1. An obligation in terms of the currency of a country takes the
risk of currency fluctuations, and whether creditor or debtor
profits by the change, the law takes no account of it. P
272 U. S.
519.
2. In an action brought here on a debt arising from a deposit
made in Germany and payable there on demand in marks, it is
erroneous to translate the amount due into dollars at the rate of
exchange
Page 272 U. S. 518
existing when demand was made, the mark having depreciated
thereafter. P.
272 U. S.
519.
7 F.2d 330 reversed.
Certiorari (269 U.S. 547) to a judgment of the circuit court of
appeals which affirmed a judgment of the district court in a suit
brought by Humphrey against the Deutsche Bank under the Trading
with the Enemy Act to collect a debt contracted and payable in
Germany.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a suit to reach and apply to a debt due from the
Deutsche Bank Filiale to Humphrey money seized by the Alien
Property Custodian and paid into the Treasury of the United States.
Humphrey, an American citizen, deposited money, payable on demand,
in a German Bank in Germany, and demanded it, as the Courts have
found, on or about June 12, 1915. The money was not paid, and this
suit was begun on July 9, 1921, under Trading with the Enemy Act
October 6, 1917, c. 106, 40 Stat. 411. The debt was a debt of
German marks. The Courts below held that it should be translated
into dollars at the rate of exchange existing when the demand was
made. 7 F.2d 330. The value of the mark fell after that date, and a
writ of certiorari was granted by this Court to determine whether
the time fixed for the translation into dollars was correct. 269
U.S. 547.
In this case, unlike
Hicks v. Guinness, 269 U. S.
71, at the date of the demand, the German Bank owed no
duty
Page 272 U. S. 519
to the plaintiff under our law. It was not subject to our
jurisdiction, and the only liability that it incurred by its
failure to pay was that which the German law might impose. It has
incurred no additional or other one since. A suit in this country
is based upon an obligation existing under the foreign law at the
time when the suit is brought, and the obligation is not enlarged
by the fact that the creditor happens to be able to catch his
debtor here.
Davis v. Mills, 194 U.
S. 451.
See Western Union Telegraph Co. v.
Brown, 234 U. S. 542. We
may assume that, when the Bank failed to pay on demand, its
liability was fixed at a certain number of marks both by the terms
of the contract and by the German law, but we also assume that it
was fixed in marks only, not at the extrinsic value that those
marks then had in commodities or in the currency of another
country. On the contrary, we repeat, it was and continued to be a
liability in marks alone, and was open to satisfaction by the
payment of that number of marks at any time, with whatever interest
might have accrued, however much the mark might have fallen in
value as compared with other things.
See Societe des Hotels le
Touquet Paris Plage v. Cummings, (1922) 1 K.B. 451. An
obligation in terms of the currency of a country takes the risk of
currency fluctuations, and, whether creditor or debtor profits by
the change, the law takes no account of it.
Legal
Tender cases, 12 Wall. 457,
79 U. S.
548-549. Obviously, in fact, a dollar or a mark may have
different values at different times, but, to the law that
establishes it, it is always the same. If the debt had been due
here and the value of dollars had dropped before suit was brought,
the plaintiff could recover no more dollars on that account. A
foreign debtor should be no worse off.
There has been so little discussion of what we regard as the
principles that ought to govern this question that
Page 272 U. S. 520
we refrain from citing the many cases that have touched upon it,
and content ourselves with stating what seems to us the proper
rule, only adding a few words as to
Sutherland v. Mayer,
271 U. S. 272.
That case concerned the settlement of accounts of a German
partnership having one member in America, and dealt with his claim
to funds in America in the hands of the Boston branch until seized
by the United States. With regard to the Boston partner's lien upon
that fund, the partnership contract fairly might be regarded as
subjecting the German partners to American law and warranting a
settlement as of the date when it first became legal after the war,
taking the mark at its value at that time.
Hicks v.
Guinness, 269 U. S. 71. It
was held that, in an equitable proceeding, where it was hard to lay
down any logical rule, substantial fairness warranted that result,
referring to cases that arose after the Civil War. Here, we are
lending our courts to enforce an obligation (as we should put it,
to pay damages) arising from German law alone, and ought to enforce
no greater obligation than exists by that law at the moment when
the suit is brought.
