Citibank, N.A. v. Wells Fargo Asia Ltd.

PETITIONER: Citibank, N.A.
RESPONDENT: Wells Fargo Asia Ltd.
LOCATION: Residence of Cruzan

DOCKET NO.: 88-1260
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 495 US 660 (1990)
ARGUED: Mar 19, 1990
DECIDED: May 29, 1990

ADVOCATES:
Darryl Snider - on behalf of the Respondent
Thomas W. Merrill - on behalf of United States as amicus curiae, supporting the Petitioner

Facts of the case

Question

Media for Citibank, N.A. v. Wells Fargo Asia Ltd.

Audio Transcription for Oral Argument - March 19, 1990 in Citibank, N.A. v. Wells Fargo Asia Ltd.

William H. Rehnquist:

We'll hear argument next in Number 88-1260, Citibank v. Wells Fargo Asia Limited.

Mr. Bork.

Mr. Chief Justice, and may it please the Court:

Petitioner Citibank is here on writ of certiorari to the Second Circuit.

The outcome of this case will be of tremendous importance to the banking industry and to Federal regulators, but the case is not complex.

What happened was this.

Wells... the Respondent, Wells Fargo Asia Limited, made two deposits totalling $2 million, Eurodollars, in Citibank's Manila branch.

Before the time came for repayment the Philippine government entered a decree that made it impossible for us to repay in full.

Now, at that point Wells Fargo Asia sued Citibank in New York, saying that since the Manila branch could not pay, Citibank in New York had to pay.

We, of course, think the risk of what the Philippine government did was on the depositor in the foreign branch, in the Manila branch.

Now, a panel of the Second Circuit stated that normally a deposit is repayable only at the branch where it is made, but in this case, because there were routing instructions, routine routing instructions for putting the money back through New York on the way to repayment, that they had somehow... the banks had somehow agreed to repay in New York--

William H. Rehnquist:

Well, they found... the Second Circuit found there was a contract to that effect, a contractual agreement.

--That's right.

They found there was a contract.

And what that contract was, a routing instruction, it was a little odd because the routing instruction said that Citibank Manila would pay out of its bank account in Citibank... its bank account, not Citibank,... its bank account in Citibank, would repay Wells Fargo Asia's bank account with Wells Fargo.

But simply because it went through New York the Second Circuit decided that it was payable in New York, and then shifted the person who had to pay from Citibank Manila to Citibank in New York.

William H. Rehnquist:

Well, we don't usually review those very factual determinations, was there or was there not a contract to a particular effect.

Well, I think in this case what is up for review is a question of Federal law.

It is our contention that that question of law, when they construed that as a contract, is preempted by Federal law.

And you will notice, Mr. Chief Justice, that nobody in this case defends the Second Circuit's rationale.

William H. Rehnquist:

Well, do you contend that whatever the Federal law is, the parties could not agree otherwise by contract in a situation like this?

They could agree otherwise than by contract.

As we have said in our brief and as the Solicitor General says, this is clearly not a contract.

These are the routing instructions that are used in--

William H. Rehnquist:

Well, then you are just arguing about a very fact specific determination about the Second Circuit, it seems to me, if you agree that whatever view of Federal law one takes, the parties could change the result by agreement.

--Yes, but according to Federal law, Mr. Chief Justice, what I am saying is this cannot be a contract.

If it has been, then for 40 years the Federal Reserve Board and the FDIC have been interpreting these things wrong.

Byron R. White:

Well, but if they can... if Citibank could have agreed to this liability by an express contract, you would know... you could protect yourself in every, every transaction after this by making sure that you didn't have such a contract.

No, we couldn't, Your Honor.

What we have here, all of these dollars are routed through New York, 90 percent of them.