Zalcmanis v. United States

• Decision Date: 03 June 1959
• Docket Number: No. 250-56.,250-56.
• Citation: 173 F. Supp. 355
• Parties: Janis ZALCMANIS, Gertrude Jansons, Lorena Jansons, Asja Viviana Jansons, n/k/a Asja Liders and the Public Administrator of the County of New York, State of New York, Administrator of the Estate of Karlis Jansons, Deceased v. UNITED STATES.
• Court: U.S. Claims Court

173 F. Supp. 355

Janis ZALCMANIS, Gertrude Jansons, Lorena Jansons, Asja Viviana Jansons, n/k/a Asja Liders and the Public Administrator of the County of New York, State of New York, Administrator of the Estate of Karlis Jansons, Deceased v. UNITED STATES.

No. 250-56.

United States Court of Claims.

June 3, 1959.

Robert H. Law, III, White Plains, N. Y., Robert H. Law, Jr., White Plains, N. Y., on the briefs, for plaintiffs.

Theodore D. Peyser, Jr., Washington, D. C., with whom was Charles K. Rice, Asst. Atty. Gen., James P. Garland, and Lyle M. Turner, Washington, D. C., on the brief, for defendant.

LARAMORE, Judge.

Plaintiffs, alien residents of the United States, sue to recover interest on a refund of tax and interest made by the Commissioner of Internal Revenue to the Attorney General as successor to the Alien Property Custodian.

A previous motion for summary judgment by defendant was denied without prejudice and plaintiffs were permitted to amend their petition to allege facts sufficient to allow them to bring suit against the United States under 28 U.S. C. § 2502. See Zalcmanis v. United States, 149 F.Supp. 169, 137 Ct.Cl. 543.

The pertinent facts are sufficiently set forth in the body of this opinion.

The first question presented is whether plaintiffs now have alleged and proved a right to sue in the Court of Claims under 28 U.S.C. § 2502. Section 2502 reads as follows:

"Citizens or subjects of any foreign government which accords to citizens of the United States the right to prosecute claims against their government in its courts may sue the United States in the Court of Claims if the subject matter of the suit is otherwise within such court's jurisdiction."

We think this question can only be answered in the affirmative. Plaintiffs were and are citizens of the Republic of Latvia. The overrunning of Latvia and the resulting incorporation of the country into the Union of Soviet Socialist Republics did not take from them their citizenship in the Republic of Latvia. In fact, the Republic of Latvia as it was constituted before the invasion by the Union of Soviet Socialist Republics is still recognized by the United States, and the treaty¹ between the United States and Latvia, permitting United States citizens free access to Latvian courts is still in full force and effect. However, there are in fact no courts maintained by the government in exile and all claims must be administratively determined. This situation exists through no fault of the plaintiffs. We think it would be a harsh construction of section 2502, supra, to say that this takes from plaintiffs the right to sue in the Court of Claims. To do so would be to deny the continued existence of the treaty previously referred to when in fact our Government has seen fit to recognize said treaty as a continuing international agreement between the Republic of Latvia and the United States. Until such time as the United States recognizes Latvia as it is constituted today, and no longer adheres to the treaty between the two governments, plaintiffs continue to enjoy the freedom of this court.

This brings us the question of plaintiffs' right to recover interest on the refund of taxes.

The taxes here in question were paid by trustees, pursuant to an order of the District Court, Southern District of New York, at a time in which all property of plaintiffs was vested pursuant to the Trading With the Enemy Act, infra, in the Alien Property Custodian. The District Court's order was because of plaintiffs' ownership of two vessels which were libeled by Soviet Russia in connection with the nationalization of all private Latvian property. The trustees had been appointed to operate the vessels pending final determination of the libel action. Subsequently both vessels were sunk by enemy action and thereafter insurance moneys were collected on said vessels and held by the trustees as funds obtained from the operation of the vessels. At the time the taxes were paid the insurance moneys were still in the hands of the trustees.

Under section 36(a) of the Trading With the Enemy Act, 50 U.S.C.A.Appendix, § 36(a), the vesting in the Alien Property Custodian did not render inapplicable Federal tax liability for a period prior to the date of the vesting. Accordingly, the District Court ordered and the trustees paid an assessed deficiency for taxes claimed by the Commissioner of Internal Revenue to be due for the years 1940, 1941, and 1942. The court further ordered that the trustees file claims for refund and take necessary steps to prosecute said claims in the United States District Court.

On June 29, 1946, the District Court ordered the trustees to turn over all funds held by them to the Alien Property Custodian in consequence of the 1943 vesting order. The court determined that the Alien Property Custodian had acquired all...