# Brief for the Respondent in Opposition — Chemical Bank New York Trust Co. v. Kennedy

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Brief for the Respondent in Opposition
- **Published:** January 1, 1964
- **Citation:** 375 U.S. 965

## Text

®
INDEX
ins iy Page
Opinions below---------------------------------- nese 1
Juriediction.......---..<.-- Scaceueusnhepenenn oesee=e 2
Question presented. ._-------- in ieee kaa lehewiaiagenartaits |
Statutes involved -------------.------------ Xeneeeeee--- 2
DR nc nc nccmewcccccccchkeacsescentenakseresesee 2
Argument...-...-.--------------- ------ rrrtttteenooe ;
Conclusion... --.----------------------------+------+--- 12
Appendix....-.--.--------+------.---- -------7---s+—-- 13
¢ IPVATIONS
» Cases:
yg Track Lines, luc v. United States, 371
a cine ninth baerenmenianah 10
Statutes: °° ° . - es
International Claims seo sigyel Act of 1949, as
amended, 64 Stat. 12, 69 Stat. i062, ¢f seq. 22 U.S:C.
1021, et seq------------------------------------ 2,5, 15
Section 202, 22 U.S.C. 1@31a_......-.2..,..--.- 2
Section 208; 22 U.S.C. 1631g_..-.------.---- 3,11, 12
Section 208(a), 22 USC. 1631¢( a)--- 6, 7,8, 10, 11,13
Section 208(b), 22 I.S.¢ ed 6, 11,15
Section 208(c), 2% USC. 1631g(c)----- Rath Sees 7.14
Section 302, 22 U.S.C. 1641a......------------ »
Section 303, 22 U.S.C. 1641b.----2----------- 5, 8, 14
M iscellAneous : : se
OE Fs Sivek nitcincusesnnevindwawnee ‘neiiehsnaiie 11
+ Be Caiinct cane datiabdisssncccmunneeigarthe 11
OI Wc acvatinca ese caunans eemdgnianes aa
OF i iis Snvkcantukentneeaemnlenemeniees 12.
PK i i hints scare acccniiaende iene sar ranma eal amare ‘Az
Sy SF iis SA cin conviction naeacastnneitaaintanicliaaionts 12
OE ind givcin ne rcnaneensiers ikea a
Wr tcnitpaieweeccnus aces acne a | a
25 FR. 253.__..--- aT Seer cd accnnac eats 12
re a aia aa
— BE eG gh eke kh nea eeiioeane 12
715-645 —63--—-1 ay

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Gn the Supreme Court of the Bnited States 4

- OCTOBER TERM, 1963

Wo. 550 ..

CuemicaL Baxk New York Trust Companys AND

‘ e /
MANUFACTMRERS Hanover Trust CoMPANY,/ For-
MERLY MANUFACTURERS .TRUsT COMPANY, -\PETI-
TIONERS Paes i |

: i

Rosert F. KENNEDY, ATTORNEY GENERAL QF THE

UniTep STATES Tea

ON PETITION FOR A WRIT, OF CERTIORARI TO THE UNITED
STATES COURT.OF APPEALS FOR THE DISTRICT OF COLUMBIA
CIRCUIT ate ;

- BRIEF FOR THE RESPONDENT IN OPPOSITION

—~\

© OPINIONS BELOW : ee

The. opinion of the District Court (R. 161; Pet.

App. B-1) is. reported at-199 F. Supp. 256. The

opinion of the Court of Appeals for the District of
Columbia Circuit (Pet. App. B-11) is reported at 319
F.2d 720. + ras ;

1“RS references are .o the Joint Appendix in the Court of

Appeals, filed as part of the record in this‘Court. “Pet. App.”

references are to the Appendix to the Petition For a Writ of
Certiorari. :
: (1).

