Guessefeldt v. McGrath, 342 U.S. 308 (1952)

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Author: Justice Frankfurter

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Guessefeldt v. McGrath, 342 U.S. 308 (1952)

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

This is a case brought under § 9(a) of the Trading with the Enemy Act, 40 Stat. 411, as amended,{1} to recover property vested by the Alien Property Custodian. The District Court granted the Government’s motion to dismiss, holding that plaintiff, while not "resident within" Germany within the meaning of § 2 of the Act, and thus "not an enemy" for the purposes of § 9(a), was precluded from recovering by § 39 which provides that

No property . . . of Germany, Japan, or any national of either such country vested in . . . the Government . . . pursuant to the provisions of this Act, shall be returned to former owners thereof. . . .

62 Stat. 1240, 1246, 50 U.S.C.App. (Supp. IV, 1946) § 39,{2} 89 F.Supp. 344. The Court of Appeals for the District of Columbia Circuit affirmed. 88 U.S.App.D.C. 383, 191 F.2d 639. We brought the case here for clarification of the restrictions imposed by and the remedies open under the Trading with the Enemy Act. 342 U.S. 810.

Accepting the allegations as true for the purpose of dealing with the legal issues raised by the motions to dismiss, the situation before us may be briefly stated. Guessefeldt, a German citizen, lived continuously in Hawaii from 1896 to 1938. In April of that year, he took his family to Germany for a vacation. After the outbreak of war, he was unable to secure passage home before March, 1940, when his reentry permit expired. When the United States entered the war, he was involuntarily detained in Germany, first by the Germans and after 1945 by the Russians, until July, 1949, when he returned to this country. During that time, he did nothing directly or indirectly to aid the war effort of the enemy.

The first question to be decided is whether the claimant was "resident within" the territory of a nation with which this country was at war within the meaning of §§ 2 and 9(a) of the Trading with the Enemy Act. He was physically within the enemy’s territory. He contends, however, that the meaning conveyed by "resident within" is something more than mere presence; at the least, a domiciliary connotation, if not domicile, is implied.

Legislative history leaves the meaning shrouded. Some use of the term "domicile" as the touchstone of enemy status is to be found in the Congressional hearings and reports.{3} But on the floor, Representative Montague, one of the managers of the bill, unequivocally stated under close questioning that the statutory language was intended to cover much more than those domiciled in enemy nations. Yet prisoners of war, expeditionary forces and "sojourners" were not, he said, intended to be included. 55 Cong.Rec. 4922.{4}

Guessefeldt retained his American domicile. Moreover, if anything more than mere physical presence in enemy territory is required, it would seem clear that he was not an "enemy" within the meaning of § 2. His stay before the war, as a matter of choice, was short. The circumstances negative any desire for a permanent or long-term connection with Germany. He intended, and indeed attempted, to leave there before this country entered the war. Being there under physical constraint, he is almost literally within the excepted class as authoritatively indicated by Mr. Montague. To hold that "resident within" enemy territory implies something more than mere physical presence and something less than domicile is consistent with the emanations of Congressional purpose manifested in the entire Act, and the relevant extrinsic light, including the decisions of lower courts on this issue, which we note without specifically approving any of them. See McGrath v. Zander, 85 U.S.App.D.C. 334, 177 F.2d 649; Josephberg v. Markham, 152 F.2d 644; Stadtmuller v. Miller, 11 F.2d 732; Vowinckel v. First Federal Trust Co., 10 F.2d 19; Sarthou v. Clark, 78 F.Supp. 139.

Guessefeldt has the further obstacle of § 39 to clear before he can succeed. Congress, in 1948, so the Government’s argument runs, adopted a "policy of nonreturn,"{5} and prohibited the restoration of vested property to a "national" of Germany. A citizen is a national, and Guessefeldt is a German citizen. Thus, even though he may, before the enactment of § 39, have been entitled to bring suit as a nonenemy under § 9(a), that privilege has since been cut off. To which Guessefeldt counters that § 39 must be construed harmoniously with § 9(a); the term "national" in the new section must accordingly be taken to mean only those German and Japanese citizens who could not theretofore have enforced the return of their property as of right. Section 39, in the context of its legislative history and in the light of the scheme and background of the statute, makes the Government’s contention unpersuasive.

