Opposition Brief — Standard Commercial Tobacco Co. v. Snyder
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INDEX
Page
Opinions helow 1
Jurisdiction ..... Dye ae Rhee pel Pe Renna 1
Questions presented Fkvh eOeaewnen Ro ere ee ay 2
IN renee 4 yk is Uae SAAN AERA vst thai oa 3
Statement ....... fee Kaden Te Rae LR nck aw bak ee Ce ; 4
LS ainda ie 6 KAS thMORA CS Sh ebSn ese Wareneibads 10
Conclusion ...... hencGh Ua ane Gree Raths fen ou - 18
Appendix ....... Te See ee ne FT eee ean 4 19
CITATIONS
Cases :
Angarica v. Bayard, 127 U. 8. 251... gay 12
Boynton v. Blaine, 139 U. S. 306... .. 12
Carl Byoir and Associates v. Tsune- Chi Yu, 112 F. 2d
885, certiorari denied, 311 U. S. 699... ‘ 16
Cummings v. Deutsche Bank, 300 U. S.115..... 13
Drier v. United States, 108 C. Cls. 487 ‘i 13
Exchange, The,7 Cranch 116......... ay 11
Frelinghuysen v. Key, 110 U. S. 63. a eAek see 11
; Great Western Insurance Co. v. United States, 19 C. Cls.
| 206, affirmed on other grounds, 112 U. 8.193. 11
| LaAbra Silver Mining Co. v. United States, 175 U. S.
¢ RNG. Su CAN unsh RCA Suns ka heals & yy % oe 11
| Markham vy. Cabell, 326 U.S. 404..5............ <i ae
meomee W. Ramo, BGP U. Baas... ww ws cic 15
Parker State Bank v. Pennington, 9 F. 24 966......... 16
; United States v. Diekelman, 92 U. S. 520........ oa 11
Williams v. Heard, 140 U. S. 529 12
Z. and F. Assets Corp. v. Hull, 311 U.S _ 470 12,18
| Statutes:
) Act of June 5, 1930, 46 Stat. 500 9
Act of August 6, 1947, 61 Stat. 789. 9
Act of June 25, 1948, Public Law 773, 80th Cong.,
2d sees, Section 3B.............. 3
Agreement between the United States and Germany of
August 10, 1922, 42 Stat. 2200....... 3, 8, 21
Federal Tort Claims Act, 60 Stat. 842, aie 28 U. S. C.
«2 SSR 3
ERS SK kw cs teeter eekn en 3,19
ee eee ere. Sed pees 14, 17,19
mee. 410%) ......... Be sy Ce ar 20
I kn Se Care ease Beye A iste a 17
A At ok Wc oe ack kk A Se tubes ewcwe y « . 8,20
ba
Statutes—Continued
Page
See. 421 .... 3, 21
See. 421(a) 21
See. 421(e) é 16, 21
See. 421()j) 4 21
Sec. 421(k) .... aads 21
Harrison Resolution of June 27, 1934, 48 Stat. 1267 9
Joint Resolution of July 2, 1921, 42 Stat. 105. . 7
Settlement of War Claims Act of 1928, 45 Stat. 254,
260, and as amended by the Act of August 6, 1947, 61
eek, Feet ks 3, 24
ig Bee Pusey Cie Weise lakes . 32
See. 2(a) ys Ce one .. 17,24
Sec. 2(b) =e TRE Ae ee 24
See. Bie) ....... ; “ae 24
"Ee ne 24
See. 2(h) ’ , 13, 24
Sec. 2(i) ..... . laa 25
See. 4 3, 25
Sec. 4(a) ... 25
See. 4(b) ... nf 26
RIM aR PRS ree eee ee 26
Trading with the ewe Act, 45 Stat. 254, 268, 270,
ET eC Cae RE Nah wick x vanes basin ees 16
Treaty of Berlin, 42 Stat. 1939, 1942. . 7
United States Code, Title 28:
SLE ae ae eg 3
See. 1346 3
See. 1402 3
See. 1504 3
See. 2110 3
See. 2401 3
Sec. 2402 3
See. 2411 3,17
Sec. 2412 ... 3
See. 2517 17
Sees. 2671-2680 3
War Claims Act of 1948, Public Law 896, 80th — +» 2d
sess. 14
Miscellaneous:
93 Cong. Ree. 9288 10
93 Cong. Rec. 9289 9
Final Report of H. H. Martin, Acting Agent of the
United States before the Mixed Claims Commission
(1941) pp. 94, 95 .. Ae a 8,9
=
Miscellaneous—Continued
It
Page
Hearings before the Senate Committee on the Judiciary
on H. R. 4044, 80th Cong., 2d sess.; Memoranda on
“Indebtedness to American Nationals on World War
I Adjudicated Awards of the Mixed Claims Commis-
ae” Mh SG BN re nee ewe cee 14
House Report No. 973, 80th Cong., Ist sess., p. 2 9
— Report No. 2428 on H. R. 7236, 76th Cong., 3d
oe Peery rere Greer ey ree eee yee 15
Jessup, A Modern Law of Nations (1948) p. 98........ 11
Koessler, Government Espousal of Private Claims Before
| International Tribunals, 13 U. of Chi. L. Rev. 180
Nn teed aed yeaa KAS bao 11
Restatement, Trusts, Section 198. ........... a 16
2 Seott, Trusts, Section 197.1 (1939)....... 15
Senate Report No. 679, 80th Cong., Ist sess., p. ae 9
Senate Report No. 1196 on S, 2221, 77th _— 2d sess.,
Se ... 15
ASE ROSIE AA > CN Lt a 8 - on
*
Guthe Supreme Court of the Bnited States
OcToBER TERM, 1949
No. 561
SraNDARD COMMERCIAL TOBACCO COMPANY AND
STANDARD COMMERCIAL STEAMSHIP CorpP., PETI-
TIONERS,
v.
