Gulf Oil Corporation vs.

Gilbert
330 US 501
Argued December 1! 1"! 1"#$
Decided %arc& 10! 1"#'
(acts)
*&e case arose +&en a fire gutted a +are&ouse o+ned and operated b, t&e plaintiff.
*&e allegations provide t&at t&e defendant carelessl, &andled a deliver, of gasoline
to &is +are&ouse tan-s and pumps as to cause an e.plosion and fire +&ic&
consumed t&e +&ole +are&ouse toget&er +it& t&e merc&andise of &is customers.
*&e plaintiff as-s for a /udgment amounting to 03$5!51".'' in damages. *&e
brea-do+n of +&ic& are t&e follo+ing) 2130#1!".10 damage to &is +are&ouse
+&ic& +as totall, consumed4 213 03!$01.#0 destro,ed merc&andise and fi.tures to
&is damage4 233 010!030 in/ur, to &is business and profits4 2#3 0300!000 +ort& of
burned propert, of customers in &is custod, t&roug& t&e +are&ousing agreement4
253 costs! disbursements! and interests from t&e date of t&e fire.
*&e plaintiff broug&t t&e case in Sout&ern District of 5e+ 6or- despite living in
7,nc&burg! 8iriginia and +&ere t&e +are&ouse is located. On t&e one &and! t&e
defendant is a corporation organi9ed under t&e la+s of :enns,lvania and is
;ualified to do business bot& in 5e+ 6or- and 8irginia. <t &as officials designated
to eac& state as agents to receive service of process.
=&en t&e defendant +as sued! it invo-ed t&e doctrine of forum non conveniens. <t
claimed t&at t&e 8irginia is t&e appropriate place for trial because it is +&ere t&e
plaintiff lives! +&ere t&e defendant does &is business! +&ere all t&e events of t&e
litigation too- place! +&ere most of t&e +itnesses reside! and +&ere bot& t&e state
and federal courts are available to t&e plaintiff and are able to obtain /urisdiction of
t&e defendant.
5o (ederal ;uestion is involved and +as broug&t to t&e United States District
Court solel, on t&e issue of diversit, of citi9ens&ip of t&e parties. *&e district court
dismissed t&e case citing t&e >rie ?ailroad Co. vs *omp-ins and considered t&e
t&at t&e la+ of 5e+ 6or- is forum non conveniens applied and s&ould be left to
8irginia Courts. @o+ever! t&e Circuit Court of Appeals disagreed as to t&e
applicabilit, of 5e+ 6or- la+! too- a restrictive vie+ of t&e application of t&e
entire doctrine in federal courts. <t reversed t&e district court. @ence! certiorari +as
filed.
<ssue)
=&et&er t&e United States District Court &as in&erent po+er to dismiss a suit
pursuant to t&e doctrine of forum non conveniens.
?uling)
6es. *&e district court &as t&e po+er to dismiss a suit pursuant to t&e doctrine of
forum non conveniens. As s&o+n b, several /urisprudence! t&e US courts are
allo+ed to decline /urisdiction on cases rig&tfull, under its /urisdiction on
e.ceptional circumstances! one of +&ic& is t&e application of forum non
conveniens. *&e doctrine provides t&at a court ma, relin;uis& its /urisdiction to
&ear a case +&en suc& c&oice in venue to file t&e case causes inconvenience or
burden to one of t&e parties or +&en t&e c&oice in venue clearl, is a form of
&arassment to t&e adverse part,. Also! t&e interests of fair pla,! inconvenience on
t&e part of t&e adverse part,! public interest! and t&e c&aracter or nature of t&e
parties are to be balanced. <f t&e court sees a strong balance in favor of t&e adverse
part,! it ma, appl, t&e doctrine. <n t&e case at bar! several factors +ere considered
in order to appl, t&e doctrine. (irst! t&e plaintiff is not a resident of 5e+ 6or- and
t&e tortious event &appened in 7,nc&burg! 8irginia. <n fact! t&e court +as candidl,
told b, t&e plaintiff t&at t&e venue +as c&osen b, t&e insurance compan, for
purposes of subrogation. Second! all t&e +itnesses! t&e customers of t&e plaintiff
and t&ose t&at +ere part of negligent act live in 7,nc&burg! 8irginia. Onl, t&e
la+,er for t&e plaintiff is said to be residing in 5e+ 6or-. *&ird! a trial in 8irginia
+ould simplif, t&e proceedings. <f t&e proceeding is conducted in 8irginia! issues
on conflicts of la+s ma, be avoided. @ence! given t&ese circumstances! t&e district
court did not abuse its discretion in appl,ing t&e doctrine of forum non conveniens.
U.S. Supreme Court
Travelers Health Assn. v. Virginia, 339 U.S. 643 (1950)
Travelers Health Association v. Virginia
No. 76
Argued November 15, 1949
Reargued April 17, 1950
Decided June 5, 1950
339 U.S. 643
Syllabus
In a proceeding under 6 of the Virginia "Blue Sky Law," the State Corporation
Commission ordered an Association, located in Nebraska and engaged in the mail order
health insurance business, and its treasurer (appellants here) to cease and desist from
further oferings or sales of certifcates of insurance to Virginia residents until the
Association had complied with the Act by furnishing information as to its fnancial
condition, consenting to suit against it by service of process on the Secretary of the
Commonwealth, and obtaining a permit. Notice of the proceeding was served on
appellants by registered mail, as authorized by 6 when other forms of service are
unavailable. They appeared specially, challenged the jurisdiction of the State, and
moved to quash the service of summons. On recommendations from Virginia members,
the Association for many years had been issuing insurance certifcates to residents of
Virginia, and it had approximately 800 members there. It had caused claims for losses to
be investigated, and the Virginia courts were open to it for the enforcement of
obligations of certifcate holders.
Held:
1. The State has power to issue a cease and desist order to enforce at least the
requirement that the Association consent to suit against it by service of process on the
Secretary of the Commonwealth. Pp. 339 U. S. 646-647.
2. The contacts and ties of appellants with Virginia residents, together with that State's
interest in faithful observance of the certifcate obligations, justify subjecting appellants
to cease and desist proceedings under 6. Pp. 339 U. S. 647-648.
3. Virginia's subjection of the Association to the jurisdiction of the State Commission in a
6 proceeding is consistent with fair play and substantial justice, and is not ofensive to
the Due Process Clause of the Fourteenth Amendment. P. 339 U. S. 649.
4. The power of the State to subject the Association to the jurisdiction of the State
Commission and to authorize a cease and
Page 339 U. S. 644
desist order under 6 is not vitiated by the fact that business activities carried on
outside of the State are afected. P. 339 U. S. 650.
5. Service of process on appellants by registered mail did not violate the requirements
of due process. Pp. 339 U. S. 650-651.
188 Va. 877, 51 S.E.2d 263, afrmed.
An order of the Virginia Corporation Commission requiring appellants to cease and
desist from ofering and issuing, without a permit, certifcates of insurance to residents
of the State, was afrmed by the Supreme Court of Appeals. 188 Va. 877, 51 S.E.2d
263. On appeal to this Court, afrmed, p. 339 U. S. 651.
Ofcial Supreme Court case law is only found in the print version of the United States
Reports. Justia case law is provided for general informational purposes only, and may
not refect current legal developments, verdicts or settlements. We make no warranties
or guarantees about the accuracy, completeness, or adequacy of the information
contained on this site or information linked to from this site. Please check ofcial
sources.
Schmidt v. Driscoll Hotel, Inc.
249 Minn. 376 (1957)
2 !.". (2d) 365
HERBERT G. SCHMIDT, A MINOR, BY HIS MOTHER AND NATURAL GUARDIAN, MATIE T.
SCHMIDT, v. DRISCOLL HOTEL, INC., d.b.a. THE HOOK-EM-COW BAR AND CAFE.
No. 36,!3.
S#$reme %o#rt o& Minnesot'.
A"#$% &', &(!.
)3!* Da+$,% T. Cod-, ..M. Da%-, L$"/012%34, A%35a+, G,#a613- 7 M2%a%%-, a+d H.E.
Co01#a+,, 8o# a"",%%a+3.
Ho885a++, Do+a12, 7 G#a88 a+d T. E26,+, T1o5"/o+, 8o# #,/"o+d,+3.
THOMAS GALLAGHER, .USTICE.
9%a$+3$88, H,#b,#3 G. S015$d3, a 5$+o#, $+/3$323,d 31$/ a03$o+ b- 1$/ 5o31,# a+d +a32#a%
62a#d$a+, Ma3$, T. S015$d3, a6a$+/3 31, D#$/0o%% Ho3,%, I+0., do$+6 b2/$+,// a/ T1, Hoo:-
E5-Co; Ba# a+d Ca8, $+ So231 S3. 9a2%, 8o# da5a6,/ a%%,6,d 3o 1av, #,/2%3,d 8#o5
d,8,+da+3</ $%%,6a% /a%, o8 $+3o=$0a+3/ 3o o+, .o1+ So##,+/o+.
T1, 0o5"%a$+3 a%%,6,d 31a3 d,8,+da+3 $%%,6a%%- /o%d $+3o=$0a3$+6 %$>2o#/ 3o So##,+/o+ 3o
31, ,=3,+3 o8 0a2/$+6 1$5 3o b,0o5, $+3o=$0a3,d $+ d,8,+da+3</ ,/3ab%$/15,+3 $+ So231
S3. 9a2% /o 31a3 /1o#3%- 31,#,a83,#, a/ a "#o=$5a3, #,/2%3 31,#,o8, "%a$+3$88 /2/3a$+,d
$+?2#$,/ ;1,+ a+ a23o5ob$%, d#$v,+ b- So##,+/o+, $+ ;1$01 "%a$+3$88 ;a/ a "a//,+6,#,
;a/ 0a2/,d 3o 32#+ ov,# +,a# 9#,/0o33, W$/0o+/$+.
D,8,+da+3 d,+$,d 31, 5a3,#$a% a%%,6a3$o+/ o8 31, 0o5"%a$+3 a+d a%%,6,d 31a3 $3 8a$%,d 3o
/3a3, a 0%a$5 a6a$+/3 $3. S2b/,>2,+3%-, $3 5ov,d 3o d$/5$// 31, a03$o+ o+ 31, 6#o2+d
31a3 31, "%,ad$+6/ 8a$%,d 3o /3a3, a 0%a$5 a6a$+/3 31, d,8,+da+3 a+d 31a3 31, 0o2#3
%a0:,d ?2#$/d$03$o+.
O+ A"#$% '*, &(6, 31, 3#$a% 0o2#3 5ad, $3/ o#d,# 6#a+3$+6 d,8,+da+3</ 5o3$o+. I+ 31,
o#d,# 6#a+3$+6 31, /a5,, 31, 3#$a% 0o2#3 d,3,#5$+,d 31a3 @No ",+a%3- b- ;a- o8
0o%%,03$+6 da5a6,/ a#o/, 2+d,# M.S.A. 3AB.( CC$v$% Da5a6, A03D, 2+%,// 31, $+?2#-
;a/ $+8%$03,d $+ 31, /3a3,. No 0$v$% a03$o+ 3o 0o%%,03 31, ",+a%3- a#o/, 2+%,// 31, $%%,6a%
/a%, $+ 31, /3a3, ;a/ 8o%%o;,d b- a+ $+?2#- $+ 31, /3a3,. ) ) ) M.S.A. 3AB.( do,/ +o3
"#ov$d, 8o# ,=3#a3,##$3o#$a% ,88,03, ) ) ).@
T1$/ $/ a+ a"",a% 8#o5 31, ?2d65,+3 ,+3,#,d "2#/2a+3 3o 31, 8o#,6o$+6 o#d,#.
)3! &. M.S.A. 3AB.&A, /2bd. &, "#ov$d,/E @No $+3o=$0a3$+6 %$>2o# /1a%% b, /o%d ) ) ) 3o
a+- ",#/o+ obv$o2/%- $+3o=$0a3,d ) ) ).@ M.S.A. 3AB.(, 0o55o+%- :+o;+ a/ 31, C$v$%
Da5a6, A03, "#ov$d,/ 31a3E @Ev,#- ) ) ) ",#/o+ ;1o $/ $+?2#,d $+ ",#/o+ o# "#o",#3-, )
) ) b- a+- $+3o=$0a3,d ",#/o+, o# b- 31, $+3o=$0a3$o+ o8 a+- ",#/o+, 1a/ a #$613 o8
a03$o+, $+ 1$/ o;+ +a5,, a6a$+/3 a+- ",#/o+ ;1o, b- $%%,6a%%- /,%%$+6, ba#3,#$+6 o# 6$v$+6
$+3o=$0a3$+6 %$>2o#/, 0a2/,d 31, $+3o=$0a3$o+ o8 /201 ",#/o+, 8o# a%% da5a6,/, /2/3a$+,dF
) ) ).@ W, 1av, #,0,+3%- 1,%d 31$/ "#ov$/$o+ 3o b, ,//,+3$a%%- #,5,d$a% $+ +a32#,
a%31o261 ",+a% $+ $3/ 01a#a03,#$/3$0/. Ada5/o+ v. Do261,#3-, 'A* M$++. (3(, *& N.W.
G'dH &&B.
'. I3 $/ d,8,+da+3</ "o/$3$o+ 31a3 31, a03$o+ $/ 6ov,#+,d b- 31, %a; o8 3o#3/ a+d 31a3,
/$+0, 31, %a/3 a03 $+ 31, /,#$,/ o8 ,v,+3/ 8o# ;1$01 "%a$+3$88 $+/3$323,d 1$/ a03$o+ o002##,d
$+ W$/0o+/$+, ;1$01 1a/ +o C$v$% Da5a6, A03 /$5$%a# 3o I 3AB.(,C&D 31, %a33,# 0a+ 1av,
+o a""%$0a3$o+ $+ d,3,#5$+$+6 "%a$+3$88</ #$613/ o# d,8,+da+3</ %$ab$%$3-. I+ /2""o#3 31,#,o8
d,8,+da+3 0$3,/ R,/3a3,5,+3, Co+8%$03 o8 La;/, I 3!!, ;1$01 /3a3,/E
@T1, "%a0, o8 ;#o+6 $/ $+ 31, /3a3, ;1,#, 31, %a/3 ,v,+3 +,0,//a#- 3o 5a:, a+ a03o#
%$ab%, 8o# a+ a%%,6,d 3o#3 3a:,/ "%a0,.@
A+d I 3!*, ;1$01 /3a3,/E
@T1, %a; o8 31, "%a0, o8 ;#o+6 d,3,#5$+,/ ;1,31,# a ",#/o+ 1a/ /2/3a$+,d a %,6a%
$+?2#-.@
3. T1, a%%,6a3$o+/ o8 31, 0o5"%a$+3 b- ;1$01 ;, a#, bo2+d 8o# 31, "2#"o/,/ o8 31$/
a"",a% 5a:, 0%,a# 31a3 "%a$+3$88</ da5a6,/ a#, 31, #,/2%3 o8 3;o d$/3$+03 ;#o+6/ o+,
0o55$33,d b- d,8,+da+3 $+ M$++,/o3a ;1,+ $3 /o%d So##,+/o+ $+3o=$0a3$+6 %$>2o#/ $+
v$o%a3$o+ o8 M.S.A. 3AB.&A, /2bd. &F a+d o+, 0o55$33,d b- So##,+/o+ $+ W$/0o+/$+
;1,+ 1$/ +,6%$6,+0, 0a2/,d 31, 0a# $+ ;1$01 "%a$+3$88 ;a/ #$d$+6 3o 32#+ ov,#. I3 0a++o3
b, d$/"23,d 31a3, 1ad "%a$+3$88</ a03$o+ b,,+ a6a$+/3 So##,+/o+ 8o# 1$/ +,6%$6,+0,, 1$/
#$613/ ;o2%d b, 6ov,#+,d b- 31, %a; o8 W$/0o+/$+ a""%$0ab%, $+ 3o#3 a03$o+/ o8 31$/ :$+d.
So15 v. So15, '&' M$++. 3&6, 3 N.W. G'dH A6F Ha#d6#ov, v. Bad,, )3*B &B M$++.
('3, '(' N.W. 33A. B23, ,v,+ $8 a3 31, 3$5, o8 31, a00$d,+3 31,#, 1ad b,,+ $+ ,88,03 $+
W$/0o+/$+ a /3a323, /$5$%a# 3o I 3AB.(, $3 $/ do2b382% $8 $3 0o2%d b, a""%$,d 3o a/0,#3a$+
"%a$+3$88</ #$613/ a6a$+/3 d,8,+da+3 /$+0, 31,#, $/ +o31$+6 1,#, 3o /2""o#3 a 0%a$5 31a3
d,8,+da+3 ,v,# 0o+/,+3,d 3o b, bo2+d b- W$/0o+/$+ %a;. S,,, S01,,# v. Ro0:+, Mo3o#/
Co#". G' C$#.H 6* F. G'dH A'F Yo2+6 v. Ma/0$, '* U.S. '(3, (3 S. C3. (, !! L. ,d.
&&(*.
A. F#o5 31, 8o#,6o$+6, $3 ;o2%d 8o%%o; 31a3, $8 31, "#$+0$"%,/ ,="#,//,d $+ R,/3a3,5,+3,
Co+8%$03 o8 La;/, II 3!! a+d 3!*, a#, 1,%d a""%$0ab%, 3o 52%3$/3a3, 8a03 /$32a3$o+/ %$:,
31, "#,/,+3, 31,+ +,$31,# 31, %a;/ o8 31, /3a3, ;1,#, 31, %a/3 ,v,+3 +,0,//a#- 3o 0#,a3,
3o#3 %$ab$%$3- 3oo: "%a0, +o# 31, %a;/ o8 31, /3a3, ;1,#, 31, %$>2o# d,a%,#</ v$o%a3$o+/ o8
31, %$>2o# /3a323,/ o002##,d ;o2%d a88o#d a+ $+?2#,d "a#3- a+- #,5,d- a6a$+/3 31,
o88,+d$+6 %$>2o# d,a%,# 8o# 31, $+?2#$,/ ;1$01 #,/2%3,d 8#o5 1$/ /3a323o#- v$o%a3$o+/. T1,
#,/2%3 ;o2%d b, 31a3 1,#, bo31 31, $+3,#,/3 o8 W$/0o+/$+ $+ a88o#d$+6 ;1a3,v,# #,5,d$,/
$3 d,,5/ "#o",# 8o# 31o/, $+?2#,d 31,#, a/ 31, #,/2%3 o8 8o#,$6+ v$o%a3$o+/ o8 %$>2o# %a;/
GWa3/o+ v. E5"%o-,#/ L$a. A//2#. Co#". 3A* U.S. 66, !( S. C3. &66, L. ,d. !AH, a+d
31, $+3,#,/3 o8 M$++,/o3a $+ ad5o+$/1$+6 a %$>2o# d,a%,# ;1o/, v$o%a3$o+ o8 $3/ /3a323,/
;a/ 31, 0a2/, o8 /201 $+?2#$,/F a+d $+ "#ov$d$+6 8o# 31, $+?2#,d "a#3- a #,5,d- 31,#,8o#
2+d,# 31, C$v$% Da5a6, A03 ;o2%d b,0o5, $+,88,03$v,. S,,, L,v- v. Da+$,%/< U-D#$v,
A23o R,+3$+6 Co. I+0. &B* Co++. 333, &A3 A. &63, 6& A.L.R. *A6F Go#do+ v. 9a#:,# GD.
Ma//.H *3 F. S2"". AB.
(. W, 8,,% 31a3 31, "#$+0$"%,/ $+ R,/3a3,5,+3, Co+8%$03 o8 La;/, II 3!! a+d 3!*, /1o2%d
+o3 b, 1,%d a""%$0ab%, 3o 8a03 /$32a3$o+/ /201 a/ 31, "#,/,+3 3o b#$+6 abo23 31, #,/2%3
d,/0#$b,d a+d 31a3 a d,3,#5$+a3$o+ 3o 31, o""o/$3, ,88,03 ;o2%d b, 5o#, $+ 0o+8o#5$3-
;$31 "#$+0$"%,/ o8 ,>2$3- a+d ?2/3$0,. H,#, a%% "a#3$,/ $+vo%v,d ;,#, #,/$d,+3/ o8
M$++,/o3a. D,8,+da+3 ;a/ %$0,+/,d 2+d,# $3/ %a;/ a+d #,>2$#,d 3o o",#a3, $3/
,/3ab%$/15,+3 $+ 0o5"%$a+0, 31,#,;$31. I3/ v$o%a3$o+ o8 31, M$++,/o3a /3a323,/ o002##,d
1,#,, a+d $3/ ;#o+682% 0o+d203 ;a/ 0o5"%,3, ;$31$+ M$++,/o3a ;1,+, a/ a #,/2%3
31,#,o8, So##,+/o+ b,0a5, $+3o=$0a3,d b,8o#, %,av$+6 $3/ ,/3ab%$/15,+3. T1, )3*&
0o+/,>2,+3$a% 1a#5 3o "%a$+3$88, a M$++,/o3a 0$3$4,+, a00o#d$+6%- /1o2%d b, 0o5",+/a3,d
8o# 2+d,# M.S.A. 3AB.( ;1$01 82#+$/1,/ 1$5 a #,5,d- a6a$+/3 d,8,+da+3 8o# $3/
;#o+682% a03/. B- 31$/ 0o+/3#203$o+, +o 6#,a3,# b2#d,+ $/ "%a0,d 2"o+ d,8,+da+3 31a+
;a/ $+3,+d,d b- I 3AB.(.
6. I+ a##$v$+6 a3 31$/ 0o+0%2/$o+, ;, 1av, $+ 5$+d d,0$/$o+/ o8 a +25b,# o8 ?2#$/d$03$o+/
;1$01 1av, #,a01,d /$5$%a# #,/2%3/ $+ /$32a3$o+/, ;1$01, 31o261 +o3 $+vo%v$+6 0$v$%
da5a6, a03/, "#,/,+3,d 8a032a% 0$#025/3a+0,/ 0o5"a#ab%, 3o 31o/, 1,#,. Go#do+ v.
9a#:,# GD. Ma//.H *3 F. S2"". ABF L,v- v. Da+$,%/< U-D#$v, A23o R,+3$+6 Co. I+0. &B*
Co++. 333, &A3 A. &63, 6& A.L.R. *A6F Moo#, v. 9-;,%%, ' A"". D.C. 3&', L.R.A.
GN.S.H &B!*F G#a34 v. C%a2613o+ G' C$#.H &*! F. G'dH A6F Ca%d;,%% v. Go#,, &!( La. (B&,
&A3 So. 3*!F /,,, E1#,+4;,$6, T1, 9%a0, o8 A03$+6 $+ I+3,+3$o+a% M2%3$/3a3, To#3/E La;
a+d R,a/o+ J,#/2/ 31, R,/3a3,5,+3, 36 M$++. L. R,v. &F R1,$+/3,$+, T1, 9%a0, o8
W#o+6E A S32d- $+ 31, M,31od o8 Ca/, La;, & T2%a+, L. R,v. AF Id. &6(.
I+ Go#do+ v. 9a#:,#, /2"#a, a+ a03$o+ 8o# a%$,+a3$o+ o8 a88,03$o+/ ;a/ $+/3$323,d $+
Ma//a012/,33/ b- "%a$+3$88, ;1o, ;$31 1$/ ;$8,, ;a/ do5$0$%,d $+ 9,++/-%va+$a. T1,#,$+ $3
a"",a#,d 31a3 d,8,+da+3</ ;#o+682% a03/ 1ad 3a:,+ "%a0, $+ Ma//a012/,33/, a+d
a00o#d$+6%- "%a$+3$88 /o2613 31, a""%$0a3$o+ o8 a Ma//a012/,33/ /3a323, #,%a3$+6 3o
a%$,+a3$o+ o8 a88,03$o+/. D,8,+da+3 0o+3,+d,d 31a3, /$+0, 31, 5a3#$5o+$a% do5$0$%, o8
31, "a#3$,/ ;a/ $+ 9,++/-%va+$a, ;1$01 a00o#d$+6%- ;a/ 31, "%a0, ;1,#, 31, 2%3$5a3,
;#o+6 ;a/ do+, 3o "%a$+3$88, o+%- 9,++/-%va+$a %a; 0o2%d b, a""%$,d. I+ d,+-$+6 31$/
0o+3,+3$o+ a+d a""%-$+6 31, Ma//a012/,33/ /3a323,, 31, 0o2#3 /3a3,d G*3 F. S2"". A'HE
@T1$/ $/ +o3 a /$32a3$o+ $+ ;1$01 31, $+3,#,/3/ o8 9,++/-%va+$a "%a$+%- o23;,$61 31o/, o8
Ma//a012/,33/. T1, /o0$a% o#d,# o8 ,a01 $/ $5"%$0a3,d. A/ 31, "%a0, o8 5a3#$5o+$a%
do5$0$%, 9,++/-%va+$a 1a/ a+ $+3,#,/3 $+ ;1,31,# 0o+d203 $+ a+- "a#3 o8 31, ;o#%d $/ 1,%d
3o a88,03 adv,#/,%- 31, 5a##$a6, #,%a3$o+/1$" b,3;,,+ $3/ do5$0$%$a#$,/. B23, a/ 31, "%a0,
;1,#, 31, a%%,6,d ) ) ) ;#o+6do,# %$v,/, Ma//a012/,33/ a%/o 1a/ a+ $+3,#,/3. S1, $/
0o+0,#+,d ;$31 0o+d203 )3*' ;$31$+ 1,# bo#d,#/ ;1$01 $+ 1,# v$,; %o;,#/ 31, /3a+da#d/
o8 31, 0o552+$3- ;1,#, 31,- o002#. S1, a%/o $/ 0o+0,#+,d ;1,+ 1,# 0$3$4,+/
$+3,#5,dd%, ;$31 o31,# ",o"%,</ 5a##$a6,/.@
!. W, #,0o6+$4, 31a3 31, 0o2#3/ o8 I%%$+o$/ GE%d#$d6, v. Do+ B,a010o5b,#, I+0. 3A' I%%.
A"". &(&, ( N.E. C'dD (&', '' A.L.R. C'dD &&'3H a+d N,; Yo#: GGood;$+ v. Yo2+6, 3A
H2+ '('H 1av, #,a01,d o""o/$3, 0o+0%2/$o+/ $+ 0o+/3#2$+6 0$v$% da5a6, a03/ /$5$%a# 3o I
3AB.(. Ho;,v,#, ;, 8,,% 31a3 31, /$32a3$o+/ "#,/,+3,d $+ /201 0a/,/, a/ ;,%% a/ 31a3
"#,/,+3,d 1,#,, do +o3 0o5",% a""%$0a3$o+ o8 R,/3a3,5,+3, Co+8%$03 o8 La;/, II 3!! a+d
3!*, a+d 31a3 o2# d,3,#5$+a3$o+ 31a3 o31,# "#$+0$"%,/ a""%- ;$%% b,33,# a88o#d M$++,/o3a
0$3$4,+/ 31, "#o3,03$o+ ;1$01 31, C$v$% Da5a6, A03 $+3,+d,d 8o# 31,5.
R,v,#/,d.
EL BANCO ESPAOL-FILIPINO, plaintiffAappellant!
vs.
VICENTE PALANCA, administrator of the estate of Engracio Paanca
Tan!"in#eng, defendantAappellant.
Aitken and DeSelms for appellant.
Hartigan and Welch for appellee.
ST$EET, J.%
*&is action +as instituted upon %arc& 31! 1"0! b, B>l Canco >spanolA(ilipinoB to
foreclose a mortgage upon various parcels of real propert, situated in t&e cit, of
%anila. *&e mortgage in ;uestion is dated Dune 1$! 1"0$! and +as e.ecuted b, t&e
original defendant &erein! >ngracio :alanca *an;uin,eng , 7im;uingco! as
securit, for a debt o+ing b, &im to t&e ban-. Upon %arc& 31! 1"0$! t&e debt
amounted to :11!1"#.10 and +as dra+ing interest at t&e rate of per centum per
annum! pa,able at t&e end of eac& ;uarter. <t appears t&at t&e parties to t&is
mortgage at t&at time estimated t&e value of t&e propert, in ;uestion at :1"1!55!
+&ic& +as about :'5!000 in e.cess of t&e indebtedness. After t&e e.ecution of t&is
instrument b, t&e mortgagor! &e returned to C&ina +&ic& appears to &ave been &is
native countr,4 and &e t&ere died! upon Danuar, 1"! 110! +it&out again returning
to t&e :&ilippine <slands.
As t&e defendant +as a nonresident at t&e time of t&e institution of t&e present
action! it +as necessar, for t&e plaintiff in t&e foreclosure proceeding to give notice
to t&e defendant b, publication pursuant to section 3"" of t&e Code of Civil
:rocedure. An order for publication +as accordingl, obtained from t&e court! and
publication +as made in due form in a ne+spaper of t&e cit, of %anila. At t&e
same time t&at t&e order of t&e court s&ould deposit in t&e post office in a stamped
envelope a cop, of t&e summons and complaint directed to t&e defendant at &is last
place of residence! to +it! t&e cit, of Amo,! in t&e >mpire of C&ina. *&is order +as
made pursuant to t&e follo+ing provision contained in section 3"" of t&e Code of
Civil :rocedure)
<n case of publication! +&ere t&e residence of a nonresident or absent
defendant is -no+n! t&e /udge must direct a cop, of t&e summons and
complaint to be fort&+it& deposited b, t&e cler- in t&e postAoffice! postage
prepaid! directed to t&e person to be served! at &is place of residence
=&et&er t&e cler- complied +it& t&is order does not affirmativel, appear. *&ere is!
&o+ever! among t&e papers pertaining to t&is case! an affidavit! dated April #!
1"0! signed b, Cernardo C&an , Garcia! an emplo,ee of t&e attorne,s of t&e ban-!
s&o+ing t&at upon t&at date &e &ad deposited in t&e %anila postAoffice a registered
letter! addressed to >ngracio :alanca *an;uin,eng! at %anila! containing copies of
t&e complaint! t&e plaintiffEs affidavit! t&e summons! and t&e order of t&e court
directing publication as aforesaid. <t appears from t&e postmasterEs receipt t&at
Cernardo probabl, used an envelope obtained from t&e cler-Es office! as t&e receipt
purports to s&o+ t&at t&e letter emanated from t&e office.
*&e cause proceeded in usual course in t&e Court of (irst <nstance4 and t&e
defendant not &aving appeared! /udgment +as! upon Dul, 1! 1"0! ta-en against
&im b, default. Upon Dul, 3! 1"0! a decision +as rendered in favor of t&e
plaintiff. <n t&is decision it +as recited t&at publication &ad been properl, made in
a periodical! but not&ing +as said about t&is notice &aving been given mail. *&e
court! upon t&is occasion! found t&at t&e indebtedness of t&e defendant amounted
to :1#"!355. 31! +it& interest from %arc& 31! 1"0. Accordingl, it +as ordered
t&at t&e defendant s&ould! on or before Dul, $! 1"0! deliver said amount to t&e
cler- of t&e court to be applied to t&e satisfaction of t&e /udgment! and it +as
declared t&at in case of t&e failure of t&e defendant to satisf, t&e /udgment +it&in
suc& period! t&e mortgage propert, located in t&e cit, of %anila s&ould be e.posed
to public sale. *&e pa,ment contemplated in said order +as never made4 and upon
Dul, ! 1"0! t&e court ordered t&e sale of t&e propert,. *&e sale too- place upon
Dul, 30! 1"0! and t&e propert, +as boug&t in b, t&e ban- for t&e sum of :110!100.
Upon August '! 1"0! t&is sale +as confirmed b, t&e court.
About seven ,ears after t&e confirmation of t&is sale! or to t&e precise! upon Dune
15! 1"15! a motion +as made in t&is cause b, 8icente :alanca! as administrator of
t&e estate of t&e original defendant! >ngracio :alanca *an;uin,eng , 7im;uingco!
+&erein t&e applicant re;uested t&e court to set aside t&e order of default of Dul, 1!
1"0! and t&e /udgment rendered upon Dul, 3! 1"0! and to vacate all t&e
proceedings subse;uent t&ereto. *&e basis of t&is application! as set fort& in t&e
motion itself! +as t&at t&e order of default and t&e /udgment rendered t&ereon +ere
void because t&e court &ad never ac;uired /urisdiction over t&e defendant or over
t&e sub/ect of t&e action.
At t&e &earing in t&e court belo+ t&e application to vacate t&e /udgment +as
denied! and from t&is action of t&e court 8icente :lanca! as administrator of t&e
estate of t&e original defendant! &as appealed. 5o ot&er feature of t&e case is &ere
under consideration t&an suc& as related to t&e action of t&e court upon said
motion.
*&e case presents several ;uestions of importance! +&ic& +ill be discussed in +&at
appears to be t&e se;uence of most convenient development. <n t&e first part of t&is
opinion +e s&all! for t&e purpose of argument! assume t&at t&e cler- of t&e Court of
(irst <nstance did not obe, t&e order of t&e court in t&e matter of mailing t&e papers
+&ic& &e +as directed to send to t&e defendant in Amo,4 and in t&is connection +e
s&all consider! first! +&et&er t&e court ac;uired t&e necessar, /urisdiction to enable
it to proceed +it& t&e foreclosure of t&e mortgage and! secondl,! +&et&er t&ose
proceedings +ere conducted in suc& manner as to constitute due process of la+.
*&e +ord B/urisdiction!B as applied to t&e facult, of e.ercising /udicial po+er! is
used in several different! t&oug& related! senses since it ma, &ave reference 213 to
t&e aut&orit, of t&e court to entertain a particular -ind of action or to administer a
particular -ind of relief! or it ma, refer to t&e po+er of t&e court over t&e parties! or
213 over t&e propert, +&ic& is t&e sub/ect to t&e litigation.
*&e sovereign aut&orit, +&ic& organi9es a court determines t&e nature and e.tent
of its po+ers in general and t&us fi.es its competenc, or /urisdiction +it& reference
to t&e actions +&ic& it ma, entertain and t&e relief it ma, grant.
Durisdiction over t&e person is ac;uired b, t&e voluntar, appearance of a part, in
court and &is submission to its aut&orit,! or it is ac;uired b, t&e coercive po+er of
legal process e.erted over t&e person.
Durisdiction over t&e propert, +&ic& is t&e sub/ect of t&e litigation ma, result eit&er
from a sei9ure of t&e propert, under legal process! +&ereb, it is broug&t into t&e
actual custod, of t&e la+! or it ma, result from t&e institution of legal proceedings
+&erein! under special provisions of la+! t&e po+er of t&e court over t&e propert,
is recogni9ed and made effective. <n t&e latter case t&e propert,! t&oug& at all times
+it&in t&e potential po+er of t&e court! ma, never be ta-en into actual custod, at
all. An illustration of t&e /urisdiction ac;uired b, actual sei9ure is found in
attac&ment proceedings! +&ere t&e propert, is sei9ed at t&e beginning of t&e action!
or some subse;uent stage of its progress! and &eld to abide t&e final event of t&e
litigation. An illustration of +&at +e term potential /urisdiction over t&e res! is
found in t&e proceeding to register t&e title of land under our s,stem for t&e
registration of land. @ere t&e court! +it&out ta-ing actual p&,sical control over t&e
propert, assumes! at t&e instance of some person claiming to be o+ner! to e.ercise
a /urisdiction in rem over t&e propert, and to ad/udicate t&e title in favor of t&e
petitioner against all t&e +orld.
<n t&e terminolog, of American la+ t&e action to foreclose a mortgage is said to be
a proceeding ;uasi in rem! b, +&ic& is e.pressed t&e idea t&at +&ile it is not
strictl, spea-ing an action in rem ,et it parta-es of t&at nature and is substantiall,
suc&. *&e e.pression Baction in remB is! in its narro+ application! used onl, +it&
reference to certain proceedings in courts of admiralt, +&erein t&e propert, alone
is treated as responsible for t&e claim or obligation upon +&ic& t&e proceedings are
based. *&e action ;uasi rem differs from t&e true action in rem in t&e circumstance
t&at in t&e former an individual is named as defendant! and t&e purpose of t&e
proceeding is to sub/ect &is interest t&erein to t&e obligation or lien burdening t&e
propert,. All proceedings &aving for t&eir sole ob/ect t&e sale or ot&er disposition
of t&e propert, of t&e defendant! +&et&er b, attac&ment! foreclosure! or ot&er form
of remed,! are in a general +a, t&us designated. *&e /udgment entered in t&ese
proceedings is conclusive onl, bet+een t&e parties.
<n spea-ing of t&e proceeding to foreclose a mortgage t&e aut&or of a +ell -no+n
treaties! &as said)
*&oug& nominall, against person! suc& suits are to vindicate liens4 t&e,
proceed upon sei9ure4 t&e, treat propert, as primaril, indebted4 and! +it&
t&e ;ualification aboveAmentioned! t&e, are substantiall, propert, actions. <n
t&e civil la+! t&e, are st,led &,pot&ecar, actions! and t&eir sole ob/ect is t&e
enforcement of t&e lien against t&e res4 in t&e common la+! t&e, +ould be
different in c&ancer, did not treat t&e conditional conve,ance as a mere
&,pot&ecation! and t&e creditorEs rig&t ass an e;uitable lien4 so! in bot&! t&e
suit is real action so far as it is against propert,! and see-s t&e /udicial
recognition of a propert, debt! and an order for t&e sale of t&e res. 2=aples!
:roceedings <n ?em. sec. $0'.3
<t is true t&at in proceedings of t&is c&aracter! if t&e defendant for +&om
publication is made appears! t&e action becomes as to &im a personal action and is
conducted as suc&. *&is! &o+ever! does not affect t&e proposition t&at +&ere t&e
defendant fails to appear t&e action is quasi in rem4 and it s&ould t&erefore be
considered +it& reference to t&e principles governing actions in rem.
*&ere is an instructive analog, bet+een t&e foreclosure proceeding and an action
of attac&ment! concerning +&ic& t&e Supreme Court of t&e United States &as used
t&e follo+ing language)
<f t&e defendant appears! t&e cause becomes mainl, a suit in personam! +it&
t&e added incident! t&at t&e propert, attac&ed remains liable! under t&e
control of t&e court! to ans+er to an, demand +&ic& ma, be establis&ed
against t&e defendant b, t&e final /udgment of t&e court. Cut! if t&ere is no
appearance of t&e defendant! and no service of process on &im! t&e case
becomes! in its essential nature! a proceeding in rem! t&e onl, effect of
+&ic& is to sub/ect t&e propert, attac&ed to t&e pa,ment of t&e defendant
+&ic& t&e court ma, find to be due to t&e plaintiff. 2Cooper vs. ?e,nolds! 10
=all.! 30.3
<n an ordinar, attac&ment proceeding! if t&e defendant is not personall, served! t&e
preliminar, sei9ure is to! be considered necessar, in order to confer /urisdiction
upon t&e court. <n t&is case t&e lien on t&e propert, is ac;uired b, t&e sei9ure4 and
t&e purpose of t&e proceedings is to sub/ect t&e propert, to t&at lien. <f a lien
alread, e.ists! +&et&er created b, mortgage! contract! or statute! t&e preliminar,
sei9ure is not necessar,4 and t&e court proceeds to enforce suc& lien in t&e manner
provided b, la+ precisel, as t&oug& t&e propert, &ad been sei9ed upon attac&ment.
2?oller vs. @oll,! 1'$ U. S.! 3"! #054 ## 7. ed.! 510.3 <t results t&at t&e mere
circumstance t&at in an attac&ment t&e propert, ma, be sei9ed at t&e inception of
t&e proceedings! +&ile in t&e foreclosure suit it is not ta-en into legal custod, until
t&e time comes for t&e sale! does not materiall, affect t&e fundamental principle
involved in bot& cases! +&ic& is t&at t&e court is &ere e.ercising a /urisdiction over
t&e propert, in a proceeding directed essentiall, in rem.
:assing no+ to a consideration of t&e /urisdiction of t&e Court of (irst <nstance in a
mortgage foreclosure! it is evident t&at t&e court derives its aut&orit, to entertain
t&e action primaril, from t&e statutes organi9ing t&e court. *&e /urisdiction of t&e
court! in t&is most general sense! over t&e cause of action is obvious and re;uires
no comment. Durisdiction over t&e person of t&e defendant! if ac;uired at all in
suc& an action! is obtained b, t&e voluntar, submission of t&e defendant or b, t&e
personal service of process upon &im +it&in t&e territor, +&ere t&e process is
valid. <f! &o+ever! t&e defendant is a nonresident and! remaining be,ond t&e range
of t&e personal process of t&e court! refuses to come in voluntaril,! t&e court never
ac;uires /urisdiction over t&e person at all. @ere t&e propert, itself is in fact t&e
sole t&ing +&ic& is impleaded and is t&e responsible ob/ect +&ic& is t&e sub/ect of
t&e e.ercise of /udicial po+er. <t follo+s t&at t&e /urisdiction of t&e court in suc&
case is based e.clusivel, on t&e po+er +&ic&! under t&e la+! it possesses over t&e
propert,4 and an, discussion relative to t&e /urisdiction of t&e court over t&e person
of t&e defendant is entirel, apart from t&e case. *&e /urisdiction of t&e court over
t&e propert,! considered as t&e e.clusive ob/ect of suc& action! is evidentl, based
upon t&e follo+ing conditions and considerations! namel,) 213 t&at t&e propert, is
located +it&in t&e district4 213 t&at t&e purpose of t&e litigation is to sub/ect t&e
propert, b, sale to an obligation fi.ed upon it b, t&e mortgage4 and 233 t&at t&e
court at a proper stage of t&e proceedings ta-es t&e propert, into custod,! if
necessar,! and e.pose it to sale for t&e purpose of satisf,ing t&e mortgage debt. An
obvious corollar, is t&at no ot&er relief can be granted in t&is proceeding t&an suc&
as can be enforced against t&e propert,.
=e ma, t&en! from +&at &as been stated! formulated t&e follo+ing proposition
relative to t&e foreclosure proceeding against t&e propert, of a nonresident
mortgagor +&o fails to come in and submit &imself personall, to t&e /urisdiction of
t&e court) 2<3 *&at t&e /urisdiction of t&e court is derived from t&e po+er +&ic& it
possesses over t&e propert,4 2<<3 t&at /urisdiction over t&e person is not ac;uired
and is nonessential4 2<<<3 t&at t&e relief granted b, t&e court must be limited to suc&
as can be enforced against t&e propert, itself.
<t is important t&at t&e bearing of t&ese propositions be clearl, appre&ended! for
t&ere are man, e.pressions in t&e American reports from +&ic& it mig&t be inferred
t&at t&e court ac;uires personal /urisdiction over t&e person of t&e defendant b,
publication and notice4 but suc& is not t&e case. <n trut& t&e proposition t&at
/urisdiction over t&e person of a nonresident cannot be ac;uired b, publication and
notice +as never clearl, understood even in t&e American courts until after t&e
decision &ad been rendered b, t&e Supreme Court of t&e United States in t&e
leading case of :enno,er vs. 5eff 2"5 U. S. '1#4 1# 7. ed.! 5$53. <n t&e lig&t of t&at
decision! and of ot&er decisions +&ic& &ave subse;uentl, been rendered in t&at and
ot&er courts! t&e proposition t&at /urisdiction over t&e person cannot be t&us
ac;uired b, publication and notice is no longer open to ;uestion4 and it is no+
full, establis&ed t&at a personal /udgment upon constructive or substituted service
against a nonresident +&o does not appear is +&oll, invalid. *&is doctrine applies
to all -inds of constructive or substituted process! including service b, publication
and personal service outside of t&e /urisdiction in +&ic& t&e /udgment is rendered4
and t&e onl, e.ception seems to be found in t&e case +&ere t&e nonresident
defendant &as e.pressl, or impliedl, consented to t&e mode of service. 25ote to
?a&er vs. ?a&er! 35 7. ?. A. F5. S. G! 1"14 see also 50 7 .?. A.! 554 35 7. ?. A. F5.
