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Banca Nazionale Del Lavoro v. SMS Hasenclever
Citations: 439 S.E.2d 502; 211 Ga. App. 360; 93 Fulton County D. Rep. 3890; 22 U.C.C. Rep. Serv. 2d (West) 1131; 1993 Ga. App. LEXIS 1523Docket: A93A1467
Court: Court of Appeals of Georgia; October 28, 1993; Georgia; State Appellate Court
SMS Hasenclever, GmbH (SMS), a German corporation, initiated legal action against Banca Nazionale Del Lavoro (BNL) for wrongful dishonor of letters of credit issued by the Central Bank of Iraq (CBI), which BNL had confirmed it would honor. BNL acknowledged endorsing the letters of credit and issuing confirmation certificates but raised defenses against payment demands from SMS. BNL filed a motion to dismiss, arguing SMS failed to join an indispensable party, while both parties sought summary judgment. The transaction involved SMS selling forging machinery to Nassr Enterprise for Mechanical Industries (NEMI), financed primarily through letters of credit from CBI, with BNL responsible for payments upon receipt of proper documentation. BNL's confirmation certificates outlined specific payment conditions based on the presentation of documents proving shipment and acceptance of goods. On July 11, 1990, SMS presented documents for two shipments, which included a certification stating the goods were free from Israeli origin or materials. BNL rejected the documents, citing a violation of U.S. export laws due to the anti-Israeli boycott declaration, and demanded a response from SMS by July 19, 1990. SMS attempted to obtain alternate shipping documents but could not reach Iraqi officials for confirmation. After SMS presented documents confirming the arrival of goods in Iraq, BNL refused payment, asserting that the arrival payments were contingent on the prior shipping payments. The trial court denied BNL's motions and granted summary judgment in favor of SMS, awarding damages exceeding $17,309,639. BNL appealed, arguing the trial court erred in its judgment decisions related to the summary judgment motions. The legal principles governing letter of credit transactions were reiterated, highlighting the distinct contracts involved among the buyer, seller, and bank. A confirming bank, upon confirming a credit, assumes direct obligations equivalent to that of the issuer according to OCGA 11-5-107 (2). SMS has adhered to all payment terms in the confirmation certificates from BNL. BNL contends it is not obligated to pay because SMS allegedly impaired its collection ability from CBI by presenting shipping documents with anti-Israeli certifications. BNL cites 50 USCA 2402 (5), a federal statute that prohibits compliance with boycotts against friendly nations, as the basis for its defense. However, the court notes that one cannot benefit from their own wrongdoing to escape contractual obligations. Any difficulties BNL may face in seeking reimbursement from CBI due to these certifications stem from BNL's own actions, not from SMS’s compliance. Additionally, BNL claims that an accord and satisfaction occurred when SMS agreed to submit new documents without anti-Israeli certifications. The court found no evidence supporting this claim. BNL also argued that the United States Office of Antiboycott Compliance should be joined as an indispensable party to assess the legality of transmitting the contested documents. The court determined that the presence of this federal agency was unnecessary for resolving BNL's defense, as the evaluation of a violation under 50 USCA 2402 (5) was not essential. The trial court's decisions to grant SMS's summary judgment motion and deny BNL's motions were upheld.