Aratani v. Kennedy

• Decision Date: 28 March 1963
• Docket Number: No. 16808.,16808.
• Citation: Aratani v. Kennedy, 317 F.2d 161, 115 U.S.App.D.C. 97 (D.C. Cir. 1963)
• Parties: George T. ARATANI et al., Appellants, v. Robert F. KENNEDY, Attorney General of the United States, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

115 US App. DC 97, 317 F.2d 161 (1963)

George T. ARATANI et al., Appellants, v.Robert F. KENNEDY, Attorney General of the United States, Appellee.

No. 16808.

United States Court of Appeals District of Columbia Circuit.

Argued May 11, 1962.

Decided March 28, 1963.

Petition for Rehearing Denied May 2, 1963.

Mr. Philip W. Amram, Washington, D. C., with whom Mr. Thomas H. Carolan, Washington, D. C., was on the brief, for appellants.

Mr. Armand B. DuBois, Atty., Dept. of Justice, with whom Asst. Atty. Gen. William H. Orrick, Jr., and Mr. Morton Hollander, Atty., Dept. of Justice, were on the brief, for appellee.

Before WILBUR K. MILLER, DANAHER and BASTIAN, Circuit Judges.

DANAHER, Circuit Judge.

The Office of Alien Property holds approximately $1,050,000 in account No. 39-705, net proceeds of property vested as owned by the Sumitomo Bank, Ltd., of Japan, its branches and affiliates.Our ten appellants, representing themselves and 1,134 similarly situated claimants, assert entitlement to that fund arising from prewar contractual relations with the California and Washington branches and affiliates of Sumitomo Bank, Ltd., of Japan.The Director¹ of the Office of Alien Property administratively determined that the 1,144 claimants possessed only yen obligations, payable in Japan, with interest.Appellants insisted that they were the holders of dollar obligations payable in the United States on the basis of a yendollar rate of exchange of 23.4 cents, which a departmental hearing examiner had found to be the dollar value of the yen as of December 8, 1941.

As authorized by the Trading with the Enemy Act, 50 U.S.C.App. § 34(f), our appellants sought review in the District Court of the Final Schedule of the Office of Alien Property dated October 24, 1958.That Schedule, pursuant to the 1957"Decision of the Director," assigned priorities to the appellants pursuant to section 34(g) of the Act, with interest, but allowed the claims with the dollar amount to each claimant computed at the rate of only one dollar for each 361.55 yen, stipulated by the parties to be the postwar rate.That valuation was adopted by the District Judge who granted the appellee's motion for summary judgment.

The claims arose from transactions in Japanese yen between two branches and two affiliates of Sumitomo Bank, Ltd.² of Japan, and their customers, most of whom resided in California but with some in Seattle, Washington.For many years before December 7, 1941, the Sumitomo group accepted dollars for conversion into yen deposits in Japanese banks at the rate of exchange for selling yen prevailing at the time of each transaction.Only upon specific request of a customer was a yen certificate of deposit issued by the head office in Japan or other designated Japanese branch.The California³ Sumitomo group issued, not certificates of deposit, but receipts for the dollar amount paid in.Each receipt reflected as converted into yen the dollar amount received from the claimant as of the date of the transaction, the name of the bank in Japan in which a deposit was to be made, the rate of interest and the term or period of the "certificate."Had the named bank of deposit in Japan actually issued its yen "certificate of deposit," the instrument in the Japanese language would provide for payment at maturity in yen upon surrender of the certificate to the bank in Japan.We find no evidence that any of the claimants here had asked for such a certificate.

I

The claimants before the examiner advanced two contentions that their claims should be allowed in the amount of dollars paid in: (1) that after receiving dollars in the United States to purchase yen in a Japanese bank, the Sumitomo group had failed to forward the funds to Japan, thus breaching their contract; and (2) that the Sumitomo group had actually accepted deposits in violation of state banking laws and by this subterfuge had become trustees ex maleficio.

The examiner's findings and conclusions to the contrary on these two aspects of the case are well supported.Were that not so, the Director's Decision in greater detail has treated of both arguments and adequately disposed of these issues.Many receipt or certificate holders were paid in yen in Japan before the outbreak of the war, indeed, the Director found that since "the end of the war several thousand yen certificates were paid in Japan by the foreign banking corporations and thousands of certificates were discharged by the issuance of postwar certificates of deposit payable in yen."(See note 6 and II, B, infra.)

