United States v. Pink

interest in corporation hardly ship proprietary organization” change form, or place “a mere identity, meaning of clause E. within

Reversed. in the consid- participate did not Me. Justice Roberts case. decision eration SUPERINTENDENT PINK,

UNITED STATES OF NEW THE OF STATE OF INSURANCE YORK, et al. February 2, 1942. Argued 15, 1941. Decided December

No. 42. Attorney Fahy, Solicitor General with whom Assistant Messrs. Melvin H. Siegel, General Shea' and H. Richard Demuth, Sweeney, A. H. Davis on Paul Oscar were brief, for the United States. Pink, Superintend- H. C. Louis Bennett Mr. Alfred York, respondent. New ent of Insurance of Briefs of amici curiae were filed by Messrs. Paul C. Whipp Lounsbury Bates, and D. for the Surviving Di- rectors of First Russian Insurance Co.; by Mr. Carl S. for Stern Victor Yermaloff et by Borris al.; Mr. M. Komar for Brussendorf et Mr. al.; by Avery Albert G. for H. Cattley Frederick et al.; Messrs. Frederick H. Wood Albert Ray and Connelly certain receivers; and Mr. Samson Selig for Andrew Ditmar et al., all urging affirmance. Douglas

Mr. delivered the opinion of the Justice Court.

This brought action was by the United States to recover of the assets New York branch of the First Russian Insurance Co. which remained in the hands of respondent the payment after of all domestic creditors. The material allegations complaint of the were, brief, as follows:

The First Russian Insurance Co., organized under the laws of the former Empire of Russia, established a New York branch It deposited with Superin- tendent of Insurance, pursuant to the laws of New York, certain assets payment to secure resulting claims from transactions of its New York By branch. certain laws, decrees, enactments and orders, 1918 and 1919, the Russian Government nationalized the business of insur- ance and all of the property, wherever situated, of all companies insurance (including the First Russian and cancelled all debts Co.), discharged and Insurance shareholders all rights of all companies of such the First York branch of Rus The New property. such in New York to do business Insurance Co. continued sian to an respondent, pursuant At that until 1925. time, possession New took York, Court of Supreme order the claims report upon for a determination of its assets in the United States. and creditors policyholders i.e., creditors, all claims all claims of domestic Thereafter, branch, were New York arising of the business of the out leaving his hands of a balance paid by respondent, In 1931, the New York Court of $1,000,000. than more E. directed (255 415, 175 114) respondent N. Y. N. Appeals first, pay as follows: claims of of that balance dispose filed to the prior who had attachment creditors liquidation and also proceeding, commencement of entry to the of the order prior as were filed such claims court; second, pay any surplus of that on remittitur the company. directors of board of quorum to a with mandate, respondent proceeded to that Pursuant the foreign of the claims of creditors. liquidation major portion were made thereon. payments Some stay not a claims, however, paid, were of allowed the the claim pending disposition of of having granted been 16, 1933, November the United States. On the United Republics Socialist recognized the Union of Soviet States an incident jure de of Russia as as the Government (known assignment an as recognition accepted to that Lit claims.1 The Assignment) of certain the Litvinov of dated Assignment letter, was form vinov of the United States 16,1933, to the President November Foreign for Commissar Litvinov, People’s Maxim from reading as follows: Affairs, of Diplomatic Relations with the Union of Establishment 1See State, European Dept, Series, Eastern Republics, of Socialist

Soviet recognition. documents pertaining No. various (1933) in- have honor to I “Following our conversations the Union of of Soviet you form Government a final set- that, Republics agrees preparatory Socialist counter claims between the claims and tlement of Republics Union of Socialist Governments of the Soviet of claims their of America and the and the United States of Union Soviet Socialist nationals, the Government any to enforce decisions any will not Republics steps take for the amounts litigations initiate new any of courts or it, be found to be may due due to be or admitted Russia, or prior Governments other- the successor of nationals, including corporations, from American wise, associations, or also the companies, partnerships, of the Russian Volunteer against the United States claim litigation United Fleet, Court now States being object assigned not to such amounts Claims, and will assign all amounts to hereby does release and such States, the United Government the Government duly notified Republics to the Union of Soviet Socialist by the any amount realized Government in each case of assignment. release and United from such Re- “The Union Soviet Socialist Government to the re- agrees, preparatory further settlement publics not make claims with any respect ferred to above to: “(a) may or that judgments rendered be rendered they far as relate to or property, American courts so rights, therein, or interests Union Soviet may nationals have had or Republics may Socialist or its or, an interest; claim have “(b) done or made or acts settlements with the Gov- or States, public ernment of United officials States, nationals, relating or its to property, obligations credits, any Government of Russia or nationals thereof.”

This acknowledged by was the President on the same after, acknowledgment, setting date. The forth the terms assignment, the concluded: “I Govern- undertakings by your glad am to have these notify your and I be Government pleased shall to ment in each any case of amount realized Government assignment and the United from the release States it of due, may the amounts admitted to be that be found to be the Union of due, the Government of Soviet Socialist of the that Republics, may amount be found to be due on of the Russian Volunteer Fleet.” the claim

On brought an 14, 1934, November the United States action for the the federal District Court Southern Dis- trict of York, seeking New to recover the assets hands of United States respondent. This held Court Bank Co., New York & Trust that 296 U. S.

well governing settled the convenient “principles orderly justice require jurisdic- administration that the tion of court respected” 480); state should be (p.

that, might of recognition” be “the effect whatever Government, it did not terminate the pro- state ceedings. The p. 479. United States was remitted to the state for claim, court determination its opinion no merits, being on intimated p. 481. The United States then moved leave to intervene the liquidation Its motion proceedings. was denied “without prejudice the institution the time-honored form of action.” That order was affirmed on appeal. present

Thereafter, suit was instituted in the Su- preme Court of New York. The defendants, other than respondent, were certain designated policyholders and other creditors who had presented the liquidation pro- ceedings against the claims corporation. complaint prayed, inter alia, adjudged the United be the sole and exclusive owner entitled to immediate possession of entire fund in surplus hands respondent.

Respondent’s answer allegations denied the com- plaint title to the in question funds passed

United States and that the Russian-decrees had the effect claimed. It also set forth various affirmative defenses— that the order of distribution pursuant to the decree in. 255 Y. 415, N. 175 N. E. 114, could not be affected by the Litvinov Assignment; that the Assignment Litvinov was unenforceable because it was conditioned upon a final settlement of claims and counterclaims which had not been that under accomplished; Russian law the nation in question alization decrees had no effect on property not factually taken into possession by the Russian Govern prior May 22, 1922; ment that the Russian decrees had extraterritorial effect, according no to Russian that if law; given the decrees were extraterritorial effect, they were confiscatory recognition and their would be unconstitu to the contrary public tional and policy of the United and of the State of New York; and that the Litvinov States, Assignment, under acted merely as a agency for the Russian collection Government and hence asserting any from title was foreclosed to the property in question. in was filed 1938. In March,

The answer April, 1939, Appeals decided New York Court Moscow Fire Ins. Co., York & Trust Bank New N. 280 Y. Co. 286, 20 In May, 1939, respondent E. (but N. 2d not the defendants) moved, pursuant other Rule 113 of the York Civil Rules of the New Practice Act and 476 of § that dismissing Act, for an order the complaint and awarding summary judgment in favor respondent “on ground that there is no merit action and that it is insuffi- in law.” cient The affidavit support of the motion dispute stated that there was “no facts”; as to the that the separate complaint defenses to the “need not now be con- standing sidered complaint for the alone is insufficient law”; that the facts the Moscow case and the instant one, so were material, “parallel” far Russian de- the Moscow crees the case same; authoritatively governing law principles settled instant one. read in opposition The affidavit to the motion stated that Moscow case was about for certiorari petition be filed Court; premature motion was denied, or decision withheld pending should thereon On final decision of this Court. 29, 1939, June Su- granted Court New York preme the motion and dis- complaint merits,” citing missed the “on the only the Moscow case in support of its action. On September 2, the Moscow case was filed certiorari in 1939, petition a for judgment Court. The in this that case was affirmed divided equally here an Court. 309 U. S. 624. Subse- Appellate Division of the quently, Supreme Court of York affirmed, opinion, New without the order of dismissal The Appeals in the instant case. Court of affirmed with per curiam E. opinion (284 N. 32 N. 2d 552) a Y. noting “in which, after that decision below was accord Moscow with the decision” stated: case, judges “Three of the concurred in of this court a force- opinion dissenting ful from the decision that court’s open but the decision left which has been case, question no argued upon appeal. agreed this that without We are again considering such de- questions should, this court termining Com- title to assets of First Russian Insurance in this in this case the same pany, deposited State, apply rules of law which court in the earlier case applied determining Fire title to the assets of Moscow Insurance Company deposited here.” because of the granted petition

