1. Respondent, a corporation organized under the laws of
Switzerland and having its principal place of business in that
country, sued under § 9(a) of the Trading with the Enemy Act to
reclaim property which the Alien Property Custodian had vested in
himself under § 5(b), as amended by the First War Powers Act of
1941. The property seized consisted of shares of stock in
corporations organized under the laws of various States of this
Nation and of an interest in a contract between two such
corporations, and, according to the allegations of the complaint,
which are assumed to be true, was free of all enemy taint --
i.e., the corporations whose shares had been seized, the
corporations which had a contract in which respondent had an
interest, and respondent itself, were corporations in which no
enemy, ally of an enemy, or any national of either, had any
interest of any kind whatsoever, and respondent had not done
business in the territory of the enemy or any ally of an enemy.
Held: Respondent is entitled to maintain the suit. Pp.
332 U. S.
482-490.
Page 332 U. S. 481
2. By the amendment to § 5(b) of the Trading with the Enemy Act
contained in the First War Powers Act of 1941, the property of all
foreign interests was placed within reach of the vesting power, not
to appropriate friendly or neutral assets, but to reach enemy
interests which masquerade under those innocent fronts. Pp.
332 U. S.
484-486.
3. Although §§ 2 and 9(a) were not amended in 1941, they must be
read harmoniously with § 5(b) as amended in 1941, so as not to
defeat the purpose of the 1941 amendment. Pp.
332 U. S.
486-489.
4. Section 2, defining the terms "enemy" and "ally of enemy,"
must be read differently than it was previously, so as to give the
concept of enemy or ally of enemy a scope which helps the 1941
amendment fulfill its mission without nullifying § 9(a). P.
332 U. S.
489.
5. When §§ 2, 5(b) and 9(a) are thus read together harmoniously,
§ 9(a) cannot be construed as affording no remedy for the recovery
of property by foreign interests which have no possible connection
with the enemy, merely because such property was made subject to
seizure under § 5(a), as amended. Pp.
332 U. S.
486-489.
81 U.S.App.D.C. 284, 158 F.2d 313, affirmed.
The District Court dismissed a suit brought by respondent under
§ 9(a) of the Trading with the Enemy Act to recover property vested
by the Alien Property Custodian in himself under § 5(b), as amended
by the First War Powers Act of 1941. The United States Court of
Appeals for the District of Columbia reversed. 81 U.S.App.D.C. 284,
158 F.2d 313. This Court granted certiorari. 330 U.S. 813.
Affirmed, p.
332 U. S. 490.
Page 332 U. S. 482
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
Respondent brought this suit to reclaim property which the Alien
Property Custodian, [
Footnote
1] acting under § 5(b) of the Trading With the Enemy Act, 40
Stat. 411, 50 U.S.C. App. § 1
et seq., as amended by the
First War Powers Act of 1941, § 301, 55 Stat. 839, 50 U.S.C. App.
Supp. V, § 5(b), had vested in himself. Respondent is a corporation
organized under the laws of Switzerland and having its principal
place of business in that country. The property seized consisted of
shares of stock in corporations organized under the laws of various
States of this nation, and of an interest in a contract between two
such corporations.
The complaint alleges that respondent is not an enemy or ally of
an enemy, and that at no time at or since the vesting has the
property in question been owned or controlled, directly or
indirectly, in whole or in part, by an enemy, ally of an enemy, or
a national of a designated enemy country. It also alleges that none
of the property has been owing or belonging to or held on account
of or for the benefit of any such person or interest. We construe
these allegations to mean that the property is free of all enemy
taint, and particularly that the corporations whose shares have
been seized, the corporations which have a contract in which
respondent has an interest, and respondent itself are companies in
which no enemy, ally of an enemy, nor any national of either has
any interest of any kind whatsoever, and that respondent has not
done business in the territory of the enemy or any ally of an
enemy. Those allegations, as so construed, are indeed taken as true
for the purposes of the present ruling, since petitioner's motion
to dismiss is based solely on the fact that respondent is a
national of a foreign country.
Page 332 U. S. 483
The District Court granted petitioner's motion to dismiss. The
Court of Appeals reversed, one justice dissenting.
Uebersee
Finanz-Korporation, A.G. v. Markham, 81 U.S.App.D.C. 284, 158
F.2d 313. The case is here on petition for a writ of certiorari
which we granted because of the importance of the question in the
administration of the Act. 330 U.S. 813.