Decree reversed.
MR. JUSTICE SUTHERLAND, dissenting.
It is well settled, I think, that, where the cause of action for
a tort or breach of contract to deliver goods accrues in a foreign
country and is sued on here, the time fixing the value of foreign
money in dollars is the date when the wrong was committed or the
breach occurred. This Court has recently applied the same rule to
the case of a simple debt payable in this country, in
Hicks v.
Guinness, 269 U. S. 71, and
to the settlement of partnership accounts where the partnership
funds were partly here and partly abroad in
Sutherland v.
Mayer, 271 U. S. 272. The
majority opinion rests upon the distinction that
Page 272 U. S. 521
the debt upon which recovery here is sought was payable in
Germany. The distinction, I think, is fallacious, and proceeds from
a very narrow view of the principles applied in
Hicks v.
Guinness and
Sutherland v. Mayer.
It is said that, when the bank failed to pay on demand, its
liability was fixed by German law at a certain number of German
marks, and in marks only; that it continued to be a liability in
marks only, and was open to satisfaction by the payment of that
number of marks at any time, however much the mark might have
fallen in value as compared with other things, citing
Societe
des Hotels le Touquet Paris-Plage v. Cummings, (1922) 1 K.B.
451. And that, of course, is true if the payment be made in
Germany, where marks remain legal tender at all times, irrespective
of their fluctuating value when measured by their purchasing power
or by the money of other countries. And this is all that is held in
Societe des Hotels, etc. v. Cummings, supra. See pp. 458,
461, 464. It likewise may be assumed that, if suit had been brought
in Germany, a judgment at any time for the number of marks called
for by the obligation would have satisfied the requirements of
German law, since there, marks were not only the things to be
delivered, but the lawful money with which to satisfy a breach of
an obligation to deliver them. But if suit be brought in a court of
this country, where marks are not money, but things only, the
judgment must be in dollars, and cannot be in marks, any more than
it could be in wheat if the broken contract related to that
commodity.
The view that the judgment date should govern puts undue
emphasis upon the character of the thing to be delivered, and
ignores completely the all-important element of the time when the
delivery should have been made. In respect of that element, I see
no good reason for making a distinction between marks and wheat. In
either case, if suit be brought in Germany, the injured
Page 272 U. S. 522
party is entitled to recover the amount of his loss in marks,
and in marks only. In the one case, the subject matter (wheat) must
be translated into money; but not so in the other, for the subject
matter is money already. In the case of wheat, therefore, the date
of the breach must be considered, because, presumably in Germany as
here, it is the value of the wheat in marks at that time which
fixes the amount of recovery. In the case of marks, however, the
element of time is of no consequence since, in Germany, the value
of a mark can be measured only by itself.
But, in an action brought here to recover upon a failure to
deliver marks in Germany, the question of time becomes material;
for here, a mark is not money, but a commodity, and, if plaintiff
is to be compensated in dollars for his loss, we must inquire,
"when did the loss occur?", just as we must make that inquiry in
order to fix in dollars the value of wheat in a suit to recover for
the nondelivery of that commodity. To me, it seems clear that, in
the one case as in the other, the basis of recovery must be the
value in dollars of the thing lost at the time of the loss. In this
respect, a simple debt payable in marks and an obligation to
deliver goods in Germany stand upon the same footing. In either
case, the injured party is entitled to have in the money of this
country the value of what he would have obtained if the contract
had been performed at the stipulated time. Lord Eldon, in
Cash
v. Kennion, 11 Ves. 314, 316, expressed the applicable
principle when he said:
"I cannot bring myself to doubt that, where a man agrees to pay
�100 in London upon the 1st of January, he ought to have that sum
there upon that day. If he fails in that contract, wherever the
creditor sues him, the law of that country ought to give him just
as much as he would have had if the contract had been
performed."
The date for conversion adopted by this Court after the Civil
War in respect of obligations payable in
Page 272 U. S. 523
Confederate currency was the date, and not the maturity, of the
obligation, upon the ground that such currency never had been
lawful; but, in a dictum by Mr. Justice Field in
Effinger v.
Kenney, 115 U. S. 566,
115 U. S. 575,
it is clearly recognized that if the foreign currency involved be
lawful, the date for conversion is that of the maturity of the
contract. In that case, "[t]he damages recoverable for a breach of
the contract are to be measured by the value of the currency at its
maturity."
