Court Opinion

ID: 6830092
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:50:38.648521+00
Date Added: 2024-06-11T16:04:32.208062
License: Public Domain

HOUGH, Circuit
Judge (after stating the facts as above). This bill presents two questions : (1) Can appellant, by his plea of duress, be relieved of the receipt and release executed by him? And (2) if such relief be granted, could he recover any more than he has received in this litigation?
Some other matters have been discussed arising out of an inquiry whether the decree of July, 3.921, was final or interlocutory. To this question we shall pay no attention. It is a mere matter of detail, and the vitals of the ease are plain enough.
Of the two questions above stated, we prefer to consider the second; for, however interesting the question of duress may be, considering the trend of modem decisions, a judgment here favorable to appellant would leave the second question undetermined, while the second question; if decided adversely to appellant, disposes so far as we are concerned of the whole matter.
Appellant’s proposition is that the Custodian became a trustee for Henkels in respect of this stock and its proceeds. It is now adjudicated that there was never any right to seize the stock, wherefore the Custodian must respond, Lice any other trustee who has made profit out of the fund for which he is held ultimately responsible.
It is undoubtedly true that in a certain sense the Custodian is a trustee. He is called by that name in the twelfth section of the act (40 Stat. 423), and he has called attention to his trusteeship for the public at the bar of this and many other courts.
But if appellant’s theory of attack be considered closely, it is clear that the trusteeship that he invokes as against the Custodian is one arising ex maleficio., It is a trusteeship created by a wrong; and that wrong *990was a seizure of property belonging to an American citizen and unaffected by enemy ownership.
The niceties of the law of torts have not been and cannot be strictly regarded in statutes passed under the stress of war and designed to meet war conditions.
, As the court said in Stoehr v. Wallace, 255 U. S. 239, at page 245, 41 S. Ct. 293, 296 (65 L. Ed. 604): “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 ease of mistake, is not debatable.” And what shall be “adequate provision” is for the Congress to declare.
That mistakes would be made under this act was undoubtedly contemplated, and the act itself declared in the amendment of November 4,1918 (40 Stat. 1020 [Comp. St. Ann. Supp. 1919, § 3115y2d]): “That the sole relief and remedy of any person having any claim to any money or other property heretofore or hereafter conveyed * * * to the Alien Property Custodian * * * or seized by him shall be that provided by the terms of this act, and in the event of sale or other disposition of such property * * * shall be limited to and enforced against the net proceeds received therefrom and held by the Alien Property. Custodian or by the Treasurer of the United States.” This means in substance that persons in the position of Henkels have no remedy except under section 9 of the act, and under that section the amendment just referred to limited recovery to the “net proceeds” received from the property involved.
Again, it is to be observed that appellant’s contention and any holding of the Custodian to the liabilities of a trustee ex maleficio is opposed certainly to the spirit, and we think to the letter of subdivision (e) of section 7 of the statute (40 Stat. 418 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%d]), declaring that “no-person shall be held liable in any court for or in respect to anything done or omitted in pursuance of any order, rule, or regulation made by the President under the authority of this act.” And the actions of the Custodian even when he makes mistakes are and always were pursuant to such presidential rule.
Again, in whatever trusteeship the Custodian functions, the statute (section 12, 40 Stat. 423) confines his office to “property other than money.” As to money he is compelled to pay that forthwith into the treasury of the United States, and the Congress in so many words has refused to him in respect of money the position of trustee.
Tested by ordinary legal formula, the exact standing of the Custodian is difficult of definition when the various descriptions of his duties, privileges and responsibilities prescribed by statute are considered together. But this much is we think clear: That it can never be said that by reason of conduct such as occurred in this casé of Henkels the Custodian became a trustee for Henkels in the same sense that he would have become a trustee under a deed inter partes, or by reason of an actionable wrong.
There is a technical reason why under this decree Henkels can never succeed in holding the Custodian to the position of a trustee: It is that _ the decree for money and for an accounting for money runs against' the Treasurer of the United States only.
But this objection goes deeper than a mere technicality; it is a recognition in and by the decree of the fact that when the Custodian sold Henkels’ stock and paid the proceeds into the treasury, he lost control of the money; it became like any other money in the treasury of the United States and there subject to congressional action in respecti thereof.
The only reason why the decree could in any way operate against the- Treasurer of the United States or the Secretary of the Treasury is section 9 of the statute, the authority of the court below to affect the Treasurer with the decree depended upon that statute alone.
Remembering the admission that no dividends ever accrued upon this stock, the sole question now becomes this: Can the United States be compelled to pay to Henkels whatever gain it has made out of handling Henkels’ money while it was in the treasury?
We pay no attention to the difficulty of allocating any special gain to this special fund; let it be supposed that that could be done; the question remains whether, under existing law, the United States is under compulsion to admit Henkels to a share of that property.
Thus the matter becomes the old one of allowing interest against the United States.
It is sought to justify such recovery here by analogy to cases of condemnation of lands or other property for private use. The theory of all such well-considered decisions is that since no American government can take private property for public use without making just compensation—and just compensation includes reasonable interest *991for delay in payment of amounts awarded— therefore interest should be allowed. The matter is summarily put by Brandeis, J., in United States v. North American, etc., Co., 253 U. S. 330, at page 334, 40 S. Ct. 518, 64 L. Ed. 935.
But entirely apart from the argument above stated and based upon the language of the statute, there is no resemblance between the war measure of seizing property “believed to be enemy owned” and condemning or otherwise appropriating private property for a public use. We think the difference too obvious to require further discussion.
The general proposition affecting this litigation is accurately stated in the syllabus of United States v. North Carolina, 136 U. S. 211, 10 S. Ct. 920, 34 L. Ed. 336, viz.: That no sovereign is “liable to pay interest on its debts, unless its consent to do so has been manifested by an act of its Legislature, or by a lawful contract of its executive officers.” And the matter was again put in most general terms as to all sovereigns in United States v. New York, 160 U. S. 598, at page 619, 16 S. Ct. 402, 40 L. Ed. 551.
So far as citations gain importance by similarity of facts, we remain of opinion, despite strenuous argument contra, that the decision in United States ex rel. Angarica De La Rua v. Bayard, 127 U. S. 251, 8 S. Ct. 1156, 32 L. Ed. 159, presents an almost perfect analogy to the present litigation. There, as here, the United States treasury lawfully received certain moneys, which moneys were lawfully due to one who was apparently a citizen of the United States.
There the reason for withholding was a doubt as to what would be the net proceeds after deduction of expenses. Hero the reason for withholding- was a doubt as to legal ownership; but in both cases the United States earned money by investing the withheld funds in its own securities. The Supreme Court, by applying the well-known doctrine above cited refused to permit Angariea to collect the profit made by the United States.
The law has not changed, and we would he unable to award to Henkels any portion of the money that the United States has acquired by investing his money.
We must and do hold that under the circumstances now revealed, so much of the decree of July, 1921, as required the Treasurer of the United States to pay anything more than the “net proceeds” which Henkels has already received was unlawful. He never could have gotten anything, even if there had never been a receipt and release executed.
Consequently the order appealed from is affirmed. No costs.