International Silk Guild v. Rogers, 14150

Citation262 F.2d 219
Decision Date26 November 1958
Docket NumberNo. 14150,14151.,14150
PartiesINTERNATIONAL SILK GUILD, Inc., a New York Corporation, Appellant, v. William P. ROGERS, as Attorney General of the United States, as successor to the Alien Property Custodian, et al., Appellees. William P. ROGERS, as Attorney General of the United States, as successor to the Alien Property Custodian, et al., Appellants, v. INTERNATIONAL SILK GUILD, Inc., a New York Corporation, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Mr. Delmar W. Holloman, Washington, D. C., with whom Mr. James Lee Murphy, Washington, D. C., was on the brief, for appellant in No. 14150 and appellee in No. 14151.

Mr. Max Wilfand, Atty., Dept. of Justice, of the Bar of the Supreme Judicial Court of Massachusetts, pro hac vice, by special leave of court, with whom Messrs. George B. Searls and Irwin A. Seibel, Attys., Dept. of Justice, were on the brief, for appellees in No. 14150 and appellants in No. 14151.

Before FAHY, WASHINGTON and DANAHER, Circuit Judges.

FAHY, Circuit Judge.

On October 31, 1942, the Alien Property Custodian, predecessor in interest of the Attorney General of the United States,1 vested property of Asahi Silk Company, Ltd., a Japanese exporter of silk, referred to herein as Asahi Japan.2 On December 15, 1942, the International Silk Guild, Inc., a nonprofit membership corporation of the United States, filed a debt claim with the Custodian under § 34 of the Trading with the Enemy Act,3 against the Asahi Japan vested property.

The controversy thus initiated has had a considerable history. The administrative proceedings in their earlier stages resulted in denial of the claim by the Custodian, who disagreed with his Hearing Examiner. The Guild then took the matter to the District Court, which originally agreed with the Custodian and dismissed the Guild's complaint. Thereafter, however, the court vacated its order of dismissal so as to permit newly discovered evidence to be offered before the Custodian under § 34 (e) of the Act. In consequence, further administrative proceedings were had, ending in the Custodian again disallowing the claim. The matter again came to the District Court for review, and, this time, the court disallowed the claim in part and allowed it in part. The Guild in No. 14150 appeals from the disallowance and the Custodian, in No. 14151, from the allowance.

The purpose of the Guild is to promote the interests of the silk industry in the United States. It was incorporated in 1933 as a nonprofit organization and in the early years of its existence was financed by contributions from a group of American silk firms and by the Japanese silk industry. Membership was open to "any individual, firm, or corporation engaged in or having an interest in the silk industry or any branch thereof." Eight American importing subsidiaries of Japanese silk exporting houses were founder members; one of these eight was Asahi New York, a New York corporation substantially all of whose stock was owned by Asahi Japan.

The Japanese silk industry was organized under the name of the Central Raw Silk Association of Japan, a Japanese corporation. The corporation was composed of associations representing all segments of the industry, which included two exporter associations, one in Yokohama and one in Kobe. One of the eight Japanese exporters was Asahi Japan.

In December 1933, shortly after the organization of the Guild, the Central Raw Silk Association voted to establish a three-year overseas publicity campaign to promote the use of silk. The Guild was designated as the American agency to conduct the campaign in this country while The International Silk Committee of France was entrusted with a similar promotional campaign in France. During the early years of the campaign remittances were voluntarily made by the Association to the Guild to further the promotional activities.

In January 1937 a new method of financing the Guild was inaugurated whereby an assessment or charge of five yen was levied on each picul of silk — a bale of 132.3 pounds — exported from Japan. This assessment was added to the invoice and paid by the importer to the exporter. It seems clear from the record that the assessment was imposed by the Central Raw Silk Association and there is also no question that substantial remittances were made to the Guild from the proceeds of the assessments during the period from February through August 1937. Interruptions in remittances then occurred due to foreign exchange difficulties centering around the activities of the Japanese Finance Ministry. Further remittances were made, however, in October 1937 and continued with some irregularity until all remittances stopped after May 1940, except for one made in November 1940.

