plaintiff sues to set aside these transfers, to enjoin infringement of the patent, to recover damages and have an accounting for profits, and to have it declared by the court that the patent is held by the United States or the Alien Property Custodian in trust for him in such manner as Congress may hereafter provide.

Held, the bill was not maintainable; that the plaintiff was barred from suing by the treaty of peace and by the trading with the enemy act, whether the transfers in question were regular or irregular.

Held, further, that the treaty with Prussia of 1799 had no bearing on the rights of the parties, and if inconsistent with the trading with the enemy act or the treaty of peace, was superseded by the latter.

Held, further, that the suit was not maintainable under section 10-g of the trading with the enemy act because after the seizure of his patent the plaintiff no longer "owned or controlled" the patent.

AUGUSTUS N. HAND, district judge: As this cause comes up on a motion which is equivalent to a demurrer, it must be conceded for the present purpose that the United States obtained a conveyance of the patent without consideration and transferred it to the defendant in like manner.

More

The provisions of the trading with the enemy act clearly define the rights of the parties. The treaty with Prussia of 1799 (8 Stat. 174) has no bearing upon the situation, for the only clauses which might conceivably relate to the property of Germans are directed to German merchants residing in this country -a class to which the complainant avowedly does not belong (Stoehr v. Wallace, 255 U. S., at p. 251). over, the recent subsequent treaty of peace with Germany, signed August 25, 1921, must prevail over the treaty of 1799, so far as any of its provisions are inconsistent with the former treaty (Chinese exclusion case, 130 U. S. 600; Fong Yue Ting v. United States, 149 U. S. 720). The recent treaty gave the United States the advantages of the treaty of Versailles, which provided that Germany undertook to compensate her nationals in respect of the sale or retention of their property (Part X of treaty of Versailles, article 297-i), that no question should be raised as to the regularity of a transfer of any property rights or interests, and that "no claims shall be made or action brought by Germany or German nationals in respect of the use during the war by the government of any allied or associated power or by any person acting on behalf or with the assent of such government, of any rights in industrial, literary, or artistic property, nor in respect of the sale, offering for sale, or use of any products, articles, or apparatus whatsoever to which such rights applied.

These provisions would seem to stand in the way of any present claim of the complainant. Any irregularities of transfer by the Alien Property Custodian are beyond question, so far as German nationals are concerned. Whatever rights the United States may be able to assert against the defendant if the patent has been given away can be no concern of the complainant, whose claims are barred by the treaty.

The last question involved relates to the effect of the trading with the enemy act upon the patent in suit. No doubt seems to have been cast upon the validity of the seizure by the Alien Property Custodian.

Under section 12 of the trading with the enemy act it is provided that “After the end of the war any claim of any enemy, or of an ally of enemy, to any money or other property received and held by the Alien Property Custodian, or deposited in the United States Treasury, shall be settled as Congress shall direct.

*

*

By a prior subdivision of section 12, it was enacted, "The Alien Property Custodian shall be vested with all of the powers of a common-law trustee in respect of all property other than money which has been, or shall be, or which has been or shall be required to be conveyed, transferred, assigned, delivered, or paid over to him in pursuance of the provisions of this act.

* * *""

While the Alien Property Custodian is a common-law trustee he holds the property not in the interest of the former owner, but in the public interest. The former owner, by some future act of Congress, may be allowed some recognition in respect to property seized. Conceivably, he may be limited to such remedies as are already covered by article 297-i of the treaty of Versailles, under which it is provided "Germany undertakes to compensate her nationals in respect of the sale or retention of their property. rights, or interests in allied or associated States."

At the present time, even upon the assumptions made in the bill, the beneficial interest in the patent seems not to be vested in the former owner.

Section 10-g of the trading with the enemy act provides that "Any enemy or ally of enemy may institute and prosecute suits in equity against any person other than a licensee under this act to enjoin infringement of letters patent, trade-mark, print, label, and copyrights in the United States owned or controlled by said enemy of ally of enemy in the same manner and to the extent that he would be entitled so to do if the United States was not at war, provided that no final judgment or decree shall be entered

in favor of such enemy or ally of enemy by any court except after 30 days' notice to the Alien Property Custodian. Such notice shall be in writing and shall be served in the same manner as civil process of Federal courts."

The only serious question which I have had to consider is whether section 10-g (supra) relates to cases like the present or embraces only those where the Alier Property Custodian has made no seizure. It is to be noted that section 12 of the trading with the enemy act in its original form only provided that the Alien Property Custodian should be vested with all of the powers of a common-law trustee, and should manage property coming into his possession "and do any act or things in respect thereof, or make any disposition thereof, or of any part thereof, by sale or otherwise, and exercise any rights which may be or become pertinent thereto, or to the ownership thereof, if and when necessary to prevent waste and protect such property and to the end that interests of the United States in such property and rights, or of such person as may ultimately become entitled thereto, or to the proceeds thereof, may be preserved and safeguarded."

