White v. Mechanics Securities Corp.
269 U.S. 283 (1925)

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U.S. Supreme Court

White v. Mechanics Securities Corp., 269 U.S. 283 (1925)

White v. Mechanics Securities Corporation

Nos. 423, 424, 425, 430, 431, 809, 810

Argued December 1, 2, 1925

Decided December 14, 1925

269 U.S. 283

APPEALS FROM THE COURT OF APPEALS

OF THE DISTRICT OF COLUMBIA

Syllabus

1. Under Jud.Code § 240, as amended by the Act of Feb. 13, 1925, a case pending undecided in the circuit court of appeals on appeal from a decree of the district court may be brought to this Court by certiorari. P. 299.

Page 269 U. S. 284

2. Under § 9 of the Trading with the Enemy Act, a suit may be maintained by private parties against the Alien Property Custodian and the Treasurer of the United States to collect notes of the late Imperial German Government out of its funds seized by the Custodian without making the present German government a party. P. 269 U. S. 300.

3. The disposition made of such enemy funds by the Trading with the Enemy Act was within the powers of Congress, recognized by our Treaty with Germany ending the war. Id.

4. By the Trading with the Enemy Act, the United States, with respect to funds of an enemy government seized by the Alien Property Custodian, assumed the position of trustee for the benefit of claimants, and renounced its power to assert a claim of its own, except on the same footing and in the same way as others, if at all. P. 269 U. S. 301.

5. Admissions made under oath by the Alien Property Custodian and the Treasurer of the United States in their answer in a suit against them under the Trading with the Enemy Act, to the effect that funds seized by the former and deposited with the latter belonged to the Imperial German Government, are evidence against them in that and in other like cases. P. 269 U. S. 301.

6. Such admissions are conclusive in the case in which made, in the absence of other evidence to the contrary, and their force as evidence does not depend upon the authority of the Custodian to determine the fact admitted. Id.

4 F.2d 619, 624, affirmed.

Of the above entitled causes, Nos. 423, 425 and 431 were appeals from decrees of the Court of Appeals of the

Page 269 U. S. 285

District of Columbia affirming decrees rendered by the Supreme Court of the District in three suits brought under § 9 of the Trading with the Enemy Act sustaining the plaintiffs' claims and directing the Treasurer of the United States to pay the respective amounts found due, with interest; Nos. 424, * and 430 were appeals from decrees of the Court of Appeals of the District dismissing appeals taken by the United States from orders entered by the Supreme Court of the District striking out suggestions filed on behalf of the United States in causes Nos. 425, * and 431; Nos. 809 and 810 were writs of certiorari issued for the purpose of reviewing a decree of the District Court for the Eastern District of Missouri awarding like relief to another claimant under the Act and overruling suggestions filed on behalf of the United States. The certiorari was directed to the Circuit Court of Appeals before which appeals from the last mentioned decree were awaiting argument.

Page 269 U. S. 298

MR. JUSTICE HOLMES delivered the opinion of the Court.

The cases numbered from 423 to 445 inclusive are appeals from decrees of the Court of Appeals of the District

Page 269 U. S. 299

of Columbia. They were decided under an opinion reported in 4 F.2d 619, No. 423 being disposed of per curiam, on the authority of that decision, in 4 F.2d 624. The other two cases, numbers 809 and 810, come here on writs of certiorari to the Circuit Court of Appeals for the Eighth Circuit granted last month by this Court after a decree for the plaintiff in the district court, but before a decision by the circuit court of appeals, in view of the fact that the questions raised had been presented to it by the above mentioned appeals. Judicial Code, § 240, as amended by the Act of February 13, 1925, c. 229, 43 Stat. 936.

The suits are bills in equity brought under the Trading with the Enemy Act of October 6, 1917, c. 106, § 9, 40 Stat. 411, 419, as amended by the Acts of June 5, 1920, c. 241, 41 Stat. 977, and March 4, 1923, c. 285, 42 Stat. 1511. They are all brought upon notes issued by the Imperial German Government and alleged to have been recognized by the present German government. They seek to collect the amounts from funds alleged to have belonged to the Imperial government and now in the hands of the Alien Property Custodian or the Treasurer of the United States under the above-mentioned Act. The defenses relied upon were: (1) that Germany had an interest in the fund, and that the suits required a judgment as to the obligations of a foreign sovereign, and that therefore the courts had no jurisdiction; (2) that there was no competent evidence that any funds in the hands of either of the defendants had belonged to the German government, and (3) that the United States had claims against Germany, arising out of the war, in excess of the funds and was entitled to satisfaction from those funds either in preference to other claims or at least on an equal footing with them. The last point is reinforced by a suggestion on behalf of the United States in all the cases except number 423 that it has filed notice of its claim

Page 269 U. S. 300

under oath, that the claims other than its own would more than exhaust the funds on hand, that it is entitled to priority, and that the Court should dismiss the other bills and proceed to establish the claims of the United States. The Court of Appeals of the District of Columbia, in a careful opinion, overruled the defense, dismissed the suggestion, and affirmed decrees for the plaintiffs. We are of opinion that its decision and that of the district court in Missouri were right.