Under the Act as it read prior to the 1941 amendment, respondent
would have been able to maintain this suit on a showing, without
more, that it was a corporation organized under the laws of a
friendly nation and not doing business in the territory of an enemy
nation or any of its allies. That result would be reached as
follows: Sec. 7(c) permitted seizure by the Custodian only of
property in which an enemy or ally of an enemy had an interest.
Sec. 9(a) permitted "any person not an enemy or ally of enemy"
claiming an interest in any seized property to sue to reclaim it.
And the Court held in
Behn, Meyer & Co. v. Miller,
266 U. S. 457,
that a corporation organized under the laws of a friendly nation
and not doing business in the territory of an enemy nation or any
of its allies [
Footnote 2]
Page 332 U. S. 484
could maintain such a suit even though the corporation was enemy
owned or controlled. The scheme of the Act as it was then drawn was
"to seize the shares of stock when enemy-owned, rather than to take
over the corporate property."
Hamburg-American Line Terminal
& Navigation Co. v. United States, 277 U.
S. 138,
277 U. S.
140.
That was at least one respect in which the Act had a "rigidity
and inflexibility" that was sought to be cured by the amendment to
§ 5(b) in 1941.
See H.R. Rep. No. 1507, 77th Cong., 1st
Sess., p. 3. It was notorious that Germany and her allies had
developed numerous techniques for concealing enemy ownership or
control of property which was ostensibly friendly or neutral. They
had, through numerous devices, including the corporation,
Page 332 U. S. 485
acquired indirect control or ownership in industries in this
country for the purposes of economic warfare. [
Footnote 3] Sec. 5(b) was amended on the heels of
the declaration of war to cope with that problem. Congress, by that
amendment, granted the President the power to vest in an agency
designated by him "any property or interest of any foreign country
or national thereof." [
Footnote
4] The property of all foreign interests was placed within
reach of the vesting power not to appropriate friendly or neutral
assets, but to reach enemy interests which masqueraded under those
innocent fronts.
Thus, the President acquired new "flexible powers" (H.R. Rep.
No. 1507,
supra, p. 3) to deal effectively
Page 332 U. S. 486
with property interests which had either an open or concealed
enemy taint.
While the scope of the President's power was broadened, there
was no amendment restricting the scope of § 9(a). As we have noted,
§ 9(a) granted "any person not an enemy or ally of enemy," claiming
an interest in property seized, the right to reclaim it. So the
provision reads today. Yet, as petitioner suggests, if
Behn,
Meyer & Co. v. Miller, supra, is applied despite the 1941
amendment, § 9(a) will undo much of the good which the 1941
amendment to § 5(b) was designed to accomplish. All a corporate
claimant would need do to recover the property seized would be to
show that it was organized in this country or in some friendly or
neutral country and was not doing business within the territory of
an enemy or any of its allies. [
Footnote 5] The fact that it was owned or controlled by
enemy interests and might sap the strength of this nation through
economic warfare would be immaterial. We agree that a construction
so destructive of the objectives of the 1941 amendment to § 5(b)
must be rejected.
Petitioner therefore suggests that, once the seizure is shown to
be permissible under § 5(b), there is no remedy for the return of
the property under § 9(a). It is said that § 9(a) was designed to
provide an ultimate judicial determination of the question whether
the property seized was within the vesting power defined in § 5(b).
Central Union Trust Co. of New York v. Garvan,
254 U. S. 554,
254 U. S.
567-568. The argument accordingly is that, since § 5(b)
allows seizure and vesting of "any property or interest of any
foreign country or national thereof," a suit to reclaim it is
defeated by a mere showing that the claimant is a corporation
organized under the laws of another nation.
That is to make the right to sue run not to "any person not an
enemy or ally of enemy," as § 9(a) in terms provides,
Page 332 U. S. 487
but to "any person not an enemy or ally of enemy or national of
any foreign country." That would wipe out all suits to reclaim
property brought by any foreign interest, no matter how friendly.
We stated in
Markham v. Cabell, 326 U.
S. 404,
326 U. S.
410-411,
"The right to sue, explicitly granted by § 9(a), should not be
read out of the law unless it is clear that Congress by what it
later did withdrew its earlier permission."
Such a drastic contraction, if not complete sterilization, of §
9(a) as petitioner suggests should therefore be made only if no
other alternative is open.