An amendment of March 28, 1918, gave the Alien Property Custodian clearer if not wider powers and enacted that he should "have power to manage such property and do any act or things in respect thereof, or make any disposition thereof, or of any part thereof, by sale or otherwise, and exercise any rights or powers which may be or become pertinent thereto, or to the ownership thereof, in like manner as though he were the absolute owner thereof.

*

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In order more clearly to provide for the seizure of enemy owned patents, which in the original trading with the enemy act had been treated as though the subjects of licenses, rather than of seizure, these patents by an amendment of November 4, 1918, were specifically referred to among the classes of property which might be seized, and were rendered transferable upon seizure by filing in the Patent Office a demand on the part of the Alien Property Custodian.

Section 10-g, permitting the prosecution of infringement suits by enemy aliens, is limited to cases where the letters patent are "owned or controlled" by an enemy alien. The act empowered the Government to license enemy aliens, and the enemy aliens while thus licensed would still hold title to their property. After seizure by the Alien Property Custodian the enemy alien no longer "owned or controlled" the patent, and, consequently, did not come within section 10-g of the trading with the enemy act. It is to be noted that without that provision patents which had not been seized would have had no protection, because a suit by an enemy alien, except for the privilege given under section 10-g, would not have been allowed to proceed in our courts. After seizure, however, the original owner had no title, legal or equitable, which he could assert. The present suit, having been instituted by an enemy alien after lawful seizure of his patent by the Alien Property Custodian, is without legal foundation. The motion to dismiss is granted.

Mr. NEWTON. Mr. Betts, I did not hear the first part of your remarks. Do you oppose the turning over of all or any portion of this seized property?

Mr. BETTS. I oppose the turning over of any portion of it until we know what the claims are that are before the Mixed Claims Commission. When we know that we will know whether we are depriving our own citizens of an opportunity to recover. Mr. NEWTON. Then for the present you appear in opposition to the enactment of any kind of bill involving the return of any portion of this property?

Mr. BETTS. Yes, sir; until we know what our citizens' claims are.

I think we will

know pretty soon what they are, through the work of the Mixed Claims Commission.

Mr. NEWTON. When do you expect that?

Mr. BETTS. I think in a few months.

Mr. NEWTON. Congress will not be in session at that time.

Mr. BETTS. I thank you, Mr. Chairman and gentlemen.

The CHAIRMAN. Mr. Thiesing, the committee will hear you now. name, address, and whom you represent.

Give your

STATEMENT OF MR. THEODORE H. THIESING, WASHINGTON, D. C.

Mr. THIESING. Mr. Chairman and gentlemen of the committee, we represent a number of clients who have claims pending before the Mixed Claims Commission, and a number of clients who have claims against the Alien Property Custodian for the release of their property seized during the war. We are equally anxious that both classes of these clients shall obtain the satisfaction of their just claims.

The purpose of House bill 13496, Mr. Chairman, is, as I understand it, a twofold one. First, it proposes to give relief to several thousand persons, formerly enemies, whose property is still in the hands of the Alien Property Custodian and whose property in each case amounts to a comparatively small amount, and in many

cases, to negligible amounts, ranging from less than $100 to a few thousands dollars. In other words, the intent of this bill is to give relief to these people in their present distress, to afford them the necessities of life, food and clothing, and keep them from starvation, which they are facing this winter. I shall not attenpt to further detail the plight of these people because I believe that the conditions prevailing at the present time in Germany and Austria are generally known, and have repeatedly been described during these hearings.

The second purpose of this bill is to give assurance to American citizens who have suffered damages during the Great War-that is, from July 31, 1914, until the conclusion of peace between Germany and the United States-that they will receive compensation. The damages suffered by American citizens include damages caused before the United States entered the war on April 6, 1917, and while this country was neutral and while American citizens were engaged in what they believed to be their rights in regard to traveling on the high seas and engaging in commerce with the different belligerents. Due to the exigencies of the war, a number of American citizens lost their lives, and others lost property, and due to exceptional war measures adopted by the German Government, subsequent to the declaration of war by the United States on Germanysimilar to the measures embodied in our "trading with the enemy act' on October 6, 1917-the property of American citizens situated within the jurisdiction of the German Government was subjected to compulsory administration and sequestration.

The protection of legitimate American interests and the relief of distress of a great number of German nationals is the purpose of this bill, and such purpose appears to be fully covered by the provisions of this bill, and if enacted will have the desired effect.