We certiorari raised. public importance questions nature and First. in this Respondent complaint insists that ac- sought tion the same relief was identical substance in the Moscow case, petition as the of the United States sue- were defenses as up that his answer set same against the United States the de- cessfully sustained parties also maintains that both He in that case. fendants summary that the de- judgment, motion for agreed, on cause, governed leaving this case no in the Moscow cision with agree We those contentions. It to be tried. issues motion only with the but also with papers, not in accord Appeals New York Court of ruling of the open question no which has “left been Moscow case ar- In view of gued upon appeal.” we ruling, are suggests, petitioner free to into inquire, not the propri- grounding ety practice under New York the motion for the record in summary judgment on the Moscow case. distinctly question law, That is a state on which New York has the last word. follow,

But does not as respondent urges, that the writ should be granted. dismissed as improvidently case res judicata, Moscow is not respondent since was not party to that suit. Stone v. Farmers’ Bank Kentucky, Cornell, U. Rudd N. Y. 114, 127-128, 63 N. E. 2d 823; Fowler, St. John v. 229 N. 274, Y. 128 270, N. E. 199. Nor was our affirmance of the judgment that case by an equally divided court an authoritative precedent. While it was conclusive binding and upon the parties as respects that controversy (Durant v. Essex Company, 7 Wall. 107), the lack of agreement an by a majority of the Court on the principles of law involved prevents it being from an authoritative determination for other eases. Hertz Woodman, 205, U. S. 213-214.

The upshot of the matter is that we now reach the issues in the Moscow case insofar as they are embraced in the pleadings in this case. And there is no reason why we cannot judicial take notice of the record this Court of the Moscow case. Bienville Water Supply Mobile, Co. v. 186 U. 212, S. 217; Dimmick Tompkins, 194 U. 540, Atkins, Freshman v. 269 U. S. 121, 124. Appeals of in the held The New York Court Second. decrees2 had no question Russian case Moscow true, If that is is decisive effect. extraterritorial the United un- controversy. acquired, For States present only rights such as Russia Assignment, Litvinov der the States, 126, 304 U. S. Trust Co. v. United Guaranty had. left the New York assets If the Russian decrees unaffected, then Russia companies insurance question But that nothing assign. here had exclusively court. the state to be determined law is not As- based on Litvinov the United States The claim of v. Bel- United States signment question. raises federal mont, independ- Court will review or 301 U. S. 324. This right which a federal questions all on ently determine Brass & v. Ansonia necessarily United States dependent. em placed primary on three decrees which the United 3, infra) in note described phasis (apart from the forth were one set case findings the Moscow as foEows: in the referee in of life 18, 1919 on annulment The decree November “88. of life in aE its forms abolished insurance contracts insurance companies and with insurance Republic annuEed aE contracts respect life, capital and savings the insurance of banks with income. People’s March Commissars dated “89. The decree of the Soviet enterprises, provided liquidation obligations of State on joint companies, whose enter- stock

that stock certificates and shares annuEed and prises sequestered, either are have been nationalized enterprises payment of aE provided that such are free from the also prior private persons enterprises which arisen debts to have enterprises, including on bond payments of these nationahzation only wages exception to workers loans with due employees. People’s

“90. Commissars dated June The decree the Soviet of 28,1918 provides the commercial industrial enter- in Article I that prises therein, located boundaries enumerated which are within the Republic, together capital property, with aE their Soviet regardless may the what latter are declared the consist, Republic.” the Co., 452, 462-463, 471; 218 U. S. Ancient Egyptian

Copper Michaux, 737, 744-745; 279 U. S. Broad River Order v. Carolina, 537, 281 U. 540; Power S. Co. South Pierre Louisiana, 354, U. title S. obtained under Here, on a correct Assignment depends the interpreta Litvinov' arising As cases faith tion of Russian law. under full (Huntingtons. Attrill, and credit clause 146 U. S. 657, Saenger, 64), Adam v. 303 U. for 59, questions S. these eign right law on which the asserted federal is based are cognizance not within the peculiarly of the local courts. given will While deference to the determination of the court, accepted state its conclusion is not as final. stop do review all We not the evidence the volumi- nous record of the bearing question Moscow case on the extraterritorial effect of Russian na- decrees of tionalization, to note that except expert testimony by gave great tendered United States credence its position. Subsequently hearings case, how- ever, States, through diplomatic channels, re- Foreign for the Commissariat quested Affairs of the Rus- Government sian obtain an official declaration of the R. Commissariat Justice R. which F. S. would make as a matter of clear, law, the intended effect nationalizing of the Russian decree3 insurance companies portions 3 Relevant of tbe Decree Insurance dated November findings translated in with the accordance referee in the Moscow are: case, organization

“603. On the insurance business in the Russian Republic. “(1) forms, Insurance in all its such as: fire insurance, insurance on shipments, insurance, insurance, life accident hail insurance, livestock against

insurance, crops, hereby insurance failure of proclaimed etc. is monopoly. aas State “Note. goods Mutual insurance of movable and merchandise cooperative organizations is conducted special on a basis. “(2) private companies All organizations insurance (stock holding, mutual) upon

and share also issuance of subject this decree are

m of Russia. The companies of outside the funds such upon 1937, reads as 28, November declaration, official dated follows: the R. S. F. for Justice of People’s Commissariat

“The organs of of the of the by virtue laws the R. certifies S. property of funds Government all nationalized Soviet * municipal (People’s Soviet) mutual liquidation; former rural* the Rus of organizations operating within the boundaries insurance the Russian property of hereby proclaimed are the Republic sian Republic. Socialist Federated Soviet organization business and “(3) of the insurance the immediate For institutions, have become parts insurance liquidation

for the of of Republic, a Federated Socialist Soviet of property Supreme of National Soviet Commission is established under Supreme consisting of Na- representatives of Soviet Economy, of Commerce and Indus- Economy, People’s Commissariats of tional Affairs, Prevention, Fire try, the Commissar of Insurance and Interior Organiza- Control, Insurance Labor, and of Soviet Finances, and State Municipal Mutual). (People’s tions Soviet and charged liquidating with the The same commission is “Note. which, re- organizations, property and assets private all insurance property liquidation, shall become maining on their hand after Republic. Federated Soviet Russian Socialist liquidation reorganization and of exist- “(4) above-mentioned The accomplished organizations shall be not ing and institutions insurance day April first later than the

“(8) day publi- comes force on the of its present The decree into cation.”

* “zemskie.” that, upon case publication referee Moscow found of this decree, companies prohibited engaging all Russian insurance were from Russia; they subject liqui- in the insurance business in became dissolved; were that all their dation and assets in Russia became the publication State; decree, that, of the on of the the directors companies power to lost all act directors or conservators represent companies property, any way; or to that the statutory domiciliary became the Russian Government successor and companies liquidator property was whose nationalized.

former private enterprises and companies, in particular by virtue (Collection decree of November Laws of the R. S. F. No. R., 1918, 904), Article funds and former property of insurance con- companies, stitute the property State, irrespective of the nature of the irrespective of whether it was situated the territorial limits of the within R.S.F.S.R. or abroad.” The referee in the Moscow case and the found, evidence supported finding, his the- Commissariat Justice power interpret existing has Russian law. being .That true, this official declaration is conclusive far so as the intended effect extraterritorial of the Russian decree is This official concerned. declaration was before the court though it below, part not was a the record. It was pursuant § tendered 391 of the New York Civil Prac Act, by tice as amended L. c. 1933, 6904 In New York, it would foreign seem that be law must by found the court (or in binding jury trial, case a instructions must be

4That section reads: printed copy

“A of statute, law, a state, or other written of another or territory, foreign country, printed copy proclama- a or of a or a a tion, edict, ordinance, by power or thereof, decree the executive con- publication purporting tained in book proved or or to have been published authority by thereof, proved commonly or to be admitted existing judicial as evidence of the law thereof, pre- tribunals is sumptive law, statute, proclamation, edict, evidence decree or ordinance. The unwritten or state, common law of another or of a foreign country, may territory, proved by or of a be as a fact oral adjudged reports evidence. The books of cases in the courts thereof presumptive must also admitted as evidence the unwritten or territory common law thereof. The law of such state or or country is to be determined court or referee and included in the findings charged court or referee or to the jury, may as the c'ase finding charge subject Such is appeal. be. to review on In deter- mining law, any such neither appellate the trial court nor court shall produced be limited to the evidence on parties, may the trial but any consult section, written authorities above in this named with the same force effect as if the same had been in evidence.” admitted and.

