Tabacalera Severiano Jorge, SA v. Standard Cigar Co.

• Decision Date: 23 May 1968
• Docket Number: No. 24320.,24320.
• Citation: 392 F.2d 706
• Parties: TABACALERA SEVERIANO JORGE, S. A., and Severiano Jorge, Appellants, v. STANDARD CIGAR COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

392 F.2d 706 (1968)

TABACALERA SEVERIANO JORGE, S. A., and Severiano Jorge, Appellants, v. STANDARD CIGAR COMPANY, Appellee.

No. 24320.

United States Court of Appeals Fifth Circuit.

March 18, 1968.

Rehearing Denied May 23, 1968.

Thomas Anderson, Shutts & Bowen, Miami, Fla., for appellants.

William A. Gillen, Tampa, Fla., W. G. Ward, Miami, Fla. (amicus curiae), Fowler, White, Collins, Gillen, Humkey & Trenam, Tampa, Fla., for appellee.

Before TUTTLE and WISDOM, Circuit Judges, and HEEBE, District Judge.

TUTTLE, Circuit Judge:

This is an appeal from a judgment by the trial court dismissing a suit by a Cuban corporation and/or its sole stockholder as assignee for the purchase price of approximately $100,000 worth of tobacco sold and delivered to the Standard Cigar Company, of Tampa, Florida, a few months before the Cuban government "intervened" the plaintiff company in Havana. The trial court held that the act of the Cuban government in appointing an "interventor" on September 15, 1960, was "an act of state" which took away from the officers, directors and stockholders, as well as all other persons, whatever rights had theretofore been held by the corporation in the unpaid balance owed by the Tampa-based Standard Cigar Company; that the United States courts are bound to accept as binding on them under the "Act of State Doctrine," such adverse action by the Cuban government, and that, therefore, neither the corporation Tabacalera Severiano Jorge, nor Severiano Jorge, as assignee of the corporation, resident in the state of Florida, could recover the account in the United States courts.

Since the District Court disposed of the case by entering a summary judgment of dismissal, the facts, of course, are to be taken in the light most strongly in favor of the losing party, that is to say, the plaintiffs in the court below, the appellants here. Viewed in such light, the facts are as follows:

Prior to 1954, Severiano Jorge y Cepero, a resident of Havana, Cuba, was successfully engaged in the tobacco business operating a sole proprietorship. In 1954, he incorporated under the name Tabacalera Severiano Jorge, S. A., owning all the equitable interest in the stock of the corporation. As such stockholder he caused one Higinio Miguel Caso, a tobacco buyer, to be elected president. However, at the time of such election, the corporation, at a duly held stockholders meeting was directed to execute and deliver to him, and to his accountant, a vice-president and the treasurer of the new corporation, Jose Romano, a broad power of attorney. This power of attorney appears to be about as broad as can conceivably be devised to give to these two named persons as much power as is normally enjoyed by the officers and directors of an American corporation. They included the following:

"FIRST: Administer, rule and govern all of the estate of the firm TABACALERA SEVERIANO JORGE, SOCIEDAD ANONIMA, whether consisting of real or personal property, which they may today possess or in the future acquire; guard its conservation and development; hire and discharge employees considered unsuitable; check all work; improvements and repairs which they may deem necessary to be done; obtain the necessary licenses and certificates of habitability; set forth all new constructions, recording same in the Registry of Properties; assess and determine the rents of income therefrom, pay any and all taxes, water bills and other obligations affecting said real or personal property, as well as those expenses arising from said constructions, repairs and improvements, exercising due and diligent care as any zealous and capable administrator should.

* * * * * *

"THIRD: To deposit in withdraw from banks, bankers, organizations or business enterprises, any monies which may be therein or thereafter deposited, authorizing the necessary mandates in order to endorse and collect any sums in favor of said constituent company; being allowed to borrow money in the name of said Company, with or without guarantee, including overdraws, maintaining overdraws in any account or accounts which the Company may have with any banking institution in this City and the Island, so that the empowered attorneys herein designated may exercise any and all acts of administration and dominion over personal property, real property, movables, and any other kind of possession in the name of the company, as well as accept drafts, discount same, protest same, and obtain monies from any banking institution with which it maintains business relations, including the acceptance of monies through overdraws, with or without interest.

