Societe Suisse Pour Valeurs De Metaux v. Cummings, 6978.

• Decision Date: 25 July 1938
• Docket Number: No. 6978.,6978.
• Citation: 99 F.2d 387,69 App. DC 154
• Parties: SOCIETE SUISSE POUR VALEURS DE METAUX v. CUMMINGS, Atty. Gen., et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

69 App. DC 154, 99 F.2d 387 (1938)

SOCIETE SUISSE POUR VALEURS DE METAUX v. CUMMINGS, Atty. Gen., et al.

No. 6978.

United States Court of Appeals for the District of Columbia.

Argued April 11, 1938.

Decided July 25, 1938.

COPYRIGHT MATERIAL OMITTED

Frederic D. McKenney, John S. Flannery and G. Bowdoin Craighill, all of Washington, D. C., for appellant.

Sam E. Whitaker, Asst. Atty. Gen., and Harry LeRoy Jones, Brice Toole, and Enoch E. Ellison, Attys., Department of Justice, all of Washington, D. C., for appellees.

Before GRONER, Chief Justice, and STEPHENS and EDGERTON, Associate Justices.

GRONER, C. J.

Societe Suisse Pour Valeurs De Metaux (called herein Swiss Corporation) filed its bill in the court below September 4, 1930, against the Attorney General (as Acting Alien Property Custodian) and the Treasurer of the United States to recover the sum of $643,595.81, which had accrued as interest on money received by the Custodian from the sale of shares of stock of American Metal Company taken over by him during the war. Metallgesellschaft and Metallbank, two German corporations, were at the outbreak of the war record holders of 49% of the capital stock of American Metal Company, a New York corporation. The shares were seized pursuant to the Trading with the Enemy Act, 50 U.S.C.A. Appendix § 1 et seq. and were subsequently sold by the Custodian. In September, 1921 the Custodian caused to be paid to Swiss Corporation in money and government bonds the sum of $6,967,987.30, representing the aggregate principal amount of the sale of the shares. At the time of payment there had been no allocation of the interest accrued during the period of seizure, but subsequently under Section 15 of the Act of March 10, 1928,¹ the Custodian set aside under two trusts the sum of $643,595.81 from that source. He declined, however, to pay this sum to Swiss Corporation because in May, 1926 the former Custodian and the former Attorney General had been indicted in the Southern District of New York for having fraudulently and unlawfully paid to Swiss Corporation the original principal sum. After the instant suit was begun the Attorney General and Treasurer filed an answer and a counterclaim. In the former they denied that any sum was due or payable to Swiss Corporation and in the latter sought restitution of the amount previously paid on the ground that the original claim was fraudulent and the money and bonds procured thereby unlawfully obtained.

On motion the trial court entered an order striking the counterclaim and denying the right to cross relief. We allowed a special appeal and in June, 1936 reversed the order with instructions to the lower court to permit the counterclaim to be filed.² Thereafter the cause was tried before Judge O'Donoghue, and in February, 1937 a decree was entered dismissing the bill and decreeing in favor of the United States on the counterclaim in the sum of $6,967,987.30.

The findings of facts and conclusions of law were announced immediately at the close of the argument. Counsel for Swiss Corporation excepted to the findings on the ground that they were inadequate, insufficient, and did not meet the requirements of Federal Equity Rule 70½ (296 U.S. 671), 28 U.S.C.A. following section 723 and unsuccessfully urged the court to make additional findings, and they now claim error as the result of the court's refusal to amplify the findings.

Undoubtedly the findings leave much to be desired. We have had occasion recently to emphasize the necessity of compliance with the rule (Boss v. Hardee, 68 App.D.C. 75, 93 F.2d 234), and the Supreme Court more recently still, Interstate Circuit, Inc. et al. v. United States, 304 U.S. 55, 58 S.Ct. 768, 82 L.Ed. 1146 (decided April 25, 1938), has called attention to the fact that an opinion by the trial judge is not a substitute for the required findings nor a discussion of the evidence and the court's reasoning in its opinion, sufficient to constitute the special and formal findings by which it is the duty of the court appropriately and specifically to determine all the issues which the case presents. In cases requiring findings of facts it is the better practice to insist that counsel for the prevailing party submit to the court and to the adverse party proposed findings. Thereafter a time should be set at which objections and proposed modifications, eliminations, or additions may be submitted and then, if necessary, a hearing had and the findings settled. In the instant case it would have been better if the findings had not been interwoven with conclusions of law and interspersed with expressions of the court's opinion on the merits; but by disregarding the extraneous matter there is enough left to enable us to determine the issues which the case presents.

