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prejudice to the Government. However, if it is to be retamed it is believed that the following changes at least should be made:

a in imes 24 to 16 or page 4 delete the words without benefit of any presumption with respect to ownership, control, residence or nationality.”

In line 16 or page 4, after the word "deler dart", insert words to the following effect: and considered by the court to be essential to a determmation of the merits of the suit or of the proper qualifications of the piitif.”

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IL line 5 or page 5 delete the word "shal" and substitute the word 4. It is believed that proposed sections 33 to 36, inclusive, of the act as contemplated by S. 2376 cai al be entirely eliminated from this legislation and the procedures prescribed by section 9 of the Trading With the Enemy Act as preserty i efect be substantially retained. It is recognized that some revision thereaf is desirable in order to make the provisions applicable to the situation after World War II, particularly with respect to section $e However, it is recommended that such retS)JI De substantially along the ines suggested in the pro posed alternative Perisation annexed as appendix E to the brief of National Foreign Trade Council, Inc., fied with the House Judiciary Committee in conneetion with the nearing or E. R. 50×9. Respectfully submitted.

Dated: NEW YORK, X. Y., July 19, 1946.

CLATDE M. TERRELL.

OFFICE OF ALIEN PROPERTY CUSTODIAN,
Washington 25. Jug 20, 19

MEMORANDUM ON S. 2378, To AMEND THE FIRST WAR POWERS ACT, 1941
Pursuam to leave granted at the hearing on July 15. 1946. it is desired to
Testate the more important reasons for the princina, provisions of §. 2378, and
for the urgency which, in our belief, makes its present enactment important.

SECTION 2. FUITS FOR RETTEN OF PROPERTY AND JUST COMPENSATION

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If the administration of aller property as distinguished from litigation, which will take place in any event is not to be extended indefinitely, the Custodian must have authority to sol properties tamed as, and believed to be enemy And this power of ssie is equally vita. to the sure elimination of enemy interests from the Americal ecolonie system. The copertinent of every interests through croaking was accomplished by Germany in anticipation of World War Ii by ingenious methods and to an extent Dever before emand

At present if a suit for return is fied under section 9 & of the Trading With the Every So the pri pomy cannot be disposed of until final judgment. Section 33 would expressy eliminate this requirement in the cases where cloaking of ENGILT ILTAPActs is most prevalent. i. e., suits by foreign nationais, and would gutetitute & remedy of just Compensation.

This merely exforms prosent law, as thus far judicialy construed. At least five Federal exams have held or intimated that, in view of the power to vest foreign nationas property under section 5 % of the Trading With the Enemy ACT

as amended or the First War Powers Act, 1941, a plaintiff under section & must, to maintail suit allege that he is not a foreign national—not only that he is not an enemy or ally of enemy. But the 1941 amendment was sent BATO & BOTTITUTE remedy. The present bill expressly supplies it-just compenBation.

This is an adequate remedt. AS TORETTIT Bs July 3, 1946 in Säesian-American Corporation v. Markan Judge Learned Eand speaking for the Second Cirenit r pum of Appetis, said that even the implied promise of just compensation SETES the constitutionality of the art. E. 23TA does better: it contains an express protese.

It is true that the remedy of suit for return was held to sustair the constitutionality of the old bet But return was never held to be the only adequate offers & remedy of equal adequacy, which only those Who Lave * Queing to conces need fear. The claimant without enemy taint car recover Lis property by application to the Custodian, unless the national

prejudice to the Government. However, if it is to be retained it is believed that the following changes at least should be made:

(a) In lines 14 to 16 on page 4 delete the words "without benefit of any presumption with respect to ownership, control, residence or nationality."

(b) In line 16 on page 4, after the word "defendant", insert words to the following effect: "and if considered by the court to be essential to a determination of the merits of the suit or of the proper qualifications of the plaintiff."

"may".

(c) In line 5 on page 5 delete the word "shall" and substitute the word 4. It is believed that proposed sections 33 to 36, inclusive, of the act as contemplated by S. 2378 can all be entirely eliminated from this legislation and the procedures prescribed by section 9 of the Trading With the Enemy Act as presently in effect be substantially retained. It is recognized that some revision thereof is desirable in order to make the provisions applicable to the situation after World War II, particularly with respect to section 9 (e). However, it is recommended that such revision be substantially along the lines suggested in the proposed alternative legislation annexed as appendix B to the brief of National Foreign Trade Council, Inc., filed with the House Judiciary Committee in connection with the hearings on H. R. 5089. Respectfully submitted.

Dated: NEW YORK, N. Y., July 19, 1946.

