1. A decree of the circuit court of appeals, entered prior to
the taking effect of the Jurisdictional Act of February 13, 1925,
and affirming dismissal on the merits of a bill by the United
States to set aside, as unauthorized and fraudulently procured,
sales of patent and other rights and properties seized pursuant to
the Trading with the Enemy Act was reviewable by this Court on
appeal (Jud.Code §§ 128, 241). Certiorari denied. P.
272 U. S. 5.
2. The purpose of the Trading with the Enemy Act was not only to
weaken enemy countries by depriving their supporters of their
properties, but also to promote production in the United States of
things useful for the effective prosecution of the war. P.
272 U. S. 9.
3. The Act should be construed liberally to effect its purposes.
P.
272 U. S. 10.
4. Congress has power to authorize seizure, and use or
appropriation, of enemy properties without compensation to their
owners. P.
272 U. S. 11.
5. Where German properties were seized and sold under the
Trading with the Enemy Act, the Act (including its provision that,
after war, enemy claims shall be settled as Congress shall direct)
gave the former owners no rights in, or to question the adequacy
of, the proceeds of sale. Moreover, the Treaty of Berlin prevents
the enforcement of any claim by Germany or its nationals against
the United States or its nationals on account of such seizures and
sales. P.
272 U. S. 11.
6. The Act, as amended, (§ 12), vested the Alien Property
Custodian with the powers of a "common law trustee" over all
Page 272 U. S. 2
property other than money taken over by him, with power, under
the President, to make any disposition of it "by sale or otherwise"
and to exercise any appurtenant rights or powers "in like manner as
though he were the absolute owner." A proviso regulated sales,
requiring,
inter alia, that they be public, to the highest
bidder" unless the President, stating the reasons therefor, in the
public interest shall otherwise determine."
Held:
(1) That a disposition of enemy patents, made at private sale to
a corporation organized for the purposes of taking over and holding
them as a trustee for American industries affected, of eliminating
hostile alien interests and advancing chemical and allied
industries in the United States through licenses under the patents
free to the United States and upon equal terms to others, was
within the authority granted by the Act to the President and the
Custodian. P.
272 U. S. 9.
(2) That empowering the President thus to determine the terms of
sale of enemy properties in the light of conditions arising in the
progress of the War was not an unconstitutional delegation of
legislative power. P.
272 U. S. 12.
7. Under § 5a, providing that the President may exercise any
power conferred on him by the Act "through such officer or officers
as he shall direct," the power to determine how enemy property
should be sold could be delegated, and this also is constitutional.
P.
272 U. S. 13.
8. An order of the President under § 5a is not invalid because
it purports to "vest" the power in another, instead of "to act
through" him, nor because of its failure to show that he was an
officer, when he was in fact such, appointed by the President and
confirmed by the Senate. P.
272 U. S. 13.
9. Orders made by the President's delegate describing enemy
patents which had been seized by the Alien Property Custodian, and
authorizing private sale thereof to the defendant "Foundation,"
held valid exercise of the President's power under § 12 of
the Act. P.
272 U.S.
14.
10. Evidence claimed to show that such orders were induced by
misrepresentation and made without knowledge of material facts,
will not be reexamined in face of concurrent findings of two courts
below to the contrary. P.
272 U.S.
14.
11. Such orders are supported by the presumption of official
regularity, and the validity of reasons stated therein, or the
basis of fact on which they rest, will not be reviewed by the
courts. P.
272 U.S.
14.
Page 272 U. S. 3
12. Order of the President
held to have ratified and
confirmed sales and transfers of patents made by the Alien Property
Custodian. P.
272 U. S. 15.
13. In making such an order, the President is presumed to have
known and acted in the light of the material facts. P.
272 U. S. 16.
14. Section 41 of the Criminal Code lays down a general rule for
the protection of the United States in transactions between it and
corporations to prevent its action from being influenced by anyone
interested adversely to it. It is a penal statute, and is not to be
extended to cases not clearly within its terms or to those
exceptional to its spirit and purpose. P.
