Case Name: Z. & F. ASSETS REALIZATION CORP. v. HULL, SECRETARY OF STATE, et al.
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1941-01-06
Citations: 311 U.S. 470
Docket Number: No. 381
Parties: Z. & F. ASSETS REALIZATION CORP. v. HULL, SECRETARY OF STATE, et al.
Judges: Mr. Justice Roberts took'no part in the consideration or decision of this case.
Reporter: United States Reports
Volume: 311
Pages: 470–493

Head Matter:
Z. & F. ASSETS REALIZATION CORP. v. HULL, SECRETARY OF STATE, et al.
No. 381.
Argued December 9, 10, 1940.
Decided January 6, 1941.
Mr. Joseph M. Proskauer, with whom Messrs. Frank Roberson, John F. Condon, Jr., and John Bassett Moore were on the brief, for Z. & F. Assets Realization Corp., petitioner in No. 381.
Mr. Fred K. Nielsen for. American-Hawaiian Steamship Company, petitioner in No. 382.
Solicitor General Biddle, with whom Assistant Attorney General' Shea, and Messrs. Melvin H. Siegel and Francis J. McNamara were on the brief, for Cordell Hull, Secretary of State, and Henry Morgenthau, Secretary of the Treasury, respondents.
Mr. William D. Mitchell, with whom Messrs. Frederic R. Coudert, Lester H. Woolsey,, Amos Peaslee, and John J. McCloy' were on the brief, for Lehigh Valley Railroad Company, intervener-respondent.
Together with No. 382, American-Hawaiian Steamship Co. v. Hull, Secretary of State, et al., also on writ of certiorari, post, p. 632, to,, the Court of Appeals for the District of Columbia.

Opinion:
Mr. Chief Justice Hughes
delivered the opinion of the Court.
Petitioners, Z. & F. Assets Realization Corporation and American-Hawaiian Steamship Company, are holders of awards of the Mixed Claims Commission, United States and Germany. ' These awards have been certified by the Secretary of State and are thus payable out of the fund established by the Settlement of War Claims Act of 1928. Petitioners seek a judgment declaring that later awards purporting to be made by the Mixed Claims Commission in favor of the Lehigh Valley Railroad Company, the Agency of Canadian Car and Foundry Company, Limited, the Bethlehem Steel Company and others, aré null and void, and restraining the certification of these awards by the Secretary of State and their payment by the Secretary of the Treasury. The Lehigh Valley Railroad Company intervened as a defendant.
Defendants, the Secretary of State and the Secretary of the Treasury, moved to dismiss petitioners' bills for want of jurisdiction and for failure to state a claim upon which relief could be granted. The intervener defendant filed an answer and moved for summary judgment. The District Court dismissed the bills (31 F. Supp. 371) and its judgment was affirmed by the Court of Appeals. 114 F. 2d 464. We granted certiorari, post, p. 632.
The Mixed Claims Commission, United States and Germany, was set up pursuant to an agreement of August 10, 1922, to determine the amount to be paid by Germany in satisfaction of her financial obligations under the Treaty of Berlin of August 25, 1921. The Commission consisted of three members, one appointed by the United States, another by Germany, and an Umpire se lected by the two .Governments. The Umpire was "to decide upon any cases concerning which the commissioners may disagree, or upon any points' of difference that may arise in the course of their proceedings." It was further provided that should the Umpire or any of the Commissioners die or retire, or be unable for any reason to discharge his functions, the vacancy should be filled in the same manner as the original appointment. It was agreed that the decisions of the Commission and those of the Umpire should be accepted as final and binding upon the two Governments.
The Settlemént of War Claims Act of 1928 created in the Treasury a "German Special Deposit Account." Section 2 provided that the Secretary of State should certify from time to time to the Secretary of the Treasury the awards of the Mixed Claims Commission, and the Secretary of the Treasury was directed to pay out of the amounts placed in the account the principal of each award so certified, with interest as stated.
