The opinion of the court was delivered by: COOLAHAN
This is an action by a bank, which issued an irrevocable letter of credit, against an advising bank. The parties have made cross-motions for summary judgment. Because we have determined that there is a genuine issue of material fact, these motions must be denied.
Plaintiff, Banco di Roma, seeks to recover $ 298,816.15 from defendant Fidelity Union Trust Company ("Fidelity") for Fidelity's improper payment of a letter of credit issued by Banco di Roma. The bulk of the pertinent facts in this case are contained in telexes sent back and forth between the parties.
The transactions that underly this case began in March, 1975 when Consolidated Machinery Export Ltd. ("Consolidated"), whose office is in Newark, agreed to sell two tractors to United Tractor Co. ("United"), whose office is in Beirut, Lebanon. At the request of United, Banco di Roma's Beirut branch issued an irrevocable letter of credit in favor of Consolidated. Defendant Fidelity, a New Jersey bank, agreed to advise and pay the credit on behalf of Banco di Roma.
On March 10, 1975, Banco di Roma telexed to Fidelity the fact of the opening of this letter of credit; the details of the credit to follow. The telex specified the destination of the tractors as "BEIRUT FREE ZONE IN TRANSIT KUWAIT." On March 13, 1975
Banco di Roma telexed to Fidelity the details of two letters of credit. The first credit (the "Foley credit"), which is not in issue in this case, was described in full. The cable then described the Consolidated credit as "SIMILAR TO" the Foley credit "EXCEPT . . . ." One of the terms of the Foley credit read as follows:
1) GOODS TO BE RENDERED FOB EAST PORT NEW YORK OR NEWARK DESTINATION BEIRUT ZONE FRANCH IN TRANSIT KUWAIT (emphasis added) (Zone Franch means Free Zone).
One of the "exceptions" to the Foley credit read:
2) GOODS TO BE RENDERED FOB NEWARK STOP
After receiving this March 13 telex Fidelity issued two formal letter of credit advices the Foley credit and the Consolidated credit. The Foley credit contained the term designated as (1), Supra. The Consolidated credit, however, omitted stating any destination. Apparently, Fidelity substituted phrase (2), Supra, for phrase (1), Supra, in its entirety, rather than just changing the FOB designation.
The Bill of Lading and Certificate of Origin (documents required to be presented under the letter of credit agreement) stated the destination as "Beirut" and not "Beirut Free Zone In Transit Kuwait." Although these two designations refer to the same port, no customs duties accrue in the Free Zone.
On April 18, 1975, Fidelity paid the letter of credit amount to Consolidated and forwarded the shipping documents to Banco di Roma. Also on April 18, Fidelity notified Chemical Bank that it had paid the Banco di Roma credit and requested Chemical to credit Fidelity's account against Banco di Roma's account. On April 22, 1975, Fidelity obtained $ 298,816.15 from Banco di Roma's account at Chemical Bank. It is this sum that Banco di Roma seeks to recover.
During the next month Fidelity managed to get the tractors designated Free Zone.
This was done with some difficulty because Banco di Roma was in possession of the title documents and refused Fidelity's requests for assistance. Banco di Roma several times renewed its request for reimbursement from Fidelity,