Court Opinion

ID: 5315145
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:08:00.81578+00
Date Added: 2024-06-11T08:29:15.941870
License: Public Domain

The suit was for a deposit made by the plaintiffs in defendant’s Petrograd branch bank in Russia, of rubles, Russian money, which sum so deposited the defendant is alleged to have agreed to repay in such amounts and at such times as the plaintiff's might demand, in Petrograd, Russia.
The breach claimed is that on September 1, 1918, the defendant discontinued its business at the branch at Petrograd and failed to designate any agent upon whom a demand could be made, or who was in possession of funds from which to pay demands and it became impossible for plaintiffs to demand or receive from the defendant at Petrograd any part of their balance.
It is alleged that on September 1, 1918, the rate of exchange was thirteen cents, and that their damage was the dollar value of the rubles, i. e., $194,200, with interest from September 1, 1918.
The defenses were as follows:
“ I. The agreement of deposit was made in Russia and was to be performed in Russia and hence was governed by the laws of Russia; the laws of Russia provided that force majeure excused performance of a contract in Russia; the Soviet Revolution constituted such force majeure and hence performance in Russia was prevented by force majeure.
“ II. The contract and deposit and the promise to repay were made in Russia; by its terms, such deposits were repayable only on demand, and were subject to the Russian law. Under the Russian law, any bank deposit repayable on demand becomes due and payable only on specific demand, and no such demand has ever been made by the plaintiff; by reason thereof, the deposits referred to in the complaint have never become due and all such deposits are now repayable by the defendant in the ruble currency which was legal tender in Russia under the last government in Russia which was recognized by the United States, namely, the so-called Provisional or Kerensky Government, or the dollar value of such currency at the time of such demand.
“ III. A tender of the rubles in question to the plaintiffs, in September, 1922, by the head office of defendant in New York was refused.”
The plaintiffs opened their account in the Petrograd branch by a direct payment of rubles on June 6, 1917. Between the date *567of the opening of the account and September 1, 1918, they deposited over five million rubles and withdrew over four millions and they had a balance as previously stated of 1,493,862 rubles.
No demand was ever made by the plaintiffs on the defendant, either in Petrograd or in New York, for the repayment of this balance or any part thereof. .
Plaintiffs assert as their right to recover the value of rubles as of September 1, 1918, because on that day the branch was closed and all business with it rendered impossible.
It is conceded that it was impossible at the time of the closing of the bank to export gold from Russia. Individuals were allowed to take out only 500 Russian rubles, and subsequently in America the Trading with the Enemy Act forbade the exportation or importation of Russian rubles or the transfer of funds for their purchase in the United States. This restriction ran until December 18, 1920.
During that period there was no demand or request of any kind either in Petrograd or New York for the payment of this deposit.
On November 4, 1921, defendant notified plaintiffs that it had elected to close their account and offered to pay their rubles. Plaintiffs refused the offer and said they would allow the matter to lie in abeyance “ -until Russia is in a less chaotic condition than at present.”
Defendant then tendered to the plaintiffs their balance in ruble currency and also its equivalent in dollars at the then market price for such currency in New York, which tender was not accepted.
The first the defendant knew that plaintiffs desired their rubles paid or were willing to take them or their equivalent on any basis was when this suit was begun without any previous demand, on April 7, 1924, over five years after the closing of the Petrograd branch.
Plaintiffs proved the price at which Romanoff ruble notes were sold in New York on September 1, 1918, and the trial court has awarded judgment on the basis of this price at which Romanoff ruble notes were sold in New York on that date.
Defendant asserts in the absence of any demand except the bringing of suit, the value of the ruble deposit must be based, not on the rate at the time the Petrograd branch was closed, but at the time the suit was brought.
It argues that Russia, not New York, is the market in which to measure the value of the ruble and that it is the value of Kerensky rubles that determines its liability.
The plaintiffs contend that the measure of the recovery allowed is the same measure allowed by all the courts in the Sokoloff Case (250 N. Y. 69) and as to the time at which values are to be taken. *568They assert that the breach day rule is the rule announced by the decisions of this court and the Court of Appeals in Kantor v. Aristo Hosiery Co., Inc. (229 App. Div. 502; affd., 248 N. Y. 630) and in the Sokoloff Case (supra). The argument is that the Sokoloff case established the rule that the closing of the Petrograd branch gave the depositor an immediate right to restitution or damages without demand; that the obligation of the defendant’s home office is to be determined by New York law, and that the Russian law is no more favorable to defendant than would be the rule in New York; that defendant’s tender of worthless rubles in 1921 and 1922 and plaintiffs’ rejection of this demand do not affect the measure of damages. They also assert that the Sokoloff case established New York as the market for the measure of value and since the option to pay in Kerensky rubles was never exercised, it does not. limit the defendant’s liability. The latter rule was also made in the Sokoloff case.