It is clear that the Custodian can lawfully vest under § 5 a good deal more than he can hold against a § 9(a) action. Central Union Trust Co. v. Garvan, 254 U.S. 554; Clark v. Uebersee Finanz-Korp., 332 U.S. 480. Thus Congress had to make provision for the disposal of two classes of vested property. Nonenemy property, lawfully vested under § 5, was recoverable in a suit against the Custodian. § 9(a); see Becker Steel Co. v. Cummings, 296 U.S. 74. The second class, property owned by "enemies" and therefore not subject to recovery under § 9(a), was reserved f or disposition "[a]fter the end of the war . . . as Congress shall direct." 40 Stat. 411, 423, 50 U.S.C.App. § 12.

After both wars, Congress did adopt measures to dispose of this property. The Treaty of Berlin, 42 Stat. 1939, 1940, at the end of World War I, confirmed the possession of vested enemy property by the United States. Junkers v. Chemical Foundation, Inc., 287 F. 597; Lange v. Wingrave, 295 F. 565; Klein v. Palmer, 18 F.2d 932. For present purposes, it does not matter whether this action was taken simply to secure claims of American citizens against Germany or was regarded as the rightful withholding of spoils of war. In the Settlement of War Claims Act of 1928, 45 Stat. 254, 270, 50 U.S.C.App. §§ 9(b)(12), (13), (14), (16), 9(m), Congress provided for the return to admittedly enemy owners of 80% of their vested property. See Cummings v. Deutsche Bank und Disconto-Gesellschaft, 300 U.S. 115.{6} Section 32 of the Trading with the Enemy Act, 60 Stat. 50, as amended, 50 U.S.C.App. (Supp. IV, 1946) § 32, enacted after World War II, provided for administrative returns of property to certain classes of "technical" enemies who were ineligible to bring suit under § 9(a). Thus, if § 39 is treated as dealing only with property not otherwise subject to recovery, the consistency of the pattern of enactment is preserved. On the other hand, if the significant language of the section is regarded as requiring the retention of property which would otherwise be recoverable in a suit under § 9(a), it would mark the first departure from what appears to be a heretofore consistent Congressional policy.

Section 39 was passed as part of a measure establishing a commission on the problem of compensating American prisoners of war, internees, and others who suffered personal injury or property damage at the hands of World War II enemies. Congressional attention was focused on the nature and extent of these claims and methods of adjudicating them. The issues involved in § 39 were of peripheral concern. Reading the legislative history in this light, it lends support to the view that § 39 was conceived as dealing with property not otherwise subject to return. Senate hearings opened with detailed testimony analyzing the value of assets which would be left after payments for administration and liquidation, returns under § 32, and disbursements in satisfaction of judgments in suits brought under § 9(a). Hearings before a Subcommittee of the Senate Committee on the Judiciary on H.R. 4044, 80th Cong., 2d Sess. 12-21. See also id., at 44, and Hearings before the House Committee on Interstate and Foreign Commerce on H.R. 873, 80th Cong., 1st Sess. 264. It seems clear that the legislation looks to the disposition of this fund, and the conclusion is reinforced by the provision of the section that

The net proceeds remaining upon the completion of administration, liquidation, and disposition pursuant to the provisions of this Act of any such property or interest therein shall be covered into the Treasury at the earliest practicable date.

The tenor of the hearings demonstrates no purpose to change the existing scope of § 9(a). The only reason a proviso to that effect was not included in § 39 as passed seems to be an assumption -- unwarranted in the light of other evidence before the committees discussed below -- that a national of any enemy nation had no rights under § 9(a) in any case.{7} Indeed, the terms "enemy," "enemy alien," "enemy national," and "German or Japanese national" are used interchangeably in the hearings, not only by committee members but by witnesses from the Office of Alien Property, without regard to precise shades of meaning in the context of the Trading with the Enemy Act.

