Garcia v. Chase Manhattan Bank, N.A.

• Decision Date: 20 June 1984
• Docket Number: No. 296,D,296
• Citation: 735 F.2d 645
• Parties: 39 UCC Rep.Serv. 915 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. ocket 83-7530.
• Court: U.S. Court of Appeals — Second Circuit

Page 645

735 F.2d 645

39 UCC Rep.Serv. 915

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.

No. 296, Docket 83-7530.

United States Court of Appeals Second Circuit.

Argued Dec. 14, 1983.

Decided March 28, 1984.

As Amended June 20, 1984.

Andrew J. Connick, New York City (Mark N. Parry, Milbank, Tweed, Hadley & McCloy, New York City, of counsel), for defendant-appellant.

Guy L. Heinemann, New York City, Edelmiro Salas Garcia, Hato Rey, P.R., of counsel, for plaintiff-appellee Garcia and third party defendant-appellee Gonzalez.

Marcelo Curi, Flushing, N.Y., for third party defendant-appellee Oliva.

John L. Warden, H. Rodgin Cohen, Michael Straus, Maria Foscarinis, Sullivan & Cromwell, New York City, for amicus curiae The New York Clearing House Ass'n.

Gerald D. Roth, Irving Margolies, Peter P. Kenny, Lipkowitz & Plaut, New York City, for amicus curiae Esther Garcia Manas Perez, Administratrix of the Estate of Rosa Maria Manas Y Pineiro, Deceased.

Before MESKILL, KEARSE and CARDAMONE, Circuit Judges.

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 ¹ 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 District of New York pursuant to 12 U.S.C. Sec. 94 (1976; amended 1982).

DISCUSSION

As a preliminary matter, we reject Chase's contention that Garcia's claim is barred by the New York statute of limitations. ² An action for breach of contract must be brought within six years of the accrual of the cause of action. N.Y.Civ.Prac.Law Sec. 213 (McKinney 1972). The cause of action on a certificate of deposit accrues upon demand, N.Y. U.C.C. Sec. 3-122(2) (McKinney 1964). Demand occurs upon presentment and refusal to pay. Id.; N.Y. U.C.C. Sec. 3-504 (McKinney 1964). Garcia's formal demand in this case occurred with the filing of her complaint.

Chase argues that a demand is unnecessary to start the statute of limitations running where there is a repudiation of the obligation prior to the demand. We need not decide whether a clear and unequivocal repudiation of the debt obligation would commence the limitations period, see Tillman v. Guaranty Trust Co., 253 N.Y. 295, 297, 171 N.E. 61 (1930) (per curiam), because we agree with the court below that no such repudiation occurred in this case.

Whether Chase repudiated its obligations is a question of fact unless it can be said that as a matter of law a repudiation has occurred. Chase failed to submit the factual question of repudiation to the jury. The jury rendered a verdict favorable to Garcia; Chase is thus precluded from raising the factual issue on appeal. See Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 278-79 (2d Cir.1979), cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783 (1980). Chase argues, however, that Judge Broderick erred by not finding as a matter of law that it had repudiated its obligations on the CDs.

Chase maintains that the events of 1959 and 1960 and its communication of those facts to Garcia and Dominguez by letters in 1964 and 1968 constituted a clear and unequivocal repudiation. We disagree. Repudiation must be clear and unequivocal to constitute an anticipatory breach of contract. Gittlitz v. Lewis, 28 Misc.2d 712, 713, 212 N.Y.S.2d 219 (N.Y.Sup.Ct.), appeal dismissed, 14 A.D.2d 783 (1961); 11 W. Jaeger, Williston on Contracts Sec. 1322 (3d ed. 1968). Chase's 1964 letter did not unequivocally indicate that it would not honor its obligations. ³ The letter merely recounted the actions of the Cuban government and referred inquiries to the National Bank of Cuba. Chase did not definitely Chase seeks to avoid liability to Garcia on the basis of the Cuban government's actions. It argues that while the CDs could be repaid at any Chase branch worldwide, Cuba's closing of Garcia's "account" and its appropriation of Chase's funds in a sum equal to the amount of its debt to Dominguez and Garcia prior to their presentment of the CDs canceled the debt. It then asserts that we may not question the validity of the Cuban government's action under the act of state doctrine. Chase's arguments on both of these issues must fail.

                state that it would not pay the debt, although this could be inferred from the letter.    Cf. Tillman, 253 N.Y. at 297, 171 N.E. 61.  Chase's 1968 letter was not introduced into evidence.  Presumably it was similar in substance to both the 1964 and 1970 letters. 4   As such, we cannot say as a matter of law that Chase clearly and unequivocally repudiated its contractual obligations to Dominguez and Garcia.  Therefore, the statute of limitations did not begin to run until a demand was made.  Chase's statute of limitations argument thus fails
                

Law No. 78 permitted the Ministry of Recovery of Misappropriated Property to freeze bank accounts. The Ministry subsequently ordered Dominguez's and Garcia's "account" closed and demanded from Chase a sum equal to the amount of the debt.

"It is difficult to see how the seizure of the assets of the [bank] would of itself change the rights of the [bank's creditors] to be paid at the places and in the currency stipulated." Pan-American Life Insurance Co. v. Blanco, 362 F.2d 167, 170 (5th Cir.1966). The monies paid over to the Cuban government did not come from funds specifically earmarked to Dominguez's and Garcia's "account." Rather, they came from Chase's general funds in the branch bank. Title to the deposits was vested in Chase, which became a debtor of Dominguez and Garcia. See Kondo v. Katzenbach, 356 F.2d 351, 357 (D.C.C...