Dreyfus v. von Finck Brief of Appellees August Von Finck and Merck, Finck & Co.
Public Court Documents
January 1, 1975
Cite this item
-
Brief Collection, LDF Court Filings. Dreyfus v. von Finck Brief of Appellees August Von Finck and Merck, Finck & Co., 1975. 2a721b3d-b09a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/cefc8120-47e5-4c30-a7df-495b588355d9/dreyfus-v-von-finck-brief-of-appellees-august-von-finck-and-merck-finck-co. Accessed December 05, 2025.
Copied!
(1 f c:± ^ . i O O O -X y % <
75-7135
To be argued by
W illiam Schurtman
Hmttfk (Bfmrt nt Appeals
FOR TH E SECOND CIRCUIT
D ocket No. 75-7135
W illy Dreyfus,
Plaintiff-Appellant,
v.
A ugust von F inck and Merck, F inck & Co.,
Defendants-Appellees.
O n A ppeal prom the U nited States D istrict Court
for the Southern District of New Y ork
BRIEF OF APPELLEES AUGUST von FINCK
AND MERCK, FINCK & CO.
W alter, C-onston, S churtman
& Gumpel, P.C.
Attorneys for Defendants-Appellees
August von Finch and
Merck, Finch & Co.
330 Madison Avenue
New York. New York 10017
(212) 682-2323
W illiam S churtman
Alan K anzer
Of Counsel
249 Press of Fremont Payne, Inc., 417 Canal St., N . Y.-—966— 6570
TABLE OF CONTENTS
Page
Table of Cases and Other Authorities........................ iv-x
Preliminary Statement........................................ 1
Statement of the Issues...................................... 2
Statement of the Case........................................ 3
The amended complaint................................... 3
The commencement of this action......................... 4
Defendants' motion to dismiss the original complaint... 4
The amended complaint................................... 7
The dismissal of the amended complaint.................. 7
Plaintiff's expansion of the issues on this appeal.... 8
Argument............................... 9
POINT I -
The district court correctly held that plaintiff has
failed to state a claim under any treaty of the United
States................................ 9
The decision of the district court.... ................ 9
The treaties relied on by plaintiff................... 10
A. The Hague Convention.............................. 10
B. The Kellogg-Briand Pact........................... 13
C. The Treaty of Versailles.......................... 13
D. The Four Power Occupation Agreement............... 14
Plaintiff does not have the right to sue defendants
under the Hague Convention, the Kellogg-Briand Pact,
the Treaty of Versailles or the Four Power Occupation
Agreement......................... 15
i
Page
POINT II -
The district court correctly held that plaintiff has
failed to state a claim under the law of nations...... 25
The law of nations..................................... 26
POINT III -
Plaintiff's claims are barred by the Act of State
doctrine............................................... 31
The meaning of the Act of State doctrine.............. 31
A. The Bernstein cases.............................. 32
B. First National City Bank v. Banco Nacional de Cuba 33
C. The Sabbatino decision........................... 34
Conclusion......................... 36
POINT IV -
The district court lacked subject matter jurisdiction
over plaintiff's claim................................. 37
The district court's decision.......................... 37
Bell v. Hood........................................... 38
The treaties on which plaintiff relies................. 39
Plaintiff's claim...................................... 40
POINT V -
Military Government Law No. 59 is not a "law of the
United States", and no federal question arises under
it. Moreover, plaintiff has not stated any claim for
relief based on that military law...................... 42
ii
Page
The history of MGL 59.................................. ^2
MGL 59 is not a law of the United States.............. 45
A. The legislative history of §1331................... ^5
B. Judicial construction of "laws of the United
States"........................................... ^7
C. Military occupation cases......................... 50
Plaintiff's claim does not arise under a law of the
United States.......................................... 53
POINT VI -
The federal courts lack pendent jurisdiction to con
sider plaintiff's common law claims.................... 56
Conclusion.................................................. 60
iii
TABLE OP CASES AND OTHER AUTHORITIES
Page
CASES
Acheson v. Wohlmuth, 196 F.2d 866 (D.C. Cir. 1952).............. 50, 51
Adra v. Clift, 195 P. Supp. 857 (D. Md. 19 6 1)................... 26, 29
American Society and Trust Co. v. Commisioners of the District
of Columbia, 224 U.S. ¥91 TT912)............................ 50
Antoine v. Washington, 95 S. Ct. 944 (1975)..................... 18, 20, 21
Asakura v. Seattle, 265 U.S. 332 (1924).......................... 22, 23
Association J. Dreyfus &_ Co. v. Merck, Finck &_ Co., Case No. 49,
Court of Restitution Appeals, March 7, 1951................ 5, 8, 54
Bacon v. Rives, 106 U.S. 99 (1882)............. ................. 37
Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964)........ 34, 35, 36
Bell V. Hood, 327 U.S. 678 (1946)................................ 37, 38
Bernstein v. N.V. Nederlandsche-Amerikaansche Stoomvaart-
Maatschappi,]', 210 F.2d 375 (2nd Cir. 1954)................. 32, 33
Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246
(2nd Cir. 19^7)7 cert, denied, 332 U.S. 771 (1947)......... 32, 33
Blanton v. State University of New York, 489 F.2d 377 (2nd Cir.
1973)........................................................ 38
Braden v. University of Pittsburgh, 3^3 F. Supp. 836 (W.D. Pa.
1972)......... 48
City of New York v^ Richardson, 473 F.2d 923 (2nd Cir. 1973).... 57
Cobb yu United States, 191 F.2d 604 (9th Cir. 1951)............. 50
Corbett v. Stergios, 381 U.S. 124 (1965)........................ 21
Crabb v. Wedden Bros., 164 F.2d 797 (8th Cir. 1947)............. 49
iv
Dandridge v. Williams, 397 U.S. 471 (1970)...................... 30
Dassignienis v. Cosinos Carriers & Trading Corp., 321 F. Supp.
1253 (S.D.N.Y. 1970)........................................ 37
DeCoteau v. District County Court, 95 S.Ct. 1082 (1975)......... 18, 20
Dodge v. Nakai, 298 F. Supp. 17 (D. Ariz. 1968)....... 19, 20
Edye v. Robertson, 112 U.S. 580 (1884)........................... 16, 17
Eisner v. United States, 117 F. Supp. 197 (Ct. Cl. 1954)....... . 50
Farmer v. Philadelphia Electric Company, 329 F.2d 3 (3rd Cir.
19FT)....................................................... 47
First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759
(1972)...................................................... 33, 34
Flick v. Johnson, 174 F.2d 983 (D.C. Cir. 1949)........... 42, 50, 51
52, 53
Gem Corrugated Box Corp. v. National Kraft Container Corp., 427
F.2d 499 (2nd Cir. 1970)....... 57, 58
Gully v. First National Bank, 299 U.S. 109 (1936)............... 54, 55
Hagans v. La vine, 415 U.S. 528 (1974)............................ 57, 58, 59
Harris v. Boreham, 233 F.2d 110 (3rd Cir. 1956)................. 50
Hauenstein v. Lynham, 100 U.S. 483 (1880)........................ 21, 22
Hidalgo County Water Control and Improvement District v.
Hedrick, 226 F.2d 1 (5th Cir. 1955)........................ 23, 38
Illinois v. City of Milwaukee, 406 U.S. 91 (1972)............... 49
Ivy Broadcasting Co. v^ American Tel. &_ Tel. Co., 391 F.2d 486
(2nd Cir. 19^8")............................................. 49
Karakatsanis v. Conquistador Cia. Nav. S.A., 297 F. Supp. 723
(S.D.N.Y. 1965)....... ...................................... 37
Page
v
Page
Khedivial Line, S.A.E. v. Seafarers' International Union, 278
F. 2d T49~T2nd Cir. I960)....................................... 28
Klein v. Shields & Co., 970 F.2d 1394 (2nd Cir. 1972)........... 57
Kolovrat v. Oregon, 366 U.S. 187 (1961).......................... 21
Leech Lake Band of Chippewa Indians v. Herbst, 334 F. Supp. 1001
(D. Minn. 1971)............................ 19
Lopes v. Reederei Richard Schroeder, 225 F. Supp. 292 (E.D. Pa.
1953)..................................................................................................... 29> 30
Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149
(I90F)......................................................................................... ................. 38
McClanahan v. State Tax Commission of Arizona, 411 U.S. 164
(1973)77.77777.“ ' . ................ .77 ........................................................ 18, 20, 21
McDaniel v. Brown & Root, 172 F.2d 466 (10th Cir. 1949)......... 48
Makah Indian Tribe v. McCauly, 39 F. Supp. 75 (W.D. Wash. 1941).. 19
Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304 (1816)........ 21
Mater v. Holley, 200 F.2d 123 (5th Cir. 1952)................... 49
Maximov v. United States, 373 U.S. 49 (1963).................... 23
Moore v. Sunbeam Corp., 459 F.2d 8ll (7th Cir. 1972)............ 54
Murphy v. Colonial Federal Savings and Loan Ass'n., 388 F.2d 609
(2nd Cir. 1967)..... ....................................... 47
Oneida Indian Nation v. County of Oneida, 4l4 U.S. 66l (1974).... 18, 19
Patton v. Administration of Civil Aeronautics, 217 F.2d 395 (9th
Cir. 1954)......... 48
Pauling v. McElroy, 164 F. Supp. 390 (D.D.C. 1958), aff'd, 278
F.2d 252 (i960), cert, denied, 364 U.S. 835 (i960)........... 17
People of Puerto Rico v. Hermanos, 309 U.S. 543 (1940)............ 50
vi
People of Puerto Rico v. Shell Co., 302 U.S. 253 (1937)......... 50
People of Saipan v. United States Department of Interior, 356
P. Supp. 645 (D. Haw. 1973).................................18
Phelps v. Hanson, 163 F.2d 973 (9th Cir. 1947)...... ............. 18
Romero v. International Terminal Operating Co., 358 U.S. 354
(1959)............. ^5, 46
Ryan v. J. Walter Thompson Co., 453 F.2d 444 (2nd Cir. 1971),
cert, denied, 4o6 U.S. 907 (1972)........................... 57, 58
Schulthis v. McDougal, 225 U.S. 561 (1912)...................... 54, 55
Skokomish Indian Tribe v. France, 269 F.2d 555 (9th Cir. 1959)••• 18, 19
Stevens v. Carey, 483 F.2d 188 (7th Cir. 1973).................. 48
Stokes v. Adair, 265 F.2d 662 (4th Cir. 1959)................... 49
Underhill v. Hernandez, 168 U.S. 250 (1897)..................... 31, 32
United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966)..... 56, 57, 58, 59
United Optical Workers Union v. Sterling Optical Co., Inc., 500
F. 2d 220 (2nd C i r . T O T ) .................................... 38
Valanga v. Metropolitan Life Ins. Co., 259 F. Supp. 324 (E.D.
Pa. 1966)......... 29, 30
Z&F Assets Realization Corp. v. Hull, 114 F.2d 464 (D.C. Cir.
