The Commissioner of Internal Revenue, having made jeopardy
assessments of some $19,000,000 against a Uruguayan corporation,
served with notices of levy and of federal tax lien respondent bank
in New York, in whose Montevideo branch the corporation maintained
a deposit. Concurrently, petitioner brought a foreclosure action in
Federal District Court against the corporation, respondent, and
others, pending determination of which an injunction was sought
against transfer by respondent of any property or rights held for
the corporation's account. Respondent, but not the corporation, was
personally served. The District Court granted a temporary
injunction under 26 U.S.C. § 7402(a), which gives district courts
power to grant injunctions "necessary or appropriate for the
enforcement of the internal revenue laws," and the Court of Appeals
The District Court has jurisdiction to preserve
the status quo
and prevent further dissipation of assets
by issuing its temporary injunction "freezing" the corporation's
account in respondent's foreign branch pending personal service on
the corporation. Pp. 379 U. S.
(a) Rules 4(e) and (f) of the Federal Rules of Civil Procedure
provide for service in accordance with a state statute of a
noninhabitant or person not found in the State. P. 379 U. S.
(b) Under § 302(a) of the New York Civil Practice Law and Rules,
which became effective after the temporary injunction was issued,
out-of-state personal service may be made as provided in § 313 on a
nondomiciliary transacting business within the State, a remedy
which New York law makes applicable to further proceedings, such as
are involved here, in an action pending on the effective date of
the statute. Pp. 379 U. S.
(c) Issuance of the injunction under 26 U.S.C. § 7402(a) was a
proper exercise of the equity power of the District Court,
particularly as it was acting in the public interest. P.
379 U. S.
(d) Respondent's foreign branch was not a "separate entity"
without the reach of the District Court's in personam
order. P. 379 U. S.
Page 379 U. S. 379
(e) The District Court reserved power to enter a protective
order upon a showing, though none has been made, that the
"freezing" of the foreign branch account would violate foreign law
or subject respondent to the risk of double liability, and that
court is open to any representations which the Executive Branch
might make that such "freezing" would embarrass this country's
foreign relations. P. 379 U. S.
325 F.2d 1020, reversed.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This case presents a collateral phase of litigation involving
jeopardy assessments of some $19,000,000 made by the Commissioner
of Internal Revenue against Omar, S.A., a Uruguayan corporation.
The assessments charged that income had been realized within the
United States on which a tax was due. On the same day, respondent
was served with notice of levy and notice of the federal tax lien.
At the same time, petitioner commenced an action in the New York
District Court naming Omar, as well as respondent and others, as
defendants. Personal jurisdiction over respondent was acquired,
but, as of the date of argument of the case here, Omar had not yet
been served. That action requested, inter alia,
Page 379 U. S. 380
the tax lien upon all of Omar's property, including sums held
for the account or credit of Omar in foreign branch offices of
respondent. [Footnote 1
also requested that, pending determination of the action,
respondent be enjoined from transferring any property or rights to
property held for the account of Omar; and affidavits filed with
the complaint averred that Omar was removing its assets from the
The District Court, on the basis of the affidavits, issued a
temporary injunction enjoining respondent from transferring any
property or rights to property of Omar now held by it or by any
branch offices within or without the United States, indicating it
would modify the order should compliance be shown to violate
foreign law. 210 F.
. The Court of Appeals reversed by a divided vote,
both by a panel of three, 321 F.2d 14, and en banc, 325 F.2d 1020.
The case is here on a writ of certiorari. 377 U.
Title 26 U.S.C. § 7402(a) gives the District Court power to
grant injunctions "necessary or appropriate for the enforcement of
the internal revenue laws." Since it has personal jurisdiction over
respondent, has it power to grant the interim relief requested? We
are advised that respondent's only debt to Omar is payable at
respondent's branch in Montevideo. It is said that the United
States, the creditor, can assert against respondent in New York
only those rights that Omar, the debtor, has against respondent in
New York, and that, under New York law, a depositor in a foreign
branch has an action against the head office only where there has
been a demand and wrongful refusal at the foreign branch.
Sokoloff v. National City Bank,
239 N.Y. 158, 145 N.E.
Page 379 U. S. 381
N.Y. 69, 164 N.E. 745. The point is emphasized by the argument
that any obligation of respondent to Omar is due only in Montevideo
-- an obligation apparently dischargeable in Uruguayan currency,
not in dollars. Therefore, the argument runs, there is no claim of
the debtor (Omar) in New York which the creditor can reach.
We need not consider at this juncture all the refinements of
that reasoning. For the narrow issue for us is whether the creditor
(the United States) may by injunction pendente lite
protect whatever rights the debtor (Omar) may have against
respondent who is before the court on personal service. If it were
clear that the debtor (Omar) were beyond reach of the District
Court so far as personal service is concerned, we would have quite
a different case -- one on which we intimate no opinion. But, under
§ 302(a) of the New York Civil Practice Law and Rules, 7B
McKinney's Consol.Laws Ann., § 302, personal jurisdiction may be
exercised over a "nondomiciliary" who "transacts any business
within the state" as to a cause of action arising out of such
transaction, in which event out-of-state personal service may be
made as provided in § 313. [Footnote 2
] The Federal Rules of Civil Procedure, by Rule
4(e) and Rule 4(f), allow a party not an inhabitant of the State or
found therein to be served with a summons in a federal court in the
manner and under the circumstances prescribed by a state statute.
] See United
States v. Montreal Trust Co.,
35 F.R.D. 216.
Page 379 U. S. 382
To be sure, this cause of action arose, the complaint was filed,
and the temporary injunction was issued before the New York statute
became effective. The New York Court of Appeals has, however,
indicated that, where the suit is instituted after
effective date of the statute, the statute will normally apply to
transactions occurring before
the effective date.
Simonson v. International Bank,
14 N.Y.2d 281, 290, 200
N.E.2d 427, 432, 251 N.Y.S.2d 433, 440. That court has further
indicated that where, as in the instant case, the suit based on the
prior transaction was pending on the effective date of the statute,
"the new act shall -- except where it would not be feasible or
would work injustice' -- apply "to all further
proceedings" in such action. . . ." [Footnote 4] Ibid. It seems obvious that a future
attempt by the Government to serve process on Omar would be
considered a "further proceeding" in the instant litigation.
Accordingly, we judge the temporary injunction, which has only a
prospective application, as of now and in light of the present
remedy which § 302(a)
Page 379 U. S. 383
affords. [Footnote 5
our review of the injunction as an exercise of the equity power
granted by 26 U.S.C. § 7402(a) must be in light of the public
"Courts of equity may, and frequently do, go much farther both
to give and withhold relief in furtherance of the public interest
than they are accustomed to go when only private interests are
Virginian R. Co. v. System Federation, 300 U.
, 300 U. S. 552
And see United States v. Morgan, 307 U.
