Brief for the Respondent — Kolovrat v. Oregon

reas. ar Umice-aupremne WIL Ud

ECOPY —°-- . FILED

ee ae 15 196)

JAMES R. BROWNING. Clerk

Fn the Supe Court .

of the Gnited States =

OCTOBER TERM, 1960

No. 102

ANDJA KOLOVRAT, DRAGO STOJIC, DRAGICA SUNJIC,

° NEDA TURK, JOSIP BULGAN, JURE VIVANOVIC,

MARA TOLIC and MILAN STOJIC, and also BRANKO

KARADZOLE, Consul General of Yugoslavia at San Fran- q

ciscogCalifornia, Petitioners .

Vv.

STATE OF OREGON, acting by and through. the State Land

Board, Respondent. . .

“LUTVO ZEKIC, IBRO ZEKIC, HABIBA TURKOVIC,

DZEDJA POPOVAC, SEFKO MURADBASIC, DIKA .

MURADBASIC, MURTA BRKIC, MILKA ZEKIC, JAS-

MINA ZEKIC and RAJKA ZEKIC, and BRANKO KAR-

ADZOLE, Consul General of Yugoslayia at San Prancioce,

beeecrteenene Petitioners

Vv.

STATE OF OREGON, acting by and through the State neue

Board, Respondent.

ON. WRIT OF CERTIORARI 1 TO THE .

SUPREME COURT OF THE STATE OF OREGON

BRIEF FOR THE RESPONDENT

ROBERT Y. THORNTON

; Attorney General for Oregon

| ARTHUR GARFIELD HIGGS

ATTORNEY GENERAL Assistant aauemer Genseet

CATHERINE ZORN

SUPREME COURT BUILDING . Assistant Attorney General

SALEM, OREGON. Counsel for Respondent

— a

a “

SUBJECT INDEX

° 2 Page

~ QUESTIONS PRESENTED eae: . ‘1

STATEMENT | Pie Sane Ee 2.

_ SUMMARY OF ARGUMENT. Oe

ARGUMENT

I—The construction given by this Court in Clark v.

. Allen, 331 U.S. 503, 91 L, Ed. 1633, to the provision

of Article IV of the German Treaty of Friendship,

Commerce and Consular, Rights of 1923 (44 Stat.

2132) relating to personalty governs the construc-

tion of Article II of the Serbian Treaty.of Com- ,

merce of 1881. (22 Stat. 963). By reason of lan-

guage of like meaning in each of the treaties,

Article II of the’ Serbian treaty, similarly as the

German treaty, does not cover succession to prop-

erty of an American citizen in,the United States

by a Yugoslav national im Yugoslavia ................. 15-25

II—The application of:a treaty and its construction

are the peculiar province of the judiciary and not

matters of executive or legislative determina-

te AE ENR ne MERE L SRA OORR NE

I1I—The International Monetary Fuhd Agreement

which permits parties to the,agreement to main-

tain foreign exchange control laws does not. by

reason of the fact that the United States is a

party to the Agreement constitute an overriding

federal policy forbidding the State of Oregon

from giving efféct to its statute making the right

of nonresident aliens to inherit dependent upon

the right of American heirs and legatees to re-

ceive payment of their inheritances or legacies

from the country in which the aliens reside ........ 28-33

CONCLUSION ......ccecsee SoS NW es eatalanea ae

APPENDIX A oo... NU a eregee gate oar eee, a

APPENDIX B oo ccccceceeeee sae Psa Mr Sr 36

|

"a CITATIONS

. Ps

CASES: ci

Arbulich’s Estate. . re; 41 Cal. (2d) 86, 257 P.-(2d) 433:

346 U.S. 897, 98 L. Ed. 398, 74 S. Ct. 219; 347 U.S.°908,

98 L. Ed. 1066, 74 S. Ct. 426 . 1],

Charlton, Ex parte, 185 F. 880 (aff'd in 229 U.S. 447)

Clark v. Allen, 331 U.S. 503, 91 L: Ed. 1633

4,5, 6, 7, 8-11, 12, 18, 14. 15, 16-17, 19, 20, 23, 25, 26, 31, 32,

Duus v. Brown, 245 U.S. 176, 62 L. Ed. 228 (Swedish

Treaty, 8 Stat. 60. 232, 346) .

Foster v. Neilson, 2 Pet. (U.S.) 253

Frederickson v. Louisiana, 23 How. (U.S.) 445, 16 L.

‘Ed. 577 (Convention between the United States and

Wurttemberg, 8 Stat. 588) .

* Hamilton v. -Errie R. R. _ 219 N.Y. 343, 114 NE.

A ER es ee eae

Jones v. Meehan, 175 U.S. 1, 44 L. Ed. 49 be

Knutzen’'s Estate, In re, 4 Cal. - 573, 191 P. (2d)

PATE se Rs

Krachler’s Estate, In re, 199 Or. 448, 263 P. (2d) 769

Lukich v. Department of Labor and Industries, 176 Wash.

221, 29 P. (2d) 388 . . AAEM.

Mager v. Griima, 8 How. (US) 490, 12 L. Ed. 1168

Petersen v. Iowa, 245 U.S. 170, 62 L. Ed. 225 (Treaty be-

tween United States and Denmark, 8 Stat. 340, 11

Stat. 719) ........ es :

‘Rocca v. Thompson, 223 U.S. 317

‘Skarderud v. Tax Commission, 245 U.S. 633, 62 L. Ed.:

522 (Norwegian Treaty, 8 Stat. 60, 346)

State Land Board v. Rogers, 219 Or. 233, 347 P. (2d) 57

Stoich’s Estate, In re, rar — Or. —, 349 P. (2d)

255 Fait

Valentine Vv. United States, 299 U.S. 5, 81.L. Ed. 3

_Y ii:

33, 34

16, 20

.. 12,33

. 18.24

STATUTES:

Paxe

Oregon Revised -Statutes 111.0707 2, 3. 4, 12, 14, 33

Pibhke Law 472, 80th Congress, 60 Stat. 157, Title 22 |

U.S.C: $1513 (b) (2) . . 31, 32

‘TREATIES: — - . cae a

Rretton Woods International Monetary Fund Agreement, ;

60 Stat. 1401 — : : . 2. 3. 4, 12. 14, 28,29

Economie Cooperation Acreement of 1952—United

States Yugoslavia—-T.I.A.S. 2384 «.. 4,2

Pecuniary Claims Agreement of 1948 United States

Yugoslavia—-62 Stat. 2658; T.LA.S. 1503 ‘ 32

Treaty of Commerce of 1881—United ‘States Serbia—

22 Stat. 943 ce “3

‘1,-3, 4, 5, 6, 11,12, 13,15, 16. 18, 19. 20. 21, 22. 25, 26, 27

Treaty of Commerce of 1881-—United States Roumania

(see Dispatch No. 29. Roumanian Diplomatic Series,

January 4. 1881) 22

Treaty of Commerce and Navigation of’ 1880—Great

Britain Roymania, XV Heftslet. Treaties and Con-

ventions (1885) 314 ; |

Treatv of .Friendship and Commerce of 1880-—Great

Britain Serbia, XV Hertsiet, Treaties and Conven-

tions (1885) 342 . 3. : 220

_ Treaty of Friendshin, Comm ree and Consular Rights—

United States Germany—1923. 44 Stat. 2152

. 4.5, 13.15, 16.17. 19, 20, 25

MISCELLANEOUS: :

Bouvier’s Law Dictionary-(Rawle’s Third Revision) 19

“7 Corpus Juris Sécundum, Treaties, § 13a 15

V Hackworth, Digest of Internationa! Law. 399 26

| ternational Monetary Fund, Report of First 10 Years,

. August 24,1956, p. 5 oe

'y*ernational Monetary Fund, Report of, 1947, p.-33 oe |

‘y‘ernational Monetary Fund, Report of, 1952, p. 61 2

* "ternational Monetary Fund, Report of, 1954, p. 78 28, 29 -

_!‘ernational Monetary Fund, Report of, 1960, p. 122 32

ili

In the Supreme Court

of the United States

OCTOBER TERM, 1960 -

No. 102:

ANDJA KOLOVRAT, DRAGO STOJIC, DRAGICA SUNJIC,

NEDA TURK, JOSIP BULGAN, JURE VIVANOVIC,

MAR.. TOLIC and MILAN STOJIC, and also BRANKO .

