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Matched Legal Cases: ['§ 17', '§ 17', '§ 5', '§ 5', '§ 1', '§ 1', '§ 977', '§ 977', 'art, 317', '§ 2283']

PROPER V. CLARK, 337 U. S. 472 (1949) - US SUPREME COURT DECISIONS ON-LINE
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(b) Not being defined, the term "credit," as used in the Trading with the Enemy Act, the Executive Orders and the regulations thereunder, is given its ordinary meaning of the obligation due on accounting between parties to transactions. P. 337 U. S. 480. chanroblesvirtualawlibrary
In a suit by the Alien Property Custodian under § 17 of the Trading with the Enemy Act, a Federal District Court entered judgments declaring that a receiver appointed by a state court had no right, title, or interest in a debt owed to an Austrian national, and directing the debtor to pay the debt to the Custodian. 70 F.Supp. 202. The Court of Appeals affirmed. 169 F.2d 324. This Court granted certiorari, limited to two issues. 335 U.S. 902. Affirmed, p. 337 U. S. 493. chanroblesvirtualawlibrary
The Alien Property Custodian [Footnote 1] on April 22, 1946, began this action under § 17 of the Trading with the Enemy Act in the United States District Court for the Southern District of New York to obtain the payment, and a declaration of title in him as against the petitioner as receiver, of certain royalties owed by the American Society of Composers, Authors, and Publishers (ASCAP) to Staatlich Genehmigte Gesellschaft der Autoren, Komponisten, und Musikverleger (AKM), an Austrian association, pursuant to the provisions of vesting order No. 2097, Office of Alien Property Custodian, September 4, 1943, 8 F.R. 16463, whereby the Custodian had vested in himself title to certain property of AKM, specifically claims for royalties under copyrights for the performance of musical compositions. By contract, ASCAP had been authorized by AKM to license on royalty the use in this country of musical copyrights belonging to AKM. ASCAP and the petitioner, who is the state-appointed receiver of the royalties involved, were made defendants. The District Court, on motions for summary judgment or judgment on the pleadings, entered a judgment declaring chanroblesvirtualawlibrary
On June 14, 1941, pursuant to § 5(b) of the Trading with the Enemy Act of 1917, 40 Stat. 411, 415, as amended, [Footnote 3] the President promulgated Executive Order No. 8785, [Footnote 4] a so-called freezing order, which prohibited certain transactions involving Austrian property except as they were specifically licensed by the Secretary of the Treasury. On July 29, 1941, petitioner, as receiver, began an action in the courts of New chanroblesvirtualawlibrary
First. The appointment as permanent receiver on September 29, 1941, concededly would have vested in petitioner, as permanent receiver, all right, title, and interest of AKM in its claim against ASCAP if the freezing order of June 14, 1941, had not intervened after petitioner's appointment as temporary receiver on June 12, 1941. chanroblesvirtualawlibrary
The vesting order here in question, Vesting Order No. 2097, was executed on September 4, 1943, a date subsequent to the appointment of petitioner as permanent receiver. So far as the parties to this litigation are concerned, by its specific terms, it vested in the Custodian title to the property of AKM only. [Footnote 7] Nothing presented in this case calls our attention to any effort made by the Custodian to vest in himself any title to the claim that might be in the permanent receiver for the benefit of creditors and ultimately for AKM or those entitled to its assets on distribution, [Footnote 8] nor do we adjudicate chanroblesvirtualawlibrary
Order No. 8785 was issued pursuant to the authority granted the President by § 5(b) of the Act of October 6, 1917, as amended, particularly by the Joint Resolution of May 7, 1940. [Footnote 10] The order forbade, § 1(A), "All transfers of credit between any banking institutions within the United States. . . ." Authority during war chanroblesvirtualawlibrary
By the order appointing a permanent receiver, the claim of AKM against ASCAP was directed to be transferred from AKM to the petitioner. From ASCAP's point of view. it was a debt; from AKM's, a claim. The shift of obligation contemplated by the order for a permanent chanroblesvirtualawlibrary
It remains, then, to determine whether ASCAP and petitioner are banking institutions of such a character as to be subject to the prohibition of Executive Order No. 8785, § 1A, against "transfers of credit between any banking institutions." A reading of the President's definition, note 12 supra, shows that they do fall within the words "any person holding credits for others as a direct or incidental part of his business. . . ." It is true that chanroblesvirtualawlibrary