, 307 U. S. 194
Hecht Co. v. Bowles, 321 U. S. 321
321 U. S.
If personal jurisdiction over Omar is acquired, the creditor
(the United States) will be able to collect from respondent what
the debtor (Omar) could collect. The opportunity to make that
collection should not be lost in limine
merely because the
debtor (Omar) has not
Page 379 U. S. 384
made the agreed-upon demand on respondent at the time and place
and in the manner provided in their contract.
Whether the Montevideo branch is a "separate entity," as the
Court of Appeals thought, is not germane to the present narrow
issue. It is not a separate entity in the sense that it is
insulated from respondent's managerial prerogatives. Respondent has
actual, practical control over its branches; it is organized under
a federal statute, 12 U.S.C. § 24, which authorizes it "To sue and
be sued, complain and defend, in any court of law and equity, as
fully as natural persons" -- as one entity, not branch by branch.
The branch bank's affairs are, therefore, as much within the reach
of the in personam
order entered by the District Court as
are those of the home office. Once personal jurisdiction of a party
is obtained, the District Court has authority to order it to
"freeze" property under its control, whether the property be within
or without the United States. See New Jersey v. New York
City, 283 U. S. 473
283 U. S.
That is not to say that a federal court in this country should
treat all the affairs of a branch bank the same as it would those
of the home office. For overseas transactions are often caught in a
web of extraterritorial activities and foreign law beyond the ken
of our federal courts or their competence. We have, however, no
such involvement here, for there is no showing that the mere
"freezing" of the Montevideo accounts, pending service on Omar,
would violate foreign law, cf. Societe Internationale v.
Rogers, 357 U. S. 197
357 U. S. 211
or place respondent under any risk of double liability. Cf.
Western Union Co. v. Pennsylvania, 368 U. S.
. The District Court reserved power to enter any
protective order of that character. 210 F.
, 775. And if, as is argued in dissent, the litigation
might in time be embarrassing to United States diplomacy, the
District Court remains open
Page 379 U. S. 385
to the Executive Branch, which, it must be remembered, is the
moving party in the present proceeding.
The temporary injunction issued by the District Court seems to
us to be eminently appropriate to prevent further dissipation of
assets. See United States v. Morris & Essex R. Co.,
135 F.2d 711, 713-714. If such relief were beyond the authority of
the District Court, foreign taxpayers facing jeopardy assessments
might either transfer assets abroad or dissipate those in foreign
accounts under control of American institutions before personal
service on the foreign taxpayer could be made. Such a scheme was
underfoot here, the affidavits aver. Unlike De Beers Consol.
Mines v. United States, 325 U. S. 212
there is here property which would be "the subject of the
provisions of any final decree in the cause." Id.,
325 U. S. 220
We conclude that this temporary injunction is "a reasonable measure
to preserve the status quo" (Deckert v. Independence Shares
Corp., 311 U. S. 282
311 U. S. 290
pending service of process on Omar and an adjudication of the
These branches are not separate corporations, but parts of
respondent's single, federally chartered corporation. See
12 U.S.C. §§ 601-604; First National City Bank v. Internal
271 F.2d 616.
There is also, of course, the possibility that Omar might enter
a general appearance, as it apparently did in the Tax Court when it
filed its petition of May 20, 1963, for a redetermination of the
deficiencies on the basis of which the present jeopardy assessments
Rule 4(e), effective July 1, 1963, reads in relevant part:
"Whenever a statute or rule of court of the state in which the
district court is held provides (1) for service of a summons, or of
a notice, or of an order in lieu of summons upon a party not an
inhabitant of or found within the state, or (2) for service upon or
notice to him to appear and respond or defend in an action by
reason of the attachment or garnishment or similar seizure of his
property located within the state, service may in either case be
made under the circumstances and in the manner prescribed in the
statute or rule."
Rule 4(f), also effective July 1, 1963, reads in relevant
"All process other than a subpoena may be served anywhere within
the territorial limits of the state in which the district court is
held, and, when authorized by a statute of the United States or by
these rules, beyond the territorial limits of that state."
The Court of Appeals reached these conclusions on the basis of
Civil Practice Law and Rules, § 10003, 7B McKinney's Consol.Laws
Ann., § 10003:
"This act shall apply to all actions hereafter commenced. This
act shall also apply to all further proceedings in pending actions,
except to the extent that the court determines that application in
a particular pending action would not be feasible or would work
injustice, in which event the former procedure applies. Proceedings
pursuant to law in an action taken prior to the time this act takes
effect shall not be rendered ineffectual or impaired by this
That the Government has not yet attempted to obtain personal
jurisdiction over Omar is not significant in light of the fact
that, until now, the Government's primary contention has been that
the District Court's personal jurisdiction over the respondent bank
was, by itself, an adequate basis for the issuance of the temporary
injunction. As the Government said in its petition for rehearing
before the Court of Appeals:
"The jurisdictional basis, then, for the injunction issued by
the District Court was personal jurisdiction over the Bank.
Certainly, at this stage of the proceeding, it is inconsequential
whether the District Court has jurisdiction over a res
over the taxpayer."
The Government went on to say that, if this contention was
rejected, then it wished to argue that the tax lien had attached to
Omar's deposits, and that these deposits "constitute rights to
property which were within the jurisdiction of the District Court."
Finally, the Government stated:
"It is only in the event that the Court concludes that the lien
does not attach to such deposits that personal jurisdiction over
Omar becomes relevant. In such event, the Government should be
afforded an opportunity to obtain personal jurisdiction over Omar,
and the injunction should stand pending such efforts."
Even before this Court, the Government argues alternatively that
"the District Court had authority to enter the temporary injunction
to preserve funds over which it had jurisdiction quasi in
" a contention upon which, as noted previously, we do not
MR. JUSTICE HARLAN, with whom MR. JUSTICE GOLDBERG joins,
The Court's opinion reflects an expansive view of the
jurisdiction of a federal court to tie up foreign owned and
situated property with which I cannot agree.
