Munich Reinsurance Co. v. First Reinsurance Co.

• Decision Date: 06 April 1925
• Docket Number: No. 166.,166.
• Parties: MUNICH REINSURANCE CO. v. FIRST REINSURANCE CO. OF HARTFORD.
• Court: U.S. Court of Appeals — Second Circuit

6 F.2d 742 (1925)

MUNICH REINSURANCE CO. v. FIRST REINSURANCE CO. OF HARTFORD.

No. 166.

Circuit Court of Appeals, Second Circuit.

April 6, 1925.

COPYRIGHT MATERIAL OMITTED

Cumings & Lockwood, of Stamford, Conn., and Hartwell Cabell, of New York City (Raymond Hackett, of Stamford, Conn., of counsel), for appellant.

Robinson, Robinson & Cole and Gross, Gross & Hyde, all of Hartford, Conn. (Lucius F. Robinson and Charles Welles Gross, both of Hartford, Conn., of counsel), for appellee.

Before ROGERS, MANTON, and HAND, Circuit Judges.

ROGERS, Circuit Judge (after stating the facts as above).

The question which this case raises is whether a German corporation, which during the World War was an alien enemy, is entitled, now that the war has been terminated, to maintain a suit for an accounting against a domestic corporation, to which the Alien Property Custodian paid, out of proceeds realized by a sale of the latter's shares of stock in the former, a claim against the German corporation, and which had been seized and sold by him as enemy property by virtue of the powers vested in him by law, which also authorized him to liquidate claims against the fund. The District Judge has answered the question in the negative, and has dismissed the complainant's bill. We think the dismissal of the bill was required by law, and will proceed to state the reasons which lead us to that conclusion.

The United States declared war against Germany on April 6, 1917, and on October 6, 1917, Congress passed the Trading with the Enemy Act. 40 Stat. pt. 1, c. 106, p. 411 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½a et seq.). Section 2 of the act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½aa) declared that the word "enemy," as used therein, should be deemed to mean "any individual, partnership, or other body of individuals, of any nationality, resident within the territory * * * of any nation with which the United States is at war, or resident outside the United States and doing business within such territory, and any corporation incorporated within such territory of any nation with which the United States is at war or incorporated within any country other than the United States and doing business within such territory." The word "person," as used in the act was defined in the same section as meaning "an individual, partnership, association, company, or other unincorporated body of individuals, or corporation or body politic."

Section 3 of the act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½b) made it unlawful for any person in the United States, except with a license of the President, to trade, or attempt to trade, either directly or indirectly, with or on account of, or on behalf of, or for the benefit of any enemy, or ally of an enemy. The words "to trade" were defined as meaning among other things:

"(c) Enter into, carry on, complete, or perform any contract, agreement, or obligation.

"(d) Buy or sell, loan or extend credit, trade in, deal with, exchange, transmit, transfer, assign, or otherwise dispose of, or receive any form of property.

"(e) To have any form of business or commercial communication or intercourse with."

Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½aa.

And it was also made unlawful for any person to transmit any form of communication intended to be delivered directly or indirectly to any enemy.

Section 4 of the act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½bb) provided that every enemy or ally of enemy insurance or reinsurance company, and every enemy or ally of enemy, doing business within the United States through an agency or branch office, might apply to the President for a license to continue to do business, and the President was authorized to grant or refuse such a license for such period of time and on such conditions as he deemed necessary for the safety of the United States. But the complainant in its bill does not allege that it at any time obtained or applied for such a license.

Section 6 of the act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½cc) authorized the President to appoint an official, to be known as the Alien Property Custodian, and empowered him to receive "all money and property in the United States due and belonging to an enemy * * * which may be paid, conveyed, transferred, assigned, or delivered to said Custodian under the provisions of this act, and to hold, administer, and account for the same under the general direction of the President and as provided in this act."