272 U. S. 18.
15. Section 41 of the Criminal Code is inapplicable to affect
the validity of transactions carried out under authority conferred
on the President by the Trading with the Enemy Act, whereby enemy
patents were transferred, for prices less than their commercial
value, from the Alien Property Custodian to the " Chemical
Foundation," a corporation created as an instrumentality to receive
and subsequently control the patents in the public interest, the
Custodian being the president of the company and others
representing the government being also representatives of the
corporation, but none of them interested in it financially. P.
272 U. S. 17.
16. In such case, the rule forbidding sale of trust property by
the fiduciary to himself or to a corporation of which he is the
head does not apply. P.
272 U. S. 20.
17. In absence of statutory authority, stenographers' fees and
expense of printing transcripts cannot be adjudged against the
United States. P.
272 U. S. 20.
18. This immunity from costs is a sovereign prerogative which
cannot be waived by the Attorney General or other government
counsel in the case. P. 21.
19. Equity Rule 50 does not attempt to allow taxation of
stenographers' fees against the United States. P.
272 U. S. 20.
5 F.2d 191 modified and affirmed.
Appeal from a decree of the circuit court of appeals which
affirmed a decree of the district court (294 F. 300) dismissing the
bill, on final hearing, in a suit brought by the United States to
set aside transactions whereby patents, copyrights, etc., which had
been seized as enemy property, were transferred to the defendant
corporation by the Alien Property Custodian,
Page 272 U. S. 4
acting, by direction of the President, under authority conferred
by the Trading with the Enemy Act.
MR. JUSTICE BUTLER delivered the opinion of the Court.
Suit was brought by the United States in the District Court for
Delaware to set aside sales made by it to the Chemical Foundation
of a number of patents, copyrights, trademarks, and other similar
properties -- which, for brevity, will be referred to as "patents"
-- seized pursuant to the Trading with the Enemy Act of October 6,
1917, c. 106, 40 Stat. 411, as amended by the Act of March 28,
1918, c. 28, 40 Stat. 460, and the Act of November 4, 1918, c. 201,
40 Stat. 1020, and other Acts. The complaint alleges that a number
of domestic manufacturers, as a result of war conditions, had been
able to combine and monopolize certain chemical industries in this
country, and, fearing that, at the end of the war, German
competition would destroy the monopoly, they conspired to bring
about transfers and sales of the patents at nominal prices to
themselves or to a corporation controlled by them; that the patents
so obtained would control the industries in question and perpetuate
the monopoly, and that the sales were procured through the
fraudulent deception of the President, the Alien Property
Custodian, and other officials.
Page 272 U. S. 5
The answer denies conspiracy and fraud, and asserts that the
transfers were made in good faith and pursuant to law, and that
they are valid. There was a trial at which much evidence was taken.
The district court dismissed the complaint (294 F. 300), and its
decree was affirmed by the circuit court of appeals. 5 F.2d 191.
Both courts found that no unlawful scheme, combination, or
conspiracy was shown, and that there was no deception or fraud.
The United States took an appeal under § 241, Judicial Code, and
has applied for a writ of certiorari under § 240. The decree of the
circuit court of appeals was entered March 26, 1925, prior to the
taking effect of the Act of February 13, 1925, amending the
Judicial Code. Chapter 229, 43 Stat. 936. Since this is not a case
in which the decree of that court is made final by § 128, the
United States had the right of appeal. The application for
certiorari is therefore denied.
The chemical industries in question are closely related to the
production of explosives, gasses, and other things directly used in
waging war, as well as to the production of dyestuffs and medicines
essential to the welfare of the people. At the outbreak of the war,
many necessary medicines and other substances, as well as most of
the dyestuffs used in this country, were imported from Germany or
were manufactured under patents owned by enemy Germans. The amount
of such things here produced was small. Importations were hindered
by the blockade, and ceased when this country entered the war. To
meet the demand, numerous plants were developed, and by 1919,
chemicals, dyestuffs, medicines, and the like were being produced
here in large quantities. A number of associations of manufacturers
were formed for the advancement of such industries; they included
in their membership the producers of nearly all the dyestuffs and
like chemicals made in this country. Mr. A. Mitchell Palmer was the
Alien Property Custodian until he was
Page 272 U. S. 6
appointed Attorney General, March 4, 1919. In order to protect
the United States against enemy and foreign control of its chemical
industries and to stimulate production here, he favored the seizure
and sale of the patents in question. To that end, a number of
conferences were held between his representatives and those of the
industries. The plan that was carried into effect was formulated
under his direction.
