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CHEMICAL NATURAL RESOURCES v. REPUBLIC VENEZUELA (01/04/66)

decided: January 4, 1966.

CHEMICAL NATURAL RESOURCES, INC.
v.
REPUBLIC OF VENEZUELA, APPELLANT. REPUBLIC OF VENEZUELA, PETITIONER, V. MILNER



Appeal from order of Court of Common Pleas No. 1 of Philadelphia County, Sept. T., 1963, No. 2048, in case of Chemical Natural Resources, Inc. and Venezuelan Sulphur Corporation, C. A. v. Republic of Venezuela.

COUNSEL

Thomas F. Mount, with him Rawle & Henderson, and William A. Dobrovir, Paul D. Hardy, Howard C. Westwood, B. Scott Custer, Jr., and Covington & Burling, of the Washington, D. C. Bar, for appellant.

Abraham E. Freedman, with him Martin J. Vigderman, and Freedman, Borowsky and Lorry, for appellees.

I. Raymond Kremer, for respondents.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Chief Justice Bell. Concurring Opinion by Mr. Justice Jones. Concurring and Dissenting Opinion by Mr. Justice Roberts. Dissenting Opinion by Mr. Justice Musmanno. Dissenting Opinion by Mr. Justice Cohen.

Author: Bell

[ 420 Pa. Page 137]

The Republic of Venezuela*fn1 (1) took an appeal, pursuant to the Act of March 5, 1925, P. L. 23 (12 P.S. § 672 et seq.), from an Order of the Court below which decided it had jurisdiction of plaintiffs' action of assumpsit, commenced by foreign attachment, and (2) filed in this Court an application petitioning this Court to issue a writ of mandamus or prohibition, or both, and dismiss plaintiffs' action against it.

The principal question involved in each case is the legal effect of a Suggestion of Immunity made by the Department of State. The two actions were consolidated here and will be considered together in this Opinion.

Facts and Averments

Chemical Natural Resources, Inc.,*fn2 and Venezuelan Sulphur Corporation, C.A.*fn3 sued Venezuela in an action of assumpsit commenced by a writ of foreign attachment which in this case is an action quasi in rem.*fn4 Chemical is a Delaware Corporation of which not less than 50 percent of its stock is beneficially

[ 420 Pa. Page 138]

    owned by United States citizens. Sulphur is a corporation organized under the laws of Venezuela and is a wholly owned subsidiary of Chemical.

On October 21, 1963, the plaintiffs (Chemical and Sulphur) commenced their action of assumpsit against Venezuela by filing a (praecipe for a) writ of foreign attachment (together with a complaint) under which writ the sheriff was directed to attach and seize the S.S. Ciudad de Valencia, allegedly the property of defendant Venezuela, which was then in the Port of Philadelphia and in the custody of Stockard Shipping and Terminal Corp.*fn5 The complaint demanded damages in the sum of $116,807,258.28.

On October 22, 1963, the day after the writ was issued, the sheriff attached and seized the steamship and took it into his possession. He also served copies of plaintiffs' complaint on the ship's master and on Stockard as garnishee. However, two days later, on October 24, 1963, the attachment was dissolved without prejudice upon the order of plaintiffs' attorney.*fn6

Plaintiffs' pertinent allegations in its amended complaint may be thus summarized:

In April of 1952 the plaintiffs, acting through Sulphur, purchased all mineral rights and interest or denouncements*fn7 located in the Municipality of El Pilar, State of Sucre, Venezuela. Solely by reason of plaintiffs' exploitation, reservoirs of mineral-laden geothermal steam were discovered in El Pilar. Subsequently,

[ 420 Pa. Page 139]

    plaintiffs through Sulphur entered into several contracts with a department of the Venezuelan Government under which, inter alia, plaintiffs agreed to erect facilities for converting the steam into electrical power and defendant agreed to purchase the resulting power. Plaintiffs expended large sums of money in order to carry out their part of the contract. Thereafter, Venezuela unilaterally and without any justifiable cause cancelled the contract and confiscated plaintiffs' property and property rights with a resulting loss to plaintiffs of over $116,000,000. Plaintiffs further averred that Venezuela operates its merchant vessels, including the ship which was seized, through a nationalized company wholly owned by Venezuela, and thus was engaged in a commercial and private or proprietary capacity as distinguished from a Governmental or public capacity. Plaintiffs further averred that they could not obtain Justice in any Venezuelan Court.

