EQUITY AND THE ADJUDICATION OF CLAIMS

(a) Testimony of Harold I. Baynton

In testimony before the subcommittee on November 16, 1953, Harold I. Baynton, former Deputy Director and Director of the Office of Alien Property from September 1947 to June 1952, stated that his concept of an equitable adjudication under the Trading With the Enemy Act was simply a determination of whether the property was that of an enemy under the act. If so, it was seized and retained. If not, the property was returned. No exceptions were made. In the opinion of Mr. Baynton, the act directed the seizure and confiscation of that property located in the United States which belonged to Germans and Japanese. It made no distinction between good Germans and bad Germans.

Mr. Baynton further testified that he would need to refresh his memory to recall the provisions of the act placing discretionary powers in the President to dispose of the seized enemy property in accordance with the national interest and further that during his tenure as Director no problems as to the equitable adjudication of claims were taken to his superiors unless they involved tremendous property.

Mr. Baynton clearly indicated that the law, in his opinion, gave no discretionary power for equitable adjudication.

Examination indicates that during the Baynton administration, the Department of Justice, Office of Alien Property, opposed any bills presented to the Congress designed to grant equitable relief.

(b) Testimony of Donald C. Cook

On the same date, Donald C. Cook, Director of the Office of Alien Property during the years 1945 and 1946, and more recently Chairman of the Securities and Exchange Commission, testified as follows:

Mr. Cook. The first matter dealt with is whether efficient procedures have been used for the prompt and equitable adjudication of claims under the act. Now, I listened to the testimony of Mr. Baynton with some interest, as you might well imagine. I happened to disagree with some portions of it although I should say that in this field there is substantial room for differences of opinion. I believe that any administrator in the administration of a piece of legislation should in the best way he can seek to ascertain what the intention of Congress was at the time when the legislation was passed and so administer the legislation as best to conform with that ascertained intention.

And I think constantly while administering the statute, as individual cases come up, one should ask one's self whether a particular result which seeks to be dictated by the cold naked words of the statute is a result which would shock one's conscience, whether it is a result which, if it were presented to individual members of the House and Senate, those members would feel that it was required by the statute.

I think that in the Office of Alien Property that was not done often enough. I listened attentively to the case that was presented by committee's counsel and in my judgment it was unnecessary for the Office of Alien Property to con fiscate the assets in that case. There was plenty of room for discretion under the statute and indeed I might tell the committee that shortly after I became Custodian, I found that very minor assets, trunks of old clothes and furniture and so on, were being vested and I caused a cost accounting study to be made of the cost of confiscation and administering those assets, and on the basis of that study I instituted a program under which assets which did not have a value of more than a certain amount were not to be confiscated.

That was done on the advice of the executive committee which I had in running the office and on the advice of the general counsel of the Office.

So there was no question about the legality of exercising discretion in that way.

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Senator DIRKSEN. Let us take your illustration about confiscating a trunk of old clothes that may have been as outmoded as last year's hat. What did your cost analysis show?

Mr. Cook. It is a long time ago. I don't recall the figures, but if an examination of the files of the Office of Alien Property is made, that analysis should be found and all of the detailed figures are there, and I am sure available to your committee, because this was presented finally in the form of a written report,

Senator DIRKSEN. But the point of this is, there has to be some exercise in every case of administrative discretion.

Mr. Cook. There is no question about that, Senator. Not only should there always be that exercise, but there was room for it under this statute.

Mr. NAIRN. We attempted to get the survey to which Mr. Cook refers and have been unable to do so. I might say that previous testimony indicated that Mr. Cook set a floor of a thousand dollars vesting, according to Mr. Berger, the then counsel of the Department, but that has not been followed since Mr. Cook left the Office and many, many items of small value were vested.

I would like to explore with Mr. Cook, a case that came before the committee of something less than $2,000 which reposed in a bank account in New York in the joint names of an American citizen and a person who was considered to be an enemy national under this statute.

The Office of Alien Property vested the bank account. In the meantime the enemy national had died. The claimant, an American citizen, appeared before the Office of Alien Property, before three lawyers of the office, in an attempt to make a deposition that the money belonged to her. She represented herself, pro se. The hearing examiner found in favor of the claimant and ordered the property to be returned.

The present status of the case is that the Office of Alien Property has appealed from this decision. There are six pages of appeal that must have cost the Government something in excess of the $2,000 that was involved.

There is no question but that the claimant today is an American and why the Office of Alien Property has made an issue over the joint bank account is incomprehensible to me.

Senator DIRKSEN. Have you any comment to make?

Mr. Cook. Yes, sir. I would say that is precisely the kind of asset which I never would have vested and had I been in the Office after it had been vested, it is precisely the kind of return which I would have made.

Mr. HAYES. Is it your opinion now that under the existing laws, and that it has been true at all times, under the law as you have known it, that the Director of the Office of Alien Property did have the discretion to do or not to do as he saw fit under those conditions?

Mr. Cook. That is my opinion.