The claims covered by the awards attacked by petitioners arose out of the destruction of property caused by explosions at Black Tom and Kingsland, New Jersey, in 1916 and 1917. These claims were dismissed by the Commission in 1930, and petitions for rehearing were denied in 1931 and 1932. In the following year the American agent sought to reopen the cases upon the ground that in its decision of 1930 the Commission had been misled by "fraudulent, incomplete, collusive and false evidence" on the part of witnesses for Germany. The German Government denied the power of the Commission to reopen and the Umpire, Mr. Justice Roberts, finding that there was a disagreement upon the question between the Commissioners, decided, in December, 1933, that the Commission was competent to determine its own jurisdiction by the interpretation of the Agreement creating it. The Umpire ^further decided that, while the Com mission was without power to reopen, a case merely for the presentation of after-discovered evidence, the Commission was still sitting as a court and did have power to consider the charge that it had been misled by fraud and collusion, and for that purpose to reopen the cages in order that it might consider the further evidence tendered by the American agent, and that offered in reply on behalf of Germany, and either confirm the decisions theretofore made or alter them as justice and right might. demand-
Thereafter, the German agent filedvan answer denying the .^allegations of fraud and evidence was presented. After argument, the Commission, in June,. 193b, rendered a decision, the German Commissioner concurring, by which the ruling 'of 1932 denying a rehearing was set aside; and the question whether there should be a rehearing was reserved for a hearing which should be separate and distinct from an argument on the merits unless Germany should consent to a different course.
Efforts to obtain a settlement of the claims were unsuccessful and, after much additional evidence had been introduced, the Commission,- in January, 1939, heard extended arguments , by the agents of the respective Governments. The American agent had requested that the Commission should not only set aside the original decision of. 1930 but should also proceed -'to a final decision on the merits, as-it was contended that the evidence presented to support the application for rehearing also established the responsibility of Germany for the destruction of the property as' claimed. It also appears' that the German .Commissioner insisted that, before the motion for rehearing should be granted, the Commission should examine- the proofs tendered by the United States to determine whether the claims had been made good. This, as stated by the Umpire, was upon the ground: that even though the Commission had been misled by false and fraudulent testimony, that would be immaterial if, upon an independent consideration, the United States in its own cases had failed to sustain its burden of proof. The American Commissioner and the Umpire thereupon had agreed to go beyond what they thought the necessary function of the Commission in the circumstances and had proceeded to canvass with the German Commissioner the cases as made by the United-States.
During the course of that investigation, on March 1, 1939, the German Commissioner withdrew from the Commission. At the time of his withdrawal, the two Commissioners, according to the contention of the American Commissioner and as found by the Umpire, were in disagreement upon the points in issue. On receiving notice of a meeting of the Commission to be held on June 15, 1939, the German agent said that he would not appear and the German Embassy advised the Secretary of State that, since the withdrawal of the German Commissioner, the Commission was incompetent to 'make decisions.
At the meeting held pursuant to the notice, the American Commissioner filed a certificate of disagreement with an opinion sustaining the jurisdiction of the Commission. The Umpire thereupon decided that there did exist a disagreement between the two Commissioners, — á disagreement of which he was personally cognizant and which was also shown by the certificate and opinion of the American Commissioner; that the jurisdiction of the Commission was not ousted by the withdrawal' of the German Commissioner "after submission by the parties, and after the tribunal, having taken the cases under advisement, pursuant to its rules, was engaged in the' task of deciding the issues^ presented"; that the United States "had proved its allegation that fraud in the evidence presented by Germany misled the Commission and affected its decision in favor of Germany"; and that upon the record as it then stood the cases for the claims were made ous.
Thereupon, the American agent moved for awards in favor of the United States on behalf of the sabotage cl'aimanté. An order was entered setting aside the decision of 1930, and determining that the liability of Germany had .been established and that, as it appeared that Germany did not intena to take part in further proceedings of the Commission, awards should be made upon the Commission's findings and opinion.
