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INTERPANE COATINGS, INC. v. AUSTRALIA & NEW ZEALAN

March 8, 1990

INTERPANE COATINGS, INC., a Wisconsin corporation, Plaintiff,
v.
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED a foreign bank, Defendant



The opinion of the court was delivered by: KOCORAS

 CHARLES P. KOCORAS, UNITED STATES DISTRICT JUDGE

 This matter is before the court on Defendant Australia and New Zealand Banking Group Limited's ("ANZ's") motion to dismiss Plaintiff Interpane Coatings, Incorporated's diversity action in this court for lack of subject matter jurisdiction, and for improper venue under the common law doctrine of forum non conveniens. For the following reasons, the motion is denied with respect to subject matter jurisdiction but granted on grounds of forum non conveniens.

 BACKGROUND

 Underlying this litigation is an international sale of goods run amuck. Interpane, a Wisconsin corporation and the seller in this transaction, delivered the goods to an Australian buyer who then did not pay despite having accepted the goods as well as having endorsed three bills of exchange. In this action, Interpane seeks to hold ANZ, the designated collecting bank in the transaction, liable for its failure to obtain the money from the buyer. ANZ has moved to dismiss the case, asserting a lack of subject matter jurisdiction and common law forum non conveniens.

 The relevant facts are as follows: Interpane and an Australian entity named McDowell Pacific Pty., Ltd. entered into a contract for the sale of goods whereby Interpane was to ship goods to Australia and McDowell was to pay for them. As is usual in such cases where delivery and payment are to occur at a distant point, the seller used bills of exchange and lading rather than simply shipping the goods to the buyer in Australia with an invoice.

 By using this procedure, Interpane reduced the critical transactional points of tender and acceptance to a mere documentary transfer which made acceptance a condition precedent to tender. But to do so required the aid of middlemen in the form of banks. The banks involved in the transaction at issue in this case were ANZ and the Chicago branch of Swiss Bank Corporation. ANZ, McDowell's bank, was to act as the presenting and the collecting bank. Swiss Bank was designated Interpane's local representative, forwarding and receiving the relevant documents on behalf of Interpane. It was also the named payee on the bills of exchange.

 Under the documentary procedure used in this case, Interpane sent ANZ three bills of exchange accompanied by three collection orders and three bills of lading. The bills of exchange were all sight drafts with payment to be due 60 days from McDowell's "seeing" the bill; such bills are often called time drafts as well, in order to distinguish them from sight drafts which are actually payable on sight. In addition, on each bill of exchange was a corresponding collection order, which contained instructions from Interpane to ANZ as the collecting bank setting forth just how ANZ was to go about collecting the money from McDowell. The bills of lading, on the other hand, originated with the shipper and entitled the possessor of them to collect the goods. Finally, in a sort of international choice of law provision, the documents at issue all provided that the collection and transfer procedure was to be governed by the Uniform Rules for Collection, a set of model rules promulgated by the International Chamber of Commerce and designed to address problems arising in such documentary exchanges.

 In the collection orders lay the agreement between Interpane and ANZ which is at the heart of the dispute in this case. They contained the requirements with respect to just what ANZ had to obtain from McDowell before it released the bills of exchange and the all-important bills of lading to that entity. There are two principal types of collection orders, those which require mere acceptance by the drawee/buyer and those which require actual payment. If acceptance is required, the collecting bank need only obtain the endorsement of the drawee/buyer before releasing the title documents. By accepting the bills of exchange, the drawee acknowledges the debt and commits to making payment as required by the bill of exchange (in this case 60 days from sight). However, if the collection order indicates that payment is required, the collecting bank is obligated to wait until it actually receives payment on the bill of exchange from the drawee/buyer before it releases the title documents.

 In this case, the standard form used by Interpane indicated that only acceptance was required before releasing the bills of lading. Specifically, it instructed ANZ to "deliver documents against . . . acceptance" of each bill of exchange. Although there was space on the form which would have required payment, it was not marked. However, there was also a "special instruction" with respect to collection at the bottom of the form. It stated as follows: "Release documents to drawee only on acceptance by collecting bank for assurance of payment at the 60 days sight terms. Collect interest at 9% per annum from date of acceptance." Thus, Interpane appeared to desire some assurance of payment beyond McDowell's endorsement.

 After ANZ received all these documents, it obtained the formal acceptance of McDowell but apparently did not understand just what more was required under the special instruction. Accordingly, it dispatched a communication by "telex" to Interpane's representative, Swiss Bank, asking for clarification as to the meaning of the special instruction. When further instructions were not forthcoming in the coming days, ANZ, concerned that the goods were about to go into bond, went ahead and delivered the bills of lading to McDowell, having only secured its endorsement. Ten days after ANZ requested clarification, but after it had released the title documents to McDowell and McDowell had collected the goods, ANZ received instructions that it was not to release the documents without itself signing the bills of exchange as a surety for the debt.

 The story of course concludes with McDowell failing to pay the debt it incurred by accepting the bills of exchange. Although it collected the goods as promised, McDowell claimed they were defective and refused to honor its obligation to pay. Interpane now seeks to hold ANZ responsible for the loss.

 Interpane filed suit solely against ANZ in this court on October 29, 1989, after first attempting to negotiate with ANZ in Australia. Interpane sued in this district because ANZ maintains an office in Chicago and thus could easily be served with process here. The Chicago office itself, however, has no relationship to this lawsuit.

 The complaint contains two counts. The first is a negligence claim under the Uniform Rules of Collections, which the parties agreed would govern the transaction. Article I of the Uniform Rules imposes duties of good faith and reasonable care upon banks acting in such transactions. Interpane alleges that ANZ breached its duty of reasonable care in releasing the bills of lading to McDowell before discovering the nature of the special instruction.

 ANZ now moves to dismiss the case pursuant to Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure. Under Rule 12(b)(1), ANZ argues that this court lacks subject matter jurisdiction over the case because the amount in controversy does not exceed the threshold $ 50,000. Under Rule 12(b)(3), ANZ alternatively asserts that venue is improper under the common law doctrine of ...


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