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United States v. Belmont

Supreme Court of the United States · 1937 · Constitutional Law

Constitutional LawForeign RelationsExecutive PowerSupremacyrecognition of foreign governmentsexecutive agreementinternational compactstate policy preemption

Facts

A Russian corporation had deposited money with August Belmont & Co. in New York before 1918. In 1918, the Soviet Government dissolved and liquidated the corporation and nationalized all of its assets wherever situated, including the New York deposit, which then became Soviet property. On November 16, 1933, as part of an exchange of diplomatic correspondence accompanying recognition of the Soviet Government, the Soviet Government released and assigned to the United States amounts due from American nationals, including this deposit claim. After demand, Belmont's executors refused to pay the United States.

Issue

Whether the United States could enforce, in New York, a Soviet assignment of a claim to a New York bank deposit notwithstanding asserted New York public policy against giving effect to a foreign confiscatory decree, and whether such enforcement would violate public policy of the United States.

Rule

When the political branches recognize a foreign sovereign, that recognition retroactively validates the sovereign's acts from the commencement of its existence for purposes of United States courts. An international compact made by the President in the conduct of foreign relations, though not a Senate-ratified treaty, is within federal authority and state law or policy cannot obstruct its effective operation. The Constitution's bar on taking private property without just compensation has no extraterritorial application to a foreign government's taking of its own nationals' property.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 2024, the President recognized the government of Ruritania and, through an exchange of diplomatic notes settling mutual claims, accepted an assignment to the United States of debts owed by American nationals to Ruritania. The United States sued Harbor Gate Finance, a private firm in Boston, to collect a debt formerly owed to a Ruritanian state-owned textile company. Massachusetts courts had previously announced a policy against enforcing foreign confiscatory decrees.

If Harbor Gate argues that Massachusetts public policy bars enforcement of the assigned claim, how should a federal court rule?

Explanation. The majority held that when the President, acting within the national foreign-affairs power, enters an international compact as part of recognition and related diplomatic arrangements, contrary state law or policy is irrelevant. The national government’s external power is exclusive, and a state may not interpose its own policy to defeat the compact’s effective operation.