This controversy has been long in our courts. We passed upon it at length in 2 Cir.,
*637 The complaint, verified in 1932, alleges that the plaintiff was and is “one of the nine independent- sovereign political subdivisions constituting the Government of the Republic of Austria.” At the time of the first trial and the subsequent appeal, this was true. When the second trial begаn, in 1938, the government of the Republic of Austria had ceased to exist. The. defendants offered a letter from our Department of State as proof of this fact, and then moved to dismiss the complaint.
The Constitution and the Judicial Code extend the judicial power to suits between a citizen of the United Statеs and a foreign “state, citizen or subject.” U.S. C.A. Const. Article III, § 2; 28 U.S.C.A. § 41. The state must first achieve recognition by our government, Russian Republic v. Cibrario,
The union of Austrian provinces was in many respects similar to our own federation of states. So long as Austria itself existеd, the Province of Upper Austria had capacity to sue, either as a foreign state or as a citizen of a foreign state. Austria and its constitution have disappeared, and the physical area which knew as its governments the Province of Upper Austria and the Republic of Austria now knows as its sоvereign the Third Reich of Germany. This change has occurred in a manner acceptable to our notions of.international law; the anschluss has in no wise been disavowed by the Department of State.
If the Province of Upper Austria had disappeared along with the Republic of Austria, plaintiff’s cаpacity to sue would be placed in serious jeopardy. But the Province of Upper Austria has not disappeared. Evidence offered below shows that it continues to exist as a governmental department of Germany. Upper Austria’s powers as a German political entity are somewhаt different from its powers as an Austrian state, but these differences are immaterial here. The Third Reich is recognized by our government, and any of its creatures or members may sue in our courts. We approve the finding of the District Court that Land Oberoesterreich has capacity to prosecute this suit.-
The facts of the controversy are fully set forth in 2 Cir.,
When the case was last before us, we held that on the evidence presented plaintiff was entitled to recover only the credit bаlance in favor of Alma and the three unsold bonds. Accordingly, we reversed a judgment in favor of plaintiff to the effect that all the pledged bonds had been converted, and ordered a new trial unless plaintiff would accept the smaller amount specified. Plaintiff refused to accept the reduсtion. At the new trial the District Court found for plaintiff in the exact *638 amount of the rejected judgment. O.ur former opinion could properly control our present decision; nevertheless we shall reexamine plaintiff’s contentions in the light of its claims of evidence newly offered.
All questions of substance are governed by the law of New York. As we read.that law, defendants were entitled to dispose of the bonds even though they had been notified by the Province of its claim. They were pledgees of negotiable bonds, in good faith and for value. They were privileged to stand on their contract of pledge. If they did not violate that сontract, the Province cannot complain. We think, as before, that Thompson v. St. Nicholas Nat. Bank,
Alma’s margin cаrd gave defendants no privilege to sell without notice; we believe, however, that the confirmation slips did. In arriving at this conclusion we have followed the law of New York as far as it will lead us. Where it does not specifically lead, we must proceed according to 'our own lights, hoping and believing that wе are expressing “the law” of New York. Cf. Field v. Fidelity Union Trust Co., 3 Cir.,
, As we understand the law.of New York, terms of the contract between broker and' customer may be modified and supplemented by notices printed on confirmation slips. The notice on the cоnfirmation slip is in form an offer. The offer may be accepted or not. Failure to dissent is not necessarily an acceptance, but the circumstances may be such that an assent to the offer may be inferred. If the. customer is an experienced trader, if there' has been a continued cоurse of dealing in which confirmation slips were sent and their contents became known to the customer, the customer’s silence and his continued trading may be construed as an acquiescence in the terms of the offer embodied in the confirmation slip. We believe, as before, that ‘this is the fair import оf Thompson v. Baily,
Alma & Co. opened its account with defendants in 1930; 195 confirmation slips subsequently were sent to Alma & Co. in New York — a majority of them while Alma resided in New York — and a like number to it in Vienna. Alma was an experienced trader, and before his troubles began in 1932, his New York office was fairly active. After reading the evidence we are entirely satisfied with the finding of the District Court that “these notices, of some cf them, came to the attention of Alma & Co., and their contents were known to Alma & Co. Alma & Co. never protested or objected in any way to the terms stаted, but acquiesced' therein.” In view of this finding, our decision in Leviten v. Bickley, Mandeville & Wimple, 2 Cir.,
The District Court also found that all sales were fairly .made, in good faith, at prices currently prevailing in the New York market. The defendants thus performed all their duties to their customer, Alma & Co., under their contract of pledge. Their privilege to perform in the manner selected was acquired before March 12, 1932, when the Province of Upper Austria first asserted its title to the bonds. This privilege was in no way impaired by the notice served by the Province. Thompson v. St. Nicholas Nat, Bank,' supra.
