United States v. Pink, 315 U.S. 203 (1942)

 December 15, 1941; Decided February 2, 1942

CERTIORARI TO THE SUPREME COURT OF NEW YORK

Mr. Justice DOUGLAS delivered the opinion of the Court.

This action was brought by the United States to recover the assets of the New York branch of the First Russian Insurance Co. which remained in the hands of repondent after the payment of all domestic creditors. The material allegations of the complaint were in brief as follows:

The First Russian Insurance Co., organized under the laws of the former Empire of Russia, established a New York branch in 1907. It deposited with the Superintendent of Insurance, pursuant to the laws of New York, certain assets to secure payment of claims resulting from transactions of its New York branch. By certain laws, decrees, enactments and orders in 1918 and 1919 the Russian Government nationalized the business of insurance and all of the property, whereever situated, of all Russian insurance companies (including the First Russian [315 U.S. 203, 211]   Insurance Co.), and discharged and cancelled all the debts of such companies and the rights of all shareholders in all such property. The New York branch of the First Russian Insurance Co. continued to do business in New York until 1925. At that time respondent, pursuant to an order of the Supreme Court of New York, took possession of its assets for a determination and report upon the claims of the policyholders and creditors in the United States. Thereafter all claims of domestic creditors, i.e., all claims arising out of the business of the New York branch, were paid by respondent, leaving a balance in his hands of more than $1,000,000. In 1931 the New York Court of Appeals (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) directed respondent to dispose of that balance as follows: first, to pay claims of foreign creditors who had filed attachment prior to the commencement of the liquidation proceeding and also such claims as were filed prior to the entry of the order on remittitur of that court; and second, to pay any surplus to a quorum of the board of directors of the company. Pursuant to that mandate, respondent proceeded with the liquidation of the claims of the foreign creditors. Some payments were made thereon. The major portion of the allowed claims, however, were not paid, a stay having been granted pending disposition of the claim of the United States. On November 16, 1933, the United States recognized the Union of Soviet Socialist Republics as the de jure Government of Russia and as an incident to that recognition accepted an assignment (known as the Litvinov Assignment) of certain claims. 1 The Litvinov Assignment was in the form of a letter dated November 16, 1933, to the President of the United States from Maxim Litvinov, People's Commissar for Foreign Affairs, reading as follows: [315 U.S. 203, 212]   'Following our conversations I have the honor to inform you that the Government of the Union of Soviet Socialist Republics agrees that, preparatory to a final settlement of the claims and counter claims between the Government of the Union of Soviet Socialist Republics and the United States of America and the claims of their nationals, the Government of the Union of Soviet Socialist Republics will not take any steps to enforce any decisions of courts or initiate any new litigations for the amounts admitted to be due or that may be found to be due it, as the successor of prior Governments of Russia, or otherwise, from American nationals, including corporations, companies, partnerships, or associations, and also the claim against the United States of the Russian Volunteer Fleet, now in litigation in the United States Court of Claims, and will not object to such amounts being assigned and does hereby release and assign all such amounts to the Government of the United States, the Government of the Union of Soviet Socialist Republics to be duly notified in each case of any amount realized by the Government of the United States from such release and assignment.

'The Government of the Union of Soviet Socialist Republics further agrees, preparatory to the settlement referred to above not to make any claims with respect to:

 

'(a) judgments rendered or that may be rendered by American courts in so far as they relate to property, or rights, or interests therein, in which the Union of Soviet Socialist Republics or its nationals may have had or may claim to have an interest; or,

'(b) acts done or settlements made by or with the Government of the United States, or public officials in the United States, or its nationals, relating to property, credits, or obligations of any Government of Russia or nationals thereof.'

 

This was acknowledged by the President on the same date. The acknowledgement, after setting forth the terms of the assignment, concluded: [315 U.S. 203, 213]   '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, the Government of the Union of Soviet Socialist Republics, and of the amount that may be found to be due on the claim of the Russian Volunteer Fleet.'

