Opposition — Grindlay's Bank (Uganda), Ltd. v. J. Zeevi & Sons, Ltd.

IN THE

Supreme Court of the United States

OctTosBeR Term 1975

No. 75-64

GrinpLays’s Bank (Ucanpa) Limitep,

Petitioner,

v.

J. ZEEvI anD Sons, Lrp., Gap Zeevi1, Rivka Zeevi, GAaLILua

Pact and En1a Meuzer, copartners doing business as

J. Zeev1 & Sons,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS OF THE STATE OF NEW YORK

BRIEF FOR RESPONDENTS IN OPPOSITION

Harry H. Lipsie,

Pamrit A. Riposanv and

f Epmunp B. HENNEFELD,

Counsel for Respondents,

375 Park Avenue,

New York, N.Y. 10022.

August 4, 1975.

MEILEN PRESS INC. —N. Y. C. ie 219

TABLE OF CONTENTS

PAGE

SRI Tar IIIT snssrreescstuinnscsistnsniiaeeviieininsnicininestanentinieninennstineiiaiates 1

Constitutional Provisions, Treaty and Statutes In-

E celmereiceminneicnanninnes +

SUIUINIIEN sccinssiimeniapeuitsiebiibibdiliaiatiniliniaieteiitiniindbsitainiigptnanidiians +

SEITE -sicsecisonciesdteniaideneniedaipniinptndaitecitiaionedinnibibmpains 7

I. The Decision Below is Clearly Correct ................ 8

II. There Is No Conflict of Decision -........................ 19

III. There Is No Important Question of Federal

SIT . sscccthiatscsadbieabateiadisietabidensideiaindiaiatvenanseseeseuiinntasebinin 19

RE sicsiceetscesinttsiniananeesduscieaihinlabienesinanelinnsteiinbietbinieiecnsiannantin 20

APpPENDIX—

Respondents’ Appendix 1—

Letter dated April 17, 1972 addressed to the

Manager of the First National City Bank,

8 AES I ee A ae ON SO SC la

Respondents’ Appendix 2—

Letter dated May 5, 1972 addressed to the Man-

ager of The Workers Bank, Haifa, Israel ........ 3a

il

OTHER AUTHORITIES

Cases: PAGE

Bank of America v. Whitney Bank, 261 U.S. 171 (1923) 13

Burt Randolph Sugar and Wrestling, Inc. v. Curtis

Circulation Co., 377 F. Supp. 1055 (S.D. N.Y. 1975) 14

Deutsche Bank v. Humphrey, 272 U.S. 517 (1926) —...... 18

Erb v. Banco di Napoli, 243 N.Y. 45 (1926) 0.000... 14

Fuentes v. Shevin, 407 U.S. 67 (1972) ~.....22..2000.2.22..-2-- 14

Gonzalez v. Industrial Bank (of Cuba), 12 N Y¥ 2d 33,

BD CT) aeneccscssccsinsisencissisintinieninreniaima 17,19

Hanson v. Denckla, 357 U.S. 235 (1958) -0000000 ee. 6n, 13

Harris v. Balk, 198 U.S. 215 (1905) ..................0........... 13

Hibernia Nat. Bank v. Lacombe, 84 N.Y. 367 _.............. 11

Home Insurance Co. v. Dick, 281 U.S. 397 (1930) ........ 18

International Shoe Co. v. Washington, 326 U.S. 310

CTDGB) <.nccscaniensccsinnsiivitiatisinassaassaniasammmasa ia 13

Lauritzen v. Larsen, 345 U.S. 571 (1953) 00. 18

Louisville and Nashville Railroad v. Deer, 200 U.S.

DTG CR) aciecissiistessnssosnnasssusicnsscensnsseeenieneeeeeeee 13

McGee v. International Life Ins. Co., 355 U.S. 220

(TT) eeeonracinssscsecssosunisetovinenssieibanssaupanaiunantauuisasiaaenneeen 13

North Georgia Finishing, Inc. v. Di-Chem, Inc., No.

et) Eb |: | cnn 14

Oetjen v. Central Leather Co., 246 U.S. 297 (1918) ........ 18

iii

PAGE

Pennington v. Fourth National Bank, 243 U.S. 269,

init snnesiserensinmmnennmaneonecoqnens 13, 14, 17

Pennoyer v. Neff, 95 U.S. 714 (1877) 20.0... eeeeeeeeeeeeeeeee 13

Security Bank v. California, 263 U.S. 282, 285, 287

Re ae 13,17

Simonson v. International Bank, 14 N.Y. 2d 281, 285

casa canissepansmnesonscannnanens 9,10

Underhill v. Hernandez, 168 U.S. 250 (1897) ................ 16

United States v. Belmont, 301 U.S. 324 (1937) 00.0000... 17

United States v. Pink, 315 U.S. 203 (1942) —2000000.... 17

Rules and Statutes:

