CONFLICTS OF LAWS

◦ HEINE VS NEW YORK INC.,1940 – RECIT

Heine v. New York Life Insurance Company

Facts
The New York Life Insurance Company and the Guardian Insurance Company ("the insurance
companies") were corpo;rations created in New York, USA. As conditions to be allowed to conduct
business in Germany, they were made to agree to be supervised by German authorities, to invest the
proceeds of policies in German securities, and to establish a local agency to whom summons may be
served. The insurance companies were later sued before courts in both the US and Germany for the
recovery on some 240 life insurance policies issued in Germany to German nationals, payable in German
currency.

Arguments for the Plaintiff

As the US courts have jurisdiction over the subject matter and the parties, they have no choice but to try
the case.

Issue
Whether or not the US courts may dismiss the case on the ground of forum non conveniens.

Held
Yes. Under the circumstances, the case may be more suitably tried before German courts.

Ratio Decidendi
The courts in both jurisdictions are competent to try the case and summons may be served upon the
insurance companies in both jurisdictions. Requiring the insurance companies to defend their interests in
the US would subject them to great and unnecessary inconvenience and expenses, including the
possibility of having to bring documentary evidence all the way from their office in Germany. Moreover,
trying the case in the US additionally burden the courts in that jurisdiction, to the detriment of other
litigants. The assumption of jurisdiction over a case the cause of action of which arose from another
jurisdiction and wherein both parties are non-residents is discretionary upon the court.

///

Appeal from the District Court of the United States for the District of Oregon; Robert S. Bean,
Judge.

Action by Henry Heine against the New York Life Insurance Company. From an order of
dismissal [ 45 F.2d 426], plaintiff appeals.

Affirmed.

This is an appeal from an order of dismissal granted by the court in the exercise of its power of
discretion to retain or reject jurisdiction. The action was brought in the state court of Oregon and
removed by the appellee to the federal court. It is based on insurance policies, dated November
10, 1911, issued in Germany to a German resident and citizen, written in German language, and
payable in Germany in the currency of that country. The appellant seeks to recover as damages
the cash surrender value of the policies.

The answer denies liability; pleads stipulations in the policies designating certain specified courts
in Germany as having exclusive jurisdiction; pleads novation, in that Kronos Deutsche Leben-
Versicherungs Aktien-Gesellschaft, a German insurance company, assumed the liability of the
appellee under the policies, with the assent of the appellant; pleads the currency legislation of
Germany and the valorization laws, steps taken by the German authorities to rate up certain
classes of contracts payable in marks, including insurance policies issued in Germany; pleads a
mutual arrangement between the appellee and the German insurance authorities, acting on behalf
of the German policyholders, by which a fund was established and placed in the custody of the
German insurance authorities to pay and adjust all claims on policies issued by the appellee in
Germany, including the policies in litigation. Attached to the answer are certain affidavits and
copies of the German laws and decisions of the German courts and the German Federal
Insurance Board; a decision of the German Federal Insurance Board fixing the amount of the
contribution of the appellee to the valorization fund, for the payment of all policies issued by it in
Germany, as $3,000,000 (12,000,000 marks) in addition to 2,000,000 marks when concession
was granted, 11,607,000 marks to meet war losses and 37,107,737 marks paid to "Kronos" at the
time the German business of the appellee was taken over; a distribution plan issued by the
German Federal Insurance Board for the insurance policies issued by the appellee, and a table of
the percentages of the gold mark value at which the policies of the various companies were to be
rated up for value, listing approximately fifty companies, including appellee. All premiums
collected in Germany, together with sums deposited by the appellee for license to do business,
were impounded in a reserve depository and invested under German approval for protection of
policyholders. The affidavits and statements in the record are by agreement to be considered as a
part thereof. They also recite that the mark was the sole circulating medium of exchange and
legal tender currency of Germany until the passage of the coinage law of August, 1924, which
created and established for the German Reich an entirely new and distinct currency called the
Reichsmark, making the Reichsmark the sole legal tender currency of Germany and providing
for the conversion of the old mark into the new Reichsmark at the conversion ratio of one-
million-million of the former for one of the latter; that by a decree of September 28, 1914,
contracts made prior to July 1, 1914, calling for payment in gold were declared not binding; that
the Reichs Chancellor was to decide as to the date when this decree should become ineffective;
that the decree has not been repealed, nor has the suspension of the redemption of the German
treasury bills and Reichsbank gold notes been lifted, and that the laws of August, 1924, in
connection with the loss of the war by Germany, constitute the primary cause of the subsequent
catastrophic depreciation of the German mark. (The policies in suit were payable in the old
currency, Mark D. Rwg.) Also attached is an irrevocable power of attorney to certain named
parties, which authorizes and empowers them to sue for, collect, receive, and receipt for all sums
due or owing under the policies, or compromise the same, in consideration of the assignment and
transfer to them of an undivided 25 per cent. interest in the policies, and all rights accruing
thereunder. It is stated that there are no witnesses to any of the transactions resident in the state
of Oregon; that practically all of the witnesses reside in Germany or in the state of New York;
that no records of the appellee are in the state of Oregon; that all of appellee's original data,
correspondence, and documents relating to its business in Germany and policies issued there
were kept in Germany and still are there in the possession of the "Kronos" Life Insurance
Company; that to defend this action in the courts of Oregon would impose upon the appellee
great and unnecessary difficulty, inconvenience and expense; that the appellee maintains and
intends to continue in Germany a general representative and attorney in fact, appointed pursuant
to the insurance laws of Germany, upon whom legal process may be served; that in all actions
commenced in Germany at no time has the jurisdiction of the German courts been evaded or
attempt made to invalidate service; that in all such actions the German courts have assumed
jurisdiction; that such courts are open and functioning and are competent and ready to take
jurisdiction of justiciable matters. It is further shown that there are now pending in the courts of
Oregon, against the appellee, cases involving 192 policies issued to German citizens who at all
times have been resident in and now reside in Germany, all payable in Germany in German
currency, and subject to German law, and, in the same court, actions against the Guardian Life
Insurance Company involving 50 policies, and against the Guardian Life Insurance Company
and the appellee actions involving 18 policies; that Paul Herrmann, appellant in the companion
case submitted herewith, 50 F.2d 387, a resident and citizen of Germany, is plaintiff in many of
these cases; that in one case brought by him there are involved 115 policies, in as many separate
causes of action; that another case involves 39 policies issued to different persons, and another
involves 14 policies, and others of less number. The record also discloses that two cases were
brought against the appellee in the state of New York on like policies and that the New York
court declined to retain jurisdiction and dismissed the same. Higgins v. New York Life Ins.
Co., 220 App. Div. 760, 222 N.Y.S. 819.

