The question appears to be a novel one, not hitherto decided by a court of the United States.
The Congress of the United States, in enacting the Trading with the Enemy Act, opened the doors of courts of the United States to permit those claiming to be neutrals, as well as citizens of the United States, to assert ownership of properties seized by the United States as belonging to enemy aliens. This Act, being one by which the sovereign consents to be sued, is one of grace, subject to revision or complete repeal at any time. Cf. Lynch v. United States, 1934, 292 U.S. 571, 54 S. Ct. 840, 78 L. Ed. 1434. A privilege has been conferred, and conformity to the customary procedures established for the Courts of the United States is required. Cummings v. Deutsche Bank Und Discontogesellschaft, 1937, 300 U.S. 115, 57 S. Ct. 359, 81 L. Ed. 545; Banco Mexicano de Commercio e Industria v. Deutsche Bank, 1924, 263 U.S. 591, 44 S. Ct. 209, 68 L. Ed. 465; Pflueger v. United States, 1941, 73 App.D.C. 364, 121 F.2d 732, certiorari denied 1941, 314 U.S. 617, 62 S. Ct. 98, 86 L. Ed. 497. "No man can sue in the courts of any country, whatever his rights may be, unless in conformity with the rules prescribed by the laws of that country." Marshall, C.J., in Dixon's Adm'r v. Ramsay, 1806, 3 Cranch 319, 324, 2 L. Ed. 453, 455. A claimant must take the law as he finds it; he cannot place himself in a better position than other litigants by invoking the laws and procedures of a foreign sovereign. De La Vega v. Vianna, 1 B. & D. 284, 109 Eng.Rep. 792 (K.B., 1830); Don v. Lippmann, 5 Cl. & Fin. 1, 7 Eng.Rep. 303 (H.L., 1837).
Procedures of the law of the forum customarily govern law suits. neutrals as well as citizens of the United States must meet the requirements of these procedures. It seems obvious that foreign law cannot be permitted to obstruct the investigation and discovery of facts ina case, under rules established as conducive to the proper and orderly administration of justice in a court of the United States. Even if a foreign government were itself a party, it must conform to the law of the forum and make discovery upon order of the court. Rothschild v. Queen of Portugal, 3 Y. & C. 594, 160 Eng.Rep. 838 (exch., 1839); Republic of Haiti v. Plesch, 1949, 195 Misc. 219, 88 N.Y.S.2d 9.
The danger of incrimination in another jurisdiction of claim of foreign privilege is not a valid excuse for a refusal to give testimony. United States v. Murdock, 1931, 284 U.S. 141, 52 S. Ct. 63, 76 L. Ed. 210; Societe Internationale Pour Participations Industrielles et Commerciales, S. A. v. McGrath, D.C.D.C.1950, 9 F.R.D. 680. The principle is the same, whether the information is locked in the breast of a party by a foreign government's order or whether it is locked in its chests or vaults by the same government order.
To adopt any other course would lead only to frustration and nullification of established procedures. It would permit a foreign government to release only the documents favorable to one party and to retain or destroy the rest. It would permit a foreign government to stipulate the conditions under which documents required in a court of the United States might be released and thus impose foreign procedures in trials of suits in United States Courts. It would permit a foreign party to be placed in a favored position by the laws or action of his government. It might defeat the purposes of the Trading With the Enemy Act by permitting a foreign national to bring suit in this country to recover property seized under the Act and then seek shelter under the protective cloak of its government when discovery is sought.
This reasoning is fortified by decisions of British prize cases arising during World War I: The Consul Corfitzon (1917) App.Cas. 550; The Baron Stjernblad (1918) App.Cas. 173; The Kronprinzessin Victoria (1919) App.Cas. 261; Kronprinzessin Margareta, 6 Lloyd's Prize Cases 105n. (1917); The Antilla, 7 Lloyd's Prize Cases 401 (1918); and an English patent case of the Second World War, in re von Kantzow's Patent (1944) Ch. 318. The cases are persuasive, not only for their decisions but for their reasoning and application of principles. The Trading With the Enemy Act is concerned with captures on land. The law of prize is concerned with captures at sea. Both are facts of the law of war. See Stoehr v. Wallace, 1921, 255 U.S. 239, 41 S. Ct. 293, 65 L. Ed. 604; Learned Hand, J., in Stohr v. Wallace, D.C.N.Y.1920, 269 F. 827; Mr. Justice Stanley Reed, dissenting on other grounds, in Kaufman v. Societe Internationale Pour Participations Industrielles et Commerciales, S. A., 1952, 343 U.S. 156, at page 167 note, 72 S. Ct. 611, 96 L. Ed. 853.