to make ASCAP or the petitioner a banking institution by definition is a departure from the ordinary conception of the meaning of "banking institution." Petitioner says to so construe the definition is "utter fantasy." The definition, however, as we have pointed out, has had congressional ratification. Furthermore, the obvious intention of Congress to allow flexibility to the term "banking institution" by leaving its definition to the President sheds light on its purpose. The phrase "banking institution" used and defined in the Bank Holiday Proclamation of March 6, 1933, 48 Stat. 1689, 1690, was adopted by the Emergency Banking Relief Act of March 9, 1933, 48 Stat. 1, with a delegation to the President of the power of definition. Evidently the delegation was to permit him to bring atypical forms of financial institutions within the reach of the emergency act. The Act of March 9 was grafted on to the Trading with the Enemy Act of 1917, and, when that Act was again extended to meet the foreign assets problem, the President's wide power to define banking institution was a ready instrument to cope with the myriad circumstances arising in the control of shifts of foreign assets. The power in peace and in war must be given generous scope to accomplish its purpose. Through the Trading with the Enemy Act, in its various forms, the nation sought to deprive enemies, actual or potential, of the opportunity to secure advantages to themselves or to perpetrate wrongs against the United States or its citizens through the use of assets that happened to be in this country. [Footnote 14] To do so has necessitated some inconvenience to our citizens and others who, as here, are not involved in any actions adverse to the nation's interest. That fact, however, cannot lead chanroblesvirtualawlibrary
It is petitioner's contention that a mere freezing order does not prohibit a subsequent judicial order transferring title to blocked assets covered by the previous freezing order. We will deal subsequently in this opinion with the question of whether the title to the claim passed to the temporary receiver, under New York law, on his appointment. At this point, we assume this did not happen, and examine only the question of the effect of a freezing order on the subsequent judicial order. Petitioner's argument is that such a construction would immobilize frozen property until it suits the Custodian's convenience chanroblesvirtualawlibrary
It is true that state litigation between local claimants and foreign owners or those in possession of blocked or frozen assets could proceed to a determination of rights between the claimant and the foreign national without the blocked property passing into hands that might use it to the detriment of the welfare of this nation, so long as payment could not be made without a license. Nothing in the Trading with the Enemy Act or regulations specifically forbids eo nomine litigation in state courts. The plan for prohibition of unlicensed transactions by foreign nationals comprehends blocking of transfers of credits and vesting of local assets of such nationals under the Trading with the Enemy Act and regulations thereunder. If transactions are blocked, vesting may or may not follow. When the Custodian vests blocked property, title passes to the Custodian and his authority to vest chanroblesvirtualawlibrary
We assume that the Court of Appeals of New York held, in Singer v. Yokohama Specie Bank, that title to blocked assets could pass without license from a statutory receiver to a creditor. [Footnote 18] As the Trading with the Enemy Act is federal legislation founded on federal constitutional provisions, however, the United States has authority to make all laws necessary and proper for carrying the power into execution. The power to enact carries with it final authority to declare the meaning of the legislation. Prudence Realization Corp. v. Geist, 316 U. S. 89, 316 U. S. 95. Federal chanroblesvirtualawlibrary
Petitioner contends also that the administrative interpretation of the Executive Order of June 14, 1941, has been to permit litigation as to rights in the frozen assets. That is borne out by General Ruling No. 12 of April 21, 1942, 7 F.R. 2991, promulgated after petitioner had begun his suit against ASCAP and referring to Executive Order No. 8389, as amended June 14, 1941. The applicable section is set out in the margin. [Footnote 19] It is to be observed, however, that the proviso of § (d) limits the rights a litigant may obtain to such right as the owner of blocked property could confer by voluntary act. General Ruling No. 12, as it came after the suit by the receiver against ASCAP was started and after the order appointing petitioner as permanent receiver, is not treated by us as chanroblesvirtualawlibrary
