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UEBERSEE FINANZ-KORPORATION, A.G. v. CLARK

February 21, 1949

UEBERSEE FINANZ-KORPORATION, A.G.
v.
CLARK, Atty. Gen



The opinion of the court was delivered by: LAWS

This suit was brought by plaintiff, a corporation of Switzerland, the controlling stock of which is claimed to be beneficially owned by Fritz von Opel, a citizen of Liechtenstein, to recover shares of stock of American corporations vested by the Alien Property Custodian as enemy owned property. The principal issue is whether as of the time of vesting in June and July 1942, the stock was owned or controlled by Fritz von Opel, a neutral, or by his parents, Wilhelm and Marta von Opel, citizen of Germany and 'enemies' within the provisions of the Trading with the Enemy Act. *fn1"

It is agreed that on and before October 5, 1931, Wilhelm and Marta von Opel owned 600 shares of stock of Adam Opel, A.G., a German corporation, and that since 1929 such shares were deposited in the United States subject to an option agreement providing for their sale to General Motors Corporation for a specified sum in German reichsmarks.

 Plaintiff claims that by a gift agreement executed on October 5, 1931, Wilhelm and Marta von Opel transferred their ownership in the shares of stock of Adam Opel, A.G. to their son, Fritz von Opel, and that in November, 1931, Fritz vonOpen sold the stock to General Motors Corporation pursuant to the option. In the transaction he arranged to be paid in American rather than German currency. From the funds received, Fritz von Opel acquired plaintiff corporation. Later the American securities now held by defendant were purchased by plaintiff corporation. From 1932 until the time the American securities were vested pursuant to provisions of the Trading with the Enemy Act, it is claimed Fritz von Opel owned 97 per cent of the shares of plaintiff corporation and through this ownership exercised control over the American securities. On November 21, 1939, Fritz von Opel became a citizen of Liechtenstein, which at all times during World War II was a neutral country. Any ownership or control of the American securities or any interest in them by Wilhelm or Marta von Opel as of the time the securities were vested, is denied. The agreement of October 5, 1931, indicated retention by the Opel parents of an interest in the Opel stock and any securities purchased by funds received from its sale, by way of what is known as a usufruct or 'niessbrauch' under German law. However, plaintiff claims such interest did not legally arise because of omission of words of assignment in the agreement and failure to deliver possession or co-possession to his parents of the property covered by the agreement. Moreover, it is plaintiff's claim that in 1935, a discussion was had by Wilhelm and Marta von Opel with their then attorney, Dr. Gros, with regard to any possible interest they might have in the property referred to in the agreement of October 5, 1931, and at that time Wilhelm and Marta von Opel orally waived such interest. Plaintiff, therefore, claims that if the Court should find any interest in the American securities existed in favor of Wilhelm or Marta von Opel previous to and at this time in 1935, it was effectively relinquished and surrendered, according to the laws of Germany, by the oral waiver.

 The defendant makes a number of alternative claims in opposition to the return of the vested securities. First, it maintains the agreement dated October 5, 1931, relied on by plaintiff as having divested Wilhelm and Marta von Opel of their interest in the Opel stock and properties realized from any sale of the stock, was void because it was not executed on the date it bore, but at a time in November, 1931, following sale of the Opel stock in the United States for American currency. It is contended the plan of Wilhelm von Opel was to make it appear that Fritz von Opel, who for several years had been a non-resident of Germany, known in German as a 'devisen auslander', was the owner of the stock at the time it was sold in the United States, in which event it would be permissible, under Germany's foreign exchange laws, to receive payment in American currency, instead of in German reichsmarks. If the property was owned by Wilhelm von Opel or his wife, citizens and residents of Germany, known in that country as 'devisen inlanders', the sale would be subject to Germany's foreign exchange laws. Passage of more stringent laws and regulations restricting sales of German property for foreign exchange were considered imminent in Germany about this time. That there was not believed to be sufficient time on or about October 5, 1931, to complete a satisfactory agreement transferring title to Fritz von Opel before new laws and regulations were adopted. For this reason only a preliminary draft of the gift agreement was made at or about October 5, 1931, the actual execution of the agreement having occurred in November 1931, after the sale of the Adam Opel, A.G., stock in America and Fritz von Opel's return to Germany. To make the sale of stock in America for American currency appear to have been made by Fritz von Opel, a devisen auslander, the gift agreement was pre-dated October 5, 1931.

