Title: Zschernig v. Miller
Citation: 243 Or. 567, 415 P.2d 15
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: March 23, 1966

Modified and remanded March 23, 1966.
Petition for rehearing denied June 3, 1966.
*570 Peter A. Schwabe (Sr.), Portland, argued the cause and filed the brief for appellants.
Walter L. Barrie, Assistant Attorney General, Salem, argued the cause for respondents. With him *571 on the brief was Robert Y. Thornton, Attorney General of Oregon, Salem.
Before McALLISTER, Chief Justice, and SLOAN, DENECKE, HOLMAN and LUSK, Justices.
MODIFIED AND REMANDED WITH DIRECTIONS.
HOLMAN, J.
Pauline Schrader, a resident of Oregon, died intestate on September 30, 1962. She left an estate comprised of both real and personal property. Her next of kin were a brother and sister, two nieces and two nephews, all of whom are nonresident aliens residing in the Soviet-occupied zone of Germany, hereinafter referred to as East Germany.[1] These relatives, as plaintiffs, brought a proceeding for a determination of heirship in their favor. This was contested by the State of Oregon, through its State Land Board, which requested that the property be escheated to the state.
ORS 111.070[2] provides that the right of nonresident *572 aliens to take property from Oregon estates is dependent upon (1) the reciprocal right of the citizens of the United States similarly to take property from estates in the country of which the alien is an inhabitant or citizen; (2) the right of citizens of the United States to receive in this country money originating from estates in such foreign country; and (3) proof that such aliens will receive the benefit of money or property from estates in this state without confiscation in whole or in part by such foreign country. The statute further provides that if these three prerequisites are not found to exist and there are no other heirs, the property will escheat to the State of Oregon. State Land Board v. Pekarek, 234 Or 74, 76-79, 378 P2d 735 (1963).
The trial court found that the evidence did not establish the existence of reciprocal rights to take property from or to receive the proceeds of East German estates at the date of decedent's death, that ORS 111.070 was valid and controlling, and that the proceeds of the estate escheated to the State of Oregon. Plaintiffs appealed.
Plaintiffs refer this court to Article IX, paragraph 3 of the Treaty of Friendship, Commerce and Navigation with the Federal Republic of Germany, October 29, 1954, 7 U.S.T. &amp; O.I.A. 1839, TIAS No. 3593 (effective July 14, 1956), hereinafter referred to as *573 the 1954 Treaty, which was negotiated by the United States with the government having jurisdiction over that territory known popularly as West Germany. They contend that it extends to them, as East German residents, reciprocal rights of inheritance.
Article IX, paragraph 3, of the 1954 Treaty provides as follows:
"National treatment" is defined by Article XXV, paragraph 1:
This raises the question whether East German residents are entitled to the benefits of the treaty. Plaintiffs contend that all citizens of Germany, East and West, are encompassed by the terms of the treaty because the state of Germany and its nationals continue to exist despite Germany's defeat and occupation by the allied forces. This argument is founded on Art. 116(1) of the Constitution of Germany. 2 Peaslee, Constitutions of Nations 53 (2d ed, 2d printing 1956). It is also based upon the international law doctrine concerning state succession. 2 Whiteman, Digest of *574 International Law 754-761, 787-799 (1963). The plaintiffs correctly contend that the West German government is the only legally constituted government of the state of Germany recognized by the United States. 2 Whiteman, supra at 794-795. From this line of reasoning they deduce that the 1954 Treaty entered into with the United States by the West German government was for the benefit of all Germans.
1. Courts of law are required to interpret treaties as any other contract by giving effect to the intent of the parties as manifested by the terms thereof. Sullivan v. Kidd, 254 US 433, 439, 41 S Ct 158, 65 L Ed 344 (1921); Maximov v. United States, 373 US 49, 54, 83 S Ct 1054, 10 L Ed 2d 184 (1963); Restatement (Second), Foreign Relations § 146 (1965). Article IX, paragraph 3 of the 1954 Treaty accords "national treatment, within the territories of the other Party." The "territories" referred to are delineated by Article XXVI of the treaty, which provides, in part:
This language seems to say that the 1954 Treaty was meant to apply only to that geographic area of Germany over which the government of West Germany exercises its jurisdiction.
