Clark v. Continental Nat. Bank of Lincoln, Neb., Civ. No. 3-49.

• Citation: 88 F. Supp. 324
• Decision Date: 26 November 1949
• Docket Number: Civ. No. 3-49.
• Parties: CLARK, U. S. Atty. Gen., v. CONTINENTAL NAT. BANK OF LINCOLN, NEB.
• Court: U.S. District Court — District of Nebraska

88 F. Supp. 324

CLARK, U. S. Atty. Gen., v. CONTINENTAL NAT. BANK OF LINCOLN, NEB.

Civ. No. 3-49.

United States District Court, D. Nebraska, Lincoln Division.

November 26, 1949.

COPYRIGHT MATERIAL OMITTED

Joseph T. Votava, United States Attorney of Omaha, Neb., and James L. Brown, Assistant United States Attorney, of Lincoln, Neb., for plaintiff.

Maxwell V. Beghtol, J. Lee Rankin, Kenneth E. Anderson, John C. Mason, and Nate C. Holman, all of Lincoln, Neb., for defendant.

DELEHANT, District Judge.

Counsel for the plaintiff will prepare for entry as of this date an order recognizing and finding the familiar change in personnel in the plaintiff's office and making appropriate substitution of the present incumbent thereof for the named plaintiff. See McGrath v. Manufacturers Trust Co., 70 S.Ct. 4.

For the rest, the facts are not in dispute, and the legal questions are not numerous. The case has been submitted to the court for final ruling and judgment upon the pleadings and certain additional or clarifying details reflected in the report of pretrial conference.

From those sources emerge the recognized facts upon which the court's ruling must depend. Those facts will now be mentioned as briefly as to the court seems appropriate.

The defendant is and at all times involved has been a national banking association with its office and place of business in Lincoln, Nebraska, and clothed with the authority to act as trustee of trusts of the character, and erected in the manner, hereinafter set out. Gustav C. Menzendorf died in Lincoln, Nebraska, on May 4, 1943 and for a substantial period prior to his death had been a resident of that city.

On May 3, 1943, therefore the day before he died, Menzendorf executed and delivered to the defendant a written instrument wherewith and whereby he transferred and delivered to the defendant as trustee four parcels of real estate and eighteen items of securities in the way of corporate shares and bonds and first mortgage notes, each secured by a lien on individually owned property. The defendant accepted the trust, and is engaged in its administration. Broad powers of sale, investment, reinvestment and management of, and collection of income from, the corpus of the trust were conferred on the trustee. In view of his virtually immediate death, provisions of the trust instrument for the benefit of the donor during his life may be disregarded. Provision was also made for the payment of the expenses of the last illness and funeral of the donor out of the income or principal of the trust property. By a separate paragraph of the instrument the trustee was required to "try to pay the sum of $200.00" to trustor's grandson Hans Eugene von Bomsdorff, Pottsdam, Germany, on condition that if by reason of war or political conditions such payment should be rendered uncertain or improbable and such payment should not be made for two years after the trustor's death, the provision for such payment should be wholly void.

Paragraph five of the trust agreement is in the following language.¹

"Trustee shall pay quarterly to Trustor's daughter Emmy von Bomsdorff of 05 Kohlgarten Street, 43 Tr, Leipsig Germany, if living and for as long as she may live, the income from securities numbered five to thirteen inclusive and from substituted securities. If, in the Judgment of the Trustee, war or political conditions make payments of income to Emmy uncertain or improbable, this income shall be accumulated over a period of five years and all income so accumulated for my daughter Emmy for five years, shall if not paid to Emmy, after a reasonable effort has been made to pay said income to Emmy, merge in the general income and be distributed as provided in paragraph six and seven and Trustor's daughter Emmy will have no right to or interest in the income or in the securities described in this paragraph five; securities described in this paragraph may be sold and proceeds reinvested as provided herein for the remainder of the trust property."

The significance of the reference to paragraphs six and seven will be gathered from the following copy of paragraph six:

"One-half of the net income of the trust property, other than from the securities from which Emmy is entitled to receive the income, shall be delivered to Trustor's daughter Louise, if living, for so long as she may live and thereafter this income shall be divided equally among the children born to Louise during Trustor's lifetime, until the death of Emmy and Grace and until the youngest of the children of Louise and Grace, described in this paragraph and in paragraph seven, attain the age of 21 years; if there is at any time no one who is entitled to payments under paragraph seven, then the total income described in paragraphs six and seven shall be distributed as provided in this paragraph number six."