* * * * * *

"SIXTH: To collect and receive all proceeds, amounts, terms, rents, dividends and profits of the said estate, and all other amounts, produce, effects, values and fees which may under any title or for any reason be due and owing now or in the future, subscribing to said receipts and securities. * * *

"SEVENTH: To settle disputes with regard to claims, lawsuits and questions of interest to the constituent company, in the terms, manner and forms which they may deem convenient, or through legal or friendly claims arbitrators, having the power to enforce the fulfillment of their decisions and the payment of the fines."

(Emphasis supplied).

For several years prior to 1960, the corporation sold substantial quantities of tobacco to the Standard Cigar Company of Tampa, Florida. It acquired this tobacco by buying it from tobacco farmers in Cuba. The sales of tobacco to Standard were on account without any written agreement as to the time and place of payment. Between July 1 and July 25, 1960, Tabacalera sold and shipped tobacco to Standard for the sales price of $100,894.28. At about this same time Severiano Jorge left Havana and came to the United States, where he took up his residence. During the summer months of 1960, he solicited approximately one million dollars worth of additional sales for Tabacalera, none of which were filled prior to September 15th, the date of the intervention. In June, Jorge personally loaned to Tabacalera $75,000 of his own funds and in August advanced an additional $600,000. Both of these amounts were put on deposit in the Havana branch of a New York bank. A substantial part of this sum was utilized by Tabacalera to pay tobacco growers for purchases that had been made from them in Cuba. Part was for payroll purposes. In his affidavit in support of the appellants' motion for summary judgment, Jorge asserts "the funds thus advanced were proceeds derived from the sale of my cattle ranch. It was understood by everyone, including Higinio Miguel Caso the then president of the corporation, that I would be repaid for said advances out of the proceeds of the resale of the tobacco to the companies in the United States, including defendants herein."

No testimony disputing this statement is in the record.¹

During the months of July and August, Jorge made demands on Standard Cigar Company in the name of Tabacalera for payment of the outstanding balance due to the corporation. In his affidavit Jorge stated:

"In accordance with the long standing custom and practice of the tobacco industry in Cuba, the purchase price for tobacco was due no later than the Monday following the buyer\'s acceptance. While I made certain limited exceptions which were granted only after negotiations therefor, the accounts of the defendants herein for the shipments made in July, 1960, were due and payable immediately upon the receipt of the tobacco by the purchasers. There was no custom, agreement or understanding between the corporation and these defendants that they would be allowed between 90 and 120 days after each of the shipments made in July, within which to pay the purchase price therefor."

The latter part of this affidavit was in response to an affidavit by Stanford Newman, president of the Standard Cigar Company. Newman alleged that the tobacco in question, "was purchased by purchase orders and accepted in Havana, Cuba, and was shipped f. o. b. Havana, Cuba, to the defendant in Tampa, Florida, as aforesaid. In accordance with the customs, agreements and understandings between the plaintiff and the defendant, the purchase price of each shipment was due and payable by the defendant to the plaintiff in Havana, Cuba, 90 to 120 days after each shipment."

Presumably the trial court considered that it was not relevant to the decision of the case that it resolve the conflict in this testimony, which on the one hand provided for payment well in advance of the "takeover" of September 15th, and which, on the other hand, provided for payment at a date that had not yet arrived when the interventor was put in charge in Havana We agree that it is immaterial whether the payments were actually payable prior to September 15th or were owing but payable at a later date.

On the 15th day of September, 1960, the revolutionary government of the Republic of Cuba promulgated resolution number 20260 of its Ministry of Labor, by which it "intervened" the Cuban tobacco industry, including the plaintiff corporation. While it may be assumed that the revolutionary government, which, at the time, was all powerful in Cuba, could in actual effect have physically done just about what it wished to do with respect to any property or person within its territorial reach, we think it important that the precise powers given to the interventor named for this corporation be carefully studied. These powers are contained in a resolution published by the Cuban Minister of Labor. This resolution directs that interventors are appointed to do the following things:

"THIRD: — Substitute in position and degree, the Directors of the intended industries intervened, with the Interventors designated above, with the power to open bank accounts, open credit, accept, endorse discount or in any other form negotiate payments, letters or any other commercial documents, solicit or obtain credit, carry on the operation of

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