Business Corpora‘*ion Law:

natin iniccenznenssetonannaotecesceseres 2n, 9, 10

Bretton Woods Agreement, 60 Stat. 1401 et seq.,

specifically Article VIII, Sections 2(a), 2(b), 3

3, 14, 15, 16

New York Civil Practice Law and Rules Article 62:

a ssnesestnentnasioned 8,17

EEE .

a ssentnanennnenes 8

New York Banking Law:

§200-b(2), subd. (a)(e) and (d) 0.0.0.0... 2,9, 10,11, 12

New York General Corporation Law, Section 225... 9

IN THE

Supreme Court of the United States

Octrosper Term 1975

No. 75-64

GrinpLays’s Bank (Ucanpa) Limirtep,

Petitioner,

J. Zeevi anp Sons, Lrp., Gap Zervi, Rivka Zeevi, GALILLa

Pact and Ena Meuzer, copartners doing business as

J. Zzev1 & Sons,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS OF THE STATE OF NEW YORK

BRIEF FOR RESPONDENTS IN OPPOSITION

Questions Presented

Respondents disagree with petitioner’s statement of the

questions sought to be presented. Respondents’ difference

arises from the fact that the petition, in purporting to

state the questions presented, assumes by implication, and

in some instances affirms outright, facts which the record

does not support. An additional difference is that the

petition purports to raise a number of questions beyond

those raised and determined in the state courts.

2

Respondents submit the following as a true statement of

the questions presented:

1. On the threshold issue raised by petitioner of sub-

ject-matter jurisdiction in the state court, that jurisdiction

at bar derives from New York Banking Law §200-b(2),

subd. (a)(c) and (d).* Banking Law §200-b(2) authorizes

an action to be maintained in the state courts against a

foreign banking corporation by another foreign corpora-

tion or a nonresident, in the following specified cases among

others: (1) where the contract sued upon was “to be per-

formed” within the state; (2) where the cause of action

“arose” within the state; or (3) where the action “is based

on a liability for acts done” within the state by the defen-

dant foreign banking corporation, Any one of these enu-

merated grounds for subject-matter jurisdiction is alone

sufficient.

The New York Court of Appeals in the present case held

squarely that the cause of action sued upon “arose” within

the State of New York. It further found that the provision

of the contract of irrevocable letter of credit sued upon

called for performance by reimbursement in New York, as

“an integral part of that for which the parties bargained”,

and not as a “discrete obligation”. It similarly found that

the liability sued upon was for acts done within the state

by the petitioner foreign banking corporation. These were

all questions having to do with the correct interpretation

as a matter of state law of the state statutes before the

court, as to which questions the highest state court’s de-

terminations based on those statutes would he final and

conclusive. The only contentions that might then survive

the holdings by the New York Court of Appeals with re-

spect to those state law matters was petitioner’s claim, if

* Also, from Business Corporation Law, §1314(b), similarly

worded.

3

properly advanced, that the state statutes in question vio-

lated the provisions of the United States Constitution,

specificaily, the Due Process clause of the Fourteenth

Amendment. Assuming that that issue had been properly

raised in the state courts, that would be the narrow scope

of the question of subject-matter jurisdiction that might

then be raised in this Court.

2. The New York Court of Appeals, faced with the

threshold question of “choice of law” as the basis for its

decision on the merits, chose the New York law over the

Uganda law as the law that “should be accorded paramount

control over the legal issues presented.” Though petitioner

seeks to cite that as a questio. presented for possible re-

view by this Court, respondents submit that that is purely

a question of state and not of federal law.

3. The New York Court of Appeals held that enforce-

ment of the letter of credit contract in suit did not in any

way violate the Bretton Woods Agreement, 60 Stat. 1401

et seq., specifically Article VIII, Section 2(b) thereof.

The question presented is whether on the facts at bar this

determination was correct.

4. The New York Court of Appeals ruled that the act of

state doctrine invoked by petitioner did not apply on the

facts of this case, since here the debt attached was “located”

in the territorial limits of the State of New York, and not

within the territorial limits of the Country of Uganda. The

question is whether this determination by the Court of

Appeals was correct, since decision under the act of state

doctrine turns precisely on the question whether the prop-

erty which will be affected by the judgment is within the

territory of the foreign government or within the terri-

torial limits of the forum state.

Constitutional Provisions,

Treaty and Statutes Involved

Respondents do not differ with petitioner as to the

Constitutional Provisions, Treaty and Statutes involved,

except that it may be doubted that petitioner, before the

state courts or even in the present petition, has raised any

question of the supposed unconstitutionality of the cited

provisions of the New York Banking Law or Business

Corporation Law as enacted or applied.

