Draeger Shipping Co. v. Crowley

• Decision Date: 29 May 1944
• Parties: DRAEGER SHIPPING CO., Inc., et al. v. CROWLEY, Alien Property Custodian.
• Court: U.S. District Court — Southern District of New York

55 F. Supp. 906

DRAEGER SHIPPING CO., Inc., et al. v. CROWLEY, Alien Property Custodian.

District Court, S. D. New York.

May 29, 1944.

William A. Marden, of New York City, for plaintiffs.

James B. M. McNally, U. S. Atty., of New York City, George A. McNulty, Chief, Alien Property Unit, War Division, Department of Justice, A. Matt Werner, General Counsel to Alien Property Custodian, and Albert E. Arent, Sp. Asst. to Atty. Gen., War Division, Department of Justice, all of Washington, D. C., William L. Lynch, Asst. U. S. Atty., of New York City, and J. A. Fridinger, Attorney, Alien Property Unit, War Division, Department of Justice, of Arlington, Va., for defendant.

NEVIN, District Judge (sitting by designation).

In this action, plaintiffs seek certain relief by way of injunction. The complaint was filed on October 10, 1942. Owing to circumstances over which neither the court nor counsel had control, it was not finally submitted, however, until April 20, 1944.

On the same day the complaint was filed, plaintiffs moved by order to show cause, for a preliminary injunction, and on October 24, 1942, defendant moved to dismiss the complaint.

Both motions came on for hearing before Judge Bondy. On February 13, 1943, Judge Bondy denied the defendant's motion to dismiss and granted plaintiff's motion in part. Draeger Shipping Co. v. Crowley, D.C., 49 F.Supp. 215. Subsequently (May 3, 1943) Judge Bondy filed his findings of fact and conclusions of law, and entered his order accordingly.

No appeal was taken from the decision or order of Judge Bondy. It is agreed by all counsel, therefore, that the ruling of Judge Bondy is "the law of this case." In their brief (p. 2) counsel for defendant say: "Judge Bondy's decision is at the present time, the law of this case; although the defendant has not waived any of the points raised on his motion to dismiss."

In his decision (page 219 of 49 F.Supp.) Judge Bondy makes, inter alia, the following statements: "The fact that anyone other than an enemy or ally of enemy may recover his property on proving that he is not a national of a foreign or enemy country within the meaning of the Act or the President's definition, does not establish that a foreign or enemy country or national thereof within such meaning will succeed in obtaining possession of property. * * * The motion to dismiss the complaint is accordingly denied and the application of the plaintiffs granted only to the extent of directing the defendant not to liquidate the business of the company or sell its stock pending the determination whether they are nationals of a foreign or enemy country, or whether the seized property is owned or controlled by a foreign or enemy country or national thereof."

On May 4, 1943, defendant filed his answer and thereafter, on June 1, 1943, the cause came on for hearing on the merits, that is, for "determination whether they, (plaintiffs) are nationals of a foreign or enemy country, or whether the seized property is owned or controlled by a foreign or enemy country or national thereof."

There has been no material change in the pertinent facts as found by Judge Bondy, upon the record presented to him, on the respective motions, occasioned by defendant's answer or by the evidence adduced at the trial. Additional facts, however, have been disclosed, either by way of admissions in the answer or by evidence.

Draeger Shipping Co., Inc., one of the plaintiffs herein, was adjudicated a bankrupt in this court on June 19, 1943. A trustee in bankruptcy has possession of the assets of the corporation. At the outset of the trial, and again at the close of the case, defendant moved that Draeger Shipping Co., Inc., be dismissed as a party plaintiff. These motions were not decided at the time and are still pending. They are each and both here, and now, overruled.

