U.S. Supreme Court Banco Mexicano v. Deutsche Bank, 263 U.S. 591 (1924)
Banco Mexicano de Commercio e Industria v. Deutsche Bank
Argued January 9, 1924
Decided January 21, 1924
263 U.S. 591
APPEAL FROM THE COURT OF APPEALS
OF THE DISTRICT OF COLUMBIA
1. A suit in equity brought under § 9 of the Trading with the Enemy Act, against the Alien Property Custodian, the Treasurer of the United States and a foreign corporation, to establish a debt of the corporation to the plaintiff, as a claim against its property seized under the act and held by the Custodian and the Treasurer, is in effect a suit against the United States, and can therefore be maintained only under the conditions laid down in the act. P. 263 U. S. 603 .
2. Where money was lent by liquidators of a Mexican bank at New York to a German bank, and deposited by the borrower to its general credit with a trust company in that city, and, after the outbreak of the late war, before the loan fell due, the deposit with other assets of the borrower was taken over by the Alien Property Custodian, held that suit to collect the loan could not be maintained by the Mexican bank under the above statute, since the debt was not one that "arose with reference to the money or other property held." P. 263 U. S. 599 .
3. The fact that, under the law of New York, the debt, when due, might have been collected by attachment of the property, had this not been seized under the statute, did not alter the case. P. 263 U. S. 602 .
4. Legislative history of this statute, including remarks of a congressman explaining the bill, held not to determine its construction. P. 263 U. S. 601 .
289 F. 924 affirmed.
Appeal from a decree of the Court of Appeals of the District of Columbia affirming a decree of the Supreme Court of the District which, on motion, dismissed the bill in a suit to enforce a claim under the Trading with the Enemy Act.
MR. JUSTICE McKENNA delivered the opinion of the court.
Appeal from the decree of the Court of appeals, affirming the decree of the Supreme Court of the District of Columbia, which dismissed the suit of appellants, brought in the latter court by them under the Act of Congress of October 6, 1917, entitled "An act to define, regulate, and punish trading with the enemy, and for other purposes," as amended June 5, 1920. 40 Stat. 411; 41 Stat. 977.
The Deutsche Bank of Berlin was duly appointed liquidator of the Banco Mexicano, a banking corporation
organized under the laws of Mexico, and authorized to act in the process of liquidation through Elias S.A. De Lima and Carlos Schulze as the representatives of the Banco Mexicano. Upon their appointment, they proceeded with the liquidation of the affairs of the bank.
By virtue of their appointment and during the period they were acting as such liquidators, they were authorized to make loans of the assets of the bank for its account, and to collect, and, if necessary, to sue for and collect, upon the claim which is the subject of this action.
They, as liquidators for and on behalf of the Banco Mexicano, made a loan of 500,000 gold dollars in New York City on December 15, 1916, to the Deutsche Bank of Berlin, a banking corporation existing under the laws of the German Empire, for six months, with interest at the rate of 5 percent per annum.
The amount was paid to Hugo Schmidt, the agent of the latter bank at its place of business in the United States, and the bank agreed to repay the same in that city on June 15, 1917, with interest at the rate above mentioned.
Upon receiving that amount, represented by check, the bank forthwith deposited the same with the Guaranty Trust Company of New York to the credit of its general bank account, which it then had with that institution.
On April 6, 1917, war was declared between the United States and Germany. Thereafter, as the appellants are informed and believe, under the provisions of the Trading with the Enemy Act and other statutes in such case made and provided, all moneys, securities, and property owned by the Deutsche Bank in the United States, or held for it by others, were turned over to or seized by the Alien Property Custodian of the United States, and have ever since been held by him.
It is averred, on information and belief, that the money so loaned was never transferred from the United States physically or otherwise, but constituted a part of the balance
of the general deposits and securities and other property in the United States of the bank, which were taken over and seized by the Alien Property Custodian. The total amount of such balance, and the total value of the securities and property, are unknown to appellants, but are sufficient, as they are informed and believe, after the payment and satisfaction of all other claims and demands, fully to pay, satisfy, and discharge the claim and demand of the appellants arising upon the loan.
