UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 97-40021

Summary Calendar

KENAN DENIZCILIK TICARET VE SANAYI A.S. ISTANBUL, as owners of the

M/V NAZLI POYRAZ,

Plaintiff-Appellant,

versus

1207 COILS MORE OR LESS OF HOT ROLLED STEEL,

Defendant,

TUBERIA NACIONAL, S.A. DE C.V.,

Claimant-Appellee.

*******************************************************************

TUBERIA NACIONAL, S.A. DE C.V.,

Plaintiff-Appellee,

versus

THE CARGO VESSEL NAZLI POYRAZ, her engines, tackle, apparel, etc.,

in rem,

Defendant,

KENAN DENIZCILIK TICARET VE SANAYI A.S. ISTANBUL,

Claimant-Appellant.

Appeal from the United States District Court

for the Southern District of Texas

Brownsville Division

(No. 94-CV-216)

September 5, 1997

Before REYNALDO G. GARZA, STEWART, and PARKER, Circuit Judges.
 

* PURSUANT TO 5TH CIR. R. 47.5, the court has determined that this

opinion should not be published and is not precedent except under

the limited circumstances set forth in 5TH CIR. R. 47.5.4.

2

PER CURIAM:*

The owner of the M/V NAZLI POYRAZ, Kenan Denizcilik Ticaret Ve

Sanayi A.S. Istanbul (“Kenan”), appeals a magistrate judge’s order

requiring that Tuberia Nacional, S.A. de C.V. (“Tuberia”), be paid

the sum of $52,694.70, plus interest, for damage caused to certain

steel coils the vessel was transporting to the Port of Brownsville.

The only issue in this appeal is whether Tuberia bore the risk of

loss to the coils and therefore has standing to sue Kenan. After

reviewing the opinion of the magistrate judge, the arguments of

both parties, and the relevant law, we conclude that the risk of

loss rested with the buyer and accordingly affirm the judgment of

the magistrate judge.

I.

On March 25, 1994, Tuberia, a Mexican corporation doing

business in Monterrey, placed an order for a quantity of steel

coils with Ferrostaal Metals Corporation (“Ferrostaal”), with a

purchase price just over $ 3 million. Payment would be

accomplished by means of an irrevocable letter of credit in favor

of Ferrostaal, payable on sight drafts by the Banco Nacional de

Mexico (“Banamex”). The steel was loaded onto the M/V NAZLI POYRAZ

in St. Petersburg, Russia and Ferrostaal was issued a clean bill of
3

lading. On June 28, 1994, Ferrostaal presented the bill of lading

and other documents to Banamex which, on July 5, paid Ferrostaal

for the steel. The letter of credit defined the shipping terms as:

“C AND F LANDED, BROWNSVILLE, TEXAS.”

In the meantime, the M/V NAZLI POYRAZ had left St. Petersburg

bound for Houston, for an interim stop, and then to Brownsville.

Between Houston and Brownsville, fuel oil leaked in the vessel and

caused damage to some of the coils. The vessel reached Brownsville

on July 8. After being unloaded, the coils were sent to Tuberia’s

plant in Monterrey where they were cleaned. Tuberia brought this

suit to recover the costs it incurred in repairing the goods. The

case went to trial before a magistrate judge, the Honorable John

Wm. Black, and a judgment was rendered in favor of Tuberia. 945 F.

Supp. 1040 (S.D. Tex. 1996). The magistrate judge held, inter

alia, that the risk of loss to the cargo passed from Ferrostaal to

Tuberia before its arrival in Brownsville, thereby providing

Tuberia with standing to recover from the vessel the resulting

damages. This, as mentioned above, is the only issue Kenan raises

on appeal.

II.

The parties agree that the governing law is the Texas version

of the Uniform Commercial Code, codified at Tex. Bus. & Com. Code

Ann. §§ 1.01 et seq. The magistrate judge determined that § 2.320
 

* Kenan’s citation of Rheinberg Kellerei v. Brooksfield Nat’l

Bank of Commerce, 901 F.2d 481 (5th Cir. 1990), is off the mark.

Among other things, we stated in that case only that by the time

the goods arrived at Houston risk of loss had shifted. We made no

determination as to when the risk shifted since that was

unnecessary to the resolution of any issue in that case.

4

governed resolution of this issue. This section provides meaning

to the terms “C.I.F.” and “C & F” as they are used in transactions

for the sale of goods. Under the Code, a C & F contract means that

the cost of the goods includes cost and freight to the named

destination; it differs from a C.I.F. contract only in that the

latter includes the cost of insurance. Tex. Bus. & Com. Code Ann.

§ 2.320(a). The risk-of-loss effect of a C.I.F. contract under

Texas law was discussed in Steuber Co. v. Hercules, Inc., 646 F.2d

1093 (5th Cir. Unit A 1981). We held that the Texas UCC shifts the

risk of loss from the seller to the buyer at the point where the

seller presents conforming documents and is paid. This holding is

in accord with the official comments to this section, which provide

that the buyer bears the risk of loss after the seller has

performed all of his obligations under a C.I.F. contract. Tex.

Bus. & Com. Code § 2.320 cmt. 1. The comments also state that the

same rule obtains for C & F contracts. Tex. Bus. & Com. Code §

2.320 cmt. 16. Kenan is unable to point us to any subsequent cases

of our court or of the Texas courts which suggest that the holding

in Steuber Co. is no longer good law.* We agree with the

magistrate judge that, as a C & F contract, the risk of loss passed
5

to Tuberia upon Ferrostaal’s presentation of conforming documents.

Kenan argues, however, that this is not the end of the

inquiry. It states that the parties to a C & F contract are free

to arrange alternate risk-of-loss provisions and that they have

done so in this case. We agree with the first proposition, that

the parties were free to negotiate different burdens, but we cannot

concur in the second. Kenan is unable to point to anything

suggesting that the parties arranged any other terms. In fact, the

magistrate judge found that the parties’ actions made it clear that

this indeed was their understanding of the agreement. Moreover,

Kenan’s suggestion that another Code section, whether it be § 2.509

or § 2.510, controls is without basis; neither section negates the

effect of § 2.320.

In light of the foregoing, the judgment is affirmed.

AFFIRMED.