Opinion ID: 393941
Heading Depth: 2
Heading Rank: 2

Heading: The Letter of Credit Transactions

Text: 7 Prior to the expropriations, Branches regularly engaged in the issuance of letters of credit to Cuban importers seeking to purchase foreign goods. The usual letter of credit transaction had several stages. First, a Cuban customer applied to Branches for a letter of credit; accompanying this application would be an application for an import license. If a Branches officer approved the letter of credit application, he would send the import license application to Banco Nacional's foreign exchange control department, where it was reviewed on behalf of the Cuban Currency Stabilization Fund, which controlled foreign payments by Cuban businesses. If Banco Nacional approved the license application, it would send the import license to Branches. Following further review by Branches of the letter of credit application, Branches would send both the license and the letter of credit application to Banco Nacional for a final review. Final approval was given by Banco Nacional in every case in which initial approval had been given, and the papers were returned to Branches. In most cases the Cuban buyer was required to deposit Cuban pesos with Branches before the letter of credit would issue. When the pesos were deposited, Branches would issue the letter of credit and send it to Boston; Boston would confirm the credit and send the confirmation and the letter of credit to the seller. After the seller had shipped the goods to the Cuban buyer, he would present his confirmed letter of credit, along with the shipping documents, to Boston and receive payment from it in U.S. dollars. On any letter of credit issued by Branches and paid by Boston, Boston charged the amount paid against Branches' account. Branches replenished their account daily by purchasing U.S. dollars from Banco Nacional with pesos received from its Cuban letter of credit customers, and sending the dollars to Boston. 8 At issue in the present action are 324 letters of credit that were issued by Branches, approved by Banco Nacional, and confirmed by Boston prior to September 17, 1960. A small number of these, totaling $177,282, were paid by Boston prior to that date; the great bulk of them, totaling $1,498,466, were paid by Boston between September 17 and November 23, 1960. Between September 17 and November 23, Boston requested, but did not receive, assurances from Banco Nacional that Boston would be reimbursed for these payments. In an effort to ensure reimbursement, Boston withheld from the Cuban buyers the shipping documents that they ordinarily would have needed in order to obtain possession of the goods. This effort was thwarted, however, since Banco Nacional intervened to procure the release of the goods without the usual documentation.