221 it to be though procedural require considerations given), Fitzpatrick v. Inter of fact. question as a presented Co., 169 Y. N. E. Railway 127, 252 N. national City Bank, K. Bank v. National 253 Petrogradsky M. amended, 391, And under § E. 479. N. Y. N. authority New York court has appellate it clear that the foreign law interpreting decisions appropriate to consider to the trial. though they subsequently are rendered even Angeles Corp. Joslyn, Securities Investment Los 2d notice of E. 968. We can take such N. Y. N. **5 York the New court could have taken.* foreign law as Saenger, supra. conclude official Adam v. We only not before properly of Russian law was declaration but embraced within appeal, court on also that was § “written 391 authorizes authorities” those though not introduced evidence even consider, court it it For, “printed,” while was not would on the trial. unquestioned to be “other written law” authen seem meaning § within the of 391. ticity authority, concerned, far intended effect6 is that, hold so as its We York embraced the New assets of the Russian decree Co. Insurance First Russian of whether the decree should be question

Third. a distinct matter. given is, course, effect extraterritorial in whether, that connection is issue raised primary One New York law system, constitutional can under our in the way. allowed to stand Appeals the New York Court

The decision of It held that “under the law unequivocal. case Moscow confiscatory do not affect the such decrees State Y. 20 N. E. 2d (280 314, 769); here” N. claimed property certify Hence, of the United States motion the denial the Moscow case in this the record part of declaration as official 487) 2d would seem immaterial to our 818, 24 N. E. (281 Y.N. Court it. right consult 7,' also note See infra. branch acquired of the New York a property “dependent” of its own” which was on the

“character law 310); comity New York that no “rule and no (p. act government constrains of the United States this State to of its to share any part control or it with a abandon that, although the (p. 310); State” death of the parent company, decree effected the the situs the New York branch was New York; New principle and that no of law forces York to forsake the method of authorized the' distribution ap- earlier (255 114) N. Y. 175 N. E. to hold peal that “the method which in 1931 jus- conformed to exactions of rejected must be equity tice and because retroactively 312). become (p. has unlawful” thing hold, It is done Guaranty Trust one was States, supra, Co. v. p. 304 U. at that under Assignment did Litvinov United States not acquire right preexisting “a free of such infirmity,” running as the against of the statute of limitations the Russian Govern- Unlike ment, assignor. presented its the problem here Moscow case, that holding no way sanctions power deny of New York asserted enforcement of a the Litvinov Assignment claim under because of an over- riding policy of State which denies validity in New York of Russian decrees on the assigned claims was rest. That denied New York in United States power Belmont, supra, 301 U. S. 324. With one qualification, the Belmont case is determinative of the noted, to be present controversy. right

That the case involved of the United States under Assignment recover, the Litvinov from a custodian or stakeholder in New funds which York, had been na- tionalized appropriated by and the Russian decrees. through

This Court, speaking Mr. Justice Sutherland, held the of foreign that conduct is relations committed the the political Constitution to departments of the Fed- of the exercise of that propriety that the Government; eral recognition and that judicial open inquiry; not power is the sovereign conclusively binds courts and aof and conduct of validates all actions retroactive and “is from the commencement of recognized government so the It further held p. (p. U. S. at existence.” 301 its the estab- Government, of the Soviet 330) recognition that with the Litvinov it, relations diplomatic lishment transaction, resulting in “all of one parts were Assignment governments.” between the two compact international an done here, “in of what was the stating that, respect After organ” authority speak as sole had Executive 330): assign- “The it added government, (p. the national not, in connection therewith did agreements ment and treaty term is used treaties, as that case of (Art. II, 2), require making Constitution § clause 331) It held (p. of the Senate.” and consent the advice the United are to be powers “external policies. to state laws or regard without exercised been respect recognized in this has treaty of a supremacy And it added that “all interna- beginning.” from be with are to treated agreements” compacts tional “complete power over the reason dignity for similar government in the national and is affairs international curtailment or interfer- subject any cannot not and p.331. states.” This Court the several part on ence any policy fact there was whether inquire stop to did not Assign- of the Litvinov enforcement New York policy prevail “no state can infringe since would ment here compact involved.” international against p. 327. in the Moscow case Appeals, Court of York

The New Bel- distinguished 758), 20 N. E. 2d Y. 309, N. (280 on the suffi- it was decided ground that on the mont case complaint to the the demurrer ciency pleadings, was decree the the Russian admitting that under trans- then Government confiscated Assign- under the Litvinov the United States ferred to the decree seen, we But, ment. have effect extraterritorial was intended to have an question here involved. funds the kind which are embrace and to the kind that claims of any there be serious doubt Nor can Assign- in the Litvinov were included question here It inter- inclusive. should be ment.7 It is broad and exchange Assignment was made an the Litvinov clarification of A People’s Charge d’Affaires and between the American of letters The letter Foreign January 7, 1937. of the Affairs on Commissar for former read: understanding you is the of the that it honor to inform

“I have the of the Union that the Government Government of United upon the formation Republics considers that and of Soviet Socialist Republics adoption of the and the Socialist of the Union of Soviet Republics, of Soviet Socialist Constitution of 1923 of the Union acquired right dispose of the Republics Socialist Union Soviet corporations of all property, rights, interests therein located abroad by decrees of theretofore been nationalized companies and which had predecessors. republics or their the constituent further understands that “The of the United States Government of the Union of of the Government purpose was the and intention assign the Government United Republics Soviet Socialist be due or among amounts, admitted to States, other all the amounts only Socialist may found to be due not the Union Soviet republics of Soviet the constituent Union Republics but also nationals, Republics predecessors American from Socialist or their associations, and including corporations, companies, partnerships, or against claim of the Russian Volunteer also the the United States Claims, litigation and that Fleet, in States Court of United Republics did release and of the Union of Socialist Government Soviet assign the Government the United States all such amounts to by you the President of the virtue of note addressed 16, States on November understanding good enough you be to confirm “Will concerning matter, has in this of the United States

Government Republic, the Constitu- Federated Soviet law of the Russian Socialist Republics, the in- Socialist tion laws of the Union Soviet of Soviet Socialist purpose tention of the Union Government assignment?” Republics in the above-mentioned compact to of the consonantly purpose with the preted two friction between these all of possible eliminate sources Alexandroff, 183 U. S. Tucker See great nations. 127. Strict con- Toshiro, U. Jordan policy. For, national to that would run counter struction against claims Rus- unpaid of the existence see, as we shall in this and country, nationals, which were held sia and its to had intended Assignment secure, was which the Litvinov rela- friendly of resumption long one to impediment been great powers. these two tions between Foreign People’s Affairs was: for reply The the Commissar of the honor in- January I have to your 7, 1937, reply note of “In Repub- Socialist the of Soviet you of Union form that the Government Union of Soviet upon formation of the by and the lics considers that of 1923 of adoption the Constitution Republics the of Socialist and of Soviet Socialist Republics, the the Union Union of Soviet Socialist rights, or property, dispose of the acquired right Republics the companies and corporations of all interests therein located abroad the constituent of decrees which theretofore been nationalized had predecessors. republics their or of intention purpose the and it was are further informed that “You assign Republics to Socialist Soviet Government of the Union of the amounts, States, among all other to the of the United Government may be due not be found to due or that amounts admitted the con- Republics also the only but the Union of Soviet Socialist Republics their Socialist republics the stituent Union of Soviet including corporations, com- predecessors nationals, American from against the associations, also the claim panies, partnerships, or and litigation Fleet, Russian Volunteer United States of the Claims, Union the Government States Court of and that assign all such amounts Republics Socialist did release and of Soviet addressed of the note virtue to the United States Government 16,1933. November by me United States on President understanding, as ex- therefore, honor, to confirm the have the “I 7, 1937, the Government your January which pressed in note of concerning Russian matter, the law the has in this United States of the Republic, and laws Constitution Federated Socialist Soviet purpose Republics, the intention and of Soviet Socialist. Union in the Republics Government of Union of Soviet Socialist . . assignment.” above-mentioned Belmont case is therefore holding determi- The unless the controversy, stake of the present native in this liquidation proceeding and foreign creditors provided York has pro- New their provision result. for a different call tection Belmont case forecloses any relief Fourth. to the Court For this held corporation. that ease . 332): Constitution, “. . our laws p. at (301 U. S. operation, extraterritorial unless no re- have policies . . . What another country citizens. of our own has spect taking way over its nationals, done corporations, judi- of its not a matter for especially Such nationals must look to consideration here. their cial for any they redress to which government may be own entitled.” urged

But it is that different considerations apply case of the creditors8 to whom New York Court (255 Appeals 415, 175 114) N. Y. N. E. ordered distribu argument rights tion of these funds. The is that their by these funds have vested virtue of the New York decree; that them deprive to of the would violate the Fifth Amendment which extends its to protection aliens Assignment as well as to citizens; that the Litvinov cannot deprive New York power of its to administer the balance of the fund with for the accordance its laws benefit of these creditors.