In the British prize cases, claimants, citizens of Sweden, were ordered to make discovery under an order or rule of the court similar in content to Rule 34 of the Federal Rules of Civil Procedure. See The Consul Corfitzon, supra, at 551n. (2). Claimants resisted, on the grounds that they were precluded by Swedish law from revealing information or opening their books to foreign powers. The court struck the claims, holding that neutral claimants must comply with the discovery requirements of the forum. While the substantive law administered by the prize court was international law, its practice and procedure were governed by the municipal law of the State from which the court derived its jurisdiction, and could not be modified by the municipal law of any other State. The Consul Corfitzon, supra. The court cannot accept the dictates of any municipal law other than its own as to what discovery ought or ought not to be insisted upon either generally or in any particular case. The Baron Stjernblad, supra. It is impossible for a court to allow its investigation of the truth of matters brought before it to be limited by the restrictions of the municipal law affecting one of the parties to the proceedings before it. The Kronprinzessin Victoria, supra. The refusal of a foreign government to permit discovery can make no difference to the court. Kronprinzessin Margareta, supra. A claim may be struck even though the other party has had inspection of many documents besides those relating to the particular matters in question and a different view of the order for discovery is taken by the claimant's government. The Antilla, supra. The neutral is as responsible for the actions of his own government as a cargo owner for the action of the master or crew of the vessel on which the cargo is shipped. The Baron Stjernblad, supra. If his position is anomalous, it certainly is not due to any defect in the practice of the court or the law it administers. Ibid. If an applicant is the subject of a foreign State and is precluded from giving the necessary information to the court, that is his misfortune. In re von Kantozow's Patent, supra. The rule is the same, whether it is left to his discretion by his government to make discovery and thereby violate his municipal law, as in The Antilla, supra, or whether there has been a direct prohibition by his government, as in The Baron Stjernblad, supra.
Counsel for plaintiff cites Securities and Exchange Commission v. Minas de Artemisa, S. A., 9 Cir., 1945, 150 F.2d 215, for the proposition that a Federal Court of the United States will take into consideration the impact which the laws of a foreign country may have upon its orders, and will cut or prune them accordingly. That decision is not in conflict with the opinion of the court in this case. A federal court there ordered a corporation subject to its jurisdiction to produce in the United States books and records located in Mexico; the Court of Appeals ruled that the order had been improperly drafted, since the laws of Mexico prohibited their removal. The question before the court was one of accommodation and convenience, not of ultimate production. No secrecy laws were involved, production itself was not resisted; the required books and records could be inspected at the office in Mexico, authenticated copies could be furnished, and the Court of Appeals so directed.
For the reasons stated, this court finds itself constrained to decide that an order dismissing plaintiff's suit is required if the Sturzenegger papers are not made available. Such dismissal is not by way of punishment for contempt or for contumacy, for an intentional and wilful flouting of the court's authority, or for an offense to its dignity. It is rather by way of denying the right of plaintiff to proceed without obeying established court procedures. If plaintiff had failed to file a complaint seasonably within the time allowed by law, or had failed to state sufficient facts to show the pleader was entitled to relief, or had filed the complaint before a court without jurisdiction of the parties or the subject matter, the same result would follow.
