Bonnar v. United States

Decision Date19 February 1971
Docket NumberNo. 293-63.,293-63.
Citation194 Ct. Cl. 103,438 F.2d 540
PartiesJ. Robert BONNAR et al. v. The UNITED STATES.
CourtU.S. Claims Court

J. Frederic Taylor, New York City, attorney of record, and Coleman Burke, New York City, for plaintiffs. Burke & Burke, New York City, and Armin R. St. George, Washington, D. C., of counsel.

Robert R. Donlan, Washington, D. C., with whom was Asst. Atty. Gen. William D. Ruckelshaus, for defendant, Mary M. Schroeder, Washington, D. C., of counsel.

Before COWEN, Chief Judge, JONES, Senior Judge, and LARAMORE, DURFEE, COLLINS, SKELTON and NICHOLS, Judges.

OPINION

DURFEE, Judge.*

Plaintiffs, as citizens of the United States, are former stockholders or successors in interest to former stockholders of the General Dyestuff Corporation of New York (GDC). In 1942, during the war with Germany, the stock of this company was vested or seized by the Alien Property Custodian1 of the United States under the Trading With the Enemy Act § 1 et seq. (1964).

Under the Trading With the Enemy Act, the U. S. Alien Property Custodian (APC) in 1942 also vested title in the stock of General Aniline & Film Corporation (GAF), another American company engaged in the manufacturing of dyestuffs, chemicals and other products, and assumed titular control thereof.

In 1954, after an exchange of stock, the U. S. Attorney General merged GDC into GAF. In 1965, the Attorney General sold the GAF common stock for over $329,000,000. The allocable portion of these proceeds now claimed by plaintiffs in this litigation is $22,227,483.15, with interest thereon from March 1965, when the Attorney General sold the GAF stock.

Although a settlement of an earlier suit by plaintiffs in the United States District Court was effected in 1945 and 1951, these settlements and accompanying releases constitute no prohibition to the present action. Section 42(a) of the Trading With the Enemy Act confers jurisdiction on this court to hear and render judgment on these plaintiffs' claims "Notwithstanding any statute of limitation, lapse of time, any prior decision by any court of the United States, or any compromise, release or assignment to the Alien Property Custodian, * * *."

Defendant has attempted to place the responsibility for unusual delay in this long protracted litigation upon plaintiffs. The original bill enabling plaintiffs to sue in this court after the earlier settlement of the District Court action in 1945 and 1951, was enacted by Congress in 1962, and plaintiffs thereupon filed their original petition in this court. Due to a jurisdictional defect in the bill, resulting from a Supreme Court decision,2 it was amended in 1964 by Congress,3 and plaintiffs then filed their second amended petition in this court on November 16, 1964. After further pleadings by both parties, defendant amended its answer on April 27, 1965, to add as a new affirmative defense, an alleged conspiracy by plaintiffs with I. G. Farben to cloak the ownership and control of GDC.

Extensive pretrial conferences, orders and initial trial proceedings were carried on by Trial Commissioner McConnaughey, whose untimely death in 1966 required further time for Trial Commissioner Fletcher to become current with all the matters then unsolved in this complicated case. Further amendments were added to the pleadings. Thereafter, extensive and protracted investigations were conducted of records scattered throughout the Washington area and in Germany, with translation required for the German documents. Equally extensive trial sessions and conferences were required in Washington and in Germany. Proof was closed in August 1968, and briefs and proposed findings by both parties were not finally completed until March 1969. The Trial Commissioner then had to review an extremely long and complex case with extensive briefs by both parties, an immense record of over 2,800 pages of oral testimony and over 900 exhibits, many of which are themselves voluminous.4

The Commissioner filed his report in January 1970, including a 21-page opinion and 93 meticulous and necessarily complicated Findings of Fact. Thereafter, extensions of time for filing exceptions and briefs to the court were required, and the case was argued here at the October 1970 term.

Much of the time required to present this mass of material was taken in thoroughly exploring the history of the business and political practices and motivations of I. G. Farben and its German predecessor for the past one hundred years. Defendant insisted that the court review this as an essential part of the "entire mosiac" of Farben's devious international ventures in order to see GDC's part of the pattern. While the Trial Commissioner correctly considered much of this mass of evidence to be of doubtful relevancy, it was admitted over plaintiffs' continuing objections and covered in the findings where relevant. Certainly no onus for the long protracted litigation of this case can be ascribed solely to plaintiffs, despite defendant's contention in this regard.