 Defendant maintains further, that regardless of whether the agreement was executed in October or November, 1931, it was not a bona fide transaction, but was in all respects a sham adopted by the parents as a means of making it possible, from a sale of assets outside of Germany, to obtain gold or American securities without apparently violating the exchange laws and regulations of Germany. By reason of such a sham transaction, defendant claims the agreement was void and Wilhelm and Marta von Opel continued to have complete ownership and control of the American securities sought to be recovered by this suit.

 If the Court does not accept the claim of complete ownership by Wilhelm and Marta von Opel in the vested American securities, defendant contends the evidence establishes at the least that they held a substantial part ownership in the securities. It is conceded that the gift agreement itself, if found to be valid, did not effectually create in favor of Wilhelm and Marta von Opel a usufructuary interest in the property mentioned. However, defendant asserts such an interest came into existence at a later time, when delivery was made of the controlling shares of stock of plaintiff corporation to one Hans Frankenberg, who was then acting as agent for Wilhelm and Marta von Opel. It is maintained this was an in rem interest, according to the laws of Germany. Defendant makes an alternative claim of limited ownership, to the effect that if the Court should find a usufructuary interest in the property did not arise in favor of Wilhelm and Marta von Opel, as last hereinbefore asserted, nevertheless Wilhelm and Marta von Opel by the agreement dated October 5, 1931, obtained a right at any time to assert a claim in personam against Fritz von Opel for the creation of an in rem interest in the property mentioned in the gift agreement.

 Defendant's position with respect to any type of ownership the Court may find Wilhelm and Marta von Opel held in the American securities is that the evidence establishes there was not in fact a waiver or surrender of such ownership in 1935, or at any other time, but that their ownership continued in full effect until the Alien Property Custodian vested the American securities. The defendant also maintains that under German law a waiver of ownership in the property, if made, would be void unless a license was obtained and one was not obtained.

 In the event the Court does not agree with any of the foregoing defenses, defendant makes two other points which it submits should result in judgment against plaintiff. First, that the plaintiff corporation itself is an 'enemy', within the definition of Section 2 of the Trading with the Enemy Act, in that it is incorporated within a country other than the United States and during the time the United States was at war, was doing business within the territory of a nation with which the United States was at war. Second, defendant maintains that while it concedes Fritz von Opel is a naturalized citizen of a neutral country of Liechtenstein, nevertheless the still is a German national, within the meaning of Section 39 of the Trading with the Enemy Act and is not entitled to obtain return of the vested property.

 The evidence presented in this case has extended to many disputed items of fact, but it develops that upon reaching findings as to a limited number of them, this suit may be decided.

 I find the agreement dated October 5, 1931, between Wilhelm and Marta von Opel, as donors, and their son Fritz von Opel, as donee, was made for the primary purpose of obtaining realization in the form of gold or American securities from the the sale of the 600 shares of Opel Works stock, but there was also a purpose to make financial provision for Fritz von Opel. In the transaction, Wilhelm and Marta von Opel intended to retain a usufructuary interest, according to the laws of Germany, in any property which might be obtained from funds resulting from the sale in the United States of the Opel Works stock, and it was only by inadvertence this was not accomplished by the agreement itself. However, at a time between 1932 and 1934, following the sale of the Opel Works stock in the United States and a purchase of American securities from the funds received, there was a delivery of the stock of plaintiff corporation, which had acquired the American securities, to one Hans Frankenberg, who, the evidence compels me to find was acting in the transaction as agent for Wilhelm and Marta von Opel. According to the laws of Germany, the delivery to Frankenberg resulted in the establishment of a usufructuary interest in favor of Wilhelm and Marta von Opel in plaintiff corporation and all of its assets. In 1935, a waiver of this interest was discussed by Wilhelm von Opel with his then attorney, Dr. Gros, but I find that a waiver was not in fact made. I further find that at the time the Alien Property Custodian vested the American securities which are the subject of this suit, Wilhelm and Marta von Opel continued to hold, without impairment, their usufructuary interest in said stock of plaintiff corporation and the American securities.

 A right of usufruct, once established, is under German law an in rem right in property. A person having a usufruct in property has a right:

 (a) to the enjoyment of the property or, in the case of money or securities, to the income from the securities;

 (b) to co-possession of the property together with the person holding legal title to the property;

 (c) to a voice in the management of the property insofar as the maintenance and preservation of the usufructuary's rights under ...


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