KARADZOLE, Consul General of Yugoslavia at San Fran-

cisco, California, Petitioners

V

STATE OF OREGON, acting by and through the State Land

' Board, Respondent. ,

LUTVO ZEKIC, IBRO ZEKIC, HABIBA TURKOVIC,

DZEDJA POPOVAC, SEFKO MURADBASIC, DIKA

MURADBASIC, MURTA BRKIC, MILKA ZEKIC, JAS-

MINA ZEKIC and RAJKA ZEKIC, and BRANKO KAR-

ADZOLE, Consul General of Yugoslavia at San Francisco,

California, Petitioners

v.

STATE OF OREGON, acting by and through the State Land |

Board, Respondent.

‘ON WRIT OF CERTIORARI TO THE’

SUPREME COURT OF THE STATE OF OREGON

BRIEF FOR* THE RESPONDENT

QUESTIONS PRESENTED |

1. Whether or not Article II of the Treaty of Com-

merce between the United States of America and Serbia

ot 1881, 22 Stat. 963 (R. 55, App. B, infra) covers succes-

2.

sion by Yugoslavian nationals to property of American

citizens dying and leaving property in ihe United States.

2. Whether or ‘not the International Monetary Fund °

Agreement, 60 Stat. 1401, T-I.A.S. 1501 (R. 57), consti-

tutes an overriding Federal policy forbidding Oregon

from giving effect. to its statute making the right of non-

resident aliens to succeed to _ property from Oregon °

estates deperdent upon the right of American heirs to

take and receive payment of their foreign. inheritances

-_ and legacies: | ate

STATEMENT

‘Joe Stoich ‘and .Muharem Zekich died intestate in -

_ Oregon in December 1953 leaving estates of personal

property. They were residents of Grégon and their United

States citizenship is not questioned. Their sole surviv-

ing relatives were residents and ‘nationals of Yugo-

slavia, who,.together With Karadzole, the Consul Gen-

eral of Yugoslavia at San F nareclacn, California, their

attorney in fact, gre the petitionérs. There being no other

relatives of the decedents legally qualified to inherit,

the State of Oregon filed petitions in the Circuit Court

of the State of Oregon for Multnomah County for the

escheat of the estates. under :the provisions of ORS’

111.070. This statute conditions the right of nonresident

aliens to inherit from Oregon decedent’s ‘estates wnon

the'right of Ameri ican heirs to take and receive payment

in the United States” of their inheritances .or legacies

3

originating from the estates of decedents in the foreign

country.: (App. A)

. The petitioners ‘answered the Staie’s petition for

escheat by asserting that the rights required by ORS

111.070 existed between the United States and Yugo-

slavia and denying that the estates had escheated.. No

‘mention was made in either of the answers, aS. to :the

Treaty of Commerce ard Navigation of 1881 with Ser-

bia or of the International Monetary Fund ‘Agreement

(R 3,7).

The trial court held in fav or of the petitioners and \

against the State of Oregon and entered its Order in-

« cluding findings prepared by petitioners on direction of

the court. Again, ng reference was contained fn the Order

or findings concerning the Treaty or the Monetary Fund

Agreement (R 76, 79).

Because the basic facts and questions were substan-

tially the same, the cases were consolidated, both in the

trial court and on appeal. In determining this appeal,

the Oregon Supreme Court addressed itself-only to the

question of the second right required by the Oregon

statute as to whether there was a‘ Certain and enforce-

ale right vested in American citizens to receive pay-

Section 111.070 (1), Oregon Revised "Statutes, R. So, App. A., infra, p. 34,

pertinent here, reads:

“(1) The right of gm alien not residing within the United States or its

territories to take either real or persqnal property or the proceeds thereo!

n this state by succession or testamentary disposition, upon the same teims

ind conditions as inhabitants and citizens. of the United States, is dependent

in each case: ‘

“(a) Upon the existence of a reciprocal right upon the part of citizens

of the United States to take real and personal property and the | proceeds

thereof upon the same terms and conditions as inhabitants and citizens of the

country of which such alfen ts an inhabitant or citizen;

“(b) Upon the rights of citizens of the United States to receive by pay-

ent to them within the United States or its territories money originating

from the estates of persons dying within such foreign country; * * *”" .

iy 4

ment in. this country of the proceeds of their Yugo

slavian inheritances (R. 86). a

The Oregon Supreme Court reversed the trial court

and held that petitioners had failed to meet the require-

ments of ORS 111.070 in that (1) the Yugoslavian for-

eign exchange, laws and regulations (R. 87, 92) failed to

give American heirs and legatees an unqualified legally

enforceable right to receive payment of their Yugoslavian

inheritances and legacies (R. 93-94); (2) that language in

_ Article II of the Treaty ef Commerce of 1881 with Serbia

had the sam¢ import and meaning as language in Article

IV of the German Treaty of 1923 (44 Stat. 2132) and did

not cover nationals residing in their home countries with *

respect to testaté or intestate succession of their property

by nationals in the other country, the construction of

the treaty being governed“ by Clark v. Allen, .331 U. S.

503, 91 L. Ed. 1633, 67'S; Ct. 1431 (R. 100); and (3) that

‘the Bretton Woods Agreement (International Monetary

Fund Agreement) in its terms recognized that countries —

may impose monetary restrictions such as the Yugo-

slavian foreign exchange laws but that the agreement

did not stipport’ petitioners’ thesis (R. £03).

It is not clear. from petitioners’ brief. in the Oregon

Supreme Court case, pp. 72-74, what legal significance

‘they then attached to the International Monetary Fund

- Agreement or what specifically Was their thesis (R. 102-

103). Petitioners’ thesis concerning the overriding effect

of the International Monetary Fund Agreement is ap-

parently a development in these proceedings for cer-

tiorari.

4

)

Z

a

Realizing that the construction ofa treaty is a mat-

ter for the courts rather than a political question, and

having before it the construction of Article IV of the

German Treaty of 1923 in Clark v. Allen, supra (331

U.S. 503, 515-516), as well as the construction of similar

treaty language in the earlier cases cited in the Clark

case, the Oregon Supreme Court properly held that

Afticle II of the Serbian Treaty did not apply in the

case of citizens of the United States residing in the

United States with regard to the testate or’ intestate

succession to their property by the nationals of the other

country. ~ | ‘

The construction of treaties being a matter of judi-

cial determination by this Court and the construction of

a similar applicable treaty provision having been made

_ by the United States Supreme Court, such construction

was binding, not.only upon the Oregon court, but also

upon the executive and legislative branches of the states

and the United States. Being bound by this Court’s con-

struction of treaty language of identical meaning in the

Clark case, the Oregon court was necessarily-required to

reject or disregard a construction-at variance or in con-

flict with the construction of the United States Supreme

Court. k | :

Petitioners attempt to weaken the adherence of. the

—— Supreme Court to this Court's construction of

the German treaty in Clark v. Allen, supra (33), U.S.

