(146 N.E.) struction should be indulged in." Swart v. may produce, and take their depositions in Rickard, supra. . We may not hold that either writing, and cause them to be subscribed by complainant or justice of the peace has com- the parties making them.” Here the informmitted a legal wrong for which he should re- ant was sworn; his deposition was made spond in damages because he has failed to in writing, and was subscribed by him. The display a learning which he could not rea- failure of the niagistrate to sign the jurat sonably be presumed to possess. In the may have been negligence on his part in the present case McGran charged that the plain- performance of his duties, but it was tiff received felt from Mrs. Leonard Delia, wrong for which the defendant can be held whose husband, Leonard Delia, had stolen responsible, nor did it affect the jurisdiction said felt from the De Feriet mill of the St. of the magistrate. Regis Paper Company. The information fur [9] Since the warrants upon which the ther states that plaintiff had said felt "in plaintiff was arrested were not jurisdictionhis possession for the purpose of conceal. ally defective, the plaintiff has failed to esment," and that the plaintiff received the tablish any cause of action against defendgoods “knowingly" and "wilfully” and “cor- ant for false imprisonment, even if the deruptly." Certainly these statements are suf- fendant caused the plaintiff's arrest under ficient to allow and perhaps even to require such warrants. It is therefore uunecessary the inference that the complainant charged for me to determine whether the evidence the plaintiff with receiving and concealing is sufficient to sustain a finding that either property which he knew was stolen. The McGran or the defendant has in fact caused justice of the peace was called upon to de- the arrest. cide whether a warrant should issue, and the The judgment should be reversed and complaintiff's arrest was therefore not unlaw- plaint dismissed, with costs in all courts. ful, though his innocence might thereafter appear. Other objections now urged to the

HISCOCK, C. J., and CARDOZO, POUND, form of the warrant and the information MCLAUGHLIN, CRANE, and ANDREWS,

JJ., concur. have too little substance to require consideration.

Judgments reversed, etc. [7,8] We have analyzed first the information upon which the second warrant was is. sued, because the plaintiff's trial and conviction was under that warrant. The same

(239 N. Y. 154) considerations which lead us to conclude that that warrant was not jurisdictionally defec-BROAD & LACKAWANNA REALTY CO. v.

BREITUNG et al. tive lead us to the conclusion that the allegations contained in the first information (Court of Appeals of New York. Nov. 25, were also sufficient to give jurisdiction.

1924.) While this information does not expressly 1. Appeal and error ema1091 (1)-Defendants' charge the plaintiff with knowledge that the

evidence assumed true on appeal from judggoods which were found in his possession

ment affirming judgment on directed verdict were stolen, yet it contains allegations from

for plaintiff. which that inference might be drawn, and

On appeal from judgment affirming judgwhich, if not contradicted or explained, ment on directed verdict for plaintiff, Court of might be sufficient to sustain a conviction | Appeals must assume that defendants' evidence at a trial. When the magistrate received is true. information that stolen goods were delivered 2. Bills and notes 380—Makers, intrusting to the plaintiff by the thief for concealment,

broker with apparently valid negotiable notes, and were found in the plaintiff's possession, cannot escape liability to innocent purchaser he was then called upon to determine wheth for value. er the circumstances justified the inference Makers, intrusting broker with possession that the plaintiff knew the goods were stolen. of and apparent right to transfer apparently The evident intent of the information, read valid negotiable notes, merely to enable him to as a whole, was to charge the plaintiff with open negotiations for sale, cannot escape lia

bility to innocent purchaser for value on such knowledge, and was sufficient to apprise ground that broker sold them without notice to him of the charge. Its defects are not of makers of such intent, and that they received such substance that the warrant which is none of proceeds. based upon it may be attacked collaterally

3. Corporations Om428 (5) Corporation and disregarded as void. Section 148 of

chargeable with notice to incorporators and the Code of Criminal Procedure requires the directors of invalidity of notes. magistrate to "examine on oath the inform Corporation, to which notes, purchased for ant or prosecutor, and any witnesses he inadequate consideration by sole incorporators

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and directors, were assigned by them, is charge- | ceived any of the proceeds thereof. At the able with any notice to them of invalidity in close of the defendants' evidence the trial inception.

justice directed a verdict in favor of the 4. Bills and notes 537(6)-Holder of notes plaintiff.

