Petitioner
United States
Respondent
Morgan and Eleanor R. Belmont, executors of the last will and testament of August Belmont, deceased
Petitioner's Claim
That a U.S. district court erred in dismissing the U.S. government's claims against the August Belmont Company.
Chief Lawyer for Petitioner
Stanley Reed, U.S. Solicitor General
Chief Lawyer for Respondent
Cornelius Wickersham
Justices for the Court
Louis D. Brandeis, Pierce Butler, Benjamin N. Cardozo, Charles Evans Hughes,James Clark McReynolds, Owen Josephus Roberts, Harlan Fiske Stone, George Sutherland (writing for the Court), Willis Van Devanter
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
3 May 1937
Decision
Diplomatic relations between the United States and the Soviet Union dictatedthat the bank must release the funds.
Significance
The decision affirmed the power of presidential executive orders. The Court reasoned that some types of treaties do not require Senate approval to be implemented.
Millions In Limbo
When the Soviet Union nationalized the Petrograd Metal Works in 1918, not allof the business's assets were within easy reach of the new Soviet government. Earlier that same year, the metal works had deposited $24,438 with a New York City private banking firm, August Belmont & Company. The money remained in New York for nearly 20 years before a U.S. Supreme Court decision made its release possible.
During the first tumultuous years of the Soviet regime, hundreds of millionsof dollars in claims were filed by Americans whose business with Russian firms was disrupted by the Soviet takeover of private enterprise. Likewise, hugesums aimed by Soviet claimants against American interests remained uncollected because no formal diplomatic relations existed between the United States and the Soviet governments.
This legal standoff lasted until 1933, when President Franklin D. Roosevelt recognized the Soviet Union by executive order. In some quarters, Roosevelt'sdecision to recognize the Soviet government was controversial. Because the president established diplomatic relations by issuing an executive order, debate or approval by Congress was not required.
Financial claims were among the issues discussed by the Roosevelt administration and Soviet People's Commissar of Foreign Relations Maxime Maximovitch Litvinoff. In a reciprocal agreement signed on 16 November 1933, each side agreed to release and transfer the job of weighing and collecting claims to the government on whose soil the claim was being made. In the Petrograd Metal Workscase, this meant that the United States agreed to pursue the claim of the Soviet government on the money withheld by the Belmont firm, in return for Soviet action on claims by Americans against Russian nationals.
The August Belmont Company, however, refused to release the disputed money. The U.S. government responded with a lawsuit. After August Belmont died in 1924, the federal suit named the executors of his estate, Belmont's widow Eleanor and Morgan Belmont. At first, the federal government's claim was dismissedby the U.S. District Court for the Southern District of New York. The court agreed that the Belmont case was within the scope of the Roosevelt-Litvinoff accord. Since the deposit was made in New York and not on Soviet territory, however, the court decided that appropriating the money would amount to confiscation, an act which was against the public policy of both the state of New York and the United States. Dismissal of the case amounted to a decision that the U.S. government was not entitled to sue the Belmont company.
The Power of International Compacts
With dozens of similar claims involving millions of dollars pending in othercourts, the federal government persisted, appealing the New York court's decision before the U.S. Supreme Court on 4 March 1937. This time, the Belmont firm was found to be liable to legal action. On 3 May 1937, the Supreme Court reversed the New York court's decision, paving the way for the federal claim to proceed.
In an opinion written by Justice Sutherland, six of the nine justices agreedthat President Roosevelt had acted within his power to recognize the Soviet Union as a sovereign state. Consequently, any diplomatic agreements arrived atthrough executive action, such as the Litvinoff accord, were legitimate. Justice Sutherland noted that binding treaties between the U.S. and foreign nations required approval by the Congress. The Litvinoff agreement, however, wasan "international compact" made by executive order and was legal as an exercise of presidential power.
The Court would not consider the idea that appropriating the Petrograd account might violate any New York State policies. Under no circumstances, the Court ruled, could a state policy be found to legally supersede an agreement between the national government and a sovereign foreign power. The external powers of the U.S. government could be exercised without regard to state laws.
Furthermore, the Court did not accept the argument that U.S. government claims on the Petrograd account were in violation of the Fifth Amendment's clauseprohibiting the confiscation of private property. Justice Sutherland's written opinion noted that the money in question was not the private property of the Belmont firm, which was only a custodian of the disputed sum. The money hadbeen the property of the Petrograd Metal Works, which had been dissolved bythe Soviet government. As a matter of general principle, the Supreme Court was not in the business of judging the acts of foreign governments on their ownsoil.
Three justices agreed with the result of Justice Sutherland's opinion, but for a different reason. Justices Stone, Brandeis, and Cardozo were uneasy aboutthe majority's theory that the state of New York had no right to refuse to transfer funds. Still, the justices agreed that the federal government had theright to pursue a legal claim to the Petrograd account, just as long as it was understood that the government had no more or less legal standing in the suit than the Soviets as a claimant.
Ultimately, the Court's decision in the Belmont case would be of lesssignificance to the parties involved in the lawsuit over the Petrograd MetalWorks account than as a precedent establishing that presidential executive power was not to be subjected to the rules of individual states.
Related Cases
United States
Respondent
Morgan and Eleanor R. Belmont, executors of the last will and testament of August Belmont, deceased
Petitioner's Claim
That a U.S. district court erred in dismissing the U.S. government's claims against the August Belmont Company.
