Sorenson v. Sutherland

• Citation: 27 F. Supp. 44
• Parties: SORENSON et al. v. SUTHERLAND, Allen Property Custodian, et al.
• Decision Date: 30 January 1939
• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

27 F. Supp. 44

SORENSON et al. v. SUTHERLAND, Allen Property Custodian, et al.

District Court, S. D. New York.

January 30, 1939.

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Leonard B. Smith and Selden Bacon, both of New York City (Nathan L. Miller and Selden Bacon, both of New York City, of counsel), for Irving Trust Co., executor of Hermann Sielcken.

Sam E. Whitaker, Asst. Atty. Gen., Lamar Hardy, U. S. Atty., of New York City, Francis J. McNamara, Sp. Asst. to Atty. Gen., and Harry LeRoy Jones, Frank C. Sterck, and James A. Shipper, all of Washington, D. C., Attys., Department of Justice (David W. Wainhouse, Asst. U. S. Atty., of New York City, of counsel), for defendants.

GODDARD, District Judge.

This is a motion by the Attorney General of the United States to vacate the final decree entered herein on the 30th day of December, 1929, for the plaintiffs on the ground that the court was without jurisdiction of the suit because it was not a suit cognizable under the provisions of the Trading with the Enemy Act, 50 U.S.C.A. Appendix § 1 et seq., and was not otherwise properly within the jurisdiction of this court.

The suit was against Howard Sutherland, then Alien Property Custodian, and Frank White, then Treasurer of the United States, in their official capacities. The Zentral-Einkaufs-Gesellschaft, m. b. H. (hereinafter referred to as Z. E. G.), a corporation of Berlin, Germany, doing business as an official purchasing agency of the German Government, was also named as a defendant, although no relief was prayed for against it or awarded by the decree; and it appeared and filed an answer and unsuccessfully contested the debt. The suit was brought by the plaintiffs, Sorenson and Nielsen, as the surviving partners of the firm of Crossman & Sielcken, a New York partnership, in 1927, in purported pursuance of section 9(a) of the Trading with the Enemy Act, c. 106, 40 Stat. 411, as amended, 50 U.S.C.A.Appendix § 9(a). The entire capital of that firm was owned by Hermann Sielcken who, up to the time of his death on October 8, 1917, had continuously resided in Germany since March 1914. The suit sought to establish a debt owing to the firm of Crossman & Sielcken from Z. E. G. which was based upon the value of certain cargoes shipped by Crossman & Sielcken from New York to neutral consignees but destined for delivery to Z. E. G. under an agreement made between officials of the German Imperial Government, the firm of Theodor Wille of Hamburg, and Hermann Sielcken, while he was a resident of Germany, and the suit sought to have applied to the payment of the debt the sum, amounting with interest, to some $715,000, which had been seized as enemy property by the Alien Property Custodian under the Act and held by him and the Treasurer of the United States under a Trust No. 592 in the name of Z. E. G.

The suit which resulted in the decree for the plaintiffs for the sum of $716,160.37 on December 30, 1929, was tried in this court. No appeal was taken and the decree was satisfied by the Alien Property Custodian and the Treasurer of the United States. A warrant for satisfaction in the amount of $727,618.93 was executed on April 10, 1930.

On May 1, 1934, pursuant to an Executive Order 6694, the office of Alien Property Custodian was abolished and the authority, rights, powers and duties conferred upon the Alien Property Custodian by law and executive order, were transferred to the Department of Justice to be administered under the supervision of the Attorney General.

Service of motion papers to vacate the decree was made on John S. Sorenson, one of the original plaintiffs herein, and upon the Chase National Bank of the City of New York as Ancillary Executor of the Estate of Thorleif S. B. Nielsen, deceased; but on June 10, 1938, after a hearing before a Judge of this court on an order to show cause why an order should not be entered vacating the service on the said Bank as Ancillary Executor on the ground that it was discharged as such Ancillary Executor in 1934, the Attorney General and the Bank agreed to a discontinuance of the proceedings as to the Chase National Bank, as Ancillary executor of the Estate of Thorleif S. B. Nielsen, deceased, and on June 15, 1938, an order was entered to that effect. Thorleif S. B. Nielsen died in September, 1930, and thereupon John S. Sorenson became the sole surviving member of the former firm of Crossman & Sielcken.

Out of the recovery in said suit, it appears that one-half was directly or indirectly paid to Z. E. G. and $100,000 to the firm of Theodor Wille.