held not innocent purchaser for value as mat (2-4) Upon this appeal we must assume ter of law.

that the evidence produced by the defendThat makers, delivering negotiable notes to ants is true. If this evidence is true, it esbroker to enable him to open negotiations for tablishes that the notes were delivered to sale, promised to tell prospective purchasers the note broker subject to a condition prece that they were valid, or signed letter asserting dent which was never complied with, and validity, did not entitle corporation, to which assigned by incorporators, purchasing them for that the notes consequently had no valid

inception. Since the defendants chose for inadequate consideration, to recover thereon as matter of law, in absence of evidence that pur- their own purposes to intrust the broker chasers inquired of makers or purchased them with possession of and apparent right to in reliance on makers' written representations. transfer negotiable instruments which were

apparently valid, they cannot escape liability, Appeal from Supreme Court, Appellate if the notes were thereafter transferred to Division, First Department.

an innocent purchaser for value; but the Action by the Broad & Lackawanna Real. inadequate consideration paid by the purty Company against Edward N. Breitung chasers of the notes in this case raises a and others, copartners under the firm name question whether the purchasers were in fact of E. N. Breitung & Co., and others. From innocent. These purchasers were the sole a judgment of the Appellate Division (207 incorporators and the sole directors named App. Div. 810, 201 N. Y. S. 888) unanimously in the plaintiff's certificate of incorporation, affirming a judgment for plaintiff on a di- and the plaintiff is chargeable with any no

The rected verdict, defendants appeal by permis- tice the purchasers may have had. sion. Judgments reversed, and new trial or- plaintiff's position is not helped by the cir

cumstance that the defendants admit that dered.

See, also, 207 App. Div. 851, 201 N. Y. S. they promised the broker to tell prospec889, 207 App. Div. 902, 202 N. Y. S. 918.

tive purchasers, who might inquire about Otto Sommerich and James M. Snee, both that the defendants signed a letter assert

the notes, that they were valid or by the fact of New York City, for appellants.

ing the validity of the notes. RepresentaSamuel R. Golding, of New York City, for tions made by the defendant which were respondent.

brought to the attention of the purchasers

might have some bearing on the question of LEHMAN, J. The defendants, in Octo-the purchasers' good faith, and, if acted upber, 1921, signed three notes, aggregating on by the purchasers, might even create an $27,000, to their own order, payable six éstoppel, but in the present case there is no months thereafter. They handed these notes evidence that the purchasers ever made into' a note broker, who sold them for the sum quiries of the defendants as to the validity of $6,850 to four persons, who immediately of the note or that they purchased the notes thereafter formed the plaintiff corporation in reliance on the defendants' written repreand transferred the notes to that corporation, sentations. The testimony in this case esreceiving therefor stock of the par value of tablishes that the plaintiff's assignors pur$27,000.

chased notes which had no previous legal [1] In the present action, which has been inception for one-quarter of their face value brought upon one of these notes for the sum from a party who was not the owner and of $10,000, the defendants pleaded that the who had apparent but not actual right to notes were never delivered, and at the trial transfer the notes, and upon that testimony it produced evidence to show that these notes was error to direct a verdict. were given to the note broker merely to en The judgments should be reversed and a able the broker to open negotiations for their new trial ordered, with costs to abide the sale with prospective purchasers; that such event. prospective purchasers were then to be put in touch with the defendants in order to en HISCOCK, C. J., and CARDOZO, POUND, able them to close the negotiations; that McLAUGHLIN, CRANE, and ANDREWS, the broker sold the notes without any notice JJ., concur. to the defendants of intention to make such sale; and that the defendants never Judgments reversed, etc,



(145 N. E.) (239 N. Y. 158)

amount of deposit in Russian branch, is amount SOKOLOFF V. NATIONAL CITY BANK OF paid, for which no equivalent has been received, NEW YORK.

and, on theory of breach of contract by refus

al to pay, is value of rubles, but doctrine of (Court of Appeals of New York. Nov. 25, 1924. frustration is inapplicable in either case, where Motion for Reargument Denied

plaintiff makes no claim for profits. Dec. 19, 1924.)

