In re Miller

• Decision Date: 17 April 1922
• Docket Number: 130.
• Citation: 281 F. 764
• Parties: In re MILLER, Alien Property Custodian
• Court: U.S. Court of Appeals — Second Circuit

281 F. 764

In re MILLER, Alien Property Custodian

No. 130.

United States Court of Appeals, Second Circuit.

April 17, 1922

E Henry Lacombe, James O. Tryon, and Henry Bennett Leary, all of New York City, for appellants.

William Hayward, U.S. Atty., of New York City (Mansfield Ferry, of New York City, of counsel), for Alien Property Custodian.

Selden Bacon, of New York City, amicus curiae.

Before ROGERS, MANTON, and MAYER, Circuit Judges.

ROGERS Circuit Judge.

This is an appeal from an order made by the District Court for the Southern District of New York, on the petition of the Alien Property Custodian of the United States, who is hereinafter called the Custodian. The order, which was entered on August 3, 1921, directed the three trustees under the will of Dr Louis Schaefer, a deceased citizen of the United States and a resident of the city of New York, to pay over to the Custodian a certain income, which, it is admitted, had arisen from trusts created by the testator for the benefit of his daughters Amalia Schaefer Janner and Helene Schaefer Kyriss, respectively; they being alien enemies.

The testator died in New York City on November 26, 1921, leaving a will creating certain trusts and naming three trustees-- his brother Eugene Schaefer, also appointed executor, his son Ludwig Schaefer, and Edwin W. Preston. Certain provisions in the will relating to the trust may be found in the margin. ^[1]

The Act of Congress approved October 6, 1917, and entitled 'An act to define, regulate, and punish trading with the enemy and for other purposes,' by section 6, authorized the President to appoint and prescribe the duties of an official to be known as the Alien Property Custodian, 'who shall be empowered to receive all money and property in the United States due or belonging to an enemy, or ally of enemy, which may be paid, conveyed, transferred, assigned, or delivered to said custodian under the provisions of this act.' 40 Stat. pt. 1, c. 106, p. 415 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Sec. 3115 1/2cc). The act provides for the transfer or delivery of property held for or on account of an alien enemy to the Custodian, if the President shall so require. And by an act approved on November 4, 1918, the act of 1917 was amended, and express provision was made giving to the Custodian the right to seize property which the President has determined belongs to an alien enemy and has required to be paid over. 40 Stat.pt. 1, c. 201, p. 1020 (Comp. St. Ann. Supp. 1919, Sec. 3115 1/2d).

The right of the Custodian to the property of an alien enemy and to the aid of the court in securing its possession is directly involved herein, and as we proceed in the consideration of this appeal we shall have occasion to examine more in detail the acts of Congress which bear upon the subject involved. It appears that the Custodian filed a petition in the District Court for the Southern District of New York in which he made application for an order directing the trustees under the Schaefer will to deliver to him as Custodian balances of $36,129.89 upon the Helen Kyriss trust fund and of $35,450.54 upon the Amalia Janner trust fund, and he prayed that the trustees be ordered to appear and show cause why the property, which had been previously demanded of them by him, had not been delivered and why it should not be delivered to him and for such other and further relief as the court deemed just.

The order to show cause, dated June 28, 1921, was issued and directed to be served upon the three trustees. It was served upon two only, Eugene Schaefer and Edwin W. Preston. The third trustee, Dr. Ludwig Schaefer, was not served, being without the United States and within the republic of Switzerland temporarily at the time these proceedings were had. Two of the three, Eugene Schaefer and Edwin W. Preston, appeared and made return to the petition. They demurred, and also put in a traverse and answer. When the case came on to be heard upon petition, answer, and proof of service upon the two trustees, and after argument, the District Court entered an order requiring the three trustees forthwith to pay over to the Custodian the property as demanded. This order, which is the one appealed from, may be found in the margin. ^[2]

The question of the constitutionality of the various acts of Congress authorizing the government to take possession of the property of alien enemies which are involved in this case is not raised by counsel. The right of Congress to pass this legislation seems to be now too clearly established to admit of question. Stoehr v. Wallace, 255 U.S.