Mr. HAYES. And if you had been the director at the time that the Office vested the property of a fellow who had served in a GI uniform for the United States of America, who had been given a Purple Heart for having been hit in action, and after leaving the hospital, had stormed the Beach of Anzio and gave his life for the rest of us, would you as Director of the Office of Alien Property have vested the $12,000 which was found in his estate which would have gone to his mother in Germany otherwise?

Mr. Cook, I would not have vested it. If I had been in the Office after it had been vested it would have been the first return that I would have made.

(c) Attitude of the Department of Justice prior to 1953

The attitude of the Department of Justice is reflected in the case of Pvt. Henry Gerkin. The files of the Office of Alien Property reflect that Henry Gerkin immigrated to the United States, acquired citizenship in due course, and was called in the service of the United States, under the Selective Service Act.

In his will, executed subsequent to his induction and made in anticipation of the untimely and violent death which shortly followed, Private Gerkin said:

I hereby give, devise and bequeath, all the rest, residue and remainder of my estate to my beloved parents residing at Hepstedt, Kreis, Bremervoerde, Germany.

Thereafter Henry Gerkin served in the European Theater of Operations, was awarded the Purple Heart and returned to his regiment.

On July 1, 1944, Henry Gerkin gave his life to this country while storming a German stronghold and was awarded the Bronze Star, posthumously.

On July 11, 1947, David L. Bazelon, Director of the Office of Alien Property, prepared a memorandum for his superior, the Attorney General, which set forth the facts in this case and stated:

Emotionally, I find it very difficult to take this property and deny the last wish of the boy who gave his life for this country. On the other hand, the people in this office advise that although we have the power to exercise this discretion, we will be letting open the floodgates on requests to make more exceptions in so-called hardship cases.27

If you approve, I would not vest the property in this case in spite of the fact that there is substantial merit to the administrative problem which might 'bẹ created by such action.

On July 23, 1947, Peyton Ford, Assistant Attorney General, wrote a memorandum on this case to the Assistant to the Attorney General, stating:

While I see no reason to question the discretion of the Office of Alien Property not to vest in particular cases, I think I should hesitate to recommend an exercise of that discretion, if based only on emotional considerations, particularly where failure to vest would create administrative problems.

On August 13, 1947, the Overseas Branch of the Office of Alien Property was asked to conduct an investigation of the parents of the late Henry Gerkin. The substance of the report is summarized in a memorandum of March 28, 1949, which states:

The former burgomaster of the community in which the parents reside swore neither parent was a member of the Nazi party, its organizations, or engaged in political activity.

The investigation, however, reflected that the sons of the parents had been Nazi party members according to an "off-the-record" report. The parents were at the time 77 years of age.

The Office of Alien Property finally decided on June 27, 1949, to provide some relief for the aged parents by authorizing the payment of $2,000 from the proceeds of New York Life Insurance Co. policies to the parents as beneficiaries. The bulk of the estate was confiscated under Vesting Order No. 13639 issued August 10, 1949, by which the Attorney General took title to the remainder of the estate, consisting of $14,242.48 in stocks and cash.

It appears from the foregoing case that the prime consideration was not equitable treatment of individuals. The Department of Justice recognized the discretion granted by the act, but was more concerned with administrative burdens than with equitable treatment. (d) Testimony of Dallas S. Townsend

On July 22, 1953, Dallas S. Townsend, Director, Office of Alien, Property, speaking unofficially, but for the record, at a subcommittee hearing on pending legislation before the Congress, stated:

Speaking only as a citizen and referring only to the question of policy, I think the policy was a great mistake, and I have said that to the committee before, and as a private citizen, I would be ashamed of it. But I am not now talking officially on this thing.

Mr. Townsend's statement followed the testimony of Carl J. Mulert of Pittsburgh, Pa., who testified concerning the estate of his father,

"Italic supplied.

who came to the United States as a young man. The father's will created a substantial trust fund, from assets accumulated in the country of his adoption, for the benefit of brothers, sisters, and other relatives in Germany. Under the terms of the trust the German relatives were given certain life interests with the corpus upon the death of the life tenants vesting in the American descendants of the testator.

Since 1941, the life interest has been vested in the Attorney General of the United States. Mr. Mulert continued by stating that recently one of the recipients of the trust was forced to flee from the Eastern Zone of Berlin and is now destitute in Western Germany. These relatives, according to Mr. Mulert, are in dire need of their income from the estate which is being paid to the Attorney General. This situation exists in numerous cases in spite of the fact that on April 17, 1953, by Executive order of the President, the vesting of property ceased.