The act of 1917 vested in the Custodian "all the powers of a common-law trustee" in respect of the property seized. See section 12 of the act. 40 Stat. pt. 1, c. 106, p. 423. And the Act of March 28, 1918, 40 Stat. pt. 1, c. 28, p. 459 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½ff), amended the Trading with the Enemy Act to read as follows:

"The Alien Property Custodian shall be vested with all of the powers of a common-law trustee in respect of all property, other than money, which has been or shall be * * * conveyed, transferred, assigned, delivered, or paid over to him in pursuance of the provisions of this act, and, in addition thereto, acting under the supervision and direction of the President, and under such rules and regulations as the President shall prescribe, shall have power to manage such property and do any act or things in respect thereof or make any disposition thereof or of any part thereof, by sale or otherwise * * * as though he were the absolute owner thereof." 40 Stat. pt. 1, c. 28, p. 460.

The Trading with the Enemy Act has been held to be a constitutional exercise of the war power. Stoehr v. Wallace, 255 U. S. 239, 41 S. Ct. 293, 65 L. Ed. 604. The act was not terminated by the cessation of hostilities, by the joint resolution declaring the state of war between Germany and the United States at an end, or by the President's proclamation of peace. Commercial Trust Co. v. Miller, 262 U. S. 51, 43 S. Ct. 486, 67 L. Ed. 858.

It thus appears that under the act of 1917 and the amendatory act of 1918 the Alien Property Custodian was empowered to act "under the supervision of the President, and under such rules and regulations as the President shall prescribe." And the court is entitled to take judicial notice of the executive orders prescribing the duties of the Alien Property Custodian. The order issued by the President on November 12, 1918, related to the duties of the Custodian respecting insurance companies. It specifically declared that the Custodian should have power, among other things, "to sell or otherwise dispose of * * * any and all property, other than money, of any insurance company heretofore doing business within the United States which has been or shall be conveyed * * * or paid over to him, or which shall be seized by him," pursuant to the Trading with the Enemy Act.

The order also gave him, after taking possession of the property, powers of custody, management, administration, and control over the business, property, and assets so taken. It specifically gave him power and authority "to pay all leases, claims, premiums, adjustment charges, rents, interest and other accounts and liens or charges * * * and to settle, compromise and adjust claims, demands and choses in action." It also provided that he should have power "generally to manage, administer, preserve, conduct, operate and control such business and any or all parts or parcels and assets thereof as though the absolute owner. * * *"

And in a subsequent provision (paragraph 5) it is declared that he shall have "full power and discretion with respect to the business, property and assets of any insurance company * * * which has been or shall be seized by him, and may liquidate, reinsure or retrocede, or sell or otherwise dispose of in accordance with" the Trading with the Enemy Act as amended, "the said business in whole or in part at such times and upon such terms as he may determine. * * *"

The provision empowering the Custodian to pay claims due from an alien enemy is set forth in section 9 of the Act of 1917 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½e):

"That any person, not an enemy, or ally of enemy, claiming any interest, right, or title in any money or other property which may have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian hereunder, and held by him or by the Treasurer of the United States, or to whom any debt may be owing from an enemy, or ally of enemy, whose property or any part thereof shall have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian hereunder, and held by him or by the Treasurer of the United States, may file with the said custodian a notice of his claim under oath and in such form and containing such particulars as the said custodian shall require; and the President, if application is made therefor by the claimant, may, with the assent of the owner of said property and of all persons claiming any right, title, or interest therein, order the payment, conveyance, transfer, assignment or delivery to said claimant of the money or other property so held by the Alien Property Custodian or by the Treasurer of the United States or of the interest therein to which the President shall determine said claimant is entitled: Provided, that no such order by the President shall bar any person from the prosecution of any suit at law or in equity against the claimant to establish any right, title or interest which he may have in such money or other property. If the President shall not so order within sixty days after the filing of such application, or if the claimant shall have filed the notice as above required and shall have made no application to the President, said claimant may, at any time before the expiration of six months after the end of the war, institute a suit in equity in the District Court of the United States for the district in which such claimant...