I am therefore in favor of the bill as it reads, although I should like, Mr. Chairman, to see one provision in this bill which would particularly benefit a great number of American citizens who are residing in this country and a great number of nationals of the allied and associated powers who have a right, title, and interest in some of the seized property but who can not, at the present time, under the provisions of the present law, obtain the satisfaction of their claims. There are a great number of American citizens and citizens of the allied and associated powers who have acquired some right, title, and interest in property by devise, bequest, or inheritance from persons who have died subsequent to the seizure of their property by the Alien Property Custodian. Under the law as it now stands, the Alien Property Custodian is not authorized to allow claims of these beneficiaries, because it is the view of the office of the Alien Property Custodian that if the property of a living person is seized, such person is deprived of title in such property and the Alien Property Custodian has such title; and if the former owner subsequently dies testate or intestate, the beneficiary under his will or his heirs do not acquire any title to such property but acquire only some equitable right of claim which will be satisfied when and if some time in the future Congress should decide that seized property belonging to the decedent's estate shall be returned in whole or in part.

I may be permitted, Mr. Chairman, to cite one example by way of illustration: I have in mind particularly the case of one of our clients who is a Canadian citizen and who has been a client of our office for several years, and whose father's estate was administered by our office and whose mother's estate is being administered by us. The mother of this Canadian died in Germany in 1918, about a month or two after her property had been seized by the Alien Property Custodian. Her son, who, by the way, was her only child, is her sole heir and beneficiary under the will. This Canadian has not been able, as yet, to obtain the release of the estate of his mother, which is considerable, for the reason stated by me-he did not acquire upon the death of his mother title in her seized estate. because his mother was divested of title by the seizure of the property and upon her death title could not vest in her son as the title was and still is in the Alien Property Custodian. If this man's mother had died shortly before the demand was issued by the Alien Property Custodian for the delivery of her property, the property would have vested in her son and he would have been entitled, if the property had been subsequently seized, to receive it. It is a mere technicality of the law that, we might say, the space of a month prevents the beneficiary from obtaining and enjoying his inheritance.

There are a large number of American citizens, as well as a great number of citizens of the allied and associated powers, who are in a similar position. Under the provisions of the present bill these persons will also obtain relief, but only to the extent of $10,000. But I contend that American citizens should now be entitled to receive all of their right, title, and interest, and I, therefore, respectfully submit to your committee, Mr. Chairman, that an amendment be inserted in the bill, at its proper place, providing

Mr. GRAHAM. Mr. Chairman, I would like to ask a question right there.

early treaties entered into by the United States and Great Britain, Germany, and other European countries, and in a number of legal decisions of which the most important was rendered by Chief Justice Marshall. (Brown v. The United States, 8, Cranch, 110, 1281, 1814.) Of course, Congress has reserved to itself the right in accordance with the provisions of Article XII of the "trading with the enemy act," to dispose of the seized property as it deems best.

It is therefore in the province of Congress to decide what shall be done with this property, and the question is whether or not Congress, in view of the policy heretofore adhered to by the United States, will change such policy and retain the property held in trust by the Alien Property Custodian-not merely as a pledge to secure the payment of legitimate American claims, but to confiscate such property and apply the proceeds to the payment of such claims.

The principle of the security of private enemy property developed gradually, and was uniformly adopted during the latter part of the eighteenth century, particularly subsequent to the French Revolution by most of the European countries. During the wars up to that time, particularly during the wars of the seventeenth and early part of the eighteenth centuries, private enemy property belonged to the victor and was a part of the spoils of the war. But prior to the outbreak of the Great War of 1914 it was the law and the policy of the civilized nations of the world that warfare was waged not between the nationals of the respective belligerents, but between the armed forces of one government against those of another government, and that therefore the private rights and property of enemy nationals would be respected and not be affected by a state of war, except where military measures justified the use and seizure of private property of nationals and enemies alike.

Soon after the outbreak of the European war this modern principle was disregarded and a reversion to the old maxim took place when Great Britain and subsequently other allied powers adopted exceptional war measures which may be summed up as sequestration, liquidation, and confiscation of private property belonging to enemies situated within the respective jurisdictions. The Central Powers enacted similar measures, professedly in retaliation.

Not content with having deprived private persons of their property and rights during the war, the victorious nations, meeting at Paris to draft the conditions of peace, inserted provisions in the treaty of Versailles which affirmed and continued the exceptional war measures affecting private property of enemies, thus continuing the policy of regarding an enemy individual as a person with no rights whatever. Under the provisions of the treaty of Versailles, particularly under article 297, each allied and associated power is authorized to retain and liquidate all property interests belonging to German nationals within its territory and to apply thereto exceptional war measures until the completion of the liquidation thereof.

Soon after the armistice of November, 1918, and particularly after the treaty of Versailles had become legally effective, that is, on January 10, 1920, it became apparent that all war measures directed against private property had had and were having a most detrimental effect on the resumption of pre-war international trade relations. The fact that moneys deposited in international banks and investments made in different industrial undertakings had been seized and were, under the provisions of the treaty of peace, permanently to be withheld from the rightful owner on the ground that his government had entered into war with the government of the country in which such moneys had been deposited and investments had been made did not encourage those who had been affected by these measures to again make deposits and investments in such countries and to again place anything of value in the hands of the banks of such countries.