Statement

Respondents disagree with the statements of the case

contained in the petition. Respondents submit that the

following is a correct statement of the facts as they appear

in the record:

On March 24, 1972, Hiram Zeevi & Company (Uganda)

Ltd., an Israeli corporation, deposited with Grindlays

Bank (Uganda) Ltd., local currency valued at approxi-

mately $406,846.80 (R. 109),* for the purpose of establish-

ing a fund upon which respondent, J. Zeevi and Sons, an

Israeli copartnership, could draw money (R. 110). On the

same date, respondent opened its irrevocable credit No.

110/84 for $406,846.80 in favor of that copartnership and

issued a letter of credit acknowledging that it had opened

the irrevocable credit for ‘$406,846.80 (U.S. dollars four

hundred and six thousand eight hundred and forty-six, cents

eighty)” (A29), and providing that the credit amount be

* Numbers in parentheses prefixed by the letter “A” refer to

pages of the appendix to the petition. Numbers in parentheses

prefixed by the designation “Resp. App.” refer to pages of the

appendix to this brief in opposition. Numbers in parentheses

prefixed by the letter “R.” refer to pages of the printed record

in the state court.

5)

available against clean drafts drawn on the depositor in

equal amounts of $40,684.68 commencing April 15, 1972,

and monthly thereafter (ibid). The letter of credit con-

cluded with these provisions (A30) :

“We guarantee the payment of drafts drawn in con-

formity with the terms and conditions stated. * * *

The negotiating bank is authorized to claim reim-

bursement for their payments on the due dates listed

above from First National City Bank, 399 Park Ave-

nue, New York to the debit of our aceount with them

together with a certificate to the effect that all terms

of the credit have been complied with and the relative

drafts have been air-mailed to us.”

On April 4, 1972, petitioner advised its New York agent,

First National City Bank, above referred to, of the issu-

ance of the letter of credit numbered 110/84 (R. 167).

Thereafter, on April 14, 1972, by cable dated and received

April 14, 1972, and confirmatory letter dated April 17, 1972,

petitioner advised its New York agent, the First National

City Bank, that the Government of Uganda had instructed

it to “cancel” the letter of credit “No. 110/84 dated 24-3-

1972 favouring J. Zeevi & Sons Haifa Israel for US

406846-80”, and directed the First Nationa! City Bank

“not to effect payment of drawing thereunder” (Resp.

App. 1).

A letter dated May 5, 1972 from petitioner stated (Resp.

App. 2):

“In the circumstances we have had no option but to

instruct our agents in New York not to effect reim-

bursement of the drawing due to be made on 15.5.1972

without further reference to us.”

6

On December 28, 1972, Chemical Bank presented to the

First National City Bank for reimbursement ten drafts

each for $40,684.68 totalling $406,846.80 drawn under letter

of credit 110/84, and on January 11, 1973, Chemical wrote

to the First National City Bank that “we are again pre-

senting our domestic collection R92049 in the amount of

$406,846.80 under irrevocable credit 110/84, reimbursable

on your good selves * * * as per the terms and conditions

thereof.” (R. 56). On January 19, 1973, the First National

City Bank returned the subject drafts unpaid to Chemical

(R. 58).

The present action by the copartnership, the beneficiary

of letter of credit 110/84, and by J. Zeevi and Sons, Ltd.,

the assignee of that partnership, was commenced by an

order of attachment issued out of the Supreme Court,

New York County, on November 24, 1972, service of a

copy of that order on the First National City Bank in New

York City as garnishee, and levy pursuant to the order

made by the New York City Sheriff upon funds of peti-

tioner on deposit with the First National City Bank (R. 1).

The obtaining thereby of in rem or quasi in rem* jurisdic-

tion against petitioner was completed by service by pub-

lication of a copy of the summons and complaint in the

action upon petitioner pursuant to order of the Court

issued for such service by publication.

Petitioner thereafter moved to dismiss the complaint

for claimed lack of subject-matter jurisdiction (R. 7-13).

On that motion, petitioner raised no question as to the

legal sufficiency of the levy of attachment itself, which

constituted the basis for the underlying in rem jurisdic-

*We shall follow the practice indicated by this Court in

Hanson v. Denckla, 357 U.S. 235 (1958), footnote p. 246, and for

“eonvenience of terminology” use “tn rem” in lieu of “in rem” and

“quasi in rem.”

7

tion, and no question as to the legal sufficiency of the

service by publication made pursuant to order of the Court

issued therefor. Therefore, these questions as to the legal

sufficiency, as such, either of the levy under the order of

attachment, or the subsequent service of process by pub-

lication, must be deemed outside the scope of the present

petition.*

The motion to dismiss for supposed lack of subject-

matter jurisdiction was duly denied by the New York

County Trial Term, and that denial thereafter on June 21,

1973, duly affirmed by the Appellate Division, First

Judicial Department, and subsequently by the New York

Court of Appeals (A15-A17, R. 195-196, A1-A9).