2. In the interpretation of treaties, "the meaning given them by the departments of government particularly *575 charged with their negotiation and enforcement is given great weight," Kolovrat v. Oregon, 366 US 187, 194, 81 S Ct 922, 6 L Ed 2d 218 (1961); Sullivan v. Kidd, supra at 442. This does not mean, however, that courts are necessarily bound by the interpretation of the executive branch. Restatement (Second), Foreign Relations § 152 (1965). The State Department of the United States has declared the position of our government with respect to Article XXVI of the 1954 Treaty as follows:
To the contrary, however, the position of the West German government, as contained in a Foreign Office certificate issued at Bonn on September 30, 1963, and introduced into evidence, is as follows:
3. It is the belief of this court that neither German citizenship nor nationality has real bearing on this issue *576 because territorial application of the 1954 Treaty, by the terms of Article XXVI, is governed by sovereignty. The West German government has no sovereign authority over that geographical area known as East Germany. The interpretation of the State Department of the United States seems to us to be the only reasonable interpretation of the language of Article XXVI. We believe it was not the intent of the United States and West Germany, at the time of making the 1954 Treaty, to extend its provisions to residents of East Germany.
The situation here differs from those prevailing in the cases of Estate of Nepogodin, 134 Cal App 2d 161, 285 P2d 672 (1955), and Mullart v. State Land Board, 222 Or 463, 353 P2d 531 (1960), relied upon by plaintiffs. In those cases the relevant treaties applied to the country or state as a whole. In this case, however, the 1954 Treaty specifically provides that its geographic application is to an area less than the state of Germany as a whole and excludes the area in which plaintiffs live.
Plaintiffs contend that if the 1954 Treaty is inapplicable Articles IV and XXV of the Treaty of Friendship, Commerce and Consular Rights with Germany, December 8, 1923, 44 Stat 2132, T.S. No. 725 (effective October 14, 1925) amended June 3, 1935, 49 Stat 3258, T.S. No. 897, hereinafter referred to as the 1923 Treaty, are applicable.
4. The state of Oregon contends that the 1923 Treaty has been abrogated by virtue of subsequent events. Article XXVIII of the 1954 Treaty with the West German government provides as follows:
The 1954 Treaty thus purports to abrogate Article IV of the 1923 Treaty dealing with the rights of individuals to take property. However, the 1954 Treaty, as previously pointed out, explicitly extends only to those areas over which West Germany has sovereignty. This does not include East Germany. Its provisions would therefore not affect the application of the 1923 Treaty to East Germany. This conclusion has also been reached by the United States State Department. The Department has said:
Since the enactment of the 1923 Treaty, World War II has ensued, Germany has been defeated and occupied, and the Soviet government has created a regime in East Germany which is not recognized by the United States as a legal government. The United States government still treats East Germany as Soviet-occupied territory of Germany. No treaty of peace *578 has ever been consummated.[3] What then is the status of the 1923 Treaty as it relates to East Germany?
In considering whether the many changes in Germany's status would abrogate the treaty, the case of Clark v. Allen, 331 US 503, 67 S Ct 1431, 91 L Ed 1633 (1947), must be considered. In that case the decedent died in 1942 a resident of California leaving real and personal property there. She bequeathed her entire estate to four relatives who were nationals and residents of Germany. The Alien Property Custodian instituted an action against the executor of the estate and California heirs-at-law to determine that the California heirs-at-law had no interest in the estate and that he was entitled to the entire estate as the representative of the German nationals. The heirs-at-law claimed the German nationals were ineligible as legatees because a reciprocity requirement of California law similar to that of Oregon could not be satisfied.