In February, 1919, the Chemical Foundation was incorporated
under the laws of Delaware. The certificate of incorporation
discloses that it was created and empowered to purchase enemy-owned
patents seized by the Custodian, and to hold the
"property and rights so acquired in a fiduciary capacity for the
Americanization of such industries as may be affected thereby, for
the exclusion or elimination of alien interest hostile or
detrimental to the said industries, and for the advancement of
chemical and allied science and industry in the United States;"
to grant to the United States nonexclusive licenses to make,
use, and sell the inventions covered by the patents, and also to
grant like licenses, on equal terms and without advantage as
between licensees, to American citizens and corporations under
control of American citizens. The board of directors is authorized
to prescribe the terms and conditions of such licenses. It may
refuse to issue any license or may revoke any license granted by
it. The corporation is required to enforce its rights and to
protect the rights of its licensees. The authorized capital stock
is $500,000, consisting of 5,000 shares of the par value of $100
each: 4,000 shares constitute nonvoting preferred stock, the
holders of which are entitled to a cumulative dividend of 6
percentum per annum, and 1,000 shares constitute the common stock,
the holders of which are entitled to dividends not exceeding 6
percentum per annum after dividends on the preferred stock have
been provided for. The preferred stock is subject to redemption at
par plus
Page 272 U. S. 7
accumulated dividends, if any, and, after such redemption, net
earnings not needed for working capital
"shall be used and devoted to the development and advancement of
chemistry and allied sciences, in the useful arts and manufactures
in the United States, in such manner as the board of directors may
determine."
The holders of the common stock have all the voting power. The
certificate provides that, without the approval of the board of
directors, stockholders may not sell any of their stock. The board
of directors consists of three members. The executive officers are
president, vice-president, and a secretary and treasurer. The
president and vice-president are required to serve without pay. The
shares of the Foundation were subscribed by those interested in the
chemical and dye industries. But a voting trust agreement was made
pursuant to which all common stock was deposited with, and all
voting power was vested in, five trustees. Directors and officers
were chosen March 8, 1919. Francis P. Garvan, Douglas I. McKay, and
George J. Corbett were made directors and constituted the board.
Mr. Garvan, then Alien Property Custodian, was elected president.
Mr. McKay was elected vice-president, and Mr. Corbett secretary and
treasurer. Otto T. Bannard and four others were made voting
trustees. All the directors, officers, and voting trustees were
chosen by or in accordance with the direction of Mr. Palmer, given
while he was Custodian.
The President, by Executive Order December 3, 1918, declared: "I
hereby vest in Frank L. Polk all power and authority conferred upon
the President by the provisions of § 12" of the Trading with the
Enemy Act as amended. Mr. Polk was then counselor for the
Department of State, but was not so described in the order. He made
two orders, dated respectively February 26, 1919, and April 5,
1919, to authorize the Custodian to sell at private sale to the
Foundation without advertisement at such places and upon such terms
and conditions as to the
Page 272 U. S. 8
Custodian might seem proper, all patents found to relate to the
objects and purposes of the Foundation as expressed in its charter.
These orders contained a statement of the reasons therefor in the
public interest. Briefly, they were that the patents could not be
sold to the best advantage at public sale after advertisement; that
the Foundation had been incorporated to hold the patents as a
trustee for American industries affected by the patents, to
eliminate hostile alien interests and to advance chemical and
allied industry in the United States, and that it was obligated to
grant nonexclusive licenses upon equal terms to qualified American
manufacturers and was empowered to grant free licenses to the
United States; that the public interest would be best served by a
wide use of the inventions, which most readily could be promoted by
licenses which the Foundation was obligated to grant; that a
private sale would prevent the patents from falling into the hands
of purchasers unwilling or unable to use the inventions or who
would use them for speculative purposes; that it would be
impossible to make a public sale that would secure these benefits,
and that a private sale would avoid unnecessary expense, delay, and
inconvenience.
Prior to and contemporaneously with the organization of the
Foundation, the representatives of the chemical industries
cooperated with those of the Custodian in making lists of the
patents to be seized and sold by the Custodian to the Foundation.
