Case Name: Commission for Polish Relief, Ltd., Respondent, v. Banca Nationala a Rumaniei, Appellant. John J. McCloskey, Jr., as Sheriff of the City of New York, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1942-07-29
Citations: 288 N.Y. 332
Docket Number: 
Parties: Commission for Polish Relief, Ltd., Respondent, v. Banca Nationala a Rumaniei, Appellant. John J. McCloskey, Jr., as Sheriff of the City of New York, Respondent.
Judges: 
Reporter: New York Reports
Volume: 288
Pages: 332–341

Head Matter:
Commission for Polish Relief, Ltd., Respondent, v. Banca Nationala a Rumaniei, Appellant. John J. McCloskey, Jr., as Sheriff of the City of New York, Respondent.
Argued March 18, 1942;
decided July 29, 1942.
John W. Davis, William C. Cannon, Harold W. Bissell and Frederick C. Watson, appearing specially, for appellant.
Under the executive order, in the absence of a license, the attempted levy upon the defendant’s deposit account did not and could not give the court any dispositive dominion over any right or interest of the defendant therein. (Commonwealth v. Imperial Woolen Co., 290 Penn. St. 526; Schalucky v. Field, 124 Ill. 617.) Inasmuch as the attempted levy upon the defendant’s deposit account failed to give the court any dispositive dominion over any right or interest of the defendant therein, no valid levy has been made and no jurisdiction has been acquired. (Fredrick v. Chicago Bearing Metal Co., 221 App. Div. 588; Sturcke v. Link, 26 N. Y. Supp. [2d] 748; Pennoyer v. Neff, 95 U. S. 714; Harris v. Balk, 198 U. S. 215; Security Sav. Bank v. California, 263 U. S. 282; Zuhlke v. Prudential Life Ins. Co., 244 App. Div. 549; Bollack v. Societe Generale, 177 Misc. Rep. 136; Penoyar v. Kelsey, 150 N. Y. 77; Sheehy v. Madison Square Garden Corp., 266 N. Y. 44; Columbia Bank v. Equitable Life Assur. Soc., 79 App. Div. 601; Reifman v. Warfield Co., 170 Misc. Rep. 8; McFadden v. Innes, 60 Misc. Rep. 543; 130 App. Div. 880; Dunlop v. Patterson Fire Ins. Co., 74 N. Y. 145; Judis v. Martin, 218 App. Div. 402.)
Edwin P. Shattuck, Sydney Waldecker and George B. Francis for plaintiff, respondent.
Appellant’s deposit accounts are attachable res. The executive order does not affect this status. The executive order merely provides a regulatory plan and operates exclusively in personam upon the banks. (United States v. Campbell, 5 Fed. Supp. 156; Hyatt v. Taylor, 42 N. Y. 258; Furey v. Town of Gravesend, 104 N. Y. 405; McKuskie v. Hendrickson, 128 N. Y. 555; United States v. Chase, 135 U. S. 255; Fasulo v. United States, 272 U. S. 620; United States v. Driscoll, 9 Fed. Supp. 454; City of East Cleveland v. Fidelity & Deposit Co., 5 Fed. Supp. 212.) The Supreme Court has adequate jurisdiction in rem under the attachments, and the levies have been executed in accordance with the provisions of the Civil Practice Act. (Warner v. Fourth Nat. Bank, 115 N. Y. 251; Simpson v. Jersey City Contracting Co., 165 N. Y. 193; McNeeley v. Welz, 166 N. Y. 124; Higgins v. McConnell, 130 N. Y. 482; General Motors Corp. v. Ver Linden, 199 App. Div. 375; Brown v. Morgan & Co., 177 Misc. Rep. 763; Birge-Forbes Co. v. Hege, 251 U. S. 317; Raftes v. Argyropulo, 123 Misc. Rep. 738; Castriotis v. Guaranty Trust Co., 229 N. Y. 74; Ajax Craftsmen, Inc., v. Whinston, 269 N. Y. 7; Coddington v. Gilbert, 5 Duer, 72; Clinton Trust v. Compania, 172 Misc. Rep. 148.)
John V. Campbell and Sidney Posner for John J. McCloskey, Jr., as Sheriff of the city of New York, respondent.
Francis M. Shea, Assistant Attorney-General, Mathias F. Correa, United States Attorney, Sidney J. Kaplan, Special Assistant to Attorney-General (Edward H. Foley, Jr., Bernard Bernstein, Ansel F. Luxford and Josiah E. Du Bois, Jr., of counsel), for United States of America, amicus curiæ.
Title to the funds of the National Bank of Rumania held in blocked accounts in the State of New York cannot be transferred without the approval of the Secretary of the Treasury under the executive order. (Grogan v. Walker & Sons, 259 U. S. 80; Sturm v. Truly, 245 App. Div. 357; Barton v. Port Jackson Road Co., 17 Barb. 397; United States v. Dickerson, 310 U. S. 554; United States v. American Trucking Associations, Inc., 310 U. S. 534; Littlefield v. Clary, 66 Ga. 322; Bryan v. Menefee 21 Okla. 1; Bullen v. Wisconsin, 240 U. S. 625; Norwegian Nitrogen Products Co. v. United States, 288 U. S. 294; Skeen v. Lynch, 48 Fed. Rep. [2d] 1044.) Unauthorized transfers of property in blocked accounts are invalid under General Ruling No. 12 made under the executive order. (British-American Tobacco Corp. v. Federal Reserve Bank, 104 Fed. Rep. [2d] 652; Koninklijke Lederfabriek Oisterwijk N. V. v. Chase Nat. Bank, 177 Misc. Rep. 186; Amstelbank N. V. v. Guaranty Trust Co., 177 Misc. Rep. 548; The Kensington, 183 U. S. 263; Norman v. Baltimore & Ohio R. R. Co., 294 U. S. 240; Blount v. Windley, 95 U. S. 173; Funkhouser v. Preston Co., 290 U. S. 163.) There has been a valid attachment authorized by the Secretary of the Treasury pursuant to the executive order. Castriotis v. Guaranty Trust Co., 229 N. Y. 74; Hanna v. Stedman, 230 N. Y. 326; National Park Bank v. Billings, 144 App. Div. 536; 203 N. Y. 556; Higgins v. McConnell, 130 N. Y. 482; Hamilton v. Drogo, 241 N. Y. 401; McNeeley v. Welz, 166 N. Y. 124.)

Opinion:
Loughran, J.
Commission for Polish Relief, Ltd., a domestic membership corporation, is the plaintiff. The defendant is Banca Nationala a Rumaniei, a foreign private banking corporation existing under the laws of the Kingdom of Rumania.
The material allegations of the unchallenged complaint are these: In October, 1939, Bank Poliski — a foreign private banking corporation existing under the laws of the Republic of Poland — delivered to the defendant at its principal office at Bucharest, Rumania, gold of the value of $3,060,704 which the defendant there received for safekeeping. In April, 1940, Bank Poliski transferred all its right to this gold to Polish Food Commission, Inc., a Delaware non-profit corporation. In May, 1940, Polish Food Commission, Inc., made demand for this gold upon the defendant and delivery thereof was refused. In December, 1940, the cause of action for such tortious conversion of this gold was assigned by Polish Food Commission, Inc., to the plaintiff.
This action was initiated in December, 1940, by issuance of the summons and of a warrant of attachment that had been granted to the plaintiff. On December 19, 1940, the warrant was levied-upon $4,000,000 of credits in deposit accounts maintained by the defendant at domestic banking houses in the city of New York. On January 14, 1941, the plaintiff obtained an order under which the summons was served by publication.
At that stage, the defendant moved for an order vacating the warrant of attachment, the levies thereof and the constructive service of process. This appearance of the defendant was made specially for the one purpose of invoking the following provisions of an Executive Order of the President of the United States:
"Section 1. All of- the following transactions are prohibited, except as specifically authorized by the Secretary of the Treasury by means of regulations, rulings, instructions, licenses, or otherwise, if (ii) such transactions involve property in which any foreign country designated in this Order, or any national thereof, has at any time on or since the effective date of this Order had any interest of any nature whatsoever, direct or indirect:
" A. All transfers of credit between any banking institution within the United States; and all transfers of credit between any banking institution within the United States and any banking institution outside the United States (including any principal, agent, home office, branch, or correspondent outside the United States, of a banking institution within the United States);
" B. All payments by or to any banking institution within the United States;
" E. All transfers, withdrawals or exportations of, or dealings in, any evidences of indebtedness or evidences of ownership of property by any person within the United States; and
" F. Any transaction for the purpose or which has the effect of evading or avoiding the foregoing prohibitions.