1940), afrtd, 311 U.S. T 7 FTT941)......................... 17
Page
Constitutions
United States Constitution, article III, section 2.............. 46, 47, 49
Treaties
Berlin Treaty of 1921, 42 Stat. 1939............................. 13, 17
vii
Page
Pour Power Occupation Agreement, 5 U.S.T. 2062 (1945)........... 6, 10, 14,
15, 22, 23,
39, 40, 42, 43
Hague Convention of 1907, 36 Stat. 2277.......................... 6, 10, 11,
12, 13, 15,
22, 23, 39, 40
Income Tax Convention between the United States and the United
Kingdom, 60 Stat. 1377 (1945)............................... 23
Kellogg-Briand Pact, 46 Stat. 2343 (1929)........................ 6, 10, 13,
15, 22, 23,
39, 40
Treaty of Amity and Commerce between Prance and the United States,
8 Stat. 12 (1778)........................................... 28
Treaty of Amity and Commerce between Prussia and the United
States, 8 Stat. 84 (1785)................................... 28
Treaty between Japan and the United States, 37 Stat. 1504 (1911). 23
Treaty between Mexico and the United States, 59 Stat. 1219 (1945) 24
Treaty between the United States and the Sioux Indians, 15 Stat.
505 (1867).................................................. 20
Treaty between the United States and the Swiss Confederation, 11
Stat 587 (1850)...... 22
Treaty of Canandaigua of 1794, 7 Stat. 44....................... 19, 20
Treaty of Port Harman of 1789, 7 Stat. 33................. 19, 20
Treaty of Fort Stanwix of 1784, 7 Stat. 15...................... 19, 20
Treaty of Friendship between Spain and the United States, 8 Stat.
138 ( 1795) ..................................................................................................................................................................... 28
Treaty of Peace and Amity between Algiers and the United States,
8 Stat. 133 (1795).......................................... 28
Treaty of Peace and Friendship between Morocco and the United
States, 8 Stat. 100 (178 7).................................. 28
viii
Page
Treaty of Versailles, S. Doc. No. 348, 67th Cong., 4th Sess.
3329 (1923)........ ......................................... 6> 10> 13’
14, 15, 17,
22, 23, 39, 40
Statutes
28 U.S.C. §1331.................................................. 13, 38, 45,
46, 53, 55
28 U.S.C. §1332.................................................. 37
28 U.S.C. §1343.................................................. 58
28 U.S.C. §1350................................................. 13, 25, 26,
28, 29, 30, 32
28 u .s .c . §1363................................................................................................... 50
28 u .s .c . §1983................................................................................................... 58
Civil Rights Act of 1964, 42 U.S.C. §2000e....................... 54
Judiciary Act of 1789, 1 Stat. 73................................. 26
Judiciary Act of 1875, 18 Stat. 470.............................. 45, 46
Military Government laws
Military Government Law No. 59, 12 Fed. Reg. 7983 (1947) ......... 2, 6, 8,
14, 42, 44,
45, 53, 54, 55
Other Authorities
Brierly, The Law of Nations (6th ed. 1963)....................... 27
Elliott, Journal of the Federal Convention....................... 46
ix
Page
Elliott's Debates (1888)......................................... 27
The Federalist No. 80 (J. Cooke ed. 19 6 1) (Hamilton)............ 28
Restatement (2nd) of Foreign Relations........................... 18
Warren, The Making'of the Constitution (1929)................... ^6
x
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
■X
WILLY DREYFUS, :
Plaintiff-Appellant, :
-against- : Docket No. 75-7135
AUGUST von FINCK and MERCK, :
FINCK & CO.,
Defendants-Appellees.
•X
BRIEF ON BEHALF OF DEFENDANTS-APPELLEES
AUGUST von FINCK and MERCK, FINCK & CO.
PRELIMINARY STATEMENT
Plaintiff-appellant ("plaintiff") appeals from an order dated
January 21, 1975* of Judge Charles L. Brleant, Jr. of the United States
District Court for the Southern District of New York dismissing plaintiff’
amended complaint (App. R) for failure to state a claim upon which relief
can be granted.
* A copy of the January 21, 1975 order is set forth in the Joint
Appendix as document "U". Hereafter, references to documents
contained in the Joint Appendix will be to "App." followed by
the letter by which the document is designated therein, as, e.g.,
"App. U".
STATEMENT OF THE ISSUES
1. Did the district court err in holding that plaintiff's
amended complaint failed to state a claim for relief under the treaties
alleged therein?
2. Did the district court err in holding that plaintiff's
amended complaint failed to state a claim for relief under the law of
nations?
3. Does the Act of State doctrine permit the exercise of
jurisdiction over plaintiff's claims?
4. Do the federal courts have subject matter jurisdiction
over plaintiff's claims under the law of nations and the treaties of the
United States?
5. Do the federal courts have subject matter jurisdiction
over plaintiff's claims under Military Government Law No. 59?
6. Has the plaintiff stated a claim for relief under Military
Government Law No. 59?
7. Should plaintiff's common law claims be adjudicated under
the doctrine of pendent jurisdiction?
-2-
STATEMENT OP THE CASE
This is an action commenced in the United States District
Court for the Southern District of New York by a citizen and resident of
Switzerland against two citizens and residents of West Germany based on
events which took place entirely in Germany more than 25 years ago.
Plaintiff purported to obtain jurisdiction over the foreign
defendants by attaching their bank accounts in New York and by mailing
copies of the summons and complaint to the defendants in West Germany.
The amended complaint
The amended complaint (App. R) alleges that plaintiff Willy
Dreyfus is a citizen and resident of Switzerland (f 1) and that de
fendants are residents and citizens of West Germany (HH 3 and 4).
The amended complaint also alleges that in 1938 the Nazis
compelled plaintiff, who was Jewish, to transfer the German banking firm
of J. Dreyfus & Co., and all of his interests therein, to the defendants
at a completely unfair, illegal, inadequate and inequitable price; that
plaintiff and his family were forced to leave Germany; that plaintiff
sought appropriate compensation from the defendants after the end of
World War II and entered into a settlement agreement in 194b, which
defendants thereafter allegedly refused to honor and, in fact, renounced.
- 3-
The amended complaint seeks damages and an accounting, but
does not offer any explanation why plaintiff waited 25 years to bring
the present action.
The commencement of this action
On December 12, 1973 plaintiff filed his original complaint
and on January 15, 197^ plaintiff obtained an ex parte order of attach
ment from the district court in the amount of $150,000 which was used to
tie up bank accounts maintained by defendants in New York (App. E).
Plaintiff posted a $15,000 bond (App. F).
In order to free their bank accounts, and without in any way
conceding the validity of the attachment or consenting to jurisdiction,
the defendants had to post a bond of $150,000 (not $15,000 as plaintiff
incorrectly alleges at page 5 of his appeal brief) (App. G) and the
attachment was vacated by a consent order dated February 5, 1974.
Defendants' motion to dismiss the original complaint
Defendants moved (App. H), pursuant to Rule 12(b) of the
Federal Rules of Civil Procedure, to dismiss the complaint on the
following grounds: (a) lack of subject matter jurisdiction, (b) lack of
personal jurisdiction, (c) forum non conveniens, and (d) insufficient
service of process, but subsequently waived their challenge to suf
ficiency of service and deferred, without prejudice, their claim of lack
of personal jurisdiction and forum non conveniens.
-4-
In their motion papers, defendants pointed out, inter alia,
that the complaint neglected to inform the court that the parties had
litigated the validity of the 194b settlement in the German courts and
had ultimately entered into a new settlement agreement dated February
12, 1951 which ended the litigation and settled all of plaintiff's
claims against defendants upon payment by defendants to plaintiff of
a substantial sum. Defendants submitted as Exhibit "B" a copy of an
opinion dated March 7, 1951 by the Court of Restitution Appeals of the
United States Courts of the Allied High Commission for Germany ("CORA")
which states, at page 2:
"The motion was set for hearing before us on the 12th day
of February, 1951. Whereupon, in open court, the parties
announced to the Court that they had arrived at an ami
cable settlement and they requested that a signed agree
ment be recorded. This was accepted and recorded."
and at page 4:
"It is further ordered that the joint motion of the parties
to withdraw the Motion for Recall and for other appro
priate relief be, and the same is hereby granted. The
claimants petition is dismissed."
(Reply Affidavit of William Schurtman, sworn to April 26, 1974; App. K)
The reference to this superseding 1951 court-approved settle
ment, which was artfully omitted from the original and also from the
later amended complaint*, is relevant on this appeal because of plaintiff's
Plaintiff is in error when he claims at page 4 of his brief on
appeal that he alleged the 1951 settlement in his amended
complaint. He did not.
-5-
decision to broaden the issues before this Court by relying on Military
Government Law No. 59 - the very law under which CORA approved the
1951 settlement some twenty-four years ago. (See plaintiff's appeal
brief, p. 33).
Plaintiff's brief on this appeal alleges for the first time -
but still without the particularity required by Rule 9(b) of the Federal
Rules of Civil Procedure - that the 1951 settlement was fraudulent.
Moreover, plaintiff's brief on appeal again fails to explain why plaintiff
waited more than twenty years before making this claim.*
In a memorandum opinion dated May 20, 197^ (App. L), Judge
Brieant concluded that the district court had subject matter juris
diction, but dismissed the complaint for failure to state a claim upon
which relief could be granted. He expressly held that the treaties on
which plaintiff relied - the Hague Convention, the Kellogg-Briand Pact,
the Treaty of Versailles and the Four Power Occupation Agreement - did
not give rise to private causes of action, and also that the Act of
State doctrine barred the district court from considering the legitimacy
of the acts of the German government.
Since the district court twice dismissed the complaint for failure
to state a claim, defendants have not been required to file an
answer. If an answer were necessary, it would include not only a
denial of the allegations of wrongdoing, but also defenses of pay
ment, release, settlement, accord and satisfaction, statute of limi
tations and laches. In addition, defendants would renew their
motion to dismiss the action on the ground of forum non conveniens
since the action involves a Swiss plaintiff, German defendants, events
which took place entirely in Germany, evidence and witnesses located
in Germany, proof in the German language, and no explanation by
plaintiff why this action cannot or should not be brought in a West
German court.
-6-
The amended complaint
Plaintiff moved for rehearing and reargument (App. N). By
order dated June 26, 1974 (App. Q), the district court granted the
motion and modified the May 20, 1974 memorandum opinion to permit
plaintiff to file an amended complaint that:
"... shall allege with particularity specific pro
visions of such treaty or treaties relied upon."
Plaintiff then served defendants with an amended complaint
(App. R) which was substantially similar to the original complaint (App.
B), but which purported to conform to the judge's requirement that the
treaty provisions be specified with particularity.
The dismissal of the amended complaint
Defendants then moved (App. S) to dismiss the amended complaint
principally on the grounds of failure to state a claim and lack of
subject matter jurisdiction.*
By a memorandum opinion dated January 2, 1975, the district
court dismissed the amended complaint for failure to state a claim on
which relief could be granted. The district court also suggested,
though it noted that it need not so hold, that the Act of State doctrine
barred consideration of plaintiff's claims (App. T).
The motion also asserted the grounds of lack of personal juris
diction and forum non conveniens, but these issues were deferred
without prejudice.
-7-
Plaintiff's expansion of the Issues on this appeal
On February 18, 1975, plaintiff filed a Notice of Appeal and,
on May 15, 1975, moved (App. V) to remand this action to the district
court on the ground that plaintiff had failed to raise in the district
court a question of law allegedly necessary for the resolution of the
case, namely, the applicability of Military Government Law No. 59- De
fendants objected on the ground that Military Government Law No. 59
had been expressly called to the attention of the district court by de
fendants in their Memorandum in Opposition to Plaintiff's Motion for
Rehearing and Reargument, which stated, at page 10:
"The Four Power Occupation Agreement is neither self-executing
nor sufficiently precise nor detailed to permit judicial en
forcement. It was implemented by Military Government Law No.