Mr. Garvan, the Custodian, from time to time commencing April 10,
1919, executed and delivered to the Foundation various assignments
of the patents. The considerations paid by the Foundation to the
Custodian amounted in all to $271,850.00. The President, February
13, 1920, made an executive order which was held by both courts
below to constitute a ratification of the transactions. And,
pursuant to that order, the Custodian confirmed the assignments
theretofore made.
Page 272 U. S. 9
We come to the question whether, as held below, the Act, as
amended March 28, 1918, empowered the President to authorize, and
the Custodian under his supervision to consummate, these sales.
The pertinent provisions of the act are in § 12 as amended:
"The Alien Property Custodian shall be vested with all of the
powers of a common law trustee in respect of all property other
than money which has been or shall be, or which has been or shall
be required to be, conveyed, transferred, assigned, delivered, or
paid over to him in pursuance of the provisions of this Act, and,
in addition thereto, acting under the supervision and direction of
the President, and under such rules and regulations as the
President shall prescribe, shall have power to manage such property
and do any act or things in respect thereof or make any disposition
thereof or of any part thereof, by sale or otherwise, and exercise
any rights or powers which may be or become appurtenant thereto or
to the ownership thereof in like manner as though he were the
absolute owner thereof:
Provided, that any property sold
under this Act, except when sold to the United States, shall be
sold only to American citizens at public sale to the highest
bidder, after public advertisement of time and place of sale which
shall be where the property or a major portion thereof is situated,
unless the President, stating the reasons therefor, in the public
interest shall otherwise determine. . . ."
40 Stat. 460.
"After the end of the war, any claim of any enemy or of an ally
of enemy to any money of other property received and held by the
Alien Property Custodian or deposited in the United States
Treasury, shall be settled as Congress shall direct. . . ."
40 Stat. 424.
It is conceded that, when seized, the patents belonged to enemy
Germans, and that they were lawfully taken over by the Custodian.
The purpose of the Trading with the Enemy Act was not only to
weaken enemy countries
Page 272 U. S. 10
by depriving their supporters of their properties (
Miller v.
Robertson, 266 U. S. 243,
266 U. S.
248), but also to promote production in the United
States of things useful for the effective prosecution of the war.
Section 10(c) authorized the President, if he deemed it for the
public welfare, to grant licenses to American citizens or
corporations to use any inventions covered by enemy-owned patents.
Subsection (c) of § 7 of the Act as amended November 4, 1918,
authorized the seizure of enemy-owned patents, and provided that
all property so acquired should be held and disposed of as provided
by the Act. And there is no ground for contending that the seizure
and transfers did not tend to lessen enemy strength and to
encourage and safeguard domestic production of things essential to
or useful in the prosecution of the war. There is nothing to
support a strict construction of the Act in respect of the seizure
and disposition of enemy property. On the other hand,
contemporaneous conditions and war legislation indicate a purpose
to employ all legitimate means effectively to prosecute the war.
The law should be liberally construed to give effect to the
purposes it was enacted to subserve.
As originally enacted, § 12 gave the Custodian in respect of
properties in his possession "all of the powers of a common law
trustee." He was authorized, acting under the supervision and
direction of the President and under rules and regulations
prescribed by the President, to manage the property and do any act
or things in respect thereof or make any disposition of it by sale
or otherwise and to exercise any rights appurtenant to its
ownership
"if and when necessary to prevent waste and protect such
property and to the end that the interests of the United States in
such property and rights, or of such person as may ultimately
become entitled thereto, or to the proceeds thereof, may be
preserved and safeguarded."
The Custodian was a mere conservator, and
Page 272 U. S. 11
was authorized to sell only to prevent waste. But brief
experience made it clear that this restriction on the power to
dispose of enemy property sometimes operated to defeat the purpose
of the Act and brought profit and advantage to the enemy. The
amendment of March 28, 1918, eliminated the restriction upon the
power of sale. It stated that the other powers given were "in
addition" to those of a common law trustee. And it authorized the
Custodian under the President to dispose of such properties by sale
or otherwise "in like manner as though he were the absolute owner
thereof."
There is no support for a construction that would restrain the
force of the broad language used. Congress was untrammeled and free
to authorize the seizure, use, or appropriation of such properties
without any compensation to the owners. There is no constitutional
prohibition against confiscation of enemy properties.