Thereafter, the Supreme Court, New York County,

granted on motion of plaintiff J. Zeevi and Sons, Ltd.

partial summary judgment on the first ecafise of action in

the complaint (that based on irrevocable letter of credit

110/84), and directed entry of judgment in favor of that

plaintiff. The Appellate Division of the Supreme Court

unanimously affirmed, and on subsequent appeal, the New

York Court of Appeals likewise unanimously affirmed

(A1-A12).

Argument

The decision below is clearly correct.

The federal questions surviving the determination of

the New York Court of Appeals are few in number and

most narrow in scope. None involve a decision by the

state courts determining a federal question of substance

not heretofore decided by this Court. None involve a

decision by the state courts in any way at odds with

* Notwithstanding, those questions will be treated in this brief

in opposition. See, pp. 13-14, infra.

8

applicable decisions of this Court. All present issves of

law already fully and conclusively adjudicated by this

Court and not warranting from any standpoint, whether

of public or private importance, review by this Court on

certiorari.

I.

The Decision Below is Clearly Correct.

A.

Petitioner contends in its petition as a threshold ques-

tion that the complaint should have been dismissed by the

state court for lack of subject-matter jurisdiction (Pet. 3,

12-16). But this, as shall be shown, was solely a question

of state law and not of federal law.

New York Civil Practice Law and Rules provides in

Article 62, Sections 6201 et seq., for attachment of a

foreign corporation’s property within the territorial limits

of the state as a basis for obtaining jurisdiction over that

foreign corporation in rem (CPLR 6201). Section 6202

specifies a “debt” as a form of property that may be so

attached. Section 6213 provides for completion of the in

rem jurisdiction by service by publication upon the defen-

dant foreign corporation pursuant to an order of the

court obtained therefor.

At bar, all the foregoing was duly accomplished, and at

no stage of this litigation in the state courts did petitioner

raise any question as to the legal sufficiency of the steps

taken by respondents to obtain such in rem jurisdiction in

the manner provided for in the state statutes.

However, the State of New York, acting through its

legislature, has chosen to limit itself in the matter of the

jurisdiction it will exercise where a litigation involves a

defendant foreign banking corporation or foreign non-

banking corporation sued by another foreign corporation

or a nonresident person. Thus, Subdivision 2 of section

200-b of the Banking Law, entitled ‘‘Actions maintained

against foreign banking corporation; residents; foreign

corporations, foreign banking corporations as nonresi-

dents,’’ provides in part:

“2. Except as otherwise provided in this chapter,

an action * * * against a foreign banking corporation

may be maintained by another foreign corporation or

foreign banking corporation or by a nonresident in the

. following cases only:

(a) where the action is brought to recover damages

for the breach of a contract * * * to be performed

within this state * * *;

(c) where the cause of action arose within this state;

(d) where the action is based on a liability for

acts done within this state by a foreign banking corpo-

ration; ° ° °.”

Subdivision (b) of section 1314 of the Business Corpora-

tion Law contains almost identical language. (Business

Corporation Law §1314(b), in turn, was derived from New

York General Corporation Law, Section 225, having sub-

stantially similar provisions.)

It is to be noted that Banking Law 4200-(b)(2) and

Business Corporation Law §1314(b) do not come in‘o opera-

tion unless and until jurisdiction sufficient to satisfy due

process requirements already exists, either in personam or

in rem, (See, on this precise point, Simonson v. Interna-

tional Bank, 14 N.Y. 2d 281, 285 (1964), where the under-

lying jurisdiction was lacking either in personam or in

rem.) Then, even where due process jurisdiction exists,

10

the state sovereignty, acting through its state courts in

interpretation of the two statutes involving suits against

foreign corporations above referred to, decides whether

or not it will entertain the litigation in its courts. This,

however, is a matter of self-imposed restraint and self-

limitation, reflecting solely New York State’s own policy

“against lending its courts to the resolution of disputes

between non-resident parties”, except as provided in the

statute (Simonson v. International Bank, 14 N.Y. 2d 281

[1964], at p. 285). It is thus not in the least a question

of federal constitutional law, whether arising under the

federal Due Process clause or any other.

When, therefore, in the case at bar,"the New York Court

of Appeals, interpreting Banking Law §200-b(2) and Busi-

ness Corporation Law §1314(b), held that the facts estab-

lished a cause of action arising within the state, and that

on that basis the action would be permitted to be main-

tained, it was deciding a question solely of state law ind

not at all a question of federal law, specifically, not a

question arising under the federal Due Process clause.