There are several reasons which make us hesitate to take that
course. In the first place, as we have suggested, the phase of the
problem with which we are presently concerned and with which
Congress was wrestling when it amended the Act in 1941 started and
ended with property having an enemy taint. We find not the
slightest suggestion that Congress was concerned under this Act
with property owned or controlled by friendly or neutral powers and
in no way utilized by the Axis. Those interests were not waging
economic warfare against us. Secondly, we are dealing here with the
power "to affirmatively compel the use and application of foreign
property in a manner consistent with the interests of the United
States." [
Footnote 6] Sen.Rep.
No. 911, 77th Cong., 1st Sess., p. 2. It is hard for us to assume
that Congress adopted that drastic course in the case of friendly
or neutral foreign interests whose investments in our economy were
in no way infected with enemy ownership or control. Our hesitation
is, moreover, increased when we note that § 7(c) makes the remedy
under the Act the only one Congress has granted a claimant. It is
not easy for us to assume that Congress treated all nonenemy
nations, including
Page 332 U. S. 488
our recent allies, in such a harsh manner, leaving them only
with such remedy as they might have under the Fifth Amendment.
The problem is not without its difficulties whichever way we
turn. But we think that we adhere more closely to the policy of
both § 5(b) as amended and § 9(a), if we do not carry over into the
amended Act the consequences of
Behn, Meyer & Co. v.
Miller, supra.
As we have observed, the scheme of the Act when
Behn, Meyer
& Co. v. Miller was decided was to respect the corporate
form, even though the enemy held all the stock of the corporate
claimant.
Hamburg-American Line Terminal & Navigation Co.
v. United States, supra. The 1941 amendment to § 5(b)
reflected a complete reversal in that policy. The power of seizure
and vesting was extended to all property of any foreign country or
national so that no innocent appearing device could become a Trojan
horse. Congress did not, however, alter the definitions of enemy or
of ally of enemy contained in § 2. They remain the same as they
were at the time
Behn, Meyer & Co. v. Miller was
decided. [
Footnote 7]
Yet if the question were presented for the first time under the
amended Act, we could not confine the statutory definitions of
enemy or ally of enemy to the narrow categories indicated by
Behn, Meyer & Co. v. Miller. To do so would be to run
counter to the policy of the Act and be disruptive of its purpose.
We are dealing with hasty legislation which Congress did not stop
to perfect as an integrated whole. Our task is to give all of it --
1917 to 1941 -- the most harmonious, comprehensive meaning
possible.
Markham v. Cabell, supra. So, if the definitions
contained in § 2 [
Footnote 8]
are to be harmonized with the policy underlying § 5(b) and § 9(a)
of the amended Act, we would have to say that they are merely
illustrative,
Page 332 U. S. 489
not exclusionary. To do otherwise would be to impute to Congress
a purpose to paralyze with one hand what it sought to promote with
the other.
There is perhaps, in logic, some basis for saying that that
should be the consequence, since Congress did not amend § 2 when it
revised the Act by its amendment of § 5(b). The argument is that
the only change effected was in § 5(b), and that § 2, which stands
unamended, should be taken to mean what it meant before 1941. But
the answer to our problem cannot be had by the use of logic alone.
We are dealing here with conflict and confusion in the statute.
Though neither § 2 nor § 9(a) was amended with § 5(b) in 1941, one
of them must be read differently after than before that event. We
believe it is more consonant with the functions sought to be served
by the Act to apply § 2 differently than it was previously applied
than to read § 9(a) more restrictively. We believe a more
harmonious reading of § 2, § 5(b), and § 9(a) is had if the concept
of enemy or ally of enemy is given a scope which helps the
amendment of 1941 fulfill its mission and which does not make §
9(a) for the first time in its history and contrary to the normal
connotation of its terms stand as a barrier to the recovery of
property by foreign interests which have no possible connection
with the enemy.
It is suggested, however, that this approach may produce results
which are both absurd and uncertain. It is said that the entire
property of a corporation would be jeopardized merely because a
negligible stock interest, perhaps a single share, was directly or
indirectly owned or controlled by an enemy or ally of an enemy. It
is also pointed out that securities or interests other than stock
might be held by an enemy or ally of an enemy and used effectively
in economic warfare against this country. But what these interests
are, the extent of holdings necessary to constitute an enemy taint,
what part of a friendly alien
Page 332 U. S. 490
corporation's property may be retained where only a fractional
enemy ownership appears, are left undecided. Since we assume from
the allegations of the complaint that respondent is free of enemy
taint, and therefore is not within the definition of enemy or ally
of an enemy, those problems are not now before us. We recognize
their importance, but they must await legislative [
Footnote 9] or judicial clarification.