On November 14, 1934, the United States brought an action in the federal District Court for the Southern District of New York, seeking to recover the assets in the hands of respondent. This Court held in United States v. Bank of New York & Trust Co., 296 U.S. 463 , 56 S.Ct. 343, that the well settled 'principles governing the convenient and orderly administration of justice require that the jurisdiction of the state court should be respected' (page 480 of 296 U.S., page 348 of 56 S. Ct.); and that whatever might be 'the effect of recognition' of the Russian Government, it did not terminate the state proceedings. Page 479 of 296 U.S., page 348 of 56 S.Ct.. The United States was remitted to the state court for determination of its claim, no opinion being intimated on the merits. Page 481 of 296 U.S., page 348 of 56 S.Ct.. The United States then moved for leave to intervene in the liquidation proceedings. Its motion was denied 'without prejudice to the institution of the time-honored form of action'. That order was affirmed on appeal.

Thereafter the present suit was instituted in the Supreme Court of New York. The defendants, other than respondent, were certain designated policy holders and other creditors who had presented in the liquidation proceedings claims against the corporation. The complaint prayed, inter alia, that the United States be adjudged to be the sole and exclusive owner entitled to immediate possession of the entire surplus fund in the hands of the respondent.

Respondent's answer denied the allegations of the complaint that title to the funds in question passed to the[315 U.S. 203, 214]   United States and that the Russian decrees had the effect claimed. It also set forth various affirmative defenses-that the order of distribution pursuant to the decree in People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114 could not be affected by the Litvinov Assignment; that the Litvinov Assignment was unenforceable because it was conditioned upon a final settlement of claims and counter claims which had not been accomplished; that under Russian law the nationalization decrees in question had no effect on property not factually taken into possession by the Russian Government prior to May 22, 1922; that the Russian decrees had no extraterritorial effect, according to Russian law; that if the decrees were given extraterritorial effect, they were confiscatory and their recognition would be unconstitutional and contrary to the public policy of the United States and of the State of New York; and that the United States under the Litvinov Assignment acted merely as a collection agency for the Russian Government and hence was foreclosed from asserting any title to the property in question.

The answer was filed in March, 1938. In April, 1939 the New York Court of Appeals decided Moscow Fire Ins. Co. v. Bank of New York & Trust Co., 280 N.Y. 286, 20 N.E.2d 758. In May, 1939 respondent (but not the other defendants) moved pursuant to Rule 113 of the Rules of the New York Civil Practice Act and 476 of that Act for an order dismissing the complaint and awarding summary judgment in favor of respondent 'on the ground that there is no merit to the action and that it is insufficient in law'. The affidavit in support of the motion stated that there was 'no dispute as to the facts'; that the separate defenses to the complaint 'need not now be considered for the complaint standing alone is insufficient in law'; that the facts in the Moscow case and the instant one, so far as material, were 'parallel' and the Russian de- [315 U.S. 203, 215] crees the same; and that the Moscow case authoritatively settled the principles of law governing the instant one. The affidavit read in opposition to the motion stated that a petition for certiorari in the Moscow case was about to be filed in this Court; that the motion was premature and should be denied or decision thereon withheld pending the final decision of this Court. On June 29, 1939, the Supreme Court of New York granted the motion and dismissed the complaint 'on the merits', citing only the Moscow case in support of its action. On September 2, 1939, a petition for certiorari in the Moscow case was filed in this Court. The judgment in that case was affirmed here by an equally divided Court. United States v. Moscow Fire Ins. Co., 309 U.S. 624 , 60 S.Ct. 725. Subsequently the Appellate Division of the Supreme Court of New York affirmed, without opinion, the order of dismissal in the instant case. The Court of Appeals affirmed with a per curiam opinion (284 N.Y. 555, 32 N.E. 2d 552) which after noting that the decision below was 'in accord with the decision' in the Moscow case stated:

'Three of the judges of this court concurred in a forceful opinion dissenting from the court's decision in that case, but the decision left open no question which has been argued upon this appeal. We are agreed that without again considering such questions this court should, in determining title to assets of First Russian Insurance Company, deposited in this State, apply in this case the same rules of law which the court applied in the earlier case in determining title to the assets of Moscow Fire Insurance Company deposited here.'

