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Russia v. National City Bank of New York

February 6, 1934

STATE OF RUSSIA
v.
NATIONAL CITY BANK OF NEW YORK ET AL.



Action by the State of Russia against the National City Bank of New York, impleaded with the Bankers' Trust Company.

Author: Manton

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

MANTON, Circuit Judge.

This action, brought in the name of the state of Russia July 9, 1928, sought the recovery of a deposit in the National City Bank of New York. A decree for the defendant was entered October 11, 1933, and this appeal was taken by the state of Russia.

Mr. Serge Ughet, the financial attache of the Russian Embassy under the Russian Provisional Government, in the name of the state of Russia, appealed from the decree October 14, 1933. On October 21, 1933, Mr. Ughet sent a letter to the Department of State expressing a desire to be relieved of his duties as a representative of the state of Russia, and, on November 15, 1933, he made an assignment of this cause of action to the United States. On November 16, 1933, the President of the United States established diplomatic relations with the Union of Soviet Socialist Republics as the de jure government of Russia. Mr. Maxim Litvinoff, the People's Commissar for Foreign Affairs of the Soviet Republics, assigned to the government of the United States the claim in suit and thus ratified the assignment of the claim in suit which had been made by Mr. Ughet.We judicially recognized Mr. Ughet as the financial attache of the Russian Embassy in the United States. Lehigh Valley R. Co. v. State of Russia, 21 F.2d 396 (C.C.A. 2).

The deposit of money, in December, 1917, was in the Bankers' Trust Company in the name of three individuals, and was drawn from the general account of the Russian government and deposited with the National City Bank. These individuals were empowered to sign checks. They were officials of the Russian Railroad Commission in the United States appointed prior to the Soviet Revolution. It was a government account. In 1918 one of these same three officials had transferred allegiance to the Soviet government. The others arranged to transfer to the National City Bank the existing credit balance in the Bankers' Trust Company. Mr. Ughet obtained their check and deposited the same with the bank to a general account for the credit of the Russian government. The account, $115,788.32, remained there until July, 1928, under a special arrangement unnecessary to consider here. This action was then commenced.

Below it was agreed that the money is the sole and exclusive property of the Russian government, but that the government owes the National City Bank $4,435,000, evidenced by a promissory note dated May 1, 1917. The money was used to finance the purchase of railroad cars in the United States for the Russian government. Below the bank successfully offset its claim against the deposit.

The diplomatic letters exchanged, dated November 16, 1933, were as follows:

"The White House, Washington,

November 16, 1933.

"My Dear Mr. Litvinov:

"I am very happy to inform you that as a result of our conversations the Government of the United States has decided to establish normal diplomatic relations with the Government of the Union of Soviet Socialist Republics and to exchange ambassadors.

"I trust that the relations now established between our peoples may forever remain normal and friendly, and that our nations henceforth may cooperate for their mutual benefit and ...


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