JoHN W. SNYDER, SECRETARY OF THE TREASURY, AND
Unitep STaTES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE DIS-
TRICT OF COLUMBIA CIRCUIT
BRIEF FOR RESPONDENTS IN OPPOSITION
OPINIONS BELOW
The opinion of the United States District Court
for the District of Columbia (R. 16A-17A) is not
reported. The opinion of the United States Court
of Appeals for the District of Columbia Circuit
(R. 26) is reported at 176 F. 2d 951.
JURISDICTION
The judgment of the United States Court of
Appeals for the District of Columbia Circuit was
(1)
a
2
entered on June 13, 1949 (R. 27). A petition for
rehearing (R. 28-36) was denied on September 28,
1949 (R. 37). By order of the Chief Justice, the
time for filing a petition for a writ of certiorari
Was extended to January 28, 1950 (R. 39). The
petition for a writ of certiorari was filed on Janu-
ary 27, 1950. The jurisdiction of this Court is in-
voked under 28 U. S. C. 1254(1).
QUESTIONS PRESENTED
In partial fulfillment of her World War I obliga-
tions, fixed by the Mixed Claims Commission,
Germany undertook to make certain payments
to the United States to be applied on awards made
by the Commission. The United States distributed
these payments among American nationals, in-
cluding petitioners, who had received awards. In
1931, Germany, before completing the required
payments, defaulted.
The questions presented are:
1. Whether the United States may be held liable
to petitioners under the Federal Tort Claims Act
for judgments in amounts equal to the unpaid por-
tion of petitioners’ World War I awards.
2. If so, whether the Secretary of the Treasury
may be ordered to pay such amounts out of German
property sequestered by the Alien Property Custo-
dian during World War II, notwithstanding the
fact that Congress has provided for a different dis-
position of the sequestered funds.
3
STATUTES INVOLVED
1. The pertinent provisions of Sections 410, 420
and 421 of the Federal Tort Claims Act* are set
forth in the Appendix, infra, pp. 19-21.
9. The English text of the Agreement of August
10, 1922, between the United States and Germany
(42 Stat. 2200) is set forth in the Appendix, infra,
pp. 21-23.
3. The pertinent provisions of Section 2 of the
Settlement of War Claims Act of 1928 (45 Stat.
954), authorizing payment of Mixed Claims Com-
mission awards out of the German Special Deposit
Account are set forth in the Appendix, infra,
pp. 24-25.
4. Section 4 of the Settlement of War Claims Act
of 1928 (45 Stat. 260) as amended by the Act of
August 6, 1947 (61 Stat. 789), creating the German
Special Deposit Account and establishing the order
of priority of payment out of that fund, is set forth
in the Appendix, infra, pp. 25-30.
1 The Federal Tort Claims Act (60 Stat. 842, 28 U.S.C. 921
et seq.) was repealed, and its provisions were revised and
reenacted into law as 28 U.S.C. 1291, 1346, 1402, 1504, 2110,
2401, 2402, 2411, 2412, 2671-2680 by the Act of June 25,
1948, effective September 1, 1948 (Pub. Law 773, 80th Cong.,
2d sess.). Section 39 of the repealing act provides that exist-
ing rights and liabilities shall not be affected by the repeal.
Since the case at bar arose prior to the repeal, it appears that
any rights which petitioner may have against the United
States herein are governed by the Federal Tort Claims Act
as it existed at the time of the repeal. It is the former pro-
visions of the Act, therefore, which are set out in the Appendix,
infra, pp. 19-21.
—
4
STATEMENT
This suit was instituted by Katharine M. Drier
in the United States District Court for the District
of Columbia on February 28, 1947, on behalf of
herself and persons and corporations similarly
situated, under the Settlement of War Claims Act
of 1928 (R. 20). Her complaint, to ‘‘ Enforce Pay-
ments of Funds by the Secretary of Treasury”’ and
for ‘‘Damages to or Loss of Property under the
Federal Tort Claims Act’’, claimed judgment
against the United States for the unpaid World
War I damages she had been caused by Germany,
as determined by the Mixed Claims Commission
(R. 20, 25). The complaint also prayed for an
order directing the respondent Secretary of the
Treasury to pay her the amount of such judgment
‘*out of the monies and properties of Germany and
x German nationals in his possession or under his
control’’ (R. 25).
Petitioners, Standard Commercial Tobacco
Company and Standard Commercial Steamship
Corporation, being two of the ‘‘similarly situated”
corporations, which had sustained World War I
damages for which they had not been fully com-
pensated, filed complaints in intervention (R. 2A-
16A).
Standard Commercial Tobacco Company alleged
that it holds an award of the Mixed Claims Com-
mission in the amount of $450,000 with interest at
5% from November 11, 1918, on which there was
due and owing as of October 22, 1941, on account
paneer ty a
—_
5
of principal a balance of $146,220.99,’ and unpaid
interest of $147,663.73, a total of $293,884.72, with
further accruals of interest since that date (R. 3A).
Standard Commercial Steamship Corporation al-
leged that it holds an award of the Mixed Claims
Commission in the amount of $89,294.00 with in-
terest of 5% from November 11, 1918, on which
there was due and owing as of October 20, 1941, on
account of principal a balance of $7,921.02° and
interest of $12,390.86, a total of $20,311.88, with
further accruals of interest since that date (R.