At the it outset, should appears, be noted far as that, so all creditors whose dealings claims with' arose out of New York branch paid. have been we are not faced Thus with the question whether New policy protecting York’s disposition express In view of case, which make of this we we no asserting view on whether these creditors from their would be barred by Ry. Geb ruling claims here in Canada Co. v. virtue of the Southern hard, legal 527, 538, “anything home of the 109 U. S. done at the corporation, discharges authority laws, it from under the of such liability everywhere.” there, discharges it them giving priority creditors local the so-called (Matter People, the State with deposited the assets recognized 159) E. should be 148, 158-159, 151 N. Y. 242 N. Williard, 294 U. S. or v. should of Clark within rule in the international policy expressed the Federal to yield 284 U. Egan, Santovincenzo agreement. or compact Belmont, supra. We intimate States United 30, 40; The contest here is between question. no on opinion corporation Russian States and creditors the United of this country are not citizens and whose who, assume, we of transactions with New did not arise out claims seeking protect branch. York also holds but claims its only claims which not 76th Rep. Cong., 1st Sess. Such H. No. nationals. with this did arise out of transactions claims not against however, Russia they are, claims corporation; The existence such claims and their its nationals. been one the barriers years had non-payment regime Depart the Soviet Executive recognition of Relations, 1917-1933: Graham, ment. Russian-American 28 Am. Pol. Hackworth, Sc. Rev. Interpretation, An (1940), Law 302-304. The Digest pp. of International leading policy recog of the discussions purpose outstanding” questions nition was resolve “all between Diplomatic two nations. Establishment of Relations Republics, Dept, of Socialist with- the Union Soviet of 1 Series, State, European (1933), p. Eastern No. Set Russia, claims against -of-all- American was one tlement removing objections the method prior recog some nition the policy based on Soviet of nationalization. Assignment only parcel Litvinov was not and part recognition (id., 13), the new it policy p. was also the adopted by Department method the for alle Executive viating in country rigors of nationalization. Congress tacitly recognized policy. Acting an of the realization funds the Litvinov ticipation under 865, 76th 1st Assignment (H. Rep. Cong., Sess.)/ No. it a Commissioner to appointment authorized deter- nationals against mine the claims of American the Soviet Joint August 4, Resolution of Government. Stat. 1199. power

If President to determine had the policy govern question recognition, which was then the way Amendment not stand Fifth does of giving Assignment. and effect the Litvinov full force To be as well as citizens are entitled sure, protec- aliens the Fifth tion of Amendment. Volunteer Fleet States, 282 481. A v. United U. S. State is not precluded, however, by the Amendment Fourteenth from according against to local creditors creditors priority who are foreign nationals countries whose claims arose Umbreit, Disconto abroad. U. S. 570. Gesellschaft By token, the same the Federal Government is not barred Fifth from securing Amendment for itself and our priority against such it nationals creditors. And matters procedure adopted not that by the Federal Govern- globular ment and involves a regrouping assets. no why There is Constitutional reason this Government agent as the need act collection for nationals of other steps when it to protect countries taires itself or its own nationals on external debts. There is no reason why it may not, through such devices as the Litvinov Assignment, make itself its nationals whole from assets here before such assets to permits go abroad satisfaction of claims made of aliens elsewhere not incurred connection with business conducted this country. The fact that New York has marshaled the claims of creditors here involved and authorized their payment does not give immunity general them from that rule.

If priority had been accorded American claims by treaty with Russia, there would be no doubt as to its valid ity. Egan, Cf. Santovincenzo supra. The same result

229 in the conduct the President powers here. obtains consent without the power, included foreign relations United public policy Senate, to determine decrees. nationalization to the Russian respect with here as representa regarded to be government is “What a rather than political state is a foreign sovereign of a tive political is to determined judicial question, Trust Co. Guaranty v. government.” department States, supra, authority United 137. That U. at p. 304 to be the government limited to a determination is not the policy to determine power It includes the recognized. recognition. Objec question govern is to which objections well as policy as underlying tions to the department political be addressed to the recognition are to Trust Guaranty Co. v. to the courts. See and not Chambers, 14 States, Kennett v. supra, p. 38, How. Belmont case this Court noted, we have As 50-51. was interna Assignment an the Litvinov recognized require participation did not compact tional (301 pp. 330-331): U. S. “There It stated Senate. of which a a modus compacts, protocol, many such are agreements like that postal convention, vivendi, illustrations.” And are see under consideration now United States Mississippi, Monaco v. 313, 331; 292 U. S. Curtiss-Wright Corp., Recognition 299 U. S. 318. is sometimes conditional. always absolute; is not Digest (1906), pp. 73-74; International Law Moore, Digest (1940), of International Law Hackworth, pp. such obstacles to full recog to remove Power 192-195. of claims of our nationals (Levitan, nition as settlement 35 Ill. L. Rev. Agreements, 382-385) cer Executive power of the President implied a modest who tainly is government the federal organ the field of the “sole Curtiss-Wright United States relations.” international supra, p. in handling Corp., Effectiveness deli requires relations no less. problems cate Unless such a power exists, the power recognition might be thwarted or seriously diluted. No such obstacle can be placed the way of rehabilitation of relations between this country and another nation, unless the historic con ception of the powers and responsibilities of the President foreign (see the conduct of Moore, affairs Treaties and Agreements, Q. 385, 403-417) Executive 20 Pol. is Sc. be drastically revised. It was judgment po department litical that full recognition of the Soviet Gov ernment required outstanding the settlement of all prob including lems the claims of our Recognition nationals. Assignment and the Litvinov were interdependent. We would if usurp the executive function we held that decision was not final and conclusive in the courts.

“All constitutional whether in power, acts the execu- in the judicial tive or department, legal have as much validity obligation if they proceeded from the legislature, . .” The Federalist, . No. 64. A treaty is supremacy (Art. a “Law of the Land” under the clause VI, 2)Cl. Constitution. Such com- international pacts agreements Assignment as the Litvinov have a Belmont, United States supra, dignity. similar v. 301 p. Corwin, U. S. at 331. See Office & President, Powers (1940), pp. 228-240.

It true that even course, treaties with is, foreign na- carefully will be construed derogate tions so as not to jurisdiction authority from of this clearly necessary to nation unless effectuate the national States, Trust Guaranty Co. v. United supra, p. policy. Todok v. Union example, 143 cited. For and cases Bank, State 281 U. Court took pains S. this its relating treaty, power to the construction a of an alien dispose country, not to invalidate governing provisions dispositions. of state law such obligation will Frequently treaty dependent of a on Greneaux, law. Prevost v. 1. How. But state state with, impairs or inconsistent yield must when law an international treaty or of provisions of, policy or Johnson, U. Nielsen compact See v. agreement. or to refuse enforcement a State Then, power to the runs law which counter rights based on McCoach, 313 U. S. (Griffin the forum policy of public policy give way superior before the Federal 506) must agree compact or international treaty aby evidenced Egan, 284 U. S. supra, ment. Santovincenzo Belmont, supra. States v. by the formulated policy of New York’s as

Enforcement the with and subtract from case would collide Moscow the absence premised it was on policy, Federal whether decrees, the the Russian con extraterritorial effect of of juristic per York branch as a distinct ception of the New the by New York of sonality, disapproval or 9 the For Moscow case refuses of nationalization.8 program recognition New York to of the give or acts to effect by policy United States its Government which Soviet longer question. no to Enforcement recognition agreed of indeed tend some would to restore state policies of such friendly relations which to impediments the precise on inauguration intended remove President In Government. of the Soviet recognition policy (b) that New In it should be noted this connection § of a receiver provides appointment for the York Practice Act Civil alia, where, inter it foreign corporation has liquidate local assets of Subdivision 19 of that dissolved, liquidated, or nationalized. been part: provides in section expiration of its liquidation, dissolution, nationalization,

"... such charter or annulment of its repeal, suspension, revocation existence, or confiscatory any country law or organic domicile, of its or law in or any extra-territorial effect be to have deemed thereof, decree shall not tangible intangible, debts, or demands validity property, or any corporation within the or debts state in action of such or choses persons, or owing corporation firms cor- from obligations to such or doing sojourning business state.” porations residing, or first place, such York, gloss action New no matter what given it, amounts to official or disapproval non-recogni- tion of the program nationalization of the Soviet Govern- ment. non-recognition That disapproval or is in the face of a disavowal of any United States official concern with that It program. the face the underlying policy adopted by the United it recognized States when Soviet In Government. the second place, to extent that the in refusing action of the State enforcement of the Assignment Litvinov results reduction non-payment nationals, helps keep claims of our alive one source of policy recognition friction which the intended to re- move. the action of New York Thus tends to restore some irritants which precise long had affected the great between these two relations nations and which recognition designed was policy eliminate. Davidowitz, in Hines We stated recently 312 U. the field affects Vhich international relations is government “the from aspect one our the first has been generally most conceded imperatively to demand broad national authority”; any and that power state may exist restricted “is to the narrowest of limits.” There, dealing we were with the question as to whether a state regulating statute aliens survived similar a federal statute. not. We held that did are Here, dealing we with an ex- If clusive federal function. state laws and policies did not yield before the of exercise powers external of the States, foreign then our policy might be thwarted. are These delicate If matters. state action could defeat foreign or alter our policy, serious consequences might en- sue. The nation as a whole would be to held if answer a State created difficulties with foreign Chy a Cf. power. Lung Freeman, 92 U. 275, S. 279-280. Certainly, “enduring conditions for friendship” nations, between the which policy recognition of in this instance was de- likely flourish con- where, are not to signed effectuate,10 to atmosphere of lingering hostility a trary policy, national to action. is created state Oetjen of principle considerations underlie the

