Dreyfus v. Von Finck

Citation534 F.2d 24
Decision Date06 April 1976
Docket NumberNo. 194,D,194
PartiesWilly DREYFUS, Plaintiff-Appellant, v. August VON FINCK and Merck, Finck & Co., Defendants-Appellees. ocket 75-7135.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Eric Schnapper, New York City (John R. Horan, New York City, of counsel), for plaintiff-appellant.

William Schurtman, New York City (Walter, Conston, Schurtman & Gumpel, P. C., Alan Kanzer, New York City, of counsel), for defendants-appellees.

Before OAKES, VAN GRAAFEILAND and MESKILL, Circuit Judges.


The judgment appealed from dismissed the complaint of a Swiss citizen and resident seeking recovery from West German citizens and residents for allegedly wrongful confiscation of property in Nazi Germany in 1938. The action was commenced in the Southern District of New York in 1973 by attaching certain of defendants' assets in New York City.

Plaintiff, a Jew and former resident of Germany, was forced to emigrate from that country to Switzerland and sold defendants his interest in the banking firm of J. Dreyfus & Co., allegedly under duress and at a price which was one and one-half million dollars below its actual value. Following World War II, plaintiff sought additional compensation from the defendants, and, in 1948, settlement was agreed upon. This settlement was never consummated, allegedly because of wrongful repudiation by defendants; and plaintiff then sought relief in a Restitution Court, or "Chamber", established under the aegis of the United States Military Command in Germany. In 1951, while the decision of this tribunal was on appeal in the Court of Restitution Appeals, a second settlement agreement was reached in open court; and plaintiff's petition was thereupon dismissed. The consideration recited in this agreement, four hundred ninety thousand German marks, was paid.

Plaintiff predicated his cause of action below upon both the original taking of his property and defendants' alleged repudiation of the 1948 settlement agreement. He alleged the existence of Federal jurisdiction under 28 U.S.C. § 1332 upon an asserted diversity of citizenship, and under 28 U.S.C. §§ 1331 and 1350 because defendants' conduct allegedly violated four treaties or pacts to which the United States was a party or adherent the Hague Convention, 1 the Kellogg-Briand Pact, 2 the Versailles Treaty 3 and the Four Power Occupation Agreement. 4

Defendants promptly moved pursuant to Fed.R.Civ.P. 12(b) to dismiss the complaint, asserting, among other grounds, lack of subject matter jurisdiction. 5 The parties conceded on oral argument that there was no diversity of citizenship under § 1332. However, the District Court held that, because a colorable claim was made under the above mentioned treaties, it had jurisdiction under §§ 1331 and 1350 to determine whether the complaint stated a cause of action on which it could grant relief. The District Court then ordered the complaint dismissed, because none of the treaties relied upon by plaintiff conferred upon him any personal right of recovery and because the "Act of State" doctrine precluded the court from inquiring into the alleged forceful transfer of plaintiff's property to defendants.

Plaintiff moved for reargument and rehearing pursuant to Rule 9(m) of the General Rules of the Southern District, contending that he had not had an opportunity to brief and argue the sufficiency of his complaint and that the Act of State doctrine, not having been raised as a defense, should not have been considered. This motion was granted, and the District Court's original decision was modified on reargument to permit plaintiff to file an amended complaint setting forth the specific provisions of the several treaties upon which plaintiff based his claim. An amended complaint was served on July 24, 1974, and defendants moved again to dismiss.

The District Judge, in a memorandum opinion dated January 2, 1975, reviewed the several treaties in greater detail and again concluded that no private right of recovery for defendants' allegedly tortious conduct was provided for in any of them. He also reviewed the recent decisions of this Court and of the Supreme Court dealing with the Act of State doctrine 6 and the so-called "Bernstein exception" and concluded that Judge Learned Hand's opinion in Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246 (2d Cir.), cert. denied, 332 U.S. 772, 68 S.Ct. 88, 92 L.Ed. 357 (1947), 7 continued to state the correct application of that doctrine. The District Judge did not, however, rest his January 2 decision on that doctrine, because he felt that the complaint failed to state a claim on which relief could be granted.

Notice of appeal to this Court was served on February 18, 1975. On May 15, 1975, plaintiff moved to have the case remanded to the District Court because his attorney, in preparing the brief on appeal, had concluded that Military Law 59, "Restitution of Identifiable Property", 12 Fed.Reg. 7983 (1947), promulgated by the American Military Government in Germany, might furnish an additional basis for jurisdiction in the District Court. On the argument of the motion, defendants' counsel stipulated that in the interest of having a prompt disposition of his appeal, defendants would not object if this Court also considered plaintiff's supplemental contentions concerning Military Law 59.