The elaborate argument that was made against the jurisdiction of courts over actions against foreign governments or to examine the conduct of such governments is beside the mark. In these cases, no judgment is asked against Germany or against property that it is entitled to defend. The funds were seized adversely by the United States in time of war. They are in its hands; it has declared by an Act of Congress what shall be done with them, and that is the end of the matter. There is no question that such a seizure and disposition are within its powers. Brown v. United States, 8 Cranch 110, 12 U. S. 129; Miller v. United States, 11 Wall. 268. The Treaty with Germany has recognized their effect. Article 1, according the rights asserted by the Joint Resolution of July 2, 1921, § 5, recited in the Treaty, 42 Stat., part 2, p. 1939. Turning, then, to the Trading with the Enemy Act, we find in § 9 express authority to any person not an enemy to maintain bills like the present for satisfaction of debts owing from an enemy out of the property that has come from such enemy into the Custodian's hands. By § 2, "enemy" as used in the Act is defined and stated to include the government of any nation with which the United States is at war. The jurisdiction is complete unless the suggestion of an adverse interest on the part of the United States should induce a different result.

We will take up the claim of the United States in this connection, as it is the only point that is entitled to any

Page 269 U. S. 301

serious consideration. The United States seized the property in question from an enemy, and, of course, could do with it what it liked. When it comes into court and seeks to appropriate, it there is a natural notion that it has elected to use its power. Its power could not be denied if the Attorney General were the complete mouthpiece of its will. But, whatever his authority, it is subordinate to Congress, and Congress has more authentically declared the sovereign intent by the statute to which we have referred. The statute gives an absolute right to the suitor who comes within its terms, unqualified by any reservation of a superior lien in case the United States should be a rival creditor. Even assuming, notwithstanding Davis v. Pringle,268 U. S. 315, 268 U. S. 318, that the United States is a "person" given the right to sue by § 9, there is no reservation of priority in the Act, or of a right to intermeddle in the private suit of another, or of any advantage that it might have retained as captor of the fund. Whether from magnanimity or forgetfulness, it has assumed the position of a trustee for the benefit of claimants, and has renounced the power to assert a claim except on the same footing and in the same way as others if at all. There is no doubt an intermittent tendency on the part of governments to be a little less grasping than they have been in the pas,t and it may be that the enactment was intended to exhibit the self-denial that, whether intended or not, was achieved in the Bankruptcy Act with regard to the priority of liens. Davis v. Pringle,268 U. S. 315. There is more reason for it when, as here, the competition is between claims imposed by reason of success in war and those arising out of ordinary business transactions of citizens in time of peace.

With regard to the evidence, the contention on behalf of the United States does not seem to us to need more than a word of reply. The facts admitted by answer under oath of the Custodian and the Treasurer in one of the cases

Page 269 U. S. 302

were that the Custodian determined after investigation that $515,575 were owing to the German government, that he demanded and received them under the Act, paid them to the Treasurer, and holds them in a special trust; that he afterwards collected and paid over to the Treasurer $5,000,000 in a special trust as from an unknown enemy, but later determined that $2,200,000 of the latter sum were held when he received them from the Imperial German Government, and directed the Treasurer to transfer that amount to a special account to the credit of the Imperial German Government, and that this was done. It was pressed at great length that the Custodian had no authority to determine the fact, especially after the money had been transferred to the treasurer. But it is immaterial whether he had that authority or not. He had authority to answer in his own case, and the admission of the two defendants under oath is evidence against them in other cases as it would be conclusive against them in the one where it was filed, in the absence of any evidence to the contrary. Pope v. Allis,115 U. S. 363. No evidence to the contrary was given in any of the cases, nor was any reason shown to doubt the fact.

Decrees affirmed.

MR. JUSTICE STONE took no part in this case.

* By stipulation of counsel, it was agreed that the disposition of the following cases: No. 427, White, Treasurer, et al. v. Borland, Trustee; No. 429, White, Treasurer, et al. v. Stralem et al.; No. 433; White, Treasurer, et al. v. American National Bank of St. Paul; No. 435, White, Treasurer, et al. v. Hilken; No. 437, White, Treasurer, et al. v. Garbat; No. 439, White, Treasurer, et al. v. Thalman; No. 441, White, Treasurer, et al. v. Republic Trading Company; No. 443, White, Treasurer, et al. v. Kaufman, and No. 445, White, Treasurer, et al. v. Hecksher -- should abide the decision announced by the court in No. 425, White, Treasurer, et al. v. Securities Corporation General, and that the disposition of the following cases: No. 426, United States v. Borland, Trustee; No. 428, United States v. Stralem, et al.; No. 432, United States v. American National Bank of St. Paul; No. 434, United States v. Hilken; No. 436, United States v. Garbat; No. 438, United States v. Thalman; No. 440, United States v. Republic Trading Company; No. 442, United States v. Kaufman, and No. 444, United States v. Hecksher -- should abide the decision announced by the court in No. 424, United States v. Securities Corporation General.

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