.
-

JURISDICTION

The judgment ot the Jourt of Appeals was filed on
_ May 2, 1968, (Pet. App. B-14). A timely: “petition
for rehearing was, denied:on July 16, 1963. The
petition for certiorari was filed on October 14, 1963.
The jurisdiction of this Court is invoked under 28
US C1 1254(1)> ‘fi:
: QUESTION ‘PRESENTED

Ww Aiiner, in light -of the provisions of section
208 ( n) of the International Claims Settlement Act of
1949, as amended, 22 USC. 1631g(a), prohibiting
‘the.allowance by the Attorney General of debt claims
asserted against an agency of the Hungarian Govern-
ment, the Court of Appeals erred in directing that
the case ‘be remanded for a finding by the Attorney
General as to whether the instant claims were in fact
asserted against an agency of the Hungarian Govern- .

ment.
Ra ee STATUTES INVOLVED

The pertinent provisions of the International
Praga Settlement Act of Prag, as amended, 64 Stat.

2, 69 Stat. 562, et seq., 22 U. S.C." 1621, et seqg., are
set forth in the Appendix, infra, pp. 13-15.

Sop aTEMENT

Cada pr operty. of the National Bank of Hungary
was vested by the Attorney General on May 28, 1956,
| pursuant to section 202 of the International Claims |
Settlement Act of 1949, as amended, 22 U.S.C. 1631a
(R. 53-67)... Subsequently, the New Y ork Trust Com-
pany (now the Chemieal Bank New York Trust .
Company) and the Manufacturers» Trust Company
: (now the Mauutacturers Hanover Trust Company )

filed with the Office of Alien Property of the Depart-
ment of Justice notices of debt claims. in the respec-
tive sums of $684,142.98 and $159,833.04 (R. 68-85).
Both claims, filed under seetion 208 of the Interna-
tional Claims Settlement Act of 1949, as amended,
22, U.S.C. 1631g, were asserted against the National
Bank of Hungary atid payment was sought from the
“vested property of that- bank (R. 68-85). The net
amount in the bank’s vested account available for .the
payment of debt claims is $168,158.07 (R. 157). The
facts underlying these claims can be summarized as
follows: ?

The petitioners’ ‘iia were based on “unpaid bal-
ances’ on loans made under an agreement of Decem-
ber 39,°1928 (hereinafter called the Hungarian Ex-
| port Agreement) which provided for a self-liquidat-
‘ ing, revolving $5,000,000 export credit to be furnished
by petitioners to enable Hungarian exporters to ob-,
tain payment in dollars for products exported from
Hungary. .Eight Hungarian banks guaranteed the
due payment at maturity of any and all drafts drawn
by their customers against this fund and accepted by
New York Trust Company (R: 16-20). By a ‘con-
current agreement the Royal Hungarian Government
also guaranteed that the Hungarian firms taking the
credits would remit to. the credit of the special ac-
.count of the Hungarian banks with the New York
Trust Company amounts sufficient for the payment
of .their obligations on the basis of bills accepted
and discounted by the New York Trust Company,
and that, should such firms fail to do so, the Hui-

4
garian Government would remit the necessary amounts
(R. 20-26). .
The provisions of the Hungarian Expert Agree-
ment were duly carried out without significant: inei-

dent until early August 1931. At that tinie the Hun-.

garian Government enacted moratorium laws which
provided that. payments ‘of foreign currency outside
of Hungary required permission of the National Bank
of Hungary, a bank partly owned by the Hungarian
Government and designated by it as its national
administrator of foriegn exchange (R. 96). On Au-
gust Hy, L931, counsel for the Hungarian Commer-
eidl Bank of Pest, the syndicate ‘manager for the

eight Hungarian banks that. guaranteed the Hun- -

garian export credit, wrote to the National Bank of
‘Hungary, - requesting a written statement that thé

moratorium decrees would not prevent the continuance

of business under the Hungarian export agreement

(R. 32-33).

pack response, on August 25, 1931, the National Bank -

Uungary wrote to the Hungarian Commercial
met of Pest and gave. its consent that the counter
value in foreign exehange of bills discounted within
the $5,000,000 export credit granted. by the New York

‘Trust Company could. be claimed by the exporters |

from. the National Bank of Hungary at the time these
bills fell dive CR. 35-36).
However, shortly before January 15, 1932, appar-

ently as aeresult of further moratorium laws, the.

