Source: https://law.justia.com/cases/federal/appellate-courts/F2/669/925/149325/
Timestamp: 2020-02-27 16:55:01
Document Index: 799193487

Matched Legal Cases: ['§ 254', '§ 254', '§ 1609', '§ 1610', '§ 1610', '§ 1610', '§ 1605', '§ 1330']

United States of America, Appellee, v. County of Arlington, Virginia, Appellant.andbennie L. Fletcher, Jr., Treasurer of the County Ofarlington, Virginia, Defendant.united States of America, Appellant, v. County of Arlington, Virginia, and Bennie L. Fletcher, Jr.,treasurer of the County of Arlington, Virginia, Appellees, 669 F.2d 925 (4th Cir. 1982) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fourth Circuit › 1982 › United States of America, Appellee, v. County of Arlington, Virginia, Appellant.andbennie L. Fletche...
United States of America, Appellee, v. County of Arlington, Virginia, Appellant.andbennie L. Fletcher, Jr., Treasurer of the County Ofarlington, Virginia, Defendant.united States of America, Appellant, v. County of Arlington, Virginia, and Bennie L. Fletcher, Jr.,treasurer of the County of Arlington, Virginia, Appellees, 669 F.2d 925 (4th Cir. 1982)
US Court of Appeals for the Fourth Circuit - 669 F.2d 925 (4th Cir. 1982) Argued Oct. 7, 1981. Decided Feb. 1, 1982
The United States can sue to enforce its policies and laws, even when it has no pecuniary interest in the controversy. See United States v. Arlington County, 326 F.2d 929, 932 (4th Cir. 1964). This principle has been invoked to enable the United States to honor its treaty obligations to a foreign state. Sanitary District v. United States, 266 U.S. 405, 425-26, 45 S. Ct. 176, 178, 69 L. Ed. 352 (1925). And it has been applied to allow the United States to seek redress against a municipality that taxed a foreign government's property in contravention of the laws of the United States. United States v. City of Glen Cove, 322 F. Supp. 149, 152-53 (E.D.N.Y. 1971), aff'd per curiam, 450 F.2d 884 (2d Cir. 1971).
Moreover, the county's argument misconstrues rule 19(a) (1). The rule provides that a person shall be joined if feasible where his absence precludes "complete relief ... among those already parties." " 'Complete' relief refers to relief as between the persons already parties, not as between a party and the absent person whose joinder is sought ...." 3A Moore's Federal Practice P 19.07-1(1) at 19-128; see also Morgan Guaranty Trust Co. of New York v. Martin, 466 F.2d 593, 598 (7th Cir. 1972). Complete resolution of the dispute between the United States and Arlington County does not require the joinder of the GDR.
We conclude that the district court did not err by upholding the validity of the 1979 agreement. The President is empowered to recognize the government of a foreign state. Guaranty Trust Co. v. United States, 304 U.S. 126, 137-38, 58 S. Ct. 785, 791, 82 L. Ed. 1224 (1938). This authority is not confined to the act of recognition. Among the principal cases dealing with the scope of this power are United States v. Belmont, 301 U.S. 324, 57 S. Ct. 758, 81 L. Ed. 1134 (1937), and United States v. Pink, 315 U.S. 203, 62 S. Ct. 552, 86 L. Ed. 796 (1942), which upheld the validity of an assignment and agreement for the settlement of claims incident to the President's recognition of the Soviet Union. In Belmont, 301 U.S. at 330-31, 57 S. Ct. at 760-61, the Court said:
The Court reiterated these principles in Pink, 315 U.S. at 229-30, 62 S. Ct. at 565:
Although the county's argument is consistent with a literal reading of the statute, we believe that Congress did not intend to limit the previously existing power of the President to deal with foreign states. Courts long have recognized that diplomatic immunity primarily serves the needs of the foreign sovereign. See The EXCHANGE, 11 U.S. (7 Cranch) 116, 138, 3 L. Ed. 287 (1812). The privilege extended to an individual diplomat is merely incidental to the benefit conferred on the government he represents. The legislative history of § 254c underscores this view by noting that the statute was enacted to reflect Article 47 of the Vienna Convention.5 Section 2b of this Article provides that there is no impermissible discrimination between nations when "States extend to each other more favourable treatment than is required by the provisions of the present Convention." Thus, the Convention implicitly views immunity as primarily benefitting governments rather than the individuals who serve them. The immunities conferred pursuant to § 254c, therefore, are indirectly designed to aid both foreign governments and the United States. The Act, we believe, should be construed to permit the President, or his delegate, to do directly what he is authorized to do indirectly.
