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RUSCHE v. BROWNELL

December 22, 1955

Otto RUSCHE, Plaintiff,
v.
Herbert BROWNELL, Jr., Attorney General of the United States, as Successor to the Alien Property Custodian, and Ivy Baker Priest, as Treasurer of the United States, Defendants



The opinion of the court was delivered by: THOMAS

This action came on for trial before the Court on April 25, 26, 27, 28 and 29, and May 2, 3, 4, 5, 9, 10, 11 and 13, 1955; and the Court, having heard the evidence adduced and the arguments of counsel, and having considered the briefs filed by counsel, now, after due deliberation, makes findings of fact and conclusions of law as follows:

Findings of Fact

 1. Plaintiff brings this suit to recover various stocks and bonds issued by domestic corporations and certain other properties vested under the Trading with the Enemy Act, 50 U.S.C.A. Appendix, § 1 et seq., by the Attorney General of the United States, as successor to the Alien Property Custodian. For the most part, the vested properties have been sold and this suit is for the proceeds amounting to approximately $ 1,000,000.

 2. The properties were vested in 1950 and 1951 by the Attorney General's Vesting Orders No. 14640, dated May 8, 1950, (filed with the Federal Register on June 5, 1950, F.R. Doc. 50-4815; published June 6, 1950, 15 F.R. 3510), No. 14685, dated May 24, 1950, (filed with the Federal Register on June 5, 1950, F.R. Doc. 50-4822; published on June 6, 1950, 15 F.R. 3514), No. 14868, dated July 12, 1950, (filed with the Federal Register on July 25, 1950, F.R. Doc. 50-6536; published on July 26, 1950, 15 F.R. 4777), No. 18503, dated September 20, 1951 (filed with the Federal Register on September 26, 1951, F.R. Doc. 51-11608; published on September 27, 1951, 16 F.R. 9840) and No. 18560, dated October 16, 1951, (filed with the Federal Register on October 19, 1951, F.R. Doc. 51-12635; published on October 20, 1951, 16 F.R. 10762).

 3. Plaintiff was born on February 1, 1883, in Schleibnitz, Germany, of German parents; he is and always has been a German citizen exclusively.

 4. Plaintiff received his formal education in Germany. In 1906, after working for about a year in England, plaintiff returned to Germany for a brief period, and then left Germany for Mexico.

 5. From 1906 to 1912, plaintiff worked in Mexico for the firm Enrique Schoendube, which was the representative in Mexico of the German company, Allgemeine Elektricitaets Gesellschaft (hereinafter called 'AEG').

 6. AEG was and is a very large corporation incorporated in Germany, and doing business in Germany and in many other countries throughout the world. It manufactured and sold a wide variety of electrical products ranging from huge turbines and generators for power plants to home appliances. It is the German counterpart of Westinghouse or General Electric in the United States.

 7. In 1912, plaintiff married the daughter of the owner of the Schoendube firm, she being a native citizen of Mexico. They had five daughters, all of whom are living with the exception of Hannah, who died in Germany in 1937.

 8. In 1912, AEG established a subsidiary company in Mexico and plaintiff was appointed manager. Plaintiff retained this position until the early 1930's, and until that time he received his basic salary in Mexico from AEG.

 9. From 1906 to the early 1930's, plaintiff resided in Mexico, although he spent part of his time in traveling and working for AEG in the United States and South America. Plaintiff made return visits to Germany during this period, but during the 1920's he spent very little time in Germany.

 11. Plaintiff retained ownership of these two houses until he sold his 5 Klaus Grothstrasse house in 1950, and his 27 Goethestrasse house in 1953.

 12. Plaintiff and his family returned to live in Germany in the early 1930's, and resided in the 27 Goethestrasse house. Plaintiff was registered with the German police as residing at the 27 Goethestrasse house as early as February 18, 1931.

 13. Plaintiff continued to work for AEG in Germany. In 1934 or 1935, he was appointed chief of the Overseas Department of AEG; and in February 1936, he was appointed a deputy member of the managing board of directors ('Vorstand') of the company. Plaintiff retained these positions continuously through 1944.

 14. The main office, headquarters and commercial domicile of AEG and its Overseas Department prior to and from 1934 through 1944 was in Berlin, Germany.

