Iravani Mottaghi v. Barkey Importing Co., 22

Decision Date29 March 1957
Docket NumberNo. 22,Docket 23926.,22
Citation244 F.2d 238
PartiesM. Shafi IRAVANI MOTTAGHI, Plaintiff-Appellant, v. BARKEY IMPORTING CO., Defendant-Appellee.
CourtU.S. Court of Appeals — Second Circuit



Thomas F. Meehan, New York City, for plaintiff-appellant.

Kresel & Meyerson, Harold I. Meyerson, New York City (Isidor J. Kresel, Saul Gordon and Irving L. Weinberger, New York City, of counsel on the brief), for defendant-appellee.

Before CLARK, Chief Judge, and FRANK* and LUMBARD, Circuit Judges.

Writ of Certiorari Denied June 24, 1957. See 77 S.Ct. 1402.

LUMBARD, Circuit Judge.

This is a contract action brought by M. Shafi Iravani Mottaghi (hereinafter Iravani), a citizen of Iran, against Barkey Importing Co., Incorporated in New York (hereinafter "BIC"). Iravani's complaint contained ten causes of action, on all of which the district court ultimately found against him. BIC filed a counterclaim, which the district court also found that Iravani had admitted. The court therefore entered judgment for BIC in the sum of $139,723.31, the full amount of the counter-claim. Iravani appeals.

There are four main contracts, as to the existence of which there is no dispute, but as to the performance of which there are many, as well as many alleged modifications of these agreements; in addition, there are many other agreements as to the existence and scope of which the parties differ radically. Most of the negotiations on these alleged agreements took place by correspondence and findings had to be made on the slimmest of evidence. The district judge filed an opinion of 84 pages, D.C.S.D.N.Y.1955, 134 F.Supp. 719-802, and although we can well understand the difficulties of the problems he faced, we must reverse on certain issues and remand for certain additional findings on other issues.

We shall first set out chronologically a statement of the events which gave rise to this litigation.

I. Chronology of Events

In general, the case before us deals with shipments of Iranian carpet wool by Iravani in Iran, through his agent, Randolph Valensi in New York, to BIC, also in New York. Iravani had never sold any wool before. In late 1949 Valensi became Iravani's American agent and in December 1949 Iravani and BIC contracted for the sale of 350 tons1 of greasy2 white3 wool, to be delivered by February 15, 1950, at 60 cents per net pound clean basis. A letter of credit was opened by BIC in Iravani's favor, to be used only for bills of lading dated not later than February 15, 1950. In January Iravani indicated he would not be able to complete the contract in time. In February the contract was modified in Iran by Iravani and BIC's agent, Robert Kitching, in that in place of 50 tons of washed white wool, Iravani was permitted to ship 40 tons of greasy cream wool. No price change appears or is material. It is clear that the contract, even as modified, was not completed in time and one of the basic disputes in the case is when this first contract was finally completed. Iravani claims completion was on December 5, 1950; BIC claims the contract was not completed until January 1951.

Throughout January and February 1950 there are many indications in the correspondence of Iravani's great difficulties in shipping the wool, of Iravani's very precarious financial position and that BIC was made aware of this. Valensi also corresponded with Iravani about the possibility of a consignment arrangement with BIC for shipments of colored wool at prices much lower than for white wool.

In April the S. S. Steel Artisan embarked from Iran carrying 70 tons of wool.4 BIC accounts indicate this was composed of 36 tons white and 34 tons cream, all allocable to the First Contract at 60 cents. There is no substantial dispute as to this.

In April two more contracts were made between Iravani and BIC. The first of these (the "Second Contract") was executed between April 17 and 19, 1950, and was for 300 tons of white wool (200 greasy and 100 washed) at 70 cents per net clean pound, shipment not later than June 5, 1950. A second letter of credit was opened to cover this, not to be drawn against until the first letter of credit was exhausted.

The other contract ("Third Contract") was executed between April 21 and 25, 1950 for 100 tons of cream wool at 60 cents per net clean pound, shipment during July/August from Iran. Also in April, Valensi again advised Iravani that BIC "would be willing to help finance a consignment of up to 150 tons of other color wools."

