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SULLIVAN v. STATE

January 9, 1941

SULLIVAN
v.
STATE OF SAO PAULO



The opinion of the court was delivered by: MOSCOWITZ

MOSCOWITZ, District Judge.

This is a motion made on behalf of the defendant, The State of Sao Paulo, one of the Federated States of the United States of Brazil and by the Government of the United States of Brazil appearing specially, to dismiss the complaint and vacate the warrant of attachment and the order for the publication of the summons based thereon. The action in which this motion is made has been removed from the New York Supreme Court and is one brought by a holder of bonds issued by the State of Sao Paulo whereby he seeks payment of principal and interest.

The warrant of attachment had been issued by the New York state court on April 25, 1940 and was served upon the fiscal agent of the defendant State, in the United States. Based thereon, the New York Supreme Court issued an order of service by publication on May 17, 1940.

 Subsequent to the commencement of this action the Brazilian Ambassador to the United States sent a letter, dated July 11, 1940, to the State Department of the United States in which he asserted the alleged immunity of the State of Sao Paulo from suit and the alleged immunity from attachment of the funds upon which jurisdiction in this action is sought to be predicated. After receiving this letter of the Brazilian Ambassador, the State Department requested the United States Attorney for the Eastern District of New York to submit a written suggestion to this court with respect to the claim of immunity asserted in that letter. The United States Attorney in accordance with the request of the State Department has presented to this court a suggestion embodying the diplomatic representations of the Brazilian Ambassador to the United States Secretary of State.

 The issue thus raised is one of the sovereign immunity of the defendant state from suit and the immunity of the funds from attachment by reason thereof and by reason of the alleged interest of the United States of Brazil therein, which will be discussed below in more detail. It has been a well-established principle of law that a sovereign is immune from suit without its consent. To achieve this immunity the device of a suggestion has been utilized. The foreign state makes representations to our State Department which in turn conveys a suggestion of immunity to the court through the representative of the United States Government. In Compania Espanola v. The Navemar, 303 U.S. 68, 58 S. Ct. 432, 434, 82 L. Ed. 667, the United States Supreme Court said with respect to the claim of a foreign sovereign: "If the claim is recognized and allowed by the Executive Branch of the government, it is then the duty of the courts to release the vessel upon appropriate suggestion by the Attorney General of the United States, or other officer acting under his direction." Thus in a government like ours based upon separation into executive, legislative and judicial branches, a court must, insofar as a claim is recognized by the State Department, give full acceptance to that recognition.

 In order to obtain clarification as to the extent to which the State Department had recognized and allowed the claim of the United States of Brazil and its Federated State in causing a suggestion to be presented to the court, correspondence has been had with the State Department. On October 24, 1940, the State Department addressed a letter to this court which substantially summarized its prior letters. This communication reads as follows: *fn1"

 From this letter it is evident, first, that no diplomatic relations exist between the United States and the State of Sao Paulo. Diplomatic relations exist only with the United States of Brazil. In short, the State of Sao Paulo as a Federated State lacks "external sovereignty" which the State Department's letter indicates rests in the Federal Government alone. Secondly, that letter makes it evident that the State Department has accepted as true the statements contained in the aforementioned letter of the Brazilian Ambassador, even though the Department of State has taken the position that the ultimate legal question of sovereign immunity was one to be left for the determination of this court.

 Subsequently, namely, on November 22, 1940, the State Department addressed a further letter to this court which reads as follows: *fn2"

 In view of the importance of this correspondence received subsequent to the argument of the motion, the court held a further hearing on November 28, 1940, in order that counsel might have adequate opportunity to give full expression to their views. Time was also allowed for supplemental briefs which have been submitted.

 At the supplemental hearing held before this court the issue to which the argument was primarily directed was the extent to which this court is bound by the statement of facts contained in the letter of the Brazilian Ambassador in view of the statement of the State Department that it has accepted as true the various facts set forth in that letter. Obviously, if these facts are accepted as true and are adequate to determine the issue of sovereignty or the sovereign immunity of the funds attached, the court is in a position to determine the matter without further hearing on the facts.

 As pointed out above, the United States Supreme Court has said in the Navemar case that where the executive "recognize[s] and allow[s]" the claim of the foreign sovereign it is the duty of the court to give effect to the claim of immunity. The purport of such a rule is to grant to the foreign sovereign the privilege of immunity from suit in the municipal courts of another nation where, in the normal course of diplomatic relations, the executive branch of the latter has seen fit to recognize the claim of the foreign sovereign. Friendly intercourse between nations demands that a sovereign not be called upon to litigate its rights in the same manner as a private litigant where its diplomatic relations have been given recognition.

 If, where the claim of immunity is recognized and allowed by the executive, the court must relinquish jurisdiction, it is difficult to see why the same finality should not be given to the sovereign's presentation of facts where the same has been accepted as true by the executive branch of the government, as has been done herein. The same theories upon which one rests, are the basis of the other. If the word of a sovereign is not to be questioned where accepted by the executive, then the rule applies equally to the case where the executive accepts as true only the facts, and by reason of lack of desire to usurp judicial functions does not pass upon the ultimate legal question of immunity. In fact the number of cases where the executive has made outright demand for release of sovereign property are very few. The Schooner Exchange v. McFaddon, 7 Cranch 116, 3 L. Ed. 287, is an example. Such instances are, however, the exception and in most cases only a suggestion has been filed. If therefore a suggestion is not given effect beyond what the plaintiff contends, then it has little or no value.

 The plaintiff has attempted to lay much stress on the statements in the letter of the State Department dated November 22, 1940, that a prima facie case was made for immunity. The plaintiff seeks to infer that there was implied in the use of that phrase the plaintiff's right to rebut the defendant's statements. As the court reads the language of the State Department, that language meant nothing more than what has just been indicated, namely, that the defendant established its factual case via the diplomatic representations of the Brazilian Ambassador, with legal determinations left to the court. To place upon the language the interpretation that the facts as set forth could be challenged or shown to be inadequate, after the same had been accepted as true by the executive, would fail to give full recognition to the word of a sovereign government, the United States of Brazil.

 Plaintiff has cited several authorities purported to justify his position with respect to his right to a hearing on the facts. Most significant among these cases is Lamont v. Travelers Ins. Co., 281 N.Y. 362, 24 N.E.2d 81, wherein the New York Court of Appeals held that the mere transmittal of a suggestion by the State Department was not a recognition or allowance of the claim as to be binding upon the court, and constituted a mere assertion ...


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