We might also rest our decision upon another ground. When plaintiff served notice of its claim to ownership, it did not request that defendants abide by the pledge agreement with Alma & Co. Intead, it chose to demand unequivocal and immediate return of all the pledged bonds. This demand was entirely unsupportable;
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defеndants were justified in refusing to surrender. Plaintiff did not at this or any subsequent time before trial insist that defendants conform to the initial pledge agreement. If it had so insisted, defendants would easily have been able to comply. When a person has two grounds of complaint and presses only one, he waives his privilege to assert the second if the second is an objection which the other party could have cured had he been apprised of it in time. Brink v. Hanover Fire Ins. Co.,
There remain to be disposed of three subsidiary issues. The first involves seven bonds sold by defendants on April 26, 1932. Although several bonds had already been marketed with and without notice, defendants, on April 22, 1932, wrote a letter to Alma & Co. stating that, unless the debit balance was cleared up before May 2, they would proceed to liquidate the collateral. Without waiting until May 2, defendants nevertheless sold seven bonds on April 26. Had they not sent the letter, defendants would have beеn safe in transacting the sale of April 26. But it is the law of New York that a period of grace voluntarily conferred upon a customer cannot be entirely ignored by the broker. At least where the customer has relied on the promise and would have been able to procure the necessary funds within the period of grace, the broker’s statement that he will extend time assumes the force of a binding obligation. Rosenthal v. Brown,
Defendants, on their appeal, protest the ruling made against thеm on the sale of seven bonds during the month of November, 1932. Apparently Alma & Co.’s debit balance had been cleared up as soon as three of these seven bonds were sold, but after all seven were disposed of Alma & Co. had a credit balance of $2,171.45. To the extent of this surplus, defendants exceеded their powers under the pledge agreement with Alma & Co., and are responsible to plaintiff for conversion. Their defense as to these seven bonds, and also as to the three bonds never sold, is that plaintiff cannot establish title to any of the securities pledged by Alma & Co., notwithstanding the finding of the District Court to the contrary. Briefly stated, their position is that bonds are fungibles, that the bonds acquired by Alma & Co. as agent for plaintiff were, with the permission of plaintiff, mingled with other identical bonds owned by Alma & Co. in its own right, and that the bonds pledged with defendants by Alma & Co. cannot be identified as the bonds belonging to plaintiff. But the plaintiff is readily аble to make the necessary identification. Alma & Co. kept a list of the serial numbers of the bonds pledged by it to defendants. Every bond on this list is a bond which Alma & Co. acquired on behalf of plaintiff. Defendants have offered no evidence contradicting the accuracy of these lists, and their appeal cannot prevail.
Since we hold that defendants converted certain of the bonds (apparently four in number), sold during November, 1932, we must determine the measure of damages. In our former opinion we adhered to the rule announced in City of Memphis v. Brown,
The District Court made no finding as to the extent of damage; instead it relied upon our statements in 2 Cir.,
The judgment of the District Court is therefore modified to provide for a re-computation of plaintiff’s damages in accordance with this opinion. No costs will be taxed in favor of either party on these appeals.