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INTERNATIONAL SILK GUILD v. BROWNELL

March 29, 1957

INTERNATIONAL SILK GUILD, Inc., a New York Corporation, Plaintiff,
v.
Herbert BROWNELL, as Attorney General of the United States, as successor to the Alien Property Custodian, and Ivy Baker Priest, Treasurer of the United States, Defendants



The opinion of the court was delivered by: MORRIS

In the opinion filed by this Court June 27, 1952, 105 F.Supp. 766, in this proceeding (brought under Section 34(e) of the Trading with the Enemy Act, as amended, 50 U.S.C.A.Appendix, § 34(e), for a review of the action of the Director of the Office of Alien Property denying plaintiff's claim against funds of Asahi Silk Company, a Japanese corporation, vested under the provisions of the Act), I stated that, notwithstanding the absence of proof of an agreement between the parties that assessments paid by importers in this country to exporters of silk in Japan that the exporters would remit such monies to the plaintiff, 'I would conclude that the claim should be allowed in view of the purpose and understanding on the part of the importers at the time the money was paid and received by the exporters, including Asahi, Japan, with the knowledge of such purpose and understanding on the part of the importers paying the funds, if it were shown that such funds were in the hands of the exporters, in the instant case in the hands of Asahi, Japan, at the time of the vesting of that exporter's property in the Alien Property Custodian. To conclude otherwise would be to sanction an unjust enrichment contrary to the law of the State of New York, which is the critical law here applicable.' Without such showing, summary judgment was granted to the defendants on July 8, 1952.

Pursuant to motion filed by plaintiff July 17, 1952, order of this Court was filed April 13, 1953, in which the previous order and judgment of the Court was vacated and set aside and the proceedings reopened to receive into the record newly discovered evidence. At the suggestion of the Court that the administrative agency might wish to reconsider the matter in the light of the newly discovered evidence, and the record in this case, pursuant to order of the Court, having been turned over to the custody of the Director of the Office of Alien Property, Department of Justice, the Director ordered January 12, 1954, 'that the claim be reopened * * * for the purpose of reconsidering such evidence as the parties may adduce with respect to the issue whether Asahi Silk Company, Ltd., Japan, had in its possession on October 31, 1942, the effective date of Vesting Order No. 283, funds claimed by the claimant, and for such disposition as said evidence may warrant.' On January 31, 1956, the Deputy Director, Office of Alien Property, issued a decision, stating:

 'After a thorough consideration of the entire record, including the new evidence, I find that there is no sound basis, in law or in fact, for the Guild's claim that Asahi, Japan, ever became indebted to it in the amount alleged or in any amount. Accordingly, the claim is again disallowed.'

 Following that decision, and leave of this Court therefor, plaintiff filed a supplemental complaint for review, and each of the parties filed motions for summary judgment, upon which arguments were had and briefs filed.

 The new evidence disclosed, and the defendants concede, that Asahi, Japan, was in possession of $ 80,323.09 on October 31, 1942, the date of vesting of its property in the Alien Property Custodian, and the balance of the funds collected by Asahi, Japan, were held by the special committee, through which the funds were to be remitted to the plaintiff. Also among the new evidence were affidavits of Takuichi Wakimoto and of Yujiro Nishimoto.

 From 1933 to 1936 plaintiff was supported by monies collected from the exporters and other dealers in the silk industry in Japan, which were sent to it by the Central Raw Silk Association of Japan, but was advised toward the end of 1935 that such contributions would be discontinued. In an effort to create a source of income, plaintiff proposed to the importers in the United States (a considerable number of which were Japanese representatives of the exporters) that they pay the extra charge, or assessment, on all silk purchased, and it was decided that an accurate collection thereof could better be assured by the exporters by simply adding the assessment charge to all purchases on invoices therefor, the exporters to remit the funds thus collected to the Guild. The assessments were collected by the exporters and remitted to the special committee of the Central Raw Silk Association through the Yokohama and Kobe Silk Exporters Associations, and were sent to the Guild with substantial regularity (though considerable prodding on the part of the Guild became necessary as early as September 1937) until May 1940, and from May 1940 to July 1941 only one remittance was received. Remittances after June 14, 1941, became impossible because of the imposition on that date of freezing controls preventing any foreign exchange transaction between the parties. There is no substantial evidence in the record to substantiate a finding that the Guild, the importers and the exporters did not agree to this method of furnishing income for a continuation of the work of the Guild, which was beneficial to all; nor is there substantial evidence to support a finding that Asahi, Japan, was not indebted to the Guild for the monies thus collected by it, and in its hands at the time of the vesting of its property by the Alien Property Custodian.

 The question as to whether recovery can be had of the monies held on the date of vesting by the special committee is a more difficult one. I do not think it was contemplated by any of the parties that any of the monies collected through this plan, except some small portion for operational cost in Japan, would not be remitted to the Guild, and it is unthinkable that the United States importers would have furnished the monies for any other purpose, but it admittedly was obvious to all that their plan and purposes would have to yield to the intricacies of the Japanese Government in so far as necessary to accomplish the remittances from that country to the United States. The following is an excerpt from the minutes of a meeting of the Executive Committee of the Guild on November 29, 1938:

 'The President then read in full the translation which had been furnished the Guild of the resolution adopted by the Raw Silk Export Associations of Yokohama and Kobe and affirmed by the Central Raw Silk Association of Japan at its Seventh Special Meeting held June 22, 1936, calling the Committee's particular attention to subparagraph B of paragraph 3, reading as follows:

 'That, the Central Raw Silk Association of Japan shall form a special committee which shall be entrusted with the power to outline the policy on the promotion and method of spending the fund. The Committee shall be comprised of five persons, in order to maintain a minimum number: -- the Vice-President of the Central Raw Silk Association of Japan, and another member of the same Association, and three representatives of the Exporters.'

 It is insisted by the plaintiff that this special committee was controlled by the exporters, and Mr. Wakimoto stated in his affidavit that this purpose of the exporters was accomplished by having exporters constitute a majority of its membership, and doubtless this was their hope. Cross-examination of Mr. Paolino Gerli, president from its organization of the Guild, developed the following testimony:

 'I believe I have already testified that the method which the Japanese exporters adopted in Japan for the remittances to us was something over which I had no control and which I did not pretend to advise them on, because we were in a foreign country and I didn't know what the rules and regulations were, and it was entirely up to them to devise their own assessment.

 'And so we had to help them in Japan, the ones here would come and say, 'Please be reasonable, you got to do those things and you got to cooperate otherwise you won't get to first base on these things,' and of course we tried to be suppliant and we had to do and did a lot of these things they requested us to do.'

 The minutes of the meeting on November 29, 1938, reflected the president's satisfaction of the resolution of the special committee, and it was voted at the meeting to suggest to the special committee its adoption of a resolution declaring that, under the authority conferred upon it by the resolution which created it, it would as a matter of policy and method, forward to the Guild regularly in dollars monthly the amount of assessments collected in Japan upon the raw silk exported to the United States during each preceding month, except in the event of action by the Japanese Government with respect to the exportation of money from Japan generally which rendered such remittances impossible. On August 18, 1939, the special committee adopted and forwarded to the Guild the following resolution:

 '* * *, the special committee states that it has in the past remitted to the International Silk Guild for the Guild use in promoting Silk in the U.S. the approximate amount of the assessments collected upon the raw silk exported to the U.S. and that, in so far as ...


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