304 U.S. 126 (1938), 566, Guaranty Trust Co. v. United States

Docket Nº:No. 566
Citation:304 U.S. 126, 58 S.Ct. 785, 82 L.Ed. 1224
Party Name:Guaranty Trust Co. v. United States
Case Date:April 25, 1938
Court:United States Supreme Court
 
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Page 126

304 U.S. 126 (1938)

58 S.Ct. 785, 82 L.Ed. 1224

Guaranty Trust Co.

v.

United States

No. 566

United States Supreme Court

April 25, 1938

Argued March 28, 29, 1938

CERTIORARI TO THE CIRCUIT COURT OF

APPEALS FOR THE SECOND CIRCUIT

Syllabus

1. The rule which exempts the United States and the States from the operation of statutes of limitations rests not upon any inherited notion of royal prerogative, but upon the public policy of protecting the public rights, and thereby the citizen, from injury through negligence of public officers. P. 132.

2. The benefit of this rule does not extend to a foreign sovereign suing in a state or federal court. P. 133.

In such cases, the reason for the rule -- the considerations of public policy above mentioned -- are absent.

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3. The rights of a sovereign State are vested in the State, rather than in any particular government which may purport to represent it, and suit in its behalf may be maintained in our courts only by that government which has been recognized by the political department of our own government as the authorized government of the foreign state. P. 136.

4. What government is to be regarded here as representative of a foreign sovereign state is a political, rather than a judicial, question, and is to be determined by the political department of our government. The action of that department in recognizing a foreign government and in receiving its diplomatic representatives is conclusive on all domestic courts, which are bound to accept that determination, although they are free to decide for themselves its legal consequences in litigations pending before them. P. 137.

5. After the overthrow of the Imperial Russian Government, the United States recognized, March 22, 1917, the Provisional Government of Russia, and thereafter the United States continued to recognize the Provisional Government and to recognize, as its representatives in this country, its Ambassador and the Financial Attache of its Embassy -- until November 16, 1933, when the Soviet Government, which on November 7, 1917, had overthrown the Provisional Government, was for the first time recognized by the United States. At that same time the United States, through an agreement between the President and a representative of the Soviet Government, took from that government an assignment of all

amounts admitted to be due or that may be found to be due it, as the successor of prior Governments of Russia, or otherwise, from American nationals, including corporations . . .

The United States, as such assignee, then sued in a federal court in New York to recover from a New York bank the amount of a deposit which had stood to the credit of the Provisional Government. The bank set up the New York statute of limitations, claiming that, in February, 1918, it had offset the deposit against indebtedness due it by the Russian Government, and that, on that date, it had repudiated all liability on the deposit account, and that, prior to June 30, 1922, it had given due notice of such repudiation to both the Financial Attache and the Ambassador of the Provisional Government, thus starting the running of the limitation period.

Held:

(1) That such notice of repudiation, given to the then duly recognized diplomatic representatives, was notice to the Russian State. P. 139.

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(2) That the later recognition of the Soviet Government left unaffected those legal consequences of the previous recognition of the Provisional Government and its representatives, which attached to action taken here prior to the later recognition. P. 140.

(3) That, if the statutory period has run against the claim of the Russian Government, the claim of the United States, as assignee, is likewise barred since:

(a) Proof that the statutory period had run before the assignment offends against no policy of protecting the domestic sovereign. It deprives the United States of no right, for the proof demonstrates that the United States never acquired a right free of a preexisting infirmity, the running of limitations against its assignor, which public policy does not forbid. P. 141.

(b) Assuming that the respective rights of the bank and the Soviet Government could have been altered, and the bank's right to plead the statute of limitations curtailed, by force of an executive agreement between the President and the Soviet Government, there is nothing in the agreement and assignment of November 16, 1933, purporting to enlarge the assigned rights in the hands of the United States, or to free it from the consequences of the failure of the Russian government to prosecute its claim within the statutory period. P. 142.

(4) Even the language of a treaty will be construed, wherever reasonably possible, so as not to override state laws or to impair rights arising under them. P. 143.

