Gerold v. Cosmopolitan Trust Co.

245 Mass. 259 | Mass. | 1923

DeCourcy, J.

On or about July 1, 1920, the defendant made a contract with the plaintiffs to purchase of the plaintiff, five million Austrian kronen at eighty-three cents per hundred kronen, to be delivered during the month of December, 1920, on demand of the defendant. The commissioner of banks took possession of the trust company on September 25, 1920; and the plaintiffs had knowledge of that fact within forty-eight hours. The liquidating agent, on behalf of the commissioner, on December 29, 1920, in reply to a letter of the plaintiffs, notified them to cancel the order for kronen.' On January 8, 1921, the plaintiffs sold the kronen contracted for, and received therefor $10,500. The contract price for the same on July 1, 1920, was $41,500: their value at the current rate of exchange on September 25, 1920, was $21,500: and on December 31, 1920, was $12,250. This action was brought to recover the difference between the amount realized and the contract price, viz. $31,000. The trial judge found for the plaintiffs in the sum of $22,330, determining the damages as of September 25, 1920; and reported the case.

I. As to the defence of ultra vires: Under G. L. c. 172, § 33, a Massachusetts trust company may “ also invest its money or credits, whether capital or general deposits, in the stocks, bonds or other evidences of indebtedness of corporations or of governments, both foreign and domestic.” The agreed facts recite: The Kronen sold by the plaintiff and purchased by the defendant is the unit of currency of the Austrian government. It was and is represented by the bank notes of the Austro-Hungarian Bank at Vienna, made payable on demand at its principal offices in legal currency. *261The issuance of said bank notes is authorized and controlled by the Austrian Government in the same manner as the provision which enables National Banks of the United States to issue currency.” The investment in question seems to come within the statutory provision. Further, in Cosmopolitan Trust Co. v. Ciarla, 239 Mass. 32, and Federal Trust Co. v. State Bank, 241 Mass. 572, it was recognized that a trust company may legally deal in foreign currency. In the latter case the contract was for the purchase of Russian roubles, to be delivered within six or eight weeks from date, at stated prices and denominations; and the trust company recovered damages for the defendant’s failure to deliver them. It is true that in that case there was evidence tending to show that banks in Boston usually and generally bought and sold and dealt in foreign currency, and hence that the selling of foreign currency was part of “ the usual business of banking ” within R. L. c. 115, § 30, dealing with State banks. The right of the trust company to purchase such currency apparently was not questioned. In the present record there were facts from which presumably the trial judge drew an inference that it was customary for trust companies to deal in foreign currency, in the usual course of banking business. It appeared that this trust company enjoyed a very large foreign business; numbered among its depositors a great number of foreign born persons; extensively dealt in foreign exchange, and so'advertised; had delegated officers whose sole duty was to superintend its foreign business and attend to the wants and needs of its resident foreign depositors and customers; and had personal representatives in Europe to secure and conserve foreign business. On this record we cannot say as matter of law that the contract under consideration was beyond the lawful power of the defendant.

2. We are of opinion that the judge rightly computed the damages by allowing the plaintiffs the difference between the contract price and the value of Austrian kronen at the current rate of exchange on September 25, 1920, when the bank commissioner took possession. It may be that the same rule would not apply if the trust company had sub*262sequently resumed its orderly business administration. But on that date the defendant’s right to control its property or carry on its business was ended by legal authority; and its affairs have since been in process of liquidation. As a practical matter, the purposes of the statute will be best accomplished by adjusting the rights of parties as of the date when the commissioner took possession of the trust company; and that rule has been adopted in other cases. American Express Co. v. Cosmopolitan Trust Co. 239 Mass. 249. Cosmopolitan Trust Co. v. Ciarla, supra. Commissioner of Banks, petitioner, in re Prudential Trust Co. 240 Mass. 478.

In accordance with the report judgment is to be entered for the plaintiffs on the finding.

So ordered.