On October 3, 1939, the German Charge d'Affaires ad-, dressed an elaborate communication to the Secretary of State making a detailed statement supplementary to a note of. July 11, 1939, with respect to the allegedj-illegal acts of the Umpire, -and protesting against all further measures by the Umpire, the American Commissioner and the American agént, which were aimed at securing awards in the Black Tom and Kingsland cases. The Secretary of State replied, on October 18, 1939, that it would be highly inappropriate for thé Department to endeavor to determine the course of the proceedings of the Commission; that thé Secretary had entire confidence in the ability and integrity of the Umpire and the Commissioner appointed by the United States despite the severe' and, as he believed, "entirely unwarranted criticisms," and that he was constrained to invite attention to the fact "that the remarkable action of the Commissioner appointed by Germany was apparently designed to frustrate or postpone indefinitely the work of the'Commission at a time when, after years of labor on the particúlar cases involved, it was expected- that its functions would be brought to a conclusion.-'
Notice was given of a meeting of the Commission to be held on October 30, 1939, which the German Commissioner did not attend, and awards were then made in fayor of the claimants. The Umpire stated that he had found the awards to be accurately and properly calculated and had joined the American Commissioner in signing, them.
The awards were certified by the Secretary of State to the Secretary of the Treasury on October 31, 1939, pursuant to the Settlement of War Claims Act of. 1928.. On the same day, this suit was brought, the complaint being filed before, and process being served on the Secretary of State after, his certification of the awards.
The Court of Appeals has held that the question with respect to the validity of- the awards in favor of the sabotage claimants is political in its nature and that the District Court was without jurisdiction to entertain it.
There are, however, certain preliminary questions which are indubitably appropriate/for judicial consideration, and we think that the proper answer to these-questions is determinative of the whole case.
The first question is whether petitioners have standing to bring this suit. Except for the situation created by the Settlement of War Claims Act of 1928, they would have no such standing. They could not be heard to complain of action upon claims other than their own. And Congress, with or without awards, could provide for the payment of the claims in question without let or hindrance by petitioners. But petitioners contend that the Settlement of War Claims Act created a fund in the Treasury, known as the "German Special Deposit Account"; that petitioners with othér earlier award-holders are entitled by the Act to payment out of that fund; that the fund is insufficient to pay petitioners' claims in full if payments are permitted to be made.to the sabotage claimants; and hence that petitioners have standing to complain of an unlawful depletion of the fund to their injury by means of such payments.
We-think that in these circumstances as shown by the bills petitioners are entitled to sue to protect such inter ests as they may have under the Act. Compare Houston v. Ormes, 252 U. S. 469; Mellon v. Orinoco Iron Co., 266 U. S. 121. But as their standing rests solely upon the provisions of the Act, they may not escape its terms or succeed in a challenge to payments for which the Act is found to provide.
The next question is with respect to the effect that should be given under the terms of the statute to the action of the Secretary of State in certifying the awards. Congress has authorized and.required the Secretary of the Treasury to pay out of the special account the awards which the Secretary of State has certified. There is no question that the Secretary of State has given his certificate in this instance.- It is. adequate in form and substance under the terms of the Act.
Petitioners contend that the certification is a mere ministerial act. " It is said to mean merely that the award is a genuine document, in the same sense that a notary public authenticates the signature of axgrantor in a deed. We think that this construction of the Act is inadmissible. The notarial conception of the function of the Secretary of State in this matter ignores his role in the conduct of foreign affairs as the right hand of the Executive and in particular his relation to proceedings for the determination of claims of the United States against foreign governments. There can be no doubt of the constitutional authority of Congress to lodge with the Secretary of State the authority to consider ai|d pass upon the regularity and validity of the awards made by the Mixed Claims Commission for the statutory purpose of qualifying them for payment out of the account in the Treasury. Congress had complete power to decide what payments should be made from that account and to attach such conditions as it saw fit. Congress not only had this power but it was natural and appropriate that Congress should entrust to the Secretary of State the decision of questions that might arise with respect to the propriety of the payment of awards made by the Commission and to require his affirmative action through certification before payment. The Mixed Claims Commission had been created by an executive agreement. The claims to be considered by the Commission were only those sporn sored and presented by the United States against Germany. They were presented as claims of the United States, the national claimants themselves having no standing save as they were represented by the United States. See Frelinghuysen v. Key, 110 U. S. 63, 75, 76; Boynton v. Blaine, 139 U. S. 306, 323, 325; Williams v. Heard, 140 U. S. 529, 537, 538. The claims so sponsored were presented and handled by . an American agent appointed by the President. It was obvious, as the present contentions abundantly illustrate, that the proceedings before such a commission might easily give rise to questions between the governments concerned and might involve diplomatic representations or protests with which it would be. the duty of the Secretary of State to deal. Whatever might be said of such representations or protests, or the occasion for them, or with respect to the existence of any international right or obligation arising from the agreement setting up the Commission, Congress could, and naturally would, require the. views of the Secretary of State-before appropriating money for the payment of awards, and, in creating a special fund for that purpose, /would look to the Secretary of State for the exercise of his appropriate authority on behalf of the Executive and thus for his judgment upon the' question whether the proceedings had been such as duly to qualify the awards for payment. See Frelinghuysen v. Key, supra; Boynton v. Blaine, supra. We find.nothing in the Settlement of War Claims At which points to a different purpose.
