Principality of Monaco
COURT OF FIRST INSTANCE

R.681

Hearing of October 23, 1997

On the complaint of:

The company CS FIRST BOSTON CORPORATION, which has its head office in the city of NEW YORK, 55 East 52nd Street, State of New York in the United States of America, acting by its legal representative located for legal purposes at said address;

PLAINTIFF, having chosen as its address for the purposes of this action the offices of Maître Evelyne KARCZAG-MENCARELLI, a member of the Bar of the Court of Appeal of Monaco, and pleading through the said counsel;

on the one hand,

Against:

Mr. Morris FINLAY, living in Monaco, 21, avenue Princesse Grace;

DEFENDANT, having chosen as his address for the purposes of this action the offices of Maître Rémy BRUGNETTI, a member of the Bar of the Court of Appeal of Monaco, and pleading through the said counsel;

on the other hand,

THE COURT,

After having deliberated in conformity with the law;

In view of the complaint served by Maître Marie-Thérése ESCAUT-MARQUET, Bailiff, dated March 26, 1996, recorded;

In view of the reply by Maître Rémy BRUGNETTI, counsel for the defense on behalf of Morris FINLAY, dated November 8, 1996, and March 19, 1997;

In view of the rebuttal by Maître Evelyne KARCZAG-MENCARELLI, counsel for the company CS FIRST BOSTON CORPORATION, dated December 11, 1996;

Having heard Maître Evelyne KARCZAG-MENCARELLI, counsel for the company CS FIRST BOSTON CORPORATION, in its oral and written arguments;

Having heard Maître Rémy BRUGNETTI, counsel for Morris FINLAY, in its oral and written arguments;

Having heard the Public Prosecutor;

CONSIDERING THE FOLLOWING FACTS:

Whereas the following facts appear from the pleadings exchanged by the parties, in particular the complaint of March 26, 1996, and the reply submitted by the defendant dated November 8, 1996:

In order to perform various stock exchange transactions, Morris FINLAY had at his disposal in the books of the company CS FIRST BOSTON CORPORATION - hereafter "BANQUE BOSTON" - an account named RA 15 R;

Following the sale of 250,000 Treasury Bonds of the United Kingdom, Morris FINLAY ordered the bank in January 1994 to transfer the product of that sale, i.e., 135,717.47 Pounds Sterling to the account of his daughter Caroline Finlay at the Geneva branch of CREDIT LYONNAIS;

This order was carried out on January 26, 1994;

On June 21, 1994, the Banque BOSTON, in error, re-credited the account RA 15 R in the amount of 135,717.47 Pounds, so that, on June 30, 1994, this account had an apparent credit of 135,685.53 Pounds, taking into account a prior debit of 31.94 Pounds; On September 29, 1994, the bank received from its Monaco client hand-written instruction, signed "MORRIS", asking it to transfer this apparent credit of 135,685.53 Pounds to "ALEXANDER EQUITIES, to the attention of Neil SWAIZLAND" via BANKERS TRUST in London; this transfer was immediately executed; Following these occurrences, an accounting review at the Banque BOSTON revealed the error committed on June 21, 1994; Whereas after vain attempts to recover its funds, the Banque BOSTON, through the above-mentioned complaint of March 26, 1996, brought suit upon Morris FINLAY for payment of the equivalent in francs of the sum of 135,685.53 Pounds Sterling with "interest computed as provided on the New York Market and by the interior rules (of the Banque BOSTON)" or legal interest market, as well as 100,000 francs damages for excessive resistance; That it bases its action on the rules of restitution of undue amounts provided for in article 1090 of the Civil Code and on the offense committed by FINLAY, having damaged the bank, resulting from his knowingly ordering the withdrawal of funds not at his disposal (article 1229 of the Civil Code); Whereas in order to oppose this request, Morris FINLAY states that he contested on January 23, 1996, the summons to pay, which was served "on him in his personal name and in his quality of legal representative of the company CORDEL INVESTMENTS INC." by the Banque BOSTON on January 10, 1996; That he pointed out that it took the bank nine months to become aware of its error and, for a professional bank, qualifies this attitude as "frivolous"; That he claims to have not received "physically" the sum which is claimed from him as unduly taken; That the bank, having transferred this sum by error without taking the precautions commanded by prudence, he considers that it has committed a fault and considers himself seriously prejudiced by the fact that it implies that he could have unduly attributed this sum to himself by fraudulent schemes, which could influence his state of health adversely;

That he protests against the excessive conduct having consisted for the Banque BOSTON in domiciling the Panama company CORDEL INVESTMENTS at his Monaco address for the needs of the demand to pay and claims to being a stranger to this company - other than admitting that he holds a "power of attorney" - by pointing out that it was up to the bank to "assure itself of the identity of the principal" and to proceed with verifications "to detect the initial error";

That he requests the Court to establish that he does not have the capacity to represent the company CORDEL, which is not domiciled in MONACO, to hold consequently inadmissible the demand for payment submitted by the Banque BOSTON and to condemn it to pay him 100,000 francs in damages for excessive and vexatious conduct;

