The opinion of the court was delivered by: Leval, District Judge.
This is an action for interpleader pursuant to 28 U.S.C. § 1335.
Algemene Bank Nederland N.V. ("Algemene"), the issuer
of a letter of credit, has paid the proceeds into court,
serving notice on various contesting parties, and moves for an
order of discharge and release from liability under 28 U.S.C. § 2361.
The defendants fall into two camps: Defendant Soysen Tarim
Urunleri Dis Ticaret Ve Sanayi A.S. ("Soysen") is the
specified beneficiary of the letter of credit. Soysen drew a
draft on the credit in favor of Soysen's creditor, defendant
Egebank A.S., Izmir Branch ("Egebank"). Soysen and Egebank
move for summary judgment directing payment of the proceeds to
The other camp consists of defendants Barrow Lane and
Ballard Ltd. ("Barrow"), the account party at whose instance
the letter of credit was issued by Algemene, and Barrow's
parent, HTC Commodity Corp. ("HTC"), which levied against the
proceeds in an effort to enforce a judgment in its favor
against Soysen. Barrow and HTC crossmove for summary judgment
in favor of HTC.
The facts are as follows: Algemene issued an irrevocable
documentary letter of credit for $40,481.25, at Barrow's
request and with Soysen as the designated beneficiary (the
"Letter of Credit"). The Letter of Credit was procured by
Barrow as the means of payment to Soysen for its shipment of
Turkish apricots to Barrow.*fn1 The Letter of Credit was
payable by "sight draft," in favor of Soysen upon its
presentation of documents evidencing the shipment's arrival in
New York and its successful passage through U.S.F.D.A.
inspection. Payment was to be made within 15 business days of
the vessel's arrival. On September 23, 1989, Soysen prepared
a draft on the letter of credit in favor of Egebank, its
"negotiating bank," presumably to secure a borrowing.
On October 25, 1989, Soysen presented the specified
documents to Algemene, together with the draft dated September
23, 1989 directing Algemene to pay the face amount of the
Letter of Credit to Egebank. The vessel had arrived in New
York on October 24, 1989; Algemene was thus required to make
payment before November 10, 1989.
On November 1, 1989, before Algemene had paid the draft, it
was served with a sheriff's levy and order of execution
asserting a claim by HTC to a substantial portion of the
proceeds. The levy was based on a judgment previously obtained
by HTC against Soysen in New York State Supreme Court,
confirming an arbitration award in HTC's favor after a dispute
over goods shipped to HTC in 1988, and awarding HTC
In light of these two competing claims to payment of the
proceeds, fearing litigation and the risk of double liability
if it paid either claimant, Algemene commenced this
interpleader action on November 6, 1989 and deposited the face
amount of the Letter of Credit into the court registry.
A. Algemene's Motion for Discharge
Algemene moves for an order pursuant
to 28 U.S.C. § 2361,*fn2 permitting it to be discharged from
this action and protecting it against further liability.
Algemene argues that a discharge is justified because it has
complied fully with the requirements of 28 U.S.C. § 1335,*fn3
and because it asserts no right to the disputed moneys and no
claim against any of the defendants other than this
Soysen and Egebank oppose Algemene's motion for discharge.
They argue that Egebank is entitled to the proceeds based on
the draft delivered to Algemene on October 25, and that the
interpleader was therefore wrongfully commenced. They assert
that Soysen, the beneficiary, had assigned the proceeds to
Egebank September 23, 1989, to secure Egebank's advance of
funds. They argue that once Algemene was notified of the
assignment, the proceeds of the Letter of Credit ceased to be
the property of Soysen and became the property of Egebank, and
Algemene was obligated to turn them over to Egebank regardless
of the later-served sheriff's levy attempting to attach assets
of Soysen. This obligation was so certain, they contend, that
Algemene's commencement of an interpleader action constituted
frivolous litigation, and Algemene should not be entitled to
be discharged until Egebank has been paid.*fn4
These arguments are not persuasive. Regardless of whether
Egebank may ultimately prevail in collecting on the Letter of
Credit, Algemene was faced with multiple claims and a
significant risk of litigation if it favored one claimant over
another. HTC's competing claim was not patently invalid. The
purpose of the federal interpleader statute, 28 U.S.C. § 1335,
is to allow a party in such a situation to avoid the risk of
double liability and litigation if it chooses one claimant over
the other. Algemene was fully justified in invoking
interpleader. Having done so, and having complied ...