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A/S KREDIIT PANK v. CHASE MANHATTAN BANK

September 18, 1957

A/S KREDIIT PANK, Tallinn, Estonia, Plaintiff,
v.
The CHASE MANHATTAN BANK, Defendant



The opinion of the court was delivered by: BRYAN

Plaintiff A/S Krediit Pank, hereinafter referred to as 'Krediit', moves, pursuant to Rule 12(b), Fed.Rules Civ.Proc., 28 U.S.C., to dismiss the counterclaim for interpleader pleaded in the defendant's answer on the ground that it fails to state a claim upon which interpleader relief can be granted. Defendant, The Chase Manhattan Bank, hereinafter referred to as 'Chase', cross-moves, pursuant to Rules 13(h) and 22(1), F.R.C.P., and 28 U.S.C. § 1655, for an order (a) interpleading additional parties upon its counterclaim and directing service by publication upon such parties, (b) permitting Chase to retain the funds which are the subject matter of the action subject to the claims of the interpleaded parties pending final judgment on its counterclaim, and (c) discharging it from all further liability with respect to the funds at this time.

The action arises out of the following circumstances:

Krediit is a banking corporation organized under the laws of the Republic of Estonia, which was occupied by Soviet Russia in the early summer of 1940. Since that time Estonia has remained continuously under Soviet occupation, with the exception of a period from 1941 to 1944 when the country was occupied by the Germans. The United States has never recognized the occupation of Estonia.

 Prior to the occupation Krediit had its domicile and head office in Tallinn, Estonia. At the time of the occupation Krediit had on deposit to its account with the then Chase National Bank, now the Chase Manhattan Bank, the sum of $ 123,017.18. It had been a depositor in Chase since at least 1935. When Estonia was occupied these funds were blocked under Executive Order 8389, April 10, 1940, as amended, 12 U.S.C.A. § 95a note.

 For some years prior to 1940 Krediit had furnished Chase with circulars containing specimen signatures of the persons authorized to draw on behalf of Krediit. Two of these persons who were so authorized at the time of the occupation were Armin A. Matto, a member of the Board of Management, and Fromhold Lauristin (alleged to have changed his name to Laurikivi in 1950), Deputy Manager and Chief Accountant. Both of these gentlemen escaped from Estonia and went to Sweden after the occupation.

 On December 10, 1940, some five months after the Soviet occupation, Chase received a so-called 'tested' cable from Tallinn signed 'A/S Krediit Pank', which directed it to close the Krediit account and place the balance to the account of Gosbank, the cable name for the State Bank of the Union of Socialist Soviet Republics in Moscow, and to advise Krediit and the so-called 'beneficiary' when this had been done. A 'tested' cable is a cable sent in the private code of the sender (in this case Krediit), of which Chase had a copy. Thereafter, Chase applied to the Foreign Funds Control Section of the Treasury Department for a license permitting it to dispose of the Krediit account in accordance with the tested cable, but no such license was ever issued.

 According to affidavits submitted by plaintiff, an extraordinary meeting of the shareholders of Krediit was held in Stockholm in July 1948 at which the domicile of Krediit was moved to Stockholm, the authority of Matto and Lauristin to sign for Krediit was confirmed, and they were granted a power of attorney to act on its behalf. A second meeting of shareholders was held in 1950 at the Estonian Consulate General in New York at which the authority of Matto and Lauristin (whose name by then had been changed to Laurikivi) to act on Krediit's behalf was again confirmed. In addition, one Viktor Kargaja was elected a Trustee and was also authorized to sign on behalf of Krediit and to act on its behalf.

 Shortly thereafter Messrs. Matto and Laurikivi wrote to Chase from Sweden outlining the events which had taken place since the occupation, including the shareholders' meetings, and requesting Chase to apply to the Treasury Department for a license to unblock the account. Chase replied, stating that it had applied to the Treasury for unblocking as requested, but advised that in view of the circumstances it would probably be necessary to have a judicial determination 'as to the persons entitled to dispose of this account' before any payment could be made. Messrs. Matto and Laurikivi then undertook direct dealings with the Treasury Department on behalf of Krediit with regard to the unblocking of the account, which are not yet concluded. There was further correspondence between Chase and Matto and Laurikivi in which Chase informed them of the outstanding tested cable from Tallinn which had never been cancelled, and again took the position that it could not make payment, if the account should be unblocked, without a judicial determination.