Appellants have not here sought to demonstrate that there was error in the disposition of the first of the stipulated pre-hearing issues which was whether or not customers of the Sumitomo group were entitled to have their claims "allowed in the number of dollars deposited at the time of the purchase of the yen certificates of deposit."Accordingly we will pass to the second stipulated issue, which is really the heart of the case: granting that these appellants have valid claims against the Sumitomo group, upon what dollar basis should the claims be allowed?

II

A.

As to this latter issue, the examiner found that the "proper rate of exchange to be used in computing the dollar value of these claims is $.234 per yen, or 23.4 cents per yen."He based his answer on (1)"all the evidence" including the established business practice utilized and relied upon by the parties in these various exchange transactions; (2) the fact that the banks were closed on December 8, 1941, so that necessity of a formal demand was obviated; and (3) the yen on December 8, 1941 was worth $.234.⁴The examiner deemed closest in point as "ruling the present situation,"Hicks v. Guinness, 269 U.S. 71, 46 S.Ct. 46, 70 L.Ed. 168(1925).Since he regarded the effect of the transactions as calling for payment in dollars in the event of an unmet demand, and decided that demand was unnecessary because of the onset of the war, he fixed the breach as of December 8, 1941.Thus he took 23.4 cents as the proper rate to be applied.

In concluding that the custom and business practice of the parties must be considered, the examiner found it to be "clear from the record in this case that the claimants would not have bought the certificates if they did not understand that they would be paid in dollars on demand in the United States."He described the claimants⁵ as middle-aged "Japanese" who were very poorly educated and had little knowledge of the English language.Having "heard and seen many of the holders of yen certificates testify in this proceeding, I was compelled to conclude that there was an understanding among all the holders of such certificates that they could be cashed in dollars at any time at the local issuing branch, and that this understanding was held and referred to by the employees of the banks with whom the certificate holders came in contact.My conclusion from all the evidence is that the Japanese banks, through their American branches, sold certificates of deposit of yen in Japan and that the contract of sale included the term that the certificates were redeemable in dollars at any time upon demand at the American branch of issue."⁶

The examiner rested his conclusion upon substantial evidence that the Japanese community generally understood that the Sumitomo receipts would be cashed at any time by the branch which had issued them.That business practice, so understood by the receipt holders as well as by the issuing bank, provided that a receipt representing a deposit in a bank in Japan would be purchased on demand by its American branch at the buying rate of exchange, dollars for yen, prevailing at the time of redemption.

The examiner thus found this case to present not at all a question of foreign exchange but one of measuring in dollars the damages to which the contracting claimants were entitled because of the breach as of December 8, 1941 by the Sumitomo group of the obligation to repurchase the receipts.⁷

II

B.

The Director's consolidated Decision dealt, as we have observed, with the insolvent accounts of Yokohama Specie Bank, Ltd. and Sumitomo Bank, Ltd.His text repeatedly and throughout made reference to the "Yen Certificates of Deposit," such as were actually issued by Yokohama, whereas the Sumitomo claims were based upon the receipts held by Sumitomo's American customers.⁸For our purposes we may assume that his findings and conclusions as to the Sumitomo accounts have not become suffused with a coloration derived from the evidence concerning the Yokohama claims.

Thus viewed, we read the Director's decision as holding importantly: first, that the Sumitomo claimants had acquired obligations payable only in yen in Japan; and second, there never was an obligation on the Sumitomo banks in California and Washington to repay dollars in this country, and thus the conversion of yen into dollars must be made at the rate of exchange existing on the "judgment day,"⁹November 13, 1957, the date of his decision.Accordingly, the Director found that the claimants were entitled only to a rate of 361.55 yen per dollar which the parties had stipulated to be the first rate available after the termination of hostilities.

In the foregoing respects and otherwise, the District Judge in granting summary judgment adopted the findings and conclusions of the Director.Additionally, the trial judge found that "No rate of exchange existed on the assumed breach date of December 8, 1941 and indeed none had existed since the freezing controls under Executive Order No. 8389, as amended, became effective as to Japan on July 25, 1941 when the rate of exchange was 23.4 cents or 4.27 to the dollar."

The appellants particularly assail the conclusion of the District Judge that there "is no genuine issue as to any material fact in this case."They argue that the Director had reversed the "crucial" findings of fact of the examiner and substituted "totally...