The opinion of the court was delivered by: WORTENDYKE
The complaint in this action has been dismissed as to all the defendants. See this Court's orders of December 11, 1961 and March 15, 1963, and the opinion filed February 28, 1963 (reported at 214 F.Supp. 723).
The adjudication expressed in the opinion was (by agreement of the parties and with the consent of the Court) limited to the issue of the liability of the defendants Jayess Corporation, Sepenuk & Sons Corp. and Mack Sepenuk (jointly hereinafter referred to as Jayess) to the plaintiffs (hereinafter Ferreira). The dismissal of the complaint on motion, as to defendant Alexander Marques (hereinafter Marques), was for lack of jurisdiction over the cause of action therein alleged against him. He remains in the case as a cross-claimant against Jayess, and as a respondent to counter-claim of Jayess against him. The counterclaim of Jayess for abuse of process against both Ferreira and Marques was dismissed by this Court's order of June 14, 1963. Thus there remain in the action pending in this Court only two claims: (1) the crossclaim of Marques against Jayees, and (2) the counter-claim of Jayess against Marques.
Ferreira, operators of a metals foundry in Braga, Portugal, sought damages from all of the defendants for alleged breach of contract for the sale of light copper scrap for which they paid $ 44,010. They claim that by reason of the inferior quality of the merchandise shipped to them, they were compelled to reduce their prices to customers to whom they were committed to sell the merchandise. Marques admits, but Jayess denies, the contract of sale upon which Ferreira bases its complaint.
In its counterclaim against Ferreira and Marques, Jayess alleges that, on May 17, 1957, it agreed to sell to Marques 60 metric tons of light copper scrap for the price of 24 3/4 cents per pound, subject to the opening of an irrevocable letter of credit in the amount of the agreed price in favor of Jayess at the Chase National Bank of New York City. The counter-claim further alleges that, prior to June 10, 1957, Marques agreed to sell 60 metric tons of light copper to Ferreira, who caused their bank in Portugal to issue its assignable, irrevocable letter of credit, for $ 35,010 or more, in favor of Lusitania Export Agency (Marques' business name), which assigned the letter of credit to Jayess to the extent of $ 35,010, and that Jayess delivered to Marques 59.7905 metric tons of the merchandise, which was shipped to Ferreira. The counterclaim further alleges, and Marques admits, that, for purposes of collection, Jayess assigned the letter of credit to its nominee, who instituted an attachment action in New York whereby collection of the letter of credit in full was accomplished on September 3, 1957.
In his amended cross-claim against Jayess, Marques claims $ 2,000, representing the difference between the aggregate of the proceeds of two letters of credit assigned to Jayess ($ 44,000) and the sum of the price of seventy-five metric tons of light copper sold and delivered by Marques to Ferreira ($ 40,000), and the freight charges assumed by Marques ($ 2,000). That difference, $ 2,000, is alleged to represent Marques' profit on the transaction. Marques also seeks to recover from Jayess $ 1,500 as one-half of Marques' expenses of his trip to Portugal in an effort to adjust the complaints of Ferreira respecting the quality of the merchandise received by them. In another count of his amended cross-claim Marques alleges that on May 16, 1957 he entered into a contract with Ferreira for sale to them of one thousand tons of copper, which he was to locate, at a price which would yield Marques a profit of 1.5 cents to 2 cents per pound; that the copper sold by Jayess to Marques was of inferior quality of that represented by Jayess, and that, in consequence of that misrepresentation by Jayess, Ferreira refused to perform their contract with Marques, and he was thus deprived of profits of $ 35,000.
In its answer to the amended cross-claim of Marques, Jayess admits that on May 16, 1957 it agreed to sell 75 tons of a certain grade of copper to Marques, trading as Lusitania Export Agency, for delivery to Ferreira in Portugal, for 24 3/4 cents per pound, Marques to pay freight charges and all insurance on shipments made by him. Jayess further admits that Marques assigned to Jayess two letters of credit received by him from Ferreira as conditional payment by Marques to Jayess for the copper. The first letter of credit was for $ 9,000, plus 10% If drawn upon. The invoice of Jayess to Marques for delivery of some 15 tons of copper came to $ 8,206.82, which included $ 79.94 for insurance. Jayess claims it collected $ 9,079.44 (sic, should read $ 9,079.94) on the first letter of credit, and paid the difference of $ 873.12 to Marques. Against the second letter of credit for $ 35,010 plus 10% If drawn upon, which Marques assigned to Jayess, the latter claims it charged Marques for some 60 tons at 24 3/4 cents per pound, plus freight, insurance and telephone, a total of $ 35,615.07. Jayess further claims it collected only $ 34,575.90 on the second letter and seeks the difference between these two figures, plus the total due on an alleged loan to Marques of $ 600 and the legal expense ($ 1,573.90 of which amount the attorneys who sued to collect upon this letter of credit had deducted fees of $ 1,073.90 before remitting the $ 34,575.90 to Jayess, the remaining $ 500 of the total amount of the fee had been paid to them as a retainer) which Jayess incurred for collection of the second letter of credit. Upon these figures Jayess claims that Marques is indebted to Jayess for $ 3,213.07. Jayess denies any liability for any part of Marques' travel expenses or any misrepresentation to Marques and any liability for his lost profits of $ 35,000.