5. The court there held that the 1923 Treaty between the United States and Germany was not entirely abrogated by the outbreak of World War II and the enactment of the Trading with the Enemy Act. It held that the treaty provisions regarding descent and distribution of property were still in effect. The court said as follows:
In Techt v. Hughes, 229 NY 222, 128 NE 185, cert. denied 254 US 643 (1920), Cardozo, J., stated:
Concerning the continued applicability of the 1923 Treaty, Mr. Justice Douglas said, in Clark v. Allen, supra at 513-514:
6, 7. What of the effect of the events subsequent to the termination of World War II? Is the provision of the treaty under which the right to inherit is asserted incompatible with present national policy? At the time Clark v. Allen, supra, was decided the war was over and Germany had been occupied by the Allies. The court said as follows:
The world political situation has vastly changed in the nearly twenty years since the decision in Clark v. Allen, supra. As previously pointed out, the Soviet government has purported to turn over power in East Germany to a regime which is not recognized by the United States. However, the executive branch of the United States government, which is charged with the negotiation and interpretation of treaties, has recently indicated publicly its attitude concerning the continued effectiveness of Article IV of the 1923 Treaty and its application to East Germany. A document published by the Treaty Affairs Staff, Office of the Legal Adviser, United States State Department dated September 30, 1965, entitled "Treaty Provisions Relating to the Rights of Inheritance and Acquisition and Ownership of Property in Force between the United States and Other Countries," states at page 19, note 3, as follows:
8, 9. This indicates that the United States government still considers Article IV of the 1923 Treaty in effect with relation to East Germany. While that attitude of the United States government is not binding upon this court in an adjudication of title to private property, Clark v. Allen, supra at 517, the State Department document is entitled to great weight. Kolovrat v. Oregon, supra at 194; Sullivan v. Kidd, supra at 442. This is particularly true in view of the fact that whether that part of Germany known as East Germany is in a position to perform its treaty obligations is essentially a political question. In the case of Estate of Nepogodin, 134 Cal App 2d 161, 285 P2d 672 (1955), the court considered whether communist control of Manchuria, the part of China where decedent's heirs resided, was such as to invalidate a treaty with Nationalist China which was used as evidence of reciprocal rights of inheritance. The court there said, at page 170:
*583 In Terlinden v. Ames, 184 US 270, 287-288, 22 S Ct 484, 46 L Ed 534 (1902), the court said:
Terlinden v. Ames, Clark v. Allen, and Estate of Nepogodin all say that the ability of a foreign country to comply with its treaty obligations is essentially a political question. In view of these cases and the present attitude of the State Department, we apply the principle of judicial abstention to the question of whether a foreign state is able to carry out its treaty obligations and therefore whether the United States is still bound.[4] The political department of the federal government particularly charged with the negotiation *584 and enforcement of the treaty in question has determined that the United States is still obligated. We therefore hold Articles IV and XXV of the 1923 Treaty to be still in effect as they apply to the territory of East Germany.
Plaintiffs contend that the provisions of ORS 111.070 are in conflict with Articles IV and XXV of the 1923 Treaty and that the statute must yield to the terms of the treaty. In so far as Article IV provides for the reciprocal taking of property by the nationals of one country from decedents' estates in the other upon the same conditions as citizens of such other state, it is in conformance with the reciprocal provisions of ORS 111.070 (1)(a). However, the statute in (1)(b) and (c) establishes two additional prerequisites to the vesting or taking by alien nationals of property from Oregon estates, neither of which is demanded by the treaty. These requirements are (1)(b) that citizens of the United States be able to receive payment here of money originating from estates in the foreign country and (1)(c) that beneficiaries of Oregon estates residing in such foreign country be able to receive there, without confiscation, money originating from such estates. Decedent's foreign relatives have not shown that subsections (1)(b) and (c) can be complied with as required by ORS 111.070 (2). They do not even contend that the requirements of (1)(b) can be met. However, these additional prerequisites to vesting are in contravention of the rights granted by the terms of the treaty.
10, 11. A state statute in contravention of a treaty between the United States and a foreign government must yield to that treaty. State Land Board v. Kolovrat, 220 Or 448, 462, 349 P2d 255 (1960), rev'd on other grounds, Kolovrat v. Oregon, 366 US 187, 190, 81 *585 S Ct 922, 6 L Ed 2d 218 (1961); Clark v. Allen, supra at 508, 517; Hauenstein v. Lynham, 100 US 483, 488-490, 25 L Ed 628 (1880); Ware v. Hylton, 3 US [3 Dall] 199, 236, 1 L Ed 568 (1796). Therefore, the requirements of ORS 111.070 (1)(b) and (c) must yield to the treaty where the treaty applies.
