Honda v. Clark
386 U.S. 484 (1967)

Annotate this Case

U.S. Supreme Court

Honda v. Clark, 386 U.S. 484 (1967)

Honda v. Clark

No. 164

Argued February 14, 1967

Decided April 10, 1967

386 U.S. 484




This suit was brought by 4,100 citizens or residents of the United States who were depositors, holding "yen certificates," in the Yokohama Specie Bank (YSB). In 1943, the Alien Property Custodian had vested as enemy property the assets of YSB located in the United States. In 1946, Congress provided in § 34 of the Trading with the Enemy Act for the payment from the vested assets to American citizen or resident creditors of persons whose property was vested. After some 7,500 yen certificate holders filed claims for payment, the Attorney General (successor to the Custodian) determined that the debts were payable in yen and that the proper conversion rate was the postwar rate of 361.55 yen to the dollar, rather than the prewar 4.3 rate. In 1958, all YSB claimants were advised of this decision, were told to submit their original certificates within 45 days, were informed that a full schedule of claimants would be made pursuant to § 34(f) of the Act, after which aggrieved claimants could file suit in the District Court, and that they could at once redeem their certificates at the postwar rate from YSB's successor in Japan. Petitioners took no action, and their claims were disallowed as abandoned. In 1961, a final schedule under § 34(f), which did not include petitioners' claims, was prepared and sent to all claimants, including petitioners, who were advised that, under § 34(f), they could, if aggrieved, file suit in the District Court within 60 days of the mailing of the schedule. Within 60 days, a suit (Abe v. Kennedy) was brought on behalf of those claimants listed on the schedule to challenge the rate of exchange ruling. This suit was held in abeyance pending determination of the same issue in a suit involving yen certificates of another bank. The lower courts upheld the postwar rate in the latter case (Aratani v. Kennedy), and, after this Court granted certiorari, the Attorney General entered into a compromise settlement in both cases, in Abe at approximately the prewar rate without interest. Upon the final disposition of the Abe case, and before the dismissal of certiorari in Aratani, petitioners filed this suit, asking for similar treatment. The Attorney General denied their claims because they were not included in the class represented in the Abe suit and they had not brought suit within the 60-day

Page 386 U. S. 485


Held: Since the statutory scheme of § 34, which as modeled on the Bankruptcy Act, was intended to provide a fair and equitable distribution of vested enemy assets to American residents or citizens, the limitations period was tolled during the pendency of the Abe litigation, and petitioners' right to bring their suit was not foreclosed. Pp. 386 U. S. 494-502.

(a) The Bankruptcy Act presents a compelling analogy in § 5n, which provides that

"claims not filed within the time hereinabove prescribed may nevertheless be filed within such time a the court may fix or for cause shown extend, and, if duly proved, shall be allowed against an surplus remaining in such case."

See also Nassau Works v. Brightwood Co.,265 U. S. 269. Pp. 386 U. S. 496-498.

(b) The 60-day limitation serves only as a means of expediting the distribution of vested assets to creditors, and here there are no other creditors, a surplus remains in the fund, and the Attorney General is a mere stakeholder. P. 386 U. S. 498.

(c) Since petitioners filed their suit immediately upon settlement of the Abe case, they did not interfere with the speed or manner in which this litigation was conducted. Pp. 386 U. S. 499-500.

(d) In this case, where the public treasury is not directly affected, it is consistent with the overall congressional purpose to apply a traditional equitable tolling principle, aptly suited to the facts of this case and nowhere eschewed by Congress, to preserve petitioners' cause of action. Pp. 386 U. S. 500-502.

123 U.S.App.D.C. 12, 356 F.2d 351, reversed and remanded.

MR. JUSTICE HARLAN delivered the opinion of the Court. Petitioners are 4,100 United States citizens or residents of Japanese descent seeking to recover funds vested under

Page 386 U. S. 486

the Trading with the Enemy Act, 40 Stat. 411, 50 U.S.C.App. § 1 et seq. The District Court dismissed their suit against the Attorney General [Footnote 1] as barred by limitations, and the Court of Appeals affirmed by a divided vote. 123 U.S.App.D.C. 12, 356 F.2d 351. We granted certiorari because of the importance and unusual character of the questions involved, affecting the proper application of this wartime statute. 385 U.S. 917.

Both as the case was treated by the lower courts, and, as it was largely argued here, the limitations issue has been thought to turn on whether the Government is estopped from asserting the 60-day time bar provided for actions of this kind by § 34(f) of the Trading with the Enemy Act. We conclude, however, that "estoppel" is not the controlling issue, but that, for reasons discussed in this opinion, the period of limitations was tolled, requiring reversal of the judgment below.


Upon the outbreak of hostilities with Japan, the United States, on December 7, 1941, acting under the Trading with the Enemy Act, seized the American assets of businesses owned by Japanese nationals, among such property being the assets of the Yokohama Specie Bank, Ltd. The assets of the bank were liquidated, and, in 1943, were vested in the Alien Property Custodian; see Paramount Pictures, Inc. v. Sparling, 93 Cal.App.2d 768, 770-771, 209 P.2d 968, 969-970. Petitioners were among the approximately 7,500 depositors of the bank

Page 386 U. S. 487

holding "yen certificates," [Footnote 2] who submitted timely claims, many being filed as early as 1946, under § 34 of the Act seeking recovery of their deposits.