The Internal Revenue Service first focused on Omar, S.A., a
Uruguayan corporation, in 1959, when Omar filed a return seeking a
$10,000 credit from a regulated investment company. Investigation
of this relatively small refund claim revealed the possibility
that, in fact, Omar owed a very substantial amount in taxes to the
Government. Omar maintained accounts with several New York
securities brokers, and purchase and sale orders
Page 379 U. S. 386
communicated from abroad had resulted in the realization of
large profits. The lawyer acting for Omar contended that these
transactions gave rise to no tax liability, because Omar was not a
personal holding company. In a meeting with the investigating agent
in May, 1962, the lawyer warned that if the Service persisted in
its attempt to tax Omar as a personal holding company, "Omar would
quite likely liquidate its holdings in the United States, and send
the money out of the country." [Footnote 2/1
The Service did persist. On October 31, 1962, it issued jeopardy
assessments against Omar totaling $19,300,000, and, on the same
day, filed a complaint in the District Court for the Southern
District of New York naming as defendants Omar, the brokerage
houses with which Omar had dealt, and several banks, including the
First National City Bank (hereinafter Citibank), which is the
respondent here. By this time, Omar had in large part succeeded in
liquidating its securities and transferring the funds out of the
country. Some of the funds were apparently transferred to
Citibank's branch in Montevideo, Uruguay, and were on deposit there
on the day the complaint was filed. As part of the relief sought,
the Government asked the District Court to "freeze" this account
(we are not informed as to its size) until such time as personal
jurisdiction could be obtained over Omar. Citibank contested the
authority of the court to make such an order on the ground that the
account had its situs in Montevideo, and was therefore beyond the
jurisdiction of the court. Personal jurisdiction over Omar had not
been obtained at the time the complaint was filed, and has not been
obtained in the two years since. Omar is thus not a party to the
present litigation. Personal jurisdiction over Citibank was
obtained by service upon its home office at 55 Wall Street, New
Page 379 U. S. 387
The issue presented by the case is: did the Federal District
Court have jurisdiction to freeze the account in Montevideo by
enjoining Citibank from transferring any property or rights to
property held therein for Omar? The Government argues that
jurisdiction could stem from either of two sources: jurisdiction
quasi in rem
over the debt owing from Citibank's
Montevideo branch to Omar, or personal jurisdiction over Citibank,
which is capable of controlling the debt even though its situs may
be outside the court's jurisdiction. Despite its enigmatic and
unsupported statement that "there is here property which would be
the subject of the provisions of any final decree in the
cause,'" ante, p.
379 U. S. 385, the Court does not decide the quasi
in rem issue on which the District Court relied. The opinion
rests entirely on the personal jurisdiction theory. Both theories
are, in my view, demonstrably insufficient.
The Court upholds the freeze order on the basis that the
District Court, pending acquisition of personal jurisdiction over
Omar, had authority to enjoin Citibank (over which it did have
personal jurisdiction) from allowing its Montevideo branch to
transfer the funds to Omar.
There can be no doubt that the enforcement powers available to
the District Court were adequate to accomplish that much of the end
in view. Citibank was before the court. It had sufficient control
over the Montevideo branch to require compliance with the freeze
order, and, if it did not exercise that control, the sanctions of
contempt could be inflicted on officers and property of Citibank
within the New York district. [Footnote
] But "jurisdiction" is not
Page 379 U. S. 388
synonymous with naked power. It is a combination of power and
policy. Judge Learned Hand made this point in Amey v. Colebrook
Guaranty Sav. Bank,
92 F.2d 62, a case containing some of the
same elements as the case before us. In reversing so much of an
interlocutory decree of a federal judge sitting in Vermont as
provided for the cutting of timber in Maine, Judge Hand said:
"The word 'jurisdiction' is, in this connection, somewhat
equivocal; in one sense, the judge had it; the bank had personally
appeared, and was subject to his orders as far as any corporation
can be; he might sequester its property in Vermont, if he could
find any, or he might proceed against its officers as for a
contempt. But although he thus had the power to prevent the
defendant from asserting its rights in Maine, it might still be
improper for him to do so. Courts do not always exert themselves to
the full, or direct parties to do all that they can effectively
compel, and such forbearance is sometimes called lack of
'jurisdiction.' What reserves a court shall make when dealing with
real property beyond its territory is not altogether plain; as to
some things, it will act freely when it has before it those who
hold the legal interests."
92 F.2d at 63.
The real problem with this phase of the case is therefore this:
Granting that the District Court had the naked power to control the
Montevideo account by bringing to bear coercive action on Citibank,
ought the court to have exercised it? Or, to put the question in
the statutory terms, [Footnote 2/3
was the court's order "appropriate" for the enforcement of the
internal revenue laws?
Page 379 U. S. 389
1. Need for Personal Jurisdiction Over
We should first consider the question in its starkest form.
Assuming that there is no quasi in rem
the property (see
Part IV, infra,
p. 379 U. S. 404
and no reasonable likelihood of obtaining personal jurisdiction
over Omar, why should the court not use its naked power, to the
extent that it could be brought to bear on others situated as was
Citibank, to tie up Omar's property all over the world for the
avowed purpose of coercing Omar into paying its taxes?
Use of judicial equity powers to coerce a party over whom the
court has no jurisdiction or likelihood of obtaining jurisdiction
is unheard of. The statute authorizing courts to render such
decrees as may be "necessary or appropriate for the enforcement of
the internal revenue laws" clearly intends that courts use only
their traditional equity powers to that end. [Footnote 2/4
] It should not be interpreted as an
authorization to employ radically new and extremely far-reaching
forms of coercive action in a more freewheeling approach to
international than to domestic cases. [Footnote 2/5
] Neither the Government nor the Court
argues for such an extraordinary judicial use of power. Suffice it
to say that, if the contrary position were taken, serious
constitutional problems would arise.
Page 379 U. S. 390
2. Improbability of Obtaining Personal Jurisdiction
Omar as of the Time the Injunction Was
It is basic to traditional notions of equity that, to justify
the issuance of a protective temporary injunction, there must exist
a substantial probability that jurisdiction, judgment, and
enforcement will be obtained with respect to the person sought to
be affected. [Footnote 2/6
Court does not and could not contest this proposition, and
virtually concedes that, at the time the injunction was issued, the
Government had insufficient probability of obtaining personal
jurisdiction over Omar to justify the issuance of the freeze order.
Section 302(a) of the New York Civil Practice Law and Rules, upon
which the Court alone relies, did not become effective until 10
months later. [Footnote 2/7
No other theory is offered by the Court which could justify the
freeze order as of the time at which it was issued. [Footnote 2/8
Page 379 U. S. 391
3. Evaluating the Injunction "as of now."
The only course left open to the Court on its theory of the case
is to judge the injunction "as of now." Indeed the New York Court
of Appeals ruled, in Simonson v. International Bank,
N.Y.2d 281, 200 N.E.2d 427, 251 N.Y.S.2d 433, that § 302(a) does
not retroactively validate actions in pending cases taken before
its enactment, and may be applied to further proceedings in pending
cases only if it is equitable to do so. [Footnote 2/9
] Thus, even on the glib assumption that New
York courts would interpret § 302(a) to give personal jurisdiction
over one who merely traded long
Page 379 U. S. 392
distance for his own account on the New York Exchanges,
] the Court must
nonetheless show, as a matter of both state and federal law, that
there is equity in continuing the existence of the freeze order.
There are two inescapable reasons why such a showing is
(a) The so-called "temporary" freeze order has now been in
effect for over two years. During this time, no form of
jurisdiction over Omar has been obtained. It may be argued that it
is this appellate review which has been the cause of delay. But
Omar is not party to this review. The contesting parties are the
Government and Citibank. Nothing pertaining to these proceedings
precluded or excused the Government from obtaining personal
jurisdiction over Omar and proceeding with the case if it was
otherwise able to do so. As far as Omar is concerned, its property
has been taken from its control by a court having jurisdiction
neither over the corporation nor over the property (see
Part IV, infra,
p. 379 U. S.
), prior to any judgment of liability being entered
against it, and during a time when the Uruguayan peso has fallen
over 60%. [Footnote 2/11
Government had its chance to reach Omar's property before it was
removed from the country. Indeed, it was warned (supra,
379 U. S.
), and made no legal move until several months later.
