U.S.
Supreme Court two parties at Buena Vista, some seven miles from Bolivar, in which the troops
Underhill v. Hernandez, 168 U.S. 250 (1897)
Underhill v. Hernandez
No. 36
Argued October 22, 25, 1897
Decided November 29, 1897
168 U.S. 250
Syllabus
Hernandez was in command of a revolutionary army in Venezuela when an
engagement took place with the government forces which resulted in the defeat
of the latter, and the occupation of Bolivar by the former. Underhill was living in
Bolivar, where he had constructed a waterworks system for the city under a
contract with the government, and carried on a machinery repair business. He
applied for a passport to leave the city, which was refused by Hernandez with a
view to coerce him to operate his waterworks and his repair works for the benefit
of the community and the revolutionary forces. Subsequently a passport was
given him. The revolutionary government under which Hernandez was acting
was recognized by the United States as the legitimate government of Venezuela.
Subsequently Underhill sued Hernandez in .the Circuit Court for the Second
Circuit to recover damages caused by the refusal to grant the passport, for alleged
confinement of him to his own house, and for alleged assaults and affronts by
Hernandez' soldiers. Judgment being rendered for defendant, the case was taken
to the circuit court of appeals, where the judgment was affirmed, the court
holding "that the acts of the defendant were the acts of Venezuela, and as such
are not properly the subject of adjudication in the courts of another
government." Held that the circuit court of appeals was justified in that
conclusion.
Every sovereign state is bound to respect the independence of every other
sovereign state, and the courts of one country will not sit in judgment on the acts
of the government of another, done within its own territory.
In the early part of 1892, a revolution was initiated in Venezuela against the
administration thereof, which the revolutionists
Page 168 U. S. 251
claimed had ceased to be the legitimate government. The principal parties to this
conflict were those who recognized Palacio as their head, and those who
followed the leadership of Crespo. General Hernandez belonged to the anti-
administration party and commanded its forces in the vicinity of Ciudad Bolivar.
On the 8th of August, 1892, an engagement took place between the armies of the
under Hernandez prevailed, and on the 13th of August, Hernandez entered
Bolivar and assumed command of the city. All of the local officials had in the
meantime left, and the vacant positions were filled by General Hernandez, who
from that date, and during the period of the transactions complained of, was the
civil and military chief of the city and district. In October, the party in revolt had
achieved success generally, taking possession of the capital of Venezuela
October 6, and on October 23, 1892, the "Crespo government," so called, was
formally recognized as the legitimate government of Venezuela by the United
States.
George F. Underhill was a citizen of the United States, who had constructed a
waterworks system for the City of Bolivar under a contract with the government,
and was engaged in supplying the place with water, and he also carried on a
machinery repair business. Some time after the entry of General Hernandez,
Underhill applied to him, as the officer in command, for a passport to leave the
city. Hernandez refused this request, and requests made by others in Underhill's
behalf, until October 18, when a passport was given, and Underhill left the
country.
This action was brought to recover damages for the detention caused by reason of
the refusal to grant the passport, for the alleged confinement of Underhill to his
own house, and for certain alleged assaults and affronts by the soldiers of
Hernandez' army.
The cause was tried in the Circuit Court of the United States for the Eastern
District of New York, and on the conclusion of plaintiff's case, the circuit court
ruled that, upon the facts, plaintiff was not entitled to recover, and directed
Page 168 U. S. 252
a verdict for defendant on the ground that
"because the acts of defendant were those of a military commander, representing
a de facto government in the prosecution of a war, he was not civilly responsible
therefor."
Judgment having been rendered for defendant, the case was taken to the circuit
court of appeals, and by that court affirmed upon the ground
"that the acts of the defendant were the acts of the government of Venezuela, and
as such are not properly the subject of adjudication in the courts of another
government."
65 F. 577. Thereupon the cause was brought to this Court on certiorari.
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Banco Nacional de Cuba v. Sabbatino
Facts of the case
Farr, Whitlock & Co. contracted to buy sugar from a Cuban corporation.
The corporation loaded the sugar on to the S.S. Hornfels, but in response to
President Eisenhower reducing the Cuban sugar quota, Cuba issued a decree
taking possession of the sugar. The Cuban government would only allow the
sugar to leave Cuba if Farr, Whitlock entered into a new contract with Banco
Nacional de Cuba, an instrumentality of the Cuban government. After the sugar
left Cuba, Farr, Whitlock refused to pay Banco Nacional. Banco Nacional sued in
the U.S. District Court for the Southern District of New York to recover
payment. The court granted summary judgment for Far, Whitlock, holding that
Cuba’s taking of the sugar violated international law. The U.S. Court of Appeals
for the Second Circuit affirmed.
Question
May the courts of the United States refuse to give effect to decrees of a foreign
sovereign government where the decree violates common international law?
Conclusion
No. In an 8-1 decision, Justice John M. Harlan wrote the majority opinion
reversing the lower court. The Supreme Court held that it will not decide the
validity of a decree by a foreign government absent a treaty or other agreement.
It did not matter that the taking violated customary international law. The
majority noted that a judicial decision on this issue without a treaty would strain
U.S.-Cuba relations. Justice Byron R. White wrote a dissent, stating that he
would decide the case on the merits, absent any specific objection to examining
Cuba’s law under international law.
Banco Nacional de Cuba v. Sabbatino
Citation. Foster v. Neilson, 27 U.S. 253, 7 L. Ed. 415, 1829 U.S. LEXIS 405
(U.S. Mar. 9, 1829)
Brief Fact Summary. The bills of lading for a shipment of sugar contracted
between Farr, Whitlock & Co an American commodities broker was assigned by
Banco Nacional de Cuba (P), but another Cuban bank instituted this action
alleging conversion of the bills of lading and sought to recover the proceeds
thereof from Farr and to enjoin Sabbatino (D), a court-appointed receiver from
exercising control over such proceeds.
Synopsis of Rule of Law. The judiciary, in line with the Act of State Doctrine
will not examine the validity of a taking of property within its own territory by a
foreign sovereign government recognized by this country in the absence of
international agreements to the contrary, even if the taking violates customary
international law.
Facts. A contract to purchase Cuban sugar from a wholly owned subsidaiary of
Compania Azucarera Vertientes-Camaquey de Cuba (CAV) a corporation
organized under Cuban law was made by Farr, Whitlock & Co. (Farr) an
American commodities broker. The CAV stock was principally owned by United
States residents. The agreement was for Farr to pay for the sugar in New York
upon the presentation of the shipping documents. After this deal, a law was
enacted in Cuba which empowered the government to nationalize forcefully,
expropriation of property or enterprise in which American nationals had an
interest.
Hence, the sugar which Farr had contracted was expropriated from Compania
Azucarera. Farr however entered into contracts which was similar to the one
made with CAV with the Banco Para el Comercio de Cuba, which was an
instrumentality of the government. This was done by Farr in order to obtain
consent from the Cuban government before a ship carrying sugar could leave
Cuba.A bill of lading which was also an instrumentality of the Cuban
government was assigned by the bank to Banco Para el Comercio de Cuba, who
presented the bills and a sight draft as required under the contract to Farr in New
York in return for payment. After CAV notified Farr of its claim to the proceeds
as rightful owner of the sugar, Farr refused the documents.
This action of Farr resulted in a court order which appointed Sabbatino (D) as
receiver of CAV‘s New York assets and enjoined it from removing the
payments from the state. Based on the allegation of the conversion of the bills of
lading seeking to recover the proceeds thereof from Farr and to enjoin Sabbatino
(D), the receiver from exercising dominion over such proceeds, the Banco
Nacional (P) instituted this action. A summary judgment was granted against
Banco Nacional (P) by the district court on the grounds that the Act of State
Doctrine does not apply when the foreign act in question is in violation of
international law. The court of appeals also upheld this judgment.

