International Commodities Export Corp. v. North Pacific Lumber Co.

764 F. Supp. 608, 15 U.C.C. Rep. Serv. 2d (West) 825, 1991 U.S. Dist. LEXIS 7294, 1991 WL 91032
CourtDistrict Court, D. Oregon
DecidedApril 9, 1991
DocketCiv. 90-357-RE
StatusPublished
Cited by1 cases

This text of 764 F. Supp. 608 (International Commodities Export Corp. v. North Pacific Lumber Co.) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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International Commodities Export Corp. v. North Pacific Lumber Co., 764 F. Supp. 608, 15 U.C.C. Rep. Serv. 2d (West) 825, 1991 U.S. Dist. LEXIS 7294, 1991 WL 91032 (D. Or. 1991).

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW

REDDEN, Chief Judge:

A two-day court trial was held beginning on March 22, 1991 to resolve this dispute. The parties are citizens of different states and the matter in controversy exceeds the sum or value of $50,000 exclusive of interest and costs. Therefore, this court has subject matter jurisdiction over this matter pursuant to diversity. 28 U.S.C. § 1332.

FINDINGS OF FACT

1. On or about August 2-4, 1988, plaintiff International Commodities Export Corporation (ICEC), prepared sales contract no. L35701 which memorialized the final agreement reached regarding the sale of 230 metric tons of Chinese small white beans to defendant North Pacific Lumber Company (North Pacific). (See plaintiff’s exh. 6).

2. The sale was made on a C. & F. basis to Portland, Oregon, the port designated by North Pacific. (See plaintiff’s exh. 4, 5, 6).

3. The parties’ agreement included the following terms:

(a) the beans were to conform to sample PC-16;

(b) shipment was to be “C. & F. liner terms” Portland, Oregon;

(c) North Pacific would pay ICEC $570 per metric ton for 230 metric tons of beans (plus or minus five percent);

(d) payment would be made by North Pacific to ICEC “NCRI/ Documents” (net cash receipt of invoice and documents). The documents ICEC was to deliver to North Pacific included a weight certificate, quality certificate, certificate of origin, and bills of lading. (See plaintiff’s exh. 6).

4. On or about August 26, 1988, six separate containers of beans (approximately 2,100 bags) were loaded on board the vessel “Jian He” at the port of Hong Kong. The “Jian He” sailed on or about August 26, 1988 and arrived in Portland on or about September 18, 1988.

5. On or about September 4, 1988, seven containers of beans (approximately 2,433 bags) were loaded on board the vessel “Tokyo Maru” at the port of Hong Kong. The “Tokyo Maru” sailed on or about September 4, 1988, and arrived in Portland on or about September 25, 1988.

6. The certificates of quality were prepared by an independent marine and cargo surveyor, Andrew & Paulmann (H.K.) Ltd. These inspection certificates of quality verified that the surveyor had opened at random three percent of the total consignment and found the bean quality to be in conformity with the description of the goods *610 as stipulated in the shipper’s invoice. (See defendant’s exh. 1033).

7. Prior to October 7, 1988, North Pacific’s representative, Mr. Lowry contacted ICEC’s representative, Mr. Lenti and told him that the beans were not white enough, they were dirty and they did not conform to the sample. (See Lowry’s trial testimony and plaintiff’s exh. 27, 85, 85).

8. On or about October 7, 1988, Lenti and Lowry inspected some of the beans that were stored both in the Portland and MG warehouses. They found that there were some variations in the beans. (See plaintiffs exh. 84, 85).

9. On October 4, 1988, the Food and Drug Administration (FDA) collected a twenty pound sample of beans from the “Jian He” shipment (sample ’274). After inspecting the beans, on October 15, 1988, the FDA detained the shipment concluding they “contain[ed] filth.” (See plaintiff’s exh. 33).

10. On October 12, 1988, the FDA collected a twenty pound sample of beans from the “Tokyo Maru” shipment (sample ’283). After inspecting the beans, on November 1, 1988, the FDA detained the shipment concluding they were “unfit for food in that [the beans had a] musty/moldy odor, moldy beans present.” (See plaintiff’s exh. 34).

11. After the beans were delivered to the Portland and MG warehouses, the parties exchanged a series of facsimile trans-mittals (fax) throughout October 1988, where defendant complained of the quality of the beans and outlined its progress in getting the beans approved by the FDA. Plaintiff received a fax from defendant dated October 25, 1988 which indicated that defendant was “working to arrange [a] sale subject [to the] FDA’s final release of goods.” Defendant stated that it hoped to have the problem resolved in “1-2” weeks. (See plaintiff’s exh. 22). Plaintiff heard nothing from defendant for the following 3% months until February 9, 1989 when defendant sent plaintiff a fax stating that the FDA had still not released the beans and “North Pacific Trading must look to I.C.E.C. for help and cooperation in this matter.” (See plaintiff’s exh. 65). Another two months passed before defendant again contacted plaintiff on April 3, 1989 stating that defendant “is going to look to I.C.E.C. to help resolve this problem.” (See plaintiff’s exh. 70). I find no language in any of defendant’s communications with plaintiff which indicates a clear and unequivocal rejection of the beans.

12. Defendant’s Vice-President, Robert Reynolds, stated in his affidavit for Support of Motion for Change of Venue from New York to Oregon that

[rjather than rejecting the shipment immediately, at ICEC’s urging, North Pacific sought to obtain the FDA’s approval of a plan to recondition the beans in order to bring them up to import standards. Since their arrival, the beans have been stored in a warehouse in Portland, Oregon under federal government detention. Despite substantial efforts by North Pacific to propose a plan in an attempt to cleanse the beans, the government has refused to lift the detention order. After exhaustive efforts in Portland to secure the release of the beans, by letter dated July 3, 1989, North Pacific rejected the shipments for failure to conform with Sample PC-16 as warranted by ICEC.

Reynolds’ Affidavit in Support of Motion for Change of Venue, September 28, 1989, p. 4, para. 9.

13. On January 10, 1989, the USDA graded each shipment of beans as “U.S. No. 2, small white beans.” The USDA found a total of 3.6 percent defects in the beans from the Portland warehouse and 4.0 percent in the beans from the MG warehouse. (See plaintiff’s exh. 12, 13).

14. By letter to plaintiff dated July 3, 1989, defendant rejected the beans in their entirety and tendered the beans back to plaintiff for safekeeping. (See plaintiff’s exh. 69).

15. North Pacific sold the beans to a buyer in South Africa per North Pacific’s “Order Acceptance” dated January 15, 1990. (See plaintiff’s exh. 40, 54 and 55).

*611 CONCLUSIONS OF LAW

1. Defendant accepted the goods when, after a reasonable opportunity to inspect the goods, it signified to plaintiff that it would take or retain them in spite of their alleged non-conformity. (See U.C.C. § 2~606(l)(a)).

2. Defendant failed to make an effective rejection of the goods until July 3, 1989, at which time the rejection was not timely. This failure constitutes an acceptance of the goods. I find no language by defendant of clear and unequivocal rejection of the beans in any of the communications between the parties, including the October 6, 1988 meeting between Lenti, Lowry and Reynolds in Portland, Oregon, up until the July 3, 1989 letter. (See U.C.C. §§ 2-606(l)(b), 2-602(1)).

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764 F. Supp. 608, 15 U.C.C. Rep. Serv. 2d (West) 825, 1991 U.S. Dist. LEXIS 7294, 1991 WL 91032, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-commodities-export-corp-v-north-pacific-lumber-co-ord-1991.