59 (the "Restitution Law"), which expressly authorized victims
of Nazi laws to institute restitution actions in Germany.
Actions were initiated in local German courts called Restitution
Chambers; the Court of Restitution Appeals ("CORA"), an
American court in Germany, had exclusive jurisdiction of
appeals, (cf. the 1951 CORA decision in the Dreyfus action,
annexed as Exhibit B to defendants' reply affidavit by
William Schurtman, sworn to April 26, 197^0.
Since plaintiff himself invoked the benefits of the Restitution
Law by suing the defendants and obtaining a disposition of the
case in the Court of Restitution Appeals, it is most sur
prising that he overlooks the fact that the basis for that
action was Military Government Law No. 59, not the Four
Power Occupation Agreement."
During oral argument on plaintiff's remand motion, defendants'
counsel stipulated that in the interest of leaving a prompt disposition
of plaintiff's appeal, defendants would not object to this Court's
considering Military Government Law No. 59, the allegedly overlooked
law. Counsel's stipulation was subsequently confirmed by letter. (App. X).
ARGUMENT
POINT I
THE DISTRICT COURT CORRECTLY HELD
THAT PLAINTIFF HAS FAILED
TO STATE A CLAIM UNDER ANY
TREATY OF THE UNITED STATES
The decision of the district court
Judge Brieant, in his memorandum opinion of January 2, 1975
(App. T), dismissed plaintiff's amended complaint for failure to state a
claim upon which relief could be granted. The district judge did not,
as plaintiff erroneously contends on this appeal, hold that the district
court lacked subject matter jurisdiction but, on the contrary, expressly
held that it did have subject matter jurisdiction:
"This District Court has subject matter jurisdiction,
because the right of plaintiff to recover under his
complaint will be sustained if the treaties of the
United States are given one construction, and will
be defeated if they are given another." (memorandum
opinion of May 20, 1974 [App. L], incorporated by
reference in the January 2, 1975 memorandum opinion
[App. T]*.
Defendants do assert on this appeal, as an alternative argument
to sustain the dismissal of the complaint, that the district
court also lacked subject matter jurisdiction. (See Point
IV, infra.)
- 9-
The treaties relied on by plaintiff
Plaintiff, In his amended complaint (App. R), claimed that he
had been injured by actions which defendants allegedly took in viola
tion of the Hague Convention of 1907, 36 Stat. 2277, the Treaty of
Versailles, S. Doc. No. 348, 67th Cong., 4th Sess. 3329 (1923), the
Kellogg-Briand Pact, 46 Stat. 2343 (1929), and the Four Power Occupa
tion Agreement, 5 U.S.T. 2062 (1945).
As defendants show below, none of these treaties prohibited
the German government or any of its citizens from expropriating
property situated in German territory irrespective of whether it was
owned by Germans or aliens. Furthermore, none of the cited treaties
conferred any rights on private individuals.
A. The Hague Convention
The only portions of the Hague Convention on which
plaintiff purports to rely are the Preamble and Articles 1, 41 and 46.
The Hague Convention was an attempt to impose restrictions on
the ways in which belligerent powers could wage war, and governed such
areas as the treatment of prisoners of war and inhabitants of occupied
- 1 0 -
territory.
The Preamble merely stated that in the absence of provisions
covering specific situations, the warring nations should be governed by
"the principles of the law of nations, as they result from the usages
established among civilized peoples, from the laws of humanity, and the
dictates of the public conscience." (36 Stat. 2280).
The Preamble does, however, cleanly define and limit the scope
and applicability of the Hague Convention. The Convention's provisions,
the Preamble states:
"... are intended to serve as a general rule of conduct for the
belligerents in their mutual relations and in their relations
with the inhabitants*." (36 Stat. 2279)-
While the reference to "inhabitants" is ambiguous, Judge Brieant
concluded, and the context clearly shows, that the inhabitants
referred to are the citizens and residents of countries occupied
by, or at war with, the belligerent powers. See, e.g., Articles 2,
44 and 45 of the Regulations respecting the laws and customs of war
on land:
Article 2
"The inhabitants of a territory which has not been occupied,
who, on the approach of the enemy, spontaneously take up arms
to resist the invading troops without having had time to
organize themselves in accordance with Article 1, shall be re
garded as belligerents if they carry arms openly and if they
respect the laws and customs of war." (36 Stat. 2296).
Article 44
"A belligerent is forbidden to force the inhabitants of ter
ritory occupied by it to furnish information about the army of
the other belligerent, or about its means of defense." (36
Stat. 2306).
Article 45
"It is forbidden to compel the inhabitants of occupied ter
ritory to swear allegiance to the hostile Power." (36 Stat.
2306).
- 1 1 -
Article 1 of the Convention, which provides:
"The Contracting Powers shall issue instructions to their armed
land forces which shall be in conformity with the Regulations
respecting the Laws and Customs of War on Land, annexed to the
present Convention." (36 Stat. 2290).
clearly pertains solely to nations and their armies, and defendants come
within neither category. Moreover, Article 2 specifically provides that
the Regulations cited by plaintiff:
"...do not apply except between Contracting Powers, and then
only if all the belligerents are parties to the Convention."
(36 Stat. 2290).
Article 4l of the Regulations provides:
" X violation of the terms of the armistice by private persons
acting on their own initiative only entitles tha,Jjiiiff£dJ2arty
to demand the punishment of the offenders or, if ngpessary,?
compensation for the losses sustained." (36 Star? 2;306j'.
But Article 40, which provides:
"Any serious violation of the armistice by one of the parties
gives the other party the right of denouncing it, and even, in
cases of urgency, cf recommencing hostilities immediately."
(36 Stat. 2305-2306),
clearly shows that the injured "party" referred to in Article 4l is a
"state", with the consequence that only nations, and not private in
dividuals, have the right to demand compensation in the event that a
private party violates the Convention.
Article 46 is equally inapposite. It provides:
"Family honour and rights, the lives of persons, and private
property, as well as religious convictions and practice, must
be respected.
Private property cannot be confiscated." (36 Stat. 2306-2307).
- 1 2 -
At first glance the reference to confiscation of property
might seem in point, but Article 46 is a part of a group of Regulations
headed: "Military Authority over the Territory of the Hostile State".
Consequently it is clear that Article 46 prohibits confiscation of
property of citizens of occupied nations, and has no bearing on de
fendants' alleged conduct or plaintiff's right to obtain relief under
the Hague Convention.
B. The Kellogg-Briand Pact
The Kellogg-Briand Pact, 46 Stat. 2343 (1929), is equally
inapplicable. As plaintiff has earlier conceded, it is but "a sweeping
declaration renouncing war as an instrument of national policy"*, and
there is nothing in the language or history of the Pact that indicates
any intent to confer rights or impose duties on individuals or businesses.
C. The Treaty of Versailles
Even assuming that the Treaty of Versailles, S. Doc. No.
348, 67th Cong. 4th Sess. 3329 (1923), is a treaty within the meaning of
28 U.S.C. §1331 or §1350 (a most dubious proposition since it was never
ratified by the United States, and since the 1921 Treaty of Berlin, 42
Stat. 1939, on which plaintiff apparently relies, only provided that the
* Quoted from plaintiff's brief in support of his petition for re
hearing and reargument, p. 1 9 .
-13-
United States would be granted by Germany some of the benefits bestowed
by the Versailles Treaty upon its signatories), the Articles cited by
plaintiff are patently unrelated to his claims. They merely required
Germany to pay reparations for damages suffered by French nationals at
the bands of German nationals (Article 124), permitted the Allies, with
the cooperation of Germany, to prosecute German citizens for war crimes
committed during World War I (Articles 227-230), fixed responsibility
for damage done Allied countries and their citizens by Germany and her
allies during World War I (Article 231), and provided that Allied
nationals injured by acts done in Germany during World War I could file
complaints in a newly created arbitration tribunal (Article 300).
D. The Four Power Occupation Agreement*
The Four Power Occupation Agreement (Agreement on Control
Machinery in Germany), 5 U.S.T. 2062 (1945), simply provided for the
governance of occupied Germany by the United States, England, the Soviet
Union and France during the period at the end of World War II in which
Germany was "carrying out the basic requirements of unconditional surrender".
It contains no provisions that relate in any way to private individuals.
This treaty will be discussed in greater detail in relation to
Military Government Law No. 59 in Point V, infra.
-14-
Plaintiff does not have the right to sue
defendants under the Hague Convention, the
Kellogg-Briand Pact, the Treaty of Versailles
or the Four Power Occupation Agreement_______
After reviewing the provisions of the treaties relied on by
plaintiff, Judge Brieant held that they conferred no express rights on
individuals, and declined to imply a private right of action under
them:
"We find no authority, and none is cited to us in which
a private cause of action arising out of extraterritorial
acts, but justiciable in the federal courts, has been
asserted successfully as arising by implication out of
any international treaty.
When the international lawyers and diplomats desire to
create a private right arising out of a treaty, they
know how to do so. The classic example, of course, is
the Warsaw Convention, by which private causes of action
were created by express language of the Convention it
self, against international air carriers for the benefit of
passengers and shippers. See Chapter Three thereof,
and particularly Article 28(1) which fixes the venue
for the private action.
The learning with respect to international compacts dif
fers from the interpretation of legislative intent
followed by our courts in implying private rights of action
under remedial statutes such as the federal securities
laws. An accepted principle of international law seems
to be that to create a private right or obligation, the
treaty must, as in the case of the Warsaw Convention,
express a clear intent so to do." (Memorandum opinion
dated May 20, 1974, pages 11-12, App. L)
Defendants submit that Judge Brieant's decision is correct
and in accord with a long line of cases (discussed below) in which the
courts, in recognition of the limited role the judiciary should play
-15-
in the area of foreign affairs, have, for the purpose of determining
which claims could properly be adjudicated, distinguished between
treaties which, either by their express terms or reasonable implica
tion, confer rights on individuals, and those, like the ones on which
plaintiff purports to rely, which are either broad policy pronouncements
or pacts regulating the relations of the convenanting nations with one
another.
The Supreme Court, in Edye v. Robertson, 112 U.S. 580 (1884)
(the Head Money Cases), stated the distinction as follows:
"A treaty is primarily a compact between independent
Nations. It depends for the enforcement of its pro
visions on the interest and the honor of the govern
ments which are parties to it. If these fail, its
infraction becomes the subject of international ne
gotiations and reclamations, so far as the injured
party chooses to seek redress, which may in the end
be enforced by actual war. It is obvious that with
all this, the judicial courts have nothing to do
and can give no redress. But a treaty may also contain
provisions which confer certain rights upon the
citizens or subjects of one of the Nations residing
in the territorial limits of the other, which partake
of the nature of municipal law, and which are capable
of enforcement as between private parties in the
courts of the country. An illustration of this
character is found, in treaties which regulate the
mutual rights of citizens and subjects of the con
tracting Nations in regard to rights of property
by descent or inheritance, when the individuals con
cerned are aliens. The Constitution of the United
States places such provisions as these in the same
category as other laws of Congress by its declaration
that 'This Constitution and the laws made in pursuance
thereof, and all treaties made or which shall be made
under authority of the United States, shall be the
supreme law of the land.' A treaty, then, is a law
of the land as an Act of Congress is, whenever its
-16-
provisions prescribe a rule by which the rights
of the private citizens or subject may be determined.
