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SCHMITZ v. SOCIETE INTERNATIONALE

January 19, 1966

Robert A. SCHMITZ, Plaintiff
v.
SOCIETE INTERNATIONALE, etc., and Henry H. Fowler, Secretary of the Treasury, Defendants. Herman A. SCHMITZ, Robert A. Schmitz, and Lloyd J. Vail, Executors of the Estate of Dietrich A. Schmitz, Deceased, Plaintiffs v. SOCIETE INTERNATIONALE, etc., and Henry H. Fowler, Secretary of the Treasury, Defendants



The opinion of the court was delivered by: PINE

 These two cases were consolidated for hearing on the motions respectively filed in each. The first mentioned case is brought by Robert A. Schmitz against Societe Internationale, etc., known and referred to herein as Interhandel, and the Secretary of the Treasury. The second mentioned case is brought by the Executors of the Estate of Dietrich A. Schmitz, deceased, against Interhandel and the Secretary of the Treasury.

 Before me are motions in each case, filed, respectively, by Interhandel and the Secretary of the Treasury, hereinafter referred to as Secretary.

 These cases are the outgrowth of protracted litigation before this Court, the United States Court of Appeals for the District of Columbia Circuit, and the Supreme Court of the United States. It was finally brought to a conclusion in 1964 by the entry of a Stipulation of Settlement hereinafter referred to. The litigation involved the claim of Interhandel against the Alien Property Custodian to assets of Interhandel including more than 90 percent of the capital stock of General Aniline and Film Corporation, hereinafter referred to as GAF. These assets were vested in the Alien Property Custodian under the Trading With The Enemy Act, *fn1" under a claim that Interhandel was controlled by officers and stockholders who were engaged in a conspiracy with the German Government and German Nationals to conduct the business of GAF in their interest during the war with Germany. Interhandel brought an action in this Court, which became the subject of the protracted litigation above referred to, contending that the assets of Interhandel had been illegally seized and that the assets were not enemy tainted.

 This is only a brief description of this litigation, but is sufficient for the purposes of the motions I am called upon to decide.

 In the case filed by Robert A. Schmitz, individually, defendant Interhandel has filed a motion to dismiss and/or to quash the return of summons, and defendant Fowler, the Secretary, has filed a motion to dismiss for lack of jurisdiction and for failure to state a claim upon which relief may be granted.

 In the case filed by the Executors of the Estate of Dietrich A. Schmitz, deceased, defendant Interhandel and defendant Fowler, the Secretary, have filed motions identical to those filed by them in the other suit.

 The first mentioned case, brought by Robert A. Schmitz, individually asserts in brief the following: In December 1958, while plaintiff was in Switzerland, carrying on negotiations between Interhandel and certain prospective purchasers of Interhandel's interest in GAF, he was told by Dr. Sturzenegger, the principal stockholder of Interhandel, that Interhandel had decided not to sell its interest in GAF until it had brought to a conclusion its claim against the United States Government for the return of the property, and would negotiate with the United States Government to this end through an agent of its own choosing. Plaintiff's cooperation was solicited by Interhandel and he suggested the name of Charles E. Wilson, hereinafter referred to as Mr. Wilson, as Interhandel's representative for this purpose. Plaintiff reported to Interhandel after conferences with Mr. Wilson that the latter could be persuaded to act only if he were offered full powers as trustee to negotiate a settlement of the dispute upon such terms and conditions as would appear honorable and just to him. Plaintiff's suggestion was accepted, and he was asked to attempt to bring about the trusteeship of Mr. Wilson. Dr. Sturzenegger agreed that Interhandel would pay plaintiff a fee for bringing about the Wilson trusteeship and suggested that 2% or 3% would be more acceptable to Interhandel's stockholders than 5% as suggested by plaintiff. Plaintiff did not consent and no agreement was reached regarding the amount or percentage to be paid to plaintiff, but the clear understanding was that such fee should not be less than 2% or 3% of the total sum obtained. Plaintiff then proceeded with his efforts to bring about the trusteeship of Mr. Wilson, and in 1960 Mr. Wilson accepted the trust powers, which he held until 1962. Prior to his acceptance of the trust powers it was necessary for the plaintiff to accomplish many tasks including convincing Mr. Wilson that he should accept. On or about October 26, 1959, Dr. Schaefer, the chief executive and chairman of the executive committee of Interhandel, agreed that Interhandel would pay plaintiff for his services 5% of any money which Interhandel might receive in settlement of its dispute with the United States Government, payment to be made when the settlement funds due Interhandel became available; and largely as a result of plaintiff's efforts the image of Interhandel was changed in United States Government circles and the most influential Government officials were persuaded that justice demanded the recognition of Interhandel's claim.

 In 1964 a Stipulation of Settlement was entered into between Interhandel and the then Attorney General Robert F. Kennedy, in which they agreed that the GAF stock involved herein should be sold, and the sums to which under the Stipulation of Settlement Interhandel should be entitled should be deposited in an account to be maintained by the United States Treasury to be designated as Interhandel Corporation of Switzerland, payable only on the order of the Attorney General according to the provisions of the Stipulation. The stock was sold, and pursuant to the Stipulation proceeds of the sale, amounting to approximately $121,000,000.00 were deposited in the Treasury of the United States, of which according to the statement of counsel for defendant Secretary at oral argument, are now of a value of approximately $61,000,000.00. Plaintiff claims that he has an equitable lien on this fund to the extent of 5% of the amount recovered by Interhandel, namely, $145,000,000.00, or $7,250,000.00.

 The second count is based on an alleged agreement between plaintiff and Interhandel that plaintiff would be compensated for the work performed by him and described in the first count. He alleges that no final agreement was reached regarding the amount or rate of his compensation, and claims that it had a reasonable value of $150,000.00, which after deducting $38,000.00 already paid him on account makes the amount due and owing him $112,000.00.

 Accordingly, plaintiff prays for an injunction against the Secretary from making disbursements of any part of this fund until provision is made for satisfying plaintiff's claims; that if necessary a Receiver be appointed to receive and hold $7,362,000.00 from the fund pending determination of plaintiff's complaint for a mandatory injunction against defendant Secretary, that $7,362,000.00 of this fund be declared to be a trust for the benefit of plaintiff and the amount found to be due him ordered paid him, and that judgment be entered against defendant Interhandel in the amount of $7,250,000.00, plus interest, and in the further amount of $112,000.00, plus interest.

 Interhandel is a corporation organized and existing under the laws of Switzerland, having its principal place of business in Basel, Switzerland. There has been no attempt to serve process on Interhandel in this jurisdiction, but instead service by registered airmail has been attempted under Rule 4, Fed.R.Civ.P. *fn2"

 Plaintiff asserts jurisdiction of this case by reason of the provisions of § 11-521 and § 13-336, District of Columbia Code, (Supp. IV, 1965), *fn3" the general equity powers of the court in rem over a fund within the District of Columbia, and personal jurisdiction over defendant Secretary of the Treasury to control the exercise of his ministerial duty. There being no personal service on Interhandel relief cannot be obtained against it unless this action falls within the ambit of §§ 11-521 and 13-336, D.C.Code, supra, and the general equity powers of the court in rem over a fund within the District.

 Interhandel in its motion contends that the purported service is a nullity because it is predicated upon the assumed existence of a res in the District of Columbia, and upon a claim to or lien upon such res on the ...


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