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INTEGRATED MEASUREMENT SYS. v. INTERNATIONAL COMME

February 5, 1991

INTEGRATED MEASUREMENT SYSTEMS, INC., an Oregon Corporation, Plaintiff,
v.
INTERNATIONAL COMMERCIAL BANK OF CHINA, a Taiwan, Republic of China corporation, and OVERSEAS CHINESE COMMERCIAL BANKING CORPORATION, a Taiwan, Republic of China corporation, Defendants



The opinion of the court was delivered by: SHADUR

 MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Integrated Measurement Systems, Inc. ("Integrated Measurement") sues International Commercial Bank of China ("International Bank") and Overseas Chinese Commercial Banking Corporation ("Overseas Bank") (International Bank and Overseas Bank are collectively referred to as "Banks") for having dishonored an irrevocable letter of credit ("LOC") issued by Overseas Bank to Pan Oceanic Products Corporation ("Pan Oceanic") and transferred to Integrated Measurement. *fn1" Integrated Measurement now moves for summary judgment against both Banks under Fed. R. Civ. P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, Integrated Measurement's motion for summary judgment is granted against both Banks.

 Facts2

 In December 1988 Integrated Measurement and Illinois-based Pan Oceanic entered into a purchase and sale agreement under which Integrated Measurement agreed to sell Pan Oceanic certain electronic measurement testing equipment for $ 68,860. Payment was to be made through an irrevocable and transferable letter of credit issued by Overseas Bank in Taiwan. On February 6, 1989 Overseas Bank issued its LOC in the amount of $ 74,020 to Pan Oceanic.

 These were the relevant terms of the LOC (quoted from P. Mem. Ex. B, except that the prefatory numbers have been inserted by this Court):

 
1. form of documentary credit: IRREVOCABLE/TRANSFERABLE.
 
2. date and place of expiry: 890325 USA.
 
3. shpt/disptch at/transport to: FROM USA AIRPORT TO CKS AIRPORT (C AND F). *fn3"
 
4. partial shipment: ALLOWED.
 
5. transshipment: PROHIBITED.
 
6. shipment (of goods): 1 SET OF LOGIC MASTER HS 1000 MAINFRAME INTEGRATED CIRCUIT ANALYSER WITH ASSOCIATED ACCESSORIED (sic) AND OPTIONS. (DETAILS PER CONTRACT REF NO. PI-120288).
 
7. documents required:
 
SIGNED COMMERCIAL INVOICE IN 6 COPIES INDICATING THIS CREDIT NBR AND I/P NO. 77BH1-054487
 
CLEAN AIR WAYBILLS CONSIGNED TO OVERSEAS CHINESE COMM'L BKG CORP NOT LATER THAN 890317 MARKED FREIGHT PREPAID NOTIFY APPLICANT INDICATING THIS CREDIT NBR
 
PACKING LIST IN 5 COPIES
 
8. bank to bank information: SUBJECT TO UCP 1983 PUB NO. 400.

 That final term expressly subjected the LOC to the terms of the Uniform Customs and Practice for Documentary Credits (1983 Revision), International Chamber of Commerce Publication No. 400 ("UCP").

 International Bank in Chicago, Illinois acted as the advising and negotiating agent for Overseas Bank on the LOC. Pan Oceanic President Joseph Lin ("Lin") wrote a letter to International Bank (Amended Complaint Ex. B) asking that the LOC be transferred to Integrated Measurement with the same terms and conditions as the original LOC, except that airway was to be from Portland, Oregon to Chicago O'Hare International Airport ("O'Hare") with the latest shipping date as March 10, 1989.

 On February 15 *fn4" International Bank transmitted its Advice of Transfer to Integrated Measurement in Oregon through its advising bank, First Interstate Bank of Oregon, N.A. ("First Interstate"). That Advice of Transfer (P. Mem. Ex. D) notified Integrated Measurement that the right to demand payment under the LOC had been transferred from Pan Oceanic as the original beneficiary to Integrated Measurement in the amount of $ 68,860. It restated the exact terms of the original LOC with some material exceptions:

 
1. It stated: "SHIPMENT FROM PORTLAND, OR, TO O'HARE INT'L AIRPORT CHICAGO NOT LATER THAN MARCH 10, 1989" and "PARTIAL SHIPMENT PROHIBITED, TRANSSHIPMENT ALLOWED."
 
2. It itemized in detail the goods to be shipped.

 In reliance on the Advice of Transfer issued by International Bank (and not itself having seen the LOC), Integrated Measurement sent the goods described in the Advice of Transfer via United Airlines from Portland to O'Hare on March 2. On March 9 Integrated Measurement also delivered to First Interstate all of the documents required by the Advice of Transfer. International Bank received the documents from First Interstate on March 10.

 At that point supervening events took over. United States Department of Commerce ("DOC") suspended Pan Oceanic's export license on March 3, informing Pan Oceanic that "no shipments may be made against this license until further notice" (P. R. Mem. Ex. A). Pan Oceanic's license was then revoked on May 18 (id. Ex. B). After the goods arrived at O'Hare (post-suspension though prior to revocation of the export license), they were seized by DOC. *fn5"

 On March 30, five days after the expiration of the LOC, International Bank refused payment -- notifying First Interstate by telex that the documents presented did not comply with the terms and conditions of the Advice of Transfer in three ways (Tai *fn6" Aff. para. 6):

 
(1) the description of the goods on the Airway bill was not consistent with that on the commercial invoice;
 
(2) the commercial invoice did not bear the statement "details per P/O No. PO/120288";
 
(3) the flight/date, rate and freight charge were written by hand on the Airway bill without appropriate correction stamps.

 On March 31 Pan Oceanic's lawyer wrote a letter to International Bank (D. Mem. Ex. 2) telling it that Pan Oceanic's export license had been revoked (although, as already stated, it had only been suspended). Then on April 4 International Bank informed First Interstate by telex that payment on the LOC was being refused for the additional reason that the condition of obtaining a valid export license was not met.

 Under its Amended Complaint, Integrated Measurement asserts (1) a breach of the LOC by Overseas Bank (Count I), (2) a breach of the Advice of Transfer by Overseas Bank (Count II) and (3) a breach of the Advice of Transfer by International Bank (Count III). Though the nature of the claims against the two Banks thus ...


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