Cummings v. Hardee
| Decision Date | 23 January 1939 |
| Docket Number | No. 7127.,7127. |
| Parties | CUMMINGS, U. S. Atty., v. HARDEE. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Harry LeRoy Jones, of Washington, D. C., for appellant.
Swagar Sherley, Charles F. Wilson, H. B. Weaver, Jr., and George B. Springston, all of Washington, D. C., for appellee.
Before GRONER, Chief Justice, and MILLER and VINSON, Associate Justices.
This is an appeal by Homer S. Cummings, Attorney General of the United States, as successor in interest to the Alien Property Custodian, from a final decree and order of the District Court granting the plaintiff's (appellee's) motion to strike certain parts of defendant's (appellant's) answer and entering judgment pro confesso for the plaintiff. The suit was instituted by the receiver of the Commercial National Bank of Washington, D. C., against the Attorney General and a number of other defendants. In each case decree went for the receiver. The appeals of the defendants Inland Waterways Corporation, United States Shipping Board Merchant Fleet Corporation, Harry H. Woodring, Secretary of War, and others, were heard together and decided on a separate record by this court October 31, 1938.1 The decrees were affirmed. In each case, including the present one, the purpose of the suit was to recover preferential payments made by the bank after insolvency. The bill alleged that each defendant had deposited sums of money with the bank, that the bank had unlawfully pledged part of its assets to each defendant to secure the deposits; that the bank thereafter became insolvent and a receiver was appointed to administer its assets, that the receiver, acting under mistake of law, redeemed part of the pledged assets at their full value; and that defendants sold the remaining part to satisfy the bank's indebtedness in full. The prayer of the bill in this case is that the defendant be declared trustee for the benefit of the receiver for the sums received from the sale and that the receiver have a decree for the amount thereof, with interest.
Admittedly the deposits were to the account of the Alien Property Custodian and consisted of money derived from two per cent. deductions from alien property, authorized by statute to be made upon return of the property to former enemy owners.2
The final decree of the District Court gave judgment against Homer S. Cummings,3 Attorney General, as successor to the Alien Property Custodian, for the sum of $88,556.56, with interest from December 1, 1937, until paid, representing a balance of principal in the sum of $64,852.85 after deducting dividends at the rate paid unsecured creditors, and interest thereon in the sum of $23,703.71.
Nine grounds of error are relied on, but in the view we take of the case it is necessary to discuss only one of them.
The answer of the Attorney General alleged that the United States were the sole and absolute owners of the moneys deposited by the Alien Property Custodians in the bank and that the moneys were public moneys; that the moneys received from the sale of the pledged securities were when received deposited in the Treasury of the United States and credited to "Secretary's Special Deposit Account No. 8" and commingled with other funds of the United States; that this account is subject only to the check of the Secretary of the Treasury; that the Attorney General has not now and never has had the physical custody or possession of or any interest in the moneys received by the former custodian from the sale of the pledged securities. On these grounds the Attorney General insists that if the decree is to be considered one against him in his individual capacity, it is erroneous because he admittedly had no individual interest in the subject matter and, if it is to be considered one against him in his official capacity, it is invalid because not authorized under any of the provisions of the Trading With the Enemy Act, as amended, 50 U.S.C.A. appendix § 1 et seq.
We think the first ground may be eliminated, for obviously the decree is only against the Attorney General as Acting Alien Property Custodian, and the judgment is in effect to require him to exercise his official control over alien property funds in the Treasury of the United States. The case in this aspect differs from the cases decided in October in at least one major respect. In the cases of the Fleet Corporation and Inland Waterways Corporation, although the deposits were moneys of the United States and the proceeds of the pledge had been covered into the Treasury, they were, as corporations, the actual wrongdoers, suable in their individual capacities and therefore liable to judgment for conversion of the illegal pledge; and in the case against the Secretary of War, as custodian of the postal funds of the Panama Canal Zone, the proceeds of the pledged securities were not moneys of the United States and had not been covered into the Treasury but were still in his possession and control, and the suit was therefore for the recovery of a specific res unlawfully in the custody of an official of the Government. In the present suit, as we have seen, not only is it alleged that the deposits in the bank were moneys of the United States, but the proceeds of the securities pledged to secure the deposits were deposited in the Treasury of the United States and commingled with the funds of the United States, and in this aspect the question for decision is whether the District Court had jurisdiction to enter a decree for the restoration of the money — conceding the contract for deposit-security to have been illegal — without the consent of the United States to be sued. We think the answer to the question is to be found in our decision in Haskins Bros. & Co. v. Morgenthau, 66 App.D.C. 178, 85 F.2d 677, certiorari denied, 299 U.S. 588, 57 S.Ct. 118, 81 L.Ed. 433. It is quite true that in the case of O'Connor v. Rhodes, 65 App. D.C. 21, 79 F.2d 146, 151 — which was a previous suit brought by a depositor of the Commercial National Bank against the Attorney General as Alien Property Custodian and a number of other defendants to recover on these same causes of action — we said on an appeal from a decree overruling defendant's motion to dismiss the bill:
Hence we did not consider the suit as one against the United States. That case was subsequently dismissed, and the present suit for the same purpose was instituted by the receiver. But it should be observed that our former decision was based upon the facts appearing in the bill of complaint in that suit, and these facts showed that the fund being sued for — the proceeds of the pledge — was then a fund exclusively under the control of the Attorney General; that it was not money of the United States; was held by the Attorney General; and had not been covered into the Treasury of the United States and commingled with the moneys of the United States. The contrary appears on the appeal in the present suit. We do not, therefore, regard O'Connor v. Rhodes, supra, as establishing the law in this case or, in view of the circumstances, as controlling.
On the facts now shown, we think that the money deposited in the bank was unquestionably money of the United States, and that the judgment in this case can be satisfied only by payment of money out of the United States Treasury. As to the first proposition we did, as in the O'Connor case, express a contrary view in Deutsche Bank v. Cummings, 65 App.D.C. 297, 83 F.2d 554. There we said that legislation on the seizure of alien property, passed in the exercise of the war power of Congress, indicated no purpose of confiscating to the use of the United States enemy property found within the country; that, while the power to confiscate existed, it had never been exercised; and that, until exercised, the seizure and retention of alien property created only a trusteeship and did not change title. We thought we were justified in this conclusion by the language of the statutes and the declarations of the Executive Departments on the subject of confiscation, but on appeal to the Supreme Court (300 U.S. 115, 57 S.Ct. 359, 81 L.Ed. 545) our views were disapproved, and it was held that alien enemy owners were divested of every right in respect of money and property seized and held by the custodian during the war and that the title to the same upon seizure became absolute in the United States. In this view it follows (in the light of the facts here) that the suit to recover the proceeds of the pledge made to secure the deposit is in substance a suit against the United States. Cummings v. Societe Suisse Pour Valeurs De Metaux, 66 App.D.C. 121, 85 F.2d 287;...
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