S.G! 311
*&e idea upon +&ic& t&e decision in :enno,er vs. 5eff 2supra3 proceeds is t&at t&e
process from t&e tribunals of one State cannot run into ot&er States or countries and
t&at due process of la+ re;uires t&at t&e defendant s&all be broug&t under t&e
po+er of t&e court b, service of process +it&in t&e State! or b, &is voluntar,
appearance! in order to aut&ori9e t&e court to pass upon t&e ;uestion of &is personal
liabilit,. *&e doctrine establis&ed b, t&e Supreme Court of t&e United States on
t&is point! being based upon t&e constitutional conception of due process of la+! is
binding upon t&e courts of t&e :&ilippine <slands. <nvolved in t&is decision is t&e
principle t&at in proceedings in rem or ;uasi in rem against a nonresident +&o is
not served personall, +it&in t&e state! and +&o does not appear! t&e relief must be
confined to t&e res! and t&e court cannot la+full, render a personal /udgment
against &im. 2De+e, vs. Des %oines! 1'3 U. S.! 1"34 #3 7. ed.! $$54 @eidritter vs.
>li9abet& Oil Clot& Co.! 111 U. S.! 1"#4 1 7. ed.! '1".3 *&erefore in an action to
foreclose a mortgage against a nonresident! upon +&om service &as been effected
e.clusivel, b, publication! no personal /udgment for t&e deficienc, can be entered.
27atta vs. *utton! 111 Cal.! 1'"4 Clumberg vs. Circ&! "" Cal.! #1$.3
<t is suggested in t&e brief of t&e appellant t&at t&e /udgment entered in t&e court
belo+ offends against t&e principle /ust stated and t&at t&is /udgment is void
because t&e court in fact entered a personal /udgment against t&e absent debtor for
t&e full amount of t&e indebtedness secured b, t&e mortgage. =e do not so
interpret t&e /udgment.
<n a foreclosure proceeding against a nonresident o+ner it is necessar, for t&e
court! as in all cases of foreclosure! to ascertain t&e amount due! as prescribed in
section 15$ of t&e Code of Civil :rocedure! and to ma-e an order re;uiring t&e
defendant to pa, t&e mone, into court. *&is step is a necessar, precursor of t&e
order of sale. <n t&e present case t&e /udgment +&ic& +as entered contains t&e
follo+ing +ords)
Cecause it is declared t&at t&e said defendant >ngracio :alanca *an;uin,eng
, 7im;uingco! is indebted in t&e amount of :1#"!355.31! plus t&e interest! to
t&e ECanco >spanolA(ilipinoE . . . t&erefore said appellant is ordered to deliver
t&e above amount etc.! etc.
*&is is not t&e language of a personal /udgment. <nstead it is clearl, intended
merel, as a compliance +it& t&e re;uirement t&at t&e amount due s&all be
ascertained and t&at t&e evidence of t&is it ma, be observed t&at according to t&e
Code of Civil :rocedure a personal /udgment against t&e debtor for t&e deficienc,
is not to be rendered until after t&e propert, &as been sold and t&e proceeds applied
to t&e mortgage debt. 2sec. 1$03.
*&e conclusion upon t&is p&ase of t&e case is t&at +&atever ma, be t&e effect in
ot&er respects of t&e failure of t&e cler- of t&e Court of (irst <nstance to mail t&e
proper papers to t&e defendant in Amo,! C&ina! suc& irregularit, could in no +ise
impair or defeat t&e /urisdiction of t&e court! for in our opinion t&at /urisdiction rest
upon a basis muc& more secure t&an +ould be supplied b, an, form of notice t&at
could be given to a resident of a foreign countr,.
Cefore leaving t&is branc& of t&e case! +e +is& to observe t&at +e are full, a+are
t&at man, reported cases can be cited in +&ic& it is assumed t&at t&e ;uestion of
t&e sufficienc, of publication or notice in a case of t&is -ind is a ;uestion affecting
t&e /urisdiction of t&e court! and t&e court is sometimes said to ac;uire /urisdiction
b, virtue of t&e publication. *&is p&raseolog, +as undoubtedl, originall, adopted
b, t&e court because of t&e analog, bet+een service b, t&e publication and
personal service of process upon t&e defendant4 and! as &as alread, been suggested!
prior to t&e decision of :enno,er vs. 5eff 2supra3 t&e difference bet+een t&e legal
effects of t&e t+o forms of service +as obscure. <t is accordingl, not surprising t&at
t&e modes of e.pression +&ic& &ad alread, been molded into legal tradition before
t&at case +as decided &ave been broug&t do+n to t&e present da,. Cut it is clear
t&at t&e legal principle &ere involved is not effected b, t&e peculiar language in
+&ic& t&e courts &ave e.pounded t&eir ideas.
=e no+ proceed to a discussion of t&e ;uestion +&et&er t&e supposed irregularit,
in t&e proceedings +as of suc& gravit, as to amount to a denial of t&at Bdue process
of la+B +&ic& +as secured b, t&e Act of Congress in force in t&ese <slands at t&e
time t&is mortgage +as foreclosed. 2Act of Dul, 1! 1"01! sec. 5.3 <n dealing +it&
;uestions involving t&e application of t&e constitutional provisions relating to due
process of la+ t&e Supreme Court of t&e United States &as refrained from
attempting to define +it& precision t&e meaning of t&at e.pression! t&e reason
being t&at t&e idea e.pressed t&erein is applicable under so man, diverse
conditions as to ma-e an, attempt a, precise definition &a9ardous and
unprofitable. As applied to a /udicial proceeding! &o+ever! it ma, be laid do+n
+it& certaint, t&at t&e re;uirement of due process is satisfied if t&e follo+ing
conditions are present! namel,4 213 *&ere must be a court or tribunal clot&ed +it&
/udicial po+er to &ear and determine t&e matter before it4 213 /urisdiction must be
la+full, ac;uired over t&e person of t&e defendant or over t&e propert, +&ic& is
t&e sub/ect of t&e proceeding4 233 t&e defendant must be given an opportunit, to be
&eard4 and 2#3 /udgment must be rendered upon la+ful &earing.
:assing at once to t&e re;uisite t&at t&e defendant s&all &ave an opportunit, to be
&eard! +e observe t&at in a foreclosure case some notification of t&e proceedings to
t&e nonresident o+ner! prescribing t&e time +it&in +&ic& appearance must be
made! is ever,+&ere recogni9ed as essential. *o ans+er t&is necessit, t&e statutes
generall, provide for publication! and usuall, in addition t&ereto! for t&e mailing of
notice to t&e defendant! if &is residence is -no+n. *&oug& commonl, called
constructive! or substituted service of process in an, true sense. <t is merel, a
means provided b, la+ +&ereb, t&e o+ner ma, be admonis&ed t&at &is propert, is
t&e sub/ect of /udicial proceedings and t&at it is incumbent upon &im to ta-e suc&
steps as &e sees fit to protect it. <n spea-ing of notice of t&is c&aracter a distinguis&
master of constitutional la+ &as used t&e follo+ing language)
. . . if t&e o+ners are named in t&e proceedings! and personal notice is
provided for! it is rat&er from tenderness to t&eir interests! and in order to
ma-e sure t&at t&e opportunit, for a &earing s&all not be lost to t&em! t&an
from an, necessit, t&at t&e case s&all assume t&at form. 2Coole, on *a.ation
F1d. ed.G! 51'! ;uoted in 7eig& vs. Green! 1"3 U. S.! '"! 0.3
<t +ill be observed t&at t&is mode of notification does not involve an, absolute
assurance t&at t&e absent o+ner s&all t&ereb, receive actual notice. *&e periodical
containing t&e publication ma, never in fact come to &is &ands! and t&e c&ances
t&at &e s&ould discover t&e notice ma, often be ver, slig&t. >ven +&ere notice is
sent b, mail t&e probabilit, of &is receiving it! t&oug& muc& increased! is
dependent upon t&e correctness of t&e address to +&ic& it is for+arded as +ell as
upon t&e regularit, and securit, of t&e mail service. <t +ill be noted! furt&ermore!
t&at t&e provision of our la+ relative to t&e mailing of notice does not absolutel,
re;uire t&e mailing of notice unconditionall, and in ever, event! but onl, in t&e
case +&ere t&e defendantEs residence is -no+n. <n t&e lig&t of all t&ese facts! it is
evident t&at actual notice to t&e defendant in cases of t&is -ind is not! under t&e
la+! to be considered absolutel, necessar,.
*&e idea upon +&ic& t&e la+ proceeds in recogni9ing t&e efficac, of a means of
notification +&ic& ma, fall s&ort of actual notice is apparentl, t&is) :ropert, is
al+a,s assumed to be in t&e possession of its o+ner! in person or b, agent4 and &e
ma, be safel, &eld! under certain conditions! to be affected +it& -no+ledge t&at
proceedings &ave been instituted for its condemnation and sale.
<t is t&e dut, of t&e o+ner of real estate! +&o is a nonresident! to ta-e
measures t&at in some +a, &e s&all be represented +&en &is propert, is
called into re;uisition! and if &e fails to do t&is! and fails to get notice b, t&e
ordinar, publications +&ic& &ave usuall, been re;uired in suc& cases! it is
&is misfortune! and &e must abide t&e conse;uences. 2$ ?. C. 7.! sec. ##5 Fp.
#50G3.
<t &as been +ell said b, an American court)
<f propert, of a nonresident cannot be reac&ed b, legal process upon t&e
constructive notice! t&en our statutes +ere passed in vain! and are mere
empt, legislative declarations! +it&out eit&er force! or meaning4 for if t&e
person is not +it&in t&e /urisdiction of t&e court! no personal /udgment can
be rendered! and if t&e /udgment cannot operate upon t&e propert,! t&en no
effective /udgment at all can be rendered! so t&at t&e result +ould be t&at t&e
courts +ould be po+erless to assist a citi9en against a nonresident. Suc& a
result +ould be a deplorable one. 2Huarl vs. Abbett! 101 <nd.! 1334 51 Am.
?ep.! $$1! $$'.3
<t is! of course universall, recogni9ed t&at t&e statutor, provisions relative to
publication or ot&er form of notice against a nonresident o+ner s&ould be complied
+it&4 and in respect to t&e publication of notice in t&e ne+spaper it ma, be stated
t&at strict compliance +it& t&e re;uirements of t&e la+ &as been &eld to be
essential. <n Guarant, *rust etc. Co. vs. Green Cove etc.! ?ailroad Co. 213" U. S.!
13'! 133! it +as &eld t&at +&ere ne+spaper publication +as made for 1" +ee-s!
+&en t&e statute re;uired 10! t&e publication +as insufficient.
=it& respect to t&e provisions of our o+n statute! relative to t&e sending of notice
b, mail! t&e re;uirement is t&at t&e /udge s&all direct t&at t&e notice be deposited in
t&e mail b, t&e cler- of t&e court! and it is not in terms declared t&at t&e notice
must be deposited in t&e mail. =e consider t&is to be of some significance4 and it
seems to us t&at! &aving due regard to t&e principles upon +&ic& t&e giving of suc&
notice is re;uired! t&e absent o+ner of t&e mortgaged propert, must! so far as t&e
due process of la+ is concerned! ta-e t&e ris- incident to t&e possible failure of t&e
cler- to perform &is dut,! some+&at as &e ta-es t&e ris- t&at t&e mail cler- or t&e
mail carrier mig&t possibl, lose or destro, t&e parcel or envelope containing t&e
notice before it s&ould reac& its destination and be delivered to &im. *&is idea
seems to be strengt&ened b, t&e consideration t&at placing upon t&e cler- t&e dut,
of sending notice b, mail! t&e performance of t&at act is put effectuall, be,ond t&e
control of t&e plaintiff in t&e litigation. At an, rate it is obvious t&at so muc& of
section 3"" of t&e Code of Civil :rocedure as relates to t&e sending of notice b,
mail +as complied +it& +&en t&e court made t&e order. *&e ;uestion as to +&at
ma, be t&e conse;uences of t&e failure of t&e record to s&o+ t&e proof of
compliance +it& t&at re;uirement +ill be discussed b, us furt&er on.
*&e observations +&ic& &ave /ust been made lead to t&e conclusion t&at t&e failure
of t&e cler- to mail t&e notice! if in fact &e did so fail in &is dut,! is not suc& an
irregularit,! as amounts to a denial of due process of la+4 and &ence in our opinion
t&at irregularit,! if proved! +ould not avoid t&e /udgment in t&is case. 5otice +as
given b, publication in a ne+spaper and t&is is t&e onl, form of notice +&ic& t&e
la+ unconditionall, re;uires. *&is in our opinion is all t&at +as absolutel,
necessar, to sustain t&e proceedings.
<t +ill be observed t&at in considering t&e effect of t&is irregularit,! it ma-es a
difference +&et&er it be vie+ed as a ;uestion involving /urisdiction or as a
;uestion involving due process of la+. <n t&e matter of /urisdiction t&ere can be no
distinction bet+een t&e muc& and t&e little. *&e court eit&er &as /urisdiction or it
&as not4 and if t&e re;uirement as to t&e mailing of notice s&ould be considered as a
step antecedent to t&e ac;uiring of /urisdiction! t&ere could be no escape from t&e
conclusion t&at t&e failure to ta-e t&at step +as fatal to t&e validit, of t&e
/udgment. <n t&e application of t&e idea of due process of la+! on t&e ot&er &and! it
is clearl, unnecessar, to be so rigorous. *&e /urisdiction being once establis&ed! all
t&at due process of la+ t&ereafter re;uires is an opportunit, for t&e defendant to be
&eard4 and as publication +as dul, made in t&e ne+spaper! it +ould seem &ig&l,
unreasonable to &old t&at failure to mail t&e notice +as fatal. =e t&in- t&at in
appl,ing t&e re;uirement of due process of la+! it is permissible to reflect upon t&e
purposes of t&e provision +&ic& is supposed to &ave been violated and t&e
principle underl,ing t&e e.ercise of /udicial po+er in t&ese proceedings. Dudge in
t&e lig&t of t&ese conceptions! +e t&in- t&at t&e provision of Act of Congress
declaring t&at no person s&all be deprived of &is propert, +it&out due process of
la+ &as not been infringed.
<n t&e progress of t&is discussion +e &ave stated t&e t+o conclusions4 213 t&at t&e
failure of t&e cler- to send t&e notice to t&e defendant b, mail did not destro, t&e
/urisdiction of t&e court and 213 t&at suc& irregularit, did not infringe t&e
re;uirement of due process of la+. As a conse;uence of t&ese conclusions t&e
irregularit, in ;uestion is in some measure s&orn of its potenc,. <t is still necessar,!
&o+ever! to consider its effect considered as a simple irregularit, of procedure4 and
it +ould be idle to pretend t&at even in t&is aspect t&e irregularit, is not grave
enoug&. (rom t&is point of vie+! &o+ever! it is obvious t&at an, motion to vacate
t&e /udgment on t&e ground of t&e irregularit, in ;uestion must fail unless it s&o+s
t&at t&e defendant +as pre/udiced b, t&at irregularit,. *&e least! t&erefore! t&at can
be re;uired of t&e proponent of suc& a motion is to s&o+ t&at &e &ad a good
defense against t&e action to foreclose t&e mortgage. 5ot&ing of t&e -ind is!
&o+ever! s&o+n eit&er in t&e motion or in t&e affidavit +&ic& accompanies t&e
motion.
An application to open or vacate a /udgment because of an irregularit, or defect in
t&e proceedings is usuall, re;uired to be supported b, an affidavit s&o+ing t&e
grounds on +&ic& t&e relief is soug&t! and in addition to t&is s&o+ing also a
meritorious defense to t&e action. <t is &eld t&at a general statement t&at a part, &as
a good defense to t&e action is insufficient. *&e necessar, facts must be averred. Of
course if a /udgment is void upon its face a s&o+ing of t&e e.istence of a
meritorious defense is not necessar,. 210 ?. C. 7.! '1.3
*&e lapse of time is also a circumstance deepl, affecting t&is aspect of t&e case. <n
t&is connection +e ;uote t&e follo+ing passage from t&e enc,clopedic treatise no+
in course of publication)
=&ere! &o+ever! t&e /udgment is not void on its face! and ma, t&erefore be
enforced if permitted to stand on t&e record! courts in man, instances refuse
to e.ercise t&eir ;uasi e;uitable po+ers to vacate a /udgement after t&e lapse
of t&e term a, +&ic& it +as entered! e.cept in clear cases! to promote t&e
ends of /ustice! and +&ere it appears t&at t&e part, ma-ing t&e application is
&imself +it&out fault and &as acted in good fait& and +it& ordinar,
diligence. 7ac&es on t&e part of t&e applicant! if une.plained! is deemed
sufficient ground for refusing t&e relief to +&ic& &e mig&t ot&er+ise be
entitled. Somet&ing is due to t&e finalit, of /udgments! and ac;uiescence or
unnecessar, dela, is fatal to motions of t&is c&aracter! since courts are
al+a,s reluctant to interfere +it& /udgments! and especiall, +&ere t&e, &ave
been e.ecuted or satisfied. *&e moving part, &as t&e burden of s&o+ing
diligence! and unless it is s&o+n affirmativel, t&e court +ill not ordinaril,
e.ercise its discretion in &is favor. 215 ?. C. 7.! $"#! $"5.3
<t is stated in t&e affidavit t&at t&e defendant! >ngracio :alanca *an;uin,eng ,
7im;uingco! died Danuar, 1"! 1"10. *&e mortgage under +&ic& t&e propert, +as
sold +as e.ecuted far bac- in 1"0$4 and t&e proceedings in t&e foreclosure +ere
closed b, t&e order of court confirming t&e sale dated August '! 1"0. <t passes t&e
rational bounds of &uman credulit, to suppose t&at a man +&o &ad placed a
mortgage upon propert, +ort& nearl, :300!000 and &ad t&en gone a+a, from t&e
scene of &is life activities to end &is da,s in t&e cit, of Amo,! C&ina! s&ould &ave
long remained in ignorance of t&e fact t&at t&e mortgage &ad been foreclosed and
t&e propert, sold! even supposing t&at &e &ad no -no+ledge of t&ose proceedings
+&ile t&e, +ere being conducted. <t is more in -eeping +it& t&e ordinar, course of
t&ings t&at &e s&ould &ave ac;uired information as to +&at +as transpiring in &is
affairs at %anila4 and upon t&e basis of t&is rational assumption +e are aut&ori9ed!
in t&e absence of proof to t&e contrar,! to presume t&at &e did &ave! or soon
ac;uired! information as to t&e sale of &is propert,.
*&e Code of Civil :rocedure! indeed! e.pressl, declares t&at t&ere is a presumption
t&at t&ings &ave &appened according to t&e ordinar, &abits of life 2sec. 33# F1$G34
and +e cannot conceive of a situation more appropriate t&an t&is for appl,ing t&e
presumption t&us defined b, t&e la+giver. <n support of t&is presumption! as
applied to t&e present case! it is permissible to consider t&e probabilit, t&at t&e
defendant ma, &ave received actual notice of t&ese proceedings from t&e unofficial
notice addressed to &im in %anila +&ic& +as mailed b, an emplo,ee of t&e ban-Es
attorne,s. Adopting almost t&e e.act +ords used b, t&e Supreme Court of t&e
United States in Grannis vs. Ordeans 213# U. S.! 354 5 7. ed.! 13$33! +e ma, sa,
t&at in vie+ of t&e +ellA-no+n s-ill of postal officials and emplo,ees in ma-ing
proper deliver, of letters defectivel, addressed! +e t&in- t&e presumption is clear
and strong t&at t&is notice reac&ed t&e defendant! t&ere being no proof t&at it +as
ever returned b, t&e postal officials as undelivered. And if it +as delivered in
%anila! instead of being for+arded to Amo,! C&ina! t&ere is a probabilit, t&at t&e
recipient +as a person sufficientl, interested in &is affairs to send it or
communicate its contents to &im.
Of course if t&e /urisdiction of t&e court or t&e sufficienc, of t&e process of la+
depended upon t&e mailing of t&e notice b, t&e cler-! t&e reflections in +&ic& +e
are no+ indulging +ould be idle and frivolous4 but t&e considerations mentioned
are introduced in order to s&o+ t&e propriet, of appl,ing to t&is situation t&e legal
presumption to +&ic& allusion &as been made. Upon t&at presumption! supported
b, t&e circumstances of t&is case! !+e do not &esitate to found t&e conclusion t&at
t&e defendant voluntaril, abandoned all t&oug&t of saving &is propert, from t&e
obligation +&ic& &e &ad placed upon it4 t&at -no+ledge of t&e proceedings s&ould
be imputed to &im4 and t&at &e ac;uiesced in t&e conse;uences of t&ose
proceedings after t&e, &ad been accomplis&ed. Under t&ese circumstances it is
clear t&at t&e merit of t&is motion is! as +e &ave alread, stated! adversel, affected
in a &ig& degree b, t&e dela, in as-ing for relief. 5or is it an ade;uate repl, to sa,
t&at t&e proponent of t&is motion is an administrator +&o onl, ;ualified a fe+
mont&s before t&is motion +as made. 5o disabilit, on t&e part of t&e defendant
&imself e.isted from t&e time +&en t&e foreclosure +as effected until &is deat&4
and +e believe t&at t&e dela, in t&e appointment of t&e administrator and
institution of t&is action is a circumstance +&ic& is imputable to t&e parties in
interest +&oever t&e, ma, &ave been. Of course if t&e minor &eirs &ad instituted an
action in t&eir o+n rig&t to recover t&e propert,! it +ould &ave been different.
<t is! &o+ever! argued t&at t&e defendant &as suffered pre/udice b, reason of t&e
fact t&at t&e ban- became t&e purc&aser of t&e propert, at t&e foreclosure sale for a
price greatl, belo+ t&at +&ic& &ad been agreed upon in t&e mortgage as t&e upset
price of t&e propert,. <n t&is connection! it appears t&at in article nine of t&e
mortgage +&ic& +as t&e sub/ect of t&is foreclosure! as amended b, t&e notarial
document of Dul, 1"! 1"0$! t&e parties to t&is mortgage made a stipulation to t&e
effect t&at t&e value t&erein placed upon t&e mortgaged properties s&ould serve as a
basis of sale in case t&e debt s&ould remain unpaid and t&e ban- s&ould proceed to
a foreclosure. *&e upset price stated in t&at stipulation for all t&e parcels involved
in t&is foreclosure +as :1$!000. <t is said in be&alf of t&e appellant t&at +&en t&e
ban- boug&t in t&e propert, for t&e sum of :110!100 it violated t&at stipulation.
<t &as been &eld b, t&is court t&at a clause in a mortgage providing for a tipo! or
upset price! does not prevent a foreclosure! nor affect t&e validit, of a sale made in
t&e foreclosure proceedings. 26angco vs. Cru9 @errera and =, :iaco! 11 :&il.
?ep.! #014 CancoA>spaIol (ilipino vs. Donaldson! Sim and Co.! 5 :&il. ?ep.! #1.3
<n bot& t&e cases &ere cited t&e propert, +as purc&ased at t&e foreclosure sale! not
b, t&e creditor or mortgagee! but b, a t&ird part,. =&et&er t&e same rule s&ould be
applied in a case +&ere t&e mortgagee &imself becomes t&e purc&aser &as
apparentl, not been decided b, t&is court in an, reported decision! and t&is
;uestion need not &ere be considered! since it is evident t&at if an, liabilit, +as
incurred b, t&e ban- b, purc&asing for a price belo+ t&at fi.ed in t&e stipulation!
its liabilit, +as a personal liabilit, derived from t&e contract of mortgage4 and as
+e &ave alread, demonstrated suc& a liabilit, could not be t&e sub/ect of
ad/udication in an action +&ere t&e court &ad no /urisdiction over t&e person of t&e
defendant. <f t&e plaintiff ban- became liable to account for t&e difference bet+een
t&e upset price and t&e price at +&ic& in boug&t in t&e propert,! t&at liabilit,
remains unaffected b, t&e disposition +&ic& t&e court made of t&is case4 and t&e
fact t&at t&e ban- ma, &ave violated suc& an obligation can in no +ise affect t&e
validit, of t&e /udgment entered in t&e Court of (irst <nstance.
<n connection +it& t&e entire failure of t&e motion to s&o+ eit&er a meritorious
defense to t&e action or t&at t&e defendant &ad suffered an, pre/udice of +&ic& t&e
la+ can ta-e notice! +e ma, be permitted to add t&at in our opinion a motion of
t&is -ind! +&ic& proposes to unsettle /udicial proceedings long ago closed! can not
be considered +it& favor! unless based upon grounds +&ic& appeal to t&e
conscience of t&e court. :ublic polic, re;uires t&at /udicial proceedings be up&eld.
*&e ma.imum &ere applicable is non ;uieta movere. As +as once said b, Dudge
Cre+er! after+ards a member of t&e Supreme Court of t&e United States)
:ublic polic, re;uires t&at /udicial proceedings be up&eld! and t&at titles
obtained in t&ose proceedings be safe from t&e rut&less &and of collateral
attac-. <f tec&nical defects are ad/udged potent to destro, suc& titles! a
/udicial sale +ill never reali9e t&at value of t&e propert,! for no prudent man
+ill ris- &is mone, in bidding for and bu,ing t&at title +&ic& &e &as reason
to fear ma, ,ears t&ereafter be s+ept a+a, t&roug& some occult and not
readil, discoverable defect. 2%artin vs. :ond! 30 (ed.! 15.3
<n t&e case +&ere t&at language +as used an attempt +as made to annul certain
foreclosure proceedings on t&e ground t&at t&e affidavit upon +&ic& t&e order of
publication +as based erroneousl, stated t&at t&e State of Jansas! +&en &e +as in
fact residing in anot&er State. <t +as &eld t&at t&is mista-e did not affect t&e
validit, of t&e proceedings.
<n t&e preceding discussion +e &ave assumed t&at t&e cler- failed to send t&e
notice b, post as re;uired b, t&e order of t&e court. =e no+ proceed to consider
+&et&er t&is is a proper assumption4 and t&e proposition +&ic& +e propose to
establis& is t&at t&ere is a legal presumption t&at t&e cler- performed &is dut, as t&e
ministerial officer of t&e court! +&ic& presumption is not overcome b, an, ot&er
facts appearing in t&e cause.
<n subsection 1# of section 33# of t&e Code of Civil :rocedure it is declared t&at
t&ere is a presumption Bt&at official dut, &as been regularl, performed4B and in
subsection 1 it is declared t&at t&ere is a presumption Bt&at t&e ordinar, course of
business &as been follo+ed.B *&ese presumptions are of course in no sense
novelties! as t&e, e.press ideas +&ic& &ave al+a,s been recogni9ed. Omnia
presumuntur rite et solemniter esse acta donec probetur in contrarium. *&ere is
t&erefore clearl, a legal presumption t&at t&e cler- performed &is dut, about
mailing t&is notice4 and +e t&in- t&at strong considerations of polic, re;uire t&at
t&is presumption s&ould be allo+ed to operate +it& full force under t&e
circumstances of t&is case. A part, to an action &as no control over t&e cler- of t&e
court4 and &as no rig&t to meddle undul, +it& t&e business of t&e cler- in t&e
performance of &is duties. @aving no control over t&is officer! t&e litigant must
depend upon t&e court to see t&at t&e duties imposed on t&e cler- are performed.
Ot&er considerations no less potent contribute to strengt&en t&e conclusion /ust
stated. *&ere is no principle of la+ better settled t&an t&at after /urisdiction &as
once been re;uired! ever, act of a court of general /urisdiction s&all be presumed to
&ave been rig&tl, done. *&is rule is applied to ever, /udgment or decree rendered
in t&e various stages of t&e proceedings from t&eir initiation to t&eir completion
28oor&ees vs. United States Can-! 10 :et.! 31#4 35 U. S.! ##"34 and if t&e record is
silent +it& respect to an, fact +&ic& must &ave been establis&ed before t&e court
could &ave rig&tl, acted! it +ill be presumed t&at suc& fact +as properl, broug&t to
its -no+ledge. 2*&e 7essee of Grignon vs. Astor! 1 @o+.! 31"4 11 7. ed.! 13.3
<n ma-ing t&e order of sale Fof t&e real state of a decedentG t&e court are
presumed to &ave ad/udged ever, ;uestion necessar, to /ustif, suc& order or
decree! vi9) *&e deat& of t&e o+ners4 t&at t&e petitioners +ere &is
administrators4 t&at t&e personal estate +as insufficient to pa, t&e debts of
t&e deceased4 t&at t&e private acts of Assembl,! as to t&e manner of sale!
+ere +it&in t&e constitutional po+er of t&e 7egislature! and t&at all t&e
provisions of t&e la+ as to notices +&ic& are director, to t&e administrators
&ave been complied +it&. . . . *&e court is not bound to enter upon t&e
record t&e evidence on +&ic& an, fact +as decided. 2(lorentine vs. Carton! 1
=all.! 1104 1' 7. ed.! '5.3 >speciall, does all t&is appl, after long lapse of
time.
Applegate vs. 7e.ington and Carter Count, %ining Co. 211' U. S.! 1553 contains
an instructive discussion in a case analogous to t&at +&ic& is no+ before us. <t
t&ere appeared t&at in order to foreclose a mortgage in t&e State of Jentuc-,
against a nonresident debtor it +as necessar, t&at publication s&ould be made in a
ne+spaper for a specified period of time! also be posted at t&e front door of t&e
court &ouse and be publis&ed on some Sunda,! immediatel, after divine service! in
suc& c&urc& as t&e court s&ould direct. <n a certain action /udgment &ad been
entered against a nonresident! after publication in pursuance of t&ese provisions.
%an, ,ears later t&e validit, of t&e proceedings +as called in ;uestion in anot&er
action. <t +as proved from t&e files of an ancient periodical t&at publication &ad
been made in its columns as re;uired b, la+4 but no proof +as offered to s&o+ t&e
publication of t&e order at t&e c&urc&! or t&e posting of it at t&e front door of t&e
courtA&ouse. <t +as insisted b, one of t&e parties t&at t&e /udgment of t&e court +as
void for lac- of /urisdiction. Cut t&e Supreme Court of t&e United States said)
*&e court +&ic& made t&e decree . . . +as a court of general /urisdiction.
*&erefore ever, presumption not inconsistent +it& t&e record is to be
indulged in favor of its /urisdiction. . . . <t is to be presumed t&at t&e court
before ma-ing its decree too- care of to see t&at its order for constructive
service! on +&ic& its rig&t to ma-e t&e decree depended! &ad been obe,ed.
<t is true t&at in t&is case t&e former /udgment +as t&e sub/ect of collateral ! or
indirect attac-! +&ile in t&e case at bar t&e motion to vacate t&e /udgment is direct
proceeding for relief against it. *&e same general presumption! &o+ever! is
indulged in favor of t&e /udgment of a court of general /urisdiction! +&et&er it is
t&e sub/ect of direct or indirect attac- t&e onl, difference being t&at in case of
indirect attac- t&e /udgment is conclusivel, presumed to be valid unless t&e record
affirmativel, s&o+s it to be void! +&ile in case of direct attac- t&e presumption in
favor of its validit, ma, in certain cases be overcome b, proof e.trinsic to t&e
record.
*&e presumption t&at t&e cler- performed &is dut, and t&at t&e court made its
decree +it& t&e -no+ledge t&at t&e re;uirements of la+ &ad been complied +it&
appear to be ampl, sufficient to support t&e conclusion t&at t&e notice +as sent b,
t&e cler- as re;uired b, t&e order. <t is true t&at t&ere oug&t to be found among t&e
papers on file in t&is cause an affidavit! as re;uired b, section #00 of t&e Code of
Civil :rocedure! s&o+ing t&at t&e order +as in fact so sent b, t&e cler-4 and no
suc& affidavit appears. *&e record is t&erefore silent +&ere it oug&t to spea-. Cut
t&e ver, purpose of t&e la+ in recogni9ing t&ese presumptions is to enable t&e
court to sustain a prior /udgment in t&e face of suc& an omission. <f +e +ere to
&old t&at t&e /udgment in t&is case is void because t&e proper affidavit is not
present in t&e file of papers +&ic& +e call t&e record! t&e result +ould be t&at in t&e
future ever, title in t&e <slands resting upon a /udgment li-e t&at no+ before us
+ould depend! for its continued securit,! upon t&e presence of suc& affidavit
among t&e papers and +ould be liable at an, moment to be destro,ed b, t&e
disappearance of t&at piece of paper. =e t&in- t&at no court! +it& a proper regard
for t&e securit, of /udicial proceedings and for t&e interests +&ic& &ave b, la+
been confided to t&e courts! +ould incline to favor suc& a conclusion. <n our
opinion t&e proper course in a case of t&is -ind is to &old t&at t&e legal presumption
t&at t&e cler- performed &is dut, still maintains not+it&standing t&e absence from
t&e record of t&e proper proof of t&at fact.
<n t&is connection it is important to bear in mind t&at under t&e practice prevailing
in t&e :&ilippine <slands t&e +ord BrecordB is used in a loose and broad sense! as
indicating t&e collective mass of papers +&ic& contain t&e &istor, of all t&e
successive steps ta-en in a case and +&ic& are finall, deposited in t&e arc&ives of
t&e cler-Es office as a memorial of t&e litigation. <t is a matter of general
information t&at no /udgment roll! or boo- of final record! is commonl, -ept in our
courts for t&e purpose of recording t&e pleadings and principal proceedings in
actions +&ic& &ave been terminated4 and in particular! no suc& record is -ept in t&e
Court of (irst <nstance of t&e cit, of %anila. *&ere is! indeed! a section of t&e Code
of Civil :rocedure +&ic& directs t&at suc& a boo- of final record s&all be -ept4 but
t&is provision &as! as a matter of common -no+ledge! been generall, ignored. *&e
result is t&at in t&e present case +e do not &ave t&e assistance of t&e recitals of suc&
a record to enable us to pass upon t&e validit, of t&is /udgment and as alread,
stated t&e ;uestion must be determined b, e.amining t&e papers contained in t&e
entire file.
Cut it is insisted b, counsel for t&is motion t&at t&e affidavit of Cernardo C&an ,
Garcia s&o+ing t&at upon April #! 1"0! &e sent a notification t&roug& t&e mail
addressed to t&e defendant at %anila! :&ilippine <slands! s&ould be accepted as
affirmative proof t&at t&e cler- of t&e court failed in &is dut, and t&at! instead of
&imself sending t&e re;uisite notice t&roug& t&e mail! &e relied upon Cernardo to
send it for &im. =e do not t&in- t&at t&is is b, an, means a necessar, inference. Of
course if it &ad affirmativel, appeared t&at t&e cler- &imself &ad attempted to
compl, +it& t&is order and &ad directed t&e notification to %anila +&en &e s&ould
&ave directed it to Amo,! t&is +ould be conclusive t&at &e &ad failed to compl,
+it& t&e e.act terms of t&e order4 but suc& is not t&is case. *&at t&e cler- of t&e
attorne,s for t&e plaintiff erroneousl, sent a notification to t&e defendant at a
mista-en address affords in our opinion ver, slig&t basis for supposing t&at t&e
cler- ma, not &ave sent notice to t&e rig&t address.
*&ere is undoubtedl, good aut&orit, to support t&e position t&at +&en t&e record
states t&e evidence or ma-es an averment +it& reference to a /urisdictional fact! it
+ill not be presumed t&at t&ere +as ot&er or different evidence respecting t&e fact!
or t&at t&e fact +as ot&er+ise t&an stated. <f! to give an illustration! it appears from
t&e return of t&e officer t&at t&e summons +as served at a particular place or in a
particular manner! it +ill not be presumed t&at service +as also made at anot&er
place or in a different manner4 or if it appears t&at service +as made upon a person
ot&er t&an t&e defendant! it +ill not be presumed! in t&e silence of t&e record! t&at it
+as made upon t&e defendant also 2Galpin vs. :age! 1 =all.! 350! 3$$4 Settlemier
vs. Sullivan! "' U. S.! ###! ##"3. =&ile +e believe t&at t&ese propositions are
entirel, correct as applied to t&e case +&ere t&e person ma-ing t&e return is t&e
officer +&o is b, la+ re;uired to ma-e t&e return! +e do not t&in- t&at it is
properl, applicable +&ere! as in t&e present case! t&e affidavit +as made b, a
person +&o! so far as t&e provisions of la+ are concerned! +as a mere
intermeddler.
*&e last ;uestion of importance +&ic& +e propose to consider is +&et&er a motion
in t&e cause is admissible as a proceeding to obtain relief in suc& a case as t&is. <f
t&e motion prevails t&e /udgment of Dul, 1! 1"0! and all subse;uent proceedings
+ill be set aside! and t&e litigation +ill be rene+ed! proceeding again from t&e date
mentioned as if t&e progress of t&e action &ad not been interrupted. *&e proponent
of t&e motion does not as- t&e favor of being permitted to interpose a defense. @is
purpose is merel, to annul t&e effective /udgment of t&e court! to t&e end t&at t&e
litigation ma, again resume its regular course.
*&ere is onl, one section of t&e Code of Civil :rocedure +&ic& e.pressl,
recogni9es t&e aut&orit, of a Court of (irst <nstance to set aside a final /udgment
and permit a rene+al of t&e litigation in t&e same cause. *&is is as follo+s)
S>C. 113. Upon suc& terms as ma, be /ust t&e court ma, relieve a part, or
legal representative from t&e /udgment! order! or ot&er proceeding ta-en
against &im t&roug& &is mista-e! inadvertence! surprise! or e.cusable
neglect4 :rovided! *&at application t&ereof be made +it&in a reasonable
time! but in no case e.ceeding si. mont&s after suc& /udgment! order! or
proceeding +as ta-en.
An additional remed, b, petition to t&e Supreme Court is supplied b, section 513
of t&e same Code. *&e first paragrap& of t&is section! in so far as pertinent to t&is
discussion! provides as follo+s)
=&en a /udgment is rendered b, a Court of (irst <nstance upon default! and
a part, t&ereto is un/ustl, deprived of a &earing b, fraud! accident! mista-e
or e.cusable negligence! and t&e Court of (irst <nstance +&ic& rendered t&e
/udgment &as finall, ad/ourned so t&at no ade;uate remed, e.ists in t&at
court! t&e part, so deprived of a &earing ma, present &is petition to t&e
Supreme Court +it&in si.t, da,s after &e first learns of t&e rendition of suc&
/udgment! and not t&ereafter! setting fort& t&e facts and pra,ing to &ave
/udgment set aside. . . .
<t is evident t&at t&e proceeding contemplated in t&is section is intended to
supplement t&e remed, provided b, section 1134 and +e believe t&e conclusion
irresistible t&at t&ere is no ot&er means recogni9ed b, la+ +&ereb, a defeated part,
can! b, a proceeding in t&e same cause! procure a /udgment to be set aside! +it& a
vie+ to t&e rene+al of t&e litigation.
*&e Code of Civil :rocedure purports to be a complete s,stem of practice in civil
causes! and it contains provisions describing +it& muc& fullness t&e various steps
to be ta-en in t&e conduct of suc& proceedings. *o t&is end it defines +it& precision
t&e met&od of beginning! conducting! and concluding t&e civil action of +&atever
species4 and b, section '"5 of t&e same Code it is declared t&at t&e procedure in all
civil action s&all be in accordance +it& t&e provisions of t&is Code. =e are
t&erefore of t&e opinion t&at t&e remedies prescribed in sections 113 and 513 are
e.clusive of all ot&ers! so far as relates to t&e opening and continuation of a
litigation +&ic& &as been once concluded.
*&e motion in t&e present case does not conform to t&e re;uirements of eit&er of
t&ese provisions4 and t&e conse;uence is t&at in our opinion t&e action of t&e Court
of (irst <nstance in dismissing t&e motion +as proper.
<f t&e ;uestion +ere admittedl, one relating merel, to an irregularit, of procedure!
+e cannot suppose t&at t&is proceeding +ould &ave ta-en t&e form of a motion in
t&e cause! since it is clear t&at! if based on suc& an error! t&e came to late for relief
in t&e Court of (irst <nstance. Cut as +e &ave alread, seen! t&e motion attac-s t&e
/udgment of t&e court as void for +ant of /urisdiction over t&e defendant. *&e idea
underl,ing t&e motion t&erefore is t&at inasmuc& as t&e /udgment is a nullit, it can
be attac-ed in an, +a, and at an, time. <f t&e /udgment +ere in fact void upon its
face! t&at is! if it +ere s&o+n to be a nullit, b, virtue of its o+n recitals! t&ere
mig&t possibl, be somet&ing in t&is. =&ere a /udgment or /udicial order is void in
t&is sense it ma, be said to be a la+less t&ing! +&ic& can be treated as an outla+
and slain at sig&t! or ignored +&erever and +&enever it e.&ibits its &ead.
Cut t&e /udgment in ;uestion is not void in an, suc& sense. <t is entirel, regular in
form! and t&e alleged defect is one +&ic& is not apparent upon its face. <t follo+s
t&at even if t&e /udgment could be s&o+n to be void for +ant of /urisdiction! or for
lac- of due process of la+! t&e part, aggrieved t&ereb, is bound to resort to some
appropriate proceeding to obtain relief. Under accepted principles of la+ and
practice! long recogni9ed in American courts! a proper remed, in suc& case! after
t&e time for appeal or revie+ &as passed! is for t&e aggrieved part, to bring an
action to en/oin t&e /udgment! if not alread, carried into effect4 or if t&e propert,
&as alread, been disposed of &e ma, institute suit to recover it. <n ever, situation
of t&is c&aracter an appropriate remed, is at &and4 and if propert, &as been ta-en
+it&out due process! t&e la+ concedes due process to recover it. =e accordingl,
old t&at! assuming t&e /udgment to &ave been void as alleged b, t&e proponent of
t&is motion! t&e proper remed, +as b, an original proceeding and not b, motion in
t&e cause. As +e &ave alread, seen our Code of Civil :rocedure defines t&e
conditions under +&ic& relief against a /udgment ma, be productive of conclusion
for t&is court to recogni9e suc& a proceeding as proper under conditions different
from t&ose defined b, la+. Upon t&e point of procedure &ere involved! +e refer to
t&e case of :eople vs. @arrison 2# Cal.! $0'3 +&erein it +as &eld t&at a motion
+ill not lie to vacate a /udgment after t&e lapse of t&e time limited b, statute if t&e
/udgment is not void on its face4 and in all cases! after t&e lapse of t&e time limited
b, statute if t&e /udgment is not void on its face4 and all cases! after t&e lapse of
suc& time! +&en an attempt is made to vacate t&e /udgment b, a proceeding in
court for t&at purpose an action regularl, broug&t is preferable! and s&ould be
re;uired. <t +ill be noted ta-en verbatim from t&e California Code 2sec. #'33.
*&e conclusions stated in t&is opinion indicate t&at t&e /udgment appealed from is
+it&out error! and t&e same is accordingl, affirmed! +it& costs. So ordered.
Arellano, C.J., Torres, Carson, and Avancea, JJ., concur.
Se&arate O&inions
'ALCOL', J., dissenting)
< dissent. <t +ill not ma-e me long to state m, reasons. An immutable attribute K
t&e fundamental idea K of due process of la+ is t&at no man s&all be condemned
in &is person or propert, +it&out notice and an opportunit, of being &eard in &is
defense. :rotection of t&e parties demands a strict and an e.act compliance +it&
t&is constitutional provision in our organic la+ and of t&e statutor, provisions in
amplification. 7iterall, &undreds of precedents could be cited in support of t&ese
a.iomatic principles. =&ere as in t&e instant case t&e defendant received no notice
and &ad no opportunit, to be &eard! certainl, +e cannot sa, t&at t&ere is due
process of la+. ?esultantl,! BA /udgment +&ic& is void upon its face! and +&ic&
re;uires onl, an inspection of t&e /udgment roll to demonstrate its +ant of vitalit,
is a dead limb upon t&e /udicial tree! +&ic& s&ould be lopped off! if t&e po+er so to
do e.ists. <t can bear no fruit to t&e plaintiff! but is a constant menace to t&e
defendant.B
<DO5A@ S7AD> :>?J<5S! petitioner!
vs.
