Court Opinion

ID: 9418916
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:43:12.804043+00
Date Added: 2024-06-11T08:06:03.133740
License: Public Domain

Mr. Justice Stone,
concurring.
I agree with the result, but I am unable to follow the path by which it is reached. Upon the record before us there is, I think, no question of reexamining the validity of acts of a foreign state, and no question of the United States’ declaring and enforcing a policy inconsistent with one that the State of New York might otherwise adopt in conformity to its own laws and the Constitution.
The United States, by agreement with the Soviet government, has acquired an assignment of all the rights of the latter in a chose in action, against an American citizen, formerly belonging to a Russian national, and confiscated by decree of the Soviet government. If the subject of the transfer were a chattel belonging to an American, but located in Russia, we may assume that the validity of the seizure would be recognized here, Oetjen v. Central Leather Co., 246 U. S. 297; Ricaud v. American Metal Co., 246 U. S. 304, 308-310; Salimoff & Co. v. Standard Oil Co., 262 N. Y. 220; 186 N. E. 679. Similarly, the confiscation of the present claim, being lawful where made, is upon familiar principles to be regarded as effective in New York, except in so far as that state, by reason of the presence of the debtor there, may adopt and enforce a policy based upon non-recognition of the transfer.
*334But this Court has often recognized that a state may refuse to give effect to a transfer, made elsewhere, of property which is within its own territorial limits, if the transfer is in conflict with its public policy. Green v. Van Buskirk, 5 Wall. 307, 311-312; Hervey v. Rhode Island Locomotive Works, 93 U. S. 664; Security Trust Co. v. Dodd, Mead & Co., 173 U. S. 624; Clark v. Williard, 292 U. S. 112, 122; Clark v. Williard, 294 U. S. 211. It is likewise free to disregard the transfer where the subject of it is a chose in action due from a debtor within the state to a foreign creditor, especially where, as in the present case, the debtor’s only obligation is to pay within the state, on demand. Harrison v. Sterry, 5 Cranch 289; Disconto Gesellschaft v. Umbreit, 208 U. S. 570; Barth v. Backus, 140 N. Y. 230; 35 N. E. 425; Vladikavkazsky Ry. Co. v. New York Trust Co., 263 N. Y. 369, 378-379; 189 N. E. 456. The chose in action is so far within the control of the state as to be regarded as located there for many purposes. Wyman v. Halstead, 109 U. S. 654, 656; Chicago, R. I. & P. Ry. Co. v. Sturm, 174 U. S. 710; Harris v. Balk, 198 U. S. 215; Pennington v. Fourth National Bank, 243 U. S. 269; Security Savings Bank v. California, 263 U. S. 282, 285; Corn Exchange Bank v. Coler, 280 U. S. 218; In re Russian Bank for Foreign Trade, L. R. 1933, Ch. Div. 745, 767; American Law Institute, Restatement, Conflict of Laws, §§ 108, 213.
It does not appear that the State of New York, at least since our diplomatic recognition of the Soviet government, has any policy which would permit a New York debtor to question the title of that government to a claim of the creditor acquired by its confiscatory decree, and no reason is apparent for assuming that such is its policy. Payment of the debt to the United States as transferee will discharge the debtor and impose on him no burden which he did not undertake when he assumed the position of debtor. Beyond this he has no interest for the state *335to protect. But it is a recognized rule that a state may rightly refuse to give effect to external transfers of property within its borders so far as they would operate to exclude creditors suing in its courts. Harrison v. Sterry, supra; Security Trust Co. v. Dodd, Mead & Co., supra; Disconto Gesellschaft v. Umbreit, supra; Clark v. Williard, supra; Barth v. Backus, supra.
We recently held, in Clark v. Williard, supra, that the full faith and credit clause does not preclude the attachment of property within the state, by a local creditor of a foreign corporation, all of whose property has been previously transferred, in the state of its incorporation, to a statutory successor for the benefit of creditors. Due process under the Fifth Amendment, the benefits of which extend to alien friends, as well as to citizens, Russian Volunteer Fleet v. United States, 282 U. S. 481, does not require any different result. Disconto Gesellschaft v. Umbreit, supra, 579, 580. The Constitution has no different application where the property transferred is a chose in action, later seized by a creditor in the state of the debtor. Disconto Gesellschaft v. Umbreit, supra. See Harrison v. Sterry, supra. In conformity to this doctrine, New York would have been free to enforce a local policy, subordinating the Soviet government, as the successor of its national, to local suitors. Its judicial decisions indicate that such may be its policy for the protection of creditors or others claiming an interest in the sum due. James & Co. v. Second Russian Insurance Co., 239 N. Y. 248, 257; 146 N. E. 369; Matter of People (City Equitable Fire Insurance Co.), 238 N. Y. 147, 152; 144 N. E. 484; Matter of Waite, 99 N. Y. 433, 448; 2 N. E. 440. See Vladikavkazsky Ry. Co. v. New York Trust Co., supra.
It seems plain that, so far as now appears, the United States does not stand in any better position with respect to the assigned claim than did its assignor, or any other *336transferee of the Soviet government. We may, for present purposes, assume that the United States, by treaty with a foreign government with respect to a subject in which the foreign government has some interest or concern, could alter the policy which a state might otherwise adopt. It is unnecessary to consider whether the present agreement between the two governments can rightly be given the same effect as a treaty within this rule, for neither the allegations of the bill of complaint, nor the diplomatic exchanges, suggest that the United States has either recognized or declared that any state policy is to be overridden.
So far as now relevant, the document signed by the Soviet government, as preparatory to a more general settlement of claims and counterclaims between the two governments, assigns and releases to the United States all amounts “due or that may be found to be due it” from American nationals, and provides that the Soviet government is “to be duly notified in each case of any amount realized by the Government of the United States from such release and assignment.” The relevant portion of the document signed by the President is expressed in the following paragraph:
“I am glad to have these undertakings by your Government and I shall be pleased to notify your Government in each case of any amount realized by the Government of the United States from the release and assignment to it of the amounts admitted to be due or that may be found to be due.”
There is nothing in either document to suggest that the United States was to acquire or exert ¿ny greater rights than its transferor, or that the President, by mere executive action, purported or intended to alter the laws and policy of any state in which the debtor of an assigned claim might reside, or that the United States, as assignee, *337is to do more than the Soviet government could have done after diplomatic recognition — that is, collect the claims in conformity with those laws. Cf. Todok v. Union State Bank, 281 U. S. 449.
As respondent debtor may not challenge the effect of the assignment to the United States, the judgment is rightly reversed. But as the reversal is without prejudice to the rights of any other parties to intervene, they should be left free to assert, by intervention or other appropriate procedure, such claims with respect to the amount due as are in accordance with the laws and policy of New York. There is no occasion to say anything now which can be taken to foreclose the assertion by such claimants of their rights under New York law.
Mr. Justice Brandéis and Mr. Justice Cardozo concur in this opinion.