175 F.2d 897 | 3rd Cir. | 1949
The Attorney General, the Honorable Tom C. Clark, as successor
In July, 1941 Lavino became indebted to Kawasaki Kisen Kaisha, Ltd. (“Kawasaki”), a Japanese shipping corporation, for $72,753.27, the sum representing freight charges for the carriage of freight in one of the latter’s vessels. Lavino paid Kawasaki $47,753.27 but retained $25,000, claiming this amount as a set-off against damages which Lavino' asserted it sustained because of Kawasaki’s breach of a prior contract in failing to deliver to Lavino a shipment of chrome ore, whereby, Lavino alleges, it was damaged- to the extent of $24,-759.
On July 30, 1942 the Custodian, having determined that Kawasaki was an enemy national within the meaning of the Trading with the Enemy Act, 50 U.S.C.A.Appendix, § 1 et seq., issued two vesting orders, No. 77 and No. 80, by virtue of which all property of any nature whatsoever owned or controlled by, payable or deliverable to Kawasaki Kisen Kaisha, Ltd. and to Kawasaki Kisen Kabushiki Kaisha,
On September 12, 1946 the Custodian issued a turnover directive to Lavino, directing it to pay $25,000 to the Custodian, this sum, as we have said, being the balance due Kawasaki' for transportation of freight. The order was served on Lavino on October 15, 1946. Upon Lavino’s refusal to comply with the directive, the Custodian filed a petition in the court below, pursuant to Section 17
The court below entered judgment for the Custodian for $25,000 and interest from September 5, 1942. Lavino then moved to vacate -the judgment, contending that the Custodian was not -entitled to interest. The -court vacated the order, and, after a rehearing on the sole question of interest, entered judgment directing that the “ * * * respondent [Lavino] forthwith turn over and deliver to the petitioner [the Custodian] the sum of $25,000”, interest being omitted from the judgment.
The Custodian has -appealed, contending (1) that he is entitled to interest at a reasonable rate on the amount of $25,000 from
The narrow question presented by the instant appeal is whether the Custodian is entitled to interest, and, if so, from what beginning date. The Act makes no provision for payment of interest where, as here, there is noncompliance with the Custodian’s demand that enemy property be turned over to him.
In Board of Com’rs v. United States, 308 U.S. 343, 349, 350, 60 S.Ct. 285, 287, 84 L.Ed. 313, where, as in the instant case, the question was the right of the United States to collect interest prior to judgment in a suit to recover taxes wrongfully collected from an Indian ward of the United States by a county of the State of Kansas, the Supreme Court, speaking through Mr. Justice Frankfurter, pointed out that, “The issue is uncontrolled by any formal expression of the will of Congress.,” and said, “In ordinary suits where the Government seeks, as between itself and a private litigant, to enforce a money claim ultimately derived from a federal law, thus implying a wish of Congress to collect what it deemed fairly owing according to the traditional notions of Anglo-American law, this Court has chosen that rule as to interest which comports best with general notions of equity. United States v. Sandborn, 135 U.S. 271, 281, 10 S.Ct. 812, 815, 34 L.Ed. 112; Billings v. United States, 232 U.S. 261, 34 S.Ct. 421, 58 L.Ed. 596. Instead of choosing a rigid rule, the Court has drawn upon those flexible considerations of equity which are established sources for judicial law-making.” Compare also Rodgers v. United States, 332 U.S. 371, 373, 68 S.Ct. 5, 92 L.Ed. 3; Royal Indemnity Co. v. United States, 313 U.S. 289, 295, 296, 61 S.Ct. 995, 85 L.Ed. 1361. The Act creates the obligation to turn over on demand the property of the alien, not only to keep such property from being used for the benfit of the enemy but also to “affirmatively compel the use and application of foreign property” in “the interest of and for the benefit of the United States.” See H. R. Rep. No. 1507, 77th Cong., 1st Sess. pp. 2-3; 55 Stat. 839, 50 U.S.C.Appendix, § 5(b) (1).
When the Custodian served his turnover directive upon Lavino the latter had an immediate duty to comply. The statute requires an immediate transfer of
We conclude that the United States is entitled to interest from the date of service of the demand, viz., October 15, 1946, to the date of the judgment of the court below.
We cannot agree with the contention of the Custodian that the law of Pennsylvania has -any application here. We are adjudicating a federal question arising under an Act of Congress, and, in the absence of an applicable federal statute, it is for the federal court to aw;afd, according to its own criteria, appropriate damages expressed in terms of interest. Compare Royal Indemnity Co. v. United States, supra, 313 U.S. at page 296, 61 S.Ct. 995, 85 L.Ed. 1361. As the duty to transfer the property arises only on demand by the Custodian, such a demand, followed by non-compliance, constitutes - the condition precedent necessary to accrual of interest on the debt for the benefit of the Custodian. But there is no statute and no acceptable legal theory which would award interest prior to the Custodian’s demand. Indeed to award the Custodian interest on the sum demanded prior to the date of the turnover directive would penalize the debtor for delays by the Custodian wholly beyond the debtor’s control. To impose such a burden on the debt- or would not be just.
The judgment of the court below will be reversed with the direction to award interest on the sum of $25,000 from the date of service of the turnover directive, viz., October 15, 1946 to the date of judgment in the court below. Interest on the judgment when modified should of course follow the usual rule.
By Executive Order No. 9788, effective October 15, 1946, 11 F.R. 11981, 50 U.S.C.A.Appendix, § 6 note, the'Attorney General succeeded to the powers and duties of the Alien Property Custodian. For the purpose of convenience we shall employ the term “Custodian” as referring either to the Alien Property Custodian or to the Attorney General.
Though the turnover directive re-required Lavino to turn over the “. . . property with all dividends, accumulations and increment thereon . . .", there is no showing that the fund received any accumulations or increment or that Lavino received any dividends. The notice of appeal raises but one question: viz., the failure to award interest in the judgment.
Tbe relation of this Japanese corporation to Kawasaki Kisen Kaisha Ltd. does not appear from the record. No question concerning the status of the second Japanese corporation is raised by the parties.
Section 17 provides as follows: “The district courts of the United States are hereby given jurisdiction to make and enter all such rules as to notice and otherwise, and all such orders and decrees, and to issue such process as may be necessary and proper in the premises to enforce the provisions of this Act, with a right of appeal from the final order or decree of such court * *
The Custodian contends that under Rule 54(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A., the court below should have granted him the relief to which he was entitled even though he demanded interest on the $25,000 only from September 5, 1942.
See, however, Section 16 of the Act, 50 U.S.C.A.Appendix, § 16, which provides that “Whoever shall wilfully . . . refuse to comply with any order of the President issued in compliance with the provisions of this act, shall, upon conviction be lined not more than $10,000, or, if a natural person, be imprisoned for not more than ten years, or both.” In this connection see Stoehr v. Wallace, 255 U.S. 239, 245, 41 S.Ct. 293, 65 L.Ed. 604.
Interst on the judgment is not in issue here.