Tagle v. Regan

• Decision Date: 27 April 1981
• Docket Number: No. 79-3239,79-3239
• Citation: 643 F.2d 1058
• Parties: Mario Alfonso TAGLE and Lourdes A. Martinez, Plaintiffs-Appellants, v. Donald T. REGAN, as Secretary of Treasury of the United States, Defendant- Appellee. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1058

643 F.2d 1058

Mario Alfonso TAGLE and Lourdes A. Martinez, Plaintiffs-Appellants, v. Donald T. REGAN, as Secretary of Treasury of the United States, Defendant- Appellee.

No. 79-3239.

United States Court of Appeals, Fifth Circuit.

Unit B

April 27, 1981.

Cesar R. Camacho, Curtis, Mallet-Prevost, Colt & Mosle, Miami, Fla., for plaintiffs-appellants.

Stephen M. Pave, Miami, Fla., Benjamin C. Flannagan, Gen. Litigation & Legal Advice Sect., Crim. Div., Dept. of Justice, Washington, D. C., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before VANCE, HATCHETT and ANDERSON, Circuit Judges.

VANCE, Circuit Judge:

This case comes before us on stipulated facts. Mercedes Tagle y Campos died intestate in Cuba on or about November 9, 1975. She was survived by Lourdes A. Martinez, a daughter and naturalized citizen of the United States, Mario Alfonso Tagle, a son and permanent alien resident in the United States, and Manuel Alfonso Tagle, a son who is a citizen and resident of Cuba. On May 12, 1977, the circuit court of Dade County, Florida entered an order determining that each of the three surviving children was entitled to one-third of the estate.

Included in the estate were assets, consisting of cash and securities, held by the Bank of Nova Scotia in New York. These assets were frozen on July 8, 1963 under the Cuban Assets Control Regulations, 31 C.F.R. § 515, ¹ which were themselves issued under section 5(b) of the Trading With the Enemy Act, 50 U.S.C.App. § 5(b). The two surviving children who resided in the United States applied for a license to unblock their shares of the assets, but the Federal Reserve Bank of New York, acting for the Secretary of the Treasury, (hereinafter cited as "the Treasury") refused their application. Thereafter, they filed suit in district court urging that the Cuban Asset Control Regulations (hereinafter cited as "the Regulations") were no longer in effect, or, alternatively, that they were entitled to the assets regardless of the Regulations. The district court rejected both these contentions. We agree with the district court that the Regulations are still in force, but hold that they do not prevent appellants from receiving their shares of the assets within the United States.

I

The validity of the Regulations was first analyzed by this court in Real v. Simon, 510 F.2d 557 (5th Cir. 1975). We noted that section 5(b) of the Trading With the Enemy Act authorized the President to issue regulations during a period of national emergency to "prevent or prohibit ... transactions involving ... any property in which any foreign country or a national thereof has any interest ...." 510 F.2d at 559, 560 (quoting 50 U.S.C.App. § 5(b)). We held that the Regulations were authorized because the nation had been "under a declaration of national emergency insofar as the Trading With the Enemy Act" since the Korean crisis in 1950 was declared to be a national emergency by President Truman. Accord, Nielsen v. Secretary of Treasury, 424 F.2d 833, 836-38 (D.C.Cir.1970); Sardino v. Federal Reserve Bank, 361 F.2d 106, 109-10 (2d Cir.), cert. denied, 385 U.S. 898, 87 S.Ct. 203, 17 L.Ed.2d 130 (1966).

Appellants, however, call attention to the subsequent history of section 5(b). On September 14, 1976 Congress enacted the National Emergencies Act, Pub.L.No.94-412, 90 Stat. 1255 (1976) (codified at 50 U.S.C. §§ 1601 et seq.), which terminated "(a)ll powers and authorities possessed by the President ... as a result of the existence of any declaration of national emergency ...." 50 U.S.C. § 1601(a). Section 502(a)(1) of the law, codified at 50 U.S.C. § 1651(a)(1) (repealed), exempted section 5(b) from its coverage. ² This exemption was then repealed by the Act of December 28, 1977, Pub.L.No.95-223, § 101(d), 91 Stat. 1625. This Act also amended section 5(b) by forbidding the declaration of a national emergency during peacetime. Section 101(b) of the Act, however, contained a grandfather clause.