Therefore moneys were deposited in neutral countries and investments were made there or in countries where such measures had not obtained during the war and which had signified their intention not to avail themselves of the rights under the treaty of peace. Long-existing business relations were not renewed because confidence and faith in the security of private property had been absolutely destroyed. Naturally, neutral countries and those countries which had not resorted to seizure and liquidation during the war and after the war made the most of the situation to extend their business relations all over the world by proclaiming that only they could be relied upon as secure and trustworthy. One by one of the allied countries whose international, commercial, and financial relations were thus adversely affected, and particularly the financial circles of such countries, came to the conclusion that something had to be done to stop the propaganda by the neutral countries directed against their interests and to regain the former trade by reestablishing faith and confidence.

While in England in the summer of 1921 I had the opportunity of observing the attitude of English banks toward this question and their alarm as to their future business. I learned from authoritative sources that the London banks had, chiefly

fore last, people were most anxious to pay all and any legitimate claims of American citizens arising out of the war; and the sooner they could accomplish that the better for them, because in that case they expect to get back their seized property. They know that this property will be retained, or the larger part of it, in accordance with the provisions of the treaty until suitable arrangements have been made to pay these claims.

Mr. MAPES. As a practical proposition, do they expect that to be done?
Mr. THIESING. Yes, sir.

The CHAIRMAN. You may continue your statement.

Mr. THIESING. If your committee, Mr. Chairman, would deem it advisable to insert an amendment of this purport indicated by me into the present bill, the benefits to be derived from the effects thereof by a large number of American citizens are obvious. Some of these American citizens are not wealthy, and whatever property they obtain would add very materially to their well-being. The release of this property would also add to the general benefit of the country because money, instead of lying in the vaults of the United States Treasury, would be put into circulation. Likewise relief will be granted to a great number of citizens of the allied and associated powers. My particular reason for including citizens of the allied and associated powers in my proposed amendments is this:

During the past two years we represented several American citizens who had claims against the Public Trustee for alien enemy property in some of the allied countries. I should like to state here that the consideration which was given by such foreign trustees to the claims of American citizens, so far as our clients were concerned, has been most courteous and sympathetic, and the claims were recognized and satisfied. In some instances where proof as to ownership of property required under the laws of the different countries was difficult to obtain, the strict compliance of the law was waived in order to give relief to American citizens. One case in which I was particularly interested was a claim of a woman residing in this country, for the release of her bank accounts seized early in 1914 by the Public Trustee of Egypt.

This lady resided, at the outbreak of the European war, in Egypt, and was, at that time, a German national. She had to leave that country and returned to Germany, and was obliged to leave behind her moneys deposited in banks, amounting to approximately $2,000 and representing her savings of salary received in her position as governess in the family of one of the Egyptian officials. In 1915 this lady came to the United States, has lived here ever since, and became, in due time, a citizen of the United States. Early last spring we made application to the Public Trustee of Egypt for the release of her property on the ground that she was an American citizen. However, in my opinion, there was no legal basis for a claim because at the time of the seizure she was a German national, and at the time the treaty of Versailles became effective, that is, on January 10, 1920, as between Great Britain and Germany, this woman was not an American citizen. However, after some correspondence between our office and the Egyptian Public Trustee, her claim was allowed in full, with interest for the period of seizure-not on any legal grounds, but for humanitarian reasons, to give relief to this woman. It was a gracious act on the part of the British High Commissioner to order the payment of this claim.

I will not take up more time of your committee, Mr. Chairman, by bringing to its attention other instances of sympathetic treatment of American citizens in their claims against foreign governments.

If your committee should deem it best however, for reasons of its own to recommend the enactment of the bill in its present form and without any amendments, I shall not urge the adoption of my proposed amendment, because I am most auxious that something be done by Congress in the matter of the release of enemy property at the earliest possible moment.

I may perhaps be permitted to ask the indulgence of your committee for a few minutes to state my particular reasons for favoring the passage of the bill before your committee or any other bill authorizing the release of a part or all of the seized property. It has repeatedly been stated unofficially that it is not the policy of this Government to use private enemy property for the satisfaction of American claims. Mr. Miller the Alien Property Custodian, the other day before this committee, when making his fair and able statement in support of this bill, said that be, himself, did not object-in fact that he would be glad to receive authorization to release all of the seized property to the true owners, and that he was averse to the idea of paying American war claims out of the fund that would be realized from the liquidation of the property in his custody. It has been the policy of the United States Government, up to the present time, with respect to the disposition of the property owned by former enemies, to return such property to the true owners, and not to confiscate privately owned property. This policy of the United States has found its expression in the