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Ladue & Co. v. Brownell

March 18, 1955


Author: Swaim

Before DUFFY, Chief Judge, and FINNEGAN and SWAIM, Circuit Judges.

SWAIM, Circuit Judge.

This appeal is from an order of the United States District Court for the Northern District of Illinois, Eastern Division, dismissing the plaintiff's complaint.

The plaintiff, Ladue & Co., an Illinois corporation, a dealer in securities since 1948, brought this action against the defendant, Herbert Brownell, Jr., Attorney General of the United States, as Successor Alien Property Custodian, to recover property seized, as the property of enemy aliens, by the defendant under the alleged authority of the Trading with the Enemy Act, as amended, 50 U.S.C.A. Appendix, ยง 1 et seq. The complaint alleged that since its incorporation plaintiff had been a citizen of the United States and that since that date it was neither an enemy, the ally of an enemy nor a national of any foreign enemy country within the meaning of the Trading with the Enemy Act, or any regulation, proclamation or order issued in connection with that Act.

The complaint further alleged that the plaintiff was the sole owner of certain stocks, securities and the accruals thereon, issued by the St. Louis Southwestern Railway Company and the City of New York; that at no time on or since April 13, 1953, had said property been owned, controlled or held for the benefit of any enemy aliens; that the defendant, on April 13, 1953, purporting to act under the authority of the Trading with the Enemy Act and certain executive orders relating thereto, issued his Vesting Order 19266, vesting in defendant said securities and the accruals thereon, the order alleging that the securities were owned by unknown German nationals; that on April 16, 1953, the defendant acting under said vesting order instructed the Manufacturers Trust Company of New York City to pay to defendant the $3,187.50 interest which had accrued on said securities during the period from October 1, 1945 to October 1, 1952, inclusive. The complaint further alleged that the said vesting order was void and of no force or effect, and that the action of the defendant in appropriating the securities described therein and the accruals therefrom was a confiscation and taking of plaintiff's property without due process of law.

The complaint therefore prayed that the defendant be ordered to revest in plaintiff the title to the securities, and that the defendant account for and pay to the plaintiff all moneys received by the defendant as income from said securities.

The Government moved to dismiss the complaint on the ground that plaintiff had not filed the notice of claim required by Section 9(a) of the Trading with the Enemy Act. The plaintiff in its brief in this court makes no mention of its failure to file the required notice of claim, apparently relying on its contention that the seizure, having been made after the official termination of war, was unconstitutional and that a notice of claim was, therefore, unnecessary. We shall first consider the constitutionality of the seizure.

The plaintiff cites as supporting this contention several decisions in which there are various statements which plaintiff contends support its position. In Brownell v. Edmunds, D.C., 110 F.Supp. 828, the interest of the German nationals under a last will and testament did not vest until after the termination of the war. The Alien Property Custodian issued a vesting order in 1946 attempting to seize the interest of the German nationals before the interest was vested. The court there properly held that such a vesting order was invalid because at the time it was issued there was no interest in German nationals subject to seizure. The Joint Resolution by its terms only reserved the right to seize property which was "prior to January 1, 1947, * * * subject to vesting or seizure under the provisions of the Trading With the Enemy Act * * *." 65 Stat. 451.

Stoehr v. Wallace, 255 U.S. 239, 41 S. Ct. 293, 65 L. Ed. 604, concerned a seizure during war. In the opinion, 255 U.S. at page 245, 41 S. Ct. at page 296, the Supreme Court said: "That Congress in time of war may authorize and provide for the seizure and sequestration through executive channels of property believed to be enemy-owned, if adequate provision be made for a return in case of mistake, in not debatable." That opinion was not concerned with whether such seizures might be made after the formal termination of the war. Orme v. Northern Trust Co., 410 Ill. 354, 102 N.E.2d 335, certiorari denied Von Hardenberg v. McGrath, 343 U.S. 921, 72 S. Ct. 677, 96 L. Ed. 1334, also involved property seized prior to the formal termination of the war.

In Miller v. Rouse, D.C., 276 F. 715, a demand, signed before the date of the proclamation of peace in World War I, was served three days after the proclamation. The court there held, contrary to the contention of the Custodian, that the mere signing of the demand was not sufficient; that the property did not become the "subject" of a demand until all steps were taken which would vest the property in the United States; that such vesting did not occur until the demand was served, which demand, coming after the declaration, was too late.

In Matheson v. Hicks, D.C., 10 F.2d 872, 873, it was also held that a demand served after the termination of World War I was too late to transfer the property to the Custodian.

In Application of Miller, 2 Cir., 288 F. 760, 767, it was held that the Custodian, having properly made demands for property of an enemy alien could maintain action after termination of war to enforce a seizure which had already been effected by a proper demand. There the question was only as to the effect, if any, of the peace declaration on the claim of the United States to enemy property which had been seized prior to the termination of the war. The court there pointed out that the Joint Resolution of July 2, 1921, terminating World War I, United States Statutes at Large, Vol. 42, Part 1, pages 105, 106, expressly provided that: "All property * * * of all German nationals which was, on April 6, 1917, in or has since that date come into the possession or under control of, or has been the subject of a demand by the United States of America or of any of its officers, agents, or employees, from any source or by any agency whatsoever, * * * shall be retained by the United States of America and no disposition thereof made, except as shall have been heretofore or specifically hereafter shall be provided by law * * *." This resolution did not purport to deal with any property except that seized during the war.

None of these cases cited by the plaintiff decided that the Congress could not, by proper language in the Joint Resolution terminating World War II, have reserved the power to continue to seize enemy property.

The appellant concedes, as it must, that the courts of this country have uniformly upheld the right of the Government to seize enemy property during time of war on the theory that the right is a necessary adjunct to the ability to wage war successfully. Silesian-American Corp. v. Clark, 332 U.S. 469, 475, 68 S. Ct. 179, 92 L. Ed. 81; Stoehr v. Wallace, 255 U.S. 239, ...

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