United States v. Pink

• Citation: 86 L.Ed. 796,62 S.Ct. 552,315 U.S. 203
• Decision Date: 02 February 1942
• Docket Number: No. 42,42
• Parties: UNITED STATES v. PINK, Superintendent of Insurance of State of New York, et al
• Court: United States Supreme Court

315 U.S. 203

62 S.Ct. 552

86 L.Ed. 796

UNITED STATES

v PINK, Superintendent of Insurance of State of New York, et al.

No. 42.

Argued Dec. 15, 1941.

Decided Feb. 2, 1942.

[Syllabus from pages 203-205 intentionally omitted] Mr. Charles Fahy, Sol. Gen., of Washington, D.C., and Mr. Francis Biddle, Atty.Gen., for petitioner.

[Argument of Counsel from pages 205-209 intentionally omitted] Mr. Alfred C. Bennett, of New York City, for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

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

The First Russian Insurance Co., organized under the laws of the former Empire of Russia, established a New York branch in 1907. It deposited with the Superintendent of Insurance, pursuant to the laws of New York, certain assets to secure payment of claims resulting from transactions of its New York branch. By certain laws, decrees, enactments and orders in 1918 and 1919 the Russian Government nationalized the business of insurance and all of the property, whereever situated, of all Russian insurance companies (including the First Russian Insurance Co.), and discharged and cancelled all the debts of such companies and the rights of all shareholders in all such property. The New York branch of the First Russian Insurance Co. continued to do business in New York until 1925. At that time respondent, pursuant to an order of the Supreme Court of New York, took possession of its assets for a determination and report upon the claims of the policyholders and creditors in the United States. Thereafter all claims of domestic creditors, i.e., all claims arising out of the business of the New York branch, were paid by respondent, leaving a balance in his hands of more than $1,000,000. In 1931 the New York Court of Appeals (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) directed respondent to dispose of that balance as follows: first, to pay claims of foreign creditors who had filed attachment prior to the commencement of the liquidation proceeding and also such claims as were filed prior to the entry of the order on remittitur of that court; and second, to pay any surplus to a quorum of the board of directors of the company. Pursuant to that mandate, respondent proceeded with the liquidation of the claims of the foreign creditors. Some payments were made thereon. The major portion of the allowed claims, however, were not paid, a stay having been granted pending disposition of the claim of the United States. On November 16, 1933, the United States recognized the Union of Soviet Socialist Republics as the de jure Government of Russia and as an incident to that recognition accepted an assignment (known as the Litvinov Assignment) of certain claims.¹ The Litvinov Assignment was in the form of a letter dated November 16, 1933, to the President of the United States from Maxim Litvinov, People's Commissar for Foreign Affairs, reading as follows:

'Following our conversations I have the honor to inform you that the Government of the Union of Soviet Socialist Republics agrees that, preparatory to a final settlement of the claims and counter claims between the Government of the Union of Soviet Socialist Republics and the United States of America and the claims of their nationals, the Government of the Union of Soviet Socialist Republics will not take any steps to enforce any decisions of courts or initiate any new litigations for the amounts admitted to be due or that may be found to be due it, as the successor of prior Governments of Russia, or otherwise, from American nationals, including corporations, companies, partnerships, or associations, and also the claim against the United States of the Russian Volunteer Fleet, now in litigation in the United States Court of Claims, and will not object to such amounts being assigned and does hereby release and assign all such amounts to the Government of the United States, the Government of the Union of Soviet Socialist Republics to be duly notified in each case of any amount realized by the Government of the United States from such release and assignment.

'The Government of the Union of Soviet Socialist Republics further agrees, preparatory to the settlement referred to above not to make any claims with respect to:

'(a) judgments rendered or that may be rendered by American courts in so far as they relate to property, or rights, or interests therein, in which the Union of Soviet Socialist Republics or its nationals may have had or may claim to have an interest; or,

'(b) acts done or settlements made by or with the Government of the United States, or public officials in the United States, or its nationals, relating to property, credits, or obligations of any Government of Russia or nationals thereof.'