Having held the 1923 Treaty still in effect as to that territory of Germany known as East Germany and the provisions of ORS 111.070 (1)(b) and (c) of no effect when in conflict therewith, we must now turn to the specific provisions of the treaty for the purpose of determining whether they grant plaintiffs the right to inherit decedent's property. Article IV of the treaty provides as follows:
This is the same article of the same treaty which was construed in Clark v. Allen, supra; so we again turn to that case for the construction of its terms. The court said, in reference to the second paragraph of Article IV concerning personal property, as follows:
12. This is dispositive of any contention of the plaintiffs in this case that the 1923 Treaty is applicable to the personal property of decedent. The treaty does not cover personal property located in this country which an American national undertakes to leave to German nationals.[5] Not being applicable, there can be no conflict between its terms and ORS 111.070 regarding disposition of decedent's personal property. ORS 111.070 controls and decedent's German relatives have not made the showing necessary to bring them within its terms.
13. Plaintiffs argue, however, that even if the provision of Article IV of the treaty is inapplicable, the personal property may not be escheated pursuant to the Oregon statute because the statute is an unconstitutional attempt by the state to invade the exclusive power of the federal government to regulate the foreign relations of the United States. They contend that the statute violates Article I, Section 10 of the United States Constitution. They imply that the subject matter of the statute is within the treaty-making power of the federal government and is an area of legislation from which the states are excluded by virtue of Article VI of the Constitution. This argument was also put to bed by Clark v. Allen, supra. The court was there dealing with a California statute similar to ORS 111.070. It was argued that the statute was an unconstitutional "extension of state power into *588 the field of foreign affairs, which is exclusively reserved by the Constitution to the Federal Government." 331 US at 516. The court held that a state statute governing the descent and distribution of property must give way only if there is a conflict with "an overriding federal policy as where a treaty makes different or conflicting arrangements. Hauenstein v. Lynham, supra." 331 US at 517 (emphasis ours).
14, 15. We now turn to the first paragraph of Article IV of the 1923 Treaty which pertains to real property. We again quote from Clark v. Allen, which states in regard to this paragraph as follows:
The 1923 Treaty provision has thus been construed to vest the title to real property of estates in this country in German heirs or devisees. The requirements of ORS 111.070 (1)(b) and (c) place additional requirements upon such vesting and are therefore in conflict with the treaty and are of no effect. The provisions *589 of the statute cannot operate to bar the right of the German heirs to inherit the real property.
16. The court realizes there is the practical problem of delivery of any benefits of the real property to the heirs at law in East Germany. The United States government does not recognize the regime established there and has no diplomatic relations with it. Also, the United States Treasury Department has issued the following:
This court has determined that this official declaration may be regarded "as evidence that foreign beneficiaries would not receive their interests free from control amounting to, at least, a partial confiscation." State Land Board v. Pekarek, 234 Or 74, 82, 378 P2d 735 (1963).
Article XXV of the 1923 Treaty, which we have held to be still in force as applied to East Germany, provides as follows:
Plaintiffs, therefore, claim the West German Consul is authorized to receive funds for them to be invested for their benefit by the West German government until such time as they may receive the funds.
17. Although Article XXV of the 1923 Treaty was incorporated into and made a part of the 1954 Treaty, we have, in this opinion, held that the 1954 Treaty does not extend to those persons who reside in that area over which West Germany does not have sovereignty. For that reason West German consular officers have no authority under the 1954 Treaty to act for and receive property for persons residing in East Germany.
The United States government has taken a similar view that West German Consuls have no authority to act on behalf of German nationals residing in East Germany. The following is an excerpt from a letter released by the Office of the Legal Adviser, Department of State, May 23, 1962:
*591 18. The fact that plaintiffs cannot immediately receive the benefit of decedent's real property does not mean that they cannot inherit or own it because we have determined that ORS 111.070(1)(c), which makes their ability to receive the benefits of the property in East Germany a prerequisite to vesting of title, must yield to Article IV of the 1923 Treaty with Germany, which has been construed in Clark v. Allen, supra, as granting the rights of inheritance and ownership. The German heirs at law are now the owners of real property in this state.
The decree of the trial court is modified in that plaintiffs are declared to be decedent's heirs at law in respect to her real property only, and these proceedings are remanded for the entry of an order determining heirship in conformance with this opinion.
*592 Peter A. Schwabe (Sr.), Portland, for the petition.