We have determined that the Findings of Fact made by the Commissioner are amply supported by the record, and that where such findings consist of inferences based upon circumstantial evidence, these inferences may be reasonably drawn from the record. The court is also in agreement with the excellent opinion of Commissioner Fletcher, as herein modified and combined into a single opinion, and hereby adopts the same, together with his findings of fact with minor modifications, as the basis of its judgment for plaintiffs in this case.

It is quite clear, of course, that the Government had the power to seize GDC's stock in 1942 provided only that "adequate provision is made for a return in case of mistake." Central Union Trust Co. v. Garvan, 254 U.S. 554, 566, 41 S.Ct. 214, 215, 65 L.Ed. 403 (1921); Stoehr v. Wallace, 255 U.S. 239, 41 S.Ct. 293, 65 L.Ed. 604 (1921). It is equally clear that, under § 9(a) of the Act,5 it is the claimant's burden in a case to recover his vested property to show that he was not an enemy, an ally of an enemy, or the agent of either, and that he owned his property beneficially without enemy taint. Societe Internationale Pour Participations, Industrielles Et Commerciales v. Rogers, 357 U.S. 197, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958); von Clemm v. Smith, 255 F.Supp. 353 (1965), aff'd 363 F.2d 19 (2d Cir. 1966); Feller v. McGrath, 106 F.Supp. 147 (W.D.Pa. 1952), aff'd sub nom. Feller v. Brownell, 201 F.2d 670 (3d Cir.) cert. denied, 346 U.S. 831, 74 S.Ct. 24, 98 L.Ed. 355 (1953). The parties are in no disagreement with respect to these fundamental legal propositions. They disagree only as to whether plaintiffs have borne their burden of proof as delineated above. That question, admittedly complex, has been resolved in plaintiffs' favor.

Beneficial Interest

It is undisputed that all of plaintiffs or their predecessors in interest held legal title to their respective GDC shares when the stock was vested in 1942 by the Alien Property Custodian. However, the Government contends that by means of a prior cloaking arrangement and conspiracy, plaintiffs in reality were holding their stock for the benefit of I. G. Farben, a German corporation, and an enemy national at the time plaintiffs' shares were vested. Our ultimate conclusion is that plaintiffs or their predecessors in interest held beneficial, as well as legal ownership of their stock, and that there was no conspiracy as alleged by defendant at the time of seizure in 1942. Plaintiffs' proof meets both tests of bona fide ownership and nonenemy status. Accordingly, they are entitled to recover here.

However different the situation may have been before July 1939, when Ernest K. Halbach, as an American citizen, obtained complete majority control and direction of GDC, no cloak in favor of I. G. Farben existed thereafter with respect to the stock of GDC. No plaintiff or predecessor-shareholder was an "enemy," and each had both legal and beneficial ownership, subject only to options in favor of GDC contained in several stockholders' agreements in 1939, as will be later discussed herein.

Early History of the German Dyestuff Industry

The early history of the pioneer German dyestuff companies began in 1863, and within 10 years they had become the leading producers of coal-tar dyestuffs in the world. By 1916, these companies had formed a large cartel. Their largest customers were in the United States, and 90 percent of the dyes sold here were purchased through United States sales corporations organized and controlled by members of this German cartel. Defendant offers this early history for an understanding of the clandestine practice by Farben's predecessor companies, of secretly "cloaking" the actual ownership of their foreign sales companies prior to and after World War I.

In 1925, these German manufacturers combined their companies into one of the most spectacular business cartels recorded in history, I. G. Farbenindustrie, A. G., generally referred to as "Farben." With virtual nationalization of German industry in the 1930's by Hitler's Nazi Party, Farben became an essential and important factor in the Germanic aggression of the 1930's and 1940's.6 Farben's final end as an operating cartel came with the German surrender on May 7, 1945, but its name remains a specter that has bedeviled the United States Government and its courts for many years, and persists throughout the record of this case.

The Founding of General Dyestuff Corporation

The history of GDC and its successive shareholders is important, and their connection with Farben must be examined in some detail. The formation of the company in 1925 as a dyestuffs sales organization was part of an overall plan for sales operations within the United States formulated by leading German chemical and dyestuffs manufacturers, the three most prominent of which were known by the abbreviated names of Bayer, Badische and Hoechst. Also, part of the...

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