Such Co., Leather 302-303, U. that when a Central jure as a de recognized gov- government is revolutionary recognition in ernment, is retroactive effect vali- “such government so and conduct of the dates all the actions existence.” from the commencement its recognized v. Her- in Underhill rule expressed also They explain nandez, country 252, that “the courts one 168 U. S. government judgment on the acts of will not sit territory.” done within its own another in this sub- The action of New York case amounts underlying rec- policy a a rejection part stance to is not power Russia. Such ognition by this nation Soviet permit To system. constitutional accorded State our of Fed- dangerous to sanction a invasion it would be rela- “imperil For it would amicable authority. eral peace vex the of nations.” governments tions between Co., supra, p. 304. It Oetjen Leather would v. Central foreign relations equilibrium our tend disturb to govern- national our political departments endeavored establish. diligently ment had sovereignty there áre limitations on the repeat We policy can rewrite our No of the States. State Power over external domestic policies. conform its own in the na- States; not it is vested shared affairs It need not be so exer- government exclusively. tional whether policies, or state cised as to conform to state laws judicial they constitutions, statutes, expressed wholly become policies And decrees. States, act- judicial inquiry when the United irrelevant Diplomatic Relations with Union Soviet Establishment supra Republics, p. note Socialist seeks

ing sphere, its constitutional enforcement of within foreign policy reasons, courts. For such Mr. its in United Belmont, stated States Sutherland Justice U. “In of all supra, p. 331, respect S. at international negotiations compacts, respect and our disappear. pur- lines generally, relations state As to such not of New York does exist.” poses State right hold that the to the funds or ques- We property tion vested in the became Soviet Government as the suc- cessor to the First Russian Co.; right Insurance that this has to the passed United States under the Litvinov As- signment; and that entitled to the against corporation the foreign credi- tors.

The judgment is reversed and the cause is remanded to Supreme Court New York for proceedings not in- consistent with opinion.

Reversed. Mr. Justice Reed and Mr. Justice par- Jackson did not ticipate in the consideration or decision of this case.

Mr. Justice Frankfurter:

The nature of the controversy makes appropriate to Douglas’ add a few observations to Brother opinion. my Legal ideas, like other organisms, cannot survive sever- ance from their congenial environment. like Concepts “jurisdiction” “situs” and “comity” summarize views evolved by judicial process, the absence of control- ing legislation, for the settlement of domestic issues. To utilize such concepts for the solution of in- controversies ternational nature, though even are they presented the courts in the form of a private litigation, invoke is to a narrow and inadmissible frame of reference.

The expropriation decrees U. gave S. S. R. rise to litigation extensive among various classes claimants to companies doing business or belonging funds to Russian England and New York were keeping accounts abroad. The litigation. opinions the centers of this most active courts constitute a sizeable many the cases before their effect They single all from a theme —the library. derive upon particular decrees expropriation of Russian recog before and some cases after some cases claims, de One R., de jure either nition of U. S. facto. judicial in the Divisional opinions, of body cannot read this Lords, of the House Court, and Appeal the Court of and the Division, Appellate New Supreme Court, York with not left the conviction Court of and Appeals, confusion, and largely casuistry, they product are Foreign Rela Jaffee, Aspects See Judicial indecision. prob were inherent in the tions, The difficulties passim. They were due to what the courts. lems that confronted “the hazards and embarrass Judge Chief Cardozo called confiscatory decrees of the Rus growing ments out (Russian Rein People Republic,” Matter sian Soviet N. E. and to 114, 115, 255 N. Y. Co.), surance 415, 420, 175 adjust these “hazards and embarrass endeavor to public and largest policy to “the considerations ments” Insurance, Co., Co. justice,” James & v. Second 369, private when claims' N. E. 248, 256, 146 239 Y. N. were before decrees expropriation to funds covered non-recognition time when courts, at a particularly policy. national was our New York English and the both the opinions show consequences these business deal with struggling to

courts through major applica- complications international “jurisdic- judicial concepts. “Situs,” tion traditional “dissolution” of tion,” “comity,” “domestication” enough in legal ideas often corporations, and other their purely prove domestic nature limita- litigation of a means for for even as solution or tions instruments claims adjudicating for into service pressed were analysis, whose implications international could not be sterilized. This divergence accounts for the among judges views contradictory such confusing rulings as the series of New York from v. Russian Re cases, Wulfsohn public, 372, 138 234 N. Y. E. the ruling N. now under review, Moscow Fire Ins. Co. v. Bank New York & Co., Trust 280 N. Y. 286, N. E. 2d 758, accounts for Russian Commercial & Industrial Bank v. Comptoir d’Escompte Mulhouse, de ^[1925] A. C. 112, compared with Lazard Brothers & Co. Midland Bank, ^[1933] A. C. 289, and for the result of the decision in Lehigh Valley fantastic R. Co. State Russia, 21 F. 2d 396, the Keren sky regime was, in with diplomatic accordance determina tion, existing government treated as the Russian a decade its after extinction. hardly

Courts could escape perplexities when citizens as- serted claims to Russian within funds the control the forum. totally But a different situation was presented when all claims of local creditors were satisfied and only the conflicting claims of Russia and of former Russian creditors were In involved. the particular circumstances companies doing Russian insurance business in New the York, Superintendent State of Insurance took posses- sion of the assets of the Russian branches in New York to the conserve them for benefit of those entitled to them. Liquidation followed, domestic creditors and policy hold- ers were paid, Superintendent found large a sur- plus statutory his hands. As on liquidator, the Superin- took ground tendent that “in Insurance view of the hazards and uncertainties of the Russian situation, not be surplus paid any should one, but should be left in his hands until indefinitely, government a recognized by the United States shall function in the territory of what Empire.” was once Russian 255 N. Y. 415, 421, 175 114, Appellate N. 115. So the E. Division decreed. 229 Y. Div. 243 N. S. 35. But App. the Court of Appeals among reversed the scramble claimants Y. N. 255 N. E. proceed. was allowed the retention of the Appeals The Court held that sur- Superintendent Insur- plus custody funds until international relations between ance formalized “did not solve the States and Russia had been adj ournment, die.” adj It ourned it sine But problem. suggested, a interim may sometimes constructive meas- temporizing premature solution avoid I ure rise to new difficulties. believe giving Such rejec- been bound to follow have the mischief was policy tion of the conservation Superintendent’s Their disposi- recognition. funds until surplus Russian entangled tion was inescapably recognition. sues, effect,

In the immediate the United case government for claims assignee government against Company the Russian Insurance no New York to which American deposit for monies can change manner of speech citizen makes claim. No belonged to that monies which a the central fact here are government the Russian and for which company Russian to itself. payment has decreed York is whether New can bar question

And so the realizing against its decrees these funds from on Russia recognition the United by New after formal in York that light of the circumstances led up Russia and exchange of notes that it. recognition and attended deny the of these New York to effectiveness Russian For circumstances would be to oppose, such at under decrees its notions as to the effect respects, which least some against recognition that be accorded entertained should authority conducting our the national by is the same whether And the result New York affairs. judicial courts it because its invoke views accomplishes of foreign expropriation enforcement de- regarding crees, or survival of a Russian regarding New York according

business law had ceased to to Russian York courts over exist, regarding power of New New companies owing funds of Russian from York credi- If is not by tors. this Court bound construction which York of Appeals places upon complicated New Court they York in determining transactions New whether against come within the im- protection Constitution obligations contract, not certainly we should pairing court’s by be bound construction of so transactions entangled significance in international as the status of Russian companies New York branches the dispo- Appleby City Compare Newof sition their assets. v. York, Irving Trust Co. v. 271 U. 364 and S. Day, U. S. 556. When the decision a question fact or of local law is so interwoven with the of question decision a authority of national necessarily the one involves other, we are not foreclosed by the state court’s determi- nation of the or of facts the local law. Otherwise, national Cres- authority could be frustrated by rulings. local See Knights Pythias, Wechsler, will Davis 225 U. S. 263 U.