Before the state courts, petitioner had argued merely

that respondent did not bring its suit within the provisions

of Banking Law 4§200-b(2) (a)(c) and (d) and Business

Corporation Law §1314(b), contending (a) that the “al-

leged cause of action did not arise in New York”, (b) that

the contract of guarantee “was not to be performed in

New York”, (c) that the First National City Bank account

“was not designated as the source of payment to plaintiff”,

and (d) that it was “not true” that the claim in suit was

“predicated on a liability for acts done within this state”

by petitioner (Pet. Reply Brief in New York Court of

Appeals, pp. 2-5). The New York Court of Appeals over-

ruled all these contentions, however, holding as had the

Appellate Division and Trial Court previously, that the

facts of the case established a cause of action “occurring

—_—e

11

within New York” within the meaning of the above-quoted

Banking Law Section 200-b(2)(c) (A5). Thus, on this

precise point the Court of Appeals found that in irrevo-

cable credit 110/84,

“defendant contracted to pay upon compliance with its

terms (Lamborn v. National Park Bank of New York,

supra, at p. 525) and defendant’s order countermand-

ing payment by cable and letter took etfect upon receipt

by Citibank in New York and then gave rise to a cause

of action here (Gonzalez v. Industrial Bank (of Cuba),

12 N Y 2d 33, 38). Citing Hibernia Nat. Bank v. La-

combe (84 N.Y. 367), this court stated in Gonzalez

that ‘a cause of action arises where that is done which

should not be done.’ In this instance, New York was

the locus of repudiation, whereas it should have been a

site of payment.”

This ruling was, of course, fully supported by the record

(see, pages 4-6, supra).

Overruling petitioner’s contention made before it that

the provision respecting reimbursement by the First Na-

tional City Bank in New York was a wholly separate,

“eratuitous” and inessential part of the irrevocable letter

of credit, the Court of Appeals stated (A5-A6):

“The provision respecting reimbursement in New

York was an integral part of that for which the parties

bargained, it was not a discrete obligation. The sep-

arate character of defendant’s undertakings is negated

by its guarantee of payment of drafts. The value to

those in commerce of having a place at a financial

capital where funds can be obtained on a simple letter

of credit, away from a relatively small bank in an un-

developed country of uncertain political stability, is

12

obvious. The reimbursement provision is quite essen-

tial, economically, to the total arrangement since a

promisee would be unwilling to present a draft based

on a letter of credit, in dollar terms, to a commercial

house in the United States and then be required to

wait a relatively inordinate time for the money to

come from a remote source.”

In another portion of its opinion, the Court stated

(A6-A7) :

“New York * * * is a financial capital of the world,

serving as an international clearinghouse and market

place for a plethora of international transactions,

such as to be so recognized by our decisional law (Inter-

continental Planning v. Daystrom, supra, at pp. 383-

384). A vast amount of international letter of credit

business is cusomarily handled by certain New York

banks whose facilities and foreign connections are par-

ticularly adaptable to this field of operation (34 N Y

Jur., Letters of Credit, 410, p. 427). The parties, by

listing United States dollars as the form of payment,

impliedly accepted these facts and set up procedures

to implement their trust in our policies. In order to

maintain its preeminent financial position, it is im-

portant that the justified expectations of the parties

to the contract be protected * * *.”

Further, on the question arising under Banking Law

§200-b(2)(c) as to where the cause of action “arose”, the

Court of Appeals stated (A6):

“When defendant, the issuer, repudiated the letter

of credit before presentment of the draft and before

expiration of the letter, it was guilty of an anticipatory

breach of contract and became liable for damages

13

caused the beneficiary (Foglino € Co. v. Webster, 217

App. Div. 282, 297-298, mod. on other grounds, 244

N.Y. 516; Doelger v. Battery Park National Bank, 201

App. Div. 515, 521-522; Mendelson v. Wechsler, 203

N.Y.S. 197; 34 N Y Jur., Letter of Credit, §38; see

Uniform Commercial Code, §5-115).”

Such repudiation took place when petitioner notified

First National City Bank, its “agent” in New York City

to effect reimbursement, not to make payments on the

drafts as it had previously been “advised” to do (R. 167).

The foregoing disposes of all of the following cases cited

by petitioner (pp. 13-16), each and every one of which

involved claimed violation of the Due Process clause based

on the failure, or claimed failure, to obtain the necessary

underlying jurisdiction either in personam or in rem:

Hanson v. Denckla, 357 U.S. 235 (1958); McGee v. Inter-

national Life Ins. Co., 355 U.S. 220 (1957); International

Shoe Co. v. Washington, 326 U.S. 310 (1945); Bank of

America v. Whitney Bank, 261 U.S. 171 (1923); Harris v.