903), bys chatZing that the Oregon court “misconceived”

und “misread” the treaty provision and the decision in

-@

<

the Clark case, that it arrived ata “mistaken” belief as to

the decision in the case, and that the language quoted

and summarized by the Oregon court from the Clark

“case “completely preverted” the treaty provisions and

“plainly misstated” the holding of the Clark case (Pet.

Br.7-8).. 3

The provisions of Article IV of the German Treaty

of 1923 (44 Stat. 2132) as to personalty, considered in

- Clark v. Allen, supra (331 U.S. 503), and Article II of

the Serbian Treaty of Commerce of 1881 (22 Stat, 963)

were quoted i in, full in, the opinion of the Oregon Supreme, °

Court. In re Stoich’s Estafe, Or..——, 349 P. (2a

255, 263, 265 (R. 95, 98)...

The unanimous opinion of this Court in Clark v.

Allen, supra (331 U.S. 503), was W ritten by Mr. Justice

Douglas. We quote from the Clark “opinion relating to.

the treaty as follows (331 U. S. 503, 514-516):

. “Third. The problem of the personalty raises dis-

tinct questions, Article IV of the treaty contains the

following provision pertaining to it:

* ‘Nationals of either High Contracting Party mav

have full power to dispose of their personal property

of eVery kind within the territories. of the other, by

testament, donation,.or otherwise, and their heirs,

legatees and donees, of whatsoever nationality,

whether resident ér non-resident, shall succeed to

such personal property, and may take possession

thereof, either by themselves or by cthers acting for

them, and retain or dispose of the same af their

pleasure subject to the payment of such charges only

as the nationais of the High Contracting Party within

whose territories such property may be or belong

shall Be liable to pav in like cases.’

4

“A practically identical provision of the Treaty

588, 590, was before the Court in Frederickson v. Leu-

isiana, 23 How (US) 445, 16 L ed 577. In that case’ the

testator was a citizen of the United States, his legatees,

being citizens and residents of. Wurttemberg. Louis-

iana, where the testator was domiciled, levied .a suc-

cession tax of 10 per cent on legatees not demiciled

.in‘the United States. The Court held that the treaty

did not cover the ‘case of’a citizen or subject of the

respective countries residing at home; and disposing

of property there in favor. of a citizen or subject of

the other...’ pp 447, 448. That decision: was made

in 1860. In 1917 the Court followed it in cases in-

volving three other treaties. Petersen v. Iowa, 245

US 170, 62 L ed 225, 38 S Ct 109: Duus v. Brown, 245

US 176, 62 L ed 228, 38 S Ct 111; Skarderud v. Tax’

Commission, 245 US 633, 62 L ed 522, 38S Ct 133.

“The construction adopted by those cases is, to

say the least, permissible when the syntax of the

sentences dealing with realty and personalty is cOn-

sidered. So far as realfy is concerned, the testator

includes ‘any person’; and the-property covered is

that within the territory of either of the high. con-

tracting parties. In case of personalty, the provision '

governs the right .of ‘nationals’ of either contracting

_ party to dispose of their property within the terri-

- tory of the ‘other’ contracting party; and it is ‘such

personal property’ that the ‘heirs, legatees and donees’.

are entitled to take. a

3 4 Pio See 8 be

“We accordingly hold that Article IV of the treaty

does not cover personalty located in this country and

which.an American citizen undertakes to leave: to

German nationals. * * *”

For the purposes of comparison and ‘to dispel any

doubt as yi the correctness of’ the Oregon court’ S quota-

ea) are

of [April 10) 1844 with Wurttemberg, Art. III, 8 Stat-

e

8

tions and summary of the language’in the Clark case,

we likewise quote. from the opinion of the Oregon court ,

concerning the treaty provisions (R. 96- 99):

- “Clark v. Allen, supra, decided June 9, 1947, be-

comes a holding of prime interest in this matter in

that it was precipitated by a proceeding initiated

_ under § 259, California Probate Code as it was in 1942.

It will be remembered that section bears upon the

rights of aliens not residing in the United States to

take real or personal property in the state of Cali-

fornia. And for the further reason tnat it construes

a treaty poeee similar to Article II of the Treaty

of 1881.

“In the Clark case, Alvina Wagner, a resident of

California, died in 1942. She left real.and personal

property situate in that state. By.a will, dated De-

cember 23, 1941, she bequeathed her entire estate

to four relatives who were nationals and residents

of Germany. Six heirs at law, who.were residents

of California, filed a petition for determination of

heirship in the probate proceeding, claiming that the

. German nationals were ineligible as legatees under

$259, supra, of the California Probate Code. It ap-

pears that at the time of the decision in Clark, there

had never been a hearing on that petition. This, for

; the reason that in 1943 the Alien Property Custodian

vested in himself all right, title and interest of the |

German nationals in Mrs. Wagner’s estate. The Prop-

erty Custodian thereupon in-lfol. 148} stituted an

action in the U.S. District Court against the execu-

tor under the will and the California heirs at law for

a determination that the California heirs had no

interest in the estate and that he was entitled to the

entire net estate upon the conclusion of the adminis-

tration. The District Court granted judgment for the

‘Custodian on the pleadings (52 F Sup 850). The Cir- .

cuit Court of Appeals revérsed, holding that the Dis-

trict Court was without jurisdiction of the subject

oy

snatter (147 F2d 136). The case went thence to the

Supreme Court on certiorari where it was held that

‘the District Court had jurisdiction of the suit and

remanded the cause to the Circuit Court of Appeals .—

(9th CC) for consideration on ‘the merits (326 US

490). The Circuit Court of Appeals thereafter held for |

the California heirs (156 F2d 653). The case was re-

turned again to the Supreme Court on a petition for

a ‘rit of certiorari which was granted on the ground

that the issues raised were of:national importance.

“The defendants concede that the Clark case over

the years has, since its pronouncement in 1947, come

to be regarded as ‘the cornerstone of the entire re-

ciprocal inheritance rights structure as it was’ the

first maior decision by a court of last resort on the

Californiz reciprocity statute.’

“In Clark v. Allen, supra, the court was called

upon to construe Article IV of the Treaty of Friend-

ship, Commerce and Consular Rights made with

Germany December 8, 1923 (44 Stat 2132). It had

different provisions relating to the testamentary dis-

position of realty and personalty. Article IV of the

Treaty, which is the provision of our interest, con-

tained the foHowing provisions as to the cisposition

of personalty:

“ “Nationals of either High Contracting. Party

’ may Ifgl. 149! have full power to dispose of their

personal property of every kind within the terri-

tories of the other, by testament, donation, or

otherwise, and their heirs, legatees and donees,

of whatsoever nationality, whether resident or

non-resident, shall succeed to such personal prop-

erty, and may take possession thereof, either by

themselves or by others acting fer them, and re-

tain or dispose of the same at’their pleasure sub-

ject to the payment of such duties or charges

only as the nationals of the High Contracting

Party within w hose terr:tories such property may

10

be or belong shall be liable to pay in like cases,’

(Emphasis ours.) (91 L ed at 1644)

“We are of the opinion that the following words

and phrases found in the German Treaty of 1923

‘Nationals of either High Contracting Party * * *

within the territories of the other’ are of the same

import and meaning as the words and phrases found’

in Article II of the Treaty of 1881; that is, ‘citizens

of the United States in Serbia and Serbian subjects

- in the United States,’ a phrasing which the defend-

-ants ascribe to Victorian English.

