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Clemm v. Smith

decided: June 22, 1966.


Moore, Smith and Kaufman, Circuit Judges.

Author: Smith

J. JOSEPH SMITH, Circuit Judge:

Werner C. von Clemm individually and as a partner of Rayford D. Alley, Trustee for von Clemm's children, in Bridge Import Company, appeals from a judgment dismissing the suit brought pursuant to § 9(a) of the Trading with the Enemy Act, 50 U.S.C. App. § 9(a), by himself and Alley against the Treasurer of the United States and against the Attorney General, to recover property vested by the Alien Property Custodian under § 5 of the Act. The District Court for the Southern District of New York, Edward C. McLean, Judge, held that von Clemm was an enemy under the Act, and therefore not entitled to recover. 255 F. Supp. 353. The court did not reach the question of title. We find no error and affirm the judgment.

Von Clemm sought recovery of shares of stock in Pioneer Import Corporation of New York and of diamonds and synthetic and semi-precious stones or their proceeds. The jewels were seized prior to the outbreak of war with Germany (December 11, 1941) by Customs and by Postal authorities, and vested by the Alien Property Custodian in 1945.

Judge McLean's opinion contains a full statement of the facts. It is enough here merely to state the following. Von Clemm was a citizen of this country born in Germany. Around 1938 he conceived of a plan to import German goods into this country by paying for them one-half in dollars and one-half in German Marks which could be obtained at a substantial discount due to the fact that they were blocked. His plan was to have the owners of these blocked Marks purchase the German products in Germany, and send them to the United States through Pioneer, which he had organized, and through associates in Europe. Apparently this scheme was purely commercial. In any case none of the goods at issue here were paid for in any part with blocked Marks.

On May 10, 1940, the Low Countries were overrun by the German armed forces. On that date the Presidential freezing order of April 10, 1940, covering Denmark and Norway, Executive Order 8389, 12 U.S.C. § 95a note, was extended to these newly occupied countries. Under the order, transactions in property with those countries, and, more directly, transactions in payment for such property, were severely regulated, so that exports from those occupied countries to the United States could neither enter this country, nor could payment therefor leave this country, without license. This order was extended to most other European countries, including Germany and Switzerland, on June 14, 1941. See 12 U.S.C. § 95a note. Until that date there was no impediment on importing German goods into this country from Germany or Switzerland, although importers had to avoid the British blockade.

Eleven days after the low countries were occupied, on April 21, 1940, von Clemm sent a memorandum to his brother, a German national, under an assumed name, in Bologna, Italy. The memorandum stated:

The recent Rotterdam developments should make it interesting for us to enter the diamonds picture * * *. Please discuss with Cremer.

Cremer was an official of the German Economics Ministry (RWM), an expert on diamonds, with whom von Clemm had conferred in Europe in 1939. He was in Belgium as advisor to the German military government there as to the sale in the United States of Belgian diamonds for dollars. There is no direct evidence that von Clemm knew of Cremer's status in Belgium.

On October 25, 1940, Cremer submitted a memorandum to one Major Lemberg, the official of the German military government in charge of Belgian diamonds, which said:

The isolation of Belgium from the entire other foreign world makes resumption of the diamond export possible only with the assistance of Germany as mediator [middle-man?] * * *. In accordance with personal conferences, the Imico-Handel, Berlin * * * takes over the function of the necessary intermediate agency in Germany.

Imico was a German firm set up by Carl von Clemm, appellant's brother, and two associates, all of whom had previously worked for Eurohandel, a firm which had assisted in the blocked Marks transactions. The Cremer memorandum explains the role of Imico in diamond shipments: Belgian diamonds go by courier to Berlin, where Imico arranges the necessary papers, ships the diamonds to a neutral agent (a "cloak") in Portugal, who sends them along to New York; the New York buyer makes payment to a Berlin bank for account of Imico, which turns the money over to the German government. There was no direct evidence that von Clemm knew of this memorandum. Lemberg testified that Imico was the commercial agent of the Reich, but not that von Clemm knew this.

Between October 26, 1940 and early February, 1941, six packages of diamonds were sent by this route, according to plan. Evidence was introduced that a New York diamond purchaser received a letter from a former Belgian supplier offering diamonds, and accompanying the letter was a note instructing the buyer to make payment for credit of Imico at the Berlin bank, and to address communications to [an alias of] one of the Imico organizers in Lisbon. The Belgian supplier testified that he was directed to write the letter by Lemberg.

So far von Clemm's knowledge of the role of the German government as the real exporter and the party receiving payment is largely a matter of suspicion. But there is evidence that on June 27, 1940, Imico wrote Pioneer concerning diamond purchases, and said, "The Reich Economic Ministry want to do business with us and you * * *, your commission to be 2 percent," shipment via Lisbon. Based upon this and other evidence the District Court found that prior to the outbreak of war with Germany, von Clemm was a [knowing] agent of the German ...

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