McGrath v. Cities Service Co.

• Decision Date: 24 October 1950
• Citation: 93 F. Supp. 408
• Parties: McGRATH, Atty. Gen., v. CITIES SERVICE CO. et al.
• Court: U.S. District Court — Southern District of New York

93 F. Supp. 408

McGRATH, Atty. Gen., v. CITIES SERVICE CO. et al.

United States District Court S. D. New York.

October 24, 1950.

Irving H. Saypol, United States Attorney for Southern District of New York, New York City, James A. Devlin, Assistant United States Attorney, New York City, George B. Searls, Edward J. Friedlander, Attorneys, Office of Alien Property, Department of Justice, Washington, D. C., for plaintiff.

Milbank, Tweed, Hope & Hadley, New York City, Timothy N. Pfeiffer, New York City, for Chase Nat. Bank of City of New York.

Frueauff, Burns, Ruch & Farrell, New York City, for Cities Service Co.

McGOHEY, District Judge.

Each party moves either for judgment on the pleadings or for summary judgment. There appears to be no issue between the parties as to any material fact.

Vesting Order 12960, executed March 11, 1949, vested in the Attorney General as successor to the Alien Property Custodian as "property within the United States owned or controlled by, payable or deliverable to, held on behalf of or on account of, or owing to, or which is evidence of ownership or control by, Adline von Campenhausen" an enemy alien

"a. That certain debt or other obligation, matured or unmatured, evidenced by two (2) Cities Service Company 5% Gold Debentures Bearer Bonds, of $1,000 face value each, bearing the numbers M 23293 and M 23318, and any and all rights to demand, enforce and collect the aforesaid debt or other obligation, together with any and all rights of redemption, and,

"b. That certain debt or other obligation, matured or unmatured, evidenced by one (1) Cities Service Company 5% Gold Debenture Bearer Bond, of $1,000 face value, bearing the number M 7029, and all rights to demand, enforce and collect the aforesaid debt or other obligation, together with any and all rights in, to and under said bond."

On January 5, 1950, after some previous correspondence, the Office of Alien Property authorized and directed defendant Cities Service Company to cancel bonds M 23293 and M 23318 and to issue to the Attorney General in lieu thereof its check representing the proceeds of redemption with accrued interest. These two bonds had been called for redemption prior to the issuance of the Vesting Order. Cities Service Company was also authorized and directed to cancel bond M 7029 and to issue to the Attorney General a new bond of the same series for the same face value and having affixed thereto the number of coupons corresponding to the unredeemed coupons affixed to M 7029, or, alternatively, to issue a check for the redemption price and accrued interest. This bond matures in 1969.

This action was brought January 30, 1950, to enforce the above demands. Defendant Chase National Bank is the present trustee under the indentures under which the bonds were issued.

The parties have stipulated that no claim is to be made with regard to M 23293 because it was paid prior to the issuance of the Vesting Order. M 7029 was presented for redemption in New York by Fiduciary Trust Company of New York on behalf of Globe & Rutgers Fire Insurance Company on January 5, 1950. It was not redeemed. A notation of the issuance of the Vesting Order was made on the debenture and it was then returned to Fiduciary Trust Company. It is now apparently in the possession of a New York brokerage firm. The parties have stipulated that "The present whereabouts of Debenture No. M 23318, last reported in Berlin, are unknown. In response to an official inquiry from the Branch Office of the Office of Alien Property in Germany, the Deutsche Bank, located in the Soviet Sector of Berlin, by letter dated May 19, 1949, advised that * * * M 23293, M 23318 and M 7029 had been seized and transferred by the local occupying authorities and that, therefore, the debentures were not at present at their disposal. * * * Information in the possession of the Government indicates that the Debentures had been held in the Russian Sector of Berlin prior to the issuance of Vesting Order No. 12960 and that the seizure by the occupying authorities occurred prior to the issuance of the Vesting Order."

The Trading with the Enemy Act, § 5(b) (1), 50 U.S.C.A.Appendix, § 5(b)...