“In the Clark case, it’was held that the language

of Article IV of the German Treaty applied only te

nationals of either of the party nations who were

within the territory of the other. Mr. Justice.Douglas _

speaking for the court, says at-p 1664 L ed:

ve © * in coe Of personalty,. the provision

governs the right of ‘‘nationals” of either contract-

ing party to dispose of their property within the

territory of the “other” contracting party; and it

is “such personal ‘property’ that the “heirs,

legatees and donees” are entitled to take.

“ ‘Petitioner, however, presents a detailed ac-

count of the history of the clause which was not

before the Court in Frederickson v. Louisiana,

23 How (US) 445, 16 L ed 577, supra, and which

_-bears out the construction [fol. 150! that it grants

the foreign heir the right to succeed to ‘his in-

heritance or the proceeds thereof. But we do not

stop to review that history.. For the consistent

judicial constriction of the language since 1860

has given it a character which the treaty-making

agencies have not seen fit to alter. And that con-

struction is entirely consistent with the plain

language af the treaty. We therefore do not deem

it appropriate to change that construction at this

late date, even though as an original matter the

other view might have much to commend it..

il

“*We accordingly hold that Article IV. of the

treaty does not cover personafty located in this

,country and- which an American. citizen ynder-

takes to leave to German nationals. * * *’”

The Oregon court then referred to the case of In re

Arbulich’s Estate, 41 Cal. (2d) 86, 257 P. (2d) 433, in

which. the Cafifprnia court applied the United States

construction 4f Article II of the Serbian Treaty (R. 99-

regon Supreme Court then went on ‘to say

“If "we correctly. appraise the position of defend:

ants, they would, notwithstanding the doctrine of

Clark v. Allen, supra, have us interpret the words ‘in

_ Serbia’ and ‘in the United States,’ as they appear in

Arti¢le Il of the Treaty of 1881, as referr: ng to the

place where property rights are granted rather than

to the geographical location of the person claiming

them. If thus construed. the provision would accord

to the nationals of either party wherever résident

rights similar to those’ enjoyed by nationals‘of the

decline'to do, being impressed that the construction

with equal force to the Serbian Treaty of 1881, and

as also held in Arbulich’ $ Estate.”

tion concerning receipt, of payment by American heirs

our understanding, however, that findings . and deter-

are not re-examined »y the United States Supreme Court.

We have therefore not undertaken a review and analysis

- Supreme Courfs interpretation in the Clark case to the

most favored:nation wherever resident. But this we,

=

_ given to the German Treaty in the Clark case applies *

Error in been suggested as to the deceaal determina-

of their ‘Yugoslavian inheritances (Pet. Br. 11-14); It is.

minations of fact by the state courts are conclusive and.

12°

of the evidence, a review of which will be found in the

Oregon Supreme Court briefs. The testimony and ex-

hibits are in the case file transmitted to the Clerk of this

‘Court..The factual situation in relation to statutes such

as Oregon Revised Statutes 111.070, relative to the rights

of inheritance and receipt of payment of foreign inher-

itances, is covered by In re Estate of Krachler, 199 Or.

448, 263 P. (2d) 769; State Land Board v. Rogers, 219

Or. 233, 347 P. (2d) 57: In re Arbulich’s Estate, supra

(257 P. (2d) 433), and cases in other ee cited in

these opinions.

As has already been indicated, petitioners’ thesis as_

to the International Monetary Fund Agreement was not

clear in ‘its brief 6n appeal in the Oregon Supreme Court

(Resp. Br., Or. Sup. Ct., pp. 72-74). We are unable to

find either in that brief or in the Oregon Supreme Court's

opinion, rejecting their thesis, the theory of the over-

riding-effect of the Monetary Fund Agreement urged by

petitioners in these proceedings for certiorari. This thesis

apparently presents the question here in the first ir

stance. - Pas er :

‘

>

SUMMARY .OF ARGUMENT

os :

As a general rule treaties, as other written’ docu- °

ments and statutes, should be given effect as written

in accordance with their terms. Because of the like

import and meaning of the language used in Article II

of the Serbian treaty as was used in Article IV of the

13

°

in Clark v. Allen, 331 U.S. 503. 91 L. Ed.. 1633, is im-

-portant,

The langui ige “nationals of either- High Contracting

Party * * * within the territories of-the other” used

in Article IV of the Germen treaty is identical in mean-

ing with the language “citizens of the United States

in Serbia and Serbian subjects in the United States”

used in Article II]-of-the Serbian treaty. The decision

in Clark v. Allen, supra. holding that the German treaty

did not apply to-the succession by Germai nationals to

property in the United States of decedents who were

American citizens governs the construction of the like

language in the Serbian treaty. A historical background

{ negotiations of the treaty does not serve to alter

a long continued judicial construction consistent with

the plain language of the treaty, which the treaty-making

agencies have not seen fit to change.

fe ; dI ;

The application of a treaty in a given case and the

construction of-.treaties are, as other questions of law,

‘ie peculiar province of the judiciary. The determina-

German treaty, the construction. of the German treaty .

‘ion of this Court as to the construction of a treaty is.

‘inding on the state courts as well as on fhe legislative

ind executive branches of government.

Executive interpre tations of.a treaty should follow

‘he interpretation of this Court where an applicable

‘reaty construction exists. An executive interpreta-

‘ion of a treaty at variance with an existing applicable

‘reaty construction of this Court must vield to this

Court’s interpretation. gi a

2

t

; 14 ‘ ie

iil .

The International Moneiary Fund Agreement which

permits the parties,to the agreement to maintain foreign

exchange control laws does not b¥ reason of the fact

that the United States is a pgrty constitute an over-

riding federal policy forbidding Oregon from giving

effect to its statute making the right of nonresident -

aliens to inherit dependent upon the right of American

heirs and Jegatees to, retcive payment of their inherit-

ances or legacies from the cétintry. in which the. aliens

reside. |

_ Under. the Monetary Fund Agreement the parties

have recognized that they could impose unlimited mone-

tary controls to regulate capital’ movements. Transfers

of inherited funds appear to be capital transfers. The

mere recognition by one party of the right of. the other

to impose exchange restrictions does not preclude

disparage the rights of the former. The United States ha

imposed no exchange restrictions and accordingly has

not sct up any overriding federal policy one way or th

other with regard to capital’ transfers.

The Oregon statute, ORS 111.970. is a law of suc-

cession with respect to decedents’ estates. The right !

determine succession to a decedents’- property is a mat-

ter of local law. Similarly, aS was held in Clark v.. Allen,

supra (331 U.S. 503, 517), the Oregon statute is not a

forbidden extension of state power into the field «

foreign affairs which is exclusively reserved to the Fed:

eral Government.

15

ARGUMENT

I

The construction given by this Court in Clark v.

Allen, 331 U.S. 503, 91 L. Ed. 1633. to the provision

of Article IV of the German Treaty of Friendship,

Commerce and Consular Rights of 1923 (44 Stat. .

2132), relating to personalty, governs the construction

of Article II of the Serbian Treaty of Commerce of

1881 (22 Stat. 963). By reason of language of like

meaning in each of the treaties, Article II of the

Serbian treaty, similarly as the German treaty, does

not cover succession to property of an American cit-

izen in the United States by a Yugoslav national in

‘Yugoslavia. | oy

. ° ; . -

‘As a genéral rule treaties, as other written ‘docu-

events, should be'given effect as written in accordance

with their terms. Valex..ne-v. United States, 290 US.

