Case Name: Yolanda Duque de Estrada Gonzalez, Appellant, v. Industrial Bank (of Cuba), Respondent, and Banco Nacional de Cuba, Intervenor-Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1962-11-01
Citations: 12 N.Y.2d 33
Docket Number: 
Parties: Yolanda Duque de Estrada Gonzalez, Appellant, v. Industrial Bank (of Cuba), Respondent, and Banco Nacional de Cuba, Intervenor-Respondent.
Judges: 
Reporter: New York Reports
Volume: 12
Pages: 33–42

Head Matter:
Yolanda Duque de Estrada Gonzalez, Appellant, v. Industrial Bank (of Cuba), Respondent, and Banco Nacional de Cuba, Intervenor-Respondent.
Argued September 25, 1962;
decided November 1, 1962.
Mark F. Hughes, Joseph M. Callahan and Kenneth J. Bialkin for appellant.
I. The new finding of the Appellate Division that the transaction in suit involved only the purchase and sale of a foreign draft should he set aside and the finding of Special and Trial Term that appellant and Industrial contracted for the delivery of dollars in New York, and the judgment based upon it, should be reinstated. (Aerated Prods. Co. v. Godfrey, 290 N. Y. 92; Bristol-Myers Co. v. Picker, 302 N. Y. 61; Kerr S. S. Co. v. Chartered Bank of India, Australia & China, 292 N. Y. 253; International Firearms Co. v. Kingston Trust Co., 6 N Y 2d 406; Callery v. Lyons, 292 N. Y. 15; Smith v. Dotterweich, 200 N. Y. 299; Friedman & Co. v. Newman, 255 N. Y. 340; Juilliard v. Chaffee, 92 N. Y. 529; Chapin v. Dobson, 78 N. Y. 74.) II. Special and Trial Term was correct in holding that as an action on the instrument the cause of action arose in New York where it was payable and .where payment was refused upon Industrial’s instruction. (Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367; Riddle v. Bank of Montreal, 145 App. Div. 207; Amsinck v. Rogers, 189 N. Y. 252; Swift & Co. v. Bankers Trust Co., 280 N. Y. 135; Tandoc v. Luckenbach S.S. Co., 5 A D 2d 857.) III. Since the contract related to property in New York at the time the contract was made, this court has jurisdiction. (Heuertematte v. Morris, 101 N. Y. 63; Leach v. Central Trust Co., 203 Iowa 1060; First Nat. Bank of Murfreesboro v. First Nat. Bank of Nashville, 127 Tenn. 205.) IV. The affirmative defenses are insufficient as a matter of fact and as a matter of law. (Kassel v. N. V. Nederlandsch Amerikaansche Stoomvaart Maatschappij, 177 Misc. 92; Pan Amer. Securities Corp. v. Fried, Krupp AG., 169 Misc. 445, 256 App. Div. 955; Goodman v. Deutsch-Atlantische Tel. Gesellschaft, 166 Misc. 509; Central Hanover Bank & Trust Co. v. Siemens & Halske AG., 15 F. Supp. 927, 84 F. 2d 993, 299 U. S. 585; Vladikavkazsky Ry. Co. v. New York Trust Co., 263 N. Y. 369; Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 280 N. Y. 286; Bollack v. Societe Generale, 263 App. Div. 601; Plesch v. Banque Nationale de la Republique d’Haiti, 273 App. Div. 224, 298 N. Y. 573; Merilaid & Co. v. Chase Nat. Bank, 189 Misc. 285; United States v. Pink, 315 U. S. 203.) V. The denial of a postponement of the trial and of the motion for a new trial was a sound exercise of judicial discretion. (Zirn v. Bradley, 270 App. Div. 829; Ten Broeck v. Travelers Ins. Co., 42 Hun 656, 116 N. Y. 663; Wax v. Glaubman, 3 A D 2d 714; La Tant v. Stark, 3 A D 2d 94, 4 N Y 2d 890; Honsberger v. Wilmot, 276 App. Div. 884; Gawthrop v. Leary, 9 Daly 353.)
Leonard B. Boudin and Mary M. Kaufman for respondents.