It made no effort to obtain personal jurisdiction over Omar within
a reasonable time after the "temporary" injunction was issued, or
after § 302(a) was enacted, or after the date at which it
supposedly altered the theory on which it chose to argue
Page 379 U. S. 393
its case. The Court expresses the opinion that this latter
event, obviously irrelevant to the equities of Omar and Citibank,
somehow explains and excuses the Government's failure to have
acquired personal jurisdiction over Omar. This is surely untenable.
The petition for rehearing was filed on July 10, 1963, following
the initial Court of Appeals' opinion and prior to the opinion of
the court en banc. Over 18 months have elapsed since that time.
Were this in itself not conclusive, the Government stated
unequivocally, and as its very first ground for rehearing:
"The United States, which in this action seeks, inter
a judgment in personam
against Omar, is taking
necessary steps to effectuate personal jurisdiction over Omar."
In the face of this statement, there is no way that the Court
can excuse or avoid the fact that the Government, by reason of
either neglect or inability, has failed to acquire jurisdiction
over Omar in the ample time which has been available to it. Yet the
Court inexplicably finds equity in continuing the freeze order.
] Omar, as a
foreign corporation which allegedly withdrew its assets to avoid
taxation by this country, naturally does not present a sympathetic
aspect to this Court, but that is no justification for perpetuating
a "temporary" order which, without any jurisdiction basis, has tied
Page 379 U. S. 394
property for over two years. [Footnote 2/13
] Alleged tax dodgers, as much as those
charged with crime, are entitled to due process treatment. And the
hand of equity should be stayed long before it reaches
(b) Whether the situation is examined as of the time the order
originally issued or as of now, the Government has to show that the
funds to be frozen may be subject to ultimate execution. If the
property cannot be subjected to government levy, there is obviously
no equity in freezing it. That is the situation presented here. The
quasi in rem
statute does not permit the court to attach
the property directly (see
Part IV, infra,
379 U. S.
), and no view is expressed by the Court as to how or
whether this difficulty could be avoided.
The Government argues that this obstacle can be skirted in the
following fashion. Personal jurisdiction under § 302 can be
obtained over Omar by mailing a
Page 379 U. S. 395
letter to Uruguay pursuant to New York's substituted service
statute. [Footnote 2/14
can then be obtained, together with an order to Omar to transfer
the funds in the Montevideo account to the Government. When Omar
refuses to comply voluntarily -- it has no officers in New York who
could be punished for contempt -- a court officer appointed under
Rule 70 of the Federal Rules of Civil Procedure could be sent to
Montevideo to make demand upon the Citibank branch in the name of
the United States. [Footnote
] If the branch refuses payment, it will breach its
contract to pay on demand. An action for breach of the contract
could then be brought by the depositor against Citibank in New York
fn2/27|>n. 27, infra
). Once that obligation
accrues in New York, the Government can garnish it to satisfy the
personal judgment. Of course, if the court could directly order
Citibank in New York to pay the debt, the obligation would be
payable "within the district" (see
p. 379 U. S.
), in which case the quasi in rem
would serve without necessitating elaborate personal jurisdiction
The reasons why this procedural cakewalking should not commend
itself are manifest. Foreign courts in customary
Page 379 U. S. 396
international practice (which Uruguay presumably follows) do not
enforce foreign tax judgments. [Footnote 2/16
] Therefore, Uruguay would undoubtedly not
consider valid a demand made by the court-appointed officer for the
property within Uruguayan borders. If the refusal to pay the court
officer is proper under the Uruguayan law which governs the
contract, there can be no breach which would give rise to a cause
of action in New York, Zimmermann v. Sutherland,
274 U. S. 253
Furthermore, the prospect is more than startling that a district
court, aware that a foreign country would not enforce its judgment,
would nonetheless dispatch a court officer to the foreign
jurisdiction to accomplish that end by self-help. [Footnote 2/17
Page 379 U. S. 397
THE DE BEERS AND DECKERTS CASES
It is surprising that the Court has been content to so cursorily
lay aside De Beers Consolidated Mines, Ltd. v. United
States, 325 U. S. 212
for, upon examination, that case will be found to be
indistinguishable from the present case, and should control this
litigation on the personal jurisdiction issue.
The United States brought a Sherman antitrust action against De
Beers and other African-based diamond companies alleging
monopolization and conspiracy in restraint of trade. All were
allegedly doing business within the United States. With the
complaint, the Government requested a preliminary injunction
freezing all property in the United States belonging to the
defendants. As stated in the opinion, the reasons given in support
of the motion were:
"'The injury to the United States of America from the withdrawal
of said deposits, diamonds or other property would be irreparable
because sequestration of said property is the only means of
enforcing this Court's orders or decree against said foreign
corporate defendants. The principal business of said defendants is
carried on in foreign countries, and they could quickly withdraw
their assets from the United States, and so prevent enforcement of
any order or decree which this Court may render.'"
"Amongst other supporting papers was an affidavit by counsel for
the United States which stated that 'the investigation which he has
made shows the
Page 379 U. S. 398
foreign corporate defendants named herein have endeavored to
avoid subjecting themselves to the jurisdiction of the courts of
the United States by making their sales abroad only and requiring
customers to pay in advance for all purchases.'"
325 U.S. at 325 U. S.
Under the Sherman Act, district courts had power "to prevent and
restrain violations of this act." (26 Stat. 209, 15 U.S.C. § 4
(1958 ed.)), and, under the "all writs" section of the Judicial
Code, to "issue all writs necessary or appropriate in aid of their
respective jurisdictions and agreeable to the usages and principles
of law" (now 28 U.S.C. § 1651 (1958 ed.)). The Court construed
these grants of authority as limited to traditional equitable
powers. It then demonstrated the remoteness of any levy by the
Government against the property of the defendants, and, because of
the remoteness, vacated the freeze order. It should be noted that,
unlike the present case, the property sought to be frozen was
within the borders of the United States, and that, without a hold
on it, an order to the defendants to stop their alleged
monopolistic practices would have been as little likely to meet
with voluntary compliance as an order to Omar to pay
The Government would distinguish De Beers
on the ground
that, under the Sherman Act, the trial court could award only
injunctive relief, whereas, in the present case, the judgment, were
the Government successful, would be a money award. However, the
Court recognized that levy against the property
could ultimately be had as a means of enforcing the injunctive
order. Clearly, the Court's point in emphasizing the scope of the
order which could issue in the first instance was that the
possibility of an ultimate levy was too remote in practical terms
to justify freezing the property from the outset of the litigation.
