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ROGERS v. HERTLEIN

October 31, 1958

William P. ROGERS, Attorney General of the United States, as Successor to the Alien property Custodian, Plaintiff,
v.
Ludwig HERTLEIN, Defendant



The opinion of the court was delivered by: ZAVATT

The plaintiff moves for judgment on the pleadings pursuant to Rule 12(c) Rules of Civil Procedure, 28 U.S.C.A. and thereby raises a novel question under the Trading with the Enemy Act of 1917, as amended. 50 U.S.C.A.Appendix § 1-40, hereinafter referred to as the 'Act'. In his complaint in a proceeding instituted under § 17 of the Act, the plaintiff alleges that the defendant became indebted to an enemy of the United States within the meaning of 50 U.S.C.A.Appendix, § 2 in the sum of Two Thousand Eight Hundred ($ 2,800) Dollars on February 13, 1942 and continued to be so indebted on February 11, 1953 when the plaintiff executed Vesting Order No. 19170 by virtue of which said alleged indebtedness vested in the plaintiff; that said order was made under the authority vested in the plaintiff by the Act and Executive Order No. 9095 (March 11, 1942) 7 F.R. 1971, as amended by Executive Order 9193 (July 6, 1942), 7 F.R. 5205, *fn1" and Executive Order No. 9788 (Oct. 14, 1946), 11 F.R. 11981; *fn2" that thereby the plaintiff acquired title to said debt of the defendant to said enemy and the defendant became indebted to the plaintiff therefor; that defendant has failed and refused to pay said debt. The defendant, in his answer, denies any knowledge or information as to the allegation in the complaint that the German company named in the complaint (hereinafter referred to as 'Herborn') has its principal place of business in Germany and that it is an enemy of the United States within the meaning of 50 U.S.C.A.Appendix, § 2. He denies that he ever became indebted to Herborn; that the Vesting Order vested the alleged debt in the plaintiff and that by virtue of that order title to said debt is vested in the plaintiff and that defendant became indebted to the plaintiff.

The plaintiff contends that he is entitled to judgment against defendant despite the fact that defendant denies any indebtedness to Herborn and, consequently, to plaintiff; that the plaintiff had the right under the Act to make a determination that defendant is indebted to Herborn and to make a determination that Herborn is an enemy; that plaintiff, having made these two determinations in and by the Vesting Order, his determinations are conclusive, whether right or wrong, and not subject to review by a trial of the issues raised in this action by the defendant's answer; that these determinations having vested title in plaintiff, this action is not one to determine whether there is or is not an indebtedness by defendant to Herborn but, rather, one to recover possession of that which plaintiff has determined to be vested in him; that defendant's only remedy is that afforded by section 9(a) of the Act, i.e. to file with the plaintiff a notice of claim to be processed as provided in the Act or to institute a suit in equity in the District Court of the United States for the district in which he resides to establish his interest, right, title or debt so claimed.

The authority of the plaintiff to reach the property of an enemy is set forth in §§ 5(b) and 7(c) of the Act and Executive Order No. 9193, supra. Executive Order No. 9788 is pertinent only in that it terminated the Office of the Alien Property Custodian and the powers of the Alien Property Custodian and transferred to and vested in the Attorney General their powers and duties under the Act. Vesting Order No. 19170 does not specify which of these two sections of the Act, i.e. 5(b) or 7(c), were invoked by that order. Rather it recites that the order was made under the authority of the Act and of certain stated executive orders. This practice has been criticized. *fn3" However, the failure of the Attorney General to specify the section of the Act invoked by his vesting order is not determinative of the instant motion. The decision of the Court on plaintiff's motion would be the same whether the Attorney General had specified either of these sections of the Act in his vesting order.