It is suggested that the Secretary of State construed his action in certifying as merely ministerial because he acted at once on the presentation of the awards. But the argument overlooks' the fact that the Secretary of State had long, been cognizant Qf the questions that had arisen in relation to the Commission's authority to grant a rehearing and make the awards. As early as October, 1933, the German Government had notified the Secretary of State that it regarded the Commission as without Authority to grant a rehearing on the sabotage claims. The Secretary of State had informed the American agent that the question of jurisdiction was one properly to be decided by the Commission itself and he directed the American agent to bring the matter to the attention of the American Commissioner,, or the full Commission, for the purpose of obtaining the decision of the Umpire on that disputed point. In March,- 1939, the American Commissioner informed the Secretary of State of the withdrawal of the German Commissioner and reviewed the circumstances. In June, 1939, petitioners themselves formally communicated to the Secretary of State their objections to the proceedings. In the same month the German Embassy advised the Secretary of State that its ' Government regarded the Commission as incompetent to make decisions because of the German Commissioner's" withdrawal. This was followed by a further protest delivered to the Secretary of State in July and a detailed statement by the German Government of its grounds in its communication of October 3, 1939, to which the Secretary -of State replied on October 18, 1939, in the note from which we have quoted. Thus, when the actual awards were presented the Secretary of State had before him these diplomatic representations and was fully conversant with all the proceedings of the Commission, with the action of the German Commissioner and the attitude of his Government, and with the contentions' of peti tioners. We find no basis for concluding that the Secretary of State in certifying the awards did not act after due deliberation or fail to express his considerate judgment, as we think the statute contemplated.
We are of the opinion that for the purpose of payment under the statute the certificate of the Secretary df' State must be deemed to be conclusive. We do . not need to consider whether Congress could commit to the judiciary the determination of the validity of the challenged, claims (See La Abra Silver Mining Co. v. United States, 175 U. S. 423), for Congress has not done so but has made payment out of the fund depend upon the Secretary's certificate. The question in this relation is simply one .of the intent of Congress as disclosed by the Act. Congress has expressly directed payments to be made from the special account of the awards "so certified." The literal and natural import of this provision is that finality is to be accorded to the certificate of the Secretary of State and we.perceive no ground for limiting the terms of the Act by construction. On the contrary, the nature of the questions presented and their relation.to the conduct of foreign affairs within the province of the Secretary of State support the conclusion that the statute should have effect according to its explicit terms.
In view of, the statutory provisions governing this case,we have no occasion to consider the circumstances in which an international agreement, of action thereunder, may-be deemed to vest rights in private persons, or the. scope of such rights in particular cases: See Comegys v. Vasse, 1 Pet. 193; Mellon v. Orinoco Iron Co., supra. Petitioners must claim solely by virtue of their interest, in ' the fund created by the statute and under its terms they are not entitled to complain of payments out. of that'., fund of awards which the Secretary-of State has certified
The judgment of the Court of Appeals is
Affirmed.
[Over.]
Mr. Justice Roberts took'no part in the consideration or decision of this case.
45 Stat. 254.
42 Stat. 2200.
42 Stat. 1939.
45 Stat. 254.