Affirmed.
THE CHIEF JUSTICE took no part in the consideration or decision
of this case.
[
Footnote 1]
The powers and functions of the Custodian were subsequently
transferred to the Attorney General. Executive Order No. 9788, 11
Fed.Reg. 11981 (Oct. 14, 1946).
[
Footnote 2]
Sec. 2 provides:
"That the word 'enemy,' as used herein, shall be deemed to mean,
for the purposes of such trading and of this Act --"
"(a) Any individual, partnership, or other body of individuals,
of any nationality, resident within the territory (including that
occupied by the military and naval forces) of any nation with which
the United States is at war, or resident outside the United States
and doing business within such territory, and any corporation
incorporated within such territory of any nation with which the
United States is at war or incorporated within any country other
than the United States and doing business within such
territory."
"(b) The government of any nation with which the United States
is at war, or any political or municipal subdivision thereof, or
any officer, official, agent, or agency thereof."
"(c) Such other individuals, or body or class of individuals, as
may be natives, citizens, or subjects of any nation with which the
United States is at war, other than citizens of the United States,
wherever resident or wherever doing business, as the President, if
he shall find the safety of the United States or the successful
prosecution of the war shall so require, may, by proclamation,
include within the term 'enemy.'"
"The words, 'ally of enemy,' as used herein, shall be deemed to
mean --"
"(a) Any individual, partnership, or other body of individuals,
of any nationality, resident within the territory (including that
occupied by the military and naval forces) of any nation which is
an ally of a nation with which the United States is at war, or
resident outside the United States and doing business within such
territory, and any corporation incorporated within such territory
of such ally nation, or incorporated within any country other than
the United States and doing business within such territory."
"(b) The government of any nation which is an ally of a nation
with which the United States is at war, or any political or
municipal subdivision of such ally nation, or any officer,
official, agent, or agency thereof."
"(c) Such other individuals, or body or class of individuals, as
may be natives, citizens, or subjects of any nation which is an
ally of a nation with which the United States is at war, other than
citizens of the United States, wherever resident, or wherever doing
business, as the President, if he shall find the safety of the
United States or the successful prosecution of the war shall so
require, may, by proclamation, include within the term 'ally of
enemy.'"
[
Footnote 3]
Some of the uses of the corporation in promotion of these
subversive projects are summarized in Administration of the Wartime
Financial and Property Controls of the United States Government,
Treasury Dept. (1942), pp. 29-30. It is pointed out that technical
legal title "to some of the most dangerous of the Axis-influenced
enterprises may be Swiss, Dutch, Swedish, or American." It is also
said that
"Actual ownership of business enterprises frequently runs
through tangled mazes of holding companies. These holding companies
were normally incorporated in neutral countries, and the ownership
of the holding companies themselves was normally represented by
bearer shares, making it extremely difficult to negate a claim that
the ownership of the corporation was coincident with the state of
incorporation."
[
Footnote 4]
Sec. 5(b)(1), as amended, also granted the President the power
to
"investigate, regulate, direct and compel, nullify, void,
prevent or prohibit, any acquisition holding, withholding, use,
transfer, withdrawal, transportation, importation or exportation
of, or dealing in, or exercising any right, power, or privilege
with respect to, or transactions involving, any property in which
any foreign country or a national thereof has any interest, by any
person, or with respect to any property, subject to the
jurisdiction of the United States. . . ."
Sec. 5(b)(1), as amended, further provided as respects property
which had been vested that,
"upon such terms and conditions as the President may prescribe,
such interest or property shall be held, used, administered,
liquidated, sold, or otherwise dealt with in the interest of and
for the benefit of the United States. . . ."
[
Footnote 5]
See note 2
supra.
[
Footnote 6]
As to the powers of the custodian or other agency designated by
the President over the property,
see § 5(b)(1),
supra, note 4 and §
12.
[
Footnote 7]
See note 2
supra.
[
Footnote 8]
See note 2
supra.
[
Footnote 9]
See Pub.L. 322, 79th Cong., 2d Sess., adding §
32(a)(2)(E) to the Act.