Federal Reserve Bank v. Atlanta Trust Co.

• Decision Date: 13 August 1937
• Docket Number: No. 8398.,8398.
• Citation: 91 F.2d 283,117 ALR 1160
• Parties: FEDERAL RESERVE BANK OF ATLANTA, for Use of AMERICAN SURETY CO. OF NEW YORK, et al. v. ATLANTA TRUST CO.
• Court: U.S. Court of Appeals — Fifth Circuit

117 ALR 1160, 91 F.2d 283 (1937)

FEDERAL RESERVE BANK OF ATLANTA, for Use of AMERICAN SURETY CO. OF NEW YORK, et al. v. ATLANTA TRUST CO.

No. 8398.

Circuit Court of Appeals, Fifth Circuit.

July 9, 1937.

Rehearing Denied August 13, 1937.

Max F. Goldstein and Shepard Bryan, both of Atlanta, Ga., for appellants.

Ralph R. Quillian and Samuel Nesbitt Evins, both of Atlanta, Ga., for appellee.

Before FOSTER, HUTCHESON, and HOLMES, Circuit Judges.

HUTCHESON, Circuit Judge.

This suit was originally begun by the Federal Reserve Bank of Atlanta, as use plaintiff, by petition filed in the state court of Georgia, on February 14, 1936. As brought, it was for moneys paid by plaintiff bank to the Federal Reserve Bank of Chicago, on account of checks drawn from 1925 to 1929, inclusive, bearing forged indorsements, the genuineness of which defendant bank, by its own indorsement, had guaranteed. The claim was that plaintiff bank had taken the checks for collection under Federal Reserve Regulation J¹, and had later, to wit, in 1935 been obliged by the Federal Reserve Bank of Chicago, the bank in the district in which said checks were payable, to indemnify it, when, and not until then, it became entitled to sue defendant its principal, for indemnity. Removed to the federal court, where a motion to remand was made and overruled, the defendant moved to dismiss the petition on the ground that it affirmatively appeared on the face of complainant's bill that its cause of action accrued as to each check, more than six years prior to the filing of the petition, and plaintiff was barred of recovery. Whereupon plaintiff, on September 18, 1936, and further, on October 9, amended its bill to more definitely allege the defendant's membership in the Federal Reserve System; that in becoming a member it thereby subjected itself to the provisions of the Federal Reserve Act (12 U.S.C.A. § 221 et seq.) and the Regulations of the Federal Reserve Board, including Regulation J aforesaid; that in engaging plaintiff as its agent to collect the forged checks it expressly agreed to indemnify it on account of that agency; and that, the checks turning out to be forged, and judgment having gone against the Federal Reserve Bank of Chicago, who in turn compelled plaintiff to indemnify it, defendant thereupon became liable to plaintiff upon its contract of indemnity to reimburse it for losses it had sustained. Defendant renewed its motion to dismiss plaintiff's petition as amended on the ground that it appeared on the face of it that its action was barred.

The District Judge thought the suit not one by an agent against his principal for indemnity, but one for moneys wrongfully had and received, arising as to each check upon, and to be brought within six years from, plaintiff's payment of its proceeds to defendant. He thought Leather Manufacturers' National Bank v. Merchants National Bank, 128 U.S. 26, 9 S.Ct. 3, 32 L.Ed. 342, and our case, Fourth National Bank v. Gainesville National Bank (C.C.A.) 80 F.(2d) 490, controlling. He sustained the motion and dismissed the petition. This appeal, though it also raises in tentative fashion the question of federal jurisdiction raised on the motion to remand, is concerned mainly with testing for error the ruling which dismissed the suit as barred.

In view of 12 U.S.C.A. § 632, providing that the District Courts of the United States shall have original jurisdiction over all suits of a civil nature at common law or in equity, to which any Federal Reserve Bank shall be a party, we do not think the jurisdictional question seriously arguable. Besides, the petition declared upon and seeks to enforce rights growing out of a Federal Reserve Bank Regulation promulgated under the authority of federal law. Such a suit, in the strictest sense, is one arising under the Constitution and laws of the United States. Gully v. First National Bank, 299 U.S. 109, 57 S. Ct. 96, 81 L.Ed. 70.

The main question, whether the action was barred, may not be answered so easily, and with such confidence. It may be confidently affirmed, though, that the difficulties attending answering it arise, not out of any confusion or uncertainty as to when, in general, under the law of limitations, time begins to run on causes of action, but out of differences of opinion as to the cause of action plaintiff has brought.

If, as appellee contends, and the District Judge found, plaintiff's suit is an action for moneys wrongfully had and received of it by defendant, or an action on defendant's guaranty of prior indorsements, the cause of action arose and time began to run when defendant was credited with the proceeds of each collection and the holding of the Leather Manufacturers' National Bank and Fourth National Bank Cases applies. If, on the other hand, the suit as brought is one by an agent against his principal for indemnity for a loss sustained in the principal's service, not those cases, but cases governing actions for indemnity, apply³, and the cause of action did not accrue, and time did not begin to run, until the loss was actually sustained.

That plaintiff was attempting to sue for indemnity, rather than for moneys had and received, its petition, especially as amended, leaves in no doubt. In the most meticulously careful way plaintiff declared upon Regulation J, and sued as agent for the indemnity that agreement affords. To construe plaintiff's suit as one for moneys paid to and wrongfully had and received of it by defendant, in the face of its definite and positive declaration for indemnity, is, we think, to plead its case for it, rather than to take its case as it has pleaded it.

We think it may not be doubted that plaintiff could have elected to sue for moneys had and received, or upon the guaranties of prior indorsements, nor that, if this were such a suit, the action would now be barred. We think, though, that it may not be doubted, either, that it had a right to rely upon its position, and indemnities as agent, and to elect to sue in that character, and that time did not begin to run against that suit until 1935, when plaintiff, as agent for defendant, made good the forged checks it had handled for it, and thereby first sustained loss.

Statutes of limitation are statutes of repose. They are designed to prevent undue delay in bringing claims. They operate to defeat claims thus delayed. It is of the essence of these statutes that time begins to run under them as to causes of action only after the right to prosecute them to a successful conclusion has fully accrued.⁴ It is of their essence that each cause of...