As to the claim that the closing of the Petrograd branch gave an immediate right to damages without demand, the appellant urges that, since there was no demand, the amount of the recovery is affected only by the beginning of the suit and that the dollar value of the plaintiffs’ ruble balance at that time and not when the Petrograd branch closed, is the amount that plaintiffs should recover.
The Sokoloff Case (supra) decided that since the contract was to pay rubles at the Petrograd branch whenever demanded, the bank had the right to treat the place of performance as the essential feature of the contract and to refuse to honor any demand made upon it elsewhere than at the Petrograd branch. The depositor had the same right and could, therefore, treat the closing of the Petrograd branch as of itself a termination of the contract entitling him to the restitution of his balance, or a breach of the contract, giving him a right to damages in that amount.
As of September 1, 1918, when the Petrograd branch ceased to function, the right now enforced in this case arose.
Appellant contends that the Sokoloff case does not establish a right of action for the closing independent of a demand. It contends that in that case a demand had been made on the Petrograd branch, but the demands in the Sokoloff case were either withdrawn or not properly made by check or other draft to close out the account, and Sokoloff in those circumstances did not rely upon any alleged demand in 1917, but upon the closing in 1918, and the Court of Appeals in the Sokoloff case based its decision on the broad ground that demand was unnecessary. They say that “ the fact that the bank had gone out of business on that date made a *569demand useless and unnecessary; the law by reason of the contract between the parties will consider the case as if a demand had been made. In other words, that which becomes impossible and useless ceases to be required by the law in cases like this.”
The suspension of the business in 1918 rendered it futile to make at that branch any demand for plaintiffs' deposits and, therefore, such demands were not necessary as a condition of the maintenance of the action, but, in itself, does furnish evidence of a breach of contract to enable plaintiffs to maintain action.
I agree with the rule announced by Mr. Justice Martin with regard to the value of the exchange and that it should be measured as of the place where it was intended that the bank was to deposit it; but I believe such rule has been altered, due to the peculiar conditions in Russia at the time of the breach, by the decision in the Sokoloff Case (supra).
I think that the question whether a demand in New York was necessary is purely a question of New York law, although defendant contends that the doctrine of force majeure under the Imperial Russian law governs.
The obligation this action was brought to enforce was the responsibility of the home office for plaintiffs’ deposit in Russia, and they rely upon the pledge in the contract of all the defendant’s assets to meet plaintiffs’ debt. That pledge was reiterated by the defendant’s home office in New York, before plaintiffs ever opened their deposit in Russia. The Petrograd branch closing made performance in Russia impossible, and New York became the place of performance. The debt then was to be paid by the defendant at its principal office.
The question whether the right is now enforcible by action in New York is a question of the remedy and, therefore, the law of the forum applies.
Plaintiffs established by indisputable evidence the dollar value of the ruble in New York by quotations recognized as authoritative in the trade. This value, according to these witnesses, at the market price of Russian rubles in New York on September 1, 1918, was not less than thirteen cents. There were said to be twenty dealers besides the banks, and there were for every dealer quantities of customers. Defendant called a dealer as a witness, who confirmed the thirteen-cent price and said that his firm alone had transactions in 1918 amounting to ten million rubles, and the City Bank earlier in the year estimated the number of rubles on the New York market at seventy-five millions.
To the objection that New York is not the proper place to measure value, the answer is that the same objection was made in the *570Sokoloff case and the referee in that case ruled that “ the measure of plaintiff’s recovery is the value of the Russian ruble in New York city,” and defendant excepted to this conclusion, and to a refusal to find that the price paid in New York for Russian rubles pre-war currency, cash against delivery, is not evidence of the value of plaintiff’s rubles deposited in Russia and payable there. The Court of Appeals affirmed the referee’s ruling and said that Sokoloff’s damages were to be measured according to the value of the rubles on that day; that is, September 1, 1918, in Petrograd, measured in dollars in New York, where the remedy was sought. The Sokoloff case disposed of that question and the New York market has been adopted for the measurement. The Sokoloff case is not distinguished on the ground that in that case there was no evidence such as was here offered concerning the supposed market in Russia. The question was the same, however, because had defendant been correct in its contention that the Russian market controlled, Sokoloff’s case would have been left without any proof of the value of the ruble. The attempt to measure the value of the ruble in Russia seems to be a vain task. The Bolshevik Revolution in 1917 paralyzed business in Russia.
I think, therefore, that the value of the ruble as proved in the New York market at that time was the only proper standard of value. It was also held in the Sokoloff case that whatever right defendant had to pay plaintiff in Kerensky rubles was lost after September 1, 1918.
The judgment should be affirmed, with costs.
Judgment reversed and a new trial ordered, with costs to the appellant to abide the event.