Remoteness is the determinative point,
Page 379 U. S. 399
whatever its cause, and, in terms of remoteness, the case before
us argues even stronger than De Beers
against the issuance
of what amounts to an interim sequestration order. The principles
of De Beers
should govern this litigation. [Footnote 2/18
The Government puts forth Deckert v. Independence Shares
Corp., 311 U. S. 282
instead of De Beers
as the case most analogous to the
present one. In Deckert,
a bill in equity was brought
against an insolvent and allegedly fraudulent securities vendor and
against a third party who held assets of the vendor. By way of
interlocutory relief, the plaintiffs asked that the assets in the
hands of the third party be frozen, and this Court sustained the
request. Distinguishing features are many. Deckert
involved no international problems. The court had personal
jurisdiction over all parties concerned. There was no question of
power to enforce a judgment against the frozen funds. The only
contingency on which enforcement depended was whether the plaintiff
would win the suit; thus, there was virtually no problem of
remoteness. And, unlike the present case (see infra,
379 U. S.
-545), the frozen funds could have been attached
directly by a suit quasi in rem
in a state court.
Page 379 U. S. 400
THE OVERALL BALANCE OF EQUITIES, AND CONSIDERATIONS
AFFECTING JURISDICTION [Footnote 2/20]
Certainly the Court's remark that it must act in light of the
"public interest" cannot mean that, because the Government is a
party here, the Court may ignore its duty to consider the balance
of equities. It is, therefore, well to consider just what overall
benefits will accrue in the public interest as a result of today's
Except in the context of the comparatively rare case in which
the Government has the element of surprise on its side, it must be
recognized that the utility of the extraterritorial freeze order as
a tax collecting weapon is minimal. Under the tax regulation
adopted during this action, the Government declares that it would
use the freeze order power to reach only funds which were
transferred out of this country in order to hinder or delay the
collection of taxes and which were in banks having an American
office. [Footnote 2/21
] In other
words, the regulation would
Page 379 U. S. 401
snare only those taxpayers smart and unscrupulous enough to
withdraw their funds from the United States, but stupid and
uninformed enough, even after this decision, to put the transferred
funds in a bank having a United States office. In order to provide
the Government with this toy pistol, the Court flexes its muscles
in a manner never before imagined.
If the overall benefits of this exercise of power are minimal,
the detriments are substantial.
(a) It would expose Citibank, an innocent stakeholder, to
exactly the kind of administrative hazards which New York's
"separate entity" theory is designed to obviate.
(b) It would subject Citibank to the possibility of double
liability if Uruguay did not recognize the United
Page 379 U. S. 402
States' judgment, and multiple liability if Uruguay permitted
actions for slander of credit. The District Court's offer to modify
the freeze order if Citibank shows that it conflicts with Uruguayan
law is some hedge against the first of these dangers, but,
operating at its best, it places the heavy burden on Citibank,
blameless in this situation, of discovering Uruguayan law. In
practical operation, the Uruguayan law may well be unclear to the
point that Citibank can only be sure of its obligation to Omar if
it is sued for payment and the matter is litigated. If Omar is
loath to sue for one reason or another (it may fear that its demand
for the money and the bank's refusal to pay it will cause the
obligation to become payable in New York), it may be impossible for
Citibank to establish Uruguayan law before it is too late. If the
Government manages to levy on the account, and only afterwards is
it established that the bank was liable to Omar, Citibank would be
left to sue the United States for recoupment, an eventuality for
which no provision has been made, and which the Government stated
at the oral argument of this case that it would oppose.
(c) Citibank alleges that its foreign banking business will be
hurt because foreign depositors will be discouraged from using
United States banks for fear that their funds can be reached by
United States courts. There is no sure way to gauge the seriousness
of this possibility, but, since Citibank is an innocent stakeholder
here, doubt should be resolved in its favor.
(d) The Uruguay Code of Civil Procedure provides, in rough
"Art. 511. Judgments rendered foreign states shall have in the
Republic [Uruguay] the effect prescribed by applicable
"Art. 512. If there are not treaties with the nation in which
they are rendered, they shall have the same
Page 379 U. S. 403
effect which, by the laws of that nation, it would give to the
decrees rendered in the Republic."
"Art. 513. If the judgment proceeds from a nation in which by
its jurisprudence, it would not give effect to the decrees of the
Tribunals of the Republic, they [sic
] shall have no force
here. [Footnote 2/22
When Omar sues Citibank in Montevideo for its account, Citibank
will plead the United States decree as a defense, and the Court
speculates that Uruguay will give it effect (ante,
379 U. S.
-385). In light of Uruguay's reciprocity principle,
the Court's decision implicitly signifies that our courts would
recognize a similar order by a Uruguayan court. [Footnote 2/23
] Operating under a tax regulation
similar to that adopted by the Government, a Uruguayan court with
jurisdiction over the Montevideo branch of Citibank could freeze
accounts in New York. [Footnote
] I am extremely reluctant to uphold such a power. The
freeze orders of the type in question here issue prior to any court
judgment-- indeed, before any significant proceedings at all. A
nation asked to recognize such a freeze order will have virtually
nothing to go on but the bare request. The propriety of the decree
does not even rest on the reliability of the foreign court, as is
the usual case in judgment recognition problems, [Footnote 2/25
] but on the reliability of the
foreign taxing authorities, something a domestic court has no way
The Court should not lose sight of the fact that our modern
notions of substituted service and personal jurisdiction
Page 379 U. S. 404
were developed within a framework of States whose various
processes are governed by the Due Process Clause and whose
judgments must be given full faith and credit by the other States
within the federal structure. Great care and reserve should be
exercised when extending our notions of personal jurisdiction into
the international field, both as a basis for asserting federal
judicial power with respect to property in foreign countries and
for permitting property in this country to be tied up by foreign
QUASI IN REM JURISDICTION
There remains for consideration the quasi in rem
which the Government argues but which the Court chooses not to
decide. Whether the District Court had quasi in rem
jurisdiction turns on whether Omar had property or rights to
property within the Southern District of New York to which a
federal lien could attach. [Footnote
Page 379 U. S. 405
Under New York law, Omar had only a conditional right to payment
in New York in the event that a demand made upon the Montevideo
branch where the account is maintained was wrongfully refused,
Sokoloff v. National City Bank,
250 N.Y. 69, 164 N.E. 745;
] and two recent
decisions by this Court establish that it is New York law which
here determines the nature and existence of property rights for
federal tax lien purposes.
In United States v. Bess, 357 U. S.
, the taxpayer died leaving income taxes unpaid for a
prior year. Several life insurance policies were part of his
estate. The Court said:
"We must now decide whether Mr. Bess possessed in his lifetime,
within the meaning of § 3670, any 'property' or 'rights to
property' in the insurance policies to which the perfected lien for
the 1946 taxes might attach. Since § 3670 creates no property
Page 379 U. S. 406
rights, but merely attaches consequences, federally defined, to
rights created under state law, . . . we must look first to Mr.
Bess' right in the policies as defined by state law."
357 U.S. at 357 U. S. 55
] Since Bess had
had no right to the proceeds of the policies during his lifetime,
no federal tax lien could have attached to them. But Bess could
have drawn on the cash surrender value; thus, under state law, he
had "rights to property" during his lifetime to that extent.