239, 245, 41 Sup.Ct. 293, 296 (65 L.Ed. 604); Central Trust Co. v. Garvan, 254 U.S. 554, 41 Sup.Ct. 214, 65 L.Ed. 403. In the Stoehr Case the court said:

'That Congress in time of war may authorize and provide for the seizure and sequestration through executive channels of property believed to be enemy-owned, if adequate provision be made for a return in case of mistake, is not debatable. Central Union Trust Co. v. Garvan, supra. There is no warrant for saying that the enemy ownership must be determined judicially before the property can be seized; and the practice has been the other way. The present act commits the determination of that question to the President, or the representative through whom he acts, but it does not make his action final. On the contrary, it distinctly reserves to any claimant who is neither an enemy nor an ally of an enemy a right to assert and establish his claim by a suit in equity unembarrassed by the precedent executive determination.'

Important acts were passed by Congress in 1861 and 1862, during the Civil War, confiscating the property of the enemies of the government. Act Aug. 6, 1861, 12 Stat. 319, c. 60; Act July 17, 1862, 12 Stat. 589, c. 195. The legislation of 1862 was limited to the forfeiture of the life estate of the owner. As the act of 1862 originally passed Congress, President Lincoln thought the confiscatory features of it unconstitutional and intended a veto; his objection being that the forfeiture provisions extended beyond the life of the person whose estate was made subject to forfeiture, thus violating article 3, Sec. 3 of the Constitution. Upon this coming to the knowledge of Congress, a joint resolution was passed by that body which declared that the proceedings under the act should not be so construed 'as to work a forfeiture of the real estate of the offender beyond his natural life. ' See 12 Stat.p. 627. Thereupon the President approved the resolution and the act. See 145 U.S. 553, 12 Sup.Ct. 868, 36 L.Ed. 812. The constitutionality of the measure was sustained as a legitimate exercise of the war power of the government. See Miller v. United States, 11 Wall. 268, 20 L.Ed. 135; Jenkins v. Collard, 145 U.S. 546, 552, 12 Sup.Ct. 868, 36 L.Ed. 812.

Under the Constitution the sole power of authorizing confiscation of enemy property is vested in Congress, and is an incident to its war powers. Article 1, Sec. 8, cl. 11, gives the Congress the power:

'To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water.'

We have already referred to the Act of Congress approved on October 6, 1917, known as the Trading with the Enemy Act. It is necessary to note some of its provisions. Section 7c of the act, as originally passed, provided as follows:

'If the President shall so require, any money or other property owing or belonging to or held for, by, on account of, or on behalf of, or for the benefit of an enemy or ally of enemy not holding a license granted by the President hereunder, which the President after investigation shall determine is so owing or so belongs or is so held, shall be conveyed, transferred, assigned. delivered, or paid over to the alien property custodian. ' Comp. St. 1918, Sec. 3115 1/2d.

The amendment of November 4, 1918, made section 7 of the act of 1917 read, so far as it is relevant here, as follows: (1) 'Alien Property Custodian. Subsection (c) of section seven of the 'Trading with the Enemy Act,' approved October 6, 1917, is amended to read as follows:

"(c) If the President shall so require any money or other property including (but not thereby limiting the generality of the above) patents, copyrights, applications therefor, and rights to apply for the same, trade-marks, choses in action, and rights and claims of every character and description owing or belonging to or held for, by, on account of, or on behalf of, or for the benefit of, any enemy or ally of enemy not holding a license granted by the President hereunder, which the President after investigation shall determine is so owing or so belongs or is so held, shall be conveyed, transferred, assigned, delivered, or paid over to the Alien Property Custodian, or the same may be seized by the Alien Property Custodian; and all property thus acquired shall be held, administered and disposed of as elsewhere provided in this act.' * * *

'The sole relief and remedy of any person having any claim to any money or other property theretofore or hereafter conveyed, transferred, assigned, delivered, or paid over to the Alien Property Custodian, or required so to be, or seized by him shall be that provided by the terms of this act, and in the event of sale or other disposition of such property by the Alien Property Custodian, shall be limited to and enforced against the net proceeds received therefrom and held by the Alien Property Custodian, or by the Treasurer of the United States.' 40 Stat.pt. 1, c. 201, p. 1020 (Comp. St. Ann. Supp. 1919, Sec. 3115 1/2d).

It is to be observed that the amendment did two things: First, it specifically mentioned 'choses in action and rights and claims of every character and description' as...