United States of America and Republic of France v Dollfus Mieg et Cie, S.A. and Bank of England

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeEarl Jowitt,Lord Porter,Lord Oaksey,Lord Radcliffe,Lord Tucker
Judgment Date25 Feb 1952
Judgment citation (vLex)[1952] UKHL J0225-4
Docket NumberCase No. 37

[1952] UKHL J0225-4

House of Lords

Earl Jowitt

Lord Porter

Lord Oaksey

Lord Radcliffe

Lord Tucker

United States of America and Others
and
Dollfus Mieg et Compagnie S.A. and Others

Upon Report from the Appellate Committee to whom was referred the Cause United States of America and others against Dollfus Mieg et Compagnie S.A. and others, that the Committee had heard Counsel as well on Monday the 10th, as on Tuesday the 11th, Wednesday the 12th, Thursday the 13th, Monday the 17th, Tuesday the 18th and Wednesday the 19th, days of December last, upon the Petition and Appeal of United States of America and Republic of France, 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 11th of January, 1951, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioners might have the relief prayed for in the Appeal, or 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 Dollfus Mieg et Compagnie S.A. ; and also upon the printed Case of the Governor and Company of the Bank of England, 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 Her Majesty the Queen assembled, That the said Order of His late Majesty's Court of Appeal of the 11th day of January 1951, complained of in the said Appeal, be, and the same is hereby Discharged except as to Costs, and that the Order of the Honourable Mr. Justice Romer of the 3d day of November 1950, thereby affirmed, be, and the same is hereby, Discharged except as to Costs: And it is further Ordered, That all further proceedings relating to the fifty one Bars of Gold, being part of the sixty four Bars of Gold mentioned in the Statement of Claim, be stayed: And it is further Ordered, That in relation to any steps in these proceedings in which Orders as to Costs have not already been made, including the Appeal to this House and including the Petition presented to this House on the 3d day of May 1950, each party do bear and pay their own Costs: And it is also further Ordered that the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

1

Earl Jowitt (read by Lord Porter)

My Lords,

2

Messrs. Dollfus Mieg, the Respondents to this appeal, are a French company who before the outbreak of war in 1939 had acquired as their property 64 bars of gold.

3

These bars of gold were stored in a bank at Limoges in a special vault which the Respondents had hired.

4

When the German armies overran Limoges they captured the 64 bars in question and carried them off to Germany; and when the American armies occupied that part of Germany at which the bars had been stored by the Germans they were taken possession of by the Americans and brought to Frankfurt where they remained for some time in American custody.

5

Negotiations followed between the various allied governments as to the course to be followed with gold captured by the allied armies in Germany and finally a treaty was signed between eighteen allied governments.

6

Nothing, I think, turns for present purposes on the precise terms of that treaty—it is sufficient to say that the 64 gold bars in question, together with other gold bars, passed into the possession of the American, British and French Governments. These governments established a "Tripartite Commission for the Restitution of Monetary Gold" to deal with gold taken from Germany on their behalf.

7

In March, 1948, a "gold set aside account" was opened at the Bank of England in accordance with the terms of a letter from H.M. Treasury dated 9th March. 1948, and the Bank's reply dated the 11th March, 1948.

8

The trial judge set out the terms of these letters in his judgment and came to the conclusion that the effect of such letters was to create a contract between the Bank of England and the American, British and French Governments. He regarded the Treasury as a mere intermediary acting on behalf of the governments who were to operate the account. I think he was amply justified in reaching this conclusion.

9

The terms of the contract must be construed in the light of the course of business which was well-known to all the contracting parties.

10

Ever since 1940 the Bank of England in operating a gold set-aside account had not kept separate the gold belonging to one customer from the gold belonging to another customer, though the customers' gold, considered globally, was kept separate from gold belonging to the Bank itself.

11

Under the "gold set-aside" account as managed in 1948 the Bank on receiving gold in whatever form from a customer would weigh the gold and assay it and, if necessary, bring it up to the standard of fineness for good delivery in the London Bullion Market.