0, 11,.81 L. Ed. 3,9. The rule is summarized in 87 C.J.S.,

Treaties, ¢ 13 a, where it is said: |

“If the terms of a treaty are clear and unambig-

uous the courts must recognize an@-enforce it as

written, notwithstanding the language of the treaty

is inconsistent with the correspondence .which pre-,

ceded it; but if the treaty is open to construction the

courts should endeayor to ascervain and give cfiect

to'the intention of the parties at the time the treaty

was made. While various rules have been‘laid down

expressly with respect to the construction of treaties,

the courts in seeking to give effect to the intention

of the parties usually adopt general rules similar to

those which are applicable in the construction of

statutes, contra ts of individuats..and documents or

written instrumcnts generally.” -

In Clark v. Allen, 331 U.S. 503, 91 L. Ed. 1633, this

Court had occasion to construe the provision of Article

~ 16

IV of the Treaty of Friendship, Commerce and Consular _

Rights of 1923 between the United States and Ger- :

many (44 Stat. 2132) relating t© personalty with re-

spect to the succession to the personal property of an

American citizen dying in the United States by German

nationals. Because of the identity in meaning of the

language in the German treaty and the Treaty of Com-

merce between the United States and Serbia of 1881

(22 Stat. 963), which is recognized as continuing in ef-

fect with Yugoslavia, the construction of the German

treaty in Clark v. Allen governs.

An construing the treaty provision of he —

. treaty in Clark v. Allen, supra, this Court referred to. the

/earlier casescinvolving siniilar treaty language as Fred-

erickson v. Louisiana, 23 How. (U.S.) 445, 16 L. Ed. 577

( Convention between the United -States and Wurttem-

berg, 8 Stat? 588); Petersen v. lowa, 245 U.S. 170 62 L.

Ed. 225 (Treaty between the Wnited States and- Den-

mark, 8 Stat. 340, 11 Stat. 719); Duus v. Brown, 245

U.S. 176, 62 L. Ed. 228 (Swedish Treaty, 8 Stat. 60, 232,

346); and Skarderud v. Tax Commission, 245 U.S. 633,

,62 L. Ed. 522 (Norwegian; Treaiy, 8 Stat. 60, 346).

In Clark v. Allen the petitioner presented an account

of the history of the clause not before the Court in Fred-

erickson v. Louisiana, supra. However, this Court in its

opinion written by Mr. Justice Douglas said (331 U.S

at 515):

“*k * © Tn case of personalty, the provision gov- °

erns the right of ‘nationals’ of either contracting

party to, dispose of their property within the terri--

wh

17

tory of the ‘other’ contracting party: and it is ‘such

‘personal property’ that the ‘heirs, legatees and donees’

are entitled to take.

“Petitioner, however, presents a det: iled ac cbunt

_ of the history of the clause w hich was not before the

Court in Frederickson v. Louisiana, 23 How (US)

445, 16 L ed 577, supra, and which hears out the con-

struction that it grants the foreign heir the right to

succeed to his inheritance or the proceeds thereof.

“But we do not stop to review that history. For

the consistent judicial construction of the language

since 1860-has given it a character which the treaty-

making agencies have not seen fit to alter. And that

construction is entirely consistent with -the plain

language of the treaty. We therefore do not deem it

appropriate to change that construction at this late.

date, even though as an original matter the other

view might have much to commend it.”

For the purpose of comparison the pertinent pro-

visions of both the German and Serbian treaties are

quoted. Article IV of the German treaty relating to perry

sonalty reads: [

“Nationals of either High Contracting Party may

have full power to dispose of their personal property

of every kind within the territories of the other, by

. testament, donation, or otherwise, and their heirs, leg-

atees and donees, of whatsoever nationality, whether

resident Or non-resident, shall succeed to such per-

sonal property, and may take possession thereof,’

either by themselves’ or by others acting for them,

and retain or dispose of the same at their pleasure:

subject to the payment of such duties or charges only

as the nationals of the High Contracting Party wijth-.

in whose territories such property may be or belong

shall be liablé to pay in like cases.” (Emphasis sup-

plied.) | ;

’

-

ae 18

Article II of the Serbian |! Yugoslav] treaty (22 Stat.

963) reads; -°. ww _

“In. all that concerns the right of acquiring,

possessing or disposing of every kind of property,

real or personal,. citizens of the United States in Ser-

- bia and Serbian subjects in the United States, shall

enjoy the rights which the respective laws grant or

#Y shall grant in each of these states to the subjects of

the most favored natidn:

“Within these limits, and under the same condi-

tions as the subjects of the most favored nation, they

shall be at liberty to acquire and dispose of such

property, w hether by ‘purchase, salé, donation, ex-

change, marriage contract, testament, inheritance, or

in any other: manner whateverwithout being sub-

ject to any taxes, imposes.or charges whatever, other

or higher than those which are or shall: be levied on

natives or on the subjects of the most favored state.

. “They shall likewise be at liberty to export freely

the proceeds of the sale of their property, and their

goods in general, without being subjected to pay any

other or higger duties than those payable under sim-

ilar circumstantes by, natives or-by the subjects of

the most favored state.” (Emphasis Supplied)

The language “Nationals of either High Contracting

Party * * * within the territories of the other” used in

the German treaty is but a paraphrase of the terms

“citizens of the United States in Serbia and Serbian sub-

jects in the United States” fotind in the Serbian treaty

of 1881, continuing in effect as to Yugoslavia.

x In both In re. Arbulich’s Estate, 41 Cal. @d) 86, 257

- P, (2d) 433, and Lukich v. Department of Labor and In-

-dustries, 176 Wash. 221, 29 P. 22d) 388, the language

“Sitizens of the United States in Serbia and Serbian sub-

“19

jects-in the United States” was interpreted as meaning

the nationals of the contracting nations within the ter-

ritorial limits of the other. © ~~ ;

The word “national” (used in Article IV. of the Ger-

man treaty) has been defined as “A word ceommonly

used in diplomatic language and ir? treaties to indicate

a citizen or subject of a given country.” 3 Bouvier’s Law

Dictionary (Rawle’s Third Revision). ‘In this sens@ the

language “citizens of the United States in Serbia and

_ Serbian subjects in the United States” used! in’ the

American-Serbian treaty and “Nationals of either High

Contracting, Parfv °

other” in the German treaty considered in Clark v. Allen,

supra (331 us. 503), are indistinguishable in meaning. |

* withth the territories of the

“The above emphasized language of the Yugoslavian

treaty spécifically designates and limits the class of per-

sons to whom the treaty applies: It covers both dispo-

sition and acquisition of property by a citizen of the

United States who may be in Yugoslavia or a citizen

of Yugoslavia who may be in the,United States, but it

does not apply to nationals of either country within their

own territory. The second paragraph of Article II is

warefully introduced by the qualifying werds “Within

‘these limits.” The word “they” in the second and third

paragraphs of Article II can have no other antecedent

~‘than'the words ‘ ‘citizens of the United ‘States in Serbia

} and Serbian subjects in the United States.” Only “with-

in these limits” may they (citizens of the United States,

in Serbia [Yugoslavia! and Serbian [Yugoslavian] sub-

—,

20

jects in the United States) enjoy ‘the privileges of the”

most favored nation. e. '

Petitioners concede that ‘the Clark case decided that

the German Treaty of 1923 “did not apply to the suc-.

cession by Gerrhan nationals to personal property in the

‘United States of decedents who were American na-

tionals” (Pet. Br. 9). The Clark ‘decision took into con- .

sideration the w hereabouts of both the decedent and her

heirs. In analy zing. Frederickson v. Louisiana, 23 How.