10A).
Each of the intervening complaints and Mrs.
Drier’s original complaint alleged that the actions
were brought under the Federal Tort Claims Act
and that the respondent Secretary of the Treasury
was sued in his official capacity (R. 3A, 10A, 20).
The complaints asserted that Germany had agreed
to pay in full for World War I damages as deter-
2This petitioner has, in fact, already received more than
the $450,000.00 principal amount of its award. The alleged
balance of $146,220.99 was arrived at by adding to the $450,-
000, interest amounting to $205,643.84, for the period from
November 11, 1918, through January 1, 1928. From that total
of $655,643.84, there was deducted the sums of $509,422.85
(paid over by the United States to petitioner on the principal
amount of the $450,000.00 award), leaving the balance of
$146,220.99.
3This petitioner has, in fact, also already received more
than the $89,294.00 principal amount of its award. The al-
leged balance of $7,921.02 was arrived at by adding to the
$89,294.00, interest amounting to $40,806.13, for the period
from November 11, 1918, through January 1, 1928. From that
total of $130,100.13, there was deducted the sum of $122,179.11
(paid over by the United States to petitioner on the principal
ate of the $89,294.00 award), leaving the balance of
—
6
mined by the Mixed Claims Commission; that
these amounts were not fully paid; that following
the 1941 declaration of war with Germany, the
United States vested in itself title to properties
belonging to the German Government and Ger-
man nationals, and that such properties ‘‘became
and still are impressed with a trust in favor of’’ the
petitioners and others similarly situated (R. 5A,
12A, 23). Petitioners further alleged that the
failure of the respondents to apply these ‘‘trust”’
properties to the payment of petitioners’ unpaid
Mixed Claims Commission’s awards constituted a
breach of trust actionable under the Federal Tort
Claims Act (R. 6A, 13A, 24). .
The complaint filed by Mrs. Drier alleged that
pleat demand had been made by her on respondents
for payment of the balance due her, but that the
respondent Secretary of the Treasury refused to
make such payment (R. 24). The intervening
complaints made no similar demands upon either
the Secretary of the Treasury or the United States,
but merely alleged that, in light of the rejection of
Mrs. Drier’s claim by the Secretary of the Treas-
ury, similar demands upon their part would be
futile (R. 7A, 14A).
On February 10, 1948, the district court ruled
that the complaints failed to state a claim on which
relief could be granted and dismissed the com-
plaints on the grounds that the ‘‘Federal Tort
Claims Act does not apply, either in terms or con-
—
7
struction,’’ and that ‘‘any purported claim of lia-
bility is specifically negatived by the provisions of
the War Claims Act of 1928 (45 Stat. 254) ’’ which
provides that nothing in the Act shall be construed
as the ‘‘assumption of liability by the United States
for the payments of awards” (R. 16A-17A, see Ap-
pendix, infra, pp. 24-25). On appeal to the United
States Court of Appeals for the District of Colum-
bia the judgment of dismissal was affirmed in a
per curiam opinion (R. 26).*
The genesis of petitioners’ claims, though not
fully disclosed in the record, is readily apparent
from the official records of international arrange-
ments made to compensate Americans whose prop-
erty was confiscated by Germany during World
War I. Within two months after the Joint Reso-
lution of July 2, 1921 (42 Stat. 105) had terminated
the war between Germany and the United States,
a formal peace treaty, the Treaty of Berlin, was
concluded. That Treaty obligated Germany ‘‘to
accord to the United States, and the United States
shall have and enjoy, all the rights, privileges, in-
demnities, reparations or advantages’’ enumerated
in the Joint Resolution of July 2, 1921. (42 Siat.
4 Mrs. Drier, the original complainant, did not seek review
of the decision of the court of appeals. Petitioners were also
“reluctant” to petition for writs of certiorari, but decided to
file petitions after “receiving notice of the decision of this
Court on December 12, 1949, in the cases of United States v.
Aetna Casualty Co. * * *” [No. 35, this Term]. See p. 3
of Petitioners’ “Motion to Extend Time for Filing Petition for
Writ of Certiorari” and p. 1 of the Affidavit attached to the
motion.
—
—
1939, 1942). In order to determine the amount to
be paid by Germany in satisfaction of her financial
obligations to the United States under the Treaty
of Berlin, an agreement was made between the two
Governments on August 10, 1922 (42 Stat. 2200),
providing for the establishment of a Mixed Claims
Commission.
8
The Commission consisted of three members, one
appointed by the United States, another by Ger-
many, and an umpire, selected by the two Govern-
ments, who decided ‘‘any cases concerning which
the commissioners’’ disagreed. 42 Stat. 2201. More
than 20,000 claims were presented by the United
States to the Commission, which entered a total of
7,025 awards. Final Report of H. H. Martin, Act-
ing Agent of the United States before the Mixed
Claims Commission (1941), p. 94.
In 1928 Congress passed the Settlement of War
Claims Act (45 Stat. 254) establishing the fund
known as the German Special Deposit Account out
of which the Commission’s awards to the United
States on behalf of American nationals were to be
paid. The Act provided that 20% of the seized
property of World War I German nationals,
together with funds contributed by Germany for
the payment of the awards, should be paid into the
Special Account. It further provided for the re-
turn to German nationals of the remaining 80% of
the seized property which the United States then
held for the protection of the American awards.
>
—,
9
On June 23, 1930, in accordance with the provi-
sions of the Debt Funding Agreement between Ger-
many and the United States pursuant to the Act
of June 5, 1930 (46 Stat. 500), the United States
accepted German bonds in a sum sufficient to liqui-
date all of the unpaid awards of the Commission.