It is not with consonant conduct sturdy of our for- eign relations that the effect of Russian decrees upon Rus- country sian funds should on depend gossamer such distinctions as those which have courts determined that Russian branches survive the death their Russian origin. with When courts deal such essentially political- phenom- ena as the over of taking businesses the Rus- government by resorting to the forms and phrases sian law, conventional corporation they inevitably fall into dialectic With- quagmire. candor, commendable frankly House of Lords confessed much when prac- tically overruled Russian Commercial &Industrial Bank v. Comptoir d’Escompte Mulhouse, de supra, saying through Lord Wright, “the whole matter has now to be reconsidered light of new evidence and of the-historical evolution

239 Bank, Midland & Brothers Co. v. Lazard years.” ten of ^[1933] A. C. 300. physical property— with dealing we here

For not are intangi- with dealing are realty. We whether chattels or these The fact ble with action. choses rights, change the char- not money were does claims reduced tenuous a thread certainly is too claims, acter of the affecting the relation between which issues on to determine give rules law may rise to Corporeal property nations. contro- held, purely even domestic which, we have adjudication of to the not to be ought versies transferred Curry controversy. such here impalpable claims as are seg. McCanless, et U. v. 307 363 regard respective for their states, As due between governmental is written into Constitution acts 1). But IV, (Art. Full Faith and Credit Clause § may the of one policy state scope operation its —when by the deny consequences of a transaction authorized judicial given history long rise laws another —has for hardly commend themselves transfer subtleties analogous problems friendly between solution Attrill, Huntington 657; Finney v. 146 U. S. nations. See Co., Milwaukee Guy, County v. White 335; U. S. 189 Comm’n, Ins. Co. v. Industrial U. S. Pacific Pink Highway Express, A. A. A. 493, 502; U. S. U. S.

For- than fifteen formal between years, more relations were the United and Russia broken because seri- regarding differences between the two countries ous major consequences policies. to us of two This friction, complicated friendly abstention from process accommodation, relations, negotiations efforts at removing friction, the causes are summarized “non-recognition.” delusively simple concept of no room for relations leaves history of Russo-American difficulty were underlying the-two doubt sources propaganda Russian expropriation. any Had state during given court period this comfort to the Russian views government contest between its and ours, it would, to that extent, have interfered with the conduct our relations even if it Executive, had purported to do under guise so of enforcing state law in a matter of policy. local On the contrary, during this period of non-recognition New York denied Russia access to her courts and did so on the single and conclusive ground: nothing “We to thwart the policy should.do which the United States has adopted.” Repub- lic Y. Cibrario, 235 N. 255, 263, 139 N. E. 259, 262. Similarly, no invocation of a local governing rule “situs” or the survival aof domesticated corporation, however ap- plicable in ordinary an within case, is the competence of a state court if it would thwart to any extent “the policy which the United States has when the adopted” President friendly reestablished relations And it would be if judgment thwarted below were allowed to stand.

That the President’s control of foreign relations includes the settlement of claims is indisputable. Thus, referring to the adhesion of the United States to the Dawes Plan, Secretary Hughes reported State agreement that “this negotiated was under the long-recognized authority of the President arrange for the payment of claims favor of the United and its nationals. The exercise of this authority has many illustrations, one of which is the Agreement of 1901 for the so-called Boxer Indemnity.” (Secretary Hughes to President Coolidge, February 3, 1925, MS., Department quoted of State, in 5 Hackworth, Digest Law, 16, 514.) of Int. c. § power President’s negotiate such a settlement is the same whether it is an isolated transaction between this country and a friendly nation, or is of a part complicated negotiation to restore relations, normal as was the case with Russia. relations with a normal to establish such power That equally indis- belongs the President foreign country a- foreign country is not theo- Recognition aof putable. It symbolism. or exercise abstract retical an problem power directed towards safe- the of national is assertion and of our interests those civili- and guarding promoting revolutionary government nor- of a Recognition zation. As of of friction. often mally the removal areas involves by adjustment the friction are removed areas of not, as on country behalf its nationals pressed by this claims regime. a new against when this by was made the President a settlement

Such relations with Russia. The two normal resumed country with friendship Russia —intru- to renewed chief barriers expropriation the effects of decrees and propaganda sive negotiations the of our at core nationals —were our upon good many years. a The been for they as had M. must the President and Litvinov between exchanges of diffi- but as the culmination not isolation be read years. And dealings extending over fifteen and culties docu- as self-contained technical read not they must be lading, bill of marine contract or a like a insurance ments, expressions delicate and elusive characteristically but as must save The draftsmen such notes diplomacy. explicitness diplomatic on which and avoid sensibilities negotiations easily so founder. controlling régime of the history Soviet it be read between the lines

country’s relations with must needs Agreement. One to be Roosevelt-Litvinov to know the expropriation no Russian law that expert sweep intended to the assets of Russian companies decrees government into control no by taken over that Russia’s where were credited. clear Equally matter those assets assignment give by Russia meant States, as part comprehensive settlement, United against everything that Russia claimed under its laws 242- It of negotiations

Russians. does violence the course between Russia, scope the United States and to the final settlement adjustment, to assume thus made on of the United States —to both behalf settle money feelings qualified claims and to soothe to be —was variant of the re- forty-eight notions courts states garding “jurisdiction” intangibles “situs” or over In survival of extinct corporations. dealings our with the world, speaks outside with one voice and one, complications acts unembarrassed are as to domestic issues which inherent distribution political power government between national the individual states. Stone, dissenting:

Mr. Chief Justice judgment I think the should affirmed.

myAs brethren are content to rest their decision on the Belmont, in States authority the dictum any U. S. without the pertinent aid decision of I think this a word should be of the Court, authority said of the Belmont case and reasoning the principles I controlling think are here. the Belmont In case, brought United States suit alleged the federal court debt to recover a to be due upon deposit account Russian of a national with a New York banker. set complaint up the confiscation of by the account the Soviet decrees of Government and the by transfer of debt the United to the Litvinov our concurrently diplomatic recognition with assignment, of that Government. It not nor alleged, was did it appear, that York had, subsequent New courts to recognition, refused to effect give to the Soviet as operating decrees transfer the title of nationals property located in New York. No such any national or adverse claimant In party was a to the suit. sustaining complaint against demurrer, “In 332): this Court said (p. so holding, only presented we the case now and with the deal with do not consider the now before us. We status parties if claims, parties there be of others not to this any, adverse nothing we is to be And have said construed as action. foreclosing any such claim to the fund assertion involved, by or other appropriate proceed- intervention ing. alleges only complaint We decide facts of action against sufficient to constitute a cause respondents.”

The questions explicitly presented thus reserved are York, the case now before The courts of New us. authority ordinarily pos-

exercise constitutional sessed state courts to the rules of law applicable declare their limits, located within territorial have recognize the Soviet decrees as credi- depriving refused tors and other claimants the interests of representing rights their New company of under York law. insurance Numerous creditors and other claimants, individual the New York Superintendent Insurance, repre- who parties to the claimants, present sents all are suit and their to the exclusion of the assert claims United States. Court, case, indulged It is true Belmont the effect New York some remarks as to on law of our recognition of the Soviet Government diplomatic and of assignment against of all its claims American nationals Upon to the United States. basis of these observa- thought that the New York courts tions were bound to recognize apply the Soviet decrees to property which in York when the promul- was located New decrees were predicated was gated. upon But all this the mistaken by disregarding the assumption that decrees the New York giving courts would be an extraterritorial effect to New York were law. observations irrelevant to the These de- and, there shortly cision announced for reasons to be given, I plainly inapplicable They think here. were but obiter which, they dicta so far as have not been discredited by in Guaranty decision Trust States,

our Co. v. United 126, they “may S. and so far as now merit it U. be re- but not to control the in spected, ought judgment a sub- suit, very point when the sequent presented de- Chief Marshall in v. Virginia, cision.” Justice Cohens 264, Mr. in 399; 6 Wheat. Justice Sutherland Williams v. States,

United 289 U. S. no here with the wisdom of the We have concern rules York adopted law which the New courts have enlightened with or their consonance most prin- case jurisprudence. questions State do not become ciples they are because difficult or questions federal because we wrong courts given think that the state have may answers only questions before us are whether them. New authority to adopt constitutional its own has rules York defining property located rights state, and, lawof has authority been that curtailed if whether so, superior power by recognition federal exercise acceptance assignment of its Government Soviet against of claims American nationals, property. York including the New for thinking grounds that my pro state I shall case, Belmont on which the Court re nouncements to these are without the questions, sup for the answer lies principles of law. accepted No reason or one port govern are decrees the acts of Soviet doubts sovereign in state, which is its own ment of recognition consequence of our and that territory, be so our will treated State they De government they affect As when was such, partment. time of their promulgation, they in Russia at located all, only through if at our State subject inquiry, are Underhill not in our courts. v. Her Department Oetjen Co., Central Leather 250; U. nandez, 168 Co., Metal 246 U. S. 304, American Ricaud v. S.U. Co., 262 N. Y. & Co. Standard Oil 308-10; Salimoff

245 property N. to which the New E. But York 186 all relevant times been relates has at New judgment Superintendent of of custody Insurance York as security insurance policies company, for the and is custody Liquidator the Superintendent’s acting now York direction of New courts. United under the Co., Bank York 463, v. New 296 S. U. 478-79. distributing the administering In and thus within York control, their the New courts are to apply free their including law, rules of their own doctrines of own conflict see Erie laws, Tompkins, R. Co. v. 304 U. 64, S. 78; McCoach, Kryger Wilson, v. U. S. v. 242 498; 313 Griffin 171, subject insofar as 176, except they U. S. are to the of the full faith and credit requirements clause —a clause judgments applicable only public acts of states foreign the Union and not those of Aetna states. Life Tremblay, Co. Insurance v. 223 U. cf. Bank 185; S. Earle, 13 Augusta 519, Hume, v. Pet. Bond 589-90; v. 243 15, U. S. 21-22.

