The opinion of the court was delivered by: BRODERICK
This action arises out of the transfer of funds of plaintiff Delbrueck & Co. ("Delbrueck") by defendant Manufacturers Hanover Trust Company ("Manufacturers") to The Chase Manhattan Bank, N.A. ("Chase") for the account of Bankhaus I.D. Herstatt, K.G.a.A. ("Herstatt") on June 26, 1974.
Shortly before the funds left Manufacturers, Herstatt was formally ordered closed by the German banking authorities. This action concerns that closing, its impact with respect to contractual obligations between Delbrueck and Herstatt, and the actions taken by plaintiff, defendant, and Chase in the wake of the closing.
Delbrueck charges Manufacturers with negligence a) in transferring the funds when it knew or should have known of the action that had been taken with respect to Herstatt; and b) in failing to reclaim the funds from Chase. Delbrueck seeks damages in the amount of $ 5 million.
Delbrueck is a private German banking partnership with a principal office in Cologne. Manufacturers is a New York banking corporation with a principal office in New York City. Jurisdiction exists under 28 U.S.C. § 1332(a)(2).
A bench trial was held before me. This opinion constitutes my findings of fact and conclusions of law pursuant to Rule 52(a), Fed.R.Civ.P.
For many years prior to June 26, 1974, Delbrueck was a customer of Manufacturers and maintained an account with Manufacturers in New York City. Manufacturers was a paying and receiving bank for Delbrueck in the United States and, as such, was responsible for receipt and transfer of United States dollars upon instructions from Delbrueck.
On June 14, 1976, Delbrueck entered into two foreign exchange contracts with Herstatt. The two contracts provided for delivery by Delbrueck, on June 26, 1974, of $ 10 million and.$ 2.5 million, respectively, in exchange for an agreed upon amount of German marks to be delivered by Herstatt to Delbrueck. The dollars were to be paid by Manufacturers to the Herstatt account at Chase in New York, and the German marks in exchange were to be paid in Hamburg into Delbrueck's account at the German state central bank.
On June 25, 1974 at 6:10 p.m.
Delbrueck sent to Manufacturers a telex payment order directing the transfer on June 26, 1974 of the $ 12.5 million to the Herstatt account at Chase.
A separate foreign exchange contract required payment of $ 10 million by Delbrueck to Herstatt on June 27, 1974. Early on June 26, 1974 Delbrueck sent to Manufacturers a telex payment order directing the transfer on June 27, 1974 of the $ 10 million to the Herstatt account at Chase.
Events of June 26, 1974 significant to this action are outlined in the following table:
On July 10, 1974, I. e., two weeks later, Manufacturers delivered to Chase a letter requesting the return of the $ 12.5 million. ...