Wells Fargo Asia Ltd. v. Citibank, N.A., 652

• Citation: 936 F.2d 723
• Decision Date: 19 February 1991
• Docket Number: No. 652,D,652
• Parties: WELLS FARGO ASIA LIMITED, Plaintiff-Appellee, v. CITIBANK, N.A., Defendant-Appellant. ocket 87-7685. . Final Submissions After Remand from Supreme Court
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 723

936 F.2d 723

WELLS FARGO ASIA LIMITED, Plaintiff-Appellee, v. CITIBANK, N.A., Defendant-Appellant.

No. 652, Docket 87-7685.

United States Court of Appeals Second Circuit.

Final Submissions After Remand

from Supreme Court Feb. 19, 1991.

Decided June 26, 1991.

Darryl Snider, Los Angeles, Cal. (George A. Cumming, Jr., Duncan E. Haynes, Jessica M. Hoover, Brobeck, Phleger & Harrison, San Francisco, Cal., of counsel), for plaintiff-appellee.

Robert H. Bork, Washington, D.C. (Michael S. Helfer, David Westin, Scott Hoing, Yoon-Young Lee, Wilmer, Cutler & Pickering, and Kenneth S. Geller, Mark I. Levy, Stuart E. Abrams, Mayer, Brown & Platt, of counsel), for defendant-appellant.

John L. Warden, New York City (Michael M. Wiseman, Sandra M. Malinowski, Sullivan & Cromwell, Norman R. Nelson, Lawrence R. Uhlick, of counsel), for The New York Clearing House Ass'n and the Institute of Intern. Bankers as Amici Curiae in support of reversal.

Kenneth W. Starr, Sol. Gen. of the U.S., Washington, D.C. (Stuart M. Gerson, Asst. Atty. Gen., Jeffrey P. Minear, Asst. to the Sol. Gen., Anthony J. Steinmeyer, John P. Schnitker, Attys., Dept. of Justice, Michael J. Matheson, Principal Deputy Legal Adviser, Dept. of State, Jeanne S. Archibald, Acting Gen. Counsel, Dept. of the Treasury, J. Virgil Mattingly, Gen. Counsel, Bd. of Governors of the Federal Reserve System, Alfred J.T. Byrne, Gen. Counsel, F.D.I.C., Robert B. Serino, Deputy Chief Counsel, Office of the Comptroller of the Currency, of counsel), for the U.S. as Amicus Curiae in support of reversal.

Kenneth V. Handal, New York City (Dennis G. Lyons, Robert H. Winter, Deborah S. Prutzman, David F. Freeman, Jr., Arnold & Porter, Christine E. Beatty, of counsel), for Bank of Montreal, Credit Du Nord, Maryland Nat. Bank, and the Toronto-Dominion Bank as Amici Curiae urging affirmance.

Before TIMBERS, KEARSE and MAHONEY, Circuit Judges.

KEARSE, Circuit Judge:

This action, brought by plaintiff Wells Fargo Asia Limited ("WFAL") to recover funds deposited with the Philippine branch of defendant Citibank, N.A. ("Citibank"), returns to us on remand from the United States Supreme Court, see Citibank, N.A. v. Wells Fargo Asia Limited, --- U.S. ----, 110 S.Ct. 2034, 109 L.Ed.2d 677 (1990), vacating and remanding 852 F.2d 657 (2d Cir.1988), aff'g 660 F.Supp. 946 (S.D.N.Y.1987) (Knapp, J.), for a determination of what law applies to the present controversy and the content of that law, and for resolution of the controversy in light of those determinations. For the reasons below, we affirm the district court's ruling that the law of New York is applicable and its award of judgment in favor of WFAL.

I. BACKGROUND

The background of this action has been recounted in several opinions, including Citibank, N.A. v. Wells Fargo Asia Limited, --- U.S. ----, 110 S.Ct. 2034, 109 L.Ed.2d 677 ("WFAL IV "); Wells Fargo Asia Limited v. Citibank, N.A., 852 F.2d 657 (2d Cir.1988) ("WFAL III "), Wells Fargo Asia Limited v. Citibank, N.A., 695 F.Supp. 1450 (S.D.N.Y.1988) ("WFAL II "), and Wells Fargo Asia Limited v. Citibank, N.A., 660 F.Supp. 946 (S.D.N.Y.1987) ("WFAL I "), familiarity with which is assumed. Briefly, in 1983, WFAL, a Singapore-chartered bank wholly owned by the United States-chartered Wells Fargo Bank, N.A., placed two six-month nonnegotiable U.S. $1,000,000 deposits with Citibank for its branch in Manila, Philippines ("Citibank/Manila"). The deposit agreement called for WFAL to pay this amount to Citibank in New York for deposit at Citibank/Manila; it called for Citibank to repay Wells Fargo International's New York account for WFAL.