Venezuela has never entered a general appearance in this action, but improperly entered a special appearance for the purpose of challenging the jurisdiction of the Court of Common Pleas. However, Venezuela, more importantly and properly, challenged the jurisdiction of the Court by filing preliminary objections to plaintiffs' complaint and writ of foreign attachment.*fn8 On December 5, 1963, Venezuela averred in its preliminary objections (a) that plaintiffs did not have a cause of action, and (b) that the Courts of Venezuela are available to the plaintiffs to assert any claim they may have, and (c) that the vessel allegedly operated by the nationalized Company is not, in fact, the property of Venezuela, and (d) that under the principle or doctrine of Sovereign Immunity the Court below could not obtain

[ 420 Pa. Page 140]

    jurisdiction through an action quasi in rem. Plaintiffs filed an answer which denied virtually all of Venezuela's material averments of fact and conclusions of law.

Venezuela also sought and obtained the intervention of the United States Department of State which, by the United States Attorney for the Eastern District of Pennsylvania acting under orders of the Attorney General of the United States, filed a "Suggestion of Immunity", which included a prayer to dismiss plaintiffs' action against Venezuela because of a certification of Sovereign Immunity which was recognized and allowed by the Department of State. The Attorney General acted upon a request received from the Legal Adviser of the State Department dated January 13, 1964 -- after all parties had been wisely given a hearing by the Legal Adviser both on the facts and the law -- reading pertinently:

"The Department recognizes and allows the sovereign immunity of the Republic of Venezuela, defendant in the above suit, from the jurisdiction of the Court of Common Pleas of Philadelphia County, Pennsylvania, and it will be appreciated if appropriate instructions can be issued to the United States Attorney in that jurisdiction to file a suggestion of immunity with the Court."*fn9

On December 18, 1964, the Court below entered the following Order: "In re the Suggestion of Immunity

"And Now, this 18th day of December, 1964, in re the Suggestion of Immunity, the motion of the defendant, the Republic of Venezuela, to dismiss the complaint is overruled, with leave to the defendant to file an answer within thirty days from date of this Order."

What the Court apparently intended to do was to deny the State Department's prayer and Venezuela's motion to dismiss (which was contained in its preliminary

[ 420 Pa. Page 141]

    objections), basing its denial on its determination that Venezuela was not entitled to Sovereign Immunity. Venezuela then took a timely appeal to this Court under § 3 of the Act of March 5, 1925, supra.

Thereafter (on March 8, 1965), Venezuela, we repeat, filed in this Court a petition for a writ of mandamus or, in the alternative, a writ of prohibition, or both, naming as respondents Judges Milner and Ullman. These Judges duly filed an answer opposing a grant of the writ and this Court ordered argument on the merits of the petition and answer at the time of oral argument on Venezuela's appeal. Briefs, counterbriefs, supplemental briefs and reply briefs were filed by some or all of the parties in one or both of these cases and have been carefully studied by us.

Jurisdiction re Foreign Attachment

The Court below undoubtedly acquired jurisdiction by service of the writ of foreign attachment upon the captain of the vessel, and its jurisdiction was not subsequently divested or lost as a result of plaintiffs' voluntary dissolution of the (foreign) attachment without prejudice. Cf. Ex Parte Peru, 318 U.S. 578 and Pa. R. C. P. 1272. For reasons hereinafter appearing we deem it unnecessary to decide whether on the present complicated and controversial record, with so many conflicting averments, Venezuela's preliminary objections could be sustained. Cf. Pa. R. C. P. 1030 and 1017(b)(1) and 1028(c).

We shall proceed to discuss the very important and crucial question of Sovereign Immunity which, we repeat, was raised (1) in Venezuela's preliminary objections and (2) also in its petition for a writ of mandamus or prohibition or both, as well as in the State Department's Suggestion of Immunity, and which the parties themselves consider the principal question in these cases.