I. The court had no jurisdiction to entertain the suit since the cause of action, if any, arose outside the State. II. The Appellate Division was correct in holding that the transaction was an executed one for the purchase and sale of a draft. (Kerr S.S. Co. v. Chartered Bank of India, Australia & China, 292 N. Y. 253; Gravenhorst v. Zimmerman, 236 N. Y. 22; International Firearms Co. v. Kingston Trust Co., 6 N Y 2d 406; Moe v. Bank of United States, 211 App. Div. 519; Goeske v. Taylor, 205 App. Div. 429; Auerbach v. Barrett, 214 App. Div. 279; American Express Co. v. Cosmopolitan Trust Co., 239 Mass. 249 ; Foreign Trade Banking Corp. v. Cosmopolitan Trust Co., 240 Mass. 413; Carmen v. Higginson, 245 Mass. 511; Matter of Pacat Finance Corp., 295 F. 394.) III. The parol evidence rule constitutes an additional reason why the finding by the Appellate Division concerning the nature of the transaction must be sustained. (Schweitzer v. Fargo, 255 N. Y. 60; Mitchill v. Lath, 247 N. Y. 377; Higgs v. de Maziroff, 263 N. Y. 473; Ruppert v. Singhi, 243 N. Y. 156; Oleet v. Pennsylvania Exch. Bank, 285 App. Div. 411 ; Long Is. Trust Co. v. Merz, 20 Misc 2d 342; Morris v. Douglass, 237 App. Div. 747; White v. Douglas, 240 App. Div. 530.) IV. The Appellate Division was correct in holding that the obligation of a drawer on a draft is the secondary one of reimbursing the holder at the place of making the contract and that hence the cause of action, if any, arose in Cuba. (Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367; Riddle v. Bank of Montreal, 145 App. Div. 207; Amsinck v. Rogers, 189 N. Y. 252; Swift & Co. v. Bankers Trust Co., 280 N. Y. 135; Hennenlotter v. De Orvananos, 114 Misc. 333; Susquehanna Woolen Co. v. Imperial Coal & Coke Co., 66 Misc. 621; Kline v. Imperial Coal & Coke Co., 66 Misc. 616.) V. The contract does not relate to property in New York at the time it was made. VI. The refusal of the trial court to adjourn the trial or to order depositions when respondents’ only witnesses were suddenly prevented from appearing was an abuse of discretion, a denial of a fair trial, and a denial of due process in violation of the Federal and State Constitutions. (Riglander v. Star Co., 98 App. Div. 101, 181 N. Y. 531; Clifton Shirting Co. v. Bronne Shirt Co., 213 App. Div. 239; Jarvis v. Stoddart, 215 App. Div. 523; Alteresko v. Phillips, 208 App. Div. 171; Ellis v. Hearn, 132 App. Div. 207; Concord Oil Corp. v. York Heat Serv., 262 App. Div. 758; Tilden v. Gardiner, 25 Wend. 662; Cahill v. Hilton, 31 Hun 114, 96 N. Y. 675; Smith v. Lidgerwood Mfg. Co., 60 App. Div. 467; Keystone Coop. Grape Assn. v. Perdue, 265 App. Div. 1035; Honsberger v. Wilmot, 276 App. Div. 884; Gowthrop v. Leary, 9 Daly 353; Ayad v. American Foreign S.S. Corp., 9 Misc 2d 343.) VII. The act of State doctrine precluded the court from entertaining jurisdiction over the action. To entertain jurisdiction would constitute judicial intrusion upon the powers of the executive branch of our Federal Government. (Underhill v. Hernandez, 168 U. S. 250; Oetjen v. Central Leather Co., 246 U. S. 297; United States v. Pink, 315 U. S. 203.) VIII. The court was in error as a matter of law and fact in holding that respondents failed to prove their affirmative defenses. Judgment should have been awarded in respondents’ favor. IX. The obligation under the contract, if any, was discharged by the supervening act of the sovereign. (Louisville & Nash ville R. R. v. Mottley, 219 U. S. 467; Knox v. Lee, 12 Wall. [79 U. S.] 457.) X. The draft was procured by false representations of material facts in violation of Cuban law. (Wallenstein v. Deak & Co., 26 Misc 2d 28.) XI. The transaction violated Cuban currency regulations and is void and unenforcible. (Holzer v. Deutsche Reichsbahn-Gesellschaft, 277 N. Y. 474; Perutz v. Bohemian Discount Bank, 304 N. Y. 533; Eck v. N. V. Nederlandsch Amerikaansche Stoomvart Maatschapij, 183 Misc. 691.) XII. The contract is unenforcible by virtue of an international agreement and an act of Congress. (Southwestern Shipping Corp. v. National City Bank, 6 N Y 2d 454; Banco Do Brasil v. Israel Commodity Co., 29 Misc 2d 229, 13 A D 2d 652; Kraus v. Zivnostenska Banka, 187 Misc. 681.) XIII. The draft is unenforcible because it was not presented for collection within three months from its date and because it was not protested for nonpayment and no notice of dishonor was given. (Auerbach v. Barrett, 214 App. Div. 279.) XIY. The denial of respondents’ motion to strike the case from the calendar constituted an abuse of discretion. (Van Blarcom v. Rogers, 11 A D 2d 678; McGuire v. Pick, 8 A D 2d 800.)

Opinion:
Per Curiam.