The precise issue of state law involved, i.e., whether the temporary receiver under § 977-b of the New York Civil Practice Act is vested with title by virtue of his appointment, is one which has not been decided by the New York courts. Both the District Court and the Court of Appeals faced this question and answered it in the negative. In dealing with issues of state law that enter into judgments of federal courts, we are hesitant to overrule decisions by federal courts skilled in the law of particular states unless their conclusions are shown chanroblesvirtualawlibrary
Petitioner contends here for the first time that a vesting of title in the temporary receiver is an essential prerequisite to the exercise of jurisdiction in rem over the assets within the state of a nonresident association which is served by publication. The contention is that an affirmance of the court below on the issue of state law will render proceedings under § 977-b subject to an attack on constitutional grounds under the doctrine of Pennoyer v. Neff, 95 U. S. 714. In our opinion, the argument is without merit. Pennoyer v. Neff merely holds that a personal judgment cannot be obtained against a nonresident on service by publication. It recognizes at p. 95 U. S. 733 that, for an in rem action, it is sufficient that the property be within the state, subject to the control of the Court, and that there be some form of service which is reasonably calculated to give notice to parties whose interests may be affected by the judgment. Cf. Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463. The first requirement can be met in other ways than seizure of title, e.g., by an injunction against transfer of the property, Pennington v. Fourth National Bank, 243 U. S. 269; by an attachment, Herbert v. Bicknell, 233 U. S. 70; or by personal service on the party holding the property within the state, Security Savings Bank v. California, 263 U. S. 282. We have no doubt that, where property is in a state and comes under the control of a court, as here by appointment of the temporary receiver, it is fair to permit substituted service. 321 U. S. 240, et seq.; see McDonald v. Mabee,@ 243 U. S. 90.
This suggested procedure has been followed in order to avoid a decision on a federal constitutional issue -- Spector Motor Co. v. McLaughlin, 323 U. S. 101; Chicago v. Fielderest Dairies, 316 U. S. 168; Railroad Comm'n v. Pullman Co., 312 U. S. 496; but cf. Public Utilities Comm'n v. United Fuel Gas Co., 317 U. S. 456, 317 U. S. 462-463 -- and where the only issue in the case was one of state law, although federal jurisdiction was based on the Bankruptcy Act. Thompson v. Magnolia Petroleum Co., 309 U. S. 478. We have refused in a diversity of citizenship case to allow the difficulty of an issue of state law to deter us chanroblesvirtualawlibrary
Where a case involves a nonconstitutional federal issue, however, the necessity for deciding which depends upon the decision on an underlying issue of state law, the practice in federal courts has been, when necessary, to decide both issues. This was the course we followed in Markham v. Allen, 326 U. S. 490, 326 U. S. 495-496, a case arising under the Trading with the Enemy Act, where an issue was the construction of a state statute. The state law question in Estate of Spiegel v. Commissioner, supra, was concededly difficult and unsettled; its decision admittedly controlled the existence of a federal question, since a finding that there was no possibility of reverter under Illinois law would have finally determined the issue on which the case was decided. And yet, although a method may have existed for obtaining an adjudication on the issue from the Illinois courts, 335 U. S. 335 U.S. 632, 335 U. S. 673-674, this Court followed the procedure which we adopt here of depending upon the determination of state law by the Court of Appeals. 335 U. S. 335 U.S. 701, 335 U. S. 707-708. In so doing, it followed the decision in Helvering v. Stewart, 317 U. S. 154, 317 U. S. 161, et seq. Erie R. Co. v. Tompkins, 304 U. S. 64, a common law case, is itself a precedent against any general ruling that cases properly in the federal courts that depend upon chanroblesvirtualawlibrary
The cases mentioned above where this Court required submission of single issues, excised from the controversy, to state courts were cases in equity. The discretion of equity as to the terms upon which it would grant its remedies in the light of our rule to avoid an interpretation of the Federal Constitution unless necessary was relied upon to justify a departure from normal procedure. In the Magnolia case, we directed that the trustee file plenary proceedings to determine title in a state court litigation necessarily complete in itself. The complaint here in a single count seeks recovery of the debt from ASCAP and determination of the Custodian's title to the claim vis-a-vis the receiver. Assuming that quieting title to a chattel is an equitable proceeding and that the District Court can, by cutting