Varga v. Credit-Suisse

• Decision Date: 18 March 1958
• Docket Number: CREDIT-SUISSE
• Citation: 171 N.Y.S.2d 674,5 A.D.2d 289
• Parties: Bela VARGA, individually, and as President of the National Hungarian Government, on behalf of himself and all those beneficiaries of the National Hungarian Trust Fund similarly situated, Plaintiff-Respondent, v., also known as Schweizerische Kreditanstalt, also known as Credito Svizzero, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 674

171 N.Y.S.2d 674

5 A.D.2d 289

Bela VARGA, individually, and as President of the National Hungarian Government, on behalf of himself and all those beneficiaries of the National Hungarian Trust Fund similarly situated, Plaintiff-Respondent, v. CREDIT-SUISSE, also known as Schweizerische Kreditanstalt also known as Credito Svizzero, Defendant-Appellant.

Supreme Court, Appellate Division, First Department.

March 18, 1958.

William Eldred Jackson, New York City, of counsel (Rebecca M. Cutler, New York City, on the brief; Milbank, Tweed, Hope & Hadley, New York City, attorneys), for appellant.

Michael M. Platzman, New York City, for respondent.

Before BOTEIN, P. J., and RABIN, VALENTE, McNALLY and STEVENS, JJ.

RABIN, Justice.

This action was brought by Bela Barga, at one time President of the Republic of Hungary, to compel the defendant, a Swiss banking institution, to account for funds which were placed in a safe deposit box maintained at said bank pursuant to a formal contract. According to the allegations of the complaint the funds in question were trust funds of a trust created in 1943 'for the maintenance of the then Government of Hungary, should it be exiled from the country and to provide funds for the activities of the said National Hungarian Government in Exile'. It is alleged that in 1949 the bank withdrew these funds from the safe deposit box and wrongfully turned them over to the Hungarian People's Republic, which had displaced the former National Hungarian Government.

This appeal is from an order of Special Term denying defendant's motion to dismiss the complaint on the grounds that plaintiff lacks legal capacity to sue, that the complaint does not state a cause of action, and that the action is barred by the statute of limitations.

Plaintiff brings the action on behalf of himself individually; in his representative capacity as President of the Hungarian National Government in Exile, also known as the Hungarian National Council, and on behalf of all other Hungarian Nationalists presently in exile represented by said Council and all other persons similarly situated.

At the outset we should say that the plaintiff is not a sovereign power and may not sue as such because the group which plaintiff claims to represent is not recognized by the State Department as a sovereign power and was not so recognized at the time suit was instituted. Likewise, plaintiff Bela Varga may not sue as an individual because, concededly, as such, he has no right to the fund claimed. At best he may claim in a representative capacity on behalf of the entity known as the Hungarian National Government in Exile or the Hungarian National Council. However, the complaint, in so far as it purports to show legal capacity to sue in a representative capacity, leaves much to be desired. There is nothing alleged identifying or describing the persons who comprise this group which is claimed to be the beneficiary of the fund. Nor can it be ascertained from the complaint whether plaintiff is the person properly authorized to represent this group and maintain an action on its behalf. Possibly these defects could be cured by amendment, but on the complaint in its present form it could very well be held that plaintiff has failed to establish legal capacity to sue. We need not reach that conclusion however, for we believe the complaint should be dismissed for reasons hereinafter indicated.

There are three possible theories upon which plaintiff might state a cause of action: first, that a trust (express or constructive) can be found in favor of the Government in Exile as beneficiary with the defendant bank as trustee; second, breach of contract; and third, conversion.

The complaint may not be upheld on the trust theory in view of an earlier decision of this Court (Varga v. Credit Suisse, 2 A.D.2d 596, 597, 157 N.Y.S.2d 391, 393). In that proceeding attacking the court's jurisdiction of the subject matter of this action, we sustained such jurisdiction based upon a construction of the complaint as one for breach of contract, but we specifically rejected jurisdiction on the theory of a trust, either express or constructive.

If we consider the action as one for breach of contract or one based upon conversion then in either event we are compelled to hold that it is barred by the statute of limitations.

The time for instituting an action for breach of contract, under the applicable section of the Civil Practice Act ( § 48, subd. 1), is limited to six years from the occurrence of the breach. If defendant breached its contract, then that breach occurred either on May 20, 1949, the date on which the complaint alleges the bank terminated its contract on the safe deposit box, or on August 22, 1949, the date on which the motion papers show the fund was delivered by the bank to the Hungarian People's Republic. Since this action was not commenced until April 27, 1956, the six year limitation would bar a claim based upon a breach of contract occurring on either date. If the cause is based in conversion, the conversion took place not later than August 22, 1949 and is accordingly barred by the applicable three year statute (Civ.Prac.Act, § 49, subd. 7).

It is urged however that the deposit of the funds with defendant bank was one which was not to be repaid at a fixed time but only upon a special demand, and consequently the statute did not commence to run until plaintiff's...