Zimmermann v. Miller
| Decision Date | 02 June 1924 |
| Citation | 2 F.2d 623 |
| Parties | ZIMMERMANN et al. v. MILLER, Alien Property Custodian, et al. |
| Court | U.S. District Court — Southern District of New York |
Stockton & Stockton, of New York City (Joseph M. Hartfield and Hamilton Vreeland, Jr., both of New York City, of counsel), for plaintiffs.
William Hayward, U. S. Atty., of New York City (Dean Hill Stanley, Sp. Asst. Atty. Gen., of counsel), for defendants Miller and White.
Peaslee, Brigham & Gennert, of New York City (Thomas G. Haight, of Jersey City, N. J., and Amos J. Peaslee, of New York City, of counsel), for defendant Deutsche Bank.
In this action, instituted under the provisions of section 9 of the Trading with the Enemy Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115½e), plaintiffs seek to recover out of seized money or property of the Deutsche Bank of Berlin, Germany, now in the hands of the Alien Property Custodian and the Treasurer of the United States, the dollar value of 3,613,454.30 German marks, as of March or April, 1917. The average cable transfer rate of exchange for United States dollars and German marks, then existing, would give the latter a value of about $623,317.25. At the time of trial, marks were worth 15 cents per trillion.
The basis of the claim is that there was owing to plaintiffs from the Deutsche Bank upon or about October 1, 1917, the aforesaid number of German marks, and being the balance of a deposit account theretofore opened with the bank. The contention is that the money became due and payable to plaintiff upon the outbreak of the war between the United States and Germany, and not having been remitted by the bank, recoupment, at the pre-war rate of exchange, may here be had.
The Alien Property Custodian and the Treasurer admit that the former having determined the Deutsche Bank to be an alien enemy under the terms of the Trading with the Enemy Act (sections 3115½a-3115½j), and that certain money and other property was owing, or belonging to, held for, by, on account of, and for the benefit of said enemy, within the United States, required the same to be paid to him, to be held, administered, and accounted for as provided by law. The money so received was duly paid into the treasury of the United States. These defendants also plead the pendency of numerous other suits which have been brought against them by other persons, firms, and corporations, who assert the right to collect from the seized money and property of the Deutsche Bank in their hands certain claims which are alleged to be payable therefrom.
The Deutsche Bank, in a separate answer, sets up numerous defenses. Those principally relied upon are the following:
(1) That plaintiffs' claim is not within section 9 of the Trading with the Enemy Act, and the court is therefore without jurisdiction.
(2) That there was no default upon the part of the bank, prior to December 17, 1921, and even assuming the court's jurisdiction, plaintiffs' recovery must be limited to the dollar equivalent of the marks claimed as of that date.
(3) That if plaintiffs are entitled to any claim for damages or compensation for matters beyond the bank's control, they must seek relief through the Mixed Claims Commission appointed pursuant to agreement made between the United States and Germany upon August 10, 1922.
The facts giving rise to the account, and its condition upon the outbreak of the war, are these: Plaintiffs were bankers and brokers who engaged in an extensive foreign business. It was essential for them to maintain considerable deposits in banking houses abroad. In 1908 they opened a deposit and a check account with the Deutsche Bank. The former was intended to record transactions in securities, and the latter was designed as a fund against which drafts, letters of instruction for payments, bills, encashments, etc., might be charged. The original deposit and all subsequent withdrawals were made in terms of German marks. At quarterly intervals from 1908 to the beginning of the year 1916, the bank sent transcripts of the account to plaintiffs. These showed the debits and credits over the preceding quarter, together with the balance remaining upon deposit at the end of the period covered by the statement. The statements were accompanied by a letter in which Zimmermann & Forshay were requested to acknowledge the correctness of the accounts, and such communications bore this notation:
Over the period from 1916 to July 1, 1919, the bank continued to prepare the quarterly statements, but, owing to the uncertainties of communication and prohibitive statutes, the same were not sent to America until the resumption of communication in July, 1919. The accounts carry the transaction between the parties down to December 31, 1917, but inasmuch as suits maintainable under section 9 of the Trading with the Enemy Act are restricted to such debts as were owing to and owned by a claimant, prior to October 6, 1917, declaration is made upon the number of marks standing to plaintiffs' credit as of October 1, 1917.
Immediately before and for some time after April 6, 1917, the date of our entry into the war, the bank made payments from plaintiffs' account to the extent of 898,952 marks. For the most part, these were made pursuant to the instructions of a man named Cale or Cohn, who, it is said, was the Berlin representative of Zimmermann & Forshay. Subsequent to the war, such payments were personally confirmed by one of the plaintiffs. Over the same period, the account was credited with deposits mailed to the bank prior to April 6, 1917, and subsequently received by it. In addition, a total of 1,639,403 marks, representing the payment of coupons upon German war bonds, owned by plaintiffs, was credited.
Prior to our declaration of war, Zimmermann & Forshay had delivered to various persons orders calling upon the bank to make certain payments. Had such orders been presented before April 6, 1917, and had there been no credits to the account, plaintiffs' balance would have been greatly reduced. The greater portion of such orders were never paid from the accounts existing upon April 6, 1917, because of a "stop order" issued against the same by a German official called the "Treuhander," who seems to have exercised an authority and control not unlike that possessed by our own Alien Property Custodian.
The Treuhander's entry into the situation seems to have occurred about November 10, 1917, at which time a decree relating to enemy property in Germany, theretofore operative as against Great Britain and other enemies, was made applicable to the United States. This decree or subsequent orders and laws of a similar character continued in force until December 18, 1921.
No sooner were communications resumed with Germany than plaintiffs sought to have their outstanding orders honored by the bank. On or about July 19, 1919, in a letter dated June 9, 1919, they sent confirmations of a large number of pre-war orders drawn against the account between October 6, 1916 and April 3, 1917, aggregating close to four million marks. The letter of transmittal concluded:
"We therefore beg of you to carefully compare and examine these copies and ascertain which of the payments have not been made by you and proceed immediately to carry out our instructions and make the payments."
For reasons already stated, the payments from the old accounts could not be made, and to care for the outstanding orders plaintiffs opened new accounts with the bank.
About July 23, 1919, the bank was requested to forward plaintiffs' "account current" from January 1, 1916, to date, with approximate credit balance. At about the same time, the bank was asked to ship such securities as were held for plaintiffs. In answer to their request, the bank replied:
"Shipment securities and disposal old balance about four million eight hundred thirty nine thousand impossible at present consequence peace conditions."
This was followed by a cable of August 9, 1919, from plaintiffs, which reads:
The bank appealed to the German Department for Foreign Affairs for instructions as to what might be done. It was told that
The following cable to plaintiff was then sent:
The treaty of peace between the United States and Germany was proclaimed November 14, 1921. A month later plaintiffs filed a claim under section 9 of the Trading with the Enemy Act with the Alien Property Custodian,...
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