Universal Adjustment Corp. v. Midland Bank, Ltd., of London, England

• Decision Date: 09 January 1933
• Citation: 281 Mass. 303,184 N.E. 152
• Parties: UNIVERSAL ADJUSTMENT CORPORATION v. MIDLAND BANK, LIMITED, OF LONDON, ENGLAND, et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

281 Mass. 303

184 N.E. 152

UNIVERSAL ADJUSTMENT CORPORATION

v.MIDLAND BANK, LIMITED, OF LONDON, ENGLAND, et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 9, 1933.

Appeal and Exceptions from Superior Court, Suffolk County; Wilford D. Gray, Judge.

Action by the Universal Adjustment Corporation against the Midland Bank, Limited, of London, England, and trustees. The superior court made findings and rulings, declining to retain jurisdiction of the action, and the plaintiff appeals and brings exceptions.

Appeal dismissed, and exceptions overruled.E. R. Anderson and R. B. Owen, both of Boston, for plaintiff.

J. W. Davis, of New York City, and N. W. Bingham, Jr., F. H. Chase, and W. Malcolm, all of Boston, for defendants.

RUGG, C. J.

The plaintiff is a Massachusetts corporation. The defendant is an English bank whose principal place of business is London, England, and which carries on business solely in England and Wales. The action is in contract and was begun by trustee writ. The declaration sets out in several counts two causes of action, based on an alleged right to recover large sums of money on deposit in the defendant bank. The plaintiff asserts title to these deposits made in the defendant bank by the Moscow Merchants Bank. It claims title under assignments from two nonresident alien corporations-the Moscow Merchants Bank, a banking corporation organized under the Empire of Russia, and Mokuba, Limited, a corporation organized under the laws of the Republic of Switzerland-both assignments being in a single instrument and executed in the name of each corporation by the same individual. Service of process was made on three Boston banks named as trustees, whose answers disclosed credits due to the defendant. No service was made on the defendant, but an order of notice was issued to it as an absent nonresident defendant. The defendant thereafter appeared specially, without submitting generally to the jurisdiction of the court and solely for the purpose of protecting its interest in the goods, effects and credits in the hands of the trustees attached on the writ. The defendant filed a motion requesting the court to decline jurisdiction and to discharge the attachment, setting out numerous reasons. The motion was supported by affidavit. Summarily stated, those reasons are that the plaintiff claims as assignee of the deposits in the defendant bank, that the deposits were made before the Great War with the defendant in London by a Russian corporation; that the rights of the original depositor and obligations of the defendant depend upon the law of Russia, and upon the law of England where the deposits were made and are payable, and that the validity of the assignments to the plaintiff depends in part upon the law of Russia as an empire and under its present government; and that the inconvenience of trial of these and other issues in this Commonwealth would impose an undue burden on the defendant and on the courts of this Commonwealth.

When the motion came on for hearing, the plaintiff objected to the introduction of any oral evidence, basing its objection on Common Law Rule 23 of the Superior Court (1923) to the effect that the ‘court will not hear any motion grounded on facts, unless the facts are verified by affidavit * * * .’ The judge overruled this objection on the ground that it had been waived by the action of the plaintiff. This finding was justified by the facts stated. Even apart from waiver, the court had a right to hear the motion on testimony given by witnesses, or on affidavits, or both. Spaulding v. Knight, 118 Mass. 528;Manning v. Boston Elevated Ry. Co., 187 Mass. 496, 498, 73 N. E. 645;Scott v. Bevilacqua, 226 Mass. 554, 116 N. E. 563.