Brown v. United
States, 8 Cranch 110,
12 U. S. 122;
Miller v. United
States, 11 Wall. 268,
78 U. S. 305
et seq.; Kirk v. Lynd, 106 U. S. 315,
106 U. S. 316;
Stoehr v. Wallace, 255 U. S. 239,
255 U. S. 245;
White v. Mechanics Securities Corp., 269 U.
S. 283,
269 U. S. 300.
And the Act makes no provision for compensation. The former enemy
owners have no claim against the patents or the proceeds derived
from the sales. It makes no difference to them whether the
consideration paid by the Foundation was adequate or inadequate.
The provision that, after the war, enemy claims shall be settled as
Congress shall direct conferred no rights upon such owners.
Moreover the Treaty of Berlin prevents the enforcement of any claim
by Germany or its nationals against the United States or its
nationals on account of the seizures and sales in question.
*
While not denying the power to confiscate enemy properties, the
United States argues that, as construed below,
Page 272 U. S. 12
the provision in question is unconstitutional because it
attempts to delegate legislative power to the executive. But the
Act gave the Custodian, acting under the President, full power of
disposition. No restriction was put upon dispositions other than by
sales. And sales to the United States were not regulated. The
general rule laid down was that all dispositions by sale or
otherwise should be made in accordance with the determinations of
the President; the proviso made an exception including a class of
sales; and, upon the failure of the President otherwise to
determine stating the reasons therefore in the public interest, it
required that such sales should be made as there specified. It was
not necessary for Congress to ascertain the facts of or to deal
with each case. The Act went as far as was reasonably practicable
under the circumstances existing. It was peculiarly within the
province of the Commander-in-Chief to know the facts and to
determine what disposition should be made of enemy properties in
order effectively to carry on the war. The determination of the
terms of sales of enemy properties in the light of facts and
conditions from time to time arising in the progress of war was not
the making of a law; it was the application of the general rule
laid down by the Act. When the plenary power of Congress and the
general rule so established are regarded, it is manifest that a
limitation upon the excepted class is not a delegation of
legislative power.
Field v. Clark, 143 U.
S. 649,
143 U. S. 692;
Buttfield v. Stranahan, 192 U. S. 470,
192 U. S. 496;
Union Bridge Co. v. United States, 204 U.
S. 364,
204 U. S. 377;
United States v. Grimaud, 220 U.
S. 506,
220 U. S.
516.
The language of the statute is too plain to be misunderstood.
Except as affected by the proviso, the Custodian's dominion over
the property and power to dispose of it, acting under the President
as provided, were as unlimited as are the powers of an absolute
owner, and the power of the President to determine terms and
Page 272 U. S. 13
conditions of sales or other disposition was not restricted. He
was authorized, stating the reasons therefor in the public
interest, to dispense with any or all requirements specified in the
proviso and to substitute others for them.
Cf. Levinson v.
United States, 258 U. S. 198.
When the amended section is read in comparison with the original
enactment and regard is had to the chemical warfare and other
conditions existing at the time of the amendment, March 28, 1918,
the inevitable conclusion is that it empowered the President to
authorize, and the Custodian, acting under him, to consummate, the
sales in question.
The United States argues that the Executive Order of December 3,
1918, was void, and that the one of February 13, 1920 did not
authorize or ratify the transactions.
Section 5(a) of the Act provides that: "the President may
exercise any power or authority conferred by this Act through such
officer or officers as he shall direct." The language of the
executive order is: "I hereby vest in Frank L. Polk all power and
authority conferred upon the President by the provisions of § 12. .
. ." Obviously all the functions of his great office cannot be
exercised by the President in person. The contention that power to
determine how enemy property should be sold could not be delegated
to another is not sustained. This Court has had occasion to
consider a like question in
Central Trust Co. v. Garvan,
254 U. S. 554,
254 U. S. 567;
Stoehr v. Wallace, 255 U. S. 244,
supra, and
Commercial Trust Co. v. Miller,
262 U. S. 51,
262 U. S. 53.
These decisions sustain the delegation here involved.
It is argued that the order was not made in conformity with the
statute, because to "vest" power in another is not to "act through"
him, and because the order did now show that Mr. Polk was an
officer. But if two constructions are possible, and one of them
would render the order useless and the other give it validity, the
latter is to be adopted.