Hungarian Minister: of Finance advised the New
“York Trust Company that payments in foreign
currencies were prohibited and that the commitment
eomimission due the New York ‘Prust Company on

<g

a)

5

January 15, 1932, would not be paid. On January
lth, the .New York Trust Company ‘abled beth
the Hungarian Commerciai Bank of Pest and the
Hungarian Minister of Finanee, and notified them
that payment was not received, that the Hungarian
Export Agreement of 1928 was thus im default, and
that the Trust Company's obligations thereunder had
terminated (R: 36). Following these cablegrams,
the National Bank of Hungary, on January 20, 1932,
informed the Hungarian Commercial Bank of Pest
by letter that the National Bank’s letter of August
25, 1931, would have to be considered null and void
fe. 37). Although various expedients were under-
taken in the ensuing vears to reduce the amount of
the unpaid debt (R. 3848), at the“fime the subject
claims were filed with the Office of Alien Property
#684,142.98 was still due to the New Work Trust.
~ Company and the.other banks it represented (R. 69)‘
and $159,885.04 remained due to the Manufacturers
Trust Company (R. 80)... |

Based upon the above-deseribed events during the
period 1928-1932, the petitioners filed claims under
the International Claims Settlemetit Act of 1949, as
amended, 22 U.S.C. 1621,. et seq., infra, pp. 13415,
with two different. governmental agencies. Pursuant
to seetion 303 of the Aet, 22 U.S.C. 1641b. infra,
p. 14 they filed elaims against the Governnient of
Hungary with the Foreign Claims Settlement. Com-,
-mission, and these claims were allowed bythe Cem-
mission (R. 85: Petitioners’ brief itr ‘the Court of °
Appeals, pp. 16-17). These claims were specifically

grounded upon the Hungarian Government's breach
of its 1928 guaranty of the Hungarian Export Agree-
ment (ibid.). In addition, petitioners filed the in-
stant claims against the National Bank of Hungary
with the Office of Alien Property (R. 68-85). These
claims against the bank were grounded. upon the as-
sertion that the August 25, 1931, letter from the’
National Bank, giving its consent for operations
under the Hungarian Export Agreement to continue, —
gave rise to a contractual obligation from the Na-
tional Bank to the New York ‘Trist — (R.
- 70, 75-78, 80, 84-85).

‘On December 22, 1960, the Attorney ‘Genus or-
dered that. these claims be dismissed because there
was 10 debi due arid owing to petitioners by the
National Bank of Hungary (R. 151-155). There-
upon, pursuant. to section 208(b) of the International
Claims Settlement Act, 22 U.S.C. 1631g(b), petition-
ers instituted this action for review in the District
Court (R. 3). 2

The District Court held that the ‘August 25, 1931,
‘Jetter from the National Bank of Hungary gave rise
to aWtontract between the «National Bank and thé
New York Trust Company which the bank breached
and ordered petitioners’ claims paid. (R. 161-170;
Pet. App. B1-10). The Court of Appeals reversed.
Pointing to section 208(a) of the Act, 23 U.S.C.
1631g(a), which provides that the Attorney General
shall not allow a claym if it is asserted against
an agency of thy’Hungarian Government and noting
that the Ports dagen had failed to pass upon
the question, She court ordered that the case

e -

| 7

be remanded to the Attorney General for a determi-
nation as to whether the petitioners’ claims against
the National Bank of Hungary were claims: against
an agency of the Hungarian Government and ‘thus

barred by the statute (Pet, App. B11-13). -
| ARGUMENT 4

The decision of the court below is correct and con-
cerns a matter of no continuing importance. - Fur-
ther review of that decision bs this Court is therefore
unwarranted. ‘ ne

