301 U.S. 324 (1937), 532, United States v. Belmont

Docket Nº:No. 532
Citation:301 U.S. 324, 57 S.Ct. 758, 81 L.Ed. 1134
Party Name:United States v. Belmont
Case Date:May 03, 1937
Court:United States Supreme Court

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301 U.S. 324 (1937)

57 S.Ct. 758, 81 L.Ed. 1134

United States



No. 532

United States Supreme Court

May 3, 1937

Argued March 4, 1937




1. A decree of the Soviet Government dissolved a Russian corporation and expropriated all of its assets, including a deposit account with a bank in New York. Subsequently, the President of the United States recognized, and established diplomatic relations with, the Soviet Government, and, for the purpose of bringing about a final settlement of claims and counterclaims between that Government and the United States, it was thereupon agreed, among other things, that the Soviet Government would take no steps to enforce claims against American nationals, but all such claims, including the deposit account, were assigned to the United States with the understanding that the Soviet Government would be notified of all amounts so realized by the United States. Held that, as between the United States and the depositary, the deposit, in virtue of the international compact, belonged to the United States, whatever the policy of the State of New York touching the enforcement of acts of confiscation. P. 327.

2. Judicial notice is taken of the facts that, coincidentally with the assignment, the President recognized the Soviet Government and normal diplomatic relations were established between the two Governments, followed by an exchange of ambassadors. P. 330.

3. The effect of this was to validate, so far as this country is concerned, all acts of the Soviet Government here involved from the commencement of its existence. P. 330.

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4. The international compact was within the competency of the President, and participation by the Senate was unnecessary. P. 330.

5. The external powers of the United States are to be exercised without regard to state laws or policies. P. 331.

6. What another country has done in the way of taking over property of it nationals, and especially of its corporations, is not questionable in our courts. P. 332.

85 F. (2d) 542, reversed.

CERTIORARI, 299 U.S. 531, to review the affirmance of a judgment of the District Court dismissing the complaint in an action by the United States to recover from executors a sum of money which had been deposited with their decedent by a Russian corporation and assigned by the Soviet Government, after expropriation, to the United States.

SUTHERLAND, J., lead opinion

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

This is an action at law brought by petitioner against respondents in a federal district court to recover a sum of money deposited by a Russian corporation (Petrograd

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Metal Works) with August Belmont, a private banker doing business in New York City under the name of August Belmont & Co. August Belmont died in 1924, and respondents are the [57 S.Ct. 759] duly appointed executors of his will. A motion to dismiss the complaint for failure to state facts sufficient to constitute a cause of action was sustained by the district court, and its judgment was affirmed by the court below. 85 F.2d 542. The facts alleged, so far as necessary to be stated, follow.

The corporation had deposited with Belmont, prior to 1918, the sum of money which petitioner seeks to recover. In 1918, the Soviet Government duly enacted a decree by which it dissolved, terminated and liquidated the corporation (together with others), and nationalized and appropriated all of its property and assets of every kind and wherever situated, including the deposit account with Belmont. As a result, the deposit became the property of the Soviet Government, and so remained until November 16, 1933, at which time the Soviet Government released and assigned to petitioner all amounts due to that government from American nationals, including the deposit account of the corporation with Belmont. Respondents failed and refused to pay the amount upon demand duly made by petitioner.

The assignment was effected by an exchange of diplomatic correspondence between the Soviet Government and the United States. The purpose was to bring about a final settlement of the claims and counterclaims between the Soviet Government and the United States, and it was agreed that the Soviet Government would take no steps to enforce claims against American nationals, but all such claims were released and assigned to the United States, with the understanding that the Soviet Government was to be duly notified of all amounts realized by the United States from such release and assignment. The assignment and requirement for notice

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are parts of the larger plan to bring about a settlement of the rival claims of the high contracting parties. The continuing and definite interest of the Soviet Government in the collection of assigned claims is evident, and the case, therefore, presents a question of public concern, the determination of which well might involve the good faith of the United States in the eyes of a foreign government. The court below held that the assignment thus effected embraced the claim here in question, and with that we agree.

That court, however, took the view that the situs of the bank deposit was within the State of New York; that in no sense could it be regarded as an intangible property right within Soviet territory, and that the nationalization decree, if enforced, would put into effect an act of confiscation. And it held that a judgment for the United States could not be had, because, in view of that result, it would be contrary to the controlling public policy of the State of New York. The further contention is made by respondents that the public policy of the United States would likewise be infringed by such a judgment. The two questions thus presented are the only ones necessary to be considered.

First. We do not pause to inquire whether, in fact, there was any policy of the State of New York to be infringed, since we are of opinion that no state policy can prevail against the international compact here involved.

This court has held, Underhill v. Hernandez, 168 U.S. 250, that every sovereign state must recognize the independence of every other sovereign state, and that the courts of one will not sit in judgment upon the acts of the government of another done within its own territory.

That general principle was applied in Oetjen v. Central Leather Co., 246 U.S. 297, to a case where an action in replevin had been brought in a New Jersey state court to recover a consignment of hides purchased in Mexico from

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General Villa. The title of the purchaser was assailed on the ground that Villa had confiscated the hides. Villa, it appeared, had seized the hides while conducting independent operations under the Carranza government, which, at the time of the seizure, had made much progress in its revolution in Mexico. The government of the United States, after the trial of the case in the state court, had recognized the government of Carranza, first as the de facto government of the Republic of Mexico and later as the government de jure. This court held that the conduct of foreign relations was committed by the Constitution to the political departments of the government, and the propriety of what may be done [57 S.Ct. 760] in the exercise of this political power was not subject to judicial inquiry or decision; that who is the sovereign of a territory is not a judicial question, but one the determination of which by the political departments conclusively binds the courts, and that recognition by these departments is retroactive, and validates all actions and conduct of the government so recognized from the commencement of its existence. "The principle," we said, p. 303,

that the conduct of one independent government cannot be successfully questioned in the courts of another is as applicable to a case involving the title to property brought within the custody of a court, such as we have here, as it was held to be to the cases cited, in which claims for damages were based upon acts done in a foreign country, for it rests at last upon the highest considerations of international comity and expediency. To permit the validity of the acts of one sovereign State to be reexamined and perhaps condemned by the courts of another would very certainly "imperil the amicable relations between governments, and vex the peace of nations."

Ricaud v. American Metal Co., 246 U.S. 304, 308-309, 310, is to the same effect.

In A. M. Luther v. James Sagor & Co., L.R. [1921] 3 K.B. 532, the English Court of Appeal expressly approved

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and followed our decision in the Oetjen case. The English case involved that part of the same decree of the Soviet Government here under consideration which declared certain private woodworking establishments to be the property of the Republic. Under that decree, the Government seized plaintiff's factory in Russia, together with a stock of wood therein. Agents of the Republic sold a quantity of the stock so seized to the defendants, who imported it into England. Thereafter, the British Government recognized the Soviet Government as the de facto government of Russia. Upon these facts, the court held that, the British Government having thus recognized the Soviet Government, existing at a date before the decree in question, the validity of that decree and the sale of the wood to the defendants could not be impugned, and gave...

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