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Sardino v. Federal Reserve Bank of New York and Secretary of Treasury of United States

decided: April 22, 1966.


Lumbard, Chief Judge, Friendly and Smith, Circuit Judges.

Author: Friendly

FRIENDLY, Circuit Judge:

Plaintiff Sardino, a Cuban residing in Havana, has a savings account in a New York bank of some $7000, this being the proceeds of an insurance policy on the life of his son who died in New York. The bank would not remit the funds to Sardino in Cuba because the Cuban Assets Control Regulations,*fn1 31 C.F.R. § 515.201, issued pursuant to the Trading with the Enemy Act, § 5(b) (1), 50 U.S.C. App. § 5(b) (1), prohibited transfers outside the United States of property owned by Cuban nationals except with specific authorization. The Federal Reserve Bank of New York, acting as agent for the Secretary of the Treasury, refused to issue the required license because "transactions of this type are not consistent with the present policy of this Government with respect to Cuba." Sardino thereupon brought this action in the District Court for the Southern District of New York against the Federal Reserve Bank and the Secretary of the Treasury for a direction that they issue a license or a declaration that none was required; he contended that the Regulations were not authorized by the statute and that, if they were, the statute and the Regulations were unconstitutional as applied to him for various reasons discussed hereafter. Judge Palmieri granted defendants' motion to dismiss the complaint for failure to state a claim upon which relief could be granted. This appeal followed.


The statutory authority for the Regulations seems plain enough. Section 5(b)(1) of the Trading with the Enemy Act, 50 App. U.S.C. § 5, says that:

"During the time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, and under such rules and regulations as he may prescribe, by means of instructions, licenses, or otherwise --

(A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments between, by, through or to any banking institution and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and

(B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest,

by any person, or with respect to any property,*fn2 subject to the jurisdiction of the United States."

On December 16, 1950, President Truman, taking particular note of "recent events in Korea and elsewhere" but also making general reference to "the increasing menace of the forces of communist aggression," proclaimed the existence of a national emergency. 64 Stat. A454. The declaration has never been revoked; rather it has been repeatedly and recently reaffirmed. Exec.Order No. 10896, 25 F.R. 12281 (1960); Exec.Order No. 10905, 26 F.R. 321 (1961); Exec.Order No. 11037, 27 F.R. 6967 (1962). While the courts will not review a determination so peculiarly within the province of the chief executive, there can hardly be doubt as to the existence of an emergency today when thousands of United States troops are in action and many more are in readiness around the globe. Plaintiff's contention that the national emergency provision, which came into the statute at the time of the economic crisis of 1933, 48 Stat. 1, is limited to economic emergencies, is sufficiently answered by the breadth of the language. The understanding that the words mean all they say was illustrated by President Roosevelt's freezing the assets of nationals of Norway and Denmark on the invasion of those countries by Germany long before the United States was at war, Exec.Order No. 8389, 5 F.R. 1400 (1940).*fn3 We take the prompt Congressional ratification, 54 Stat. 179 (1940), as a demonstration of approval of what was already lawful rather than as an indication of doubt. See Pike v. United States, 340 F.2d 487, 488 (9 Cir. 1965).

The claim that the statute constitutes an unconstitutional delegation of legislative power is foreclosed by United States v. Curtiss-Wright Export Co., 299 U.S. 304, 57 S. Ct. 216, 81 L. Ed. 255 (1936). Although the delegation there sustained was narrower than that in § 5(b) of the Trading with the Enemy Act, the Court's opinion was not thus circumscribed. Painting with a broad brush, extensively analyzing the source of the foreign affairs power of the central government, and emphasizing the wide delegations by early Congresses familiar with the intent of the framers, the Court rather plainly meant to make clear, once and for all, that "if, in the maintenance of our international relations, embarrassment -- perhaps serious embarrassment -- is to be avoided and success for our aims achieved, congressional legislation which is to be made effective through negotiation and inquiry within the international field must often accord to the President a degree of discretion and freedom from statutory restriction which would not be admissible were domestic affairs alone involved." 299 U.S. at 320, 57 S. Ct. at 221. See also Zemel v. Rusk, 381 U.S. 1, 17, 85 S. Ct. 1271, 14 L. Ed. 2d 179 (1965); United States v. Von Clemm, 136 F.2d 968, 970 (2 Cir.), cert. denied, 320 U.S. 769, 64 S. Ct. 81, 88 L. Ed. 459 (1943).

The claim that the Constitution is violated by the President's delegation of his power to issue regulations to the Secretary of the Treasury and the latter's delegation of administration of the regulations to the Office of Foreign Assets Control, is likewise insubstantial. The founders could not have meant to impose upon the President burdens that would make it humanly impossible to conduct his office as the nation grew. See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 165, 2 L. Ed. 60 (1803). Congress can validly authorize the President to depute a portion of his duties in the field of foreign affairs, as it can do with other high officers. Cf. Jay v. Boyd, 351 U.S. 345, 351 n. 8, 76 S. Ct. 919, 100 L. Ed. 1242 (1956). The safeguard remains, as stated in the 1816 report of the Senate Committee on Foreign Relations, that for all that is done, whether by him or in his name, the President "is responsible to the Constitution." See United States v. Curtiss-Wright Export Corp., supra, 299 U.S. at 319, 57 S. Ct. 216, 81 L. Ed. 255.

The only substantial contention is that the Regulations, as they have been applied to Sardino, deprive him of his property without due process of law in violation of the Fifth Amendment. The Government makes a three-fold response -- Sardino has not been deprived of property, the Fifth Amendment does not protect non-resident aliens, and in any event the Government's action was not violative of due process.

The contention that Sardino has not been deprived of his property stresses that the Government has not taken over the bank account but has merely placed a temporary barrier to its transfer outside the United States. Indeed, the barrier is said to be not merely temporary but partial. Without a license Sardino can use the account to pay customs duties, taxes or fees owing to the United States, a state, or any sum belonging to him invested in securities listed on a national securities exchange or issued by the United States, instrumentality of either, 31 C.F.R. § 515.510, or can have the sum belonging to him invested in securities listed on a national securities exchange or issued by the United States, a state, or an instrumentality of either, 31 C.F.R. § 515.513; the Regulations also permit remittance not in excess of $100 a month for necessary living expenses, but only through payment to a blocked account of a Cuban bank in the United States, 31 C.F.R. § 515.521. Sardino effectively replies that he owes no customs duties, taxes or fees; that securities purchased at his instruction would be blocked to the same extent as the savings account; and that there would be little incentive for a Cuban bank to make monthly payments to him in Havana when the corresponding payments to it in the United States were blocked. To be sure, all this could change in short order if this country's relations with Cuba were to alter for the better. But the very considerations urged by the Government as showing that the emergency declared by President Truman in 1950 exists in 1966 cast doubt on the reality of this prospect. While the Government points out also that, despite the broad language of the Regulations, § 515.201(a), the funds would be made available to Sardino if he sought refuge in this country as many of his fellow Cubans have done, see 49 Dept. of State Bull. 160 (1963), the record contains nothing to show any intention on his part to do this. The due process clause speaks in terms not ...

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