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Vishipco Line v. Chase Manhattan Bank

decided: September 29, 1981.


Appeal from a judgment of the United States District Court for the Southern District of New York entered by Judge Robert L. Carter after a non-jury trial, dismissing plaintiffs' claims for breach of contract growing out of defendant's failure to repay plaintiffs' piastre demand deposits and certificate of deposit after the fall of South Vietnam forced defendant to close its Saigon branch in 1975. Reversed .

Before Lumbard, Mansfield and Van Graafeiland, Circuit Judges.

Author: Mansfield

Plaintiffs appeal from a judgment of the United States District Court for the Southern District of New York entered after a non-jury trial by Judge Robert L. Carter on December 5, 1980, dismissing their claims against Chase Manhattan Bank, N.A. ("Chase"), for breach of contract. The ten corporate plaintiffs Vishipco Line, Ha Nam Cong Ty, Dai Nam Hang Hai C.T., Rang Dong Hang Hai C.T., Mekong Ship Co. Sarl, Vishipco Sarl, Thai Binh C.T., VN Tau Bien C.T., Van An Hang Hai C.T., and Cong Ty U Tau Sao Mai are Vietnamese corporations which maintained piastre demand deposit accounts at Chase's Saigon branch in 1975. Invoking diversity jurisdiction, they claim that Chase breached its deposit contracts with them when it closed the doors of its Saigon branch on April 24, 1975, to escape from the Communist insurgents and subsequently refused to make payment in New York of the amount owed. The individual plaintiff Ms. Nguyen Thi Cham is a Vietnamese citizen who purchased a six-month two hundred million piastre certificate of deposit ("CD") from Chase's Saigon branch on November 27, 1974, and claims that Chase is in breach for refusing to cash the CD in dollars in New York.

We reverse. Chase was clearly obligated to pay plaintiffs the amounts it owed them. None of the affirmative defenses raised by Chase to its conceded obligations to plaintiffs can be sustained. Under Rule 44.1, plaintiffs' failure to introduce evidence of their right to recovery under Vietnamese law governing deposit obligations is not a ground for dismissal of their claims. The evidence was sufficient to give Tran Dinh Truong standing to represent the corporate plaintiffs in this lawsuit. The record does not support Chase's claim that the new Vietnamese government became the successor in interest to the corporate plaintiffs or that the individual plaintiff Ms. Nguyen Thi Cham is disqualified from bringing her action because the funds used to buy her CD may not have been her own. Chase's defenses of impossibility and force majeure fail because it remained liable to discharge obligations incurred through its branch, which were never assumed by the new Vietnamese government. The present worthlessness of the South Vietnamese piastre is no barrier to recovery. Under New York law which governs, the dollar value of Chase's obligation to the corporate plaintiffs must be determined as of the date when it closed its branch without giving them the opportunity to withdraw sums owed them rather than the date of judgment. The individual plaintiff, Ms. Cham, is entitled to recover the value in dollars of her CD on its due date.

From 1966 until April 24, 1975, Chase operated a branch office in Saigon. Among its depositors were the ten corporate plaintiffs, which were principally engaged at that time in providing shipping services to the U.S. Government in Southeast Asia, and the individual plaintiff, who owned a 200 million piastre CD issued by Chase's Saigon branch. Chase's operations in Saigon came to an end at noon on April 24, 1975, after Chase officials in New York determined that Saigon would soon fall to the Communists. After closing the branch without any prior notice to depositors, local Chase officials balanced the day's books, shut the vaults and the building itself, and delivered keys and financial records needed to operate the branch to personnel at the French Embassy in Saigon. Saigon fell on April 30th, and on May 1st the new government issued a communique which read as follows:

All public offices, public organs, barracks, industrial, agricultural and commercial establishments, banks, communication and transport, cultural, educational and health establishments, warehouses, and so forth together with documents, files, property and technical means of U.S. imperialism and the Saigon administration will be confiscated and, from now on, managed by the revolutionary administration.

Shortly thereafter, the French embassy turned over records from the Chase branch to the new government.

Tran Dinh Truong, who is a major shareholder of most, if not all, of the ten corporate plaintiffs and who represents them here, fled South Vietnam just prior to the Communist takeover, as did Nguyen Thi Cham, the individual plaintiff. After arriving in the United States, Truong and Cham demanded that Chase repay the piastre deposits made in Saigon, but Chase refused to do so. Invoking diversity jurisdiction Truong, acting under his powers of attorney, subsequently caused the plaintiffs to bring this action against Chase for breach of contract, seeking recovery of the dollar value of the piastre deposits held by its Saigon branch for them at the time it was closed, as well as the value of the certificate of deposit owned by Cham.*fn1

Chase, admitting that plaintiffs had made the alleged deposits in its Saigon branch, interposed a series of affirmative defenses as grounds for denial of recovery including claims that 1) the seizure of Chase's former branch in South Vietnam by the dominant authorities in North Vietnam relieved Chase of any liability to plaintiffs, 2) Chase could not be held liable since the piastre accounts for which plaintiffs sought recovery were payable only in piastres at its Saigon branch, 3) plaintiffs lacked standing to assert their claims, and 4) payment of the claims would be illegal and is barred by Foreign Asset Control Regulations. With respect to the individual claim asserted by Nguyen Thi Cham, Chase added as a defense that the obligation of its Saigon branch had been assumed by the Government of Vietnam.

The evidence was undisputed that on April 24, 1975, the ten corporate plaintiffs held demand piastre deposits (or overdrafts) with Chase in the following sums:

Name of Account Balance

Vishipco Line VN $22,995,328

Ha Nam Cong Ty 9,053,016

Dai Nam Hang Hai C.T. 9,397,598

Rang Dong Hang Hai C.T. 8,974,556

Mekong Ship Co. Sarl 7,239,661

Vishipco Sarl (12,498,573)

Thai Binh C.T. 68,218

VN Tau Bien C.T. 5,925,249

Van An Hang Hai C.T. 87,439,199

Cong Ty U Tau Sao Mai 380,419

Chase also concedes that on November 27, 1974, it issued to Ms. Cham a CD in the sum of 200,000,000 Vietnamese piastres, payable on May 27, 1975, and that the CD bore interest at ...

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