A?S>5<O :. D<LO5! Dudge of (irst <nstance of %anila! >UG>5> A?*@U?
:>?J<5S! and C>5GU>* CO5SO7<DA*>D %<5<5G CO%:A56! respondents.
Alva D. @ill for petitioner.
?oss! 7a+rence! Selp& M Carrascoso for respondent Dudge and Cenguet
Consolidated %ining Compan,.
De=itt! :er-ins M :once >nrile for respondent :er-ins.

%O?A5! D.)
On Dul, $! 1"3! respondent! >ugene Art&ur :er-ins! instituted an action in t&e
Court of (irst <nstance of %anila against t&e Cenguet Consolidated %ining
Compan, for dividends amounting to :'1!3'"."0 on 51!'# s&ares of stoc-
registered in &is name! pa,ment of +&ic& +as being +it&&eld b, t&e compan,4 and!
for t&e recognition of &is rig&t to t&e control and disposal of said s&ares! to t&e
e.clusion of all ot&ers. *o t&e complaint! t&e compan, filed its ans+er alleging! b,
+a, of defense! t&at t&e +it&&olding of suc& dividends and t&e nonArecognition of
plaintiffEs rig&t to t&e disposal and control of t&e s&ares +ere due to certain
demands made +it& respect to said s&ares b, t&e petitioner &erein! <dona& Slade
:er-ins! and b, one George @. >ngel&ard. *&e ans+er pra,s t&at t&e adverse
claimants be made parties to t&e action and served +it& notice t&ereof b,
publication! and t&at t&ereafter all suc& parties be re;uired to interplead and settle
t&e rig&ts among t&emselves. On September 5! 1"3! t&e trial court ordered
respondent >ugene Art&ur :er-ins to include in &is complaint as parties defendant
petitioner! <dona& Slade :er-ins! and George @. >ngel&ard. *&e complaint +as
accordingl, amended and in addition to t&e relief pra,ed for in t&e original
complaint! respondent :er-ins pra,ed t&at petitioner <dona& Slade :er-ins and
George >ngel&ard be ad/udged +it&out interest in t&e s&ares of stoc- in ;uestion
and e.cluded from an, claim t&e, assert t&ereon. *&ereafter! summons b,
publication +ere served upon t&e nonAresident defendants! <dona& Slade :er-ins
and George @. >ngel&ard! pursuant to t&e order of t&e trial court. On December "!
1"3! >ngel&ard filed &is ans+er to t&e amended complaint! and on December 10!
1"3! petitioner <dona& Slade :er-ins! t&roug& counsel! filed &er pleading entitled
Bob/ection to venue! motion to ;uas&! and demurrer to /urisdictionB +&erein s&e
c&allenged t&e /urisdiction of t&e lo+er court over &er person. :etitionerEs
ob/ection! motion and demurrer &aving been overruled as +ell as &er motion for
reconsideration of t&e order of denial! s&e no+ broug&t t&e present petition for
certiorari! pra,ing t&at t&e summons b, publication issued against &er be declared
null and void! and t&at! +it& respect to &er! respondent Dudge be permanentl,
pro&ibited from ta-ing an, action on t&e case.
*&e controlling issue &ere involved is +&et&er or not t&e Court of (irst <nstance of
%anila &as ac;uired /urisdiction over t&e person of t&e present petitioner as a nonA
resident defendant! or! not+it&standing t&e +ant of suc& /urisdiction! +&et&er or
not said court ma, validl, tr, t&e case. *&e parties &ave filed lengt&,
memorandums rel,ing on numerous aut&orities! but t&e principles governing t&e
;uestion are +ell settled in t&is /urisdiction.
Section 3" of our Code of Civil :rocedure provides t&at +&en a nonAresident
defendant is sued in t&e :&ilippine courts and it appears! b, t&e complaint or b,
affidavits! t&at t&e action relates to real or personal propert, +it&in t&e :&ilippines
in +&ic& said defendant &as or claims a lien or interest! actual or contingent! or in
+&ic& t&e relief demanded consists! +&oll, or in part! in e.cluding suc& person
from an, interest t&erein! service of summons ma,be made b, publication.
=e &ave full, e.plained t&e meaning of t&is provision in >l Canco >spaIol
(ilipino vs. :alanca! 3' :&il.! "11! +&erein +e laid do+n t&e follo+ing rules)
213 <n order t&at t&e court ma, validl, tr, a case! it must &ave /urisdiction over t&e
sub/ectAmatter and over t&e persons of t&e parties. Durisdiction over t&e sub/ectA
matter is ac;uired b, concession of t&e sovereign aut&orit, +&ic& organi9es a court
and determines t&e nature and e.tent of its po+ers in general and t&us fi.es its
/urisdiction +it& reference to actions +&ic& it ma, entertain and t&e relief it ma,
grant. Durisdiction over t&e persons of t&e parties is ac;uired b, t&eir voluntar,
appearance in court and t&eir submission to its aut&orit,! or b, t&e coercive po+er
of legal process e.erted over t&eir persons.
213 =&en t&e defendant is a nonAresident and refuses to appear voluntar,! t&e court
cannot ac;uire /urisdiction over &is person even if t&e summons be served b,
publication! for &e is be,ond t&e reac& of /udicial process. 5o tribunal establis&ed
b, one State can e.tend its process be,ond its territor, so as to sub/ect to its
decisions eit&er persons or propert, located in anot&er State. B*&ere are man,
e.pressions in t&e American reports from +&ic& it mig&t be inferred t&at t&e court
ac;uires personal /urisdiction over t&e person of t&e defendant b, publication and
notice4 but suc& is not t&e case. <n trut&! t&e proposition t&at /urisdiction over t&e
person of a nonAresident cannot be ac;uired b, publication and notice +as never
clearl, understood even in t&e American courts until after t&e decision &ad been
rendered b, t&e Supreme Court of t&e United States in t&e leading case of
:enno,er v. 5eff 2"5 U.S.! '1#4 1# 7a+. ed.! 5$53. <n t&e lig&t of t&at decisions
+&ic& &ave subse;uentl, been rendered in t&at and ot&er courts! t&e proposition
t&at /urisdiction over t&e person cannot be t&us ac;uired b, publication and notice
is no longer open to ;uestion4 and it is no+ full, establis&ed t&at a personal
/udgment upon constructive or substituted service against a nonAresident +&o does
not appear is +&oll, invalid. *&is doctrine applies to all -inds of constructive or
substituted process! including service b, publication and personal service outside
of t&e /urisdiction in +&ic& t&e /udgment is rendered4 and t&e onl, e.ception seems
to be found in t&e case +&ere t&e nonAresident defendant &as e.pressl, or impliedl,
consented to t&e mode of service. 25ote to ?a&er vs. ?a&er! 35 7. ?. A. F5. S.G!
1"14 see also 7.?.A. 554 35 7.?.A. F5.S.G! 311.3
233 *&e general rule! t&erefore! is t&at a suit against a nonAresident cannot be
entertained b, a :&ilippine court. =&ere! &o+ever! t&e action is in rem or ;uasi in
rem in connection +it& propert, located in t&e :&ilippines! t&e court ac;uires
/urisdiction over t&e res! and its /urisdiction over t&e person of t&e nonAresident is
nonAessential. <n order t&at t&e court ma, e.ercise po+er over t&e res! it is not
necessar, t&at t&e court s&ould ta-e actual custod, of t&e propert,! potential
custod, t&ereof being sufficient. *&ere is potential custod, +&en! from t&e nature
of t&e action broug&t! t&e po+er of t&e court over t&e propert, is impliedl,
recogni9ed b, la+. BAn illustration of +&at +e term potential /urisdiction over t&e
res! is found in t&e proceeding to register t&e title of land under our s,stem for t&e
registration of land. @ere t&e court! +it&out ta-ing actual p&,sical control over t&e
propert, ! assumes! at t&e instance of some person claiming to be o+ner! to
e.ercise a /urisdiction in rem over t&e propert, and to ad/udicate t&e title in favor
of t&e petitioner against all t&e +orld.B
2#3 As before stated! in an action in rem or ;uasi in rem against a nonAresident
defendant! /urisdiction over &is person is nonAessential! and if t&e la+ re;uires in
suc& case t&at t&e summons upon t&e defendant be served b, publication! it is
merel, to satisf, t&e constitutional re;uirement of due process. <f an, be said! in
t&is connection! t&at Bma, reported cases can be cited in +&ic& it is assumed t&at
t&e ;uestion of t&e sufficienc, of publication or notice in t&e case of t&is -ind is a
;uestion affecting t&e /urisdiction of t&e court! and t&e court is sometimes said to
ac;uire /urisdiction b, virtue of t&e publication. *&is p&raseolog, +as undoubtedl,
originall, adopted b, t&e court because of t&e analog, bet+een service b,
publication and personal service of process upon t&e defendant4 and! as &as alread,
been suggested! prior to t&e decision of :enno,er v. 5eff 2supra3! t&e difference
bet+een t&e legal effects of t&e t+o forms of service +as obscure. <t is accordingl,
not surprising t&at t&e modes of e.pression +&ic& &ad alread, been moulded into
legal tradition before t&at case +as decided &ave been broug&t do+n to t&e present
da,. Cut it is clear t&at t&e legal principle &ere involved is not affected b, t&e
peculiar languages in +&ic& t&e courts &ave e.pounded t&eir ideas.Bla+p&i1.net
*&e reason for t&e rule t&at :&ilippine courts cannot ac;uire /urisdiction over t&e
person of a nonAresident! as laid do+n b, t&e Supreme Court of t&e United States
in :enno,er v. 5eff! supra! ma, be found in a recogni9ed principle of public la+ to
t&e effect t&at Bno State can e.ercise direct /urisdiction and aut&orit, over persons
or propert, +it&out its territor,. Stor,! Confl. 7.! c&. 14 =&eat! <nt. 7.! pt. 1! c&. 1.
*&e several States are of e;ual dignit, and aut&orit,! and t&e independence of one
implies t&e e.clusion of po+er from all ot&ers. And so it is laid do+n b, /urists! as
an elementar, principle! t&at t&e la+s of one State &ave no operation outside of its
territor,! e.cept so far as is allo+ed b, comit,4 and t&at no tribunal establis&ed b,
it can e.tend its process be,ond t&at territor, so as to sub/ect eit&er persons or
propert, to its decisions. BAn, e.ertion of aut&orit, of t&is sort be,ond t&is limit!B
sa,s Stor,! Bis a mere nullit,! and incapable of binding suc& persons or propert, in
an, ot&er tribunals.B Stor,! Confl. 7.! sec. 53".B 2:enno,er v. 5eff! "5 U.S.! '1#4
1# 7a+. ed.! 5$5! 5$A5$".3.
=&en! &o+ever! t&e action relates to propert, located in t&e :&ilippines! t&e
:&ilippine courts ma, validl, tr, t&e case! upon t&e principle t&at a BState! t&roug&
its tribunals! ma, sub/ect propert, situated +it&in its limits o+ned b, nonAresidents
to t&e pa,ment of t&e demand of its o+n citi9ens against t&em4 and t&e e.ercise of
t&is /urisdiction in no respect infringes upon t&e sovereignt, of t&e State +&ere t&e
o+ners are domiciled. >ver, State o+es protection to its citi9ens4 and! +&en nonA
residents deal +it& t&em! it is a legitimate and /ust e.ercise of aut&orit, to &old and
appropriate an, propert, o+ned b, suc& nonAresidents to satisf, t&e claims of its
citi9ens. <t is in virtue of t&e StateEs /urisdiction over t&e propert, of t&e nonA
resident situated +it&in its limits t&at its tribunals can in;uire into t&e nonA
residentEs obligations to its o+n citi9ens! and t&e in;uir, can t&en be carried onl, to
t&e e.tent necessar, to control t&e disposition of t&e propert,. <f t&e nonAresident
&as no propert, in t&e State! t&ere is not&ing upon +&ic& t&e tribunals can
ad/udicate.B 2:enno,er v. 5eff! supra.3
<n t&e instant case! t&ere can be no ;uestion t&at t&e action broug&t b, >ugene
Art&ur :er-ins in &is amended complaint against t&e petitioner! <dona& Slade
:er-ins! see-s to e.clude &er from an, interest in a propert, located in t&e
:&ilippines. *&at propert, consists in certain s&ares of stoc-s of t&e Cenguet
Consolidated %ining Compan,! a sociedad anonima! organi9ed in t&e :&ilippines
under t&e provisions of t&e Spanis& Code of Commerce! +it& its principal office in
t&e Cit, of %anila and +&ic& conducts its mining activities t&erein. *&e situs of t&e
s&ares is in t&e /urisdiction +&ere t&e corporation is created! +&et&er t&e
certificated evidencing t&e o+ners&ip of t&ose s&ares are +it&in or +it&out t&at
/urisdiction. 2(letc&er C,clopedia Corporations! :ermanent ed. 8ol. 11! p. "53.
Under t&ese circumstances! +e &old t&at t&e action t&us broug&t is ;uasi in rem! for
+&ile t&e /udgement t&at ma, be rendered t&erein is not strictl, a /udgment in rem!
Bit fi.es and settles t&e title to t&e propert, in controvers, and to t&at e.tent
parta-es of t&e nature of t&e /udgment in rem.B 250 C.D.! p 5033. As &eld b, t&e
Supreme Court of t&e United States in :enno,er v. 5eff 2supra34
<t is true t&at! in a strict sense! a proceeding in rem is one ta-en directl, against
propert,! and &as for its ob/ect t&e disposition of t&e propert,! +it&out reference to
t&e title of individual claimants4 but ! in a large and more general sense! t&e terms
are applied to actions bet+een parties! +&ere t&e direct ob/ect is to reac& and
dispose of propert, o+ned b, t&em! or of some interest t&erein.
*&e action being in ;uasi in rem! *&e Court of (irst <nstance of %anila &as
/urisdiction over t&e person of t&e nonAresident. <n order to satisf, t&e
constitutional re;uirement of due process! summons &as been served upon &er b,
publication. *&ere is no ;uestion as to t&e ade;uac, of publication made nor as to
t&e mailing of t&e order of publication to t&e petitionerEs last -no+n place of
residence in t&e United States. Cut! of course! t&e action being ;uasi in rem and
notice &aving be made b, publication! t&e relief t&at ma, be granted b, t&e
:&ilippine court must be confined to t&e res! it &aving no /urisdiction to render a
personal /udgment against t&e nonAresident. <n t&e amended complaint filed b,
>ugene Art&ur :er-ins! no mone, /udgment or ot&er relief in personam is pra,ed
for against t&e petitioner. *&e onl, relief soug&t t&erein is t&at s&e be declared to be
+it&out an, interest in t&e s&ares in controvers, and t&at s&e be e.cluded from an,
claim t&ereto.
:etitioner contends t&at t&e proceeding instituted against &er is one of interpleading
and is t&erefore an action in personam. Section 110 of our Code of Civil :rocedure
provides t&at +&enever conflicting claims are or ma, be made upon a person for or
relating to personal propert,! or t&e performance of an obligation or an, portion
t&ereof! so t&at &e ma, be made sub/ect to several actions b, different persons!
suc& person ma, bring an action against t&e conflicting claimants! disclaiming
personal interest in t&e controvers,! and t&e court ma, order t&em to interplead
+it& one anot&er and litigate t&eir several claims among t&emselves! t&ere upon
proceed to determine t&eir several claims. @ere! *&e Cenguet Consolidated %ining
Compan,! in its ans+er to t&e complaint filed b, >ugene Art&ur :er-ins! averred
t&at in connection +it& t&e s&ares of stoc- in ;uestion! conflicting claims +ere
being made upon it b, said plaintiff! >ugene Art&ur :er-ins! &is +ife <dona& Slade
:er-ins! and one named George @. >ngel&ard! and pra,ed t&at t&ese last t+o be
made parties to t&e action and served +it& summons b, publication! so t&at t&e
t&ree claimants ma, litigate t&eir conflicting claims and settle t&eir rig&ts among
t&emselves. *&e court &as not issued an order compelling t&e conflicting claimants
to interplead +it& one anot&er and litigate t&eir several claims among t&emselves!
but instead ordered t&e plaintiff to amend &is complaint including t&e ot&er t+o
claimants as parties defendant. *&e plaintiff did so! pra,ing t&at t&e ne+
defendants t&us /oined be e.cluded fro an, interest in t&e s&ares in ;uestion! and it
is upon t&is amended complaint t&at t&e court ordered t&e service of t&e summons
b, publication. <t is t&erefore! clear t&at t&e publication of t&e summons +as
ordered not in virtue of an interpleading! but upon t&e filing of t&e amended
complaint +&erein an action ;uasi in rem is alleged.
@ad not t&e complaint been amended! including t&e &erein petitioner as an
additional defendant! and &ad t&e court! upon t&e filing of t&e ans+er of t&e
Cenguet Consolidated %ining Compan,! issued an order under section 110 of t&e
Code of Civil :rocedure! calling t&e conflicting claimants into court and
compelling t&em to interplead +it& one anot&er! suc& order could not per&aps &ave
validl, been served b, publication or ot&er+ise! upon t&e nonAresident <dona&
Slade :er-ins! for t&en t&e proceeding +ould be purel, one of interpleading. Suc&
proceeding is a personal action! for it merel, see-s to call conflicting claimants
into court so t&at t&e, ma, interplead and litigate t&eir several claims among
t&emselves! and no specific relief is pra,ed for against t&em! as t&e interpleader
&ave appeared in court! one of t&em pleads o+ners&ip of t&e personal propert,
located in t&e :&ilippines and see-s to e.clude a nonAresident claimant from an,
interest t&erein! is a ;uestion +&ic& +e do not decide not. Suffice it to sa, t&at &ere
t&e service of t&e summons b, publication +as ordered b, t&e lo+er court b,
virtue of an action ;uasi in rem against t&e nonAresident defendant.
?espondents contend t&at! as t&e petitioner in t&e lo+er court &as pleaded over t&e
sub/ectAmatter! s&e &as submitted &erself to its /urisdiction. =e &ave noticed!
&o+ever! t&at t&ese pleas &ave been made not as independent grounds for relief!
but merel, as additional arguments in support of &er contention t&at t&e lo+er
court &ad no /urisdiction over t&e person. <n ot&er +ords! s&e claimed t&at t&e
lo+er court &ad no /urisdiction over &er person not onl, because s&e is a nonA
resident! but also because t&e court &ad no /urisdiction over t&e sub/ectAmatter of
t&e action and t&at t&e issues t&erein involved &ave alread, been decided b, t&e
5e+ 6or- court and are being relitigated in t&e California court. Alt&oug& t&is
argument is obviousl, erroneous! as neit&er /urisdiction over t&e sub/ectAmatter nor
res ad/udicata nor lis pendens &as an,t&ing to do +it& t&e ;uestion of /urisdiction
over &er person! +e believe and so &old t&at t&e petitioner &as not! b, suc&
erroneous argument! submitted &erself to t&e /urisdiction of t&e court. 8oluntar,
appearance cannot be implied from eit&er a mista-en or superflous reasoning but
from t&e nature of t&e relief pra,ed for.
(or all t&e foregoing! petition is &ereb, denied! +it& costs against petitioner.
'"ane () Centra *ano(er Ban+ , Tr"st Co
Crief (act Summar,. Appellee! a ban- located in 5e+ 6or-! set up a trust covering
113 participants and sent notice b, publication to all -no+n and un-no+n
beneficiaries regarding AppelleeNs application for /udicial settlement of t&e trust! as
re;uired under a 5e+ 6or- statute. Upon first distribution of t&e trust! Appellee
+ould mail notice to -no+n beneficiaries t&at could benefit from t&e interest or
principal. Appellant! guardian of t&e beneficiaries! appealed! arguing t&at notice b,
publication alone violated t&e beneficiariesN due process rig&ts under t&e
(ourteent& Amendment.
S,nopsis of ?ule of 7a+. 5otice must be Oreasonabl, calculated under all t&e
circumstances! to apprise interested parties of t&e action and give t&em an
opportunit, to ob/ect.
(acts. Appellee! Central @anover Can- M *rust! set up common fund pursuant to a
5e+ 6or- statute allo+ing t&e creation of common funds for distribution of
/udicial settlement trusts. *&ere +ere 113 participating trusts. Appellee petitioned
for settlement of its first account as common trustee. Some of t&e beneficiaries
+ere not residents of 5e+ 6or-. O5oticeP +as b, publication for four +ee-s in a
local ne+spaper. Appellee &ad notified t&ose people b, mail t&at +ere of full age
and sound mind +&o +ould be entitled to s&are in t&e principal if t&e interest t&e,
&eld became distributable. Appellant +as appointed as special guardian and
attorne, for all persons -no+n or un-no+n not ot&er+ise appearing +&o &ad or
mig&t t&ereafter &ave an, interest in t&e income of t&e common trust fund.
Appellee +as appointed to represent t&ose interested in t&e principal. Appellant
appeared speciall,! ob/ecting t&at notice b, publication! permitted under t&e
applicable statute +as inade;uate to afford t
&e beneficiaries due process under t&e (ourteent& Amendment and t&at t&erefore
/urisdiction +as lac-ing.
<ssue. <s notice b, publication of a /udicial settlement to un-no+n beneficiaries of
a common trust reasonable notice under t&e due process re;uirements of t&e
(ourteent& AmendmentQ
<s notice b, publication to all of t&e beneficiaries of a common trust +&ose
residences are -no+n reasonable notice under t&e due process re;uirements of t&e
(ourteent& AmendmentQ
@eld. (irst issue) 6,es. Second issue) 5no.
=&et&er or not t&e action is in personam or in rem! t&e court can determine t&e
interests of all claimants as long as t&ere is a procedure allo+ing for notice and an
opportunit, to be &eard.
*&ere &as to be notice and opportunit, for a &earing appropriate to t&e nature of t&e
case. *&e claimants at issue could potentiall, be deprived of propert, &ere! as t&e
proposed disposition cuts off t&eir rig&ts to sue for negligent or illegal impairments
of t&eir interests. <n addition! t&e courtNs decision appoints someone +&o! +it&out
t&eir -no+ledge! could use t&e trust to obtain t&e fees and e.penses necessar, for a
s&am proceeding.
*&ere need not be personal service because t&e state &as an interest in settling
trusts. O5otice &as to be reasonabl, calculated! under all t&e circumstances! to
apprise interested parties of t&e pending action and afford t&em an opportunit, to
present t&eir ob/ections.P 6ou do not &ave to notif, all t&e beneficiaries +&en t&e
trust concerns man, small interests. Sending notice to most of t&em +ill protect
t&eir interests sufficientl,.
*&e 5e+ 6or- Can-ing 7a+! &o+ever! t&at does not re;uire notice to all persons
+&ose +&ereabouts are -no+n! violates t&e due process clause of t&e (ourteent&
Amendment because contacting beneficiaries b, mail at t&eir last -no+n address is
not particularl, burdensome.
Dissent. Dustice Curton) Omitted from caseboo-.
Discussion. *&e ma/orit,Ns opinion illustrates t&at notice b, publication +ill not
suffice onl, because it +ould be burdensome for t&e plaintiff to notif, all parties
involved. <f t&e plaintiff -no+s of a +a, to contact t&e parties! t&en t&e plaintiff
must bear t&at e.pense. %ailing notice to an address! if -no+n! +ill suffice. 5otice
b, publication +ill suffice onl, if t&ere is no practical +a, of -no+ing t&e identit,
or location of t&e part,.
'A$-O$IE E) .OO/0INE, Petitioner, () T*E S1PE$IO$ CO1$T OF
LOS AN.ELES CO1NT2, $es&ondent3 /ON F) .OO/0INE, $ea Part# in
Interest)
CO1NSEL
?ic&ard %. %oore and Cooper M 5elsen for :etitioner.
@arold =. Jenned,! Count, Counsel! and =illiam (. Ste+art! Deput, Count,
Counsel! for ?espondent.
5e+man M 5e+man and 5at&an 5e+b,! Dr.! for ?eal :art, in <nterest.
O:<5<O5
*?A65O?! C. D.
On October ! 1"$#! plaintiff! %ar/orie >. Good+ine! began an action for separate
maintenance against &er &usband! Don (. Good+ine. A +rit of attac&ment +as
levied upon defendantEs real propert, in t&e Count, of 7os Angeles! giving t&e trial
court ;uasiAinArem /urisdiction. 2Cald+in v. Cald+in! 1 Cal. 1d #0$! #15 F1'0
:.1d $'0G4 5ic&ols v. Superior Court! 1 Cal. 1d 5"! 5"" F3$ :.1d 30! "5 A.7.?.
"#G4 %urra, v. %urra,! 115 Cal. 1$$! 1'5 F#' :. 3'! 5$ Am.St.?ep. "'! 3' 7.?.A.
$1$G.3plaintiff secured an order for service b, publication based on an affidavit t&at
defendant resided out of t&e state 2see Code Civ. :roc.! R #113! and defendant +as
personall, served in %e.ico 2see Code Civ. :roc.! R #133. Defendant moved to
;uas& t&e +rit of attac&ment! t&e service of summons and complaint! and to
dismiss t&e action! on t&e ground t&at t&e trial court +as +it&out /urisdiction. *&e
trial court granted defendantEs motion and dismissed t&e action! sta,ing its order
pending appellate revie+.plaintiff t&en filed t&is petition for a +rit of mandate to
compel t&e trial court to vacate its order dismissing t&e action. F$3 Cal. 1d #3G
:laintiff and defendant +ere married in ?eno! 5evada! on April 1! 1"55.
*&e, lived in California until %arc& 1"$3! +&en t&e, moved to %e.ico to live in
retirement. Defendant obtained a residentEs visa and became a domiciliar, of
%e.ico.plaintiff obtained a tourist visa because of local regulations! but s&e also
intended to become a permanent resident of %e.ico. On September 3! 1"$#!
plaintiff left defendant and +ent to 7os Angeles to reside +it& &er sister! allegedl,
because &e treated plaintiff +it& e.treme cruelt,. :laintiff t&en broug&t t&e action
for separate maintenance! see-ing support of 01!000 per mont&! attorne,Es fees! and
costs out of defendantEs propert, +it&in t&e state.
Defendant contends t&at t&e trial court &as no /urisdiction in an action for
separate maintenance +&en neit&er part, is domiciled in t&e state. *&ere is no merit
in t&is contention. <n an action for divorce! domicile is dispositive! since Bt&e
domicile of one spouse +it&in a State gives po+er to t&at State ... to dissolve a
marriage +&eresoever contracted.B 2=illiams v. 5ort& Carolina <<! 315 U.S. 11$!
11"A130 F$5 S.Ct. 10"1! " 7.>d. 15''! 15' A.7.?. 13$$G.3 *&e state in +&ic& one
spouse is domiciled is deemed to &ave sufficient interest to terminate t&e marriage.
*&us! a state &as t&e po+er to grant an e. parte divorce to a domiciliar, +ife
+it&out personal /urisdiction over t&e &usband or ;uasiAinArem /urisdiction over &is
propert,. 2=illiams v. 5ort& Carolina <! 31' U.S. 1'! 303 F$3 S.Ct. 10'! ' 7.>d.
1'"! 1#3 A.7.?. 11'3G.3
F1G <n an action for separate maintenance! &o+ever! domicile is neit&er
sufficient nor necessar, for /urisdiction. An action for separate maintenance is
essentiall, an action for support 21 =it-in! Cal. :rocedure 21"5#3 Durisdiction! R
110! p. 3'53! see-ing a mone, /udgment against t&e defendant. Durisdiction does
not depend on domicile but on ac;uiring personal /urisdiction over t&e &usband or
;uasiAinA rem /urisdiction over &is propert,. 28anderbilt v. 8anderbilt! 35# U.S.
#1$! #1 F'' S.Ct. 13$0! 1 7.>d.1d 1#5$G4 Cald+in v. Cald+in! 1 Cal. 1d #0$!
#15 F1'0 :.1d $'0G4 1 =it-in! Cal. :rocedure 21"5#3 Durisdiction! R 110! pp. 3'5A
3'$4 see Code Civ. :roc.! R 53'.3 F1G Once ;uasiAinArem /urisdiction is establis&ed!
t&e court can a+ard a mone, /udgment to t&e e.tent of t&e defendantEs interest in
t&e propert, attac&ed. 2Cald+in v. Cald+in! supra! 1 Cal. 1d #0$! #15.3 F3G *&e
residence re;uirements applicable to t&e plaintiff in divorce actions 2Civ. Code! R
113 are inapplicable in actions for separate maintenance. 2@iner v. @iner! 153 Cal.
15#! 1$0 F"# F$3 Cal. 1d ##G :. 10##G.3 >.ercising /urisdiction in t&ese cases does
not encourage forumAs&opping! since t&e court +ill not necessaril, appl, t&e
substantive la+ of t&e forum under t&e applicable conflict of la+s rules. 2See
Cern-rant v. (o+ler! 55 Cal. 1d 5! 5"$ F11 Cal.?ptr. 1$$! 3$0 :.1d "0$G.3
F#G :laintiff contends t&at since defendant moved to dismiss t&e action! &e made a
general appearance giving t&e trial court personal /urisdiction over &im! rat&er t&an
;uasiAinArem /urisdiction.
=e agree +it& plaintiff t&at defendant made a motion to dismiss. >ven
t&oug& t&e re;uest for dismissal is found onl, in t&e title of defendantEs motion! t&e
motion rests on a t&eor, t&at t&e court lac-ed sub/ectAmatter /urisdiction +&en
neit&er part, +as domiciled in t&e state. Defendant t&us c&allenged t&e sub/ectA
matter /urisdiction of t&e court! as +ell as its personal /urisdiction over &im. =e
disagree +it& plaintiff! &o+ever! t&at a motion to dismiss for lac- of sub/ectAmatter
/urisdiction is a general appearance. B EF=G&ere t&e defendant appears and as-s
some relief +&ic& can onl, be granted on t&e &,pot&esis t&at t&e court &as
/urisdiction of cause and person! it is a submission to t&e /urisdiction of t&e court as
completel, as if &e &ad been regularl, served +it& process! +&et&er suc& an
appearance b, its terms be limited to a special appearance or not.E B 2Securit, 7oan
M *rust Co. v. Coston M S. ?. (ruit Co.! 11$ Cal. #1! #11 F5 :. "#1! 5" :. 1"$G4
<n re Clar-e! 115 Cal. 3! 3"1 F5 :. 11G4 see 1 =it-in! Cal. :rocedure 21"5#3
Durisdiction! R '1! p. 3#1.3 An ans+er! a demurrer! and a motion to stri-e constitute
a general appearance 2Code Civ. :roc.! R 101#3! since a court does not decide
;uestions raised b, suc& pleadings at t&e be&est of persons over +&om it &as no
/urisdiction.
A court need not &ave /urisdiction over t&e person! &o+ever! to dismiss for
lac- of sub/ectAmatter /urisdiction. <ndeed! t&e court must dismiss on t&at ground
on its o+n motion. 2%orris v. Gilmer! 11" U.S. 315! 31$A31' F" S.Ct. 1"! 31
7.>d. $"0G4 Abelleira v. District Court of Appeal! 1' Cal. 1d 10! 301A303 F10"
:.1d "#1! 131 A.7.?. '15G.3 *&us! a c&allenge to t&e sub/ectAmatter /urisdiction of
t&e court is not inconsistent +it& a c&allenge to personal /urisdiction. %oreover!
since t&e court must dismiss on its o+n motion! an appropriate c&allenge to
sub/ectAmatter /urisdiction aids t&e court in performing its dut,. *&e defendant
s&ould t&erefore be allo+ed to point out lac- of sub/ectAmatter /urisdiction +it&out
ma-ing a general appearance. Dudson v. Superior Court! 11 Cal. 1d 11 F11" :.1d
3$1G! is to t&e contrar,! but it &as often been critici9ed F$3 Cal. 1d #5G 2see 31
Cal.7.?ev. 3#14 1 =it-in! Cal. :rocedure 21"5#3! R '$! p. 3#$3 and is overruled.
Defendant contends t&at even if t&e trial court &as ;uasiAinArem /urisdiction! it
properl, refused to e.ercise it under t&e doctrine of forum non conveniens.
*&e trial court! &o+ever! &as not ,et considered +&et&er t&e doctrine of
forum non conveniens applies to t&is case! since it treated defendantEs motion as
being Bfor t&e sole purpose of ob/ecting to t&e courtEs /urisdiction.B Since t&e court
&as /urisdiction of t&e sub/ect matter! it can no+ consider t&e applicabilit, of t&at
doctrine! +&ic& is accepted in t&is /urisdiction 2:rice v. Atc&ison! *. M S.(. ?,. Co.!
#1 Cal. 1d 5''! 53 F1$ :.1d #5'! #3 A.7.?.1d '5$G3 and applies to actions for
support 2=ilburn v. =ilburn! 2D.C.3 1"1 A.1d '"'! 004 %elvin v. %elvin! 11"
(.1d 3"! #0 F'$ App.D.C. 5$G3. F5G <n determining t&e applicabilit, of t&e doctrine!
t&e court must consider t&e public interest as +ell as t&e private interests of t&e
litigants. *&e court must consider suc& factors as t&e ease of access of proof! t&e
availabilit, and cost of obtaining +itnesses! t&e possibilit, of &arassment of t&e
defendant in litigating in an inconvenient forum! t&e enforceabilit, of t&e
/udgment! t&e burden on t&e communit, in litigating matters not of local concern!
and t&e desirabilit, of litigating local matters in local courts. F$G B EFUGnless t&e
balance is strongl, in favor of t&e defendant! t&e plaintiffEs c&oice of forum s&ould
rarel, be disturbed.E B 2:rice v. Atc&ison! *. M S.(. ?,. Co.! supra! #1 Cal. 1d 5''!
55.3
*&e trial court must in t&e first instance consider t&ese factors in
determining +&et&er to appl, t&e doctrine. *&us plaintiff alleges mistreatment
t&roug&out t&e marriage! bot& in California and in %e.ico! and t&e trial court must
ascertain t&e location of +itnesses and ot&er sources of proof. %oreover! t&e trial
court must consider plaintiffEs contention t&at s&e is domiciled in California. *&e
trial court originall, relied on defendantEs affidavit t&at plaintiff +as domiciled in
%e.ico! on t&e failure of plaintiff to file a counteraffidavit! on t&e ambiguit, of
plaintiffEs allegation of residence in &er complaint! and on points and aut&orities
submitted b, t&e parties in deciding plaintiff +as not a California domiciliar,. On
remand! plaintiff can submit furt&er evidence of &er domicile in t&is state. F'G A
determination t&at a plaintiff is domiciled &ere +ould ordinaril, preclude granting
t&e defendantEs motion for dismissal on t&e ground of forum non conveniens. 2See
Carrett! F$3 Cal. 1d #$G *&e Doctrine of (orum 5on Conveniens! 35 Cal.7.?ev.
30! #13A#15.3
7et t&e peremptor, +rit issue as pra,ed.
%cComb! D.! :eters! D.! *obriner! D.! :ee-! D.! %os-! D.! and Cur-e! D.! concurred.
7ALA?O C. ?A6?A6! plaintiffAappellant!
vs.
C@A> J6U5G 7>>! defendantAappellee.
Daime ?. 5uevas for plaintiff and appellee.
?afael Dose for defendant and appellant.
CO5C>:C<O5! C.D.)
Appeal from a decision of t&e Court of Duvenile and Domestic ?elations.
:laintiff 7a9aro ?a,ra, see-s t&e annulment of &is marriage to defendant C&ae
J,ung 7ee. <nasmuc& as! t&e latterEs +&ereabouts is un-no+n! and s&e +as
formerl, a resident of :usan! Jorea! summons +as served b, publication! as
provided in t&e ?ules of Court. *&ereafter! plaintiff moved t&at defendant be
declared in default! s&e not &aving filed an ans+er! and t&at a date be set for t&e
reception of &is evidence. Cefore acting on t&is motion! t&e lo+er court referred t&e
case to t&e Cit, (iscal of %anila pursuant to Articles and 101 of t&e Civil Code
of t&e :&ilippines! for t&e purpose of determining +&et&er or not a collusion
bet+een t&e parties e.ists. Said officer &aving found no suc& collusion! t&e case
+as &eard on t&e merits. <n due course! t&ereafter! decision +as rendered
dismissing plaintiffEs complaint! +it&out costs! upon t&e ground) 213 t&at t&e court
could not nullif, a marriage contracted abroad4 and 213 t&at t&e facts proven do not
+arrant t&e relief pra,ed for. A reconsideration of t&is decision &aving been denied!
plaintiff appealed to t&e Court of Appeals! +&ic& certified t&e case to t&e Supreme
Court! t&e /urisdiction of t&e lo+er court being in issue in t&e appeal.
<n relation t&ereto! t&e court a ;uo found t&at it &ad no /urisdiction to pass upon t&e
validit, of plaintiffEs marriage to t&e defendant! it &aving been solemni9ed in
Seoul! Jorea. Said conclusion is erroneous. <n order t&at a given case could be
validl, decided b, a court of /ustice! it must &ave /urisdiction over 213 t&e sub/ectA
matter of t&e litigation4 213 t&e person of t&e parties t&erein4 and 233 in actions in
rem or ;uasiAinArem! t&e res.1
*&e sub/ectAmatter of t&e present case is t&e annulment of plaintiffEs marriage to
t&e defendant! +&ic& is +it&in t&e /urisdiction of our courts of first instance!1 and!
in %anila! of its Court of Duvenile and Domestic ?elations.3
*&e same ac;uired /urisdiction over plaintiff &erein b, &is submission t&ereto in
conse;uence of t&e filing of t&e complaint &erein.# Defendant +as placed under
t&e /urisdiction of said court! upon t&e service of summons b, publication.5
*&is is an action in rem! for it concerns t&e status of t&e parties &erein! and status
affects or binds t&e +&ole +ord. *&e res in t&e present case is t&e relation bet+een
said parties! or t&eir marriage tie.$ Durisdiction over t&e same depends upon t&e
nationalit, or domicile of t&e parties! not t&e place of celebration of marriage! or
t&e locus celebrationis.' :laintiff &ere is a citi9en of t&e :&ilippines! domiciled
t&erein. @is status is! t&erefore! sub/ect to our /urisdiction! on bot& counts. *rue
t&at defendant +as and K under plaintiffEs K t&eor, still is a nonAresident alien.
Cut! t&is fact does not deprive t&e lo+er court of its /urisdiction to pass upon t&e
validit, of &er marriage to plaintiff &erein.
<ndeed! marriage is one of t&e cases of double status! in t&at t&e status t&erein
involves and affects t+o persons. One is married! never in abstract or a vacuum!
but! al+a,s to somebod, else. @ence! a /udicial decree on t&e marriage status of a
person necessaril, reflects upon t&e status of anot&er and t&e relation bet+een
t&em. *&e prevailing rule is! accordingl,! t&at a court &as /urisdiction over t&e res!
in an action for annulment of marriage! provided! at least! one of t&e parties is
domiciled in! or a national of! t&e forum. Since plaintiff is a (ilipino! domiciled in
t&e :&ilippines! it follo+s t&at t&e lo+er court &ad /urisdiction over t&e res! in
addition to its /urisdiction over t&e sub/ectAmatter and t&e parties. <n ot&er +ords! it
could validl, in;uire into t&e legalit, of t&e marriage bet+een t&e parties &erein.
As regards t&e substantial validit, of said marriage! plaintiff testified t&at &e met
t&e defendant in :usan Jorea! sometime in 1"51! +&ere s&e +as operating a
nig&tclub4 t&at t&e, lived toget&er from 5ovember 1"51 to April 1"554 t&at t&e,
+ere married in :usan Jorea! on %arc& 15! 1"53! as attested to b, t&eir marriage
certificate >.&ibit D4 t&at before t&e +edding s&e obtained t&e Bpolice clearanceB
>.&ibit A! +ritten in Jorean language! and dated (ebruar, 1$! 1"53! +&ic& +as
necessar, in order t&at s&e could contract marriage4 t&at on Dune 30! 1"53! &e
proceeded to <ndia and left t&e defendant! t&en in advanced stage of pregnanc,! in
Jorea4 t&at in October! 1"53! s&e /oined &im in <ndia! bringing +it& &er said
>.&ibit A! and its translation into >nglis&! >.&ibit C4 t&at &e t&en noticed t&at! on
(ebruar, 1$! 1"5! defendant +as alread, married! according to said >.&ibit C4
t&at as &e confronted t&e defendant +it& t&e contents of t&is document! &er repl,
+as t&at it is not unusual for a Jorean girl to marr, t+ice in Jorea4 t&at +&en &e
in;uired about &er status on %arc& 15! 1"53! defendant confided to &im t&at s&e
&ad lived +it& about t+o 213 Americans and a Jorean! adding! &o+ever! t&at t&ere
+as no impediment to &er contracting marriage +it& &im4 and t&at! later on! t&e,
+ere separated and &er +&ereabouts are no+ un-no+n to &im.
*&e lo+er court considered plaintiffs evidence insufficient to establis& t&at
defendant +as married to anot&er person prior to %arc& 15! 1"53! and +e agree
+it& t&is conclusion. *o begin +it&! >.&ibit A is not signed. <t merel, purports to
bear t&e seal of t&e C&ief of :usan 5ational :olice. Secondl,! t&e record does not
s&o+ +&o prepared it! muc& less t&at &e &ad personal -no+ledge of t&e trut& of t&e
entr, t&erein concerning defendantEs status on (ebruar, 15! 1"53. <t s&ould be
noted! t&at defendant +as a native! not of :usan but of Seoul! Jorea. @ence!
>.&ibit A could! at best! be no more t&an &earsa, evidence. Again! +&en plaintiff
allegedl, confronted t&e defendant +it& t&e contents of >.&ibit C! defendant did
not sa, t&at s&e &ad been married before. :laintiff declared t&at s&e admitted
&aving previousl, lived +it& several ot&er men! adding! &o+ever! t&at s&e &ad no
impediment! t&us! in effect! negating t&e alleged previous marriage.
*&irdl,! if >.&ibit A +as obtained on (ebruar, 1$! 1"53! in order to establis&
defendantEs ;ualification to contract marriage! +&, is it t&at t&e +edding too-
place! despite t&e entr, in said document to t&e effect t&at defendant +as married
alread,Q *&ere is no competent evidence to t&e effect t&at Jorean la+s permit
bigam, or pol,gam,. %oreover! t&e presumption is t&at t&e foreign la+ is identical
to t&e le. fori! or! in t&e case at bar! t&e :&ilippine 7a+." <n fact! t&e statement!
imputed b, plaintiff to t&e defendant! to t&e effect t&at! alt&oug& s&e &ad co&abited
before +it& ot&er men! t&ere +as no impediment to &er marr,ing &im! clearl,
suggests t&at a previous marriage on &er part +ould &ave been! in &er opinion! a
legal obstacle to &er marriage +it& t&e plaintiffs. *&en too! t&e marriage certificate
>.&ibit D contains spaces for t&e entr, of data on +&et&er an, of t&e contracting
parties &ad been previousl, married4 +&et&er t&e prior marriage &ad been dissolved
b, a decree of divorce4 and! if t&ere &ad been suc& decree! t&e date t&ereof. Surel,!
t&ese data +ould be absolutel, irrelevant if pol,gam, +ere sanctioned in Jorea.