Cf. 264 U. S. Co.
Johnson, 264 U.S.
Page 272 U. S. 14
375,
264 U. S. 390;
United States v.
Coombs, 12 Pet. 72,
37 U. S. 75-76.
The intention to exert the power conferred under § 5 is plain.
Meticulous precision of language was not necessary.
Russell Co.
v. United States, 261 U. S. 514,
261 U. S. 523.
While the use of the word "vest" was not accurate, it must be
deemed sufficient when the context and circumstances are
considered. Mr. Polk was an officer through whom the President was
authorized to act. He was counselor for the Department of State,
appointed by the President and confirmed by the Senate.
United
States v. Germaine, 99 U. S. 508. No
particular form of designation was required. It would be
unreasonable to read the order otherwise than as meaning that, in
respect of the matters covered by § 12, the President determined to
act through Frank L. Polk, Counselor for the Department of
State.
And the validity of each of the orders made by Mr. Polk is
attacked by the United States on the ground that it was too broad,
and constituted an attempt to give to the Custodian the very power
granted to the President by the Act -- that is, the power to
determine that enemy properties should be disposed of otherwise
than as specified in the proviso. But the contention cannot
prevail. Each of the orders sufficiently described the patents
seized and authorized a private sale to the Foundation without
advertisement. This was enough to indicate a determination to take
these sales out of the class covered by the proviso. And it is
insisted that the orders were induced by misrepresentation, and
were made without knowledge of the material facts. But both courts
found that the United States failed to establish any conspiracy,
fraud or deception alleged. Findings of fact concurred in by two
lower courts will not be disturbed, unless clearly erroneous.
Washington Sec. Co. v. United States, 234 U. S.
76,
234 U. S. 78.
Under this rule, the findings must be accepted. The presumption of
regularity supports the official acts of public officers, and, in
the absence of clear evidence to the
Page 272 U. S. 15
contrary, courts presume that they have properly discharged
their official duties.
Confiscation
Cases, 20 Wall. 92,
87 U. S. 108;
United States v. Page, 137 U. S. 673,
137 U. S.
679-680;
United States v. Nix, 189 U.
S. 199,
189 U. S. 205.
Under that presumption, it will be taken that Mr. Polk acted upon
knowledge of the material facts. The validity of the reasons stated
in the orders, or the basis of fact on which they rest, will not be
reviewed by the courts.
Dakota Cent. Tel. Co. v. South
Dakota, 250 U. S. 163,
250 U. S. 184;
Monongahela Bridge v. United States, 216 U.
S. 177,
216 U. S. 195;
Martin v.
Mott, 12 Wheat. 19,
25 U. S. 30.
Cf. Levinson v. United States, 258 U. S. 201,
supra.
We agree with the lower courts that the sales and transfers of
the patents were ratified and confirmed by the President's order of
February 13, 1920. It is urged that there was no ratification
because it is not shown that the President had knowledge of the
material facts, that he did not intend to ratify the sales of
patents, and that the language used in the order is not broad
enough to include the patents, trademarks, any copyrights in
question.
The Polk order of February 26, 1919, described the property
covered as
"all of the letters patent, trademarks and rights under letters
patent and trademarks, including all profits and damages . . . for
the past infringement thereof which the Alien Property Custodian
may seize or may have seized . . . and which he from time to time
shall determine relate to the objects and purposes"
of the Chemical Foundation. The President's order of
confirmation recites that the Polk orders authorized the Custodian
to sell
"certain choses in action and rights, interests, and benefits
heretofore determined to belong to, or to be held for, by, or on
account of, or for the benefit of persons heretofore determined to
be enemies."