By § 39 Congress was manifesting its "firm resolve not to permit the recurrence of events which after the close of World War I led to the return of enemy property to their former owners." H.R.Rep. No. 976, 80th Cong., 1st Sess. 2. Those events, as we have seen, culminated in the Settlement of War Claims Act of 1928 permitting enemies as defined in § 2 of the Trading with the Enemy Act to recover 80% of their vested assets. The major controversy on § 39 was whether this reversal of post-World War I policy was justifiable as a matter of international law or appropriate as a course of action for the United States. Opponents of the section considered the "policy of nonreturn" as applied to admitted enemies illegal, or at least unjust, confiscation of private property. To this point -- and not to the issue before the Court in this case -- were directed the references in the reports, H.R.Rep. No. 976, 80th Cong., 1st Sess. 2, and debate, 94 Cong.Rec. 550-551, on which the Government relies.

On the other hand, both Senate and House committees had before them testimony calling attention to the very problem now in issue. Hearings before the House Committee on Interstate and Foreign Commerce, supra, at 265; Hearings before a Subcommittee of the Senate Committee on the Judiciary, supra, at 197, 254. And one witness presented a draft substitute for the section, complex to be sure, which would expressly have saved cases like Guessefeldt’s from the operation of the bill. Id. at 233-236. This suggestion was not acted upon by the committee. Yet taken as a whole, the testimony on this issue was meagre and unimpressive. It was largely in written form, and therefore less likely to have been seen by or to have had impact on the committee members or to reflect their views. These considerations, taken together with the peripheral character of the problem from the committees’ point of view, the consistent failure to appreciate the technical significance of the term "enemy national" in the framework of the Act, and the fact that the matters raised by this testimony were not touched upon in floor debate -- all go far to overcome any presumption that the claimant’s situation was considered by Congress and rejected.

Moreover, a decision for the Government would require us to decide debatable constitutional questions. I suits by United States citizens, § 9(a) has been construed, over the Government’s objection, to require repayment of just compensation when the Custodian has liquidated the vested assets. Becker Steel Co. v. Cummings, supra; Henkels v. Sutherland, 271 U.S. 298; see Central Union Trust Co. v. Garvan, supra, 254 U.S. at 566; Stoehr v. Wallace, 255 U.S. 239, 245. Such a construction, it is said, is necessary to preserve the Act from constitutional doubt. It is clear, too, that friendly aliens are protected by the Fifth Amendment requirement of just compensation. Russian Volunteer Fleet v. United States, 282 U.S. 481. The question which remains is whether a citizen in Guessefeldt’s position of a nation with which this country is at war is deemed a friendly alien. More broadly, is any national of an enemy country within the reach of constitutional protection? The thrust of the Government’s argument is that § 39 bars any such claimant on the mere showing of his citizenship. Ex parte Kawato, 317 U.S. 69, holds that, as a matter of common law as well as interpretation of the Trading with the Enemy Act, a resident enemy national, even though interned, must be permitted access to American courts. And The Venus, 8 Cranch 253, seems to say that at common and international law, in the absence of hostile acts, enemy status, at least for the purpose of trade, follows location and not nationality. Cf. Miller v. United States, 11 Wall. 268, 310-311.

On the other side is Mr. Justice (then Judge) Cardozo’s careful opinion in Techt v. Hughes, 229 N.Y. 222, 128 N.E. 185, holding that a national of an enemy country, wherever resident, is an enemy alien, and that any mitigation of the rigors of that status, as in the right to sue, is a matter of grace. He suggests, however, that "enemy alien," for the purpose of trade with the enemy, may be something different than for other purposes, but he had, of course, no occasion to consider whether this difference attained constitutional dimensions. In Klein v. Palmer,supra, a suit by two resident German citizens, one proclaimed a dangerous enemy alien during World War I, against the Alien Property Custodian for damages and equitable relief, Judges Hough, L. Hand and Mack held that "the government was under no constitutional prohibition from confiscating the property of the enemy’s nationals, whether resident or nonresident." Id. at 934. It was the court’s view that the class of nonenemies for the purpose of § 2 of the Trading with the Enemy Act was broader than the class entitled to just compensation under the Fifth Amendment.

Certainly, the constitutional problem is not imaginary, and the claim not frivolous which would have to be rejected to decide in the Government’s favor. Considering that confiscation is not easily to be assumed, a construction that avoids it and is not barred by a fair reading of the legislation is invited.