(e) Special cases reviewed by the subcommittee

The following cases have been compiled from the summaries of pending cases prepared for the subcommittee by the Office of Alien Property and from closed files made available for examination by the subcommittee:

ESTATES OF DECEASED MEMBERS OF THE UNITED STATES ARMED FORCES

On June 8, 1953, the Office of Alien Property answered as follows a request for all cases of vesting action with regard to the estates of deceased members of the Armed Forces:

The Office of Alien Property has followed the practice of unblocking the proceeds of national service life insurance policies payable to beneficiaries who are nationals of enemy countries and has permitted remittances of the proceeds to these beneficiaries. As far as known, there has been no case of vesting action taken with respect to a national service life insurance policy. The Office based its decision to refrain from vesting on the ground that it would be unfair to seize the fruits of an agreement between a member of the Armed Forces and another Government agency-the Veterans Administration. The decision was buttressed by the undoubted fact that few, if any, members of the Armed Forces who purchased national service life insurance had received advice from the Government as to the possible consequence of designating an enemy beneficiary.

Senator Dirksen's letter refers to the vesting of estates of deceased members of the Armed Forces. It should be noted that the Office of Alien Property has never vested decedents' estates as such. Its vesting action has been limited to the enemy interests in the estates. In some cases, of course, the sole beneficial interest in the estate was enemy owned so that the Office of Alien Property received all assets remaining after payment of creditors, taxes and costs of administration. In most cases, however, the enemy interest was only partial and the beneficial interest in the estate was shared by the Office of Alien Property with American citizens or other nonenemies.

In carrying out the vesting program in connection with interests in decedents' estates, the Office of Alien Property has made no differentiation between estates of persons who died while in the Armed Forces and estates of other decedents. The considerations which led to the decision in regard to national service life insurance benefits were, of course, not present in cases of estates of deceased members of the Armed Forces. In addition it was believed that an exercise of discretion not to vest in these cases would create a substantial administrative problem by inviting great numbers of requests for other exceptions to vesting in so-called hardship cases.28

Senator Dirksen's letter requested details of any cases of vesting action in connection with the estates of deceased members of the Armed Forces. Members 25 Italic supplied.

of the office staff assigned to estate matters are of the opinion that there were not a great number of cases of this nature. However, such cases have not been segregated in the records of the office so that it would require screening of all files of decedents' estates in order to identify them. One case, the estate of Henry Gerken, who died while serving in the Army, has been recalled by the members of the staff.29

CLAIM OF MARION ILER

Decision of the hearing examiner, Office of Alien Property, dated July 6, 1953, sets forth the following findings of fact with regard to the claim of Marion Iler, a citizen of the United States and resident of New York City:

1. Alice Kusswetter, the claimant's aunt, opened a bank account No. 136778 in the Emigrant Industrial Savings Bank on January 4, 1932. This account had a balance of $2,641.13 as of March 26, 1936.

2. On March 27, 1936, Miss Kusswetter had the designation of this account changed to read "Alice Kusswetter or niece, Marion Iler, or the survivor."

3. Alice Kusswetter was the life beneficiary of a testamentary trust under the will of Elisabeth Marbury, deceased, and the funds deposited in her individual savings account, as well as in the joint account, were derived from this life interest in the trust.

4. Alice Kusswetter was naturalized as an American citizen in 1922. She resided in New York City where she was employed as secretary to Elisabeth Marbury until the latter's death. In September 1936 she left on a trip to Germany because of the precarious health of a sister, a resident of Germany. She intended to return to New York as soon as her sister's condition and her own health permitted. Her sister, a victim of cancer, lingered longer than had been expected and Miss Kusswetter was caught in Germany by the war. Her own health then deteriorated.

5. The joint account was opened for the convenience of Alice Kusswetter in order to enable the claimant to make withdrawals in the former's behalf as the occasion warranted during her stay in Europe. The claimant intended to make no withdrawals from the account for her own use and understood that the account was put in her name for the convenience of her aunt during her absence, but that she would succeed to absolute ownership of the account upon the death of her aunt.

6. The Alien Property Custodian by Vesting Order No. 6684 dated June 20, 1946, vested "that certain debt or other obligation owing to Alice Kusswetter or Marion Iler by the Emigrant Industrial Savings Bank, New York, N. Y., arising out of a savings account, Account No. 136778," after making a finding that the property so described was property within the United States owned or controlled by, payable or deliverable to, held on behalf of or on account of, or owing to, or which is evidence of ownership of control by, the aforesaid national of a designated enemy country.

7. On July 15, 1946, the bank in compliance with the Custodian's demand and vesting order paid over to the Office of Alien Property the sum of $2,911.20 constituting the entire proceeds of Bank Account No. 136778.

8. Alice Kusswetter died in Germany on September 24, 1946, having lived there since her departure from New York in 1936.

9. Notice of claim for the return of the vested property was filed by the claimant with the Office on October 10, 1946.

POSITION TAKEN BY THE OFFICE OF ALIEN PROPERTY BEFORE ITS HEARING EXAMINER

The Office of Alien Property conceded that under New York law, the claimant was entitled without question to all of the moneys in the account because of the death of the other joint tenant. The attorneys argued, however, that the claimant was not now entitled to the proceeds of the account and the statutory presumptions avail the claimant nothing because there was no money still on deposit in the

Full details with regard to the estate of Pvt. Henry Gerken have been previously reported.

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