It appears that for several years a vigorous campaign has been conducted in Germany to secure
control of policies issued in Germany by American companies, approximately 28,000 for
prosecution in the American courts, upon the representation that a much larger recovery might be
had in the American courts than from German courts or German administrative bodies. (The
term "American" in this memorandum means United States.)

It further appears that there is pending in the state court for Multnomah county, Or., an action
brought by one Luetjohann, a citizen and resident of Germany, against the appellee, on a like
policy, in which case a motion has been filed to compel the appellee to bring to Portland for
inspection by plaintiff's counsel, who also represents all the plaintiffs in the various actions
brought on the German policies, the following:

"All of the day books, journals and ledgers kept by defendant during the years 1922 to 1928,
whether in book form or otherwise; and

"All balance sheets and trial balances;

"Also all lists, registers and other records containing the names of all policyholders and the
amounts and kinds of insurance issued and in effect during said years;

"All other books, papers, documents and records in the possession of defendant which disclose
the amount of profits made each year by defendant and which disclose the present whereabouts,
amount and situs of the assets and surplus of the defendant and the investments thereof;
"All books of account, papers, documents and records in the possession of the defendant which
disclose the unit value, i.e., American dollars or other units, in which the profits, surpluses and
assets of the defendant were earned by defendant and were kept during said years and are now
kept and figured and calculated in said books of accounts."

It appears that the books and records so requested comprise:

"Hundreds of volumes of current books of accounts, consisting of many kinds of cash books,
journals and ledgers, kept by the numerous departments of defendant's business, and they also
include hundreds of thousands of unbound sheets of accounts. These day books, journals, ledgers
and accounts constitute the current books of account of the defendant in its various departments.
They are in constant daily use by scores of the accountants and actuaries of the company and
they could not be removed from defendant's New York office without hopelessly disrupting all
of the departments of the defendant's business and stopping the company's operations.

"The `lists, registers and other records containing the names of all policyholders and the amounts
and kinds of insurance issued and in effect during the years 1922 to 1928, inclusive,' demanded
by plaintiff, are kept by defendant only in card form. There are separate cards for each kind of
information concerning each policy, including index cards, brief cards, mortality cards, premium
cards and dividend cards. These cards are kept in different departments and each card contains
only such information concerning the policy as is necessary for the purpose of the department in
which it is kept. * * * The company had outstanding during the period covered by plaintiff's
request more than 2,500,000 policies. It would be necessary, therefore, in order to meet plaintiff's
request, * * * to send to Oregon many millions of policy cards, which constitute all of
defendant's records concerning its individual policies issued and in effect during the years 1922
to 1928. These cards are in daily use by hundreds of defendant's employees in making loans,
computing dividends, converting policies, paying claims, answering inquiries and otherwise
dealing with its policies and policyholders. The removal of these cards from the company's New
York office would absolutely stop the company's functioning in regard to its policies and
policyholders.