- Gus) 445, 16: L. Ed. a77,. the opinion in the Clark case nS

points out that the testator was a citizen of the United

- States, domiciled in Louisiana, and that the legatees

were citizens and residents of Wurttemberg, not do-

miciled in the United States. Clark v. Allen, supra .(331

_US at 515). In its holding as to the application of the

German treaty to the facts in the Ciark case, the opinion

determine that the treaty provision “doesnot cover

personalty located in this country,and which an Ameri-

can citizen undertakes to leave to German nationals.”

Clark v. Allen, supra (331 U.S. 503, 516). - |

oa pam that the language in ‘Article II of the

Serbian treaty had the same import and meaning: as

-, that in Article IV of the German treaty, ‘the. Oregon. |

ae llowed the pattern of interpretation in the Clark

case and held; in effect, that Article II_of the Serbian

‘treaty did.not cover succession by Yugoslavian nationals.

to property in Oregon of decédents who were American

citizens. ii |

The language of a treaty must be read in context

sand in relation’ to the treaty as a wiiole. If the nego-

a ‘

Pe _

. . os oe

-* tiators intended to restrict the rights granted by the

provisions to the nationals of one country in the terri- |

tory of the other, it is difficult to think of more apt

language better suited aaa: precisely that pur-

pose.

The languagé ‘ ‘citizens “of the United States in

Serbia and Serbian subjects in the United States” is not

unique to Article II but is also found in other provisions

of the Serbian treaty.

Ld

Article I reads:

“There shall be reciprocally full and entire lib-

erty of commerce and navigation between the ci‘-

izens and subjects of the two high contracting pow-

ers, vho shall ‘be at liberty to establish themselves

freely in each other’s territory.

“Citizens of the United States in Serbia and Ser-

bian subjects in the United States shall reciprocally,

on conforming to*the laws of the country, be at lib-

erty freely to enter, travel or reside in any part of

the respective: territories, to carry on their business,

_and shall enjoy in this respect for their persons and’

property the same protection as that enjoyed by na-

tives or by the subjects of the most favored nation.

. “>. * * * ‘ ;

“In like manner in all that relates to local taxes,

customs, formalities; brokerage, patterns or samples

introduced by commercial travellers, and ali other

‘matters connected with trade, citizen$ of the United

States in Serbia and Serbian subjects in the United .

States shall enjoy the treatment of the most favored

nation, and all the rights, privileges, exemptions and

immunities of any kind enjoyed with respect to com-

‘merce and industry by the citizens or subjects cf the

high contracting parties, or which are.of may bp-here-

after conceded to the ‘subjects of any third power,

shall be: extended to the citizens or subjects of the

other. _ apee supplied.) - ‘

22

Again, Article IV reads:

; “Citizens of the U nited States 3 in Serbia and Ser-

bian ‘subjects in the United States shall be recip-

rocally exempted from all personal service. whether

_in the army by !and or by sea: Whether in the na-

tional guard of :ilitia; from .billeting; from all con-

tributions, whether pecuniary or in kind, destined

as a compensation for “personal service; from. all

forced loans, and from all military exactigns or

requisitions. The liabilities, however, arising out of

the possession of real property, and for military loans

and requisitions to which all the natives might -be.

called upon to contr ibute ag proprietors of real prop:

erty or as farmers, shall be excepted.

“They shall be equally exempted from all obliga-

tory official, judicial, -administrative or municipal

functions whatever.

oh o# ots

Other articles of the treaty are not so qualified. and

presumably under them broad privileges may, no doubt.

be enjoyed. .

Language similar to the terms ‘ ‘citizens of the United

States in Serbia and Serbian subjects in the United

, otates” appears in the treaty between Roumania and

the United States of 1581, approved Ly Congress buat ap-

parently. never conciuded with Roumania, and also in

the treaties between Serbia and Great Britain, and Rou-

mania and Great britain, also negotiated about that time

An interesting historical background is presented in

the brief of the Unifed States as. amicus curiae as wo .

documents and correspondence of Edward Schuyler and

John A. Kasson who negotiated che Rourmanian and Ser-

~bian treaties with the United States. (The brief of the

United States advises this documentary material’ has’

20 % ee

been deposited with th. Clerk of the United Staies Su- .

preme Court.) The clarity of language used by Schuyler

and Kasson in this correspondenve again buttresses the

conclusion that the language in, qusetion in the Ser-

-bian treaty is not Stilted English, but purposefully chosen’

to convey a particular meaning. . an

From this documentary material it appears that the

treaties which Roumania and Serbia had negotiated -or

concluded with other countries, and particularly the

Roumanian and Serbian treatics with Great Britain,

served as models for the treaties of Roumania and Ser-

bia with the United States. See Sehuyter’s dispatches

to the Secretary of State, dated Nov ember 29, 1880, and

January 4. 1881, and copics of. treaties between’ Rou-

mania and Great Britain concluded April 5, 1880, and

Serbia and Great Britain concluded J anuary 30, 1830.

in these treaties language similar to that here under

consideration in the Serbian treaty with the United.

v

States also appears ind eviden¢es a particular intent.

_ Asalready mentioned, historical material of this kind’

was furnished in Clark v. Allen, supra (331 U.S. 503.

515,516). Declining a review of that aistofy, the opinion

pointed out that a consistent judicial construction had

civen the language a fixed chayacter which treaty-

naking agencies had not seen fit to change, and, since

‘hat construction was consistent with tie plain language-

it the treaty, the Court would not change it.

Treaties are the subject of careiul consideration be-—

‘ore they are entered into and are drawn by -persons

“ompetent to choose apt words to express tueir .mean-

* &

24

ing: Rocca v. Thompson, 223 U.S. 317, 332. As shown

by the cases cited supra in this brief, a distinction in

treaties between citizens and noncitizens within a coun:

try is normal and not uncommon. A “most favored na-

- tion” clause is limited to such matters as are within the

: subject matter of the particular treaty in which it is

contained. Lukici v. Department of Labor and Indus-

tries, 176 Wash. 221, 29 P, (2d) 388, 390.

In the Lukich vase the Washington court coramented

upon the construction of the Yugoslavian treaty in re-

_ lation to the most favored nation clause. as follows (29

P. (2d) 388 at p.-389): o

“The question here presented turns upon the con-

struction to be given to the convention between the

two countries. It is important to note that article 1

of the convention contains the ‘most favored nation’

clause, which provision is well known in interna-

tional law, and occurs in many treaties which con-

cern the rights of nationals of the respective high

- contracting. parties while residing in the territory of

the other. Generally speaking, the effect of this clause

is to grant to the nationals of the contracting parties,

while witkin the territorial limits of the other, all

rights, privileges, and immunities, which in the past

have been granted by the treaty or which may in

‘the future ‘be so granted to the nationals of other

- nations along the same lines covered in the treaty.

in question. * * *’ (Emphasis suppli¢gd)

The second paragraph of Article II of the Serbian

treaty carefully limits the clausé by the restrictive words

* “Within these limits.” This phrase confines and qualifies

the terms of'the “most favored nation” clause.

is ;

25

As was said in Valentine v. United States, 299 U. S. ‘5, |

11, 81 L. Ed.-3, 9:

“Examining the treaty in that aspect discretion

of the Executive on extradition], it is our duty’.o

interpret it according to its terms. These must be ~

: fairly construed, Lut we cannot add to or: detract from

them.”

Since fhe language defining the class 40 whom

Article II ot the Yugoslavian treaty and Article IV of -

the German ‘treaty apply.is identical in meaning, the

‘interpretation of the German treaty in Clark v. Allen,

supra, governs the interpretation of Article II of the.

Yugoslavian treaty.

_ I. )

The application of a treaty and its construction are

the peculiar province of-the judiciary and not mat-,

‘ters of executive or legislative determination.

