Clark v. Ueberseeg

Decision Date08 December 1947
Docket NumberNo. 35,A,FINANZ-KORPORATIO,35
Citation92 L.Ed. 88,68 S.Ct. 174,332 U.S. 480
PartiesCLARK v. UEBERSEEG. Re
CourtU.S. Supreme Court

Mr. M. S. Isenbergh, of Washington, D.C., for petitioner.

Mr. Richard J. Connor, of Washington, D.C., for respondent.

Mr. William Harvey Reeves, of New York City, for National Foreign Trade Council, Inc., amicus curiae.

[Argument of Counsel from page 481 intentionally omitted] 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., 50 U.S.C.A.Appendix, § 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), 50 U.S.C.A.Appendix, § 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.

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, 67 S.Ct. 772.

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, 45 S.Ct. 165, 69 L.Ed. 374, 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 allies.2 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 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, 48 S.Ct. 470, 471, 72 L.Ed. 822.

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 cor- poration, 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 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 e emy,' claiming an nterest 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 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 immaterial. We agree that a construction so destructive of the objectives of the 1941 amendment to § 5(b) must be rejected.

Petitioner therefore suggests that once the seizure is shown to be permissible under § 5(b), there is no remedy for the return of the property under § 9(a). It is said that § 9(a) was designed to provide an ultimate judicial determination of the question whether the property seized was within the vesting power defined in § 5(b) Central Union Trust Co. of New York v. Garvan, 254 U.S. 554, 567, 568, 41 S.Ct. 214, 215, 65 L.Ed. 403. The argument accordingly is that since § 5(b) allows seizure and vesting of 'any property or interest of any foreign country or national thereof,' a suit to reclaim it is defeated by a mere showing that the claimant is a corporation organized under the laws of another nation.

That is to make the right to sue run not to 'any person not an enemy or ally of enemy' as § 9(a) in terms pro- vides but to 'any person not an enemy or ally of enemy or national of any foreign country.' That would wipe out all suits to reclaim property brought by any foreign interest, no matter how friendly. We stated in Markham v. Cabeil, 326 U.S. 404, 410, 411, 66 S.Ct. 193, 196, 90 L.Ed. 165, 'The right to sue, explicitly granted by § 9(a), should not be read out of the law unless it is clear that Congress by what it later did withdrew its earlier permission.' Such a drastic contraction, if not complete sterilization, of § 9(a) as petitioner suggests should therefore be made only if no other alternative is open.

There are several reasons which make us hesitate to take that course. In the first place, as we have suggested, the phase of the problem with which we are presently concerned and with which Congress was wrestling when it amended the Act in 1941 started and ended with property having an enemy taint. We find not the slightest suggestion that Congress was concerned under this Act with property owned or controlled by friendly or neutral powers and in no way utilized by the Axis. Those interests were not waging economic warfare against us. Secondly, we are dealing here with the power 'to affirmatively compel the use and application of foreign property in a manner consistent with the interests of the United States.'6 Sen. Rep. No. 911, 77th Cong., 1st Sess., p. 2. It is hard for us to assume that Congress adopted that drastic course in the case of friendly or neutral fireign interests whose investments in our economy were in no way infected with enemy ownership or control. Our hesitation is, moreover, increased when we note that § 7(c) makes the remedy under the Act the only one Congress has granted a claimant. It is not easy for us to assume that Congress treated all nonenemy nations, including our recent allies, in such a harsh manner, leaving them only with such remedy as they might have under the Fifth Amendment.

The problem is not without its difficulties whichever way we turn. But we think that we adhere more closely to the policy of both § 5(b) as amended and § 9(a), if we do not carry over into the amended Act the consequences of Behn, Meyer & Co. v. Miller, supra.

As we have observed, the scheme of the Act when Behn, meyer & Co. v. Miller was decided was to respect the corporate form, even though the enemy held all the stock of the corporate claimant. Hamburg-American Line Terminal & Navigation Co. v. United States, supra. The 1941 amendment to § 5(b) reflected a complete reversal in that policy. The power of seizure and vesting was extended to all property of any foreign country or national so that no innocent appearing device could become a Trojan horse. Congress did not, however, alter the definitions of enemy or of ally of enemy contained in § 2. They remain the same as they were at the time Behn, Meyer & Co. v. Miller was decided.7

Yet if the question were presented for the first time under the amended Act, we could not confine the statutory definitions of enemy or ally of enemy to the narrow categories indicated by Behn, Meyer & Co. v. Miller. To do so would be to run counter to the policy...

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