And paragraph seven is the equivalent of paragraph six, with the reversal of the positions of the daughters, Grace and Louise.

Then, paragraph eight of the instrument makes provision for the time and manner of the termination of the trust and the final distribution of the corpus of the trust estate, as follows:

"When the time comes when there are no further income payments required by this agreement, the trustee is directed to assign convey and transfer all the remaining trust estate to the persons who received, or the persons who shared, in the last distribution of income and in case of death of one or more of such sharers of income, before the distribution of principal is completed the share of the deceased shall be given to the heirs of such deceased person or persons."

The grantor's daughter Emmy von Bomsdorff-Leibing was at all material times, and is now, a resident of Leipsig, Germany, and a German national, and therefore an alien enemy. Hans Eugene von Bomsdorff is her son.

The grantor's daughter Louise, is Louise M. Lewis, a citizen of the United States and a resident of California, who has only one child, a daughter, Jean Lewis. Jean Lewis was born during the lifetime of the grantor. His daughter Grace, is Grace Ryan, a citizen of the United States and a resident of Lincoln, Nebraska, who has only three children, Ann Margaret Ryan, Daniel James Ryan and Michael Joseph Ryan, all of whom were born during the lifetime of the grantor.

No payments of income have ever been made by the defendant to the grantor's daughter Emmy. In the judgment of the defendant, payments of income to her were uncertain and improbable from May 4, 1943 for the period of five years thereafter, due to the then existing war and political conditions. In that interval the defendant accumulated the income from securities numbered five to thirteen, both inclusive, as identified in the trust agreement and from substituted securities. The amount thus accumulated up to December 21, 1948 was $1,562.59. The net accumulations for the exact five year period beginning May 4, 1943 were and are $1,369.09. Those items are in the defendant's possession, as are also all items of income, less proper disbursements received after December 21, 1948.

On March 19, 1948 the original plaintiff, under authority of the Trading with the Enemy Act, as amended, 50 U.S.C.A.Appendix, § 1 et seq., and Executive Orders 9193 and 9788, 50 U.S.C.A.Appendix, § 6 note (vide infra) issued Vesting Order No. 10,917, a copy of the essential language of which is set out in a footnote.² On March 31, 1948 the original plaintiff, by United States mail, transmitted to the defendant a demand in language set out in a footnote.³ With the demand was transmitted a copy of the vesting order. The defendant received the demand and copy of the vesting order in due course of post; but declined to regard it as adequate to compel or justify its surrender to the plaintiff of any of the accumulated income from items five to thirteen, inclusive, and has not made any such payment.

This action followed, the complaint having been filed on January 22, 1949. In it the plaintiff prays that it be determined that he is entitled to the accumulated interest from the designated securities or their respective substitutes; that the defendant be ordered to surrender to the plaintiff such income, so far as it has accumulated, and hereafter to continue to pay such income so long as provision therefor is made by the trust instrument; and that the plaintiff have general equitable relief appropriate in the premises.

By answer, setting up its contentions (considered hereafter) and also a detailed accounting of its receipts and disbursements in respect of items numbered five to thirteen of the trust property, the defendant prays for the dismissal of the action and a judgment that the plaintiff is not entitled to any interest under the trust and by virtue of his vesting order and demand, or, alternatively, and only if its primary prayer be denied, for a construction of the trust instrument and a determination of what interest thereunder the plaintiff has acquired by reason of the vesting order and demand, and that its accounting be approved, and for general equitable relief.

Several legal considerations upon which there is no question may be passed over with their mere mention. More extended comment would be both superfluous and inappropriate. The jurisdiction of this court is unchallenged, and unquestionably exists. See generally Title 28 U.S. C.A. § 1345 and specifically Title 50 U.S. C.A.Appendix, § 17 and Cummings v. Deutsche Bank, etc., 300 U.S. 115, 57 S.Ct. 359, 81 L.Ed. 545; Markham v. Allen, 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256; Clark v. Tibbetts, 2 Cir., 167 F.2d 397. The validity of the Trading with the Enemy Act, Title 50 U.S.C.A.Appendix, § 1 et seq., and of the Executive Orders 9193, 3 C.F.R. 1174 vesting the Alien Property Custodian with final and conclusive authority to take possession of the property of alien enemies, and designating Germany as an enemy country, and 9788, 1 C.F.R., 1946 Supp. 169, transferring to the...