## Facts

- A private Brazilian bank alleged that unknown defendants submitted false applications to obtain U.S. dollar travelers’ checks in exchange for Brazilian currency, in violation of Brazilian foreign-exchange regulations.
- The bank alleged it relied on the misrepresentations and exchanged Brazilian cruzeiros for travelers’ checks totaling $1,024,000.
- The proceeds were traced to New York, including deposits into accounts at Bankers Trust Company and at Manfra Tordella & Brookes, Inc., each using code names.
- The bank sued for damages based on fraud, deceit, and conspiracy, and sought rescission of the currency-exchange contracts allegedly induced by the false applications.
- The trial court granted an order of attachment against defendants’ property located in New York and authorized service of process by publication.

## Issues

1. Whether a private foreign bank may maintain a New York action for common-law fraud, deceit, and rescission when the alleged misrepresentations involve evasion of the bank’s home-country currency-exchange regulations.
2. Whether New York’s policy against enforcing foreign penal or revenue laws, including limits associated with foreign exchange-control regimes, bars such a private tort and rescission action.
3. Whether the attachment of property in New York could stand given the nature of the underlying claims.

## Decision

- The Court of Appeals reversed the dismissal of the complaint and reinstated the action.
- The court held that the bank stated cognizable New York claims for fraud, deceit, conspiracy, and rescission, notwithstanding that the fraud was connected to violations of Brazilian currency regulations.
- The court concluded that the action did not amount to enforcement of a foreign sovereign’s revenue or regulatory scheme because the claims sought private-law remedies under New York law.
- The attachment of property in New York was reinstated, and the case was remanded for further proceedings.

## Legal Principles

- New York courts generally will not enforce foreign penal or revenue laws, including attempts to use New York litigation to implement a foreign sovereign’s public-law currency-control regime.
- That nonenforcement rule does not bar a private plaintiff’s common-law fraud and deceit claims, or contract rescission, even if foreign currency regulations form part of the factual setting for the alleged misrepresentations.
- A claim is not transformed into impermissible enforcement of foreign public law merely because the alleged fraud involves misstatements about compliance with foreign exchange restrictions.
- New York may apply its own tort and contract doctrines to transactions with substantial New York contacts, including where proceeds are deposited through New York financial institutions and assets are located in New York for attachment.

## Conclusion

The Court of Appeals permitted a private Brazilian bank to pursue New York common-law fraud and rescission remedies arising from a currency-exchange scheme connected to Brazilian exchange controls, distinguishing private tort enforcement from impermissible enforcement of foreign sovereign regulatory or revenue policy, and reinstated the attachment and action for further proceedings.


Banco Frances e Brasileiro S.A. v. Doe, 36 N.Y.2d 592, 370 N.Y.S.2d 534, 331 N.E.2d 502 (1975)