The purpose of the freezing program, as thus broadly construed, has been wellstated as follows:
'The freezing program, by subjecting to licensing and consequent strict scrutiny transactions affecting property in the United States in which foreign countries (allied and neutral as well as enemy) or their nationals had an interest, not only prevented the Axis from using its own property in the United States as a means of obtaining credit and foreign exchange but, more important, seriously interfered with its plans for the looting of conquered countries. * * * The imposition of 'occupation costs' or the simple pointing of a gun could secure the transfer of interests in American property to the Axis; 'evidences of ownership' so obtained could easily have been exchanged in neutral countries for 'hard money.' As it was, few neutrals cared to speculate in evidences of ownership which American law declared null and void.' Bishop, Judicial Construction of the Trading with the Enemy Act, 62 Harv.L.Rev. 721 (1949).
The freezing program was endorsed by Congress in a Joint Resolution of May 7, 1940, and was extended when Congress in 1941 amended Section 5(b) of the Trading with the Enemy Act to give the President explicit and broad powers to 'nullify, void, prevent or prohibit any * * * transfer, * * * or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest * * *.' The Department of the Treasury implemented the licensing program further in its General Ruling No. 12, 31 C.F.R.Cum.Supp. (1943 ed.) 8849-50 (April 21, 1942), which defined 'transfer' as:
'any actual or purported act or transaction, whether or not evidenced by writing, and whether or not done or performed within the United States, the purpose, intent, or effect of which is to create, surrender, release, transfer, or alter, directly or indirectly, any right, remedy, power, privilege, or interest with respect to any property and without limitation upon the foregoing shall include the making, execution, or delivery of any assignment, power, conveyance, check, declaration, deed, deed of trust, power of attorney, power of appointment, bill of sale, mortgage, receipt, agreement, contract, certificate, gift, sale, affidavit, or statement; the appointment of any agent, trustee, or other fiduciary; the creation or transfer of any lien; the issuance, docketing, filing, or the levy of or under any judgment, decree, attachment, execution, or other judicial or administrative process or order, or the service of any garnishment; the acquisition of any interest of any nature whatsoever by reason of a judgment or decree of any foreign country; the fulfillment of any condition, or the exercise of any power of appointment, power of attorney, or other power: Provided, however, That the term 'transfer' shall not be deemed to include transfers by operation of law.'
There is, of course, no question that the purported Nazi 'transfer' of the credit balance in the Incasso Bank to the Finanzamt Charlottenburg Berlin was precisely such a transaction as the freezing program was designed to render completely ineffective, and if Ossip Pernikoff were claiming ownership via such transfer, he would be barred, since the transfer was obviously never licensed. The defendants argue as if this were the plaintiffs' theory. But when the plaintiffs say that Ossip Pernikoff was entitled to the funds in 1951 (at the time the funds were vested by the Alien Property Custodian) 'by reason of the liquidation' of the corporation in 1942, plaintiffs are asserting something different: namely, that because the corporation was declared by the Nazis no longer to exist, and because the freezing program was effective to keep the funds from Nazi hands, and because Ossip Pernikoff had a rightful and equitable claim to the funds, that therefore these plaintiffs are entitled to recover.
This Court can find no language, either in Executive Order 8389, supra, or in General Ruling No. 12, supra, or in the Trading with the Enemy Act, or in any case cited by the defendants, to require the rejection of plaintiffs' theory. Indeed, the Government itself has gone on record as indicating that one of the purposes of General Ruling No. 12 was: 'Protecting property of persons in occupied countries.' See Zittman v. McGrath, 341 U.S. 446, 453, 71 S. Ct. 832, 837, 95 L. Ed. 1096 (1951). Such 'protection' would be illusory indeed if, after the freezing program has succeeded in keeping the funds from Nazi hands, those funds are not returned to the heirs of the person for whom the protection was designed in the first place. In reality, there was no 'transaction' or 'transfer' which would subject Ossip Pernikoff's claim of title to the licensing requirements of the freezing order. The only 'transfer' or 'transaction' was the ineffective Nazi transfer, which was solely a paper transaction through which plaintiffs do not derive title. Plaintiffs' title is derived from the fact that the corporation simply ceased to exist. It is important to note, as well, that there was no speculation in Pernikoff's interest, and title to that interest did not 'shift from person to person,' Propper v. Clark, 337 U.S. at 484, 69 S. Ct. at 1340. In fact, such title never shifted at all, and in law, such title did not shift except so far as this Court now holds that the dissolution and liquidation of the corporation operated, as a matter of United States law, to transfer the title to Ossip Pernikoff. This Court, therefore, can reach no other conclusion except that, in equity and fairness and within the terms of the Trading with the Enemy Act, the plaintiffs here are not barred by any lack of a license under the freezing program. And, it should be remembered, Congress has specified that suits under section 9(a) are suits 'in equity.'
As to plaintiffs' second theory -- that under German law as put forth in the affidavit of Mr. Simon, Ossip Pernikoff is considered to have been the true owner of the funds from the moment of their deposit -- the defendants contend that the case upon which Mr. Simon bases his opinion was a restitution case, and that general German law, as distinct from special restitution law, is to the contrary. Mr. Simon, however, stated that the principles he relied on had become general German law, and defendants have offered no counter affidavit. In any event, the policy behind the present German law, even if it is the law of restitution, seems completely applicable to the instant case. Therefore, to the extent that foreign law is relevant to this case, plaintiffs have raised a material issue of fact (since foreign law must generally be proved as a fact).
The motion of defendants for summary judgment will therefore be denied, both because there is a material issue of fact which is in dispute, and because the plaintiffs have alleged sufficient facts to establish Ossip Pernikoff's 'interest, right, or title' to the funds within the meaning of section 9(a) of the Trading with the Enemy Act.