CLAUDE M. TERRELL.

OFFICE OF ALIEN PROPERTY CUSTODIAN,
Washington 25, July 20, 1946.

MEMORANDUM ON S. 2378, To AMEND THE FIRST WAR POWERS ACT, 1941 Pursuant to leave granted at the hearing on July 18, 1946, it is desired to restate the more important reasons for the principal provisions of S. 2378, and for the urgency which, in our belief, makes its present enactment important.

SECTION 33. SUITS FOR RETURN OF PROPERTY AND JUST COMPENSATION

If the administration of alien property (as distinguished from litigation, which will take place in any event) is not to be extended indefinitely, the Custodian must have authority to sell properties vested as, and believed to be, enemy properties, but claimed as neutral. And this power of sale is equally vital to the sure elimination of enemy interests from the American economic system. The concealment of enemy interests through cloaking was accomplished by Germany in anticipation of World War II by ingenious methods and to an extent never before equaled.

At present, if a suit for return is filed under section 9 (a) of the Trading With the Enemy Act, the property cannot be disposed of until final judgment. Section 33 would expressly eliminate this requirement in the cases where cloaking of enemy interests is most prevalent, i. e., suits by foreign nationals, and would substitute a remedy of just compensation.

This merely confirms present law, as thus far judicially construed. At least five Federal courts have held or intimated that, in view of the power to vest foreign nationals' property under section 5 (b) of the Trading With the Enemy Act, as amended by the First War Powers Act, 1941, a plaintiff under section 9 (a) must, to maintain suit, allege that he is not a foreign national-not only that he is not an enemy or ally of enemy. But the 1941 amendment was silent as to a substitute remedy. The present bill expressly supplies it—just compensation.

This is an adequate remedy. As recently as July 3, 1946, in Silesian-American Corporation v. Markham, Judge Learned Hand, speaking for the Second Circuit Court of Appeals, said that even the implied promise of just compensation saves the constitutionality of the act. S. 2378 does better: it contains an express promise.

It is true that the remedy of suit for return was held to sustain the constitu tionality of the old act. But return was never held to be the only adequate remedy. This bill, S. 2378, offers a remedy of equal adequacy, which only those who have something to conceal need fear. The claimant without enemy taint can recover his property by application to the Custodian, unless the national

ADMINISTRATION OF ALIEN PROPERTY
RATIO

103

interest forces a retention. If retained, it is requisitioned, subjected to the unquestioned right of eminent domain. A foreign national who receives an award by way of just compensation for a taking under eminent domain is in the same position as an American or any other whose property is requisitioned or condemned. It is flatly untrue that the bill assimilates friendly aliens to the status of enemies. It does not; it confirms to them rights equal to those enjoyed by any claimant against an act of eminent domain. This is no violation of treaty or constitution; nor can it affect commercial relations or lead to reprisal.

The procedural provisions of section 33 have been made to seem unduly formidable. They are not. First, in expressly placing the burden of proof on claimants by denying the benefit of certain presumptions, the bill confirms present law. It has been consistently held that a claimant even under section 9 (a) must sustain the burden of proof, particularly as to ownership and status as an enemy. It is important that this rule be carried over into the just-compensation remedy. Ownership in 1938, for example, should not, without more proof, automatically provide a presumption of continued ownership after the outbreak of war with all its attendant dislocations. But an affidavit of continued ownership would suffice to meet the burden of proof in the absence of contraverting evidence. This is no undue hardship. Second, the provisions for evidence permit the court to have the benefit, in its deliberations, of the same degree and kind of proof as would be available to it in a proceeding in this country. And the machinery for obtaining such proof would be used not by choice of Government counsel but in the sound discretion of the court.

Reference has been made to the possible arbitrariness of the Custodian's determinations, and it has been suggested that the bill is inconsistent in principle with section 10 (a) of the Administrative Procedure Act.

The Custodian cannot, under his own published regulations, deny a claim without full opportunity for hearing and without a considered determination. The requirements were amply consistent with those of the Administrative Procedure Act before its passage, but since then further study has been undertaken in order to insure compliance in every detail. The most sedulous conformity to prodedural due process has at all times been the rule. And in administering the standard of "national interest,' the President has instructed the Custodian to consult with the departments of the Government which have responsibilities pertinent to the issue.

There is no room under this bill for star-chamber proceedings or, as was intimated, for decisions on the basis of a claimant's personal characteristics.