 The Act is still in effect. Though the state of war between the United States and the Government of Germany terminated on October 19, 1951 by virtue of House Joint Resolution No. 289 and the President's Proclamation No. 2950, *fn4" the Resolution and the Proclamation provide that the provisions of the Act continue as to any property or interest which was subject to vesting or seizure prior to January 1, 1947. *fn5" Section 5(b)(1) authorizes the vesting of '* * * any property in which any foreign country or a national thereof has any interest, * * *' and it absolves those who make payment to the United States under a vesting order made pursuant thereto. Section 7(a) of the Act requires any person in the United States, who is indebted to any enemy or to any person he may have reasonable cause to believe to be any enemy, to report the fact to the Alien Property Custodian (now the Attorney General) by a written statement under oath. Section 7(c) of the Act authorizes the President (and the Executive Orders hereinabove cited have delegated the authority to the Attorney General) to require that any money or property 'owing or belonging to or held for * * * an enemy * * * be * * * paid over to the Alien Property Custodian * * *' and authorizes the Alien Property Custodian to seize any such property. Section 7(c) provides for an 'investigation' and a determination which, under the executive orders cited above, are now authorized to be made by the Attorney General. The plaintiff contends that section 7(c) authorizes him to make an investigation and a determination as to (1) whether or not a debt exists, (2) the identity of the debtor, (3) the amount of the debt, (4) the identity of the person to whom the debt is due, and (5) whether or not that person is an enemy and that all of said determinations are conclusive. The pertinent portions of section 7 provide as follows:

 '(c) If the President shall so require any money * * * owing or belonging to or held for, * * * or for the benefit of, an enemy * * * which the President after investigation shall determine is so owing or so belongs or is so held, shall be * * * paid over to the Alien Property Custodian, or the same may be seized by the Alien Property Custodian;

 'Whenever any such property shall consist of shares of stock * * * it shall be the duty of the corporation * * * issuing such shares * * * to cancel upon its * * * books all shares of stock * * * standing upon its * * * books in the name of any person or persons, or held for, * * * or for the benefit of any person * * * who shall have been determined by the President, after investigation, to be an enemy * * * and which shall have been required to be * * * transferred, assigned, or delivered to the Alien Property Custodian or seized by him * * *.

 'The sole relief and remedy of any person having any claim to any money of other property * * * transferred, assigned, delivered, or paid over to the Alien Property Custodian, or required so to be, or seized by him shall be that provided by the terms of this Act * * *.

 '(d) If not required to pay * * * under the provisions of subsection (c) hereof, any person not an enemy * * * who owes to * * * an enemy * * * any money * * *, or to whom any obligation or form of liability to such enemy * * * is presented for payment, may, at his option, * * * pay * * * to the alien property custodian said money * * *.

 'Any payment * * * made to the alien property custodian hereunder shall be a full acquittance and discharge for all purposes of the obligation of the person making the same to the extent of the same.'

 Executive Order 9193 in effect grants to the Alien Property Custodian the authority and power vested in the President under the Act. It, too, speaks of 'any property * * * owned or controlled by, payable * * * to * * * any enemy * * * national * * *' and authorizes the Custodian to vest property within the United States 'owned or controlled by a designated enemy country or national thereof * * *.' Executive Order 9193, § 2. It, too, provides that:

 'For the purpose of the Executive Order any determination by the Alien Property Custodian that any property or interest of any foreign country or national thereof is the property or interest of a designated enemy country or national thereof shall be final and conclusive as to the power of the Alien Property Custodian to exercise any of the power or authority conferred upon me by section 5(b) of the Trading with the Enemy Act, as amended.' Executive Order 9193, § 10(a).

 Section 12 of that Order provides, further:

 'No person affected by any order * * * or other action issued or taken by either the Secretary of the Treasury or the Alien Property Custodian shall be entitled to challenge the validity thereof * * * on the ground that pursuant to the provisions of this Executive Order, such order * * * or other action was within the jurisdiction of the Alien Property Custodian rather than the Secretary of the Treasury of vice versa.'

 In Simon v. Miller, D.C.S.D.N.Y.1923, 298 F. 520, 522, the Alien Property Custodian seized Three Hundred Fifty Thousand ($ 350,000) Dollars on deposit in a bank to the credit of the plaintiff claiming that plaintiff held it for the benefit of a German subject, Albert. Plaintiff denied that this deposit was so held and brought a proceeding under 9 of the Act to recover the amount seized by the defendant. The defendant contended that, since plaintiff and Albert had had business transactions between them, he had the power to state the amount ex parte between them and to seize the balance which he determined was due by plaintiff to ...


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