Issue. Does the judiciary have the authority to examine the validity of a taking of
property within its own territory by a foreign sovereign even if the taking
violated international law?

Held. (Harlan, J). No. The judiciary, in line with the Act of State Doctrine will
not examine the validity of a taking of property within its own territory by a
foreign sovereign government recognized by this country in the absence of
international agreements to the contrary, even if the taking violates customary
international law. Even in a situation whereby international law has been
violated, the clear implication of past cases is that the Act of State Doctrine is
applicable because the Act of State doctrine does not deprive the courts of
jurisdiction once acquire over a case. The damages of adjudicating the propriety
of such expropriation acts, regardless of whether the State Department has it did
in this case, asserted that the act violated international law are too far-reaching
for the judicial branch to attempt. Hence the judgment of the court of appeals is
reverse and the case remanded back to the district court.

Dissent. (White, J). American courts are not required by the Act of State
Doctrine to decide cases in disregard of international law and of the rights of
litigants to a full determination on the merits.

Discussion. Even in the diversity of citizenship cases, the Court concluded that
the Act of State Doctrine must be determined according to federal rather than
state law. The court also made it clear that it is constrained to make it clear that
an issue concerned with a basic choice regarding the competence and function of
the judiciary and national executive in ordering our relationships with other
members of the international community must be treated exclusively as an aspect
of federal law.