 

We granted the petition for certiorari because of the nature and public importance of the questions raised. 313 U.S. 553 , 61 S.Ct. 960.

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Third: The question of whether the decree should be given extraterritorial effect is of course a distinct matter. One primary issue raised in that connection is whether under our constitutional system New York law can be allowed to stand in the way.

The decision of the New York Court of Appeals in the Moscow case is unequivocal. It held that 'under the law of this State such confiscatory decrees do not affect the property claimed here' (280 N.Y. page 314, 20 N. E.2d page 769); [315 U.S. 203, 222]   that the property of the New York branch acquired a 'character of its own' which was 'dependent' on the law of New York (page 310 of 280 N.Y., page 767 of 20 N.E.2d); that no 'rule of comity and no act of the United States government constrains this State to abandon any part of its control or to share it with a foreign State' (page 310 of 280 N.Y., page 767 of 20 N.E. 2d); that although the Russian decree effected the death of the parent company, the situs of the property of the New York branch was in New York; and that no principle of law forces New York to forsake the method of distribution authorized in the earlier appeal (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) and to hold that 'the method which in 1931 conformed to the exactions of justice and equity must be rejected because retroactively it has become unlawful' (page 312 of 280 N. Y., page 768 of 20 N.E.2d).

It is one thing to hold as was done in Guaranty Trust Co. v. United States, supra, 304 U.S. page 142, 58 S.Ct. page 793, that under the Litvinov Assignment the United States did not acquire 'a right free of a pre-existing infirmity' such as the running of the statute of limitations against the Russian Government, its assignor. Unlike the problem presented here and in the Moscow case, that holding in no way sanctions the asserted power of New York to deny enforcement of a claim under the Litvinov Assignment because of an overriding policy of the State which denies validity in New York of the Russian decrees on which the assigned claims rest. That power was denied New York in United States v. Belmont, supra. With one qualification to be noted, the Belmont case is determinative of the present controversy.

That case involved the right of the United States under the Litvinov Assignment to recover from a custodian or stakeholder in New York funds which had been nationalized and appropriated by the Russian decrees.

This Court, speaking through Mr. Justice Sutherland, held that the conduct of foreign relations is committed by the Constitution to the political departments of the Fed- [315 U.S. 203, 223] eral Government; that the propriety of the exercise of that power is not open to judicial inquiry; and that recognition of a foreign sovereign conclusively binds the courts and 'is retroactive and validates all actions and conduct of the government so recognized from the commencement of its existence.' Page 328 of 301 U.S., page 760 of 57 S.Ct.. It further held (page 330 of 301 U.S., page 760 of 57 S.Ct.) that recognition of the Soviet Government, the establishment of diplomatic relations with it, and the Litvinov Assignment were 'all parts of one transaction, resulting in an international compact between the two governments.' After stating that 'in respect of what was done here, the Executive had authority to speak as the sole organ' of the national government, it added (page 330 of 301 U.S., page 761 of 57 S.Ct.): 'The assignment and the agreements in connection therewith did not, as in the case of treaties, as that term is used in the treaty making clause of the Constitution (Art. 2, 2), require the advice and consent of the Senate.' It held (page 331 of 301 U.S., page 761 of 57 S.Ct.) that the 'external powers of the United States are to be exercised without regard to state laws or policies. The supremacy of a treaty in this respect has been recognized from the beginning.' And it added that 'all international compacts and agreements' are to be treated with similar dignity for the reason that 'complete power over international affairs is in the national government and is not and cannot be subject to any curtailment or interference on the part of the several states.' Page 331 of 301 U.S., page 761 of 57 S.Ct.. This Court did not stop to inquire whether in fact there was any policy of New York which enforcement of the Litvinov Assignment would infringe since 'no state policy can prevail against the international compact here involved.' Page 327 of 301 U.S., page 759 of 57 S.Ct..

