Guaranty Trust Co of New York v. United States 28 8212 29, 1938

• Decision Date: 25 April 1938
• Docket Number: No. 566,566
• Parties: GUARANTY TRUST CO. OF NEW YORK v. UNITED STATES. Argued March 28—29, 1938
• Court: U.S. Supreme Court

304 U.S. 126

58 S.Ct. 785

82 L.Ed. 1224

GUARANTY TRUST CO. OF NEW YORK

v UNITED STATES.

No. 566.

Argued March 28—29, 1938.

Decided April 25, 1938.

[Syllabus from pages 126-128 intentionally omitted] Mr. John W. Davis, of New York City, for petitioner.

Mr. Sam E. Whitaker, Asst. Atty. Gen., for the United States.

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 Nobember 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 At- tache . 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 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, 28 U.S.C.A. § 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 sumbitted affidavits and exhibits in opposition. The District Court 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. 2 Cir., 91 F.2d 898. Moved by the importance of the questions involved, we granted certiorari. 302 U.S. 681, 58 S.Ct. 363, 82 L.Ed. —-.

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 sovereign constitutes an implied exception to that statute and to the Conformity Act; and because in any case, since no suit to recover the deposit could have been maintained in New York by the Soviet Government prior to its recognition by the United States and, since according to New York law the statute does not run during the period when suit cannot be brought, the present suit is not barred. It is insisted further that even though the Soviet Government is bound by the local statute of limitations the United States is not so bound, both because the New York statute which bars the remedy but does not extinguish the right is not applicable to the United States, and because the statute is inoperative and ineffective since it conflicts with and impedes the execution of the executive agreement between the Soviet Government and the United States by which the assignment was effected. Finally, the government assails the finding of fact of the District Court that petitioner repudiated the liability upon the deposit account, and contends that notice of the repudiation given by petitioner to representa- tives of the Provisional Government was ineffective to set the statute running against the Soviet Government and in favor of petitioner.

First. The rule quod nullum tempus occurrit regi—that the sovereign is exempt from the consequences of its laches, and from the operation of statutes of limitations—appears to be a vestigial survival of the prerogative of the Crown. See Magdalen College Case, 11 Co.Rep.66b, 74b; Hobart, L.C.J. in Sir Edward Coke's Case, Gobd. 289, 295; Bracton, De Legibus, Lib. ii, c. 5, § 7. But whether or not that alone accounts for its origin, the source of its continuing vitality where the royal privilege no longer exists is to be found in the public policy now underlying the rule even though it may in the beginning have had a different policy basis. Compare Maine, Ancient Law, 10th Ed., 1930, 32 et seq. 'The true reason * * * is to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers. And though this is sometimes called a prerogative right, it is in fact nothing more than a reservation, or exception, introduced for the public benefit, and equally applicable to all governments.' Story, J., in United States v. Hoar, 26 Fed.Cas. p. 329, 330, No. 15373. Regardless of the form of government and independently of the royal prerogative once thought sufficient to justify it, the rule is supportable now because its benefit and advantage extend to every citizen, including the defendant, whose plea of laches or limitation it precludes; and its uniform survival in the United States has been generally accounted for and justified on grounds of policy rather than upon any inherited notions of the personal privilege of the king. United States v. Kirkpatrick, 9 Wheat. 720, 735, 6 L.Ed. 199; United States v. Knight, 14 Pet. 301, 315, 10 L.Ed. 465; United States v. Thompson, 98 U.S. 486, 489, 25 L.Ed. 194; Fink v. O'Neil, 106 U.S. 272, 281, 1 S.Ct. 325, 27 L.Ed. 196; United States v. Nashville, C. & St. L R. Co., 118 U.S. 120, 125, 6 S.Ct. 1006, 30 L.Ed. 81. So complete has been its acceptance that the implied immunity of the domestic 'sovereign,' state or national, has been universally deemed to be an exception to local statutes of limitations where the government, state or national, is not expressly included; and to the Conformity Act. See United States v. Thompson, supra.

Whether the benefit of the rule should be extended to a foreign sovereign suing in a state or federal court is a question to which no conclusive answer is to be found in the authorities. Diligent search of counsel has revealed no judicial decision supporting such an application of the rule in this or any other country. The alleged immunity was doubted in French Republic v. Saratoga Vichy Spring Co., 191 U.S. 427, 437, 24 S.Ct. 145, 48 L.Ed. 247, and in Commissioners of Sinking Fund of Louisville v. Buckner, C.C., 48 F. 533. It was rejected in Western Lunatic Asylum v. Miller, 29 W.Va. 326, 329, 1 S.E. 740, 6 Am.St.Rep. 644, and was disregarded in Royal Italian Government v. International Committee of Y.M.C.A., 273 N.Y. 468, 6 N.E.2d 407, where neither appellate court delivered an opinion.

The only support found by the court below for a different conclusion is a remark in the opinion of the court in United States v. Nashville, C. & St. L.R. Co., supra, where its holding that the United States, suing in a federal court, is not subject to the local statute of limitations, was said to rest upon a great principle of public policy 'applicable to all governments alike.' The statement is but a paraphrase, which has frequently appeared in judicial opinion,¹ of Mr. Justice Story's statement in United States v. Hoar, supra, already quoted. His reference to the public policy supporting the rule...