The order of dismissal appears to be justified under Rule 37(b)(2)(iii) of the Federal Rules of Civil Procedure. Rule 37(b)(1) provides that a refusal to be sworn or to answer a question may be considered a contempt of court. Of course, contempt of court involves a wilful act. Rule 37(d) enumerates the sanctions which may be imposed for the wilful failure to appear or to serve answers. Here the word "wilful" is used. These two rules therefore clearly deal with wilful acts. However, Rule 37(b)(2)(iii) makes no mention of contempt or wilful refusal. The word "refusal" is defined as synonymous with "declination" (Webster's New International Dictionary, 2d Ed., Unabridged, p. 2095). In this case we have noted that plaintiff with the Sturzenegger papers in his actual possession has "refused" or "declined" to exhibit them as ordered by this court. That plaintiff may have had good reason for its refusal would make the act nonetheless a refusal. In the original Advisory Committee Note of 1937 to Rule 37 of the Federal Rules of Civil Procedure, the following appears:
'The provisions of this rule authorizing orders establishing facts or excluding evidence or striking pleadings, or authorizing judgments of dismissal or default, for refusal to answer questions or permit inspection or otherwise make discovery, are in accord with Hammond Packing Co. v. Arkansas, 1909, 212 U.S. 322, 29 S. Ct. 370, 53 L. Ed. 530; 15 Ann.Cas. 645, which distinguishes between the justifiable use of such measures as a means of compelling the production of evidence, and their justifiable use, as in Hovey v. Elliott, 1897, 167 U.S. 409, 17 S. Ct. 841, 42 L. Ed. 215, for the mere purpose of punishing for contempt.'
Duell v. Duell, 1949, 85 App.D.C. 78, 178 F.2d. 683, 14 A.L.R.2d 560, cited by plaintiff, is not inconsistent with the court's power to deal with failure to produce documents, whether wilful or not. In that case the court rejected the striking of a pleading by reason of an adjudication in contempt for failure of defendant in a divorce suit to produce records. The court held there was no showing defendant suppressed or failed to produce evidence in his possession which had been ordered produced. It further held that civil contempt proceedings might not be used as the basis for striking a pleading. No decision was made as to the power of the court to strike a pleading on motion for failure to produce records in the party's possession as ordered by the court. In Wittenberg Coal Co. v. Compagnie Havraise Peninsulaire de Navigation a Vapeur, 2 Cir. 1927, 22 F.2d. 904, 905, the Circuit up- held a decree pro confesso entered under a rule of admiralty for a for a persistent refusal to answer interrogatories, and said: 'The refusal to answer the interrogatories is more than a contempt. It was a failure of the appellant to give information which the appellee was entitled to under the rules in admiralty.'
The power of the court to issue an order of dismissal for failure of a party to produce designated documents has been recognized from the earliest days of the Republic, in Article 15 of the Judiciary Act of September 24, 1789, 1 Stat. 82, 28 U.S.C. § 636 (1946), repealed by the Revised Judicial code of 1948, 62 Stat. 869. This Act is the parent of Rule 34 of the Federal Rules of Civil Procedure. It was repealed by the Judicial Code because it had been superseded by the Federal Rules. 4 Moore's Federal Practice, 2429-2430n, 2428 (2d ed., 19500. The Federal Rules thus establish that the proper time for the inspection of documents is before trial, as an integral part of the purposes of the Rules to narrow and clarify the issues and to ascertain the facts of the case. 'The way is now clear, consistent with recognized privileges, for the parties to obtain the fullest possible knowledge of the issues and facts before trial. * * * The deposition-discovery procedure simply advances the stage at which the disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility of surprise.' Hickman v. Taylor, supra, 329 U.S. at page 501, 507, 67, S. Ct. at page 389.
But apart from dismissal by authority of specific rule of court or statute, a court has inherent power to dismiss a suit, stay a trial or impose other limitations on the right to proceed with trial when it is established a party plaintiff has failed to comply with order of the court issued pursuant to its rules. See Refior v. Lansing Drop Forge Co., 6 Cir., 1942, 316 U.S. 671, 62 S. Ct. 1047, 86 L. Ed. 1746; Note, 4 A.L.R.2d. 348. If this were not so, a court would be powerless to enforce its rules and a litigant might ignore them with abandon. In cases where plaintiffs have refused to comply with essential court procedures, the court customarily has stayed the trial until the procedures have been complied with; and if it has later developed with certainty the procedures will not be followed, the court has denied relief by dismissing the suit.