Whereas in reply, the Banque BOSTON, having noted that the facts described in its complaint are not contested by its adversary, specifies that the investigation conducted in order to discover the origin of the instructions requesting the withdrawal of the funds a second time, revealed the hand-written order of September 29, 1994, which had been immediately executed by the bank, a circumstance which was certified later by a correspondent (London branch of FIRST NATIONAL BANK OF CHICAGO), having confirmed that the BANKERS TRUST had in effect received the 135,685.53 Pounds on September 30, 1994, and credited therewith the account of ALEXANDER EQUITIES;

That it maintains its demands based upon articles 1090 and 1229 of the Civil Code and requests the rejection of the counter-claim, not without having observed that the problems of health invoked by MORRIS are attributable to his own fault and to his refusal to accept an amicable settlement of the case;

That concerning the Company CORDEL, it considers the argument developed by FINLAY as ineffectual once the question rests on the responsibility of the defendant;

Whereas in response, Morris FINLAY insists on the fact that he was nothing more than a "power of attorney" of the company CORDEL, which could be the real debtor of the bank once the contentious funds were transferred to its profit;

That he defends himself to be the "economic beneficiary" of that company and considers he is artificially sued in place of this company;

That, as a consequence, he repeats the terms of his counter claim;

Upon which:

Whereas it is established and not contested:

That the sale of the British treasury bonds generated a credit of 135,717.47 Pounds on 26 January 1994 on account RA 15 R, of which Morris FINLAY is the holder (see exhibit no. 1-A Me KARCZAG-MENCARELLI);

That this sum was transferred the same day (date of value February 18, 1994) to the account of the daughter of the defendant, under the heading "check paid by London" (see exhibit no. 1-B), and was therefore entered as a debit to account RA 15 R;

That, however, this entry was annulled accounting-wise by the entry, on June 21, 1994, of a transaction by which the account was credited with 135,717.47 pounds under the heading "check received by London, reversal of entry VAL 18.2.94" (see exhibit no. 1-E);

Whereas, by this transaction, which the parties are in agreement to recognize that it comes from an error of the bank, the account of Morris FINLAY was unduly credited with the above sum; that it is established that he then disposed of this sum by transferring it to the account of ALEXANDER EQUITIES at BANKERS TRUST (see exhibit no. 2-A Me KARCZAG-MENCARELLI);

Whereas in the terms of article 1223 of the Civil Code, "he who receives in error or knowingly what is not due to him, is obligated to return it to whomever he unduly received it from";

That it follows that the Banque BOSTON, inasmuch as the sums which it transferred to the account of the defendant on June 21, 1994, were not due, is entitled by that single fact to obtain its restitution, without need for an examination of the further circumstances under which these sums were dissipated, the argument developed by FINLAY on the subject of the company CORDEL appearing in this regard to be ineffectual;

Whereas the error from which the undue payment resulted is insufficient in itself to engage the responsibility of Banque BOSTON for a tort; that it would be different if this error was due to serious misconduct having caused a loss to FINLAY;

Whereas it is not so in this case; assuming even that the bank committed an error susceptible of engaging its responsibility, the absence of all harm following the undue payment is sufficient to discard the means of defense opposed by FINLAY, inasmuch as he cannot point out any damage connected to the error at the origin of the undue payment;

Whereas therefore it is appropriate to order FINLAY to pay today's equivalent of the sum of 135,685.53 Pounds Sterling as requested;

That failing for the Banque BOSTON, on the one hand, to provide the Court with the elements which would justify the application of an agreed-upon interest rate, on the other hand, to indicate the date from which these interests are claimed, the interest at the legal rate must be granted on the allowed sum starting on March 26, 1996, date of the complaint equivalent to summons to pay;

Whereas in opposing the return of a sum which was not due to him and which he knew to have been paid in error, Morris FINLAY committed a fault obligating the Banque BOSTON to turn to justice;

That, in view of the expenses incurred by the plaintiff in this regard, the Court decides the sum of 20,000 francs as damages due to the bank in view of the excessive resistance of the defendant; Whereas it is not necessary, for the above reasons and the consequences thereof, to entertain the requests formulated by FINLAY;

Whereas the defendant must bear the cost of the action by application of article 231 of the Code de Procedure Civile;

FOR THESE REASONS,

THE COURT,

AFTER HEARING BOTH PARTIES, RULES,

Orders Morris FINLAY to pay to the company called CS FIRST BOSTON CORPORATION, with interest at the legal rate as from March 26, 1996, today's equivalent in French Francs of the sum of 135,685.53 Pounds Sterling, as well as the sum of 20,000 Francs as damages;

Dismisses the entirety of Morris FINLAY'S claim;

Orders him to pay the costs, including those incurred by Maître Evelyne KARCZAG-MENCARELLI, counsel for the plaintiff upon her due statement;

Orders that the said costs shall be provisionally fixed by the Chief Clerk;

So judged and pronounced at a public session of the Court of First Instance of the Principality of Monaco, on October 23, 1997, by Mr. Jean-Francois LANDWERLIN, President, Officer of the Order of Saint-Charles, Mr. Philippe NARMINO, First Vice-President, Officer of the Order of Saint-Charles, Mrs. Brigitte GAMBARINI, Vice-President, Chevalier of the Order of Saint-Charles, in the presence of Mr. Daniel SERDET, PREMIER SUBSTITUT DU PROCUREUR GENERAL, assisted by Mrs. Antoinette FLECHE, COMMIS-GREFFIER.

(signed)