 15. The Overseas Department of AEG, during the period from 1934 through 1944, handled the company's business in countries over-the-seas, including England and Ireland. In 1937, the Overseas Department received, in addition, jurisdiction over the company's business in Russia and the Baltic States of Latvia, Lithuania and Estonia.

 16. Under German law in general and as specifically applied to AEG during the period from 1936 through 1944, the managing board of directors performed the combined functions of officers and board of directors of an American corporation. The managing board of directors of AEG was the organ of AEG which actually managed and conducted the business of the company and it was the decisive and most important body of AEG in directing, supervising, controlling, managing and operating the company.

 17. Under German law in general and as specifically applied to AEG during the period from 1936 to 1944, deputy members of the managing board of directors had all the rights, powers, functions, duties and privileges of regular members of the board, although their salaries were somewhat lower. Deputy members and regular members of the managing board of AEG were required to devote their full time to the company.

 18. Under German law in effect from 1937 through 1944, the chairman of the managing board of directors could decide any differences of opinion within the board unless the by-laws provided otherwise. The by-laws of AEG did provide otherwise, for they specified that a majority of the managing board would prevail if there was a difference of opinion within the board and that the chairman could cast the deciding vote only where the board was otherwise equally divided.

 19. From 1936 until April 1944, the managing board of directors of AEG met regularly twice a week in Berlin. From 1936 to March or April 1944, plaintiff, except when he was away on trips as found in paragraph 41 herein, regularly attended the meetings of the managing board of directors of AEG and fully participated in its decisions and deliberations.

 20. From 1936 through 1944, AEG had a supervisory board ('Aufsichtsrat'). This was a board elected by the stockholders which had some veto powers over the managing board of directors and which selected the managing board. The supervisory board was not concerned with the day-to-day management and conduct of the business of AEG as was the managing board of directors.

 22. It will be remembered that World War II in Europe commenced with the German invasion of Poland on September 1, 1939, and the United States entered the war against Germany on December 11, 1941.

 23. On December 21, 1936, plaintiff entered into an employment contract with AEG for a salary of 30,000 Reichsmarks a year plus a guaranteed minimum bonus of 12,000 Reichsmarks a year, the bonus being tied to the profits of the company. In this contract plaintiff agreed to devote his full time to AEG. On April 8, 1937, plaintiff entered into a new employment contract with AEG under which he was to be paid a salary of 42,000 Reichsmarks a year plus a bonus which was made dependent upon the profits of the company in a specified formula. As in the earlier contract, plaintiff obligated himself to devote his full time to the company. This contract of April 8, 1937, was to be effective until September 30, 1938, and thereafter was automatically renewable for periods of one year each unless terminated by either of the parties on six months' notice. The contract of April 8, 1937, was modified by the parties on December 10, 1941, and on April 1, 1943. These modifications pertained to the formula for determining plaintiff's bonus, which, even after the modifications was still dependent on the profits of the company. Plaintiff continued to be employed by AEG until at least December 31, 1944; and his relationships with the company were governed by the contract of April 8, 1937, as modified on December 10, 1941, and April 1, 1943.

 24. From at least 1936 through 1944, plaintiff received his annual salary and bonus from AEG in Germany. His total compensation kept increasing during this period. Thus, his salary and bonus from AEG totaled 57,000 Reichsmarks in 1938, 69,000 Reichsmarks in 1939, and 78,000 Reichsmarks in 1942, 1943 and 1944. In 1942, 1943 and 1944, plaintiff's annual salary from AEG was 42,000 Reichsmarks and his bonuses were 36,000 Reichsmarks each year.

 25. During World War II and through at least 1944, AEG was the second most important industry in the electrical field for the German war effort. Among other things, AEG manufactured and sold to German industry and to the German government, its armed forces and official supply organizations, motors, turbines, generators, wire, cable and electrical power producing and distributing equipment of all kinds. By February 1941, AEG was 99% converted to war work. AEG employed as many as 100,000 employees during World War II, and the number kept increasing from 1941 through 1944. During these years the company maintained and operated numerous factories in Germany and its sales ran into the hundreds of millions of Reichsmarks each year. High priorities and allocations were received by AEG from the German government for this business.

 26. Prior to and during the war and until March or April of 1944, plaintiff had a private office at the main administration building of AEG in Berlin and had at least one private ...


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