We also reject the county's argument that the 1979 agreement is invalid because the note evidencing the agreement was signed by a Deputy Assistant Secretary of State instead of an Assistant Secretary of State. The county correctly points out that internal State Department rules indicate that such agreements are the province of Assistant Secretaries. It does not follow, however, that the agreement is invalid. The record discloses that the proposal to conclude the agreement with the GDR was brought to the attention of the Deputy Secretary of State. Clearly, as the institution of this suit demonstrates, the agreement was ratified. Under these circumstances, the presumption of official regularity in the conduct of public affairs, which has not been rebutted, is sufficient to sustain the proper execution of the agreement. See R. H. Stearns Co. v. United States, 291 U.S. 54, 63, 54 S. Ct. 325, 328, 78 L. Ed. 647 (1934); United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15, 47 S. Ct. 1, 6, 71 L. Ed. 131 (1926).
The starting point for consideration of the county's position is the fundamental concept that the immunity of a foreign state within the territory of another nation depends on the assent of the nation. The EXCHANGE, 11 U.S. (7 Cranch) 116, 136, 3 L. Ed. 287 (1812). In a country such as ours that contains multiple political entities, we must, therefore, determine which entity takes precedence-that is, whether the federal government's assent to immunity or the county's denial of immunity controls. The Supreme Court has provided ample precedent for the answer to this question.
In United States v. Curtis-Wright Corp., 299 U.S. 304, 315-22, 57 S. Ct. 216, 218-21, 81 L. Ed. 255 (1936), the Court explained that the power of the federal government in respect to foreign or external affairs is quite different from the limited powers conferred on it by the Constitution with respect to domestic or internal affairs. The individual colonies, the Court emphasized, never possessed international powers. Before independence, these powers were possessed by the British Crown. The Court then stated, 229 U.S. at 316, 57 S. Ct. at 219:
Consequently, the Court observed, the "investment of the federal government with the powers of external sovereignty did not depend upon affirmative grants of the Constitution." 299 U.S. at 318, 57 S. Ct. at 220.
The principles explained in Curtis-Wright were applied by the Court in United States v. Belmont, 301 U.S. 324, 57 S. Ct. 758, 81 L. Ed. 1134 (1937), which involved, just as in the case presently before us, the effect to be given an agreement with a foreign state negotiated by the executive branch as an incident to this country's recognition of the foreign state. There the Court held that the law of New York could not defeat the rights created by the agreement. Expounding this theme, 301 U.S. at 331-32, 57 S. Ct. at 761, the Court said:
Applying these precedents, we conclude that the 1979 agreement did not unconstitutionally infringe on the county's power to tax. The 1974 and 1979 agreements between the United States and the GDR must be accorded the dignity of formal treaties. The supremacy clause, Article VI, Clause 2 of the Constitution, makes them the "Law of the Land." United States v. Pink, 315 U.S. at 230, 62 S. Ct. at 565; United States v. Belmont, 301 U.S. at 331, 57 S. Ct. at 761. Consequently, the district court correctly ruled that with respect to taxes assessed after May 4, 1979, the United States' grant of immunity takes precedence over the county's denial of immunity.
Nevada v. Hall, 440 U.S. 410, 99 S. Ct. 1182, 59 L. Ed. 2d 416 (1979), does not require a contrary result.6 That case and others of a similar nature cited by the county dealt with relations among the several states or between a state and the United States arising out of domestic affairs. As the Supreme Court explained, the origin and nature of these relationships are quite different from relations with foreign governments growing out of the international or external affairs of the United States.
The legislative history recounts the background of the Act.7 The Supreme Court formerly recognized the immunity of a foreign state's property from arrest or execution on the basis of the laws and practices of nations, which the Court perceived to be also the law of the United States. The EXCHANGE, 11 U.S. (7 Cranch) 116, 3 L. Ed. 287 (1812). This immunity was extended to the property of a foreign government engaged in a commercial enterprise. Berizzi Bros. Co. v. PESARO, 271 U.S. 562, 46 S. Ct. 611, 70 L. Ed. 1088 (1926). Gradually, however, the Court relied more on the policy and practices of the State Department to determine whether immunity was appropriate. See, e.g., Mexico v. Hoffman, 324 U.S. 30, 65 S. Ct. 530, 89 L. Ed. 729 (1945). Responding to the increase of commerce between Americans and foreign governments or their trading companies, the State Department in 1952 adopted a restrictive principle of sovereign immunity.8 Congress clearly intended to adopt the State Department's policy. The House Report states:
(Section 1610(a) (4)) would deny immunity from execution against property of a foreign state which is used for a commercial activity in the United States and is either acquired by succession or gift or is immovable. Specifically exempted are diplomatic and consular missions and the residence of the chiefs of such missions. This exemption applies to all of the situations encompassed by sections 1610(a) ... (E)mbassies and related buildings could not be deemed to be property used for a "commercial" activity as required by section 1610(a).10
The county argues that the exemption from execution provided by § 1609 is not applicable because the apartment owned by the GDR is not used "for purposes of maintaining a diplomatic or consular mission or the residence of the Chief of such mission" as required by § 1610(a) (4) (B). On the contrary, asserts the county, the apartment is used for commercial activity as found by the district court in the 1978 judgment in the action brought by the county against the GDR.12 Consequently, the county maintains that execution is also proper pursuant to § 1610(a) (2).
