Brooklyn Overall Export Co. v. Amerford International Corp.

In an action to recover damages for breach of contract, defendant appeals, as limited by its brief, from so much of a judgment of the Supreme Court, Queens County (Calabretta, J.), entered April 7,1980, as, after a nonjury trial, awarded plaintiffs the principal sum of $34,500, on two causes of action. Judgment affirmed insofar as appealed from, with costs. The record shows that defendant breached an oral agreement with plaintiffs to structure a business transaction that involved shipping plaintiffs’ goods to a buyer in Sweden and arranging for payment. Plaintiffs’ employee, Jeffrey Boshnack, testified that he informed defendant’s customer service agent, Ruth Witz, that he had 52 cartons of jeans to be shipped to a Stockholm buyer from his companies’ Texas factory and Long Island warehouse. He said he informed her specifically that the goods were not to be handed over to this buyer except on payment. With this arrangement, he testified, he believed he had no need to investigate the credit rating of the buyer, a new customer; such was the normal procedure for his employer. Pursuant to Witz’ request, he sent her written instructions for each shipment point; the Long Island instruction was to “ship * * * against sight draft,” and the Texas instruction was to “ship * * * to [buyer] * * * Ship freight collect — customer must pay on sight draft.” Boshnack said he relied on defendant to prepare the paperwork necessary to carry out his intent, and assumed everything was in order and the goods were paid for on his receipt of a copy of the papers after air shipment of the goods. Boshnack admitted being unfamiliar with shipping customs. His prior experience involved shipping goods for cash in advance, cash on delivery or on letters of credit, and his understanding of those terms was limited to domestic usage. In this instance, he said, he used the term “sight draft,” which he had picked up from a forwarder, even though prior shipments through defendant had been for cash on delivery terms and he was not sure what the term meant. Mrs. Witz testified that she would have insisted on using a cash on delivery term had she been told by Boshnack that he wanted assurance of payment on delivery. What Boshnack emphasized, she said, was the need for speed. After she filled in a shipper’s letter of instruction form to specify drawing drafts at sight, defendant’s banking department prepared certain documents. The draft for each of the two consignments [599] specified that a Stockholm bank, acting as defendant’s agent, should deliver the documents against payment. Mrs. Witz acknowledged the fact that this meant the documents would not be released to the buyer absent payment. But she admitted that the buyer could obtain the goods on arrival in Sweden without payment because the air waybills listed the buyer as consignee instead of the correspondent bank (thus obviating the buyer’s need for any documents). She blamed plaintiffs’ instructions that, she said, told her to consign the goods directly to the buyer without any intermediate consignee who would hold the goods pending payment. Had plaintiffs told her they wanted the drafts paid on delivery, she would have listed the correspondent bank as consignee on the waybill so that buyer would have had to obtain the documents from the bank before presenting them to the carrier for delivery of the goods. Trial Term found that Mrs. Witz clearly understood what Boshnack had intended, and held defendant liable for delivery of the goods to the buyer without payment. We agree. Plaintiffs’ intention, as expressed to defendant, was to retain control over the goods pending payment, and to rely on defendant’s skill in using a sight draft rather than a cash on delivery term. Defendant could have met the obligation by arranging a documentary sale in which the air waybills were negotiable instruments of title entrusted to its banking agent in Stockholm pending buyer’s honoring of the sight draft by payment, or by restricting straight (i.e., nonnegotiable) waybills in such a manner that the carrier would not hand over the goods to the buyer absent instructions from defendant’s agent, secured after payment. (See Dusal Chem. Co. v Southern Pacific Co., 102 Misc 222; see, also, Christoffersen v Murray Packing Co., 24 AD2d 587, affd 17 NY2d 855; Gubelman v Panama R.R. Co., 192 App Div 165, 169; US Code, tit 49, §§82, 83, 88, 89, 112; Uniform Commercial Code, §§7-104, 7-303, 7-403, 7-504; Warsaw Convention, 49 Stat 3000; US Code, tit 49, § 1502, n, arts 11,12,13.) Mrs. Witz’ insistence at trial that Boshnack specified speed rather than security is belied by the basic incompatibility of straight waybills directly consigning goods to the buyer, with sight drafts prepared for a documentary sale. (See Dusal Chem. Co. v Southern Pacific Co., supra, pp 224-225.) Even if Boshnack is to be faulted, as the dissent suggests, for his ignorance of the term “sight draft,” nevertheless defendant should be held accountable for the negligent exercise of its relied-on expertise in carrying out the parties’ understanding. Defendant also argues that its tariff filed with the Civil Aeronautics Board should apply in limiting the value of the goods delivered to the buyer and, therefore, the amount of plaintiffs’ loss. Defendant, however, acted not only as plaintiffs’ agent in being an intermediate carrier of the goods from the factory and warehouse to the airports involved, but also in establishing the form for this transaction, which involved both carriage and collection. Part of its duty in this latter regard was deciding whether to make an excess valuation declaration, and there is no evidence indicating that this was not one of the several decisions necessary to the transaction that had been entrusted by plaintiffs to defendant’s discretion. Defendant’s further argument that the Warsaw Convention’s limitation of liability is applicable to this shipment must likewise be rejected. The breach resulting in plaintiffs’ injury arose in the preparation of documents prior to defendant’s acceptance of the goods as a forwarder and indirect carrier (see Orlove v Philippine Air Lines, 257 F2d 384, 387; N. V. Organon [Oss] v Coop Ver. Nederlandse Luchtvracht Groupage Centrum [NLC], 3 Hill & Evans Tr L of World 877 [Trib Haarlem, 1971]; but see Pick v Lufthansa German Airlines, 48 Misc 2d 442, 454-455; Crosby & Co. v Compagnie Nationale Air France, 76 Misc 2d 990, 997-998). We therefore conclude that defendant was properly held liable for its breach of the agency agreement with plaintiffs (see Bostwick v [600] Baltimore & Ohio R.R. Co., 45 NY 712; Dana v New York, Cent., & Hudson Riv. R.R. Co., 50 How Prac 428). Hopkins, J.P., Lazer and Gibbons, JJ., concur.