[ 420 Pa. Page 142]

Appeal

Venezuela's appeal which, under the Act of 1925,*fn10 challenges the jurisdiction of the lower Court, cannot be sustained and must be quashed. It is important to note that the Order of the lower Court overruled Venezuela's motion to dismiss the complaint "with leave to the defendant to file an answer within thirty days. . ." . This is an interlocutory Order,*fn11 and an appeal under the Act of 1925 raises only questions of jurisdiction, as that term has been interpreted and defined by the Courts. Vendetti v. Schuster, 418 Pa. 68, 208 A.2d 864; see also University Sq. No. 1, Inc. v. Marhoefer, 407 Pa. 257, 180 A.2d 427; Simpson v. Simpson, 404 Pa. 247, 172 A.2d 168; McGinley v. Scott, 401 Pa. 310, 164 A.2d 424; County Const. Co. v. Livengood Const. Corp., 393 Pa. 39, 142 A.2d 9; Welser v. Ealer, 317 Pa. 182, 176 A. 429.

In the Vendetti case the defendant, a surgeon employed by the Government in a veterans hospital, moved to dismiss a malpractice suit brought against him by a patient on the ground that, as such surgeon he was immune from suit*fn12 for negligent conduct. The lower Court dismissed his motion. This Court quashed the appeal, holding that the lower Court's Order was interlocutory and was not appealable under the Act of 1925. In its Opinion the Court said (page 71):

"Even if the defendant is in fact immune from suit as he contends, the Court below undoubtedly had jurisdiction of the cause of action*fn13 because it has the jurisdiction and power to inquire into actions of trespass. In McWilliams v. McCabe, 406 Pa. 644, 179 A.

[ 420 Pa. Page 1432]

    d 222, the Court said (page 648): '. . . ". . . the test for determining whether a court has jurisdiction of the subject matter is the competency of the court to determine controversies of the general class to which the case presented for its consideration belongs, and the controlling question is whether the court had power to enter upon the inquiry, not whether it might ultimately decide that it was unable to grant the relief sought in the particular case. . . ." [citing numerous cases].'"

Sovereign Immunity is in the nature of an affirmative defense; (a) it does not go to jurisdiction and (b) it can be waived. For example, a Court unquestionably has jurisdiction (1) whenever a foreign Sovereign brings suit, and (2) whenever a foreign Sovereign interposes a set-off or counterclaim: National City Bank v. Republic of China, 348 U.S. 356; Mexico v. Hoffman, 324 U.S. 30; Guaranty Trust Company v. U.S., 304 U.S. 126. In such cases, a Sovereign cannot successfully challenge jurisdiction; indeed, the plea of Sovereign Immunity, even when pleaded by a Sovereign or by one of its corporations or instrumentalities, is not an absolute defense unless accompanied by the State Department's Suggestion of Immunity: Mexico v. Hoffman, 324 U.S., supra (pp. 34, 35). As the Supreme Court in those cases (and in a number of other cases) stated, the question is not whether the Court had jurisdiction -- which it had -- but whether the jurisdiction which the Court had acquired should be relinquished for diplomatic reasons in order to promote our foreign relations or to prevent a possible war. Ex Parte Peru, 318 U.S., supra; Mexico v. Hoffman, 324 U.S., supra; Campania Espanola v. Navemar, 303 U.S. 68, 76; Sullivan v. State of Sao Paulo, 122 F. 2d 355, 360; Rich v. Naviera Vacuba S.A., 295 F. 2d 24; Stone Eng. Co. v. Petroleos Mexicanos, 352 Pa. 12, 42 A.2d 57.

[ 420 Pa. Page 144]

The contention that the question of jurisdiction is governed by our decisions in the NLRB cases is erroneous. In those cases, Congress has delegated to the NLRB exclusive jurisdiction in certain labor disputes, with the result that in cases involving such disputes (a) the field has been pre-empted by the Federal Government, and (b) State Courts have no jurisdiction, and (c) Orders dismissing preliminary objections will be reversed: Terrizzi Beverage Co. v. Local Union No. 830, 408 Pa. 380, 184 A.2d 243; Marine Engineers v. Interlake Co., 370 U.S. 173. For exceptions, see City Line Open Hearth v. Hotel M. & C.E., 413 Pa. 420, 197 A.2d 614, holding that State Courts may restrain violence even when committed in such labor disputes.