out the title issue and by refusing to proceed in the controversy unless obeyed, compel the Custodian, by whatever proceedings New York may provide, to litigate only the narrow issue of title in the temporary receiver, there would remain the problem of control of the receiver, by threats of contempt action, to keep him from raising in such proceedings federal issues such as the right to secure title as permanent receiver through state judicial action after the freezing or immobilization order. This federal issue we decided above. Furthermore, as the state court could reasonably require complete adjudication of the controversy, the District Court would perhaps be compelled to stay proceedings in the state court to protect its own jurisdiction. 28 U.S.C. § 2283. Otherwise, in sending a fragment of the litigation to a state court, the federal court might find itself blocked by res judicata, with the result that the entire federal controversy would be ousted from the chanroblesvirtualawlibrary
Third. The petitioner makes the further point that the judgment below determining that he had no right, title or interest to the claim of AKM against ASCAP is beyond the competence of the federal district court because that property was in the hands of the state court by virtue of the receivership. Even if title did not pass, he argues, he, and through him the state court, had possession of the claim by virtue of his appointment as temporary receiver before the promulgation of the freezing order. Reliance is placed on the rulings of cases like Kline v. Burke Construction Co., 260 U. S. 226, 260 U. S. 229, 260 U. S. 231; Princess Lida v. Thompson, 305 U. S. 456, 305 U. S. 466, and Farmers' Loan, Co. v. Lake St. R. Co., 177 U. S. 51, 177 U. S. 61. The rule declared by these cases is that, when one court has taken possession and control of a res, a second court is disabled from exercising a power over that res. The circumstances of this controversy do not present such an interference with state control of a res. We are dealing with a situation more closely resembling determinations of rights to participate in res in the hands of state courts. [Footnote 25] What chanroblesvirtualawlibrary
It is true that, in all but one of these cases, recourse to the State courts also served the purpose of avoiding what might have proved to be unnecessary decision of a constitutional issue. But see Thompson v. Magnolia Petroleum Co., 309 U. S. 478. Even more fundamental, however, was recognition of the importance of maintaining chanroblesvirtualawlibrary
"Few public interests have a higher claim upon the discretion of a federal chancellor than the avoidance of needless friction with state policies, whether the policy relates to the enforcement of the criminal law, Fenner v. Boykin, 271 U. S. 240; Spielman Motor Co. v. Dodge, 295 U. S. 89; or the administration of a specialized scheme for liquidating embarrassed business enterprises, Pennsylvania v. Williams, 294 U. S. 176; or the final authority of a state court to interpret doubtful regulatory laws of the state, Gilchrist v. Interborough Co., 279 U. S. 159; cf. Hawks v. Hamill, 288 U. S. 52, 288 U. S. 61. These cases reflect a doctrine of abstention appropriate to our federal system whereby the federal courts, 'exercising a wise discretion,' restrain their authority because of 'scrupulous regard for the rightful independence of the state governments' and for the smooth working of the federal judiciary. See Cavanaugh v. Looney, 248 U. S. 453, 248 U. S. 457; @ 296 U. S. 73."
"We are of the opinion that the procedure which we followed in the Pullman case should be followed here. Illinois has the final say as to the meaning of the ordinance in question. It also has the final word on the alleged conflict between the ordinance and the state Act. The determination which the District Court, the Circuit Court of Appeals or we might make could not be anything more than a forecast -- a prediction as to the ultimate decision of the Supreme Court of Illinois. . . . As we said in the Pullman case, 'The resources of equity are equal to an adjustment that will avoid the waste of a tentative decision' and any 'needless fiction with state policies.' . . . It is an exercise of a 'sound discretion, which guides the determination of courts of equity.' 312 U. S. 50]. In this case, that discretion calls for a remission of the parties to the state courts, which alone can give a definitive answer to the major questions posed. Plainly they constitute the more appropriate forum for the trial of those issues. See@ 54 Harv.L.Rev. 1379. Considerations of delay, inconvenience, and cost to the parties which have been urged upon us do not call for a different result. For we are here concerned with the much larger issue as to the appropriate relationship between federal and state authorities functioning as a harmonious whole."