The New York Court of Appeals in the Moscow case, 280 N.Y. 309, 20 N. E.2d 758 distinguished the Belmont case on the ground that it was decided on the sufficiency of the pleadings, the demurrer to the complaint admitting that under the Russian decree the property was confiscated by the Russian Government and then trans- [315 U.S. 203, 224]   ferred to the United States under the Litvinov Assignment. But, as we have seen, the Russian decree in question was intended to have an extraterritorial effect and to embrace funds of the kind which are here involved. Nor can there be any serious doubt that claims of the kind here in question were included in the Litvinov Assignment.7  It is broad and inclusive. It should be inter- [315 U.S. 203, 225]   preted consonantly with the purpose of the compact to eliminate all possible sources of friction between these two great nations. See Tucker v. Alexandroff, 183 U.S. 424, 437 , 22 S.Ct. 195, 200; Jordan v. K. Tashiro, 278 U.S. 123, 127 , 49 S.Ct. 47, 48. Strict construction would run counter to that national policy. For, as we shall see, the existence of unpaid claims against Russia and its nationals which were held in this country and which the Litvinov Assignment was intended to secure, had long been one impediment to resumption of friendly relations between these two great powers. [315 U.S. 203, 226]   The holding in the Belmont case is therefore determinative of the present controversy unless the stake of the foreign creditors in this liquidation proceeding and the provision which New York has provided for their protection call for a different result.

Fourth: The Belmont case forecloses any relief to the Russian corporation. For this Court held in that case (301 U.S. at page 332, 57 S. Ct. at page 761): '... our Constitution, laws, and policies have no extraterritorial operation, unless in respect of our own citizens. ... What another country has done in the way of taking over property of its nationals, and especially of its corporations, is not a matter for judicial consideration here. Such nationals must look to their own government for any redress to which they may be entitled.'

But it is urged that different considerations apply in case of the foreign creditors8 to whom the New York Court of Appeals (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) ordered distribution of these funds. The argument is that their rights in these funds have vested by virtue of the New York decree; that to deprive them of the property would violate the Fifth Amendment which extends its protection to aliens as well as to citizens; and that the Litvinov Assignment cannot deprive New York of its power to administer the balance of the fund in accordance with its laws for the benefit of these creditors.

At the outset it should be noted that, so far as appears, all creditors whose claims arose out of dealings with the New York branch have been paid. Thus we are not faced with the question whether New York's policy of protecting [315 U.S. 203, 227]   the so-called local creditors by giving them priority in the assets deposited with the State (Matter of People by Stoddard, 242 N.Y. 148, 158, 159, 151 N.E. 159, 45 A.L.R. 622) should be recognized within the rule of Clark v. Williard, 294 U.S. 211 , 55 S.Ct. 356, 98 A.L.R. 347, or should yield to the Federal policy expressed in the international compact or agreement. Santovincenzo v. Egan, 284 U.S. 30, 40 , 52 S.Ct. 81, 84; United States v. Belmont, supra. We intimate no opinion on that question. The contest here is between the United States and creditors of the Russian corporation who, we assume, are not citizens of this country and whose claims did not arise out of transactions with the New York branch. The United States is seeking to protect not only claims which it holds but also claims of its nationals. H.Rep. No. 865, 76th Cong ., 1st Sess. Such claims did not arise out of transactions with this Russian corporation; they are, however, claims against Russia or its nationals. The existence of such claims and their non-payment had for years been one of the barriers to recognition of the Soviet regime by the Executive Department. Graham, Russian-American Relations, 1917-1933: An Interpretation, 28 Am.Pol.Sc.Rev. 387; 1 Hackworth, Digest of International Law (1940) pp. 302-304. The purpose of the discussions leading to the policy of recognition was to resolve 'all questions outstanding' between the two nations. Establishment of Diplomatic Relations with the Union of Soviet Socialist Republics, Dept. of State, Eastern European Series, No. 1 (1933), p. 1. Settlement of all American claims against Russia was one method of removing some of the prior objections to recognition based on the Soviet policy of nationalization. The Litvinov Assignment was not only part and parcel of the new policy of recognition (id., p. 13); it was also the method adopted by the Executive Department for alleviating in this country the rigors of nationalization. Congress tacitly recognized that policy. Acting in anticipation of the realization of funds under the Litvinov [315 U.S. 203, 228]   Assignment (H.Rep. No. 865, 76th Cong., 1st Sess.) it authorized the appointment of a Commissioner to determine the claims of American nationals against the Soviet Government. Joint Resolution of August 4, 1939, 53 Stat. 1199.

