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Bernstein v. Maatschappij

February 21, 1949

BERNSTEIN
v.
N.V. NEDERLANDSCHE-AMERIKAANSCHE STOOMVAART MAATSCHAPPIJ (CHEMICAL BANK & TRUST CO., THIRD-PARTY DEFENDANT).



Author: Hand

Before AUGUSTUS N. HAND, CLARK, and FRANK, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The plaintiff Bernstein who owned all the stock of the Red Star Line, a German limited liability company, brought suit on June 1, 1945, against the Holland-America Line, a Dutch corporation, which owned the S.S. Pennland and the S.S. Westernland and other assets, setting forth that in January, 1937, he was taken forcibly into custody by Nazi officials and imprisoned in jail in Hamburg, Germany; that during the entire period of his imprisonment he was led and had reasonable cause to believe, and did believe, that the Nazi officials had designs on his life and business interests; that after January, 1937, while so imprisoned, he was compelled by Nazi officials, by duress and threats of severe bodily harm, indefinite imprisonment and death, as well as business ruin, to execute documents purporting to transfer and to sanction the transfer of his shares in the Red Star Line to one Boeger; that Boeger in consequence of the authority purportedly conferred by the above documents took control of Red Star Line, undertook the liquidation and disposition of the assets thereof, and transferred the same to the Holland-America Line without fair and adequate consideration; that the defendant came into possession and control of the assets of Red Star Line with full knowledge of plaintiff's imprisonment, and that it knew or should have known that the plaintiff had been compelled by the duress to execute the documents, and that the assets of the Red Star Line came into the defendant's possession in consequence of the above coercion. The complaint further alleged that in or about June, 1939, the defendant converted the assets of Red Star Line to its own use and since that time had enjoyed the benefits thereof.

The original complaint was amended on August 10, 1946, so as to add causes of action for the recovery of insurance moneys paid to Holland-America in connection with the loss of one of the vessels and for the recovery of the proceeds of the sale of the other.

On December 5, 1946, D.C. 6 F.R.D. 297, defendant was permitted to implead Chemical Bank & Trust Company which had warranted title and made representations to defendant as to the authority of the signatories to the conveyances.

In another suit entitled Bernstein v. Van Heyghen Freres Societe Anonyme, Bernstein had made substantially the same charges against the defendant therein as were asserted in his original complaint in the case at bar. In dealing with that litigation on appeal to this court we held that we would not pass upon charges of wrongful conduct by officials of a foreign state, so long as they purported to act as officials and irrespective of the foreign law under which they acted, 2 Cir., 163 F.2d 246. We affirmed a judgment of the District Court dismissing the complaint in that action upon the above ground and a petition to the Supreme Court for a writ of certiorari was denied. 332 U.S. 772, 68 S. Ct. 88.

After the foregoing decisions in the Van Heyghen case, Bernstein moved in the present suit to serve a second amended complaint in which he omitted his former allegations of duress by Nazi officials and attempted to set forth duress in very general terms and without revealing the source. He at the same time applied to the District Court for leave to intervene as a party-plaintiff in his capacity as temporary New York receiver of Red Star Line, a position to which he had been appointed by the New York Supreme Court in an ex parte proceeding which he had instituted in order to obtain intervention in the suit at bar.

The defendant Holland-America Line and the third-party defendant Chemical Bank & Trust Company moved to dismiss the action on the ground that it was barred by the statute of limitations and also on the merits because there was no sufficient allegation of duress. The District Court disposed of these motions by the defendants as well as the motions of the plaintiff to intervene as temporary receiver, and to file a second amended complaint. It granted the motion to file a second amended complaint, but held that the claims were barred by the New York statute of limitations and that the plaintiff should not be allowed to intervene as temporary receiver because under the Regulations and Rulings of the United States Treasury Department issued pursuant to the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 1 et seq., his appointment by the New York court was null and void unless he could procure a federal license. It accordingly concluded that the "complaint, as deemed amended, must be dismissed." D.C., 76 F.Supp. 335.

In April, 1948, the plaintiff moved for a rehearing of the judge's decision, claiming that the New York Legislature had amended Section 13 of the New York Civil Practice Act in such a way as to toll the statute of limitations and enable plaintiff to proceed with the present action. He accompanied the motion by a further proposed amended complaint in which his allegations as to duress were somewhat extended. The judge held, D.C., 79 F.Supp. 38, that the legislative amendment of April, 1948, did not toll the statute of limitations as regards Bernstein because the latter was a resident of New York and the amendment was only applicable to nonresidents. He also denied the application for leave to serve the proposed amended complaint for the reason that it came too late. He reaffirmed his former ruling denying intervention to the plaintiff as temporary receiver and directed judgment dismissing the action, from which judgment the plaintiff is here on appeal. He also dismissed the third-party action by Holland-America Line against Chemical Bank & Trust Company and the former has appealed from the order to that effect.

Statute of Limitations.

It is unnecessary to determine whether the three-year or six-year statute of limitations of the State of New York, Civil Practice Act, §§ 48, 49, applies in the case at bar, since in our view either statute would be tolled by the amendment of April, 1948, to Section 13 of the Civil Practice Act. Section 13, with the amendment italicized, reads as follows:

"Limitation where cause of action arises outside of the state. Where a cause of action arises outside of this state, an action cannot be brought in a court of this state to enforce such cause of action after the expiration of the time limited by the laws either of this state or of the state or country where the cause of action arose, for bringing an action upon such cause of action, except that where the cause of action originally accrued in favor of a resident of this state, the time limited by the laws of this state shall apply; and except that where the cause of action arose in a foreign country with which the United States or any of its allies was then or subsequently at war, or in territory then or subsequently occupied by the government of such foreign country, the period during which such foreign country was at war with the United States or any of its allies, or during which such territory was so occupied, is not a part of the time limited in this article for commencing the action; * * *"

The conclusion of the trial judge that the New York statute, as amended in April, 1948, did not toll the statute of limitations because it applied only to non-residents and Bernstein was at all times a resident of New York seems unwarranted. In the first place, Section 13 begins with the descriptive words as to its contents, "Limitation where cause of action arises outside of the state," which apparently embrace both residents and non-residents. It then proceeds to apply the New York period of limitation to residents of the state where a cause of action originally accrued in the latters' favor and follows this by an exception, apparently a general one, which provides that where a cause of action arose in a foreign country with which the United States or its allies was then or subsequently at war, or in territory then or subsequently occupied by the government of such foreign country, the period during which such foreign country was at war should not be "a part of the time limited in this article for commencing the action." We think it improbable that a resident was placed in a position less favorable than a non-resident in respect to the tolling of the statute during wartime. But the statute itself applies in terms to both residents and ...


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