"Some idea of the volume of books and records requested by plaintiff may be gleaned from a
recent experience of the New York Life Insurance Company in moving its headquarters from
346 Broadway to its present headquarters, 51 Madison Avenue. The distance between the old
headquarters and the new is about one and one-half miles. It took thirty trucks, in constant
operation for four days and nights, to move the books and records of the company.

"The experience of the auditors of the New York State Department of Insurance is also
instructive on this point. The auditors examine the accounts of the company every three years. It
takes 25 or 30 accountants from the State Department of Insurance a period of approximately
four months to cover the books and records of the company for a three-year period."

It appears that the Appellate Division of the German courts reviewed the history of the activities
of the appellee and held that it had at all times been under the supervision of the German
Insurance Board, referred to the fact that it had an office and general representative in Germany
and large assets, in addition to those transferred to "Kronos," and said: "As the court below
expressly stated, the company always fulfilled every order of the German Insurance Board." And
it appears that the legal tender status of the German mark was confirmed by decision of the
German Supreme Court April 16, 1921, reported in decisions of the Supreme Court in Civil
Cases, vol. 102, p. 98, holding that the stipulation of the contract with relation to the payment is
binding, and that the German courts have uniformly held that insurance policies issued in
Germany to German nationals are German contracts and that their construction, the extent of the
liability and the remedy or discharge thereunder are determinable exclusively by German law.
Ferensdorff, nee Herz v. Swiss Life Insurance Annuity Institute, decided by the Supreme Court
December 18, 1929; Messerschmitt v. N Y Life Ins. Co., decided by the Berlin Court of Appeals
March 12, 1930; Hardt v. N.Y. Life Ins. Co., decided by the same court on the same date; Marx
v. N.Y. Life Ins. Co., decided by the District Court, Mainz (Germany) January 27, 1930;
Protective Assn. of Holders of Foreign Insurance Policies v. Swiss Life Insurance Annuity
Institute, decided by the Munich Court of Appeals April 15, 1929 (affirmed by the Supreme
Court February 21, 1930); Daunert v. Guardian Life Ins. Co., decided by the Berlin Court of
Appeals July 11, 1928; decision of the German Insurance Board October 25, 1928, in the Matter
of New York Life Insurance Company, affirmed by decision of the Appellate Division February
13, 1929. The following decisions by French, Austrian, Jugoslavian and other courts, and by the
Tripartite Claims Commission, of which Judge Parker was chairman, are cited by appellee to the
same effect: Credit Lyonnais v. Credit National, Cour d'Appel de Paris, decided February 18,
1927; Maslova v. Urbaine Life Ins. Co. (4th Chamber, Tribunal of Commerce, Dept. of the
Seine, Paris), decided July 19, 1926, reported fol. 156, case 6; Bauchon v. Credit Lyonnais (1st
Chamber, Civil Court), decided October 26, 1925, affirmed by Court of Appeals of Paris, Dalloz
Law Reports, June 17, 1927; Banque Hypothecaire de Bale v. Riegart, Cour de Cassation,
decided January 23, 1924, reported in Gazette des Tribunaux April 28, 29, 1924; Banque
Hypothecaire v. Riff, decided January 11, 1926, Dalloz L.R. 1926, p. 85; Ghan v. Orloff, Dalloz
L.R. 1927, p. 62; decision of Supreme Court of Austria, January 18, 1927, Ob. III 993-28
"Zentralblatt" No. 102 ex 1927; decision of May 25, 1927, by Tripartite Claims Commission, 21
Am. Journal International Law, 610.

This brief statement of the record, made up of affidavits and documents, is not denied, while the
material parts of the answer are denied by the reply. It has been set out to the end that the history
of the issue and procedure can be more fully appreciated.

C.T. Haas and E.B. Seabrook, both of Portland, Or., for appellant.

Huntington, Wilson Huntington and Clark Clark, all of Portland, Or., for appellee.

Before WILBUR and SAWTELLE, Circuit Judges, and NETERER, District Judge.

NETERER, District Judge (after stating the facts).

The agency in Germany was established as a distinct entity, a German creation under German
law. A reserve fund was made and all premiums received were placed in that fund and invested
in Germany under German official approval. Upon creation of "Kronos," all funds and property
of appellee in Germany were delivered to and supervision and execution of power assumed by
the German Federal Insurance Board, and additional deposits made by the appellee, as required
by the German valorization laws, in accordance with the decisions of the German Federal
Insurance Board. The laws in relation thereto have been interpreted to apply to like policies, and
many similar cases are now pending before the German courts, they being open, able, competent,
and efficient, and the German Federal Insurance Board being active and fully functioning.

It is obvious that this litigation is not the normal outgrowth of usual business activity and
relation, but that it is the creation of activity to secure representation of some 28,000 insurance
policies executed in Germany by American companies, written in the German language, in the
relation of collection agent or agencies, and file actions thereon in the state and federal courts of
the United States, an indirect appeal from the German judiciary and the German Federal
Insurance Board.