And when such rights are of a nature to be enforced
in a court of justice, that court resorts to the
treaty for a rule of decision for the case before
it, as it would to a statute." (Id. at 598-599).
And Z&F Assets Realization Corp. v. Hull, 114 F.2d 464 (D.C.
Cir. 1940), aff!d , 311 U.S. 470 (1941), applying the test set forth in
the Head Money Cases, held that a private party’s claim that its rights
under the Berlin Treaty of 1921* had been infringed did not state a
justiciable controversy:
"The compact [the Treaty of Berlin] is between the
two governments; the citizens [plaintiffs] are not
parties thereto; and no provision is made or contem
plated therein, for submitting any question to the
courts." (Id. at 472.) (footnote omitted.)
Similarly, in Pauling v, McElroy, 164 F. Supp. 390 (D.D.C.
1958), aff'd, 278 F.2d 252 (I960), cert, denied, 364 U.S. 835 (I960),
the court held that a private citizen cannot enforce treaties that do
not purport to grant individuals rights:
"The provisions of the Charter of the United Nations,
the Trusteeship Agreement for the Trust Territory of
the Pacific Islands, and the international law principle
of freedom of the seas relied on by plaintiffs are not
self-executing and do not vest any of the plaintiffs
with individual legal rights which they may assert
in this Court. The claimed violations of such inter
national obligations and principles may be asserted
only by diplomatic negotiations between the sovereign
ties concerned." (Id. at 393.)
As previously noted, on page 15, supra, the Treaty of Berlin is
alleged by plaintiff as the basis for his assertion that the Treaty
of Versailles, which was never signed or ratified by the United
States, Is nevertheless a "treaty of the United States".
-17-
Accord: People of Saipan v. United States Department
of Interior, 35(Tf . Supp.“545 (D. Haw. 1973).
These principles have also been recognized and codified in the
Restatement (2nd) of Foreign Relations, which bars actions by aliens
against a state absent express authorization, §17 5, and remits to the
state of which the alien is a national the sole right to seek redress of
his Injuries, §174. See also §1, Comment f.
While plaintiff cites a plethora of cases where courts have
held that they have jurisdiction to consider claims allegedly based on
treaties, an examination of these cases shows that In every instance in
which the courts held that the plaintiff had stated a claim upon which
relief could be granted, the plaintiff was either itself a party to the
treaty (as in the cases involving Indian tribes) and thus clearly had
standing to sue under it, or the treaty relied on expressly conferred
rights on private individuals.
The bulk of the cases cited by plaintiff involve the rights of
Indians under treaties between the United States and their tribes.
These cases include: DeCoteau v. District County Court, 95 S.Ct. 1082
(1975); Antoine v. Washington, 95 S.Ct. 944 (1975); Oneida Indian Nation
v. County of Oneida, 414 U.S. 661 (1974); McClanahan v. State Tax Com
mission of Arizona, 4ll U.S. 164 (1973); Skokomish Indian Tribe v.
France, 269 F.2d 555 (9th Cir. 1959); Phelps v. Hanson,* 163 F.2d 973
* Plaintiff's reference to Phelps v. Hanson is both puzzling and mis
leading, since the Ninth Circuit held that the district court
lacked subject matter jurisdiction Inasmuch as the complaint did
not raise any federal question.
-18-
(9th Cir. 1947); Leech Lake Band of Chippewa Indians v. Herbst, 334 F.
Supp. 1001 (D. Minn. 1971); Dodge v. Nakai, 298 F. Supp. 17 (D. Ariz.
1968); and Makah Indian Tribe v. McCauly, 39 F. Supp. 75 (W.D. Wash.
1941).
Oneida Indian National, Skokomish Indian Tribe, Leech Take
Band of Chippewa Indians, and Makah Indian Tribe, supra, all involve suits
by Indian tribes to enforce specific rights conferred on them by treaties
to which they were parties.
Oneida Indian Nation, supra, is representative of this group
of cases and well illustrates the significant differences between the
treaties relied on by the Indians and those alleged herein by plaintiff.
The plaintiffs in Oneida Indian Nation were the Oneida Indian
Nation of New York State and the Oneida Indian Nation of Wisconsin. The
defendants were the Counties of Oneida and Madison in New York State.
Plaintiffs alleged, inter alia, that pursuant to three treaties
between the Oneidas and the United States - the Treaty of Fork Stanwix
of 1784, 7 Stat. 15, the Treaty of Fort Harman of 178 9, 7 Stat. 33, and
the Treaty of Canandaigua of 1794, 7 Stat. 44 - the Indians had the
right to occupy certain land which had wrongfully been taken from them.
Since the plaintiffs were themselves parties to the treaties
on which they relied, their standing to sue under those treaties could
not be doubted. Moreover, the rights the Oneidas sought to enforce were
specifically granted by those treaties. The Treaty of Fort Stanwix
-19-
stated that:
"[t]he Oneida and Tuscarora nations shall be
secured in the possession of the lands on
which they are settled",
and under the Treaty of Fort Harman, plaintiffs were "again secured and
confirmed in the possession of their respective lands". Moreover,
Article II of the Treaty of Canandaigua provided:
"The United States acknowledge the lands reserved
to the Oneida, Qnandaga and Cayuga Nations, in
their respective treaties with the state of New
York, and called their reservations, to be their
property; and the United States will never claim
the same nor disturb them...in the free use and
enjoyment thereof..." (The aforequoted passages
from the Oneida treaties are set forth in the
Supreme Court’s opinion at 414 U.S. 664, n.3-)
Dodge v. Nakai, supra, differs from the preceding Indian tribe
cases only in that the Indian tribe was a defendant, rather than a
plaintiff. The remaining Indian cases, DeCoteau v. District County
Court, Antoine v. Washington and McClanahan v. State Tax Commission of
Arizona, supra, are also readily distinguishable.
In DeCoteau, Sioux Indians claimed that under a 1867 treaty
between their tribe and the United States, 15 Stat. 505, the states in
which they resided had no jurisdiction over them. The Supreme Court
held that the treaty had been superseded by a subsequent act of Congress.
Consequently, the Court did not reach the question of their rights, if
any, under that treaty.
In both Antoine and McClanahan, however, the Supreme Court
- 2 0 -
upheld the right of individual Indians to be free of state regulations.
McClanahan involved the right of a state to tax the income earned by
an Indian on a reservation. Following a long line of cases, the Supreme
Court held that within reservations, Indians had exclusive sovereignty
of their affairs. Consequently, the decision did not revolve around
the rights of individual Indians under treaties but rather the
jurisdiction of states within reservations and the question of whether
federal law preempted the field.
Similarly, Antoine held that under an act of Congress which
ratified an agreement between plaintiffs' tribe and the United States,
the states were not free to interfere with the right of tribe members
to hunt and fish. Like McClanahan, the central question was one of
whether the federal government had exclusive power to regulate the
affairs of the Indians.
The non-Indian cases cited by plaintiff are equally inap
posite.
Corbett v, Stergios, 381 U.S. 124 (1965) 3 Kolovrat v. Oregon,
366 U.S. Ib7 (1961), Hauenstein v. Lynham, 100 U.S. 433 (l880), and
Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304 (18 16), all involved
the question of the rights of aliens to acquire, inherit, hold or sell
land in the United States under treaties which specifically granted them
those rights. Since Hauenstein v. Lynham, supra, is representative of
these cases, defendants will limit their discussion to Hauenstein to
- 2 1 -
avoid unnecessary repetition.
Kauenstein held that Swiss citizens had the right, under an
1850 Treaty between the United States and the Swiss Confederation, 11
Stat. 587, to sell property which, under Virginia law, they were not
permitted to inherit.
Unlike the Hague Convention, the Kellogg-Briand Pact, the
Treaty of Versailles and the Pour Power Occupation Agreement, the Swiss-
American Treaty specifically and unambiguously conferred rights on the
citizens of those two nations. Article 5 of the Treaty states, in
pertinent part:
"...in case real estate situated within the territories
of one of the contracting parties should fall to a citi
zen of the other party, who, on account of his being
an alien, could not be permitted to hold such property
in the State or in the canton in which it may be situated,
there shall be accorded to the said heir, or other suc
cessor, such term as the laws of the State or canton
will permit to sell such property; he shall be at liberty
at all times to withdraw and export the proceeds thereof
without difficulty, and without paying to the government
any other charges than those which, in a similar case,
would be paid by an inhabitant of the country in which
the real estate may be situated." (quoted in Hauenstein
v. Lynham, 100 U.S. at 486) (emphasis supplied).
Asakura v. Seattle, 265 U.S. 332 (1924), although it does not
involve land, is quite similar to the foregoing group of cases. Plaintiff
was a Japanese citizen domiciled in the state of Washington who, because
of his nationality, was denied the right, under a Seattle ordinance, to
operate a pawnshop in that city. The Supreme Court held the ordinance
-22-
Invalid on the ground that it conflicted with a 1911 treaty between
Japan and the United States, 37 Stat. 1504.
Unlike the Hague Convention, the Kellogg-Briand Pact, the
Treaty of Versailles and the Four Power Occupation Agreement, the
Japanese-American Treaty was clearly intended to confer specific rights
on the citizens of Japan and the United States:
"The citizens or subjects of each of the high contracting
parties shall have liberty to enter, travel and reside
in the territories of the other to carry on trade, whole
sale and retail, to own or lease and occupy houses, manu
factories, warehouses and shops, to employ agents of their
choice, to lease land for residential and commercial pur
poses, and generally to do anything incident to or necessary
for trade upon the same terms as native citizens or subjects,
submitting themselves to the laws and regulations there
established.... The citizens or subjects of each...shall
receive, in the territories of the other, the most constant
protection and security for their persons and property..."
(Asakura v. Seattle, 265 U.S. at 340).
Maximov v. United States, 373 U.S. 49 (1963), merely held that
a domestic trust was a separate taxable entity, apart from its bene
ficiaries, and thus did not qualify for the benefits which the 1945
Income Tax Convention between the United States and the United Kingdom,
60 Stat. 1377, bestowed on residents of Great Britain.
Hidalgo County Water Control and Ixrprovement District v.
Hedrick, 226 F.2d 1 (5th Cir. 1955), the final case cited by plaintiff
to bolster his contention that the district court improperly dismissed
his claim under the Hague Convention, the Kellogg-Briand Pact, the
Treaty of Versailles and the Four Power Occupation Agreement, held that
the plaintiffs therein, two individuals and two political subdivisions
-23-
of the State of Texas, failed to state a claim for relief under the
Mexican-American Treaty of 1945, 59 Stat. 1219 (19^5)-
Plaintiff has thus failed to cite a single case in which a
court has held that a private individual has standing to sue under a
United States treaty that does not expressly confer specific rights
on the claimant.
Consequently, it is respectfully submitted that this Court
should affirm the district court's holding that plaintiff has failed
to state a claim under a treaty of the United States because:
(1) defendants' alleged conduct did not violate
any of the provisions of the cited treaties;
(2) none of the treaties on which plaintiff
relies confers specific rights on private
individuals; and
(3) this Court should not imply private rights
of action under such treaties.
