304 U.S. 126 (58 S.Ct. 785, 82 L.Ed.
1224) Decided: April 25, 1938.
FACTS:
On July 15, 1916, the
Imperial Russian Government opened a bank account with petitioner, the Guaranty
Trust Company, a New York banking corporation. On March 16, 1917, the Imperial
Government was overthrown and was succeeded by the Provisional Government of
Russia which was recognized by the United States on March 22, 1917. On July 5,
1917, Mr. Boris Bakhmeteff was officially recognized by the President as the
Ambassador of Russia. On July 12, 1917, the account being overdrawn, $5,000,000
was deposited in the account by Mr. Serge Ughet, Financial Attache of the
Russian Embassy in the United States. On Nobember 7, 1917, the Provisional
Government was overthrown and was succeeded by the government of the Union of
Soviet Socialist Republics, which will be referred to as the Soviet Government.
At that time there remained on deposit in the account the sum
of approximately $5,000,000. On November 28, 1917, the Soviet Government
dismissed Bakhmeteff as Ambassador and Ughet as Financial Attache . But the
United States continued to recognize Bakhmeteff as Ambassador until on June 30,
1922, he withdrew from his representation of the Russian Government.
Thereafter, until November 16, 1933, it continued to recognize the Financial
Attache, and after the retirement of Bakhmeteff as Ambassador it recognized the
former as custodian of Russian property in the United States.
On November 16, 1933, the
United States recognized the Soviet Government, and on that date took from it
an assignment of all 'amounts admitted to be due that may be found to be due
it, as the successor of prior Governments of Russia, or otherwise, from
American nationals, including corporations.' After making demand upon the
petitioner for payment of the balance of the account the United States, on
September 21, 1934, brought the present suit in the District Court for Southern
New York to recover the deposit. Petitioner then moved under the Conformity
Act, 28 U.S.C. 724, 28 U.S.C.A. § 724; New York Civil Practice Act, § 307; and
Rules 107 and 120 of the New York Rules of Civil Practice, to dismiss the
complaint on the ground that the recovery was barred by the New York 6-year
statute of limitations.
In support of the motion
petitioner submitted numerous affidavits, two depositions, and other
documentary proof tending to show that on February 25, 1918, it had applied the
balance of the account as a credit against indebtedness alleged to be due to it
by the Russian Government by reason of the latter's seizure of certain ruble
deposit accounts of petitioner in Russian private banks; that on that date it
had repudiated all liability on the deposit account; and that it had then given
notice of such repudiation to the Russian Embassy and later both to the
Financial Attache and to Bakhmeteff as Ambassador. The United States submitted
affidavits and exhibits in opposition. The District Court found that petitioner
had repudiated liability on the account on February 25, 1918; that it had given
due notice of repudiation prior to June 30, 1922, to both the Financial Attache
and Ambassador Bakhmeteff; and that recovery was barred by the applicable
6-year statute of limitations of New York. The Circuit Court of Appeals for the
Second Circuit reversed the judgment for petitioner, holding that the New York
statute of limitations does not run against a foreign sovereign. Moved by the
importance of the questions involved, we granted certiorari. 302 U.S. 681, 58
S.Ct. 363, 82 L.Ed. —-.
ISSUE/S:
1. whether,
in a suit at law brought in a federal District Court to recover the deposit of
a foreign government with a New York bank, such government is subject to the
local statute of limitations as are private litigants; and, if so, whether the
assignment of November 16, 1933, by the Russian Soviet Government to the United
States of the right of the former to the bank account restricts or overrides
the operation of the statute of limitations.
2. A subsidiary question is
whether in the circumstances of the case the running of the statute of
limitations, if otherwise applicable, was affected by the US’ non-recognition
of the Soviet Government during the interval of approximately 16 years between
recognition of the Provisional Government of Russia and recognition of its
successor.
RULING:
1.
