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Garcia v. Chase Manhattan Bank

decided: March 28, 1984.

JUANITA GONZALEZ GARCIA, PLAINTIFF-APPELLEE,
v.
THE CHASE MANHATTAN BANK, N.A. AND SIRO PEREZ OLIVA, DEFENDANTS, THE CHASE MANHATTAN BANK, N.A., DEFENDANT-APPELLANT, SIRO PEREZ OLIVA, THIRD PARTY PLAINTIFF-APPELLEE, JOSE M. PEREZ GONZALEZ, THIRD PARTY DEFENDANT-APPELLEE



Appeal from a judgment of the United States District Court for the Southern District of New York, Broderick, J., entered after a jury trial holding Chase Manhattan Bank liable to honor certificates of deposit representing funds deposited in Chase's Vedado, Cuba branch prior to Cuban government seizure of branch bank's assets. Held that the act of state doctrine does not apply. Affirmed. Judge Kearse dissents in a separate opinion.

Meskill, Kearse and Cardamone, Circuit Judges. Kearse, Circuit Judge, dissenting.

Author: Meskill

MESKILL, Circuit Judge.

Defendant Chase Manhattan Bank, N.A. (Chase) appeals from a judgment of the United States District Court for the Southern District of New York, Broderick, J., entered after a jury trial, awarding plaintiff Juanita Gonzalez Garcia $760,383.30 as the amount due on two certificates of deposit issued by Chase's Vedado, Cuba branch prior to Cuban government seizure of the branch's assets. We affirm.

BACKGROUND

Garcia and her late husband Jose Lorenzo Perez Dominguez, a wealthy businessman, were Cuban citizens prior to the Cuban revolution. Dominguez also served in the Cuban Senate from 1954-1958 and retired from the Cuban army with the rank of colonel in 1949. Dominguez and Garcia became concerned for the safety of their money in 1958 in light of the ongoing Cuban revolution. At the recommendation of a friend, they visited Chase's Vedado branch on March 10, 1958 and spoke to two bank officers. Dominguez expressed his fears over the safety of his money and stated that he wanted to make a fixed term deposit of 100,000 pesos. The Chase officials responded that he was doing the right thing "because it was an insurance, security for the money." They explained that the deposit was a "private contract" between the bank and Dominguez and Garcia. They stated that Chase's main office in New York would guarantee the certificate and that they could be repaid by presenting the certificate at any Chase branch worldwide. The officials said that repayment could be made in dollars in New York since "that is the money that the bank used." Pesos were equal in value to dollars at the time.

Dominguez and Garcia gave Chase 100,000 pesos that day and received a non-negotiable certificate of deposit (CD) which by its terms was returnable on March 10, 1959 and bore an interest rate of three and one-half percent.

As the political situation in Cuba worsened during 1958, Dominguez and Garcia became increasingly worried about the safety of their money. They returned to the Vedado branch on September 16, 1958 and spoke with two Chase officers, one of whom was present during the March 10 discussion. The Chase officials again told them that they were doing the right thing by securing their money. The officers reaffirmed that payment could be had in dollars at any Chase branch. Dominguez and Garcia gave Chase 400,000 pesos this time. The CD they received would mature on March 16, 1959 and was otherwise identical to the first CD except that it bore an interest rate of three percent and was for six months rather than a year.

In late 1958 Dominguez and Garcia sent the CDs to Garcia's cousin in Spain for safekeeping. Her cousin promptly acknowledged receipt of the CDs.

When Fidel Castro entered Havana on January 1, 1959, Dominguez took refuge in the El Salvadorian Embassy and subsequently went to El Salvador. Garcia left Cuba for Spain in 1964. Dominguez died in Puerto Rico in 1975. The CDs were found after his death in his safe deposit box in a Chase branch in Puerto Rico.

In February 1959 the revolutionary Cuban government enacted Law No. 78*fn1 which enabled the Ministry of Recovery of Misappropriated Property, inter alia, to freeze bank accounts. The Ministry subsequently ordered Chase to freeze the Garcia/Dominguez "account." On July 16, 1959, the Ministry ordered the "account" closed and demanded that Chase remit its value. Chase complied by sending a sum equal to the debts owed Garcia and Dominguez to the Ministry.

Chase's Cuban branches were nationalized in 1960. The National Bank of Cuba assumed the assets and liabilities of Chase's Cuban branches.

In 1964 Dominguez inquired of Chase through Banco Coca in Madrid, Spain on the status of the CDs. He was advised by Chase of the actions of the Cuban government and told to address further inquiries to the National Bank of Cuba. Garcia made a similar inquiry in 1968 through Banco Coca. Chase's response was not introduced into evidence. In 1970, a lawyer for Dominguez wrote to Chase concerning the CDs. In response, Chase referred to its 1964 letter concerning Dominguez's original inquiry and noted again the actions of the Cuban government.

Garcia commenced the present action in 1976 in the United States District Court for the District of Puerto Rico seeking the money allegedly due on the certificates of deposit. The suit was transferred to the United States District Court for the Southern ...


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