- 2 4 -
POINT II
THE DISTRICT COURT CORRECTLY
HELD THAT PLAINTIFF HAS FAILED
TO STATE A CLAIM UNDER THE LAW
__________ OF NATIONS__________
The court below also held that plaintiff failed to state a
claim under the law of nations clause of 28 U.S.C. §1350, which pro
vides, in pertinent part:
"The district court shall have original jurisdiction
of any civil action by an alien for a tort only,
committed in violation of the law of nations..."
Plaintiff, an alien suing two other aliens over an allegedly
tortious act occurring outside the United States, evidently claims that
any tort committed anywhere in the world by anyone (whether a United
States citizen or not) against anyone (other than a United States citizen),
which violates the law of nations, is cognizable by a United States
district court under §1350 even if the tort has no connection of any
kind with the United States.
Moreover, plaintiff apparently claims that the law of nations
protects the rights of individuals as well as nations.
As defendants show below, neither the history of §1350 nor
the decisions construing it support such a broad, untrammelled reading
of the statute. Indeed, such a construction of §1350 would convert the
United States courts into the policemen of the world.
Significantly, plaintiff has not cited, and defendants have
not found, a single case in which a federal court accepted jurisdiction
-25-
under §1350 of an action that did not involve some nexus with the
United States, such as a United States defendant or a tort committed in
the United States.
Nor has plaintiff cited, or defendants found, a single case in
which the courts held that an individual, as well as a nation, had
rights protected by the law of nations. In the one case where a court
upheld a claim under the law of nations clause of §1350, the Court made
it clear that while the individual alien had standing to sue under §1350,
his claim had to show that he was injured by a violation of his nation's
rights.* *
The law of nations
Although it has been the law since 1789 that an alien can sue
in the federal courts if he has been tortiously injured in violation of
the law of nations**, defendants have found only one case in which
jurisdiction was successfully asserted under the law of nations.* Con
sequently, such judicial construction as there is of the "law of nations"
is mainly dicta.
Scholarly commentary is not much more extensive, and centers
primarily on the applicability of the law to nations, rather than to
individuals. This is not surprising, however, since historically It was
* Adra v. Clift, 195 F. Supp. 857 CD. Md. 1961), discussed infra, at
page 29.
** §9 of the Judiciary Act of 1789, 1 Stat. 73, 77 provided that the
district courts shall have cognizance of:
"...all causes where an alien sues for a tort only in
violation of the law of nations..."
This provision is now contained in 28 U.S.C. §1350.
-26'
the state, and not its citizens, that asserted rights 'under the law of
nations.*
What little discussion there is of why the newly formed United
States was interested in protecting aliens' rights under the law of
nations suggests two principal reasons: first, a desire to expand the
trade of the United States both by encouraging foreigners to invest in
this country and by insuring reciprocal treatment of Americans abroad;
and second, a fear that absent federal control of the treatment of
aliens, one of the states might take action that could thrust the United
States into war.
The first of these concerns was expressed by James Madison
during the debates on the ratification of the Constitution, when he
noted that the inability of foreign merchants to obtain the protection
of the state courts had inhibited "many wealthy gentlemen from trading
or residing with us". 3 Elliott's Debates 583 (1888). This concern is
further evidenced by the fact that most of this nation's early treaties
explicitly provided for the right of citizens of the signatories to do
Plaintiff, at page 19 of his appeal brief, quotes the following
passage from Brierly, The Law of Nations (6th ed. 1963), but omits
the underlined portion which supports defendants' contention that
historically an individual could not sue under the law of nations:
"No state is legally bound to admit aliens into its
territory, but if it does so it must observe a certain
standard of decent treatment towards them, and their
own state may demand reparation for an Injury caused
to them by a failure to observe this standard.tT (id.
at 276)(emphasis supplied).
-27-
business in one another's territory*.
The latter point was stressed by Alexander Hamilton, who
observed:
"The union will undoubtedly be answerable to foreign
powers for the conduct of its members. And the re
sponsibility for an injury ought ever to be accompanied
with the faculty of preventing it. As the denial or
perversion of justice by the sentences of courts...is
with reason classed among the just causes of war, It
will follow that the federal judiciary ought to have
cognizance of all causes in which the citizens of
other countries are concerned." (The Federalist,
No. 80)
Neither of these two concerns, however, would suggest any
desire by the founding fathers to protect nonresident aliens from the
acts of foreign governments taken outside the territory of the United
States.
Nor do the few recent decisions Involving the law of nations
afford plaintiff any basis for bringing an action under §1350.
In Khedivial Line, S.A.E. v. Seafarers' International Union,
278 F.2d 49 (2nd Cir. i960), an action by an Egyptian ship owner to
enjoin a U.S. labor union from picketing its ships, this Court held that
the plaintiff did not state a claim for relief under the law of nations.
See, e.g., Treaty of Amity and Commerce between France and the
United States, 8 Stat. 12 (1778); Treaty of Amity and Commerce
between Prussia and the United States, 8 Stat. 84 (178 5); Treaty of
Peace and Friendship between Morocco and the United States, 8 Stat.
100 (178 7); Treaty of Peace and Amity between Algiers and the
United States, 8 Stat. 133 (1795); and Treaty of Friendship between
Spain and the United States, 8 Stat. 138 (1795).
-28-
After noting that despite the age of §1350 and its pre
decessors, it had rarely been applied, and that the Court had found no
case which squarely based jurisdiction on a claim under the law of
nations, the Court observed that the plaintiff had failed to show that
the law of nations bestows rights on individuals, and not solely on
nations.
Adra v . Clift, 195 F. Supp. 857 (D. Md. 19 6 1), the one case
upholding jurisdiction under §1350's law of nations clause, also re
volved around the question of whether a nation's rights had been violated.
Plaintiff, a Lebanese national, alleged that his former wife,
who had remarried and who lived in the United States, had used a false
passport to get the child into the United States.
The court, in finding a violation of the law of nations,
stressed that misuse of a passport injures both the country that issued
it and the country that admits an alien in reliance on it:
"...despite the fact that the child Najwa was a Lebanese
national, not entitled to be admitted to the United
States under an Iraqi passport, defendant concealed Najwa's
name and nationality, caused her to be included in defendant's
Iraqi passport, and succeeded in having her admitted to
the United States thereby. These were wrongful acts hot
only against the United States, 8 U.S.C.A. §1182, 18 U1S.C.A.
§1546, but against the Lebanese Republic, which is en
titled to control the issuance of passports to its
nationals." (195 F. Supp. at 864-865) (emphasis supplied).
Lopes y. Reederei Richard Schroder, 225 F. Supp. 292 (E.D. Pa.
1963), and Valanga v. Metropolitan Life Ins. Co., 259 F. Supp. 324 (E.D.
- 2 9 -
Pa. 1966), both held that the federal courts lacked subject matter
jurisdiction under §1350 over the claims of the defendants therein, in
the former case because the torts alleged - unseaworthiness and negli
gence - did not constitute violations of the law of nations, and in the
latter case because a suit for the recovery of insurance proceeds was
not a true tort action.
However, the courts did discuss the law of nations in some
depth and their review of its history supports defendants' contention
that it is primarily concerned with: (a) the relations of nations with
one another; and (b) offenses that disrupt or undermine the sovereignty
or economic base of nations.
Lopes quoted extensively from Kent's Commentaries, which
defined the "Law of Nations" as:
"that code of public instruction which defines the
rights and prescribes the duties of nations in their
intercourse with each other..." (quoted at 225 F.
Supp. 297),
and listed four offenses as coming within the scope of that law: vio
lation of passports, violation of ambassadors, piracy and the slave
trade.
Valanga concluded that:
"A violation of the law of nations means a violation
of those standards by which nations regulate their
dealings with one another inter se." (259 F. Supp.
at 328.)
Consequently, since defendants' alleged conduct caused no
injury to any nation, defendants have not violated the law of nations.
-30-
POINT III
PLAINTIFF'S CLAIMS ARE BARRED
BY THE ACT OF STATE DOCTRINE
In addition to finding that plaintiff failed to state a
claim either under a United States treaty or under the law of nations,
Judge Brieant also suggested in his January 2, 1975 opinion that
plaintiff's claims would in any event be barred by the Act of State
doctrine.
After analyzing this doctrine and its exceptions, Judge
Brieant concluded:
"We need not, however, rest our decision on this
ground, since for the reasons stated above, the
complaint fails to state a claim cognizable in
this court." (App. T, p. 22)
Defendants submit that Judge Brieant was correct in his
determination that It is not even necessary to reach the Act of
State doctrine in this case. However, since plaintiff has argued
the doctrine on this appeal, defendants further submit that if this
Court should find it necessary to consider the Issue, It should find
that plaintiff's claims are Indeed barred by the Act of State doctrine.
The meaning of the Act of State doctrine
The Act of State doctrine Is perhaps best set forth in Underhill
v. Hernandez, 168 U.S. 250 (1897), where Chief Justice Fuller said for a
-31-
unanimous Supreme Court:
"Every sovereign state Is bound to respect the Indepen
dence of every other sovereign state, and the courts
of one country will not sit in judgment on the acts of
the government of another done within its own territory.
Redress of grievances by reason of such acts must be
obtained through the means open to be availed of by
sovereign powers as between themselves." (Id. at 252.)
A. The Bernstein cases
The Act of State doctrine was applied by this Court in
Bernstein v. Van Heyghen Freres Societe Anonyme, 163 F.2d 246 (2nd Cir.
1947), cert, denied, 332 U.S. 771 (1947), when it declined to take
jurisdiction over a claim that the defendant had wrongfully obtained
plaintiff's property at an unfair price as a result of duress applied by
the Nazi government of Germany, a claim substantially similar to that
alleged by plaintiff in the instant litigation.
Although there have been two major developments in the Act of
State doctrine since Van Heyghen, defendants contend that Van Heyghen is
still the controlling precedent in this Circuit and requires the dis
missal of plaintiff's action.
The first of these developments was the decision of this Court
in Bernstein v. N.V. Nederlandsche-Amerikaansche Stoomvaart-Maatschappij,
210 F.2d 375 (2nd Cir. 1954), an action which, like Van Heyghen and the
instant case, involved an alleged improper acquisition of property as a
result of the actions of German officials prior to the commencement of
World War II.
-32-
The crucial distinction between Van Heyghen and Nederlandsche-
Amerik^nsche is that after this Court ordered the plaintiff in Nederlandsche-
Amerikaansche "to refrain from alleging matters which would cause the
court to pass on the validity of acts of officials of the German govern
ment", (210 P.2d at 375), the United States State Department issued a
press release and sent this Court a letter stating that:
"The policy of the Executive, with respect to claims
asserted in the United States for the restitution
of identifiable property (or compensation in lieu
thereof) lost through force, coercion, or duress
as a result of Nazi persecution in Germany, is to
relieve American courts from any restraint upon the
exercise of their jurisdiction to pass upon the
validity of the acts of Nazi officials." (quoted
by the Court at 210 F.2d 376.)
In reliance on the State Department's pronouncement, this
Court reversed its initial decision and held that the Act of State
doctrine was not applicable in cases involving Nazi actions.*
B. First National City Bank v.
Banco Nacional de Cuba
The second major development was the rejection of the
Bernstein exception by six Justices of the Supreme Court in First National
City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972),** thus, in
* The view that the Act of State doctrine need not be applied when
the Executive explicitly authorizes the courts to determine the
controversy on the merits has come to be known, and will be re
ferred to hereafter, as the "Bernstein exception".
