Rogers v. Holmes

• Decision Date: 03 December 1958
• Citation: 332 P.2d 608,214 Or. 687
• Parties: William P. ROGERS, Attorney General of the United States, as Successor to the Allen Property Custodian, Appellant, v. Robert D. HOLMES, Mark O. Hatfield and Sigfrid Unander, comprising the State Land Board of the State of Oregon, Respondents.
• Court: Oregon Supreme Court

Page 608

332 P.2d 608

214 Or. 687

William P. ROGERS, Attorney General of the United States, as Successor to the Allen Property Custodian, Appellant, v. Robert D. HOLMES, Mark O. Hatfield and Sigfrid Unander comprising the State Land Board of the State of Oregon, Respondents.

Supreme Court of Oregon.

Argued and Submitted Oct. 27, 1958.

Decided Dec. 3, 1958.

Marbeth A. Miller, Washington, D. C., for appellant. With her on the brief were Dallas S. Townsend, Asst. Atty. Gen., C. E. Luckey, U. S. Atty. for the Dist. of Oregon, Victor E. Harr, Asst. U. S. Atty., Portland, George B. Searls, and Irwin A. Seibel, Washington, D. C.

Catherine Zorn, Asst. Atty. Gen., for respondents. With her on the brief was Robert Y. Thornton, Atty. Gen.

Before PERRY, C. J., and WARNER, McALLISTER, SLOAN, and O'CONNELL, JJ.

WARNER, Justice.

This is an appeal by William P. Rogers, Attorney General of the United States, as successor to the Alien Property Custodian, hereinafter called 'the Custodian,' in a proceeding brought pursuant to ORS 120.130 to recover property which escheated to the State Land Board from the estate of Albert Reichel.

The defendants, Robert D. Holmes, Mark O. Hatfield and Sigfrid Unander, respectively, Governor, Secretary of State and State Treasurer of the State of Oregon, together constitute the State Land Board of this state. We will hereinafter refer to them as 'the State.'

The powers and duties of the Attorney General of the United Stated as Alien Property Custodian are derived from the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 1 et seq.

The State demurred to the Custodian's amended petition on two grounds: want of legal capacity in the Custodian to sue and failure of the petition to state sufficient facts to constitute a cause of action. From an order sustaining the demurrer and the ensuing judgment, the Custodian appeals.

Proceedings were had in the estate on the petition of the State for an order of escheat, resulting in an order on June 19, 1948 finding no heirs and directing distribution of the property of the decedent to the State, whereupon title thereto vested in the state of Oregon as of May 28, 1944, the date of Reichel's death. In re Ohlsen's Estate, 158 Or. 197, 200, 75 P.2d 6; ORS 120.010. Thereafter, in October, 1948, decedent's administratrix paid the remaining funds to the State Land Board, being the residue of the personal property and proceeds resulting from sale of real property during the probate. The Custodian filed an answer to the State's petition for an order of escheat, but no appeal was taken by the Custodian from the escheat order which followed.

After the escheat order and the distribution made to the State, the Custodian apparently learned that the decedent had had a sister named Hedwig Schreiber, who lived in Germany and died prior to the death of her brother. She left surviving her five children, nieces and nephews of Albert Reichel. All of these persons, if, in fact, they were his heirs, were aliens at the time of their uncle's death. Armed with this information, the Custodian, in June, 1950, two years after the decedent's estate had escheated to and vested in the Land Board, issued his Vesting Order No. 14715, vesting the purported interests of said nieces and nephews, as the sole heirs at law of Albert Reichel.

We pause to observe that the petition of the Custodian is verified by an Assistant U. S. Attorney for the District of Oregon instead of the heirs. We also note that it does not inform us that the alleged heirs of Reichel were German aliens at the time of decedent's death, nor do we find therein the ages and places of residence of the heirs, nor that all or any of them were residents of Germany at that time. Such statements in the petition are required by ORS 120.130, infra.

It is upon the Vesting Order, made in 1950, that the Custodian rests his claim of right to proceed in this matter.

The basic question presented by the appeal is whether the right of the heirs to petition for a recovery of the escheated property vested in the Custodian by his order of June, 1950, so as to entitle him to enforce recovery under ORS 120.130. That section provides:

'(1) Within 10 years after judgment in any proceeding in the circuit court escheating real property to the state, or after the order of the court having probate jurisdiction directing the conveyance of escheated real property to the state, and in all other cases within 10 years after payment of the proceeds of escheated personal property to the State Land Board, a person not a party or privy to such proceeding, nor having actual knowledge of the making of such judgment or order or of such payment to the State Land Board, may file a verified petition in the circuit court of the county where such information was filed, showing his claim or right to the property escheated or the proceeds thereof.