After the loan was made, and until its balance, securities, and other property were turned over to the Alien Property Custodian, the Deutsche Bank continuously kept in the United States sufficient funds and property over and above what was necessary to pay and discharge all other claims and demands of every kind, to repay the loan, with interest, and the funds and securities were kept in the United States for the express purpose and with the intention by the use thereof of repaying the loan when it fell due, and the bank would have, in the ordinary and usual course of business, repaid the same when the debt fell due, if war had not intervened between the United States and Germany.
On June 15, 1917, there became due to appellants from the Deutsche Bank the amount of the loan, and it is still due, although they have made demands for the payment thereof upon the bank and the Alien Property Custodian.
In pursuance of § 9 of the Trading with the Enemy Act, the appellants, as liquidators and in behalf of the Banco Mexicano, or on about May 27, 1920, filed with the Alien Property Custodian a notice of claim, under oath, and in such form and containing such particulars as was required by that § and as the Custodian had prescribed, demanding payment of the debt above described, with interest thereon then accrued, by the Custodian, from the money or other property belonging to the bank, or held by him, or by the Treasurer of the United States.
On or about the same day, a similar application was filed with the President of the United States. Neither the President nor the Alien Property Custodian has paid the debt or the interest thereon.
Appellants aver that, since December 15, 1916, the Deutsche Bank kept in the United States sufficient cash and marketable securities over and above its obligations to enable it to pay the loan and interest, and that the Alien Property Custodian and Treasurer of the United States now hold sufficient cash and securities, formerly owned by the bank and seized by the Custodian, over and above all claims against the same, to pay the debt with interest.
Appellants are advised and believe that, under the law of New York State, and in the event of default by the Deutsche Bank in the payment of the loan, they would have had, on June 15, 1917, and ever since, and now have, a cause of action against the bank upon which they could have sued and can now sue, and could have procured and can now procure, the issue of a writ of attachment under which the funds and securities of the bank in New York City could have been and now can be levied upon and seized and applied in satisfaction of a judgment obtained.
It is averred that, by reason of the foregoing facts, the debt of the appellants arose with reference to the money and other property within the meaning and intention of subdivision (e) of § 9 of the Trading with the Enemy Act.
A motion to dismiss the bill of appellants was made, the grounds thereof being:
(1) Appellants are claimants other than citizens of the United States, and that the debt which they are seeking to recover did not arise with reference to money or any other property held by the Alien Property Custodian or the Treasurer of the United States under and pursuant to the terms and provisions of the Trading with the Enemy Act, as amended.
(2) The appellants have not set forth facts sufficient to entitle them to equitable relief under § 9 of the Trading with the Enemy Act, as amended.
The motion was granted, and a decree made and entered dismissing the bill.
Upon the appeal of appellants, the decree was affirmed by the Court of Appeals of the District of Columbia, to review which action this appeal is prosecuted.
The case is in narrow compass. The facts are set forth in the bill; the law adduced, that is § 9 as amended, it is contended, constitutes them grounds of recovery prayed for, and demonstrates the error in the decree appealed from. We quote it, although its pertinent and determining words are few. As passed October 6, 1917, it is as follows:
"That any person not an enemy or ally of enemy claiming any interest, right, or title in any money or other property which may have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United States, or to whom any debt may be owing from an enemy or ally of enemy whose property or any part thereof shall have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United States may file with the said custodian a notice of his claim under oath and in such form and containing such particulars as the said Custodian shall require, and the President, if application is made therefor by the claimant, may order the payment, conveyance, transfer, assignment, or delivery to said claimant of the money or other property so held by the Alien Property Custodian or by the Treasurer of the United States, or of the interest therein to which the President shall determine said claimant is entitled: Provided,
that no such order by the President shall bar any person from the prosecution of any suit at law or in equity against the claimant to establish any right, title, or interest which he may have in such money or other property. If the President shall not so order within sixty days after the filing of such application or if the claimant shall have filed the notice as above required and shall have made no application to the President, said claimant may at any time before the expiration of six months after the end of the war institute a suit in equity in the Supreme Court of the District of Columbia or in the district court of the United States for the district in which such claimant resides, . . . to establish the interest, right, title, or debt so claimed."
