F. PALICIO y COMPANIA, SA v. Brush, 61 Civ. 2299.

Decision Date21 September 1966
Docket NumberNo. 61 Civ. 2299.,61 Civ. 2299.
Citation256 F. Supp. 481
PartiesF. PALICIO y COMPANIA, S. A., Cifuentes y Compania, Por Larranaga, S. A., Menendez, Garcia y Compania, Limitada, and Tabacalera Jose L. Piedra, S. A., Plaintiffs, v. Gilbert P. BRUSH and Monroe Percy Bloch, co-partners doing business under the firm name and style of Brush & Bloch, Defendants.
CourtU.S. District Court — Southern District of New York

Rabinowitz & Boudin, New York City, for plaintiffs. Victor Rabinowitz, Leonard B. Boudin, Henry Winestine, New York City, of counsel.

Brush & Bloch, New York City, in pro. per. Monroe Percy Bloch, Jac M. Wolff, New York City, of counsel.

OPINION

FREDERICK van PELT BRYAN, District Judge:

The controversy which is the subject of this action arises out of the take-over by the Castro government of Cuba of five leading Cuban manufacturers of cigars whose businesses and principal assets were located in that country. Basically the dispute involves the respective rights of the "interventors" who took possession of the businesses and assets of these manufacturers on behalf of the Cuban government and the dispossessed former owners to pursue in this court suits for the purchase price of Cuban cigars sold and delivered to United States importers by the interventors and for trademark infringement.

This action is brought in the name of the five intervened Cuban business entities by Messrs. Rabinowitz & Boudin, a New York law firm who, as attorneys for the interventors, are acting for the Cuban government. Three of the named plaintiffs so intervened, F. Palicio y Compania, S. A., Tabacalera Jose L. Piedra, S. A., and Por Larranaga, S. A., are corporations organized and existing under Cuban law. Another, Cifuentes y Compania, is a Cuban partnership. The fifth, Menendez, is an entity unfamiliar to American law and is designated a "limited liability company" or a "limited partnership" under Cuban law. At the time of the take-over substantially all of the stockholders, officers and directors of the three corporations, the partners of the partnership and the partners or owners of the limited liability company were Cuban citizens residing in that country. None were American citizens.

The defendants are the New York law firm of Brush & Bloch, who have been retained by the former owners of the five Cuban business entities and have brought eleven actions in this court in the name of those entities to recover for the purchase price or value of Cuban cigars sold and delivered to United States importers by the interventors after the take-over and for alleged trademark infringement.

The action at bar seeks (1) an injunction against Brush & Bloch restraining them from prosecuting the eleven actions which they commenced in this court in the name of the plaintiffs, and (2) an order directing that attorneys for the interventors (presumably Rabinowitz & Boudin) be substituted as counsel for plaintiffs in those eleven actions.

Messrs. Rabinowitz & Boudin, representing the interventors, have moved for summary judgment. Rule 56 (a), F.R.Civ.P. Defendants Messrs. Brush & Bloch have moved pursuant to Rule 12(b), F.R.Civ.P., to dismiss the action on a variety of grounds. Since the defendants' motion is supported by affidavits and a joint stipulation of facts has been submitted, the motion will likewise be treated as one for summary judgment. Rules 12(c), 56(b), F.R.Civ.P.

Facts

The facts as stipulated by the parties are as follows:

Prior to September 15, 1960 the five Cuban entities with which we are concerned here manufactured cigars and other tobacco products in Cuba and sold their products in the United States and elsewhere. The cigars manufactured were of high and distinctive quality and reputation and for many years the products, which bore trademarks registered in the United States Patent Office, Cuba and other countries, had been identified with the respective entities.

On September 15, 1960, however, the Castro government of Cuba, acting under Cuban law, took possession of the businesses and assets in Cuba of each of the entities and ousted the owners and those who had managed and controlled the enterprises on their behalf. The Cuban government designated so-called "interventors" for each of the entities, who assumed possession and control and actually operated the businesses thereafter on behalf of the government.1 Under "intervention" procedure the interventor is vested with complete possession and control of a business enterprise to the exclusion of the officers, directors, shareholders, partners or other persons who would otherwise manage and conduct it.2 Though intervention does not appear to effectuate a formal transfer of title from the former owners and managers to the governmental authorities, the end result is indistinguishable in practical effect from complete confiscation — for almost six years the former owners have been ousted without their consent from all the properties and excluded from any participation in the businesses. Their rights to any receipts and profits have been eliminated. No compensation has been provided.