First. The rule quod nullum tempus occurrit
regi—that the sovereign is exempt from the consequences of its laches, and from
the operation of statutes of limitations—appears to be a vestigial survival of
the prerogative of the Crown. But whether or not that alone accounts for its
origin, the source of its continuing vitality where the royal privilege no
longer exists is to be found in the
public policy now underlying the rule even though it may in the beginning have
had a different policy basis. 'The true reason is to be found in the great
public policy of preserving the public rights, revenues, and property from
injury and loss, by the negligence of public officers. The rule is supportable
now because its benefit and advantage extend to every citizen, including the
defendant, whose plea of laches or limitation it precludes; and its uniform
survival in the United States has been generally accounted for and justified on
grounds of policy rather than upon any inherited notions of the personal
privilege of the king. United States v. Kirkpatrick, 9 Wheat. 720, 735, 6 L.Ed.
199; United States v. Knight, 14 Pet. 301, 315, 10 L.Ed. 465; United States v.
Thompson, 98 U.S. 486, 489, 25 L.Ed. 194; Fink v. O'Neil, 106 U.S. 272, 281, 1
S.Ct. 325, 27 L.Ed. 196; United States v. Nashville, C. & St. L. R. Co.,
118 U.S. 120, 125, 6 S.Ct. 1006, 30 L.Ed. 81. So complete has been its
acceptance that the implied immunity of
the domestic 'sovereign,' state or national, has been universally deemed to be
an exception to local statutes of limitations where the government, state or
national, is not expressly included; and
to the Conformity Act.
Whether
the benefit of the rule should be extended to a foreign sovereign suing in a
state or federal court is a question to
which no conclusive answer is to be found in the authorities. Diligent
search of counsel has revealed no judicial decision supporting such an
application of the rule in this or any other country.
The only
support found by the court below for a different conclusion is a remark in the
opinion of the court in United States v. Nashville, C. & St. L.R. Co.,
supra, where its holding that the United States, suing in a federal court, is
not subject to the local statute of limitations, was said to rest upon a great principle of public policy 'applicable to
all governments alike.' The statement is but a paraphrase, which has
frequently appeared in judicial opinion, 1 of Mr. Justice Story's statement in
United States v. Hoar, supra, already quoted. His reference to the public
policy supporting the rule that limitation does not run against a domestic
sovereign as 'equally applicable to all
governments' was obviously designed to point out that the policy is as
applicable to our own as to a monarchical form of government, and is
therefore not to be discarded because of its former identity with the royal
prerogative. We can find in that pronouncement and in its later versions no
intimation that the policy underlying exemption of the domestic sovereign
supports its extension to a foreign sovereign suing in our courts.
It is true that upon the
principle of comity foreign sovereigns and their public property are held not
to be amenable to suit in our courts without their consent. But very different
considerations apply where the foreign sovereign avails itself of the
privilege, likewise extended by comity, of suing in our courts. By voluntarily
appearing in the role of suitor it abandons its immunity from suit and subjects
itself to the procedure and rules of decision governing the forum which it has
sought. Even the domestic sovereign by joining in suit accepts whatever
liabilities the court may decide to be a reasonable incident of that act. As in the case of the domestic
sovereign in like situation, those rules, which must be assumed to be founded
on principles of justice applicable to individuals, are to be relaxed only in
response to some persuasive demand of public policy generated by the nature of the
suitor or of the claim which it asserts. That this is the guiding principle
sufficiently appears in the many instances in which courts have narrowly
restricted the application of the rule nullum tempus in the case of the
domestic sovereign. 3 It likewise appears from those cases which justify the
rule as applied to the United States suing in a state court, on the ground that
it is sovereign within the state and that invocation of the rule nullum tempus
protects the public interest there as well as in every other state. United
States v. Beebe, 127 U.S. 338, 8 S.Ct. 1083, 32 L.Ed. 121; Booth v. United
States, 11 Gill & J., Md., 373; McNamee v. United States, 11 Ark. 148; cf.
United States v. People of State of California, 297 U.S. 175, 186, 56 S.Ct.
421, 425, 80 L.Ed. 567.
