Garcia v. Chase Manhattan Bank, N.A.

Juanita Garcia (plaintiff) and her husband, Jose Dominguez, were wealthy Cuban citizens who were concerned about the political situation in Cuba in 1958, leading them to purchase short-term certificates of deposit (CDs) from a Cuban branch of the Chase Manhattan Bank, N.A. (Chase) (defendant). Dominguez and Garcia chose Chase because of Chase’s international reputation. Chase told Dominguez and Garcia that its New York head office would guarantee the CDs and that Chase would pay the CDs at any worldwide Chase branch. Cuba’s revolutionary government assumed power in January 1959 and soon thereafter froze the Garcia/Dominguez purported Chase account; in July 1959, the government ordered Chase to close the purported account and pay the government the purported account’s value. Chase complied by paying the government a sum equal to the amount that Chase owed Garcia and Dominguez, which Chase paid from its general reserves. In 1964, 1968, and 1970, Dominguez inquired with Chase about the CDs, without success. Garcia sought payment of the CDs after Dominguez’s 1975 death, but Chase refused, leading Garcia to sue Chase. At trial, the jury ruled in Garcia’s favor. Chase appealed, arguing that (1) Cuba’s actions extinguished Chase’s payment obligation to Garcia and (2) the act-of-state doctrine prohibited the court from questioning the Cuban government’s actions.