Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682 (1976)

Alfred Dunhill of London, Inc. v. Republic of Cuba

No. 73-1288

Argued December 10, 1974
Reargued January 19, 1976
Decided May 24, 1976
425 U.S. 682

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

After the "intervention" (nationalization) by Cuba in 1960 of the business and assets of five leading cigar manufacturers, the former owners (most of whom had fled to the United States) brought actions against petitioner and two other importers for, inter alia, the purchase price of cigars that had been shipped to the importers from the seized Cuban plants. Following conclusion of related litigation, the Cuban "interventors" (those named to possess and occupy the seized businesses, one of whom, and Cuba, are the respondents herein) were allowed to join in those actions, which were consolidated for trial. Both the former owners and the interventors asserted their right to sums due from the three importers for post-intervention shipments. As of the date of intervention, the importers owed various amounts for pre-intervention shipments, which they later paid to the interventors, who the importers mistakenly believed were entitled to collect accounts receivable. The former owners also claimed title to and demanded payment of these accounts. The District Court, acknowledging that, under the "act of state" doctrine reaffirmed in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, it had to give effect to the 1960 confiscation insofar as it purported to take the property of Cubans in Cuba, held that the interventors could collect all due and unpaid amounts for post-intervention shipments, but further held that the former owners were entitled to the pre-intervention accounts receivable, the situs of which was with the importer-debtors; and the former owners, rather than the interventors, were held entitled to collect those accounts from the importers, even though the latter had already mistakenly paid them to the interventors. The importers then claimed that they were entitled to recover the payments from the interventors by way of setoff or counterclaim. The interventors countered with the contention that any repayment obligation was a quasi-contractual debt whose situs was in Cuba, and that their refusal to pay was an act of state not subject to question in American courts. The District Court rejected the interventors’ claim on the grounds that the repayment obligation was deemed situated in the United States, and that nothing had occurred qualifying for recognition as an act of state. The importers accordingly were allowed to set off their mistaken payments for pre-intervention shipments against the amounts they owed for post-intervention purchases. Since petitioner’s claim against the interventors exceeded their claim against it, petitioner was awarded judgment against the interventors for the full amount of its claim, from which the smaller judgment against it would be deducted. The Court of Appeals, while agreeing with the District Court in other respects, held that the interventors’ obligation to repay the importers was situated in Cuba, and that the interventors’ counsel’s repudiation of the obligation constituted an act of state. Nevertheless, relying on First Nat City Bank v. Banco Nacional de Cuba, 406 U.S. 759, the court held that enforcement of the importers’ counterclaims was not barred up to the limits of the respective claims asserted against them by the interventors, but that the affirmative judgment awarded petitioner was barred by the act of state doctrine to the extent that petitioner’s claim exceeded its debt. In this respect, the District Court’s judgment was reversed, giving rise to the petition for certiorari in this case.

Held: There is nothing in the record of this case revealing an act of state with respect to the interventors’ obligation to return the sums mistakenly paid to them. Pp. 690-695.

(a) If the interventors, whose contentions, including the claimed act of state, with respect to the pre-intervention accounts, represented by the 1960 confiscation had been properly rejected by the courts below, were to escape repayment upon the basis of a second and later act of state involving the funds mistakenly paid to them, they had the burden of proving that act. P. 691.

(b) The interventors’ refusal to repay the mistakenly paid funds does not constitute an act of state or indicate that the interventors had governmental, as opposed to merely commercial, authority for the refusal. The "Gul Djemal," 264 U.S. 90. Pp. 691-694.

(c) The interventors’ counsel’s statement during trial that the Cuban Government and the interventors denied liability and had refused to make repayment is no proof of an act of state, and no statute, decree, order, or resolution of the Cuban Government was offered in evidence indicating Cuban repudiation of its obligations in general or of the obligations herein involved. Pp. 694-695.

485 F.2d 1355, reversed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and POWELL, REHNQUIST, and STEVENS (except for Part III), JJ., joined. POWELL, J., filed a concurring opinion, post, p. 715. STEVENS, J., filed a concurring statement, post, p. 715. MARSHALL, J., filed a dissenting opinion in which BRENNAN, STEWART, and BLACKMUN, JJ., joined, post, p. 715.