The defendant conceded at the hearing that the court might retain jurisdiction of the case but contended that in its discretion it had the power and ought to decline to exercise jurisdiction. The trial judge found from the exhibits annexed to the plaintiff's declaration and the oral evidence that the claim in suit was assigned to the plaintiff for the purpose of bringing this action in Massachusetts and that the plaintiff was organized for that purpose. This finding was amply justified. There was evidence tending to show these facts: The articles of organization of the plaintiff were filed and approved by the Commissioner of Corporations and taxation on July 7, 1930. Its authorized capital stock was 100 shares of common stock without par value and the incorporators each subscribed for one share. From the ‘Certificate of Issue of Capital Stock’ filed on August 19, 1930, it appeared that at a meeting of the directors held on the previous day it was voted to issue ninety-seven shares in addition to the amount previously issued, and that these shares were to be paid for by ‘assignment of balances due from Bank, ninety-seven shares.’ The exhibits show that the instrument of assignment to the plaintiff was executed on August 14, 1930, in the city of New York. The authority conferred upon the person who executed the assignment to the plaintiff by the vote of the directors of the Moscow Merchants Bank was in the main to effect collection of its deposit. All these circumstances support the finding. See Miller & Lux, Inc., v. East Side Canal & Irrigation Co., 211 U. S. 293, 29 S. Ct. 111, 53 L. Ed. 189.Southern Realty Investment Co. v. Walker, 211 U. S. 603, 29 S. Ct. 211, 53 L. Ed. 346. The writ in the case at bar was dated August 20, 1930.

Further findings of fact were in these words: ‘The fund in question is a deposit made by the Moscow Merchants Bank with the defendant in London prior to the Russian Revolution in 1917 and by the terms of the deposit it was payable in London on demand. The defendant is amply able to respond in damages to the full amount of the fund deposited and interest and an adequate remedy is open in the English courts to those who are legally warranted in acting for the bank. No suggestion to the contrary was made by the plaintiff either by evidence or argument. Of those who assumed to act for the bank in making the transfers to the plaintiff relied on, the one who appears to have been most active is domiciled in England and none of the others reside on this side of the water. One of the chief issues in the trial of the pending action is whether those who assumed to make the assignments under which the plaintiff claims are authorized to act for the Moscow Merchants Bank in any capacity and whether they had the power to make these assignments. A determination of these questions involves consideration of the laws of Imperial Russia and of the laws and decrees of Soviet Russia. England has recognized the Government of Soviet Russia, this country has not. This not only results in the more ready proof of certain material facts in the English courts as compared with ours, but may have a bearing on the substantive law of the case. The English law is that the MoscowMerchants Bank still retains its corporate existence but is in liquidation and although this is challenged by the plaintiff there is respectable authority for the proposition that the Soviet Government is the liquidator. The Soviet Government has filed with the defendant notice that it claims the fund which is the subject matter of this suit. The question of its right to this fund ought not to be decided by this Commonwealth except by necessity, but rather by the courts where the fund is located and where a decision binding upon the whole fund and upon all of the numerous claimants to the fund may be made. Furthermore, it is at least doubtful under the law of England whether a payment of judgment in this action by the defendant could be set off pro tanto against those whom the English courts may decide to be entitled to the fund, whether the Soviet Government or any of the numerous parties who have filed claims and demands of various kinds against the fund. [Martin v. Nadel, [1906] 2 K. B. 26.] A decision of this case in favor of the plaintiff can affect only the funds under attachment and will not be binding in further proceedings for the balance of the plaintiff's claim whether tried in England or elsewhere. It is quite apparent from the English cases cited in argument that this is only one of many similar deposits in English banks and if jurisdiction of this case is retained many similar actions may reasonably be anticipated. No consideration of comity on the facts of this case requires the crowded dockets of the courts of this commonwealth to make room for such litigation between alien corporations when the parties have available a jurisdiction where their dispute may be more justly and effectively adjudicated.’

The trial judge ruled that for the purpose of determining the question of jurisdiction the case stands as if brought by the foreign corporation which assigned the claim to the plaintiff, on account of the statute under which alone this suit can be maintained in the name of the plaintiff as assignee and which by its terms makes this action subject to all defences to which the defendant would have been entitled had the action been brought in the name of the assignor, and that under this statute the defendant may plead any defence by way of abatement as well as any defence to the merits to the same extent as if the action had been in the name of the assignor; that as to these proceedings the assignee stands in the shoes of the assignor and is in no better position as to matters raised by the defendant than the assignor would have been if the suit had been brought in the name of the assignor. He further ruled that the question of right to decline jurisdiction must be decided on the basis of this action having been brought by one foreign corporation against another foreign corporation, neither having a place of business in this Commonwealth, and of jurisdiction of the case having been acquired only as the result of finding funds of the defendant subject to ...