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154

Opinion of the Court.

the Alabama Supreme Court. On March 24, 1952, we granted certiorari and ordered the judgments and mandates of the courts below stayed pending further consideration and disposition of the case by this Court. The case was assigned for argument on the stay as well as the merits on March 31, 1952. 343 U. S. 901.

The question raised in this case has been thoroughly briefed and argued. The Court has fully considered the question and has reached its conclusion. It now announces its decision and enters its judgment in advance of the preparation of a full opinion which, when prepared, will be filed with the Clerk. [See post, p. 214.]

The Court holds that Article II, Section 1 and the Twelfth Amendment of the Constitution do not compel issuance of the order and judgment entered below.

The judgment below is reversed. The mandate of this Court is directed to issue forth with.

Reversed.

MR. JUSTICE DOUGLAS and MR. JUSTICE JACKSON dissent.

MR. JUSTICE BLACK and MR. JUSTICE FRANKFURTER took no part in the consideration or decision of this case.

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KAUFMAN ET AL. v. SOCIETE INTERNATIONALE POUR PARTICIPATIONS INDUSTRIELLES

ET COMMERCIALES, S. A., ET AL.

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CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT.

No. 172. Argued January 2, 1952.-Decided April 7, 1952.

1. When the Alien Property Custodian, under $5 (b) of the Trading

with the Enemy Act, as amended by the First War Powers Act of 1941, seizes American assets of a corporation organized under the laws of a neutral country but dominated and controlled by enemy aliens, the rights of innocent nonenemy stockholders to an interest in the assets proportionate to their stockholdings must be fully

protected. Pp. 158–160. 2. Under Rule 24 (a) (2) of the Federal Rules of Civil Procedure,

innocent nonenemy stockholders are entitled to intervene in a suit brought under $9 (a) of the Trading with the Enemy Act by a corporation, organized under the laws of a neutral country but dominated and controlled by enemy aliens, to recover American assets seized by the Alien Property Custodian under $ 5 (b), amended by the First War Powers Act of 1941, when there is a showing that the rights of such innocent nonenemy stockholders will not be adequately protected by the corporation in such suit

and they may be bound by the judgment in such suit. Pp. 160-162. 88 U. S. App. D. C. 296, 188 F. 2d 1017, reversed.

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The District Court denied petitioners' motion to intervene in a suit brought by a corporation under $ 9 (a) of the Trading with the Enemy Act to recover assets seized by the Alien Property Custodian under $ 5 (b), as amended by the First War Powers Act of 1941. 90 F. Supp. 1011. The Court of Appeals affirmed. 88 U. S. App. D. C. 296, 188 F. 2d 1017. This Court granted certiorari. 342 U. S. 847. Reversed, p. 162.

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Irving Moskovitz argued the cause for petitioners. With him on the brief were William Radner, Henry G.

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Opinion of the Court.

Fischer, Seymour Graubard, Odell Kominers, Peter N. Schiller and Beryl Harold Levy.

David Schwartz argued the cause for McGrath, Attorney General, et al., respondents. With him on the brief were Solicitor General Perlman, Assistant Attorney General Baynton, James D. Hill, George B. Searls and Sidney B. Jacoby.

John J. Wilson argued the cause for the Societe Internationale Pour Participations Industrielles et Commerciales, S. A., respondent. With him on the brief was Roger J. Whiteford.

William P. MacCracken, Jr., Urban A. Lavery and William W. Barron submitted on brief for Remington Rand, Inc., respondent.

MR. JUSTICE BLACK delivered the opinion of the Court.

Acting under $ 5 (b) of the Trading with the Enemy Act, the Alien Property Custodian vested in himself the American assets of Interhandel, a Swiss corporation. Interhandel sued in the District Court to recover the assets. The Custodian ' answered alleging that the Swiss corporation was dominated and controlled by officers, agents, and stockholders who were engaged in a conspiracy with German nationals and with the German Government to

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1 40 Stat. 411, 50 U. S. C. App. § 1, as amended by the First War Powers Act, 1941, 55 Stat. 839, 50 U. S. C. App. $ 5 (b).