 Krediit then brought this action for a declaratory judgment. Its complaint alleges that the original authority to Matto and Laurikivi to act as agents for and sign on behalf of Krediit had never been revoked and had been confirmed by the 1948 and 1950 meetings of shareholders, that it had made demand upon Chase to honor their signatures, which Chase had refused to do without a judicial determination, and that the funds remained blocked by the Treasury Department. Krediit seeks a judgment declaring that Matto and Laurikivi are the only authorized agents of Krediit in the United States and are entitled to dispose of the funds on deposit 'in whatever manner that they deem proper and promotive of the interests' of Krediit once the Government has unblocked the funds. It also seeks to restrain Chase from paying the funds to any person other than these alleged agents.

 The answer interposed by Chase admits that the specimen signature of Matto as a member of the Board of Managers was on file with it in March 1940, that it had received certified copies of translations of the minutes of the meetings of shareholders of 1948 and 1950 and that it had refused to recognize the authority of Matto and Laurikivi without judicial determination. In its counterclaim for interpleader Chase avers that it has no interest in the funds (now consisting of $ 115,000 in United States Treasury bills and a credit balance of $ 12,581.65) except to have its costs, expenses and attorneys' fees paid therefrom, that it had received the uncancelled tested cable of December 1940 and made application for unblocking pursuant thereto, that the claim now made by Krediit is adverse to the claim contained in the tested cable, and that it cannot make payments pursuant to the instructions of Matto and Laurikivi without exposing itself to possible double liability. It asks that Matto, Laurikivi, Viktor Kargaja (the new Trustee allegedly authorized to act on behalf of Krediit at the 1950 meeting), John Doe and Richard Roe, as allegedly authorized representatives of Krediit who directed the sending of the tested cable, and State Bank of the U.S.S.R., be made parties to the action to respond to the complaint and the counterclaim, and interplead their respective claims; that the court adjudge which of these parties is authorized to act on behalf of Krediit; that, subject to license under Executive Order 8389, as amended, it be permitted to pay the funds into the Registry of this court to abide judgment, that it be discharged from further liability and that it be awarded its costs, expenses and attorneys' fees.

 The motion and the cross-motion now made present squarely the question of whether, under these circumstances, Chase may have the remedy of interpleader, or whether its counterclaim should be dismissed and the plaintiff should be permitted to proceed to judgment against it on the complaint.

 Krediit asserts that Chase is not entitled to interpleader here upon two main grounds. In the first place Krediit argues that the alleged adverse claims to the funds are invalid on their face, or, in any event, so tenuous as to be patently unenforcible and therefore do not give rise to a right to interpleader. Secondly, Krediit maintains that Chase has not designated the parties it seeks to interplead, or their interest in the funds, with sufficient particularity to permit them to be brought in, and in fact such parties have not made any claims against the fund whatsoever. Therefore, Krediit contends they may not be brought into this action as claimants to the fund, and Chase has shown no proper basis for interpleader. It seems to me plain, however, that the circumstances here are such that Chase has the right to avail itself of this remedy.

 Subdivision 1 of Rule 22, F.R.C.P. provides that persons having claims against a plaintiff may be required to interplead when their claims are such that plaintiff 'is or may be exposed to double or multiple liability.' A defendant is authorized to the same relief by way of cross-claim or counterclaim.

 The remedy provided in Rule 22 is 'in addition to and in no way supersedes or limits' the remedies provided by the Federal Interpleader Statute, 28 U.S.C. §§ 1335, 1397 and 2361, as amended in 1948. Moreover, the provisions of Rule 22 supplement the provisions for ...


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