Incidentally, it may be said that the courts of the United States have uniformly applied the law of
the place to insurance contracts. Orient Insurance Co. v. Daggs, 172 U.S. 557, 19 S. Ct. 281, 43
L. Ed. 552; Mutual Life Ins. Co. of N.Y. v. Cohen, 179 U.S. 262, 21 S. Ct. 106, 45 L. Ed. 181;
Mutual Life Ins. Co. v. Hill, 193 U.S. 551, 24 S. Ct. 538, 48 L. Ed. 788; Northwestern Mut. Life
Ins. Co. v. McCue, 223 U.S. 234, 32 S. Ct. 220, 56 L. Ed. 419, 38L.R.A. (N.S.) 57. And, when
suit was entertained, the cause of which arose in a foreign country, the courts granted relief
according to the laws of the country where the action arose. Slater v. Mexican Nat. Ry. Co., 194
U.S. 120, 24 S. Ct. 581, 48 L. Ed. 900. It has been held that discharge under a foreign obligation
in accordance with the foreign law is a complete defense. Zimmerman v. Sutherland, 274 U.S.
253, 47 S. Ct. 625, 71 L. Ed. 1034. It has also been held that the courts of the United States will
not inquire into the validity, wisdom or justice of the laws of a foreign country, or the
administration of foreign agencies. League v. De Young, 52 U.S. (11 How.) 185, 13 L. Ed. 657;
Canada Southern Ry. Co. v. Gebhard, 109 U.S. 527, 3 S. Ct. 363, 27 L. Ed. 1020; Underhill v.
Hernandez, 168 U.S. 250, 18 S. Ct. 83, 42 L. Ed. 456; Hewitt v. Speyer (C.C.A.) 250 F. 367.

Nor does it appear that enlarged rights may be obtained over the German law should a suit by a
policyholder be entertained by the courts of the United States. Sutherland v. Mayer, 271 U.S.
272, 46 S. Ct. 538, 70 L. Ed. 943; Deutsche Bank v. Humphrey, 272 U.S. 517, 47 S. Ct. 166, 71
L. Ed. 383; see, also, Zimmerman v. Sutherland, supra. Such holding is in harmony with other
courts. See, Chesterman's Trust, (1923) 2 Chancery 466, where the court had before it a debt
payable in German marks which had greatly depreciated, and it was held that it might be paid in
the depreciated marks or in their exchange value converted into British currency. The same rule
was applied in British Bank v. Russian Bank, (1921) 38 Times Law Reports 65, in which Mr.
Justice Russell said that he "had great sympathy with the defendants, but it must be remembered
that the same causes that caused the fall in the value of roubles had produced great depreciation
in the plaintiff's securities." This was approved in Anderson v. Equitable Assurance Society,
(1926) 134 Law Times 557.

It is asserted by appellant that, jurisdiction being apparent on the face of the record, it may not be
challenged by motion but must be by plea, and that when, as here, jurisdiction is challenged by
plea, by the answer, and put in issue by the reply, issue must be submitted to the jury for decision
on the merits, and that there is no precedent for the order of the trial court.
As to the last objection, to have a precedent there must be an antecedent case; but the lack
thereof does not defeat a right or privilege. No fault can be found with the cases cited by the
appellant, the following of which are the more prominent: Farmington v. Pillsbury, 114 U.S.
138, 5 S. Ct. 807, 29 L. Ed. 114; Hartog v. Memory, 116 U.S. 588, 6 S. Ct. 521, 29 L. Ed. 725;
Mexican Central Railway Co. v. Pinkney, 149 U.S. 194, 13 S. Ct. 859, 37 L. Ed. 699; City
Railway Co. v. Citizen's Street Railroad Co., 166 U.S. 557, 17 S. Ct. 653, 41 L. Ed. 1114; Union
Mutual Life Insurance Co. v. Kirchoff, 169 U.S. 103, 18 S. Ct. 260, 42 L. Ed. 677; York County
Sav. Bank v. Abbot (C.C.) 131 F. 980. These cases do not point the way. One sustains dismissal
when the fact appears to a legal certainty; another, where a party is collusively added; another
holds that the evidence considered must be pertinent to the issue, or to the inquiry by the court;
another holds that where there is reasonable plausibility of bona fide claim, jurisdiction will be
passed to trial on the merits, and another is one where the court holds that claim rightly viewed
unfounded must be denied.

Every requirement appears to be met substantially by the record. Process in this case was served
upon the statutory agent of the appellee in Oregon, appointed as a condition to do business in that
state and for the convenience and protection of residents to whom policies may be issued and
afford them access to the courts of the state or district.

