FAR Liquidating Corporation v. Brownell

• Decision Date: 18 April 1955
• Docket Number: Civ. A. No. 1462.
• Citation: 130 F. Supp. 691
• Parties: F.A.R. LIQUIDATING CORPORATION, Plaintiff, v. Herbert BROWNELL, Jr., Attorney General of the United States of America, Successor to the Alien Property Custodian, Defendant.
• Court: U.S. District Court — District of Delaware

130 F. Supp. 691

F.A.R. LIQUIDATING CORPORATION, Plaintiff, v. Herbert BROWNELL, Jr., Attorney General of the United States of America, Successor to the Alien Property Custodian, Defendant.

Civ. A. No. 1462.

United States District Court D. Delaware.

April 18, 1955.

C. Waggaman Berl, Jr. (of Berl Potter & Anderson), Wilmington, Del., and Ernest S. Meyers (of Laporte & Meyers), New York City, for plaintiff.

Dallas S. Townsend, Asst. Atty. Gen., James D. Hill, Robert J. Wieferich and James H. Falloon, Washington, D. C., and Leonard G. Hagner, U. S. Atty., Wilmington, Del., for defendant.

LEAHY, Chief Judge.

This is an action by F.A.R. Liquidating Corporation, a Delaware corporation, against the Attorney General of the United States, under 50 U.S.C.A.Appendix, § 9(a). Plaintiff seeks recovery of 111 patents vested by defendant, acting under the authority of the Trading With the Enemy Act. On cross-motions, summary judgment was awarded in plaintiff's favor. F.A.R. Liquidating Corporation v. McGranery, D.C.Del., 110 F. Supp. 580. Such summary judgment was reversed on appeal with instructions to the District Court to proceed in accordance with the mandate. 3 Cir., 209 F.2d 375.

Plaintiff is a non-enemy corporation and alleges it is owner of the vested property in the patents by reason of the assignment to plaintiff from Frenseh, G.m.b.H., a German corporation. Summary judgment was awarded plaintiff because plaintiff was the owner by assignment — the contract having been represented by an offer sent in May 1941 by cable from plaintiff to the German corporation and accepted by it on June 14, 1941 in a reply cable filed in Germany and transmitted to plaintiff in the United States. The master facts may be read in the two opinions, supra.

The immediate dispute concerns defendant's motion for a separate trial of the question whether German law is applicable to the contract relied on by plaintiff. Plaintiff, in turn, has a cross-motion directing defendant cannot raise the issue of German law.

Defendant's position is: (1) plaintiff having sued under the Trading With the Enemy Act must establish every statutory condition for relief including the burden of proving title to the vested property; (2) plaintiff resting on assignment of contract must prove every element of such contract; (3) where plaintiff alleges the contract was completed in Germany by an acceptance there, defendant is entitled to raise the question of applicable German contract law; (4) German law, like all foreign law, is a fact question which must be proved; (5) the court's former disposition of the cross-motions for summary judgment does not prevent the raising of the issue of the application of German law; and (6) separate trial of the issue of German law should be had under Rule 42(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A.

1. Where an action is brought against the Attorney General of the United States as successor to the Alien Property Custodian, it is an action against the United States. A plaintiff to come within the terms of a remedial statute must prove all statutory conditions for recovery of his property.¹ Thus, under § 9(a) of the Trading With the Enemy Act, plaintiff must prove every element of the transaction upon which it bases claim of title.² Defendant argues it is part of plaintiff's case to prove the contract of assignment was valid under German law; and as German law is applicable that foreign law is a question of fact which must be proved by plaintiff.

2. On November 29, 1954, a pretrial order was entered which, inter alia, provided:

"1. The issue or issues to be determined at the trial hereof is or are:

"A. Was the cable of acceptance of Fernseh, G.m.b.H., sent prior to 1:10 P.M. (E.S.T.) in Washington, D. C., June 14, 1941, and hence prior to the effective time of Executive Order 8785, 12 U.S.C.A. § 95a note?

"B. Can the question of the applicability of German Law to the completion of the contract be raised by defendant at this time?

"C. If the answer to `B' is in the affirmative, was the execution of the contract between plaintiff and Fernseh controlled by German Law?

"D. If the answer to `C' is in the affirmative, did the sending of the cable of acceptance of Fernseh, G.m.b.H., complete the making of the contract, or was the receipt thereof by plaintiff required to complete the contract under German Law?"