To take the date of judgment for determining the value is to
adopt for the measurement of a loss a test resting upon the
fluctuating chances of a court calendar, instead of upon an event
already fixed -- that is, to put aside certainty for uncertainty.
The date of the breach, whether of a contract to deliver goods or
to pay money, marks the essential event which gives rise to the
cause of action and bears a necessary relation to the wrong sought
to be redressed, while the date of the rendition of judgment bears
no relation whatever to the wrong complained of and has nothing to
do with the cause of action. The cases are not agreed, but an
examination of them convinces me that the conclusion I have
indicated by the foregoing is supported by the great weight of
authority.
See, for example, Page v. Levenson, 281 F. 555,
558;
Dante v. Miniggio, 298 F. 845;
Wichita Mill &
E. Co. v. Naamlooze, etc., Industrie, 3 F.2d 931;
Hoppe v.
Russo-Asiatic Bank, 235 N.Y. 37, 39,
aff'g 200
App.Div. 460, 465;
Simonoff v. Granite City Nat. Bank, 279
Ill. 248, 254;
Grunwald v. Freese (Cal.), 34 P. 73, 76;
Manners v. Pearson & Son, [1898] 1 Ch. 581, 587-588,
592-593;
Societe des Hotels v. Cummings, [1921] 3 K.B.
459, 461 (reversed on another point, [1922] 1 K.B. 451, 455, 463,
465);
Uliendahl v. Pankhurst Wright & Co., 39 Times
L.R. 628;
Peyrae v. Wilkinson, [1924] 2 K.B. 166;
Barry v. Van den Hurk [1920] 2 K.B. 709, 712;
In
Page 272 U. S. 524
re British American Continental Bank, [1922] 2 Ch. 589,
594-598.
The case last cited was a winding-up proceeding, and the
question arose over the conversion into English money of the amount
of a debt payable in Belgium in Belgian currency. The court adopted
as the date for conversion into English money the date when the
debt was payable in Belgium, saying (p. 595):
". . . this mode of computation and thus converting the one
currency into the other is based upon damages for the breach of
contract to deliver the commodity bargained for (
i.e., the
foreign currency) at the appointed time and place; consequently the
date for conversion is the date of breach and not date of the
judgment."
After reviewing the prior cases, including both decisions in
Societe des Hotels v. Cummings, supra, the court concluded
that:
"the principle in no way depends either upon the nationality of
the creditor or upon the fact that the place of payment is in the
creditor's own country, as distinguished from some other country,
but applies, if at all, to every case where an action is brought in
England for the recovery of a debt payable in some other currency
than English money."
The same principle is announced in
Lebeaupin v.
Crispin, [1920] 2 K.B. 714, 723, in an action for breach of
contract to deliver salmon. The court said:
"If the damages are fixed at the date of breach where the
contract is wholly to be performed in England, such also, I think,
should be the result where the breach is out of England. There
should not be varying rules in such a case. If the damages are once
crystallized at the date of breach, then a definite date is given
for the ascertainment of exchange, and the amount found payable at
the hearing is awarded without regard to the fluctuations of the
possible date of trial. "
Page 272 U. S. 525
I think it is extremely desirable that the rule established
should be one capable of uniform application. To take the date of
the judgment is to establish a rule which does not meet this
requirement. The amount of the recovery will depend upon whether
suit is promptly brought or promptly prosecuted; whether the
defendant interposes dilatory measures; whether the call of the
docket is largely in arrears or is up-to-date; and, perhaps, upon
whether there is a successful appeal and a new trial with the
consequent annulment of the old judgment and the rendition of a new
one. Under these circumstances, it may well happen that, in one
case, where judgment is not delayed, the plaintiff will recover a
substantial sum, while in a precisely similar case, where judgment
is delayed until the foreign currency has greatly depreciated, the
sum recovered by comparison may be altogether insignificant.
See Page v. Levenson, supra, pp. 558-559;
Lebeaupin v.
Crispin, supra, pp. 722-723.
I am of the opinion therefore that the judgment below should be
affirmed.
MR. JUSTICE McREYNOLDS, MR. JUSTICE BUTLER, and MR. JUSTICE
SANFORD concur in this opinion.