Heisler v Anglo-Dal Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 30 June 1954 |
| Judgment citation (vLex) | [1954] EWCA Civ J0630-2 |
| Court | Court of Appeal |
| Date | 30 June 1954 |
[1954] EWCA Civ J0630-2
In the Supreme Court of Judicature
Court of Appeal.
Lord Justice Somarvell,
Lord Justice Birkett, and
Lord Justice Romer
MR. D.M.PRITT, Q.C. and Mr L.J.SOLLEY (instructed by Messrs Harold Miller Co.) appeared on behalf of the Appellants (Defendants).
MR. C. CLYNN BLACKLEDGE, Q.C. and Mr F.G. PATERSON (instructed by Messrs Alfred Bieber Bieber) appeared on behalf of the Respondent (Plaintiff).
LORD JUSTICS SOMERVELL: In this case the Plaintiff claims damages for a breach of contract dated the 7th October, 1952, under which the Plaintiff agreed to sell and the Defendants to buy 300 metric tons of aluminum. The aluminum was at that date in Norway and apparently owned by a Swedish Company. The ultimate purchaser on whose behalf the Defendants were acting, though not as agents in the legal sense, was a concern in Poland referred to as Impex Metal. The contract was in writing and in the following terms: "It is herewith agreed that we have so Id to you and you have bought from us 300 (three hundred)metric tons of Aluminum Ingots of 99.5 per cent Aluminum, consignment to arrive in Antwerp within thirty days from your establishing the Confirmed irretraceable Transferable and Divisible Letter of Credit for 300 metric tons of aluminum ingots at £718 (seven hundred eighteen U.S. dollars) per metric ton f.e.b. Antwerp. We undertake to furnish you with a 10 per cent (ten per cent) guarantee that was will deliver the goods to your forwarding Agents in Antwerp as soon as we receive confirmation from your bankers that the necessary Letter of Credit, valid not less than six weeks, will be established in our favour in free transferable U.S. dollars. You undertake to establish your Confirmed Irrevocable Transferable and Divisible Letter of Credit in that U.S. dollars, validity not less than six weeks containing the following stipulation: Payment to be released against (1) Official Weight Certificate to be contra signed by P. S. A. L. in Antwerp; (2) Works Certificate that the ingots are of 99.5 per cent Aluminum and contra signed by P.S.A.L. Antwerp; (3) Confirmation of P.S.A.L. evidencing actual shipment of the goods from the port; (4) Part shipments allowed. The guarantee that your Forwarding Agents in Antwerp will load the goods as soon as possible after arrival that they will resolve the goods on arrival and store them in their warehouse until they can be loaded, and that you will extend the Letter of Credit should there be any delay in Antwerpll.
As will be seen, the first stop to be taken was for the confirmation from the Defendants' bankers that the necessary Letter of Credit would be established. This kind of confirmation has been referred to as "pre avis, which as the learned Judge said, may be a convenient shorthand expression, but it is perhaps better to use the words of the contract.
On the 20th October the Midland Bank wrote to the Defendants a letter in the following terms: Documentary Credit 49401. We confirm our telephone conversation of today when we informed you that we had received cable instructions fromHarodewy Bank Poleki, Warsaw, to open in your favour on account of impermeable Katowice, an irrevocable, confirmed, transferable, divisible credit valid for six weeks per U.S. £215400 covering 300 metric tons Aluminum in Ingots containing minimum 99.5 per cent Aluminum at the price of U.S. £718 per metric ton F. O. B. Antwerp, As we Informed you, the opening of this credit is conditional upon our receiving from you within fourteen days of the date of this letter 9.8. £ 21340 representing 10 per cost goods value as full delivery guarantee valid ten weeks and to be forfeited unconditionally buyers' favour In case of non-delivery or part delivery or If delivery will not correspond to credit conditions, the await your advice of this matter together with Information concerning the origin of the goods and particulars of the countries to which you may wish to transfer the credit".
