David v. Veitscher Magnesitwerke Actien Gesellschaft

• Decision Date: 03 January 1944
• Docket Number: 232
• Citation: 35 A.2d 346,348 Pa. 335
• Parties: David v. Veitscher Magnesitwerke Actien Gesellschaft, Appellant
• Court: Pennsylvania Supreme Court

35 A.2d 346

348 Pa. 335

David v. Veitscher Magnesitwerke Actien Gesellschaft, Appellant

No. 232

Supreme Court of Pennsylvania

January 3, 1944

Argued November 26, 1943.

Appeal, No. 232, Jan. T., 1940, from judgment of C.P. No. 1 Phila. Co., June T., 1939, No. 216, in case of Michael David v. Veitscher Magnesitwerke Actien Gesellschaft. Judgment affirmed.

Proceeding upon writ of foreign attachment.

Rule for judgment for want of a sufficient affidavit of defense as to part of claim sustained and judgment entered for plaintiff, before McDEVITT, P.J., PARRY and KUN, JJ., opinion per curiam. Defendant appealed.

The judgment is affirmed. Before any action is taken on this judgment, notice shall be given to the Federal Alien Property Custodian.

Earl G Harrison, of Saul, Ewing, Remick & Harrison, with him Harry E. Sprogell, for appellant.

Samuel A. Goldberg, with him Wolf, Block, Schorr & Solis-Cohen, for appellee.

Before MAXEY, C.J., DREW, LINN, STERN, PATTERSON and STEARNE, JJ.

OPINION

MR. CHIEF JUSTICE MAXEY:

The court below entered a judgment for the plaintiff, Dr. Michael David, for $9,798.46 with interest, for want of a sufficient affidavit of defense as to part of a claim and sustaining plaintiff's reply raising questions of law to new matter included in the affidavit of defense. From this judgment the defendant, Veitscher Magnesitwerke Actien Gesellschaft (hereinafter referred to as VMAG) takes this appeal.

The action was begun on May 18, 1939, by writ of foreign attachment garnisheeing moneys belonging to VMAG, totaling approximately $21,000. The claim was for the payment of a fixed sum set forth in an account stated by VMAG on a contract of employment embodied in various letters and minutes of the Executive Committee of VMAG attached to the pleadings.

VMAG is engaged in the business of producing and selling magnesite and similar chemicals, and was incorporated under the laws of the ci-devant nation of Austria and has its principal place of business at Vienna. On March 15, 1938, Austria was absorbed by the Third German Reich.

Dr. David, a citizen of Rumania, was employed as a director of the VMAG and served as general manager at its main office in Vienna from about December 21, 1925, to May 1, 1938. In the letter and minutes his employment was extended from time to time, and on April 28, 1936, it was extended "for an indefinite period so that it may be terminated at intervals of six months on the 30th day of June and the 31st day of December in each year, in which case Dr. David shall receive contractual dismissal pay in the sum of a year's salary," which in 1938 was 86,160 schillings. On October 4, 1937, the executive committee agreed that "in the event that the service relationship with Dr. David shall be terminated by the Company, he will receive a pension of 2000 schillings monthly, beginning with the month following the end of the service relationship." On April 28, 1938, the service relationship with Dr. David was terminated by the Company as of December 31, 1938, but excusing him "from further service from May 1, 1938, for the entire duration of the notice period, that is, up to December 31, 1938." In the same letter they expressly stated an account, thereby creating a fixed debt, as follows:

". . . There will be, therefore, the following payments made on April 30, 1938:

8 monthly salaries after the deduc-

tion of social insurance

S. 52,695.12

Christmas remuneration for 1938

S. 6,627.69

50a/c of the contractual dismissal

pay, which is established at 1

year's salary

S. 43,080.00

Gross Sum

S.102,402.81

There will be deducted with a view

to the computation of the yearly

budget for 1938 and the tax compu-

tation in accordance with Section

175 of the Tax Law as to dismissal

pay:

Tax on Salaries S. 10,120.28

Crisis and security

Taxes S. 8,844.81

S. 18,965.09

There will remain, therefore, a

payment of

S. 83,437.72

of Reichsmarks

55,625.14

the settlement of which we are ordering."

