Banco Nacional de Cuba v. First Nat. City Bank of NY, 125-126

• Decision Date: 11 May 1973
• Docket Number: 33864.,Dockets 32533,No. 125-126,125-126
• Citation: 478 F.2d 191
• Parties: BANCO NACIONAL de CUBA, Appellant, v. The FIRST NATIONAL CITY BANK OF NEW YORK, Respondent.
• Court: U.S. Court of Appeals — Second Circuit

478 F.2d 191 (1973)

BANCO NACIONAL de CUBA, Appellant, v. The FIRST NATIONAL CITY BANK OF NEW YORK, Respondent.

Nos. 125-126, Dockets 32533, 33864.

United States Court of Appeals, Second Circuit.

Argued January 30, 1973.

Decided May 11, 1973.

Victor Rabinowitz, New York City (Leonard Boudin, Michael Krinsky, Dorian Bowman, and Eric M. Lieberman, Rabinowitz, Boudin & Standard, New York City, on the brief), for appellant.

Henry Harfield, New York City (Herman E. Compter, James B. Keenan, Shearman & Sterling, New York City, on the brief), for appellee.

Before LUMBARD and HAYS, Circuit Judges, and BLUMENFELD, Chief Judge.^*

HAYS, Circuit Judge :

The involved history of this case began in July, 1967 with the decision of Judge Bryan in the Southern District of New York, 270 F.Supp. 1004, finding that the confiscation of National City Bank's property in Cuba was a violation of international law and that Banco National and the Cuban Government were one and the same for the purposes of this litigation. On appeal, this court held that the act of state doctrine applied to bar adjudication of National City Bank's counterclaim and reversed the decision of the District Court, not reaching, of course, the merits of the District Court decision. The Supreme Court, 400 U.S. 1019, 91 S.Ct. 581, 27 L.Ed.2d 630 granted certiorari and remanded the case to this court for reconsideration in the light of a letter from the Legal Adviser of the Department of State to the Supreme Court indicating that the foreign policy interests of the United States would not be injured by litigation of the merits of the instant case. This court thereupon entered a second opinion, 442 F.2d 530, adhering to its original result. The Supreme Court again granted certiorari, and, reversing this court, held that the act of state doctrine did not bar consideration of the merits. The Supreme Court remanded the case to this court for the second time for "consideration of Banco Nacional's alternative bases of attack on the judgment of the District Court." First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 770, 92 S.Ct. 1808, 1814, 32 L.Ed.2d 466 (1972).

The facts giving rise to this lengthy and involved litigation are fully stated in the earlier opinion of this court, 431 F.2d 394 (2d Cir. 1970), and it is unnecessary to recount them here. Suffice it to say that Banco Nacional originally brought suit in the District Court for the Southern District of New York for (1) the excess realized by National City Bank on the sale of collateral held as a security for a loan, and (2) for deposits by nationalized Cuban banks in National City Bank in New York. National City Bank counterclaimed, arguing that the Republic of Cuba was the real party in interest, that the Cuban government was indebted to it for the value of illegally expropriated property of National City Bank in Cuba, and that it was entitled to set off this obligation as a complete defense to the claims asserted by Banco Nacional. National City Bank then moved for summary judgment. The District Court granted the motion and Banco Nacional appealed.

Apart from the act of state defense Banco Nacional presented two major arguments¹ in the District Court (1) that National City Bank's counterclaim cannot properly be asserted against Banco Nacional but is directed at the government of Cuba, and (2) that in any event the nationalization of National City Bank's property in Cuba did not violate international law. The District Court found against Banco Nacional on both points, holding (1) "There is no serious question that the Government of Cuba and Banco Nacional are one and the same for the purposes of this litigation" and (2) "The totality of circumstances presented by this case—a patent failure to provide adequate compensation, a retaliatory confiscation by a foreign government, and discrimination against United States nationals—compel a finding that the Cuban decree directing confiscation of First National City's property was in direct contravention of the principles of international law. Thus First National City is entitled to setoff against the first claim for relief such amount as may be due and owing to it from the Cuban Government as compensation for the seized Cuban properties, and I so hold." 270 F.Supp. 1004, 1006, 1010 (S.D.N.Y.1967).

We agree with the judgment of the District Court.

I.

In respect to the expropriation of National City Bank's property in Cuba the Republic of Cuba and Banco Nacional acted as a single entity. We therefore have no difficulty in finding that for the purposes of this litigation Banco Nacional is the alter ego of the Republic of Cuba, or as the District Court said, "the Government of Cuba and Banco Nacional are one and the same for the purposes of this litigation."

The undisputed evidence in the record amply supports the conclusion that Banco Nacional and the government of Cuba acted as one in the nationalization of National City Bank's property.

Law No. 891 of October 14, 1960 provided:

"The banking

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