Facts of the Case

In 1933, the United States established formal diplomatic relations with the Soviet Union. This case involved a Russian metal works company which had deposited money in an American bank prior to the Russian Revolution of 1917. The Soviet Union nationalized the company and attempted to reclaim its assets with the help of the United States. The bank refused to cooperate, citing protection of a New York law.

Question

Did the diplomatic agreements between the two countries compel the bank to release the assets?

Conclusion

Yes. Even though the diplomatic agreements had not been implemented as formal treaties with Senate approval, they did empower the United States to seek assets on the Soviet Union's behalf. Justice Sutherland argued for a unanimous Court that different kinds of treaties existed which did not require Senate approval, but nonetheless overrode state statutes. "Plainly, the external powers of the United States are to be exercised without regard to state laws or policies," he reasoned.