Trinh v. Citibank, N.A.

• Decision Date: 21 September 1988
• Docket Number: No. 86-1258,86-1258
• Citation: 850 F.2d 1164
• Parties: Ngoc Quang TRINH, Plaintiff-Appellee, v. CITIBANK, N.A., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1164

850 F.2d 1164

Ngoc Quang TRINH, Plaintiff-Appellee, v. CITIBANK, N.A., Defendant-Appellant.

No. 86-1258.

United States Court of Appeals, Sixth Circuit.

Argued March 27, 1987.

Decided July 8, 1988.

Rehearing and Rehearing En Banc Denied Sept. 21, 1988.

John E. Jacobs (Lead Counsel), Mason, Steinhart & Jacobs, P.C., Southfield, Mich., John E. Hoffman, Jr., argued, Shearman & Sterling, New York City, for defendant-appellant.

Lawrence John, argued, Detroit, Mich., for plaintiff-appellee.

Anthony J. Steinmeyer (Lead), Marc Richman, Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., James M. Spears, argued, for amicus curiae, U.S.

Before KEITH and JONES, Circuit Judges, and BROWN, Senior Circuit Judge.

NATHANIEL R. JONES, Circuit Judge.

Defendant-appellant Citibank, N.A. ("Citibank") appeals from a judgment holding it liable to plaintiff-appellee Ngoc Quang Trinh ("Trinh") for payment on Trinh's savings account in Citibank's former branch bank in Saigon, South Vietnam. The district court, relying primarily on Vishipco Line v. Chase Manhattan Bank, 660 F.2d 854 (2d Cir.1981), cert. denied, 459 U.S. 976, 103 S.Ct. 313, 74 L.Ed.2d 291 (1982), concluded that the home office of the Saigon branch of Citibank was liable on deposits placed in the foreign branch when the branch was forced to close in 1975 as a result of the impending overthrow of Saigon by revolutionary forces. Trinh v. Citibank, 623 F.Supp. 1526 (E.D.Mich.1985). In effect, the lower court placed the risk of loss arising from a political revolution on the domestic home office of the American bank rather than on the individual depositors. Because we agree that this is precisely where the risk of loss belongs--and because neither the deposit agreement construed in light of the Vietnamese law of force majeure nor the affirmative defense asserted by Citibank convinces us otherwise--we affirm the judgment of the district court.

I.

Citibank is an international banking corporation based in New York with branch offices all over the world. Prior to 1975, it operated a branch in Saigon, South Vietnam known as Citibank Saigon. Under Vietnamese law, Citibank could not have operated in Vietnam through a separate corporation or subsidiary; Citibank was limited to operating as a branch. Moreover, Vietnamese law required that a branch maintain all of its assets in the local currency and keep all the branch's capital, assets, funds, books and records separate and apart from those of the home office. Vietnamese law also required that branch banks have a paid-in capital reserve equal to a certain percentage of its customer's deposits and that this capital be earmarked and transferred to the branch by the home office. ¹ On July 25, 1974, plaintiff's father, Quang Quy Trinh, a retired senator in the South Vietnamese government, opened a joint savings account at Citibank Saigon in his name and that of his son. The account paid annual interest at a rate of 19% compounded daily. At the time Trinh's father opened the account, Trinh was a student residing in Michigan. He became a United States citizen in 1979 and has never returned to Vietnam.

The deposit agreement governing the account provided that "withdrawals [would] be permitted only at Citibank's place of business"--which was designated as "28-30 Nguyen Van Thinh, Saigon 1, Republic of Vietnam"--and that deposits were payable only in Vietnamese piasters. The agreement further provided as follows:

Citibank does not accept responsibility for any loss or damage suffered or incurred by any depositor resulting from government orders, laws ... or from any other cause beyond its control.

J. App. at 126.

In early April 1975, the situation in Saigon was becoming desperate as the North Vietnamese forces closed in on the city. During this period, American embassy officials met often with the branch officers of the American banks in Saigon to consider what actions should be taken to protect the safety of employees, both American and Vietnamese. These meetings produced a contingency plan for emergency evacuation. During this time, the branch bank encouraged concerned depositors to withdraw their money, although the situation did not safely allow for the posting of formal notices suggesting such withdrawals.

On April 24, 1975, on the eve of Saigon's fall to the North Vietnamese, Citibank closed its Saigon branch, and its personnel left the city in conjunction with the general evacuation of American citizens and Vietnamese employees planned by the United States Embassy. All of the branch's documents, files, records, and books were left in the branch. Cash from the branch, as well as the branch's keys, vault combination, and official documents, were entrusted to embassy officials with a request to turn them over to the National Bank of Vietnam, South Vietnam's central banking authority.

