EDELSTEIN, District Judge.
In an action on certain policies of insurance and supplementary contracts issued by the defendant on the life of a decedent who died in the United States, the plaintiff beneficiaries move for summary judgment. The defendant has filed a motion labeled as a cross-motion for summary judgment. The defendant has admitted the issuance of the policies and supplementary contracts; it has admitted the death of the insured and that it was notified and received proof of his death from beneficiaries residing in the United States; and it has further admitted non-payment to the plaintiffs in this action. Thus, the policies of insurance themselves are not in dispute nor is the liability of the defendant to the named plaintiffs.
But the defendant does resist payment to these beneficiaries, who are residents and citizens of the Polish People's Republic. It denies the authority of the plaintiffs' attorneys to institute this action on their behalf, on the ground that no faith or credence can be given to such an authorization as free and voluntary when it originates in a Communist police state. And in any event, it is alleged, there is not a reasonable assurance or likelihood that the plaintiffs would actually receive or have the benefit or use or control of the insurance proceeds
Both of these issues are raised by the defendant in what purports to be a cross-motion for summary judgment. But a summary judgment, under Rule 56, Fed.Rules Civ.Proc. 28 U.S.C.A., deals with the merits and results in a judgment in bar. See 6 Moore's Federal Practice (2nd ed.) par. 56.03, page 2025. The defendant does not seek a judgment in bar, but a judgment in abatement, without prejudice, on the ground that the court has no jurisdiction to proceed because the plaintiffs have, in fact, commenced no action against the defendant. Accordingly, the motion will be treated as a motion to dismiss under Rule 12, and inasmuch as a threshhold issue of jurisdiction is presented, it must be considered first.
It has long been well settled that an appearance by a practicing attorney creates a presumption that he has authority to act and the law casts the burden of proving the contrary upon the one asserting it. Osborn v. President, etc., Bank of United States, 9 Wheat. 738, 829, 830, 6 L.Ed. 204; Hill v. Mendenhall, 21 Wall. 453, 454, 22 L.Ed. 616; Paradise v. Vogtlandische Maschinen-Fabrik, 3 Cir., 99 F.2d 53, 55; Booth v. Fletcher, 69 App.D.C. 351, 101 F.2d 676, 683; In re Gasser, 8 Cir., 104 F.2d 537, 538; In re Pearl Coal Co., 3 Cir., 115 F.2d 158, 159; Bowles v. American Brewery, 4 Cir., 146 F.2d 842, 847. In its attempt to meet that burden of proof, the defendant sets forth that counsel acting for plaintiffs have no direct authority from them. That point is conceded, inasmuch as counsel are proceeding under the authority of the Polish Consul in Chicago and his successor, to whom plaintiffs have purported to give powers of attorney.
The defendant's conclusion proceeds from an evaluation of conditions prevailing under a government in a Communist country, an evaluation of which this court requires no persuasion. But valid as it may be, the evaluation falls short of providing evidence on the specific
The Polish People's Republic is one of the specified countries
With the jurisdictional issue decided in favor of the plaintiffs, they are entitled to summary judgment, for there is no defense on the merits. The only question remaining is whether that judgment should be conditioned by the application of sections 474 and 978 of the New York Civil Practice Act. There is no provision in the Federal Rules of Civil Procedure covering the situation, but by Rule 83, the District Court may from time to time make and amend rules governing its practice not inconsistent with the federal rules. By Civil Rule 13 of this court, provision is made for the discretionary application of the procedure prevailing in the Supreme Court of the State of New York, in a situation not covered by the provisions of any statute of the United States or of the Federal Rules of Civil Procedure, where there are no parallels or analogies furnished by such statutes and rules, and in default of a procedure previously prevailing in courts of equity of the United States. See United States v. Certain Land, etc., D.C., 71 F.Supp. 363, 364. This situation would seem to be one where the New York procedure might appropriately be applied.
But the plaintiffs argue that to apply it, by ordering the proceeds of the judgment to be deposited in court for the benefit of the plaintiffs, to be paid out on the special order of the court when they subsequently are able to show that they will have the benefit or use or control of the money, would be in violation of the Constitution of the United States. Specifically, it is contended that such statutes so applied would impair the obligation of contracts, in violation of Section 10 of Article 1;
It is, of course, an axiom of constitutional law that a substantial impairment of a means of enforcement is an impairment of the contract obligation. Sturges v. Crowninshield, 4 Wheat. 122, 4 L.Ed. 529; McCracken v. Hayward, 2 How. 608, 11 L.Ed. 397; White v. Hart, 13 Wall. 646, 20 L.Ed. 685; Edwards v. Kearzey, 96 U.S. 595, 24 L.Ed. 793; Bronson v. Kinzie, 1 How. 311, 11 L.Ed. 143; Penniman's Case, 103 U.S. 714, 720, 26 L.Ed. 602. The plaintiffs cite Sliosberg v. New York Life Ins. Co., 244 N.Y. 482, 155 N.E. 749, 751, as authority directly controlling the case at bar. An action had been brought in 1925, prior to United States recognition of the U. S. S. R., to recover on an insurance policy "expressed to be payable in Russian roubles" and "expressed * * * to be performed in whole or in part within the territorial confines of the former Russian Empire * * *". An application was made, pursuant to section 169-a of the Civil Practice Act (a section added by Chapter 232 of the Laws of 1926), to stay the action until the expiration of 30 days next following the recognition de jure of a government of Russia by a government of the United States. The New York Court of Appeals held the statute to be unconstitutional as depriving parties entitled to sue on a contract of a remedy for an indefinite period, that is, until the happening of an event which might never happen.