The appellant contends that, notwithstanding the agreement that the German courts shall have
exclusive jurisdiction, such agreement is not binding on the federal courts, vested with their
jurisdiction by the United States Constitution, of which they cannot be deprived by foreign laws
or agreement. The appellant also contends that these are not actions upon the policies. But,
whatever the designation may be, the basis is the policies.

No alien has a constitutional right to sue in the United States courts. Kline v. Burke Construction
Co., 260 U.S. 226, 43 S. Ct. 79, 67 L. Ed. 226, 24 A.L.R. 1077. The United States District Courts
have such jurisdiction as the Congress confers. 28 USCA § 41, grants jurisdiction as follows:

"First. Of all suits of a civil nature, at common law or in equity * * * between citizens of a State
and foreign States, citizens, or subjects. * * *

"Third. Of all civil causes of admiralty and maritime jurisdiction, saving to suitors in all cases
the right of a common-law remedy. * * *"

Civil cases and actions in admiralty and maritime jurisdiction have equal status, and the courts
have uniformly, where the question has arisen, declined to entertain jurisdiction in admiralty
suits by nonresidents when in the discretion of the court it would be inconvenient and
inexpedient to do so. And no distinction has been made to civil cases.

Nor is the right to challenge the jurisdiction or to invite the discretion of the court waived or
forfeited by removal from the state to the federal court, or the right of the court, after issue
joined, to make investigation on notice and, in its discretion, decline jurisdiction after such
inquiry. 28 USCA, § 81, provides that in all suits removed the court shall proceed as if the suit
had been originally commenced in the district court and the same proceedings had been taken in
such suit in said district court as shall have been had therein in said state court prior to its
removal.

Upon the face of the record the district court had jurisdiction when the case came to it from the
state court. When the issue first came to its attention, and upon inquiry and examination, the
court became cognizant of the status and relation and no doubt had inherent power to protect
itself from a deluge of litigation by nonresidents, inspired by contingent retainers to avoid or
overcome foreign laws and interpretation and application thereof by foreign courts of the country
of the situs of the contract; and it had the power to prefer resident litigants of the district in
access to overcrowded calendars, for, as Justice Holmes said in Douglas v. New York, N.H. H.R.
Co., 279 U.S. 377, 387, 49 S. Ct. 355, 356, 73 L. Ed. 747: "There are manifest reasons for
preferring residents in access to often overcrowded Courts, both in convenience and in the fact
that broadly speaking it is they who pay for maintaining the Courts concerned"; and it had the
power to prevent imposition upon its jurisdiction and use of the court as a "cover for injustice to
the defendants" (Cuba R. Co. v. Crosby, 222 U.S. 473, 479, 32 S. Ct. 132, 133, 56 L. Ed. 274,
38 L.R.A. (N.S.) 40) by reason of the enormous expense involved in bringing across the
continent witnesses from Germany and New York and the records of appellee which plaintiff
demands as necessary in another case and, if so, must also be necessary in this case, the removal
of which would destroy the ability of the appellee, representing more than 2,500,000
policyholders, to function.

Comity between the United States and Germany should also have consideration.

With the foregoing, nothing can be added to the opinion of Judge Robert S. Bean, who at the
time of his recent demise was the dean of the American bench, and whose death terminated a
creditable judicial career of more than forty-eight years on the state and federal bench. His
opinion is reported in (D.C.) 45 F.2d 426, and is adopted as a part of the opinion of the court.

Affirmed.

//////////`

HEINE V. NEW YORK LIFE INSURANCE CO. December 1, 1930 Topic: Jurisdiction –
Doctrine of Forum Non Conveniens Defendant insurance companies were incorporated
in NY, doing business in Germany. Cases were filed against them to recover on some
240 life insurance policies made and issued in Germany, in favor of German citizens,
and payable in German currency. The cases were filed in Portland, Oregon, where
defendants maintained statutory agents Doctrine: The courts have repeatedly refused,
in their discretion, to entertain jurisdiction of causes of action arising in a foreign
jurisdiction, where both parties are nonresidents of the forum. Circumstances often exist
which render it inexpedient for the court to take jurisdiction of controversies between
foreigners in cases not arising in the country of the forum (as, where they are governed
by the laws of the country to which the parties belong, and there is no difficulty in a
resort to its courts; or where they have agreed to resort to no other tribunals) not on the
ground that it has no jurisdiction, but that, from the motives of convenience, or
international comity, it will use its discretion whether to exercise jurisdiction or not.
FACTS:  This is one of a series of cases pending in the District Court of Oregon
against the New York Life Insurance Co. and Guardian Insurance Co., both New York
corporations, to recover on about 240 life insurance policies. o The policies were made
and issued by the defendants in Germany, in favor of German citizens, and payable in
German marks.  As a condition to the right to do business in Germany, the insurance
companies: o submitred to the supervision and control of the German insurance officials
o invested the reserves arising from German policies in German securities o established
and maintain an office in Germany with a resident representative or agent upon whom
service of process can be made.  None of the parties to the litigation are residents or
inhabitants of the District of Oregon. o The plaintiffs reside in, and are citizens of, the
republic of Germany. o The defendants are corporations organized and existing under
the laws of New York, with their principal offices in that state, with the statutory agents
in Oregon, upon whom services can be made.  None of the causes of action arose in
Oregon, nor do any of the material witnesses reside in the district, nor are any of the
records of the defendant companies pertaining to the policies in suit in the district, but
such records are either at the home office in New York or at their offices in Germany 
Plaintiffs (the insured) argue that because the court has jurisdiction of the subject-matter
and the parties, it has no discretion, but should proceed with the case o Regardless of
the where the cause of action arose, or the law by which it is controlled, or the
residence or convenience of the parties and witnesses, or the difficulty the court would
encounter in attempting to interpret and enforce a foreign contract, or the interference
with the other business of the court.  New York Life Insurance, on the other hand, while
conceding that the court has jurisdiction of the person and subject-matter, urged that it
should refuse, in its discretion, to exercise such jurisdiction for the reason of
inconvenience it would cause to the defendants and the court. o NYLC filed a motion to
dismiss.