If the President had the power to determine the policy which was to govern the question of recognition, then the Fifth Amendment does not stand in the way of giving full force and effect to the Litvinov Assignment. To be sure, aliens as well as citizens are entitled to the protection of the Fifth Amendment. Russian Volunteer Fleet v. United States, 282 U.S. 481 , 51 S.Ct. 229. A State is not precluded, however, by the Fourteenth Amendment from according priority to local creditors as against creditors who are nationals of foreign countries and whose claims arose abroad. Disconto Gesellschaft v. Umbreit, 208 U.S. 570 , 28 S.Ct. 337. By the same token, the Federal Government is not barred by the Fifth Amendment from securing for itself and our nationals priority against such creditors. And it matters not that the procedure adopted by the Federal Government is globular and involves a regrouping of assets. There is no Constitutional reason why this Government need act as the collection agent for nationals of other countries when it takes steps to protect itself or its own nationals on external debts. There is no reason why it may not through such devices as the Litvinov Assignment make itself and its nationals whole from assets here before it permits such assets to go abroad in satisfaction of claims of aliens made elsewhere and not incurred in connection with business conducted in this country. The fact that New York has marshaled the claims of the foreign creditors here involved and authorized their payment does not give them immunity from that general rule.

If the priority had been accorded American claims by treaty with Russia, there would be no doubt as to its validity. Cf. Santovincenzo v. Egan, supra. The same result [315 U.S. 203, 229]   obtains here. The powers of the President in the conduct of foreign relations included the power, without consent of the Senate, to determine the public policy of the United States with respect to the Russian nationalization decrees. 'What government is to be regarded here as representative of a foreign sovereign state is a political rather than a judicial question, and is to be determined by the political department of the government.' Guaranty Trust Co. v. United States, supra, 304 U.S. page 137, 58 S.Ct. page 791. That authority is not limited to a determination of the government to be recognized. It includes the power to determine the policy which is to govern the question of recognition. Objections to the underlying policy as well as objections to recognition are to be addressed to the political department and not to the courts. See Guaranty Trust Co. v. United States, supra, 304 U.S. page 138, 58 S.Ct. page 791; Kennett v. Chambers, 14 How. 38, 50, 51. As we have noted, this Court in the Belmont case recognized that the Litvinov Assignment was an international compact which did not require the participation of the Senate. It stated (301 U.S. pages 330, 331, 57 S.Ct. pages 760, 761): 'There are many such compacts, of which a protocol, a modus vivendi, a postal convention, and agreements like that now under consideration are illustrations.' And see Principality of Monaco v. Mississippi, 292 U.S. 313, 331 , 54 S.Ct. 745, 751; United States v. Curtiss-Wright Corp., 299 U.S. 304, 318 , 57 S.Ct. 216, 220. Recognition is not always absolute; it is sometimes conditional. 1 Moore, International Law Digest (1906), pp. 73-74; 1 Hackworth, Digest of International Law (1940), pp. 192-195. Power to remove such obstacles to full recognition as settlement of claims of our nationals (Levitan, Executive Agreements, 35 Ill.L.Rev. 365, 382-385) certainly is a modest implied power of the President who is the 'sole organ of the federal government in the field of international relations.' United States v. Curtiss-Wright Corp., supra, 299 U.S. page 320, 57 S.Ct. page 221. Effectiveness in handling the delicate problems of foreign relations requires no less. Unless [315 U.S. 203, 230]  such a power exists, the power of recognition might be thwarted or seriously diluted. No such obstacle can be placed in the way of rehabilitation of relations between this country and another nation, unless the historic conception of the powers and responsibilities of the President in the conduct of foreign affairs (see Moore, Treaties and Executive Agreements, 20 Pol.Sc.Q. 385, 403-417) is to be drastically revised. It was the judgment of the political department that full recognition of the Soviet Government required the settlement of all outstanding problems including the claims of our nationals. Recognition and the Litvinov Assignment were interdependent. We would usurp the executive function if we held that that decision was not final and conclusive in the courts.

