Oriental Fire & General Insurance v. Citizens National Bank

581 N.E.2d 49, 220 Ill. App. 3d 671, 163 Ill. Dec. 98, 1991 Ill. App. LEXIS 1629
CourtAppellate Court of Illinois
DecidedSeptember 23, 1991
DocketNo. 1—90—1512
StatusPublished
Cited by1 cases

This text of 581 N.E.2d 49 (Oriental Fire & General Insurance v. Citizens National Bank) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Oriental Fire & General Insurance v. Citizens National Bank, 581 N.E.2d 49, 220 Ill. App. 3d 671, 163 Ill. Dec. 98, 1991 Ill. App. LEXIS 1629 (Ill. Ct. App. 1991).

Opinion

PRESIDING JUSTICE MANNING

delivered the opinion of the court:

Citizens National Bank of Decatur (Citizens) filed a third-party claim for contribution against Swiss Air Transport Company (Swiss Air) pursuant to the Illinois Contribution Among Joint Tortfeasors Act (Contribution Act) (Ill. Rev. Stat. 1987, ch. 70, par. 302(a)). The circuit court of Cook County granted Swiss Air’s motion to dismiss the third-party claim finding that, as a matter of law, the contribution claim was barred by the two-year limitation period of Article 29 of the Convention for the Unification of Certain Rules Relating to International Transportation by Air Concluded at Warsaw, Poland, October 12, 1929, 49 Stat. 3000 (1934) reprinted in 49 U.S.C. §1502 (1976) (Warsaw Convention).

Plaintiff, Oriental Fire & General Insurance Co., Ltd., filed suit on January 7, 1988, against Swiss Air and other defendants, including Citizens, seeking damages for breach of contract in connection with a shipment of cut and polished diamonds which were owned by Venus Jewel, plaintiff’s subrogee, and transported by Swiss Air from Bombay, India, to O’Hare International Airport. K’s Merchandise Mart, the purchaser of the diamonds, which never received delivery, was to pay Venus Jewel by documentary credit. Citizens was to make payment to Venus Jewel’s account upon receipt of certain commercial documents before the diamonds were released to Masterfreight International for shipment to K’s Merchandise Mart. Swiss Air issued an airway bill for the diamonds on March 29, 1986, and on April 1, 1986, the shipment arrived at O’Hare in Chicago.

Although Citizens received the commercial documents and directed Swiss Air to release the diamonds, it did not disburse the $198,157.55 payment to Venus Jewel. In its complaint, plaintiff alleged that employees of Masterfreight International signed the documents for release and presented them to Swiss Air and that Swiss Air then released the diamonds to these two employees, who converted them. Plaintiff further alleged that Swiss Air breached its contract to deliver the diamonds to the consignee or its authorized agent. Because plaintiff had insured the diamonds, it paid Venus Jewel’s insurance claim and sought subrogation against the defendants.

On February 4, 1988, Swiss Air removed the case to the United States District Court for the Northern District of Illinois. The Federal court held that “the case was removed improvidently and without jurisdiction.” The removal petition stated that upon Swiss Air’s information and belief, no other defendant in the action had been served. However, because Citizens had been served prior to Swiss Air’s removal petition, the Federal court held that the petition failed to meet the statutory requirement that all defendants who have been served join in the removal proceedings and remanded the case to the circuit court of Cook County on February 26,1988.

Swiss Air filed its answer on the basis of the applicability of the Warsaw Convention, and in lieu of filing an answer, Citizens moved to dismiss those counts directed against it, which motion was granted, in part, on August 22, lb88. In the interim, on July 25, 1988, the trial court granted plaintiff’s motion to voluntarily dismiss without prejudice its action against Swiss Air since it had an action pending against Swiss Air in Bombay, India.

Thereafter, plaintiff filed an amended complaint on September 19, 1988, against Citizens and others, which did not name Swiss Air as a defendant. Citizens answered the amended complaint on October 19, 1988. On January 17, 1989, Citizens then filed its third-party claim for contribution against Swiss Air. By memorandum and order dated Septémber 18, 1989, the trial court granted Swiss Air’s motion to dismiss the third-party claim on the ground that the claim was barred by the two-year limitation period of Article 29 of the Warsaw Convention and finding that the treaty governs the rights and liabilities between the parties.

On appeal, Citizens assert that as its contribution claim against Swiss Air is governed by the Contribution Act, rather than the treaty, it is not limited by the Federal time limitation as set forth in Article 29 of the Warsaw Convention. Moreover, it asserts that in applying Article 29, the trial court’s ruling improperly precludes contribution claims before they exist.

Conversely, Swiss Air contends that the rights and obligations of the parties to this action are governed exclusively by the provisions of the Warsaw Convention. Because Article 29 is a condition precedent barring claims against the carrier which have not been brought within two years from the date of arrival at the destination and Citizens did not properly bring its action within the required time period, the trial court properly dismissed the third-party contribution claim. We agree that Citizens’ third-party complaint is barred by the two-year limitation period of Article 29 of the Warsaw Convention and affirm the order of the trial court.

It is well settled that where the Warsaw Convention creates the controlling cause of action, it preempts State law in the areas covered. (Boehringer-Mannheim Diagnostics, Inc. v. Pan American World Airways, Inc. (5th Cir. 1984), 737 F.2d 456, 458.) In Pan American, the question was whether the Warsaw Convention provides the “exclusive liability remedy for international air carriers by providing an independent cause of action, thereby preempting state law, or whether it merely limits the amount of recovery for a cause of action otherwise provided by state or federal law.” (Pan American, 737 F.2d at 458.) The court in reasoning that the obvious purpose of the Warsaw Convention was to secure uniformity of liability for air carriers, held that the Warsaw Convention created the cause of action and is the exclusive remedy.

In the present case, as previously stated, the diamonds were transported by air carrier from Bombay, India, to O’Hare in Chicago, Illinois, U.S.A. Article 1 of the Warsaw Convention provides:

“(1) This convention shall apply to all international transportation of persons, baggage, or goods performed by aircraft for hire. It shall apply equally to gratuitous transportation by aircraft performed by an air transportation enterprise.
(2) For the purposes of this convention the expression ‘international transportation’ shall mean any transportation in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another power, even though that power is not a party to this convention.” Warsaw Convention, Article 1, 49 Stat. 3000 (1934), reprinted in 49 U.S.C. §1502 (1988).

Thus, the Warsaw Convention applies to Swiss Air’s transportation of the diamonds from India to Chicago.

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581 N.E.2d 49, 220 Ill. App. 3d 671, 163 Ill. Dec. 98, 1991 Ill. App. LEXIS 1629, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oriental-fire-general-insurance-v-citizens-national-bank-illappct-1991.