ISSUE: WN it is proper for the District Court of Oregon to assume jurisdiction over the
case – NO, it is not. RATIO:  The courts of Germany and New York are open and
functioning and competent to take jurisdiction of the controversies, and service can be
made upon the defendants in either of such jurisdictions.  To require the defendants to
defend the actions in this district would impose upon them great and unnecessary
inconvenience and expense, and probably compel them to produce here (three
thousand miles from their home office) numerous records, books, and papers, all of
which are in daily use by it in taking care of current business.  In addition, it would no
doubt consume months of time of the court to try and dispose of these cases, thus
necessarily disarranging the calendar, resulting in delay, inconvenience, and expense to
other litigants who are entitled to invoke its jurisdiction.  Having jurisdiction over the
subject matter and the parties, whether the Court should proceed with the case is a
matter resting in the discretion of the court. It may retain jurisdiction, or it may, in the
exercise of sound discretion, decline to do so, as the circumstances suggest.  The
courts have repeatedly refused, in their discretion, to entertain jurisdiction of causes of
action arising in a foreign jurisdiction, where both parties are nonresidents of the forum.
o Circumstances often exist which render it inexpedient for the court to take jurisdiction
of controversies between foreigners in cases not arising in the country of the forum (as,
where they are governed by the laws of the country to which the parties belong, and
there is no difficulty in a resort to its courts; or where they have agreed to resort to no
other tribunals) not on the ground that it has no jurisdiction, but that, from the motives of
convenience, or international comity, it will use its discretion whether to exercise
jurisdiction or not.  The cases involved here are cases of that kind. They are actions
brought on causes of action arising in Germany. The contract of insurance was made
and to be paid there and in German currency. It is to be construed and given effect
according to the laws of the place where it was made.  The courts of this country are
established and maintained primarily to determine controversies between its own
citizens and those having business there, and manifestly the court may protect itself
against flood of litigation over contracts made and to be performed in a foreign country,
where the parties and witnesses are nonresidents of the forum, and no reason exists
why the liability, if any, cannot be enforced in the courts of the country where the cause
of action arose, or in the state where the defendant was organized and has its principal
offices. DISPOSITIVE: Motion (to dismiss) allowed.

◦ BELLIS VS BELLIS GR L-23678

G.R. No. L-23678 June 6, 1967

TESTATE ESTATE OF AMOS G. BELLIS, deceased.

PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.

Vicente R. Macasaet and Jose D. Villena for oppositors appellants.

Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.

BENGZON, J.P., J.:

This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First
Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in
Civil Case No. 37089 therein. 1äwphï1.ñët

The facts of the case are as follows:

Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his
first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis,
George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children:
Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children:
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.

On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after
all taxes, obligations, and expenses of administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen;
(b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam
Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the
remainder shall go to his seven surviving children by his first and second wives, namely: Edward A.
Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis,
and Dorothy E. Bellis, in equal shares. 1äwphï1.ñët

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His
will was admitted to probate in the Court of First Instance of Manila on September 15, 1958.

The People's Bank and Trust Company, as executor of the will, paid all the bequests therein
including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the
three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various
amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time according as the lower court approved and allowed
the various motions or petitions filed by the latter three requesting partial advances on account of
their respective legacies.

On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter
alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock
amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition,
the executor — pursuant to the "Twelfth" clause of the testator's Last Will and Testament — divided
the residuary estate into seven equal portions for the benefit of the testator's seven legitimate
children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions
to the project of partition on the ground that they were deprived of their legitimes as illegitimate
children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
evidenced by the registry receipt submitted on April 27, 1964 by the executor. 1

After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on
April 30, 1964, issued an order overruling the oppositions and approving the executor's final account,
report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it applied
the national law of the decedent, which in this case is Texas law, which did not provide for legitimes.

