PROPER V. CLARK, 337 U. S. 472 (1949)

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U.S. Supreme Court

Proper v. Clark, 337 U.S. 472 (1949)

Proper v. Clark

No. 390

Argued March 28-29, 1949

Decided June 20, 1949

337 U.S. 472


Pursuant to § 5(b) of the Trading with the Enemy Act, as amended, the President promulgated Executive Order No. 8389 prohibiting certain transactions in property of nationals of certain foreign countries except when licensed by the Secretary of the Treasury. Two days before this was made applicable to Austria by Executive Order No. 8785, petitioner was designated by a New York court as temporary receiver of the assets of an Austrian national (AKM). The asset was a debt owed by the American Society of Composers, Authors and Publishers (ASCAP), and no license permitting its transfer was issued. After issuance of Executive order No. 8785, petitioner was designated permanent receiver. Subsequently, the Alien Property Custodian issued an order vesting in himself title to the claim of AKM against ASCAP.

Held: in a suit by the Custodian against petitioner and ASCAP, judgments were properly entered declaring that petitioner had no right, title, or interest in the claim and directing ASCAP to pay it to the Custodian. Pp. 337 U. S. 474-493.

1. The Joint Resolution of May 7, 1940, amending § 5(b) of the Trading with the Enemy Act, and Executive Order No. 8389, issued April 10, 1940, put into effect a valid plan for control of the property covered by the Executive Order that prohibited any change of title to the property here involved by reason of the subsequent appointment of petitioner as permanent receiver. Pp. 337 U. S. 476-486.

(a) The Joint Resolution of May 7, 1940, ratified Executive Order No. 8389, issued April 10, 1940, including the broad definition of "banking institution" as including "any person holding credits for others as a direct or incidental part of his business." P. 337 U. S. 478-479.

(b) Not being defined, the term "credit," as used in the Trading with the Enemy Act, the Executive Orders and the regulations thereunder, is given its ordinary meaning of the obligation due on accounting between parties to transactions. P. 337 U. S. 480.

Page 337 U. S. 473

(c) Petitioner and ASCAP are "banking institutions" within the meaning of the definitions of that term in the Executive Orders and the prohibition against "transfers of credit between any banking institutions." Pp. 337 U. S. 480-482.

(d) A transfer of the credit here involved from a liability owed by ASCAP to AKM to a liability owed by ASCAP to petitioner would violate the prohibition against "transfers of credit." P. 337 U. S. 482.

(e) Although title to the claim in question had not been vested in the Custodian when petitioner was appointed permanent receiver, the Executive Orders prevented title from being transferred to petitioner, even by judicial action. Pp. 337 U. S. 482-485.

(f) A different result is not required by the administrative interpretation of the Executive Orders. Pp. 337 U. S. 485-486.

2. Under § 977-b of the New York Civil Practice Act, title to the claim did not pass to petitioner by virtue of his appointment as temporary receiver before issuance of Executive Order No. 8785. Pp. 486-492.

(a) Although the state statute is susceptible of varying interpretations and the point has not been ruled upon by the state courts, this Court accepts the reasonable interpretation given to it by the Federal District Court and Court of Appeals, which are skilled in the laws of New York. Pp. 337 U. S. 486-489.

(b) This Court rejects petitioner's suggestion that a decision in the federal courts should be delayed until the courts of New York have settled the issue of state law. Pp. 337 U. S. 489-492.

3. The federal courts were not precluded from adjudging the rights of the respective parties in this case on the ground that the property was in the hands of the state court by virtue of a state receivership. Pp. 337 U. S. 492-493.

169 F.2d 324 affirmed.

In a suit by the Alien Property Custodian under § 17 of the Trading with the Enemy Act, a Federal District Court entered judgments declaring that a receiver appointed by a state court had no right, title, or interest in a debt owed to an Austrian national, and directing the debtor to pay the debt to the Custodian. 70 F.Supp. 202. The Court of Appeals affirmed. 169 F.2d 324. This Court granted certiorari, limited to two issues. 335 U.S. 902. Affirmed, p. 337 U. S. 493.

Page 337 U. S. 474

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