1. (a), Section 208(a) of the International Claims
Settlement Act of 1949, as amended, 22) U.S.C.
163lela). mitra,. }’. 13, prevides that: "Ne debt clainr
shall be allowed under this seetion—(1) if it is as-
serted against * * * Hunigary * * * (ineluding ‘the
vovernment or any political subdivisions, agencies, or
" instrumentalities thereof) * * *.°° Section 208(¢),
22 USC. WGSlg ce), ified, ». 14, provides 1pht the
Attorney General ‘shall make a. determination, with
respect to each claim, of allowance or disallowance’
and that his ‘determination * * * that a claim is

* & &

sss ot subsection (a)

within paragraph (1)
of this section shal! be final and shall not be subject
to judicial review, and such claim’ shall net be con-
sidered a debt claim for any ‘purpose under this
section.” Thus, as the court of appeals held, the .
statute: contemplates. that. tie claim should be granted
unless the Attarney General has first determined that
the claim is not being asserted against a governmental
agency. This is at the heart of the statutory scheme
~under which claims of Americans against. foreign

715-645 —63—+--2 sy ‘

. 8
governments ‘or governmental agencies are not to he
considered by the ‘fice of Alien Property. Instead,
such claims are to be considered by the Foreign |
Claims Settlement Commission. The Office of Alien
Property is eonecerned solely with elaims against pri-
vate persons and organizations. See sections 208(a),
302, and 303 of the Act, 22 U.S.C. 1631ge(2), li41a,
and 1641b, fre, pp. 138-15. ‘

In the present case, the pleaditigs and doctiments

submitted by “petitioners were replete with ev idence

that the National Bank of Hungary, in issuing its
letter of August 2 5, 1931 (on which petitioners rely
for their contractual claim), was acting in the ea-
pacity of a governmental ageney. In these cireum-—
stances, the Court of Appeals was fully Warranted in
ordering that the case be remanded for the Attorney
General to determine whéthe: petitioners’ claims were
being asserted against. an agenev of the Government
of Hungary : ,
Every eire ‘umistane ‘e of this case indicates that the

National Bank was acting as a governmental agency.

Petitioners’ claimis were said in their complaint to be

based upon“the August 25, 1931 exemption from the |
Moratorium Laws of Hungary" granted by the N Na
tional Bank of Hungary (R. 4). It would seem that
an eXemption- from governmental decrees could only
be granted by an organization acting as a govern-.
mental agency. In both ‘the objections filed by: peti- |

tioners: at the administrative level to the proposed

dismissal of their claims and. in their district court
complaint, the National Bank of Hungary i is described

9 .

_as “owned in part by the Hungarian Governinent and
being its agent for the administration «f foreign ex-
change” (R. 6, 96). Correspondence from the New.
York Trust Company during 1932 described the-Ya-.
tional Bank of Hungary as the “national administra-
tor of the foreign exchange” (R. 46). An agreement
of September 9, 1933, referred to the role of “the Na-
tional Bank of Hungary in its capacity as Central
Authority of foreign exchange administration” (R.

52). The New York Trust Company's Notice of
Claim filed with the Office of Alien Property «stated
that the National Lank “was and is an instrume nt of
the Government of Hungary” (R. 78)-

In addition, petitioners’ very elaim against the Na-
tional Bank of Hungary was inseparable from. the
claims against the Hungarian Government which they |
had ‘snecessfully asserted before the Foreign Claims
Settlement Commission, the proper agency for hear-
ing Claims against governmental bodies. See State-
ment, supra, pp. 3-9.