'(2) Such petition shall be verified by the oath of the petitioner and state:

'(a) The petitioner's age and place of residence;

'(b) That the petitioner lawfully is entitled to such property or proceeds, briefly describing the same;

'(c) That at the time the property escheated to the state the petitioner had no knowledge or notice thereof;

'(d) That the petitioner claims the property or proceeds as the heir or next of kin, setting forth the relationship of the decedent, who at the time of his death was the owner of same; and

'(e) That 10 years have not elapsed since the making of the judgment or order escheating the property to the state, or since the payment of the proceeds of the escheated estate by the administrator thereof to the State Land Board pursuant to the order of the court having probate jurisdiction.'

That a sovereign state cannot be sued without its consent is a cardinal principle of law so well established as to require no citation. The procedure established by ORS 120.130, supra, constitutes such a legislative consent. But being, as it is, in derogation of the state's sovereignty, the statute must be given a strict construction. Engle v. State Land Board, 164 Or. 109, 115, 99 P.2d 1018; Wood v. Sprague, 165 Or. 122, 125, 106 P.2d 287; Haley v. Sprague, 166 Or. 320, 325, 111 P.2d 1031; Peters v. McKay, 195 Or. 412, 439, 238 P.2d 225, 246 P.2d 585. These cases all involve claims arising under ORS 120.130, supra.

This court has repeatedly held that recovery under the provisions of the foregoing statute can be enforced only by the persons to whom consent has been given and that: 'The legal title of the state to escheated property can be divested only in the mode and by the persons designated by law.' Engle v. State Land Board, supra, 164 Or. at page 114, 99 P.2d at page 1021. The court stated in Engle: 'These requisites specified in the statute granting the cause of action to an heir or next of kin, by their express provisions dispel, dissipate and refute the suggestion that the authorized special proceeding to recover escheated funds may be maintained by an administratrix.' 164 Or. at page 116, 99 P.2d at page 1021. See, also, Wood v. Sprague, supra, 165 Or. at page 131, 106 P.2d at page 287, and Peters v. McKay, supra, 195 Or. 412, 238 P.2d 225, 246 P.2d 585, where the holding in the Engle case is followed.

In Cummings v. Deutsche Bank, 1937, 300 U.S. 115, 120, 57 S.Ct. 359, 362, 81 L.Ed. 545, Mr. Justice Butler, speaking for the court, declares the impact of a vesting order in these words:

'* * * Alien enemy owners were divested of every right in respect of the money and property seized and held by the Custodian under the Trading with the Enemy Act. United States v. Chemical Foundation, 272 U.S. 1, 9-11, 47 S.Ct. 1, 4, 71 L.Ed. 131. Woodson v. Deutsche, etc., Vormals, 292 U.S. 449, 454, 54 S.Ct. 804, 805, 78 L.Ed. 1357. The title acquired by the United States was absolute and unaffected by definition of duties or limitations upon the power of the Custodian or the Treasurer of the United States. Congress reserved to itself freedom at any time to dispose of the property as deemed expedient and right under circumstances that might arise during and after the war. * * *'

One author refers to the incidental results of 'vesting' as a 'sort of statutory transubstantiation * * *.' 62 Harv.L.Rev. 721, 739.

Thus, we find that the Custodian stands before us not as an heir nor as a representative of an enemy heir or an assignee or transferee, but as an owner of whatever interest, if any, of the heirs as they may have had in June, 1950, and as was encompassed by the vesting order and as one holding such title, if any, for the use and benefit of the United States without any present or future duty or obligation to the heirs of the decedent, Reichel, and without any beneficial interest remaining in them. United States v. Borax Consol., D.C.1945, 62 F.Supp. 220, 221.

The Custodian, of course, obtains by the vesting order no greater title or interest than had the alien at the time of seizure. Farmers' Loan & Trust Co. v. Miller, D.C.S.D.N.Y., 2 F.2d 493. In McGrath v. Dravo Corporation, 3 Cir., 183 F.2d 709, at page 713, the court speaks of the Custodian as standing in the alien's shoes. See, also, Zittman v. McGrath, 341 U.S. 446, 463, 71 S.Ct. 832, 95 L.Ed. 1096.

What was the nature of the 'right, title and interest' which was the subject of the putative capture by the Custodian under his vesting order of June, 1950? In Engle v. State Land Board, supra, 164 Or. at page 112, 99 P.2d at page 1020, this court declared: 'The provisions of the statute [ORS 120.130, supra] * * * plainly indicate that the right there given to institute a proceeding to recover escheated property is one that cannot be assigned.'

In Peters v. McKay, supra, 195 Or. at page 466, 246 P.2d at page 588, this concept was expanded in words which leave no question that the Custodian here enjoys no standing under that statute in question, lacking, as he does, the requisite capacity to sue. There, we said, speaking through Mr....