Furthermore, the law is well established that jurisdiction of the subject matter cannot be conferred by waiver or by consent of the parties where no jurisdiction exists: Bell Appeal, 396 Pa. 592, 152 A.2d 731; Seligsohn Appeal, 410 Pa. 270, 189 A.2d 746.

It is clear, therefore, that in the instant case, the lower Court had jurisdiction, and an appeal under the Act of 1925 will not lie.

However, Venezuela, we repeat, filed in this Court a petition for mandamus and a petition for a writ of prohibition.

Mandamus and Prohibition

Under Section 3, Article V, of our State Constitution, this Court has been specifically granted original jurisdiction to issue writs of mandamus addressed to Courts of inferior jurisdiction. On the other hand, writs of prohibition are issued by this Court on the basis of its King's Bench powers which it inherently possesses and which were specifically granted to the Court by the Act of May 22, 1722, 1 Sm. L. 131, and were confirmed and enlarged by § 1 of the Act of June

[ 420 Pa. Page 14516]

, 1836, P. L. 784 (17 P.S. § 41). Carpentertown Coal & Coke Co. v. Laird, 360 Pa. 94, 61 A.2d 426; cf. also, Commonwealth v. Onda, 376 Pa. 405, 103 A.2d 90; Commonwealth v. Caplan, 411 Pa. 563, 192 A.2d 894.

In Carpentertown Coal & Coke Co., supra, the law pertaining to writs of prohibition was extensively reviewed. The Court held that the power to issue the prerogative writ of prohibition is an inherent power of this Court which was established by the first of the two Acts above mentioned, and was not taken away by the Constitution of 1874. The Court pertinently said (page 102): ". . . The writ of prohibition is one which, like all other prerogative writs, is to be used only with great caution and forbearance and as an extraordinary remedy in cases of extreme necessity, to secure order and regularity in judicial proceedings if none of the ordinary remedies provided by law is applicable or adequate to afford relief. It is a writ which is not of absolute right but rests largely in the sound discretion of the court. It will never be granted where there is a complete and effective remedy by appeal, certiorari, writ of error, injunction, or otherwise: [citing cases] . . . ."

In Commonwealth v. Caplan, 411 Pa., supra, the Court said (pages 567-569): "Mandamus lies to compel a ministerial act [or mandatory duty] but not to review discretion, except where it is arbitrarily or fraudulently exercised or where it is based upon a mistaken view of the law: Garratt v. Philadelphia, 387 Pa. 442, 448, 127 A.2d 738; Travis v. Teter, 370 Pa. 326, 330, 87 A.2d 177; Maxwell v. Farrell School District Board of Directors, 381 Pa. 561, 566, 112 A.2d 192.

"The procedure utilized to bring this case before our Court was inappropriate and therefore the writ of mandamus must be denied. . . . The Commonwealth should have petitioned this Court for a writ of prohibition.

[ 420 Pa. Page 146]

"The law is now well settled that the Commonwealth may petition this Court to restrain a lower Court from granting discovery in a criminal case. While the cases are not in accord as to the extent or limitations of a writ of prohibition,*fn14 this Court under our King's Bench power has general supervisory and plenary power over all inferior tribunals: DiJoseph Petition, 394 Pa., supra [394 Pa. 19, 145 A.2d 187]; Bell Appeal, 396 Pa. 592, 598, 152 A.2d 731; Carpentertown Coal & Coke Co. v. Laird, 360 Pa. 94, 99, 100-101, 61 A.2d 426; Bk. Comm. Vol. 3, 42. Cf. also Smith v. Gallagher, 408 Pa. 551, 185 A.2d 135.