Chief Lawyer for Petitioner
Stanley Reed, U.S. Solicitor General
Chief Lawyer for Respondent
Cornelius Wickersham
Justices for the Court
Louis D. Brandeis, Pierce Butler, Benjamin N. Cardozo, Charles Evans Hughes,James Clark McReynolds, Owen Josephus Roberts, Harlan Fiske Stone, George Sutherland (writing for the Court), Willis Van Devanter
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
3 May 1937
Decision
Diplomatic relations between the United States and the Soviet Union dictatedthat the bank must release the funds.
Significance
The decision affirmed the power of presidential executive orders. The Court reasoned that some types of treaties do not require Senate approval to be implemented.
Millions In Limbo
When the Soviet Union nationalized the Petrograd Metal Works in 1918, not allof the business's assets were within easy reach of the new Soviet government. Earlier that same year, the metal works had deposited $24,438 with a New York City private banking firm, August Belmont & Company. The money remained in New York for nearly 20 years before a U.S. Supreme Court decision made its release possible.
During the first tumultuous years of the Soviet regime, hundreds of millionsof dollars in claims were filed by Americans whose business with Russian firms was disrupted by the Soviet takeover of private enterprise. Likewise, hugesums aimed by Soviet claimants against American interests remained uncollected because no formal diplomatic relations existed between the United States and the Soviet governments.
This legal standoff lasted until 1933, when President Franklin D. Roosevelt recognized the Soviet Union by executive order. In some quarters, Roosevelt'sdecision to recognize the Soviet government was controversial. Because the president established diplomatic relations by issuing an executive order, debate or approval by Congress was not required.
Financial claims were among the issues discussed by the Roosevelt administration and Soviet People's Commissar of Foreign Relations Maxime Maximovitch Litvinoff. In a reciprocal agreement signed on 16 November 1933, each side agreed to release and transfer the job of weighing and collecting claims to the government on whose soil the claim was being made. In the Petrograd Metal Workscase, this meant that the United States agreed to pursue the claim of the Soviet government on the money withheld by the Belmont firm, in return for Soviet action on claims by Americans against Russian nationals.
The August Belmont Company, however, refused to release the disputed money. The U.S. government responded with a lawsuit. After August Belmont died in 1924, the federal suit named the executors of his estate, Belmont's widow Eleanor and Morgan Belmont. At first, the federal government's claim was dismissedby the U.S. District Court for the Southern District of New York. The court agreed that the Belmont case was within the scope of the Roosevelt-Litvinoff accord. Since the deposit was made in New York and not on Soviet territory, however, the court decided that appropriating the money would amount to confiscation, an act which was against the public policy of both the state of New York and the United States. Dismissal of the case amounted to a decision that the U.S. government was not entitled to sue the Belmont company.
The Power of International Compacts
With dozens of similar claims involving millions of dollars pending in othercourts, the federal government persisted, appealing the New York court's decision before the U.S. Supreme Court on 4 March 1937. This time, the Belmont firm was found to be liable to legal action. On 3 May 1937, the Supreme Court reversed the New York court's decision, paving the way for the federal claim to proceed.
In an opinion written by Justice Sutherland, six of the nine justices agreedthat President Roosevelt had acted within his power to recognize the Soviet Union as a sovereign state. Consequently, any diplomatic agreements arrived atthrough executive action, such as the Litvinoff accord, were legitimate. Justice Sutherland noted that binding treaties between the U.S. and foreign nations required approval by the Congress. The Litvinoff agreement, however, wasan "international compact" made by executive order and was legal as an exercise of presidential power.
The Court would not consider the idea that appropriating the Petrograd account might violate any New York State policies. Under no circumstances, the Court ruled, could a state policy be found to legally supersede an agreement between the national government and a sovereign foreign power. The external powers of the U.S. government could be exercised without regard to state laws.
Furthermore, the Court did not accept the argument that U.S. government claims on the Petrograd account were in violation of the Fifth Amendment's clauseprohibiting the confiscation of private property. Justice Sutherland's written opinion noted that the money in question was not the private property of the Belmont firm, which was only a custodian of the disputed sum. The money hadbeen the property of the Petrograd Metal Works, which had been dissolved bythe Soviet government. As a matter of general principle, the Supreme Court was not in the business of judging the acts of foreign governments on their ownsoil.
Three justices agreed with the result of Justice Sutherland's opinion, but for a different reason. Justices Stone, Brandeis, and Cardozo were uneasy aboutthe majority's theory that the state of New York had no right to refuse to transfer funds. Still, the justices agreed that the federal government had theright to pursue a legal claim to the Petrograd account, just as long as it was understood that the government had no more or less legal standing in the suit than the Soviets as a claimant.
Ultimately, the Court's decision in the Belmont case would be of lesssignificance to the parties involved in the lawsuit over the Petrograd MetalWorks account than as a precedent establishing that presidential executive power was not to be subjected to the rules of individual states.
Related Cases
- Moscow Fire Insurance Co., v. Bank of New York and Trust Co., 20 N.E.2d 758 (1930).
- United States v. Pink, 315 U.S. 203 (1942).
- American International Group, Inc. v. Islamic Republic of Iran, 657 F.2d 430 (1981).
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