The bonds were to be paid in 103 installments cover-
ing a period expiring March 31, 1981. Germany
defaulted after paying the third installment on
March 30, 1931. Final Report of H. H. Martin,
Acting Agent of the United States before the Mixed
Claims Commission (1941), p. 95. By that time
most of the 80% of the seized German property,
which the United States had held for payment of
the American awards, had already been released as
required by the Settlement of War Claims Act.
93 Cong. Ree. 9289. In order to cut off a still fur-
ther depletion of that property, the Harrison Reso-
lution of June 27, 1934 (48 Stat. 1267), directed
that all further payments under the Settlement of
War Claims Act, insofar as it called for payments
to German nationals, should be postponed so long
as Germany remains in default.
Because of Germany’s default, the balance in the
Special Account was insufficient to make further
payments on the Commission’s awards.” However,
5 The Act of August 6, 1947 (61 Stat. 789), provided for
the building up of the Special Account by transferring to it,
from the Alien Property Trust Fund, about $8,000,000 of
seized German World War I property, which would have been
returnable to its former German owners but for the Harrison
Resolution. House Report No. 973, 80th Cong., Ist sess.,
p. 2; Senate Report No. 679, 80th Cong., Ist sess., p. 2.
—_—_—a
SO OE AEE ALE
10
despite that default, all but 451 of the 7,025 awards
made by the Mixed Claims Commission on claims
of American nationals arising out of World War I
have been paid in full. Those claims paid in full
include all awards on account of death or personal
injury as well as all property damage claims of
$100,000 or less. The 451 partially-paid awards
represent property damage claims in excess of
$100,000. (93 Cong. Ree. 9288.)
ARGUMENT
Petitioners contend that the awards of the Mixed
Claims Commission resulted in a trust of which
Germany was the settlor, the United States the
trustee and petitioners the beneficiaries. They fur-
ther argue that the United States violated that
‘“*trust’’ when it failed to apply German property
seized during World War II to the payment of
their awards. Finally it is urged that the alleged
breach of trust constitutes a tort, actionable under
the Federal Tort Claims Act. These arguments
were urged upon, and rejected by, both courts
below. That rejection, we submit, was plainly cor-
rect and does not warrant further review by this
Court.
1. The conclusive answer to petitioners’ trust-
creation theory is that it is ‘‘impossible to hold the
United States to be a trustee for anyone when
it receives a sum of money from a foreign govern-
ment, paid in pursuance of a treaty, for the satis-
faction of claims of American citizens against such
—
11
government * * *.’’ Great Western Insurance
Co. v. United States, 19 C. Cls. 206, 217, affirmed on
other grounds, 112 U. S. 193; cf. Angarica v.
Bayard, 127 U. S, 251, 259; Koessler, Government
Espousal of Private Claims Before International
Tribunals, 13 U. of Chi. L. Rev. 180, 182 (1946).
Well-settled principles of international law and the
provisions of the Settlement of War Claims Act of
1928, which created the German Special Deposit
Account, bring that impossibility into sharp focus
in the instant case.
Since foreign governments may not without their
consent be subjected to suits in the courts of the
United States, the claims of American nationals
against such governments may be prosecuted “‘not
by suit in the courts, as of right, but by diplomacy,
or, if need be, by war’’ United States v. Dickelman,
92 U. S. 520, 524; Frelinghuysen v. Key, 110 U.S.
63,72; The Exchange,7 Cranch 116, Only with the
consent of the government involved will a claim on
behalf of a national of one sovereign be allowed to
proceed against another sovereign. See Un ited
States v. Diekelman, 92 U. S. 520, 524; LaAbra
Silver Mining Co. v. United States, 175 U.S. 423,
455-463.
In the orderly conduct of its foreign relations it
is obvious that a Government must be allowed to
exercise its discretion as to whether it should
espouse the claim of one of its nationals against a
foreign government. Jessup, A Modern Law of
Nations (1948), p.98. When it does espouse a claim,
ee
12
as the United States did when it provided for the
creation of the Mixed Claims Commission and pre-
sented to that Commission the claims of its na-
tionals, it makes those claims ‘‘its own.’’ Boynton
v. Blaine, 139 U.S. 306, 323. As this Court pointed
out in Z. and F. Assets Corp. v. Hull, 311 U. 8. 470,
487, ‘‘the claims to be considered by the [Mixed
Claims ] Commission were only those sponsored and
presented by the United States against Germany.
They were presented as claims of the United States,
the national claimants themselves having no stand-
ing save as they were represented by the United
States.’’ Moreover, not only do the espoused claims
themselves become those of the Government, but the
funds received by the United States, in payment,
are property of the United States until payment is
made to the private claimants. Williams v. Heard,
140 U.S. 529, 537-538. Although the United States
is under a ‘‘moral obligation’? to make payment,
‘*no individual claimant had, as a matter of strict
legal or equitable right, any lien upon the fund
awarded, nor was Congress under any legal or
equitable obligation to pay any claim out of the
proceeds of that fund.’? Williams v. Heard, supra.
The Settlement of War Claims Act of 1928, in
creating the German Special Deposit Account, fully
recognized this lack of legal or equitable ownership
on the part of individual claimants and, far from
establishing any private rights in those claimants,
specifically prohibited the assumption by the
_———
13
United States of any liability to them (R. 16A) ;
Section 2(h), Appendix, infra, pp. 24-25. The funds
in that account have accordingly been held to be
under the absolute ownership of the United States.