Balk, 198 U.S. 215 (1905). Those cases, classic jurisdiction

controversies arising under the Due Process clause, can-

not be the least authority in the present situation where

the basic due process jurisdiction, ix rem in character, has

indisputably been obtained in the time-honored and case-

sanctioned manner through attachment upon defendant’s

property situated within the territorial limits of-the forum

state, followed by service of process by publication in the

manner provided for by statute. Pennoyer v. Neff, 95 U.S.

714 (1877); Harris v. Balk, 198 U.S. 215 (1905) ; Louisville

and Nashville Railroad v. Deer, 200 U.S. 176 (1906); Pen-

nington v. Fourth National Bank, 243 U.S. 269, 271, 272

(1917): Security Bank v. California, 263 U.S. 282, 285, 287

(1923). As pointed out in the Pennington case, supra,

14

moreover, bank accounts are precisely “the species of

property which courts of the several States have most

frequently applied in satisfaction of the obligations of

absent debtors.” (243 U.S. at p. 271).

Erb v. Banco di Napoli, 243 N.Y. 45 (1926), cited by

petitioner (p. 15), has, of course, no relevance whatever

since the present suit is against petitioner and not against

the First National City Bank, which as depositary bank

is the analogue of the Banco di Napoli in the Erb case.

The presen: case is against petitioner alone, the First

National City Bank’s sole connection being that it is the

debtor of petitioner with respect te the debt (bank deposit)

locally attached to obtain the basis for an in rem jurisdic-

tion.

Petitioner has also cited Fuentes v. Shevin, 407 U.S. 67

(1972}, North Georgia Finishing, Inc. v. Di-Chem, Inc.,

No. 73-1121 (1975), not officially reported, and Burt Ran-

dolph Sugar and Wrestling, Inc. v. Curtis Circulation Co.,

377 F. Supp. 1055 (S.D. N.Y. 1975), but all three of those

eases involved attacks on the respective attachment and

replevin statutes. At bar, at no time has petitioner at-

tacked in the New York courts the New York attachment

statute under which levy and attachment of property con-

sisting of a debt was effected in order to constitute a basis

for in rem jurisdiction. Petitioner’s sole attack in the

New York courts has been on “subject-matter jurisdiction”

(R. 7-13), specifically, that aspect of it that arises when

the state court, construing the pertinent state statute, ap-

plies the state’s own policy regarding lending its courts to

the determination of disputes between nonresident parties.

B.

On the question whether the decision by the New York

Court of Appeals in any way contravened the Bretton

15

Woods Agreement, 60 Stat. 1401 et seq. (thus giving rise

to a question under the Federal Supremacy Clause), it is

evident that it does not.

The Bretton Woods Agreement (60 Stat. 1401 et seq.)

provides in relevant part under Section 2(b) of Article

VIII:

“Exchange contracts which involve the currency of

any member and which are contrary to the exchange

control regulations of that member maintained or im-

posed consistently with this Agreement shall be un-

enforceable in the territories of any member.”

The New York Court of Appeals correctly ruled that the

within irrevocabie ietter of credit, even when read in its

broadest sense, did not fall within the scope of the above-

quoted provision, the one solely relied upon by petitioner,

for the reason that the letter of credit was “not an exchange

contract.” (AQ).

This conclusion is fortified by the fact that at the time

the letter of credit was issued, every legal requirement of

Uganda then in force had necessarily been complied with

and the document was proper and valid in every regard.

Significantly, ten days after the March 24, 1972 issuance,

and on April 4, 1972, petitioner itself advised the First

National City Bank in New York City that the letter of

eredit had been properly issued in favor of respondent

Zeevi (R. 167). Such advice, so given on that date, neces-

sarily meant that the letter of credit had been in all respects

validly issued and was valid as of such April 4th date, and

was hence to be complied with as a valid obligation then

outstanding. After that, the irrevocable letter of credit,

legal under the laws of Uganda on the date issued, had to

be “cancelled” (Resp. App. 1). Such cancellation did not,

in fact, take place until April 17, 1972, or at the earliest

April 14, 1972 (Resp. App. 2).

16

Unless the irrevocable letter of credit was lawful when

issued (under the Bretton Woods Agreement, or any other

treaty or statutory requirement), petitioner would have

been perpetrating the grossest kind of fraud on respon-

dents, taking Hiram’s Sh. 3,000,000 and giving in return a

tainted, and therefore actually nonexistent and wholly

worthless “irrevocable” credit.

The record shows that Bretton Woods was not referred

to in any of the correspondence preceding suit as a ground

for cancellation (R. 68, 150-153, 167, 174). Bretton Woods

itself specifically prohibits “discriminatory currency ar-

rangements or * * * practices.” (60 Stat. 1411, Sect. 3; see,

also, ibid, §§2(a) and 2(b). At bar, the attempted action

of President Amin, directed solely at Israel and Israeli

nationals (for anti-Semitic motives which the record abun-

dantly makes clear—R. 38-41), is nothing if not discrimi-

natory. It is astonishing that petitioner should be claiming

that the within acts taken by the Uganda Government were

“imposed consistently with” and are within the protection

of the Bretton Woods Agreement, an agreement designed

and adopted precisely to bar discriminatory practices.

