## Facts

- Juanita Gonzalez Garcia and her husband, Jose Lorenzo Perez Domínguez, deposited funds at a Havana branch of The Chase Manhattan Bank in 1958 and received two non-negotiable certificates of deposit (CDs) totaling 500,000 pesos, then at parity with the U.S. dollar.
- Bank officers described the CDs as a private contract, represented that Chase’s New York head office guaranteed them, and stated they were payable upon presentation at any Chase branch worldwide, including in dollars in New York.
- After the Cuban revolutionary government took power in 1959, it froze the couple’s Chase account, later ordered the account closed, and directed Chase to pay the account’s value to the Cuban government.
- Chase paid the Cuban government an amount equal to what it owed on the CDs, using its general reserves rather than a segregated fund tied to the CDs.
- Domínguez and later Garcia sought payment from Chase outside Cuba; Chase refused. Garcia sued in federal court in New York.
- After a jury trial, the district court entered judgment for Garcia for $760,383.30 (principal plus interest). Chase appealed.

## Issues

1. Whether Chase’s payment to the Cuban government pursuant to Cuban decrees discharged Chase’s contractual obligation to Garcia on the CDs.
2. Whether the act-of-state doctrine barred a U.S. court from enforcing the CDs or from determining the effect of Cuba’s actions on Chase’s obligations.
3. Whether the parties’ agreement contemplated payment outside Cuba such that Chase remained liable on the CDs notwithstanding the expropriation of branch-related assets.

## Decision

- The Second Circuit affirmed the judgment for Garcia.
- Chase’s payment to the Cuban government did not extinguish its contractual obligation to Garcia on the CDs.
- The act-of-state doctrine did not bar adjudication of Garcia’s contract claim in New York.
- The evidence supported the jury’s findings that the CDs were obligations of Chase as a whole and were intended to be payable at any Chase branch, including in New York.

## Legal Principles

- A bank may remain liable on foreign-branch deposit instruments where the contract, as proven, makes the obligation payable outside the foreign state and backed by the bank’s general credit rather than limited to local branch assets.
- A foreign sovereign’s expropriation of assets within its territory, and compelled payment by a local branch, does not necessarily discharge the bank’s independent contractual obligation enforceable in the United States.
- The act-of-state doctrine does not preclude enforcement of a private contract claim when the court can accept the foreign sovereign’s acts as effective within its territory yet still decide, under domestic law, their effect on a separate obligation payable in the United States.
- Appellate review defers to supported jury determinations concerning contractual representations, intended place of payment, and the nature of the bank’s obligation.

## Conclusion

The court held that Chase’s contractual promises—found by the jury to include a New York-backed, worldwide payment obligation—left Chase liable on the CDs despite Cuba’s seizure-related decrees and Chase’s compelled payment to the Cuban government, and that the act-of-state doctrine did not bar enforcement of that obligation in New York.


Garcia v. Chase Manhattan Bank, N.A., 735 F.2d 645 (2d Cir. 1984)