The
statute of limitations is a statute of repose, designed to protect the citizens
from stale and vexatious claims, and to make an end to the possibility of
litigation after the lapse of a reasonable time. It has long been regarded by this
Court and by the courts of New York as a meritorious defense, in itself serving
a public interest. Bell v. Morrison, 1 Pet. 351, 360, 7 L.Ed. 174; M'Cluny v.
Silliman, 3 Pet. 270, 278, 7 L.Ed. 676; Campbell v. Haverhill, 155 U.S. 610,
617, 15 S.Ct. 217, 39 L.Ed. 280; United States v. Oregon Lumber Co., 260 U.S.
290, 43 S.Ct. 100, 67 L.Ed. 261; Brooklyn Bank v. Barnaby, 197 N.Y. 210, 227,
90 N.E. 834, 27 L.R.A.,N.S., 843; Schmidt v. Merchants Despatch Transportation
Co., 270 N.Y. 287, 302, 200 N.E. 824, 104 A.L.R. 450. Denial of its protection against the demand of the domestic sovereign
in the interest of the domestic community of which the debtor is a part could
hardly be thought to argue for a like surrender of the local interest in favor
of a foreign sovereign and the community which it represents. We cannot say
that the public interest of the forum goes so far.
We lay
aside questions not presented here which might arise if the national
government, in the conduct of its foreign affairs, be treaty or other
appropriate action, should undertake to restrict the application of local
statutes of limitations against foreign governments, or if the states in
enacting them should discriminate against suits brought by a foreign
government. We decide only that in the
absence of such action the limitation statutes of the forum run against a
foreign government seeking a remedy afforded by the forum, as they run against
private litigants.
The
claim of the Russian Government was barred by limitation, the United States as
its assignee can be in no better position either because of the rule nullum
tempus or by virtue of the terms of the assignment.
The
court could find nothing in the agreement and assignment of November 16, 1933,
which purports to enlarge the assigned rights in the hands of the United
States, or to free it from the consequences of the failure of the Russian
Government to prosecute its claim within the statutory period.
There is
nothing in either document to suggest that the United States was to acquire or
exert any greater rights than its transferor or that the President by mere executive
action purported or intended to alter or diminish the rights of the debtor with
respect to any assigned claims, or that the United States, as assignee, is to
do more than the Soviet Government could have done after diplomatic
recognition—that is, collect the claims in conformity to local law. Even the
language of a treaty wherever reasonably possible will be construed so as not
to override state laws or to impair rights arising under them.
The assignment left
unaffected the right of petitioner to set up against the United States the
previous running of the statute of limitations.
2. Second. Respondent, relying
on the New York rules that the statute of limitations does not run against a suit to recover a bank account until liability
upon it is repudiated, Tillman v. Guaranty Trust Co., 253 N.Y. 295, 171
N.E. 61, and that the statute of
limitations does not run against a plaintiff who has no forum in which to
assert his rights, Oswego & Syracuse R. Co. v. State, 226 N.Y. 351,
359, 362, 124 N.E. 8; Board of Sup'rs of Cayuga County v. State, 153 N.Y. 279,
291, 47 N.E. 288; Parmenter v. State, 135 N.Y. 154, 163, 31 N.E. 1035, argues that until recognition of the Soviet
Government there was no person to whom notice of petitioner's repudiation could
be given and no court in which suit could be maintained to recover the deposit.
It is
not denied that, in conformity to generally accepted principles, the Soviet Government could not maintain a
suit in our courts before its recognition by the political department of the
government. For this reason access
to the federal and state courts was denied to the Soviet Government before
recognition. The Penza, D.C., 277 F. 91; The Rogdai, D.C., 278 F. 294;
Russian Socialist F. S. Republic v. Cibrario, supra; Preobazhenski v. Cibrario,
Sup., 192 N.Y.S. 275. But the argument
ignores the principle controlling here and recognized by the courts of New York
that the rights of a sovereign state are vested in the state rather than in any
particular government which may purport to represent it, The Sapphire,
supra, 11 Wall. 164, 168, 20 L.Ed. 127, and that suit in its behalf may be maintained in our courts only by that
government which has been recognized by the political department of our own
government as the authorized government of the foreign state. Jones v.
