Court Opinion

ID: 3584535
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:34:57.536343+00
Date Added: 2024-06-11T07:41:42.696586
License: Public Domain

The complaint herein contains allegations that on November 14, 1919, the Nemeth State Bank agreed "to sell the plaintiff two million lei and transmit the same by cable forthwith for the account of these plaintiffs to Banque Marmorosch Blank  Co., Bucharest, Roumania, the same to be payable to said Banque Marmorosch Blank  Co. for the account of the plaintiffs on November 17, 1919," and that the Nemeth State Bank wholly failed and neglected to transmit, pay or deliver the said two million lei by cable to the bank in Roumania until May 27, 1921, and the plaintiffs did not receive notice of such payment until August 17, 1921. Though the complaint does not contain any affirmative allegation that the plaintiffs thereafter availed themselves of the moneys alleged to have been transmitted to the bank in Roumania for their account, the action is brought not for the restitution of the original consideration paid to the Nemeth State Bank, nor for the amount of moneys which the Nemeth State Bank had agreed to "transmit," but for the damages suffered by alleged delay on the part of the bank in carrying out the contract. The complaint assumes belated performance has been made and accepted, and alleges that the "market value of the said two million lei depreciated from November 17, 1919, when the same should have been transmitted and paid and when the same should have been available as aforesaid, to May 27th, 1921, when the same was transmitted and paid as aforesaid." These allegations are intended to show that the belated performance was less valuable than stipulated performance would have been. For this alleged difference in value the plaintiffs have brought this action against the defendant which has assumed the obligations and liabilities of the Nemeth State Bank, and for convenience we shall hereafter refer to the defendant as if the complaint alleged that it had entered into the original obligation. The defendant has moved to dismiss the complaint on the ground that it *Page 171 
fails to state facts sufficient to constitute a cause of action.
There is no contention that the complaint does not sufficiently allege a contract on the part of the defendant and a breach of that contract by the defendant's failure to "transmit," or "to establish or effect a credit," for the stipulated number of lei at the stipulated time. Assuming, as we must upon this appeal, that all the facts alleged in the complaint can be established, the plaintiffs at that time undoubtedly had a cause of action against the defendant for the consequent damages. Acceptance of belated performance would not bar the plaintiffs from bringing an action for damages for delay unless such acceptance constituted a waiver of, or an accord and satisfaction for, the earlier breach. The plaintiffs' cause of action is for damages for breach of a contract made in this country and not strictly for a debt payable in foreign money in a foreign country. (British AmericanContinental Bank — In re Goldzieher  Penso's Claim, [1922] 2 Chancery, 575. Same. In re Lisser  Rosenkranz's Claim, [1923] 1 Chancery, 276.) If the cause of action had arisen in the foreign country for a debt created there and which could at any time be met by payment there in the foreign currency, a different question might arise. (Societe des Hotels Le TouquetParis-Plage v. Cummings, [1922] 1 K.B.D. 451.) It is not seriously claimed that from the allegations of the complaint inference arises of waiver of any claim for damages. Mere acceptance of belated performance does not ordinarily give rise as a matter of law to such inference. If such performance was less valuable than the stipulated performance, it does not as matter of law constitute satisfaction of the contract though tendered and accepted for mutual convenience. The real question involved and the only question considered by the courts below is whether the complaint shows that belated performance was in fact less valuable and that the plaintiffs have been damaged in a manner for which the law *Page 172 
can afford redress. We may upon this appeal properly dismiss without consideration, or at least postpone consideration, of such questions as whether the plaintiffs even without setting forth the nature of the damages they seek, might not, perhaps, recover nominal damages or interest for the detention of moneys due to them. No such questions are raised by the parties, and it is evident from the pleadings and from plaintiffs' course in this litigation that they are seeking only the particular kind of damages which they allege they have suffered and the court should upon this motion determine whether they have a cause of action for such damages.