91 F.2d 898 reversed.

Certiorari, 302 U.S. 681, to review the reversal of a judgment dismissing the complaint in an action by the United States to recover from the present petitioner the amount of a bank deposit which the United States claimed as assignee of the Russian Government. The motion was based on the New York statute of limitations.

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STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

The principal questions for decision are whether, in a suit at law brought in a federal District Court to recover the deposit of a foreign government with a New York bank, such government is subject to the local statute of limitations as are private litigants, and, if so, whether the assignment of November 16, 1933, by the Russian Soviet Government to the United States of the right of the former to the bank account restricts or overrides the operation of the statute of limitations. A subsidiary question is whether, in the circumstances of the case, the running of the statute of limitations, if otherwise applicable, was affected by our nonrecognition of the Soviet Government during the interval of approximately 16 years between recognition of the Provisional Government of Russia and recognition of its successor.

On July 15, 1916, the Imperial Russian Government opened a bank account with petitioner, the Guaranty Trust Company, a New York banking corporation. On March 16, 1917, the Imperial Government was overthrown, and was succeeded by the Provisional Government of Russia, which was recognized by the United States on March 22, 1917. On July 5, 1917, Mr. Boris Bakhmeteff was officially recognized by the President as the Ambassador of Russia. On July 12, 1917, the account being overdrawn, $5,000,000 was deposited in the account by Mr. Serge Ughet, Financial Attache of the Russian Embassy in the United States. On November 7, 1917, the Provisional Government was overthrown, and was succeeded by the government of the Union of Soviet Socialist Republics, which will be referred to as the Soviet Government. At that time, there remained on deposit in the account the sum of approximately $5,000,000. On November 28, 1917, the Soviet Government dismissed Bakhmeteff as Ambassador and Ughet as Financial Attache.

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But the United States continued to recognize Bakhmeteff as Ambassador until, on June 30, 1922, he withdrew from his representation of the Russian Government. Thereafter, until November 16, 1933, it continued to recognize the Financial Attache, and, after the retirement of Bakhmeteff as Ambassador, it recognized the former as custodian of Russian property in the United States.

On November 16, 1933, the United States recognized the Soviet Government, and on that date took from it an assignment of all

amounts admitted to be due that may be found to be due [58 S.Ct. 788] it, as the successor of prior Governments of Russia, or otherwise, from American nationals, including corporations. . . .

After making demand upon the petitioner for payment of the balance of the account, the United States, on September 21, 1934, brought the present suit in the District Court for Southern New York to recover the deposit. Petitioner then moved under the Conformity Act, 28 U.S.C. § 724, New York Civil Practice Act, § 307, and Rules 107 and 120 of the New York Rules of Civil Practice, to dismiss the complaint on the ground that the recovery was barred by the New York 6-year statute of limitations.

In support of the motion, petitioner submitted numerous affidavits, two depositions, and other documentary proof tending to show that, on February 25, 1918, it had applied the balance of the account as a credit against indebtedness alleged to be due to it by the Russian Government by reason of the latter's seizure of certain ruble deposit accounts of petitioner in Russian private banks; that, on that date, it had repudiated all liability on the deposit account, and that it had then given notice of such repudiation to the Financial Attache of the Russian Embassy and later both to the Financial Attache and to Bakhmeteff as Ambassador. The United States submitted affidavits and exhibits in opposition. The District Court

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found that petitioner had repudiated liability on the account on February 25, 1918; that it had given due notice of repudiation prior to June 30, 1922, to both the Financial Attache and Ambassador Bakhmeteff, and that recovery was barred by the applicable 6-year statute of limitations of New York. New York Civil Practice Act, § 48. The Circuit Court of Appeals for the Second Circuit reversed the judgment for petitioner, holding that the New York statute of limitations does not run against a foreign sovereign. 91 F.2d 898. Moved by the importance of the questions involved, we granted certiorari.

Respondent argues that the Soviet Government, in a suit brought in the federal courts, is not subject to the local statute of limitations both because a foreign, like a domestic, sovereign is not subject to statutes of limitations, and its immunity, as in the case of a domestic...

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