6. Banks and banking en 1882-Bank's use of 1. International law w 4-Possibllity of acts money regarded as equivalent of benefit to de. and decrees of unrecognized de facto govern.

positor. ment being valid if justice or public policy de On bank's refusal to pay in Russian rubles mand,

amount paid it for deposit in Russian branch While unrecognized government may be as agreed, where interest is not demanded for viewed juridically as no government, if power any period before date of dishonoring deposiwithholding recognition so chooses, government tor's drafts, its use of money paid without inde facto, though formally unrecognized because terest must be regarded as full equivalent of deemed unworthy of place in society of nations, any benefit to depositor from enjoyment of may possibly gain quasi governmental validity banking facilities while account was running. for its acts and decrees, if violence to funda Lehman, J., dissenting in part. mental principles of justice or public policy might otherwise be done.

Appeal from Supreme Court, Appellate 2 Banks and banking On 18842-Liability of

Division, First Department. bank for amount deposited in Russian branch Action by Boris N. Sokolofr against the held not affected by acts of Russian govern- National City Bank of New York. From ment.

an order of the Appellate Division (208 App. Liability of national bank, under executory Div. 627, 204 N. Y. S. 69) reversing an order contract to repay Russian rubles as demanded of Special Term (199 N. Y. S. 355), which in amount paid it with which to open account denied a motion to strike out defenses in in Russian branch bank, held unaffected by de amended answer, and granting such motion, crees of Russian government nationalizing banks and confiscating deposits as revolutionary

defendant appeals by permission. Order affirmed, and certified questions answered.

See, also, 204 N. Y. S. 949, 196 N. Y. S. 3. Banks and banking 188/2 Liability to

.364. repay amount deposited in Russian branch bank held not defeated by implied condition.

The following questions were certified: National bank's liability to repay amount “(1) Is the first separate defense contained paid it with which to open account in Russian in the second amended answer herein sufficient branch upon its failure to carry out contract in law? to pay in rubles on demand held not defeated by “(2) Is the second separate defense containimplied condition that latter's business would be ed in the second amended answer herein suffipermitted to continue by Russian government; cient in law?" consideration failing to extent that performance

John A. Garver and Carl A. Mead, both was frustrated.

of New York City, for appellant. 4. Banks and banking ano 1881/2 - Undisclosed Morris Hillquit, of New York City, for re

intent that performance of agreement with spondent. depositor should be governed by decrees of Russian government no defense to action for CARDOZO, J. The case is here upon the restitution.

pleadings. In June, 1917, the plaintiff paid Undisclosed intent by parties to contract to the defendant, the National City Bank in for deposit in bank's Russian branch that per- the city of New York, $30,225 upon its promformance should be governed by laws of Russia, ise to open an account in favor of the plainand orders or decrees of any government there- tiff in its Petrograd branch, and to repay of, held insufficient to exempt bank from liabili- him this sum in rubles at the rate of 2344 ty to make restitution on Russian government's nationalization of banks and confiscation of decents per ruble, or a total of 130,000 rubles, posits, in absence of agreement varying parties' at such times and in such amounts as he obligations; especially as such decrees did not by his written orders might demand. The regulate, but thwarted, performance.

plaintiff, after stating this agreement alleges

that the account was opened ; that the plainOn Motion for Reargument.

tiff from time to time drew against it till the 5. Banks and banking Om 1881/2-Measure of balance was reduced to $28,365 or 122,000

recovery from bank refusing to pay rubles in rubles; and that thereafter, in November, amount paid it for deposit in Russian branch 1917, and again in February, 1918, checks stated.

for the balance were presented and disMeasure of recovery on theory of rescis- honored. sion, with right to restitution of amount paid The questions certified to us for answer bank under contract to repay Russian rubles in are directed to two defenses.

