Opinion ID: 254329
Heading Depth: 1
Heading Rank: 3

Heading: Disposition of License Fees

Text: 18 Each of the 1937-1940 Standstill Agreements contained Clause 4(10), which set forth the manner of disposition of these license fees. All license fees levied by the Reichsbank were to be held for the Reichsbank in a separate special account to be administered at the discretion of the Reichsbank under Clause 4(10), wherein the Reichsbank promised to make these license fee accounts available to creditors as an additional potential source of foreign exchange in their own currency. The Reichsbank agreed to turn over its license fees only upon the occurrence of both of the following events: 19 First, on three different dates during the year, called apportionment dates, the Reichsbank was to make an apportionment of the license fees among the creditors who were adherents to the current Standstill Agreement. No apportionment was made by the Reichsbank of the license fees in question, because there were no adherents and, in fact, no existing Standstill Agreement to which the creditor banks could adhere. The amount which a creditor was to receive was to be computed by the Reichsbank on the basis of the percentage which that creditor's outstanding credits bore to the total amount of credits extended by all the creditor banks on the date of apportionment. If a particular American creditor bank had extended 25% Of the total credits extended by all American banks as of a given date, the Reichsbank would apportion 25% Of the accumulated license fees in the special account in the Trust Company. 20 Second, the money so apportioned could be released to the creditor only if and when the creditor's German debtor actually purchased from the Reichsbank with reichsmarks an amount of foreign exchange (dollars) equivalent to the amount made available to such creditor by the Reichsbank apportionment. The German debtor was to make this purchase or payment when called upon by his foreign creditor in reduction of his indebtedness. The license fee fund was not a bonus to the American creditor bank, but was to be utilized as another means of effecting repayment to the American creditor in dollars rather than reichsmarks. When the German debtor made such purchase or payment, the Reichsbank would then release the fees, held for it by the Trust Company, to the American creditor bank, and that bank would then credit its German debtor accordingly. For example, if a New York bank was an adherent to the Standstill Agreement of 1940, it had a registered credit balance with the Reichsbank. It could transfer a part of this credit balance to a travel mark account, upon which transfer the Reichsbank levied a fee. The bank could then sell travel marks against its travel mark account, collecting from the ultimate user of the travel marks both the cost of the reichsmarks and the transfer fee in American dollars. The bank would keep the dollars from the sale of the reichsmarks and its credit balance in the Reichsbank was reduced accordingly. It paid the amount of the license fee, levied by the Reichsbank, in dollars to Manufacturers under the Standstill Agreement. If and when the Reichsbank made its apportionment, the bank received its proportionate share. If its share was $10,000.00, it would notify its debtor in Germany, and that debtor would then pay the equivalent in reichsmarks to the Reichsbank. Upon receipt of this money from the German debtor, the Reichsbank would then notify Manufacturers to release or pay out of the Reichsbank Standstill Account the sum of $10,000.00 to the New York creditor bank. Upon receipt of same, the bank would credit the account of its German debtor. Thus, the Reichsbank would collect its license fees, and the New York bank would collect its payment from its German debtor in dollars instead of reichsmarks. 21 The Reichsbank kept the reichsmarks to apply 'toward expenses of administration of the travel marks' and 'as a further contribution to the expenses of the Standstill administration,' as provided in the 1940 Standstill Agreement. The reichsmark equivalent of the seized fees or funds was less than the amount of costs (4,000,000 marks) due the Reichsbank for its administration of the travel marks already sold. Had there been an existing contract and adherents thereto, and the necessary apportionment after May 31, 1941, as to the funds in question, the reichsmark equivalent of the seized funds would have been paid to and kept by the Reichsbank as its property to apply to the costs already incurred in connection with the administration of the travel mark accounts under the Standstill Agreement. 22 Each of the Standstill Agreements was negotiated and signed by the German Reichsbank, the German Golddiskontbank, and committees representing foreign creditors. However, the committee representing the American creditors was not a legal entity and no indebtedness was owed to it. Its sole function was to negotiate the agreements and to advise and recommend to constituent banks the actions such banks should take. It did not attempt to bind the individual American creditor banks and had no authority to do so.