A final point made by plaintiff may be disposed of briefly. The claim is that an order of dismissal would constitute a denial of due process of law in violation of the Constitution of the United States, Amend. 5. Plaintiff has had a hearing. It has had its day in court. The order is entered upon motion and notice; plaintiff has had full opportunity to comply with the order of the court. Hammond Packing Co. v. Arkansas, supra, clearly establishes the want of foundation in this contention. Rather it appears to the ocurt that due process would be denied if a foreign government were to be allowed to frustrate the procedures established in the courts of the United States.
The attention of the court has been directed to a statement of the Swiss Federal Attorney on June 25, 1951, as reported in the findings of the Special Master:
'* * * we are prepared to release individual documents proved to be indispensable for the suit, insofar as explicit statements are produced for each one of these documents by all the parties having an interest in them (banking firm H. Sturzenegger & Co., its clients and other individuals or judicial persons participating), from which it should be clearly evident that there is neither a violation of Art. 273 St. GB (economic espionage) nor of Art. 47 of the Bank Law (bank secrecy). The Office of the Swiss Federal Attorney explicitly reserves itself the right to refuse to release individual documents without stating grounds for this.'
For three and one-half years, since the order of July 5, 1949, was promulgated, plaintiff has been on notice that the Sturzenegger documents must be produced. For two and one-half years it has been legal default of that order. At not time during that long period has it been excused from its duty to produce. It may be, as contended by the Government, this offer by the Swiss Federal Attorney as a means of producing the required papers is illusory. It may also be true attempts should have been made by plaintiff long before this. The court notes the Special Master has found that obtaining waivers would not appear at any time to offer a solution to the problem of production of the papers. But this court is of opinion it should extend further opportunity to plaintiff to comply with the order to produce the documents designated. Especially is this true since a court of the United States has now, apparently for the first time, made clear that full production of the papers is essential to permitting a trial of this case and cannot be excused because of prohibitions of plaintiff's government. The court therefore will suspend the effective date of its order of dismissal of plaintiff's complaint for a limited period of about three months to permit plaintiff to apply for release of the documents in accordance with the statement of the Swiss Federal Attorney. If then it develops full disclosures are not permitted, this suit will be dismissed with prejudice so far as plaintiff is concerned.
While the motions before the court were under advisement, plaintiff field with the court a motion to require defendants to cooperate with plaintiff in preparing applications to the Swiss Federal Attorney for the release of documents. The duty to produce the documents in conformity with the order of the court rests upon plaintiff, and the court will not transfer that responsibility to defendants. If plaintiff must seek waivers, it is because its government chooses to enforce a foreign law of privilege, the banker-customer privilege, not recognized in the law of this forum where plaintiff has brought suit. The court assumes defendants will not in anywise obstruct the efforts of plaintiff to secure production of the papers.
Under the decision of the Supreme Court of the United States in Kaufman v. Societe Internationale Pour Participations Industrielles et Commerciales S. A., 1952, 343 U.S. 156, 72 S. Ct. 611, 96 L. Ed. 853, if a final order of dismissal against plaintiff may yet remain their suit, it appearing that they never had possession, custody or control of the pertinent documents.
The court will make disposal of pending motions as follows:
1. Overrule defendants' exceptions to the Special Master's Report. Grant plaintiff's motion to adopt the said Special Master's Report.
2. Overrule plaintiff's motion to be relieved from producing the Sturzenegger papers for inspection and copying as ordered on July 5, 1949.
3. Grant defendants' motion to dismiss plaintiff's suit, provided however, such dismissal shall not become effective until a date about three months hence, in order that plaintiff may have further opportunity to produce the Sturzenegger documents as ordered by this court.
4. Overrule plaintiff's motion to require defendants to cooperate with plaintiff in preparing applications to the Swiss Government for production of the Sturzenegger papers.
5. Grant the motion of intervenor plaintiffs, that the dismissal of this suit shall not apply as to their claims.
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