Russian Commercial & Industrial Bank v Le Comptoir D'escompte De Mulhouse and Westminster Bank, Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Atkinson,Lord Wrenbury,Viscount Finlay,Lord Sumner,Viscount Cave |
| Judgment Date | 22 July 1924 |
| Date | 22 July 1924 |
| Year | 1924 |
| Court | House of Lords |
[1924] UKHL J0722-2
House of Lords
Viscount Cave.
Viscount Finlay.
Lord Atkinson.
Lord Sumner.
Lord Wrenbury.
After hearing Counsel, as well on Tuesday the 13th, as Thursday the 15th, Friday the 16th, Monday the 19th and Tuesday the 20th, days of May last, upon the Petition and Appeal of the Russian Commercial and Industrial Bank, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 12th of June 1923, might be reviewed before His Majesty the King in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King in His Court of Parliament might seem meet; as also upon the printed Case of Le Comptoir d'Escompte De Mulhouse and the London County Westminster and Parr's Bank, Limited, mentioned in the Schedule to the Appeal, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 12th day of June 1923, complained of in the said Appeal, be, and the same is hereby, Reversed, and that Judgment be entered for the Appellants for the relief claimed: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The facts leading up to this Appeal may be shortly stated. The Appellant, the Russian Commercial and Industrial Bank, was incorporated under Russian law in the year 1889, its capital being divided into shares. Its head office was in St. Petersburg, and it had branches in London, Paris and elsewhere. The manager of the London branch was Mr. Victor Jones, who held a power of attorney giving him wide powers. In January 1914 the Appellants through their head office obtained from the Respondents Le Comptoir D'Escompte de Mulhouse (whom I will call "the Mulhouse Bank") an acceptance credit of 800,000 marks; and on the instructions of the head office the London branch deposited with the Respondents the London County Westminster and Parrs Bank, Limited (whom I will call "the Westminster Bank") as security for the advance 29,000 l. Chinese 5 per cent. bonds and 29,000 l. Brazilian 4 per cent. bonds. In January 1919, the London branch was minded to pay off the advance, and after some correspondence the amount due for principal and interest was agreed at Marks 1,090,000, and the Mulhouse bank agreed to accept payment of that sum from the London branch. On the 15th September 1919, the Mulhouse bank wrote to the Paris branch of the Appellant bank in the following terms: �
In pursuance of our verbal discussion with Monsieur Maurice Montebrun, your Attorney, we request you to remit for our account to the B.N. de C., at Mayence, the amount of:
Mk. 1,090,000�One million and ninety thousand Marks, representing approximately the balance of your account per 22nd September.
On the other hand, we are writing to-day to the London County Westminster and Parrs Bank to hold at the disposal on the 22nd September of your London Office:
£29,000�Chinese 5 per cent. Bonds Capital and
£29,000�Brazil 4 per cent. 1911 Bonds Coupons secured.
security which has been lodged in 1914 by your London Office for account of your Petrograd Office for the purpose of covering our advance of 800,000 Marks.
We will despatch to you as soon as possible a rectified extract of account, and request you to settle the difference as soon as possible with the B.N. de C., at Mayence, under advice to us.
In reliance on the agreement which had been made and confirmed by the above letter the London branch paid to the credit of the Mulhouse bank the sum of Marks 1,090,000, and claimed delivery of the bonds; but the Mulhouse bank, having received the agreed amount, made difficulties about giving up the bonds, and finally instructed the Westminster bank not to part with them. Thereupon this action was brought by the Appellants against the Mulhouse bank and the Westminster bank, claiming the bonds and the interest accrued thereon with damages for their detention. The two defendant banks joined in resisting the Plaintiffs' claim, and by their defence as amended raised in substance two pleas, namely, (1) that by virtue of certain decrees of the Soviet Government of Russia the plaintiff corporation had been dissolved and its property transferred to the People's State Bank of Russia; and (2) that the real Plaintiff in the action was not the plaintiff corporation but Mr. Jones, and that the effect of the decrees above mentioned and of the seizure of the Appellants' property in Russia was to determine his authority either to receive the bonds or to bring the action. In addition to these pleas, the Court had to consider a contention raised on behalf of the Plaintiffs that the Defendants having received the Marks 1,090,000 under the agreement confirmed by the above letter were estopped from alleging the Plaintiffs' want of authority as an excuse for their failure to carry out their part of the agreement. During the currency of the proceedings an order was made under section 268 of the Companies Act, 1908, for the winding-up of the Appellant Company, and the effect of that order had to be considered.
The action was heard by Sankey, J., who gave judgment for the Defendants, mainly on the second of the above pleas; and on appeal his judgment was confirmed by a majority of the Court of Appeal (Bankes and Scrutton, L.JJ.) mainly on the first of the above pleas, Atkin, L.J., dissenting. Both the Courts held that the alleged estoppel had not been made out. Hence the present Appeal.
My Lords, in the course of argument of this Appeal a number of questions were raised, and I propose to deal with them in the following order:�
1. Have the Defendants proved that the Appellant Company is dissolved and therefore incapable of maintaining this action?
2. Have they proved that the property in the bonds in dispute is no longer in the Appellant Company?
3. Have they proved that the authority of Mr. Jones was determined and accordingly that he had no authority either to receive the bonds or to bring this action?
4. Were the Defendants prevented by their conduct from alleging want of authority?
1. Before considering the effect of the decrees it appears desirable to refer briefly to the nature of the Constitution which was set up in Russia after the Revolution of October 1917. It appears from the evidence given in this case that after that time the supreme authority in Republican Russia was vested in the All Russian Congress of Soviets, but that legislative authority was also vested in the Central Executive Committee of Soviets. There was also an executive body called the Council of People's Commissaries, which had wide powers of administration; but all its orders or important decisions were subject to the examination and ratification of the Central Executive Committee. The Government so established originally exercised its functions in the northern districts of Russia only, including Petrograd and Moscow; but its authority was gradually extended over other parts of old Russia including the Ukraine. The Soviet Government was recognised by the British Government as the de facto Government of Russia in or about May 1921; and it is well known that at a later period, that is to say, in January 1924, it was recognised as the de jure Government also.
The decrees upon which the Respondents relied in their pleadings were three in number and were dated the 14th December 1917, the 26th January 1918, and the 12th April 1918. A fourth decree dated the 19th January 1920 was discovered and put in evidence at a later period. There are also certain resolutions and instructions of the Russian Government which have to be taken into account.
The decree of the 14th December 1917 was made by the Central Executive Committee and was in the following terms:�
DECREE ON THE NATIONALISATION OF BANKING.
In the interests of the proper organisation of national economic life, of the resolute eradication of banking speculation, and of the complete liberation of the workers, peasants, and the whole labouring population from exploitation by banking capital, and also with the object of establishing a single People's Bank of the Russian Republic�a bank genuinely serving the interests of the people and the poorest classes� the Central Executive Committee hereby decrees:�
1. Banking is declared a State monopoly.
2. All existing joint stock banks and banking houses are amalgamated with the State Bank.
3. The assets and liabilities of the liquidated banks are taken over by the State Bank.
4. The method of amalgamation of joint stock banks with the State Bank shall be determined by a special decree.
5. The management of the business of joint stock Banks is temporarily placed in the charge of the Council of the State Bank.
6. The interests of small investors shall be fully safeguarded.
The decree of the 26th January 1918 was made by the Council of People's Commissaries, and there is no evidence that it was confirmed by the Central Executive Committee. It was as follows:�
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