The question whether a treaty of the. United States

is to be construed by the executive branch of government

or otherwise has long'since been answer. 1 by this Court.

In Jones v. Meehan, 175 U.S. 1, 32, 44 L. Ed. 49, 62; this

Court said: ? , .

-“* * * The construction of treaties is the peculiar

province of the jrdiciary; and, except in cases purely

political, Congress has no constitutional power to set-

tle the rights under a treaty, or to affect titles already

granted by the treaty itself. Wilson, v. Wall, 6 Wall.

~ 83, 89, 18 L. ed. 727, 729; Reichart v. Felps, 6 Wall.

160, 18 L. ed. 849; Smith v. Stevens, 10 Wall. 321,

327, 19 L. ed. 933, 935; Ho’den v: Joy, 17 Wallt.-211,

247, 21 ‘L. ed. 528, 535.” (Emphasis supplied)

?

. 26

The application of a treaty to a given case aid its

-corstruction are. as any other law, questions for ‘the

courts: Hamilton v. Erie R.R. Co., 219'N.Y. 343, 114 N.E.

. 399, 402.

This principle in relation to the inter, retation of a

treaty by the State Department and a representative of |

a foreign country is expounded by Setretary of State

Knox upon the request of the Mexican Government for

an exchange of notes interpreting a provision of the

extradition treaty (V Hackworth, Digest of International

Law, 399). as follows:

“The department regrets to say that it deems it

inadvisable to exchange notes in the sense proposed

in your note, since even if the department did ex-

change notes setting forth an understanding as sug-

gested by you, such notes would net, so far as the

‘internal affairs of this Government are concerned.

have the status either of a treacy or of a law, but

would be merely an executive interpretation of the

treaty and of the Federal statutes. This would not.

be binding upon the courts of this country, which

might at anv time disregard: the agreement. incor-

poraicd in the notes, in w hich case it would not be

possible for the department to control their decision.

ok *9

_ The note of the. State Department of April 24. 1958.

int rpreting Article IT of the Yugoslavian ireaty, (Pet.

Br. 29-31 and App D, p. 7a) is at variance with the in-

terpretation of this Court of. similar languuge in the

German treaty considered in Clark. v. Allen, supra

(331 ‘U.S. .503). However, the note itgelf concludes by ’

recognizing that it “is not to be considered as. having

e

2

27 . :

the character of an international agreement or.as ef-

ny

“fecting any modification of the treaty.” — .

Whv ther the construction placed upon ‘the treaty by

the executive branch of government Or i foreign country

is binding is aptly discussed in Ex parte Charlton, 165

‘F. 880, 886 (aff'd. in 299: U.S. 447), in which it was said:

“* = %* Lndoeubted!v, in view that treaties are

made a part of the supreme law of the land by the

Constitution which authorizes them, the courts are

. bound to construe such treaties as they are bound to

construe any‘other law of the land when properly

presented, for interpretation, and, while the courts

will give due consideration. to the construction placed

upon a treaty by she executive or diplomatic bran hés

of the governmer.., yet upon the courts is pl cea the

duty of acting independently. end to arcept full re-

sponsibility in determining the construction that is.

to be given to the treaties. And further, inasmuch

as the treaty is by the Constitution made a law of the

lard, the vonstruction placed upon some of its pro-

visions -by the depattments of the foreign country

vith whom the treaty is made, executive. legisla-

tive, or judicial. is not controlling. The fact that our

courts’ interpretation of the true meaning of such

provisions may not be acquiesced in by the foreign

government is of no consequence when the question

is one of enforcing such treaty provisions in. this

country, and over a person,.wno-is within its juris: —~

diction.”

Like any other jaw’ or contract, a treaty must be

onstrued according to its terms. Language- contained

na treaty cannot be rejected as surplusage nor can -it

o» said to have been inserted carelessly or inadvisedly.

“Foster v. Neilson, 2 Pet. (U.S.) 253, 308-309. The lan-

quage of Article II ot the Yugoslavian treaty Becémes

ts

28

“stilted” only when the construction urged by petitioners

is attempted to be applied.

The Intérnational Monetary Fung Agreement which:

permits parties to the agreement fo maintain foreign

exchange control laws does not by reason of the fact

' that the United States is a party to the Agreement

constitute an overriding ‘federal policy forbidding the

State of Oregon from giving effect to its statute mak-

ing the right of nonresident ahens to inherit deperd-

ent upon. the right of American heirs aftd legatees to

receive payment of their inheritances or legacies’

from the. country in which the aliens reside.

It is recognized that the International Monetary Fund

Agreement permits the member nations to maintain for-

eign exchange control laws restricting international ex-

change transactions within the framework of the agree-

ment. It is not the ‘purpose of the Fund, however, to

encourage such monetary restrictions, but rather its

_policy has been one of toleration, the object of the Fund

‘being to secure withdrawal of exchange restriciions as \’

soon as possible. This policy ‘s expressed in the Annual

Report of the Monetaty Fund, 1994, page 78, where it is -.

said:

“The Fund has made a careful cuasdinahion of the

restrictive svstem of each member country which still

avails itself of the protection of Article XIV.. Where

the Fund has raised no objection to the maintenance.

of existing restrictions, its view that restrictive prac-

_tices should be of a temporary character. and its in-

- tention to pursue the matter further in later consulta-. _

tions have been noted. In such eases the Fund Has

»

. 29 ——

urged serious consideration of measures that would

‘facilitate the elimination of the restrictive practices.

a Se Ree <7:

"While § 1(a) of Article VI of the Agreement (R. 58-—

59) relatins to capital transfers provides that a member

_ may not make “net use” of the Fund's resources to meet

a large or sustained outflow ‘of capital and that the mem-:

ber may, in such event, be requested by the Fund to im-

pose controls, ° 1(b) of this Article states that wiles

in the Section should be deemed:

‘“(i) to prevent the use of the resources of the Fund

for capital transactions of reasonable an.ount

required:for the expansion of exports or in the

ordinary course_of trade iene or other busi-

ness, or

‘““ii) to effect capital movements which are met out

of a member's own resources ct gold and foreign

exchange, but members -undertake that such

capital movements will be in accordance ‘with

‘the purposes of the Fund.”

Section 3 of Article VI, as ss wad provides (R. 59):

‘Members may exercise such controis as are neces-

sary to regulate international capital movements, but ©

no rnember may exercise these controls in a manner

which will restrict paynients, for current transactions

* * *” (Emphasis supplied.)

Petitioners’ brief, pp. 44-45, refers to Article VNI

of the Agreement (R. 60) and sets forth the interpreta-"

tion of the. Executive Directors as to § 2 (b) relating to

exchange contracts. It appears, oven: Article VIII,

$ 2, relates to current payments rather than capital trans-

. ” a - «

cD -

_slavia’ as signatories to the Agreement recognized “that

‘stating: ”.

* other members in this area. In this respect the United

30 ON ey

nie ° , ax » al

fers, and, accordingly, the interpretation doeS not ap-

pear to be applicable. - — er ’

Petitioners’ brief, pp. 41,42, recognizes that inherit-

ancés are “capital” and that the transfér of inherited

funds are “capital transfers” over which the members

of the Fund are / permitted to exercise. controls. The

United States in its brief. as amicus curiae, p. 32, upon

reviewing the prov isions of the Monetary Fund Agree-

ment, points out that both the United States and Yugo-

either or. both could impose unlimited monetary contro!s \

to regulate capital movements.” The Annual Report of

the International Monetary Fund, 1947, p. 33, confirms

the right of members to control capital movements,

“Control, of capital movements, is permitted to

Fund members at all times.” \

~

- Accordingly, if transfers of inherited funds. are “‘cap-

ital transfers” or “capital mavements, ” then both the

United States and Yugoslavia are free to control capital

transfers or not as they choose.