Section 34 of the Act was enacted in 1946 as a legislative response to this Court's decision in Markham v. Cabell,326 U. S. 404, which allowed non-enemy creditors of former owners of vested property to bring suit under a World War I statute [Footnote 3] and recover directly out of vested assets. The Alien Property Custodian feared that allowance of such suits might lead to inequitable results, in that creditors who brought suit immediately might exhaust the assets at the expense of other equally valid claims. The Custodian urged, and the Congress agreed, that an approach on the lines of the Bankruptcy Act was a fairer method of distributing such assets. [Footnote 4] See H.R.Rep. No. 2398, 79th Cong., 2d Sess., 10, 14 (1946); S.Rep. No. 1839, 79th Cong., 2d Sess., 4, 8 (1946). As in bankruptcy law, the new Act required the filing of a

Page 386 U. S. 488

debt claim with the Custodian within a specified period, § 34(b).

Approximately 7,500 yen certificate holders, including petitioners, immediately complied with this provision and submitted photostatic copies of their respective certificates. In the course of processing the claims pursuant to § 34(f), a question arose as to the redemption value of the certificates both for depositors of the Yokohama Specie Bank and for those of another bank, the Sumitomo Bank, holding similar certificates. An administrative determination was sought in a proceeding brought in the name of one of the Yokohama Bank depositors, Kunio Abe, Claim No. 55507. Abe, acting for all yen certificate holders, took the view that, since these deposits had been made in American dollars and the certificates were allegedly redeemable in dollars at any time upon demand at American branches of the bank, they should be treated as dollar debts at the amount of their value when seized in 1941, at a rate of about 4.3 yen to the dollar. The Attorney General, [Footnote 5] however, characterized the debts as yen debts, and, following the rule of Deutsche Bank v. Humphrey,272 U. S. 517, and Zimmermann v. Sutherland,274 U. S. 253, held that the proper measure of recovery would be at the postwar conversion rate of 361.55 yen to the dollar, or less than 2% of the prewar rate. It is noteworthy that, throughout this period, the Yokohama Bank's successor in Japan, the Bank of Tokyo, Ltd., was willing to redeem these certificates at the postwar rate. Petitioners at any time could therefore have received from the Japanese bank the amount the Government asserted would eventually be obtained from the vested assets.

At the conclusion of the administrative process, in 1958-1959, the Chief of the Claims Section wrote to each

Page 386 U. S. 489

of the depositors who had filed a claim, including petitioners, advising that

"The Director of this Office decided on November 13, 1957, In the Matter of Kunio Abe, et al., Claim No. 55507, Docket No. 55 D 72, which decision the Attorney General has declined to review, that yen certificates of deposit issued by the Yokohama Specie Bank, Ltd. . . . are obligations payable in yen in Japan . . . ,"

and therefore that the postwar rate of 361.55 yen to the dollar would be used in redeeming certificates from the vested assets. Claimants were told to submit their original certificates within 45 days. However, the letter continued, "Payment of your claim . . . will not be made immediately." The letter informed the claimant that a full schedule of claimants would be made, § 34(f), and that, after its issuance, aggrieved certificate holders might file suit in the United States District Court for the District of Columbia for judicial review. "Under the circumstances," the letter continued,

"you may wish to utilize the funds in Japan, rather than await settlement by this Office. If this is done, the Notice of Claim filed with this Office should be canceled by signing and mailing the enclosed Notice of Cancellation of Claim card."

Petitioners characterize this letter as "confusing" and "insulting." We think the opprobrium which is sought to be fastened on the letter is undeserved, and consider it more accurate and fairer to say that, although its instructions were complex. the letter was written in a manner designed reasonably to apprise a layman of the choices before him. However, on the particular facts of this case and given the empirical evidence available, it is quite understandable that, of the 7,500 initial claimants, only 1,817 responded affirmatively by sending in their certificates, and less than 1,600 canceled their claims and sought immediate recovery in Japan. The remainder, a majority of all who had claims, petitioners in this case, did nothing.

Page 386 U. S. 490

The reasons for their inaction are quite apparent, and, it can reasonably be argued, should have been so to the Government: the letter indicated that, despite as long as 12 years of waiting after the original submission of their claims, supported by copies of their certificates, they could expect to receive less than 2% of their basic deposits measured in prewar dollar terms, and that even this amount would not be forthcoming immediately, but only after issuance of a schedule (an additional interval, it turned out, of three years) plus possible judicial review. Claimants would clearly be better off getting repayment immediately from the Japanese bank itself. This recourse, suggested by the letter itself, was at the same time understandably advantageous to the Government, as well: American citizens or residents would obtain relief, but from a foreign source, thus freeing more of the vested assets for distribution to remaining claimants. It is thus understandable that the Government did nothing to ascertain why a majority of the 7,500 claimants had responded in no way to its letter.

In affidavits submitted to the District Court, and not contradicted on the motion to dismiss the complaint, various other reasons were asserted for the failure of these petitioners to respond. Petitioner Jiro Kai asserted:

"I did receive a letter from the Office of Alien Property offering me about 30

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