Expropriation of Insurance Companies Case

CourtCourt of Appeal of Berlin (Germany)
Docket NumberCase No. 43
German Federal Republic, Higher Court of Appeal (Kammergericht) of West Berlin.
Case No. 43
Expropriation of Insurance Companies Case.

Jurisdiction — Extra-territorial Effect of — Confiscatory Legislation — Territorial Limitation of — Expropriation of Assets of Insurance Company — Insurance Company as Mortgagee — Transfer of Assets to State Enterprise — Whether Mortgage Debtors Liable to Original Mortgagee or State Enterprise.

The Facts.—The defendants, an insurance company incorporated in Germany, were the owners of certain mortgages secured on real property situate in a part of Saxony (Germany) which, on the conclusion of hostilities in the Second World War, became Soviet-occupied territory. By an Ordinance dated December 30, 1946, all property owned by insurance companies and situate in Soviet-occupied Saxony (with the exception of negotiable instruments) was confiscated and vested in a State enterprise, the plaintiffs in this case. Some of the company's mortgage debtors were resident in West Berlin, which did not form part of the Soviet zone of occupation; and being uncertain as to whether they were liable to pay their mortgage debts to the original mortgagees, the defendants herein, or to the newly established State enterprise, the plaintiffs herein, they deposited the moneys they owed—as they were entitled to do—with a court in West Berlin. In this action the plaintiffs brought an action against the defendants claiming the consent of the latter to the payments being made to them, the plaintiffs, as mortgage creditors. The claim was resisted on the ground that the Ordinance of December 30, 1946, was limited to Soviet-occupied Saxony in its territorial application and therefore incapable of vesting the mortgage debts in the plaintiffs. The Court of first instance accepted this contention and dismissed the action. The plaintiffs now appealed.

Held: that the Ordinance purporting to confiscate the property of the defendants was confined to Soviet-occupied Saxony in its territorial application and therefore incapable of vesting the mortgage debts in the plaintiffs, and that the appeal must accordingly be dismissed. The Court said:

“We cannot allow a ‘system of law’ to triumph, the basis of which ‘violates constitutional principles, good morals and the objects of existing legal enactments’. This point of view must, without any doubt, prevail in favour of the defendants. They...

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