Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WAGMAN v. ARNOLD

May 23, 1957

Oscar WAGMAN and N. Wagman & Company, Incorporated, Petitioners,
v.
Elting ARNOLD, Acting Director, and Walter C. Gorsuch, Supervising Agent, Foreign Assets Control Treasury Department



The opinion of the court was delivered by: LEVET

Oscar Wagman and N. Wagman & Company, Incorporated, have petitioned this court for an order quashing or modifying an administrative 'subpoena' entitled 'Order to Make Records Available for Examination' issued by the Foreign Assets Control Division of the Treasury Department, and directing that certain property be returned which allegedly had been unlawfully seized by agents of the Foreign Assets Control without a warrant.

The Foreign Assets Control is a division of the Treasury Department and is authorized to enforce Section 5(b) of the Trading With the Enemy Act, 50 U.S.C.A.Appendix, § 5(b), which gives the President or his appointee the power during any period of national emergency to regulate or prohibit transactions with any foreign country or nationals thereof, and to require full records, reports and information concerning such transactions. The President delegated his power under this statute to the Secretary of the Treasury, Executive Order No. 9193, 50 U.S.C.A.Appendix, § 6 note. On December 17, 1950, in accordance with this authority and under the proclamation of a national emergency because of the Korean conflict, the Secretary of the Treasury promulgated the current Foreign Assets Control Regulations, 31 C.F.R. §§ 500.101 et seq. Section 500.204 of these regulations prohibits individuals and corporations subject to the jurisdiction of the United States from engaging in any transaction concerning merchandise originating from Communist China or North Korea, unless specifically authorized by the Secretary of the Treasury or his designee. Hog bristles are expressly included in the category of merchandise within the meaning of this regulation. The Secretary of the Treasury's power to enact these regulations was upheld in United States v. China Daily News, Inc., 2 Cir., 1955, 224 F.2d 670, certiorari denied 350 U.S. 885, 76 S. Ct. 138, 100 L. Ed. 780.

The petitioner, Oscar Wagman, is vice-president and a director of the corporate petitioner, N. Wagman & Company, Incorporated. The corporation is engaged in the business of importing and exporting bristles, animal hair and wool. It maintains offices in Philadelphia, Pennsylvania, and New York City, New York. Prior to 1953, the bulk of the corporation's business was in China hog bristles. The corporation was licensed to import China hog bristles until sometime in 1952. Thereafter it could no longer lawfully import this commodity.

 In May, 1954, the New York Office of the Foreign Assets Control Division commenced an investigation of the Wagman corporation in order to ascertain whether or not in 1953 and 1954 the firm had engaged in transactions involving Chinese bristles in contravention of the Foreign Assets Control Regulations. The Foreign Assets Control Division was particularly interested in the Wagman corporation's connection with certain transactions involving the sale of China hog bristles by de Muinck & Company of Amsterdam, Holland to a Canadian brush manufacturing firm named T. S. Simms and Company, Ltd. Mr. Oscar Wagman appeared at New York office of the Foreign Assets Control Division and permitted the agents to inspect certain of his files. He also furnished the agents with a detailed affidavit of his dealings with de Munick and Simms in which he stated that he made a personal loan to Simms totaling $ 300,000 to enable Simms to purchase China hog bristles from de Muinck. The loan was without interest and allegedly made for the purpose of retaining Simms' good will.

 Further investigations of the Wagman corporation were made in August, 1956, when agents of the Foreign Assets Control Division simultaneously visited its Philadelphia and New York offices. At both offices the agents were informed that Oscar Wagman was in Europe. In addition, the agents visiting the New York office were advised by the secretary in charge that she had been in the corporation's employ only a short time and was not familiar with the files. The agents told her that they were Treasury agents, displayed their badges and asked to see the correspondence and records relating to the purchase and sale of hog bristles. There is some dispute as to whether the agents took several folders of documents from the file cabinets or whether the secretary handed the folders to the agents and told them that they might look through the file cabinet themselves. In any event, pursuant to a telephone conversation with the agents who were then in the corporation's Philadelphia office, the agents in the New York office discontinued their examination of the records and wrapped the documents, which they had removed from the files, in a shopping bag and then sealed the bag with a piece of paper on which they signed their names. They informed the secretary that they were going to leave the package in Oscar Wagman's office until they returned to continue the examination and that it would be unlawful to break the seal. No representative of the Treasury Department has had any access to these documents since that time. The package remained in the custody of the petitioners and their counsel until the hearing on this motion.

 Petitioners object to the 'Order to Make Records Available for Examination,' dated February 11, 1957, on the following grounds:

 '1. The said Order is not authorized by law, as required by Section 6(b) of the Administrative Procedure Act, 5 U.S.C.A. Section 1005(b).

 '2. The said Order unlawfully requires the production of documents and records made more than two years before February 11, 1957, and is unauthorized under Section 500.602 of Chapter V of Title 31 of the Code of Federal Regulations, 31 C.F.R. 500.602.

 '3. The said Order requires the production of records selected from petitioners' files in their office at 80 Wall Street, New York, N.Y. by Treasury Representatives, pursuant to unlawful search and seizure, in violation of the 4th Amendment to the Constitution of the United States.

 '4. The purpose of said Order is to procure evidence to compel petitioner Oscar Wagman to incriminate himself, in violation of the 5th Amendment to the Constitution of the United States.'

 The parties to this motion have stipulated that the court might inspect the contents of the sealed package in order to determine whether the documents in the folders relate to corporate affairs or to private matters of Oscar Wagman. The stipulation was entered into without prejudice to petitioners' position that the distinction between corporate or private matters is immaterial, since it is claimed that the documents were obtained as a result of an unreasonable search and seizure within the meaning of the Fourth Amendment.

 The 'Order to Make Records Available for Examination' which was issued to Mr. Oscar Wagman, individually and as vice-president of N. Wagman & Company, Incorporated, reads in part as follows:

 'Pursuant to Section 5(b) of the Trading with the Enemy Act, as amended, and Sections 500.601 and 500.602 of Chapter V of Title 31 of the Code of Federal Regulations, 31 CFR 500.601, 500.602, You and Each of You Are Hereby Required to Produce and Make Available:

 'The record within your custody or control, including all books of account, contracts, letters, memoranda or other papers relative to all transactions subject to the provisions of this Chapter engaged in by you and each of you on or since December 17, 1950 and relative to any property in which any foreign country or any national thereof has or ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.