the aircraft purchased by the broker does not meet the buyer's specifications in full, in which case the broker agrees to modify the craft so as to meet the buyer's specifications. Such was the situation here.
A ten per cent cash deposit is required by industry trade practice as earnest money amounting to a deposit in consideration of the forthcoming, often expensive, modifications to be performed by the broker. Here, the letter of credit was specifically provided as a substitute for the usual and customary ten per cent cash deposit. It is through the $35,000 letter of credit that National Aero was to receive formal authorization for proceeding with the modifications. National Aero contends that it had a right to negotiate the letter of credit as it did, at the time it did, in accordance with, not only the trade practice of the industry, but also in accordance with the understandings of the parties.
The letter of credit, by its own terms, was irrevocable for a period of thirty days from its issuance, and would expire on July 1, 1973. Defendant argues and plaintiff admits that the expected period for completion of the modifications to the aircraft was six to eight weeks.
Six to eight weeks allotted for modifications of the aircraft would move the expected delivery date to the middle of July, 1973 or approximately the first of August. The letter of credit was set to expire, by its own terms, July 1, 1973.
Plaintiff argues that the letter of credit's express terms must control, and that by the plain language on its face, the letter could not be negotiated by defendant until the aircraft was actually ready for delivery and the agreed modifications had been effectuated. If this be the agreed intent of the parties, the question is posed, what purpose would a thirty day letter of credit negotiable only when the airplane was ready for delivery, serve where, as here, the expected date of delivery is two to four weeks after the letter of credit's expiration date? In thirty days the letter of credit would have expired and defendant left without reimbursement or compensation if plaintiff failed to complete the transaction.
Defendant argues that such a reading of the parties intent is inconsistent with the industry trade practice and the policies which support that practice, and that the letter of credit would be worthless as security for the aircraft modifications to be undertaken by defendant. The Court agrees.
The expected date of delivery was understood by both parties to fall somewhere between two to four weeks subsequent to the expiration of the letter of credit. Such an agreed expectation leads to the only conclusion which would give viable effect to the letter of credit and to the purposes of the industry trade practice requiring a ten per cent deposit for the purchase of an airplane: that the letter of credit is to be negotiated prior to the modifications being undertaken by the defendant. This is consistent with defendant's position that in negotiating the letter of credit on June 6, 1973 there was no intent on the part of defendant National Aero to deceive plaintiff Vaengir.
Further, on the basis of all the pleadings, and the entire record herein, it appears that the plaintiff obtained the letter of credit pursuant to negotiations with the defendant and had it available at the American Security and Trust Company prior to the time of any investigation or observation of the airplane in question.
This would appear to the Court to demonstrate that the letter of credit was not obtained in reliance by plaintiff upon any representation of the defendant made subsequent to the time that the letter of credit was obtained.
For the reasons heretofore outlined the Court finds that with respect to the questions of intent to deceive and action taken in reliance upon the representation that there is no genuine issue of material fact. The plaintiff has failed to prove two of the five essential elements necessary to make out a case of fraudulent misrepresentation. There being no genuine issue of material fact with respect to at least two of the essential elements of the complaint that plaintiff must prove, the defendant is entitled to judgment as a matter of law.
Joseph C. Waddy United States District Judge [EDITOR'S NOTE: The following court-provided text does not appear at this cite in 432 F. Supp.]
Upon consideration of plaintiff's motion for partial summary judgment, defendant's cross motion for summary judgment, and the entire record herein; it appearing to the Court that there is no genuine issue of material fact with respect to at least two of the essential elements of the complaint that plaintiff must prove, and that defendant is entitled to judgment as a matter of law for the reasons set forth in the Memorandum Opinion filed in this case this same date, it is by the Court this 21st day of January, 1977,
ORDERED that plaintiff's motion for partial summary judgment as to the defendant's counterclaim be, and hereby is, denied as moot as the defendant, by stipulation of counsel filed December 23, 1973, has withdrawn its counterclaim. In all other respects plaintiff's motion for summary judgment is denied, and it is
FURTHER ORDERED that defendant's cross motion for summary judgment be, and hereby is, granted.
Joseph C. Waddy United States District Judge