Court Opinion

ID: 8903181
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:25:24.701325+00
Date Added: 2024-06-11T17:08:00.001080
License: Public Domain

MOORE, Circuit Judge
(dissenting):
We face a rather unique factual situation. As of July 7, 1963 Carl and Concepcion Stuetzel, as man and wife, were joint owners of their property located in the Bank of Nova Scotia in New York. The next day, July 8th, their property was frozen pursuant to the Trading with the Enemy Act. Thereafter, both were powerless to exercise dominion and control over it. When Carl died intestate on August 24, 1965, Concepcion as the only heir-at-law became entitled to all of the property in the New York bank, but only in theory because the property was frozen as to both.
Concepcion entered the United States as a permanent resident on October 13, 1969. On the basis of this new status and her application for a license unblocking the property in the New York bank, the Secretary of the Treasury released 50% of the funds. Concepcion having died on October 31, 1971, her executors, all United States citizens, now seek her other half. Her niece, Elena Richardson, also a United States citizen, is the beneficiary under her will.
It is clear that under estate law, as Carl’s sole survivor, Concepcion was entitled to his assets on the date of his death. It is equally clear that the assets were solidly frozen on that date. The key question, in my opinion, is: were Carl’s interest in the property and his status as a Cuban national altered by reason of his death? In other words, on August 24, 1965, did Concepcion become the sole owner of the New York-located funds, and did her change of status subsequent thereto act as such a thaw as to entitle her to a release of 100% of the funds? 31 C.F.R. § 515.525(a)(2) (1976) specifically allows:
“Any transfer to any person by intestate succession;”
However, in the same section is a proviso that “no transfer to any person by intestate succession . . . shall be deemed to terminate the interest of the decedent in the property transferred if the decedent was a designated national [as Carl was].” 31 C.F.R. § 515.525(b) (1976). In other words, despite estate laws of succession to the contrary, Carl remained after death the owner of his half — although not in a position to claim it.
An identical situation recently was presented to the court in the Fifth Circuit. Real v. Simon, 510 F.2d 557 (1975). The court, in reversing the denial of a license to a former Cuban national residing in the United States, was influenced in part at least by a House Report indicating that “there is no intent on the part of Congress to require the Treasury to continue blocking funds lawfully claimed by American citizens where there is no Cuban interest in the assets.” Id. at 564. Assuming-this as Congressional policy, the Real court said:
“With this perspective on the policies behind the blocking of Cuban assets, we return to the issue whether there is a sufficient interest on the part of the Cuban government or a Cuban national which would justify or authorize the application of the Trading with the Enemy Act and the Cuban Assets Control Regu- ' lations to the facts of this case. The Government claims there is such an interest, because the deceased, Urbano Real, retains an interest in his estate. But the real issue is whether the Government can validly, within the scope of the Trading with the Enemy Act, determine that a deceased person retains an interest in his estate. We hold that such a determination by the United States is arbitrary and without basis in either the language or the purpose of the Trading with the Enemy Act.”
* * * * * *
*507“The Government recognizes that a Cuban interest must pertain to the assets in order to justify blocking, and so by administrative fiat has decreed that deceased persons have an interest in their assets, thus justifying the blocking of their estates. The concept that a dead person is a ‘foreign national’ in possession of property within the meaning of the Trading with the Enemy Act does not have the support of logic. Under the facts presented by this case, such a determination does not have the support of the congressional policies behind the Act. We conclude, therefore, that, under the facts and circumstances, the Government’s determination that the deceased, Urbano Real, retains an interest in his estate which justifies withholding the assets from American citizens and residents has no basis in law and must be set aside and annulled.” 510 F.2d at 564-565.
The majority rejects the Real decision but I find it most persuasive. Real rejects the stilted argument that an agency’s regulations are sacrosanct, and that Carl, though in his grave, hovers as a Cuban national spirit over the vaults of the Bank of Nova Scotia. The Treasury thus, in effect, by agency fiat, has rewritten the laws of succession to read that no American citizen or anyone similarly situated is entitled to receive any inheritance from the estate of a Cuban national. This, I would hold, is beyond the power of the agency and a deprivation of property without due process. The district court, by a hypothesis not applicable to this case, assumed a sale by a Cuban national [by Carl] to someone in America, who would then seek a license, thus frustrating the freeze. But this is not such a situation. During his lifetime, Carl had property which was encumbered by the freeze order, but upon his death the property was no longer his. Death and the applicable estate laws were the agents transferring it to Concepcion. To say that these funds remain Carl’s and may be retained (or in actuality confiscated) by the Government for the purpose of paying other American claimants is to hold that Concepcion and Mrs. Richardson must be deprived of their property to aid others. Whatever Carl might have tried to do with his property during his lifetime is irrelevant. We are not dealing with a situation in which the funds might trickle back to the Cuban government. The result of the majority opinion is merely to deprive an American citizen of property rightfully hers by recognized laws of descent. For these reasons I would reverse and remand.