However, it was also true under state law that no creditor was
permitted to attach the cash surrender value of the policies. In
answer to the contention that the Government should be treated no
differently than any other creditor, the Court said:
"[O]nce it has been determined that state law creates sufficient
interests in the insured to satisfy the requirements of § 3670,
state law is inoperative to prevent the attachment of liens created
by federal statutes in favor of the United States."
357 U.S. at 357 U. S. 56
On the basis of this analysis -- that state law creates property
rights, but federal law determines whether liens should attach to
them -- the Court concluded that the lien could be enforced against
the beneficiary of the policies to the extent of the cash surrender
Even under Bess,
an argument could be made for
permitting a federal lien in this instance to attach in New
Page 379 U. S. 407
York. New York law, which treats branch banks as separate
entities and makes Omar's account payable in the first instance
only in Montevideo, was developed primarily to meet the problems
created by ordinary garnishing creditors, and arguably has no
application to a claim by the United States. But the Court, in
Aquilino v. United States, 363 U.
, chose to accept state property law just as it
found it, and not to evaluate its underlying rationale in light of
the needs of federal revenue collection. There, the Government sued
a general contractor who had defaulted both on the payment of
federal taxes and on the payment of amounts due to subcontractors
with mechanics' liens. Money payable by the property owner to the
general contractor was the subject of the suit. The subcontractors
contended that, under New York lien law, the general contractor had
"mere title" to the contested fund, holding it in trust for the
subcontractors; thus, it was argued, he himself had no right to the
property within the meaning of the federal lien statute. In
remanding the case to determine if the New York law was as the
subcontractors contended, the Court indicated it would accept this
argument despite the fact that the only practical effect that New
York's definition of the general contractor's property rights could
have would be to control which creditors prevailed against the
my dissenting opinion, 363 U.S. at
363 U. S.
.) The Court said:
"The application of state law in ascertaining the taxpayer's
property rights and of federal law in reconciling the claims of
competing lienors is based both upon logic and sound legal
principles. This approach strikes a proper balance between the
legitimate and traditional interest which the State has in creating
and defining the property interest of its citizens, and the
necessity for a uniform administration of the federal revenue
363 U.S. at 363 U. S.
Page 379 U. S. 408
The State of New York has determined that branch banks should be
treated as separate entities, primarily in order to avoid the
crippling effects which could result from requiring each branch to
be aware of and liable to make payments to depositors and
garnishing creditors on accounts maintained in other branches.
] If New York,
based upon this policy, has determined that Omar has no immediate
right to payment in New York, federal lien law, under Bess
cannot create one. The rule of those cases
would not, I think, go so far as to allow an incidental contract
provision adopted by two contracting parties simply for their own
convenience to thwart the operation of federal lien law -- for
instance, an agreement that the parties would meet at a certain
place to consummate their transaction -- but, in the present case,
the policy determination has been made by the State, not by private
parties, and cannot be treated as incidental. The only right to
property which New York recognizes in Omar is the conditional right
to payment predicated on a wrongful refusal in Montevideo. The
Government can, of course, levy on that conditional right, but the
satisfaction it will derive from doing so is obviously limited.
The Government seeks to analogize various insurance company
cases in which liens are permitted to attach to the cash surrender
value of policies despite a contract condition that the
policyholder must surrender his policy in order to collect.
] It is contended
that, just as federal courts can override the requirement of policy
surrender, they can override the requirement of demand and wrongful
refusal in Montevideo. The insurance cases, however, are readily
distinguishable. The policy
Page 379 U. S. 409
surrender requirement is of the order of an incidental rule of
contract between two private contracting parties; indeed, it has
been characterized as a housekeeping detail. [Footnote 2/31
] And if the purpose of requiring
surrender of an insurance policy is to protect the company against
suit at some later time, a court decree would fully satisfy it. The
District Court guaranteed, and could guarantee, Citibank no such
protection from suit by Omar.
In conclusion on the quasi in rem
branch of this case,
it should be remembered that it is a statute which we are
interpreting. [Footnote 2/32
Section 1655, 28 U.S.C., pertaining to "Lien enforcement; absent
defendants," provides for quasi in rem
federal district courts over property "within the district." Courts
of other countries would recognize that the situs of the Omar
account was in Montevideo. [Footnote
] Courts of New York State would so hold, [Footnote 2/34
] and where, as here, the common
understanding would be that the situs of an account payable to a
Uruguayan corporation in Montevideo is in Montevideo, we should not
indulge a wholly novel interpretation of the governing statute.
The only case cited by the Court relating to injunctions
involving property outside the United States is New Jersey v.
New York City, 283 U. S. 473
which this Court enjoined New York City from dumping its
Page 379 U. S. 410
in the sea off the coast of New Jersey. [Footnote 2/35
] In the face of this slender reed stands
basically indistinguishable from the case at
bar, plus the powerful equitable considerations enumerated above.
The clear preponderance of the competing considerations leads to
the conclusion that the issuance of this freeze order was not
"appropriate for the enforcement of the internal revenue laws" (§
7402(a), n. 3, supra
), and therefore that the District
Court, even though it possessed the naked power to act as it did,
had no "jurisdiction" (ibid.
) to issue the challenged
order. The same result follows even if naked power be considered as
synonymous with jurisdiction (a proposition which, for me, is
wholly unacceptable), for, in that event, the action of the
District Court must be regarded as entailing an abuse of discretion
of such magnitude and mischievous radiations in our general
jurisprudence as to make the order a proper subject of review by
this Court under its supervisory powers. [Footnote 2/36
While I have the utmost sympathy with the Government's efforts
to protect the revenue, I do not think the course it has taken here
can be sustained without extending federal court jurisdiction
beyond permissible limits.
I vote to affirm the judgment of the Court of Appeals.
Affidavit of William R. T. Gottlieb, one of the investigating
Cf. Penn v. Lord Baltimore,
1 Ves. sen. 444, 454 (Ch.
1750) (1st Am. ed. 1831); Deschenes v. Tallman,
33, 161 N.E. 321.
Internal Revenue Code of 1954, § 7402(a), provides:
"To issue orders, processes, and judgments.
district courts of the United States at the instance of the United
States shall have such jurisdiction to make and issue in civil
actions, writs and orders of injunction, and of ne exeat republica,
orders appointing receivers, and such other orders and processes,
and to render such judgments and decrees as may be necessary or
appropriate for the enforcement of the internal revenue laws. The
remedies hereby provided are in addition to and not exclusive of
any and all other remedies of the United States in such courts or
otherwise to enforce such laws."
Compare De Beers Consol. Mines, Ltd. v. United States,
325 U. S. 212
Appalachian Coals, Inc. v. United States, 288 U.
, 288 U. S.