And! again! +&, is it t&at >.&ibit D states t&at defendant &ad &ad no previous
marriageQ
7ast! but not least! plaintiff cannot possibl, secure t&e relief pra,ed for unless full
fait& and credence are given to &is testimon,! but +e cannot believe &im for t&e
records s&o+ t&at &e +ould not &esitate to lie +&en it suits &is purpose. *&us! for
instance! +&en plaintiff contracted marriage +it& t&e defendant! &e said t&at &e +as
single! alt&oug&! &e admitted! t&is +as a lie! because! sometime in 1"#0! &e married
in Caguio! one Adelaida %elecio or 8alde9.10 Cut! t&en &e +ould! also! &ave us
believe t&at &is marriage +it& t&e latter +as illegal or fictitious! because Adelaida
and &e did no more t&an sign! on a small +indo+ in t&e Cit, @all of Caguio!
certain documents t&e contents of +&ic& &e did not read.
=@>?>(O?>! t&e decision appealed from s&ould be! as it is &ereb,! affirmed!
+it& t&e costs of t&is instance against plaintiffAappellant. <t is so ordered.
E-Fad () Centra Ban+ of -ordan, No) 45-6787 9/)C) Cir) Fe:r"ar# 6, 1996).
*&oug& it up&olds sovereign immunit, as to one defendant! DC Circuit 213
reverses dismissal for lac- of personal /urisdiction over second defendant so as to
allo+ plaintiff to ta-e discover, of /urisdictional facts! and 213 reverses forum non
conveniens dismissal for defendantsE failure to s&o+ t&at Dordanian courts +ill
entertain plaintiffEs claims
C, :rofessor Do&n ?. Sc&mert9! Dr.! Georgeto+n Universit, 7a+ Center! and %i-e
%eier! >s;.
(rom 1"1 to 1""! @assan >lA(adl! a 7ebanese! +or-ed under a longAterm
contract in Amman! Dordan! for :etra <nternational Can-ing Corporation 2:<CC34
:<CC is a D.C. subsidiar, of :etra Can-! a privatel, o+ned Dordanian ban-. After
t&e Central Can- of Dordan 2CCD3 uncovered financial improprieties at :etra Can-
and placed it in receivers&ip! it fired >lA(adl t&roug& a letter from %ic&el %arto!
CCDEs Deput, Governor. Dordanian aut&orities also arrested and tortured >lA(adl
but ultimatel, e.onerated &im. >lA(adl sued CCD! %arto! :etra Can- and :<CC in
federal court to recover damages for +rongful disc&arge. *&e district court
dismissed t&e complaint as to all defendants. <t found t&at it lac-ed sub/ect matter
/urisdiction under t&e (S<A over t&e CCD defendants. Den,ing >lA(adlEs re;uest for
discover, of /urisdictional facts! it also found t&at it lac-ed personal /urisdiction
over :etra Can- under DC longAarm statutes. (inall,! alt&oug& >lA(adl &ad
presented evidence t&at Dordanian la+ +ould bar &is actions against t&e ban-s in
Dordan! t&e court granted :<CCEs motion to dismiss on forum non conveniens
grounds
*&e US Court of Appeals for t&e District of Columbia Circuit first affirms t&e
lo+er courtEs dismissal of CCD and %arto under t&e (S<A. CCD is clearl, t&e
instrumentalit, of a foreign state and plaintiff failed to s&o+ t&at %arto +as acting
in an, +a, ot&er t&an as its agent +&en &e sent t&e letter of dismissal to plaintiff.
*&e Court! &o+ever! reverses t&e dismissal in favor of :etra Can- and remands to
let >lA(adl obtain discover, from :etra as to /urisdictional facts. *&e Court finds
t&at BFplaintiffEsG allegations! alt&oug& t&e, fall s&ort of a prima facie case t&at
:etra Can- +as Edoing businessE in t&e District of Columbia! are not Econclusor,E
since >lA(adl &as alleged specific transactions. @is t&eor, t&at :etra Can- ma,
&ave &ad furt&er! as ,et un-no+n! connections to t&e District is not implausible...A
plaintiff faced +it& a motion to dismiss for lac- of personal /urisdiction is entitled
to reasonable discover,! lest t&e defendant defeat t&e /urisdiction of a federal court
b, +it&&olding information on its contacts +it& t&e forum.B F15G
*&e Court also reverses t&e forum non conveniens dismissal of t&e claims against
:etra Can- and :<CC because! as movants! t&e, failed to meet t&eir burden of
proof t&at Dordan +as an ade;uate alternative forum. *&e Court notes t&at a foreign
forum is not inade;uate merel, because its substantive la+ ma, be less favorable
to plaintiff. Cut in t&e rare case +&ere t&e foreign forum +ould den, &im access to
its /udicial s,stem! &o+ever! dismissal based on t&e forum non conveniens
doctrine+ould be inappropriate. DefendantsE rebuttal to plaintiffEs material on
Dordanian la+ &ad man, gaps and +as unresponsive.
(inall,! t&e Court notes t&at! if doubts about t&e availabilit, of an alternative forum
remain due to t&e difficulties of determining Dordanian la+! t&e district court
s&ould not dismiss under t&e forum non conveniens doctrine +it&out conditioning
t&e dismissal on t&e defendantsE submission to /urisdiction in Dordan and on t&e
Dordanian courtsE acceptance of t&e case.
$e&":ic of the Phii&&ines () Pimente
(acts
1. *&is case +as filed as an interpleader action b, 5e+ 6or- bro-erage firm
%errill 7,nc&! +&ic& listed t&e ?epublic of t&e :&ilippines! t&e :residential
Commission on Good Government 2establis&ed +&en %arcos ceased being
president in order to recover propert, &e &ad stolen3! Arelma 2a corporation
t&at &ad assets of former :resident of t&e :&ilippines! %arcos3! and
:&ilippines 5ational Can- as t&e petitioners and t&e :imentel class 2a group of
&uman rig&ts victims3 as t&e respondents. <t +as argued on %arc& 1'! 100
and decided on Dune 11! 100 in t&e Supreme Court of t&e United States.
1. *&e :imental class &ad filed a case in a US court and +on a 01 billion
settlement against former :resident %arcos! including some assets t&roug&
Arelma! bro-ered t&roug& %errill 7,nc&. *&e ?epublic of t&e :&ilippines
also +as tr,ing to get control of some assets t&at %arcos too- illegall,!
included t&e Arelma funds +it& %errill 7,nc&. %errill 7,nc& t&en filed t&is
suit because of t&e disputed funds. *&e ?epublic of t&e :&ilippines
successfull, proved t&at t&e, &ad sovereign immunit, under t&e (oreign
Sovereign <mmunities Act of 1"'$. *&ere +as also a simultaneous case
occurring in t&e :&ilippines to determine t&e rig&tful o+ners of t&e assets! and
t&e US courts +aited to &ear t&e outcome of t&ose cases! but t&e, +ere
indecisive and reac&ed no decision. Similarl,! t&e case in t&e US courts
+asnNt totall, dismissed since t&ere +ere respondents t&at +ere not immune
2Arelma and :5C3 and t&e district court and t&e appellate court bot& found t&e
assets belonging to t&e :imentel class. *&e ?epublic of t&e :&ilippines t&en
submitted a +rit of certiorari to t&e Supreme Court! arguing t&at t&e entire
case s&ould &ave been dismissed because of t&eir sovereign immunit,
3. *&e plaintiff in t&e +rit of certiorari to t&e Supreme Court is t&e ?epublic
of t&e :&ilippines! t&oug& t&e petitioners of t&e entire case also include t&e
Commission! Arelma! and :5C 2Arelma and :5C &ad subse;uentl, soug&t
revie+ of t&e lo+er courtNs decision3. *&e government of t&e :&ilippines
claimed t&at t&e :imental group s&ould never &ave been a+arded t&e %errill
7,nc& assets because t&e entire case s&ould &ave been t&ro+n out +&en t&e
:&ilippines successfull, proved foreign sovereign immunit,.
#. *&e respondent in t&is case is t&e :imentel class +&o +as a+arded t&e
assets as damages b, t&e lo+er courts. *&e, &ad successfull, +on a 01 billion
settlement in t&eir la+suit against former :resident %acros for damages due
to &uman rig&ts violations during &is reign! but t&is case +as a result of a
dispute to +&om %acrosN assets in Arelma belonged to.
Huestions
1. <f one or several of t&e petitioners in a case successfull, prove t&at t&e,
&ave sovereign immunit, in a case under t&e (oreign Sovereign <mmunities Act of
1"'$! does t&at automaticall, dismiss t&e entire caseQ
1. Can a state be deemed to &ave sovereign immunit, under t&e (S<A of
1"'$ and be a Ore;uiredP state under section 1"2a3 of t&e act! ,et be OdispensableP
2t&e case could proceed +it&out t&em3 according to section 1"2b3! t&us
allo+ing t&e case to be &eard in court if t&ere are ot&er petitionersQ
Decision
1. *&e Supreme Court ruled t&at t&e lo+er courts did not recogni9e t&e
importance of sovereign immunit, in t&is case and stated t&at t&e case s&ould
be t&ro+n out due to t&e sovereign immunit, of t&e government of t&e
:&ilippines. <n addition! t&e Supreme Court /udged t&at t&e government
s&ould be considered an OindispensableP part, to t&e case under ?ule 1"2b3.
*&us! precedent describing &o+ all governments +&o are absent from a court
&earing because of t&eir sovereignt, t&at grants t&em immunit, from a /oint
case! s&ould al+a,s be seen as OindispensibleP under ?ule 1" 2b3 and t&e cases
s&ould be dismissed if t&e claims of t&e sovereign are not OfrivolousP. C,
allo+ing a case to be &eard despite sovereign immunit,! t&e sovereignt, of
ot&er states is undermined.
1. <n addition! t&e court decided t&at t&e government of t&e :&ilippines and
t&e commission &ave an e.treme interest in &andling &o+ t&e assets of Arelma
s&ould be distributed and it is not up to t&e court s,stem of anot&er state to
determine &o+ to do t&at.
:rinciples
1. *&e -e, international la+ issue in t&is case is sovereignt, as it pertains to t&e
(oreign Sovereignt, <mmunities Act of 1"'$.
1. *&is case affirms t&at foreign sovereign states &ave t&e rig&t to immunit,
in t&e national court s,stem of t&e United States in order to up&old t&e
dignit, of ot&er states b, allo+ing t&em to &andle disputes +it&in t&eir o+n
courts s,stems.
3. *&is case s&o+s t&at in cases +it& numerous petitioners! if one is deemed to
&ave sovereign immunit,! t&e case &as to be t&ro+n out to avoid being
decided +it&out t&e interests of t&e sovereign state being compromised.
Conclusion
*&is importance of t&is case lies in t&e Supreme Court asserting t&e importance of
sovereign immunit,. *&is decision e.panded t&e po+ers of t&e (oreign Sovereign
<mmunities Act of 1"'$! b, &ig&lig&ting t&e importance of being deferential to
sovereign states. *&roug& asserting t&at t&e United States courts &ave no rig&t to
decide matters of ot&er national governments if t&e issue can be ta-en care of in
t&eir &ome courts! t&e Supreme Court re/ects t&e undermining of ot&er nations in
t&e US court s,stem.
Also! b, dismissing t&e case t&at &ad been broug&t b, %errill 7,nc&! t&e Supreme
Court s&o+ed t&at statesN interests in sovereignt, overrules t&at of a corporation to
solve a dispute.
<slamic ?epublic of <ran v. :a&lavi 21"#3
1$0 Cal. App. 3d $10 F10$ Cal. ?ptr. '51G
FCiv. 5o. C00153'. Court of Appeals of California! Second Appellate
District! Division One. October 1! 1"#.G
<S7A%<C ?>:UC7<C O( <?A5! :laintiff and Appellant! v. S@A%S
:A@7A8<! Defendant and ?espondent.
2Opinion b, 7eet&am! D.! +it& @anson 2*&a.ton3! Acting :. D.! and Dalsimer!
D.! concurring.3 F1$0 Cal. App. 3d $11G
COU5S>7
At-inson! Andelson! 7o,a! ?uud M ?omo! *&omas =. Jovacic&! OED+,er
M Cernstein! Dames *. =in-ler and :atricia Stearns >,res for :laintiff and
Appellant.
%cCutc&en! Clac-! 8erleger M S&ea! Steven =. =eston and Susan D. *riplett
for Defendant and ?espondent.
O:<5<O5
7>>*@A%! D.
*&e la+suit in t&e present action! filed Dune 30! 1"1! apparentl, came in t&e
+a-e of a great social up&eaval in t&e countr, of <ran during +&ic& t&e S&a& of
<ran fled around Danuar, 1$! 1"'". *&e complaint filed on be&alf of t&e present
government of <ran! alleges a series of rat&er conclusionar, malefactions and
conspiracies! and modestl, as-s for damages in t&e amount of 03 billion toget&er
+it& e.emplar, damages in t&e amount of 010 million. <nterestingl, enoug&! one
of t&e codefendants! <erspe. (inance 5.8.! admitting t&e complaint allegation t&at
it is a 5et&erlands Antilles Corporation but den,ing t&at it does business in 7os
Angeles Count,! California! filed an ans+er to t&e complaint on August 1'! 1"1.
Apparentl,! no furt&er proceedings &ave ta-en place +it& respect to t&e parties
plaintiff and defendant <erspe. (inance 5.8.! and its status is not part of t&e present
appeal.
After unsuccessfull, attempting personal service of summons and complaint
upon t&e defendant S&ams :a&lavi! a-a @.<.@. :rincess S&ams :a&lavi! as
designated in t&e complaint 2and &ereinafter referred to as :a&lavi3! t&e plaintiff
obtained an e. parte order in t&e superior court for substituted service of process
b, publication. On April 11! 1"1! on be&alf of t&e defendant :a&lavi +as filed a
document in t&e proceedings indicating a special appearance +as being made Bto
;uas& service of summons for lac- of personal /urisdiction! B and at t&e same time
notice +as given of a motion Bfor limited discover, re /urisdiction!B reciting in t&e
&eading of t&e document BSpecial Appearance Onl,.B A series of legal maneuvers
commenced at t&is stage b, counsel on be&alf of t&e respective parties! not onl, at
t&e trial court level but b, +rit petition to t&e Court of Appeal and t&e California
Supreme Court4 +&ic& adroit proceedings &ave little e.cept &istoric significance at
t&is stage. Defendant :a&lavi posed a motion to dismiss t&e plaintiffEs complaint on
Danuar, 1#! 1"3! +&ic& +as &eard in con/unction +it& t&e previousl, filed motion
to ;uas& service of summons b, t&e F1$0 Cal. App. 3d $1#G trial court on %a, 10!
1"3. *&e matter &aving been submitted! +as determined b, t&e trial court on %a,
1#! 1"3! +it& t&e issuance of t&e follo+ing terse order) B%otion of Defendant
:a&lavi to ;uas& summons and motion for FsicG dismissing t&e action +it&
pre/udice is granted on all grounds stated t&erein. Sanctions and costs are granted
as pra,ed.B On Dune '! 1"3! t&e trial court signed and filed a /udgment in se;uel to
t&e %a, 1#! 1"3! decision including t&e follo+ing language) B<t <s @ereb,
Ordered! Ad/udged and Decreed t&at)
B1. *&e Order for :ublication of Summons or Citation issued &erein on
December 3! 1"1! is &ereb, vacated4
B1. *&e attempted service of process pursuant to said Order! being void and
invalid ab initio! is &ereb, ;uas&ed4
B3. *&e complaint on file &erein s&all be! and is &ereb,! dismissed +it&
pre/udice as to defendant S&ams :a&lavi4 and
B#. Defendant S&ams :a&lavi s&all &ave and recover from plaintiff! t&e
<slamic ?epublic of <ran! &er costs of suit &erein ....B <nterestingl, enoug&! plaintiff
filed a notice of appeal on Dune 30! 1"3! not from t&e /udgment of Dune '! 1"3!
but from t&e trial courtEs minute order of %a, 1#! 1"3.
<ssues
*&e briefs on be&alf of t&e t+o parties &ere leave us some+&at perple.ed as
to +&at are t&oug&t to be t&e issues to be resolved. After a careful revie+ of t&e
record and t&e presentations made from time to time in t&e trial court 2t&e cler-Es
transcript consists of 1! "'5 pages3! it +ould seem t&at t&e points in controvers,
s&ould be as follo+s)
A. Do t&e Algerian Accords bet+een t&e United States and t&e <slamic
?epublic of <ran place t&e present la+suit in a special categor, of litigation!
e.empted from t&e usual /urisdictional re;uirementsQ
C. =ere t&e re;uirements of t&e California la+ fulfilled in t&is case +it&
respect to substituted service of processQ
C. =as t&e trial court /ustified in vacating t&e order for publication made b,
Commissioner Do&n ?. Ale.ander on December 3! 1"1Q
D. =as t&e appearance of t&e defendant and respondent :a&lavi in t&is cause
of a general significance! precluding a ;uas&ing b, t&e trial court of service of
summonsQ F1$0 Cal. App. 3d $15G
>. =as t&e trial court /ustified in dismissing +it& pre/udice t&e plaintiffEs
action against t&e defendant :a&laviQ
(. =as t&e pattern of sanctions and costs levied against t&e plaintiff b, t&e
trial court /ustifiedQ
Discussion
*&ere is initiall, a tec&nical problem) *&e plaintiffEs appeal purports to &ave
been ta-en from t&e trial courtEs minute order of %a, 1#! 1"3. A /udgment +as
signed and filed! in conformit, +it& t&e %a, 1#! 1"3! minute order on Dune '!
1"3. =e s&all assume t&at plaintiffEs appellate designation inadvertentl, omitted
t&e latter document and s&all treat t&e appeal as involving bot& documents.
*&e evidentiar, posture of t&e Algerian Accords! +&ic& +ere developed
bet+een t&e United States and t&e <slamic ?epublic of <ran is some+&at obscure.
5evert&eless! t&e provisions of t&e Algerian Accords are carried in t&e appendi. to
appellantEs brief and are! as suc&! full, commented upon in respondent :a&laviEs
brief.
F1G *&e Algerian Accords carr, no language +it& respect to t&e affirmative
duties of American state courts as to litigation about <ranian assets. So! +e are not
concerned +it& t&e impact of federal treat, po+er on t&e /urisdiction of a state
court or t&e operation of local legislation or rules as to status. =e can assume
+it&out deciding t&at t&e language of paragrap& 1# in t&e General Declaration of
t&e Algerian Accords! +&ere it spea-s of BUnited States courts! B includes state
courts as +ell as federal courts. *&e provision simpl, states t&at t&e Bclaims of <ran
s&ould not be barred eit&er b, sovereign immunit, principles or b, t&e act of state
doctrine.B *&e situation of t&is la+suit involving t&e present t+o parties &as never
reac&ed t&e state +&ere affirmative defenses of t&e defendant :a&lavi are even a
factor of consideration. A rat&er telling summar, of t&e legal situation in t&e lig&t
of t&e Algerian Accords is contained at page 15 of appellantEs opening brief) B*&e
return of t&e assets of t&e former ro,al famil, +as from t&e ver, beginning a
fundamental demand of t&e <ranian government. *&e position of t&e United States
government +as e;uall, clear) it +ould not! indeed could not! commit itself to a
summar, sei9ure of propert, in t&e United States from an, member of t&e former
ro,al famil,. *&e onl, +a, suc& assets could be returned +as pursuant to an
ad/udication b, a U. S. court in accordance +it& due process of la+.B :resumabl,!
+e could also add t&at an, parties before an American court are constitutionall,
entitled to t&e e;ual protection of our la+s. Succinctl, put! eac& litigant before our
courts ma, be e.pected to compl, +it& t&e same standards re;uired of F1$0 Cal.
App. 3d $1$G an, ot&er litigant. *&e basic ;uestion &ere! t&en! is not one of
e.clusion of a litigant! but +&et&er or not t&e plaintiff and appellant placed itself
under our legislation and rules in a position of &aving accomplis&ed service of
process on t&e defendant and respondent :a&lavi. =e &old t&at t&ere is no special
categor, of <ranian litigant. <n t&is connection! +e can onl, &ope t&at an American
/udge assigned to a matter suc& as t&e present ma, fare better t&an a S+edis&
/udge. fn. 1
F1aG *&e plaintiff urges t&at summons +as properl, served on t&e defendant
:a&lavi in t&is action b, t&e substituted met&od of publication. *&e re;uirements
for t&is form of service are set out in section #15.50 of t&e Code of Civil
:rocedure. fn. 1 (rom t&e evidence and s&o+ings made before F1$0 Cal. App. 3d
$1'G t&e trial court! as +ell as t&e inference from contentions made &ere! it is
obvious t&at +e are not concerned +it& subdivisions 2b3! 2c3! 2d3 and 2a3213. Did t&e
plaintiff fulfill t&e re;uirements of subdivision 2a3 and subdivision 2a3213Q
Alt&oug& t&ere could be some c&allenge considered +it& respect to t&e Breasonable
diligenceB e.ercised in attempted service under subdivision 2a3! 2Donel! <nc. v.
Cadalian 21"'3 ' Cal. App. 3d 31' F150 Cal.?ptr. 55G3! on t&e +&ole it appears
t&at t&e trial court commissioner acted in t&is regard +it&in &is discretion in
signing t&e order for publication dated December 3! 1"1. *&e remaining
fundamental ;uestion! under subdivision 2a3213! is +&et&er Bupon affidavit it
appears to t&e satisfaction of t&e court ... t&at .... A cause of action e.ists against t&e
part, upon +&om service is to be made ....B
On December 3! 1"1! it is recited in t&e order for publication prepared b,
plaintiffEs counsel and signed b, t&e trial court commissioner t&at t&e complaint
&as been read as +ell as t&e declarations of :&,llis Cennis! Crian OED+,er and
?obert Jenned,! and t&at t&e defendant :a&lavi cannot be Bserved +it& reasonable
diligence.B *&e order furt&er recites t&at Bit also appearing from t&e Declaration of
%o&ammed *. Sadeg&i t&at a good cause of action e.ists in t&is action in favor of
t&e plaintiff ... and against t&e defendantB 2:a&lavi3 and t&at service of summons
ma, be made upon said defendant b, publication. <nitiall,! it is obvious t&at t&e
complaint +as asserted to &ave been read on t&e Breasonable diligenceB ;uestion
alone. <f for a +ider purpose! t&e Sadeg&i verification of t&e complaint +ould seem
clearl, insufficient. *&e notar, public area is blan-. *&ere &as been no compliance
+it& Code of Civil :rocedure section 1015.5! subdivision 2b3. *&e rubber stamp
mar- of t&e >mbass, of Algeria in =as&ington! purports to aut&enticate not&ing in
particular. :robabl, because of t&e verification s&ortcomings! t&e +ords in t&e
order for publication! Bverified complaint or petitionB &ave been lined out and a
superscription BDeclaration of %o&ammed *. Sadeg&iB inserted! follo+ed b, t&e
initials *. =. J. 2presumabl, one of plaintiffEs counsel3. *&e BAffidavitB of
%o&ammed *. Sadeg&i! probabl, ;ualifies as a declaration under Code of Civil
:rocedure section 1015.5! subdivision 2b3. @o+ever! its contents are a medle, of
conclusions and political declamation and certainl, fails to formulate a
compre&ensible cause of action. <t is dubious +&et&er it +ould ;ualif, for its
e.pressed purpose if t&e true test of sufficienc, BEBis +&et&er it &as been dra+n in
suc& a manner t&at per/ur, could be c&arged t&ereon if an, material allegation F1$0
Cal. App. 3d $1G contained t&erein is false.BEB 2*riAA State %fg. Co. v. Superior
Court 21"$#3 11# Cal. App. 1d ##1! ##5 F3$ Cal.?ptr. '50G.3
<n t&e present situation! t&e ruling of t&e trial /udge on %a, 1#! 1"3! +as
based upon additional information not disclosed at t&e time t&e publication order
+as obtained on December 3! 1"1. Apparentl,! from &is laterAAta-en deposition!
t&e declarant Sadeg&i +as in sc&ool in *e.as bet+een 1"'3 and 1"'"! and after
spending a fe+ mont&s in 1"'" +it&in <ran after t&e S&a&Es departure! returned to
t&e United States! remaining until April of 1"1. *&ere is no indication t&at on %a,
1#! 1"3! or at an, earlier date %r. Sadeg&i could &ave been designated as a
+itness in t&is cause for an, purpose ot&er t&an t&e formal identification of
documents! t&e contents of +&ic& so far presented are of &ig&l, speculative
admissibilit,. F3G B(or t&e purpose of service b, publication! t&e e.istence of a
cause of action is a /urisdictional fact.B 2@arris v. Cavasso 21"''3 $ Cal. App. 3d
'13! '1$ F13' Cal.?ptr. #10G.3 F1bG <t is rat&er apparent t&at /urisdictional facts
+ere missing from t&is case on December 3! 1"1! and b, %a, 1#! 1"3! it +as
pellucidl, clear t&at t&e, &ad been missing from t&e beginning. <t is not enoug&
t&at t&e verif,ing and declaring +itnessE familiarit, +it& t&e facts in an application
for a substituted service order be based up on +&at is termed Bcommon -no+ledge
of t&e <ranian people.B >ven t&e translated documents from <ran appear to give no
support to a cause of action. F#G California la+ &as long aut&ori9ed t&e setting aside
of a publication order +&ere fraud or lac- of /urisdictional facts are apparent from
an e.amination of t&e affidavit for publication. 25arum v. C&eat&am 21"313 11'
Cal.App. 505! 50' F15 :.1d 110$G.3
F5G A contention is made t&at t&e defendant :a&lavi! in posing t&e motion to
;uas& in t&is case! in ta-ing t&e deposition of %o&ammed *. Sadeg&i! in posing
interrogatories and in e.amining certain of plaintiffEs documents actuall, made a
general appearance. As noted in t&e case cited b, plaintiffAappellant! t&e
determination of +&en a part, &as made a special appearance depends on a number
of circumstances and is a /udicial determination. 210Corp. v. Superior Court
21"$13 5' Cal. 1d #0! #3 F11 Cal.?ptr. 10"! 3'1 :.1d "5G.3 <t appears t&at t&ere
+as ade;uate ground for t&e learned trial /udge in t&is case to implicitl, determine
t&at t&e appearance of defendant :a&lavi +as special.
F$a! 'aG *&e trial court ma, properl, e.ercise its po+er of sanctions and
ot&er forms of coercion to prevent an abuse of process. 2Code Civ. :roc.! R 103#4
5eal v. Can- of America 21"#"3 "3 Cal. App. 1d $' F10" :.1d 15G4 *aliaferro v.
:rettner 21"553 135 Cal. App. 1d 15' F1$ :.1d "''G.3 F$bG =e feel t&at t&e costs
and sanctions imposed +ere basicall, reasonable and /ustified under t&e
circumstances 2:ritc&ard v. Sout&ern :acific F1$0 Cal. App. 3d $1"G Co. 21"353 "
Cal. App. 1d '0# F51 :.1d #1G4 <n re %arriage of 7emen 21"03 113 Cal. App. 3d
'$" F1'0 Cal.?ptr. $#1G.3 F'bG =ere t&e matter completel, at issue! failure to
compl, under Code of Civil :rocedure section 103# mig&t /ustif, dismissal of t&e
action. <n t&e present posture of t&e case! &o+ever! t&e parties &ave cited us to no
applicable case la+ on t&e point and +e &ave found none b, independent researc&.
=&ere t&e moving defendant &as speciall, appeared and ac&ieved t&e essential
purpose of ;uas&ing t&e service of summons b, publication! can t&e ultimate
sanction of dismissal of t&e action itself be imposedQ 7ogicall,! it +ould seem not
because presentl, t&e defendant :a&lavi 2e.cept for t&e collection of costs and
financial sanctions3 is no+ completel, removed from plaintiffEs action. *&e
discover, actuall, obtained +as sufficient for t&e defendantEs purpose and t&e fact
t&at some proper discover, &as been frustrated is of little conse;uence. <n a general
appearance situation on t&e contrar,! dismissal of an action ma, be t&e onl,
ade;uate relief. Accordingl,! from t&e minute order of %a, 1#! 1"3! t&e superior
court is ordered to stri-e t&e p&rase Band motion for FsicG dismissing t&e action
+it& pre/udice4B from t&e /udgment of Dune '! 1"3! t&ere +ill be stric-en t&e
p&rase B*&e complaint on file &erein s&all be! and is &ereb,! dismissed +it&
pre/udice as to defendant S&ams :a&lavi.B *&e actions of t&e trial court in all ot&er
particulars are affirmed.
@anson 2*&a.ton3! Acting :. D.! and Dalsimer! D.! concurred.
(5 1. An article appearing in t&e 7os Angeles *imes on September '! 1"#!
+as to t&e follo+ing effect) B<ranian at Claims *ribunal *&reatens to Jill S+edis&
Dudge
B*&e @ague 2U:<3AAAn <ranian /udge t&reatened to -ill a S+edis& /urist
*&ursda, at t&e international tribunal t&at is &andling claims arising from t&e 1"'"
<ranian ta-eover of t&e U.S. >mbass, in *e&ran! diplomats said.
B*&e, said t&e t&reat came after <ranian /udge %a&moud %. Jas&ani refused
to apologi9e for p&,sicall, assaulting S+edis& /udge 5ils %angard on %onda,.
BE<f %angard ever dares to enter t&e tribunal c&amber again4 eit&er &is corpse
or m, corpse +ill leave it rolling do+n t&e stairs! E Jas&ani said *&ursda,!
according to t&e diplomats and tribunal officials.
BJas&ani and anot&er <ranian colleague! Dudge S&afi S&afie grabbed
%angard b, t&e collar! t+isted &is arm be&ind &is bac- and began beating &im up
during %onda,Es session of t&e tribunal.
B%angard +as not seriousl, &urt in t&e incident! +&ic& a U.S. spo-esman
called Esimpl, s&oc-ing.E
B*ribunal :resident Gunnar 7agergren! one of t&e S+edis& /udges! issued a
letter *&ursda, t&at suspended all tribunal proceedingsAA si. sessions due to begin
late ne.t +ee-AAuntil furt&er notice.
B<ranian officials ac-no+ledged t&at %onda,Es incident too- place but
declined to give furt&er details.
BDiplomats said t&e <ranian delegation t+o ,ears ago filed an official
complaint +it& t&e <nternational Court of DusticeAA+&ic& set up t&e tribunalAA
c&arging t&at %angard +as not ob/ective.
B*&e international tribunal! one of t&e fe+ places +&ere U.S. and <ranian
officials come into direct contact on a regular basis! +as set up in 1"1 under an
accord signed in Algiers to free t&e U.S. &ostages &eld for ### da,s at t&e U.S.
>mbass, in *e&ran. <t is composed of t&ree U.S. /udges! t&ree <ranian /udges! t+o
S+edis& /udges and a Dutc& /udge.B
(5 1. *&e provisions of t&e sub/ect statute are as follo+s) BR #15.502a3 A
summons ma, be served b, publication if upon affidavit it appears to t&e
satisfaction of t&e court in +&ic& t&e action is pending t&at t&e part, to be served
cannot +it& reasonable diligence be served in anot&er manner specified in t&is
article and t&at)
B213 A cause of action e.ists against t&e part, upon +&om service is to be
made or &e is a necessar, or proper part, to t&e action4 or
B213 *&e part, to be served &as or claims an interest in real or personal
propert, in t&is state t&at is sub/ect to t&e /urisdiction of t&e court or t&e relief
demanded in t&e action consists +&oll, or in part in e.cluding suc& part, from an,
interest in suc& propert,.
B2b3 *&e court s&all order t&e summons to be publis&ed in a named
ne+spaper! publis&ed in t&is state! t&at is most li-el, to give actual notice to t&e
part, to be served and direct t&at a cop, of t&e summons and of t&e complaint be
fort&+it& mailed to suc& part, if &is address is ascertained before e.piration of t&e
time prescribed for publication of summons. >.cept as ot&er+ise provided b,
statute! t&e publication s&all be made as provided b, Section $0$# of t&e
Government Code unless t&e court in its discretion orders publication for a longer
period.
B2c3 Service of summons in t&is manner is deemed complete as provided in
Section $0$# of t&e Government Code.
B2d3 5ot+it&standing an order for publication of t&e summons! a summons
ma, be served in anot&er manner aut&ori9ed b, t&is c&apter! in +&ic& event suc&
service s&all supersede an, publis&ed summons.B
C?>D<* SU<SS>4 S+iss Can- Corporation! :etitioners! v. U5<*>D
S*A*>S D<S*?<C* COU?* (O? *@> C>5*?A7 D<S*?<C* O(
CA7<(O?5<A! ?espondent! 7oretta Ann ?osales4 @ilda 5arciso! ?eal :arties in
<nterest.
5o. "'A'01"3.
Decided) December 3! 1""'
Cefore) @A77! and *.G. 5>7SO5! Circuit Dudges! and =<5%<77!District
Dudge.S %ic&ael @. ?auc&!(ried! (ran-! @arris! S&river M Dacobson! 5e+ 6or-
Cit,! for petitioner Credit Suisse4 :aul D. Csc&orr! De+e, Callantine! 5e+ 6or-
Cit,! and %att&e+ %. =als&! De+e, Callantine! 7os Angeles! California! for
petitioner S+iss Can-. ?obert A. S+ift! Jo&n! S+ift M Graf! :&iladelp&ia!
:enns,lvania! and Don %. 8an D,-e! @onolulu @a+aii! for real parties in interest.
Step&en >. Cec-er! S&a+! :itman! :otts M *ro+bridge! =as&ington! DC! for
amicus.
Credit Suisse and S+iss Can- Corporation 2t&e OCan-sP3 petition t&is court
for a +rit of mandamus! pro&ibition or ot&er appropriate e.traordinar, relief from
t&e district courtEs denial of t&e Can-sE motion to dismiss t&e action ?osales et al. v.
Credit Suisse and S+iss Can- Corp.! 5o. C8 "$A$#1" 2C.D.Cal.3 2?eal! D.3
2O?osales actionP3. =e &ave /urisdiction pursuant to 1 U.S.C. R 1$512a3.
Cecause t&e relief soug&t in t&e ?osales action +ould violate t&e act of state
doctrine! +e grant t&e petition.
<.
A. *&e %ultiADistrict 7itigation
<n %ultiADistrict 7itigation 2O%D7P3 Case 5o. #0 2D.@a+aii3! "!53"
victims of &uman rig&ts violations +on a 01!"$#!005!5"."0 /udgment against t&e
>state of (erdinand >. %arcos 2O>stateP or O%arcos >stateP3. *&e /udgment
included an in/unction restraining t&e >state and its agents! representatives and
aiders and abettors from transferring or ot&er+ise conve,ing an, funds or assets
&eld on be&alf of or for t&e benefit of t&e >state pending satisfaction of t&e
/udgment.
C. :ostADudgment >nforcement :roceedingA*&e @ilao Action
<n an attempt to collect on t&e /udgment! t&e plaintiffs in t&e %D7 case
registered t&eir /udgment in t&e Central District of California. See @ilao v. >state
of %arcos! "5 (.3d #! 50 2"t& Cir.1""$3. =rits of e.ecution and notices of
lev, +ere t&ereafter delivered to t&e Can-sE offices in California.1 *&e notices of
lev, purported to lev, against deposit accounts in t&e name of (erdinand >.
%arcos or t+ent,Asi. of &is alleged aliases or pseudon,ms. <d. 5one of t&ese
deposit accounts +ere maintained at t&e California offices of eit&er Can-. <d.
After t&e plaintiffs indicated t&at t&e, +ere see-ing assets and information
from t&e Can-sE offices in S+it9erland! bot& Can-s filed motions to vacate and
;uas& t&e notices of lev,. <d. *&e district court denied t&e Can-sE motions and sua
sponte entered an order directing t&e Can-s to deposit into t&e ?egistr, of t&e
United States District Court for t&e Central District of California Oas an
interpleader proceeding all assets in t&e possession of t&e CA5JS t&at are t&e
sub/ect matter of t&is proceeding.P <d. at 51. *&e Can-s appealed and +e
reversed. <d. at 5$.
=e first &eld t&at! pursuant to (ed.?.Civ.:. $"2a3!1 t&e postA/udgment
enforcement proceeding &ad to compl, +it& California la+. <d. at 53.
California la+ re;uires Opersonal serviceP of a notice of lev, on a deposit account
to be made at t&e branc& or office of t&e financial institution at +&ic& t&e account
is actuall, carried. <d. Cecause none of t&e >stateEs assets +ere &eld in deposit
accounts located in California! t&e service of t&e notice of lev, at t&e Can-sE
California offices +as ineffective. <d. at 53A5#. *&e district court s&ould &ave
t&erefore granted t&e Can-sE motions to vacate and ;uas& t&e levies. <d. at 5#.
Second! +e &eld t&at because ?ule $"2a3 Oessentiall, limits a district courtEs
mec&anism for enforcement of a mone, /udgment to a +rit of e.ecution! t&e court
&ad no aut&orit, to order t&e Can-s to deposit t&e contested funds into t&e court
registr,.P <d. at 5$. <n coming to t&is conclusion! +e noted t&at alt&oug& t&e
Can-s &ad previousl, been found to be Oagents and representativesP of t&e %arcos
>state! t&e significance of t&is finding +as Oout+eig&ed b, t&e fact t&at t&e Can-s
+ere not parties before t&e court in t&e case in +&ic& t&e finding +as made.P <d.
at 55.
C. *&e ?osales Action
(ollo+ing our decision in @ilao! counsel for t&e plaintiffs 3 filed t&e ?osales
action directl, against t&e Can-s! see-ing t&e follo+ing relief) 213 an in/unction
restraining t&e Can-s from transferring or ot&er+ise conve,ing an, funds or assets
&eld b, t&e Can-s on be&alf of t&e %arcos >state! e.cept as ordered b, t&e district
court4 and 213 a declaration t&at t&e C&inn assignment# is valid and binding on t&e
Can-s.
*&e Can-s filed a motion to dismiss t&e ?osales action pursuant to
(ed.?.Civ.:. 112b3 on t&e ground t&at! among ot&er t&ings! t&e in/unctive and
declarator, relief soug&t in t&e action +ould violate t&e act of state doctrine. *&e
district court denied t&e Can-sE motion to dismiss! and t&e Can-sE subse;uent
motion for certification for interlocutor, appeal.5 *&e Can-s t&en filed t&e
present petition! re;uesting t&is court to issue a +rit of mandamus compelling t&e
district court to vacate its denial of t&e motion to dismiss! and directing t&e district
court to dismiss t&e action.
<<.
A +rit of mandamus O&as traditionall, been used in t&e federal courts onl,
to confine an inferior court to a la+ful e.ercise of its prescribed /urisdiction or to
compel it to e.ercise its aut&orit, +&en it is its dut, to do so.P Cauman v. United
States Dist. Court! 55' (.1d $50! $5# 2"t& Cir.1"''3 2;uotations omitted3. OFOGnl,
e.ceptional circumstances amounting to a /udicial usurpation of po+er +ill /ustif,
t&e invocation of t&is e.traordinar, remed,.P <d. 2;uotations omitted3. Cefore a
+rit +ill issue! t&is court must be Ofirml, convinced t&at t&e district court &as erred
and t&at t&e petitionerEs rig&t to t&e +rit is clear and indisputable.P 8alen9uelaA
Gon9ale9 v. United States Dist. Court! "15 (.1d 11'$! 11'" 2"t& Cir.1""03 2citation
and ;uotations omitted3.
<n determining +&et&er a +rit s&ould issue! t&is court loo-s to five
specific guidelines! -no+n as t&e OCauman guidelinesP)
213 *&e part, see-ing t&e +rit &as no ot&er ade;uate means! suc& as a direct
appeal! to attain t&e relief &e or s&e desires. 213 *&e petitioner +ill be damaged or
pre/udiced in a +a, not correctable on appeal. 2*&is guideline is closel, related to
t&e first.3 233 *&e district courtEs order is clearl, erroneous as a matter of la+. 2#3
*&e district courtEs order is an oftArepeated error! or manifests a persistent disregard
of t&e federal rules. 253 *&e district courtEs order raises ne+ and important
problems! or issues of la+ of first impression.
Cauman! 55' (.1d at $5#A55 2citations omitted3. 5one of t&ese guidelines
is determinative and all five guidelines need not be satisfied at once for a +rit to
issue. 8alen9uelaAGon9ale9! "15 (.1d at 11'". <n fact! rarel, +ill a case arise
+&ere all t&ese guidelines point in t&e same direction or +&ere eac& guideline is
even relevant or applicable. Cauman! 55' (.1d at $55.
*&e Can-s argue applicabilit, of onl, t&e first t&ree Cauman guidelines.
=e +ill limit our revie+ to t&ose t&ree guidelines! since t&e remaining guidelines
do not affect our anal,sis.
A. 5o Ot&er Ade;uate %eans to Obtain Desired ?elief
*&e district courtEs denial of t&e Can-sE motion to dismiss is not a Ofinal
decisionP +it&in t&e meaning of 1 U.S.C. R 11"1!$ and it is t&erefore not
immediatel, revie+able. See Catlin v. United States! 31# U.S. 11"! 13$! $5 S.Ct.
$31! $35! " 7.>d. "11 21"#53. (urt&ermore! because t&e district court denied t&e
Can-sE motion for certification for interlocutor, appeal under 1 U.S.C. R 11"12b3!
permissive interlocutor, appeal is not available. *&e Can-s t&us &ave no ot&er
means of obtaining immediate revie+ of t&e denial of t&eir motion to dismiss.
See 8alen9uelaAGon9ale9! "15 (.1d at 11'" 2&olding t&at t&ere +as no ot&er
ade;uate means to obtain revie+ follo+ing district courtEs denial of R 11"12b3
motion34 C&ristensen v. United States Dist. Court! ## (.1d $"#! $"$ 2"t&
Cir.1"3 2granting mandamus relief +&ere district court refused to certif, ;uestion
for immediate appeal3.
C. Damage or :re/udice to :etitioner 5ot Correctable on Appeal
*&e district court issued an order! sta,ed b, t&is court! compelling t&e
Can-s to respond to t&e plaintiffsE discover, re;uests. *&ese discover, re;uests
include interrogatories see-ing detailed information about accounts purportedl,
located in S+it9erland and re;uests to produce a +ide variet, of documents
maintained at t&e Can-sE S+it9erland offices. <t is undisputed t&at provision of
t&e re;uested information! and production of t&e re;uested documents! +ould
violate S+iss ban-ing secrec, and ot&er la+s +&ic& carr, criminal penalties. *&e
district courtEs order compelling t&e Can-s to respond to t&e discover, re;uests
t&erefore places t&e Can-s in t&e position of &aving to c&oose bet+een being in
contempt of court for failing to compl, +it& t&e district courtEs order! or violating
S+iss ban-ing secrec, and penal la+s b, compl,ing +it& t&e order. ?e;uiring
t&e Can-s to c&oose bet+een being in contempt of court and violating S+iss la+
clearl, constitutes severe pre/udice t&at could not be remedied on direct appeal.
C. Order Clearl, >rroneous as a %atter of 7a+AAct of State Doctrine
*&e classic statement of t&e act of state doctrine is found in Under&ill v.
@ernande9! 1$ U.S. 150! 151! 1 S.Ct. 3! #! #1 7.>d. #5$ 21"'3! +&ere Dustice
(uller stated for t&e Court)
>ver, sovereign State is bound to respect t&e independence of ever, ot&er
sovereign State! and t&e courts of one countr, +ill not sit in /udgment on t&e acts
of t&e government of anot&er done +it&in its o+n territor,. ?edress of grievances
b, reason of suc& acts must be obtained t&roug& t&e means open to be availed of
b, sovereign po+ers as bet+een t&emselves.
Canco 5acional de Cuba v. Sabbatino! 3'$ U.S. 3"! #1$! # S.Ct. "13! "3#!
11 7.>d.1d 0# 21"$#3 2;uoting Under&ill! 1$ U.S. at 151! 1 S.Ct. at #3.