The Question of Jurisdiction

The District Court held that it had subject matter jurisdiction to consider plaintiff's treaty-based claims, because plaintiff's right to recover "will be sustained if the treaties of the United States are given one construction and will be defeated if they are given another." This analysis was proper. Section 1331 provides that the District Courts shall have jurisdiction in cases involving more than ten thousand dollars which arise " under the Constitution, laws or treaties of the United States." Section 1350 provides for such jurisdiction in any civil action by an alien for a tort "in violation of the law of nations or a treaty of the United States." While these provisions do not create a cause of action for a plaintiff seeking recovery under a treaty, they do give the District Court power to determine whether, in a well pleaded complaint, a cause of action exists. Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 249, 71 S.Ct. 692, 694, 95 L.Ed. 912, 917 (1951); Romero v. International Terminal Operating Co.,358 U.S. 354, 359, 79 S.Ct. 468, 473, 3 L.Ed.2d 368, 374 (1959); Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939, 943 (1946). Cf. Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666, 94 S.Ct. 772, 776, 39 L.Ed.2d 73, 78 (1974).

Where, however, a plaintiff's allegation of jurisdiction is so attenuated and insubstantial as to be absolutely devoid of merit, a District Court may refuse jurisdiction. Bell v. Hood, supra, 327 U.S. at 682-83, 66 S.Ct. at 776, 90 L.Ed. at 943-44. Plaintiff's claim under Military Law 59, as distinguished from his treaty claims, falls within this category. This "law" was promulgated by the American Military Government of occupied Germany on November 10, 1947, at a time when the United States was still officially at war with that country. 8 Its stated purpose was:

(T)o effect to the largest extent possible the speedy restitution of identifiable property . . . to persons who were wrongfully deprived of such property within the period from 30 January 1933 to 8 May 1945 for reasons of race, religion, nationality, ideology, or political opposition to National Socialism. Military Law 59, Art. 1(1).

A claimant under this act would file a petition with a Central Filing Agency which would forward it to an appropriate Restitution Agency for attempted adjustment. Id., Arts. 55, 62. If the matter could not be compromised, it was then referred to the Restitution Chamber, a three-judge court which held hearings and rendered written opinions. Id., Arts. 64, 66, 68. Appeals from the Chamber originally went to a Board of Review, Art. 69, but in 1950 this was replaced by the Court of Restitution Appeals. 15 Fed.Reg. 1547 (1950). Decisions of the Court of Restitution Appeals were final and not subject to further review. 15 Fed.Reg. 1548 (1950).

Traditionally, the "laws" of the United States within the meaning of § 1331 are statutory in origin. The Fair v. Kohler Die and Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716, 717 (1913); Montana-Dakota Utilities Co. v. Northwestern Public Service Co., supra, 341 U.S. at 249, 71 S.Ct. at 694, 95 L.Ed. at 917, although the Supreme Court has in recent years broadened the definition of this term to include claims founded upon federal common law. Illinois v. City of Milwaukee, 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972). United States Military Commissions and Occupation Courts generally have no statutory existence. Madsen v. Kinsella 343 U.S. 341, 347, 72 S.Ct. 699, 703, 96 L.Ed. 988, 995 (1952); In re Yamashita, 327 U.S. 1, 19 n. 7, 66 S.Ct. 340, 349, 90 L.Ed. 499, 511 (1946). The President has extensive power to set up special tribunals in occupied foreign lands, and they are considered arms of the Executive. Rose v. McNamara, 126 U.S.App.D.C. 179, 375 F.2d 924, 927 (1967). As stated in 1 Moore's Federal Practice P 0.5(3.-1), at 141, "military commissions with their flexible jurisdiction are largely unfettered instruments of the executive branch of government and the President as Commander in Chief." In times of war, executive decisions are generally political and military in nature, and neither judicially manageable nor reviewable. United States v. Shaughnessy,177 F.2d 436 (2d Cir. 1949), cert. denied, 338 U.S. 948, 70 S.Ct. 486, 94 L.Ed. 585 (1950); DaCosta v. Laird, 448 F.2d 1368, 1370 (2d Cir. 1971) (per curiam), cert. denied, 405 U.S. 979, 92 S.Ct. 1193, 31 L.Ed.2d 255 (1972); Atlee v. Laird, 347...

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