C.

Petitioner contends that the decision of the New York

Court of Appeals was contrary to the thoroughly accepted

act of state doctrine as enunciated in numerous decisions

of this Court.

There is no dispute or controversy as to the scope of

that dectrine, it having been early and authoritatively

enunciated in Underhill v. Hernandez, 168 U.S. 250 (1897),

as follows:

“Every sovereign State is bound to respect the inde-

pendence of every other sovereign State, and the courts

17

of one country will not sit ou judgment on acts of the

government of another one within its own territory.”

(Fuuuer, Ch. J., 168 U.S. at page 252).

The doctrine is not applicable here because this case in-

volves the debt owing by the First National City Bank to

petitioner, the attachment of which debt provided the basis

for in rem jurisdiction exercised by the New York courts

under the state statute, CPLR 446201 et seq., for such

cases made and provided. That debt is “located” within

the territorial limits of the State of New York, and not

within the territorial limits of the country 6f Uganda, since

New York, and not Uganda, alone has the power to enforce

and collect it. Security Bank v. California, supra, 263 U.S.

282, 285 (1923); Pennington v. Fourth National Bank,

supra, 243 U.S. 269 (1917). Conclusive on the point that

New York has such power, is that in accordance with the

New York statute covering such matters, the debt has been

actually attached in New York and is presently in custodia

legis in the State of New York awaiting the ultimate dis-

position of this case.

Petitioner cites United States v. Pink, 315 U.S. 203

(1942) and United States vy. Belmont, 301 U.S. 324 (1937),

but those cases are wholly distinguishable, being instances

of actual conflict between federal and state policy where

the federal government in the proper conduct of its foreign

relations has specifically adopted a public policy vis-a-vis

a foreign government with which federal policy the pur-

ported state policy is in conflict. Concerning any supposed

federal policy intimated by petitioner, what the New York

Court of Appeals stated in the wholly opposite case of

Gonzalez v. Industrial Bank (of Cuba), supra, 12 N.Y. 2d

33 (1962), is fully applicable (Per Curiam, p. 39): “There

being no present policy of the executive branch of the

United States Government requiring acquiescence in the

18

confiscatory acts of the Cuban Government, the well-known

policy of this State against such acquiescence is operative.”

Petitioner cites in its petition (pp. 20-21) Lauritzen v.

Larsen, 345 U.S. 571 (1953), and Home Insurance Co. v.

Dick, 281 U.S. 397 (1930), Deutsche Bank v. Humphrey, 272

U.S. 517 (1926), and Oetjen v. Central Leather Co., 246

U.S. 297 (1918), but these cases are all so clearly inapplica-

ble as not to require comment.

D.

Petitioner contends that the choice by the New York

Court of Appeals of the New York Law over the Uganda

Law in determining the merits of the case violates the

federal law, specifically, the Due Process clause of the

Fourteenth Amendment.

It is submitted, however, that as has already been indi-

cated (page 3, supra), the correct choice of law by the

forum state is not at all, and never has been, a question

arising under the federal constitution, Due Process clause

or any other. The considerations of state law the Court of

Appeals had in mind in choosing the New York Law over

the Uganda Law in arriving at its decision on the merits,

are well stated in its opinion, as follows (A6):

“We come now to the question of the choice of law.

‘(T]he rule which has evolved clearly in our most re-

cent decisions is that the law of the jurisdiction having

the greatest interest in the litigation will be applied

and that the facts or contacts which obtain significance

in defining State interests are those which relate to

the purpose of the particular law in conflict’ (Inter-

national Planning v. Daystrom, 24 N.Y. 2d 372, 382).

New York has an overriding and paramount interest

in the outcome of this litigation. * * * Since New York

Pease cane catateencten cnet a

19

has the greatest interest and is most intimately con-

cerned with the outcome of this litigation, its laws

should be accorded paramount control over the legal

issues presented (cf. Auten v. Auten, 308 N.Y. 155,

161).”

II.

There Is No Conflict of Decision.

Petitioner has failed totally to point to any such conflict,

or supposed conflict, of decision.

III.

There Is No Important Question of Federal Law.

The few, if any, questions of federal law that have sur-

vived the New York Court of Appeals’ determination have

been repeatedly settled by decisions of this Court in a

manner to leave their answers in no doubt, and entirely

opposed to petitioner’s present contentions.