The concern of the Trading with the Enemy Act is with problems at once complicated and far-reaching in their repercussions. Instead of a carefully matured enactment, the legislation was a makeshift patchwork. Such legislation strongly counsels against literalness of application. It favors a wise latitude of construction in enforcing its purposes. Cf. Clark v. Uebersee Finanz-Korp., 332 U.S. 480; Markham v. Cabell, 326 U.S. 404; Silesian-American Corp. v. Clark, 332 U.S. 469.{8}

None of the considerations we have canvassed standing alone is conclusive in favor of the claimant. Perhaps none, by itself, would justify a decision in his favor. The cumulative effect, however, places such a decision well within the bounds of reasonable construction. We have said enough to show that the question is not free from doubt. On the balance, however, we think § 39 is properly construed as applying only to those German and Japanese nationals otherwise ineligible to bring suit under § 9(a).

The judgment below is

Reversed.

MR. JUSTICE CLARK took no part in the consideration or decision of this case.

1.

SEC. 2. 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.

SEC. 9. (a) Any person not an enemy . . . claiming and any interest, right, or title in any money or other property which may have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United States, . . . may file with the said custodian a notice of his claim under oath and in such form and containing such particulars as the said custodian shall require; . . . [S]aid claimant may institute a suit in equity in the Supreme Court of the District of Columbia or in the district court of the United States for the district in which such claimant resides, or, if a corporation, where it has its principal place of business (to which suit the Alien Property Custodian or the Treasurer of the United States, as the case may be, shall be made a party defendant), to establish the interest, right, title, or debt so claimed, and if so established the court shall order the payment, conveyance, transfer, assignment, or delivery to said claimant of the money or other property so held . . . or the interest therein to which the court shall determine said claimant is entitled.

50 U.S.C.Appendix, §§ 2, 2(a), 9(a).

2.

SEC. 39. No property or interest therein of Germany, Japan, or any national of either such country vested in or transferred to any officer or agency of the Government at any time after December 17, 1941, pursuant to the provisions of this Act, shall be returned to former owners thereof or their successors in interest, and the United States shall not pay compensation for any such property or interest therein. The net proceeds remaining upon the completion of administration, liquidation, and disposition pursuant to the provisions of this Act of any such property or interest therein shall be covered into the Treasury at the earliest practicable date. Nothing in this section shall be construed to repeal or otherwise affect the operation of the provisions of section 32 of this Act or of the Philippine Property Act of 1946.

3. See Statement of Hon. Robert Lansing, Secretary of State, Hearings before the House Committee on Interstate and Foreign Commerce on H.R. 4704, 65th Cong., 1st Sess. 3, 4. But see id. at 9. Assistant Attorney General Charles Warren, principal draftsman of the bill, testified that it had no application to Germans "domiciled" in this country. Id. at 34. And the House Report speaks of enemy status as being determined

not so much . . . by the nationality or allegiance of the individual, . . . as by his . . . commercial domicile or residence in enemy territory. The enemy domiciled or residing in the United States is not included. . . .

H.R.Rep.No.85, 65th Cong., 1st Sess. 2.

4. The validity of this construction is additionally suggested by the explanation in the Senate report of the parallel term of § 2, "doing business within such territory." According to the report, that meant "having a branch or agency actively conducting business within that country." S.Rep.No.111, 65th Cong., 1st Sess. 4. That is to say, not "domiciled" in enemy territory by American corporation law standards, but having a substantial, not casual or transitory connection with it. See also Hearings before a Subcommittee of the Senate Committee on Commerce on H.R.4960, 65th Cong., 1st Sess. 136-137.

5. H.R.Rep.No.976, 80th Cong., 1st Sess. 2.

6. The resolution of July 2, 1921, terminating the state of war with Germany, provided that

All property of the Imperial German Government . . . and of all German nationals which . . . has . . . come into the possession or under control of . . . the United States . . . shall be retained . . . and no disposition thereof made, except as shall have been heretofore or specifically hereafter shall be provided by law.

