Severnoe Sec. Corp. v. London & Lancashire Inc.

• Decision Date: 06 January 1931
• Court: New York Court of Appeals Court of Appeals
• Parties: SEVERNOE SECURITIES CORPORATION v. LONDON & LANCASHIRE INC. CO., Limited, et al.

255 N.Y. 120

174 N.E. 299

SEVERNOE SECURITIES CORPORATION

v.LONDON & LANCASHIRE INC. CO., Limited, et al.^*

Court of Appeals of New York.

Jan. 6, 1931.

Action by the Severnoe Securities Corporation against the London & Lancashire Insurance Company, Limited, and another. From an adverse judgment (228 App. Div. 808, 240 N. Y. S. 872), named defendant appeals.

Reversed, and complaint dismissed.

HUBBS, J., dissenting.

Appeal from Supreme Court, Appellate Division, first Department.

Hartwell Cabell and Milton B. Ignatius, both of New York City, for appellant.

Paul Bonynge, of New York City, for plaintiff-respondent.

Ralph P. Buell, of New York City, for defendant-respondent.

David Rumsey and Louis J. Wolff, both of New York City, for Liverpool and L. and G. Ins. Co. amicus curiae.

CARDOZO, C. J.

The Northern Insurance Company of Moscow, dismembered by the decrees of the Russian Soviet Republic, retains a pallid life as the shade or little more of its former self. There is a cause of action in its favor growing out of transactions in England with a British insurance company, having a domicile in England, though with a branch in New York. Of the board of directors of the Moscow company, a board consisting of five regular members and two alternate members, two only survive. These authorized a manager, whose authority was confined to the transaction of current business, to assign the cause of action to the plaintiff, a domestic corporation, for the purpose of suit in the courts of this state. The validity of the assignment is the question in the case.

The surviving directors, not constituting a quorum of the board, were without authority in this state to act in its behalf except as conservators of assets that might otherwise be lost. Authority to conserve exists ex necessitate rei, and is circumscribed by the necessity that calls it into life. We find no necessity here, nor anything approaching it. The subject of the assignment was not so localized within the state as to exact the intervention of conservators to keep it from destruction. Here was no derelict to be moored while it could be seized lest the tide carry it away. Here was an intangible asset localized, so far as common forms of speech avail to give it a locality, in countries far away. The owner corporation, acting by a quorum of the board, could have maintained an action in any jurisdiction where the debtor could be found, in the absence, at all events, of statute to the contrary. The conclusion does not follow that it has a like latitude of choice when acting by a conservator, whose position has many analogies with that of a receiver.

Tangibles have a legal situs in the state of physical location. Frick v. Commonwealth of Pennsylvania, 268 U. S. 473, 45 S. Ct. 603, 69 L. Ed. 1058, 42 A. L. R. 316. Intervention by a conservator may be necessary in that place if they are to be salvaged for the owners. The situs of intangibles is in truth a legal fiction, but there are times when justice or convenience requires that a legal situs be ascribed to them. The locality selected is for some purposes, the domicile of the creditor; for others, the domicile or place of business of the debtor, the place, that is to say, where the obligation was created or was meant to be discharged; for others, any place where the debtor can be found. Farmers' Loan & Trust Co. v. Minnesota, 280 U. S. 204, 211, 217, 50 S. Ct. 98, 74 L. Ed. 371;Baldwin v. Missouri, 281 U. S. 586, 50 S. Ct. 436, 74 L. Ed. 1056;Beidler v. South Carolina Tax Commission, 51 S. Ct. 54, 75 L. Ed. 131;Liverpool & London & Globe Ins. Co. v. Board of Assessors for the Parish of Orleans, 221 U. S. 346, 354, 31 S. Ct. 550, 55 L. Ed. 762, L. R. A. 1915C, 903;Wyman v. Halstead, 109 U. S. 654, 3 S. Ct. 417, 27 L. Ed. 1068;Douglass v. Phenix Ins. Co., 138 N. Y. 209, 219,33 N. E. 938,20 L. R. A. 118, 34 Am. St. Rep. 448;Harris v. Balk, 198 U. S. 215, 25 S. Ct. 625, 49 L. Ed. 1023, 3 Ann. Cas. 1084. At the root of the selection is generally a common sense appraisal of the requirements of justice and convenience in particular conditions. Safe Deposit & Trust Co. of Baltimore v. Commonwealth of Virginia, 280 U. S. 83, 92, 93, 50 S. Ct. 59, 74 L. Ed. 649; Powell, Business Situs of Credits, 28 W. Va. L. Quart, 89. Cf. 34 Yale L. J. 654, 656. What we are to determine in the case at hand is the locality to be chosen for the exercise by conservators of powers born of an emergency.

For that purpose, if not for others, the situs of the chose in action, the subject of this claim, is in England and perhaps in Russia, but certainly not here. The debt is localized in England because there contracted by a British debtor in favor of a foreign creditor doing...