As stated, defendant has moved for a separate trial of the issue raised by subparagraph "D", supra. Since the issues isolated in sub-paragraphs "C" and "D" need not be determined if the answer to sub-paragraph "B" is in the negative, plaintiff then moved for an order determining the issue set forth in sub-paragraph "B"; in short, plaintiff says the preliminary issue to be met (before any consideration is given to defendant's motion) is whether the applicability of German law to the completion of plaintiff's contract can be raised by defendant in the light of the opinion and mandate of the Court of Appeals.

The record here shows on May 29, 1952, plaintiff filed its complaint. On June 13, 1952, defendant filed answer which consisted of a general denial of the allegations of the complaint. On November 3, 1952, plaintiff filed its motion for summary judgment. On January 26, 1953, defendant in turn filed his counter-motion for summary judgment. The parties were apparently agreed there was no general issue of any material fact. Judgment in plaintiff's favor was entered; and the Court of Appeals on January 13, 1954, for the reasons stated in its opinion, reversed this court's judgment and remanded the cause "with instructions to the District Court to proceed in accordance with this opinion", 3 Cir., 209 F.2d 375, at page 380. After the receipt of the mandate from the Court of Appeals, at a subsequent pretrial conference, defendant for the first time suggested in his pretrial memorandum "that German Law governs the validity of the contract in this case and that under such law no valid contract was ever formed". Prior to the pretrial conference, the only contentions advanced by defendant in this court and the Court of Appeals were: (a) confirmation by plaintiff of Fernseh's acceptance was required before a contract was formed and (b) the only factual question involved was the time when Fernseh's acceptance cable was delivered to the Cable Office in Germany. The incorporation of the issue of German law in the pretrial order was on the insistence of defendant.

3. If foreign law is relied on, it must be pleaded and its substance, at least, laid out as a fact.³ Not only must foreign law be pleaded, but the pleading must be more than mere reference to the foreign law. In Coronet Phosphate Co. v. United States Shipping Co., D.C. S.D.N.Y., 260 F. 846, 847, involving certain restraints placed on shipments to Sweden and Holland by Great Britain and her allies, Judge Learned Hand stated: "This allegation is certainly bad as it stands * * * in pleading foreign ordinances having the force of law the pleader is bound to allege more than his conclusion of the effects of the ordinance", and when foreign law is not pleaded and proved, it is presumed to be the law of the forum.⁴

4. Defendant's present contention here is this "case was sent back for trial on the merits as to whether plaintiff and Fernseh had a contract, not just whether a certain cable was filed at a certain hour"; and "German Law governs the validity of the contract in this case and that under such law no valid contract was ever formed". As I read the opinion and mandate of the Court of Appeals, the only issue left open for the District Court's determination is stated in sub-paragraph "A" of paragraph "1" of the pretrial order, which reads:

"A. Was the cable of acceptance of Fernseh, G.m.b.H., sent prior to 1:10 P.M. (E.S.T.), in Washington, D.C., June 14, 1941, and hence prior to the effective time of Executive Order 8785?"

For example, the Court of Appeals made the following determinations:

(1) "* * * the facts on and before June 14, 1941, demonstrate that no confirmatory cable from FAR was required to consummate the contract. This conclusion is supported by the subsequent acts and declarations of F.A.R. and Fernseh", 209 F.2d 375, at page 379.

(2) The District Court's opinion that a contract was formed was adopted by the Court of Appeals providing the District Court found pursuant to the mandate the acceptance cable was transmitted prior to 1:10 P.M. on June 14, 1941, as the general denials in defendant's answer put in issue, as a fact, the time when Fernseh's acceptance was sent.

And (3) The Court of Appeals thus concluded:

"In the instant case there was a genuine issue of fact as to the time when Fernseh's cable was sent, and accordingly the court below erred in granting summary judgment in favor of FAR.

"For the reasons stated the judgment and order of the District Court will be reversed and the cause remanded with instructions to the District Court to proceed in accordance with this opinion." 209 F.2d 375, at page 380.

I cannot, therefore, view the case as sent back for trial on the merits as to whether plaintiff and Fernseh had a contract under German law. Under the mandate, the issue to be tried is when the acceptance cable was dispatched. I do not see how German law is within the issues because defendant has not pleaded it; consequently, he cannot raise or prove it. Defendant is not entitled to a trial of the entire factual issue of the making of the contract between plaintiff and Fernseh. The precise question is whether Fernseh's acceptance cable was transmitted prior to the effective date of the Executive Order of the President of the United States. Unless foreign law is expressly pleaded "the case must be decided according to the law of the federal courts as a question of general commercial law". Liverpool & G. W. Steam Co. v. Phenix Ins. Co., 129 U.S. 397, 444-446, 9 S.Ct. 469, 473, 32 L.Ed. 788. In moving for the trial of the separate issue,...