The opinion of the court was delivered by: CHARLES S. HAIGHT, JR.
In this diversity action brought to obtain payment under a commercial standby letter of credit, the beneficiary moves for summary judgment pursuant to Rule 56, Fed. R. Civ. P.
Plaintiff Continental Grain Company ("CGC"), a Delaware corporation with its principal place of business in New York City, is a merchandiser of grains, rice, and other agricultural products around the world. In March, 1992 CGC contracted with Societe Anonyme Aminou et Cie. ("SAAC"), a rice importing company in Cameroon, West Africa, to sell to SAAC's affiliate Agra International Inc. ("Agra") 9390.35 metric tons of Indian white rice for $ 2,929,789.20. The principals of SAAC were Al-Hadji Aminou ("Aminou") and his son, Oamaru Aminou. The rice was loaded on board the M/V Mega Luck at the port of Kandala, India and carried to the port of Douala, Cameroon, where the vessel arrived on March 20, 1992. The MEGA LUCK discharged her rice cargo into the Sebams warehouse, a bonded facility located in Douala. Discharge was completed on April 26.
To secure payment for the rice, Agra applied for and obtained from defendant Meridien International Bank Limited ("Meridien"), a Bahamian banking company headquartered in Nassau, a standby letter of credit in CGC's favor. That letter of credit, dated April 14, 1992, bearing number 023/92, and addressed to CGC, provided in part as follows:
THIS STANDBY LETTER OF CREDIT IS AVAILABLE TO YOU AS BENEFICIARY AGAINST THE FINANCIAL DEFAULT OF THE APPLICANT AGRA INTERNATIONAL INC. IN RESPECT OF THEIR OBLIGATIONS UNDER THE PURCHASE OF 9390.35 METRIC TONS OF RICE FROM YOURSELVES WHICH HAS BEEN SHIPPED ON BOARD THE M/V' 'MEGA LUCK"
DRAWINGS UNDER THIS CREDIT ARE AVAILABLE BY YOUR DRAFTS AT SIGHT ON US BEARING THE CLAUSE"DRAWN UNDER STANDBY LETTER OF CREDIT NUMBER NAS 023/92 ISSUED BY MERIDIEN INTERNATIONAL BANK LIMITED, NASSAU, BAHAMAS" AND ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
1) YOUR STATEMENT IN ORIGINAL SIGNED BY TWO OF YOUR AUTHORIZED OFFICERS CERTIFYING THAT AGRA INTERNATIONAL INC. IS IN DEFAULT OF ITS OBLIGATIONS IN RESPECT OF PAYMENT FOR 9390.35 METRIC TONS OF RICE.
2) BEFORE DRAWING HEREUNDER AND WITHIN THE VALIDITY OF THIS LETTER OF CREDIT, YOU SHALL HAVE GIVEN THE APPLICANT, AGRA INTERNATIONAL INC. AND OURSELVES TEN (10) DAYS NOTICE BY TELEX OF YOUR INTENTION TO CLAIM STATING THE NATURE OF THE DEFAULT; COPIES OF BOTH MESSAGES REQUIRED.
Immediately following this language, the letter of credit set out a series of provisions under the caption "SPECIAL CONDITIONS." The first of these provided:
THE RICE WHICH HAS BEEN OFF-LOADED AT DOUALA IN A BONDED FACILITY MUST REMAIN UNDER YOUR/OUR CONTROL AND IS TO BE RELEASED ONLY IN PROPORTION TO PAYMENTS MADE EITHER IN THE FORM OF CASH REMITTANCES, IRREVOCABLE LETTER OF CREDIT, OR COLLECTION DOCUMENTS AGAINST PAYMENT.
Agra and SAAC failed to pay for the rice discharged from the Mega Luck. On August 4, 1992 CGC moved to invoke its remedies under the April 14 letter of credit. CGC presented to Meridien a sight draft for $ 2,929,789.20; a statement signed by two CGC officers reciting that Agra had not paid for the rice; and copies of letters from CGC to Agra and Meridien giving ten days' notice of CGC's intention to claim under the letter. John Waugh, the Meridien officer in charge of the transaction, acknowledged at his deposition that at this time CGC presented to Meridien the documents required by the letter of credit to draw under it. Waugh dep. at 131.
But Meridien did not pay under the letter at this time. Rather, Meridien and CGC entered into the first of four agreements to extend the letter's expiration date, the last extension expiring on November 30, 1992. Meridien asked for these extensions, in the hope and expectation that SAAC and Agra would eventually pay for the Mega Luck's rice cargo. Waugh acknowledged in his deposition that if the extensions had not been agreed to by CGC, Meridien would ...