The intervention of four of the entities has remained in effect from September 15, 1960 until the present. The fifth entity — Cifuentes — was nationalized on June 29, 1961 by resolution of the Cuban Central Planning Board.

Subsequent to the take-overs the interventors, acting on behalf of the Cuban government, continued to manufacture cigars in the Cuban plants which they had taken over and to sell the products under the same names and trademarks to various importers in the United States, including Faber, Coe & Gregg, Alfred Dunhill of London, Dunhill International, Inc. and Saks & Co. These importers accepted and retained the cigars shipped by the interventors but, no doubt apprehensive of double liability, failed to pay the purchase price. The amounts due for the cigars so shipped eventually aggregated some $570,000, consisting of trade acceptances in the amount of $196,000, held by the interventors in Cuba and the balance on open account.3 With limited exceptions not here material all of the amounts due from the various importers are for cigars shipped by the interventors subsequent to the take-overs.

When the interventors failed to receive payment for the cigars which they had shipped, beginning in April 1961 all exportation of Cuban cigars was funneled through a newly formed entity "Empresa Cubana de Exportaciones," an instrumentality of the Cuban government. A New York corporation, R. C. W. Supervisor, Inc., was organized as the sole United States importer of Cuban cigars. It carried on that business until February 6, 1962, when Presidential Proclamation 3447, 27 Fed. Reg. 1085, brought about the cessation of commercial intercourse between the United States and Cuba.

Following the interventions of September 15, 1960, the former owners of the five Cuban entities retained Messrs. Brush & Block to represent their interests. These attorneys initiated nine actions in this court in the names of the respective entities on behalf of their original owners against the various importers who had not paid the purchase price of the cigars (1) for an injunction restraining them from infringing plaintiffs' United States trademarks and from paying to anyone else the price of goods belonging to plaintiffs, originating from their plants or bearing their United States trademarks; (2) for an accounting, damages and any sums found to be due to the plaintiffs; and (3) for the purchase price or value of cigars bearing plaintiffs' trademarks and shipped from their plants in Cuba. Messrs. Brush & Bloch also commenced an action in the names of all five entities seeking the same relief against R. C. W. Supervisor, Inc., R. C. Wood Imported Cigars, Inc. and Robert C. Wood, who apparently had paid the interventors for the cigars shipped to them. The eleventh action was commenced by Brush & Bloch in the name of Tabacalera and sought similar relief against R. C. Wood Imported Cigars, Inc., which also had paid for cigars which the interventors had shipped from the intervened Tabacalera plants. In the last two actions Messrs. Rabinowitz & Boudin who brought the present action in the names of the Cuban entities are attorneys for the defendants.

The ultimate issue raised here — whether the interventors or the former owners of the five Cuban entities are entitled to control the eleven actions against the importers and receive any proceeds and benefits which may be recovered— plainly turns upon the legal effect of the interventions.

I.

At the outset it is clear that this action in the nature of a plenary proceeding challenging the authority of the defendant attorneys to represent the plaintiffs in eleven other actions in this court is an appropriate vehicle for determining that ultimate issue.

At any stage of a case the court has inherent power to make inquiry as to the authority of an attorney to represent a litigant. E. g., Pueblo of Santa Rosa v. Fall, 273 U.S. 315, 47 S.Ct. 361, 71 L.Ed. 658 (1927); In re Retail Chemists Corp., 66 F.2d 605 (2 Cir. 1933); Sutherland v. International Ins. Co., 43 F.2d 969 (2 Cir. 1930). This question, usually raised by motion in the action, may, and often does, go to the very heart of the controversy being litigated. It may, as here, affect the right of the litigant to assert the claim which he is pressing and to recover the proceeds of the action. Pueblo of Santa Rosa v. Fall, supra.

There is no doubt that an attorney's authority depends upon the consent of the client who may dismiss his attorney at any time, with or without cause, and retain a new one. E. g., Doggett v. Deauville Corp., 148 F.2d 881 (5 Cir. 1945); Gangewere v. Bernstein, 199 F. Supp. 38 (S.D.N.Y.1961).

However, the issue in the case at bar is somewhat different. Here there is no question that the Cuban government has authorized the interventors to act on behalf of the five Cuban entities,4 and...

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