Summary
In Matter of People (255 N.Y. 428) the problem to be solved was whether as to a debt due in June, 1923, payment should be made in chervonetz rubles, or in the depreciated rubles then in circulation.
Summary of this case from Dougherty v. Equitable Life Assur. Soc. of U.S.Opinion
Argued January 5, 1931
Decided February 10, 1931
Appeal from the Supreme Court, Appellate Division, First Department.
Walter H. Pollak, G. Frank Dougherty and Charles S.S. Epstein for appellant.
James F. Donnelly, Alfred C. Bennett, John M. Downes and Clarence C. Fowler for Superintendent of Insurance, respondent.
Frederick B. Campbell and Paul C. Whipp for First Russian Insurance Company, respondent.
Appellant, the assignee of a foreign policyholder of First Russian Insurance Company, filed a proof of claim with the Superintendent of Insurance to recover the amount due under a policy of insurance issued to his assignor in Russia in 1910.
By the policy the insurer undertook, in consideration of semiannual premiums, to pay to the insured in June, 1923, the sum of 10,000 rubles. The insured paid the premiums until June, 1918, when the revolution in Russia and the decrees of the Soviet Republic prevented further payments at the place stated in the contract. Among the provisions of the policy is one to the effect that after premiums have been paid for three years, the insurance shall be continued, even though there are later defaults, but only at a reduced amount. The appellant has given evidence that the amount due under this provision in June, 1923, when the insurance became payable, was 5,921 rubles instead of 10,000 rubles, the face amount of the policy. No objection to this calculation is made by the respondents. For the purpose of the appeal we assume it to be accurate.
The Supreme Court at Special Term confirming the report of a referee disallowed the proof of claim on the ground that the Superintendent of Insurance was without authority to liquidate a claim arising out of foreign business. The Appellate Division unanimously affirmed.
In an opinion handed down herewith, we have held that the liquidator may be required before distributing the surplus to consider claims of creditors arising out of foreign business, and to pay them if allowed. A different question arises where the corporation is insolvent, or where application for allowance is made before the ascertainment of the surplus and the adoption of a plan for a just and equitable distribution. The insurer in this case is solvent, and payment, if now directed, will be incidental to a general plan whereby all the interests affected will be considered and protected.
The claim being provable, a question remains as to the measure of recovery.
The referee found that in June, 1923, when the contract was broken, the value of 5,921 rubles was equivalent to $3,049.31 in money of the United States.
We are to determine whether this finding is supported by the evidence.
At the time of the Soviet revolution, the gold ruble of the Russian Empire had been supplanted by a paper currency with a value steadily depreciating. The Soviet Republic established at the beginnings of its history a currency in money tokens which declined by leaps and bounds. In October, 1922, an attempt was made to re-establish the gold standard. By a decree of that date there was adopted a gold coin known as the chervonetz, which had the value of ten gold rubles of the empire. With the chervonetz there circulated treasury notes, also redeemable in gold, for one, two, three and five rubles, the value of a gold ruble being equal to fifty-one and one-half cents of our money.
If these were the only facts to be considered, the solution of the problem would be comparatively simple. It is complicated by others. The depreciated paper currency was not called in by the Soviet authorities till August, 1923, or later, and passed from hand to hand in the meantime with the quality of legal tender. None the less, the chervonetz and its subdivisions had been turned into the standard, and the rate of exchange between the two competing currencies was re-established monthly or even oftener to correspond with the current depreciation in the value of the tokens.
We interpret the record as meaning that in June, 1923, the Russian ruble was again on a gold basis, and that where token rubles were paid in satisfaction of a debt, the number would have to be increased to the extent necessary to make the payment equivalent to one in gold. If this interpretation is correct, the sum due to the appellant should be computed upon the basis of the value of the chervonetz or of rubles of like fineness ( Buerger v. New York Life Assur. Co., 43 T.L.R. 601; cf. Matter of Lendle, 250 N.Y. 502).
The decision must be understood to be confined to the record now before us. We do not attempt to say to what extent a different record, exhibiting in a different light the history of the ruble, would exact a different conclusion. In particular we reserve the question whether the insurer would be liable on the basis of the gold coinage if in truth it had an option to discharge the debt in gold or by the same number of rubles in depreciated paper (cf. Williston, Contracts, vol. 3, § 1407; American Law Institute, Restatement of the Law of Contracts, § 335). We read the record otherwise.
The Soviet decree restoring the gold standard is to be ranked with those "every-day transactions of business or domestic life" that "are not subject to impeachment, though the form may have been regulated by the command of the usurping government" ( Petrogradsky M.K. Bank v. National City Bank, 253 N.Y. at p. 29, and cases there cited; Thorington v. Smith, 8 Wall. [U.S.] 1; Stewart v. Salamon, 94 U.S. 434, 435)
The order of the Appellate Division and that of the Special Term should be reversed, and payment directed to be made to the appellant in the sum fixed by the referee, $3,049.31, with interest from June 23, 1923, and costs in all the courts.
POUND, CRANE, LEHMAN, KELLOGG, O'BRIEN and HUBBS, JJ., concur.
Ordered accordingly.