Cummings v. Deutsche Bank, 300 U. S. 115, 120-
124; Drier v. United States, 108 C. Cls. 487, 490.
This absolute ownership on the part of the United
States precludes, of course, the existence of any
trust in favor of the individual claimants.
9. Even assuming the creation of a trust to bene-
fit American owners of property seized by Germany
during World War I, the record here shows no
violation of that trust. Its res would have had to
be either the monies retained under the Settlement
of War Claims Act of 1928 or those received from
Germany under the Debt Funding Agreement of
1930 (supra, pp. 8-9), é.e., the payments earmarked
for the satisfaction of Mixed Claims Commission’s
awards. In none of the complaints in this case,
however, is there any allegation that these funds
were not applied to the satisfaction of those awards.
Petitioners’ assumption that the trust res con-
sists of German property sequestered by the United
States during World War II is completely un-
founded. Certainly, not a syllable in the Settle-
ment of War Claims Act of 1928, or in the Debt
| Funding Agreement, would warrant allocating
alien property seized during World War II for the
purpose of indemnifying petitioners’ World War I
a
14
damages. That such an allocation was never in-
tended by Congress is made further apparent by
its rejection of prior attempts by World War I
claimants to be paid out of the World War II
funds. See Memoranda and discussion on “‘ Indebt-
edness to American Nationals on World War I
Adjudicated Awards of the Mixed Claims Commis-
sion,’’ pp. 46-56, 138-157, Hearings before the Sen-
ate Committee on the Judiciary on H. R. 4044, 80th
Cong., 2d sess. In fact, at those hearings, counsel
for the World War I claimants specifically ad-
mitted that, apart from a small balance of funds
left over from World War I, his clients have no
claim to ‘‘any other funds now in the hands of the
Alien Property Custodian.’”’ Jd. at p. 157. Even
more significant is the fact that when Congress
enacted H. R. 4044 into the War Claims Act of 1948
(Public Law 896, 80th Cong., 2d sess.), it set upa
comprehensive scheme for the disposition of prop-
erty seized during World War II but made abso-
lutely no provision for an allocation of any of that
property to the satisfaction of World War I claims.
3. Finally, the language of the Federal Tort
Claims Act and its express exceptions make it ob-
vious that that Act may not be here applied even
if the breach of a trust relationship is assumed.
a. The type of damage for which the United
States assumed liability under the Federal Tort
Claims Act is ‘‘damage to or loss of property or
* * * personal injury or death”’. Section 410(a),
i
15
Appendix, infra, pp. 19-20. This language relates
to the ordinary common law tort resulting from
trespass, and connotes physical damage. It is con-
sistent with the title of the Act which refers only to
“tort claims.’’ The Act’s legislative history also
shows that it was intended to encompass common
| law tort claims only. Thus, the purpose of the con-
templated legislation was stated to be to allow suit
‘‘against the Government in respect to any common
law tort.’’ It was further stated that the ‘‘existing
exemption in respect to common law torts appears
incongruous. Its only justification seems to be his-
torical. With the expansion of governmental ac-
tivities in recent years, it becomes especially im-
portant to grant to private individuals the right to
sue the Government in respect to such torts as neg-
ligence in the operation of vehicles.’’ House Re-
port No, 2428 on H. R. 7236, 76th Cong., 3d sess.,
pp. 2-3. See also Senate Report 1196 on S. 2221,
Tith Cong., 2d sess., p. 5.
It is well-settled that the beneficiary of a trust
may not maintain an action at law in tort against
the trustee for breach of trust. 2 Scott, Trusts,
Sec. 197.1 (1939). His remedies against the trustee
are traditionally equitable. McKee v. Lamon, 159
U.S. 317, 322. He may sue for the specific enforce-
ment of the trustee’s duties, seek to enjoin the trus-
tee from violating the trust, or institute proceed-
ings for the removal of the trustee and the appoint-
ment of a receiver to administer the trust. In the
16
few instances where the beneficiary may sue at law,
he is restricted to an action for money had and
received. Carl Byoir and Associates v. Tsune-Chi
Yu, 112 F. 2d 885 (C. A. 2), certiorari denied, 311
U.S. 699; Parker State Bank v. Pennington, 9 F.
2d 966, 969 (C. A. 8); see Restatement, Trusts,
Section 198. Since he may not, however, proceed
at law in an action in tort, the Federal Tort Claims
Act is, we submit, inapplicable.
b. At least one express exception in the Federal
Tort Claims Act furnishes another, independent
ground for its inapplicability to the claims here
presented by petitioners. Section 421(e) expressly
excludes ‘‘any claim arising out ef an act or omis-
sion of any employee of the Government in ad-
ministering the provisions of the Trading with the
EnemyAct, as amended.’’ (Appendix, infra, p.
21). As pointed out above, pp. 7-8, the relief sought
by petitioners is based on rights which they claim
under the Settlement of War Claims Act of 1928.
That Act specifically states that it is an amendment
to the Trading with the Enemy Act. (45 Stat. 254,
268, 270, 271). That it means just what it says is
evident from the concurring opinion of Mr. Justice
Burton in Markham vy. Cabell, 326 U. S. 404, 413,
where the history of the Trading with the Enemy
Act and its amendments are reviewed. The opinion
points out that ‘‘later amendments [t.e., of the
Trading with the Enemy Act] emphasized this re-
striction of Section 9(e) to World War I, while
17
preserving the general and permanent character
of Section 9(a)’’. 326 U.S. 404,418. Ina footnote
to that quotation the ‘‘later amendments”’ are
enumerated. Included in that enumeration is the
Act of ‘‘March 10, 1928 (45 Stat. 254-279). This
was the ‘Settlement of War Claims Act of 1928.’