Appended to Jayess' answer to the amended cross-claim is an additional counterclaim against Marques demanding (1) the payment of the $ 3,213.07 deficiency due to Jayess and (2) lost profits of $ 1,091.31 caused by Marques' alleged breach of an agreement to purchase 33 tons of light copper scrap from Jayess in August of 1957. Marques denies the debt of $ 3,213.07 and the liability for lost profits.
At the pretrial conference, it was conceded by all of the parties to this action that Ferreira contracted with Marques for the purchase from Marques of 75 tons of 'light copper' scrap at the price of $ 578.00 per ton for some of it and $ 600 per ton for the balance of the order; that 'light copper' scrap was shipped to the plaintiffs; that the plaintiffs paid in full for the 'light copper' scrap which they ordered; and that the moneys paid by the plaintiffs for that scrap were received by Jayess under an assignment or assignments of letters of credit from Marques to Jayess. The defense of the Statute of Frauds was raised by Marques in answer to Jayess' counterclaim and by Jayess to Marques' amended cross-claim, but the defense was abandoned by the respective parties at the trial.
The Jayess defendants contend, and I find factually, that Marques agreed to purchase from Jayess who agreed to sell to Marques, for export to Portugal, 60 tons of light copper at 24 3/4 cents per pound, as such product is defined in Standard Classification for Non-Ferrous Scrap Metals, Circular NF-50, effective April 1, 1950, which provides as follows:
'May consist of the bottoms of kettles and boilers, bathtub linings, hair wire, burnt copper wire which is brittle, roofing copper and similar copper free from radiators, brass and bronze screening, excessive lead and solder, readily removable iron, old electrotype shells, unclean gaskets, and free of excessive paint, tar and scale.'
That contract between Jayess and Marques is embodied in a letter dated May 17, 1957 from Jayess to Lusitania Export Agency (Marques). The merchandise was required to be suitably packed by the seller for export in bales and/or drums, F.A.S. Coast Ports, and if the freight rate were higher than from New York, the excess freight would be 'for the account of Jayess Corporation.' Shipments were to be made during June and July 1957. Partial shipments were permitted in lots of not less than 15 tons. The order embodied in the letter from Jayess to Lusitania was accepted by Marques and by its terms was made subject to the opening by Marques of an irrevocable letter of credit suitable and acceptable to Jayess, and in its favor, on or about May 24, 1957, at the Chase National Bank in New York City. The letter further provided that the order contained therein was subject to the obtaining by Marques of the proper export license from the United States Department of Commerce. Payment to Jayess for the merchandise was to be made against its commercial invoice, weight certificates and dock receipts.
Jayess was a dealer in scrap metals, but had no scrap inventory when its agreement with Marques was entered into.
Pursuant to the agreement, Marques obtained the necessary export license and an assignable irrevocable letter of credit issued in favor of Marques with the Chase Manhattan Bank of the City of New York, in the sum of $ 9,000 covering 14,000 kilos of copper scrap at a price of $ 600.00. This letter of credit was assigned by Marques to Jayess under date of June 5, 1957. Jayess collected the proceeds thereof upon shipment via S.S. Ribiera Grande of 15 tons of what was represented to be light copper scrap. The date of that shipment was June 26, 1957. Out of the proceeds of the assigned letter of credit which were collected by Jayess, it paid to Marques the sum of $ 873.12 in three checks, all in evidence, in the following dates and amounts: June 13, 1957 $ 200.00; June 20, 1957 $ 200.00; and June 28, 1957 $ 473.12. The next shipment of copper scrap was via the S.S. Fortuna on July 31, 1957 consisting of 26.9145 metric tons, of which 15 metric tons were charged at $ 600.00 per ton and 11.9145 at $ 578.00 per ton. With insurance amounting to $ 280.82, the total invoiced by Marques to Ferreira was $ 16,167.40. On August 8, 1957, a further shipment of copper scrap was made via S.S. Monte Brasil in the quantity of 32.8760 metric tons, invoiced at $ 578.00 per ton, totalling, with insurance of $ 336.37, the sum of $ 19,338.59. In accordance with his contract with Jayess, Marques obtained from his consignee in Portugal a further irrevocable assignable letter of credit in the amount of $ 35,010.00 which he assigned to Jayess. The proceeds of this letter of credit were ultimately collected by Jayess through the institution of attachment proceedings in New York.
After the first shipment had arrived in Portugal and while the second and third shipments were in route, Marques received a message from Ferreira, dated July 25, 1957, complaining that the quality of the shipment was not in accordance with the agreement. Marques advised Jayess of this complaint and of the request of the plaintiffs that further shipments be held up. Jayess informed Marques that the remaining shipments were either on the dock, or en route thereto, and assured him that everything would be taken care of. By this time, Jayess had become the irrevocable assignee of both letters of credit which, as previously stated, aggregated $ 44,010.00.