Compare Banco Nacional de Cuba v. Sabbatino,
376 U. S. 398
Hall Signal Co. v. General R. Signal Co.,
153 F. 907;
A. H. Bull Steamship Co. v. National Marine Engineers'
250 F.2d 332, 337.
It became effective on September 1, 1963. The freeze order was
issued on October 31, 1962. Section 302 provides:
"(a) Acts which are the basis of jurisdiction.
may exercise personal jurisdiction over any nondomiciliary, or his
executor or administrator, as to a cause of action arising from any
of the acts enumerated in this section, in the same manner as if he
were a domiciliary of the state, if, in person or through an agent,
"1. transacts any business within the state; or"
"2. commits a tortious act within the state, except as to a
cause of action for defamation of character arising from the act;
"3. owns, uses or possesses any real property situated within
"(b) Effect of appearance.
Where personal jurisdiction
is based solely upon this section, an appearance does not confer
such jurisdiction with respect to causes of action not arising from
an act enumerated in this section."
The lame suggestion is made by the Government that Omar would
voluntarily make a general appearance to defend the suit. In light
of the fact that Omar had quite evidently purposefully withdrawn
most of its property from the jurisdiction, including the property
here in question, an appearance voluntarily putting this very
property in jeopardy would have been most surprising. The
Government makes the further argument that Omar might have
attempted to make a limited appearance to contest the title to some
other property over which the District Court had clear quasi in
jurisdiction (an account with Lehman Bros. in New York has
been attached); and, since the limited appearance might not be
recognized, but instead treated as a general appearance, personal
jurisdiction would be obtained. (There is a split of authority as
to whether limited appearances are permitted. See United States
236 F.2d 298 (C.A.2d Cir.), cert.
352 U.S. 968, and cases cited therein. See
Developments in the Law: State Court Jurisdiction, 73
Harv.L.Rev. 909, 953 (1960)). Whether or not a rule against limited
appearances should prevail in our federal courts, it is clear that
no argument for having such a rule could extend so far as to
authorize a court, by reason of its having quasi in rem
jurisdiction over one piece of property, to use whatever naked
power is at its command to freeze all property wherever located,
which could conceivably be affected by a personal judgment.
involved a suit brought in 1960 in New York
against an Arizona bank. The trial court held that there was no
personal jurisdiction over the defendant under existing statutes.
By the time the plaintiff's appeal on this issue reached the Court
of Appeals, § 302 had become effective and appellant tried to rely
on it. The court held that § 302 did not retroactively apply to
validate the service that had been made upon the Arizona bank, and
affirmed the dismissal of the complaint.
See Simonson v. International Bank,
14 N.Y.2d 281, 288,
200 N.E.2d 427, 431, 251 N.Y.S.2d 433, 439; Purdy Co. v.
333 F.2d 95, cert. denied,
379 U.S. 962
(decided under the Illinois statute on which § 302 was patterned).
Compare Grobark v. Addo Machine Co., 16 Ill. 2d
, 158 N.E.2d
; Insull v. New York World-Telegram Corp.,
166; National Gas Appliance Corp. v. AB Electrolux,
Foreign Exchange Rates, N.Y. Times, Oct. 31, 1962, p. 47, col.
5; N.Y. Times, Jan. 11, 1965, p. 37, col. 4.
The Court's very assertion that the Government changed its
theory is belied by the statement, prominently featured in the
petition for rehearing, that
"The Government contended in the brief heretofore filed in this
Court that there is every likelihood that personal jurisdiction
over Omar can be effectuated. . . ."
Of course, the Government argued alternative theories below,
just as it has done here. The statements quoted by the Court
(gleaned from a footnote) indicate only that the Government
(rightly, I think) regarded the personal jurisdiction argument as
its weaker point.
The Government's delay in obtaining personal jurisdiction is
particularly significant because of the unknowns and imponderables
with which the case in its present posture is saturated. Thus, we
have no firm indication of what Uruguayan law is with respect to
any aspect of this action, no indication of the effect freeze
orders would have on this country's banking interests, and Omar,
the foreign taxpayer whose interests are most at stake, is not
before the Court. Can it be doubted that a decision upon the
propriety of the novel use of judicial power here involved could be
much better made if the issue were presented in a context with some
of the unknowns removed? Had the Government not delayed but,
instead, proceeded (if possible) to acquire personal jurisdiction
over Omar, and then judgment and execution (if possible) against
the Montevideo account, the case could come before us with most of
this opaqueness removed. Omar could have presented the issue of the
validity of the freeze order as a defense to an ultimate levy upon
the account; the issue would not be moot at that stage, because
there would have been no earlier time at which Omar could have
attacked the order without running the risk of being subjected to
the personal jurisdiction of the court, and, as a matter of sound
judicial principle, the Government should not be permitted to levy
successfully upon the account when its ability to do so stems from
an improper freeze order.
Section 313 of New York Civil Practice Law and Rules
"A person domiciled in the state or subject to the jurisdiction
of the courts of the state under section 301 or 302, or his
executor or administrator, may be served with the summons without
the state, in the same manner as service is made within the state,
by any person authorized to make service within the state who is a
resident of the state or by any person authorized to make service
by the laws of the state, territory, possession or country in which
service is made or by any duly qualified attorney, solicitor,
barrister, or equivalent in such jurisdiction."
Rule 70 provides in relevant part:
"If a judgment directs a party to execute a conveyance of land
or to deliver deeds or other documents or to perform any other
specific act and the party fails to comply within the time
specified, the court may direct the act to be done at the cost of
the disobedient party by some other person appointed by the court
and the act when so done has like effect as if done by the
United States v. Harden,
 Can.Sup.Ct. 366, 41
D.L.R.2d 721; Government of India v. Taylor,
491 (H.L.); Peter Buchanan Ld. & Macharg v. McVey,
 A.C. 516 (Eire Sup.Ct.). For enforcement of tax claims
between States, see Moore v. Mitchell,
30 F.2d 600,
aff'd on other grounds, 281 U. S. 281
18; Colorado v. Harbeck,
232 N.Y. 71, 133 N.E. 357.
Contra: Oklahoma Tax Comm'n v. Rodgers,
238 Mo.App. 1115,
193 S.W.2d 919. Tax treaties may be used to change the general
international understanding. See
Owens, United States
Income Tax Treaties: Their Role in Relieving Double Taxation; 17
Rutgers L.Rev. 428, 449-451 (1963). We have no tax treaty with
Uruguay, Treaties in Force 205 (Dept. of State 1964).
Nations, generally chary of having foreign officials enter their
borders even for purposes of serving process, are even more
unlikely to look with favor upon a foreign official entering in an
attempt to enforce a tax judgment. See
Aspects of Federal Civil Procedure, 61 Col.L.Rev. 1031, 1040
(1961); Harvard Research in International Law, Draft Convention on
Judicial Assistance, 33 Am.J.Int'l L., Spec.Supp. II, 43-65 (1939);
Jones, International Judicial Assistance: Procedural Chaos and a
Program for Reform, 62 Yale L.J. 515, 534-537 (1953); Longley,
Serving Process, Subpoenas and Other Documents in Foreign
Territory, A.B.A. Section of Int'l and Comp.Law 34 (1959).
The Court derives support for such a bizarre procedure from the
fact that "the District Court remains open to the Executive Branch"
pp. 379 U. S.
-385). But certainly the Court cannot justify a
procedure at odds with proper international practice simply because
the Executive has not expressed a contrary wish.
