Central Union Trust Company of New York v. Garvan/Opinion of the Court

These are libels brought by the Alien Property Custodian under the Trading with the Enemy Act October 6, 1917, c. 106, § 17, 40 Stat. 411, 425 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115 1/2 i), to obtain possession of securities in the hands of the plaintiffs in error respectively as trustees. The libel in each case alleges that the Alien Property Custodian after investigation determined that a German insurance company named was an enemy not holding a license from the President, etc.; that certain specified securities belonged to it or were held for its benefit by the party now appearing as a plaintiff in error in that case; and that a demand for the property had been made but not complied with. The libellant prayed an order directing the marshal to seize the property and citing claimants of a right to possession to show cause why the same should not be delivered to him. The plaintiffs in error appeared as claimants in their several cases, denied that the funds were held for the benefit of an enemy, and set up the trust under which they held them as required by the laws of Massachusetts or Connecticut for the security of American policyholders and creditors, with reasons for their right to retain the funds alleged in detail. The libellant moved for decrees for possession upon the pleadings which were granted by the District Court. The decrees were affirmed by the Circuit Court of Appeals, Garvan v. $20,000 Bonds, 265 Fed. 477; Garvan v. $6,000 Bonds, 481. As the decision of the latter Court is not made final by the statute the cases have been brought on writ of error to this Court.

As is obvious from the statement of the pleadings the libels are brought upon the theory that these are purely possessory actions and that for the purposes of immediate possession the determination of the Enemy Property Custodian is conclusive, whether right or wrong. The claimants on the other hand set up substantive rights and seek to have it decided in these suits whether the funds are enemy property in fact and whether they have not the right to detain them. Strictly possessory actions still survive in the laws of some States and have been upheld, leaving the party claiming title to a subsequent suit. Grant Timber & Manufacturing Co. v. Gray, 236 U.S. 133, 35 Sup. Ct. 279, 59 L. Ed. 501. There can be no doubt that Congress has power to provide for an immediate seizure in war times of property supposed to belong to the enemy, as it could provide for an attachment or distraint, if adequate provision is made for a return in case of mistake. As it can authorize a seizure in pais it can authorize one through the help of a Court. The only questions are whether it has done so as supposed by the libellant and if so whether the conditions imposed by the Act have been performed.

If the Custodian was entitled to demand the delivery of the property in question it does not seem to need argument to show that the demand could be enforced by the District Courts under section 17 of the Act, giving to those Courts Jurisdiction to make all such orders and decrees as may be necessary and proper to enforce the provisions of the Act. The first question then is whether the Custodian had the right to make the demand. By section 5 (section 3115 1/2 c) the President may exercise any power or authority conferred by the Act through such officers as he may direct. It is admitted that he has exercised the powers material to these cases through the Enemy Property Custodian and by the Act of November 4, 1918, c. 201, 40 Stat. 1020, the Custodian is given the right to seize. By section 7(c) section 3115 1/2 d-as originally enacted:

'If the President shall so require, any money or other     property owing or belonging to or held for, by, on account      of, or on behalf of, or for the benefit of an enemy or ally      of enemy not holding a license granted by the President      hereunder, which the President after investigation shall      determine is so owing or so belongs or is so held, shall be      conveyed, transferred, assigned, delivered, or paid over to      the Alien Property Custodian.'

We are to take it therefore that the President has 'so required,' and that a case is made out under section 17 unless we are to consider the defences interposed.

If we look no further than section 7(c), it is plain that obedience to the statute requires an immediate transfer in any case within its terms without awaiting a resort to the Courts. The occasion of the duty is a demand after a determination by the President and it is hard to give much meaning to the words 'which the President after investigation shall determine is so * *  * held' unless the determination and demand call the duty into being. The condition 'after investigation' additionally points to the intent to make his act decisive upon the point, as it is in other cases mentioned in section 7(a). But it is said that the subject of the section is enemy property only and therefore that the determination cannot be final in its effect. Day v. Micou, 18 Wall. 156, 21 L. Ed. 860. And it is true that it is not final against the claimant's rights. Upon surrender the claimant may at once file a claim under section 9 (section 3115 1/2e), if he satisfies the representative of the President may obtain a return, and, if he does not obtain it in sixty days after filing his application, or forthwith if he has given the required notice but filed no application to the President, may bring a suit to establish his rights in the District Court, in which case the property is to be retained by the Custodian until final decree. These provisions explain the initial words of section 7(c) as saving the ultimate rights of the claimant while the determination of the President still may be given effect to carry out an immediate seizure for the security of the Government until the final decision upon the right. The reservation implies that mistakes may be made and assumes that the transfer will take place whether right or wrong.

The argument on the original words of the Act in view of the manifest purpose seems to us to be strong, but it appears to us to be much strengthened by the amendments of later date. By the Act of November 4, 1918, c. 201, 40 Stat. 1020, section 7(c), was amended among other things by adding after the requirements of transfer 'or the same may be seized by the Alien Property Custodian; and all property thus acquired shall be held, administered and disposed of as elsewhere provided in this Act.' This shows clearly enough the peremptory character of this first step. It cannot be supposed that a resort to the Courts is to be less immediately effective then a taking with the strong hand. Clinkenbeard v. United States, 21 Wall. 65, 22 L. Ed. 477, has no application. That was debt on a bond for a tax and turned on the right of the Government to the tax, not on possession. By a later paragraph 'the sole relief and remedy of any person having any claim to any * *  * property' transferred to the Custodian 'or required so to be, or seized by him shall be that provided by the terms of this Act.' The natural interpretation of this clause is that it refers to the remedies expressly provided, in this case by section 9; that property required to be transferred and property seized stand on the same footing, not that the resort by the Custodian to the Courts instead of to force opens to the person who has declined to obey the order of the statute or who has prevented a seizure a right by implication to delay what the statute evidently means to accomplish at once.

To the conclusion that we reach it is objected that the Custodian gets a good deal more than bare possession-that the property is to be conveyed to him, and that by the Act of March 28, 1918, c. 28, 40 Stat. 459, 460 (Comp. St. Ann. Supp. 1919, § 3115 1/2 ff), enlarging section 12, the Custodian 'shall be vested with all of the powers of a common-law trustee in respect of all property, other than money, which has been or shall be, or which has been or shall be required to be, conveyed,' etc., to him, and is given the power to sell and manage the same as though he were absolute owner. All this may be conceded if no claim is filed. But this act did not repeal section 9, which is amended by the later Acts of July 11, 1919, c. 6, 41 Stat. 35, and of June 5, 1920, c. 241, 41 Stat. 977, and as we have said, provides for immediate claim and suit and requires the property in cases of suit to be retained in the custody of the Alien Property Custodian or in the Treasury of the United States to abide the result. The present proceeding gives nothing but the preliminary custody such as would have been gained by seizure. It attaches the property to make sure that it is forthcoming if finally condemned and does no more.

Decrees affirmed.

The Chief Justice took no part in the consideration or decision of these causes.