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The First Russian Insurance Co. established a branch in New York in 1907. In 1918 and 1919 the Russian Government nationalized all insurance companies, discharged and canceled all debts and the rights of shareholders in such companies. The New York Branch continued to do business until 1925. At that time, Respondent, pursuant to an order of the Supreme Court of New York took possession of its assets. All claims were settled, and a balance of more than $1,000,000 was left over. The Court of Appeals directed that the claims of foreign creditors be paid and then to pay any surplus remaining to a quorum of the board of directors of the company. A stay was granted, and in the interim, in 1933 the U.S. recognized the USSR and as an incidence to that recognition accepted an assignment of certain claims (this was known as the Litvinov Assignment). The New York court of appeals held that the Russian decrees had no extraterritorial effect.

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