Their respective motions for reconsideration having been denied by the lower court on June 11,
1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply —
Texas law or Philippine law.

In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied
by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually
pertinent where the decedent is a national of one country, and a domicile of another. In the present
case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the
time of his death.2 So that even assuming Texas has a conflict of law rule providing that the
domiciliary system (law of the domicile) should govern, the same would not result in a reference
back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a
conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the place
where the properties are situated, renvoi would arise, since the properties here involved are found in
the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it should not
be presumed different from ours.3 Appellants' position is therefore not rested on the doctrine of
renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they argue
that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation
to Article 16 of the Civil Code.

Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent,
in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b)
the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the
capacity to succeed. They provide that —

ART. 16. Real property as well as personal property is subject to the law of the country
where it is situated.

However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may he the nature of the property and
regardless of the country wherein said property may be found.

ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.

Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that —

Prohibitive laws concerning persons, their acts or property, and those which have for their
object public order, public policy and good customs shall not be rendered ineffective by laws
or judgments promulgated, or by determinations or conventions agreed upon in a foreign
country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil
Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art.
16 a specific provision in itself which must be applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees
that capacity to succeed is to be governed by the national law of the decedent.

It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For
it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's
national law. Specific provisions must prevail over general ones.

Appellants would also point out that the decedent executed two wills — one to govern his Texas
estate and the other his Philippine estate — arguing from this that he intended Philippine law to
govern his Philippine estate. Assuming that such was the decedent's intention in executing a
separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil.
867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in
accordance with Philippine law and not with his national law, is illegal and void, for his national law
cannot be ignored in regard to those matters that Article 10 — now Article 16 — of the Civil Code
states said national law should govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and
that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional rights are to be determined under
Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.

Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ.,
concur.

Footnotes

1
He later filed a motion praying that as a legal heir he be included in this case as one of the
oppositors-appellants; to file or adopt the opposition of his sisters to the project of partition;
to submit his brief after paying his proportionate share in the expenses incurred in the
printing of the record on appeal; or to allow him to adopt the briefs filed by his sisters — but
this Court resolved to deny the motion.

2
San Antonio, Texas was his legal residence.

3
Lim vs. Collector, 36 Phil. 472; In re Testate Estate of Suntay, 95 Phil. 500

/////
Bellis v. Bellis
G.R. No. L-23678, 6 June 1967

FACTS:

Amos Bellis, born in Texas, was a citizen of the State of Texas

and of the United States. He had 5 legitimate children with his
wife, Mary Mallen, whom he had divorced, 3 legitimate children
with his 2nd wife, Violet Kennedy and finally, 3 illegitimate
children. Subsequently, Amos Bellis died a resident of San
Antonio, Texas, USA. His will was admitted to probate in the
Philippines. The People’s Bank and Trust Company, an executor of
the will, paid the entire bequest therein.

Preparatory to closing its administration, the executor submitted

and filed its “Executor’s Final Account, Report of Administration
and Project of Partition” where it reported, inter alia, the
satisfaction of the legacy of Mary Mallen by the shares of stock
amounting to $240,000 delivered to her, and the legacies of the 3
illegitimate children in the amount of P40,000 each or a total of
P120,000. In the project partition, the executor divided the
residuary estate into 7 equal portions for the benefit of the
testator’s 7 legitimate children by his 1st and 2nd marriages.

Among the 3 illegitimate children, Mari Cristina and Miriam Palma

Bellis filed their respective opposition to the project partition
on the ground that they were deprived of their legitimes as
illegitimate children.

The lower court denied their respective motions for

reconsideration.

ISSUE:

Which law must apply – Texas Law or Philippine Law?

RULING:
The Philippine law will apply. Under the doctrine of Processual
Presumption, the foreign law, whenever applicable, should be
proved by the proponent thereof, otherwise, such law shall be
presumed to be exactly the same as the law of the forum.

In the absence of proof as to the conflict of law rule of Texas,

it should not be presumed different from ours. Apply Philippine
laws. Article 16, par. 2, and Art. 1039 of the Civil Code, render
applicable the national law of the decedent, in intestate or
testamentary successions, with regard to four items: (a) the
order of succession; (b) the amount of successional rights; (e)
the intrinsic validity of the provisions of the will; and (d) the
capacity to succeed. They provide that —ART. 16. Real property as
well as personal property is subject to the law of the country
where it is situated.

However, intestate and testamentary successions, both with

respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary
provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may be the
nature of the property and regardless of the country wherein said
property may be found.

ART. 1039. Capacity to succeed is governed by the law of the

nation of the decedent.