(b) There is no merit to petitioners’ remaining
grounds of attack upon the decision of the Court of

? Some other statements by the petitioners fo the Office of
-Ahen Property showing the capacity in which the National
Bank of Hungary acted. are found in the record on the fol-
lowing pages: R. 104 (stating that the Bank was “ap instru-
mentality of the Hungarian Government”): R. 105) (deserib-
ing the Bank as the “Agent” of the Government): R. 116
(describing the National Bank of Hungary as the “adminis-
trator” of the Moratorium Laws): R. 117 (pointing out that
the Hungarian Government. “ordered National Bank of Hun-.

gary, its instrumentality, to grant the exemption’): R. 123:
R. 133-154; R. 136; R. 149: R. 150. oo

10

Appeals. It is urged that the Court of Appeals
should not have considered the Attorney General’s
contention, raised for the first time in te Court of
Appeals, that petitioners’ claims were barred bv sec-
tion 208(a) of the Act. Reliance is placed pon the
recent opinion in Burlington Truck Lines, Ine. v.
United States, 371 U.S. 156, 168-169, where this Court
pointed out that an agency's . discretionary: order
Should be upheld only on grounds articulated by the
agency. The short answer is that the Court of Appeals
did not uphold the administrative determination on
a ground not considered by the agency. Instead, the
case: Was, remanded to, the ageney with directions to
consider whether petitioners’ claims . fell within a
statutory. imitation upon the agenev’s own jurisdie-
tion. As pointed: out above, under section 208(a)
the Office of Alen prope rty has no authority to allow
a vlain asserted against an instrumentality or agency
‘of the Hungarian Government..

ce) Tt is- alse argued that the remand deprives
petitioners of due process .- because it “‘permits a
biased ‘and prejudiced review of the Attorney Gen-
eral’s disatlowance of the claims, for it is a foregone
conclusion in light of the bistury of this dispute that
“he will ne w make an unreviewable determination
that Petitioners’ claims are against an agency of Hun- .
gary’ (Pet. 13). To be sure, the Attorney General did
take the position in the Court of Appeals ‘that the
vustaut record shows the claims to be asserted against
an ageney of the Hungarian Government. In light

—
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11

of this record, such a conclusion is virtually inescap-
able. It is true that if the petitioners fail to amplify
the. record upon remand, the Attorney General will
presumably determine that their claims are asserted —
against a. governmental agency. . On the other hand,
petitioners may submit to the Office of Alien Prop-
erty any further evidence which they may have bear-
ing upon the capacity of the National Bank of Hun-
- gary and tending to show a contractual obligation owed.
_ by the National Bank te the New York Trust Company
-- which is not barred by section.208(a) of the Act. Any
~ evidence or arguments submitted by ‘petitioners will
be fully and fairly. considered .by-the Attorney Gen-
eral in making the determination which, under the
statute, he is required to make. . es

2. The issues raised by ‘the petitioners with respect
to section 208: of the International, Claims Settlement
Act as amended, 22 U.S.C. 1631g, infra, pp. 13-14,
relating to Rumanian, Bulgarian’ and Hungarian

Claims, have no continuing. importance. Other than |
. the petitioners’ cluims, there are now no section 208

claims pending before the Office of Alien Property.
Under sectign 208(b) of the Act, 1631g(b),- infra, |

p. 13, the Attorney General is authorized to fix the.”

_ dates in respect to which the filing of particular debt
claims under the section shall be barred. By a series.
of “Bar Orders,”” which have been published ‘in the
Federal Register, the filine of any future claims
against vested property under section 208(b) has been
barred. See, 21 F. R. 10183 ; 22 F. R. 88 ; 22.F.R. 2512;

12

22 F.R. 7802; 23 F.R. 489: 23° F.R. 5531; 24 F.R.
_ 399; 24 F.R. 5661; 25 F.R. 253; 25 F.R. 8384; 26 PLR.

8259." |
* CONCLUSION

For the foregoing reasons, it is respectfully sub-
mitted that the petition for a writ of certiorari should

be denied.
ACHIBALD Cox,

Solicitor Geiecral. .

| JOHN W. Doveras,

fr

Assistant Attorney Géneral.
- ALAN S. Rosextuat,
JoHN C. ELprmae, —
Attorneys.