42 Stat. 105, 106. By the Treaty of Versailles, art. 297(d), "all the exceptional war measures, or measures of transfer . . . shall be considered as final and binding upon all persons." In art. 297(i), Germany undertook "to compensate her nationals in respect of the sale or retention of their property, rights or interests in Allied or Associated States." The Treaty of Berlin, 42 Stat. 1939, 1940, incorporated these provisions of the Versailles Treaty, together with appendices defining "exceptional war measures" and cutting off the right of suit by German nationals against American officials on account of wartime action. An agreement of August 10, 1922, 42 Stat. 2200, established a Mixed Claims Commission to adjudicate claims of American nationals against Germany. Provisions for the return of vested property were made by successive amendments to § 9. Finally, in the Settlement of War Claims Act, 45 Stat. 254, 270, Congress provided for the return of 80% of their vested property to German enemies who would waive their claims to the remaining 20%. Germany in a debt funding agreement of June 23, 1930, deposited bonds with the United States, payments on which were to be applied to the settlement of awards of the Mixed Claims Commission. When Germany defaulted on these payments, Congress, by Public Resolution No. 53 of June 27, 1934, 48 Stat. 1267, suspended all deliveries of property under the Settlement of War Claims Act to German nationals until Germany should clear up the arrears.

7. As it passed the House, the bill contained a provision suspending the payment out of vested assets of debts owed by enemies to citizens. In the Senate hearings, Representative Beckworth, who had sponsored that provision, urged the Senate to go further and suspend the payment of so-called "title claims" as well. He presented a draft amendment for the Senate committee’s consideration which provided that "no property . . . shall be returned to former owners . . . except as directed by a court under § 9(a) of the act." This was to be an addition to the provision which became § 39. Hearings before a Subcommittee of the Senate Committee on the Judiciary on H.R. 4044, 80th Cong., 2d Sess. 124. Both of these provisions were omitted from the bill reported by the Senate. Although this bit of legislative history reveals a certain amount of confusion about the operation of the Act, it is tolerably clear from it that the operation of § 9(a) was not intended to be affected by the legislation.

8. Other than those here for review, six district court cases have involved construction of § 39. The Government contends that five of these have accepted the position it urges in this case. Schill v. McGrath, 89 F.Supp. 339; Lippmann v. McGrath, 94 F.Supp. 1016; Bellman v. Clark, Civ.No.47-229 (S.D.N.Y. Nov. 8, 1948); Mittler v. McGrath, 102 F.Supp. 1007; Janner v. McGrath, Civ.No.3685-49, D.C.D.C.Mar. 31, 1950. Even if this were true, it would present no such settled line of adjudication as to give pause to this Court in upsetting it. But at least three of these cases present no conflict with a decision in favor of the claimant here. In Mittler, Janner, and Lippmann, plaintiffs are enemies within § 2, thus ineligible under § 9(a), and, because they are also citizens of Germany, must be barred by § 39 whatever the meaning ascribed to the term "national" in that section. The same is possibly true of Schill, since the plaintiff there was interned as a dangerous enemy alien during the war. It might also be added that, in McGrath v. Zander, supra, decided after the enactment of § 39, the Government apparently made no contention that the section would bar the suit, although on the Government’s theory that result would clearly follow. Thus, analysis of the cases shows no such near unanimity in its favor as the Government contends.

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Chicago: Frankfurter, "Frankfurter, J., Lead Opinion," Guessefeldt v. McGrath, 342 U.S. 308 (1952) in 342 U.S. 308 342 U.S. 310–342 U.S. 320. Original Sources, accessed April 21, 2018, http://www.originalsources.com/Document.aspx?DocID=D2LNK4ILLLI97KG.

MLA: Frankfurter. "Frankfurter, J., Lead Opinion." Guessefeldt v. McGrath, 342 U.S. 308 (1952), in 342 U.S. 308, pp. 342 U.S. 310–342 U.S. 320. Original Sources. 21 Apr. 2018. www.originalsources.com/Document.aspx?DocID=D2LNK4ILLLI97KG.

Harvard: Frankfurter, 'Frankfurter, J., Lead Opinion' in Guessefeldt v. McGrath, 342 U.S. 308 (1952). cited in 1952, 342 U.S. 308, pp.342 U.S. 310–342 U.S. 320. Original Sources, retrieved 21 April 2018, from http://www.originalsources.com/Document.aspx?DocID=D2LNK4ILLLI97KG.