'All constitutional acts of power, whether in the executive or in the judicial department, have as much legal validity and obligation as if they proceeded from the legislature; ....' The Federalist, No. 64. A treaty is a 'Law of the Land' under the supremacy clause, Art. VI, Cl. 2, of the Constitution. Such international compacts and agreements as the Litvinov Assignment have a similar dignity. United States v. Belmont, supra, 301 U. S. page 331, 57 S.Ct. page 761. See Corwin, The President, Office & Powers (1940), pp. 228-240.

 

It is of course true that even treaties with foreign nations will be carefully construed so as not to derogate from the authority and jurisdiction of the States of this nation unless clearly necessary to effectuate the national policy. Guaranty Trust Co. v. United States, supra, 304 U.S. page 143, 58 S.Ct. page 793, and cases cited. For example in Todok v. Union State Bank, 281 U.S. 449 , 50 S.Ct. 363, this Court took pains in its construction of a treaty, relating to the power of an alien to dispose of property in this country, not to invalidate the provisions of state law governing such dispositions. Frequently the obligation of a treaty will be dependent on state law. Prevost v. Greneaux, 19 How. 1. But state [315 U.S. 203, 231]   law must yield when it is inconsistent with or impairs the policy or provisions of a treaty or of an international compact or agreement. See Nielsen v. Johnson, 279 U.S. 47 , 49 S.Ct. 223. Then the power of a State to refuse enforcement of rights based on foreign law which runs counter to the public policy of the forum (Griffin v. McCoach, 313 U.S. 498, 506 , 61 S.Ct. 1023, 1027, 134 A.L.R. 1462) must give way before the superior Federal policy evidenced by a treaty or international compact or agreement. Santovincenzo v. Egan, supra; United States v. Belmont, supra.

Enforcement of New York's policy as formulated by the Moscow case would collide with and subtract from the Federal policy, whether it was premised on the absense of extraterritorial effect of the Russian decrees, the conception of the New York branch as a distinct juristic personality, or disapproval by New York of the Russian program a nationalization.9  For the Moscow case refuses to give effect or recognition in New York to acts of the Soviet Government which the United States by its policy of recognition agreed no longer to question. Enforcement of such state policies would indeed tend to restore some of the precise impediments to friendly relations which the President intended to remove on inauguration of the policy of recognition of the Soviet Government. In the [315 U.S. 203, 232]   first place, such action by New York, no matter what gloss be given it, amounts to official disapproval or non-recognition of the nationalization program of the Soviet Government. That disapproval or non-recognition is in the face of a disavowal by the United States of any official concern with that program. It is in the face of the underlying policy adopted by the United States when it recognized the Soviet Government. In the second place, to the extent that the action of the State in refusing enforcement of the Litvinov Assignment results in reduction or non-payment of claims of our nationals, it helps keep alive one source of friction which the policy of recognition intended to remove. Thus the action of New York tends to restore some of the precise irritants which had long affected the relations between these two great nations and which the policy of recognition was designed to eliminate.

