ZITTMAN V. MCGRATH, 341 U. S. 446 (1951)

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U.S. Supreme Court

Zittman v. McGrath, 341 U.S. 446 (1951)

Zittman v. McGrath

No. 298

Argued February 28, 1951

Decided May 28, 1951*

341 U.S. 446


After "transfers" of assets of German nationals had been forbidden by Executive Orders Nos. 8785 and 8389, issued by the President pursuant to § 5(b) of the Trading with the Enemy Act, petitioners, American holders of claims against German banks, levied attachments on the debtors' accounts in a New York bank and prosecuted the claims to judgments in New York state courts. Subsequently, the Alien Property Custodian issued Vesting Orders vesting in himself the right, title and interest of the debtors in the accounts. Due to the outstanding attachment levies, the New York bank refused to release the accounts, and the Custodian sued in a federal district court for a declaratory judgment that petitioners "obtained no lien or other interest in" the attached accounts, and that the Custodian was entitled to possession of the funds in the accounts.

Held: the Custodian was not entitled to the relief sought. Pp. 341 U. S. 447-449, 341 U. S. 464.

1. Under New York law, petitioners have judgments, secured by attachments on balances owned by German aliens, good as against the debtors, but subject to federal licensing before they can be satisfied by transfer of title or possession. Pp. 341 U. S. 449-452.

2. The attachment levies in this case are not nullities as against the right, title and interest of the German banks. Pp. 341 U. S. 452-459.

(a) Attachments such as these have been treated as valid by consistent administrative practice, and are not to be deemed invalid by retroactive application of General Ruling No. 12 specifically designating an attachment levy as a "transfer" prohibited by Executive Order No. 8389. Pp. 341 U. S. 452-459.

3. The attachment proceedings pursued in this case are not inconsistent with the federal program for control of alien property,

Page 341 U. S. 447

sine they do not purport to control the Custodian in the exercise of the federal licensing power or in his power to vest the res for purposes of administration. Propper v. Clark, 337 U. S. 472, distinguished. Pp. 341 U. S. 459-463.

4. As against the German debtors, the attachments and the judgments they secure are valid under New York law, and they cannot be cancelled or annulled under a Vesting Order by which the Alien Property Custodian takes over only the right, title and interest of those debtors in the accounts. Pp. 341 U. S. 463-464.

182 F.2d 349, reversed.

In declaratory judgment actions against petitioners by the Alien Property Custodian, the District Court granted the relief sought. 82 F.Supp. 740. The Court of Appeals affirmed. 182 F.2d 349. This Court granted certiorari. 340 U.S. 882. Reversed, p. 341 U. S. 464.

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