The first defense states that there was a, These judgments are not decisive of the case revolution in Russia in November, 1917, before us now. The Russian government is which resulted in the formation of the Rus- not here either as plaintiff or as defendant. sian Socialist Federated Soviet Republic; A domestic corporation pleads the acts and that in the same month the said government mandates of that government to excuse a decreed the nationalization of all private default and discharge an obligation. Joint-stock banks organized under the laws Courts of high repute have held that con. of Russia or operating therein; that it took fiscation by a government to which recogni. possession of said banks by force of arms, tion has been refused has no other effect in and decreed that they be merged in the State law than seizure by bandits or by other law. Bank of Russia; that all the assets and li- less bodies. Russian Commercial & Industri. abilities of the liquidated banks were taken al Bank v. Comptoir D'Escompte de Mulover by the State Bank acting for the Soviet house, (1923) 2 K. B. 630, 638; S. C., H. of government; that by force of said decree the L., 40 T. L. R. 837; Banque Internationale v. government assumed the liability, if any, Goukassow, (1923] 2 K. B. 682; A. M. Luther then owing to the plaintiff ; that the defend- v. James Sagor & Co., [1921] 1 K. B. 456; s. ant's Russian assets consisted of money on C., (1921) 3 K. B. 532. Cf. White, Child & deposit in other banks, Russian state obliga- Beney, Ltd., v. Simmons, [1922] 127 L. T. tions, securities held in custody for clients, 571. It would be hazardous, none the less, and certain other assets, of the value of over to say that a rule so comprehensive and so 240,000,000 rubles; that the liabilities of the drastic is not subject to exceptions under said branch to its depositors were over 240,- pressure of some insistent claim of policy 000,000 rubles; that the government follow- or justice. In our own country, Oetjen v. ing the seizure proceeded to the liquidation Central Leather Co., 246 U. S. 297, 38 S. Ct. of the banks whose activities it had ended ; 309, 62 L. Ed. 726, and Ricaud v. American and that by a subsequent decree all deposit Metal Co., Ltd., 246 U. S. 304, 38 S. Ct. 312, accounts were confiscated and were credited 62 L. Ed. 733, are cited sometimes as proto the account of a revolutionary tax. The re. nouncements of equal generality, but in truth cital of these happenings is followed by an the point involved was narrower. 31 Yale averment that the plaintiff was fully aware L. J. 535. Property in Mexico, bides and of the probability of future political and gov- bullion, had been seized under requisitions ernmental changes, and that it was intended by Villa and Pereyra, generals of Carranza. by the parties that the agreement should be the ruling was that title had been thus diperformed in Russia, and that the perform- vested, since, following the seizure, the Carance thereof should be governed by the laws ranza government had been recognized as of Russia and by any orders or decrees of the lawful government of Mexico. There any government which might exercise au was no occasion to determine whether, in thority therein. By reason of these facts default of recognition, a like effect would the plaintiff's deposit account is said to have have been ascribed to a levy of contributions been seized, his title thereto divested, and by a commander in the field. O'Neill & Oetthe defendant's liability discharged.

jen v. Central Leather Co., 87 N. J. Law, 552, The second defense is the same as the first, 91 A. 789, L. R. A. 1917A, 276; Ford v. Sur. except that it pleads the facts as a partial get, 97 U. S. 594, 605, 606, 24 L. Ed. 1018. defense rather than a complete one.

We think the case at hand is not so govern. The government of the United States re-ed by authority but that it may be dealt with fuses recognition of the Soviet Republic as upon principle. the government of Russia. Problems not [1] Juridically, a government that is unreceasy to solve have followed in the wake of ognized may be viewed as no government at the refusal. We have had occasion to deal all, if the power withholding recognition with some of them in cases recently before chooses thus to view it. In practice, how. us. Wulfsohn v. Russian Socialist Federat- ever, since juridical conceptions are seldom, ed Soviet Republic, 234 N. Y. 372, 138 N. E. if ever, carried to the limit of their logic, 24, decided that the government of Russia, the equivalence is not absolute, but is subthough unrecognized, was immune from suit ject to self-imposed limitations of common in its corporate capacity at the instance of sense and fairness, as we learned in litigaa plaintiff who asserted its existence as a tions following our Civil War. In those liti. government and sought to hold it to account gations acts or decrees of the rebellious gov. for governmental acts within its territorial ernments, which, of course, had not been reejurisdiction. Russian Socialist Federated ognized as governments de facto, were held Soviet Republic v. Cibrario, 235 N. Y. 255, to be nullities when they worked injustice 139 N. E. 259, decided that the same govern- to citizens of the Union, or were in contiict ment had no standing to sue as plaintiff in with its public policy. Williams v. Bruffy,

