Miller v. Ferrocarrill Del Pacifico De Nicaragua

• Decision Date: 04 March 1941
• Citation: 18 A.2d 688
• Parties: MILLER et al. v. FERROCARRILL DEL PACIFICO DE NICARAGUA.
• Court: Maine Supreme Court

18 A.2d 688

MILLER et al.

v. FERROCARRILL DEL PACIFICO DE NICARAGUA.

Supreme Judicial Court of Maine.

March 4, 1941.

[Copyrighted material omitted.]

Exceptions from Superior Court, Cumberland County.

Action by Robert N. Miller and others against Ferrocarrill del Pacifico de Nicaragua to recover compensation for legal services rendered. The action was dismissed, and plaintiffs bring exceptions to that ruling.

Exceptions overruled.

Argued before STURGIS, C. J., and THAXTER, HUDSON, MANSER, WORSTER, and MURCHIE, JJ.

McLean, Fogg & Southard, of Augusta, for plaintiff.

Verrill, Hale, Dana & Walker, of Portland, for defendant.

WORSTER, Justice.

On exceptions. The plaintiffs, attorneys at law, seek to recover of the defendant compensation for legal services rendered it in connection with the claim for refund of taxes hereinafter mentioned.

Objection to the maintenance of the suit having been raised on behalf of the Republic of Nicaragua, on the ground that the defendant was one of its instrumentalities, the action was dismissed in the court below, and the matter is brought here on plaintiffs' exceptions to that ruling.

The defendant is a Maine corporation, organized under the general corporation law of this state, with an authorized capital stock of $3,300,000. It appears from its corporate certificate that, among other purposes, it was organized, stated very briefly, to acquire, construct and exploit any railway or steamship lines within the Republic of Nicaragua, and to perform all acts, operations and contracts in connection therewith, and in order to carry out said purposes, to acquire, own and exploit, in whole or in part, and under any legal title, any concessions, rights and properties which the company may acquire from the Republic of Nicaragua, or from any company, enterprise or individual. The corporation was also authorized to make, issue and sell, pledge or otherwise dispose of promissory notes, bills of exchange, checks, drafts and other evidences of indebtedness, whether secured or unsecured, and to do and enter into all civil and mercantile acts and contracts for the carrying out of the company's purposes, including the issue of mortgage bonds or obligations.

The defendant having paid to the United States taxes amounting to approximately $641,115, employed the plaintiffs to obtain a repayment of said sum by way of refund. Then, as alleged in the plaintiffs' declaration :

"* * * it developed that defendant was an instrumentality of the Nicaraguan Government and that that Government owed the United States approximately $484,000, and that the United States would not pay any tax refund in approximately the sum of $641,115 without offsetting the amount owed to it by said government of Nicaragua; that it seemed advisable to plaintiffs to settle on that basis, to wit, have $484,000 debt owed to the United States paid up, plus receiving a cash payment from the United States of the balance of tax refund; that the plaintiffs negotiated this settlement to the point where the settlement was practically completed when the Nicaraguan Government, unbeknown to the plaintiffs, sent a special agent to the United States to handle the matter and said special agent took up the negotiations where they had been carried by said plaintiffs, and without allowing them to participate in said negotiations, prevailed upon the Department of State to cause the United States Government and the Government of Nicaragua to enter into a treaty under which there would be an offsetting of the two claims, one against the other, and the payment of a cash refund to the Government of Nicaragua in the amount of $72,000, which treaty was executed on April 14, 1938 and pursuant to said treaty the claims were offset and $72,000 was duly paid by the United States; that said settlement, as effected by said treaty, resulted in a money benefit to the defendant of $556,000. * * *"

That some foreign governments own and operate railroads is so well known that we take judicial knowledge of that fact. Oliver American Trading Co., Inc., v. Government of the United States of Mexico et al, 2 Cir, 5 F.2d 659; Mason v. Intercolonial Railway of Canada, 197 Mass. 349, 83 N.E. 876, 16 L.R.A, N.S, 276, 125 Am.St.Rep. 371, 14 Ann.Cas. 574.

And the plaintiffs must be considered as admitting, at the very outset, that in connection with the claim for refund of taxes, the defendant was an instrumentality of the Republic of Nicaragua, for they allege in their declaration that "it developed that defendant was an instrumentality of the Nicaraguan Government", and they are bound by that allegation. 20 Am. Jur., Evidence, section 630, page 532 et seq.

An action cannot be maintained in our courts against a foreign government, or against any of its departmental agencies, through and by which such government discharges its governmental activities, if that government, by proper procedure, objects to the maintenance of the action.

Whether or not a defendant in a given case is such a departmental agency of a foreign government, and whether or not the action is maintainable, can be determined by the court if the issue is therein raised as a judicial question, only in those cases where the matter has not already been settled as a political question by the executive branch of our government through diplomatic channels.

In the instant case, objection to the maintenance of this action, on the ground that the defendant was an instrumentality of the Republic of Nicaragua, was presented to the court below in three different ways:

(1) By the defendant.

This question, however, cannot be successfully raised by the defendant corporation. Kunglig Jarnvagsstyrelsen v. Dexter & Carpenter, Inc., 2 Cir., 32 F.2d 195, certiorari denied, 280 U.S. 579, 50 S.Ct. 32, 74 L.Ed. 629.

(2) By the duly accredited Minister of the Republic of Nicaragua to the United States, who appeared as a friend of the court and formally stated the Republic's objection to the maintenance of the action on the ground above mentioned, supported by his affidavit that he was authorized so to do.

The right to immunity from suit may be claimed for the foreign government by its accredited and recognized representative, with the sanction of that government. Ex parte Muir, 254 U.S. 522, 41 S.Ct. 185, 187, 65 L.Ed. 383.

(3) By the Assistant United States Attorney for the District of Maine, who appeared as amicus curiae by permission of court, and, acting under instructions from the Attorney General of the United States, at the request of the Secretary of State of the United States, represented to the court the position of the Nicaraguan Government as made through the diplomatic channels of the Department of State of the United States.

Objection may properly be raised through diplomatic representations "to the end that, if that claim was recognized by the ...