United States v. Board of Finance and Revenue

Dissenting Opinion by

Mr. Justice Jones:

The majority’s extended discussion of our dual form of government and the constitutional separation of powers between the Federal Government on the one hand and the several States on the other is presently academic. It is advanced to support the mistaken thesis that the validation of the Alien Property Custodian’s claim to the fund in controversy would violate the *405 Commonwealth’s right to determine and control the devolution of property within its borders. No such question is here involved. The fact of the matter is that ownership of the fund is not in issue. Indeed, the majority opinion at one point concedes (see footnote 2) that the only right of the Commonwealth to the fund (which the Orphans’ Court awarded it without escheat) is to “custody and possession subject to reclamation by one presenting proofs of better title.” Elsewhere the majority opinion proceeds on the assumption that the fund belongs to the Commonwealth. Yet, the sole question is which party presents a better right to custody of the fund, and the matter of fundamental importance is the paramountcy of a Federal statute enacted pursuant to an express power conferred upon Congress by the Constitution of the United States, — in this instance, the power to declare war.

The assumption is unwarranted that the Trading With the Enemy Act ( 40 Stat. 411 ), amended by the First War Powers Act of 1941 ( 55 Stat. 839 , 50 U. S. C. A. App. §§1-40, 616-620), as applied by the learned court below to the facts of this case, constitutes an interference with State activities. In no true sense can such application of the Act be thought of as an invasion of a State’s power over the devolution of property within its borders: see Miller v. Clausen, 299 F. 723 (C. C. A. 8), where a Nebraska county court’s decree of heirship, handed down three years after the Alien Property Custodian vested the land, was recognized by the Federal court in proceedings against the Custodian under Section 9 of the Trading With the Enemy Act. At p. 727 the court said, “The contention that the county court of Morrill county had no jurisdiction because of the provisions of the Trading with the Enemy Act is not sound. That act did not take away from the county court its peculiar jurisdiction *406 to determine who were the heirs . . . and to adjudicate their status as such.” Nor does the Act deprive the Commonwealth of its right to escheat if the necessary conditions are met: see Commonwealth v. Von Zedtwitz, 215 Ky. 413 , 285 S. W. 224, 228 , where certiorari by the United States Supreme Court was denied, 273 U. S. 735 . In that case the Supreme Court of Kentucky, rejecting the argument of the Commonwealth that the Trading With the Enemy Act interfered with the powers reserved to it by the Constitution, declared, “The act took away from the commonwealth of Kentucky no right it had of escheating the lands in question, but only required it to institute and prosecute any such action in the federal district courts . . . .” In last analysis, the Act constitutes nothing more than an appropriate exercise of the war-making power which the Constitution of the United States reposes in the Congress (Article I, Section 8) and, being such, it binds the judges in every State “anything in the Constitution or laws of any State to the contrary notwithstanding” (Article VI).

The vesting authority conferred upon the Alien Property Custodian by Section 5 (b) of the Trading With the Enemy Act as amended (50 U. S. C. A. App. §616) is not limited to the vesting of property in the hands of a “person” but is applicable to “any property ... of any . . . foreign . . . national ...” and is therefore broad enough to include property in the custody of a State: In re Yokohama Specie Bank, Limited, 188 N. Y. Misc. 137, 66 N. Y. S. 2d 289. The distinction between the regulating powers and the vesting powers conferred by Section 5 (b) of the Act is by no means specious as the majority opinion states. That Section provides that “. . . the President may, through any agency that he may designate, . . . regulate,. . . nullify, ... or prohibit, any . . . transactions involving, any *407 property in which, any foreign country or a national thereof has any interest, by any’ person, or with respect to any property, subject to the jurisdiction of the United States; and any property ... of any foreign . . . national . . . shall vest, when, as, and upon the terms, directed by the President . . . .” This provision plainly authorizes regulation, such as licensing of transactions and blockage of assets, independent of vesting and has been recognized so to do by the Supreme Court of the United States. In Propper v. Clark, 337 U. S. 472, 483 , it was said that “The plan for prohibition of unlicensed transactions by foreign nationals comprehends blocking of transfers of credits and vesting of local assets .... If transactions are blocked, vesting may or may not follow” (Emphasis supplied). Moreover, Section 7 (c) of the Act (50 U. S. C. A. App. §7 (c)) provides that “. . . any . . . property . . . belonging to ... an enemy . . ., which the President after investigation shall determine ... so belongs . . ., shall be . . . transferred ... to the Alien Property Custodian, or the same may be seized by the Alien Property Custodian . . . .” The majority opinion ignores this Section entirely.

Once property becomes vested in the Custodian pursuant to a vesting order based on the stated belief that it is the property of an alien enemy, the only recourse available to one seeking to contest the vesting is the remedy provided by Sections 7 (c) and 9 of the Trading With the Enemy Act: see Propper v. Clark, supra, at pp. 483-484; Josephberg v. Markham, 152 F. 2d 644 (C. C. A. 2); Commonwealth v. Von Zedtwitz, supra. And where, as here, the Alien Property Custodian vests in himself title to the fund and not merely the interest therein of the alien enemy, he has a right to possess it even though there has been no prior judicial determination of the fact of the enemy interest *408 or the extent or nature thereof: see Stoehr v. Wallace, 255 U. S. 239, 245 ; Central Union Trust Company of New York v. Garvan, 254 U. S. 554, 566 ; Commercial Trust Company of New Jersey v. Miller, 262 U. S. 51, 53 .

There remains to be considered only the Pennsylvania legislation applicable to a suit by the Custodian against the Commonwealth in its own courts for the fund in question. The Attorney General of the United States, as successor to the Alien Property Custodian, is a natural person (see Sections 5 (b) and 7 (c) of the Trading With the Enemy Act, supra). He consequently qualifies as the “person legally entitled” under Section 10 of the Pennsylvania Act of June 25, 1937, as amended, 27 PS §443 (a), which provides that “Any person legally entitled to any moneys which shall have been paid into' the State Treasury . . . without escheat . . . may . . . apply to the Board of Finance and Revenue for a refund of the same, and, upon his making proof of his ownership or right of possession to the satisfaction of the board, such moneys shall be paid him . . .” (Emphasis supplied).

The Custodian’s right of possession was ordained by Congress in an exercise of its constitutionally exclusive power to make war. It is obviously a part of the supreme law of the land. Accordingly, the Board of Finance and Revenue abused its discretion in failing to recognize and sustain the sufficiency of the Custodian’s “proof of right of possession”. The learned court below was correct in holding that the supplemental vesting orders were proof of “better title.”

I would, therefore, affirm.

Mr. Justice Allen M. Stearne joins in this dissent.