First National City Bank v. Banco Nacional de Cuba

PETITIONER: First National City Bank
RESPONDENT: Banco Nacional de Cuba
LOCATION: Leon County Courthouse

DOCKET NO.: 70-295
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 406 US 759 (1972)
ARGUED: Feb 22, 1972
DECIDED: Jun 07, 1972

Henry Harfield - for petitioner
Victor Rabinowitz - for respondent

Facts of the case


Media for First National City Bank v. Banco Nacional de Cuba

Audio Transcription for Oral Argument - February 22, 1972 in First National City Bank v. Banco Nacional de Cuba

Warren E. Burger:

The case is submitted.

We’ll hear arguments next in number 70-295, First National City Bank against Banco Nacional De Cuba.

Mr. Harfield, you may proceed whenever you’re ready?

Henry Harfield:

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

This case brings up for review a decision by divided panel of the Court of Appeals for the Second Circuit.

The Solicitor General said of that decision that it seriously impairs the power of the executive over the control of foreign affairs.

The case may be stated very briefly.

The material facts are not in dispute.

In September 1960, the petitioner First National City Bank owned and operated 11 branches in Cuba.

On the night of Friday, September 16, 1960, the Cuban Government seized those branches.

The instrumentalities at use were its armed militia and the Banco Nacional De Cuba, the respondent here.

On the following day, Saturday, there was a radio announcement that the confiscation of American Banks had occurred by reason of executive power resolution number two, issued under Cuban Law 851.

On the opening of business on Monday, September 19, the respondent in this case was in full possession of the petitioner’s foreign branches and it was the respondent that served formal notice of confiscation on a resident Vice President of the petitioner who had been summoned to the petitioner’s former main branch for that purpose.

On the following day, the petitioner cabled to the respondent referring to the seizure of the branches and stating we have exercise our rights of lien and offset and closed your accounts as of September 17.

Now, among those accounts was a loan account which had originally been made in 1958, and this was a loan made by this petitioner to the government of Cuba here in New York City.

The borrower was a Cuban government instrumentality called Bandes (ph) and collateral for the loan was pledge by another Cuban government instrumentality called Fondo (ph), and a third Cuban government instrumentality, the respondent in this case acted as the fiscal agent for the government in connection with this.

On September 21 and 22, we are still operating in a five-day compass.

The petitioner sold the collateral that was in New York and after crediting the respondent the amount of principal and interest on the loan, there remain on the petitioner’s books in New York a balance of just about $2 million.

Two months later in November of 1960, the respondent instituted this lawsuit to in the United States District Court for the Southern District of New York to recover that balance.

And as a defense counterclaim and setoff, the petitioner showed that the value of the confiscated branches exceeded the amount claimed by the respondent.

I pause here to say that there is no dispute as to this value.

The parties have stipulated that if the petitioner is lawfully entitled to the offset claim by it, the amount is such that the respondent shall take nothing in this action.

Harry A. Blackmun:

Mr. Harfield, just as a matter of practicality, suppose that the respondent prevails here, what happens to the $2 million?

Henry Harfield:

I take it that the $2 million would -- you mean in the sense, physically will it be remitted to Cuba?

Harry A. Blackmun:

Well, does Banco Nacional get the $2 million?

Henry Harfield:

Well, I take it that the any recovery by Banco Nacional would be for the benefit of the Cuban Government because Banco Nacional is at least at this point completely integrated into the Cuban monolithic system.

Now, there is a blocking system that is --

Harry A. Blackmun:

Just as this is to which my question is directed?

Henry Harfield:


My understanding is that the -- if judgment were awarded to Banco Nacional to Cuba that the amount of that judgment would be subjected to freezing under executive order.