This Court repeatedly has decided that the extent which state court will follow the rules of law of a recog foreign country preference nized own is its wholly a matter comity, that, absence relevant treaty obligations, the application the courts of a state of rules of its own law rather than those of a country question. no federal Rose 4 Himely, raises v. Cranch 241; Sterry, 289; Harrison v. 5 Cranch Crosby, States v. Bennett, 11 115; Oakey 7 v. 33, 43-46; Cranch How. Hilton Guyot, 165-66; 159 U. Disconto 113, v. S. Gesellschaft Baglin Umbreit, cf. Co., 208 U. S. 570; S. v. Cusenier 221 U. Co., Trust 580, 594-97; Guaranty United States v. 340, 345-47. This is when equally U. S. case a state apply the Union a sister state, refuses the law of if is no full question Kryger there faith credit, v. Wil son, supra; Guy, Finney Alropa 189 U. 346; S. Kirchwehm, Corp. v. U. Milwaukee County see or due 268, 272-73, process, Home 296 U. S. Co., White

v. clearly thought 397. So was this Dick, Co. v. 281 U. S. Ins. power exercise of a forum appropriate be an jurisdiction property within its territorial this over Co., Ingenohl in Olsen & 273 U. 541, 544-45, v. S. Court, right of accepted beyond all doubt the the British courts Hong in Kong recognition to refuse to the American alien property rights custodian’s transfer of exclusive to the use Hong of a trademark in gave Kong, and the Court effect here Kong to the Hong judgment.

In the application of this doctrine, this Court has often held that a state, following policy, may its own law and re fuse give a effect to transfer made elsewhere of prop erty which is within its own territorial limits. Green v. Buskirk, Van 307, 6 Wall. 311-12; v. Hervey Rhode Island Locomotive Works, 93 U. 664; Security S. Trust Co. v. Dodd, Co., Mead & Williard, 173 624; U. S. Clark v. 292 S. 112, 122; Williard, U. Clark v. 294 U. S. So far is a in respect state free that the full faith and credit clause preclude does not attachment local creditors of the property within the state of a corporation, all of property whose has been previously in transferred the state incorporation of its to statutory successor for the benefit Williard, of creditors. supra; Clark v. Fischer v. American Co., United Ins. 314 U. 549. Due process under the Life Amendment, Fifth the benefits of which extend to alien as well as to citizens, friends Russian Volunteer Fleet v. States, 282 U. S. does not call 481, for any different- Disconto conclusion. Umbreit, v. supra, Gesellschaft 579-80. Barclay Russell, 1797,

At least v. since 3 Vesey, Jr., 424, English 428, 433, the courts have consistently held that foreign confiscatory operate decrees do not to transfer title if England, located even the decrees were so intended, foreign government whether has has not recognized by been the British Government. Lecouturier Rey, ^[1910] A. C. 266. Cf. also Folliott Ogden, 123, 135-36, 726, affirmed, 1 H. Black. 3 T. R. affirmed Oxholm, Cases 6 M. & Parl., 111; Brown’s v.Wolff carried non may both which have the doctrine of S. 92, recognition foreign confiscatory decrees even further. History English Acts of Holdsworth, See The State English 1325-26. The Law, Columbia L. Rev. litigation applied arising have this rule out of courts decrees, holding they are not effectual to Sedg title to Great Britain. property situated transfer Co., K. B. Collins & v. Rossia Insurance wick Co. [1926] 1 (No. Jupiter S), A. C. 1, 15, affirmed, [1927] ^[1927] P. 122, 144-46, affirmed, ^[1927] P. 250, 253-55; In re Russian Bank Foreign Trade, ^[1933] 1 Ch. 745, prevailed The same doctrine has case 767-68. Don confiscatory Vizcaya Banco de v. Spanish decrees, Alfonso, ^[1935] 1 K. B. 140, 144-45, as well as with respect alien custodian. property the American by to seizures Sutherland v. Administrator German Property, ^[1934] court for of the British B. and see decision K. Co., supra, in Olsen & Ingenohl v. Hong Kong discussed Wing v. On & Ingenohl decision Privy Council’s 359-60. In no case which Co., Journal Patents recognition question to has occasion decide there was forum, the law of the to have thought subordinated been juris its territorial within property to situated respect with has the state. Never recognized that of the to diction, of title to such follow transfers forum’s refusal the most with considered inconsistent been property recognized foreign government, with the friendly relations time at the military alliance with an active or even transfer. York law claimants that under New

It is plain rights of the asserting and those creditors case, both rights, respect with have enforcible company, insurance recognized been there, which have located though by judgments not created of its courts. The conclusion is inescapable had there been no that, assign- ment and this suit had been maintained the Soviet Gov- ernment subsequent recognition, or in- private claiming assignment dividual under an from it, the decision of the New York court would presented have question no reviewable here.

The only question remaining is whether the circum stances the present case, that the Russian decrees pre recognition ceded assignment towas States, United which here appears role plaintiff, any call for different If result. they recognition then do, assignment and the give have operated to to the United rights assignor its did not have. have They compelled the state to surrender its own rules law ap plicable to property within its and to limits, substitute rules of A Russian law for them. potency would thus be recognition attributed assignment which is lack ing to the full faith and credit clause of the Constitution. Williard, Clark supra; See Fischer American Co., supra. Ins. Life

In deciding any question federal involved, it can make no difference to us whether New York has chosen to ex its press public policy by statute merely by the common law determinations of its courts. Erie R. Co. Tomp v. kins, supra, 304 U. 64; S. Florida, Skiriotes v. 313 U. S. . 69, 79; Louisiana, Hebert v. 272 U. S. 316 The state court’s repeated declaration of a policy of treating the New York branch of the insurance company as “complete organization” and separate permit would satisfaction of whatever foreign claims of creditors, as well as those of states, sister that New York deems provable against the local if fund. But my brethren are in concluding correct that all foreign creditors must be deprived of access to fund, the it would seem to the follow—since Soviet decrees have exempted no class of rights creditors —that

249 any rights other states, or in New York or in sister creditors law, equally York must recognized by New in the given effect virtue of the extraterritorial by be ousted For, statutory priori- decision. by present decrees lienholders, New York York or policyholders of New ties of distribution priorities system and law common and and judgment below endeavored to effectuate which the yield superior alike force said intact, must preserve the recog- to the Soviet decrees imparted by to have been assign- assignment. Nothing the Litvinov and nition recognition suggests for an negotiations in the or ment discriminations be- impose upon states intention to other creditors which sustain York would tween New If obliterating of the latter. liens while those the former’s state assignment policies pro- overrides the Litvinov thought creditors, hardly it can to do less foreign tect of New York or a whether sister creditors, to domestic state. purposes sweeping for that these alter- present

I assume could be rights persons of states and ations although even executive by treaty agreement, achieved or authority which would sustain such referred to no we are been exerted here power exercise of as is said have an It is true by mere unratified Senate. assignment recognition establishing friendly that, according speaks this Government country, with a relations it true that forty-eight states. But was never all the any law or recognition pre- substantive state alters recog- scribes uniform law for the nationals of the state country. contrary, does not even secure nized On for them of treatment equality states, several any state, treatment with citizens in equal save as Pennsylvania, Patsone v. it. Constitution demands 232 Thompson, Terrace Clarke U. U. S. 197; Deckebach, U. S. cited. are ends cases Those only which can be achieved assumption some be obligation expressed fairly form of inferred from or its words. treaty making, political act, is a and

Recognition, like no be terms and conditions. But that fact may upon both it Court, upon adju- more is called forecloses this where dicate from as to what those terms private rights, inquiry circumstances, conditions it in like precludes, and are than ascertaining the of a scope meaning a court’s true and power treaty. course, may appropriate Of national the power constitutional means override of states and rights But, of individuals. without collision between them, power there is no impairment such loss of or rights, whether and cannot known state law and rights collide with private political expressed acts agreements until their treaties or executive respective are boundaries defined.

It seem, therefore, deciding would some case been inquiry should have made to public ascertain what binding rule of with policy respect conduct state rights individual has been power proclaimed by the recognition of the Soviet assign- Government and the ment of its claims to the United States. The mere act of recognition and bare transfer of the claims of the Soviet Government to can, themselves, be taken to hardly any have such effect, they can be regarded only as intended do so if that purpose is made their evident terms, light read in the of diplomatic exchanges between the two countries and of surround- ing Even circumstances. when courts deal with the lan- guage of diplomacy, some foundation must be laid in- ferring obligation an where previously there none, was some expression must be found in the conduct relations which fairly indicates an intention to assume it. Otherwise, courts, rather than the executive, may shape foreign policy and define which the executive has not adopted.

