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SECOND RUSSIAN INS. CO. V. MILLER, 268 U. S. 552 (1925)

U.S. Supreme Court

Second Russian Ins. Co. v. Miller, 268 U.S. 552 (1925)

Second Russian Insurance Company v. Miller

No. 362

Argued April 30, May 1, 1925

Decided June 1, 1925

268 U.S. 552


After promulgation, in the earlier years of the World War, of a Russian ukase forbidding, under penalties, all Russian subjects to enter into any agreement or commercial relations with citizens of enemy countries and proclaiming all contracts with enemy firms at an end, an arrangement was made between a Russian insurance corporation, a German firm of Hamburg, which was its general agent for reinsurance business including that originating in this country, and a New York corporation, which was the German firm's sub-agent here and shared the commissions on the American business, whereby, in form, the New York corporation was substituted as general agent and entitled to the full commissions on the net premiums it collected. Thereafter, and before.the United States entered the war, the American agent collected premiums on old business, but, instead of appropriating the full commissions to which it was thus nominally entitled, retained only the percentage which it would have had under the old arrangement and deposited the rest in a special account in its name. Later, it turned over the fund to the insurance company's trustee under the New York law. The fund was seized by the Alien Property Custodian as belonging to the German firm. Two courts below having found from the evidence that the change of agency was colorable only, made to evade the ukase, and that the deposit was intended by all parties for the German enemies.

Held, adopting that finding,

(1) That the agreement by which the commissions were set apart for the German firm was valid by the law of the United States, as it was also proven to be by the law of Germany. P. 268 U. S. 558.

(2) That the insurance company, having consented that the German firm should have the commissions and they having been actually set apart accordingly, retained no legal interest entitling it to reclaim them from the Alien Property Custodian. P. 268 U. S. 559.

(3) Semble, that comity does not require that extraterritorial effect be given to the Russian ukase so as to make illegal transactions had in the United States between the insurance company and the

Page 268 U. S. 553

New York corporation respecting their dealings with the German firm. P. 268 U. S. 559.

(4) Assuming that the payment was forbidden by the ukase, no principle of comity would entitle the Russian company to recover it back; the rule denying relief when both parties to an illegal executed contract are in pari delicto would apply. P. 268 U. S. 561.

(5) A right to a fund in the hands of a depositary is not divested by the act of the latter in merely turning it over without consideration to a trustee holding other funds and securities for an adverse claimant. P. 268 U. S. 562.

297 F. 404 affirmed.

Appeal from a decree of the circuit court of appeals affirming a decree of the district court which dismissed the appellant's bill, brought under the Trading with the Enemy Act to recover money seized by the Alien Property Custodian, and held by the Treasurer of the United States, as the property of a German firm.

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