2 Although the corporation is commonly called "Interhandel," its full legal name is Societe Internationale Pour Participations Industrielles et Commerciales S. A., etc. The American assets consisted of bank accounts and over 90% of the capital stock in the General Aniline & Film Corporation of Delaware, all of the assets apparently being valued at more than $100,000,000.

3 In 1946, the Attorney General succeeded to the powers and duties of the Alien Property Custodian. Exec. Order No. 9788, 11 Fed. Reg. 11981.

Opinion of the Court.

343 U.S.

operate the company's business in their interests while we were at war with Germany. Petitioners, United States citizens who own stock in Interhandel, filed a motion to intervene. They admitted the Custodian's charge that Interhandel was dominated by officers and stockholders who had been engaged in such a conspiracy. They also admitted the right of the Custodian to retain an interest in the seized assets proportional to the stock ownership of enemy stockholders. But petitioners contended that they and other nonenemy stockholders had claims in the corporate assets which it was the corporation's duty to protect. Alleging that the dominant enemy group which had charge of the suit would not press the corporate claim in a manner that would adequately protect the claims of innocent shareholders, petitioners asserted a right to intervene under Rule 24 (a) of the Federal Rules of Civil Procedure. The District Court denied the motion to intervene, 90 F. Supp. 1011, and the Court of Appeals affirmed, 88 U. S. App. D. C. 296, 188 F. 2d 1017. Underlying the claimed right of petitioners to intervene is an important question of the power of the Alien Property Custodian under the Trading with the Enemy Act, namely: What part of the assets of a corporation organized under the laws of a neutral country may the Custodian retain where part of the corporate stock is owned by enemies, part by American citizens, and part by nonenemy aliens? This question was reserved in Clark v. Uebersee Finanz-Korp., 332 U. S. 480, 489–490. To consider it we granted certiorari in this case. 342 U. S. 847.

First. Interhandel is a neutral corporation organized in Switzerland. Prior to 1941, even ownership of its stock and domination by enemy nationals would not have justified seizure of its assets. In order to reach the enemy interests in such neutral corporations, Congress amended the controlling Act in 1941. The background, scope and

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Opinion of the Court.

consequences of that amendment were discussed in Clark v. Uebersee Finanz-Korp., supra. We there held that the 1941 amendment authorized the Custodian to seize and vest in himself all property of any foreign country or national, even that of friendly or neutral nations. At the same time we refused to hold that the 1941 amendment deprived friendly or neutral nations or nationals of a right to have their assets returned if they could prove that they were free of any open or concealed enemy taint. The purpose of the amendment, we found, was "not to appropriate friendly or neutral assets but to reach enemy interests which masqueraded under those innocent fronts." Clark v. Uebersee Finanz-Korp., supra, at 485.

Thus, under the 1941 amendment the nonenemy character of a foreign corporation because it was organized in a friendly or neutral nation no longer conclusively determines that all interests in the corporation must be treated as friendly or neutral. The corporate veil can now be pierced. Enemy taint can be found if there are enemy officers or stockholders; even the presence of some nonenemy stockholders does not prevent seizure of all the corporate assets. But such a governmental seizure requires consideration of the plight of innocent stockholders. For as stated in the Uebersee case, the amendment does not contemplate appropriation of friendly or neutral assets. While Congress has clearly provided for forfeiture of enemy assets, it has used no language requiring us to hold that innocent interests must be confiscated because of the guilt of other stockholders. Nor does any legislative history pointed out persuade us that Congress intended to inflict such harsh consequences upon the innocent. We decline to read such a congressional purpose into the Act.

Our holding is that when the Government seizes assets of a corporation organized under the laws of a neutral

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