JOSEPHBERG et al. v. MARKHAM, Alien Property Custodian.
No. 83.
Circuit Court of Appeals, Second Circuit.
Dec. 10, 1945.
152 F.2d 644
Little need be said concerning the debtor‘s appeal from the order of the District Court denying his motion for a new trial. An order overruling a motion for a new trial is not appealable in the absence of a showing of an abuse of discretion on the part of the trial court. Fairmount Glass Works v. Cub Fork Coal Co., 287 U.S. 474, 481, 53 S.Ct. 252, 77 L.Ed. 439; Paine v. St. Paul Union Stockyards Co., 8 Cir., 28 F.2d 463, 467. Not only is there no showing of an abuse of discretion upon the part of the trial court, but it also appears that the motion was not presented to the trial court until long after the appeal from the order dismissing appellant‘s petition under
The judgment of the District Court dismissing the debtor‘s petition under
Hobart S. Bird, of New York City (Hobart S. Bird and Maurice Josephberg, both of New York City, of counsel), for appellants.
John F. X. McGohey, U. S. Atty., of New York City, and C. E. Rhetts, Acting Head, War Division, Harry LeRoy Jones, Chief, Alien Property Litigation Unit, M. S. Isenbergh, and David Schwartz, Chief Trial Attys., War Division, Department of Justice, all of Washington, D. C. (William L. Lynch, Asst. U. S. Atty., of New York City, of counsel), for appellee.
Before SWAN, CHASE, and CLARK, Circuit Judges.
CHASE, Circuit Judge:
The appellants, a committee of one Alfred Cerutti, an incompetent, seek to recover property of the incompetent committed to their care which had been vested by the Alien Property Custodian under order of August 3, 1943.1 Cerutti was born in Italy, and came to this country in 1913, becoming a naturalized citizen in 1926. At least as early as 1931, he was afflicted with a mental disease known as paranoid schizophrenia and was treated by a New York neurologist during 1929
Determination on this appeal, both as to the propriety of the seizure and of the standing of the plaintiffs to sue under
Appellants first contend that we are foreclosed by the finding in the commitment proceedings of the New York Supreme Court from again investigating the residence of Cerutti. But commitment proceedings are in rem to determine status. See Hughes v. Jones, 116 N.Y. 67, 22 N.E. 446, 5 L.R.A. 632, 15 Am.St.Rep. 386. And as such they bind non-parties only as to the status found. See Restatement, Judgments (1942), § 74(1), and comment a. The decree is “not conclusive [upon non-parties] as to a fact upon which the judgment is based * * *.” Id. at § 74(2), and comment c.
In argument we are presented with contrary definitions of the word “resident.”3 The appellants argue first that it means domicile, and alternatively, that if it doesn‘t, it means some conception of legal residence as opposed to actual residence or happenstance physical presence in an enemy country. They then point to many facts to show that Cerutti remained “resident” in the United States: being mentally incompetent, he was never capable of forming the requisite intent to change his domicile or legal residence; that he was in Italy only for the specific purpose of his health;4 that his remaining in Italy after declaration of war was involuntary.5
The appellee to the contrary contends that “resident“, as used in the presently pertinent statute, is to be taken to refer to physical presence alone; and further points out that in any event Cerutti, while in this country, had always intended to return to Italy; that when he went there he stayed with relatives; that he was only occasionally, and then voluntarily, an inmate of Villa Turro; that when he was, he was a “free incompetent“; that he tried to purchase a new villa in Italy; that he paid taxes, contributed to local charities, was a sympathizer with the Fascist regime, and voted in the general election of 1934 after having previously ascertained that he was properly enrolled as an Italian citizen and subject.6 The district judge found that Cerutti had become an “actual resident” of Italy and entered judgment for the defendant. This appeal followed.
In determining whether Cerutti falls within the provisions of the statute authorizing the seizure of the property of a citizen of the United States, his physical presence, or to use the phrase of the trial court his “actual residence” there at the time the vesting order took effect, is not decisive. Stadtmuller v. Miller, 2 Cir., 11 F.2d 732, 45 A.L.R. 895; Vowinckel v. First Federal Trust Co., 9 Cir., 10 F.2d 19; Miller v. Sinjen, 8 Cir., 289 F. 388. Cerutti‘s property in New York was in no way threatened with subjection to enemy uses by reason of his presence in Italy. He had no control over it himself since it was being administered by a committee appointed by the New York court; and, consequently, Italy could exercise no control over it through the control of him. Furthermore, the New York court would not have permitted its use for the benefit of an enemy. See Petition of Bernheimer, 3 Cir., 130 F.2d 396. Such use could also have been prevented by a freezing order issued by the Treasury. See Executive Orders Nos. 8389 and 8785, supra.
The property being in cash and securities its confiscation was not required, as, for instance, is the case of assets consisting of, or controlling, manufacturing facilities usable to secure production of materials to aid this government in the prosecution of the war; and, as a means for the purchase of such materials, it was comparatively negligible.
The purpose of confiscation under the
When this significance is, as it should be, given to term “resident” in the
Although one with his mental incapacity may not have lived abroad involuntarily, by the same token it is impossible to say that he has voluntarily remained there except in the status he had when he went there for a temporary visit. We think “resident” in the statute and orders imports something more than mere physical presence in a designated enemy country. It would be inconceivable, for instance, that Congress intended to provide for the confiscation of the property of a member of the American armed forces who was captured and held as a prisoner of war within a designated enemy country. Yet in the sense that he was physically present in the enemy country he would be a resident thereof. No such absurd construction of the term is, of course, admissible. Nor does such an extreme case need to be used for illustration. Cerutti‘s case is a fair example.