The relief sought by plaintiffs, as stated (Tr. p. 6) by their counsel, is as follows: "The relief which is asked is for a decree of this Court restraining the liquidation of the business of the corporate plaintiff, and this is the relief which the corporation asks for, and to restrain the defendant from preventing the plaintiffs from accepting new business, and to restrain the defendant and his representatives from writing letters to customers of the plaintiff corporation stating that it is not accepting new business, pending the determination of the action. Fourth, adjudging that the right and title in the property seized by the Alien Property Custodian is in the plaintiff, Draeger Shipping Company, and that it is entitled to the immediate possession thereof; further, that a decree be entered directing the defendant to pay, convey, transfer, assign and deliver to it the business, money and other property so held by the defendant as Alien Property Custodian; further, declaring that the vesting order which was issued by the Alien Property Custodian is a nullity and of no effect; further, declaring that the election of one H. D. Weiser, as president and treasurer, and R. W. Watts, as secretary of the plaintiff, Draeger Shipping Company, be declared a nullity and of no effect. Now the individual plaintiff, Frederick Draeger, asks that the decree direct the defendant, as Alien Property Custodian, to transfer, assign, deliver and return to him the stock of the Draeger Shipping Company seized by the Alien Property Custodian, and that it be adjudged that the right, title and interest in and to said stock is in the individual plaintiff, Frederick Draeger, and that he is entitled to the immediate possession of this stock."

Plaintiffs insist that "Section 5(b) of `Trading With the Enemy Act as Amended' and Executive Orders 8389 and 9095, as Amended, are unconstitutional, if the interpretation placed thereon by the Alien Property Custodian is adopted"; that "the record fails to disclose any evidence which would warrant the seizure of the property of an American Citizen," that the action taken by the Alien Property Custodian was and is illegal, and that plaintiffs are entitled to all of the relief prayed for in their complaint.

The constitutional question was disposed of by Judge Bondy in his decision. This Court is in full accord with the views expressed by Judge Bondy and adopts the same as its own. It has long been the settled law that any property which the enemy can use, either by actual appropriation or by the exercise of control over its owner, or which the adherents of the enemy have the power of devoting to the enemy's use, is a proper subject of confiscation. Miller v. United States, 1870, 11 Wall. 268, 306, 20 L.Ed. 135.

In their brief (pp. 36, 48) plaintiffs say: "The hodge-podge character of the evidence adduced by the defendant at the trial, shows an effort to throw in everything at hand and trust that something might stick. If ever there was a case in which the words `conjecture and surmise' are pertinent, this is it. No Court of Justice could possibly say that such evidence as was adduced, would justify the seizure of the property of an American citizen. The character and national sentiment of Frederick Draeger, are best shown by the character and sentiment of those surrounding him personally, and of those whom he made officers and directors of his corporation. * * * There was no internal merger of Draeger Shipping Co., and Schenker-New York. The property of Draeger Shipping Co., always remained its property, and the property of Schenker remained Schenker property. It is the plaintiff's contention that it is beyond the province of any person in the United States, to declare an American citizen a `national' and thereby give the Government the right to confiscate his property. The `sentence' of the Alien Property Custodian, to the effect that plaintiff Frederick Draeger was a `national', was pronounced without giving him a hearing of any kind. In McCoy v. McCoy, 29 W.Va. 794 2 S.E. 809, 817, it was held: `* * * a sentence of a court pronounced against a party when the court did not hear him or give him an opportunity to be heard, is not a judicial determination of his rights, and is not entitled to respect in any other tribunal.' Even if the court should find that Frederick Draeger might have done some imprudent act, this would not justify his characterization as a `national', and thereby suffer the penalties which have been visited upon him at the hands of the Alien Property Custodian."

The record, either by way of admissions in the pleadings, or by the evidence adduced at the trial, discloses the following: Plaintiff, Frederick Draeger, was born in Stettin, Germany, about 70 years ago. He came to the United States in 1892—then about 18 years of age. He became a naturalized citizen in 1898. From 1915 until the outbreak of the present world war, he spent a large part of his time abroad, much of it in London, England.

He is a half-owner and a managing director of an English corporation known as Gerhard & Hey, of London, England—one of the largest forwarding concerns in the British Empire. His interest in Gerhard & Hey was acquired from the British Government.

The only real estate owned by Frederick Draeger or his wife (Tr. P. 101 et seq.) consists of a villa located near Munich, Germany. This property was purchased by Mrs. Draeger and is still used and occupied, at times, by the family.

Draeger Shipping Co., Inc., was organized by Frederick Draeger in 1922. The company was incorporated under the laws of the State of New York to engage in the business of foreign freight forwarder and customs broker, in which business it was engaged until adjudicated a bankrupt. The main office of the company was located at 17 State Street, New York City. It handled imports and exports from and to all parts of the world.

All the outstanding stock of Draeger Shipping Co., Inc., with the temporary exception of one share, has always been registered in the name of Frederick Draeger, and from the organization of the company he was its president...