First National City Bank of New York v. Gillilland

• Decision Date: 12 June 1958
• Docket Number: No. 14248.,14248.
• Citation: 257 F.2d 223
• Parties: The FIRST NATIONAL CITY BANK OF NEW YORK, Appellant, v. Whitney GILLILLAND et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

257 F.2d 223 (1958)

The FIRST NATIONAL CITY BANK OF NEW YORK, Appellant, v. Whitney GILLILLAND et al., Appellees.

No. 14248.

United States Court of Appeals District of Columbia Circuit.

Argued April 28, 1958.

Decided June 12, 1958.

Certiorari Denied October 13, 1958.

Mr. John A. Wilson, of the bar of the Court of Appeals of New York, New York City, pro hac vice, by special leave of court, with whom Messrs. F. Gloyd Awalt, Washington, D. C., and W. V. T. Justis, Herndon, Va., were on the brief for appellant.

Mr. B. Jenkins Middleton, Atty. Dept. of Justice, with whom Asst. Atty. Gen., George C. Doub, Messrs. Oliver Gasch, U. S. Atty., and Samuel D. Slade, Atty. Dept. of Justice, were on the brief, for appellees.

Messrs. Morton Hollander, Atty., Dept. of Justice, and Harold D. Rhynedance, Jr., Asst. U. S. Atty., also entered appearances for appellees.

Before EDGERTON, Chief Judge, and BAZELON, Circuit Judge, and MADDEN, Judge, United States Court of Claims.^*

Certiorari Denied October 13, 1958. See 79 S.Ct. 61.

MADDEN, Judge.

This is an appeal from a judgment of the District Court dismissing the appellant's action for want of jurisdiction. The basis for the order of the District Court was that an applicable statute expressly denied resort to the courts.

Before the Russian revolution of 1917, the appellant bank had ruble deposits in the Russo-Asiatic Bank, one of the largest banks in Russia. Russo-Asiatic had dollar deposits in appellant bank and other banks in New York City, particularly the Guaranty Trust Company. The new Soviet Government, when it seized power, nationalized the banks in Russia, and repudiated the obligation of those banks to pay their depositors. Russo-Asiatic, however, continued to do business through its branches in England, France, and China.

Appellant says that in January 1918 it had on deposit in Russo-Asiatic in Petrograd rubles worth $537,515.80; that it demanded payment and payment was refused. At that time Russo-Asiatic had on deposit with appellant in New York $2,261,981.72. Subsequent withdrawals reduced this amount to $232,623.66 by 1925. The appellant does not clearly indicate why it permitted these withdrawals rather than paying itself out of the funds on deposit.

In 1932 the appellant decided to reduce to judgment its claim against Russo-Asiatic and collect it out of Russo-Asiatic's assets which might be found in New York, including the $232,623.66 which Russo-Asiatic still had in appellant's own bank. Decisions in the State courts of New York, particularly the decision of the Court of Appeals in Sokoloff v. National City Bank, 239 N.Y. 158, 145 N.E. 917, 37 A.L.R. 712; Id., 250 N.Y. 69, 164 N.E. 745, established the doctrine in those courts that the Soviet nationalization of the banks was not a defense to a suit brought elsewhere against a bank on account of the refusal of its branch in Russia to pay its depositors. The appellant desired, therefore, to have its suit litigated in the State courts of New York. If it had, itself, sued in a New York court, Russo-Asiatic, a noncitizen of New York, could have removed the case to the Federal courts. The appellant, therefore, assigned its claim to one Grant, a resident of New York but a national of Great Britain. A suit by Grant against Russo-Asiatic could not be removed to the Federal courts, since both were non-citizens.

The assignment to Grant was, as written, absolute. If it was to serve the purpose for which it was made, it must have been intended to be absolute, since the Constitutional provision that the jurisdiction of the Federal courts shall extend to controversies between citizens of a state and citizens of a foreign state, and the statutes implementing that Constitutional provision cannot be frustrated by the interposition of a nominal party for the sole purpose of placing jurisdiction in a court of the real owner's preference.

In Grant's suit against Russo-Asiatic substituted service by publication was used, and there was attachment of Russo-Asiatic's deposits in appellant's bank and in Guaranty Trust Company's bank. Guaranty Trust Company made a return to the service of the attachment upon it stating that it had no funds of Russo-Asiatic in its bank. Appellant made a return stating that it had $232,623.66 belonging to Russo-Asiatic. On April 1, 1933, Grant took a default judgment for $537,515.80 plus interest and costs, the total judgment being $1,031,757.25, against Russo-Asiatic. Appellant paid its $232,623.66 to Grant, who, after deducting attorney's fees and expenses, paid over the balance, $227,505.53 to appellant. That amount was credited as a partial satisfaction of Grant's judgment. On August 23, 1933, Grant assigned all his rights in appellant's claim against Russo-Asiatic to appellant.

Guaranty Trust's return in Grant's attachment suit stating that it owed Russo-Asiatic nothing was proved inaccurate by the decision in 1947 in Steingut v. Guaranty Trust Co., D.C.S.D.N.Y., 58 F.Supp. 623, affirmed 2 Cir., 161 F.2d 571, certiorari dismissed on motion of petitioner's counsel 332 U.S. 753, 68 S.Ct. 81, 92 L.Ed. 339. We shall refer hereinafter to that litigation.

On November 16, 1933, the President of the United States recognized the Soviet Government of Russia, and in connection with this recognition the Litvinov Assignment was executed. By that instrument, the Soviet Government assigned to the United States all claims which the Soviet Government owned in the United States. Since the Soviet Government had nationalized the Russian banks, it owned the deposits which those banks had in banks in the United States, one of which was Russo-Asiatic's deposit of $3,364,000 in Guaranty Trust in New York. In the Steingut case, cited above, in which the suit was brought under the Litvinov Assignment, it was held that Guaranty Trust was not entitled to set off the amount which it had lost because of the refusal of Russo-Asiatic to pay it its ruble deposits in Russo-Asiatic's Petrograd branch. The United States recovered a judgment of $3,364,939.69 in Steingut, all of which was paid into the Treasury in 1947 and 1948. In the Steingut litigation a number of persons who had levied attachments on Russo-Asiatic's deposits in Guaranty Trust intervened to protect their attachment liens. The appellant did not intervene. It says that it did not do so because the United States in that litigation was testing the question whether Guaranty Trust owed Russo-Asiatic anything, and appellant's intervention would have been for the same purpose, and hence useless. This is a remarkable explanation of appellant's indifference to the Steingut suit. The purpose of that suit was not merely to test a legal question, but to collect the money, if any, which Guaranty Trust owed Russo-Asiatic, and put it into the Treasury of the United States. But that was the same money which appellant now says it owns, and has owned ever since its 1932 attachment was levied. It says that it stood by and allowed the Government to carry off its money because it anticipated that the Government would use the money to reimburse its nationals who suffered losses due to Soviet nationalization.

The United States during some eighteen years of investigation and litigation was able to collect some $9,000,000 as a result of the Litvinov Assignment. In 1955 Congress provided by statute for the distribution of this fund. By the Foreign Claims Settlement Commission Act of 1955, 69 Stat. 562, section 302, 22 U.S.C.A.Supp. IV, 1641a, Congress appropriated this money into a Soviet Claims Fund. It gave to the Foreign Claims Settlement Commission, a tribunal which had been set up in 1949 to administer a Yugoslav fund, the task of receiving and...