United States v. Rodiek

• Decision Date: 17 February 1941
• Docket Number: No. 67.,67.
• Citation: 117 F.2d 588
• Parties: UNITED STATES et al. v. RODIEK.
• Court: U.S. Court of Appeals — Second Circuit

117 F.2d 588 (1941)

UNITED STATES et al. v. RODIEK.

No. 67.

Circuit Court of Appeals, Second Circuit.

February 17, 1941.

Reuben D. Silliman, of New York City (Russell C. Gay and Sherwood E. Silliman, both of New York City, of counsel), for appellant.

John T. Cahill, U. S. Atty., of New York City (Francis M. Shea, Asst. Atty. Gen., Harry LeRoy Jones and Frederick L. Smith, Attys., Department of Justice, all of Washington, D. C., George B. Schoonmaker, Asst. U. S. Atty., of New York City, and Frederick Bernays Wiener, of Providence, R. I., of counsel), for appellees.

Before SWAN, CHASE, and CLARK, Circuit Judges.

SWAN, Circuit Judge.

Purporting to act pursuant to the terms of section 9 of the Trading with the Enemy Act, as amended, 50 U.S.C.A. Appendix, § 9, the President of the United States in April 1924 allowed the claim of Johann Friedrich Hackfeld for the return of his property, or its proceeds, seized by the alien property custodian in 1918. Under this presidential order more than $3,700,000 in cash and United States bonds were paid to Hackfeld between June 7, 1924, and August 20, 1931. After Hackfeld's death the ancillary executor of his estate, appointed by the surrogate of New York county, attempted by means of a private bill introduced in the United States Senate, to obtain an additional sum representing what the custodian would have received upon sale of the seized property had it been fairly sold for what it was worth. There followed a congressional reference to the Court of Claims, 28 U.S. C.A. § 257, and a proceeding therein, which is still pending, for an advisory report. In April 1936 the present suit was filed in the court below by the United States, the then attorney general (for whom the present incumbent of that office has been substituted) and the Treasurer of the United States against the ancillary executor of Hackfeld's estate. The theory of the action is that the presidential allowance of Hackfeld's claim resulted from misrepresentations and fraud on his part and from mistakes of law and fact on the part of United States officials; that Hackfeld was not a citizen of the United States, as the President had found, but was an alien enemy; and in consequence that he never became entitled to get back more than 80% of the proceeds of the seized property, as authorized by the Settlement of War Claims Act of March 10, 1928. 45 Stat. 254, 50 U.S.C.A. Appendix, § 9 et seq. Accordingly the complaint sought recovery from the defendant of 20% of the aforesaid payments to Hackfeld, with interest thereon. After trial to a jury the district judge directed a verdict for the plaintiffs in the sum of $1,604,632.45 on the ground that Hackfeld was never a United States citizen. He found that the presidential allowance of Hackfeld's claim was made under a mistake of law and "for that reason and also because of the commencement of the proceedings in the Court of Claims," he held that the presidential allowance could be reconsidered. The district judge did not consider whether or not the evidence in respect to the charges of fraud was sufficient to justify direction of the verdict. From the ensuing judgment the defendant has appealed.

This case presents several interesting questions of law. The first pertains to the jurisdiction of the district court; the second, to a plea of res judicata; and the third, if the merits can be reached, to Hackfeld's citizenship. But before passing to these legal questions some further statement of the facts is desirable.

Hackfeld was born in Germany in 1856. At the age of 21 he came to Hawaii and entered the service of his uncles' sugar business. He acquired a home in Honolulu, was active in local affairs, aided in the establishment of the Hawaiian Republic, and by reason of such services received from the Minister of the Interior of the Republic a certificate, dated December 21, 1894, which stated that he was "entitled, so long as he shall remain domiciled in the Republic, to all the privileges of Citizenship without thereby prejudicing his native citizenship or allegiance." This certificate, the defendant contends, constituted Hackfeld a citizen of the Republic and as such he became a citizen of the United States by virtue of the Act to provide a government for the Territory of Hawaii, which granted citizenship to all who were citizens of the Republic on August 12, 1898. 31 Stat. 141, 48 U.S.C.A. § 491 et seq.