It dealt expressly with World War I. It was con-
cerned with such subjects as the ‘Mixed Claims
Commission’ and ‘The Tripartite Claims Commis-
sion.’ It amended the Trading with the Enemy Act
in many details as to World War I claims and
added many new provisions as to those claims’’.
396 U.S. 404, 418-419, fn. 4. (Emphasis supplied).
e. In addition, the Federal Tort Claims Act au-
thorizes the entry of judgments for claims against
the United States for money only. Section 410(a),
Appendix, infra, p. 19. These judgments are pay-
able out of specific ‘‘appropriation Act(s)”’’ espe-
cially passed for that purpose. 28 U.S. C. 2411,
28 U. S. C. 2517; and see Section 411, Federal Tort
Claims Act, 60 Stat. 844. Here, however, petition-
ers seek payment by the respondent Secretary of
the Treasury out of the German Special Deposit
Account—a result obviously inconsistent with the
Act.®
® As far as the respondent Secretary of the Treasury is
concerned, there is no allegation in any of the complaints
that pursuant to Section 2(a) of the 1928 Act (Appendix,
infra, p. 24) the Secretary of State has certified to the Secre-
tary of the Treasury the portions of the Mixed Claims Com-
mission awards here involved. Under the 1928 Act the
Secretary of State alone has the authority to consider and
18
CONCLUSION
For the reasons stated, it is respectfully submit-
ted that the petition for a writ of certiorari should
be denied.
Puiuip B. PERLMAN,
Solicitor General.
_ H.G. Morison,
Assistant Attorney General.
| Pau A. SWEENEY,
Morton HoLuanpDeR,
Attorneys.
Marcu, 1950.
pass upon the regularity and validity of the awards made by
the Mixed Claims Commission for the statutory purpose of
qualifying them for payment by the Secretary of the Treasury.
In the absence of an allegation of certification by the Secretary
of State, there is no basis upon which the Secretary of the
Treasury could make payment of the award even were such
a matter one where resort could be had to the courts. Z. and F.
Assets Corp. v. Hull, 311 U.S. 470, 486-487.
19
APPENDIX
1. Sections 410, 420, 421 of the Federal Tort
Claims Act (60 Stat. 842, 843-846)" provide in per-
tineut part:
Src. 410. (a) Subject to the provisions of
this title, the United States district court for
the district wherein the plaintiff is resident
or wherein the act or omission complained of
occurred, including the United States district
courts for the Territories and possessions of
the United States, sitting without a jury, shall
have exclusive jurisdiction to hear, determine,
and render judgment on any claim against the
United States, for money only, accruing on
and after January 1, 1945, on account of dam-
age to or loss of property or on account of per-
sonal injury or death caused by the negligent
or wrongful act or omission of any employee
of the Government while acting within the
scope of his office or employment, under cir-
cumstances where the United States, if a pri-
vate person, would be liable to the claimant for
such damage, loss, injury, or death in accord-
ance with the law of the place where the act
or omission occurred. Subject to the provi-
sions of this title, the United States shall be
liable in respect of such claims to the same
claimants, in the same manner, and to the
same extent as a private individual under like
circumstances, except that the United States
shall not be liable for interest prior to judg-
TSee footnote 1, supra, p. 3.
—
20
ment, or for punitive damages. Costs shall be
allowed in all courts to the successful claimant
to the same extent as if the United States were
a private litigant, except that such costs shall
not include attorneys’ fees.
(b) The judgment in such an action shall
constitute a complete bar to any action by the
claimant, by reason of the same subject matter,
against the employee of the Government whose
act or omission gave rise to the claim. * * *
Sec. 420. Every claim against the United
States cognizable under this title shall be for-
ever barred, unless within one year after such
claim accrued or within one year after the date
of enactment of this Act, whichever is later, it
is presented in writing to the Federal agency
out of whose activities it arises, if such claim
is for a sum not exceeding $1,000; or unless
within one year after such claim accrued or
within the year after the date of enactment of
this Act, whichever is later, an action is begun
pursuant to part 3 of this title. In the event
that a claim for a sum not exceeding $1,000 is
presented to a Federal agency as aforesaid, the
time to institute a suit pursuant to part 3 of
this title shall be extended for a period of six
months from the date of mailing of notice to the
claimant by such Federal agency as to the final
disposition of the claim or from the date of
withdrawal of the claim from such Federal
agency pursuant to section 410 of this title, if
it would otherwise expire before the end of
such period.
21
Src. 421. The provisions of this title shall
not apply to—
(a) Any claim based upon an act or omis-
sion of an employee of the Government, exer-
cising due care, in the execution of a statute or
regulation, whether or not such statute or regu-
lation be valid, or based upon the exercise or
performance or the failure to exercise or per-
form a discretionary function or duty on the
part of a Federal agency or an employee of
the Government, whether or not the discretion
involved be abused.
* * * x *
(e) Any claim arising out of an act or
omission of any employee of the Government
in administering the provisions of the Trading
with the Enemy Act, as amended.
* ” * * —
(j) Any claim arising out of the combatant
activities of the military or naval forces, or
the Coast Guard, during time of war.
(k) Any claim arising in a foreign country.
* * * * .
