The opinion of the court was delivered by: KAUFMAN
The Court had before it cross motions for summary judgment under Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A. Both parties agree that there are no issues of fact requiring a trial and that judgment depends only upon interpretation of law.
During 1939, four firms of Hamburg, Germany delivered to the Hamburg Agency of Chartered Bank of India, Australia and China
(hereinafter referred to as Chartered Bank) eighteen bills of exchange in the amount of $ 6,217.22 for collection in the Philippines. They were transmitted to three branches of Chartered Bank in the Philippines and were collected for the account of the German customers. The proceeds of collection, instead of being remitted to Hamburg, were forwarded to defendant where they were entered as a credit on defendant's books in its 'Hamburg Office U.S. Dollar Account.' Between September 23, 1939 and January 23, 1940 this account was credited with $ 6,217.22 representing the proceeds of collections of the bills of exchange.
Between July 8, 1939 and December 5, 1939 the four German firms became indebted to the Hamburg Agency in the amount of 5, 837.3.6. pounds sterling and $ 613.99 for unpaid bills of exchange negotiated by the Agency. This indebtedness has been partially reduced, and it is defendant's claim that the funds instantly vested are to be used by the London office as a setoff against the indebtedness which obligates certain of the German firms to the Hamburg Agency. As a result, it says, there will in fact be nothing owing to these firms and therefore nothing to vest.
On April 27, 1949 defendant applied to the Attorney General
for a license to transfer the $ 6,217.22 from its Hamburg U.S. Dollar Account to its London Dollar Account in fulfillment of a request from Chartered Bank's head office in London,
Defendant was requested to advise the Office of Alien Property whether these funds were the property of the Hamburg Agency or merely represented proceeds of collections made for the account of customers of the Hamburg Agency. Defendant replied that they represented collections due the customers and that those customers were indebted to the Hamburg Agency in pounds sterling for unpaid advance bills (exports) negotiated by the Hamburg Agency. In that letter, and as was set out supra, defendant also said that the London office of Chartered Bank wished to utilize the $ 6,217.22 in defendant's Hamburg U.S. dollar account as a partial setoff against the pounds sterling owed on the unpaid export bills.
The application to the Office of Alien Property was denied and the funds subsequently vested.
When defendant refused to comply with the Vesting Order this action was commenced by invoking the jurisdiction of this Court under Section 7 of the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 7, and under 28 U.S.C.A. § 1345 to enforce compliance with the Vesting Order.
The disposition of the cross motions turns on the determination of two essential issues in the case:
1. Is the credit of $ 6,217.22 on defendant's books a debt to the German firms, representing property within the United States and therefore subject to vesting?
2. Are the debts and the alleged setoffs thereto mutual, that is, are the New York and Hamburg Agencies of Chartered Bank one and the same business entity for instant purposes?
At the outset I stress the thoroughly grounded doctrine that for the purposes of the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 1 et seq., a debt is property which may be seized by the appropriate federal authority, in this case the Attorney General. McGrath v. Manufacturers Trust Co., 1949, 338 U.S. 241, 70 S. Ct. 4, 94 L. Ed. 31; Propper v. Clark, 1949, 337 U.S. 472, 69 S. Ct. 1333, 93 L. Ed. 1480; American Exchange Nat. Bank v. Garvan, 2 Cir., 1921, 273 F. 43, affirmed 1922, 26u U.S. 706, 43 S. Ct. 165, 67 L. Ed. 474; Miller v. Rouse, D.C.S.D.N.Y.1921, 276 F. 715; Kohn v. Jacob & Josef Kohn, D.C.S.D. N.Y., 1920, 264 F. 253; Clark v. E. J. Lavino & Co., D.C.E.D. Pa. 1947, 72 F.Supp. 497.
Defendant, although not contesting this principle, asserts its inapplicability. The assertion comes down to two propositions which defendant states in this order:
(a)Only the balance of the debt after setoffs is subject to seizure.
(b)The debt, having been collected in the Philippines and payable in Hamburg, is not property within the United States subject to seizure.
In support of the proposition that there is no property within the United States, defendant argues that the debt was payable in German. But the place of payment is not the criterion of a debt's situs. Chicago, Rock Island & Pacific Railway Co. v. Sturm, 1889, 174 U.S. 710, 19 S. Ct. 797, 43 L. Ed. 1144. What does control the power to enforce payment of a debt is the court's power over the person of the debtor. Blackstone v. ...