As a matter of real fact there is but a single issue involved, for in the view we take of the case, the question whether Richard Merton as the representative of Swiss Corporation was privy to the bribery of Miller,³ the Custodian, need not be decided.

So far as is involved here we shall assume that Swiss Corporation was at all times during the period of the war an alien friend. In that view if the shares of stock of the American Metal Company seized by the Custodian during the war rightfully belonged to it before April 6, 1917, the seizure was unlawful,⁴ the restitution made in 1921 was proper, and the accumulated interest allocated to the trusts should now be paid to it. Contrarily, if the stock of American company did not then belong to Swiss Corporation, but belonged to Metallbank and Metallgesellschaft, alien enemies, the payment in 1921 was in fact unlawful, whether induced by bribery or not. And this brings us to a consideration of the evidence.

Metallgesellschaft was formed in 1881 under the laws of Germany as a trading company in metals. It was organized and controlled by the Merton family. Metallbank was formed prior to the war, also by the Merton family, with the idea of keeping separate the industrial and financial sides of the family business. The boards of the two companies were much the same, and Richard Merton was managing director of Metallgesellschaft, and his father of Metallbank. On the death of his father, Richard became chairman of the board of Metallbank. Swiss Corporation was organized in 1910, mainly by the elder Merton, as a holding company, and it acquired by purchase from the two German companies several million dollars of their capital shares. The latter companies held 51% of the capital of Swiss Corporation at all times during the period with which we are concerned. Long prior to the World War the two German companies acquired 49% of the capital stock of American Metal Company. The share certificates were deposited for the account of the German corporations with the American corporation at its New York office. After the United States entered the war the president of American company reported this enemy ownership of stock to the Alien Property Custodian, who took possession of the certificates under the Trading with the Enemy Act (40 Stat. 411, 50 U.S.C.A. Appendix § 1 et seq.). The stocks were subsequently sold by the Custodian.

Richard Merton came to the United States in March, 1921 and consulted Mr. Dulles, a New York lawyer, relative to filing a claim in the name of Swiss Corporation for the fund held by the Custodian. Dulles went to Washington and made an investigation and informed Merton that the claim would not be allowed without litigation. Merton thereafter met John T. King, a Connecticut politician, whom he interested in the case, and through King he was introduced to Jess Smith, of Ohio, a friend of the then Attorney General, and to Miller, the Custodian. By this means Merton had an interview with George E. Williams of the Custodian's office and obtained the information which he thought necessary in the preparation of the claim of Swiss Corporation. He then returned to Europe and later brought back with him to this country the prepared claim papers which were submitted to the Custodian through either King or Smith. One or the other, told Merton "that he had put up the claim in the wrong way" and not as he had been told, as the result of which he asked for and had a further conference with Williams to find out what was wrong. Williams apparently explained that the papers as prepared showed a "debt claim" rather than an "ownership claim" to the seized property and for that reason could not be allowed. Merton was permitted to withdraw the papers and to take them with him to Switzerland for redrafting.

He returned to Washington with the new claim papers the last of August or the first of September, 1921, and within two or three days after their delivery to the Custodian he was notified by either King or Smith that the claim had been allowed; and at the suggestion of Smith or King a dinner party was arranged at the Ritz-Carlton in New York City, attended by Merton, Miller, Smith, and King. At that time treasury checks in the amount of approximately six and a half million dollars were delivered to Merton, followed by the delivery the next day or the day after of Liberty Bonds in the amount of approximately $500,000. Merton paid King for his services about $400,000 in government bonds, — having previously paid him $50,000 in cash, — and a week or ten days later returned to Europe.

In 1926 Miller, Attorney General Daugherty, and King were indicted on account of the transaction just described, for violation of Section 37 of the Criminal Code, 18 U.S.C.A. § 88. King died, Miller was convicted, and the jury disagreed as to Daugherty. Miller appealed, and the judgment of conviction was affirmed February 6, 1928. In the criminal trial Merton testified as a witness for the United States, insisting in his testimony, however, that he had never authorized King or Smith to make any payments to any officials of government to expedite or to allow the claim. Thus the matter remained...