Notwithstanding the amendment made by subsection (a), the authorities conferred upon the President by section 5(b) of the Trading With the Enemy Act, which were being exercised with respect to a country on July 1, 1977, as a result of a national emergency declared by the President before such date, may continue to be exercised with respect to such country, except that, unless extended, the exercise of such authorities shall terminate (subject to the savings provisions of the second sentence of section 101(a) of the National Emergencies Act) at the end of the two-year period beginning on the date of enactment of the National Emergencies Act. The President may extend the exercise of such authorities for one-year periods upon a determination for each such extension that the exercise of such authorities with respect to such country for another year is in the national interest of the United States.

The Regulations have been regularly extended, 45 Fed.Reg. 59549 (1980); 44 Fed.Reg. 53153 (1979); 43 Fed.Reg. 40449 (1978).

Appellants' argument centers on the phrase "with respect to such country." Appellants concede that the President was authorized to extend the Regulations, but they contend that to do so he was obliged first to declare a state of emergency specifically regarding Cuba. Since the President merely extended the Regulations on the authority of the state of emergency declared in 1950, appellants maintain the extension was invalid.

Legislative history refutes appellants' contention. During hearings on an earlier draft of Pub.L.No.95-223, an attorney from the Office of the General Counsel of the Treasury Department, Leonard Santos, raised precisely this point. He objected to the presence of the word "declared" in connection with the grandfathering clause, and expressed a preference for the word "continued." Emergency Controls on International Economic Transactions: Hearings on H.R. 1560 and H.R. 2382 and Markup of the Trading With the Enemy Reform Legislation before the Subcomm. on International Economic Policy and Trade of the House Comm. on International Relations, 95th Cong., 1st Sess. 189-90 (1977). The following colloquy took place:

Mr. Santos: ...

As I indicated yesterday, it is difficult, considering our present state of negotiations with Cuba and other countries that the President would want to declare a national emergency with respect to those countries.

....

Rep. Bingham: I can see the problem. I personally would not argue that we should ask or expect the President to declare, for the first time, an emergency with respect to Cuba.

Id. at 190 (Rep. Bingham chaired the subcommittee).

At the next session of the subcommittee, Rep. Bingham introduced and explained a revision in the draft of the bill.

First of all, title 1 limits the existing Trading with the Enemy Act to situations where there is a declared war, that is for the future. With regard to those situations where these authorities are currently being exercised under the old Trading With the Enemy Act and I might mention that the principal ones are Vietnam, Cuba, and North Korea, and the freezing of assets of a number of Communist countries, including China as well as a number of Eastern European countries the tentative judgment of the subcommittee has been that these, in effect, should be grandfathered, subject only to a requirement that as of September of next year, which is the time at which the other emergencies that are covered by the National Emergencies Act expire, the President would simply have to indicate that certain powers which he has been exercising under the Trading With the Enemy Act are to be continued in the national interest. This is the latest of several versions that we have discussed.

We have recognized that it might be embarrassing for the President to have to declare new national emergencies with respect to Cuba and Vietnam. At the same time, if we were to take action here, in effect, terminating those embargoes, we know that this bill, which we hope will not be particularly controversial, would become instantly controversial.

So we have arrived at this proposed compromise, which I hope will be satisfactory to the administration. We would not require the President to declare that the emergency of 1950, under which those powers are now being exercised, continues; we would simply require him to state, beginning in September 1978 and annually thereafter, that such powers are continued in the national interest.

Id. at 207-08. This resolution of the matter is embodied in the language of the bill as enacted. We find this legislative history persuasive, and hold that the Regulations are still in force.

II

We next consider the application of the Regulations to the fact situation before us. ³ We are guided by the language of the Regulations and our previous consideration of an intestate blocking question in Real.

Intestate succession is specifically dealt with in the Regulations.

The term "blocked estate of a decedent" shall mean any decedent's estate in which a designated national has an interest. A person shall be deemed to have an interest in a decedent's estate if he (a) was the decedent; (b) is a personal representative; or (c) is a creditor, heir, legatee, devisee, distributee, or beneficiary.

31 C.F.R. § 515.327.

Section 515.201 prohibits all transactions incident to the administration of the blocked estate of a decedent, including the appointment and qualification of personal representative, the collection and liquidation of assets, the payment of claims, and distribution to beneficiaries. Attention is directed to § 515.523 which authorizes certain transactions in connection with the administration of blocked estates of decedents.

31 C.F.R. § 515.407.

(a) The following are hereby authorized:

....

(2) Any transfer to any person by intestate succession;

....

(b) Except to the limited extent authorized by § 515.523 or by any other...