The important issues in this action by a nonresident against a foreign corporation are whether defendants' motion to dismiss the complaint should have been granted on the ground that the court lacked jurisdiction, and on the further ground of failure to establish a cause of action.
The jurisdictional question involves the application of subdivision 3 of section 225 of the General Corporation Law, i.e., did the cause of action pleaded arise within this State? The Appellate Division found that the cause of action, if any, arose in Cuba, and accordingly reversed a judgment of Special and Trial Term in favor of plaintiff and dismissed the complaint. We think the Appellate Division erred in resting its jurisdictional determination on the cases of Amsinck v. Rogers (189 N. Y. 252) and Swift & Co. v. Bankers Trust Co. (280 N. Y. 135) which dealt with problems of choice of law. Whether jurisdiction exists under section 225 must be determined upon the facts pleaded without regard to applicable -law... Fairly read, v the complaint alleges a wrong occurring within New York.
Plaintiff purchased from Industrial in Cuba a United States currency draft upon the Colonial Trust Company in New York City, payable to her order. She paid the equivalent amount of Cuban pesos and all charges and taxes incident to the purchase and transfer of dollars. Industrial later repudiated its agreement by directing Colonial not to pay the draft when presented.
• Defendants' answers admit that Industrial issued the draft and that it was not paid upon presentment but otherwise deny the allegations of the complaint. They also plead the affirmative defenses of lack of jurisdiction of the subject matter, fraud and illegality under Cuban law.
On the facts of this case, i.e., a draft payable to the person who purchased it, there is a necessarily implied promise by the drawer not to affirmatively interfere with the contemplated performance of the drawee. (Cf. Schweitzer v. Fargo, 255 N. Y. 60, 64.) Nothing contained in the cases relied upon by the Appellate Division, which deal with choice of law, militates against the conclusion that the order countermanding payment took effect upon- its receipt by Colonial in New York, and, unless excused, gave rise to a cause of action here under section 225. Upon the point that a cause of action arises where that is done which should not be done, Hibernia Nat. Bank v. Lacombe (84 N. Y. 367) is still sound law. Special and Trial Term, therefore, properly took jurisdiction of this action, and, in our opinion, for reasons somewhat different from those there relied upon, properly disposed of the affirmative defenses raised by defendants. We are of the further opinion that remission to the Appellate Division for the purpose of passing on the affirmative defenses and for review of the questions usually involved in an exercise of discretion is unnecessary.
Plaintiff's failure to present the draft before it became overdue affords no defense to this action under New York law, which here governs questions of presentment (Swift & Co. v. Bankers Trust Co., 280 N. Y. 135, supra). Not only is no question of damage to a drawer through a drawee's insolvency involved but, under section 139 of the Negotiable Instruments Law, defendant, having countermanded payment, waived presentment on the ground that it had no right to expect that the drawee would pay.
As we read the clearly stated Cuban currency regulations existing at the time of this transaction, plaintiff's written application for the sale of the draft was in full compliance with them. The alleged falsity of plaintiff's declaration in the application that the transaction was for a required commercial purpose, i.e., investment in realty in the United States, has not been and now cannot possibly be demonstrated, since the funds were denied plaintiff after her arrival in the United States. It is clear, moreover, that no attempted confiscatory act of the Cuban government, thereafter enacted, could diminish plaintiff's rights in respect to Industrial's funds at all times located in New York. The case of United States v. Pink (315 U. S. 203) has no application here. There being no present policy of the executive branch of the United States Government requiring acquiescence in the confiscatory acts of the Cuban government, the well-known policy of this State against such acquiescence is operative. (Vladikavkazsky Ry. Co. v. New York Trust Co., 263 N. Y. 369; Moscow Fire Ins. Co. v. Bank of New York, 280 N. Y. 286.)
Defendants moved for a postponement of trial and, later, for a new trial, in order to obtain expert witnesses to testify (1) as to the effect of Cuban decrees which we deem irrelevant, and (2) as to the effect of Cuban parol evidence rule which, it is asserted, would hold this transaction to be a completed sale of a. draft— which conclusion we assume, but find not to affect the result. The denial of defendants' motion by Special and Trial Term does not, therefore, in any way prejudice defendants.
Under the view we take of this case, the proof offered by defendants through those witnesses could not alter our disposition of the questions of law which we decide on the admitted facts and documentary proof without resort to any parol evidence. Defendant Industrial having taken plaintiff's pesos and having exacted the full commission and taxes on the transaction was under a duty to refrain from doing anything which would tend to prevent the payment of the draft issued by it to the plaintiff purchaser. The countermand of payment issued to Colonial in New York constituted a wrong and breach of contract committed by Industrial in New York against plaintiff.
The judgment below should be reversed and that of the Supreme Court reinstated, with costs in this court and in the Appellate Division.