We recently stated in Hines v. Davidowitz, 312 U.S. 52, 68 , 61 S.Ct. 399, 404, that the field which affects international relations is 'the one aspect of our government that from the first has been most generally conceded imperatively to demand broad national authority'; and that any state power which may exist 'is restricted to the narrowest of limits'. There we were dealing with the question as to whether a state statute regulating aliens survived a similar federal statute. We held that it did not. Here we are dealing with an exclusive federal function. If state laws and policies did not yield before the exercise of the external powers of the United States, then our foreign policy might be thwarted. These are delicate matters. If state action could defeat or alter our foreign policy, serious consequences might ensue. The nation as a whole would be held to answer if a State created difficulties with a foreign power. Cf. Chy Lung v. Freeman, 92 U.S. 275, 279 , 280 S.. Certainly the conditions for 'enduring friendship' between the nations, which the policy of recognition in this instance was de- [315 U.S. 203, 233]   signed to effectuate,10 are not likely to flourish where contrary to national policy a lingering atmosphere of hostility is created by state action.

Such considerations underly the principle of Oetjen v. Central Leather Co., 246 U.S. 297, 302 , 303 S., 38 S.Ct. 309, 310, 311, that when a revolutionary government is recognized as a de jure government, 'such recognition is retroactive in effect and validates all the actions and conduct of the government so recognized from the commencement of its existence.' They also explain the rule expressed in Underhill v. Hernandez, 168 U.S. 250, 252 , 18 S.Ct. 83, 84, that 'the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.'

The action of New York in this case amounts in substance to a rejection of a part of the policy underlying recognition by this nation of Soviet Russia. Such power is not accorded a State in our constitutional system. To permit it would be to sanction a dangerous invasion of Federal authority. For it would 'imperil the amicable relations between governments and vex the peace of nations.' Oetjen v. Central Leather Co., supra, 246 U.S. page 304, 38 S.Ct. page 311. It would tend to disturb that equilibrium in our foreign relations which the political departments of our national government had diligently endeavored to establish.

We repeat that there are limitations on the sovereignty of the States. No State can rewrite our foreign policy to conform to its own domestic policies. Power over external affairs is not shared by the States; it is vested in the national government exclusively. It need not be so exercised as to conform to state laws or state policies whether they be expressed in constitutions, statutes, or judicial decrees. And the policies of the States become wholly irrelevant to judicial inquiry, when the United States, act- [315 U.S. 203, 234]   ing within its constitutional sphere, seeks enforcement of its foreign policy in the courts. For such reasons, Mr. Justice Sutherland stated in United States v. Belmont, supra, 301 U.S. page 331, 57 S.Ct. page 761, 'In respect of all international negotiations and compacts, and in respect of our foreign relations generally, state lines disappear. As to such purposes the state of New York does not exist.'

We hold that the right to the funds or property in question became vested in the Soviet Government as the successor to the First Russian Insurance Co.; that this right has passed to the United States under the Litvinov Assignment; and that the United States is entitled to the property as against the corporation and the foreign creditors.

The judgment is reversed and the cause is remanded to the Supreme Court of New York for proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice REED and Mr. Justice JACKSON did not participate in the consideration or decision of this case.

Mr. Justice FRANKFURTER.

The nature of the controversy makes it appropriate to add a few observations to my Brother DOUGLAS' opinion.

Legal ideas like other organisms cannot survive severance from their congenial environment. Concepts like 'situs' and 'jurisdiction' and 'comity' summarize views evolved by the judicial process, in the absence of controlling legislation, for the settlement of domestic issues. To utilize such concepts for the solution of controversies international in nature, even though they are presented to the courts in the form of a private litigation, is to invoke a narrow and inadmissible frame of reference.