Republic of China v. Pong-Tsu Mow

• Decision Date: 05 April 1954
• Docket Number: PONG-TSU,No. A--105,A--105
• Citation: 104 A.2d 322,15 N.J. 139
• Parties: REPUBLIC OF CHINA et al. v.MOW.
• Court: New Jersey Supreme Court

Page 139

15 N.J. 139

104 A.2d 322

REPUBLIC OF CHINA et al. v. PONG-TSU MOW.

No. A--105.

Supreme Court of New Jersey.

Argued Feb. 23, 1954.

Decided April 5, 1954.

David Stoffer, Newark, for appellant (Stoffer & Jacobs, Newark, attorneys).

Emory C. Risley, Newark for respondents (Stryker, Tams & Honer, Newark, attorneys).

The opinion of the court was delivered by

OLIPHANT, J.

This is an appeal from an order of the Superior Court, Law Division, denying defendant-appellant's motion to quash a writ of attachment and the levy made thereunder, and to set aside two orders directing the issuance of the writ and substituted process, R.R. 4:77--2(a)(b). The appeal is apparently taken under R.R. 2:2--3(a)(3) on the theory that a question of jurisdiction is involved, but we prefer to treat the appeal as if it were taken with leave under R.R. 2:2--3(b) since if the appeal was sustained there was a possibility the action would have been terminated. The case has been certified here on our own motion pursuant to R.R. 1:10--1(a).

The plaintiff, Republic of China is a foreign sovereign government duly recognized by the United States. The defendant, Mow, is a citizen of the Republic of China and was one of the agents of that government for a period from January 1, 1948 to April 30, 1951. It was the practice of that government to entrust to the defendant and others and place under their control large sums of money which the defendant was authorized to spend for governmental purposes.

In May 1949 two checks of the Bank of China, New York agency, in the sum of $985,000 were issued payable to the order of three individuals and in turn endorsed by them to the order of the defendant Mow and the plaintiff Yu, another agent of the Republic of China. These two in turn endorsed the checks and they were deposited in a bank account with the Bank of Montclair (to which the National Newark and Essex Banking Company of Newark is successor). The said deposits were made subject to withdrawal only upon the joint signatures of Mow and Yu. Since that time there have been withdrawals and there now remains to the credit of said account the sum of $675,000.

The affidavits upon which the application for the writ of attachment was based show that the joint depositor, Yu, has at all times been and is now ready and willing to join in the payment of the balance in said bank account to the Republic of China and its regularly recognized officials. The affidavits allege that Mow has failed and refused so to do in defiance of the order of his government and has fled to and remains in Mexico, and that such refusal of Mow deprives the Republic of China of the balance deposited to the credit of the said bank account to which it is lawfully entitled and constitutes a conversion thereof by Mow for which damages are claimed in favor of the Republic of China.

The appellant's motion in the court below is based in a large part upon the pendency of an action instituted on November 14, 1951, in the United States District Court for the District of Columbia by the Republic of China against one Mow and one Hsiang. The action was one in equity for injunctive relief and to compel an accounting of the funds entrusted to or placed under the control of the defendant. A temporary restraint was issued against the defendants upon the filing of the complaint and Mow subsequently entered an appearance in the action and moved to dismiss it on numerous technical grounds, and actively opposed the issuance of a preliminary injunction against him. The motion to dismiss was denied and an order was entered enjoining Mow from transferring or otherwise disposing of any of the moneys or properties involved. 101 F.Supp. 646 (D.C.D.C.1951). The action of the District Court was affirmed on appeal, 91 U.S.App.D.C. 324, 201 F.2d 195 (C.A.D.C.1952), and certiorari was denied on April 6, 1953, 345 U.S. 925, 73 S.Ct. 784, 97 L.Ed. 1356.

The action proceeded on the failure of Mow to appear for depositions. As a result of this refusal all his pleadings were stricken and a default judgment was entered against him, among other things making permanent the preliminary injunction and directing Mow to render an accounting of all moneys and properties entrusted to him by the Republic of China and to pay over to it all the said moneys and properties not properly expended. The cause was referred to an auditor to hold hearings and make a report and the cause is still pending. Mow in the meanwhile had gone to Mexico and is presently imprisoned because of some dispute over an extradition proceeding which is irrelevant insofar as the questions before this court are concerned.

The trial court held that both of the depositors, Mow and Yu, had acquired a legal right in the bank account, including the right of withdrawal, but that they held these rights in trust for the plaintiff, and that Mow's refusal to surrender his rights in the bank account on demand was tantamount to an appropriation of them by Mow; and while conceding he cannot transfer the funds the court very aptly said 'what he refuses to give up is the key to the vault so far as these funds are concerned.' The court felt the cause was controlled by the decision of Manufacturers' Casualty Ins. Co. v. Mink, 129 N.J.L. 575, 130 A.2d 510 (Sup.Ct.1943), and the cases cited therein. See 1 Chitty Pleading (6th ed.), p. *8(2).

The appellant argues that resort to attachment under the facts and circumstances in this case amounts to an abuse of this limited statutory process. He argues it is an abuse of the process to resort to attachment where a claim of ownership had not been honored. Further, he argues that a default judgment, the permanent injunction against the transfer of the various bank accounts, including the one here involved, and the mandatory injunction to pay to the Republic all unexpended funds, necessarily depended upon the recognition of the Republic's claim of equitable ownership, and that in the action here by the Republic and its agent in attempting to attach proceeds of this account they are proceeding to reach it by attachment as 'property' of the defendant. N.J.S. 2A:26--2, N.J.S.A.

It is further contended that the positions taken by the plaintiffs in these two suits are inconsistent since in the Federal District Court case there is asserted a claim of equitable ownership, while in this case an attempt is made to reach the moneys as 'property' of the defendant and a conversion is alleged.

The jurisdiction by attachment is not general but a limited one and hence jurisdiction must be shown and will not be presumed. On the other hand the doctrine of election of remedies is not in the strict sense a jurisdictional question since it is the plaintiff who has the right to elect which of two inconsistent rights he intends to exercise. The court cannot deny him the right to elect which course he will choose, and where he makes an election the court has no right to change the cause of action to the other inconsistent remedy since the court has jurisdiction over both rights of actions or remedies. 20 C.J., p. 4; 28 C.J.S., Election of Remedies, § 2. The doctrine of election of remedies is generally grounded in the principles of waiver or estoppel. Blum Bldg. Co. v. Ingersoll, 99 N.J.Eq. 563, 134 A. 176 (Ch.1926); Lizak v. Rottenbucher, 140 N.J.Eq. 76, 81, 53 A.2d 362 (Ch.1947). But under the new rules the mere filing of a complaint is not the decisive act, and it is...