146 N.E. 369 | NY | 1925
The Eagle, Star British Dominions Insurance Company, Ltd., plaintiff's assignor, entered into contracts or treaties with the defendant, Second Russian Insurance Company, a Russian corporation, by which the latter reinsured the former's marine risks to the extent therein stated. Losses were sustained and the British company attempted to recover them from its Russian reinsurer. The demand having met with a refusal, the cause of action was assigned to the plaintiff, a domestic corporation. The defendant, which has appeared generally, admits that it is engaged in business in New York, but urges as a defense that its corporate life was ended by a decree of the Russian Soviet government nationalizing the business of insurance companies in Russia; that by the same decree, the companies were *254 released from the payment of debts and liabilities; that Great Britain has recognized the existence of the Russian Soviet government, and by a trade agreement set forth in the answer has confirmed the confiscation of the debts owing to its nationals; that all these things were done before the transfer to the plaintiff; and that the plaintiff, taking no greater rights than its assignor, is seeking to enforce a right of action which at the time of the assignment had already been extinguished. The defendant moved that the plaintiff be directed to reply to its defenses, and the Appellate Division, refusing that relief, has certified questions which require us to determine whether the defenses, variously pleaded, are sufficient on their face.
We deal first with the so-called defense that the corporation which defends is dead and so incapable of defending (Martyne v.American Union Fire Ins. Co.,
If existence be assumed, the question remains whether liability has been extinguished. Was it extinguished by the Soviet decree canceling or releasing the debts of the nationalized companies? If not, was it extinguished by the action of Great Britain in negotiating the trade agreement of 1921? As to the Soviet decree, we think its attempted extinguishment of liabilities is brutumfulmen, in England as well as here, and this whether the government attempting it has been recognized or not. Russia might terminate the liability of Russian corporations in Russian courts or under Russian law. Its fiat to that effect could not constrain the courts of other sovereignties, if assets of the debtor were available for seizure in the jurisdiction of the forum (Barth
v. Backus,
The defendant insists, however, that though the Soviet *258
decree standing by itself may have been inoperative in England to terminate the right of recourse to assets beyond the territory of Russia, yet the effect of the trade agreement of 1921 between Great Britain and Soviet Russia was to extinguish by force of eminent domain the rights of action of British nationals against Russian corporations and to put their own government in place of the defendant and of others similarly situated as a substituted debtor (citing Ware v. Hylton, 3 Dall. 199, 245; Gray v.U.S., 21 Ct. Claims, 340, 390; 2 Wharton, Digest Int. Law, p. 709, § 248; cf. Hijo v. U.S.,
The order should be affirmed with costs, and the questions certified answered in the negative.
HISCOCK, Ch. J., POUND, McLAUGHLIN, ANDREWS and LEHMAN, JJ., concur; CRANE, J., absent.
Order affirmed.