Alt&oug& once vie+ed as an e.pression of international la+! resting on
considerations of international comit, and e.pedienc,! t&e act of state doctrine is
currentl, vie+ed as a Oconse;uence of domestic separation of po+ers! reflecting
Tt&e strong sense of t&e Dudicial Cranc& t&at its engagement in t&e tas- of passing
on t&e validit, of foreign acts of state ma, &inderN t&e conduct of foreign affairs.P
=.S. Jir-patric- M Co.! <nc. v. >nvironmental *ectonics Corp.! <ntEl! #"3 U.S. #00!
#0#! 110 S.Ct. '01! '0#! 10' 7.>d.1d 1$ 21""03 2;uoting Canco 5acional! 3'$
U.S. at #13! # S.Ct. at "3'3.
Under t&is current vie+! an action +ill be barred onl, if) 213 t&ere is an
Oofficial act of a foreign sovereign performed +it&in its o+n territor,P4 and 213
Ot&e relief soug&t or t&e defense interposed Fin t&e action +ould re;uireG a court in
t&e United States to declare invalid t&e Fforeign sovereignEsG official act.P <d. at
#05! 110 S.Ct. at '0#.
1. Official Act of a (oreign Sovereign
<n 1"$! +&en (erdinand >. %arcos left po+er! t&e S+iss (ederal
Council!' t&e &ig&est governing bod, in t&e S+iss >.ecutive Cranc&! issued an
>.ecutive Order free9ing all assets of t&e %arcos famil, t&at +ere &eld in
S+it9erland. *&e (ederal Council! e.pecting t&e :&ilippine government to see-
recover, of funds deposited b, %arcos and &is famil, in S+it9erland! issued t&e
free9e order to ensure t&at t&e funds did not disappear before t&e :&ilippine
government &ad an opportunit, to act.
S&ortl, t&ereafter! t&e :&ilippine government formall, re;uested! pursuant to
t&e S+iss (ederal Act on %utual Assistance in Criminal %atters 2O<%ACP3! t&at
t&e Government of S+it9erland free9e all assets &eld in S+it9erland t&at belonged
to %arcos and &is famil, pending t&e outcome of a criminal investigation and
prosecution in t&e :&ilippines." *&e :&ilippine government also re;uested
assistance in obtaining evidence about t&e amount and nature of t&e %arcos assets
&eld in S+it9erland and t&e circumstances under +&ic& suc& assets +ere deposited.
After ensuring t&at t&e :&ilippine governmentEs re;uest complied +it&
<%AC! t&e S+iss (ederal Office of :olice for+arded t&e re;uest for assistance to
t&e enforcement aut&orities of t&e cantons in +&ic& t&e %arcos ban- accounts +ere
maintainedAGeneva! (ribourg and Luric&A+it& instructions to ta-e provisional
measures immediatel,.10 :ursuant to <%AC procedures +&ic& re;uire t&e
cantonal aut&orities to e.ecute t&e instructions of t&e S+iss federal government!
cantonal orders +ere immediatel, issued free9ing all assets belonging directl, or
indirectl, to %arcos andUor &is famil,. *&ese cantonal orders! +&ic& superseded
t&e previousl, issued >.ecutive Order! +ere appealed and affirmed b, /udgments
of t&e S+iss (ederal Supreme Court! t&e &ig&est court in S+it9erland. *&e
cantonal free9e orders remain in effect toda,.
S+it9erlandEs act of issuing first t&e >.ecutive Order and t&en t&e cantonal
free9e orders pursuant to <%AC +as Oparadigmaticall, sovereign in nature4 it is
not Ft&e t,pe of actG t&at a private person can e.ercise.P Calle/o v. Cancomer!
S.A.! '$# (.1d 1101! 111$ 25t& Cir.1"53. *&e >.ecutive and subse;uent cantonal
orders +ere! t&erefore! clearl, an Oofficial act of a foreign sovereign performed
+it&in its o+n territor,.P =.S. Jir-patric-! #"3 U.S. at #05! 110 S.Ct. at '0#.
1. ?elief Soug&t =ould ?e;uire a United States Court to Declare O<nvalidP
a (oreign SovereignEs Official Act
<n t&e ?osales action! t&e %D7 plaintiffs see- relief including) 213 an
in/unction restraining t&e Can-s from transferring or ot&er+ise conve,ing an,
funds or assets &eld b, t&e Can-s on be&alf of t&e %arcos >state e.cept as ordered
b, t&e district court4 and 213 a declaration t&at t&e C&inn assignment is valid and
binding on t&e Can-s. Cot& of t&ese forms of relief +ould not onl, re;uire a
United States court to ;uestion t&e validit, of t&e free9e orders! but +ould also
Orender nugator,P S+it9erlandEs attempts to render legal assistance to *&e
?epublic of t&e :&ilippines b, protecting t&e >state assets. See Calle/o! '$# (.1d
at 111$. *&e relief soug&t t&erefore violates t&e act of state doctrine! and t&e
district courtEs refusal to dismiss t&e action +as clearl, erroneous as a matter of
la+.
*&e in/unction soug&t b, t&e plaintiffs +ould compel t&e Can-s to &old an,
assets of t&e %arcos >state sub/ect to t&e district courtEs furt&er orders. <t is clear
t&at t&e district court plans on ta-ing control of an, >state assets &eld b, t&e
Can-s! even t&oug& t&ose assets are currentl, fro9en pursuant to official orders of
S+iss aut&orities. An, order from t&e district court compelling t&e Can-s to
transfer or ot&er+ise conve, >state assets +ould be in direct contravention of t&e
S+iss free9e orders. Sub/ecting >state assets &eld b, t&e Can-s to t&e district
courtEs furt&er orders +ould t&us allo+ a United States court to ;uestion and! in
fact! Odeclare invalid t&e official act of a foreign sovereign.P =.S. Jir-patric-!
#"3 U.S. at #05! 110 S.Ct. at '0#. <ssuance of t&e in/unctive relief soug&t +ould
t&erefore violate t&e act of state doctrine.
A declaration b, a United States court t&at t&e C&inn assignment is valid and
binding on t&e Can-s +ould also violate t&e act of state doctrine. *&e assignment
purports to assign to ?obert S+ift! counsel for t&e %D7 plaintiffs! all of t&e
>stateEs Orig&t! title and interest in and to ban- accounts maintained in
S+it9erland.P *&e assignment directs entities &aving aut&orit, over suc& ban-
accounts Oto perform all necessar, acts to effect t&e transfer of t&e above ban-
accounts fort&+it&.P
A declaration t&at t&is assignment is valid and binding on t&e Can-s +ould
be a declaration t&at t&e Can-s must transfer all >state assets &eld b, t&e Can-s to
S+ift Ofort&+it&.P Suc& a declaration +ould not onl, contradict! and t&erefore
declare invalid! t&e S+iss free9e orders! but +ould also re;uire t&e Can-s to
disregard t&e S+iss orders.
United States courts are Obound to respect t&e independence of ever,
ot&er sovereign State!P including S+it9erland. See Under&ill! 1$ U.S. at 151! 1
S.Ct. at #. <f t&e %D7 plaintiffs +ant to contest t&e legalit, of t&e S+iss free9e
orders! see- a declaration of t&e validit, of t&e C&inn assignment as against t&e
Can-s! or see- an in/unction compelling t&e Can-s to turn over t&e assets! t&e,
s&ould do so via t&e S+iss /udicial s,stem. See %iller v. United States! "55
(.Supp. '"5! '" 25.D.O&io 1""$3.
<<<.
*&e cler- of t&is court is directed to issue a +rit of mandamus directing
t&e district court to vacate its denial of t&e Can-sE motion to dismiss! and to dismiss
t&e action ?osales et al. v. Credit Suisse and S+iss Can- Corp.! 5o. C8 "$A$#1"
2C.D.Cal.3 2?eal! D.34 and furt&er directing t&e district court to refrain from ta-ing
an, furt&er action in t&e ?osales action or an, ot&er case involving an, or all of t&e
?eal :arties in <nterest and an, assets of t&e >state of (erdinand >. %arcos &eld or
claimed to be &eld b, t&e Can-s.
*&is court retains /urisdiction over t&is case. An, motions for vacation or
modification of t&is order s&all be filed +it& t&e cler- of t&is court.
*&e :etition for =rit of %andamus is G?A5*>D.
=.S. J<?J:A*?<CJ M CO.! <5C.! >* A7.! :>*<*<O5>?S 8.
>58<?O5%>5*A7 *>C*O5<CS CO?:O?A*<O5! <5*>?5A*<O5A7.
According to respondentEs complaint! petitioners obtained a construction
contract from t&e 5igerian Government b, bribing 5igerian officials. 5igerian la+
pro&ibits bot& t&e pa,ment and t&e receipt of suc& bribes. ?espondent! an
unsuccessful bidder for t&e contract! filed an action for damages against petitioners
and ot&ers under various federal and state statutes. *&e District Court ruled t&at t&e
suit +as barred b, t&e act of state doctrine! +&ic& in its vie+ precluded /udicial
in;uir, into t&e motivation of a sovereign act t&at +ould result in embarrassment to
t&e sovereign! or constitute interference +it& t&e conduct of United States foreign
polic,. *&e court granted summar, /udgment for petitioners because resolution of
t&e case in favor of respondent +ould re;uire imputing to foreign officials an
unla+ful motivation 2t&e obtaining of bribes3! and accordingl, mig&t embarrass t&e
>.ecutive Cranc& in its conduct of foreign relations. *&e Court of Appeals
reversed and remanded t&e case for trial! &olding t&at on t&e facts of t&is case t&e
doctrine did not appl, because no embarrassment of t&e >.ecutive in its conduct of
foreign affairs +as evident.
@eld) *&e act of state doctrine does not appl, because not&ing in t&e present
suit re;uires a court to declare invalid t&e official act of a foreign sovereign. See!
e.g.! ?icaud v. American %etal Co.! 1#$ U.S. 30#! 3 S.Ct. 311! $1 7.>d. '33. <t
does not suffice t&at t&e facts necessar, to establis& respondentEs claim +ill also
establis& t&at t&e 5igerian contract +as unla+ful! since t&e contractEs legalit, is
simpl, not a ;uestion t&at t&e District Court must decide. American Canana Co. v.
United (ruit Co.! 113 U.S. 3#'! 35'A35! 1" S.Ct. 511! 513! 53 7.>d. 1$ 2@olmes!
D.3! distinguis&ed. 5or does it suffice t&at /udgment in favor of respondents +ill
re;uire t&e court to impute to foreign officials improper motivation in t&e
performance of official acts.
*o sa, t&at international comit,! respect for t&e sovereignt, of foreign
nations! and t&e avoidance of embarrassment to t&e >.ecutive Cranc& in its
conduct of foreign relations are t&e policies underl,ing t&e act of state doctrine is
not to sa, t&at t&e doctrine is applicable +&enever t&ose policies are implicated.
*&e doctrine is not a rule of abstention +&ic& pro&ibits courts from deciding
properl, presented cases or controversies simpl, because t&e >.ecutiveEs conduct
of foreign relations ma, be adversel, affected4 it is a rule of decision +&ic&
re;uires t&at! in t&e process of deciding! t&e acts of foreign sovereigns ta-en +it&in
t&eir o+n /urisdictions be deemed valid. :p. #0#A#10.
Pennh"rst State Schoo , *os&ita () *aderman
Crief (act Summar,. *&e ?espondents! @alderman and ot&ers
2?espondents3! filed suit against t&e :etitioners! t&e :enn&ust State Sc&ool and
@ospital and its officials 2:etitioners3! c&arging conditions at t&e &ospital violate
class memberNs rig&ts. *&e :etitioners argued before t&e Supreme Court of t&e
United States 2Supreme Court3 t&at t&e >levent& Amendment of t&e United States
Constitution 2Constitution3 pro&ibited t&e District Court from ordering state
official to conform t&eir conduct to state la+.
S,nopsis of ?ule of 7a+. A federal courtNs grant of relief against state
officials on t&e basis of state la+! +&et&er! prospective or retroactive directl,
interferes +it& t&e principles of federalism t&at underlie t&e >levent& Amendment
of t&e Constitution.
(acts. *&is case is before t&e Supreme Court for a second time to determine
+&et&er a federal court can grant relief against state officials based on state la+.
*&e case concerns t&e condition of care at :etitionersN institution for t&e mentall,
retarded. *&e ?espondentsN amended complaint c&arged t&at t&e :etitioners
violated class memberNs rig&ts under 2i3 t&e >ig&t& and (ourteent& Amendments of
t&e Constitution! 2ii3 Section)50# of t&e ?e&abilitation Act of 1"'3! 2iii3 t&e
Developmentall, Disabled Assistance and Cill of ?ig&ts Act and 2iv3 t&e
:enns,lvania %ental @ealt& and %ental ?etardation Act of 1"$$. *&e Court of
Appeals for t&e *&ird Circuit decided t&at t&e ?espondents &ad a rig&t to
re&abilitation in t&e least restrictive environment! based solel, on t&e bill of rig&ts
provision in t&e Developmentall, Disabled Assistance and Cill of ?ig&ts Act. *&e
Supreme Court of t&e United States 2Supreme Court3 reversed t&e /udgment of t&e
Court of Appeals finding t&at t&e Developmentall, Dis
abled Assistance and Cill of ?ig&ts Act did not create an, substantive rig&ts
and remanded t&e case bac- to t&e Court of Appeals to determine if t&e remedial
order could be supported b, an, of t&e ?espondentsN ot&er arguments. *&e Court
of Appeals concluded t&at state la+ supported its prior /udgment and also re/ected
t&e :etitionersN argument t&at t&e >levent& Amendment barred t&e federal court
from considering t&e pendent state la+ claim. *&e case goes before t&e Supreme
Court to consider t&e :etitionersN position.
<ssue. =&et&er a federal court &as /urisdiction to a+ard in/unctive relief
against state officials on t&e basis of state la+Q
@eld. (ederal Courts lac- /urisdiction to en/oin :etitionersN actions on t&e
basis of state la+. ?eversed and remanded.
Dissent. *&e ma/orit, decision goes against establis&ed precedence b, t&e
Supreme Court! stating a federal court can a+ard in/unctive relief on t&e basis of
state la+. *&is ne+ pronouncement +ill re;uire federal courts to decide federal
constitutional ;uestions despite t&e availabilit, of stateAla+ grounds for decision.
Discussion. *&e >levent& Amendment of t&e Constitution pro&ibits a state
from being sued in federal courts b, &er o+n citi9ens! as +ell as b, citi9ens of
anot&er state. *&e >levent& Amendment bars a suit against state officials +&en t&e
state is a real! substantial part, in interest. An e.ception to t&e rule against suing
state officials is +&en t&e suit is c&allenging t&e constitutionalit, of state officialNs
actions. =&en bringing suit in a federal court for a state officialNs actions based on
violation of federal la+! a court can impose an in/unction t&at governs t&e officialNs
future conduct! but ma, not a+ard retroactive monetar, relief. <t is not t&e
/urisdiction of federal courts to a+ard relief against a state official based on state
la+.
7O?D DA6 M 7O?D! Carrett Smit&! :laintiffs!
v.
*@> SOC<A7<S* ?>:UC7<C O( 8<>*5A%! S+iss ?einsurance
Compan,! Assurance Generales de (rance! and Groupe des %utuelles Alsaciennes
Defendants.
5o. "$ Civ. 5'552DAC3.
United States District Court! S.D. 5e+ 6or-.
%arc& 1'! 1001.
S550 S551 S551 %organ! 7e+is M Coc-ius 77:! 5e+ 6or- Cit,! >ugene (.
Cannigan! Dennifer %angino! for :laintiff.
=&ite M Case! =as&ington! DC! C&ristop&er %. Curran! (rancis A. 8as;ue9!
Dr.! :eter D. Carne, for Defendant t&e Socialist ?epublic of 8ietnam.
S553 S+iss ?e America @olding Corporation! 5e+ 6or- Cit,! :atric- D.
OECrien! for Defendants t&e S+iss ?einsurance Compan,! Assurance Generales de
(rance <art! and Groupe des %utuelles Alsaciennes.
O:<5<O5
CA**S! District Dudge.
:laintiff 7ord Da, M 7ord 2B7ord Da,B3! a la+ firm in li;uidation! broug&t
t&is interpleader action to determine t&e entitlement of funds currentl, &eld in t&e
possession of t&is Court. *&e Socialist ?epublic of 8ietnam 2B8ietnamB3! S+iss
?einsurance Compan,! Assurance Generales de (rance! and Groupe des %utuelles
Alsaciennes 2collectivel, B?einsurersB3 &ave all claimed suc& entitlement.
Defendant 8ietnam moves to dismiss t&e ?einsurersE CrossAComplaint for lac- of
/urisdiction! pursuant to (ed.?.Civ.:. 112b32134 2b32134 and 2c3. (or t&e reasons set
fort& belo+! Defendant 8ietnamEs motion is G?A5*>D in its entiret,.
<. CACJG?OU5D
A. (actual Cac-ground
On December $! 1"'0! a cargo of rice o+ned b, t&e! t&en! ?epublic of
8ietnam 2Bformer ?epublicB3 +as lost during overseas transport +&en t&e s&ip
carr,ing t&e cargo sustained a collision in t&e :anama Canal. 2?einsurersE Compl.
VV 1! 1".3 *&e cargo +as insured under a polic, issued b, Societe 8ietnamenne
DEAssurances et de ?eassurances 2BSO8A?B3! a 8ietnamese insurance corporation.
2<d. V $.3 :ursuant to t&e terms of its insurance agreement! SO8A? reimbursed t&e
former ?epublic and *ong Cuoc *iep *e! t&e t&en BGeneral Suppl, Agenc,B of t&e
former ?epublic! its insured! for t&e full value of t&e loss. 2<d. VV 1A1".3 SO8A?
obtained an assignment dated December 1#! 1"'1 from its insured for all rig&ts
against t&ird parties responsible for t&e loss. 2<d. V 1"4 App. %em. Opp.! >.. C
2subrogation agreement33.F1G <n turn! SO8A? +as indemnified b, t&e ?einsurers
for a portion of t&e total cargo loss. 2?einsurersE Compl. V 11.3
Under :laintiff 7ord Da,Es legal representation! SO8A? and t&e former
?epublic commenced a subrogation action in 1"'3 see-ing recover, for t&e lost
rice cargo against parties allegedl, responsible for t&e loss. 2?einsurersE Compl. V
104 <nterpleader Compl. V #.F1G3 *&e action proceeded in t&e name of t&e ?epublic
of 8ietnam and *ong Cuoc *iep *e 2t&e countr,Es general suppl, agenc,3. See <n
re) C&inese %aritime *rust! 7td.! '1 Civ. 1$12?7C3 2S.D.5.6. %ar. 1#! 1"'53
2(inal <nterlocutor, Consent Dudgment3.F3G *&is action resulted in a settlement in
1"'5! S55# +&ere t&e former ?epublic and *ong Cuoc *iep *e +ere to obtain
05#!3$#.5$ from t&e :anama Canal Compan,! after pa,ment of sums due ot&er
parties. 2?einsurersE Compl. V 103.
On April 30! 1"'5! s&ortl, after t&e settlement c&ec- +as issued from t&e
:anama Canal Compan, to :laintiff 7ord Da,! Saigon fell to t&e armies of t&e
Socialist ?epublic of 8ietnam! and t&e United States subse;uentl, banned all
transfer of funds to t&e 8ietnamese government and 8ietnamese nationals.
2<nterpleader Compl. V $.F#G3 See also *rading =it& t&e >nem, Act! #0 (ed.?eg.
RR 1"101! 1"103 21"'33 2B*=>AB34 31 C.(.?. R 500.1012a3213! 2d3. *&e settlement
c&ec- +as issued B:a, to t&e Order of) 7ord! Da, M 7ord! attorne,s for ?epublic
of 8ietnam M *ong Cuoc *iep *e U General Suppl, Agenc,.B 2Court >.. 1.3
:revented from transferring t&e settlement c&ec- to its 8ietnamese clients!
:laintiff soug&t and +as issued a 7icense b, t&e (ederal (oreign Assets Control
agenc, permitting placement of t&e funds into a bloc-ed account! pursuant to t&e
*rading =it& t&e >nem, Act. See Court >.. 1 2Application for 7icense3. See also
<n re) C&inese %aritime *rust! 7td.! '1 Civ. 1$12?7C3 2S.D.5.6. %ar. 1"'$3
2Order3 2directing 7ord! Da, M 7ord to place balance of t&e settlement funds Binto
a bloc-ed account in a domestic ban- in t&e name of t&e ?epublic of 8ietA5am and
*ong Cuoc *iep *e. *&e ban- must ac-no+ledge establis&ment of t&e account to
t&e Office of (oreign Assets Control giving details.B3.
:laintiff applied for a 7icense in its role as Battorne,s for 8ietnam Assurance
and ?eassurance Co.!B i.e. SO8A?. Court >.. 1 at 1. <n its application! :laintiff
listed SO8A?! rat&er t&an t&e former ?epublic! as a Bpresent claimantB to t&e
funds. <d. at 5. <n its Complaint! :laintiff e.plains t&at! alt&oug& t&e case +as
broug&t in t&e name of 8ietnam and *ong Cuoc *iep *e and t&e Consent Dudgment
directed pa,ment to 8ietnam and *ong Cuoc *iep *e! B7ord Da, &ad planned to
transfer t&e settlement funds to SO8A? because upon information and belief!
SO8A? +as subrogated to all rig&ts of t&e ?epublic of 8ietnam.BF5G 2<nterpleader
Compl. V 5.3
S555 <n t&e 7icense application! :laintiff stated t&at it soug&t t&e license in
order collect t&e unpaid /udgment and for t&e purpose of ma-ing disbursements to
attorne,s related to t&e settlement and Bto suc& ot&er persons &aving an interest in
t&e balance as ma, la+full, be paid.B 2Court >.. 1 at #.3 Alt&oug& :laintiffs
ac-no+ledged in t&e license application t&at B<t is our understanding ... t&at t&ere
are ot&er coAinsurers and reAinsurers +&o ma, be entitled to a s&are of t&e
proceeds!B no part, claims to &ave soug&t pa,ment from t&e account +&ile t&e
assets +ere fro9en. <d. at 5.
Upon issuance of t&e 7icense! :laintiff deposited t&e funds in t&e name of
t&e ?epublic of 8ietnam and *ong Cuoc *iep *e in an interestAbearing account
+it& (irst 5ational Cit, Can- in 5e+ 6or-. 2<nterpleader Compl. V 4 Court >.. 3
27tr. dated %a, $! 1"'$ from (irst 5ational Cit, Can- ac-no+ledging opening of
bloc-ed account3.3 Since t&e initial ban- deposit b, :laintiff! t&e settlement funds
&ave accrued interest and are no+ valued at appro.imatel, 01. million.
>ffective %arc& $! 1""5! t&e United States lifted t&e ban! t&us allo+ing t&e
settlement funds deposited b, :laintiff to be finall, transferred. 2<nterpleader
Compl. V 10.3 @o+ever! follo+ing t&e fall of Saigon! SO8A? &ad been effectivel,
dissolved and nationali9ed in April 1"'5 b, 8ietnam! +&o discontinued its
operations. 2?einsurersE Compl. V 1#.3 Uncertain &o+ to proceed! :laintiff filed t&e
instant <nterpleader action.
C. :rocedural Cac-ground
:laintiff is a 5e+ 6or- la+ firm currentl, in li;uidation. 2<nterpleader
Compl. V 11.3 :laintiff broug&t t&is interpleader action pursuant to ?ule 11 of t&e
(ederal ?ules of Civil :rocedure naming t&e Socialist ?epublic of 8ietnam 2t&e
current government of 8ietnam! &ereinafter! B8ietnamB3! and t&ree foreign
corporations believed to be former s&are&olders of SO8A?) S+iss ?einsurance
Compan, 2BS+iss ?eB3! Assurances Generales de (rance! and Groupe des
%utuelles Alsaciennes 2Bt&e ?einsurersB3. 2<d. VV 11A1".3
:laintiff 7ord Da, soug&t 213 t&at eac& of t&e Defendants interplead and
settle S55$ among t&emselves t&eir respective rig&ts to t&e funds at issue4 213
en/oinment and restraint from Defendants ma-ing an, claim against :laintiff to
turn over t&e funds and prosecuting an, action for t&e recover, of t&e funds4 233
disc&arge from all liabilit, in transfer and maintenance of t&e funds4 and 2#3 fees
and attorne,sE costs.
(ollo+ing a &earing to s&o+ cause in interpleader conducted on 5ovember
13! 1""$! t&is Court granted :laintiff relief on eac& of its re;uests. *&e Court also
ordered :laintiff to deposit t&e funds +it& t&e Cler- of t&is Court.
*&e ?einsurers ans+ered t&e Complaint and appeared as parties of interest
+it& respect to t&e funds on 5ovember $! 1""$. Upon resolution of outstanding
service issues! 8ietnam filed its Ans+er on %a, 1! 1""'. 8ietnamEs Ans+er to
:laintiffEs <nterpleader Complaint asserts its rig&t to t&e funds pursuant to an
>.ecutive Agreement and also asserts several affirmative defenses! including its
rig&t to immunit, as a foreign sovereign under t&e (oreign Sovereign <mmunities
Act. 28ietnamEs Ans+er V 1.3
*&e ?einsurers also filed a CrossAComplaint asserting entitlement to t&e
funds. According to t&e ?einsurers! prior to SO8A?Es dissolution and
nationali9ation! t&e ?einsurers &ad an agreement +it& SO8A? to provide
indemnit, reinsurance covering a portion of t&e rice cargo loss! and also &eld
appro.imatel, 30 percent of common stoc- in t&e corporation. 2<d. VV 1'! 15.3 *&e
?einsurers claim o+ners&ip of t&e funds b, t&eir status as reinsurers and
s&are&olders before and during SO8A?Es dissolution and nationali9ation. <n
addition! S+iss ?e brings a separate claim for e.propriation.
8ietnam filed t&e instant motion to dismiss t&e ?einsurersE CrossAComplaint
pursuant to (ederal ?ules of Civil :rocedure 112b3 and 2c3 on various grounds!
including 8ietnamEs asserted rig&t to t&e funds as a matter of la+ pursuant to an
>.ecutive Agreement! lac- of /urisdiction under t&e (ederal Sovereign <mmunities
Act and t&e statute of limitations.
<<. D<SCUSS<O5
<nterpleader actions generall, proceed in t+o stages. (irst! t&e Court
determines +&et&er t&e plaintiff is entitled to t&e relief soug&t! including disc&arge.
:enns,lvania <ns. Co. v. 7ong <sland %arine Suppl, Corp.! 11" (.Supp. 1$! 1
2S.D.5.6.1"$#3. Second! t&e Court ad/udicates t&e adverse claims of t&e
interpleaded defendants. <d.
BA case is properl, dismissed for lac- of sub/ect matter /urisdiction under
?ule 112b3213 +&en t&e district court lac-s t&e statutor, or constitutional po+er to
ad/udicate it.B %a-arova v. U.S.! 101 (.3d 110! 113 21d Cir.10003. B<n resolving a
motion to dismiss for lac- of sub/ect matter /urisdiction under ?ule 112b3213! a
district court ... ma, refer to evidence outside t&e pleadings.B <d. 2citing Jamen v.
American *el. M *el. Co.! '"1 (.1d 100$! 1011 21d Cir.1"$33. (urt&er! a motion to
dismiss ma, be granted onl, if! ta-ing as true t&e allegations pleaded in t&e
complaint and ma-ing all reasonable inferences in favor of t&e plaintiff! Bit appears
be,ond doubt t&at t&e plaintiff can prove no set of facts in support of &is claim
+&ic& +ould entitle &im to relief.B (riedl v. Cit, of 5e+ 6or-! 110 (.3d '"! 3 21d
Cir.10003 2;uoting @arris v. Cit, of 5e+ 6or-! 1$ (.3d 1#3! 150 21d Cir.1"""33
2;uoting Conle, v. Gibson! 355 U.S. #1! #5A#$! ' S.Ct. ""! 1 7.>d.1d 0 21"5'33.
A. Durisdiction
*&e (oreign Sovereign <mmunities Act 2B(S<AB3 is t&e e.clusive basis for
federal sub/ect matter and personal /urisdiction in suits involving foreign states. 1
S55' U.S.C. RR 1330! 13312a3213A2#3! 1##12d3! 1$01A1$114 8erlinden C.8. v.
Central Can- of 5igeria! #$1 U.S. #0! ##! 103 S.Ct. 1"$1! '$ 7.>d.1d 1 21"334
S&apiro v. ?epublic of Colivia! "30 (.1d 1013! 101' 21d Cir.1""13. Sovereign
entities are entitled to immunit, from suit and federal courts lac- /urisdiction
unless a statutor, e.ception applies. 8erlinden! #$1 U.S. at #"3A"#! 103 S.Ct. 1"$1.
<n its ans+er to t&e <nterpleader Complaint! 8ietnam +aived its immunit,
agreeing to appear in response to :laintiffEs interpleader action for t&e sole purpose
of asserting its claim to t&e disputed funds. 28ietnamEs Ans+er V 13. @o+ever!
8ietnam e.plicitl, reserved its rig&ts as a foreign sovereign immune from
/urisdiction in connection +it& an, ot&er claims. 28ietnamEs Ans+er V 13. 8ietnam
claims immunit, from all ot&er claims to t&e funds because! it argues! an, suc&
claims re;uire t&e court to consider alleged contractual relations bet+een 8ietnam
and t&e ?einsurers.F$G >ffectivel,! 8ietnam see-s to grant t&is Court /urisdiction
solel, for t&e purpose of a+arding it t&e funds. *&is! 8ietnam cannot do.
1. Counterclaim
*&e (S<A provides a counterclaim e.ception! +&ic& states)
<n an, action broug&t b, a foreign state! or in +&ic& a foreign state
intervenes! in a court of t&e United States or of a State! t&e foreign state s&all not
be accorded immunit, +it& respect to an, counterclaim ...
2b3 arising out of t&e transaction or occurrence t&at is t&e sub/ect matter of
t&e claim of t&e foreign state! ...
1 U.S.C. R 1$0'. ?ecentl,! t&e Second Circuit defined t&is Btransaction or
occurrenceB liberall, as an, claim s&aring a Blogical relations&ipB +it& t&e claim of
t&e foreign state. Cabiri v. GovEt of ?epublic of G&ana! 1$5 (.3d 1"3! 1"' 21d Cir.3!
cert. denied! 51' U.S. 1011! 11" S.Ct. 13$! 1## 7.>d.1d ''1 21"""3. *&e courtEs
approac& Bloo-s to t&e logical relations&ip bet+een t&e claim and t&e counterclaim!
and attempts to determine +&et&er t&e essential facts of t&e various claims are so
logicall, connected t&at considerations of /udicial econom, and fairness dictate
t&at all t&e issues be resolved in one la+suit.B <d. 2permitting counterclaims s&aring
t&e same Bcore issueB as t&ose concerning t&e foreign stateEs eviction proceeding3.
*&e procedural stance of t&is case is not identical but permits analogous
application of t&is e.ception. @ere! 8ietnam &as neit&er broug&t t&e action nor
intervened! but rat&er! it &as appeared to pursue its claim in interpleader. *&e
?einsurers are codefendants and &ave t&us filed crossclaims! rat&er t&an
counterclaims! against 8ietnam. 5evert&eless! t&e partiesE interests are analogous
ma-ing t&e application of t&e counterclaim e.ception appropriate.
Onl, t&e ?einsurersE claim for breac& of contract s&ares an, arguable Bcore
issueB +it& 8ietnamEs claim. Cot& claims arise out of t&e 1"'0 s&ip accident and
bot& parties claim entitlement to t&e settlement funds pursuant to contract rig&ts
arising prior to t&e 1"'3 action. *&e remaining claims for dissolution and
e.propriation do not s&are common factual or legal ;uestions. Cot& t&e dissolution
and e.propriation claims arise out of t&e alleged dissolution and nationali9ation of
SO8A? in 1"'5! S55 +&ic& occurred in 8ietnam and +as unrelated to t&e
previous :anama Canal accident. *&ere is no factual connection to 8ietnamEs claim
of title ot&er t&an t&e mere fact t&at alleged former funds of SO8A?Es are located
in t&is district.
1. =aiver
>ven if t&e counterclaim e.ception +as inapplicable &ere! 8ietnam &as also
+aived its immunit, to t&e e.tent necessar, for t&e Court to determine title to t&e
funds in its possession. Under t&e (S<A! t&e +aiver e.ception permits federal
courts to assert /urisdiction over a foreign sovereign t&at +aives its immunit,
Beit&er e.plicitl, or b, implication.B 1 U.S.C. R 1$052a32134 Cargill <ntEl S.A. v.
%U* :A8>7 D6C>5JO! ""1 (.1d 1011! 101' 21d Cir.1""33. Courts are nearl,
unanimous in construing t&e implied +aiver e.ception narro+l,. S&apiro! "30 (.1d
at 101' 2collecting cases3. @o+ever! t&e Second Circuit &as &eld t&at district courts
&ave discretion in determining +&et&er t&e conduct of a part, constitutes an
implicit +aiver of foreign sovereign immunit, Bin lig&t of t&e circumstances of a
particular case.B Canadian Overseas Ores 7td. v. Compania de Acero del :acifico
S.A.! '1' (.1d 1'#! 1' 21d Cir.1"#3.
*&e appropriate e.tent of 8ietnamEs implied +aiver &ere is also impacted b,
t&e CourtEs abilit, to e.ercise in rem /urisdiction as it is in possession of t&e funds
at issue. See 1 U.S.C. R 1$5#. *&e in rem statute permits t&e Court to determine
claims of o+ners&ip to propert, in its possession but does not provide a means for
parties to sue on unrelated grounds. See 8idal v. Sout& American Securities Co.!
1'$ (. 55 21d Cir.1"113 2citing former R 113. *&e federal in rem statute &as been
&eld to e.tend onl, to preAe.isting claims and cannot be used to assert liens for t&e
first time. <d.4 1# C&arles A. =rig&t! Art&ur ?. %iller! >d+ard @. Cooper! (ederal
:ractice M :rocedure! R 3$3#! at 5#. Similarl,! courts considering implied +aiver
under t&e (S<A &ave e.panded +aiver onl, to t&e e.tent necessar, to consider
factuall, and legall, related causes of action. See! e.g.! Cabiri v. GovEt of ?epublic
of G&ana! 1$5 (.3d 1"3 21d Cir.3! cert. denied! 51' U.S. 1011! 11" S.Ct. 13$! 1##
7.>d.1d ''1 2eviction proceeding broug&t b, foreign state lac-ed direct connection
to false imprisonment claim t&us barring implied +aiver34 <n re >state of (erdinand
%arcos @uman ?ig&ts 7itigation! "# (.3d 53" 2"t& Cir. 1""$3 2:&ilippine action
see-ing recover, of public assets +as not implied +aiver for &uman rig&ts
violation action34 Gates v.. 8ictor (ine (oods! 5# (.3d 1#5' 2"t& Cir.3! cert. denied!
51$ U.S. $"! 11$ S.Ct. 1'! 133 7.>d.1d 11# 21""53 2refusing to e.pand +aiver to
encompass unrelated action34 Jramer v. Coeing Co.! '05 (.Supp. 13"1
2D.C.%inn.1""3 2+aiver for contract dispute did not e.tend +aiver to tort action3
<n fact! pursuant to 1 U.S.C. R 1$55! +&ere a defendant does not voluntaril,
appear! Bt&e court ma, proceed as if t&e absent defendant &ad been served +it&
process +it&in t&e State! but an, ad/udication s&all! as regards t&e defendant
+it&out appearance! affect onl, t&e propert, +&ic& is t&e sub/ect of t&e action.B
*&us! if t&e Court permitted 8ietnam to limit its +aiver as 8ietnam suggests! it
+ould &ave effectivel, failed to appear. <n suc& a case! t&e Court +ould
nevert&eless be enabled to determine title under 1 U.S.C. R 1$55 and +ould
necessaril, a+ard t&e funds to t&e ?einsurers! t&e onl, parties appearing. See id. <n
order to avoid t&is nonsensical result! t&e Court must construe 8ietnamEs +aiver as
broad enoug& to clear t&e Bcloud upon t&e titleB to t&e personal propert, +it&in t&is
district. See Canadian Overseas at 1'4 1 U.S.C. R 1$55.
S55" *&us b, its appearance and claim to t&e funds! 8ietnam &as impliedl,
+aived its immunit, to t&e e.tent necessar, to determine all preAe.isting claims
relating to legal title to t&e propert, arising out of t&e 1"'1 accident. Onl, t&e
contract claim meets t&is limited +aiver under bot& in rem and (S<A +aiver and
counterclaim anal,sis. *o t&e e.tent t&e ?einsurers see- recover, be,ond t&e
propert, +it&in t&is /urisdiction or recover, under t&eories of dissolution or
e.propriation! neit&er +aiver or counterclaim e.ceptions appl, to grant
/urisdiction.
3. Additional Asserted >.ceptions
*&e ?einsurers also argue t&at t&is Court &as /urisdiction over t&eir claims
under eit&er commercial activities or e.propriation e.ceptions to t&e (S<A.
Alt&oug& t&e ?einsurersE claims are ot&er+ise timeAbarred! see infra! bot&
e.ceptions are nevert&eless inapplicable to t&e ?einsurersE dissolution and
e.propriation claims.
a. Commercial Activities
*&e commercial activities e.ception of t&e (S<A provides t&at a foreign state
is not immune from t&e /urisdiction of federal courts in an, case Bin +&ic& t&e
action is based upon a commercial activit, carried on in t&e United States b, t&e
foreign state.B 1 U.S.C. R 1$052a3213! BF*G&e commercial c&aracter of an act is to
be determined b, reference to its WnatureE rat&er t&an its WpurposeE.B ?epublic of
Argentina v. =eltover! <nc.! 50# U.S. $0'! $1#! 111 S.Ct. 11$0! 11" 7.>d.1d 3"#
21""13. (urt&ermore! Bt&e issue is +&et&er t&e particular actions t&at t&e foreign
state performs 2+&atever motive be&ind t&em3 are t&e t,pe of actions b, +&ic& a
private part, engages in Wtrade and traffic or commerce.EB <d. 2citing Clac-Es 7a+
Dictionar, 1'0 2$t& ed.1""033.
*&e ?einsurers argue t&at t&e former ?epublicEs earlier prosecution and
settlement of t&e commercial subrogation action in 1"'3 creates a commercial
activit, e.ception to sovereign immunit,. Again! t&e ?einsurers carr, t&is
argument too far. =&ile initiation and settlement of commercial litigation ma, be a
Bcommercial activit,B +it&in t&e meaning of t&e statute! see Caribbean *rading and
(idelit, Corp. v. 5igerian 5atEl :etroleum Co.! 5o. "0 Civ. #1$"! 1""3 =7
5#113$! at ' 2S.D.5.6.1""33! t&e ?einsurers &ave failed to demonstrate &o+ t&eir
current claims are Bbased uponB t&e 1"'3 litigation. See Cargill <ntEl S.A. v. %U*
:avel D,ben-o! ""1 (.1d 1011! 101$ 21d Cir.1""33 2plaintiff &as burden of
s&o+ing t&at immunit, +ould not be granted3.
*&e 1"'3 litigation soug&t damages for destruction of rice cargo after an
accident allegedl, cause b, t&ird parties. An action is Bbased uponB commercial
activit, +it&in t&e United States +&en t&e commercial activit, is a necessar,
element of :laintiffEs claim or depends in some +a, on t&e alleged commercial
activit,. See Saudi Arabia v. 5elson! 50' U.S. 3#"! 35'! 113 S.Ct. 1#'1! 113
7.>d.1d #' 21""33. See also *ransatlantic S&iffa&rts-ontor v. S&ang&ai (oreign
*rade Corp.! 10# (.3d 3#! 3"0 21d Cir.10003 2B=&at does Wbased uponE meanQ At
a minimum! t&at language implies a causal relations&ip.B3.
*&e ?einsurers need not prove t&at 8ietnam participated in t&e commercial
activit, of settling a subrogation action in t&e United States to prove t&eir claims.
5or did t&e subrogation settlement cause t&eir claims to arise. ?at&er! t&eir claims
arise from alleged contractual agreements bet+een SO8A? and t&e reinsurers!
o+ners&ip interests frustrated b, t&e dissolution of SO8A?4 and an alleged
e.propriation of SO8A? b, 8ietnam. *&us! even if t&e Court +ere to impute t&e
commercial activit, of t&e former ?epublic to 8ietnam! t&e ?einsurersE claims to
t&e mone, are S5$0 not based upon 8ietnamEs commercial activit,! ma-ing t&e
e.ception of 1 U.S.C. R 1$052a3213 inapplicable.
b. >.propriation >.ception
(inall,! t&e ?einsurers argue t&at t&e e.propriation e.ception to foreign
sovereign immunit, is applicable to t&eir e.propriation claim. Under t&e
e.propriation e.ception! a foreign entit, is not immune from a suit +&erein)
rig&ts in propert, ta-en in violation of international la+ are in issue and t&at
propert, or an, propert, e.c&anged for suc& propert, is present in t&e United
States in connection +it& a commercial activit, carried on in t&e United States b,
t&e foreign state4 or t&at propert, or an, propert, e.c&anged for suc& propert, is
o+ned or operated b, an agenc, or instrumentalit, of t&e foreign state and t&at
agenc, or instrumentalit, is engaged in commercial activit, in t&e United StatesF.G
1 U.S.C. R 1$052a3233.
BF<Gn order to establis& /urisdiction pursuant to t&e (S<A e.propriation
e.ception! a plaintiff must s&o+ t&at) 213 rig&ts in propert, are in issue4 213 t&at t&e
propert, +as Wta-enE4 233 t&at t&e ta-ing +as in violation of international la+4 and
2#3 t&at one of t&e t+o ne.us re;uirements is satisfied.B Lappia %iddle >ast Constr.
Co. v. >mirate of Abu D&abi! 115 (.3d 1#'! 151 21d Cir.10003. *o establis& t&e
necessar, /urisdictional ne.us +it& t&e United States! t&e propert, must Beit&er 2a3
be present in t&e United States in connection +it& a commercial activit, carried on
in t&e United States b, t&e foreign state! or 2b3 be o+ned or operated b, an agenc,
or instrumentalit, of t&e foreign state t&at is engaged in a commercial activit, in
t&e United States.B de Sanc&e9 v. Canco Central de 5icaragua! ''0 (.1d 135!
13"5 25t& Cir.1"53.
*&e ?einsurers claim &ere is fatall, fla+ed. :ropert, ta-en +it&in t&e
meaning of t&e statute means Bp&,sical propert,B not t&e rig&t to receive pa,ment.
@irs& v. State of <srael! "$1 (.Supp. 3''! 33 2S.D.5.6.1""'3 2citing Canadian
Overseas Ores 7td. v. Compania de Acero! 51 (.Supp. 133' 2S.D.5.6.1"13
2&olding t&at contractual rig&ts to pa,ment! absent an e.propriation of real
propert,! do not constitute Bpropert,B +it&in t&e meaning of t&e (S<A33.
Jalama9oo Spice >.traction Co. v. :rovisional %ilitar, GovEt of Socialist
>t&iopia! cited b, t&e ?einsurers! is not to t&e contrar,. $1$ (.Supp. $$0
2D.C.%ic&.1"53. <n Jalama9oo! t&e court found t&at a ma/orit, stoc- interest!
+&ic& gave control over t&e p&,sical assets of t&e compan,! fell +it&in t&e
e.ception! but did not find t&at less t&an ma/orit, interest! as alleged &ere! +ould
trigger e.propriation /urisdiction.F'G<d. at $$3.