courts till recognition was accorded. 96 U. S. 176, 187, 24 L. Ed. 716. On the


(145 N.E.) other hand, acts or decrees that were just, was not a physical object committed to the in operation and consistent with public policy defendant's keeping, but an intangible right, were sustained not infrequently to the same a chose in action, the right to receive rubles extent as if the governments were lawful. in the future under an executory contract. U. S. v. Insurance Companies, 22 Wall. 99, This contract the defendant has not per22 L. Ed. 816; Sprott v. U. S., 20 Wall. 459, fórmed, yet it refuses to return the dollars 22 L. Ed. 371; Texas v. White, 7 Wall. 700, that were paid to it by the plaintiff upon its 733, 19 L. Ed. 227; Mauran v. Ins. Co., 6 promise of performance. Two acts that Wall. 1, 18 L. Ed. 836; Baldy v. Hunter, 171 must be kept distinct in thought are said to U. S. 388, 18 S. Ct. 890, 43 L. Ed. 208. Cf. justify this refusal. One is the decree naDickinson, Unrecognized Governments, 22 tionalizing the banks of Russia with the acMich. L. R. 29, 42. These analogies suggest companying seizure of their assets. The the thought that, subject to like restrictions, other is the later decree confiscating the aceffect may at times be due to the ordinances counts of the depositors as a "revolutionary of foreign governments which, though for- tax.” mally unrecognized, have notoriously an ex The defendant's liability was unaffected by istence as governments de facto. Conse- the attempt to terminate its existence and quences appropriate enough when recogni- the seizure of its assets. A government of tion is withheld on the ground that rival! Russia could not terminate its existence factions are still contending for the mastery , either by dissolution or by merger, for it may be in need of readjustment before they was a corporation formed under our laws, can be fitted to the practice, now a growing and its corporate life continued until the one, of withholding recognition whenever it law of its creation declared that it should is thought that a government, functioning end. What a Russian government could do unhampered, is unworthy of a place in the was to deprive it of the privilege of doing society of nations. Limitations upon the business upon Russian soil. But the ending general rule may be appropriate for the pro- of its Russian business was not the ending tection of one who has been the victim of of its duty to make restitution for benefits spoliation, though they would be refused to received without requital. As to this, there the spoliator or to others claiming under would be no dispute if its assets had been him. We leave these questions open. At the left intact. The situation in a legal 'aspect utmost, they suggest the possibility that a is nat changed by the fact that the property body or group which has vindicated by the of the Russian branch has been scattered or course of events its pretensions to sovereign despoiled. Plaintiff did not pay his money power, but which has forfeited by its con- to the defendant, and become the owner of duct the privileges or immunities of sov- this chose in action, upon the security of ereignty, may gain for its acts and decrees a' the Russian assets. He paid his money to a validity quasi governmental, if violence to corporation organized under our laws upon fundamental principles of justice or to our the security of all its assets, here as well as own public policy might otherwise be one. elsewhere. Everything in Russia might have

[2] We think the defendant, though we been destroyed by fire or flood, by war or were to assume the existence of such ex- revolution, and still the defendant would ceptions to the need of recognition, has not have remained bound by its engagement. brought itself within them. There is room The plaintiff had no means of knowing for debate whether relief from liability whether the assets physically in Russia were would follow if the acts set up in its answer large or small. He might fairly assume, if were those of a government de jure. Wheth- he gave thought to it at all, that the reserve er that is so or not, we find no such injus- in cash or bullion at the disposal of the Rustice or impolicy in enforcing liability as to sian branch would be only a small proportion necessitate an exception to the rule that acts of the Russian liabilities. Even now the deor decrees, to be ranked as governmental, fendant does not state that it kept any more must proceed from some authority recogniz rubles or securities in Russia after its agreeed as a government de facto. The defend- ment with the plaintiff than before. It states, ant is not a bailee for the plaintiff, nor were 240,000,000 rubles, and that its Russian li

indeed, that its Russian assets were over any of its assets earmarked to the plaintiff's abilities were over that amount, but it does

If that were its position, there would not state that the excess was the same for be other tests of liability.

Surrender to each.

If assets physically in Russia were overwhelming force would excuse the loss less than liabilities, the defendant would be or destruction of the subject of a bailment making a profit by the process of cancellawhether the force that overwhelmed was tion. The defense becomes the more untenlegitimate or lawless. That is not the case able when we mark the description of the asbefore us. The res belonging to the plaintiff sets seized. They consisted in part of securi


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