His physical presence in Italy at the time his property was seized was a condition not attributable as a matter of law to his volition; his property could not be used to aid the enemy; he was not engaged in trade with the enemy and he could engage in no commercial activities of any kind whatever. He was an American citizen whose presence in Italy for reasons beyond his control did not subject his property to any control or use by an enemy government and so did not make him a “resident” of Italy within the meaning of the statute and executive orders under which his property in this country was seized. Stadtmuller v. Miller, supra; Vowinckel v. First Federal Trust Co., supra; Miller v. Sinjen, supra. Consequently he was neither an “enemy” nor “a foreign national” nor “a national of a designated enemy country.”
Though a vesting order may not necessarily be condemnation nor confiscation, it does, when it lawfully becomes effective, prevent any suit for the recovery of the property except in accordance with the provisions of
We are bound to construe the term “resident” in so far as reasonably possible in a way to avoid either invalidating the statute and orders on constitutional grounds or raising a serious doubt as to their constitutionality. Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 307, 44 S.Ct. 336, 68 L.Ed. 696, 32 A.L.R. 786; Ex parte Mitsuye Endo, 323 U.S. 283, 299, 65 S.Ct. 208; United States v. Shreveport Grain & El. Co., 287 U.S. 77, 82, 53 S.Ct. 42, 77 L.Ed. 175. If the term “resident” is held to include a United States citizen in the situation of Cerutti and the statute and orders are construed to provide for the seizure and withholding of his property in this country, held here as it is, the failure to provide any remedy for its return or for just compensation to the owner for its seizure, other than what
Judgment reversed and cause remanded with directions to enter judgment for the plaintiffs.
CLARK, Circuit Judge, dissents with memo.
CLARK, Circuit Judge (dissenting).
Conceding the validity of the abstract legal principles stated in the opinion, I nevertheless think that the District Court‘s finding of Cerutti‘s “actual” residence in Italy was not “clearly erroneous” and justified the defendant‘s judgment, which it arrived at after a most carefully reasoned opinion. Indeed, I cannot avoid the feeling that the present result seems rather absurd as a practical matter. For it views as still a resident of New York for war-defense purposes a man who returned to his old homeland (lately an enemy country) a decade and a half ago, of his own volition and by himself, and stayed there, trying to purchase a villa, paying taxes, contributing to local charities, being “a sympathizer with the Fascist regime,” voting there “in the general election of 1934 after having previously ascertained that he was properly enrolled as an Italian citizen and subject,” and being “only occasionally, and then voluntarily,” an inmate of a sanitarium. Not until six years after his return was he adjudged an incompetent, and then only as to his property. This holding opens distinct possibilities as to means of retaining not merely American citizenship, but American residence for many years after actual residence in a country now our enemy. For example, consider a person caught abroad by the depression without means to return; does he not come within the ruling? I do not think this case is like that of “transients,” such as prisoners of war or other quite temporary visitors. Stadtmuller v. Miller, 2 Cir., 11 F.2d 732, 45 A.L.R. 895.
The result here appears to flow from two premises, neither of which should be accepted in my judgment. The first is the effectiveness of the adjudication of incompetency (not of commitment) in the New York courts. Had this adjudication not existed, I doubt if Cerutti‘s Italian actual residence would have been questioned. But as properly pointed out, this adjudication is not legally binding. It should not be made so practically, having in mind the obvious different setting and purpose of the state proceeding. The second is that under the circumstances Cerutti‘s New York property could not be subjected to enemy uses or enhance the ability of this country to prosecute the war.
Notes
After Germany had practically overrun Europe, Congress amended
This was amended by Executive Order No. 8785, Section 5, 12 U.S.C.A. § 95a note: “D. The term ‘foreign country’ shall include, but not by way of limitation, (i) The State and the government thereof on the effective date of this Order as well as any political subdivision, agency, or instrumentality thereof or any territory, dependency, colony, protectorate, mandate, dominion, possession or place subject to the jurisdiction thereof, * * *. E. The term ‘national’ shall include, (i) Any person who has been domiciled in, or a subject, citizen or resident of a foreign country at any time on or since the effective date of this Order, * * *” Id. p. 948, June 14, 1941.
After the United States entered the war, Congress passed the amendatory act of 1941 (supra note 1), section 302 of which provided that all prior “acts, actions, regulations, rules, orders, and proclamations” were “approved, ratified, and confirmed.”
And the final attempt at definition is found in Executive Order No. 9193, 50 U.S.C.A.Appendix, § 6 note, section 2(f) of which authorizes the Custodian to vest property of “a designated enemy country or national thereof,” and section 10(a) of which provides: “The term ‘designated enemy country’ shall mean any foreign country against which the United States has declared the existence of a state of war * * * and any other country with which the United States is at war in the future. The term ‘national’ shall have the meaning prescribed in section 5 of Executive Order No. 8389, as amended, * * *” C.F.R. loc. cit. p. 1174, July 6, 1942.
We are cited to several discussions of Congress, none of which help in the present problem. See S.Rep. 113, 65th Cong., 1st Sess. p. 2; 55 Cong.Rec. 4922.