(urt&er! t&e plain language of t&e statute presents several obstacles to its
application on t&ese facts. *&e ?einsurers can point to no propert, in t&e United
States ta-en in violation of international la+ K t&e funds in t&e United States &ave
remained in a ban- account &ere for t+ent,Afive ,ears. 5or is t&e propert,
allegedl, ta-en in violation of international la+ present in con/unction +it& a
commercial activit, conducted S5$1 b, 8ietnam or o+ned or operated b, a foreign
state engaged in commercial activit, in t&e United States. Conse;uentl,! t&e
e.propriation e.ception is inapplicable on t&ese facts.
(inall,! as t&e Court lac-s /urisdiction over t&e ?einsurersE second and t&ird
claims! bot& under t&e (S<A and because t&e, are timeAbarred! see infra! it is
unnecessar, to consider t&e Act of State doctrine issues suc& claims mig&t trigger.
See de Sanc&e9 v. Canco Central de 5icar.! ''0 (.1d 135! 13" 25t& Cir.1"53
2citing Canco 5acional de Cuba v. Sabbatino! 3'$ U.S. 3"! #11A13! # S.Ct. "13!
11 7.>d.1d 0# 21"$#33 2t&e Act of State doctrine re;uires Bt&at a court! after
e.ercising /urisdiction! decline to revie+ certain issues! in particular! t&e validit, or
propriet, of foreign acts of state.B3 2emp&asis added3.
C. Statute of 7imitations
1. Applicable 7a+
*&e (S<A does not provide for a federal substantive la+ rule of decision but
operates merel, as a BpassAt&roug&B to state la+ principles. See :escatore v. :an
Am. =orld Air+a,s! "' (.3d 1! 11 21d Cir.1""$3. *&us! t&e Court +ill appl, 5e+
6or- c&oice of la+ rules. 5e+ 6or-Es c&oice of la+ rules re;uire application of t&e
la+ of t&e forum +it& t&e greatest interest. 5eumeier v. Jue&ner! 31 5.6.1d 111!
11'! 335 5.6.S.1d $#! 1$ 5.>.1d #5# 21"'13. 5e+ 6or- re;uires t&at a foreign
statute of limitations! if s&orter t&an t&e 5e+ 6or- statute! must be applied +&ere a
cause of action accrues outside of 5e+ 6or-. Cesser v. >.?. S;uibb M Sons! 1#$
A.D.1d 10'! 53" 5.6.S.1d '3# 21st DepEt 1""3. @ere! &o+ever! t&e parties agree
t&at 5e+ 6or- statutes of limitations appl, and neit&er &as raised alternate foreign
limitations periods. Accordingl,! in lig&t of t&e partiesE agreement! 5e+ 6or-Es
interest in propert, &eld +it&in t&is state! and t&e absence of conflicting la+! t&e
Court +ill appl, t&e 5e+ 6or- statute of limitations. See Sc&midt v. :olis&
:eopleEs ?epublic! '#1 (.1d $'! '0 21d Cir. 1"#3 2affirming application of 5e+
6or- statute of limitations upon partiesE agreement under (S<A /urisdiction3.
*&e Court +ould reac& t&e same result under federal common la+ conflict
principles or under its in rem /urisdiction. See :escatore! "' (.3d at 1#A154 Union
Camp Corp. v. D,al! #$0 (.1d $' 25t& Cir.1"'13 2appl,ing c&oice of la+ rules of
situs of t&e propert, under federal in rem /urisdiction3.
*&e instant action raises c&allenging and novel statute of limitations
;uestions. *&e parties agree t&at 5e+ 6or-Es si.A,ear statute of limitations applies
to eac& of t&e ?einsurersE t&ree claims. 56 C:7? R 113. *&e partiesE dispute
centers upon +&en eac& cause of action accrued and +&et&er t&e limitations period
+as tolled during t&e +ar andUor +&ile t&e assets +ere fro9en.
B=&ile t&e ;uestion of +&en a cause of action accrues often proves to be
difficult in particular applications! it is governed! in t&eor,! b, a simple principle)
WA cause of action does not accrue until its enforcement becomes possible.EB
?oldan v. Allstate <ns. Co.! 1#" A.D.1d 10! 5## 5.6.S.1d 35"! 3$1A$3 21nd DepEt
1""3 2;uoting Dacobus v. Colgate! 11' 5.6. 135! 1#5! 111 5.>. 3' 25.6.1"1$33.
<n ot&er +ords! a Bcause of action accrues! for t&e purpose of measuring t&e period
of limitations! +&en all of t&e facts necessar, to t&e cause of action &ave occurred
so t&at t&e part, +ould be entitled to obtain relief in courtB. %otor 8e&icle Acc.
<ndemnification Corp. v. Aetna Cas. M Sur. Co.! " 5.6.1d 11#! 111! $51 5.6.S.1d
5#! $'# 5.>.1d 13#" 25.6.1""$3 2internal ;uotations and citations omitted3. B<t
+ould seem to be a logical corollar, to t&is rule S5$1 t&at t&e Statute of
7imitations ma, not begin to run before all t&e elements of a cause of action ma,
trut&full, be alleged! nor ma, it continue to run for an, period of time during
+&ic& an element of t&e cause of action can no longer be trut&full, alleged.B
?oldan! 5## at 3$3.
1. Accrual
a. Contractual ?eimbursement Claim
*&e ?einsurersE first claim is based on SO8A?Es alleged contractual dut, to
reimburse t&e ?einsurers out of t&e settlement monies.FG According to t&e
?einsurers! t&e contract entitled t&e ?einsurers to receive 33.13X of an, settlement
received b, SO8A?. ?einsurersE Compl. V 11. A reinsured is bound to account pro
tanto to its reinsurer for an, recover, it receives. See Couc& on <nsurance 1d 2?ev
ed3 R $1)15. See also @amilton (ire <ns. Co. v. Greger! 1#$ 5.6. 1$1! 15 5.>. $0
21"1'3 2creating an e;uitable promise to repa, insurerEs indemnit, pa,ments +&ere
part, +&o caused damages also compensated t&e in/ured part,34 %ar,land Cas. Co.
v. Cit, of Cincinnati! 1"1 (. 15! 1 2S.D.O&io 1"133 2re;uiring reinsured to
recoup indemnit, it received from reinsurer on contract and e;uit, t&eories3.
>ffectivel,! t&is is a cause of action for e;uitable or contractual reimbursement
under t&e ma.im t&at Bno one s&ould be enric&ed b, anot&erEs loss.B See Couc& R
$1)10. :ut anot&er +a,! +&et&er b, e.press contract or implied in e;uit,! a
reinsurer +&o &as been compelled to pa, under a polic, oug&t to be reimbursed
+&en its reinsured is paid b, t&e part, +&ose fault caused t&e damages. See
generall, '1 56 Dur. 1d! <nsurance R 11'3 2citing (ederal <ns. Co. v. Art&ur
Andersen M Co.! '5 5.6.1d 3$$! 553 5.6.S.1d 1"1! 551 5.>.1d '0 25.6. 1""033.
A cause of action for reimbursement does not accrue until a pa,ment
constituting a Bdouble recover,B is made.F"GSee Aetna 7ife and Cas. Co. v. 5elson!
$' 5.6.1d 1$"! 501 5.6.S.1d 313! #"1 5.>.1d 3$ 25.6.1"$3 2interpreting 5.6.
<nsurance 7a+ R $'3213 Fno+ R 510#2b3G3. 7ord Da,! acting as an agent for
8ietnam and SO8A?!F10G received t&e settlement funds s&ortl, after April 1'!
1"'5 +&en t&e c&ec- +as issued. *&us! SO8A? +as in constructive receipt of t&e
settlement funds as of April 1"'5.F11GSee 7a+,ersE (und v. Gate+a, State Can-!
13" A.D.1d 1$! $5 5.6.S.1d '05! '0' 23rd Dept.1""'3 2B*&e -e, to determining
+&et&er t&e pa,ee &as obtained possession is +&et&er t&e transferor placed t&e
instrument out of its control b,! for e.ample! delivering it to t&e S5$3 pa,eeEs
agentB3 2citations omitted34 0 56 Dur.1d! R 1'1 2discussing constructive deliver,3.
See also <nterpleader Compl. V 5 2B7ord Da, &ad planned to transfer t&e settlement
funds to SO8A? because upon information and belief! SO8A? +as subrogated to
all t&e rig&ts of t&e ?epublic of 8ietnam.B3. 7ord Da,Es receipt of t&e settlement
pa,ment t&us created a Bdouble recover,B for SO8A? 2&aving received pa,ment
from bot& t&e ?einsurers and t&e :anama Canal Compan,3.F11G *&e ?einsurers
suffered &arm and &ad a rig&t to reimbursement from t&at date for+ard as all of t&e
elements to state a claim for reimbursement &ad accrued b, April 1"'5.
b. Dissolution Claim
*&e ?einsurersE second claim see-s recover, on t&e t&eor, t&at t&e, are t&e
remaining s&are&olders of SO8A? and are t&us Bentitled to a distribution of t&e
balance of t&e fund 2after pa,ment of t&e reinsurerEs claims under t&e (irst Claim
for relief &erein3 based on t&e respective percentages of t&eir s&are&oldings in t&e
former SO8A?.B ?einsurer Compl. V 1'.
*&e Court construes t&is claim as an action for dissolution or an accounting.
Suc& a cause of action accrues +&en t&e corporation ceases to operate! 8an
Suetendael v. 8an Suetendael! 1"3 5.6. 133! 135! 5$ 5.>.1d 5$3 25.6.1"##3 and is
governed b, a si.A,ear statute of limitations 2C:7? R 1133. Cernstein v. 7a ?ue!
110 A.D.1d #'$! 501 5.6.S.1d "$! " 21d DepEt 1"$3. *&us! t&e ?einsurersE
second cause of action accrued +&en SO8A? +as dissolved and discontinued b,
t&e Socialist ?epublic of 8ietnam in April 1"'5. ?einsurer Compl. V 1#.
c. >.propriation Claim
*&e parties agree t&at t&e ?einsurersE e.propriation claim accrued in 1"'5
+&en t&eir o+ners&ip rig&ts in SO8A? +ere allegedl, confiscated. ?einsurer
%em. 7a+ at 11. >.propriation is governed b, a si.A,ear statute of limitations. 56
C:7? R 113.
<n sum! all t&ree of t&e ?einsurersE claims accrued in April 1"'5 and are
governed b, a si.A,ear statute of limitations. *&us! eac& of t&ese t&ree claims must
&ave been broug&t no later t&an April 1"1 absent an applicable tolling provision.
3. *olling
a. =ar
*&e ?einsurers argue t&at as eac& of t&eir claims is against a countr, +it&
+&ic& t&e United States +as at +ar! t&e statute of limitations +as tolled pursuant to
5.6. C:7? R 10" during &ostilities +it& 8ietnam. 5e+ 6or-Es +ar tolling
provision R 10"2a3 provides)
F+G&ere a cause of action! +&et&er originall, accrued in favor of a resident
or nonAresident of t&e state! accrued in a foreign countr, +it& +&ic& t&e United
States or an, of its allies +ere t&en or subse;uentl, at +ar! or territor, t&en or
subse;uentl, occupied b, t&e government of suc& foreign countr,! t&e time +&ic&
elapsed bet+een t&e commencement of t&e +ar! or of suc& occupation! S5$# and
t&e termination of &ostilities +it& suc& countr,! or of suc& occupation! is not a part
of t&e time +it&in +&ic& t&e action must be commenced.
C:7? R 10"2a3.F13G *olling is triggered +&en t&e occupation begins even
+&ere t&e United States or its allies are not ,et at +ar +it& t&e occup,ing countr,.
Gruss v. 5ettel! 100 %isc. 1'#! 1'$! 10# 5.6.S.1d 31" 25.6.Sup.Ct.1"513. (urt&er!
C:7? R 10"2b3 tolls t&e statute of limitations)
F+G&ere a person is unable to commence an action in t&e courts of t&e state
because an, part, is an alien sub/ect or citi9en of a foreign countr, at +ar +it& t&e
United States or an, of its allies! +&et&er t&e cause of action accrued during or
prior to t&e +ar! t&e time +&ic& elapsed bet+een t&e commencement of t&e +ar
and t&e termination of &ostilities +it& suc& countr, is not a part of t&e time +it&in
+&ic& t&e action must be commenced.
C:7? R 10"2b3. *&us! assuming arguendo t&at eit&er of t&e tolling provision
applies! t&e statute of limitations +as tolled from April 1"'5 until &ostilities +it&
8ietnam ended.
*&e ?einsurers assert t&at B&ostilities!B +it&in t&e meaning of t&e statute! did
not terminate until 1""5 +&en t&e United States normali9ed relations +it& 8ietnam
and unbloc-ed 8ietnamese assets fro9en in t&is countr,. *&us! t&e, argue! t&e
statute of limitations onl, began to run +&en t&e United States normali9ed
diplomatic relations +it& 8ietnam in 1""5. *&is is an untenable result.
<n support of t&eir tolling argument! t&e ?einsurers point to Sa-in v. 7ondon!
5e+ 6or- S&ang&ai *rading Corp! in +&ic& t&e 5e+ 6or- Appellate Division!
(irst Department! tolled t&e statute of limitations +&ere a plaintiff +as disabled
from bringing suit pursuant to *=>A provisions! as t&e ?einsurers allege t&e, too
+ere disabled! see infra. 1'' A.D. "'' 21st DepEt 1"503. @o+ever! Sa-in addresses
to +&om t&e tolling provisions appl, but sa,s not&ing about t&e terminal date
operable under C:7? R 10"! t&e issue before t&is Court. <d. *&us! assuming t&e
?einsurersE +ere disabled under t&e meaning of 10"2b3 pursuant to Sa-in! t&e
in;uir, does not end t&ere.
=&ile t&e United States reac&ed a settlement of propert, claims and
normali9ed diplomatic relations +it& 8ietnam in 1""5! militar, conflict bet+een
t&e t+o countries &ad long since ended.F1#G Absent a clear indication t&at t&e
7egislature intended t&e term B&ostilitiesB to encompass bot& diplomatic &ostilities
as +ell as militar,! t&e Court +ill not so interpret t&e statute. See @ernande9 v.
CarriosA:aoli! "3 5.6.1d '1! $" 5.6.S.1d 5"0! '10 5.>.1d $$ 21"""3 2courtEs
role is to carr, out t&e purpose of t&e statute as embodied in t&e +ords c&osen b,
t&e 7egislature3.
C:7? R 10"2a3 tolls t&e statute of limitations Bbet+een t&e commencement
of t&e +ar! or suc& occupation! and t&e termination of &ostilities +it& suc& countr,!
or of suc& occupation.B C:7? R 10"2b3 contains nearl, identical language. *&e
5e+ 6or- 7egislature amended C:7? R 10" 2formerl, RR 13! 1' and 1Aa3 in 1"#"
to S5$5 ma-e clear t&at a treat, of peace +as unnecessar, to establis& a terminal
date ending t&e tolling period and found t&at t&e Btermination of &ostilities +it&
suc& countr,B +ould suffice. 5.6. 7a+ ?ev. CommEn ?ep. '$"! '"5A"$ 21"#"3
2cited in 1 5e+ 6or- Civil :ractice) C:7? Articles 1A1 R 10".01 2Dune 100033.
:rior to t&e 1"#" amendment! t&e tolling provision e.tended t&roug&out Bt&e
period during +&ic& suc& foreign countr, +as at +ar +it& t&e United States or an,
of its allies! or during +&ic& suc& territor, +as so occupiedB. 5.6. 7a+ ?ev.
CommEn ?ep. '$"! at ''1.
*&e 7egislatureEs action soug&t to avoid operation of t&e tolling provision
until Bratification of t&e peace treat, or t&e proclamation of peaceB because t&is
could lead to operation of t&e tolling provision Bindefinitel,.B <d. at '"$! $"
5.6.S.1d 5"0! '10 5.>.1d $$. <nstead! alt&oug& t&e amendment could Beffect a
s&ortening of t&e time allo+ed for commencing suit!B id. at '"1! $" 5.6.S.1d 5"0!
'10 5.>.1d $$! t&e 7egislature determined to alter t&e terminal date so t&at Bt&e
statute of limitations s&ould not be undul, e.tendedB. <d. at ''5! $" 5.6.S.1d 5"0!
'10 5.>.1d $$. Accordingl,! t&e Court +ill not interpret t&e statute to lengt&en
effectivel, t&e duration of t&e tolling period.
>ver, court to consider t&is argument &as reac&ed t&e same conclusion. See!
e.g.! *ran v. Citiban-! 5$ (.Supp. 103! 10$ n. 1 2S.D.5.6.1"33 2BR 10"2a3 does
not contemplate t&e ultimate triump& of a government +&ic& t&e United States
recogni9es! +it& a concomitant indefinite suspension of t&e statute of
limitations.B34 Cao v. Can- of America! 1"$ =7 10'! at S3AS# 2S.D.5.6.1"$3
2citing *ran and adding t&at t&e parties &ad failed to Bconvince t&e Court t&at a
remnant of t&e Arm, of t&e ?epublic of 8ietnam or ot&er Wfriendl,E groups e.ist
+&ic& desire to overt&ro+ t&e Woccup,ingE &ostile Socialist ?epublic of 8ietnam
governmentB3.
*&us! to t&e e.tent C:7? 10"2a3 or 2b3 applies! its tolling provisions ceased
to operate upon t&e termination of militar, conflict +it& 8ietnam. *&e ?einsurersE
Complaint +as filed in 1""'! +&ic& +as clearl, more t&an si. ,ears after t&e
termination of suc& &ostilities. See! e.g.! *ran 2re/ecting similar tolling argument
for claim filed in 1"334 Cao 2same for claim filed in 1"$3.
b. >;uitable *olling
*&e Court construes t&e ?einsurersE remaining tolling argument! /ustif,ing
t&eir failure to bring suit from t&e end of militar, &ostilities +it& 8ietnam until
1""'! as an e;uitable tolling argument based upon t&eir alleged disabilit, under t&e
*rading =it& t&e >nem, Act prior to t&e unbloc-ing of assets in 1""5. *&e
?einsurers assert t&at t&e, &ad no tribunal in +&ic& to bring t&eir claim as t&e
funds soug&t +ere fro9en. See! e.g.! Sa-in! 1'' A.D. "''! 100 5.6.S.1d 1'
2tolling statute of limitations +&ere plaintiff disabled from bringing suit per
*=>A3. ?el,ing on t&is alleged disabilit,! t&e ?einsurers see- relief from t&e
statute of limitations. *&is argument must fail because t&e ?einsurers &ave failed to
establis& t&eir disabilit,. (urt&er! even if a disabilit, could be establis&ed! t&e Court
lac-s t&e aut&orit, to e.tend t&e +ar tolling provision and t&e ?einsurers &ave
ot&er+ise failed to act +it& t&e diligence necessar, to trigger e;uitable tolling.
2i3 Disabilit,
Under 5e+ 6or- la+! Blimitations are suspended +&en t&ere is no tribunal
competent to ad/udge.B Os+ego v. State! 11$ 5.6. 351! 3$1! 11# 5.>. 25.6.
1"1"3 2citing :armenter v. State of 5. 6.! 135 5.6. 15#! 1$3! 31 5.>. 1035 21"133.
See also Dacobus v. Colgate! 11' 5.6. 135! 111 5.>. 3' 25.6.1"1$3 2same3
2citations S5$$ omitted3. <ndeed! Bit +ould FbeG absurd to &old t&ere +as a statute
of limitations +it&in +&ic& a claim must be sued! +&en t&ere F+as noG court or
tribunal before +&ic& t&e FdefendantG could be summoned to ans+er t&e suit.B
:armenter! 135 5.6. 15# at 1$3! 31 5.>. 1035 2citations omitted3. @o+ever! t&e
?einsurers &ave not establis&ed t&at t&e, +ere barred from pressing t&eir claim
eit&er in t&e United States or abroad prior to 1""5! t&us t&is tolling argument must
also fail.
Despite t&eir assertion to t&e contrar,! t&e ?einsurers +ere not clearl, barred
from bringing suit in t&e United States prior to 1""5 +&en t&e assets +ere
unfro9en. *&e *rading =it& t&e >nem, Act 2B*=>AB3 provides an e.clusive
remed, for recover, of bloc-ed assets. See 50 U.S.C.App. R "2a3. See also Can-
8oor @andel en Sc&eepvaart! 5.8. v. Jenned,! 1 (.1d 3'5 2D.C.Cir.3! cert.
denied! 3$$ U.S. "$1! 1 S.Ct. 1"13! $ 7.>d.1d 115# 21"$13. Under t&e *=>A
provisions! a part, ma, petition t&e Alien :ropert, Custodian to unbloc- assets for
debts o+ing +&ic& arose out of t&e propert, sei9ed. 50 U.S.C.App. R "2a3. See also
' Am Dur.1d =ar R $$! et se;. 210003. *&ese provisions permit friendl, alien
corporations! inter alia! to collect on claims! Jaufman v. Societe <nternationale
:our :articipations <ndustrielles et Commerciales! 3#3 U.S. 15$! '1 S.Ct. $11! "$
7.>d. 53 21"513! +&ic& e.isted prior to t&e free9ing of t&e asset! see Stasi v.
%ar-&am! $" (.Supp. 1$3! 1$5 2D.5.D.1"#$34 =ilson v. %iller! 2>.D.5.6.1"113!
provided t&at t&e claimantEs government gives reciprocal rig&ts to American
citi9ens in similar circumstances. 50 U.S.C.App. R "2e3.
@o+ever! enemies and enem, allies! including foreign corporations
conducting business in an enem, countr,! are e.pressl, e.cluded from t&e
provisions. See S+iss 5atEl <ns. Co. v. %iller! 1$' U.S. #1! #3! #5 S.Ct. 113! $"
7.>d. 50# 21"153 2citing 50 U.S.C.App. R 13. *&us! factual ;uestions remain as to
t&e ?einsurersE +artime status and t&e relevant reciprocit, provisions. @o+ever! it
is clear t&at depending on t&e ?einsurersE status! a remed, ma, &ave been available
to t&em prior to 1""5. 5ot&ing in t&e record indicates t&at t&e ?einsurers +ere
a+are of or pursued t&ese remedies.
(inall,! t&e ?einsurers &ave failed to ma-e an, e.planation for t&eir failure
to pursue t&eir claims internationall,. All t&ree of t&e ?einsurersE claims allege
purel, economic in/uries! +&ic& arose in t&eir places of residence! see Huinn v.
*&omas @. 7ee Co.! $1 (.Supp.1d 13 2S.D.5.6.1"""3 2citing Cloc- v. (irst Clood
Assoc.! " (.1d 3##! 3#" 21d Cir.1""333 2appl,ing 5e+ 6or-Es borro+ing rule for
statute of limitations in;uir,3! or in 8ietnam +&ere t&e events occurred. As
addressed above! onl, t&e contract claim &olds even a tangential relation to t&is
forum. *&us! t&e ?einsurers &ave failed to persuade t&e Court t&at t&e, +ere
clearl, barred from filing suit &ere or abroad prior to 1""5.
2ii3 Statutor, Aut&orit,
>ven assuming t&e ?einsurers +ere disabled from bringing suit until 1""5! a
fact not establis&ed on t&e record before t&is Court! t&eir argument for e;uitable
tolling +ould fail. >;uitable tolling ma, be necessar, to Bavoid ine;uitable
circumstancesB and ma, be applied Bas a matter of fairness +&ere a Fpart,G &as
been prevented in some e.traordinar, +a, from e.ercising &is rig&ts.B <avors-i v.
United States <.5.S.! 131 (.3d 11#! 11" 21d Cir.10003 2;uoting Do&nson v. 5,ac-
@osp.! $ (.3d ! 11 21d Cir.1""$33 2internal ;uotations omitted3.
@o+ever! BFnGot all time limitations are sub/ect to e;uitable tolling.B
<avors-i! 131 (.3d at 11". Appl,ing a state statute of S5$' limitations! t&e Second
Circuit recentl, reiterated t&e 5e+ 6or- rule t&at time limitations created b, statute
are not tolled in t&e absence of statutor, aut&orit,. Courts ma, onl, Wconstrue
provisions made b, t&e 7egislature creating e.ceptions or interruptions to t&e
running of t&e time limited b, statute. ...E *&e, ma, not t&emselves create suc&
e.ceptions.
Sc&ermer&orn v. %etropolitan *rans. Aut&.! 15$ (.3d 351! 35# 21d Cir.1""3
2;uoting Jing v. C&miele+s-i! '$ 5.6.1d 11! 1'! 55$ 5.6.S.1d ""$! 55$ 5.>.1d
#35 25.6.1""033. *&e ?einsurers point to 5.6. C:7? R 10" for statutor, tolling
aut&orit,. @aving re/ected application of t&e +ar e.ception on t&ese facts! t&e
Court must onl, conclude t&at t&e action is timeAbarred.
2iii3 Diligence
>;uitable tolling ma, be nevert&eless appropriate +&ere a plaintiff &as
Bacted +it& reasonable diligence t&roug&out t&e period &e see-s to toll.B Smit& v.
%cGinnis! 10 (.3d 13! 1' 21d Cir.10003 2per curiam3. @ere! t&e ?einsurers &ave
not demonstrated an, diligent efforts to press t&eir claim over a t+ent, ,ear period.
*&e, offer no e.planation for t&is lapse and appear to &ave made no effort to file or
even give notice of t&eir claim t&roug& t&e Alien :ropert, Custodian in t&e United
States! in 8ietnam! or in an, international tribunal. Accordingl,! diligence cannot
be imputed to /ustif, e;uitable tolling.
*&erefore! even if t&e ?einsurersE +ere precluded from pursuing t&eir t+ent,
,earAold claims under t&e *=>A provisions! eac& of t&eir claims is no+ timeA
barred. As Dudge >delstein concluded in Dre+s v. >astern Sausage M :rovision
Co.! alt&oug& t&is result ma, seem &ars& or unfair! t&e ?einsurersE claims are
per&aps best vie+ed as a Bcasualt, of +ar.B 115 (.Supp. 1"! 1"1 2S.D.5.6.1"5#3
2re/ecting t&e applicabilit, of C:7? R 1' Fno+ R 10"2b3G as tolling s&are&older
derivative claims despite t&e Bno doubt &ars&B result3.
C. 8ietnamEs >.ecutive Agreement =it& *&e United States
*&e Court notes! &o+ever! t&at &ad t&e claims been timel,! 8ietnamEs
>.ecutive Agreement argument +ould fail. 8ietnam asserts t&at an >.ecutive
Agreement controls resolution of t&is action in favor of 8ietnam. <n t&e process of
normali9ing relations +it& 8ietnam in 1""5! t&e United States agreed to lift t&e
bloc- on t&e former ?epublicEs assets &eld in t&e United States. See Agreement
Cet+een t&e Government of t&e United States of America and t&e Government of
t&e Socialist ?epublic of 8ietnam Concerning t&e Settlement of Certain :ropert,
Claims! Dan. 1! 1""5! U.S.A8ietnam! 3# <.7.%. $5 2B>.ecutive AgreementB3. *&e
>.ecutive Agreement settled B2a3 t&e claims of t&e United States and of nationals
of t&e United States 2including natural and /uridical persons3 against 8ietnam ...B
and B2b3 t&e claims of 8ietnam and of nationals of 8ietnam 2including natural and
/uridical persons3 against t&e United States arising from t&e nationali9ation!
e.propriation! or ta-ing of! or ot&er measures directed against! properties! rig&ts!
and interestsB &eld in eit&er countr,. >.ecutive Agreement! art. 1! 3# <.7.%. at $$.
<n e.c&ange for t&e settlement of t&e above claims! 8ietnam agreed to pa, t&e
United States over 010.5 million Bout ofB t&e bloc-ed assets after +&ic& t&e
United States +ould Bunbloc- all assets of 8ietnamB. >.ecutive Agreement! art. 1!
VV 1!3! 3# <.7.%. at $'. According to its terms! t&e Agreement +as made Bin t&e
conte.t of t&e process of normali9ation of relations bet+een t&e United States and
8ietnam on t&e basis of e;ualit, and mutual benefit.B <d. at $$.
S5$ Cecause t&e >.ecutive Agreement unbloc-ed t&e assets of 8ietnam! in
e.c&ange for a settlement amount to be ta-en Bout ofB t&e bloc-ed funds! 3# <.7.%.
$5 at $'! 8ietnam argues t&at implicit in t&is arrangement +as a recognition t&at
8ietnam is t&e successor to t&e former ?epublic of Sout& 8ietnam and &as
succeeded to title of t&e bloc-ed assets. See 8ietnam %em. 7a+ at 10 2citing Crief
for DefendantAAppellee United States in *o v. ?ubin! 5o. "5 Civ. $0$! 1""5 =7
'13130 at " 21d Cir. Aug.11! 1""533. See also *o v. ?ubin! "" (.3d #00! 1""5 =7
'13130! at S3 21d Cir. Dec. $! 1""53 2dismissing as moot claim to unfro9en assets
b, Sout& 8ietnamese and citing favorabl, to t&e United States Government brief!
supra3! cert. denied! 51' U.S. 1135! 11$ S.Ct. 10! 135 7.>d.1d 1'$ 21""$34 *o v.
Can- of 5e+ 6or-! 101 (.3d $1! 1""$ =7 1#$51'! at S1 21d Cir. Apr. 1! 1""$3
2ac-no+ledging 8ietnam as succeeding to t&e fro9en assets3.F15G *&us! 8ietnam
argues t&at t&e >.ecutive Agreement ma-es determination &ere a nonA/usticiable
;uestion b, re;uiring all assets of t&e former ?epublic to be transferred to
8ietnam. 8ietnam %em. 7a+ at # 2citing Can v. United States! 1# (.3d 1$0! 1$#
21d Cir.1""#33. @o+ever! t&is argument begs t&e ;uestion because it assumes t&at
t&e assets +ere properl, vested in t&e former ?epublic.
Unli-e Can and t&e ot&er cases cited b, 8ietnam on t&is point! a creditorEs
dispute as to title of t&e once fro9en funds does not rise to t&e level of a political
;uestion. Can addressed t&e rig&ts of Sout& 8ietnamese nationals +&o claimed
o+ners&ip of t&e fro9en assets of t&e collapsed Sout& 8ietnamese government on
t&e t&eor, t&at t&e former Sout& 8ietnamese nationals +ere t&e onl, remaining
representatives of t&e fallen government and +ere t&erefore entitled to t&e former
countr,Es assets. *&e Second Circuit rig&tl, declined /urisdiction finding t&at suc&
a decision +ould involve an Binitial polic, determination of a -ind clearl, for
non/udicial discretionB as t&e Court +ould be re;uired to determine t&e ;uestion of
government succession and recognition. <d. at 1$# 2;uoting Ca-er v. Carr! 3$" U.S.
1$! 11'! 1 S.Ct. $"1! ' 7.>d.1d $$3 21"$133.
@ere! t&ere is no political ;uestion raised in addressing t&e conflict bet+een
t&e parties. *&e ;uestion before t&e Court is not +&et&er t&e assets of t&e former
?epublic no+ rig&tfull, belong to 8ietnam! as in Can. ?at&er! t&e ;uestions
presented are 13 +&et&er t&e title to t&e funds +as ever rig&tfull, vested in t&e
former ?epublic and 13 +&et&er 8ietnam! no+ standing in t&e s&oes of t&e former
?epublic! must &onor t&e contractual and ot&er rig&ts of t&e former ?epublicEs
creditors. *&us! t&e >.ecutive Agreement! +&ic& onl, disposes of assets clearl,
vested in t&e former ?epublic! does not settle t&e issue. 5evert&eless! t&e Court
must a+ard t&e funds to 8ietnam as t&e ?einsurersE claims are timeAbarred.
D. 8ietnamEs Claim to t&e (unds
Absent an, cogni9able competing claims and considering t&at t&e prior ban-
account +as directed to be &eld for t&e benefit of B*&e ?epublic of 8ietAnam and
*ong *uoc *iep *e!B see <n re) C&inese %aritime *rus! 7td.! '1 Civ. 1$12?7C3
2S.D.5.6. %ar. 1"'$3 2Order3! t&e funds vested to t&e former ?epublic for purposes
of t&is motion. As t&e >.ecutive Agreement operates to vest t&e funds of t&e
former ?epublic to 8ietnam! t&e funds s&all pass to 8ietnam. 8ietnam is directed
S5$" to submit a proposed Order effecting t&is Opinion.
<<<. CO5C7US<O5
Defendant 8ietnamEs motion to dismiss is G?A5*>D in its entiret,. *&e
CrossAComplaint of Defendants S+iss ?einsurance Compan,! Assurance
Generales de (rance! and Groupe des %utuelles Alsaciennes is &ereb,
D<S%<SS>D. As a matter of la+! t&e Socialist ?epublic of 8ietnam is t&e
e.clusive and rig&tful o+ner of t&e funds and is entitled to relief.
SO O?D>?>D.
Court of Appeals of 5e+ 6or-.
SA?A*OGA COU5*6 C@A%C>? O( CO%%>?C>! <5C.! et al.!
?espondents! v. George :A*AJ<! as Governor of t&e State of 5e+ 6or-! et al.!
Appellants. 2Action 5o. 1.3
Jeit& 7. =rig&t! as %ember of t&e 5e+ 6or- State Assembl,! et al.!
?espondents! v. George >. :ata-i! as Governor of t&e State of 5e+ 6or-! et al.!
Appellants. 2Action 5o. 1.3
Decided) Dune 11! 1003
>liot Spit9er! Attorne, General! Alban, 2Andre+ D. Cing! Caitlin D.
@alligan! Daniel Smirloc- and :eter @. Sc&iff of counsel3! for appellants in t&e
first and second aboveAentitled actions. OEConnell and Arono+it9! Alban,
2Cornelius D. %urra,! Deffre, D. S&errin! Dames A. S&annon and ?obert *. (ullem
of counsel3! for respondents in t&e first aboveAentitled action. Da, Goldberg! :.C.!
5e+ 6or- Cit, 2Da, Goldberg and Debra A. Jarlstein of counsel3! for respondents
in t&e second aboveAentitled action. Luc-erman Spaeder 77:! =as&ington! D.C.
2=illiam =. *a,lor! <<<! >li9abet& G. *a,lor and %ic&ael ?. Smit& of counsel3! for
Oneida <ndian 5ation! amicus curiae.
O:<5<O5 O( *@> COU?*
On t&is appeal +e address t&e aut&orit, of t&e Governor to enter into
agreements +it& <ndian tribes to permit casino gaming on <ndian reservations.
:laintiffs are legislators! organi9ations and individuals opposed to casino
gambling. <n c&allenging t&e GovernorEs aut&orit,! t&e, contend t&at b,
negotiating and signing t&e agreements +it&out legislative aut&ori9ation or
approval! Governor %ario %. Cuomo in 1""3 and Governor George >. :ata-i in
1""" violated t&e principle of separation of po+ers under t&e State Constitution
2see 5.6. Const.! art. <<<! R 14 art. <8! R 13.1 <n response! t&e Governor and t&e
ot&er defendants 2collectivel,! t&e State3 argue t&at plaintiffs ma, not bring t&is
action for a variet, of procedural reasons and t&at in an, event t&e agreements
+ere consistent +it& t&e separation of po+ers. After setting fort& t&e bac-ground
of t&e case! +e address t&e procedural issues and t&en turn to t&e merits.
<. (actual and Statutor, Cac-ground
On October 15! 1""3! t&enAGovernor Cuomo entered into t&e O*ribalAState
Compact Cet+een t&e St. ?egis %o&a+- *ribe and t&e State of 5e+ 6or-.P *&e
compact! +&ic& underlies t&is appeal! is an outgro+t& of t&e (ederal <ndian
Gaming ?egulator, Act 2<G?A3 215 USC RR 1'01A1'114 1 USC RR 11$$A11$3!
and allo+s t&e *ribe to conduct gambling! including baccarat! blac-/ac-! craps and
roulette! on t&e A-+esasne ?eservation in (ran-lin Count,.
<n response to t&e United States Supreme CourtEs decision in California v.
Caba9on Cand of %ission <ndians! #0 U.S. 101! 10' S.Ct. 103! "# 7.>d.1d 1##
F1"'G! Congress passed <G?A! +&ic& declares t&at O<ndian tribes &ave t&e
e.clusive rig&t to regulate gaming activit, on <ndian lands if t&e gaming activit, is
not specificall, pro&ibited b, (ederal la+ and is conducted +it&in a State +&ic&
does not! as a matter of criminal la+ and public polic,! pro&ibit suc& gaming
activit,P 215 USC R 1'01F5G 3. <G?A provides statutor, aut&ori9ation for t&e
establis&ment of <ndian casinos! attempts to regulate t&e gaming so as to avoid
Ocorrupting influencesP and see-s to ensure t&at t&e <ndian tribes are t&e primar,
beneficiaries of t&e gaming 2see 15 USC R 1'013.
<G?A re;uires a compact bet+een a tribe and t&e state before t&e tribe +ill
be permitted to conduct OClass <<<P gaming! +&ic& includes t&e 7as 8egasAst,le
gaming at issue &ere.1 =&en a tribe re;uests t&at a compact be negotiated! a state
is re;uired to do so in good fait& 2see 15 USC R 1'10 FdG F3G FAG 3. *&e compact
s&ould resolve suc& matters as t&e applicabilit, of state la+s at t&e casinos! state
ta.ation of gambling revenues! remedies for breac& of contract and Oan, ot&er
sub/ects t&at are directl, related to t&e operation of gaming activitiesP 215 USC R
1'10FdG F3GFCGFiGAFviiG 3. <G?A aut&ori9es compacts onl, in OStateFsG t&at
permitF G suc& gaming for an, purpose b, an, person! organi9ation! or entit,P 215
USC R 1'10FdGF1GFCG 3.
According to t&e terms of t&e 1""3 compact! t&e 5e+ 6or- State ?acing and
=agering Coard! t&e 5e+ 6or- State :olice and t&e St. ?egis %o&a+- *ribal
Gaming Commission +ere vested +it& gaming oversig&t. 7a+ enforcement
responsibilities fell under t&e cogni9ance of t&e State :olice! +it& some la+
enforcement matters left to t&e *ribe. As re;uired b, <G?A! t&e compact +as
approved b, t&e United States Department of t&e <nterior before it too- effect.
*&e *ribe opened its casino on April 10! 1""". On %a, 1'! 1"""!
Governor :ata-i 3 and t&e *ribe e.ecuted an amendment to t&e 1""3 compact.
*&e <nterior Department approved t&e amendment! +&ic& allo+ed t&e casino to
operate electronic class <<< games! including -eno. C, its terms! t&e amendment
e.pired on %a, 1'! 1000! one ,ear after it +as signed. Alt&oug& t&e Governor
and t&e *ribe later agreed to t+o additional amendments! t&e <nterior Department
disapproved t&em. As a result! t&ere is no aut&ori9ation in effect allo+ing t&e
*ribe to operate electronic gaming. 5evert&eless! t&e parties inform us t&at
electronic gaming continues at t&e casino.
S&ortl, after t&e 1""" amendment too- effect! plaintiffs broug&t suit
asserting t&at t&e 1""3 compact and t&e 1""" amendment violated t&e separation of
po+ers and t&e constitutional gambling pro&ibition. *&e, soug&t a declaration t&at
t&e 1""3 compact and t&e 1""" amendment +ere unconstitutional! and an
in/unction pro&ibiting t&e State from e.pending an, mone, in furt&erance of t&e
agreements. *&e, also as-ed t&e court to en/oin t&e Governor from ta-ing an,
furt&er unilateral action 2suc& as signing a successor to t&e 1""" amendment3 t&at
+ould e.tend gambling in t&e state.
C, /udgment entered %arc& 10! 1000! Supreme Court dismissed t&e action
for plaintiffsE failure to /oin t&e *ribe as an indispensable part, 2see generall,
C:7? 10013. On appeal! t&e Appellate Division reversed! concluding t&at t&e
*ribe +as not an indispensable part,! noting t&at a contrar, ruling +ould put <ndian
gaming compacts be,ond constitutional c&allenge or revie+ 2see Saratoga Count,
C&amber of Commerce v. :ata-i! 1'5 A.D.1d 1#5! 151A15#! '11 5.6.S.1d $'
F1000G FSaratoga < G 3. =&ile t&e Appellate Division ac-no+ledged t&at t&e
*ribeEs interests +ould be affected b, t&e suit! it determined t&at! on balance! t&e
*ribeEs absence s&ould not prevent t&e suit from going for+ard. *&e Court also
re/ected t&e StateEs statute of limitations! standing and lac&es defenses 2see id. at
15#A15! '11 5.6.S.1d $'3.
On remand! b, order entered April 11! 1001! Supreme Court granted
plaintiffs summar, /udgment. *&e court declared t&e 1""" amendment and t&e
1""3 compact void and unenforceable! and en/oined t&e Governor from ta-ing an,
furt&er action to reenact an electronic gaming amendment +it&out legislative
approval. *&e Appellate Division affirmed! &olding t&at t&e GovernorEs unilateral
action deprived t&e 7egislature of its polic,ma-ing aut&orit, in suc& areas as Ot&e
location of t&e casino! t&e gaming t&at could be carried on t&ere! t&e e.tent of state
involvement in providing regulation S S S and t&e fees to be e.acted for t&at
regulationP 2Saratoga Count, C&amber of Commerce v. :ata-i! 1"3 A.D.1d 10! 1$!
'#0 5.6.S.1d '33 F1001G FSaratoga << G 3. *&e State appealed as of rig&t! bringing
up for revie+ t&e substantial constitutional ;uestion presented.
<<. %ootness
*&e /urisdiction of t&is Court e.tends onl, to live controversies 2see
%atter of Grand Dur, Subpoenas for 7ocals 1'! 135! 15' M $0! '1 5.6.1d 30'!
311! 531 5.6.S.1d '11! 51 5.>.1d 11"5 F1"G4 %atter of @earst Corp. v. Cl,ne!
50 5.6.1d '0'! '13A'1#! #31 5.6.S.1d #00! #0" 5.>.1d '$ F1"0G 3. =e are
t&us pro&ibited from giving advisor, opinions or ruling on Oacademic!
&,pot&etical! moot! or ot&er+ise abstract ;uestionsP 2@earst Corp.! 50 5.6.1d at
'13! #31 5.6.S.1d #00! #0" 5.>.1d '$3. Accordingl,! +&ere c&anged
circumstances prevent us Ofrom rendering a decision +&ic& +ould effectuall,
determine an actual controvers, bet+een t&e parties involved!P +e +ill dismiss t&e
appeal or reverse t&e lo+er court order and direct t&at court to dismiss t&e action
2Jarger! :o+ers of t&e 5e+ 6or- Court of Appeals R '1FaG! at #1$ F3d ed.G 3.
A. 1""" Amendment
:laintiffsE c&allenges to t&e 1""" amendment are moot. *&e amendment
e.pired in %a, 1000! and in t&e intervening t&ree ,ears no similar agreement &as
gone into effect. A declaration as to t&e validit, or invalidit, of t&e 1"""
amendment +ould t&erefore &ave no practical effect on t&e parties. Granted! a
declaration as to t&e GovernorEs abilit, to negotiate amendments to t&e compact
+ould provide beneficial advice to future officials +&o +ill &ave to ma-e decisions
about t&is casino and ot&er similar pro/ects. *&is is true! &o+ever! of all re;uests
for advisor, opinions.