The language last quoted was used to define the same properties
that were covered by the Polk orders -- that is, "choses in action
and rights," etc. -- were used to
Page 272 U. S. 16
include "letters patent, trademarks," etc. The President's order
also states that it was the intention of the Polk orders to
authorize the Custodian to sell
"all choses in action, rights, interests and benefits under
agreements and rights and claims of every character and
description, including rights to receive moneys by way of royalties
or otherwise as compensation for the use of patents, trademarks, or
tradenames which the Alien Property Custodian may have seized . . .
and . . . determined to relate to the objects and purposes"
of the Foundation. It recites that doubt had arisen as to the
authority of the Custodian to sell and convey to the Foundation
"certain of the said choses in action," etc., "including rights to
receive moneys by way of royalties or otherwise." And the President
expressly authorized the Custodian to sell at private sale without
public or other advertisement to the Foundation upon such terms and
conditions as to the Custodian might seem proper
"all choses in action, rights, interests, and benefits under
agreements and rights and claims of every character and description
which the Alien Property Custodian may seize or may have
seized"
under the Act. The President further authorized the Custodian by
a suitable instrument to conform and ratify sales theretofore made
by him of any property as to which his authority under the Polk
orders might be deemed doubtful. And he stated that his reasons for
the determination and order were given in the Polk orders, and in
addition specified other reasons which need not be quoted.
This order authorizes sales of the patents to be made and
ratifies and confirms those theretofore made by the Custodian. The
President will be presumed to have known the material facts and to
have acted in the light of them. His intention to ratify the sales
is plain. The comprehensive language used is broad enough to
include the patents. Moreover the statement that his reasons for
the determination are given in the Polk orders shows
Page 272 U. S. 17
the intention to cover the properties there referred to. As the
transactions in question were ratified, it is unnecessary to
consider the objections made by the United States to the procedure
of the Custodian under the Polk orders.
The United States contends that the sales were void because made
in violation of § 41 of the Criminal Code, 35 Stat. 1088, 1097, and
the rule of law forbidding sales by a public officer or fiduciary
of trust property in his custody to himself or to a corporation of
which he is the head.
Section 41 provides:
"No officer or agent of any corporation, . . . and no . . .
person directly or indirectly interested in the pecuniary profits
or contracts of such corporation . . . shall be employed or shall
act as an officer or agent of the United States for the transaction
of business with such corporation. . . ."
Violators are made punishable by fine and imprisonment. The
United States lays much stress on these facts: Mr. Garvan, while
director of the Bureau of Investigation, Joseph H. Choate, Jr.,
chief of the chemical division of that bureau, and Ramsey Hoguet,
patent attorney for the Custodian, conferred with the
representatives of the chemical industries to arrange to make the
seizures and sales of the patents. Later, Mr. Garvan, then
Custodian, acted for the United States in making the transfers to
the Chemical Foundation, of which he was the President. Mr. McKay
and Mr. Corbett were directors and officers appointed by the
Custodian of various corporations of which he had taken control.
Before the transfers were made, Mr. Choate became the general
counsel and Mr. Hoguet the patent attorney of the Foundation. Mr.
Bannard and the other voting trustees were members of the Advisory
Sales Committee, appointed by the President to see that sales of
enemy properties were fairly made to qualified buyers. Without
further reference to the facts relied on to support
Page 272 U. S. 18
its contention, we assume in favor of the United States that
those who acted for it in the transactions complained of were at
the same time directors and officers of the corporation; that the
members of the Advisory Sales Committee, while they were voting
trustees, participated in the fixing of the prices paid for the
patents by the Foundation, and that such prices were much less than
the value of the properties, and would have been inadequate to
constitute just compensation if the patents belonged to nonenemy
owners and were taken for public use under the power of eminent
domain.
Section 41 was enacted when there was no war, and long before
the Trading with the Enemy Act. It lays down a general rule for the
protection of the United States in transactions between it and
corporations, and to prevent its action from being influenced by
anyone interested adversely to it. It is a penal statute, and is
not to be extended to cases not clearly within its terms or to
those exceptional to its spirit and purpose.
United States v.
Noveck, 271 U. S. 201;
Baender v. Barnett, 255 U. S. 224,
255 U. S. 226;
Hawaii v. Mankichi, 190 U. S. 197,
190 U. S. 212;
United States v.