251 the face of the docu- on anything to pointed not We are which even correspondence diplomatic ments or in to be a bet- was placed the United States that suggests as- which now the claim to respect with ter position, nationals. Government and than was Soviet serts, recognition was in that them any there intimation isNor any Government public to acts of the Soviet to give prior to acts than attaches such effect greater extraterritorial by common recognition which, occurring after —acts are ordi- English courts, American understanding and and force, without extraterritorial to be deemed narily been considered to before have never any event, which, their own rules apply to states power restrict territory. foreign-owned their within property to law States, Trust Co. v. United Guaranty we decided As of the Court opinion as the supra, 304 U. S. at any of the concede, nothing to there appears is now was suggest “to the United States relevant documents that rights or greater than its transferor acquire any or exert to purported mere executive action that President of the rights York] intended to alter or diminish [New assigned or that respect with to any claims, debtor to more than the Soviet States, assignee, as do United recogni- diplomatic after done could have Government conformity local is, collect the claims tion —that law.” recognized govern

Recognition our opens courts to Guaranty Trust v. Co. nationals, ment and its see States, government supra, It acts accepts 140. in sovereign, territory the acts of the within its own as recogni de cluding government before its acts as a facto Hernandez, supra, 168 U. 250; Underhill S. tion, see Ricaud Co., supra, Oetjen v. Central Leather U. S. Co., supra, v. American Metal until But, U. recognition foreign government by Govern now, of a thought ment has never serve as full faith been compelling obedience here to the laws credit clause recognized government with respect acts public country. and transactions in this One could property argue recognition well Soviet Government’s accompanied our own transactions Government, now under it had undertaken consideration, to apply the New York applicable law Russia Ingenohl Co., in New York. Cf. Olsen supra, & 273 U. S. Comm’n, Ins. Co. v. Industrial 308 U. S. Pacific 501-02.

In Guaranty States, supra, Trust Co. v. United unanimously rejected Court recog- the contention that the nition the Soviet operated Government to curtail or impair rights derived from the application of state laws policy and within the It territory. state’s own argued was by the Government that recognition operated retroac- tively, for the of the period de set government, facto rights acquired aside the United in consequence recognition of this prior Government’s of the Pro- Russian. visional Government. This argument, said, we p. 140, “ignores the distinction between the recog- effect of our nition of foreign government a with respect to its acts within its territory prior own recognition, and the effect upon previous transactions consummated here between its predecessor and our own nationals. The operates one only to validate to a limited extent acts of a de gov- facto by ernment which virtue of the recognition, has become government jure. a de itBut does recog- not follow that nition renders of no effect transactions here with prior a government recognized conformity to the declared policy our own Government.” Even though the two governments might stipulated for have alteration by this Government of municipal its the law, and consequent sur- rights render of the of individuals, the substance Court’s decision was that such an abdication of domestic policy law and is not a necessary customary or incident it. inferred No more to be from recognition fairly or of the a con- deprivation said to recognition imply can Union, of the and individuals rights of states stitutional binding which on are arising policy, of their laws out recognition the act of except as Federal Government exercise of federal by some affirmative accompanied is to set them aside. purports power or in surrounding I circumstances find Nor can of the two diplomatic relations countries history of any of either saying policy for there was basis any larger recognition effect to give different to them. It ordinarily would attach assignment than negotiations published account significant (Establishment Diplomatic Department State Republics, with the Union of Soviet Socialist Relations 1), report of sub- Series No. European Eastern of the negotiations adjustment claims sequent Congress Secretary two countries submitted give no Cong., Sess.) No. 76th (H. 1st Rep. State corre- diplomatic Even the intimation such a policy. countries, 7, 1937, of January between the two spondence oc- refers, of Court and which opinion which to had the Mos- long the United States entered after curred litigation, merely repeated Company Fire Insurance cow its suggesting without that assignment language state law. applicable had to override been purpose recognition had wide assignment scope after That it reading attempt into set any without application for them accruing under rights our local laws aside in its application It not limited was evident. In- decrees. be confiscated under the Soviet

alleged to terms, its were all “amounts assignment, by in the cluded due it may be found to be due or that admitted Gov- Government], prior successor Soviet [the otherwise, nation- Russia, from American ernments the prior governments It included claims of als.” Russia, arising not out of confiscatory decrees, also growing claims like that the Russian Fleet, Volunteer out our expropriation during own the war prop- erty assignment of Russian The far nationals. was from an if ceremony only rights idle treated as transferring it purports assign. money have Large sums already been it, collected under and other amounts are process of the law of the overturning without collection, states where the claims been have asserted.1

At assignment, the time it was not known what position country the courts would take with re spect here, to property claimed to have been confiscated by the Soviet decrees. But must been have known to governments English two courts notwith standing recognition British of the Soviet Government, apply had affecting refused to Soviet decrees as prop Sedgwick England. Collins & Co. v. Rossia erty located Co., supra; Jupiter (No. 3), Insurance In supra; re Foreign Trade, supra. Russian Bank It must also have been known that the similar expressed views by the New recognition York before courts with respect to property situated New York raised at least a strong possibility recognition that mere would not alter the result in that Bank, City v. National state. 158, 239 N. Y. Sokoloff James & Co. v. Second Russian Ins. N. E. 167-69, 145 Co., 248, 257, 239 N. Y. N. E. 369; Joint Stock Co. National City Bank, 240 Y. 368, 148 N. E. 552; Petro N. K. Bank, M. Bank v. National gradsky City 23, N. Y. 29, 170 assignment N. 479. The plainly E. contemplated this, every like other question affecting liability, was litigated to be of this courts country, since the 1By June the sums collected virtue of the Litvinov assignment $1,706,443. Attorney amounted to Report of the General p. for 122. apparently litigation. Other claims in are still See Report 1939, p. 99; the Rep. also H. Cong., No. 76th 1st Sess., p. 2. admitted to assign amounts

assignment only purported It only was be found to be due.” may due or “that be was located the debtor the the courts where normally “found to assigned would amounts Co., York Bank New States v. be due.” Cf. United supra, 296 U. American against transferring every kind, claims

By it leaving to their col- States and to the United nationals, to the necessarily remitted courts lection, parties upon the amounts due country the determination undertaking report amounts this Government’s to a of the claims final settlement “preparatory collected as governments. the two asserted and counterclaims” necessity diplomatic discussion of They thus ended claims, and so removed validity probable of the In this, countries. of friction between two all source no decision American I find hint that rules of can those the law customarily were not to be afforded courts But if the purpose courts. it was of either those applied policy local and to override law states government decision a different rule of from that prescribe any it would seem recognized by court, hitherto to have expressed both natural needful been to have some indicating undertaking form of such an intention. The obligation assignment found only to be and its ac- knowledgment by the President that of the mentioned, to States, already report amounts collected. undertaking be an hardly This can be said to to strike down assigned defenses to claims. Treaties, say valid nothing agreements assignments executive been rights, are mere transfers of have hitherto construed law or it is policy override state unless reasonably not to language from their evident that such was intention. States, Guaranty Co. United supra, Trust v. 304 U. at3. Todok Bank, Union State U. S. 449, 454; Thompson, Rocca Disconto 317, 329-34; 223 U. S. Umbreit, supra, v. 208 U. 582; S. at Pearl Gesellschaft Harrington, Assurance Co. 38 F. 14; Supp. 411, 413 - affirmed, 313 U. S. Patsone Pennsylvania, 232 U. Massachusetts, Liverpool 138, 145-46; cf. Ins. Co. v. 10 Wall. 576-77. The practical consequences of present decision would seem to be, every case of recognition foreign of a government, to foist upon the responsibility subordinating executive domestic to cases, law conflicts not, whether intended or purpose affirmatively unless such a disclaimed. system Under our dual of government, many there are legislative in which circumstances and executive government may, branches of the national by affirmative expressing policy, enlarge action its the exercise of federal authority and diminish power thus which otherwise might be exercised It is indispensable states. to the orderly system administration of the that such alteration powers consequent and the impairment of state and rights not turn private should on conceptions policy which, if ever entertained by only gov- branch of the adopt it, ernment authorized to has been left unexpressed. It is not for this Court to adopt policy, making of which has been Constitution committed to other branches It government. is not its function supply a pol- none has been icy where declared or defined and none can be inferred. joins in this opinion.

Mr. Justice Roberts

Case Details

Case Name: United States v. Pink

Court Name: Supreme Court of the United States

Date Published: Feb 2, 1942

Citation: 315 U.S. 203

Docket Number: 42

Court Abbreviation: SCOTUS