332 U.S. 480 (1947), 35, Clark v. Uebersee Finanz-Korporation, A.G.

Docket Nº:No. 35
Citation:332 U.S. 480, 68 S.Ct. 174, 92 L.Ed. 88
Party Name:Clark v. Uebersee Finanz-Korporation, A.G.
Case Date:December 08, 1947
Court:United States Supreme Court

Page 480

332 U.S. 480 (1947)

68 S.Ct. 174, 92 L.Ed. 88

Clark

v.

Uebersee Finanz-Korporation, A.G.

No. 35

United States Supreme Court

Dec. 8, 1947

Argued May 1, 1947

Reargued November 12, 1947

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA

Syllabus

1. Respondent, a corporation organized under the laws of Switzerland and having its principal place of business in that country, sued under § 9(a) of the Trading with the Enemy Act to reclaim property which the Alien Property Custodian had vested in himself under § 5(b), as amended by the First War Powers Act of 1941. The property seized consisted of shares of stock in corporations organized under the laws of various States of this Nation and of an interest in a contract between two such corporations, and, according to the allegations of the complaint, which are assumed to be true, was free of all enemy taint -- i.e., the corporations whose shares had been seized, the corporations which had a contract in which respondent had an interest, and respondent itself, were corporations in which no enemy, ally of an enemy, or any national of either, had any interest of any kind whatsoever, and respondent had not done business in the territory of the enemy or any ally of an enemy.

Held: Respondent is entitled to maintain the suit. Pp. 482-490.

Page 481

2. By the amendment to § 5(b) of the Trading with the Enemy Act contained in the First War Powers Act of 1941, the property of all foreign interests was placed within reach of the vesting power, not to appropriate friendly or neutral assets, but to reach enemy interests which masquerade under those innocent fronts. Pp. 484-486.

3. Although §§ 2 and 9(a) were not amended in 1941, they must be read harmoniously with § 5(b) as amended in 1941, so as not to defeat the purpose of the 1941 amendment. Pp. 486-489.

4. Section 2, defining the terms "enemy" and "ally of enemy," must be read differently than it was previously, so as to give the concept of enemy or ally of enemy a scope which helps the 1941 amendment fulfill its mission without nullifying § 9(a). P. 489.

5. When §§ 2, 5(b) and 9(a) are thus read together harmoniously, § 9(a) cannot be construed as affording no remedy for the recovery of property by foreign interests which have no possible connection with the enemy, merely because such property was made subject to seizure under § 5(a), as amended. Pp. 486-489.

81 U.S.App.D.C. 284, 158 F.2d 313, affirmed.

The District Court dismissed a suit brought by respondent under § 9(a) of the Trading with the Enemy Act to recover property vested by the Alien Property Custodian in himself under § 5(b), as amended by the First War Powers Act of 1941. The United States Court of Appeals for the District of Columbia reversed. 81 U.S.App.D.C. 284, 158 F.2d 313. This Court granted certiorari. 330 U.S. 813. Affirmed, p. 490.

Page 482

DOUGLAS, J., lead opinion

[68 S.Ct. 174] MR. JUSTICE DOUGLAS delivered the opinion of the Court.

Respondent brought this suit to reclaim property which the Alien Property Custodian,1 acting under § 5(b) of the Trading With the Enemy Act, 40 Stat. 411, 50 U.S.C. App. § 1 et seq., as amended by the First War Powers Act of 1941, § 301, 55 Stat. 839, 50 U.S.C. App. Supp. V, § 5(b), had vested in himself. Respondent is a corporation organized under the laws of Switzerland and having its principal place of business in that country. The property seized consisted of shares of stock in corporations organized under the laws of various States of this nation, and of an interest in a contract between two such corporations.

The complaint alleges that respondent is not an enemy or ally of an enemy, and that at no time at or since the vesting has the property in question been owned or controlled, directly or indirectly, in whole or in part, by an enemy, ally of an enemy, or a national of a designated enemy country. It also alleges that none of the property has been owing or belonging to or held on account of or for the benefit of any such person or interest. We construe these allegations to mean that the property is free of all enemy taint, and particularly that the corporations whose shares have been seized, the corporations which have a contract in which respondent has an interest, and respondent itself are companies in which no enemy, ally of an enemy, nor any national of either has any interest of any kind whatsoever, and that respondent has not done business in the territory of the enemy or any ally of an enemy. Those allegations, as so construed, are indeed taken as true for the purposes of the present ruling, since petitioner's motion to dismiss is based solely on the fact that respondent is a national of a foreign country.

Page 483

The District Court granted petitioner's motion to dismiss. The Court of Appeals reversed, one justice dissenting. Uebersee Finanz-Korporation, A.G. v. Markham, 81 U.S.App.D.C. 284, 158 F.2d 313. The case is here on petition for a writ of certiorari which we granted because of the importance of the question in the administration of the Act. 330 U.S. 813.

Under the Act as it read prior to the 1941 amendment, respondent would have been able to maintain this suit on a showing, without more, that it was a corporation organized under the laws of a friendly nation and not doing business in the territory of an enemy nation or any of its allies. That result would be reached as follows: Sec. 7(c) permitted seizure by the Custodian only of property in which an enemy or ally of an enemy had an interest. Sec. 9(a) permitted "any person not an enemy or ally of enemy" claiming an interest in any seized property to sue to reclaim it. And the Court held in Behn, Meyer & Co. v. Miller, 266 U.S. 457, that a corporation organized under the laws of a friendly nation and not doing business in the territory of an enemy nation or any of its allies2

Page 484

could maintain such a suit even though the corporation was enemy owned or controlled. The scheme of the Act as it was then drawn was "to seize the shares [68 S.Ct. 176] of stock when enemy-owned, rather than to take over the corporate property." Hamburg-American Line Terminal & Navigation Co. v. United States, 277 U.S. 138, 140.

That was at least one respect in which the Act had a "rigidity and inflexibility" that was sought to be cured by the amendment to § 5(b) in 1941. See H.R. Rep. No. 1507, 77th Cong., 1st Sess., p. 3. It was notorious that Germany and her allies had developed numerous techniques for concealing enemy ownership or control of property which was ostensibly friendly or neutral. They had, through numerous devices, including the corporation,

Page 485

acquired indirect control or ownership in industries in this country for the purposes of economic warfare.3 Sec. 5(b) was amended on the heels of the declaration of war to cope with that problem. Congress, by that amendment, granted the President the power to vest in an agency designated by him "any property or interest of any foreign country or national thereof."4 The property of all foreign interests was placed within reach of the vesting power not to appropriate friendly or neutral assets, but to reach enemy interests which masqueraded under those innocent fronts.

Thus, the President acquired new "flexible powers" (H.R. Rep. No. 1507, supra, p. 3) to deal effectively

Page 486

with property interests which had either an open or concealed enemy taint.

While the scope of the President's power was broadened, there was no amendment restricting the scope of § 9(a). As we have noted, § 9(a) granted "any person not an enemy or ally of enemy," claiming an interest in property seized, the right to reclaim it. So the provision reads today. Yet, as petitioner suggests, if Behn, Meyer & Co. v. Miller, supra, is applied despite the 1941 amendment, § 9(a) will [68 S.Ct. 177] undo much of the good which the 1941 amendment to § 5(b) was designed to accomplish. All a corporate claimant would need do to recover the property seized would be to show that it was organized in this country or in some friendly or neutral country and was not doing business within the territory of an enemy or any of its allies.5 The fact that it was owned or controlled by enemy interests and might sap the strength of this nation through economic warfare would be...

To continue reading

FREE SIGN UP