But the Sliosberg case is, I feel, inapposite. Assuming that a deposit of the proceeds of the insurance policies in court should be ordered, there would nevertheless be no denial of a remedy. Judgment, on the contrary, would have been granted the plaintiffs. Nor would there even be a denial or a postponement of the right of plaintiffs to possession of the property. For the court would be acting on a determination that they would not in any event have the "benefit or use or control of such money", and that there were "other special circumstances [making] it appear desirable that such payment * * * should be withheld * * *", relating to the possibilities of the effectuation of the judgment for the benefit of the plaintiffs. Cases more closely analogous than the Sliosberg case are those involving the distribution of estates. Cf., for example, In re Braier's Estate, 305 N.Y. 148, on page 158, 111 N.E.2d 424, at page 428, and cases cited; In re Weidberg's Estate, 172 Misc. 524, 15 N.Y.S.2d 252. True, these cases are distinguishable on the ground that they involve decedents' estates, over which the state may exercise the power of controlling distribution,
But the exercise of the court's discretion to order the deposit of the proceeds of the insurance policies in court, subject to its further order, depends upon the court's conclusion that the plaintiffs would not have the benefit or use or control of the money, or that there are other special circumstances making it appear desirable that payment should be withheld. The defendant's argument is, essentially, that the court may take judicial notice of the existence in Poland of a Communist government employing police state tactics, precluding the realization of any rights by Polish citizens without special leave from the authorities, and that the right to receive dollar exchange in the Polish People's Republic is precisely the kind of a right which would be preempted and confiscated by the government. In substantiation of this position, affidavits are submitted citing foreign exchange decrees of the Polish government. It is further argued, with supporting affidavits, that even if the plaintiffs were to receive the funds, they would be able to realize only a very small portion of them because of the confiscatory rates of exchange maintained by the Polish government between their currency and the dollar. And finally, the defendant cites the Treasury regulation specifying the Polish People's Republic as one of the countries the residents of which may not be sent United States government funds, because of a lack of reasonable assurance that the payees will actually receive such funds or be able to negotiate checks or warrants for full value.
The general conditions prevailing in a Communist country are indeed of such common knowledge as to require no proof of their fundamental antithesis to the public policy prevailing in our own country. Yet in the absence of proof, it is inadvisable for a court to hold, on the basis of judicial notice alone, that the general conditions negate the specific likelihood that these plaintiffs would receive the proceeds of a judgment. There can, of course, be judicial knowledge of specific circumstances sufficient to justify a decision, see In re Weidberg's Estate, supra; but as distasteful as the court considers the general conditions in Poland to be, he has no judicial knowledge to justify the specific conclusion that these plaintiffs would not receive payment. However, the void of judicial knowledge may be filled by the Treasury Regulation precluding the payment of United States government funds to persons residing in the Polish People's Republic, because of a finding of a lack of reasonable assurance that the payees will actually receive such funds or be able to negotiate checks or warrants for full value. This "authoritative conclusion reached by the Treasury Department" was relied upon for decision in In re Braier's Estate, supra, 305 N.Y. at page 157, 111 N.E.2d at page 428. But in that case there was no denial that conditions in the foreign
Accordingly, the plaintiffs' motion for summary judgment will be granted, but entry of judgment will be held in abeyance for ten days from the date of this memorandum, during which time plaintiffs may apply for a hearing. Failing such an application, the defendant's motion pursuant to sections 474 and 978 of the Civil Practice Act will be granted, appending to the judgment an order requiring the deposit of the proceeds of the judgment in court.
On a motion for reargument, the plaintiffs point out that the opinion omitted mention of the submission, after the argument and while the original motion was under advisement, of new powers of attorney properly authenticated which had been forwarded directly to plaintiffs' counsel by one of the plaintiffs in Poland. These powers were executed by all the plaintiffs except Jan Danisch, Antoni Danisch and Maria Stancyzk. For these three, the original powers remained unrevoked, while the new powers revoked the original powers granted to the Polish Consul.
This memorandum is issued to supply the omission. However, the problem presented and the analysis of the court are in no way altered or affected, and the motion for reargument is denied.
The remaining policy in suit was made after the effective date of the legislation claimed to impair the obligation of the contract. But it was a North Dakota contract, not subject to the New York law when issued. It is argued that inasmuch as the challenged sections did not operate on the contract until suit was brought in New York, they violate the contract clause of the Constitution. In Home Ins. Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926, the Supreme Court left open the issue of whether the guaranty of the contract clause relates to the date of a statute's effect on contracts or to the date of its enactment.