"For reasons above stated, the petition for a writ of mandamus is denied. However, because of the important issues presented in this case, we are staying all proceedings for 60 days in order to permit the District Attorney to petition this Court for a writ of prohibition."*fn15

Sovereign Immunity of Foreign Nations

It is a long and well established general rule that foreign Sovereigns, which are duly recognized by appropriate action by the State Department, and their property are not amenable without their waiver or consent, to suit in the Courts of this Country. This widely accepted National and International diplomatic policy

[ 420 Pa. Page 147]

    has been established among many civilized non-communist Nations on the principle of comity and for the preservation of International friendships and Peace. In order to preserve this policy of Sovereign Immunity from conflict, confusion and erosion, and to prevent a breach of friendly relations or a severance of diplomatic relations or a possible war with a foreign nation, the Supreme Court of the United States has held that in the realm of Foreign Relations or Foreign Affairs, a determination of Sovereign Immunity by the Executive branch of our Government, namely, the State Department, when conveyed to a Court through proper channels or officials, is -- in the absence of waiver or consent -- binding and conclusive upon all our Courts. If and when the State Department concludes that a foreign Nation is entitled to Sovereign Immunity that determination, we repeat, is conclusive no matter how unwise or, in a particular case how unfair or unjust the Department's determination appears to be (a) to injured American citizens and (b) to vast numbers of the American people and (c) to our Courts: Ex Parte Peru, 318 U.S., supra; National City Bank v. Republic of China, 348 U.S., supra. See also to the same effect, Guaranty Trust Company v. U.S., 304 U.S., supra; Mexico v. Hoffman, 324 U.S., supra; The Schooner Exchange v. M'Faddon & Others, 7 Cranch 116; In re Investigation of World Arrangements, etc., 13 F.R.D. 280 (D.C., District of Columbia); Government of France v. Isbrandtsen-Moller Co., 48 F. Supp. 631 (D.C. S.D.N.Y. 1943); Sullivan v. State of Sao Paulo, 122 F. 2d, supra. See also Berizzi Bros. Co. v. S.S. Pesaro, 271 U.S. 562; Compania Espanola v. Navemar, 303 U.S., supra; Stone Eng. Co. v. Petroleos Mexicanos, 352 Pa., supra. Cf. also The Maret, 145 F. 2d 431, 440 (C.C.A. 3).

Ex Parte Peru, 318 U.S., supra, is factually similar and legally controlling. That case involved the

[ 420 Pa. Page 148]

    libeling of the ship Ucayali belonging to the Republic of Peru to enforce a claim by a Cuban corporation arising out of the alleged breach (by a corporation acting for the Peruvian Government) of a charter party involving that ship. The case was commenced by a writ of prohibition filed in the Supreme Court of the United States after a lower Federal Court had refused to dismiss the libel, even after a Suggestion of Foreign Sovereign Immunity had been filed on behalf of the State Department. The Government of Peru asked for a dismissal of the action on the basis of a Suggestion of Immunity -- filed (as in the case at bar) by the United States Attorney at the behest of the Attorney General, acting upon the request of the State Department which, in turn, was based upon a letter from the State Department's legal adviser*fn16 -- which therein had "recognized" Peru's claim to Sovereign Immunity. The Supreme Court held (a) that the doctrine of Sovereign Immunity applied; (b) that Peru had not waived such immunity; (c) that upon submission of the State Department's certification that it recognized Peru's right to Sovereign Immunity " it became the court's duty, in conformity to established principles, to release the vessel and to proceed no further in the cause." (page 589). The Court pertinently said (pp. 579-580, 587-590):

"This is a motion for leave to file in this Court the petition of the Republic of Peru for a writ of prohibition or of mandamus. The petition asks this Court to prohibit respondent, a judge of the District Court for the Eastern District of Louisiana, and the other judges and officers of that court, from further exercise of jurisdiction over a proceeding in rem, pending in that court against petitioner's steamship Ucayali, and to direct the district judge to enter an order in the proceeding declaring the vessel immune from suit. . . .

[ 420 Pa. Page 149]

"On March 30, 1942, Galban Lobo Co., S.A., a Cuban corporation, filed a libel in the district court against the Ucayali for its failure to carry a cargo of sugar from a Peruvian port to New York, as required by the terms of a charter party entered into by libelant with a Peruvian corporation acting as agent in behalf of the Peruvian Government. On April 9, 1942, the Republic of Peru, acting by the master of the vessel, intervened in the district court by filing a claim to the vessel, averring that the Republic of Peru was sole owner, and stating: 'The filing of this claim is not a general appearance and is without prejudice to or waiver of all defenses and objections which may be available to respondent and claimant, particularly, but not exclusively, sovereign immunity.'