This was acknowledged by the President on the same date. The acknowledgement, after setting forth the terms of the assignment, concluded:

'I am glad to have these undertakings by your Government and I shall be pleased to notify your Government in each case of any amount realized by the Government of the United States from the release and assignment to it of the amounts admitted to be due, or that may be found to be due, the Government of the Union of Soviet Socialist Republics, and of the amount that may be found to be due on the claim of the Russian Volunteer Fleet.'

On November 14, 1934, the United States brought an action in the federal District Court for the Southern District of New York, seeking to recover the assets in the hands of respondent. This Court held in United States v. Bank of New York & Trust Co., 296 U.S. 463, 56 S.Ct. 343, 80 L.Ed. 331, that the well settled 'principles governing the convenient and orderly administration of justice require that the jurisdiction of the state court should be respected' (page 480 of 296 U.S., page 348 of 56 S.Ct., 80 L.Ed. 331); and that whatever might be 'the effect of recognition' of the Russian Government, it did not terminate the state proceedings. Page 479 of 296 U.S., page 348 of 56 S.Ct., 80 L.Ed. 331. The United States was remitted to the state court for determination of its claim, no opinion being intimated on the merits. Page 481 of 296 U.S., page 348 of 56 S.Ct., 80 L.Ed. 331. The United States then moved for leave to intervene in the liquidation proceedings. Its motion was denied 'without prejudice to the institution of the time-honored form of action'. That order was affirmed on appeal.

Thereafter the present suit was instituted in the Supreme Court of New York. The defendants, other than respondent, were certain designated policy holders and other creditors who had presented in the liquidation proceedings claims against the corporation. The complaint prayed, inter alia, that the United States be adjudged to be the sole and exclusive owner entitled to immediate possession of the entire surplus fund in the hands of the respondent.

Respondent's answer denied the allegations of the complaint that title to the funds in question passed to the 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 People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114 could not be affected by the Litvinov Assignment; that the Litvinov Assignment was unenforceable because it was conditioned upon a final settlement of claims and counter claims which had not been accomplished; that under Russian law the nationalization decrees in question had no effect on property not factually taken into possession by the Russian Government prior to May 22, 1922; that the Russian decrees had no extraterritorial effect, according to Russian law; that if the decrees were given extraterritorial effect, they were confiscatory and their recognition would be unconstitutional and contrary to the public policy of the United States and of the State of New York; and that the United States under the Litvinov Assignment acted merely as a collection agency for the Russian Government and hence was foreclosed from asserting any title to the property in question.

The answer was filed in March, 1938. In April, 1939 the New York Court of Appeals decided Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 280 N.Y. 286, 20 N.E.2d 758. In May, 1939 respondent (but not the other defendants) moved pursuant to Rule 113 of the Rules of the New York Civil Practice Act and § 476 of that Act for an order dismissing the complaint and awarding summary judgment in favor of respondent 'on the ground that there is no merit to the action and that it is insufficient in law'. The affidavit in support of the motion stated that there was 'no dispute as to the facts'; that the separate defenses to the complaint 'need not now be considered for the complaint standing alone is insufficient in law'; that the facts in the Moscow case and the instant one, so far as material, were 'parallel' and the Russian de- crees the same; and that the Moscow case authoritatively settled the principles of law governing the instant one. The affidavit read in opposition to the motion stated that a petition for certiorari in the Moscow case was about to be filed in this Court; that the motion was premature and should be denied or decision thereon withheld pending the final decision of this Court. On June 29, 1939, the Supreme Court of New York granted the motion and dismissed the complaint 'on the merits', citing only the Moscow case in support of its action. On September 2, 1939, a petition for certiorari in the Moscow case was filed in this Court. The judgment in that case was affirmed here by an equally divided Court. United States v. Moscow Fire Ins. Co., 309 U.S. 624, 60 S.Ct. 725, 84...