The facts themselves are sufficiently unique and special

as to present a situation not likely to recur, at least in any

form of federal question. The case of Gonzalez v. Industrial

Bank (of Cuba), supra, 12 N Y 2d 33 (1962), shows amply

that such situations, should they recur, are fully disposable

in accordance with the applicable state law, and not at all

drawing in a federal quest on of any reality or substance.

20

CONCLUSION

For the foregoing reasons, it is respectfully submitted

that this petition for a writ of certiorari should be denied.

Res; ectfully submitted,

Harry H. Lipsie,

Pamrit A. Rreosanu and

Epmunp B. HENNEFELD,

Counsel for Respondents,

375 Park Avenue,

New York, N.Y. 10022.

August 4, 1975.

APPENDIX

~~ Witte

la

Respondents’ Appendix 1

[EMBLEM ]

GrinDLavs Bank

(Ucanpa) 45 Kampata Roap

LIMITED P. O. Box 7131

(INCORPORATED IN UGANDA) Kampaua, UGANDA

TELEGRAMS NATIONAL KAMPALA

TevLex 61018

TELEPHONE 59011

MANAGER’s OFFICE

17th April, 1972

PRIVATE AND CONFIDENTIAL

The Manager,

First National City Bank,

399 Park Avenue.,

New York.

Dear Sir,

Our Letter of Credit No. 110/84 dated

24.3.1972 for U.S. $406846-80 favouring

J. Zeevi & Sons Haifa, Israel, advised

through Workers Bank, Haifa, Israel.

We confirm our telex messages dated 14th April, 1972

read as under :—

“GOVERNMENT OF UGANDA HAVE INSTRUCT-

ED US TO CANCEL OUR LETTER OF CREDIT

NO. 110/84 DATED 24-3-1972 FAVOURING J.

ZEEVI & SONS HAIFA ISRAEL FOR US $406846-80

ESTABLISHED THROUGH WORKERS BANK

2a

Respondents’ Appendix 1

HAIFA ISRAEL (STOP) DO NOT REPEAT DO

NOT EFFECT PAYMENT AGAINST DRAWING

US $40684-68 DUE TO BE PAID ON OR AFTER

15TH APRIL 1972 LETTER FOLLOWS”

“OUR TELEGRAM OF DATE REFERRING TO

CANCELLATION LETTER OF CREDIT NO. 110/

84 US $406846-80 ADD TESTWORD 23472 (STOP)

REFERENCE OUR INSTRUCTIONS NOT TO EF-

FECT PAYMENT OF DRAWING THEREUNDER

PLEASE ADD WORDS QUOTE WITHOUT REF-

ERENCE TO US FOR FURTHER INSTRUCTIONS

UNQUOTE”

Following the expulsion of all Israeli Nationals from

Uganda, the Bank of Uganda, on instructions from the

Uganda Government, have cancelled all existing permits

for purchase of Foreign Currency by Israeli Companies

which includes their approval for remittances under Let-

ters of Credit already opened by us. These instructions

have since been confirmed by the Minister of Finance.

In the circumstances we have had no alternative but to

instruct you not to reimburse drawings under the above

Letters of Credit but we are making effort to persuade

Government to permit us to honour commitments entered

into in good faith by this Bank.

We have arranged to discuss this matter with the Min-

ister of Finance and will advise you of the outcome.

Yours faithfully,

/s/ J.H.G. Henprie

MANAGER

(J.H.G. Henprte.)

3a

Respondents’ Appendix 2

[EMBLEM ]

GrinpLays Bank

(Ucanpa) 45 Kampaua Roap

LIMITED P. O. Box 7131

(INcorPoRATED IN UGANDA) Kampa.a, UGANDA

TELEGRAMS NATIONAL KAMPALA

TeLex 61018

TELEPHONE 59011

MANAGER’s OFFICE

5th May, 1972

PrivaATE AND CONFIDENTIAL

The Manager,

The Workers Bank.,

HatIPaA.,,

ISRAEL.

Dear Sir,

Our Letter of Credit No. 110/84 dated

24.3.1972 for U.S. $406846-80 favouring

J. Zeevi & Sons, Haifa, Israel.

We refer to our letter of the 17th April, 1972 and regret

to advise that we are still precluded by the Government of

Uganda, from making any payments under our above Let-

ter of Credit.

Representations have been made by us to the Ministry

of Finance and to the Bank of Uganda and we are advised

that the matter is still under consideration.

4a

Respondents’ Appendix 2

In the circumstances we have had no option but to in-

struct our agents in New York not to effect reimbursement

of the drawing due to be made on 15.5.1972 without further

reference to us.

Yours faithfully,

/s/ J.H.G. Henprie

MANAGER

(J.H.G. Henprie.)

¢.c.

Messrs. J. Zeevi & Sons.,

P. O. Box 10104,

HatrPa.,,

ISRAEL.