Further, the provisions as to tender of property by the Custodian during a just-compensation proceeding insure that all at times up to final judgment any mistake can be corrected. These factors, plus the presence of the just-compensation remedy, constitute full conformity with the principles of the Administrative Procedure Act. Even that act, in section 10, itself recognizes that some matters must be committed to agency discretion.

We repudiate the suggestion that an American citizen would, under S. 2378, be precluded from contesting in court his classification as a foreign national. The remedy of section 9 (a) is expressly preserved to the American citizen. If, by reason of alleged cloaking activities, for example, he is administratively considered to fall within a Presidential definition of "foreign national" he can contest that issue in his section 9 (a) suit. Further, the President's power to prescribe definitions is by the express terms of section 5 (b) limited to definitions not inconsistent with the purposes of that section. Any definition contravening that requirement is subject to judicial review at the suit of an aggrieved party.

Section 33 is not vulnerable as a bill of attainder. A witness alleged that persons would be prevented from suing under it if they had been convicted of certain wartime crimes, such as sabotage, photographing of military installations, etc. The charge is groundless for the reason that the reference in the bill to such crimes is not contained in and has nothing to do with section 33. It appears only in section 35, the debt-claim section, where there is no constitutional problem, since the allowance of debt claims out of United States property is, without dispute, entirely a matter of congressional grace and not the protection of a property right.

SECTION 34. STATUTE OF LIMITATIONS

This section is important apart from other sections. Without it, alien property litigation will continue interminably and no final disposition of the property can be made by Congress. It should be brought to a close. This section supplies an express, equitable time limit.

SECTION 35. DEBT CLAIMS

This section means the difference between present justice to debt claimants and continued postponement of their claims. They have waited 3 years. * Opposition to these provisions is a disservice to thousands of meritorious claimants.

The Supreme Court in Cabell v. Markham last December held that debt claimants (creditors of the former owners of vested property) can sue on their claims. If they could be paid under present law, the first to obtain a judgment might take all the proceeds of a particular account, for many of the accounts are insolvent. This would be against the tried principles of a bankruptcy system of equitable distribution, as contemplated by S. 2378.

But even payment on a first-come, first-served basis is not clearly valid, because the court expressly reserved the question whether payment could be made, stating that such matters pose problems of policy for the Congress. So more litigation and delay will be the probable result of nonenactment of section 35.

One misconception brought out at the hearing deserves particular mention: Mr. Connor was unable to find a provision protecting property claimed by nonenemy persons from being reduced by debt-claim payments made by the Custodian. The answer is on page 11 of S. 2378, at lines 15-22:

"No debt shall be paid prior to the expiration of 120 days after publication of the first such notice in respect of the debtor, nor in any event shall any payment of a debt claim be made out of any property or interest or proceeds in respect of which a proceeding pursuant to this act for return or for just compensation is pending and was instituted prior to the expiration of such 120 days.'

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In other words, a property claimant has ample opportunity, by filing his claim (including a just-compensation suit), to prevent any payment of debt claims out of that property until his claim is finally disposed of.

SECTION 36. RULES AND REGULATIONS: SUBPENA

The subpena power is important, apart from other provisions, to insure the availability of full information for dispostion of claims.

CONCLUSION

The balance of the bill appears not to be subject to dissent. It is equally important.

The bill as a whole, it is respectfully submitted, deserves favorable consideration, and calls for enactment at the present session if it is to be effective.

JOHN WARD CUTLER,
Associate General Counsel.

STATEMENT OF GEORGE ERIC ROSDEN, ATTORNEY AT LAW, WASHINGTON, D. C., ON BILL S. 2378

Since I

I am a practicing member of the bar of the District of Columbia. specialize in international and administrative law and since this practice occasions frequent trips abroad on which I meet foreign industrialists, businessmen, lawyers and members of foreign governments, I have some little conception as to the effect of United States legislative events upon foreigners abroad and upon our foreign trade. I deem it my duty as a citizen who is acquainted with the probable results of the enactment of bill S. 2378, and as a lawyer to whom unconstitutional legislation is abhorrent, to submit to this committee my reasons why this bill, and in particular section 33 (a) of this bill, should not be enacted.

I

Section 9 (a) of the Trading With the Enemy Act, as amended, carefully enumerates persons who are not enemies or allies of enemies, granting them the right to sue the Alien Property Custodian for return of property that has been seized by the Custodian. Besides complying with the statutory provisions, the burden is on the plaintiff to establish his right or title.

Section 9 (a), amongst others, enables a friendly alien whose property was wrongfully seized by the Alien Property Custodian to obtain retransfer of the property.

A number of suits were initiated pursuant to this provision. In most instances, the courts have upheld the seizure.

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