Before McALLISTER, Chief Justice, and PERRY, SLOAN, GOODWIN, DENECKE, HOLMAN and LUSK, Justices.
PETITION DENIED.
HOLMAN, J.
Plaintiffs, in a petition for rehearing, again direct our attention to Mullart v. State Land Board, 222 Or 463, 353 P2d 531 (1960). That case held that Estonian nationals had a right to inherit personal as well as real property from estates in the United States of American nationals. The provisions of Article IV of the 1925 treaty with Estonia, 44 Stat 2379, T.S. No. 736, are identical with those of Article IV of the 1923 treaty with Germany construed in the principal opinion in this case. Plaintiffs argue, therefore, that the Mullart case requires this court to permit them to inherit the personal as well as the real property of the deceased despite the contrary holding in Clark v. Allen, 331 US 503, 67 S Ct 1431, 91 L Ed 1633 (1947).
19. Article IV of the Estonian treaty was not relied on in Mullart. The court there held that the Estonian legatee had the right to inherit because the reciprocal provision of the Oregon statute, which required that United States nationals be permitted to inherit from estates in the country of the alien heir, devisee or legatee, was satisfied by Estonian law. It was therefore unnecessary to consider or rely on the *593 effect of Article IV of the treaty. By contrast, plaintiffs' right to inherit in this case depended upon the language of Article IV of the 1923 German treaty. Therefore, there is no conflict between this court's holding in Mullart and the principal opinion in this case.
The petition for rehearing is denied.
[1]  By referring to this area as "East Germany" we do not pass judgment on the political question whether Germany is a divided state or country with more than one government.
[2]  ORS 111.070 states as follows:

"(1) The right of an alien not residing within the United States or its territories to take either real or personal property or the proceeds thereof in this state by succession or testamentary disposition, upon the same terms and conditions as inhabitants and citizens of the United States, is dependent in each case:
"(a) Upon the existence of a reciprocal right upon the part of citizens of the United States to take real and personal property and the proceeds thereof upon the same terms and conditions as inhabitants and citizens of the country of which such an alien is an inhabitant or citizen;
"(b) Upon the rights of citizens of the United States to receive by payment to them within the United States or its territories money originating from the estates of persons dying within such foreign country; and
"(c) Upon proof that such foreign heirs, distributees, devisees or legatees may receive the benefit, use or control of money or property from estates of persons dying in this state without confiscation, in whole or in part, by the governments of such foreign countries.
"(2) The burden is upon such nonresident alien to establish the fact of existence of the reciprocal rights set forth in subsection (1) of this section.
"(3) If such reciprocal rights are not found to exist and if no heir, devisee or legatee other than such alien is found eligible to take such property, the property shall be disposed of as escheated property."
[3]  No peace treaty has been signed by all the belligerents to World War II. See 1 Whiteman, Digest of International Law, 331-336 (1963). In substitution therefor, the United States, Great Britain, France, and West Germany entered into a Protocol concerning Termination of the Occupation Regime in the Federal Republic of Germany, October 23, 1954, 6 U.S.T. &amp; O.I.A. 4117, TIAS No. 3425 (effective May 5, 1955) containing a Convention on Relations Between the Three Powers and the Federal Republic of Germany, 6 U.S.T. &amp; O.I.A. at 4251, by which the occupying nations revoked the occupied status of Germany and retained limited rights pending reunification of Germany and a peace settlement.
[4]  Restatement (Second), Foreign Relations § 152, comment c; Reporters' Note (1965) states:

"The `political question' doctrine as it relates to interpretation of international agreements. The principle of judicial abstention has been applied to, among others, the following types of questions arising in litigation involving international agreements:
* * *
"(c) Whether a foreign state still has power to carry out its treaty obligations and whether the United States is therefore still bound. Terlinden v. Ames, 184 U.S. 270 (1902); Charlton v. Kelly, 229 U.S. 447 (1913); Clark v. Allen, 331 U.S. 503 (1947)."
[5]  In Clark v. Allen, as here, there was no showing as to the nationality of decedent. We are presuming, in the absence of a showing to the contrary, as the United States Supreme Court did in that case (331 U.S. at 516), that decedent was a national of the United States, her country of residence at the time of her death.