Damages so far as possible should compensate for loss suffered; they represent ordinarily, in actions upon contract, the value of performance of the contractual obligation which the promisor has failed to perform. What in this case was the nature of the defendant's contractual obligation? Allegations of the complaint setting forth an agreement to sell and transmit foreign moneys have been quoted above. There are also allegations that the defendant had agreed to "establish a credit abroad" for and in behalf of the plaintiffs. At Special Term it has been held that the contract alleged is one for the sale of foreign currency and that the rule of damages in an action for delay in delivering foreign currency under a contract of sale is the same as the rule of damages in an action for delay in delivering other commodity under similar contracts, viz., the difference between the value of the commodity at the time it should have been delivered and the time it was in fact delivered. In the Appellate Division it has been held that the contract alleged is not a contract of sale but an executory contract to establish a credit in a foreign country and that for delay in carrying out such contract only damages special to these plaintiffs and within the contemplation of the parties may be recovered. We are agreed that in spite of the allegations of the complaint of a contract of sale, it sufficiently appears that the *Page 173 
contract was executory and that the defendant's obligation was "to place a certain amount of foreign money to the credit of the plaintiffs which necessarily related to the future whether measured by the celerity of a cable dispatch or by the delay of a communication by mail." (Equitable Trust Co. of N.Y. v.Keene, 232 N.Y. 290; Gravenhorst v. Zimmerman, 236 N.Y. 22. ) In determining the damages which have been suffered by a breach of contract, the technical nature of the contract is of less importance than the practical benefit which would naturally result from the obligation if carried out. Regardless of whether the defendant promised to sell and transmit foreign money to Roumania on November 17, 1919, as alleged in the complaint, or promised to "place to the credit" of the plaintiffs the same amount of foreign moneys on the same date, as we have construed the contract, if the defendant's contract had been carried out the plaintiffs would on the stipulated date have been in control of the foreign moneys. They could have used it to purchase commodities in Roumania, they could have sold it as if it were a commodity for American dollars. The value of the defendant's obligation in either case was the value of the foreign moneys on that date, and immediately upon its breach the plaintiffs could have brought an action for such value.
How would that value be determined? Of course, the contract was to be carried out abroad; the money was to be made available there, and by the defendant's failure to perform the plaintiffs were deprived of its value there. In Roumania the only recognized standard of value is Roumanian money. Here, the only standard of value is the dollar, and we would determine the value of the lei in an action for failure to deliver lei in Roumania on the stipulated date, by converting lei into our money at the rate of exchange prevailing on the date of the breach. (Hoppe v.Russo-Asiatic Bank, 235 N.Y. 37.) In other words, though the plaintiffs would be entitled to the value *Page 174 
of the lei in Roumania and not in America, yet in our courts we must fix its value in our money which is current and is the measure of value not in Roumania but only here, and we fix it on the date when the money should have been paid, delivered or made available as if it were a commodity.
The plaintiffs have not brought such action for damages for total failure to deliver, and apparently have accepted a belated performance by which they have received 2,000,000 lei as agreed, but, as alleged in the complaint, the "market value" of these lei had in the meanwhile much depreciated. If the lei were in full sense a commodity bought and sold in the markets of Roumania, the difference between the value of performance if made at the stipulated time and its value when actually made would be measured by the depreciation in the market value of the lei in Roumania between these dates. It is said, however, that since lei are in Roumania not a commodity but a measure or standard of value they can by their very nature have no market value inRoumania which can depreciate, and since the plaintiffs' damages must be fixed in accordance with values in Roumania, the place where the contract was to be performed, it does not appear that plaintiffs have suffered any damages which they can recover in this action. Upon the argument in this court, plaintiffs' counsel practically conceded that from the very nature of money there could be no difference in market value of the lei in Roumania where the lei was not a commodity but a measure of value.
Foreign money is nevertheless not solely a measure of value but at least in many respects must be regarded as a commodity when we attempt to fix its value in relation to our own currency. (Sedgwick on Damages [9th ed.], sections 273, 274; S.S. Celia
v. S.S. Volturno, [1921] 2 Appeal Cases, 544; British AmericanContinental Bank, Ltd.; In re Credit General Liegeois, [1922] 2 Chancery, 589.) We fix the value of lei at the time of failure to perform in *Page 175 
accordance with the rate of exchange then prevailing, and it would seem upon parity of reasoning, that when our courts are called upon to determine the value of the belated performance they would use the same method. The difference between the value of stipulated performance and of belated performance so fixed represents the damage suffered by the plaintiffs.
It is said that such damages do not represent the actual value,i.e., the purchasing power of the lei in Roumania. We can measure values, purchasing power and damages only in our currency. If one dollar will purchase ten units of foreign money one year, and twenty units of the same money the next year, then the purchasing value of the foreign unit even in the forum where it passes current has in comparison with the dollar been reduced by one-half, for the dollar which will purchase twenty units of money necessarily also acquires the purchasing power of the same number of units.
It is true that in some respects the purchasing power of depreciated currency in the forum where it is the recognized purchasing medium may not have depreciated in exactly the same proportion as the currency has depreciated when measured in gold or in normal money. The price, measured in local money, of lands and buildings, of labor, of commodities which cannot easily be exported, does not always advance in the same proportion as the local currency has depreciated. For us, however, the price of commodities in foreign as in domestic markets must be measured by our money, and the purchasing power of the local currency must be similarly measured. For us the "market value" of the lei is its price measured in dollars; and since the dollar must of course represent in the markets of Roumania the same purchasing value as the number of lei which it will purchase, the "market value" of the lei even though fixed in New York also determines its purchasing power in Roumania when measured in dollars. Unless we measure the value of the *Page 176 
lei by its market price expressed in dollars, we have no measure we can apply. If in the great disturbance of credit and of currency values due to the World War the measure we use is not always perfect, it must be remembered that damages are assessed against one who has not complied with his contract, and we must use the best measure we have at hand rather than deprive the injured party of remedy.
Foreign exchange represents the method by which the money in one country can be transmitted or made available as money in a foreign country. The defendant agreed to establish a credit at a certain date. The defendant actually established the credit more than a year later. At that time the "market value" of the lei had diminished; i.e., for a dollar more lei could be made available in Roumania as a purchasing medium in the Roumanian markets, and a single lei would purchase commodities of proportionately less value, measured in our currency. The value of performance at the stipulated time was the value of the lei at that time; the value of the delayed performance was the value of the depreciated lei. This difference represents damage which plaintiffs suffered. The difference can be measured only by the market value of the lei expressed in dollars. It is said that perhaps the plaintiffs might have retained the lei in the bank even if the credit had been established and have suffered no real damage. The fact remains that if the credit had been established the plaintiffs could have used the money or allowed it to remain in the bank, and if it had appreciated in value while in the bank the plaintiffs would have gained by such appreciation. On the other hand, assuming as we must the truth of the allegations of the complaint, the defendant has for over a year not complied with its contract, and by the depreciation of the market value of the lei it could perform its contract at less cost to itself measured in dollars, and the plaintiffs have received something of less value measured *Page 177 
by the same standard. By the terms of the contract between the parties it was the plaintiffs and not the defendant who had acquired the right to speculate in the foreign money.
It must be remembered that on this appeal we pass only upon the allegations of the complaint. We must assume that there has been a total failure on the part of the defendant to perform for over a year; we do not consider the effect of a mere failure to notify the plaintiffs that a credit had been effected, or of any circumstances not set forth in the complaint, which might have bearing on the defendant's obligation or its liability for damages. The allegations of the complaint seem sufficient to constitute a cause of action for damages.
The order should be reversed, with costs in this court and the Appellate Division, and motion denied.
McLAUGHLIN, CRANE and ANDREWS, JJ., concur with HISCOCK, Ch. J.; CARDOZO, J., concurs with LEHMAN, J.; POUND, J., absent.
Judgment affirmed.