Manas y Pineiro v. Chase Manhattan Bank

• Decision Date: 03 December 1980
• Parties: Rosa Maria MANAS Y PINEIRO, Plaintiff, v. The CHASE MANHATTAN BANK, N. A., Defendant.
• Court: New York Supreme Court

Page 868

434 N.Y.S.2d 868

106 Misc.2d 660

Rosa Maria MANAS Y PINEIRO, Plaintiff, v. The CHASE MANHATTAN BANK, N. A., Defendant.

Supreme Court, Trial Term, New York County, Part 70.

Dec. 3, 1980.

Peter P. Kenny, of Lipkowitz & Plaut, New York City, for plaintiff.

Andrew Connick, of Melbank, Tweed, Hadley & McCloy, New York City, for defendant.

LEONARD N. COHEN, Judge:

This case is an illustrative caveat to foreign nationals purchasing promissory money instruments from American branch banks abroad wherein subsequent to purchase a foreign governmental change results in the confiscation of the national's funds. Unless the instrument clearly expresses intentions of payment of such a debt in US dollars in the United States only the national's expectation of ultimate payment here may prove illusory.

Plaintiff is a Cuban citizen, currently residing in the United States in exile. Plaintiff's husband was the Minister of Communications in the former Batista government's cabinet. Plaintiff's husband is now also in the United States, in exile, having taken asylum in the Colombian Embassy in Cuba when Castro assumed control of the Cuban government on January 1, 1959 and in March, 1959, leaving his homeland without ever returning.

On various dates between May and December, 1958, plaintiff purchased five non-negotiable certificates of deposit (hereinafter referred to as CD's) from the defendant, Chase Manhattan Bank, N.A. (hereinafter referred to as Chase) with varying maturity dates of one year or less totalling "$227,336.47" in "Moneda Nacional" at an annual interest rate of 3% at Chase's Marianao, Cuban branch. On their face, the CD's were ambiguous as to both the currency in which they were payable and the place of presentment, neither having been specifically or unambiguously provided.

In January, 1974, the CD's were presented for payment by the plaintiff at Chase's principal place of business in New York City. On February 14, 1974, Chase refused to honor the drafts. On July 24, 1974, the plaintiff commenced an action to recover the principal amount of the five CD's in US dollars by motion for summary judgment in lieu of complaint, with defendant Chase cross-moving for summary judgment. Both motions were denied at Special Term of this court by Justice Hilda Schwartz, who stated in an order dated August 1, 1975, that:

"There are questions of fact to be resolved including, but not limited to, whether the deposits were made in U.S. currency, whether they were payable in U.S. currency, whether representations were made to the plaintiff, as she claims, that her certificates would be payable in the U.S., in view of the lack of any restriction as to the place of payment on the face of the certificates, whether the bank, under the circumstances extant in Cuba at the time of the deposit, was chargeable with knowledge of the purpose of the deposits, or whether assets of the bank were transmitted out of Cuba between the time of the deposit and the Cuban government's actions to cover this liability."

On appeal by Chase, the Appellate Division in a three-to-two decision in May, 1976, affirmed this holding, stating that:

"As observed by Special Term, there are issues of fact raised not alone by the omissions in the documents as to place of payment and the venue thereof but also as to plaintiff's status vis-a-vis the Cuban government when it committed the dictatorial acts, said to be in accordance with its laws of claimed appropriation of the debt owed to plaintiff, as well as the currency with which it might have been paid. The question of plaintiff's status alone is sufficient at this juncture to preclude decision as to whether the claimed seizures were permissible acts of a sovereign state upon which defendant appears to rely in rejection of plaintiff's claim".

In accordance with the Appellate Division majority decision, this case was set down for a jury trial of these factual issues raised by the ambiguities on the face of the CD's and by defendant Chase's defenses.

The plaintiff's theory of recovery was based simply on the proper presentment of an instrument for the payment of money only. Plaintiff asserts her right to demand payment upon presentation of the CD's in dollars at any Chase branch in the world. Defendant Chase claimed the CD's were payable only in pesos and only at its Marianao, Cuba branch. Further, Chase asserts several statutory and common law defenses stemming from the events which took place in Cuba following Castro's assumption of power.

After trial, questions of fact were submitted to the jury for a special verdict to resolve the apparent ambiguities and determine the intention of the parties at the time of the transaction as to (1) whether the place of presentment of the CD's was in New York only, Marianao, Cuba only, or a Chase branch anywhere in the world, including New York and Marianao, Cuba; (2) whether the currency in which repayment was to be made was US dollars only, or Cuban pesos only; and (3) whether plaintiff's funds on deposit in defendant Chase's Cuban branch had been confiscated by the Cuban government.

In its special verdict, the jury found that the CD's were repayable in US dollars at a Chase branch anywhere in the world, including New York and Marianao, Cuba, and further that plaintiff's funds on deposit with the Chase branch in Marianao, Cuba, had been in fact confiscated by the Castro government.

After the rendition of the special verdict and upon the jury's findings, both plaintiff and defendant moved for judgment as a matter of law. Plaintiff asserted her right to present the CD's anywhere in the world and collect US dollars as consistent with the jury's verdict.

The defendant raised the following defenses as a matter of law. First, defendant urges that as a matter of common law, defendant is relieved of liability because the act of state doctrine prohibits this court from inquiring into the validity of the confiscation of plaintiff's funds or the nationalization of defendant's assets by the duly constituted Castro government. Secondly, with respect to the obligation of the main branch of Chase in New York, defendant argues that as a New York State chartered bank, New York Banking Law § 138(1) (McKinney's 1971) applies and extinguishes any obligation on the part of the parent bank for the obligations of its branches in a foreign country where local foreign branches under the same circumstances would no longer be liable. Thirdly, Chase asserts that the jury finding that the CD's were payable only in US dollars was against the weight of the evidence.

As to the third defense, this Court finds the verdict not to be against the weight of the credible evidence and therefore this defense is dismissed as without merit.

Turning to the first defense, Chase urges that under common law, the Cuban acts of confiscation of plaintiff's deposited funds in defendant's Cuban branch and the nationalization of Chase's Cuban branch assets and liabilities extinguished its liability to repay these CD's. This argument is based on the theory that such seizures or takings were the acts of a foreign government which under the act of state doctrine may not be scrutinized by the courts of the United States.

There is no dispute that all the Chase Cuban branches were nationalized in September, 1960, and that the Castro government expropriated the Chase assets and liabilities. More significantly, the jury found that plaintiff's funds represented by the CD's and on deposit with Chase were confiscated in September, 1959, pursuant to the laws promulgated by the Cuban Ministry of Misappropriated Funds. This confiscation was a valid legally binding act of the Cuban government, even assuming a lack of publication in the Official Gazette as asserted by plaintiff as being required by Cuban law. French v. Banco Nacional de Cuba, 23 N.Y.2d 46, 295 N.Y.S.2d 433, 242...