International Law-Sovereign Immunity-State Court Authority to Determine Title to Property Under Its Jurisdiction Despite A Department of State Suggestion of Immunity

In 1952 plaintiff brought a creditor’s action for the appointment of a permanent receiver for the assets of the defendant located in New York. Defendant, Zivnostenska Banka, was a Czechoslovak corporation that had at one time been engaged in banking activities in New York. Plaintiff succeeded in having a receiver appointed upon proving that defendant had been nationalized, contrary to New York policy and law, by a 1950 decree of the Czechoslovak Government which had merged the defendant and its assets with the State Bank of Czechoslovakia. The instant controversy arose when the receiver attempted to set aside, as a fraud upon creditors, a transfer of funds made by the defendant to the State Bank in accordance with the 1950 nationalization decree. The State Department filed a suggestion of immunity with the lower court in which it “recognized and allowed”3 that the Czechoslovak Government held title to the disputed property, apparently on the basis that the property was in the name of Czechoslovakia’s recognized agent, the State Bank. The lower court did not accept the State Department suggestion and gave judgment for the plaintiff. Upon appeal to the appellate division, held, affirmed, one judge dissenting. The determination of title to property in the custody of a state court is a judicial function which is not precluded by a State Department suggestion of immunity “recognizing and allowing” that title is in a foreign sovereign. Stephens v. Zivnostenska Banka, Nat’l Corp., 15 App. Div. 2d · 111, 222 N.Y.S.2d 128 (1961).