By June 1950 the market for wool in both the United States and Iran had started to rise rapidly, induced in Iran partly by the presence of American buyers there. Since Iravani, following Iranian business custom, did not receive delivery until after he had made his contracts to sell, he was caught between lowprice contracts with his customers and rising prices from his suppliers. Moreover, Iravani was habitually short of capital. In May he wrote that his "greatest difficulty was the matter of finance" and about that time found it necessary to mortgage his property to raise $100,000 for the purchase of wool, which was all the money he had.

In May the S. S. Lemsterkerk/Westerdam (voyage #2) set out for the United States with what our calculations show to be from 144 to 149 tons of wool,5 and arrived in New York on July 17,1950. Iravani did not invoice his shipments until later and the three invoices covering this shipment billed approximately 129 tons at 60 cents (the two invoices on this were dated July 6, 1950 and December 5, 1950) allocable to the First Contract and 20 tons at 70 cents (invoice dated July 6, 1950) evidently allocated to the Second Contract. On the other hand, BIC's accounts differed as to both allocation to contracts and prices. BIC's original accounts with respect to this shipment are that 58 tons were white wool, 6 tons were cream, and only this was allocated to the First Contract. BIC allocated nothing to the Second Contract and 30 tons cream to the Third. 50 tons were colored wool, allocable to no contract and paid for at 42 cents per net clean pound. This was in accord with BIC's consistent accounting procedure whereby it allocated nothing to the Second Contract until the First was completed, allegedly in January 1951.

In June 1950, BIC was told by Kitching that Iravani was taking a severe loss on the First Contract because of the rising market. Although BIC expressed great annoyance at Iravani's failure to complete the contracts in time, Iravani persuaded BIC to delete a restriction in the second letter of credit which had prevented Iravani from drawing on it until the first credit was exhausted.

To ease his financial difficulties, Iravani made two suggestions to BIC through Valensi. On June 15, 1950 he cabled "as losses unsupportable arrange Barkey accept half all future shipments against contracts and half to sell our account." (This arrangement later came to be known as the "half-half agreement.") On June 21, 1950 BIC's agent, Kitching, cabled that Iravani intended to allocate the shipments against the contracts "half at sixty i.e., against the First Contract half at seventy i.e., against the Second Contract" and that Iravani contemplated completing the contracts within 30 days. Whether or not these proposals were acceptable to BIC at the time is not clear. Certainly BIC's final accounting, Exhibit QQ, suggests that it did not accede to the second proposal about allocation of contract shipments and this has some support in some ambiguous statements made in August by Kitching to Iravani. The district court, however, apparently agreed with Iravani to some extent, since it found for Iravani on the second cause of action in which he claimed that shipments on voyages #2, #4 and #9 were applicable to the Second Contract.6 As to the proposal for allocating the shipments half against contracts and half on consignment — the "half-half" agreement — the district court found that BIC acceded to this on or about September 28, 1950, contrary to BIC's accounting. See the discussion of the fourth cause of action, infra.

Despite BIC's annoyance with Iravani's delays and suggestions for revision of the first three contracts, he entered into a fourth contract with Iravani on June 30, 1950 which was "contingent upon you Iravani completing your present outstanding contracts with us" for 200 tons of greasy white wool at 85 cents per net clean pound, and 200 tons of greasy cream wool at 75 cents per net clean pound.

This completes the June transactions, except for one 142 bale shipment allegedly on consignment which underlies the third cause of action. The court tentatively found for Iravani and no appeal from that part of the decision is taken.

The S. S. Laagkerk/Westerdam and the S. S. Steel Apprentice (voyages #5 and #6), sailed in July, carrying approximately 21 and 124 tons respectively. The claimed allocations among the contracts on this as on the other shipments differs sharply.

The market in both the United States and Iran continued to rise rapidly especially because of the Korean war. The correspondence again indicates BIC's annoyance with Iravani, Iravani's explanations for delay and his requests that BIC open a letter of credit on the Fourth Contract immediately. Valensi also rebuked Iravani for his delays and requests for alternate and additional arrangements. At this time, however, Iravani expressed willingness to surrender documents for 27 of the 144 to 149 tons shipped on the Lemsterkerk/Westerdam (voyage #2) which arrived in New York on July 17, 1950 against which 27 tons BIC paid $17,000. This 27 tons is part of the second cause of action on the Second Contract in which Iravani claims 70 cents per pound. The district court found for Iravani and this implies that the parties did agree that at...

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