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United States v. Pink

Supreme Court of the United States · 1942 · Constitutional Law

Constitutional Lawforeign relationsexecutive agreementsfederal supremacyLitvinov Assignmentrecognition of foreign governmentsexecutive agreementsfederal supremacy

Facts

The First Russian Insurance Co., a Russian company, operated a New York branch and deposited assets with New York's Superintendent of Insurance to secure claims arising from that branch's business. Soviet decrees in 1918 and 1919 nationalized Russian insurance companies and their property wherever situated, and after domestic creditors of the New York branch were fully paid in liquidation, more than $1,000,000 remained. In 1933, when the United States recognized the Soviet government, it accepted the Litvinov Assignment of claims belonging to the Soviet government. The United States then claimed the surplus fund, while New York's prior distribution scheme would have paid certain foreign creditors and any remainder to the company's directors.

Issue

Whether, after U.S. recognition of the Soviet government and acceptance of the Litvinov Assignment, New York could refuse to give effect to Soviet nationalization decrees and apply its own policy for distributing the surplus assets of the New York branch to foreign creditors and the corporation rather than to the United States.

Rule

When the United States, in the exercise of its exclusive foreign-relations power, recognizes a foreign government and enters an international compact or executive agreement incident to that recognition, conflicting state law or policy must yield. State courts may not refuse enforcement of rights claimed by the United States under such a compact on the ground that the foreign sovereign's decrees are confiscatory, lack effect under state policy, or conflict with local notions about the status of local assets, so long as the foreign law in fact embraced the property and the federal claim depends on that recognition and agreement.

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

A bank regulator in Illinois holds surplus funds from the Chicago branch of a now-defunct insurance company formed under the laws of Ruritania. Years earlier, Ruritania nationalized all domestic insurers and their property worldwide. After the United States formally recognized Ruritania's new government, the President accepted an executive agreement assigning Ruritania's claims to the United States, but an Illinois court refused to honor the federal claim because Illinois public policy rejects foreign confiscation decrees.

Who has the better claim to the surplus fund?

Explanation. When the United States recognizes a foreign government and, as part of that recognition, enters an international compact or executive agreement, conflicting state law or policy must yield. The majority held that a state cannot refuse enforcement of the federal claim on the ground that the foreign decree is confiscatory or contrary to local policy, so long as the foreign sovereign actually had rights in the property that passed under the agreement.