"On the same day, petitioner procured the release of the vessel by filing a surety release bond in the sum of $60,000, on which petitioner was principal. . . .

"This case presents no question of the jurisdiction of the district court over the person of a defendant. Such jurisdiction must be acquired either by the service of process or by the defendant's appearance or participation in the litigation. Here the district court acquired jurisdiction in rem by the seizure and control of the vessel, and the libelant's claim against the vessel constituted a case or controversy which the court had authority to decide. Indeed, for the purpose of determining whether petitioner was entitled to the claimed immunity, the district court, in the absence of recognition of the immunity by the Department of State, had authority to decide for itself whether all the requisites for such immunity existed -- whether the vessel when seized was petitioner's, and was of a character entitling it to the immunity. See Ex parte Muir, supra; The Pesaro, 255 U.S. 216; Berizzi Bros. Co. v. The Pesaro, 271 U.S. 562; Compania Espanola v. The Navemar, supra.

[ 420 Pa. Page 150]

Therefore the question which we must decide is not whether there was jurisdiction in the district court, acquired by the appearance of petitioner, but whether the jurisdiction which the court had already acquired by seizure of the vessel should have been relinquished in conformity to an overriding principle of substantive law.

"That principle is that courts may not so exercise their jurisdiction, by the seizure and detention of the property of a friendly sovereign, as to embarrass the executive arm of the Government in conducting foreign relations. 'In such cases the judicial department of this government follows the action of the political branch, and will not embarrass the latter by assuming an antagonistic jurisdiction.' United States v. Lee, 106 U.S. 196, 209. More specifically, the judicial seizure of the vessel of a friendly foreign state is so serious a challenge to its dignity, and may so affect our friendly relations with it, that courts are required to accept and follow the executive determination that the vessel is immune. When such a seizure occurs the friendly foreign sovereign may present its claim of immunity by appearance in the suit and by way of defense to the libel. Compania Espanola v. The Navemar, supra, 74 and cases cited; Ex parte Muir, supra. But it may also present its claim to the Department of State, the political arm of the Government charged with the conduct of our foreign affairs. Upon recognition and allowance of the claim by the State Department and certification of its action presented to the court by the Attorney General, it is the court's duty to surrender the vessel and remit the libelant to the relief obtainable through diplomatic negotiations. Compania Espanola v. The Navemar, supra, 74; The Exchange, 7 Cranch 116. This practice is founded upon the policy, recognized both by the Department of State and the courts, that our national interest will be better served in such cases if the wrongs

[ 420 Pa. Page 151]

    to suitors, involving our relations with a friendly foreign power, are righted through diplomatic negotiations rather than by the compulsions of judicial proceedings.

"We cannot say that the Republic of Peru has waived its immunity. It has consistently declared its reliance on the immunity, both before the Department and in the district court. Neither method of asserting the immunity is incompatible with the other. . .

"The motion for leave to file is granted. We assume that, in view of this opinion, formal issuance of the writ will be unnecessary, . . ."

In National City Bank v. Republic of China, 348 U.S., supra, China sued the bank to collect a $200,000 deposit of the Shanghai-Nanking Railroad Administration which was an official agency of the Republic of China. The bank filed a counterclaim on the basis of China's notes upon which it had defaulted in the amount of $1,634,432. China then pled sovereign immunity as a defense to the counterclaim; this defense was disallowed because by bringing the suit China had waived the defense of sovereign immunity. Nevertheless, the Court speaking through Mr. Justice Frankfurter, said (pp. 358, 359): " The status of the Republic of China in our courts is a matter for determination by the Executive and is outside the competence of this Court. Accordingly, we start with the fact that the Republic and its governmental agencies, enjoy a foreign sovereign's immunities to the same extent as any other country duly recognized by the United States. See Guaranty Trust Co. v. United States, 304 U.S. 126, 137-138.