In this account they also stated: ". . . You will be entitled to participate in social insurance until December 31, 1938. On January 2, 1939, the other half of the dismissal pay as well as the first monthly installment of your pension in the sum fixed by agreement will fall due." They also said in this letter that "All laws which will be newly introduced with regard to the dismissal pay and pension will have to be taken into consideration at the time of payment on January 2, 1939." It is for "the other half" of the one year's salary and for the monthly pension payment which they contracted for in 1936 and upon which the statement of account of 1938 is founded, this suit was brought.

The plaintiff pleaded that three Austrian schillings have the value of two Reichsmarks and a Reichsmark is stated to be of the value of 40-1/8 cents in international exchange for conversion into the currency of the United States. The plaintiff claimed 53,080 schillings which he averred was equivalent to 35,386-2/3 Reichsmarks or the sum of $14,198.89. VMAG answered that the schillings claimed by the plaintiff are equivalent to $9,798.46. The judgment was computed in accordance with VMAG's allegations concerning the value of the schillings and the actual valuation above that expressly admitted remained to be determined by trial.

VMAG's "defense is that following absorption of Austria into the Third German Reich there became effective and binding in Austria, where VMAG's business is conducted, where plaintiff worked for VMAG, and where the contract sued upon was made and to be performed, laws which extinguished plaintiff's alleged cause of action and which made impossible the payments which plaintiff now seeks to compel. These laws were promulgated by the German Government of Austria." The first of these is a Decree to exclude Jews from the German economic life, dated at Berlin November 12, 1938, and executed by "Goering General Field Marshal", the commissioner in charge of the Four Year plan. It became effective in Austria on November 15, 1938, and provided in part that "(1) After January 1, 1939, a Jew may not be a Manager (Betriebsfuehrer) in the sense of the law of January 20, 1934 regulating national labor (Reichsgesetzbl. I S. 45). (2) If a Jew is active as a managing executive in a business establishment he may be given six weeks to quit. Upon the expiration of the period of notice all rights based on the contract are extinguished, particularly the right to pensions and cancellation settlements." VMAG pleaded that the plaintiff was a manager within the meaning of this law of January 20, 1934, and that he had been given due dismissal notice expiring prior to January 1, 1939. The second law was one on Foreign Exchange Control, which became effective in Austria about December 16, 1938, and provided in part that "Only subject to the issuance of a permit may an 'inlander' within the 'inland' (German Reich), make payments to a foreigner or in favor of a foreigner to an 'inlander', or in 'inland' or foreign payment media to a foreigner or, in favor of a foreigner, or an 'inlander'." VMAG averred that it is and always has been impossible for it to obtain such a permit. The third of these laws became effective about January 15, 1940, and designated persons resident in the United Kingdom of Great Britain as enemies and forbade any payment to them. Dr. David was such a resident.

On April 30, 1940, upon the plaintiff's rule for judgment, the court below held that the matters pleaded in the affidavit of defense were insufficient in law, except for the question concerning the value of the Austrian schilling, and judgment was duly entered.

In affirming this judgment, as we do, we are not concerned with the question whether German domination of Austria is of a de facto or de jure status, or whether or not our government by official decree recognizes Germany's sovereignty over Austria; or the extraterritorial force of any laws or decrees promulgated by the German government for Austria. We are concerned solely with the pleadings, and for the purposes of this appeal we assume the truth of the averments in the affidavit of defense and the "new matter" contained therein. We accept as true the allegations in the "new matter" that General Field Marshal Goering's decree, prohibiting any Jew from holding the position of business manager in Austria after January 1, 1939, and requiring that one "active as a managing executive may be given six weeks notice to quit, and upon expiration of the period of notice all rights based on the contract are extinguished particularly the right to pensions and cancellation settlements," became effective throughout Austria. That the Foreign Exchange Regulations, and the decree upon treatment of enemy property likewise became effective throughout Austria, we also accept as a fact. The question before us is the effect of these decrees and laws upon the plaintiff's claim against VMAG. The defendant says they "have extinguished plaintiff's cause of action and have made impossible compliance by VMAG with its former contractual liabilities, . . ." The plaintiff contends that "they do not actually apply in this case at all."

The liability of VMAG to the plaintiff became fixed not by virtue of the writing of April 28, 1938, terminating the employment but by virtue of the agreements of April 28, 1936, and October 4, 1937. These created a liquidated debt. This debt was sufficient consideration for the new cause of action created on April 28, 1938, when VMAG stated an account in writing of this liability to the plaintiff and paid him all but the "remaining 50% of the contractual dismissal pay which is established at one year's salary," and the monthly installment of his pension. The effect of this...