Court Opinion

ID: 5748710
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:53:37.17501+00
Date Added: 2024-06-11T08:41:13.523693
License: Public Domain

Rabikt, J. P. (dissenting).
I dissent and vote to grant judgment in favor of the defendant. The plaintiff may not recover on this agreed statement of facts.
The primary duty of the defendant bank was to forward the draft to its correspondent bank for collection and to transmit the proceeds of the draft, if received. Although Banco, the correspondent bank, did collect the amount of the draft it did not forward the proceeds to the defendant due to its inability to obtain the requisite permission of the Cuban Government to transmit the funds. At that point it cannot be said that Banco was remiss in its obligation to either the defendant or to the plaintiff. The obligation of Banco was to use reasonable efforts to collect the draft and transmit the funds when collected. However, in the circumstances of this case its duty to transmit was not an absolute one. Its ability to transmit — and consequently its duty to do so — was limited by the regulations of the Cuban Government—known to all parties to this transaction at the time the draft was placed for collection. Indeed, the limitations were known to the plaintiff at the time it made its original sale. Banco was not obliged to violate the laws of its country. The limit of the obligation of Banco was to use reasonable efforts to *348obtain authorization of the Cuban Government to transmit the funds. It owed neither the plaintiff, nor the defendant, any greater obligation. The submission does not allow for a conclusion that it failed in that duty.
Having failed to transmit the funds did Banco thereby become a debtor of the plaintiff, making any of its funds outside Cuba subject to seizure in satisfaction of such debt? I do not think so. To so hold would in effect prevent any collecting bank from doing its routine business if, by the law of the sovereignty having jurisdiction over it, it is prevented from remitting after the collection of a draft. I do not think that such a holding would be conducive to free international commercial intercourse and we should not so hold.
Be that as it may, however, the situation changed upon the nationalization of Banco. The Cuban Government, having taken over Banco’s obligations, became obliged to transmit the proceeds of the draft. It was within its power to do so. What was the duty of the defendant toward the plaintiff in the changed circumstances, when funds formerly belonging to Banco came into its possession? It should be noted that the bank’s primary duty was to pay the proceeds of the draft, if and when such proceeds were transmitted to the bank. It was not under any duty to enforce collection through the seizure of funds not so transmitted. It was not obliged to adjudicate the rights of the plaintiff as against Banco or the Cuban Government or for that matter of other possible creditors of Banco or Cuba and enforce collection for the benefit of the plaintiff through the seizure of the funds in its possession. It was for the plaintiff to establish its claim against the debtors and subsequently enforce its rights against these funds—funds not transmitted in payment of the draft.
But, the plaintiff says, it was prevented from doing so because of the failure of the defendant to notify it that such funds had come into the bank’s possession, asserting that it was the duty of the defendant to immediately notify the plaintiff of the acquisition of such funds so as to enable it to take such steps as it might have deemed advisable to protect its interest. It is contended that the bank, having failed to do so, thereupon became liable to the plaintiff for the amount of the draft. The defendant urges that it would place an intolerable burden upon banks to impose upon them the obligation to be on a constant lookout to ascertain whether there are any outstanding claims against the correspondent bank each time such a bank makes a deposit for purposes other than in payment of such outstanding claim. That may be so. However, assuming that the defendant had *349such an obligation*, and assuming further that it then became its duty to notify the plaintiff of the presence of Banco funds, I cannot see how, failing in that duty, the defendant was thereupon obliged to apply those funds for the plaintiff’s benefit.
We need not here decide whether the defendant had a right to appropriate the funds deposited to its own account. Of course, if it rightfully did so then plaintiff has no claim. On the other hand if it wrongfully appropriated such funds to its account it does not necessarily follow that it had to turn the money over to the plaintiff. It was for the plaintiff to establish its claim and pursue collection as against its debtor. Nor does the agreed statement of facts allow for a conclusion that the plaintiff was entitled to these specific funds — formerly belonging to Banco, subsequently nationalized. There may be others who have an interest in the specific funds — among them creditors of Banco or creditors of the Cuban Government. The statement of facts does not eliminate such possibility. We cannot impose upon the defendant the obligation to determine plaintiff’s rights as against all others (leaving aside its own interest) and to act upon such determination. The defendant cannot be expected to expose itself to the risk of turning over these funds to the plaintiff.
At best, if the defendant had any obligation toward the plaintiff at all, in the circumstances, it was to notify it that funds of Banco had come into its possession. Its failure to so notify the plaintiff would then constitute a breach thereof. But what are the consequences of such breach? It is the plaintiff’s position— and in such position it is supported by the majority— that it was then entitled to the amount herein claimed. I do not think so. The failure of the bank to notify the plaintiff constituted either negligence or a breach of its contract with the plaintiff. Breach of a duty—either in contract or in tort—■ does not without more entitle one to recover. It must also be shown that such breach resulted in damage. We may not ‘ ‘ fine ’ ’ the defendant the amount of the draft merely because it breached its duty to the plaintiff. We can only award the plaintiff the damage suffered because of such breach.
In my opinion the plaintiff has failed to show that it has been damaged. Had notice been given to the plaintiff its only rights would have been to take such steps—perhaps by way of attachment, or through the application of section 977-b of the *350Civil Practice Act or its successor sections in the Business Corporation Law, or otherwise—Jo protect its interests. What is to prevent the plaintiff from doing so now? It can do now what it could have done then had it been notified, Consequently, the plaintiff has not demonstrated that its rights have in anywise been impaired by the failure to notify it of the fact that funds of Banco had come into the defendant’s possession. Accordingly on this submission, judgment cannot be for the plaintiff but must be for the defendant.
McNally, Stevens and Steuer, JJ., concur with Wither, J.; Babin, J. P., dissents in opinion.
To the extent of its claim, plaintiff has the prior right in the funds in the hands of defendant. Judgment for plaintiff accordingly, with costs. Settle order on notice.

 It should be noted, however, that there is nothing in the submission to indicate that the defendant bank actually knew that there was an outstanding unpaid draft of the plaintiff at the time the Banco funds came into its possession.