Kirby, 7 Wall. 482,
74 U. S. 486;
Bishop on Statutory Crimes (3d ed.) § 235. At the time of the
enactment, there were no enemy properties to be dealt with, and,
save the generality of the language used, there is nothing to
indicate a legislative purpose to deal with that subject. The
Trading with the Enemy Act is a war measure covering specifically,
fully, and exclusively the seizure and disposition of enemy
properties. The authority of the President to authorize sales and
to determine terms and conditions in lieu of those specified in the
proviso undoubtedly included the power to cause the Chemical
Foundation to be incorporated to purchase and hold the patents as
specified and to direct the selection of the directors, officers,
and voting trustees. The President, and under him the Custodian,
acting for the United
Page 272 U. S. 19
States, the seller of the patents, caused the Foundation to be
created to buy and hold them and caused it to be controlled by
officers or representatives of the United States acting exclusively
in its interest. Neither Mr. Garvan nor any of the others who acted
for the United States had any financial interest in the Foundation,
its profits, or its contracts. All the corporate shares were
subscribed and paid for by others -- those interested in the
chemical industries. They furnished the money to carry out the plan
formulated by or under the direction of Mr. Palmer while he was
Custodian. Under the voting trust agreement, shareholders were
divested of all voice in the control, business, or affairs of the
corporation. All shares are to be held by the voting trustee for 17
years, within which all patents will expire. And, by charter
provisions, dividends were limited to 6 percentum per annum.
Transferable certificates of beneficial interest were issued by the
trustees to the shareholders, but these cannot be used to control
the corporation. The arrangement was intended to amount to a public
trust for those whom the patents will benefit and for the promotion
of American industries, and to give to them the right to have on
equal and reasonable terms licenses to make, use, and sell the
inventions covered by the patents. The Foundation is properly to be
considered an instrumentality created under the direction of the
President to effect that disposition and subsequent control of the
patents which he determined to be in the public interest. The
transactions complained of did not involve any of the evils aimed
at by § 41. The Act will be construed and applied as not qualified
or affected by that provision of the Criminal Code.
Utah Power
& Light Co. v. United States, 243 U.
S. 389,
243 U. S. 406;
Kepner v. United States, 195 U. S. 100,
195 U. S. 125;
Townsend v. Little, 109 U. S. 504,
109 U. S. 512;
In re Rouse, Hazard & Co., 91 F. 96, 100. And, as the
power to dispose of the properties
Page 272 U. S. 20
by sales on the terms and conditions specified was included in
the grant made by the statute, it follows that the rule in respect
of sales of trust properties by fiduciaries does not apply.
Before the commencement of the trial, the district court found
that it was necessary that the testimony be taken down in shorthand
and transcribed, and appointed an official stenographer for that
purpose, and it was ordered that his fees be ultimately taxed as a
part of the costs. By another order, counsel consenting, the court
directed that the expense of printing 100 copies of the transcript,
to be available for use in that court and on appeal, be advanced
from time to time and borne in equal amounts by the parties and
form a part of the taxable costs. The decree directs that the
Chemical Foundation recover from the United States the money
advanced by the Foundation on account of such fees and expenses,
and orders the amount to be taxed as costs in the case. The
government insists that this is erroneous.
The general rule is that, in the absence of a statute directly
authorizing it, courts will not give judgment against the United
States for costs or expenses.
United States v.
Hooe, 3 Cranch 73,
7 U. S. 91-92;
Shewan & Sons v. United States, 267 U. S.
86;
United States v. Davis, 54 F. 147, 152,
et seq.. But the Foundation insists that, under Equity
Rule 50, taken with the consent of counsel and the orders, the
court was authorized to direct that these items be taxed as costs
and to give judgment against the United States therefor.
Equity Rule 50 in general terms provides that stenographers'
fees shall be fixed by the court and taxed as costs, but it does
not specify costs or judgment for money against the United States.
The rule does not mention the United States, and does not affect
the sovereign prerogative not to pay costs. Congress alone has
power to waive or qualify that immunity. But no statute
authorizes
Page 272 U. S. 21
the giving of judgment against the United States for these items
or authorizes the Attorney General or other counsel in the case to
consent to such a judgment. No such authority is necessary for the
proper conduct of litigation on behalf of the United States, and
there is no ground for implying that authority. It follows that the
direction for judgment against the United States for costs cannot
be sustained. That part of the decree will be eliminated, and the
decree, so modified, will be affirmed.
Decree modified and affirmed as modified.
MR. JUSTICE SUTHERLAND, and MR. JUSTICE STONE took no part in
the consideration or decision of this case.
* Part X, § IV, Article 297, and annex paragraphs 1 and 3,
Treaty of Versailles, adopted by Article II(1), Treaty of Berlin,
42 Stat. 1939, 1943.