As will be seen, the Defendants had, of course, no right to demand from the Plaintiffs on any view a deposit of £ 21540, and it would appear that the Defendants were not in a position to make this deposit themselves. It was, I think, contemplated by the Defendants that the credit which would be opened in their favour by Impex would be in terms which would enable them to transfer the benefit of it to the Plaintiffs In accordance with the contract, end it may be the Plaintiffs intended to transfer it to their sellers.
The result of this letter was a conversation between the Plaintiff and Mr Ettinger on behalf of the Defendants, and I will cite the learned Judge's findings as to this conversation: "Discussion arose on that point and I think it is plain that neither side was talking In terms of suing the other. Both sides at that stage were anxious to get the business going. It is quite true - this is common ground now and I think it was common ground then - that Mr Heisler could not be obliged to provide his guarantee until he got the pre avis: but neither side, as I have said, were talking in terms of suing each other and both were concerned to find a way out. The way theythought was a way out at that stage was for Mr Heisler to say in effects, 'A11 right. In order to help this business along I will gave you a guarantee without the pre avis. It is Important perhaps to see exactly what words were used, I accept Mr Heisler's account of what he said to be substantially true, and he put it in this way: he pointed out in the discussion that what lopes Metal appeared to be requiring was not a guarantee but a deposit, and Mr Ettinger, I think, agreed with that. Then Mr Heisler said, on page 11 of the transcript, 'said immediately that this was not according to the contract and Mr Ettinger agreed. He said; 'Yes, it is right'. He said: 'This is not a pre avis of the Letter of Credit to you. But we both, both he and I – I have to say he acted always very fair and helpful if he could - we wanted to get the business through and we wanted to help each other; we did not want to fight each other. Finally I agreed, in order to help him to get the Letter of Credit, or first the pre avis of the Letter of Credit established in any favour, to let him have the letter of guarantee as it was understood in the terms of the contract. Then later he said: 'I agreed to send on to Anglo-Dal Immediately ay letter of guarantee in order to has the pre avis of the Letter of Credit established, but I made it clear immediately that I did it only as a kind of - well, to show his that X was willing to help." Then in cross-examination, on page 27, he said: "Yea, but I made it absolutely clear that I did it as a matter of goodwill, only to show that I wanted to help to get the business through and finalised! And that was without waiting for a pre-avis? (A) In order to help him to get a pre avis? yes".
In the result the Plaintiff sent along what purported to be a guarantee in these terms: "We here with guarantee to deliver 300 metric tons of Aluminum ingots of 99.5 Per-centAluminum to your Forwarding Agents in Antwerp and undertake to pay to you the amount of £21,540 (twenty one thousand five hundred and forty five U.S, dollars) which is ten per cent of the amount we have soldthe goods to you if we default to deliver the 300 tons. For and on behalf of the Metes Company, J. Heisler".
This was sent with a covering letter in which the Plaintiff said that having fulfilled his part of the contract he must now ask for confirmation of the credit, three days later on the 27th October the Defendant a wrote back maintaining that they were entitled to a bank guarantee which would enable than to fulfill the conditions of the opening of the Letter of Credit. They demanded an agreed hank guarantee within the next four days. Pausing there, that raises the point of construct ion which is the first point to be decided. Four possible views emerge as to the meaning of the second paragraph of the contract. The Plaintiff maintains that the document which he signed fulfilled the terms of that paragraph with regard to the document to be furnished. The Defendants maintain in the letter which I have cited that they were entitled to a guarantee either by a joint stock or merchant bank. A third construction was that in any event the word "guarantee" Implied an undertaking by some third party not necessarily a bank. The fourth suggestion was that assuming a third party was intended the absence of any indication as to the nature of the third party made it uncertain and therefore unenforceable.
The Defendants as against the Plaintiff a construction relied on the word "guarantee". It was also submitted that if the undertaking was to be by the Plaintiff It was quite unnecessary to provide...
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