Federal Republic of Germany v. Elicofon

• Decision Date: 25 September 1972
• Docket Number: 69-C-370.,No. 69-C-93,69-C-93
• Citation: 358 F. Supp. 747
• Parties: FEDERAL REPUBLIC OF GERMANY, Plaintiff, v. Edward I. ELICOFON, Defendant, Elisabeth Mathilde Isidore Erbgrossherzogin von Sachsen-Weimar-Eisenach (Grand Duchess of Saxony-Weimar), Plaintiff-Intervenor. KUNSTSAMMLUNGEN zu WEIMAR, Plaintiff, v. Edward I. ELICOFON, Defendant.
• Court: U.S. District Court — Eastern District of New York

358 F. Supp. 747

FEDERAL REPUBLIC OF GERMANY, Plaintiff, v. Edward I. ELICOFON, Defendant, Elisabeth Mathilde Isidore Erbgrossherzogin von Sachsen-Weimar-Eisenach (Grand Duchess of Saxony-Weimar), Plaintiff-Intervenor.

KUNSTSAMMLUNGEN zu WEIMAR, Plaintiff, v. Edward I. ELICOFON, Defendant.

Nos. 69-C-93, 69-C-370.

United States District Court, E. D. New York.

June 25, 1970.

Supplemental Opinion September 25, 1972.

Albert D. Jordan, Valicenti, Leighton, Reid & Pine, New York City, Counsel to Horst Kurnik, for Federal Republic of Germany.

Richard W. Hulbert, and George J. Grumbach, Jr., Cleary, Cottlieb, Steen & Hamilton, New York City, for Edward I. Elicofon.

Herbert J. Strong, Scribner & Miller, New York City, for Elisabeth Mathilde Isidore, etc.

Harry I. Rand, Botein, Hays, Sklar & Herzberg, New York City, for Kunstsammlungen zu Weimar.

James D. Porter, Asst. U. S. Atty., Robert A. Morse, U. S. Atty., E. D. New York, Brooklyn, N. Y., for the United States.

MEMORANDUM OF DECISION AND ORDER

MISHLER, Chief Judge.

On January 27, 1969, the Federal Republic of Germany began action number 69-C-93 against Edward I. Elicofon for the return of two paintings believed to be in defendant's possession. The paintings, portraits of Hans and Felicitas Teicher, were allegedly painted by the celebrated German artist Albrecht Duerer in or about 1499. The complaint asserts that the paintings became part of an art collection in Weimar in 1824 and were placed in a museum which since 1921 has been called "Staatliche Kunstsammlungen"; that during the occupation of Weimar (currently in East Germany) by the United States armed forces and prior to July 1, 1945, the paintings were stolen from the Castle Schwartzburg, where they had been placed for safekeeping; and that defendant, directly or indirectly, acquired the paintings from the thief.

Plaintiff claims the right to custody and possession of the paintings by reason of the Joint Declaration of Three Allied Powers of September 18, 1950, which, with the United States as a participant, declared that the Federal Republic is the only government which may represent the German people.¹

Defendant denies the allegations of the complaint, including the theft, and affirmatively claims title to the paintings through purchase in good faith for value in accordance with the laws of Germany.²

By order dated March 25, 1969, Elisabeth Mathilde Isidore Erbgrossherzogin Von Sachsen-Weimar-Eisenach (hereinafter the Grand Duchess) was granted leave to intervene. She alleged that the paintings have been part of the Grand Ducal collection since 1824 and asserts title to the paintings through assignment from the Grand Duke of Saxony-Weimar on August 8, 1968.

On April 14, 1969, the Kunstsammlungen Zu Weimar (hereinafter Weimar Art Collection), an entity existing under the laws of the German Democratic Republic (hereinafter G.D.R.) and having custody over the art collection from which the paintings in suit were allegedly stolen, both moved to intervene in 69-C-93, Fed.Rules Civ.Proc. 24(a)(2), and brought a separate action, 69-C-370, against Edward I. Elicofon for return of the paintings. The Weimar Art Collection alleges that it owned the paintings at the time of the theft.

The Federal Republic, the Grand Duchess, and Elicofon all oppose the Weimar Art Collection's application to intervene. Elicofon has, in addition, moved to dismiss the Weimar Art Collection's complaint in 69-C-370. Should his motion to dismiss be denied, however, Elicofon asks that 69-C-93 and 69-C-370 be consolidated.

The motions by the Weimar Art Collection to intervene in 69-C-93 and by Elicofon to dismiss the complaint in 69-C-370 or if that is unsuccessful to consolidate 69-C-93 and 69-C-370 are currently before the court.

The Federal Republic takes the position, shared by the Grand Duchess and Elicofon, that the Weimar Art Collection is an instrumentality of the G.D.R., a government not recognized by the government of the United States, and as such lacks standing to sue in United States courts. The Federal Republic makes the additional argument that it adequately represents the interests of the Weimar Art Collection in 69-C-93. In further support of his motion to dismiss the complaint in 69-C-370, Elicofon asserts that as a citizen of a country whose government is not recognized by the United States, the Weimar Art Collection is not a citizen or subject of a foreign state within the meaning of 28 U.S.C. § 1332(a)(2) and, therefore, that the court lacks jurisdiction over the subject matter of the action.