** Plaintiff concedes that the Bernstein exception was rejected by six
justices in Banco Nacional. Brief on appeal of plaintiff, pp. 38-39*
-33-
effect, reinstating the policy, followed by this Court in Van Heyghen,
that courts should not review the validity of acts of other nations
taken within their own territory.
Plaintiff, however, seeks to avoid the implications of the
elimination of the Bernstein exception by contending that Banco Nacional
holds only that the courts are now free to decide for themselves when to
apply the Act of State doctrine, and that under the standards announced
in Banco Nacional de Cuba v^ Sabbatino, 376 U.S. 398 (1964), this Court
should consider plaintiff's allegations on the merits.
A close reading of Sabbatino, however, shows that the case
supports defendant's contention that the Act of State doctrine bars
plaintiff's claims.
C . The Sabbatino decision
In Sabbatino, the Supreme Court held that under the Act
of State doctrine it was improper for the federal courts to consider the
validity of Cuba's expropriation of a Cuban corporation which was a
wholly-owned subsidiary of an American corporation.
Plaintiff points to a portion of the Supreme Court's
opinion In which Justice Harlan said that the need to apply the Act of
State doctrine was less where: (a) there was general agreement as to
the applicable law, (b) the act was taken by a government no longer in
existence, and (c) the issue in dispute was of minor Importance, and
-34-
contends that the instant litigation presents just such a situation.
Plaintiff, however, has wholly ignored Justice Harlan's dis
cussion of the widely divergent views which different nations have of
acts such as those from which defendants allegedly benefited.
In the first place, plaintiff overlooks Justice Harlan's
statement that:
"There are few if any issues in international law today
on which opinion seems to be so divided as the limitations
on a State's power to expropriate the property of aliens."
(376 U.S. at 428) (footnote omitted).
Plaintiff himself contends that he was an alien in Germany
both because he had dual Swiss and German citizenship (amended complaint,
112, App. R), and because Jews were regarded by the Germans as aliens
(plaintiff's brief on appeal, p. 11).
The heart of plaintiff's allegations is that the German govern
ment "...adopted the policy of making it impossible for Jews to own
economic assets including banking firms in Germany" (amended complaint,
1l8, App. R), a decision quite similar to Cuba's determination that its
sugar crop should not be controlled by foreigners. Consequently, plaintiff
can hardly claim that defendants' alleged conduct is a clear violation
of the law of nations.
Moreover, the right of a nation to expropriate the property of
an alien is a highly sensitive and Important issue that the courts would
do well to avoid:
"It is difficult to imagine the courts of this country em
barking on adjudication in an area which touches more sen
sitively the practical and ideological goals of the various
members of the community of nations." (376 U.S. at 430.)
(footnote omitted.)
-35-
Therefore, a decision that this Court is free to determine the
propriety of the former German policy on Jewish control of banks will
inevitably require this Court to take a position on the right of a
foreign government to expropriate the property of aliens who own in
dustries that are regarded as crucial to its economy, a decision the
Supreme Court in Sabbatino was not prepared to make, and a decision
which may have adverse effects on the State Department's negotiations on
behalf of American companies whose property has been expropriated by
countries throughout the Middle East and Latin America.
Similarly, if plaintiff is regarded as a German national
rather than as an alien, adjudication of his claims will require the
federal courts to take a position on the difficult and sensitive question
of the right of a foreign government, within its own borders, to act in
a discriminatory or even oppressive fashion towards classes of its
citizens, a question which, defendants submit, should not be reached in
a case having no legal nexus with the United States.
Conclusion
Consequently, this Court should decline to take jurisdiction
of plaintiff's claims under the law of nations on the ground that the
Act of State doctrine bars this Court from considering the validity of
the alleged expropriation of plaintiff's property.
-36-
POINT IV
THE DISTRICT COURT MCKED
SUBJECT MATTER JURISDICTION
OVER'PLAINTIFF'S CLAIM
The district court's decision
Defendants asserted both in their motion to dismiss plaintiff's
original complaint (App. H) and In their motion to dismiss plaintiff's
amended complaint (App. S) that the district court lacked subject
matter jurisdiction over plaintiff's claims. The district judge, how
ever, In reliance on Bell v. Hood, 327 U.S. 678 (19^6), held that it had
such jurisdiction:
"...because the right of plaintiff to recover under
his complaint will be sustained if the treaties of
the United States are given one construction, and
will be defeated if they are given another." (memo
randum opinion of Judge Brieant, dated May 20, 197^,
App. L, page 5, incorporated by reference in memo
randum opinion of Judge Brieant, dated January 2,
1975, App. T.)*
For the reasons hereinafter set forth, defendants respectfully
During the hearing on defendants' motion to dismiss plaintiff's original
complaint, plaintiff conceded that there was no diversity jurisdiction
under §1332 since all parties were aliens. (App. L, p. 3)* Neverthe
less, the amended complaint alleges jurisdiction under §1332 on the
ground that defendants' bank accounts were attached in New York. (App.
R, 1f6)
Plaintiff misconstrues §1332. The cases are clear that it does
not apply to controversies between aliens. Karakatsanis v. Conquistador
Cia. Nav. S.A., 297 F. Supp. 723 (S.D.N.Y. 1965), Dassignienis v. Cosinos
Carriers & Trading Corp., 321 F. Supp. 1253 (S.D.N.Y. 1970). The citizen
ship of the banks which held defendants' funds Is wholly Irrelevant. In
the first place, they are not parties. Secondly, the citizenship of
garnishees does not affect or create diversity of citizenship jurisdic
tion. Bacon v. Rives, 106 U.S. 99 (1882).
-37-
contend that the district judge's determination was erroneous and that
the dismissal of the amended complaint should also be sustained for lack
of subject matter jurisdiction.*
Bell v. Hood
In Bell v. Hood, supra, the Supreme Court held that if a
plaintiff asserted a claim under the Constitution or the laws of the
United States, there was federal question jurisdiction under 28 U.S.C.
§1331 unless the alleged claim was "immaterial and made solely for the
purpose of obtaining jurisdiction" or was "wholly Insubstantial and
frivolous".** (327 U.S. at 682-683.)
The cases are clear that an appellee is free to raise on appeal:
"...any matter in the record in support of the district court's
order, including arguments previously rejected by the district
court..." United Optical Workers Union v. Sterling Optical
Co., Inc., 500 F.2d 220, 224 (2nd Cir. 197I01
even though the appellee did not cross-appeal. Dandridge v. Williams,
397 U.S. 471, 475, n.6 (1970); United Optical Workers Union v.
Sterling Optical Co., Inc., supra; and Blanton v. State University
of New York, 409 F.2d 377, 382, n.7 (2nd Cir. 1973).
Moreover, lack of subject matter jurisdiction may be raised at any
time, even on appeal and even on the court's own initiative.
Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149
(1908).
There appears to be no reason why the test of subject-matter
jurisdiction should vary when the claim is based on a treaty,
rather than on the Constitution or laws of the United States. Cf,
Hidalgo County Water Control v. Hedrick, 226 F.2d 1 (5th Cir.
1955).
-38-
Defendants do not deny that plaintiff's original and amended
complaint both seek recovery under treaties of the United States. They
do, however, contend that jurisdiction is wanting since the Hague Con
vention, the Kellogg-Briand Pact, the Treaty of Versailles and the Four
Power Occupation Agreement clearly afford no basis for plaintiff's
claims. This is not, as Judge Brieant suggested, a case where plaintiff's
right to recover turns upon the manner in which a treaty is construed.
Rather, it is a case where no reasonable interpretation of the treaties
in question sustains plaintiff's action.
The treaties on which plaintiff relies
Defendants have discussed the Hague Convention of 1907, 36
Stat. 2277, the Treaty of Versailles, S. Doc. No. 348, 67th Cong., 4th
Sess. 3329 (1923), the Kellogg-Briand Pact, 46 Stat. 2343 (1929), and
the Four Power Occupation Agreement, 5 U.S.T. 2062 (1945), in some
detail in Point I, supra, and will not repeat that discussion herein.
Defendants’ position, however, is that there is no reasonable basis for
contending that plaintiff has a bona fide claim against defendants under
those treaties.
The Hague Convention restricts the manner in which nations can
conduct war. It does not impose any duties or restrictions on individuals
such as defendants. The Kellogg-Briand Pact is but "a sweeping declaration
of national policy".* The Treaty of Versailles is not even a treaty of
* Quoted from plaintiff's brief in support of his petition for re
hearing and reargument, p. 19-
-39-
the United States (see Point I, pp. 13-14, supra), and in any event was
concerned only with reparations and prosecution for acts committed by
Germany and the Axis powers during World War I. And the Four Power
Occupation Agreement merely provided for the governance of occupied
Germany at the close of World War II.
Plaintiff's claim
The amended complaint alleges that Germany undertook a war
against "the civilized world" in violation of the Hague Convention, the
Kellogg-Briand Pact, and the Treaty of Versailles, and to that end,
adopted a set of laws that had the effect first of denying plaintiff the
right to carry on his banking business in Germany, and second of forcing
plaintiff to sell his bank to defendants at an unfair price. Plaintiff
further alleges that Germany's aggressive war and racial laws were
adopted and carried out by the German government and its "political and
business leaders", but carefully stops short of alleging that defendants
were among those leaders or played any role in determining Germany's
policies.
At no point, therefore, does plaintiff connect defendants with
the purported violation of any treaties, other than by suggesting that
defendants were the indirect beneficiaries of acts taken by others.
Moreover, the failure to allege a violation of any treaties by
defendants (rather than others) cannot be ascribed to oversight; Judge
- 10-
Brleant specifically conditioned plaintiff's right to file an amended
complaint on plaintiff's alleging "...with particularity the specific
provisions of such treaty or treaties relied upon." (endorsement order
granting reargument, App. Q).
Consequently, plaintiff's assertion that his claims arise
under treaties of the United States is obviously insubstantial and
frivolous and his action should be dismissed for want of subject matter
jurisdiction.
- 4 i -
POINT V
MILITARY GOVERNMENT LAW
NO. 59 IS NOT A "LAW
OF THE UNITED STATES",
AND NO FEDERAL QUESTION
ARISES UNDER IT. MOREOVER,
PLAINTIFF HAS NOT STATED
ANY CLAIM FOR RELIEF BASED
ON THAT MILITARY LAW.
Plaintiff claimed that the district court overlooked the ap
plicability of Military Government Law No. 59 ("MGL 59"), which had not
been cited in the original or amended complaints, and asked this Court
to remand the case to Judge Brieant with directions to consider MGL 59.
Defendants contended that MGL 59 had clearly been called to
the attention of the district court (see page 8 of this brief) and
therefore consented, in the interest of economy, to have this Court
consider whether the amended complaint states a claim under MGL 59-
(App. X).
The history of MGL 59* *
Near the end of World War II, and in anticipation of Germany's
surrender, the United States, Great Britain and the Soviet Union entered
into an "Agreement on Control Machinery in Germany" (subsequently, after
* The description of military government in occupied Germany herein
after set forth is taken primarily from Flick v. Johnson, 174 F.2d
983 (D.C. Cir. 1949).
-42-
France joined in the Agreement, known as the Four Power Occupation
Agreement), 5 U.S.T. 2062 (1945), whereby they agreed that collectively
they would govern Germany until a legitimate German government could be
formed, and administrative power and responsibility transferred to it.
