United States v. Belmont, 301 U.S. 324; 57 S. Ct. 758; L. Ed. 1134 (1937)

Facts—The United States brought suit against Belmont to recover money deposited in a New York bank. The USSR had confiscated this money when it had nationalized its industries, and, after the United States and the USSR had exchanged diplomatic recognition, the USSR had assigned its rights to money owed it by Russian nationals to the United States. The U.S. District and Circuit Courts had dismissed the complaint for failure to state a cause of action, arguing that recognition of such confiscation went against New York law.

Questions—(a) Does the United States have grounds for seeking this money?

(b) Does U.S. or state law prevail in cases where diplomatic agreements ap- pear contrary to state policies?

Decisions—(a) Yes; (b) U.S. law prevails in such circumstances.

ReasonsJ. Sutherland (9–0). Every sovereign state must recognize the sovereignty of every other. Sovereignty is “not a judicial question, but one the determination of which by the political departments conclusively binds the courts.” This agreement followed the exchange of ambassadors between the United States and the USSR. This recognition validated the acts of the Soviet government. Whereas the Constitution divides domestic powers between the state and national governments, “Governmental power over external affairs is not distributed, but is vested exclusively in the national government.” Treaties require the advice and consent of the Senate but international compacts, individually called a “protocol, a modus vivendi, a postal convention” or “agreements like that now under consideration” do not. The supremacy of federal treaties applies also to such agreements: “As to such purposes the State of New York does not exist. Within the field of its powers, whatever the United States rightfully undertakes, it necessarily has warrant to consum- mate.” The argument that the Soviet action constituted an unconstitutional taking under the Fifth and Fourteenth Amendments has no place because “our Constitution, laws and policies have no extraterritorial operation.”

J. Stone, concurring, did not think that New York had a policy against recognition of what the Soviet Union had done, but he believed 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.” The United States might override such a policy through a treaty, but there had been no need to do so and it had not done so in this case.

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