The Weimar Art Collection differs with the assertions of the other parties concerning its status. It alleges that by virtue of a decree of the Minister of Culture of the G.D.R. dated April 14, 1969 and made retroactive to January 1, 1969 it is a juristic entity independent of the government and possesses the capacity "to enter into contracts, to acquire and dispose of property and to sue in its own name." Affidavit of Manfred Hofmann, at par. 10. The Weimar Art Collection argues, therefore, that it has standing to bring suit in this court regardless of the position which this court may take on the question of whether the G.D.R. itself could sue.

The parties have filed numerous and voluminous affidavits and memoranda in support of their various positions. In addition, the United States Department of Justice, acting on behalf of the Department of State, filed the following "Suggestion of Interest of the United States":

1. The United States Government does not recognize the East German regime.

2. The United States Government recognizes the Federal Republic of Germany as the only German Government entitled to speak for Germany as the representative of the German people in international affairs.

3. The United States Government recognizes the Federal Republic of Germany as entitled in this litigation to represent the Weimar Museum as trustee of its interests.

It is apparent that notwithstanding the position of the Weimar Art Collection, the question of whether a government not recognized by the United States would have standing to bring an action like the one at bar is of central importance to the resolution of the motions before the court. It is conceded by the parties that a determination favorable to the unrecognized government would establish the standing of the Weimar Art Collection in this litigation without regard to its claim of independence of the government of the G.D.R.

Survey of the Case Law

Virtually all of the courts which have had occasion to comment on the standing of unrecognized governments to sue in American courts have stated quite flatly that such governments lack standing to sue. See S. Lubman, The Unrecognized Government in American Courts: Upright v. Mercury Business Machines, 62 Colum.L.Rev. 275 (1962). Two grounds have been offered in support of this conclusion. At least one court has reasoned that the right of foreign governments to sue in American Courts is a function of the comity which exists between friendly nations and that this comity is absent between the United States and a government nor recognized by it. Russian Socialist Federated Soviet Republic v. Cibrario, 235 N.Y. 255, 139 N.E. 259 (1923). The great majority of the courts which have taken a position on the issue have based their opposition to suits by unrecognized governments on the theory that to allow an unrecognized government to sue in American courts would overrule the act of the President in withholding recognition from the plaintiff government, a power which is exclusively his under the Constitution. See e. g. The Penza, 277 F. 91 (E.D.N. Y.1921); The Rogdai, 278 F. 294 (N.D. Cal.1920).

Absent from most of these cases is a thorough analysis of the considerations which have motivated this rather consistent expression of judicial opinion. The correctness of the rule denying litigant status to non-recognized governments seems to have been taken for granted in many cases, and little attempt has been made to examine the nature of the presidential act of refusing to recognize a government. Some courts, moreover, have repeated the rule while reaching results which seem to question its validity. In Wulfsohn v. Russian Socialist Federated Soviet Republic, 234 N.Y. 372, 138 N.E. 24 (1923), appeal dismissed, 266 U.S. 580, 45 S.Ct. 89, 69 L.Ed. 451 (1924), the same court which some months later decided the now famous Cibrario case upheld the claim of Soviet Russia, at that time not recognized by the United States, to sovereign immunity from suit. The court stated that the existence of a government is a fact not dependent upon recognition and that a foreign sovereign cannot be made subject to our laws without its consent.³Cf. Bank of China v. Wells Fargo Bank & Union Trust Co., 92 F.Supp. 920 (N.D.Cal.1950), appeal dismissed, 190 F.2d 1010 (9th Cir. 1951), judgment entered, 104 F.Supp. 59, 66 (N.D.Cal.1952), modified, 209 F. 2d 467 (9th Cir. 1953); Banque de France v. Equitable Trust Co., 33 F.2d 202 (S.D.N.Y.1929), aff'd, 60 F.2d 703 (2d Cir. 1932); Russian Reinsurance Co. v. Stoddard, 240 N.Y. 149, 147 N.E. 703 (1925). And in United States v. Home Insurance Co., 89 U.S. (22 Wall.) 99, 22 L.Ed. 816 (1875) and Amtorg Trading Corp. v. United States, 71 F.2d 524 (C.C.P.A.1934), federal courts permitted suit by corporations associated with unrecognized governments. See also Upright v. Mercury Business Machines Co., 13 A.D.2d 36, 213 N.Y.S.2d 417 (1st Dep't 1961) (dictum). In Home Insurance, supra, the Supreme Court sustained the standing to sue of two corporations created by the Georgia legislature at a time when Georgia was in armed rebellion against the Union. The court reasoned that the Georgia legislature had a de facto if not a de jure existence and that enactments of the legislature which were neither hostile to the Union nor in conflict with the Constitution of the United States had the same validity as if they had been ena...