12

Until the completion of weighing and assay the particular gold would be kept separate in the name of the depositor, but once these operations were completed there would be recorded in the books of the Bank the number of ounces of fine gold comprised in the deposit, and the depositor would be entitled to receive from the Bank the number of ounces of fine gold so ascertained, less charges.

13

The customer would, however, no longer be entitled to receive any particular bars of gold in satisfaction of his contract.

14

The contract, in short, once weighing and assaying had been completed, created a relationship between the depositor and the Bank closely resembling that of debtor and creditor, except that the Bank's obligation was to be discharged by the handing over of the requisite number of ounces of fine gold.

15

During the hearing in your Lordships' House we had produced for our inspection the Bank's account.

16

This is headed "Bar Gold set aside o/a His Majesty's Treasury o/a the Governments of the United States the United Kingdom and France".

17

The account opens under date May 20, April 19, 1948, with an item "imported from B.N. Suisse Berne" and this is entered as "578700 oz. fine".

18

The 64 bars, the subject matter of these proceedings, were dealt with on a different basis.

19

By a letter of the 10th July, 1948, a Monsieur Rueff who was acting on behalf of the French delegation of the Inter-Allied Reparations Agency wrote to the Secretary-General of the Tripartite Commission asking that the 64 bars should be preserved in their present form ; and, as a result of this request, the Secretary-General of the Tripartite Commission in a letter dated the 16th July addressed to the Bank of England asked if the Bank would be able and willing to "have these bars set aside intact on arrival, if they can be identified, pending receipt of a further communication from the Commission".

20

By a letter of the 19th July, 1948, the Bank of England answered as follows:—

"The proposal which you make is acceptable to the Bank of England provided that at the time we receive the authority of the Commission to hold the gold at the disposal of the Bank of France we also receive instructions from them to ship the gold from London".

21

Shortly after these letters the Bank received the 64 bars and, as requested, set them aside

22

The weighing and assaying of the 64 bars was not completed until shortly before the 25th October, 1948, and their gold content was on that day entered in the "gold set-aside" account as 25,679.605 fine ounces.

23

This entry was, however, plainly not intended to terminate the Bank's obligation to hold the specific 64 bars, for the letter of the 25th October, 1948, from the Bank to the Tripartite Commission recording the above facts concludes with this sentence "I would mention that in view of the circumstances outlined in your letter under reference these bars have been temporarily segregated pending the receipt of instructions as to their disposal".

24

In these circumstances I think that the correct view is that the letters of July coupled with the sending of the 64 bars to the Bank constituted a bailment of the 64 bars "pending receipt of a further communication from the Commission", and that the contract of bailment continued, notwithstanding the entry of the 25th October.

25

If there had been no special arrangement constituted by the July letters I should have been of opinion that the bailment of the individual bars had been terminated when the account was credited with the fine gold content.

26

The writ in the action in which Dollfus Mieg were Plaintiffs and the Bank of England were Defendants was issued on the 18th October, 1948, and claimed delivery of the 64 bars and an injunction restraining the Defendants from parting with the bars ; and on the 2nd November, the Plaintiffs asked for an injunction restraining the Defendant Bank from selling or parting with the possession of the 64 bars.

27

On the same day the Bank served notice of motion asking the Court to set aside the writ on the ground that the 64 bars were in the possession or control of the Governments of the United States of America, the Republic of France and the United Kingdom and upon the further ground that the two foreign Governments who declined to submit to the jurisdiction were directly or indirectly impleaded.

28

On the 8th March, 1949, the writ was amended by the insertion of a claim for damages for detention and conversion of the 64 bars.

29

The Respondents Dollfus Mieg by an affidavit sworn on their behalf by Frederic Engel on the 16th October, 1948, asserted that the 64 gold bars in question had been purchased by them and remained their property at all material times ; and an affidavit sworn by...

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