John Sanderson & Co. (Wool) Pty. Ltd. v. Ludlow Jute Co., Ltd.

• Decision Date: 05 January 1978
• Docket Number: No. 77-1374,77-1374
• Citation: 569 F.2d 696
• Parties: JOHN SANDERSON & CO. (WOOL) PTY. LTD., Plaintiff-Appellee, v. LUDLOW JUTE CO., LTD., Defendant-Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 696

569 F.2d 696

JOHN SANDERSON & CO. (WOOL) PTY. LTD., Plaintiff-Appellee, v. LUDLOW JUTE CO., LTD., Defendant-Appellant.

No. 77-1374.

United States Court of Appeals, First Circuit.

Argued Nov. 8, 1977.

Decided Jan. 5, 1978.

Robert E. Sullivan, Boston, Mass., with whom James M. Hughes and Herrick & Smith, Boston, Mass., were on brief, for defendant-appellant.

Thomas E. Goode, Boston, Mass., with whom Hale, Sanderson, Byrnes & Morton, Boston, Mass., was on brief, for plaintiff-appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

BOWNES, Circuit Judge.

This is an appeal from a summary judgment for plaintiff-appellee entered in the District Court for the District of Massachusetts upholding an Australian court's default judgment for plaintiff in a contract action. Defendant-appellant alleges that the Australian judgment was obtained by fraud and that the district court should not have granted summary judgment because there were genuine issues of material facts. Defendant also claims that enforcement of the Australian judgment would violate United States treaty provisions and policy.

Plaintiff is an Australian company. Defendant is incorporated in Massachusetts, but its business is conducted in India. Plaintiff and defendant began doing business with each other in 1958. For the first three years, defendant shipped jute from India directly to Australian customers based on orders obtained by plaintiff. Plaintiff was paid a commission on each order. Because of the applicable Indian foreign exchange regulations, defendant had to obtain permission from the Reserve Bank of India before it made each commission payment.

In 1961, a new arrangement was entered into by which defendant shipped jute directly to plaintiff for resale. Plaintiff paid defendant for the jute within one hundred twenty days of shipment whether or not it was resold during that period. This arrangement was predicated on the assumption that plaintiff would resell the jute at a higher price than it paid for it. Plaintiff was obligated to remit to defendant any profit in excess of its commission and expenses. All shipments were invoiced to plaintiff in Indian rupees with the approval of Indian custom officials.

Because of falling jute prices in Australia, plaintiff incurred a net loss of approximately $96,000 (Australian) on sales of approximately $700,000 from September 1, 1961, through January 1966. On June 1, 1966, plaintiff wrote to defendant claiming that it was obligated to be reimbursed for its losses. On June 23, 1966, a representative of defendant responded saying that he would review the claim to see whether it could legally reimburse plaintiff.

Defendant did not pay the claim, and, in October, 1967, plaintiff filed suit against it in the Supreme Court of Victoria, Australia. Defendant received notice of the suit in its Massachusetts office pursuant to an Australian long arm statute similar to the Massachusetts long arm statute, but did not appear to defend the claim.

Plaintiff obtained a default judgment in Australia in 1968. In 1971, it filed the present action to enforce the judgment.

Recognition of foreign judgments in the United States is predicated on the considerations found in Hilton v. Guyot, 159 U.S. 113, 205-206, 16 S.Ct. 139, 159, 40 L.Ed. 95 (1895). ¹

When an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens, to recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless some special ground is shown for impeaching the judgment, as by showing that it was affected by fraud or prejudice, or that, by the principles of international law, and by the comity of our own country, it should not be given full credit and effect.

Accord, Scola v. Boat Frances R., Inc., 546 F.2d 459 (C.A. 1 1976); Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624 (C.A. 2 1976); Somportex Limited v. Philadelphia Chewing Gum Corp., 453 F.2d 435 (C.A. 3 1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972); Alleghany Corporation v. Kirby, 218 F.Supp. 164 (S.D.N.Y.1963), aff'd, 333 F.2d 327 (C.A. 2 1964), cert. granted, 381 U.S. 933, 85 S.Ct. 1772, 14 L.Ed.2d 698 (1965), cert. dismissed as improvidently granted, 384 U.S. 28, 86 S.Ct. 1250, 16 L.Ed.2d 335, reh. denied, 384 U.S. 967, 86 S.Ct. 1583, 16 L.Ed.2d 335 (1966). (Alleghany also distinguished between intrinsic and extrinsic fraud. Intrinsic fraud would not present an opportunity for collateral attack. The fraud alleged here is extrinsic.)

In Hahn v. Sargent, 523 F.2d 461, 464 (C.A. 1 1975), cert. denied,425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976), we set out the applicable standards for reviewing a summary judgment.

In determining whether summary judgment is appropriate the court must "look at the record . . . in the light most favorable to . . . the party opposing the motion . . . ." Similarly the court must indulge all inferences favorable to the party opposing the motion. These rules must be applied with recognition of the fact that it is the function of summary judgment, in the time hallowed phrase, "to pierce formal allegations of facts in the pleadings . . .", and to determine whether further exploration of the facts is necessary. (Citations omitted.)

The district court found here:

(N)o evidence was proffered or alleged to exist which tended to show that anyone connected with Sanderson was aware that the contract violated the Indian regulations.

Ludlow claims that certain letters submitted in evidence, plaintiff's response to defendant's requests for admissions (F.R.C.P. Rule 36), and two newspaper articles raised a genuine issue as to the illegality of the contract and plaintiff's knowledge of it.

On August 28, 1961, before the first shipment of jute in question here, defendant sent a letter to Mr. Alfred Coombe, chairman of the plaintiff company, stating:

I should like to refer to my letter of April 17 in which we outlined a proposal for doing business in Australia, as I find now that due to regulations set up by the Indian government covering the export of goods from India it will be necessary for us to invoice any yarn, Jute-Bak, or Soil Saver, which we are putting into Australian stock, to you, with specific terms for payment. Therefore, this shipment of yarn for stock will be invoiced to you with payment due 120 days from date of shipment.

Plaintiff's response to defendant's request for admissions concerning this letter is as follows:

3(a). The plaintiff was already aware of the existence of the Indian Foreign Exchange Regulations. By reason of plaintiff's receipt of defendant's (August 28) letter the attention of the plaintiff was drawn to the possible applicability of such regulations to the transactions contemplated by the plaintiff and the defendant.

3(b). Plaintiff learned of defendant's statement that the transaction contemplated by the plaintiff and defendant had to conform to the said Foreign Exchange Regulations.

3(c). Plaintiff learned of defendant's statement that the said Foreign Exchange Regulation required specific terms of payment with respect to export shipments made by defendant from India.

3(d). Plaintiff learned of defendant's statement that the said Foreign Exchange Regulations prohibited shipments to plaintiff by defendant on consignment.

3(f). Plaintiff learned of defendant's statement that the said Foreign Exchange Regulations required that shipments by de...