" Section 3. The term ' foreign country designated in this Order ' means a foreign country included in the following schedule, and the term ' effective date of this Order ' means with respect to any such foreign country, or any national thereof, the date specified in the following schedule: (f) October 9, 1940 — Rumania " (Executive Order No. 8389 of 1940 as amended by No. 8565 of 1940).
As the defendant sees it, the Executive Order so far immobilized its deposit accounts in the New York banks as to render them wholly unattachable in the absence of a lifting license of the Secretary of the Treasury. In that view the court had no jurisdiction of the cause of action —for the plaintiff disclaimed any such allowance of liberty to proceed in rem, and there was lack also of personal service of the summons. This fundamental issue has been ruled in favor of the plaintiff in the courts below and is now before us on this appeal taken by the defendant pursuant to leave of the Appellate Division. The controversy has been presented to us in two parts.
(1) The first contest is upon the question of the aim and effect of the Executive Order. The Special Term said: " There has been no seizure of the funds, but merely a restraint against their transfer or payment with the view of protecting the dominated nation or its nationals and American creditors." (176 Misc. Rep. 1070.) So, the Appellate Division said: " Clearly, the sole purpose of the Order was to prevent the funds of certain foreign nations, including Rumania, and their nationals, from falling into the hands of the aggressor Axis powers." (262 App. Div. 543, 546.) As read by the Special Term the Executive Order leaves open the way to an " assignment of the defendant's claims against the banks that would carry the title." (p. 1071.) The Appellate Division likewise conceived of the Order as a command which " operates exclusively in personam upon the banks." We hold a different opinion in respect of this question.
The Executive Order is a check upon trading with the enemy. Its prime purpose is to stop such uses of foreign property rights as might imperil national defense. The words of the Chief Executive of the nation must be taken to have deprived the defendant of power to transfer any interest in these blocked accounts except through the medium of assignment subject to a releasing of the credit by the Secretary of the Treasury.
(2) To the defendant this means that its claims against the New York banks were here non-leviable things. The point is put in this way: " It may be conceded that a ' seizure subject to license ' would not violate the Executive Order. The difficulty is that a .1 seizure subject to license ' is no seizure whatever."
In support of this contention, the defendant invokes Sheehy v. Madison Square Garden Corp. (266 N. Y. 44). We there said: "It is well settled that an indebtedness is not attachable unless it is absolutely payable at present or in the future, and not dependable upon any contingency " (p. 47). In the Sheehy case, however, the asserted res was nothing but a right to earn money in the future. Attachment of a debt is obviously an impossibility when it is thus uncertain whether the garnishee will ever become indebted to the defendant in the action. (Cf. Civ. Prac. Act, § 916, subd. 3.) We have a manifestly different case here. Each of the New York banks owed to this defendant a debt which (as between the parties thereto) was payable on demand at the time of the levy. These actual liabilities were not transmuted into contingent obligations merely because the Executive Order had adventitiously put a stay upon them. (See Drake on Attachment [4th ed.], § 552.)
The Executive Order did not forbid attachment of the conceded interest of the defendant in the credits upon which the levies were made. For all we know, payment of the blocked accounts to the credit of this action can be permitted consistently with the purpose of thé Order. We are not to presuppose that this will inevitably be refused in the event of a judgment for the plaintiff. (Cf. Simpson v. Jersey City Contracting Co., 165 N. Y. 193, 200.) The lien of an attachment is always hypothetical in some degree. A " seizure subject to license " was, we think, sufficient for the purpose of jurisdiction in rem over the deposits in question. (See Higgins v. McConnell, 130 N. Y. 482; McNeeley v. Welz, 166 N. Y. 124, 128; Clements v. Doblin, 209 App. Div. 208; 239 N. Y. 526; Davis v. C. C. C. & St. L. Ry. Co., 217 U. S. 157, 174-179; Feuchtwanger v. Central Hanover Bank & Trust Co., 288 N. Y. 342, decided herewith.)
The dissenting opinion calls upon us to say a word more. As amicus curise, the government of the United States informs us of its decision that the levies of this attachment do not offend any national policy implied by the Executive Order. We do not presume to contradict this executive determination. (See United States v. Pink, 315 U. S. 203.)
The order should be affirmed, with costs. The question certified should be answered in the affirmative.