The question therefore arises whether the provision of § 1610(a) (4) (B) exempting from execution property "used for purposes of maintaining a diplomatic or consular mission" should be interpreted to include a building used exclusively for the housing of members of the mission and their families. The Department of State has taken the position that such a building is used for maintaining a diplomatic mission. This is implicit in the 1979 agreement which assured reciprocal exemption from taxation of property "used exclusively for purposes of their diplomatic missions, including residences for the staff of their diplomatic missions and members of their families forming part of their households."
In Mexico v. Hoffman, 324 U.S. 30, 35-56, 65 S. Ct. 530, 532-533, 89 L. Ed. 729 (1945), the Court pointed out that judicial seizure of the property of a friendly state may be regarded as an affront and affect our relations with it. The Court, therefore, admonished lower courts to accept the Department's determination of immunity. The doctrine of Mexico v. Hoffman appears to have been modified by the Foreign Sovereign Immunities Act, which was intended to codify State Department policies rather than have them presented by the Department on a case-by-case basis. Nevertheless, we believe this litigation presents an appropriate occasion for heeding the Court's admonition.
Undoubtedly the purchase of this property was a commercial act regardless of its purpose. Consequently, the GDR would be subject to suit under § 1605(a) (2) by the vendor if a dispute arose over the terms of sale. Referring to diplomatic and consular property, the House Report states: "(A) foreign state cannot deny to the local state the right to adjudicate questions of ownership, rent, servitudes, and similar matters, as long as the foreign state's possession of the premises is not disturbed."14
The doctrine of collateral estoppel "has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S. Ct. 645, 649, 58 L. Ed. 2d 552 (1979). Although the State Department was aware of the 1978 suit, the United States did not participate in it directly or indirectly. Consequently, to establish privity between the United States and the GDR, the county must prove that at least one of the following situations exists: "concurrent relationship to the same right of property ... or representation of the interests of the same person." 1B Moore's Federal Practice P 0.411(1) at 1255. The district court concluded that the first of these situations applied in this case. The county argues the second is also presented. We reject both these views.
The first situation described by Moore as "privity of estate" is generally reciprocal. Examples are the relationship between a trustee and the trust beneficiary or between guardian and ward. 1B Moore's Federal Practice at 1255-56. The second situation requires proof of a substantial identity of parties. 1B Moore's Federal Practice at 1255. See Chicago, R. I. & P. Ry. v. Schendel, 270 U.S. 611, 619-22, 46 S. Ct. 420, 423-24, 70 L. Ed. 757 (1926). Neither of these concepts describes the relationship between the United States and the GDR.
The United States had no privity of estate in the property of the GDR. It had no financial or proprietary interest in the apartment or in the assets of the GDR which would be depleted by payment of the taxes. Nor is there substantial identity of parties. Indeed, the interests of the United States and the GDR are quite distinct. The GDR sought to protect its sovereignty and pecuniary interests in the 1978 action. In contrast, the United States seeks to protect its own sovereignty, to preserve its foreign policy, and to meet its international obligations by asserting its rights under federal law. At most there exists between the United States and the GDR a contractual relationship created by the 1974 and 1979 agreements. But this relationship is insufficient to establish privity for the purposes of estoppel. Cf. Chase National Bank v. Norwalk, 291 U.S. 431, 438, 54 S. Ct. 475, 478, 78 L. Ed. 894 (1934).
There is a second reason why collateral estoppel is inappropriate. Collateral estoppel "must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged." Commissioner v. Sunnen, 333 U.S. 591, 599-60, 68 S. Ct. 715, 720, 92 L. Ed. 898 (1948); see also Montana v. United States, 440 U.S. 147, 155, 99 S. Ct. 970, 974, 59 L. Ed. 2d 210 (1979). Application of this principle provides an independent reason for holding that the United States is not estopped from litigating the tax status of the GDR's property prior to May 4, 1979.
Pub. L. No. 94-583, 90 Stat. 2891, codified as 28 U.S.C. §§ 1330, 1332, 1391, 1441, 1602-11
Section 1605(a) (2) and (4), on which the district court relied, provides in part: