Zivnostenska Banka National Corporation v Frankman
| Jurisdiction | England & Wales |
| Judge | Lord Simonds,Lord Normand,Lord MacDermott,Lord Reid,Lord Radcliffe |
| Judgment Date | 20 October 1949 |
| Judgment citation (vLex) | [1949] UKHL J1020-3 |
| Court | House of Lords |
| Date | 20 October 1949 |
[1949] UKHL J1020-3
House of Lords
Lord Simonds
Lord Normand
Lord MacDermott
Lord Reid
Lord Radcliffe
Upon Report from the Appellate Committee, to whom was referred the Cause Zivnostenska Banka National Corporation against Frankman, that the Committee had heard Counsel, as well on Wednesday the 22d, as on Thursday the 23d, days of June last, upon the Petition and Appeal of Zivnostenska Banka National Corporation whose registered office is at Prague in the Republic of Czecho-Slovakia, and whose London office is at 48 Bishopsgate, London, E.C.2, 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 4th of November 1948, 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 Hans Frankman, 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 4th day of November 1948, complained of in the said Appeal, be, and the same is hereby, Reversed except as to Costs in that Court, and that the Judgment of the Honourable Mr. Justice Cassels of the 2d day of February. 1948, thereby set aside, be, and the same is hereby, Restored:
And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the costs incurred by him in respect of the said Appeal to this House, such costs to be taxed as between Solicitor and Client, and the amount thereof 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,
This appeal from an Order of the Court of Appeal which reversed a decision of Mr. Justice Cassels raises a question of some importance to bankers, though, as I think, its solution will be found to depend on the language of the particular documents by which the transaction to be considered by the House was carried out.
The short question is whether the Respondent Hans Frankman is, as the Court of Appeal held, entitled to have returned to him through the London office of the Appellant Bank three Debenture Bonds for £100 each issued by a Czecho-Slovak company known as Skoda Works Ltd., and further to have executed by nominees of the Appellant Bank in whose names the Bonds are registered all such transfers as are necessary to perfect his title to them.
I shall for convenience refer to the Appellant Bank, now known as Zivnostenska Banka National Corporation, as "the Bank." The Bank was incorporated in 1922 under the laws of Czechoslovakia with the name of the Anglo-Czechoslovak and Prague Credit Bank. Its Head Office was in Prague. In 1924 it established a branch in London at 48 Bishopsgate. Its name was changed first to Anglo-Prague Credit Bank, then to Prague Credit Bank, and ultimately to its present name. At the outbreak of war in 1939 the Bank became an enemy for the purposes of the Trading with the Enemy Act, 1939. On the 12th September, 1939, a licence was granted by H.M. Treasury to the London Branch to carry on the business of the Branch and it did so until the 30th December. 1946, under the name of the Anglo-Prague Credit Bank London Office, under which name it was originally sued in the proceedings out of which this appeal arises. At the end of 1946 the Bank had ceased to be an enemy within the meaning of the Act and permission was given by H.M. Government for control of the branch to be resumed by the Bank.
In October, 1930, a branch of the Bank at Trautenau in Czechoslovakia bought for the account of a Dr. Weiner, who lived there, £300 6 per cent. Skoda Works Debentures, notifying him of the fact by letter dated the 14th October, 1930, of which 1 set out the following material passages:
"We beg to inform you that in accordance with your instruction of the 8/10/1930 we have bought for your account the undermentioned securities, for which we have debited you according to statement. We are crediting you with the securities on your Securities Account.
At the same time we take note of your authorisation to deal with the securities enumerated below as we choose, and to deposit the same as we think best, even abroad.
We do not mention to you the name of our foreign correspondent with whom the securities acquired and mentioned below, are deposited, following your declaration according to which you exempted us from our obligation to do so."
The statement exhibited to the letter showed that the debentures had been acquired on the London Stock Exchange. It is conceded that Dr. Weiner was never the registered holder of them. But debentures to the nominal value of £300 of Skoda Works Ltd. were (together with a large number of other Debentures of the same issue) registered in the names of nominees of the Bank and were held by the London Branch in safe custody to the order of the Head Office of the Bank in Prague. Dr. Weiner was at no time a customer of the London Branch, which did not know his name in connection with these Debentures.
In or about 1935 Dr. Weiner died intestate and his sister, Paula Frankman, succeeded to his estate, which included the £300 Debentures in question. Before March, 1935, she had by some means acquired £400 similar Debentures. She too had lived at Trautenau and had an account with the Trautenau Branch of the Bank but in 1935 she moved to Prague and transferred her account to the Head Office in that city. On the 22nd March, 1938, the Head Office wrote to her at an address in Prague, informing her that by order of their Trautenau Branch they credited her with £700 6% Skoda Works Debentures (identifying them) on her deposit account with them held in London, and they enclosed, in addition to their "business conditions", a declaration concerning the deposit of their securities abroad and specimen signature forms which they asked her to return duly completed.
It would seem that Mrs. Frankman did not sign the declaration enclosed in the letter of the 22nd March, for on the 27th April the Head Office wrote to her again saying that, as she had not returned to them the declaration form relating to the place of custody of her £700 Skoda Works Debentures they had to inform her that they were deposited with their Branch in London.
Before I refer to the "business conditions" which are, as I think, of crucial importance, I will finish the narrative of relevant facts.
On the 24th May the Head Office sold £400 of the £700 Debentures and credited the account of Mrs. Frankman in Prague with the equivalent in kronen of the net proceeds. Similarly her same account was credited with interest on the remaining £300 Debentures on the 30th May and the 1st December, 1935.
In March, 1939, Mrs. Frankman came to England and there lived until she died in August. 1945. Her son, the Respondent Hans Frankman, had come to England in 1935 and he became a naturalised British subject in 1945. Letters of administration of his mother's estate were granted to him on the 24th May, 1946. In that capacity he, through his solicitors, required the London Branch of the Bank to deliver up the Debentures to him. Some question at first arose in regard to a possible claim by the Custodian of Enemy Property, but this difficulty was removed and it remained only for the London Branch to obtain the consent of the Head Office, for whom the Debentures were held in safe custody, to the delivery of them to the Respondent. This consent was refused: without it the London Branch declined to act and accordingly the Respondent commenced these proceedings claiming the return of the Debentures or their value and damages for their detention. It may be observed that this claim was in the appropriate form to an action of detinue but ignored the fact that, the Debentures being registered in the names of nominees of the Bank, further relief was required beyond that claimed, if the Debentures were to become effectively the property of the Respondent.
The ground of the refusal by the Bank, which asserted no beneficial interest in the Debentures, was that under and by virtue of Czechoslovak Finance Regulations (viz. Foreign Exchange Law No. 92 of the 11th April, 1946) delivery of them by the Bank to the Respondent was only permissible with the consent of the National Bank of Czechoslovakia and that that consent had been asked for by the Bank and had been refused. The single question for the consideration of the House is whether the ground of refusal is a valid one and at this stage I must return to the "business conditions" which so far as they are relevant govern the contractual relations of the parties. I do not understand it to be questioned that the rights of the Respondent in relation to the Bank are not different from those of his mother through whom he claims.
Of the business conditions which were enclosed in the Bank's letter to Mrs. Frankman of the 22nd March, 1938, two only need be quoted, conditions 11 and 50. It was suggested that condition 50 had no relevance to a transaction which in part consisted of the keeping of bonds in safe custody for a customer. but I see no ground for this suggestion.
I therefore set out these two conditions.
"11. As regards such stocks and securities as were purchased at a Stock Exchange other than that of Prague or were received by any Bank other...
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