The parties admit that the decedent, Amos G. Bellis, was a

citizen of the State of Texas, U.S.A., and that under the laws of
Texas; there are no forced heirs or legitimes. Accordingly, since
the intrinsic validity of the provision of the will and the
amount of successional rights are to be determined under Texas
law, the Philippine law on legitimes cannot be applied to the
testacy of Amos G. Bellis.

◦ ASSIGNMENT TO BE SUBMITTED - Why apply foreign law?

 1. Theory of Comity

Under this theory, we apply the foreign law because of its convenience, and finally, because we want
protection to our citizens, residents, and transients in our land

///

In law, comity specifically refers to legal reciprocity, the principle that

one jurisdiction will extend certain courtesies to other nations, or other
jurisdictions within the same nation. This is particularly done by
recognizing the validity and effect of their executive, legislative, and
judicial acts
////

the legal principle which dictates that a jurisdiction recognize and give effect to judicial decrees and
decisions rendered in other jurisdictions' unless to do so would offend its public policy.' Although rooted
in the Middle Ages,' comity continues to be a viable doctrine, because it facilitates the achievement of a
primary objec- tive of law-the orderly, consistent and final resolution of disputes.

///

"heor+ of comit+

According to this theory, no foreign law would be allowed to operate in another state e0cept by
the comity of nations

Comit+

The recognition which one state allows within its territory, to the legislative, e0ecutive, or
*udicial acts of another nation

2. Theory of Vested Rights

Here we seek to enforce not the foreign law itself but the rights that have been vested under such foreign
law.

//
once a right was created in one locale, its existence should be
recognized everywhere. Classic theories of conflicts law used a
number of connecting factors to determine the territorially applicable
law
//

Under this theory, our courts enforce not the foreign law or foreign judgement but the
right or rights that have been vested under such law or judgement. Rights once acquired
should be enforced regardless of where the suit for its enforcement was filed.

3. Theory of Local Law

We apply foreign law not because it is foreign but because our own laws, by applying similar rules,
require us to do so

//

under this theory, we apply a foreign law not because it is foreign, but because our own law by
applying a similar rule requires us to do so, hence it is as if the foreign law has become part of
our own internal or domestic law

///
It suggests that even though a court recognizes and enforces a local
right (a right created under its own law), in a foreign case, it does not
necessarily apply the rule that would govern a similar case of a purely
domestic nature
///

every court is to essentially formulate its own set of laws based on the previous judgements.
However, unlike territorial theory, for reasons of social expediency and practical convenience, it
takes into account the laws of the foreign country in question. The court creates its own local
right, but fashions it as nearly as possible on the law of the country in which the decisive facts
have occurred

Local Law Theory

¥Walter Wheeler Cook rejected Òdeduction from general principles as a means to
ascertain positive law.Ó
¥Proposal: unearth rules by looking at the cases and other concrete phenomena, including
the behavior of judges.
¥Observations:

First
, the power of a state to regulate within its own territory has no limitation, except
such as may be imposed by its own positive law.

Second
, in conflict of laws problems, the court does not enforce a foreign right but a
right created by its own law by treating a case as a purely domestic case that
does not involve a foreign element.

¥Result: law applied may not be exactly as what a foreign court may have enforced.
¥Criticism: practical and equitable considerations may be overlooked in favor of an
exercise of sovereignty

4. Theory of Harmony of Law

We have to apply foreign law so that whenever a case is decided, that is, irrespective of the forum, the
solution should be approximately the same; thus identical or similar solutions anywhere and everywhere

//

under this theory, identical or similar problems should be given identical or similar solutions thus
resulting in harmony of law

5. Theory of Justice

The purpose of all laws is the dispensing of justice; if this can be attained in many cases by applying the
proper foreign law, we must do

///
Since the purpose of all laws, including Conflict of Laws, is the dispensation of justice, the
proper foreign law should be applied in order to attain this objective

The defect of this theory, however, is that different persons may have different ideas of what is
*us

THEORIES WHY FOREIGN LAW SHOULD BE GIVEN EFFECT

1. Theory of Comity – foreign law is applied because of its convenience & because we want to
give protection to our citizens, residents, & transients in our land
2. Theory of Vested Rights – we seek to enforce not foreign law itself but the rights that have
been vested under such foreign law; an act done in another state may give rise to the existence
of a right if the laws of that state crated such right.
3. Theory of Local Law– adherents of this school of thought believe that we apply foreign law not
because it is foreign, but because our laws, by applying similar rules, require us to do so; hence,
it is as if the foreign law has become part & parcel of our local law
4. Theory of Harmony of Laws – theorists here insist that in many cases we have to apply the
foreign laws so that wherever a case is decided, that is, irrespective of the forum, the solution
should be approximately the same; thus, identical or similar solutions anywhere & everywhere.
When the goal is realized, there will be “harmony of laws”
5. Theory of Justice – the purpose of all laws, including Conflict of Laws, is the dispensing of
justice; if this can be attained in may cases applying the proper foreign law, we must do so