I doubt very much whether, before today's decision, even our own
State Department would have found it easy to lend its aid, by way
of issuing a passport or otherwise, to such a novel international
The Court places reliance on New Jersey v. New York
City, 283 U. S. 473
inapposite case in which the Court enjoined New York City from
taking its garbage out to sea and dumping it off the New Jersey
coast. No international problem was involved, nor any question of
personal jurisdiction, enforcement, or rights of third parties. The
garbage left our territorial jurisdiction on a circular route
calculated to return it in an offensive manner. The Court had clear
jurisdiction to prevent if from beginning that journey.
This last feature was heavily relied upon in United States
v. Morris & Essex R. Co.,
135 F.2d 711, a tax case in
which the tax lien statute could have been used directly.
Prior to the recent amendments of the Federal Rules of Civil
Rule 4(e)), a federal district court could
not obtain quasi in rem
jurisdiction over a debt owed to
an absent defendant. Big Vein Coal Co. v. Read,
229 U. S. 31
Those policy considerations which enter into a jurisdictional
determination once it is decided that naked power exists are those
which would apply in the generality of cases raising the
jurisdictional question. Those considerations which are peculiar to
this case relate to the question whether, in this instance,
jurisdiction, once established, should be exercised.
The regulation provides:
"26 CFR § 301.6332-1 (as amended by T.D. 6746, 29 Fed.Reg. 9792)
Surrender of property subject to levy.
-- (1) In general.
in possession of (or obligated with respect to) property or rights
to property subject to levy upon which a levy has been made shall,
upon demand of the district director, surrender such property or
rights (or discharge such obligation) to the district director,
except such part of the property or right as is at the time of such
demand, subject to an attachment or execution under any judicial
"(2) Property held by banks.
subparagraph (1) of this paragraph, if a levy has been made upon
property or rights to property subject to levy which a bank engaged
in the banking business in the United States or a possession of the
United States is in possession of (or obligated with respect to),
the Commissioner shall not enforce the levy with respect to any
deposits held in an office of the bank outside the United States or
a possession of the United States unless the notice of levy
specifies that the district director intends to reach such
deposits. The notice of levy shall not specify that the district
director intends to reach such deposits unless the district
director believes --"
"(i) That the taxpayer is within the jurisdiction of a United
States court at the time the levy is made and that the bank is in
possession of (or obligated with respect to) deposits of the
taxpayer in an office of the bank outside the United States or a
possession of the United States; or"
"(ii) That the taxpayer is not within the jurisdiction of a
United States court at the time the levy is made, that the bank is
in possession of (or obligated with respect to) deposits of the
taxpayer in an office outside the United States or a possession of
the United States, and that such deposits consist, in whole or in
part, of funds transferred from the United States or a possession
of the United States in order to hinder or delay the collection of
a tax imposed by the Code."
"For purposes of this subparagraph, the term 'possession of the
United States' includes Guam, the Midway Islands, the Panama Canal
Zone, the Commonwealth of Puerto Rico, American Samoa, the Virgin
Islands, and Wake Island."
Codigo de Procedimiento Civil (Couture, 1952). There have been
no amendments, Index to Latin American Legislation, Library of
Ehrenzweig, Conflict of Laws, §§ 45, 46 (1962);
Hilton v. Guyot, 159 U. S. 113
The regulation makes no distinction between parent and branch
Reese, The Status in This Country of Judgments Rendered Abroad,
50 Col.L.Rev. 783 (1950).
28 U.S.C. § 1655 (1958 ed.) provides:
"§ 1655. Lien enforcement; absent defendants.
"In an action in a district court to enforce any lien upon or
claim to, or to remove any incumbrance or lien or cloud upon the
title to, real or personal property within the district, where any
defendant cannot be served within the State, or does not
voluntarily appear, the court may order the absent defendant to
appear or plead by a day certain."
"Such order shall be served on the absent defendant personally
if practicable, wherever found, and also upon the person or persons
in possession or charge of such property, if any. Where personal
service is not practicable, the order shall be published as the
court may direct, not less than once a week for six consecutive
"If an absent defendant does not appear or plead within the time
allowed, the court may proceed as if the absent defendant had been
served with process within the State, but any adjudication shall,
as regards the absent defendant without appearance, affect only the
property which is the subject of the action. When a part of the
property is within another district, but within the same state,
such action may be brought in either district."
"Any defendant not so personally notified may, at any time
within one year after final judgment, enter his appearance, and
thereupon the court shall set aside the judgment and permit such
defendant to plead on payment of such costs as the court deems
See Bluebird Undergarment Corp. v. Gomez,
742, 249 N.Y.S 319; Cronan v. Schilling, Sup.,
N.Y.S.2d 474, aff'd,
282 App.Div. 940, 126 N.Y.S.2d 192;
Newtown Jackson Co. v. Animashaun,
148 N.Y.S.2d 66;
McCloskey v. Chase Manhattan Bank,
11 N.Y.2d 936, 228
N.Y.S.2d 825, 183 N.E.2d 227; Zimmerman v. Hicks,
443, aff'd sub nom. Zimmermann v. Sutherland, 274 U.
. And see Richardson v. Richardson
Prob. 228, 137 L.T.R. (n.s.) 492; Comment, 56 Mich.L.Rev. 90
(1957); Note, 48 Cornell L.Q. 333 (1963).
The bank account is a contract for payment on demand at the
Montevideo branch. If demand were wrongfully refused, a cause of
action for breach of contract would be created on which Omar could
sue in New York. Thus, analytically, it is not the account itself
which would become payable in New York, but damages for breach of
the contract to pay on demand in Montevideo.
Section 3670 is now Internal Revenue Code of 1954, § 6321. It
"If any person liable to pay any tax neglects or refuses to pay
the same after demand, the amount (including any interest,
additional amount, addition to tax, or assessable penalty, together
with any costs that may accrue in addition thereto) shall be a lien
in favor of the United States upon all property and rights to
property, whether real or personal, belonging to such person."
Comment, 56 Mich.L.Rev. 90 (1957).
E.g., Equitable Life Assurance Society of the United States
v. United States,
331 F.2d 29; United States v.
Metropolitan Life Ins. Co.,
256 F.2d 17; but see United
States v. Metropolitan Life Ins. Co.,
130 F.2d 149.
Equitable Life Assurance Society of the United States v.
331 F.2d 29, 33.
Crane v. Commissioner, 331 U. S.
. See also American Banana Co. v. United Fruit
Co., 213 U. S. 347
213 U. S.
Richardson v. Richardson,
 Prob. 228, 137 L.T.R.
If the law of Uruguay were known, New York might look to it as a
matter of conflicts law.
I would not decide at this juncture whether federal courts in
all situations would be required to enforce liens against property
which the State would hold to be within its jurisdiction.
fn2/18|>n. 18, supra.
Under the Court's opinion, there appears, even now, to be no
limit on the further length of time in which the Government can
delay before acquiring personal jurisdiction over Omar.