They further agreed that for administrative convenience, Germany would
be divided into several sectors, the boundaries of which would be
coterminous with the areas occupied by their respective armies.
Pursuant to the Four Power Occupation Agreement, a "Control
Council", composed of the Commanders in Chief of each of the four
Allies, was formed and acted as the supreme governing body of Germany.
Thereafter, matters affecting Germany as a whole were determined by the
Control Council; local matters were dealt with by the separate com
manders, each exercising administrative responsibility in the sector
controlled by his nation's troops. Where possible, the four nations
were to endeavor to adopt similar regulations so the rules would be as
uniform as possible throughout Germany.
In accordance with the Four Power Occupation Agreement, the
President of the United States directed General Eisenhower, who was both
the Commander in Chief of the American Forces in Germany and the Military
Governor of the American Zone, to carry out and support the policies
adopted by the Control Council.
Pursuant to the authority vested by the President, the Four
Power Occupation Agreement and the Control Council, the American Military
-43-
Government, on November 10, 1947, promulgated MGL 59, 12 Fed. Reg. 7983
(1947), which was designed:
"...to effect to the largest extent possible the speedy
restitution of identifiable property... to persons who
were wrongfully deprived of such property...for reasons
of race, religion, nationality, ideology or political
opposition to National Socialism." (Article 1(1)).
The procedure MGL 59 established was as follows:
The claimant would initially file his petition with a Central
Filing Agency which would then forward it to the appropriate Restitution
Agency (Article 55)- The Restitution Agency would then notify the holder
of the claimed property that a petition had been filed and the holder
would be given an opportunity to answer the petition (Article 6l).
If an objection were filed to the petition, the Restitution Agency would
attempt to effect an amicable settlement (Article 62). If this proved
impossible, the Restitution Agency would refer the case to the Restitution
Chamber, a German court granted jurisdiction over restitution claims
(Article 63).
The Restitution Chamber would hold public hearings and render
written opinions (Article 68). An appeal from its decisions originally
ran to the Board of Review, an American court situated in Germany
(Article 69), all of whose members were United States citizens. (Regulation
4 under MGL 59, 13 Fed. Reg. 4901 [1948].) Subsequently, the Board was
replaced by the United States Courts of the Allied High Commission for
Germany ("Court of Restitution Appeals" or "CORA"). (MGL 59, Amendment
3, 15 Fed. Reg. 1547 [1950].)
Pursuant to Regulation 7 under MGL 59:
"Decisions of the Court of Restitution Appeals shall
be final and not subject to further review." (15 Fed.
Reg. 1548 [1950]).
Except as otherwise specifically provided by MOL 59 > any claim
within its compass had to be prosecuted pursuant to its provisions
(Article 57). Tort claims not based on wrongful taking of property
were, however, permitted to be prosecuted in the ordinary German civil
courts (Article 57)*
Article 56 of MGL 59 specifically barred any claim not filed
on or before December 31, 1948.
MGL 59 is not a law of the United States
While defendants contend, for the reasons stated below, that
plaintiff no longer has a claim under MGL 59 on any conceivable theory,
defendants shall first address themselves to the jurisdictional question
(raised during the argument on plaintiff’s motion to remand) whether
MGL 59 is even a "law of the United States" under 28 U.S.C. §1331.
Federal question jurisdiction, pursuant to 28 U.S.C. §1331, is
restricted to controversies arising under "the Constitution, laws or
treaties of the United States". It is defendants' contention that MGL
59 is not a law within the meaning of that provision.
A. The legislative history of §1331
■The Supreme Court, in Romero v. International Terminal
Operating Co., 358 U.S. 354 (1959), concluded that the slight differences
in wording between 28 U.S.C. §1331 and its predecessor, §1 of the Judiciary
Act of 1875, 18 Stat. 470, "were not intended to change in any way the
meaning or content of the Act of 1875"- (Id. at 359 n.5.) Moreover,
-45-
the Court noted, the language of the Judiciary Act of 1875 "was taken
straight from Art. 3, §2, cl. 1" of the Constitution. (Id. at 363.)
Consequently, in order to interpret the meaning of the word "laws" in
§1331, it is necessary to turn first to the Constitution, which pro
vides :
"The judicial Power shall extend to all Cases, in
Law and Equity, arising, under this Constitution,
the Laws of the United States, and Treaties made,
or which shall be made, under their Authority..."
(U.S. Const., art. I, §2.)
The history of Article 3, Section 2 is sketchy. An examination
of the debates on the Federal Constitution reveals that on July 18,
1787, James Madison proposed that the jurisdiction of the federal
courts:
"... shall extend to cases under laws passed by the
General Legislature..." (Warren, The Making of the
Constitution 331 [1929].)
This association of laws with the enactments of the legislature is also
indicated by the August 6, 1787 draft of the Committee of Detail, which
provided:
"The jurisdiction of the supreme court shall extend
to all cases arising under laws passed by the legislature
of the United States..." (1 Elliott, Journal of the
Federal Convention, at 380.)
Three weeks later, however, without any discussion, the words
"passed by the legislature" were deleted. 1 Elliott, Journal of the
Federal Convention, 483.
While it is hazardous in the absence of adequate information
-46-
to speculate as to the reasons for this change, It seems probable that
It was more a question of phraseology than content.
Since the Constitution carefully withheld from the President
the power to make laws, the only potential source of "law", other than
the legislature, was the courts. And while the common law was of course
quite familiar to the framers of the Constitution, the generally accepted
jurisprudence in the l8th century was that courts "find", not "make"
law. Consequently, it is likely that the phrase "passed by the legislature"
was regarded as surplusage and stricken accordingly.
B. Judicial construction of "laws of
the United States"________________
Although the courts have gradually expanded upon the
apparent original meaning of the phrase, they have stayed close to the
concept that a "law" is an enactment of the legislature.
While under certain circumstances, for example, courts
will treat Executive Orders and administrative regulations as laws, in
each instance where they have done so they have stressed that the order
or regulation was issued pursuant to a specific Congressional authori
zation. See, e.g., Murphy v. Colonial Federal Savings and Loan Ass'n.,
388 F.2d 609 (2nd Cir. 1967) (the Home Owners' Loan Act of 1933 specifically
authorized the Federal Home Loan Bank Board to prescribe the regulation
in question); Farmer v. Philadelphia Electric Company> 329 F.2d 3 (3rd
Cir. 1964) (the Executive Order and regulation of the General Services
-47-
Administration were both authorized by the Federal Property and Ad
ministrative Services Act of 1949 and the Defense Production Act of
1949); Patton v. Administration of Civil Aeronautics, 217 F.2d 395 (9th
Cir. 1954) (the regulation of the Administrator was issued pursuant to
the Alaska Airports Act) and. Braden v. University of Pittsburgh, 343 F.
Supp. 836 (W.D. Pa. 1972), vacated on other grounds, 477 F,2d 1 (3rd
Cir. 1973) (the Executive Order was issued pursuant to the Federal
Property and Administrative Services Act of 1949).
Stevens v. Carey, 483 F.2d 188 (7th Cir. 1973), in marked
contrast, involved an Executive Order which, while duly issued, was not
specifically authorized by statute. While holding that it lacked subject
matter jurisdiction, the court stated:
"The plaintiff contends that all Executive Orders confer
jurisdiction under 28 U.S.C. §1331 and that her action
therefore should not have been dismissed on the jurisdictional
ground. She cites several cases which purportedly state
that controversies involving Executive Orders arise "under
the laws of the United States," see, e .g ., Farkas v. Texas
Instrument, Inc., 375 F.2d 62§ (5th Cir. 19 6 7), cert, denied,
389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471, and Braden
v. University of Pittsburgh, 343 F. Supp. 836 (W.D. Pa.
1972). However, an analysis of the cases cited reflects
the rationale that the Executive Orders involved were issued
pursuant to statutory authority providing for presidential
implementation and thereby have the force and effect of
law. See also Farmer v. Philadelphia Electric Co., 329
F.2d 3, 4-8 (3rd Cir. 1964). As we will note hereinafter,
that rationale is not applicable in the case of the
Executive Order here involved, even though the Order
was not beyond the presidential power." (Id. at 190.)
(emphasis in original.)
See also, McDaniel v. Brown & Root, 172 F.2d 466 (10th Cir. 1949), and
-48-
Crabb v. Wedden Bros., 164 F.2d 797 (8th Cir. 1947), both holding that
jurisdiction cannot be founded on Executive Orders.
The major expansion of the meaning of "laws" has been the
recognition of the significant role courts play in filling the gaps
between federal statutes in areas of federal concern. Thus the Supreme
Court in Illinois v. City of Milwaukee, 406 U.S. 91 (1972), relying
heavily on this Court's opinion in Ivy Broadcasting Co. v. American Tel.
& Tel. Co., 391 F.2d 486 (2nd Cir. 1968), held that judicially created
federal common law was also "law of the United States" for jurisdictional
purposes.
The courts' treatment of territorial "laws" has also shown
great sensitivity to the underlying thrust of Article 3 - to insure that
issues of nation-wide concern will be determined by the federal, and not
the state, courts.
Where the United States has exercised full sovereignty over
newly acquired territory, the laws of that territory, enacted before the
annexation, have been regarded as laws of the United States, unless
Congress provides otherwise. See, e.g., Stokes v. Adair, 265 F.2d 662
(4th Cir. 1959), and Mater v^ Holley, 200 F.2d 123 (5th Cir. 1952).
This, of course, is quite logical, since the alternative would be to
require Congress to enact piecemeal an entire system of laws for such
territories.
Where, however, the territories, although under the ultimate
-49-
control of the United States, are granted some autonomy, the laws which
Congress does enact with respect to them are generally not regarded as
"laws of the United States". See, e.g., People of Puerto Rico v.
Hermanos, 309 U.S. 543 (1940); People of Puerto Rico v. Shell Co., 302
U.S. 253 (1937); and Harris v. Boreham, 233 F.2d 110 (3rd Cir. 1956).
The reasoning of these cases is that federal laws must be of general
applicability. Where a "law" is concerned with local policy it is not
really a law of the United States. See also, American Society and Trust
Co. v. Commissioners of the District of Columbia, 224 U.S. 491 (1912),
and 28 U.S.C. §1363, which provide that for jurisdictional purposes,
laws applicable exclusively to the District of Columbia are not laws of
the United States.
C. Military occupation cases
The few cases which defendants have found involving the
legal status of the relationship between the United States and territory
occupied by it as a conqueror have uniformly taken the position that the
United States did not acquire sovereignty over the captured territory
but served only as a caretaker government until such time as a legitimate
government could be formed. See, e.g., Cobb v. United States, 191 F.2d
604 (9th Cir. 1951), which dealt with American occupancy of Okinawa
following World War II, and Acheson v. Wohlmuth, 196 F.2d 866 (D.C. Cir.
1952), Flick v. Johnson, 174 F.2d 983 (D.C. Cir. 1949), and Eisner v.
United States, 117 F. Supp. 197 (Ct. Cl. 1954), all dealing with occupation
-50-
of post-World War II Germany.
Acheson v. Wohlmuth, supra, states the American policy
most fully:
"Occupation by our troops does not make conquered
territory a part of the United States or mean that
such territory 'ceased to be a foreign country...'
[0]ccupied territory is to be administered for
the protection of the inhabitants and the occupying
force; occupation should not be used as a device
for transferring sovereignty.
