The opinion of the court was delivered by: DIMOCK
This is a motion to dismiss plaintiff's third amended complaint. Plaintiff, Bernstein, suing as temporary receiver of the New York assets of the Red Star Line, a dissolved German limited liability company, and individually as its sole stockholder, seeks to recover property which he alleges he was forced to transfer in Nazi Germany in 1937. This action was originally instituted by plaintiff in his individual capacity only. He later moved to intervene as temporary New York receiver of the Red Star Line.
The Court of Appeals of this Circuit ruled that a representative of the Red Star Line was a necessary party, but affirmed the denial of plaintiff's motion to intervene on the ground that plaintiff lacked the license required by the regulations promulgated under Executive Order No. 8389, 12 U.S.C.A. § 95a note, issued under Section 5(b) of the Trading With the Enemy Act, 50 U.S.C.Appendix, § 5(b), for 'the transfer, or withdrawal of, or other dealing in' German corporate property located in this country. Bernstein v. N.V. Nederlandsche-Amerikaansche, etc., 2 Cir., 173 F.2d 71, 76-78.
The Court of Appeals also affirmed the dismissal of plaintiff's second amended complaint on the ground that American courts would not pass upon the validity of the governmental acts of a foreign sovereign within its own territory, even if such acts were illegal under the foreign law, and that vague, general allegations of duress by unidentified private persons were insufficient to state a claim of nongovernmental duress. 173 F.2d 75-76.
The Court of Appeals stated, however, that if plaintiff obtained the appropriate license he should be permitted to intervene and to file a third amended complaint which complied with the requirements stated in the court's opinion for allegations of private duress. Plaintiff has filed a third amended complaint alleging the issuance of a license and designed to comply with the requirements of the Court of Appeals.
Defendant, Holland-America Line, contends that neither the allegations with respect to the license which plaintiff alleges he has acquired from the Office of Alien Property during the time prescribed by the Court of Appeals nor the allegations with respect to the enforced transfer of the property comply with the requirements of the Court of Appeals, and moves to dismiss the complaint on those grounds. Third-party defendant, Chemical Bank & Trust Company, supporting defendant's position, seeks the dismissal of the third-party complaint.
I turn first to an examination of plaintiff's license in the light of the requirements laid down by the Court of Appeals. That Court held in effect that the appointment of the receiver was invalid in the absence of a license, as would be his assertion of a claim against Holland-America Line, and added:
'We accordingly hold that the appointment of the state receiver and his assertion in the United States District Court of his claim to blocked property must be validated by a license from the Treasury Department if he desires to proceed further.'
It is obvious that the Court of Appeals intended to permit a nunc pro tunc validation of the appointment of the receiver if a proper license could be obtained.
Defendants say that the license actually obtained would have been insufficient to justify the appointment of the receiver even if it had been issued prior to the appointment and that the license is insufficient to justify his assertion of a claim against the Holland-America Line on behalf of the Red Star Line. Defendants' argument rests upon the assumption that the appointment of a temporary receiver is invalid unless the license permits the consummation of all of the powers with which the state statute endows the temporary receiver and the permanent receiver who will presumably succeed him. Since the license specifically prohibits the licensee from exercising the power given to the permanent receiver by section 977-b, subdivision 16, of the New Yrok Civil Practice Act to distribute the assets which he collects to the creditors and stockholders of the corporation it is argued that the appointment is invalid.
That subdivision provides that upon settlement of the receiver's account the court must direct the payment of first, the costs and expenses and, second, the allowed claims of creditors and that the surplus shall be distributed to the stockholders.
Plaintiff's license provides:
'Notwithstanding General Ruling No. 11A, as amended, a license is hereby issued removing the restrictions of Executive Order No. 8389, as amended, in so far as they may affect your assertion and enforcement, as temporary receiver under Section 977-b of the Civil Practice Act of the State of New York of the property and assets of Red Star Linie G.m.b.H., of claims of Red Star Linie G.m.b.H. to property in accordance with your power and authority under Section 977-b. This license is not intended, however, to permit you to acquire physical possession or title to the property or assets of Red Star Linie G.m.b.H. or to make any distribution of such assets to any persons deemed entitled thereto as a result of the receivership action. Any judgments which you may obtain and any property which you may acquire in execution of such judgments shall remain subject to the blocking controls and this Office reserves its right to vest at any stage if it should determine that such vesting action is appropriate.'
In my opinion, the ultimate powers of the receiver are not so interrelated with the appointment of the temporary receiver that an appointment is invalid unless there is assurance that the receiver will be permitted to carry out all of his statutory powers.
I am satisfied that the Court of Appeals required no more than the consent of the Treasury Department
to the appointment of the receiver and to the assertion of the claim in the suit so that, having decided that, under the law of New York, it is not essential to the validity of the appointment of a temporary receiver that the receiver ultimately appointed have requisite federal authority to distribute the property, I hold that the ...