This memorandum spells out in greater detail the basis for that decision.

 The plaintiff, Worldwide Sugar Corp. ("Worldwide"), is a sugar trading company located in New York. On December 18, 1981, Worldwide made a contract with Grupo Vicini ("Vicini") to purchase 10,000 long tons of sugar and pick up that sugar from Vincini in the Dominican Republic. Plaintiff's 3(g) Statement (No. 1); Affidavit of Jose Mari Chan, Oct. 7, 1983, at 3; Affidavit of William Allingham, Sept. 14, 1983, at 1. The December 18 contract neither included any provision for the furnishing by Worldwide of a letter of credit nor required that Vicini furnish a letter guaranteeing performance.

 As of March 31, 1982, Worldwide had not yet presented a vessel to pick up the sugar. Plaintiff's 3(g) Statement (No. 5). On March 30, 1982, and again on April 1, 1982, Vicini requested that Worldwide pay ninety-five percent of the sugar's value. Id. (No. 6). On April 2, 1982, apparently in response to this request, Worldwide applied to the Morgan Guaranty Trust Company of New York ("Morgan") for a letter of credit naming Vicini as the beneficiary and the Royal Bank of Canada ("Royal") as the seller's advising bank. On April 6, 1982, Morgan issued a letter of credit in favor of Vicini to expire on July 31, 1982. Royal received notice of the letter of credit, which included special instructions stating that payment would be made upon receipt by Morgan of the following:

 1. Sellers commercial invoice for 10,000 LT.

 2. Copy of insurance policy covering mentioned quantity of sugar indicating in case of sugar damage beneficiary to reimburse buyer the equivalent amount negotiated.

 3. Letter of Guarantee from beneficiary stating they will load free of charge Dominican sugar as mentioned in invoice on board (vessels) that buyer present and to present usual shippine [sic] documents necessary.

 4. Warehouse receipts covering 10,000 LT min/max of Dominican sugar.

 5. Certificate of Lloyds that there is actually sugar to cover above-mentioned Warehouse receipts.

 6. All documents to be issued in favor of Morgan Guaranty Trust Co., New York for account of Worldwide Sugar Corp.

 Chan Affidavit, Exh. D.

 On April 12, 1982, in order to comply with the third instruction, Vicini requested Royal to issue a guarantee in favor of Morgan. Deposition of Michael Kelly, May 24, 1983, at 31; Chan Affidavit, Exh. E. Of the 10,000 long tons of sugar which Vicini had contracted to sell to Worldwide, 6,000 were actually delivered in mid-April.

 Royal requested clarification of certain language in the letter of credit on April 13, 1982. Two days later, it withdrew this request and telexed Morgan that the "documents required have been presented . . . in compliance with the terms and conditions of your credit." Chan Affidavit, Exh. G. Royal then requested payment under the letter of credit, enclosing the documents. See Reply Affidavit of William Allingham, Oct. 14, 1983, Exh. W. On the same day, but in a separate letter, Royal ...


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