Germany at all times remained a political entity
- an entity to which men and women could give
formal allegiance and in which they could hold
citizenship. This situation was quite consonant
with Allied policy. Although the destruction
of the 'Nazi State* was one of our war aims, and
the attempted eradication of Nazi influences was
one of the first measures to be taken by our oc
cupying forces, government units staffed by
Germans and responsible for many aspects of domestic
government remained in existence, or were revived,
with the consent and support of the American Military
Government. From the start of the occupation,
it was the policy of our Government to reconstitute
German administrative machinery and to initiate
German selfgovemment, all looking toward the
emergence of a new Germany." (196 F.2d at 868-869.)
(footnotes and citations omitted.)
Flick v. Johnson, supra, also merits extensive consideration,
for it held that the authority of the American military governor to
issue "laws" in the American zone stemmed directly from an international
body, and that consequently a court established by the American military
-51-
governor was an international tribunal, rather than a "court of the
United States":
"Upon the surrender of Germany, the Four victorious
Powers, the United States, Great Britain, France
and Russia, completed military control of the conquered
land. Agreeably to plan, the armies of each occupied
a separate zone. It was agreed that supreme authority
over Germany would be exercised, on instructions from
their Governments, by the Commanders in Chief, 'each
in his own zone of occupation, and also jointly, in
matters affecting Germany as a whole.' At the same
time a 'Control Council' was constituted, composed of
the four Commanders in Chief, as the supreme governing
body of Germany. This plan of operation was expressly
limited to the period of occupation 'while Germany
is carrying out the basic requirements of unconditional
surrender.' (That period has continued since, and still
prevails.) Arrangements for the subsequent period
were to be 'the subject of a separate agreement.'
(Declaration of Berlin, June 5, 19455 12 U.S. Dept, of
State Bull. 1054.)
In support of the foregoing arrangement for the temporary
government of Germany, the President of the United
States, acting through his Joint Chiefs of Staff,
directed the Commander In Chief of the American Forces
in Germany, in his capacity as Military Governor of
the American Zone of Occupation, to carry out and
support, in that Zone, the policies agreed upon in
the Control Council, whose authority 'to formulate
policy and procedures and administrative relationships
with respect to matters affecting Germany as a whole will
be paramount throughout Germany.' This document confirms
and reinforces the supreme authority with which the
American Military Governor, in his capacity as Zone
Commander, was clothed by the Council." (13 U.S. Dept,
of State Bull. 596, October 17, 1945-) (emphasis supplied)
(Flick v, Johnson, 174 F.2d at 984.)
"Thus the power and jurisdiction of that Tribunal stemmed
directly from the Central Council, the supreme governing
body of Germany, exercising its authority in behalf of
the Four Allied Powers.
•52-
"Accordingly, we are led to the final conclusion that
the tribunal which tried and sentenced Flick was not
a tribunal of the United States." (Ib. at 986.)
Consequently, it would appear that MGL 59 is not a "law of the
United States". It was not enacted by Congress or by express authorization
of Congress, but rather by authorization of an international body. It
was local in its orientation, applying solely to Germany, a country over
which the United States claimed no sovereignty. It was, In effect, a
German law, promulgated by the acting government of Germany, and was
administered and enforced, in large measure, by German courts and German
officials.
Therefore, absent pendent jurisdiction (discussed below), the
federal courts have no jurisdiction to consider plaintiff's claim under
MGL 59-
Plaintiff's claim does not arise
under a law of the United States
Even assuming, arguendo, that MGL 59 is a law of the United
States, the courts still have no jurisdiction under §1331 because plaintiff's
claim does not "arise" under MGL 59-
In the first place, MGL 59 established a self-contained set of
restitution rules. It stated that its procedures were exclusive (Article
57) and that the decisions of the courts it created to hear restitution
cases were final and non-reviewable (Article 59)- It further provided
that no restitution claims could be brought under it after December 31,
-53-
1948 (Article 56). Since plaintiff's complaint herein is not brought
in a prescribed court, and was not commenced within the allowable time,
it cannot be said to be brought under MIL 59-*
Secondly, plaintiff's claim for restitution has already been
adjudicated by the courts designated by MGL 59 in the case of Association
J. Dreyfus & Co. v. Merck, Pinck &_ Co., Case No. 49, Court of Restitution
Appeals, March 7, 1951 (attached as an exhibit to the reply affidavit of
William Schurtman in support of defendant's motion to dismiss plaintiff's
complaint, App. K). See page 5 of this brief and pages 32 and 33 of
plaintiff's brief on appeal.
Plaintiff's only remaining claim is that defendants wrongfully
obtained the settlement incorporated in that CORA decision. Such a claim
is based on the ordinary common law tort of fraud, and does not require
a construction of MIL 59 for its determination.
"A suit to enforce a right which takes its origin in the
laws of the United States is not necessarily, or for that
reason alone, one arising under those laws, for a suit
does not arise unless it really and substantially involves
a dispute or controversy respecting the validity, construction
or effect of such a law, upon the determination of which
the result depends." (Schulthis v. McDougal, 225 U.S.
5 6 1, 569 (1912), quoted with approval by Gully v. First Nat.
Bank, 299 U.S. 109, 114 (1936).)
Here the "validity, construction or effect" of MGL 59 is not
When a federal statute which creates a right or confers juris
diction on the federal courts provides that a party suing under it
must do an act as a prerequisite to commencing an action, and a
time period is prescribed for that act, the requirement is juris
dictional. See, e.g., Moore v. Sunbeam Corp., 459 F.2d 8ll (7th
Cir. 1972), which held that the failure of a claimant under the
Civil Rights Act of 1964 to file an administrative notice within
the period provided by the statute deprived the court of juris
diction to consider his claim.
-54-
in dispute. The only issue raised by plaintiff is whether in 1951
defendants wrongfully procured a settlement of a restitution action
commenced in Germany under MGL 59- Consequently, plaintiff's claim
does not meet the test set forth in Gully and Schulthis, supra, and
the federal courts lack jurisdiction under §1331 to consider it.
-55-
POINT VI
THE FEDERAL COURTS LACK
PENDENT JURISDICTION TO
CONSIDER PLAINTIFF'S
COMMON LAW CLAIMS
If this Court agrees with the district court that plaintiff
failed to state a claim under the law of nations or any treaty of the
United States, or if it should hold that the federal courts lack subject
matter jurisdiction over plaintiff's claims under the law of nations and
various treaties of the United States, then, in accordance with the
policy expressed by the Supreme Court in United Mine Workers of America
v. Gibbs, 383 U.S. 715 (1966), any remaining common law claims should
also be dismissed.
After first noting that the federal courts have the power to
hear state causes of action when the state and federal claims are
derived from "a common nucleus of operative fact" and the federal claim
has "sufficient substance" to confer subject matter jurisdiction on the
court, Justice Brennan, speaking for a unanimous court in Gibbs (the
Chief Justice not participating), detailed the circumstances under which
that power should be exercised:
"It has consistently been recognized that pendent
jurisdiction is a doctrine of discretion, not of
plaintiff's rights. Its justification lies in
considerations of judicial economy, convenience
and fairness to litigants; if these are not present
a federal court should hesitate to exercise jurisdiction
-56-
over state claims, even though bound to apply
state law to them, Erie R. Co. v. Thompkins,
304 U.S. 64___ Needless decisions of state
law should be avoided both as a matter of comity
and to promote justice between the parties,
by procuring for them a surer-footed reading
of applicable law. Certainty, if the federal
claims are dismissed before trial, even though
not insubstantial in a jurisdictional sense,
the state claims should be dismissed as well."
(38'3 U.S. at 726.) (footnotes omittedTJ
(emphasis supplied.)
The instant case, of course, comes directly within the class
of cases which the Supreme Court in Gibbs emphatically held should be
dismissed for want of jurisdiction. Not only have plaintiff's federal
claims been dismissed before trial, they have been dismissed at the very
earliest stage at which dismissal is possible, before defendant has
filed an answer. No conceivable benefit of judicial economy, convenience
or fairness to litigants can possibly exist in these circumstances.
Dismissal of plaintiff's pendent common law claims, if any,
is also consistent with the controlling decisions of this Court. In the
recent case of City of New York v. Richardson, 473 F.2d 923 (2nd Cir.
1973), this Court held that the district judge properly dismissed a
state cause of action for lack of jurisdiction where the plaintiff's
federal claims were dismissed under Rule 12(b)(6) of the Federal Rules
of Civil Procedure. See also Klein v. Shields &_ Co., 470 F.2d 1344 (2nd
Cir. 1972).
In his arguments below, plaintiff sought to rely on Ryan v,
J . Walter Thompson Co., 453 F.2d 444 (2nd Cir. 1971), cert, denied, 406
U.S. 907 (1972), Gem Corrugated Box Corp v. National Kraft Container Corp.,
427 F.2d 499 (2nd Cir. 1970), and Hagans v, Lavine, 415 U.S. 528 (1974), to
support his claim of pendent jurisdiction.
Ryan v. J.Walter Thompson Co. and Gem Corrugated Box Corp. v.
-57-
National Kraft Container Corp., supra, in no way require this Court to
retain plaintiff's common law claims. In Ryan, this Court approved the
action of the district court in dismissing plaintiff's state cause of
action at the same time as it dismissed his federal claims. In Gem, this
court merely held that the district court had not acted improperly in
retaining pendent jurisdiction over state law actions where the federal
question causes of action were dismissed pursuant to stipulation of the
parties prior to trial.
Hagans v. Lavine, supra, also does not compel a different
result. Hagans involved a claim by certain welfare recipients that a
welfare regulation which permitted a state to recoup prior emergency
rent payments from subsequent welfare grants violated the U.S. Con
stitution, a federal statute and federal and state welfare regulations.
The constitutional argument was asserted pursuant to 2b U.S.C. §§1983
and 1343 which permit suits in the federal courts to redress deprivation
of Constitutional rights. The other claims invoked the Court's "pendent",
rather than "federal question" jurisdiction, since less than $10,000 was
at issue.
The Supreme Court held that the pendent claims should have
been adjudicated. United Mine Workers of America \n_ Gibbs, supra, was
distinguished on three grounds: (1 ) economy and convenience would result
from disposing of the pendent claims; (2) disposition of the case on the
statutory claim would enable the Court to avoid ruling on the constitu
tional claim; and (3) Gibbs’ rationale centered upon "considerations of
comity and the desirability of having a reliable and final determination
of the state claim by state courts", a consideration wholly irrelevant
in Hagans since all claims were based on federal law.
Hagans in no way requires this court to retain jurisdiction of
plaintiff's non-federal claims. No advantage of economy or convenience
would result to the courts or the parties as a result. Moreover, like
Gibbs, and unlike Hagans, the pendent claims in this case are non-
federal.
Consequently, there is no reason for this Court to refrain
from dismissing plaintiff's pendent claim concurrently with his federal
claims.
-59-
CONCLUSION
The decision of the district court to dismiss plaintiff's
amended complaint should be affirmed.
Respectfully submitted,
WALTER, CONSTON, SCHURTMAN &
GUMPEL, P.C.
Attorneys for Defendants-Appellees
August von Finck and
Merck, Finck & Co.
330 Madison Avenue
New York, New York 10017
(212) 6«2-2323
William Schurtman
Alan Kanzer
Of Counsel
-60-