[ 420 Pa. Page 152]

" The freedom of a foreign sovereign from being haled into court as a defendant has impressive titledeeds. Very early in our history this immunity was recognized, De Moitez v. The South Carolina, Bee 422, 17 Fed. Cas. 574, No. 9,697 (Admiralty Court of Pa., 1781, Francis Hopkinson, J.), and it has since become Page 152} part of the fabric of our law. It has become such solely through adjudications of this Court. Unlike the special position accorded our States as party defendants by the Eleventh Amendment, the privileged position of a foreign state is not an explicit command of the Constitution. It rests on considerations of policy given legal sanction by this Court. . . . It is idle to repeat or rehearse the different considerations set forth in Mr. Chief Justice Marshall's classic opinion in The Schooner Exchange v. M'Faddon, 7 Cranch 116."

F. W. Stone Engineering Co. v. Petroleos Mexicanos, 352 Pa., supra, is likewise pertinent and controlling. That case was very similar to the case at bar. Plaintiff sued defendant, which was an instrumentality of the Mexican Government and wholly owned and controlled by that Government, in a foreign attachment proceedings and attached funds of the defendant which had been deposited and were in the possession of the Butler County National Bank & Trust Company. Defendant moved to dissolve the attachment and based its motion upon a communication from the Secretary of State to the Attorney General of the United States which recognized defendant as an instrumentality of Mexico. The letter from the State Department pertinently said: "Consequently, this Government recognizes and allows the claim of the Government of Mexico that Petroleos Mexicanos is immune from suit and its property from attachment." The United States Attorney (acting upon the direction of the Attorney General pursuant to the request from the Department of State) filed a "suggestion of Immunity." Although the defendant was admittedly an instrumentality of Mexico and was engaged in a commercial enterprise for profit, this Court affirmed the Order of the lower Court which dissolved the attachment and said (pp. 16, 17, 18):

" When the Department of State makes known its determination with respect to political matters growing

[ 420 Pa. Page 153]

    out of or incidental to our Government's relations with a friendly foreign state, it is the duty of the courts to abide by the status so indicated or created and to refrain from making independent inquiries into the merit of the State Department's determination or from taking any steps that might prove embarrassing to the Government in the handling of its foreign relations. See Republic of Mexico v. Hoffman, 324 U.S. 30; Ex Parte Republic of Peru, 318 U.S. 578, 588-589; The Maret, 145 F. 2d 431, 440 (C.C.A. 3); Sullivan v. State of Sao Paulo, 122 F. 2d 355, 357-358 (C.C.A. 2).

"What was said in Ex Parte Republic of Peru, supra, at p. 589, is both apposite and controlling here: 'The [State] Department has allowed the claim of immunity and caused its action to be certified to the . . . court through the appropriate channels. The certification and the request that the [property] be declared immune must be accepted by the courts as a conclusive determination by the political arm of the Government that the continued retention of the [property] interferes with the proper conduct of our foreign relations. Upon the submission of this certification to the . . . court, it became the court's duty, in conformity to established principles, to release the [property] and to proceed no further in the cause '. The learned judge of the court below faithfully observed that injunction."

[ 420 Pa. Page 154]

See also Guaranty Trust Co. v. U.S., 304 U.S., supra. In that case, the United States as assignee of the Czarist Government sued Guaranty Trust Company to recover a $5,000,000 deposit. The bank was allowed to defeat the claim by pleading the statute of limitations, since Sovereign Immunity is an affirmative right or defense which may be asserted or consented to or waived as the Sovereign desires. However, the Court pertinently said (page 134): "It is true that upon the principle of comity foreign sovereigns and their public property are held not to be amenable to suit in our Page 154} courts without their consent. See The Exchange, 7 Cranch 116; Berizzi Bros. Co. v. S.S. Pesaro, 271 U.S. 562; Compania Espanola v. The Navemar, 303 U.S. 68. . . ."

As the District Court of the United States for the District of Columbia aptly said in In re Investigation of World Arrangements, etc., supra (pp. 289, 291): "A foreign sovereign is immune to suit, without ...


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