<n @earst +e recogni9ed t&at t&e mootness pro&ibition is sub/ect to an
e.ception! b, +&ic& +e &ave discretion to revie+ a case if t&e controvers, or issue
involved is li-el, to recur! t,picall, evades revie+! and raises a substantial and
novel ;uestion 2see 50 5.6.1d at '1#A'15! #31 5.6.S.1d #00! #0" 5.>.1d '$4 see
also =is&ole- v. Douglas! "' 5.6.1d '#0! '#1! '#3 5.6.S.1d 51! '$" 5.>.1d 0
F1001G 3. <n t&at event! a court ma, reac& t&e moot issue even t&oug& its decision
&as no practical effect on t&e parties 2see @earst! 50 5.6.1d at '1#A'15! #31
5.6.S.1d #00! #0" 5.>.1d '$3. :laintiffs &ere as- us to appl, t&e @earst
mootness e.ception and address t&e validit, of t&e 1""" amendment! arguing t&at
t&e GovernorEs t+o unsuccessful attempts to e.tend t&e amendment demonstrate a
&ig& li-eli&ood of recurrence. *&e, furt&er contend t&at t&e oneA,ear lengt& of
bot& t&e 1""" amendment and t&e t+o proposed amendments ma-es /udicial
revie+ impracticable.
*&ese are cogent assertions but +e are unpersuaded t&at t&is controvers, is
so li-el, to evade revie+ as to /ustif, our departure from t&e standard rules of
mootness. =e are confident t&at lo+er courts! if as-ed b, t&e parties! +ill
e.pedite consideration of an, future agreement! so as to ma.imi9e t&e c&ances t&at
a /udicial resolution +ill be available during t&e life of t&e agreement. %ore
importantl,! &o+ever! in lig&t of our determination +it& respect to t&e 1""3
compact 2point 8<< belo+3! t&ere is no reason to believe t&at t&e >.ecutive Cranc&
+ill e.ecute future agreements unilaterall,! and t&erefore t&e precise issues
presented b, plaintiffsE c&allenge to t&e 1""" amendment ma, never again recur.
Accordingl,! +e decline to reac& t&at portion of plaintiffsE suit t&at c&allenges t&e
validit, of t&e 1""" amendment! and +e vacate t&at portion of t&e Appellate
Division order t&at declared t&e 1""" amendment void and unenforceable.
C. 1""3 Compact
:laintiffsE c&allenge to t&e 1""3 compact undisputedl, presents a live
controvers,. =it&out a valid *ribalAState compact! <G?A does not permit t&e
operation of a casino.# *&erefore! a declaration t&at t&e 1""3 compact violates t&e
State Constitution spea-s to t&e legalit, of t&e casinoEs operation! and t&us affects
t&e rig&ts of eac& part, to t&is suit. =&ere! as &ere! a /udicial determination
carries immediate! practical conse;uences for t&e parties! t&e controvers, is not
moot 2see %atter of Do&nson v. :ata-i! "1 5.6.1d 11#! 111! $$ 5.6.S.1d "'! $"1
5.>.1d 1001 F1""'G 3.
=e no+ proceed to address plaintiffsE standing.
<<<. Standing
Standing to sue is critical to t&e proper functioning of t&e /udicial s,stem.
<t is a t&res&old issue. <f standing is denied! t&e pat&+a, to t&e court&ouse is
bloc-ed. *&e plaintiff +&o &as standing! &o+ever! ma, cross t&e t&res&old and
see- /udicial redress. <t is difficult to dra+ an e.;uisitel, s&arp line separating t&e
+ort&, litigant from one +&o +ould generate a la+suit to advance someone elseEs
cause. *&e rules governing standing &elp courts separate t&e tangible from t&e
abstract or speculative in/ur,! and t&e genuinel, aggrieved from t&e /udicial
dilettante or amorp&ous claimant.
(or generations! 5e+ 6or- courts &ave treated standing as a commonAla+
concept!5 re;uiring t&at t&e litigant &ave somet&ing trul, at sta-e in a genuine
controvers,.$ =e &ave addressed t&e issue in a number of conte.ts! including
standing for organi9ations and associations 2see %atter of Aeneas %cDonald
:olice Cenevolent Assn. v. Cit, of Geneva! "1 5.6.1d 31$! $0 5.6.S.1d '! '03
5.>.1d '#5 F1""G4 Societ, of :lastics <ndus. v. Count, of Suffol-! '' 5.6.1d '$1!
5'0 5.6.S.1d ''! 5'3 5.>.1d 103# F1""1G 3! legislators 2see Silver v. :ata-i! "$
5.6.1d 531! '30 5.6.S.1d #1! '55 5.>.1d #1 F1001G 3! voters 2see %atter of
Sc&ul9 v. 5e+ 6or- State >.ec.! "1 5.6.1d 1! $'' 5.6.S.1d 1! $"" 5.>.1d 3$0
F1""G 3 and in c&allenges to administrative actions 2see %atter of Colella v. Coard
of Assessors! "5 5.6.1d #01! '1 5.6.S.1d 1$! '#1 5.>.1d 113 F1000G4 ?udder v.
:ata-i! "3 5.6.1d 1'3! $" 5.6.S.1d '01! '11 5.>.1d "' F1"""G4 %atter of 5e+
6or- Assn. of Convenience Stores v. Urbac&! "1 5.6.1d 10#! $'' 5.6.S.1d 10!
$"" 5.>.1d "0# F1""G4 %atter of Gernatt Asp&alt :rods. v. *o+n of Sardinia! '
5.6.1d $$! $#1 5.6.S.1d 1$#! $$# 5.>.1d 111$ F1""$G 3.
A number of organi9ations! legislators and citi9enAta.pa,ers are plaintiffs
in t&is action and t&e State &as contested standing as to all of t&em. Cecause +e
conclude t&at t&e citi9enAta.pa,ers &ave standing! it is not necessar, to address t&e
StateEs c&allenge as to t&e ot&er plaintiffs 2see Count, of ?ensselaer v. ?egan! 0
5.6.1d "! ""1 n.! 5"1 5.6.S.1d $#$! $0' 5.>.1d '"3 F1""1G 3.
Unli-e ot&er plaintiffs! citi9enAta.pa,ers need not demonstrate an in/ur,AinA
fact to ac;uire standing. <nstead! pursuant to State (inance 7a+ R 113Ab 213! a
citi9enAta.pa,er ma, bring suit to prevent t&e unla+ful e.penditure of state funds
O+&et&er or not suc& person is or ma, be affected or speciall, aggrievedP b, t&e
c&allenged action. =e &ave noted t&at +&ile t&e statute mig&t be read to allo+
actions +&en little or no in/ur, &as been claimed! courts &ave been in&ospitable to
plaintiffs +&o see- essentiall, to c&allenge nonfiscal activities b, invo-ing t&e
convenient statutor, &oo- of section 113Ab 2see %atter of *ransactive Corp. v.
5e+ 6or- State Dept. of Social Servs.! "1 5.6.1d 5'"! 5"! $# 5.6.S.1d 15$! '0$
5.>.1d 110 F1""G 3. Accordingl,! +e &ave &eld t&at a plaintiffEs claims must
&ave a Osufficient ne.us to fiscal activities of t&e StateP in order to confer standing
2?udder v. :ata-i! "3 5.6.1d at 11! $" 5.6.S.1d '01! '11 5.>.1d "'3. A
contrar, rule +ould disrupt government operation b, posing t&e t&reat of litigation
to c&allenge an, governmental action.
*&e tas-! of course! is to distinguis& bet+een cases t&at present a c&allenge
to t&e e.penditure of mone, and t&ose t&at use t&e e.penditure of mone, as a
pretense to c&allenge a governmental decision. As +e &ave said! Oit is one t&ing
to &ave standing to correct clear illegalit, of official action and ;uite anot&er to
&ave standing in order to interpose litigating plaintiffs and t&e courts into t&e
management and operation of public enterprisesP 2%atter of Abrams v. 5e+ 6or-
Cit, *r. Aut&.! 3" 5.6.1d ""0! ""1! 3' 5.6.S.1d 135! 355 5.>.1d 1" F1"'$G 3.
Accordingl,! a claim t&at state funds are not being spent +isel, is patentl,
insufficient to satisf, t&e minimum t&res&old for standing! but a claim t&at it is
illegal to spend mone, at all for t&e ;uestioned activit, li-el, +ould provide t&e
plaintiff +it& standing. @ere! t&e citi9enAta.pa,ers &ave sufficientl, alleged a
c&allenge to t&e e.penditure of state mone, to +it&stand t&e StateEs motion to
dismiss for lac- of standing.
Anot&er reason informs our conclusion. =ere +e to agree +it& t&e State
and den, standing as to all plaintiffs in t&is action! an important constitutional
issue +ould be effectivel, insulated from /udicial revie+! somet&ing +e cautioned
against in Cor,s9e+s-i v. Cr,dges! 3' 5.6.1d 3$1! 3$#! 3'1 5.6.S.1d $13! 33#
5.>.1d 5'" F1"'5G. :laintiffs allege t&at t&e Governor &as acted ultra vires!
e.ceeding t&e grant of aut&orit, t&at t&e Constitution gives to t&e >.ecutive
Cranc&. <n separation of po+ers disputes of t&is -ind! t&ere +ill ordinaril, be fe+
+&o can claim concrete in/ur, resulting from a breac& of t&e constitutional division
of aut&orit,. As a part, to t&e 1""3 compact but not to t&is suit! t&e *ribe signed
t&e agreement and t+ice soug&t to e.tend most terms of t&e 1""" amendment.
*&e *ribe is t&erefore an unli-el, plaintiff. Ot&ers +&o could be considered
&armed b, casino gambling ma, be too remotel, affected to gain relief in t&e
courts.
*&e case before us contrasts s&arpl, +it& %atter of Colella v. Coard of
Assessors! "5 5.6.1d #01! #10A#11! '1 5.6.S.1d 1$! '#1 5.>.1d 113 F1000G!
+&ere +e denied standing! &olding t&at granting it +ould Opermit c&allenges to t&e
determinations of local governmental officials &aving no appreciable public
significance be,ond t&e immediatel, affected parties.P *&e issues in t&e present
dispute are fundamental and of immense public significance.

<t follo+s t&at our doctrines governing standing must be sensitive to claims
of institutional &arm. Actions of t&is t,pe can serve as a means for citi9ens to
ensure t&e continued vitalit, of t&e constraints on po+er t&at lie at t&e &eart of our
constitutional sc&eme 2cf. %atter of Dair,lea Coop. v. =al-le,! 3 5.6.1d $! 10!
3'' 5.6.S.1d #51! 33" 5.>.1d $5 F1"'5G4 Committee for an >ffective Dudiciar, v.
State! 10" %ont. 105! 111A113! $'" :.1d 1113! 111' F1"#G4 State e. rel. @o+ard
v. O-la&oma Corp. Commn.! $1# :.1d #5! 51 FO-la. 1"0G 3. *&us! +&ere a
denial of standing +ould pose Oin effect S S S an impenetrable barrier to an,
/udicial scrutin, of legislative action!P our dut, is to open rat&er t&an close t&e
door to t&e court&ouse 2see Cor,s9e+s-i! 3' 5.6.1d at 3$#! 3'1 5.6.S.1d $13! 33#
5.>.1d 5'"4 see also State e. rel. Clar- v. Do&nson! 110 5.%. 5$1! "0# :.1d 11
F1""5G4 ?ios v. S,mington! 1'1 Ari9. 3! 33 :.1d 10 F1""1G4 State e. rel. Sego v.
Jir-patric-! $ 5.%. 35"! 3$3! 51# :.1d "'5! "'" F1"'#G 3.

@ere! t&e citi9enAta.pa,er plaintiffs argue t&at t&e e.penditure of state funds
and t&e use of state regulator, personnel for t&e casino violate t&e 5e+ 6or-
Constitution. <f standing doctrine precludes t&em from bringing t&is suit! t&e
casino +ill remain operating indefinitel, +&et&er or not t&e 1""3 compact +as
constitutional. Standing is properl, satisfied &ere! lest procedural &urdles forever
foreclose ad/udication of t&e underl,ing constitutional issue. =e ne.t address t&e
statute of limitations argument.
<8. Statute of 7imitations

*&e State claims t&at t&is suit s&ould &ave been broug&t as a C:7? article
' proceeding! and t&at as suc&! t&e fourAmont& statute of limitations must be
applied and t&e suit dismissed as timeAbarred 2see e.g. C:7? 11'4 Solnic- v.
=&alen! #" 5.6.1d 11#! 11"A130! #15 5.6.S.1d $! #01 5.>.1d 1"0 F1"0G 3. =e
disagree because article ' does not provide plaintiffs a +a, of obtaining t&e relief
t&e, see-. =&ere Ono ot&er form of proceeding e.ists for t&e resolution of t&e
claims tendered in t&e declarator, /udgment action! t&e si.A,ear limitation of
C:7? 113 2subd. 13 +ill t&en be applicableP 2Solnic-! #" 5.6.1d at 130! #15
5.6.S.1d $! #01 5.>.1d 1"03.
:laintiffs see- a declaration as to t&e unconstitutionalit, of t&e 1""3 compact
and an in/unction against t&e use of state funds to implement it. *&at relief cannot
be afforded under C:7? article '. *&e closest remed, contained in article ' is
pro&ibition! +&ere an official is proceeding O+it&out or in e.cess of /urisdictionP
2C:7? '03F1G 3. =e &ave &eld! &o+ever! t&at article ' ma, not be used against
e.ecutive officials! and plaintiffs +ould t&erefore &ave been unable to use article
' to c&allenge t&e GovernorEs signing of t&e compact 2see %atter of %orgent&au
v. >rlbaum! 5" 5.6.1d 1#3! 1#'! #$# 5.6.S.1d 3"1! #51 5.>.1d 150 F1"3G4
%atter of Dondi v. Dones! #0 5.6.1d ! 13! 3$ 5.6.S.1d #! 351 5.>.1d $50 F1"'$G4
see also Sears v. @ull! 1"1 Ari9. $5! $A$"! "$1 :.1d 1013! 101$A101' F1""G 3.
Accordingl,! t&e article ' statute of limitations does not appl,. *&at being so!
plaintiffsE declarator, /udgment action falls +it&in t&e residuar, si.A,ear statute of
limitations period under C:7? 113213 2see 8igilant <ns. Co. v. @ousing Aut&.! '
5.6.1d 3$! #1! $3' 5.6.S.1d 3#1! $$0 5.>.1d 1111 F1""5G4 see also Solnic-! #"
5.6.1d at 130! #15 5.6.S.1d $! #01 5.>.1d 1"04 Siegel! :ractice Commentaries!
%cJinne,Es Cons. 7a+s of 5.6.! Coo- 'C! C:7? C3001)1! at ##$3.
*&e 1""3 compact +as signed on October 15! 1""3! and publis&ed in t&e
(ederal ?egister on December 13! 1""3. <G?A provides t&at a compact is not
OfinalP until publis&ed in t&e (ederal ?egister 215 USC R 1'10FdGF1GFAGFiiiG4 F1G
FCG 3. :laintiffs filed suit on September 13 and 1#! 1"""! +&ic& fell +it&in t&e
limitations period. A suit broug&t in compliance +it& t&e statute of limitations
ma, nonet&eless be barred b, lac&es! so +e proceed to address t&at issue.
8. 7ac&es
7ac&es and limitations are not t&e same. 7imitations involve t&e fi.ed
statutor, periods +it&in +&ic& actions must be broug&t! +&ile lac&es signifies a
dela, independent of statute 2see Siegel! 5.6. :rac. R 3$! at ## F3d ed. 1"""G4 1A
Carmod,A=ait 1d! 5.6. :rac. R 13)#! at "# F1001G 3. =e &ave defined lac&es as
an e;uitable bar! based on a lengt&, neglect or omission to assert a rig&t and t&e
resulting pre/udice to an adverse part, 2see %atter of Carabas&! 31 5.6.1d '$! 1!
33# 5.6.S.1d "0! 1$ 5.>.1d 1$ F1"'1G4 see also %atter of Drei-ausen v.
Loning Cd. of Appeals! " 5.6.1d 1$5! 1'3 n. #! '#$ 5.6.S.1d #1"! ''# 5.>.1d
1"3 F1001G 3. *&e mere lapse of time! +it&out a s&o+ing of pre/udice! +ill not
sustain a defense of lac&es 2see Gal,n v. Sc&+art9! 5$ 5.6.1d "$"! "'1! #53
5.6.S.1d $1#! #3" 5.>.1d 3#0 F1"1G4 Sorrentino v. %ier9+a! 15 5.6.1d 5"! 301
5.6.S.1d 5$5! 150 5.>.1d 5 F1"$"G4 S-rodelis v. 5orbergs! 1'1 A.D.1d 31$! '0'
5.6.S.1d 1"' F1d Dept.1000G 3. *&e defense &as been applied in e;uitable actions
and declarator, /udgment actions 2bot& of +&ic& are governed b, t&e si.A,ear
catc&all provision of C:7? 113F1G 3 +&ere t&e defendant s&o+s pre/udicial dela,
even t&oug& t&e limitations period +as met.'

*&e State claims t&at t&e nearl, si.A,ear dela, bet+een t&e effective date of
t&e 1""3 compact and t&e start of t&is suit &as pre/udiced t&e *ribe. *&e
Appellate Division refused to consider t&e effect of an, pre/udice to t&e *ribe!
concluding t&at t&e State lac-ed t&e aut&orit, to raise a claim of pre/udice on
be&alf of a nonpart,. =e conclude t&at t&e State &as t&e po+er to argue t&at
pre/udice to a nonpart, bars t&is action! but t&at in t&is instance t&ere &as been no
pre/udice to t&e *ribe +arranting dismissal.
<n %atter of Sc&ul9 v. State of 5e+ 6or-! 1 5.6.1d 33$! 3#A350! 5""
5.6.S.1d #$"! $15 5.>.1d "53 F1""3G! +e &eld t&at t&e pre/udice caused b, sales
of bonds bet+een t&e effective date of a la+ aut&ori9ing t&ose bonds and t&e
institution of t&e c&allenge to t&e la+ 2one ,ear later3 +as sufficient pre/udice to
bar t&e action. *&e Court &eld t&at t&e impact on t&e State as +ell as on t&e
investors! O+it& +&om t&e State engaged in t&ese multimillion dollar financing
transactions!P +as enoug& to spell out lac&es 2id. at 3#! 5"" 5.6.S.1d #$"! $15
5.>.1d "533. =e t&us recogni9ed t&at &arm to economic interests can be enoug&
to bar an action on lac&es grounds! even if t&e dela, does not affect a defendantEs
abilit, to defend against a suit.
5o+&ere in t&e present case! &o+ever! is t&ere an, indication t&at t&e dela,
in bringing t&is action &as caused t&e slig&test &arm to t&e *ribe. :laintiffs point
out t&at t&e *ribe &as been operating t&e casinoAand presumabl, profiting from itA
during t&e entire pendenc, of t&is suit 2cf. %arcus v. 8illage of %amaronec-! 13
5.6. 315! 331! 1 5.>.1d 5$ F1"#0G Fnoting in a 9oning dispute t&at Ot&e dela, of
plaintiffs &as afforded defendants man, ,ears of unla+ful usePG 3. =&ile in
Sc&ul9 t&e dela, could &ave caused bond investors to lose t&e opportunit, for
investments +ere t&e bonds to be invalidated! &ere t&ere is no comparable ris-.
*rue enoug&! &ad t&e casino been s&ut do+n on its grand opening! t&e investment
+ould &ave been lost. Cut t&e casino &as been operating for four ,ears! and t&ere
is not&ing on t&is record to indicate &o+ muc& mone, t&e casino &as made during
t&e pendenc, of t&is action. =it&out -no+ing &o+ muc&! if an,t&ing! t&e casino
stands to loseAand &aving no basis to conclude t&at it &as not profitedA+e cannot
dismiss a suit on lac&es grounds for economic pre/udice.
:laintiffs argue t&at t&e *ribe +as on notice as to t&e possible illegalit, of
t&e compact! citing a memorandum from Governor CuomoEs Counsel indicating
t&at t&e *ribe &ad been informed t&at legislative approval +ould be re;uired before
t&e State could enter into effective compacts. *&us! +&ile t&e casino is
presumabl, e.pected to ma-e large sums over t&e ne.t several ,ears! and +&ile
plaintiffsE suit t&reatens t&at source of revenue! t&e pre/udice caused b, a loss of
e.pected profits based on a predictabl, vulnerable compact is not t&e sort of
pre/udice t&at supports a defense of lac&es. =ere it ot&er+ise! ver, fe+ suits
+ould proceed past lac&es anal,sis! and certainl, no suits see-ing to invalidate
illegal contracts could ever proceed.
*&ere is anot&er important distinction bet+een Sc&ul9 and t&is case. <n
Sc&ul9! t&e State approved a bond program to raise revenue. <nvestors boug&t
bonds e.pecting t&e State to pa, bac- t&e investment +it& interest. *o maintain
fiscal credibilit, as a borro+er! t&e State must up&old its contracts! particularl,
+&en it &as borro+ed on credit. =e recogni9ed t&at entertaining a suit
c&allenging t&e aut&orit, of t&e State to issue t&ose bondsAparticularl, after a ,earEs
dela,Amig&t &inder t&e StateEs abilit, to raise financing in t&e future! to sa,
not&ing of t&e effects on budget pro/ections t&at invalidation of a source of revenue
+ould cause 2see Sc&ul9! 1 5.6.1d at 3#'A3#! 5"" 5.6.S.1d #$"! $15 5.>.1d "53
Fnoting Ot&e profound destabili9ing and pre/udicial effects from dela, S S S 2t&at3
must be e.amined for t&eir impact on t&e State! on t&e operation and maintenance
of orderl, government! on t&ose +it& +&om t&e State engaged in t&ese
multimillion dollar financing transactions! and on societ, in generalPG 3. 5one of
t&ose factors is present &ere.
8<. *&e *ribe as an <ndispensable :art,
*&e *ribe is not a part, to t&is action. Alt&oug& its interests are certainl,
affected b, t&is litigation! t&e *ribe &as c&osen not to participate. Unless
Congress provides ot&er+ise! <ndian tribes possess sovereign immunit, against t&e
/udicial processes of states 2see e.g. Santa Clara :ueblo v. %artine9! #3$ U.S. #"!
5! " S.Ct. 1$'0! 5$ 7.>d.1d 10$ F1"'G4 United States v. United States (id. M
Guar. Co.! 30" U.S. 50$! 511! $0 S.Ct. $53! # 7.>d. "# F1"#0G4 *urner v. United
States! 1# U.S. 35#! 35! 3" S.Ct. 10"! $3 7.>d. 1"1 F1"1"G 3. As a result! 5e+
6or- courts cannot force t&e *ribe to participate in t&is la+suit. *&e State claims
t&at t&e *ribeEs absence re;uires us to dismiss t&is action. =e disagree.
C:7? 1001 sets fort& t&e rules governing +&en /oinder of parties is
necessar, to continue an action affecting t&e rig&ts of t&ose parties. *&e statute
directs t&at persons must be broug&t into t&e action +&en /oinder is necessar, to
accord Ocomplete reliefP bet+een t&e parties! or +&en t&e interests of t&e person
mig&t be Oine;uitabl, affected b, a /udgment in t&e actionP 2C:7? 1001FaG 3.
=&ere a person +&o s&ould be /oined nevert&eless cannot be /oined! courts must
decide +&et&er t&e action can proceed +it&out t&e Onecessar,P part,. :arties +&o
must be /oined lest t&e action be dismissed are termed Oindispensable parties.P
C:7? 10012b3 provides five factors for courts to consider in deciding +&et&er to
dismiss an action +&ere! as &ere! O/urisdiction over Ft&e necessar, part,G can be
obtained onl, b, &is consent or appearanceP)
O1. =&et&er t&e plaintiff &as anot&er effective remed, in case t&e action is
dismissed on account of t&e non/oinder4
O1. t&e pre/udice +&ic& ma, accrue from t&e non/oinder to t&e defendant
or to t&e person not /oined4
O3. +&et&er and b, +&om pre/udice mig&t &ave been avoided or ma, in
t&e future be avoided4
O#. t&e feasibilit, of a protective provision b, order of t&e court or in t&e
/udgment4 and
O5. +&et&er an effective /udgment ma, be rendered in t&e absence of t&e
person +&o is not /oinedP 2C:7? 1001FbG 3.
*&e State relies principall, on paragrap& 213! and argues t&at t&e pre/udice to
t&e *ribe caused b, a /udgment eviscerating t&e aut&orit, under +&ic& it operates
t&e casino s&ould be sufficient to dismiss t&e action. <n contrast! plaintiffs rel, on
paragrap& 213! arguing t&at t&ere can be no remed, for t&e alleged constitutional
violation if t&e *ribeEs absence re;uires dismissal.
:laintiffsE arguments are on firmer ground. 5ot onl, +ill t&ese plaintiffs be
stripped of a remed, if +e &old t&at t&e *ribe is an indispensable part,! but no
member of t&e public +ill ever be able to bring t&is constitutional c&allenge. <n
effect! t&e >.ecutive could sign agreements +it& an, entit, be,ond t&e /urisdiction
of t&e Court! free of constitutional interdiction. *&e >.ecutiveEs actions +ould
t&us be insulated from revie+! a prospect antit&etical to our s,stem of c&ec-s and
balances.

*&ere are t+o principal purposes of re;uiring dismissal o+ing to t&e absence
of an indispensable part,. (irst! mandator, /oinder prevents multiple! inconsistent
/udgments relating to t&e same controvers,. Second! /oinder protects t&e
ot&er+ise absent parties +&o +ould be Oembarrassed b, /udgments purporting to
bind t&eir rig&ts or interests +&ere t&e, &ave &ad no opportunit, to be &eardP 2(irst
5atl. Can- v. S&uler! 153 5.6. 1$3! 1'0! #' 5.>. 1$1 F1"'G4 see generall,! 3
=einsteinAJornA%iller! 5.6. Civ. :rac. V 1001.01 F1001G 3.
5eit&er purpose applies &ere. *&e *ribe &as c&osen to be absent. 5obod,
&as denied it t&e Oopportunit, to be &eardP4 in fact! t&e Oneida <ndian 5ation!
+&ic& operates t&e *urning Stone Casino! &as appeared as amicus curiae ma-ing
muc& t&e same arguments +e +ould e.pect to be made b, t&e *ribe &ad it c&osen
to participate. =&ile sovereign immunit, prevents t&e *ribe from being forced to
participate in 5e+ 6or- court proceedings! it does not re;uire ever,one else to
forego t&e resolution of all disputes t&at could affect t&e *ribe 2see Jeene v.
C&ambers! 1'1 5.6. 31$! 330! 3 5.>.1d ##3 F1"3$G4 :laut v. @G@ :artners&ip! 5"
A.D.1d $$! 3" 5.6.S.1d $'1 F1st Dept.1"''G4 3 =einsteinAJornA%iller! 5.6.
Civ. :rac. V 1001.10 Fciting casesG 3. =&ile +e full, respect t&e sovereign
prerogatives of t&e <ndian tribes! +e +ill not permit t&e *ribeEs voluntar, absence
to deprive t&ese plaintiffs 2and in turn an, member of t&e public3 of t&eir da, in
court.
<n balancing t&e C:7? 1001 factors! t&e Appellate Division concluded t&at
t&e e;uities +eig&ed against dismissal. *&at conclusion +as not an abuse of
discretion. =&ile in ot&er cases sovereign immunit, mig&t support dismissal!"
&ere t&e factors +eig& to+ard allo+ing /udicial revie+ of t&is constitutional
;uestion 2see generall, Siegel! 5.6. :rac. R 133 FODismissal of t&e action for
non/oinder of a given person is a possibilit, under t&e C:7?! but it is onl, a last
resortPG 3.10
=e conclude t&at t&e alleged constitutional violation +ill be +it&out remed,
if t&is action is dismissed for t&e *ribeEs non/oinder. =e furt&er conclude t&at to
t&e e.tent t&e *ribe is pre/udiced b, our ad/udication of issues t&at affect its rig&ts
under t&e compact! t&e *ribe could &ave mitigated t&at pre/udice b, participating in
t&e suit 2cf. United States e. rel. Steele v. *urn Je, Gaming! <nc.! 135 (.3d 11#"!
1151 Ft& Cir.1""G 3. *&e *ribeEs non/oinder is t&erefore e.cused! and +e
proceed to discuss t&e merits.
8<<. Separation of :o+ers

Article <<< of t&e State Constitution vests t&e Senate and t&e Assembl, +it&
t&e legislative po+er of t&e State! +&ile article <8 vests t&e e.ecutive po+er in t&e
Governor and article 8< vests t&e court s,stem +it& t&e /udicial po+er 2see 5.6.
Const.! art. <<<! R 14 art. <8! R 14 art. 8<! R 13. =e &ave recogni9ed t&at t&ese
Oseparate grants of po+er to eac& of t&e coordinate branc&es of governmentP impl,
t&at eac& branc& is to e.ercise po+er +it&in a given sp&ere of aut&orit, 2Clar- v.
Cuomo! $$ 5.6.1d 15! 1"! #"5 5.6.S.1d "3$! #$ 5.>.1d '"# F1"5G 3. Stated
succinctl,! t&e separation of po+ers Ore;uires t&at t&e 7egislature ma-e t&e critical
polic, decisions! +&ile t&e e.ecutive branc&Es responsibilit, is to implement t&ose
policiesP 2Cour;uin v. Cuomo! 5 5.6.1d '1! '#! $1 5.6.S.1d $1! $51 5.>.1d
1'1 F1""5G Fciting %atter of 5e+ 6or- State @ealt& (acilities Assn. v. A.elrod! ''
5.6.1d 3#0! 3#"! 5$ 5.6.S.1d 1! 5$" 5.>.1d $0 21""13 G 3.
*&is is not to sa, t&at t&e functions of government can be neatl, bo.ed into
/udicial! e.ecutive and legislative categories. *&e distinctions are often elusive!
and t&e fluid functioning of government re;uires t&at t&e interactions among t&e
t&ree branc&es be allo+ed some Opla, in its /ointsP 2Cain :eanut Co. of *e.. v.
:inson! 11 U.S. #""! 501! 51 S.Ct. 11! '5 7.>d. #1 F1"31G4 see also
6oungsto+n S&eet M *ube Co. v. Sa+,er! 3#3 U.S. 5'"! $35! '1 S.Ct. $3! "$
7.>d. 1153 F1"51G FDac-son! D.! concurringG4 %atter of ?ic&ardson! 1#' 5.6. #01!
#10! 1$0 5.>. $55 F1"1G 3.

<t t&us falls to t&e courts! and ultimatel, to t&is Court! to determine +&et&er
a c&allenged gubernatorial action is OlegislativeP and t&erefore ultra vires. <n t&is
case +e &ave no difficult, determining t&at t&e GovernorEs actions +ere polic,A
ma-ing! and t&us legislative in c&aracter.
<nitiall,! +e &old t&at <G?A does not preempt state la+ governing +&ic&
state actors are competent to negotiate and agree to gaming compacts. <G?A
imposes on Ot&e StateP an obligation to negotiate in good fait& 215 USC R 1'10 FdG
F3GFaG 3! but identifies no particular state actor +&o s&all negotiate t&e compacts4
t&at ;uestion is left up to state la+ 2see :ueblo of Santa Ana v. Jell,! 10# (.3d
15#$! 155' F10t& Cir.1""'G! cert. denied 511 U.S. 0'! 11 S.Ct. #5! 13" 7.>d.1d
11 F1""'G 3. As t&e Supreme Court noted! t&e dut, to negotiate imposed b, <G?A
Ois not of t&e sort li-el, to be performed b, an individual state e.ecutive officer or
even a group of officersP 2Seminole *ribe of (la. v. (lorida! 51' U.S. ##! '5 n. 1'!
11$ S.Ct. 111#! 13# 7.>d.1d 151 F1""$G Fciting State e. rel. Step&an v. (inne,! 151
Jan. 55"! 3$ :.1d 11$" 21""13 G 3.
<G?A itself contemplates t&at states +ill confront several polic, c&oices
+&en negotiating gaming compacts 2see 6avapaiA:rescott <ndian *ribe v. Ari9ona!
'"$ (.Supp. 11"1! 11"$A11"' FD.Ari9.1""1G 3. Congress provided t&at potential
conflicts ma, be resolved in t&e compact itself! e.plicitl, noting t&e man, policies
affected b, tribal gaming compacts. <ndeed! gaming compacts are laden +it&
polic, c&oices! as Congress +ell recogni9ed.
OAn, *ribalAState compact negotiated under subparagrap& 2A3 ma, include
provisions relating toA
O2i3 t&e application of t&e criminal and civil la+s and regulations of t&e
<ndian tribe or t&e State t&at are directl, related to! and necessar, for! t&e licensing
and regulation of suc& activit,4
O2ii3 t&e allocation of criminal and civil /urisdiction bet+een t&e State and
t&e <ndian tribe necessar, for t&e enforcement of suc& la+s and regulations4
O2iii3 t&e assessment b, t&e State of suc& activities in suc& amounts as are
necessar, to defra, t&e costs of regulating suc& activit,4
O2iv3 ta.ation b, t&e <ndian tribe of suc& activit, in amounts comparable to
amounts assessed b, t&e State for comparable activities4
O2v3 remedies for breac& of contract4
O2vi3 standards for t&e operation of suc& activit, and maintenance of t&e
gaming facilit,! including licensing4 and
O2vii3 an, ot&er sub/ects t&at are directl, related to t&e operation of gaming
activitiesP 215 USC R 1'10FdGF3GFCG 3.
Compacts addressing t&ese issues necessaril, ma-e fundamental polic,
c&oices t&at epitomi9e Olegislative po+er.P Decisions involving licensing!
ta.ation and criminal and civil /urisdiction re;uire a balancing of differing
interests! a tas- t&e multimember! representative 7egislature is entrusted to perform
under our constitutional structure.
Additionall,! as noted b, GovernorEs Counsel in 1""3! t&e compacts re;uire
t&e State ?acing and =agering Coard to adopt ne+ regulations for carr,ing out its
casino oversig&t responsibilities. *&e c&oice of +&ic& agenc, s&all regulate an
activit, can be as fundamental a polic, decision as c&oosing t&e substance of t&ose
regulations. (or t&at reason! and because agencies are creatures of t&e
7egislature! t&e Constitution re;uires t&at agencies carr, out onl, t&ose duties
assigned t&em b, t&e 7egislature e.pressl, or b, necessar, implication 2see %atter
of Ceer Garden v. 5e+ 6or- State 7i;. Aut&.! '" 5.6.1d 1$$! 1'$! 51 5.6.S.1d
$5! 5"0 5.>.1d 11"3 F1""1G 3. *&ere is no legislative aut&ori9ation for state
agencies to promulgate regulations for t&e oversig&t of casino gambling. *&e
compacts t&erefore &ave usurped t&e 7egislatureEs po+er.
*&e State argues t&at b, passing certain appropriation bills! t&e 7egislature
&as signaled its approval of t&e compact. =e disagree. *&ose enactments are no
substitute for approval or total ratification. *&e 7egislature &as been free to
ratif, t&e compact but! as ,et! &as not done so. <ndeed! t&e State Assembl, in a
resolution e.pressl, opposed t&e GovernorEs unilateral action in negotiating and
signing t&e compact. *&e resolution as-ed t&e Secretar, of t&e <nterior not to
approve an, compact unless approved b, t&e 7egislature. *&e Assembl, stated
t&at OFaGn, compact permitting casino gambling necessaril, re;uires at a minimum
t&e e.ercise of legislative po+er +it& respect to regulator, appropriations and
related police po+ers!P and t&at t&erefore OFtG&e Governor lac-s aut&orit, to act on
be&alf of t&e State to enter into a tribalAstate compactP 2Assembl, ?esolution 5o.
1#13 F1""$G 3. *&is e.pression does not s;uare +it& t&e StateEs claim t&at t&e
7egislature &as impliedl, approved t&e compact.
Unsurprisingl,! ever, state &ig& court to consider t&e issue &as concluded
t&at t&e state e.ecutive lac-s t&e po+er unilaterall, to negotiate and e.ecute tribal
gaming compacts under <G?A.11 5e+ %e.ico! Jansas and ?&ode <sland &ave
eac& concluded t&at gaming compacts incorporate polic, c&oices reserved for t&e
7egislature 2see State e. rel. Clar- v. Do&nson! 110 5.%. 5$1! "0# :.1d 11 F1""5G4
State e. rel. Step&an v. (inne,! 151 Jan. 55"! 3$ :.1d 11$" F1""1G4 5arragansett
<ndian *ribe of ?.<. v. ?&ode <sland! $$' A.1d 10 F?.<.1""5G4 see also %cCartne,
v. Attorne, Gen.! 131 %ic&.App. '11! '1! 5' 5.=.1d 1#! 1' F1""G FO2*3&e
Governor &as t&e abilit, to enter into compacts +it& <ndian tribes! sub/ect to t&e
approval of t&e 7egislaturePG! appeal denied #$0 %ic&. '3! $01 5.=.1d 101
F1"""G 3. *oda, +e /oin t&ose states in a commitment to t&e separation of po+ers
and constitutional government.
8<<<. *&e Constitutional Antigambling :rovision
*&e parties &ave argued t&e applicabilit, of t&e State ConstitutionEs
antigambling provision 25.6. Const.! art. <! R "3. <n lig&t of our disposition of t&e
separation of po+ers ;uestion! it is unnecessar, for us to reac& t&at argument! and
t&ere are compelling reasons not to do so at t&is time. <ndeed! an,t&ing +e +ould
sa, in t&at regard +ould be dictum! inasmuc& as t&e separation of po+ers point is
an independent ground for invalidating t&e compact.
5eit&er t&e trial court nor t&e Appellate Division addressed t&e
antigambling provision! and it is un+ise for usAas a court of last resortAto initiate
t&e discussion. Supreme Court did not discuss t&e article <! R " constitutional
issue at all! and t&e Appellate Division made onl, a reference to it. Clearl,! it is
better for t&is Court not to resolve constitutional ;uestions unaddressed b, t&e
lo+er courts 2see Cernstein v. Codean! 53 5.6.1d 510! 51"A530! ##3 5.6.S.1d #"!
#1$ 5.>.1d '#1 F1"1G4 Comis-e, v. Arlen! #3 5.6.1d $"$! $"! #01 5.6.S.1d
100! 3'1 5.>.1d 3# F1"''G4 see also Sc&iavone v. Cit, of 5e+ 6or-! "1 5.6.1d
30! 31'! $0 5.6.S.1d ##5! '03 5.>.1d 15$ F1""G 3.
Dudge ?eadEs arguments in favor of t&e compactEs compatibilit, +it& article
<! R "! and t&e contrar, vie+s of Dudge Smit&! strengt&en our belief t&at furt&er
development of t&e issue b, t&e courts belo+ is desirable! if not necessar,. Dudge
?ead and Dudge Smit& debate t&e applicabilit, of Caba9on to t&e article <! R "
issue. =&ile t&eir insig&ts are illuminating! +e note t&at t&e lo+er courts did not
cite! let alone address! Caba9on or ot&er possibl, relevant cases. *&e, did not
determine +&et&er t&e compact could survive an article <! R " c&allenge. *&e
Appellate DivisionEs reference to t&e provision did not involve t&e treatment t&at
s&ould precede t&is CourtEs revie+ of an issue of t&at magnitude. *&e ;uestion of
t&e compactEs compatibilit, +it& t&e ConstitutionEs antigambling provision is far
too important for us to address in t&is legal vacuum. (urt&ermore! t&e parties
&ave informed us t&at a case pending before t&e lo+er courts s;uarel, addresses
t&e ;uestion of t&e applicabilit, of t&e State ConstitutionEs antigambling provision.
Accordingl,! t&e order of t&e Appellate Division s&ould be modified! +it&
costs to plaintiffs! b, vacating on t&e ground of mootness so muc& of t&e order as
affirmed t&at portion of Supreme CourtEs order declaring t&e %a, 1'! 1"""
amendment to t&e 1""3 *ribalAState Compact void and unenforceable and! as so
modified! affirmed.
< agree +it& t&e ma/orit, t&at t&e 1""3 Compact violates t&e 5e+ 6or- State
Constitution in t&at t&e 7egislature and not t&e Governor is given polic,ma-ing
aut&orit,. <n addition! because article <! R " of t&e 5e+ 6or- State Constitution
clearl, forbids t&e gambling permitted b, t&e 1""3 Compact! < +ould reac& t&at
issue.1
As noted b, t&e CourtEs opinion! t&e 5e+ 6or- State Constitution aut&ori9es
t&e 7egislature and not t&e Governor to set polic,. <t reads) O*&e legislative
po+er of t&is state s&all be vested in t&e senate and t&e assembl,P 25.6. Const.! art.
<<<! R 13. O*&e e.ecutive po+er s&all be vested in t&e governor S S S.P 25.6.
Const.! art. <8! R 1.3 O*&e governor s&all communicate b, message to t&e
legislature at ever, session t&e condition of t&e state! and recommend suc& matters
to it as &e or s&e s&all /udge e.pedient. *&e governor s&all e.pedite all suc&
measures as ma, be resolved upon b, t&e legislature! and s&all ta-e care t&at t&e
la+s are fait&full, e.ecutedP 25.6. Const.! art. <8! R 33.
<t is e;uall, true! &o+ever! t&at t&e Constitution forbids gambling! e.cept for
limited e.ceptions! and pro&ibits commerciali9ed gambling. <t reads)
OF>G.cept as &ereinafter provided! no lotter, or t&e sale of lotter, tic-ets!
poolAselling! boo-ma-ing! or an, ot&er -ind of gambling! e.cept lotteries operated
b, t&e state and t&e sale of lotter, tic-ets in connection t&ere+it& as ma, be
aut&ori9ed and prescribed b, t&e legislature! t&e net proceeds of +&ic& s&all be
applied e.clusivel, to or in aid or support of education in t&is state as t&e
legislature ma, prescribe! and e.cept pariAmutuel betting on &orse races as ma, be
prescribed b, t&e legislature and from +&ic& t&e state s&all derive a reasonable
revenue for t&e support of government! s&all &ereafter be aut&ori9ed or allo+ed
+it&in t&is state4 and t&e legislature s&all pass appropriate la+s to prevent offenses
against an, of t&e provisions of t&is sectionP 25.6. Const.! art. <! R "F1G 3.
Cefore t&e first 5e+ 6or- State Constitution +as +ritten in 1'''! gambling
in 5e+ 6or- +as forbidden. Colonial Governor *r,on +as appointed b, t&e
Jing of >ngland in (ebruar, 1''1.1 @e served as Governor until after t&e
?evolution began! leaving office on %arc& 13! 1'0. *&e commission and
instructions issued to *r,on upon &is appointment pro&ibited gambling! referred to
as OlotteriesP)
O=&ereas! a practice &at& of late ,ears prevailed in several of our colonies
and plantations in America of passing la+s for raising mone, b, constituting
public lotteries! and +&ereas! it &at& been represented unto us t&at suc& practice
dot& tend to disengage t&ose +&o become adventurers t&erein from t&at spirit of
industr, and attention to t&eir proper callings and occupations on +&ic& t&e public
+elfare so greatl, depends! and +&ereas! it furt&er appears t&at t&is practice of
aut&ori9ing lotteries b, acts of legislature &at& been also e.tended to t&e enabling
private persons to set up suc& lotteries! b, means +&ereof great frauds and abuses
&ave been committed! it is t&erefore our +ill and pleasure t&at ,ou do not give ,our
assent to an, act or acts for raising mone, b, t&e institution of an, public or
private lotteries +&atever until ,ou s&all &ave first transmitted unto us b, one of
our principal secretaries of state a draug&t or draug&ts of suc& act or acts! and s&all
&ave received our direction t&ereupon.P
*&e original Constitution of 1''' does not mention gambling or lotteries.
