## Facts

- Swiss Credit Bank issued an irrevocable letter of credit in favor of Continental Time Corp. on January 10, 1980.
- On January 21, 1980, Continental assigned its entire interest in the letter of credit to S. Frederick & Company and Arlington Distributing Co., Inc.
- Swiss Credit informed Merchants Bank on January 29, 1980 that the presented air waybill did not conform to the letter of credit’s requirements, and no payment was made before the credit expired.
- On May 28, 1980, Frederick and Arlington sued Swiss Credit in Switzerland to recover under their assigned interests; the Swiss proceedings were consolidated and expanded to include Georges Bloch.
- Continental later filed suit in federal court in the Southern District of New York alleging Swiss Credit wrongfully refused to honor the letter of credit.
- On March 18, 1982, Continental and Frederick settled related disputes; Frederick reassigned 75% of its interest in the letter of credit back to Continental, agreed to seek intervention in the federal action, and agreed to consent to a stay of the Swiss action at Continental’s request.

## Issues

1. Whether Continental, after having assigned its entire interest and later receiving a 75% reassignment from Frederick, was a proper real party in interest under Federal Rule of Civil Procedure 17(a).
2. Whether the federal action should be dismissed or stayed in deference to earlier-filed Swiss litigation involving overlapping claims about the same letter of credit.

## Decision

- The court denied Swiss Credit’s motion to dismiss.
- The court held that any real-party-in-interest problem was cured by Frederick’s reassignment of a 75% interest to Continental and the contemplated intervention/joinder steps permitted under Rule 17(a).
- The court stayed the federal case pending developments in the earlier Swiss proceedings, finding a stay sufficient to avoid duplicative litigation and inconsistent results while preserving the federal forum.

## Legal Principles

- Under Fed. R. Civ. P. 17(a), an initial real-party-in-interest defect may be cured within a reasonable time through ratification, joinder, substitution, or reassignment, permitting the action to proceed without dismissal.
- A federal court may, in its discretion, stay a case when parallel foreign litigation is first-filed and substantially overlaps in subject matter and issues, to conserve judicial resources and reduce the risk of inconsistent adjudications.
- A stay is generally a less severe measure than dismissal when foreign proceedings may resolve overlapping issues but the domestic plaintiff’s interests may not be fully resolved abroad.
- In letter-of-credit disputes, alleged documentary nonconformity (such as a noncomplying air waybill) can be central to whether an issuer may refuse honor, though the court need not reach the merits to decide procedural stay and party-status questions.

## Conclusion

The court refused to dismiss Continental’s action because Continental had regained a substantial interest in the letter of credit sufficient to satisfy Rule 17(a), but it stayed the case to defer to earlier, overlapping Swiss litigation and to avoid duplicative proceedings and potentially inconsistent outcomes.


Continental Time Corp. v. Swiss Credit Bank, 543 F. Supp. 408 (S.D.N.Y. 1982)