Berger v. Chase Nat. Bank of City of New York

L. HAND, Circuit Judge

(concurring).

I feel'too much doubt to concur in the proposition that Congress authorized federal banks to give security for Philippine deposits. That can only be spelled out with great doubt and by great indirection, when it would have been entirely simple to have stated it in a short sentence. The administrative interpretation does indeed count in its favor, and perhaps, if I were forced to decide, I might come to the same conclusion as my brothers; but it does not seem to me that I am. The action is for money paid to the plaintiff’s use which is never recoverable unless it is due ex aequo et bono. The defendant had given its own bonds to the Philippine Government to secure its deposits and that government still holds them as security for the proceeds of these very bonds. There is no way in which the defendant can reclaim them without suit and it cannot sue a sovereign, just as it could not make it a party here. It could of course refuse to honor cheques upon the deposit, but that would do it no good. The Philippine Government could indemnify itself by selling the defendant’s bonds and the defendant would be helpless. It was in effect in the position of a bona fide purchaser; it received the bonds of the banks which the plaintiff represents or their proceeds, without notice of any claims against them, and by crediting them as a deposit to the Philippine Government it in substance created a lien upon its bonds pro tanto. I say that it created such a lien, not indeed because in law the defendant’s bonds were any more charged than those of the banks which the plaintiff represents; but because that is the effect of the government’s immunity. The plaintiff is by hypothesis entitled to the banks’ bonds and the Philippine Government is under an obligation to deliver them. A recovery would mean that the defendant was compelled to discharge the government’s obligation without recourse over to the primary obligor. As between the plaintiff and the defendant this is obviously a most unjust result, for the defendant never became a surety for the Philippine Government; any obligation from it to the plaintiff would have to be thrust upon it by reason of its innocent dealings with that government. For this reason I concur.