2. The Agreement of August 10, 1922, between
the United States and Germany, 42 Stat. 2200,
provided :
The United States of America
and
Germany,
being desirous of determining the amount to
be paid by Germany in satisfaction of Ger-
many’s financial obligations under the Treaty
a
concluded by the two Governments on August
25, 1921, which secures to the United States
and its nationals rights specified under a res-
olution of the Congress of the United States
of July 2, 1921, including rights under the
Treaty of Versailles, have resolved to submit
the questions for decision to a mixed commis-
sion and have appointed as their plenipoten-
tiaries fur the purpose of concluding the fol-
lowing agreement :
THE PRESIDENT OF THE UNITED STATES OF
AMERICA
Alanson B. Houghton, Ambassador Extraor-
dinary and Plenipotentiary of the United
States of America to Germany,
22
and
THE PRESIDENT OF THE GERMAN EMPIRE
Dr. Wirth, Chancellor of the German Empire,
Who, having communicated their full
powers, found to be in good and due form,
have agreed as follows:
ARTICLE I
The commission shall pass upon the follow-
ing categories of claims which are more par-
ticularly defined in the Treaty of August 25,
1921, and in the Treaty of Versailles:
(1) Claims of American citizens, arising
since July 31, 1914, in respect of damage to, or
seizure of, their property, rights and interests,
including any company or association in
which they are interested, within German ter-
ritory as it existed on August 1, 1914;
—_7"
23
(2) Other claims for loss or damage to
which the United States or its nationals have
been subjected with respect to injuries to per-
sons, or to property, rights and interests, in-
cluding any company or association in which
American nationals are interested, since July
31, 1914, as a consequence of the war;
(3) Debts owing to American citizens by the
German Government or by German nationals.
* * * * *
ARTICLE VI
The two Governments may designate agents
and counsel who may present oral or written
arguments to the commission.
The commission shall receive and consider
all written statements or documents which may
be presented to it by or on behalf of the respec-
tive Governments in support of or in answer to
any claim.
The decisions of the commission and those of
the umpire (in case there may be any) shall be
accepted as final and binding upon the two
Governments.
ARTICLE VIL
The present agreement shall come into force
on the date of its signature.
In FartH WHEREOF, the above-named pleni-
potentiaries have signed the present agree-
ment and have hereunto affixed their seals.
Done in duplicate at Berlin this tenth day
of August 1922.
[SEAL ] Axanson B. HoucHrTon.
[SEAL ] WIRTH.
=
3. Section 2 of the Settlement of War Claims Act
of 1928 (45 Stat. 254) provides in pertinent part:
Sec. 2. (a) The Secretary of State shall,
from time to time, certify to the Secretary of
the Treasury the awards of the Mixed Claims
Commission, United States and Germany,
established in pursuance of the agreement of
August 10, 1922, between the United States
and Germany (referred to in this Act as the
**Mixed Claims Commission’’).
(b) The Secretary of the Treasury is author-
ized and directed to pay an amount equal to the
principal of each award so certified, plus the
interest thereon, in accordance with the award,
accruing before January 1, 1928.
24
(c) The Secretary of the Treasury is author-
ized and directed to pay annually (as nearly as
may be) simple interest, at the rate of 5 per
centum per annum, upon the amounts payable
under subsection (b) and remaining unpaid,
beginning January 1, 1928, until paid.
(d) The payments authorized by subsection
(b) or (e) shall be made in accordance with
such regulations as the Secretary of the
Treasury may prescribe, but only out of the
German special deposit account created by sec-
tion 4, within the limitations hereinafter pre-
scribed, and in the order of priority provided
in subsection (¢) of section 4.
* * * * *
(h) Nothing in this section shall be con-
strued as the assumption of a liability by the
United States for the payment of the awards of
_
=>"
25
the Mixed Claims Commission, nor shall any
payment under this section be construed as
the satisfaction, in whole or in part, of any of
such awards, or as extinguishing or diminish-
ing the liability of Germany for the satisfac-
tion in full of such awards, but shall be con-
sidered only as an advance by the United
States until all the payments from Germany in
satisfaction of the awards have been received.
Upon any payment under this section of an
amount in respect of an award, the rights in
respect of the award and of the claim in re-
spect of which the award was made shall be
held to have been assigned pro tanto to the
United States, to be enforced by and on behalf
of the United States against Germany, in the
same manner and to the same extent as such
rights would be enforced on behalf of the
American national.
(i) Any person who makes application for
payment under this section shall be held to
have consented to all the provisions of this Act.
* 7 * * *
4. Section 4 of the Settlement of War Claims Act
of 1928 (45 Stat. 260, as amended by the Act of
August 6, 1947, 61 Stat. 789) provides:
Src. 4, (a) There is hereby created in the
Treasury a German special deposit account,
into which shall be deposited all funds herein-
after specified and from which shall be dis-
bursed all payments authorized by section 2 or
3, including the expenses of administration
authorized under subsections (c) and (m) of
section 3 and subsection (e) of this section.
i.
(b) The Secretary of the Treasury is auth-
orized and directed to deposit in such special
deposit account—
26
(1) All sums invested or transferred by
the Alien Property Custodian, under the
provisions of section 25 of the Trading with
the Enemy Act, as amended;
(2) The amounts approvriated under the
authority of section 3 (relating to claims of
German nationals) ;
(3) All money (including the proceeds of
any property, rights, or benefits which may
be sold or otherwise disposed of, upon such
terms as he may prescribe) received, whether
before or after the enactment of this Act, by
the United States in respect of claims of the
United States against Germany on account
of the awards of the Mixed Claims Commis-
sion; and
(4) All money held in the Alien Prop-
erty Trust Fund whose payment is re-
stricted under the joint resolution entitled
‘Joint resolution to amend the Settlement
of War Claims Act of 1928, as amended”’,
approved June 27, 1934, other than prop-
erty with respect to which the restrictions
imposed by such joint resolution have been
removed by the President prior to the enact-
ment of this paragraph [August 6, 1947].