United States, 137 U.S. 202, 212, 11 S.Ct. 80, 34 L.Ed. 691; Russian Government
v. Lehigh Valley R. Co., D.C., 293 F. 133, 135, aff'd sub nom. Lehigh Valley R.
Co. v. State of Russia, 2 Cir., 21 F.2d 396, 409; Matter of Lehigh Valley R.
Co., 265 U.S. 573, 44 S.Ct. 460, 68 L.Ed. 1186; Russian S.F.S.R. v. Cibrario,
supra; Moore, International Law Digest, §§ 75, 78.
What
government is to be regarded here as representative
of a foreign sovereign state is a political rather than a judicial question,
and is to be determined by the political department of the government. Its action in recognizing a foreign
government and in receiving its diplomatic representatives is conclusive on all
domestic courts, which are bound to accept that determination, although they
are free to draw for themselves its legal consequences in litigations pending
before them. Jones v. United States, supra, 137 U.S. 202, 212, 11 S.Ct. 80,
34 L.Ed. 691; Agency of Canadian Car & Foundry Co. v. American Can Co., 2
Cir., 258 F. 363, 6 A.L.R. 1182; Lehigh Valley R. Co. v. State of Russia,
supra.
We accept as conclusive here
the determination of our own State Department that the Russian State was
represented by the Provisional Government through its duly recognized
representatives from March 16, 1917, to November 16, 1933, when the Soviet Government
was recognized. There was at all times
during that period a recognized diplomatic representative of the Russian State
to whom notice concerning its interests within the United States could be
communicated, and to whom our courts were open for the purpose of prosecuting
suits in behalf of the Russian State. In fact, during that period suits
were brought in its behalf in both the federal and state courts, which
consistently ruled that the recognized Ambassador and Financial Attache were
authorized to maintain them.
We do
not stop to inquire what the 'actual authority of those diplomatic
representatives may have been. When the
question is of the running of the statute of limitations, it is enough that
our courts have been open to suit on behalf of the Russian State in whom the
right to sue upon the petitioner's present claim was vested, and that the
political department of the government has accorded recognition to a government
of that state, received its diplomatic representatives, and extended to them
the privilege of maintaining suit in our courts in behalf of their state. The right and opportunity to sue upon the
claim against petitioner was not suspended; and notice of repudiation of the
liability given to the duly recognized diplomatic representatives must so far
as our own courts are concerned, be taken as notice to the state whom they
represented.
The
government argues that recognition of the Soviet Government, an action which for
many purposes validated here that government's previous acts within its own
territory, operates to set at naught all
the legal consequences of the prior recognition by the United States of the
Provisional Government and its representatives, as though such recognition had
never been accorded. This is tantamount to saying that the judgments in suits maintained here by the
diplomatic representatives of the Provisional Government, valid when rendered,
became invalid upon recognition of the Soviet Government. The one operates
only to validate to a limited extent acts of a de facto government which, by
virtue of the recognition, has become a government de jure. But it does not follow that recognition
renders of no effect transactions here with a prior recognized government in
conformity to the declared policy of our own government. The very purpose of the recognition by our
government is that our nationals may be conclusively advised with what
government they may safely carry on business transactions and who its
representatives are. If those transactions, valid when entered into, were
to be disregarded after the later recognition of a successor government,
recognition would be but an idle ceremony, yielding none of the advantages of
established diplomatic relations in enabling business transactions to proceed,
and affording no protection to our own nationals in carrying them on.
It is
concluded by the court that the recognition of the Soviet Government left
unaffected those legal consequences of the previous recognition of the
Provisional Government and its representatives, which attached to action taken
here prior to the later recognition.
Judgement Reversed.
Mr. Justice CARDOZO and Mr. Justice REED took no part in the
consideration or decision of this case.
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