Source: https://secondcircuit.lexroll.com/steingut-v-guaranty-trust-co-of-new-york-161-f-2d-571-2nd-cir-1947/?print=print
Timestamp: 2019-04-24 06:37:57+00:00

Document:
STEINGUT et al. v. GUARANTY TRUST CO. OF NEW YORK et al. UNITED STATES v. SAME (two cases).
Nos. 177-179, Docket 20262-20264.Circuit Court of Appeals, Second Circuit.
Action by Irwin Steingut and Harold E. Blodgett, as receivers of the assets in New York of Russo-Asiatic Bank against the Guaranty Trust Company of New York to recover from defendant a credit balance in favor of Russo-Asiatic Bank wherein Jesse C. Millard and James A. Tillman intervened; and two actions by the United States of America against the Guaranty Trust Company of New York to recover such credit balance as successor in the interest to Soviet Russia by virtue of the Litvinov assignment of November 16, 1933. The defendant cross-claimed against the Chinese government as assignor of intervenor Millard. From the judgments rendered 58 F. Supp. 623, 60 F. Supp. 103, all the parties except Jesse C. Millard intervenor, appeal.
Judgments modified on appeals of the United States in the actions brought by it and affirmed on all the other appeals.
Before AUGUSTUS N. HAND, CHASE and FRANK, Circuit Judges.
Natanson, Pack Scholer of New York City, for Receivers, plaintiffs-appellants-appellees.
Cravath, Swaine Moore, of New York City (Albert R. Connelly, Samson Selig, Samuel L. Scholer and L.D. Simpson, all of New York City, of counsel), for intervenor-appellee, Millard.
Borris M. Komar, of New York City (David L. Sprung, of New York City, of counsel), for intervenor-appellant, Tillman.
Davis Polk Wardwell Sunderland Kiendl, of New York City (John W. Davis, Ralph M. Carson, William C. Cannon, Francis W. Phillips, Edward J. McGratty, Jr. and William R. Meagher, all of New York City, of counsel), for Guaranty Trust Co. as appellant-appellee in the U.S. action and appellee-appellant in the receivers’ action.
John F.X. McGohey and Daniel M. Sandomire, both of New York City (John F. Sonnett and Paul A. Sweeney, both of Washington, D.C., and Alexander N. Sack, Howard N. Meyer, Louis W. Bookheim, Jr., Lester S. Jayson and Joseph K. Reichbart, all of New York City, of counsel), for the United States.
The facts are amply stated in the very able opinion of Judge Rifkind, D.C., 58 F. Supp. 623. We agree with that opinion.
We do not, however, entirely agree with the trial judge with respect to the interest. See D.C., 60 F. Supp. 103. He held that interest on the deposits should be computed at the contracted rates up to June 16, 1933, the effective date of the Banking Act of 1933, § 11(b), 12 U.S.C.A. § 371a, prohibiting the payment of interest on demand deposits by member banks of the Federal Reserve System; and that interest, after the date when the actions were commenced, should be computed at 4%. We accept these conclusions, except as to the 4% rate.
The judge reasoned thus: (1) Had the suits been brought by the depositor, the Russo-Asiatic Bank, or by the Russian Government, the rate, after breach, would have been at 6%, this being the rate prescribed by the New York statutes as to contracts made and to be performed in New York. (2) But, because the claims had been transferred to the United States, Royal Indemnity Co. v. United States, 313 U.S. 289, 296, 61 S.Ct. 995, 997, 85 L.Ed. 1361, applied, and required the determination of the interest as damages for delay, regardless of the local statute.
In the instant case, the claims did not “ultimately derive from a federal law” or from a contract made between the bank and the United States. Here the United States is, in effect, an assignee of the Russian government which, in turn, acquired the claims from the defendant’s depositor. The rights thus derive from contracts made between that depositor and the defendant. Accordingly, we hold that the state statute governs and that the proper rate of interest from the date of the breach was 6%.
The United States argues that the breach occurred at least as early as 1918, when the defendant, by entries on its books, purported to assert that it no longer owed anything on account of the deposits. We cannot agree. As the deposits were debts payable on demand, nothing was due and payable until a demand. We agree with the trial judge that the demand of the refugee directors of the Russo-Asiatic Bank was not effective. Accordingly, no effective demand was made until the United States instituted the present actions.
to the effect that, absent any fiduciary relation or participation in a fiduciary’s breach of his obligation, a bank is guilty of conversion merely because it makes entries on its books showing a cancellation of all or any part of its obligations to a general depositor, when the fact of such conduct has not been communicated to the depositor.
Modified on appeals of the United States in the actions brought by it; affirmed on all the other appeals.
 Cf. Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743, citing Board of Commissioners v. United States.
 Even assuming, arguendo, that there can be an anticipatory breach of an obligation to pay money, the doctrine of anticipatory breach could not be operative here, because no notice of intention not to pay was communicated by the defendant to the Russian government.
 Wrynn v. Pistor, 141 App. Div. 104, 125 N.Y.S. 970; George Haiss Mfg. Co. v. Becker, 198 App. Div. 123, 189 N.Y.S. 791; Muller v. Naumann, 85 App. Div. 337, 83 N.Y.S. 488; cf. Gordon v. Hostetter, 37 N.Y. 99; People ex rel. Zotti v. Flynn, 135 App. Div. 276, 120 N.Y.S. 511; Miller v. Miles, 58 App. Div. 103, 68 N.Y.S. 565.
 Holden v. N.Y. Erie Bank, 72 N.Y. 286; Reynolds El. Co. v. Merchants Nat. Bank, 55 App. Div. 1, 67 N.Y.S. 397; cf. Cahan v. Empire Trust Co., 2 Cir., 9 F.2d 713, 719, reversed on other grounds, 274 U.S. 473, 47 S.Ct. 661, 71 L.Ed. 1158, 57 A.L.R. 921.
 Cf. Muller v. Naumann, 85 App. Div. 337, 83 N.Y.S. 488.
 Cahan v. Empire Trust Co., 2 Cir., 9 F.2d 713, 719; Einstein v. Dunn, 61 App. Div. 195, 70 N.Y.S. 520, affirmed 171 N.Y. 648, 63 N.E. 1116; George Haiss Mfg. Co. v. Becker, 198 App. Div. 123, 189 N.Y.S. 791.
 Cf. Southwick v. First Nat. Bank, 84 N.Y. 420, 431.

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