Pflueger v. United States

Decision Date07 April 1941
Docket NumberNo. 7613.,7613.
Citation121 F.2d 732,73 App. DC 364
PartiesPFLUEGER v. UNITED STATES et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

George L. Hart, Jr., and William R. Rodenberg, both of Washington, D. C., and Sherwood E. Silliman and Reuben D. Silliman, both of New York City, for appellant.

Frederick Bernays Wiener, of Providence, R. I., and Harry LeRoy Jones and Frederick L. Smith, both of Washington, D. C., for appellees.

Before GRONER, Chief Justice, and MILLER and RUTLEDGE, Associate Justices.

GRONER, C. J.

This is an appeal from a final order of the District Court dismissing, for lack of jurisdiction, a complaint brought under § 9 of the Trading with the Enemy Act1 to recover the asserted difference between the value of the property of appellant — a naturalized American citizen2 — seized by the Alien Property Custodian during the World War, and the amount realized for it by the Custodian. The latter sum had been previously paid over to appellant.

Johann Carl Pflueger was plaintiff below and is appellant here. He was born in the Kingdom of Hawaii in 1861. At the age of six, he was taken to Germany to be educated and except for two years' residence in Hawaii between 1884 and 1886, he lived in Germany until 1920. He then came to the United States, where he has remained ever since. During the first World War he was engaged in business in Bremen. At the time of American entry he was a shareholder in H. Hackfeld and Company, Ltd., and in Pacific Guano and Fertilizer Company, two Hawaiian corporations. In January 1918, his shares in these concerns were seized as enemy-owned property by the Hawaiian representative of the Alien Property Custodian. Under the direction of the Custodian, H. Hackfeld and Company was reorganized, its assets sold to a new corporation, and the proceeds from the sale of Pflueger's shares deposited in a numbered trust in the United States Treasury. His shares in the Pacific Company were sold by the Custodian at public auction and the proceeds likewise deposited. In 1920, when Pflueger came to the United States, he filed claims for the return of the seized property. These were allowed on the ground he was an American citizen, and the sum of $506,169, representing the proceeds of his shares of stock in both companies was returned to him. Pflueger executed releases of any claims he might have against the United States or any of its officers in respect to the seizure. Thereafter, in 1922, he filed a claim with the German-American Mixed Claims Commission, alleging his property was worth one hundred and ninety thousand odd dollars more than the amount returned to him. This claim was disallowed. In 1924, with other stockholders of Hackfeld and Company, he brought suit in the California courts against purchasers of the stock, alleging fraudulent conspiracy in the sale and placing the value of each share of common stock at $465. The suit resulted in a judgment for defendants.3 In 1928 appellant brought suit in the District Court in Hawaii, charging fraud and conspiracy in the sale of his Pacific stock. This suit was withdrawn. In 1929 he filed another unsuccessful claim with the Mixed Claims Commission to recover the difference between the actual value and the sale price of his Pacific stock, on the ground that the loss was caused by his detention against his will in Germany. In the same year he vainly undertook to reopen another Hawaiian case.4 He also intervened in an accounting proceeding against Trent Trust Company as trustee in liquidation of Hackfeld and Company, which was decided adversely to him by the Supreme Court of Hawaii in 1937. The present suit was begun in November, 1937.

Appellant's position is that he is entitled to "just compensation" for his seized property, that the ascertainment of compensation is a judicial function, and that if § 7(c)5 of the Trading with the Enemy Act is construed to limit his recovery to less than just compensation, the provision is unconstitutional.

The position of appellees is that by the express terms of § 7(c) recovery against the United States is limited to the proceeds of the seized property and that accordingly the District Court was correct in holding that it had no jurisdiction and in dismissing the bill.

These opposing positions present the issue here.