The Guild claim is for the amount the importers paid to Asahi Japan, an exporter, under the assessment plan, and not remitted to the Guild, namely, $65,326.39 together with interest. The Guild contends there was an oral contract between the Guild, the importers in the United States, and the exporters in Japan, the terms of which grew out of negotiations conducted by the Guild President, Paolino Gerli, during a trip to Japan in 1936. The Guild contends the evidence establishes that under this contract the exporters, after collecting the assessments from the importers, were to remit the proceeds to the Guild, though the mode of forwarding remittances was to be worked out by the exporters according to their custom. Under the plan actually adopted in Japan the exporters paid the money to the Yokohama or the Kobe Exporters Association, which sent the funds to a Special Committee of the Central Raw Silk Association, which in turn forwarded to the Guild such remittances as were made.

The Custodian,4 in his first decision, June 19, 1951, in a painstaking analysis of the relevant events, found no contractual commitment to the Guild on the part of the Japanese notwithstanding that in a general manner the Gerli assessment plan was followed. We think one aspect of his decision is decisive on the question of a contract. No exporter, including Asahi Japan against whose vested property the Guild claim is pressed, was shown to have agreed to do more after receipt of assessment payments than to forward them to the Exporters Association of Yokohama or Kobe for transmission to the Central Raw Silk Association. As the Custodian said, even if the Central Raw Silk Association was obligated to remit these funds to the Guild, this was not the obligation of Asahi Japan. And the Custodian was unable, as we are unable, to find identity between the exporters and the Central Raw Silk Association so as to give rise to a contractual arrangement binding the exporters themselves to the Guild.

The District Court dismissed the Guild's complaint which sought review of the Custodian's above-noted decision; the court thought the Guild had not established its right to receive the funds. As previously stated, however, the court vacated the ensuing judgment to permit newly discovered evidence to be received and the record was returned to the Custodian "to enable the parties to obtain further administrative consideration of the matter."

The reopening before the Custodian hinged upon the views of the District Court expressed in a Memorandum filed in connection with dismissal of the complaint; the court, International Silk Guild v. McGrath, D.C., 105 F.Supp. 766, 768, stated that "notwithstanding the absence of such agreement," alleged by the Guild,

"I would conclude that the claim should be allowed in view of the purpose and understanding on the part of the importers * * * paying the funds, if it were shown that such funds were in the hands of the exporters, in the instant case in the hands of Asahi, Japan, at the time of the vesting of that exporter\'s property * * *. To conclude otherwise would be to sanction an unjust enrichment contrary to the law of the State of New York, which is the critical law here applicable."

On the reopened proceedings the Custodian found that on October 31, 1942, the date of the vesting of its property, Asahi Japan was in possession of promotional funds in the amount of Y80,323.09, of which Y35,208.75 had been returned by the Kobe Exporters Association on September 25, 1942, and Y45,114.34 had been returned by Yokohama Raw Silk Exporters Association on September 22, 1942. Nevertheless the Custodian adhered to his earlier decision adverse to the Guild. He thought that while the Y80,323.09 in the hands of Asahi Japan were collected by Asahi to be used for promotional purposes and constituted an unjust enrichment, there was lack of proof that these funds belonged to the Guild; the unjust enrichment of Asahi could not be said to be at the expense of the Guild any more than at the expense of the French or any other organization which in the past had been the recipient of promotional funds.

This final decision of the Custodian came to the District Court for review on a supplemental complaint of the Guild. Seeming to hold that there was agreement as to the method of financing the Guild,5 the District Court in the end held against the Guild as to assessment funds which were not in the hands of Asahi Japan. Thus, both the Custodian and the District Court concluded that the Guild could not recover on a contract theory.

We think this decision must be sustained. There is evidence that no doubt is susceptible in some degree to an interpretation favorable to the contract theory. For example, Mr. Gerli testified that when he was en route from Japan in 1936 he received a cablegram to the effect that the Japanese exporters had accepted his plan, and there is supporting testimony of others, though given at hearings conducted years after the events transpired. But there is abundant evidence indicating that though the assessment plan was put into effect and operated for some time — the assessments were levied,...

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