The following day, on April 25, 1975, the South Vietnamese government issued a joint communique stating that Citibank, and two other American banks, had "closed temporarily without asking for permission"; that these banks would be sanctioned; and that the National Bank and the Finance Ministry guaranteed to return all the money legally deposited.

Less than one week later, on April 30, 1975, the South Vietnamese government in Saigon fell. On May 1, 1975, the new revolutionary administration of Vietnam declared victory and confiscated all banks. Thus, all Saigon banks, including Citibank's branch, were "placed under the management of the Saigon-Gio Dinh Military Management Committee banking committee," and their operations suspended. The National Bank of Vietnam, the central bank, reopened under North Vietnamese control, and over the course of several weeks made a number of announcements concerning its plans for the future. Specifically, the central bank announced:

The Vietnam National Bank ... is ready to recover former debts incurred by banks through lending and to conduct settlement of debts, deposits, savings and all other sources of capital in the economy.

J. App. at 152. It was further announced that:

[T]he national bank guarantees that the savings accounts of workers, who legitimately earn their income through their own efforts and labor, will gradually be paid to them....

....

As regards banks whose owners have fled the country, the national bank will inventory and re-evaluate their assets and settle their accounts in order to determine their ability to return the savings of account holders....

Id. at 156-57.

Shortly after the fall of Saigon, plaintiff's father was placed in a reeducation camp. After his release in 1980, he sent the Citibank Saigon passbook to his son in Michigan. In May 1980, Trinh called the International Division of Citibank in New York to inquire about the deposit. Trinh was told that the National Bank of Vietnam was now responsible for the deposit. On November 5, 1980, Trinh wrote to Walter Wriston, Chairman of Citibank, expressing dissatisfaction with this reply, and was again told that the National Bank was responsible for the deposit. This lawsuit was commenced in the Eastern District of Michigan on June 14, 1984.

Applying Vietnamese law, the district court found in favor of Trinh. Trinh v. Citibank, 623 F. Supp. 1526 (E.D.Mich.1985). As mentioned, the court relied primarily on Judge Mansfield's opinion in Vishipco, where on similar facts, the Second Circuit found the Chase Manhattan Bank liable to depositors in its former Saigon branch. In this respect, the court concluded that the deposit agreement with Trinh formed an underlying basis for recovery against the bank and that, as in Vishipco, the Vietnamese law of force majeure did not relieve Citibank of its liability on that deposit. 623 F. Supp. at 1532. Although the court recognized that in Vishipco the underlying obligation had been construed under New York law, as opposed to Vietnamese law, the court did not find this distinction to be significant. Id. In the first place, the court noted that Citibank never argued that, under Vietnamese law, Trinh's deposits did not equal a debt of the bank or form an underlying basis for recovery. Moreover, since the Vishipco court did apply Vietnamese law to the argument that force majeure relieved the bank of liability--the same argument that Citibank makes here--the fact that it addressed this argument as an affirmative defense to liability (rather than as a threshold basis for denying recovery on the underlying obligation) was not, the court believed, the basis for a meaningful distinction. Id.

The court then stated that, even if it accepted Citibank's proposition that the doctrine of force majeure was incorporated into the bank's underlying obligation on the deposits, the application of that doctrine to these facts would nevertheless not relieve Citibank of liability. Id. at 1533. Specifically, the court reasoned that Citibank's decision to close its Saigon branch was a matter of "voluntary choice," not an act of God, act of government, or "fortuitous cause beyond its control," as required by Vietnamese law. Id. at 1533-34.

Further, the court rejected Citibank's argument that Citibank Saigon had been nationalized by the revolutionary government and that the National Bank of Vietnam was its successor in interest. Id. at 1534. The court concluded that the argument failed for two reasons. First, the court found that the situs of the deposit was no longer Vietnam at the time the expropriation took place because it had "spr[ung] back" to the head office of Citibank when Citibank Saigon was voluntarily closed. Id. at 1536. Second, the court found that Citibank had failed to prove that the Vietnamese government had clearly assumed the liabilities as well as the assets of Citibank Saigon. Id. at 1534-35. Accordingly, the district court ordered Citibank to pay Trinh the dollar value of his account, $1403.67, plus prejudgment interest of $1792.69, for a total of $3196.36.

II.

A.

Citibank's...