Henkels v. Sutherland
| Decision Date | 24 May 1926 |
| Docket Number | No. 318,318 |
| Citation | 70 L.Ed. 953,51 A.L.R. 229,271 U.S. 298,46 S.Ct. 524 |
| Parties | HENKELS v. SUTHERLAND, Alien Property Custodian, et al |
| Court | U.S. Supreme Court |
Messrs. Herbert R. Limberg, Morris J. Hirsch, Henry L. Sherman, and Harry F. Mela, all of New York City, for appellant.
Messrs. William D. Mitchell, Sol. Gen., of Washington, D. C., Ira Lloyd Letts, Asst. Atty. Gen., and Dean Hill Stanley, of Washington, D. C., for appellees.
This is a suit in equity, under section 9(a) of the Trading with the Enemy Act, c. 106, 40 Stat. 411, 419, as amended by c. 6, 41 Stat. 35 and c. 241, 41 Stat. 977 (Comp. St. Ann. Supp. 1923, § 3115 1/2 e), brought by Henkels, a citizen of the United States, in the federal District Court for the Southern District of New York, to recover the proceeds of the sale of 2,298 shares of common stock of International Textile, Inc., a Connecticut corporation, theretofore seized by the Alien Property Custodian upon the claim that it was the property of an alien enemy. A decree was rendered in Henkels' favor, adjudging him to be the sole owner of the stock, and the Treasurer of the United States was directed to account for, and pay over to Henkels, the proceeds of the sale 'together with the income or interest, if any, earned thereon.' There was realized from the sale of the stock, made on March 26, 1919, after deducting expenses, a balance of $1,505,052.55. This amount the Treasurer paid to Henkels. Subsequently Henkels applied to the District Court to name a master to take and state the account of interest or income earned upon the fund prior to its payment. The application was denied and a final decree of dismissal entered upon the ground that the principal sum had been paid in Henkels, who had executed a release and satisfaction in full which the court refused to set aside on the claim of duress. Henkels v. Miller, 298 F. 947. Upon appeal, the Circuit Court of Appeals, without passing upon this ground, held that the United States was not liable for income resulting from an investment of the funds in its own securities. Henkels v. Miller, 4 F.(2d) 988.
The proceeds arising from the sale of the stock were deposited with the Treasurer in conformity with law, and by that officer they were commingled with the proceeds of other sales of alien property and invested in interest-bearing securities of the United States. The government admits Henkels' right to recover income earned on the corporate shares prior to their sale, but denies his right to recover for interest actually paid on government securities in which the proceeds had been invested. This presents the only question for our determination, the government having expressly waived the point upon which the District Court decided the case.
No question is made in respect of the right of the Custodian to seize property supposed to belong to an enemy, although it may subsequently turn out to have been a mistake, adequate provision having been made for a return in that case. Central Trust Co. v. Garvan, 254 U. S. 554, 556, 41 S. Ct. 214, 65 L. Ed. 403; Stoehr v. Wallace, 255 U. S. 239, 245, 41 S. Ct. 293, 65 L. Ed. 604.
By Executive Order No. 2813 of February 26, 1918, made pursuant to law, moneys deposited with the Treasurer by the Custodian are to be held by the Secretary of the Treasury 'for account of the Alien Property Custodian,' and may be invested and reinvested from time to time in bonds or United States certificates of indebtedness. All moneys so deposited, together with interest or income received from the investment thereof, are made subject to withdrawal by the Secretary of the Treasury for the purpose of making payments pursuant to the provisions of the Trading with the Enemy Act, which would include, of course, payments under section 9(a).
Section 9(a) authorizes a suit in equity by any person not an enemy, etc., to determine a claim to any interest, right or title in the property seized. If, in the meantime, the seized property has been sold, the same remedy, by section 7(c), as amended, c. 201, 40 Stat. 1020 (Comp. St. Ann. Supp. 1919, § 3115 1/2 d), becomes available 'against the net proceeds received therefrom and held by the Alien Property Custodian or...
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