The Government in this proceeding is not questioning the decision of the court on the merits, namely, whether a debt was or was not owing by Z. E. G. to the firm of Crossman & Sielcken. The original suit was a proceeding in rem and the Z. E. G. was not a necessary party. Koscinski v. White, D.C., 286 F. 211, and the joinder, non-joinder, or the dissolution of Z. E. G., an enemy debtor, does not affect the jurisdiction herein. Spiegelberg v. Garvan, D. C., 260 F. 302.

Counsel for plaintiffs contend that there was no seizure of the property of Hermann Sielcken and could not for the reason that Sielcken died on October 8, 1917, and that the Alien Property Custodian was not appointed until October 22, 1913, and that moreover, the Custodian never made any demand for Sielcken's property or his estate. Insofar as this first contention is concerned, it is firmly established law that the Alien Property Custodian might seize enemy property found within this country, even though the former owner was deceased. Miller v. Schutte, 52 App.D.C. 359, 287 F. 604, appeal dismissed, 263 U.S. 730, 44 S.Ct. 7, 68 L.Ed. 529.

The affidavits with appended documents amply support the conclusion that not only all the right, title and interest of Hermann Sielcken in the liquidation of the partnership of Crossman & Sielcken, but all the right, title and interest of the German executors and of the beneficiaries under the will of Hermann Sielcken, deceased, were seized by the Alien Property Custodian. In support of this conclusion, without discussing the details at length, it is sufficient to refer to the admissions and records of the respondent, Irving Trust Co., the successor of the Columbia Trust Co., including Sterck's affidavits, claim of George E. Warren, Vice-President of Columbia Trust Co., sworn to March 28, 1921; the sworn amendment of March 29, 1921, to claim, the receipt of June 28, 1938, signed by Warren acknowledging that the Trust Company has filed with the Alien Property Custodian "* * * notice of claim against the money and property in the hands of said Custodian or the Treasurer of the United States taken as property of Hermann Sielcken and/or estate of Hermann Sielcken determined by said Custodian to be an enemy * * *"; also the opinion of Mr. Surrogate Foley in In re Sielcken Estate, 167 Misc. 327, 3 N.Y.S.2d 793. The Columbia Trust Co., the corporate predecessor of the respondent, Irving Trust Co., assisted in carrying the seizure into effect under its accepted appointment as agent for the Alien Property Custodian and its designation as depository for the Alien Property Custodian.

Upon seizure of the enemy alien property by the United States under the Trading with the Enemy Act, the enemy owners were divested of every right, title and interest therein. United States v. Chemical Foundation, 272 U.S. 1, 47 S.Ct. 1, 71 L.Ed. 121, and it became the property of the United States. A suit for the recovery of it is a suit against the United States which may only be brought upon the consent of the United States to be sued. Henkels v. Sutherland, 271 U.S. 298, 46 S. Ct. 524, 70 L.Ed. 953, 51 A.L.R. 229. Section 7(c) of the Act, 50 U.S.C.A.Appendix, § 7(c), authorized the seizure of all money or other property held for or by enemies or allies of enemies and provided as follows: "* * * and all property thus acquired shall be held, administered and disposed of as elsewhere provided in this Act".

Section 9 of the Act is the only statutory authority for suits to recover such property, and the pertinent part of it provides: "§ 9. (a) Any person not an enemy or ally of enemy * * * to whom any debt may be owing from an enemy or ally of enemy whose property or any part thereof shall have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United States may file with the said custodian a notice of his claim under oath and in such form and containing such particulars as the said custodian shall require. * * * If the claimant shall have filed the notice as above required and shall have made no application to the President, said claimant may institute a suit in equity in the Supreme Court of the District of Columbia or in the district court of the United States for the district in which such claimant resides, or, if a corporation, where it has its principal place of business (to which suit the Alien Property Custodian or the Treasurer of the United States, as the case may be, shall be made a party defendant), to establish the interest, right, title, or debt so claimed, and if so established the court shall order the payment, conveyance, transfer, assignment, or delivery to said claimant of the money or other property so held by the Alien Property Custodian or by the Treasurer of the United States or the interest therein to which the court shall determine said claimant is entitled. * * *"

A plaintiff whose property was thus seized could not invoke the general equity jurisdiction of the court. His remedy is that provided in section 9, which is exclusive. Crone v. Sutherland, 62 App.D.C. 16, 63 F.2d 895, Court of Appeals, District of Columbia; Sutherland v. Norris, 3 Cir., 24 F.2d 414.

After the termination of the state of war (July 2, 1921) the Congress made available certain remedies to a restricted class enabling them to proceed for...