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SCHILL v. MCGRATH

February 20, 1950

SCHILL
v.
McGRATH



The opinion of the court was delivered by: KAUFMAN

This is an action brought under Section 9 of the Trading With the Enemy Act, 50 U.S.C.A.Appendix, § 1 et seq., to recover property vested by the Alien Property Custodian during World War II. Both parties have moved for summary judgment.

Plaintiff was associated from 1930 to 1942 in ascending degrees of importance with the Nirosta Corporation, a Delaware corporation originally known as Krupp-Nirosta Corp., organized in 1928 for the purpose of holding and licensing the use of stainless steel patents which were owned by the Fried. Krupp, A. G. of Essen, Germany. Plaintiff became President of the Nirosta Corporation in 1935 and held that office until 1942, when the corporation was taken over by the Alien Property Custodian. The Krupp firm owned a majority of the stock of the corporation, and the balance of the stock was divided among certain American steel companies. The Krupp shares were transferred (in form only) to Wolframerz, A. G., a Swiss corporation, in 1937.

 On June 16, 1942, the Alien Property Custodian by Vesting Order No. 22, 7 F.R. 4628, vested in himself 715 shares of which were registered in plaintiff's name and the rest in the name of Wolframerz, A. G.

 In Vesting Order No. 1240, 8 F.R. 5775, executed on April 15, 1943, the Custodian found that plaintiff Emil Schill was 'a German citizen presently interned in a United States alien internment camp'; that the 615 shares of the Nirosta Corp., previously vested by Vesting Order No. 22, were beneficially owned by Fried. Krupp, A. G. of Germany; that plaintiff's claims against Nirosta including any claims for dividends on 70 of the 615 shares were property of a national of a designated enemy country; that 'to the extent that such nationals are persons not within a designated enemy country, the national interest of the United States requires that such persons be treated as nationals of the aforesaid designated enemy country (Germany)'; and vested plaintiff's claims and interest.

 Plaintiff entered the United States in 1904, and, except for occasional trips abroad, has resided here since that time. He was apprehended on October 5, 1942, pursuant to a Presidential warrant and interned as a dangerous enemy alien until he was temporarily paroled for hospitalization in December, 1945. On January 16, 1946 he was ordered removed to Germany by the Attorney General, but the order was vacated in July, 1946, and the plaintiff was unconditionally released on July 23, 1946. Plaintiff was naturalized as a United States citizen on January 24, 1949, pursuant to an opinion by Judge Hulbert, dated January 17, 1949, Petition of Schill, D.C., 90 F.Supp. 246. Until his naturalization, plaintiff was a citizen and national of Germany.

 On October 2, 1942 plaintiff filed a claim for the return of his stock and dividend rights with the Alien Property Custodian. No determination was made on this claim and on September 6, 1946 plaintiff filed renewed claims but they were denied by an order dated November 10, 1947. After being admitted to citizenship plaintiff applied to the Attorney General on March 4, 1949 to have vacated the order of November 10, 1947, but this application was denied on August 5, 1949. Thereafter on October 14, 1949 the present action was commenced.

 It is clear that plaintiff's motion for summary judgment could in no event be granted, for defendant has put in issue, among other things, plaintiff's right, title and interest in the property which he seeks to recover. However, defendant's motion for summary judgment should first be considered, since plaintiff's counsel admits that the action cannot survive as a matter of law if Section 39 of the Trading With the Enemy Act (one of the grounds upon which defendant's motion is based) is entitled to the construction for which defendant contends.

 Section 39, enacted as Section 12 of the War Claims Act of 1948, provides that: 'No property or interest therein of Germany, Japan, or any national of either such country vested in or transferred to any officer or agency of the Government at any time after December 17, 1941, pursuant to the provisions of this Act, shall be returned to former owners thereof or their successors in interest, and the United States shall not pay compensation for any such property or interest therein. * * * Nothing in this section shall be construed to repeal or otherwise affect the operation of the provisions of section 32 of this Act * * * .'

 This Section clearly states that if the property or interest vested by the Alien Property Custodian belonged to a national of Germany of Japan at the time it was vested, it may not be returned, and suit for the return of such property or interest cannot be brought pursuant to Section 0 of the Act.

 Plaintiff was a citizen of Germany at the time the property in question was validly vested, and as such he was a 'national' of Germany as that term is used in the Act. Bellman v. Clark, D.C., Civ. No. 47-229, S.D.N.Y., November 8, 1948; *fn1" Miyuki Okiahara v. Clark, D.C. Hawaii 1947, 71 F.Supp. 319; see H.R. 976, 80th Cong., 1st Sess., pp. 2-3; Executive Order 8389, Section 5-E(i), 5 F.R. 1400 (1940), as amended by Executive Order 8785, 6 F.R. 2897 (1941), 12 U.S.C.A. § 95a note.

 These facts are admitted by the plaintiff and the only matter in dispute on defendant's motion is the interpretation of Section 39; therefore this is a proper case for consideration upon a motion for summary judgment. See Colby v. Klune, 2 Cir., 178 F.2d 872.

 There have been no cases construing Section 39, and if the Section could in any way be considered ambiguous, the only aid to construction would be the legislative history of the Section. Since different interpretations of the Section have been advanced by the plaintiff and the defendant, respectively, an examination of the Congressional background of the bill by which the Section was enacted should resolve the issue.

 In the hearings on the bill held before a Senate Judiciary subcommittee, numerous Witnesses objected to the bill on the ground that it did not distinguish between loyal and disloyal enemy aliens, but instead precluded all from recovering vested property by judicial proceedings. See Hearings before a Subcommittee of the Committee on the Judiciary, U.S. Senate, 80th Cong., 2d Sess., on H.R. 4044, pp. 197-198, 223-236, 254-255 (hereafter designated as 'Hearings'). One witness suggested that if confiscation of alien property is to take place, 'Proper provision for the return of the property to that class of aliens as we designate as friendly ones should be made.' (p. 255). Another witness proposed an amendment which would have limited Section 39 so that it would not apply to German or Japanese nationals residing outside of enemy-occupied territory unless they aided or abetted enemies of the United States (p. 235). None of these alternative proposals was adopted.

 The bill had previously been unanimously reported by the House Committee on Interstate and Foreign Commerce, H.R. 976, 80th Cong., 1st Sess. (1947). Section 39 was given serious consideration by the House of Representatives in a discussion on the floor on January 26, 1948 (94 Cong. Rec. I, pp. 550-573), and it was recognized that many perfectly innocent people would, under the bill, lose their all (p. 551), and that recourse could only be had to Section 32 of the ...


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