The deposits were to mature in December 1983. In October 1983, however, the Philippine government issued a Memorandum to Authorized Agent Banks ("MAAB 47"). As described in our earlier opinion, MAAB 47 provided, in pertinent part, as follows:

Any remittance of foreign exchange for repayment of principal on all foreign obligations due to foreign banks As interpreted by the Central Bank of the Philippines, this decree prevented Citibank/Manila, an "authorized agent bank" under Philippine law, from repaying the WFAL deposits with its Philippine assets, i.e., those assets not either deposited in banks elsewhere or invested in non-Philippine enterprises. Citibank/Manila did not repay WFAL's deposits upon maturity.

and/or financial institutions, irrespective of maturity, shall be submitted to the Central Bank [of the Philippines] thru the Management of External Debt and Investment Accounts Department (MEDIAD) for prior approval.

WFAL III, 852 F.2d at 659. After WFAL commenced the present suit for repayment of the deposited amounts, Citibank/Manila sought and received permission from the Central Bank of the Philippines to repay its foreign depositors to the extent it could do so with non-Philippine assets. Citibank/Manila thereafter repaid WFAL $934,000, leaving $1,066,000 in dispute.

The district court, Honorable Whitman Knapp, Judge, entered judgment in favor of WFAL, rejecting Citibank's contention that MAAB 47 made it impossible to repay the WFAL deposits. Noting that MAAB 47 allows obligations to foreign banks to be repaid if the consent of the Central Bank is obtained, and further noting that Citibank had not satisfied its good faith obligation to seek that consent, the court concluded that Citibank's impossibility defense must fail. Though originally making this ruling on the hypothesis that the law of the Philippines applied, see WFAL I, 660 F.Supp. at 947, the district court concluded, upon request from this Court for clarification, that New York law, rather than Philippine law, governed the dispute, WFAL II, 695 F.Supp. at 1454. It ruled that under New York law, Citibank's worldwide assets were available for satisfaction of WFAL's claim. Id.

We affirmed. Though the district court had concluded (a) that repayment and collection are independent concepts, and (b) that the parties had not reached an agreement as to the situs of collection, and we did not disturb those rulings, we concluded that the

authorities suggest that a debt may be collected wherever it is repayable, unless the parties have agreed otherwise. Since the court found here that there was no separate agreement restricting where the deposits could be collected, and we are aware of nothing in the record that contradicts that finding, we conclude that WFAL was entitled to collect the deposits out of Citibank assets in New York.

WFAL III, 852 F.2d at 661 (emphasis added).

The Supreme Court vacated our decision, stating that we appeared to have treated the concepts of repayment and collection as interchangeable rather than independent and to have "rel[ied] upon the existence of an agreement between Citibank and WFAL to permit collection in New York." WFAL IV, 110 S.Ct. at 2040. The Supreme Court concluded that the district court's finding that there was no agreement as to the situs of collection was not clearly erroneous; it also endorsed "the District Court's conclusion that the parties, in this particular case, failed to establish a relevant custom or practice in the international banking community from which it could be inferred that the parties had a tacit understanding on the point." Id. at 2041. Concluding that our decision could not be upheld on the theory that there was an agreement as to the place of collection, the Supreme Court remanded for a determination of whether WFAL's claim is governed by New York law, Philippine law, or federal common law, and what the content of the governing law is, and directed us to decide the appeal in light of those determinations:

Given the finding of the District Court that there was no agreement between the parties respecting collection from Citibank's general assets in New York, the question becomes whether collection is permitted nonetheless by rights and duties implied by law. As is its right, ... WFAL seeks to defend the judgment below on the ground that, under principles of either New York or Philippine law, Citibank was obligated to make its Id. at 2042.

general assets available for collection of WFAL's deposits.... It is unclear from the opinion of the Court of Appeals which law it found to be controlling; and we decide to remand the case for the Court of Appeals to determine which law applies, and the content of that law.

Accordingly, we proceed to those questions.

II. DISCUSSION

In response to this Court's earlier inquiry, the district court discussed the choice-of-law question as follows:

The legal principles governing our determination are straightforward. Jurisdiction in this action is asserted both on the basis of diversity and federal question involving 12 U.S.C. Sec. 632. In diversity cases, of course, we must apply the conflict of law doctrine of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co. (1941) 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. In federal question cases, we are directed to apply a federal common law choice of law rule to determine which jurisdiction's substantive law should apply. Corporacion Venezolana de Fomento v. Vintero Sales Corp. (2d Cir.1980) 629 F.2d 786, 794-95, cert. denied (1981) 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804. The rule in New York is that "the law of the jurisdiction having the greatest interest in the litigation will be applied and that the facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict." Intercontinental Planning, Ltd. v. Daystrom, Inc. (1969) 24 N.Y.2d 372, 382, 300 N.Y.S.2d 817, 825, 248 N.E.2d 576, 582. Federal law invokes similar considerations, see, Corporacion Venezolana, 629 F.2d at 795, and the place of performance is considered an important factor. Citibank, N.A. v. Benkoczy (S.D.Fla.1983) 561 F.Supp. 184, 186 and cases cited therein.

Regardless of whether the New York or federal test is used, application of these standards leads us to the conclusion...