7otteries +ere again specificall, pro&ibited in t&e second Constitution! approved in
111. Article 8<<! R 11 provided) O5o lotter, s&all &ereafter be aut&ori9ed in
t&is state4 and t&e legislature s&all pass la+s to prevent t&e sale of all lotter, tic-ets
+it&in t&is state! e.cept in lotteries alread, provided for b, la+.P
<n t&e t&ird Constitution! approved in 1#$! article <! R 10 pro&ibited
gambling in almost identical language to t&e previous Constitution) Onor s&all an,
lotter, &ereafter be aut&ori9ed! or an, sale of lotter, tic-ets allo+ed +it&in t&is
state.P
*&e fourt& Constitution! approved in 1"#! specificall, pro&ibited gambling
in article <! R ". <n addition to pro&ibiting lotteries and gambling in general! t&is
section singled out poolAselling and boo-ma-ing as +ell. <t read) Onor s&all an,
lotter, or t&e sale of lotter, tic-ets! poolAselling! boo-Ama-ing! or an, ot&er -ind
of gambling &ereafter be aut&ori9ed or allo+ed +it&in t&is State.P
<n 1"3 t&e fift& and current Constitution +as approved. *&is Constitution
maintained t&e general pro&ibition against gambling but did aut&ori9e a limited
range of gambling. Article <! R "213 provides)
Oe.cept as &ereinafter provided! no lotter, or t&e sale of lotter, tic-ets! poolA
selling! boo-ma-ing! or an, ot&er -ind of gambling! e.cept lotteries operated b,
t&e state and t&e sale of lotter, tic-ets in connection t&ere+it& as ma, be
aut&ori9ed and prescribed b, t&e legislature! t&e net proceeds of +&ic& s&all be
applied e.clusivel, to or in aid or support of education in t&is state as t&e
legislature ma, prescribe! and e.cept pariAmutuel betting on &orse races as ma, be
prescribed b, t&e legislature and from +&ic& t&e state s&all derive a reasonable
revenue for t&e support of government! s&all &ereafter be aut&ori9ed or allo+ed
+it&in t&is state.P
Article <! R "213 provides)
Oan, cit,! to+n or village +it&in t&e state ma, b, an approving vote of t&e
ma/orit, of t&e ;ualified electors S S S voting on a proposition S S S at a general
or special election S S S! sub/ect to state legislative supervision and control! S S
S conduct S S S t&e follo+ing categories of games of c&ance S S S 2a3 bingo or
lotto! in +&ic& pri9es are a+arded on t&e basis of designated numbers or s,mbols
on a card conforming to numbers or s,mbols selected at random4 2b3 games in
+&ic& pri9es are a+arded on t&e basis of a +inning number or numbers! color or
colors! or s,mbol or s,mbols determined b, c&ance from among t&ose previousl,
selected or pla,ed! +&et&er determined as t&e result of t&e spinning of a +&eel! a
dra+ing or ot&er+ise b, c&ance.P
Subdivision 213 goes on to provide t&at Oonl, bona fide religious! c&aritable
or nonAprofit organi9ations of veterans! volunteer firefig&ter and similar nonAprofit
organi9ations s&all be permitted to conduct suc& games.P
Additionall,! subdivision 213 provides t&at OFtG&e legislature s&all pass
appropriate la+s to effectuate t&e purposes of t&is subdivision! FandG ensure t&at
suc& games are rigidl, regulated to prevent commerciali9ed gambling P 2emp&asis
added3.
Consistent +it& t&is latter provision! t&e 7egislature &as outla+ed most
forms of gambling 2see :enal 7a+ art. 1153. As noted in DonninoEs :ractice
Commentar, to article 115! O=it& certain e.ceptions! gambling is pro&ibited b,
t&e 5e+ 6or- State Constitution Farticle <! R "G.P 2%cJinne,Es Cons. 7a+s of
5.6.! Coo- 3"! at 1"5.3
*&e <ndian Gaming ?egulator, Act 215 USC R 1'01 et se;.3 does not
re;uire t&at gambling be imposed upon states +&ere it is forbidden. 15 USC R
1'01253 provides)
O<ndian tribes &ave t&e e.clusive rig&t to regulate gaming activit, on <ndian
lands if t&e gaming activit, is not specificall, pro&ibited b, (ederal la+ and is
conducted +it&in a State +&ic& does not! as a matter of criminal la+ and public
polic,! pro&ibit suc& gaming activit, P 2emp&asis added3.3
*&e <ndian Gaming ?egulator, Act defines t&ree classes of gaming. Class
< gaming means Osocial games solel, for pri9es of minimal value or traditional
forms of <ndian gaming engaged in b, individuals as a part of! or in connection
+it&! tribal ceremonies or celebrationsP 215 USC R 1'03F$G 3. Class << gaming is
defined in 15 USC R 1'032'32A3 +&ic& provides)
O*&e term Tclass << gamingN meansA
O2i3 t&e game of c&ance commonl, -no+n as bingo S S S
O2<3 +&ic& is pla,ed for pri9es! including monetar, pri9es! +it& cards
bearing numbers or ot&er designations!
O2<<3 in +&ic& t&e &older of t&e card covers suc& numbers or designations
+&en ob/ects! similarl, numbered or designated! are dra+n or electronicall,
determined! and
O2<<<3 in +&ic& t&e game is +on b, t&e first person covering a previousl,
designated arrangement of numbers or designations on suc& cards! including S S S
pullAtabs! lotto! punc& boards! tip /ars! instant bingo! and ot&er games similar to
bingo! and
O2ii3 card games t&atA
O2<3 are e.plicitl, aut&ori9ed b, t&e la+s of t&e State! or
O2<<3 are not e.plicitl, pro&ibited b, t&e la+s of t&e State and are pla,ed at
an, location in t&e State.P
*&e statute furt&er defines +&at class << gaming does not include. 15 USC R
1'032'32C3 provides)
O*&e term Tclass << gamingN does not includeA
O2i3 an, ban-ing card games! including baccarat! c&emin de fer! or blac-/ac-
2113! or
O2ii3 electronic or electromec&anical facsimiles of an, game of c&ance or
slot mac&ines of an, -ind.P
*&e term class <<< gaming is defined in 15 USC R 1'0323 and provides)
O*&e term Tclass <<< gamingN means all forms of gaming t&at are not class <
gaming or class << gaming.P
<n violation of article <! R "! t&e 1""3 Compact aut&ori9es class <<<
commercial gaming. *&e preamble to t&e 1""3 Compact! entitled O*ribalAState
Compact Cet+een t&e St. ?egis %o&a+- *ribe and t&e State of 5e+ 6or-P refers
to class <<< gaming and states O=@>?>AS! t&e St. ?egis %o&a+- *ribe and t&e
State of 5e+ 6or- &ave mutuall, agreed S S S to t&e follo+ing provisions
governing t&e conduct of Class <<< gaming activities on t&e lands of t&e *ribe S S
S FtoG 2b3 develop and implement a means of regulation for t&e conduct of Class <<<
gaming on <ndian lands.P Section 32a3 of t&e Compact refers to appendi. A for a
list of games to be conducted under t&e Compact. <ncluded in t&is list are
baccarat and blac-/ac-! t+o games +&ic& are specificall, carved out as being class
<<< gaming 2see 15 USC R 1'03F'GFCGFiG4 FG 3. 5ot onl, does t&e 1""3 Compact
aut&ori9e class <<< gaming! it also involves t&e State of 5e+ 6or- in t&e
investigation and maintenance of t&e gambling facilit,. *&e *ribe is to reimburse
t&e State of 5e+ 6or- for its e.penses.
*&e 1""" Amendment to t&e Compact +as e;uall, violative of t&e 5e+
6or- State Constitution in t&at it soug&t to allo+ computeri9ed versions of class <<<
gaming. *&e record indicates t&at despite t&e e.piration of t&is amendment and
t&e fact t&at its validit, is a moot issue! t&e gambling aut&ori9ed b, t&at
amendment continues toda, and is an issue before t&is Court.

Class <<< gaming is against public polic, and &as been since before t&is
StateEs first Constitution. %oreover! :enal 7a+ R 115.05 provides! OA person is
guilt, of promoting gambling in t&e second degree +&en &e -no+ingl, advances
or profits from unla+ful gambling activit,.P *&e :enal 7a+ furt&er defines +&at
constitutes advancing gambling activit,)
OA person Tadvances gambling activit,N +&en! acting ot&er t&an as a pla,er!
&e engages in conduct +&ic& materiall, aids an, form of gambling activit,. Suc&
conduct includes but is not limited to conduct directed to+ard t&e creation or
establis&ment of t&e particular game! contest! sc&eme! device or activit, involved!
to+ard t&e ac;uisition or maintenance of premises! parap&ernalia! e;uipment or
apparatus t&erefor! to+ard t&e solicitation or inducement of persons to participate
t&erein! to+ard t&e actual conduct of t&e pla,ing p&ases t&ereof! to+ard t&e
arrangement of an, of its financial or recording p&ases! or to+ard an, ot&er p&ase
of its operationP 2:enal 7a+ R 115.00F#G 3.
California v. Caba9on Cand of %ission <ndians! #0 U.S. 101! 10' S.Ct.
103! "# 7.>d.1d 1## F1"'G # does not negate t&e more t&an 100A,earAold 5e+
6or- antigambling polic,. (irst! t&e case did not involve a state li-e 5e+ 6or-
+it& a clear antigambling polic,. <n t&e course of t&e Caba9on opinion! t&e
Supreme Court stated! O<n lig&t of t&e fact t&at California permits a substantial
amount of gambling activit,! including bingo! and actuall, promotes gambling
t&roug& its state lotter,! +e must conclude t&at California regulates rat&er t&an
pro&ibits gambling in general and bingo in particularP 2#0 U.S. at 111! 10' S.Ct.
1033. Second! no compact bet+een a state and an <ndian tribe +as involved.
*&e issue +as not! as &ere! +&et&er a compact violated t&e State Constitution but
+&et&er a California statute and count, ordinances dealing +it& bingo and ot&er
forms of gambling +ere criminal or civil for purposes of :ublic 7a+ 10 2$' U.S.
Stat. 5! as amended3.
A revie+ of t&e facts in Caba9on ma-es clear t&at it is distinguis&able from
t&e case before us. *&e Caba9on and %orongo Cands of %ission <ndians occup,
reservations in ?iverside Count,! California. >ac& band conducts bingo games!
open to t&e general public! on t&eir reservations. *&e Caba9on Cand also
operates a card club for pla,ing dra+ po-er and ot&er card games! +&ic& are open
to t&e public.
California! +&ic& permits onl, c&aritable organi9ations to pla, bingo! soug&t
to enforce an antiAbingo statute 2Cal. :enal Code R 31$.5 F=est Supp. 1"'G 3.
?iverside Count, soug&t to enforce an antiAbingo ordinance and ordinances
pro&ibiting dra+ po-er and ot&er card games 2Ordinance 5os. 331! 553. *&e
actions of t&e State and Count, +ere ta-en pursuant to :ublic 7a+ 10.
*&e *ribes sued t&e Count, in (ederal District Court see-ing a declarator,
/udgment t&at t&e defendants &ad no aut&orit, to appl, its la+s inside t&e
reservations and an in/unction against t&eir enforcement. *&e State intervened.
*&e District Court granted t&e *ribesE motion for summar, /udgment! &olding t&at
neit&er t&e State nor t&e Count, &ad an, aut&orit, to enforce its gambling la+s
+it&in t&e reservations. *&e Court of Appeals affirmed! stating t&at state la+s
ma, be applied to tribal <ndians on t&eir reservations if Congress &as e.pressl,
consented.5
:ublic 7a+ 10 gave California and five ot&er states /urisdiction over
specified areas of <ndian lands. California +as given broad aut&orit, to enforce
its criminal la+s on <ndian lands. <t +as given onl, limited aut&orit, to enforce
its civil la+s on <ndian lands so as not to attempt a total assimilation of <ndian
tribes! +&ic& retain attributes of sovereignt,! into American societ,. *&e ;uestion
in t&is case +as +&et&er t&e antigambling la+s +ere primaril, criminal or civil in
nature.
*&e Supreme Court noted t&at t&e Court of Appeals distinguis&ed a stateEs
OcriminalUpro&ibitor,P la+s and state OcivilU regulator,P la+s as follo+s) Oif t&e
intent of a state la+ is generall, to pro&ibit certain conduct! it falls +it&in :ub.7.
10Es grant of criminal /urisdiction! but if t&e state la+ generall, permits t&e
conduct at issue! sub/ect to regulation! it must be classified as civilUregulator, and
:ub.7. 10 does not aut&ori9e its enforcement on an <ndian reservationP
2California v. Caba9on Cand of %ission <ndians! #0 U.S. 101! 10"! 10' S.Ct.
103! "# 7.>d.1d 1## F1"'G! citing Carona Group of Capitan Grande Cand of
%ission <ndians v. Duff,! $"# (.1d 115 F"t& Cir.1"1G! cert. denied #$1 U.S. "1"!
103 S.Ct. 10"1! '' 7.>d.1d 301 F1"3G 3.
<n affirming Caba9on! t&e United States Supreme Court agreed +it& t&is
distinction +&ile noting t&is Ois not a brig&tline ruleP and left room for t&e
argument t&at t&e bingo statute is pro&ibitor, rat&er t&an regulator, 2id. at 110! 10'
S.Ct. 1033. *&us! t&e Supreme Court concluded t&at t&e California statutes and
ordinances regulating gambling +ere regulator, and civil! and not criminal and
pro&ibitor,! for purposes of :ublic 7a+ 10.
(inall,! < agree +it& t&e Appellate Division t&at t&e commerciali9ed
gambling aut&ori9ed b, t&e 1""3 Compact is a clear violation of t&e 5e+ 6or-
Constitution.$ *&at Court stated)
OUnder t&e circumstances! +e conclude t&at t&e commerciali9ed 7as 8egas
st,le gambling aut&ori9ed b, t&e compact is t&e antit&esis of t&e &ig&l, restricted
and Trigidl, regulatedN 25.6. Const.! art. <! R "F1G 3 forms of gambling permitted b,
t&e 5.6. Constitution S S S and 5e+ 6or-Es establis&ed public polic, disfavoring
gambling.P 2Saratoga Count, C&amber of Commerce v. :ata-i! 1"3 A.D.1d 10!
1#! '#0 5.6.S.1d '33 F1001G.3
*&e :eople of t&e State of 5e+ 6or- &ave decided in 5e+ 6or-Es
Constitution to pro&ibit commercial gambling.' <f t&e elected representatives of
t&e :eople +ant to c&ange t&at polic,! t&e, s&ould begin t&e process of amending
t&e Constitution.
<n late 1""3! t&en Governor %ario %. Cuomo signed a tribalAstate compact
+it& t&e St. ?egis %o&a+- *ribe to regulate <ndian gaming at a casino on <ndian
lands! an activit, sanctioned b, a uni;ue interaction bet+een federal sovereignt,
over <ndian affairs and our StateEs Constitution and la+s. Si. ,ears and millions
of dollars later! plaintiffs in effect see- to s&ut do+n t&e casino. Under t&ese
circumstances! t&e claims s&ould &ave been dismissed because t&e *ribe is an
indispensable part,. Disregarding t&e severe pre/udice to t&e *ribe! our
colleagues no+ &old t&at t&e 1""3 Compact is void and unenforceable on
separationAofApo+ers grounds. <n t&e absence of a dismissal! +e believe t&at t&is
appeal presents t+o constitutional issues) +e find t&at Governor Cuomo did not
violate t&e separationAofApo+ers doctrine b, signing t&e 1""3 Compact4 t&e 1""3
Compact does not contravene article <! R " of t&e 5e+ 6or- Constitution. *&us!
+e respectfull, dissent.
<ndispensable :art,
*&e ;uestion of +&et&er an <ndian tribe is an indispensable part, in a state
court suit involving a compact entered into pursuant to t&e (ederal <ndian Gaming
?egulator, Act 2<G?A3 215 USC R 1'01 et se;.3 is a matter of first impression for
t&is Court.1 Ot&er statesE appellate courts &ave considered t&is issue +it& mi.ed
results.1 5o ot&er state or federal court! &o+ever! &as grappled +it&
indispensabilit, in lig&t of t&e e.traordinar, dela, in bringing suit manifest &ere.3
A declarator, /udgment does not re;uire t&e *ribeEs presence in order to
afford complete relief 2see Jlostermann v. Cuomo! $1 5.6.1d 515! 53A53"! #'5
5.6.S.1d 1#'! #$3 5.>.1d 5 F1"#G 34 &o+ever! as a practical matter! an adverse
declarator, /udgment +ill Oine;uitabl, affectP t&e absent *ribe. *&us! under t&e
facts of t&is case! t&e *ribe is a necessar, part, under C:7? 10012a3! as t&e
ma/orit, agrees.
Cecause t&e *ribe is a necessar, part, +&ose sovereign immunit, prevents
/oinder! t&e statutor, factors in C:7? 10012b3 must be +eig&ed to determine
+&et&er t&e litigation s&ould continue +it&out t&e *ribe. *&e second factor 2t&e
pre/udice to t&e *ribe if t&e claims proceed in its absence3 and t&e t&ird factor
2+&et&er and b, +&om t&is pre/udice mig&t &ave been or ma, be avoided in t&e
future3 are related and! in our vie+! dispositive. After all! t&e Appellate Division
ac-no+ledged t&at t&e *ribe +ould &ave a viable claim for dismissal on t&e basis
of lac&es if it +ere a part, 2Saratoga Count, C&amber of Commerce v. :ata-i! 1'5
A.D.1d 1#5! 15! '11 5.6.S.1d $' F1000G FSaratoga < G 3.
O7ac&es is defined as Tsuc& neglect or omission to assert a rig&t as! ta-en in
con/unction +it& t&e lapse of time! more or less great! and ot&er circumstances
causing pre/udice to an adverse part,! operates as a bar in a court of e;uit,.N S S
S *&e essential element of t&is e;uitable defense is dela, pre/udicial to t&e
opposing part,P 2%atter of Sc&ul9 v. State of 5e+ 6or-! 1 5.6.1d 33$! 3#! 5""
5.6.S.1d #$"! $15 5.>.1d "53 F1""3G! ;uoting %atter of Carabas&! 31 5.6.1d '$!
1! 33# 5.6.S.1d "0! 1$ 5.>.1d 1$ F1"'1G 3. *&e 1""3 Compact bet+een t&e
*ribe and t&e State +as approved b, t&e *ribeEs c&iefs on Dune "! 1""3 and b,
Governor Cuomo on October 15! 1""3. *&e Assistant Secretar, of t&e <nterior!
<ndian Affairs! approved t&e 1""3 Compact under <G?A on December #! 1""3.
*&e *ribe opened its 030 million casino on April 10! 1"""! five ,ears later.
*&ese la+suits! &o+ever! +ere not commenced until September 1"""! nearl,
si. ,ears after t&e 1""3 Compact became final. :laintiffs &ave never offered an
e.planation for t&eir neglect to sue immediatel, after t&e Governor signed t&e 1""3
Compact or t&e federal government approved it. <f plaintiffs &ad sued even
reasonabl, promptl,! t&e *ribe could &ave avoided or dela,ed substantial
investments of time and mone, to develop t&e casino. At t&e ver, least! t&e *ribe
+ould &ave been put on notice of plaintiffsE separationAofApo+ers allegations.
%oreover! t&e ma/orit, focuses its discussion of pre/udice solel, on +&et&er
or not OinvestorsP 2+&oever t&e, ma, be3 &ave recouped t&eir 030 million
investment in four ,ears 2+&ic&! of course! is un-no+able since t&e *ribe is not a
part, to t&is litigation3. *&e ma/orit, ignores t&at t&e pre/udice to t&e *ribe
comprises more t&an dollars spent or profits made) our colleagues do not
ac-no+ledge t&e potential economic t&reat posed b, t&is litigation to t&e casinoEs
#00Aodd emplo,ees and to t&e *ribeEs longAterm economic prospects.# *&e *ribe
&as dedicated 10 ,ears to t&e pursuit of gambling as an economic development
plan! and cannot no+ turn bac- t&e cloc- or OputF G genies bac- in t&eir bottlesP
2Sc&ul9! 1 5.6.1d at 3#! 5"" 5.6.S.1d #$"! $15 5.>.1d "533.
5or did t&e *ribe e.ecute t&e Compact or develop t&e casino in disregard of
a -no+n substantial separationAofApo+ers vulnerabilit,. ?at&er! an, suc&
litigation ris- t&at t&e *ribe mig&t arguabl, &ave been a+are of earl, on in 1""3
+as eclipsed b, t&e 7egislatureEs prompt and consistent support of t&e 1""3
Compact.
Specificall,! on Dul, '! 1""3! bot& &ouses of t&e 7egislature passed t&e bill
t&at became c&apter 1$# of t&e 7a+s of 1""3 upon t&e GovernorEs approval of it on
Dul, 13! 1""3. *&is legislation granted t&e State :olice and t&e Division of
Criminal Dustice Services aut&orit, to underta-e t&e responsibilities assigned to
t&em b, t&e 1""3 Compact! +&ic& &ad been approved b, t&e *ribeEs c&iefs in t&e
mont& prior to t&is legislationEs enactment. Section 1 of c&apter 1$# provides in
its entiret, as follo+s)
O<n t&e event it is establis&ed t&at activit, aut&ori9ed under :ublic 7a+ 100A
#"' F<G?AG s&all be conducted in t&is state! not+it&standing an, inconsistent
provision of la+! t&e 5e+ 6or- state division of state police! on be&alf of t&e 5e+
6or- state racing and +agering board! s&all be granted access to t&e criminal
&istor, records of t&e division of criminal /ustice services! pursuant to subdivision
Aa of section 3' of t&e e.ecutive la+! in connection +it& e.ecuting t&e
responsibilities of t&e 5e+ 6or- state racing and +agering board and t&e division
of state police in regard to t&e regulation! oversig&t! licensing! or certification!
including fingerprinting! criminal &istor, record c&ec-s and bac-ground
investigations of persons appl,ing to engage in suc& activities. *&e division of
criminal /ustice services s&all submit a fingerprint card! along +it& t&e sub/ectEs
processing fee! to t&e federal bureau of investigation for t&e purpose of conducting
a criminal &istor, searc& and returning a report t&ereon.P
<n addition! t&e 7egislature for si. consecutive ,ears appropriated monies
annuall, for t&e specific purpose of supporting oversig&t and regulator, activities
assigned in t&e 1""3 Compact to t&e ?acing and =agering Coard and t&e State
:olice. *&ese appropriations +ere made in anticipation of t&e opening of t&e
*ribeEs casino and +ere enacted b, t&e 7egislature even t&oug& t&e opening +as
dela,ed.5
%oreover! t&ese appropriations +ere not opa;ue or tuc-ed a+a, in some
obscure corner of t&e budget) t&e, +ere included +it& appropriations for programs
managed b, t&e ?acing and =agering Coard and t&e State :olice and +ere
separatel, denominated as OSpecial ?evenue (undsAOt&er! %iscellaneous Special
?evenue (undA33"! ?egulation of <ndian Gaming Account.P <ndeed! on Dul, 11!
1""3Afive da,s after bot& &ouses of t&e 7egislature passed t&e bill t&at became
c&apter 1$# of t&e 7a+s of 1""3At&e (irst Deput, Director of t&e Division of t&e
Cudget +rote to bot& t&e Spea-er of t&e Assembl, and t&e Senate %a/orit, 7eader.
@e informed t&em! as re;uired b, la+! of &is intention to transfer monies from
t&e special emergenc, appropriation in t&e alread, enacted fiscal ,ear 2(63 1""3A
1""# budget to t&e Coard and t&e State :olice Oto enable Ft&ese agenciesG to
engage in certain oversig&t and regulator, activities in relation to Class <<< gaming
operations as set fort& in gaming compacts bet+een t&e F%o&a+- and OneidaG
<ndian tribes and t&e State. *&ese transfers are being made to t&e State
%iscellaneous Special ?evenue (und! a Special ?evenue (undsAOt&er and +ill be
reimbursed b, t&e <ndian tribes.P
*&e ma/orit, do+npla,s t&ese appropriations. *&e, mig&t &ave &ad a point
if t&e ?acing and =agering Coard and t&e State :olice &ad funded responsibilities
assigned to t&em b, t&e 1""3 Compact under t&e aut&orit, of a more generic
appropriation for agenc, operations. =e +onder! &o+ever! &o+ t&e >.ecutive
ma, ever be said to &ave acted +it&out proper legislative aut&ori9ation +&en
carr,ing out activities for +&ic& t&e 7egislature &as earmar-ed funds.
*&e ma/orit, also relies &eavil, on a memorandum from Governor CuomoEs
Counsel to establis& t&at t&e *ribe &ad fair +arning of t&e 1""3 CompactEs
potential vulnerabilit,. (irst! t&ere is no reason to suppose 2or! at least! no reason
from t&e record3 t&at t&e *ribe +as contemporaneousl, a+are of t&is
memorandum! +&ic& is dated si. da,s after t&e *ribeEs c&iefs approved t&e 1""3
Compact. Second! t&e GovernorEs Counsel stated t&at +&ile Ot&e Governor &as
t&e legal aut&orit, under <G?A and state la+ to negotiate and sign an <ndian
gaming compact on t&e StateEs be&alf!P implementing legislation +as needed for
t&e ?acing and =agering Coard to regulate <ndian games4 t&e State :olice and t&e
Division of Criminal Dustice Services to conduct bac-ground investigations of
casino emplo,ees and contractors4 and t&e necessar, appropriations.
*&e 7egislature! in fact! enacted t&e -ind of criminal /ustice legislation
referred to b, GovernorEs Counsel 2i.e.! c&apter 1$# of t&e 7a+s of 1""33 and made
t&e re;uisite appropriations. *&e 7egislature &as never deemed it necessar, to
adopt legislation to state specificall, t&at t&e ?acing and =agering Coard ma,
regulate games of c&ance on <ndian lands /ust as it alread, regulates c&aritable
games of c&ance t&roug&out t&e state 2see e.g. 7. 1001! c&. 333. >ven if +e
suppose 2again! +e &ave no reason to -no+ from t&e record3 t&at t&e *ribe +as told
during negotiations t&at specific legislative approval or ratification of an, tribalA
state gaming compact +as re;uired to safeguard against a separationAofApo+ers
attac-! t&e Governor obviousl, c&anged &is vie+.$ <nstead! &e submitted
implementing legislation! +&ic& t&e 7egislature promptl, passed. <n sum! t&e
*ribe reasonabl, relied on t&e StateEs collective actions to conclude t&at t&e 1""3
Compact +as valid.
(inall,! <G?A provides t&at tribes can onl, conduct class <<< gaming
activities pursuant to a valid compact negotiated +it& t&e state in +&ic& t&e tribe is
located 215 USC R 1'10FdGF1GFCG 3. Since t&e ma/orit, &as declared t&e 1""3
Compact void and unenforceable! t&e *ribe must eit&er s&ut do+n t&e casino
immediatel, ' or conduct class <<< gaming in violation of <G?A and +it&out an,
state regulator, oversig&t. *&e 5ational <ndian Gaming Commission &as
enforcement aut&orit, for <G?A! and can ta-e action ranging from monetar,
penalties to forced closure of a casino +&ere a tribe is in Osubstantial violationP of
t&e statute 215 USC R 1'133. *&e Commission did precisel, t&is in United States
v. Santee Siou. *ribe of 5eb.! 15# (.3d '1! '31 Ft& Cir.1001G! +&ere t&e tribe
accrued fines reduced to /udgments totaling 01!11!000 and +as forced to
discontinue its class <<< gaming activities after a protracted legal battle 2see also
:ueblo of Santa Ana v. Jell,! "31 (.Supp. 11#! 11"0A11"1 FD.5.%.1""$G Fnoting
United States Attorne,Es +arning t&at continuation of gaming activities in absence
of valid compact +ould sub/ect tribes and pueblos to federal criminal sanctions and
forfeiture of t&eir gaming devicesG! affd. 10# (.3d 15#$ F10t& Cir.1""'G 3. *&e
*ribe s&ould not be e.posed to t&e ris- of t&ese significant adverse conse;uences
in lig&t of plaintiffsE prolonged dela, in bringing t&ese la+suits.
A finding t&at t&e tribe is an indispensable part, in t&ese cases does not
establis& a per se rule t&at <ndian tribes are indispensable parties +&enever a claim
is broug&t in state court involving <ndian gaming. (or instance! since onl, four
mont&s elapsed bet+een t&e e.ecution of t&e 1""" Amendment and t&e filing of
plaintiffsE complaints! t&e same anal,sis mig&t &ave ,ielded a different result &ad
t&e 1""" Amendment presented a live controvers,.
*&e Appellate Division concluded in Saratoga < t&at t&e constitutional nature
of plaintiffsE claims out+eig&ed an, pre/udice to t&e *ribe! and t&erefore t&e *ribe
+as not indispensable. *&e ma/orit, agrees! alt&oug& in Sc&ul9 +e &eld t&at a
citi9enAta.pa,erEs 11Amont& postenactment dela, in c&allenging t&e
constitutionalit, of state financing measures sufficientl, disrupted e.pectations so
as to foreclose /udicial revie+.
<n lig&t of t&e Oprofound destabili9ing and pre/udicial effects from dela,P
21 5.6.1d at 3#'A3#! 5"" 5.6.S.1d #$"! $15 5.>.1d "533 caused b, t&ese vastl,
more belated la+suits! +e can onl, conclude t&at t&e Appellate Division abused its
discretion as a matter of la+ +&en it allo+ed t&e suit to continue +it&out t&e *ribe.
<G?AUSeparation of :o+ers
Our anal,sis of t&e merits starts +it& t&e ConstitutionEs implied separationA
ofApo+ers doctrine +&ic& Ore;uires t&at t&e 7egislature ma-e t&e critical polic,
decisions! +&ile t&e e.ecutive branc&Es responsibilit, is to implement t&ose
policiesP 2Cour;uin v. Cuomo! 5 5.6.1d '1! '#! $1 5.6.S.1d $1! $51 5.>.1d
1'1 F1""5G 3.
*&e distinction bet+een legislative 2polic,ma-ing3 and e.ecutive 2polic,
implementing3 functions is not blac- and +&ite. ?at&er! OFiGt is onl, +&en t&e
>.ecutive acts inconsistentl, +it& t&e 7egislature! or usurps its prerogatives! t&at
t&e doctrine of separation is violatedP 2Clar- v. Cuomo! $$ 5.6.1d 15! 1"! #"5
5.6.S.1d "3$! #$ 5.>.1d '"# F1"5G4 %atter of Croidric- v. 7indsa,! 3" 5.6.1d
$#1! 35 5.6.S.1d 1$5! 350 5.>.1d 5"5 F1"'$G 3. =&ile t&e ma/orit, labels as
critical polic, c&oices various sub/ects related to t&e operation of gaming activities
and includible in a tribal state compact! +&at plaintiffs c&allenge in t&ese cases is
more fundamental4 namel,! t&e decision to aut&ori9e onAreservation class
<<< <ndian gaming.
An, discussion of +&at Ocritical polic, c&oicesP +ere available to t&e
7egislature on t&is score starts +it& t&e recognition t&at <ndian commerce is an
area Ounder t&e e.clusive control of t&e (ederal GovernmentP 2Seminole *ribe of
(la. v. (lorida! 51' U.S. ##! '1! 11$ S.Ct. 111#! 13# 7.>d.1d 151 F1""$G 3. O*&e
traditional notions of <ndian sovereignt, provide a crucial Tbac-dropN against +&ic&
an, assertion of state aut&orit, must be assessedP 2Gaming Corp. of Am. v. Dorse,
M =&itne,! (.3d 53$! 5#' Ft& Cir.1""$G! citing =&ite %tn. Apac&e *ribe v.
Crac-er! ## U.S. 13$! 1#3! 100 S.Ct. 15'! $5 7.>d.1d $$5 F1"0G 3.
(aced +it& t&e ;uestion of +&et&er a state could enforce its gambling la+s
on an <ndian reservation! t&e United States Supreme Court in California v. Caba9on
Cand of %ission <ndians! #0 U.S. 101! 10' S.Ct. 103! "# 7.>d.1d 1## F1"'G
reiterated t&e longAestablis&ed rule t&at O<ndian tribes retain attributes of
sovereignt, over bot& t&eir members and t&eir territor,! and t&at tribal sovereignt,
is dependent on! and subordinate to! onl, t&e (ederal Government! not t&e StatesP
2id. at 10'! 10' S.Ct. 103 Finternal ;uotation mar-s and citations omittedG 3.
%oreover! Ostate la+s ma, be applied to tribal <ndians on t&eir reservations Fonl,G
if Congress &as e.pressl, so providedP 2id.3.
<n interpreting preA<G?A la+! t&e Supreme Court &eld t&at if a state merel,
OregulatesP gambling 2i.e.! t&roug& its civil la+s3! tribes must be allo+ed to
conduct gambling on t&eir reservations free from t&e stateEs gambling regulations.
<f! &o+ever! a state Opro&ibitsP gambling 2i.e.! t&roug& its criminal la+s3! tribes
are forbidden from gambling and t&e state ma, enforce its la+s.
*&e most controversial aspects of <G?A! +&ic& codified Caba9on +it&
important modifications and Oe.pressl, preemptFedG t&e field in t&e governance of
gaming activities on <ndian landsP 2S. ?ep. 5o. 100A##$! 100t& Cong.! 1d Sess.! at
$! reprinted in 1" U.S.Code Cong. M Admin. 5e+s! at 30'1! 30'$4 see Gaming
Corp.! (.3d at 5##A5#"3! cover class <<< gaming activities. *&ese include pariA
mutuel &orse race +agering! lotteries! ban-ing card games suc& as baccarat!
c&emin de fer and blac-/ac-! electronic or electromec&anical facsimiles of an,
game of c&ance! and slot mac&ines 215 USC R 1'03F'G FCG4 FG4 15 C(?
501.#FcG! FdG 3.
<G?A continues t&e proA<ndian Caba9on &olding b, providing t&at class <<<
gaming could be conducted in a OState t&at permits suc& gaming for an, purpose
b, an, person! organi9ation! or entit,P 215 USC R 1'10FdGF1GFCG Femp&asis
addedG 3. <G?A also! &o+ever! pa,s &eed to statesE appre&ensions over
unregulated <ndian gaming b, directing t&at a tribe can conduct class <<< gaming
onl, pursuant to a O*ribalAState compact entered into b, t&e <ndian tribe and t&e
State S S S t&at is in effectP 215 USC R 1'10FdGF1GFCG 3.
(urt&er! <G?A contains enforcement provisions to re;uire t&at +&ere a state
permits class <<< gaming! it must negotiate in good fait& +it& a tribe for a compact
upon t&e tribeEs re;uest 2see %as&antuc-et :e;uot *ribe v. State of Conn.! "13 (.1d
101# F1d Cir.1""0G! cert. denied #"" U.S. "'5! 111 S.Ct. 1$10! 113 7.>d.1d '1'
F1""1G 3. <f negotiations prove fruitless! t&e tribe can sue t&e state in federal
court. <f t&e state invo-es sovereign immunit,! t&e Secretar, &as aut&orit, to
mediate t&e dispute and impose compact terms."
<n summar,! <G?A mandates t&at! if a state allo+s an, class <<< gaming b,
an, person! a tribe ma, see- to conduct t&e same games on its lands. %oreover!
t&e Second Circuit &as firml, re/ected t&e notion 2unsuccessfull, advanced b, t&e
State of Connecticut3 t&at a state t&at allo+s onl, c&arities to engage in regulated
casinoAt,pe gambling pro&ibits class <<< gaming activities for purposes of <G?A
2id. at 1031A10313. States t&at allo+ c&arities to conduct class <<< gaming must
negotiate in good fait& +it& a tribe +is&ing to do t&e same.
5e+ 6or- &as not outla+ed all gambling for more t&an si. decades. (or
better or +orse! 5e+ 6or-ers &ave adopted a public polic, t&at permits
considerable gambling! alt&oug& regulated. *&is public polic, is embodied in
article <! R " of t&e Constitution! +&ic& contains statements purporting to ban
gambling! butAsignificantl,! for purposes of <G?AAe.plicitl, aut&ori9es four
e.ceptions) 213 pariAmutuel betting on &orse racing4 213 a stateAoperated lotter, for
education4 233 bingo for certain nonprofit organi9ations4 and 2#3 Ogames of
c&anceP for t&ese same organi9ations. Games of c&ance are defined in t&e
Constitution as follo+s)
Ogames in +&ic& pri9es are a+arded on t&e basis of a +inning number or
numbers! color or colors! or s,mbol or s,mbols determined b, c&ance from among
t&ose previousl, selected or pla,ed! +&et&er determined as t&e result of t&e
spinning of a +&eel! a dra+ing or ot&er+ise b, c&ance.P 2Art. <! R "F1G.3
*&e Games of C&ance 7icensing 7a+ 2General %unicipal 7a+ art "AA3
empo+ers t&e ?acing and =agering Coard to OFsGupervise t&e administration of t&e
games of c&ance licensing la+ and to adopt! amend and repeal rules and
regulations governing t&e issuance and amendment of licenses t&ereunder and t&e
conducting of games under suc& licensesP 2General %unicipal 7a+ R 1Aa F1G 3.
Section 1$233 of t&e General %unicipal 7a+ defines Ogames of c&anceP to
include and e.clude specific t,pes of games4 and delegates to t&e Coard t&e
aut&orit, to add suc& Oot&er specific gamesP to t&e list of approved games of
c&ance as fall +it&in t&e confines of +&at is allo+ed in t&e Constitution 2i.e. games
Oin +&ic& pri9es are a+arded on t&e basis of a designated +inning number or
numbers! color or colors! s,mbol or s,mbols determined b, c&anceP3.
*o similar effect! " 56C?? 5$10.1 lists CoardAapproved games! but also
aut&ori9es Oan, ot&er game of c&ance +&ic& &as been approved in +riting b, t&e
board.P 2Subd. FuG.3 (inall,! article 1$ of t&e *a. 7a+ 2t&e 5e+ 6or- State
7otter, for >ducation 7a+3 aut&ori9es t&e Division of t&e 7otter,! among ot&er
t&ings! to determine t&e t,pe of lotter, to be conducted 2*a. 7a+ R 1$0#FaG F1G 3.
:laintiffs do not c&allenge t&e constitutionalit, of an, of t&e 1$ specific
games of c&ance listed in t&e 1""3 Compact.10 :laintiffs do not contend t&at an,
of t&e games listed in t&e 1""3 Compact are not among t&e numerous class <<<
games t&at are alread, being conducted b, nonprofit organi9ations and ot&ers in
t&e state. 5or do t&e, dispute t&e StateEs evidence t&at! as of Danuar, 11! 1001!
t&e ?acing and =agering Coard &ad issued gamesAofAc&ance identification
numbers to $!#0 organi9ations. According to t&e CoardEs records for calendar
,ear 1"""! 1!115 aut&ori9ed organi9ations +ere licensed to conduct bell /ar games
of c&ance.
*&ese organi9ations &ad a total &andle of 01"!5"!15# from +&ic& a net
profit of 051!$#$!03' resulted. =it& respect to ot&er t,pes of games of c&ance!
01!##3!"5' in net profits +ere raised b, casinoAst,le gaming from a &andle of
03!011!"13. According to t&e Division of t&e 7otter,Es Annual ?eport! in (6
1001A1003 t&e Division a+arded 03.1 billion in pri9es. <n s&ort! +&ile regulated
b, t&e ?acing and =agering Coard and t&e Division of t&e 7otter,! gambling is
commonplace in 5e+ 6or- not+it&standing article <! R "Es general condemnation
of it.
=&en Congress enacted <G?A pursuant to its plenar, aut&orit, over <ndian
affairs! it legislated for all 50 states to allo+ sovereign nations 2<ndian tribes3 to
conduct class <<< gaming activities +it&in statesE borders. <n t&is situation! t&e
Ocritical polic, decisionP c&allenged b, plaintiffsAto aut&ori9e onAreservation class
<<< <ndian gamingAderives from t&e uni;ue interpla, bet+een <G?A and our StateEs
Constitution and statutes. *&e GovernorEs recognition t&at class <<< <ndian gaming
is mandated in 5e+ 6or- b, federal la+! given polic, c&oices embodied in t&e
5e+ 6or- Constitution and state la+! did not constitute polic,ma-ing. <n
e.ecuting t&e 1""3 Compact! +&ic& regulates t&e *ribeEs conduct of class <<<
gaming at its onAreservation casino! t&e Governor +as merel, implementing
pree.isting federal and state polic, c&oices.
=&atever t&e case ma, be in ot&er states! in 5e+ 6or-! t&e Governor en/o,s
broad po+ers to enforce legislation and great fle.ibilit, in determining t&e
met&ods of enforcement. (or e.ample! +e &ave in recent ,ears affirmed t&e
GovernorEs aut&orit, to create entire ne+ agencies +it& ne+ duties for consumer
advocac, based principall, on a legislative polic, as general as article 10 of t&e
>.ecutive 7a+! +&ic& empo+ers t&e Consumer :rotection Coard to Opromote and
encourage t&e protection of t&e legitimate interests of consumers +it&in t&e stateP
2Cour;uin! 5 5.6.1d at '5A'$! $1 5.6.S.1d $1! $51 5.>.1d 1'14 see also
Clar-! $$ 5.6.1d at 1"0! #"5 5.6.S.1d "3$! #$ 5.>.1d '"# Fstatute providing t&at
State Coard of >lections Os&all &ave t&e po+er and dut, S S S to encourage t&e
broadest possible voter participation in electionsP sufficientl, articulated
legislative polic, to support GovernorEs creation of multiAagenc, voterAregistration
programG 3. *&e underl,ing legislative polic, decisions &ere are more robust and
detailed t&an +ere t&e legislative polic, decisions implicated in Cour;uin and
Clar-. On t&is record! +e find no separationAofApo+ers violation.
Conclusion
*&e ma/orit, portra,s t&e issues on t&is appeal as Ofundamental and of
immense public significanceP 2ma/orit, op. at 1#! '$$ 5.6.S.1d at $$1! '"
5.>.1d at 105#3! +&ic& demand resolution despite t&e pre/udice to t&e absent
*ribe. *&e ma/orit, t&en stops s&ort! leaving for anot&er da, Ot&e ;uestion of t&e
applicabilit, of t&e State ConstitutionEs antigambling provision.P 2<d. at 15! '$$
5.6.S.1d at $$"! '" 5.>.1d at 10$1.3
*&us! our colleagues prolong constitutional uncertaint, and create
substantial &ards&ips for t&e *ribe! not to mention for t&e casinoEs emplo,ees and
t&e surrounding communities. %oreover! because of t&e nature of plaintiffsE
claims! +e do not see &o+ t&e ma/orit, can sidestep deciding +&et&er article <! R "
pro&ibits class <<< gaming on <ndian lands once t&e merits are reac&ed.
<n t&eir briefs! during t&e course of t+o oral arguments and in several
postargument submittals! plaintiffs continuousl, pressed t&eir position t&at t&e
class <<< gaming conducted at t&e casino under t&e 1""3 Compact is pro&ibited b,
article <! R " of t&e 5e+ 6or- State Constitution. Simpl, put! plaintiffs argue
2and Dudge Smit& in &is dissent agrees3 t&at in lig&t of article <! R "Es ban of
Ocommerciali9ed gambling!P t&e Governor lac-s an, po+er to enter into a compact
aut&ori9ing t&e *ribe to conduct 7as 8egasAst,le gaming on <ndian landsA+it& or
+it&out t&e 7egislatureEs approval or ratification. *&e State ta-es t&e opposite
vie+.
*&e ma/orit, opines t&at! assuming t&e 7egislature ma, constitutionall,
aut&ori9e t&e Governor to enter into a tribalstate compact for onAreservation class
<<< gaming! t&e 7egislature did not do so on t&e facts presented. <n our vie+! t&e
underl,ing constitutional issue is ripe for decision in t&is case once t&e merits &ave
been reac&ed. (urt&er dela, benefits no oneAnot t&ose +&o ma, no+ see-
legislative ratification of e.isting tribalAstate compacts4 not t&ose +&o oppose
<ndian gaming.
(or all t&e reasons given! +e +ould reverse t&e order of t&e Appellate
Division and dismiss bot& complaints.
Order modified! etc.