An answer to appellant's position may be found in our opinion in Sigg-Fehr v. White, 52 App.D.C. 215, 285 F. 949, 954. The Custodian had seized certain shares of stock alleged to belong to a German corporation and had sold them to the Director General of Railroads, who subsequently resold at a profit. The plaintiffs, Swiss nationals, alleging that they were the true owners of the stock, sued the Director General and the Custodian to enjoin them from disposing of the fund received by the former from the sale of the shares. We held that the sale by the Custodian to the Director General was valid under the express provisions of the Act and that plaintiffs' right to recover was limited by the provisions of § 7(c), and as to this right we said: "The right of recovery is restricted to the property seized or the proceeds derived from the sale of such property by the Custodian. This measures the jurisdiction conferred by Congress. In other words, the government has permitted itself to be sued only to the extent limited by the act. To extend this proceeding to embrace additional causes of action, would amount to subjecting the sovereign to a suit in which it has not been made a party, and over which the court has not been accorded jurisdiction."

This statement of the limitations of the Act would appear to control the decision here unless § 7(c) in the respects mentioned may be disregarded as unconstitutional (a question not passed on in the Sigg-Fehr case), or unless subsequent cases in the Supreme Court have overruled it. Appellant particularly relies upon Central Union Trust Co. v. Garvan, 254 U.S. 554, 566, 41 S.Ct. 214, 65 L.Ed. 403; Stoehr v. Wallace, 255 U.S. 239, 249, 41 S. Ct. 293, 65 L.Ed. 604; Miller v. Robertson, 266 U.S. 243, 248, 45 S.Ct. 73, 69 L.Ed. 265; Becker Steel Co. v. Cummings, 296 U.S. 74, 56 S.Ct. 15, 80 L.Ed. 54. In those cases the Supreme Court said, in general language, that the provision for remedies in the Act should be construed broadly enough to give to citizens and alien friends an adequate remedy for the invasion of their property rights in the exercise of the war powers of government, and that any other construction would raise doubts of the constitutionality of the statute as applied to non-enemies. But none of the cited cases discuss the exact problem we have to decide.

Section 7(c) of the statute under which relief is asked is explicit. — The remedy shall be limited to the net proceeds received by the Custodian from the sale of the seized property.6 — To construe this language to allow suit for "just compensation", after delivery to claimant of the whole "net proceeds", would clearly be in contravention both of the language used and the obvious Congressional intent. The Supreme Court has said in a similar situation: "We fully concede that it is the duty of a court in considering the validity of an act to give it such reasonable construction as can be reached to bring it within the fundamental law. But it is very clear that amendment may not be substituted for construction, and that a court may not exercise legislative functions to save the law from conflict with constitutional limitation." Yu Cong Eng v. Trinidad, 271 U.S. 500, 518, 46 S.Ct. 619, 623, 70 L.Ed. 1059, and see also United States v. Reese, 92 U. S. 214, 221, 23 L.Ed. 563; Trade Mark Cases, 100 U.S. 82, 98, 25 L.Ed. 550; Butts v. Merchants & Miners Transportation Company, 230 U.S. 126, 135, 33 S.Ct. 964, 57 L.Ed. 1422.

If we apply this rule, as we must, it is of course our duty to look at the statute as a whole and not, as counsel for appellant suggest, to disregard § 7(c) insofar as it limits his cause of action. For to do this would be to make a new law, and this of course would be to substitute the judicial for the legislative department of government. Butts v. Merchants & Miners Transportation Company, supra, 230 U.S. at page 135, 33 S.Ct. 964, 57 L.Ed. 1422. The reason for this is that "If we should, in the case before us, undertake to make by judicial construction a law which Congress did not make, it is quite probable we should do what, if the matter were now before that body, it would be unwilling to do". Butts case, 230 U.S. at page 136, 33 S.Ct. 964, at page 966, 57 L.Ed. 1422. Even if we concluded that the Congressional limitation of remedy to the amount of "net proceeds", instead of just compensation, was unconstitutional, the effect would be to invalidate the entire statute and to remove all of the...

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