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03/10/60 Max Reissner, v. William P. Rogers

March 10, 1960

MAX REISSNER, APPELLANT

v.

WILLIAM P. ROGERS, AS ATTORNEY GENERAL OF THE UNITED STATES AND SUCCESSOR TO THE ALIEN PROPERTY CUSTODIAN, AND IVY

BAKER PRIEST, TREASURER OF THE UNITED STATES, APPELLANTS,

v.

MAX REISSNER, APPELLEE. NOS. 15165, 15166.



Before WILBUR K. MILLER, WASHINGTON and BASTIAN, Circuit Judges.

UNITED STATES COURT OF APPEALS DISTRICT OF COLUMBIA CIRCUIT. 1960.CDC.11

Baker Priest, Treasurer of the United States, Appellees.

William P. ROGERS, as Attorney General of the United States

and Successor to the Alien Property Custodian, and Ivy

March 10, 1960. Decided

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WASHINGTON

WASHINGTON, Circuit Judge.

These are appeals from grants by the District Court of cross-motions for summary judgment in a suit brought by Mr. Reissner under Section 34(e) of the Trading With the Enemy Act, added by 60 Stat. 925 (1946), as amended, 63 Stat. 107 (1949), 50 U.S.C.A.Appendix § 34(e), to recover a debt claim against the assets of Schering-Kahlbaum A.G. ("Schering"), a German company, held by the Office of Alien Property under vesting orders entered during World War II.

The facts as they appear of record may be summarized as follows: Reissner, a man of the Jewish faith, owned all of the stock of a German company called "Anticoman GmbH," which produced a patent medicine called "Anticoman," purportedly an oral remedy for diabetes. On March 1, 1937, Reissner sold to Schering the assets of this company, with certain exceptions, for Reichsmarks 153,300. Reissner left Germany shortly thereafter. On February 24, 1948, he filed a claim in the Office of Alien Property against Schering's vested assets. He there contended that the 1937 sale to Schering was void under Section 138 of the German Civil Code because it was contra bonos mores and because the inadequate purchase price resulted from Schering's exploitation of Reissner's religious disability; that these acts gave rise to claims in quasi-contract for unjust enrichment under Sections 812, 817, 818 and 819 of the German Civil Code, entitling him to return of the business and, on failure of return, to damages from Schering; and that this is a valid debt claim under Section 34.

The Hearing Examiner of the Office of Alien Property recommended that Reissner's claim be allowed as a debt in the amount of RM 273,507, together with interest at 4% from March 1, 1937, the date of transfer. The Hearing Examiner also recommended that this currency obligation be converted into dollars at the rate of RM 3.33 to $1.00, the exchange rate prevailing in 1948 when the claim was filed. On review, the Deputy Director of the Office of Alien Property agreed with the Hearing Examiner that a debt claim had been stated and that the outstanding debt at the time of transfer was RM 273,507. He ruled, however, that under the German Currency Conversion Law of 1948 this amount was to be converted into Deutsche Marks at the rate of 10 Reichsmarks for 1 Deutsche Mark, and that the Deutsche Marks were to be converted into dollars at the rate prevailing on the "judgment day." On December 23, 1957, the Attorney General, successor to the Alien Property Custodian, approved the Deputy Director's decision.

In his complaint for review of this decision in the District Court Reissner asserted that the amount of indebtedness as of March 1, 1937, was RM 651,331, that the debt was not subject to the German Currency Conversion Law, and that Reichsmarks should be converted into dollars at the rate of RM 2.50 to $1.00. He asked judgment for $260,533.24 with interest at 4% from March 1, 1937. Following the filing of the Attorney General's answer both parties moved for summary judgment.

The District Court sustained the finding of the Deputy Director that the Reichsmark debt was 273,507. It held, however, that the German Currency Conversion Law was inapplicable, ordered the debt converted at the rate of 3.33 Reichsmarks per dollar, and entered judgment for $82,134.23 plus interest at 4% from March 1, 1937. On appeal Reissner renews his contention that the net value of the property taken by Schering in 1937 was RM 651,331 and that the proper conversion ratio was RM 2.5 for $1.00. The Attorney General urges, inter alia, that the finding of the District Court with respect to the amount of the debt as of March 1, 1937, cannot be overturned because it is not clearly erroneous, and that the District Court erred in holding that the German Currency Conversion Law was inapplicable.

Both the Attorney General and the District Court determined that Reissner's claim against Schering was eligible as a "debt claim" within the meaning of Section 34 of the Trading With the Enemy Act, as amended, 50 U.S.C.A.Appendix, § 34, apparently because under German law the claim was a quasi-contractual one for money. We accept the Government's concession here that Reissner has a "debt claim" in some amount which under Section 34 may be paid out of the assets of Schering vested in the Attorney General as successor to the Alien Property Custodian. Our first question then is whether the finding as to the amount of this claim, that is, the finding as to the value of the Anticoman assets on the date of transfer, should be overturned, as Reissner contends. I.

Section 34(c) of the Trading With the Enemy Act provides for the allowance or disallowance of debt claims by the Custodian after examination of such evidence as may be before him. *fn1 If the claimant is dissatisfied, he may under Section 34(e) *fn2 ask review of the disallowance by the District Court. The court may in its discretion take additional evidence upon a showing that the evidence was excluded by the Custodian, was not available to him, or could not reasonably have been presented to him. In the present case no additional evidence was offered to the District Court. Thus, the District Court, and we, may set aside the Attorney General's finding of value only if on the record before him it ...


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