The Attorney General shall certify to the
Secretary of the Treasury the amounts to
be so deposited.
_——
27
(ec) The Secretary of the Treasury is author-
ized and directed, out of the funds in such spe-
cial deposit account, subject to the provisions
of subsection (d), and in the following order
of priority—
(1) To make the payments of expenses of
administration authorized by subsections
(c) and (m) of section 3 or subsection (e)
of this section ;
(2) To make so much of each payment
authorized by subsection (b) of section 2
(relating to awards of the Mixed Claims
Commission), as is attributable to an award
on account of death or personal injury, to-
gether with interest thereon as provided in
subsection (c) of section 2;
(3) To raake each payment authorized by
subsection (b) of section 2 (relating to
awards of the Mixed Claims Commission).
if the amount thereof is not payable under
paragraph (2) of this subsection and does
not exceed $100,000, and to pay interest
thereon as provided in subsection (c) of see-
tion 2;
(4) To pay the amount of $100,000 in re-
spect of each payment authorized by sub-
section (b) of section 2 (relating to awards
of the Mixed Claims Commission), if the
amount of such authorized payment is in
excess of $100,000 and is not payable in full
under paragraph (2) of this subsection. No
person shall be paid under this paragraph
and paragraph (3) an amount in excess of
ae.
$100,000 (exclusive of interest beginning
January 1, 1928), irrespective of the num-
ber of awards made on behalf of such person;
(5) To make additional payments auth-
orized by subsection (b) of section 2 (relat-
ing to awards of the Mixed Claims Commis-
sion), in such amounts as will make the
aggregate payments (authorized by such
subsection) under this paragraph and para-
graphs (2), (3), and (4) of this subsection
equal to 80 per centum of the aggregate
amount of all payments authorized by sub-
section (b) of section 2. Payments under
this paragraph shall be prorated on the
basis of the amount of the respective pay- |
ments authorized by subsection (b) of section
2 and remaining unpaid. Pending the com-
pletion of the work of the Mixed Claims
Commission, the Secretary of the Treasury
is authorized to pay such installments of the
payments authorized by this paragraph as
he determines to be consistent with prompt
payment under this paragraph to all persons
on behalf of whom claims have been pre-
sented to the Commission ;
(6) To pay amounts determined by the
Secretary of the Treasury to be payable in
respect of the tentative awards of the Ar-
biter, in accordance with the provisions of
subsection (s) of section 3 (relating to
awards for ships, patents, and radio sta-
tions) ;
(7) To pay to German nationals such
amounts as will make the aggregate pay- |
28
V7_
29
ments equal to 50 per centum of the amounts
awarded under section 3 (on account of ships,
patents, and radio stations). Payments au-
thorized by this paragraph or paragraph (6)
may, to the extent of funds available under
the provisions of subsection (d) of this
section, be made whether or not the payments
under paragraphs (1) to (5), inclusive, of
this subsection have been completed ;
(8) To pay (A) the accrued interest pay-
able under subsection (c) of section (2) (in
respect of awards of the Mixed Claims Com-
mission) and (B) after such interest has
been paid in full, to pay amounts equal to
the difference between the aggregate pay-
ments (in respect of awards of the Mixed
Claims Commission) authorized by subsec-
tions (b) and (c) of section 2 and the
amounts previously paid in respect thereof:
Provided, That, for the purpose only of sub-
section (c) of section 2, the amounts payable
under subsection (b) of section 2 and re-
maining unpaid shall be deemed reduced by
the amount of any payments of interest
hereafter made under clause (A) hereof;
(9) To pay into the Treasury as miscel-
laneous receipts the amount of the awards
of the Mixed Claims Commission to the
United States on its own behalf on account
of claims of the United States against Ger-
many ;
(10) To pay the accrued interest payable
under subsection (h) of section 3 (in re-
spect of awards to German nationals) ;
~~ —e
=
(11) To make such payments as are nec-
essary (A) to repay the amounts invested by
the Alien Property Custodian under subsec-
tion (a) of section 25 of the Trading With
the Enemy Act, as amended (relating to the
investment of 20 per centum of German
property temporarily withheld), (B) to pay
amounts equal to the difference between the
aggregate payments (in respect of claims of
German nationals) authorized by subsec-
tions (g) and (h) of section 3 and the
amounts previously paid in respect thereof.
If funds available are not sufficient to make
the total payments authorized ly this para-
graph, the amount of payments made from
time to time shall be apportioned among the
payments authorized under clauses (A) and
(B), according to the aggregate amount re-
maining unpaid under each clause;
30
(12) To pay accrued interest upon the
participating certificates evidencing the
amounts invested by the Alien Property
Custodian under subsection (a) of section
25 of the Trading With the Enemy Act, as
amended (relating to the investment of 20
per centum of German property tempo-
rarily withheld) ;
(13) To make such payments as are neces-
sary to repay the amounts invested by the
Alien Property Custodian under subsection
(b) of section 25 of the Trading With the
Enemy Act, as amended (relating to the in-
vestment of the unallocated interest fund) ;
but the amount payable under this para-
—
31
graph shall not exceed the aggregate amount
allocated to the trusts described in subsection
(c) of section 26 of such Act; and
(14) To pay into the Treasury as miscel-
laneous receipts any funds remaining in the
German special deposit account after the
payments authorized by paragraphs (1) to
(12) have been completed.
* * * * *
vy U. S. GOVERNMENT PRINTING OFFICE: 1950 e7seca sie
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