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February 28, 1956

Pierre BOURGEOIS, Plaintiff,
CHASE MANHATTAN BANK OF NEW YORK, Defendant and Third-Party Plaintiff, The FIRST NATIONAL CITY BANK OF NEW YORK, Third-Party Defendant

The opinion of the court was delivered by: HERLANDS

Plaintiff and defendant Chase Manhattan Bank of New York, have each moved for summary judgment. Both motions are denied for the reasons set forth in this opinion.

The litigation in chief arises out of a banking transaction in 1955, whereby funds were to be transferred from France to the United States. This transaction involved, in one way or another, the following seven participants: the plaintiff, a resident of Miami, Florida; Banque Francaise du Commerce Exterieur (referred to herein as 'the French bank'); a client of the French bank, known as Chantiers Navals de La Ciotat (referred to herein as 'La Ciotat'); the Mercantile Bank of Miami Beach (referred to herein as 'Mercantile'); the First National City Bank of New York (referred to herein as 'First National'); the Chase Manhattan Bank of New York (referred to herein as 'Chase'), and the Paris Branch of Chase. The transaction will be referred to in greater detail in the course of this opinion.

Plaintiff filed his complaint on August 11, 1955 against Chase. On September 1, 1955, Chase filed a third party complaint against First National.

 The complaint demands a total of $ 648,570 on the basis of two claims: The first charges Chase with having converted a fund of $ 228,570, allegedly transmitted on June 1, 1955 to Chase by First National for deposit to the credit or for the account of plaintiff. Chase is alleged to have refused to deliver that fund to plaintiff despite plaintiff's right to it and his appropriate demand. The second claim seeks $ 420,000 as damages resulting from Chase's alleged conversion.

 Chase's answer denies any wrongdoing; admits the fact of non-payment to plaintiff, and pleads an affirmative defense predicated upon the provisions of section 134(5) of the New York State Banking Law, McK.Consol.Laws, c. 2. That statute provides:

 'Notice to any bank or trust company of an adverse claim to a deposit of cash or securities standing on its books to the credit of, or held for the account of, any person shall not be effectual to cause said bank or trust company to recognize said adverse claimant unless said adverse claimant shall also either procure a restraining order, injunction or other appropriate process against said bank or trust company from a court of competent jurisdiction in the United States in a cause therein instituted by him wherein the person to whose credit the deposit stands, or for whose account it is held, or his executor or administrator is made a party and served with summons, or shall execute to said bank or trust company, in form and with sureties acceptable to it a bond, indemnifying said bank or trust company from any and all liability, loss, damage, costs and expenses, for and on account of the payment of or delivery pursuant to such adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands on the books of said bank or trust company or for whose account it is held by said bank or trust company.'

 It is undisputed that plaintiff has taken neither of the steps prescribed by the statute for 'adverse' claimants to a bank deposit, i.e., to procure a restraining order or to post an indemnity bond.

 In its motion for summary judgment, Chase argues that, upon the undisputed evidence, the plaintiff must be deemed conclusively to be an 'adverse' claimant subject to the above-quoted statute and, hence, that plaintiff's failure to comply with that statute compels the granting of summary judgment to Chase.

 On the other hand, plaintiff argues that he is not subject to that statute because the evidence conclusively establishes, as a matter of law, that he is not an 'adverse' claimant to the $ 228,579 fund in question; that he has clear and unqualified title to that fund as owner thereof; that there never was or could be any question as to his being the sole claimant to that fund while it was in Chase's possession; and that Chase had actual and constructive knowledge of his ownership at the time it refused to turn over the fund to him. Accordingly, plaintiff's motion is for partial summary judgment on all issues except the amount of alleged damages.

 The circumstances of proof and considerations of policy that permit the granting of a summary judgment are now so well-defined that the controlling principles may be said to be axiomatic. It is necessary only to refer to Circuit Judge Lumbard's recent caveat in Yung Jin Teung v. Dulles, 2 Cir., 229 F.2d 244, 246, where summary judgments were reversed that (a) 'If there is any relevant issue of fact which the papers do not resolve,' it would be erroneous to grant a motion for summary judgment; and (b) The only papers that may be considered on such a motion are affidavits 'made on personal knowledge' and papers that would 'constitute evidence which would be admissible at trial.'

 The competent and essential proof bearing upon the merits of these motions consists of sixteen telegrams, cablegrams, letters, and bank documents; the parties' affidavits to the extent that they are made on personal knowledge; and pre-trial depositions of the defendants. The Clerk's file indicates that plaintiff's pre-trial deposition was taken. However, that deposition is not on file nor has it been submitted to the Court.

 A painstaking analysis of this documentary chronicle leaves much to be desired in the way of a full explanation -- by sworn and competent proof -- as to the origin, background and true nature of the underlying business and banking transactions reflected only partially in the documentary proof now before me. There are significant lacunae in the submitted evidence with respect to Chase's and First National's initial and subsequent contact with and knowledge of such transactions. This unsatisfactory state of the record may best be shown by referring specifically to the telegrams, cablegrams, and the other papers.

 1. May 23, 1955: Mercantile's Cable to Paris Branch of Chase

 In a cablegram sent on May 23, 1955, Mercantile requested the Paris Branch of Chase to advise the French bank as follows: (a) that letters addressed May 16 to the French bank and La Ciotat constitute fullest reimbursement guarantee that an American bank can issue, as requested in French bank's and La Ciotat's cable, dated April 20, with reference to La Ciotat and Bourgeois, the plaintiff; (b) that 'we' are looking for their immediate transfer of funds to Miami, as requested; (c) that 'we' are advised that further delay is damaging the chartering situation which was ready long ago; and (d) that 'we' expect funds 'by Telex.'

 The record before me does not contain competent proof of the May 16th letters addressed to the French bank and La Ciotat. Nor does the record set forth the April 20th cable of the French bank and La Ciotat. The reference to the plaintiff and La Ciotat in the latter cable is not the subject of clarifying evidence. Similarly, the 'immediate transfer of funds to Miami as requested' is obscure, as to who would transfer what funds in what amount, from whom, to whom, and pursuant to what request. The 'chartering situation' is fleetingly referred to, without further comment of a probative character.

 Moreover, beyond the face of the cablegram itself, there is no clear evidence of the nature and extent of knowledge on the part of Chase's Paris Branch with respect to any of the foregoing matters, particularly the plaintiff's financial interest in them. It is, however, a fact that by May 23, 1955, the Paris Branch of Chase knew of the plaintiff by name.

 The reference to a transfer of funds 'to Miami' is somewhat ambiguous, as both the plaintiff and Mercantile are residents of Miami.

 2. May 31, 1955: French Bank Cable to First National

 In a cable received on May 31, 1955 by First National, the French bank (a) referred to its prior communication of April 20th for remittance 'in suspense account'; (b) instructed First National to transfer immediately $ 228,570 to Mercantile; (c) stated that the transfer was by order ...

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