In the year 1900 Mrs. Hackfeld's health compelled her to return to Germany. Thereafter Hackfeld spent part of his time in Germany with his wife and daughter and part in Honolulu looking after his business interests. The sugar business in which he started work had grown prodigiously; it was conducted by a Hawaiian corporation, H. Hackfeld & Co., Ltd., of which he was the president. He was in Germany when the war broke out in 1914, and he remained there until his death in 1932, except for trips to the United States on American passports in 1924, 1926 and 1929. After the United States entered the war the alien property custodian seized Hackfeld's interest in H. Hackfeld & Co., Ltd. In 1923 he filed claim, as a German citizen, for the return of $10,000, as authorized by the Winslow Act, 42 Stat. 1512, 50 U.S.C.A.Appendix, § 9(b), reserving, however, the right to establish a different citizenship. Later in the same year he filed a claim for the return of all his seized property, alleging that he was a citizen of the United States. At the same time he applied for an American passport. After an investigation of his application the Department of State became satisfied that Hackfeld was a United States citizen; it issued him a passport on March 13, 1924. Hackfeld then came to this country and pressed his claim for the return of his property. Attorney General Stone was satisfied as to his citizenship and recommended to President Coolidge that his claim be allowed. This was done under date of April 26, 1924, and pursuant to the presidential order more than $3,700,000 was paid to Hackfeld.

In 1934, after Hackfeld's death, the ancillary executor of his estate sought to obtain an additional $3,000,000 for alleged injuries growing out of the sale by the alien property custodian of the assets of H. Hackfeld & Co., Ltd., of which Hackfeld was the principal stockholder. A private bill to authorize the payment of this sum to Hackfeld's estate was introduced in the Senate and referred to the Court of Claims for report. The ancillary executor then filed a petition in that court setting up his claims and asking for a favorable report. While this proceeding was pending the present action was begun in April 1936 in the court below, and proceeded to trial with the result already stated.

The appellant contends that under the Trading with the Enemy Act, 50 U.S.C.A. Appendix, § 1 et seq., a presidential determination is not reviewable by the courts. Section 7(c) authorized the President to determine whether or not property was enemy owned. If he determined that it was so owned and required its transfer to the alien property custodian, the presidential determination was conclusive as to the custodian's right to possession. Central Union Trust Co. v. Garvan, 254 U.S. 554, 41 S.Ct. 214, 65 L.Ed. 403. In case of mistake, the sole remedy of any claimant to obtain a return of his property was provided by section 9. Subsection (a) provides alternative methods of relief for a non-enemy claimant. He may make application to the President who "may order the payment * * * or delivery" to the claimant of the money or other property held by the custodian, or "of the interest therein to which the President shall determine said claimant is entitled"; or if the President does not so order within sixty days after the claimant's application, or if no such application was made, then the claimant may institute a suit in equity in the district court for the district in which he resides. It has recently been authoritatively decided that the United States may not attack collaterally a decree for a non-enemy claimant who proceeded by suit under section 9. Jackson v. Irving Trust Co., 61 S.Ct. 326, 85 L.Ed ___, decided January 6, 1941, affirming Sorenson v. Sutherland, 2 Cir., 109 F.2d 714. As this decision turns on the application of ordinary principles of res judicata, it is not determinative of the conclusiveness of a presidential allowance; nevertheless, it affords some aid to the appellant's contention, since the statutory language tends to support the argument that a presidential decision, when relief is sought by application to the President, is as conclusive as is a judicial decree when the alternative method of a suit in court is adopted by a claimant. Subsection (c) of section 9 permits any person whose money or other property the President is authorized to return under subsection (b) to file an application for presidential allowance or to institute a suit as provided in subsection (a), and continues: "The President or the court, as the case may be, may make the same determinations with respect to citizenship and other relevant facts that the President is authorized to make under the provisions of subsection (b) hereof." And section 12 likewise pointedly treats a presidential allowance or a judicial decree under section 9 as alternative methods of decision of equal weight and finality.

In addition to the statutory language, the appellant relies on a variety of cases holding administrative determinations not subject to judicial review. Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108; Butte, A. & P. Ry. Co. v. United States, 290 U.S. 127, 54 S.Ct. 108, 78 L.Ed. 222; Great Northern Ry. v. United States, 277 U.S. 172, 48 S.Ct. 466, 72 L.Ed. 838; United States v. Chemical Foundation, 272 U.S. 1, 47 S.Ct. 1, 71 L. Ed. 131; State of Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506; Luther v. Borden, 7 How. 1, 12 L.Ed. 581; Martin v. Mott, 12 Wheat. 19, 6 L.Ed. 537. To...