91 F.2d 898 (2nd Cir. 1937), 402, United States v. Guaranty Trust Co. of New York

Docket Nº:402.
Citation:91 F.2d 898
Case Date:August 16, 1937
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 898

91 F.2d 898 (2nd Cir. 1937)





No. 402.

United States Court of Appeals, Second Circuit.

August 16, 1937

Lamar Hardy, U.S. Atty., of New York City (Leon E. Spencer, Asst. U.S. Atty., of New York City, David E. Hudson, Sp. Asst. to the Atty. Gen., and Henry Munroe, Sp. Atty., and David McKibbin, 3d, Sp. Asst. to the U.S. Atty., both of New York City, of counsel), for the United States.

Davis, Polk, Wardwell, Gardiner & Reed, of New York City (John W. Davis, Ralph M. Carson, and J. Paschall Davis, all of New York City, of counsel), for appellee.

Before MANTON, SWAN, and CHASE, Circuit Judges.

SWAN, Circuit Judge.

This is an action at law by the United States to recover from Guaranty Trust Company of New York the alleged balance of a deposit account. The complaint alleges that on July 15, 1916, the Government of the State of Russia opened a deposit account with the defendant in New York; that on December 12, 1917, there remained in said account $4,976,722.78, and said sum was then, and still is, owing by the defendant, together with interest thereafter accrued; that on November 16, 1933, the Government of the State of Russia assigned all its right, title, and interest in said debt to the plaintiff; that payment thereof has been demanded by the plaintiff and refused by the defendant. Upon affidavits and depositions before answer, the defendant made a motion to dismiss the complaint under rule 107 of the Rules of Civil Practice

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of New York and the Conformity Act. 28 U.S.C.A. § 724. The ground of the motion was that the cause of action had accrued to the assignor more than six years prior to the assignment and, therefore, the remedy of the assignee was likewise barred by the state statute of limitations. Civil Practice Act N.Y. Sec. 48. United States v. Buford, 3 Pet. 12, 29, 7 L.Ed. 585. Under the law of New York an unequivocal repudiation of liability by the bank would start the running of the statute as against a private litigant. Tillman v. Guaranty Trust Co., 253 N.Y. 295, 171 N.E. 61. The District Judge found that the defendant had unequivocally repudiated its liability as early as February 25, 1918. On that date the defendant closed the account, charging against it sums which were claimed to be owing to Guaranty Trust Company by the State of Russia as successor under nationalization decrees of banks in Russia whose assets had been confiscated. The District Judge also found that notice of such repudiation was received prior to June 30, 1922, by Ambassador Boris Bakhmeteff and by Mr. Serge Ughet, financial attache and charge d'affaires, who at the time were recognized by our State Department as the accredited representatives of the State of Russia in this country. Accordingly, the defendant's motion was granted. From judgment dismissing the complaint upon the merits the plaintiff has appealed.

The question whether a foreign sovereign is affected by a state statute of limitations is one upon which no direct authority has been found. It is, of course, settled law that a state statute of limitations cannot bar the United States. Davis v. Corona Coal Co., 265 U.S. 219, 44 S.Ct. 552, 68 L.Ed. 987. Whether a foreign sovereign might be barred was left open in French Republic v. Saratoga Vichy Spring Co., 191 U.S. 427, at page 437, 24 S.Ct. 145, 147, 48 L.Ed. 247, where Mr. Justice Brown remarked:

'It is said, however, that the doctrine of laches has no application to the neglect of the government to pursue trespassers up on its rights, and that the French Republic is entitled to the benefit of that rule. It is at least open to doubt whether the maxim nullum tempus, applicable to our own government, can be invoked in behalf of a foreign government suing in our courts. The doctrine is one of public policy, and is based upon the assumption that the officers of the government may be so busily engaged in the ordinary affairs of state as to neglect a vindication of its interests in the courts. Whether this exemption can be set up by a foreign government in the prosecution of suits against our own citizens-- in other words, whether the latter are not entitled to the benefit of the ordinary defenses at law-- is a question which does not necessarily arise in this case, and as to which we are not called upon to express an opinion.'

In United States v. Nashville, etc., R. Co., 118 U.S. 120, 125, 6 S.Ct. 1006, 1008, 30 L.Ed. 81, there is a dictum that the principle of public policy, which forbids that the public interests should be prejudiced by the negligence of the officers or agents to whose care they are confided, is 'applicable to all governments alike.' See, also, United States v. Thompson, 98 U.S. 486, 489, 490, 25 L.Ed. 194. On the other hand, in Lehigh Valley R. Co. v. State of Russia, 21 F.2d 396, 400 (C.C.A. 2), this court referred to the duty of Mr. Ughet to continue the suits for the State of Russia and to avoid delays 'which would give rise to the bar of limitation to sue. ' If Mr. Ughet had authority to continue a suit on behalf of the State of Russia, as we there held, it seems clear that he would have had authority to commence a suit on behalf of the State of Russia against Guaranty Trust Company after learning of its repudiation of liability on the deposit account. But it does not follow that his failure to do so for a period of six years would operate as a bar against the foreign sovereign. The statement on the subject of limitation in the Lehigh Valley Case was purely dictum.

The defendant relies also upon Western Lunatic Asylum v. Miller, 29 W.Va. 326, 1 S.E. 740, 6 Am.St.Rep. 644, where it was held, on the...

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