DECEMBER 1963."

oe

’ The only way in which any future litigation under section
208 could arise would be if: further Rumanian, Bo! arian or
Hungarian property were to be vested under the Act. It is our

) understanding that any, further vesting of? Rumanian, Bul-

garian or Hungarian property which would come under this —
section is extremely unlikély.

*

APPENDIX
The pertinent -pro isions of the -Internationai
Claims Settlement Act of 1949, as amended, 64 Stat.
12,.69 Stat. 562, ef seq., 22 U.S.C. 1621, ef seq., are
as follows: |

«“
;
Ve

See, 208 [22 C.S8.C) 16381g].
-* (a) Any property vested in thé designee of
+ the President pursnant to section 202(a),° or.
Mahe net proceeds thereof, shall be equitably ap-
plied by such designee in accordance with this
section to the payment of debts owed by the
. | person whe owned such property immediately
prior to its vesting in such designee. No debt
claim shall be allowed under this section—-
(1) if it is. asserted against) Bulgaria,
‘Hungary, or Rumania Cineluding the govern-
* . + ment or any political subdivisions, agencies, or
instrumentalities thereof) ; or ;

(2) if it is based upon anyobligation ex-
pressed or payable in any eurreney other than
the curreney of the United States; or

(3) if it was not due and owing—

*

* "2 * . .

(b) The desigriee of the President under this

title shall fix a date or dates after which

the filing of debt claims in respect of any or all

‘debtors shall be barred, and may extend the

. ~+time so fixed, and‘ shall give at least sitty days’

_ notice thereof by publication in the Federal

Register. In no event shall the tume extend

hevond the expiration of one yedr from the

date of the last vesting im the designee of the
(13)

«
o

y

‘dred and twenty days after

“the record, and shall make g@ determination,

under this section.

ally sustained;

14

‘President of any property: of-a. debtor in re-

spect ‘to whose debts the date is fixed. No debt ae

shall be paid prior ‘to the expiration of one hun- ?
hablics ation of. the

first such natice in respect of thé debtor, nor in

any event shali any payment of a debt-claun be

made out of any property or proceeds in re-
spect of which a suit or proceeding for return

© pursuant to this title is pending. N bay

(c) The designee shall examine.the claims... 9 ~ 2

and such evidence in respect thereof as may he — ea
presented to him-or-as he may introdiice into Pa

with respect to each claim, of : Nowance or dis;
allowance, in whole or in part. The deteyyi-
nation of the designee that a claim is Atithin
either paragraph (1) or (2) of subsection (a)
of this section shall be final and shall not be

‘subject to judicial review, and such claim,Shall :

not. be considered a deht claim for any purpose :

* *- . * * -

_ Src. 303 [22 U.S.C. 1641]. ‘The Commis-
sion shall receive, and determine in accordance
with applicable substantive law, ineluding inter-

national Jaw, the validity and amounts of claims
of nationals of the United States against the
Governments: of. Bulgaria. Hungary, and Ru-
mania, or any of then: arising: out of the f failure
to-- ;
(1) restore or pay ‘compensation for prop- se
erty of hationals of the United States as re- . .

$26 and 27 of the treaty of
gary, and articles 24 and 2 25 of

ulgaria, a
peace with

* quired by tee 23 of the’ treaty af: peace with

thé treaty of peace with Rumania. Awards

under this paragraph shall be in amounts not
to exceed two-thirds cf the loss or damage actu- Be

(2) par: effective compensation” for the na-
tionalization, compulsory liquidation, or other

*

fe

-% 2°

15

taking, prior to the effective date of this title,
of property of nationals of -the United States
w Bulgaria; Hungary, and Rumania; and

(3) meet obligations expressed in currency —
of the United States arising out of contractual .
or other rights acquired by nationals of, the.
United States prior to April 24, 1941, in “the
case of ‘Bulgaria, and prior to Septémber a.
1939, in the case of Hungary and Rumania, and
ree became payable prior to September 19,
» 194

i i . le * ;

-U S$ SOvkw nO MT PAINTING OFF) (k 1863

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_1342%3A3. Public record. Not legal advice.