Recognition by the parties to the Agreement of the

right of a member to exercise exchange controls, how:

ever, does not operate to affect or. curtail the fights of |

States by becoming a, party to the Agreement sets up no.

overriding federal policy oné way or the other with res

gard to capital transfers, and the situation remains the

same as to.state statutes concerning the rights of inherit-

31

ance from its citizens as it was-when Clark v. Allen,

supra (331 U.S. 503), was decided. oe

; Petitioners’ brief, p. 49, cites the provision in Ar-

ticle II, 1(c), of thee Economic Cooperation. Agreement

of 1952 betweertthe United States and Yugoslavia, 7

A.S. 2384,-and that {n Title 22 U.S.C. § 1513 (b) (2) pro-

viding for the taking,of steps and endeavors by the re-.

cipient country to sfabilize its currency, etc., with tne

- s iggestion that such requirements includg, the regulation -

of foreign exchange transactions. |

However, the International Monetary Fund Reports

have consistently_stressed as objectives the elimination

of exchange restrictions and the restoration of free con-

vertibility of currencies. In its Report entitled “The

First 1@ Years of the International Monetary Fund,”

db. . -s :

August 24, 1956, p. 5; it is said: . |

“No -doubt, countries can gain temporary advan-

tages at certain times By the use of restrtsifve and |

discriminatory measures, which enable them to

achieve a forced balance in their. international pay-

ments. These advantages are quickly wiped out if

other countries also impose restrictive and discrimi-

natory measures. If many countries resort to ssuch

policies, they will, of course, ultimately balance their.

_international-payments, but ata level of trade so low

that their own well-being and that of their trading |

partners will be impaired. On the other hand, policies

directed toward the achievement of international ba'-

‘ ance through expansion of world trade will contribute -

to the growth in real income throughout the world.”

— : ole

-—

-

- 3 ° ‘8 i;

ee Fe 4 oo” , 7

° “,* :

) ° a

y,

§

th

a

.

In the” Annual-Report of the International Monetary

Fund for 1952, p. 61, there was stated: :

‘. “As the period: during which restrictions are ap-

. , plied is prolonged, the disadvantages resulting from -

their widespread application tend to increase, while -

their advantages tend to diminish.”

~

., In the Annual Report of the Fund for 1960, p. 122,

the Report expressed gratification that the year 1959

“was particularly satisfactory, in the lessening of ex-

change restrictions * * *,.” | = | |

* Accordingly, it would seem, as indicated by the

policy of the.Fund, that while under the Exonomic Co-

“operation Agreement and Title 22 U“S.C. § 1513 (b) (2)

- exchenge restricticlis are permitted they are not neces-

sarily required. . -

Mention has also been made ‘in. the briefs of the Pe-

’ cuniary Claims’ Agreement of 1948 between the United

States and Yugoslavia (62 Stat: 2658; T.I.A.S. 1803; R.

' 52-53); -however, the agreement does not preclude opera-

tion of ‘foreign exchange laws but rather, in Article 11,

indicates restrictions as to capital transfers are appli-

~ cable.

Artjcle 11 provides:

_ The Government, of Yéigoslavia agrees to give

sympathetic consideration to applications for trans-

fers to, the United States of deposits in banks of

Yugoslayie and other similar forms of capital owned

; by nationals of the United States, where the. amounts

involvad are small but whieh, in view of: the circum-

stances, are of substantial Amportance to the persons

‘requesting the transfers.” _ , x

u

33.

‘

The Oregon statute, ors 411. 070, supra, before this

Court is not an exchange control regulation nor an entry

by the state into the field of foreign affairs. The Oregon

statute is a law of succession of this state as was § 259

of. the California Probate Code. considered in Clark v

Allen, supra (331. U.S. 503, 517). See In re Estate of

Rrachler, supra (199 Or. 448, 454, 263 P. (2d) 769,°772);

In re Knutzen’s Estate, 41 Cal. (2d) 573, 191 P. (2d).747,

754. The right: to determine the succession to a deced-

ant’s ‘property is‘a matter. of local law. Clark v. ‘Alien,

supra;..Mager v. Grima, 8 How. (U.S.) 490, 12 L.. Ed

1168. Yn the absence of an overriding federal policy, the

state statute vane

-* In Clark v. Allen, supra (331 US. 503, 517), the Cali-

fornia statute similar to the Oregon statute’ was chal-

lenged as an extension of state power into the field of .

- foreign affairs which was exclusively reserved to the

Federal Government. This Court rejected the conten-

tion, pointing out that-California had not entered the do-

main of negotiating with a foreign country or making

a compact. with it. The same is equally true with regard |

‘to the. Oregon statute:

Q2

34

CONCLUSION

In conclusion, it is. respectfully submitted that the 4

decision of the Oregon Supreme Court was correct and

- Should therefore: be affirmed. ae

‘Respectfully. submitted, »

ROBERT Y. THORNTON

’ .Attorney General for Oregon '

ARTHUR:GARFIELD HIGGS

Assistant Attorney General |

-CATHERINE ZORN

Assistant Attorney General

Counsel for Respondents

~ a = |

_ APPENDIX ae

genoa REVISED STATUTES 11 070

“(1) The right of an alien not residing within ‘the

United States or its territories to take either real or .

personal property or the proceeds thereof in this state by

succession or testamentary: disposition, upon’ the same

terms and conditions as -inhabitants and citizens of the

United States, is dependent in each case:

~“(a) Upon the existence of a reciprocal right upon

the part of citizens of the United States to take real and

personal property and. the- proceeds thereof upon the

same terms and conditions as inhabitants’ and citizens

of the country ef which such alien is an-inhabitant or —

citizen; t :

*. *“(b)- Upon the rights of citizens ‘of the United

States 4o receive by payment to ther within the United

‘States or its territories’ money originating from the

* estates of persons dying within such foreign country;

eand. .. '

A ee ‘Upon proof that such foreign heirs. distributees,

devisees or legatees may receive the benefit, use or con- .

trol of money or property from estates of persons dyi ing

in this state without confiscation, in whole or in part,

by the governments of such foreign countries.

* “(2) The burden is upon such. nonresident alien to.

establish the fact of*existence of the reciprocal rights

set forth im subsection (1) of this section.

(3) If such reciprocal rights are not found to ottst

and if no heir, devisee or legatee other than such alien

is found eligible to take such property, the property

shall be disposed of as escheated property.”

36

APPENDIX B

Treaty of Commerce Between the United States of

America and Serbia, concluded October} 1881

Article Il

“In all that concerns the right of acquiring, possessing,

or disposing of every kind of property, real or personal,

citizens of the United States ,in Serbia and Serbian

subjects in the United, States, shall enjoy the rights which

the respective laws grant or shall grant in eack of these .

states to the subjects of the most favored nation. — -

“Within these limits, and under the same conditions

as the subjects of ‘the most. favored. nation, they shall be

at liberty to acquire and dispose of such property,

whether by purchase, sale, donation, exchange, marriage

contract, testament, inheritancé, or in any other manner

whatever, without being subject to any taxes, imposts

“or charges whatever, other or.higher than those which

are or shall be levied on natives or on the subjects of .

the most favored state.

“They shall likewise be at liberty to export freely

the proceeds of the sale of their property, and their goods

in general, without being subjected to pay any other or

higher duties than those pavable under similar circum-

stances by natives or by the subjects of the most favored

state.” |

° *

°