The amendment of June 5, 1920, is as follows:
"No money or other property shall be returned nor any debt allowed under this section to any person who is a citizen or subject of any nation which was associated with the United States in the prosecution of the war unless such nation in like case extends reciprocal rights to citizens of the United States; nor, in any event, shall a debt be allowed under this section unless it was owing to and owned by the claimant prior to October 6, 1917, and as to claimants other than citizens of the United States unless it arose with reference to the money or other property held by the Alien Property Custodian or Treasurer of the United States hereunder. [§ 9(e).]"
The amendment provides that:
"Nor, in any event, shall a debt be allowed under this section unless it was owing to and owned by the claimant prior to October 6, 1917, and, as to claimants other than citizens of the United States unless, it arose with reference to the money or other property held by the Alien Property Custodian or Treasurer of the United States hereunder. "
The italics are ours, and mark the words which make the controversy. The Court of Appeals regarded them a limitation upon the generality of the section as originally enacted -- an
exception from its indulgence of claimants other than citizens of the United States unless the debt arose with reference to the money or other property held by the Alien Property Custodian or Treasurer of the United States under the act.
We concur. The condition did not exist in the claimant. The debt did not arise with reference to the money or property held. The transaction was an ordinary business one, money borrowed to be repaid at a specified distant date; a deposit of it in the ordinary way and with the legal result and relation, the creation of debtor and creditor, not a word or act else -- not a word or act else giving the transaction other character or quality. No distinction, indeed, from any other transaction, nothing to give specification to it or particular remedy.
But particularity is not necessary, is the contention. Mere trace of relation seems, in counsel's view, to satisfy the requirement of § 9. The definition of the Standard Dictionary is adduced, and from it, it is said, it is reasonable to look upon "with reference to" as equivalent to "with an eye toward." To give this pertinence, necessarily, the eye must see what the statute requires to be seen -- a debt that had fixed some right or title or equity to the money or other property held by the Alien Property Custodian or by the Treasurer of the United States.
In support of counsel's view, the explanation of the amendment by the congressman in charge of it is quoted as giving a remedy to a just "debt owed to a citizen of a friendly nation, that originated with reference to the property which is over here." And further:
"there would seem to be no reason in justice or good morals why that property here should not pay it subject to the limitation that it must have been a debt that accrued prior to the enactment of the Trading with the Enemy Act."
This is given emphasis of meaning by the contrast of "enemy
creditors" which it was declared "should be collected by other means than out of this property here." The views of the Attorney General were also referred to and the absence of any recommendation by the Committee on Interstate and Foreign Commerce of an intention "to make radical changes in the rights and remedies of friendly aliens as they had been created by the act previously in force."
It may be conceded that there is some suggestive strength in this history, but it is to be remembered that an act of legislation is not the act of one legislator, and its meaning and purpose must be expressed in words. If there be ambiguity in them, it is the office of construction to resolve it. This we think the Court of Appeals exercised, and to a right conclusion.
A contention, or rather the support of the main contention, is made by appellants by reference to the New York statutory law which authorized, it is said, an action against a foreign corporation -- in this case, by the Banco Mexicano against the Deutsche Bank -- for the collection of its note, a writ of attachment and a judgment that could be satisfied out of the property attached. And the further contention is that, by § 9, as amended,
"nonresident alien individuals and corporations were accorded broader rights even than they then enjoyed under the laws of New York in that they could collect their indebtedness out of the property of nonresident alien enemies in the hands of the Custodian wherever and however it arose and whatever its nature."
But this is a conclusion deduced from the construction put upon § 9 which we think is untenable.
We repeat, we do not think that the debt arose with reference to the money or other property held by the Alien Property Custodian.
Therefore, the prayer of the bill of complaint should be denied. We are constrained to this, because we agree with
the Court of Appeals that this suit is in effect a suit against the United States, and all of its conditions must obtain.
THE CHIEF JUSTICE took no part in the consideration or decision of the case.