Dr. Endre Ungar v. William French Smith, Attorney General of the United States

667 F.2d 188, 215 U.S. App. D.C. 145, 1981 U.S. App. LEXIS 16478
CourtCourt of Appeals for the D.C. Circuit
DecidedOctober 30, 1981
Docket80-1591
StatusPublished
Cited by20 cases

This text of 667 F.2d 188 (Dr. Endre Ungar v. William French Smith, Attorney General of the United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dr. Endre Ungar v. William French Smith, Attorney General of the United States, 667 F.2d 188, 215 U.S. App. D.C. 145, 1981 U.S. App. LEXIS 16478 (D.C. Cir. 1981).

Opinion

McGOWAN, Senior Circuit Judge:

This appeal is taken from a dismissal by the District Court of appellants’ complaint on the ground that the challenged action of the Department of Justice was not reviewable. The Department of Justice had denied appellants’ claims for the return of certain assets vested in the Office of Alien Property and derived from property formerly owned by a Hungarian pharmaceutical company that had been seized during the Second World War under the Trading with the Enemy Act. Although claimants relied upon legislation specially passed by Con *190 gress to aid at least some of them, the Department of Justice held that they had failed to establish their statutory entitlement to the vested funds. Finding that the administrative process accorded these claimants was constitutionally deficient, and that Congress did not intend to foreclose judicial review of unconstitutional administrative action in these circumstances, we vacate the decision of the District Court in part, affirm in part, and remand for further proceedings.

I

The story of the appellants, 1 insofar as it relates to the case at bar, begins in Hungary, a country that allied itself with Nazi Germany during the Second World War. According to the complaint, appellants owned and operated Chinoin Chemical and Pharmaceutical Works, Ltd., a Hungarian corporation that clandestinely supplied the Allies with sulfa drugs and other medicines. Complaint, ¶¶ 2-3. Chinoin, as a corporation organized under the laws of an enemy nation, fell within the definition of “enemy” found in the Trading with the Enemy Act, 50 U.S.C.App. § 2 (1976). Accordingly, during the war the Alien Property Custodian took control of certain assets belonging to the corporation, including patents, trademarks, and rights to various manufacturing processes. Appendix at 67-68. From the liquidation of these properties, the Office of Alien Property realized $239,616.47. Id. at 68.

Some corporate directors were sent to concentration camps. One, the father of appellant Susan Gyarmati, died there. Another, appellant Dr. Endre Ungar, survived. A third appellant, Ernest Szekely, also survived the war. To keep the firm away from the German cartels of I. G. Farben and Schering, the directors also transferred Chinoin stock to appellants Sandoz Chemical Factory, Ltd., a Swiss firm, and National Securities Corp., Ltd., a British company. Complaint ¶¶ 2-3.

In April, 1949, the appellants, other stockholders, and the corporation filed claims for the return of Chinoin assets vested in the Office of Alien Property under the administrative return provisions of the Trading with the Enemy Act, 50 U.S.C.App. § 32 (1976). Eight years later, the Office of Alien Property denied the claims on the grounds that (1) Chinoin was an “enemy” according to the definition in section 2 and (2) appellants as shareholders lacked the requisite direct interest in the vested property. App. at 68.

Unable to obtain relief from the Department of Justice, appellants sought remedial legislation in Congress. In 1968, after earlier efforts had not achieved success, see S.Rep.No. 684, 89th Cong., 1st Sess. (1965); S.Rep.No. 1419, 86th Cong., 2d Sess. (1960), the Congress did pass Pub.L. 90-421, which had been amended on the Senate floor to include a provision allowing shareholders who were persecuted citizens of enemy nations to seek the return of corporate assets vested in the Office of Alien Property. The legislation was codified at 22 U.S.C. § 1631o (1976).

Appellants filed new claims based upon section 1631o on December 19, 1968 and January 13, 1969. The Office of Alien Property informed appellants’ counsel that they would “be advised further after we have had the opportunity to review the record relating to these matters.” App. at 5. The next correspondence that appears in the record is dated October 5, 1978. It is a letter from the Director of the Office of Alien Property to counsel for appellants, informing him that the office was about to close, that there was nothing in their records following the submission of the claims, that the claims might be disallowed for failure to prosecute, and requesting counsel to advise the Department of Justice “whether or not claimants will consent to withdrawal of these claims, or in the alternative, your present position thereon.” App. at 7.

*191 Appellants, through their attorney, responded on October 11 by stating that they had no intention of withdrawing their claims and suggesting a conference with officials in the Alien Property Office. App. at 8.

On February 1, 1979, Bruno A. Ristau, then Director of the Office of Foreign Litigation, wrote to appellants’ counsel to inform him that he had been asked by the Assistant Attorney General in charge of alien property to look into the Chinoin claims. He wrote in part:

Candor requires me to tell you that— despite my general familiarity with the Trading with the Enemy Act — I do not understand the nature of the claims which you seek to assert. Moreover, I fail to understand why you have taken no steps since the filing of these claims in 1968 to perfect them. On their face, they appear to me not to be cognizable under any provision of the Trading with the Enemy Act.

App. at 9. On July 13, 1979, appellants’ counsel sent various materials intended to support the claims of his clients and asked to be informed on which other points the Department of Justice required additional documentation. App. at 11. It is not entirely clear from the record what documentation was submitted on July 13.

In the meantime, the Department of Justice had not been idle. It had found the file; specifically, the 1968 letters. App. at 12-13. In addition, in a letter of July 26, 1979, it informed appellants that they “literally ha[d] until mid-August at the very latest to perfect the claim(s)” (emphasis original). App. at 12.

The Department of Justice letter of July 26 was perhaps most significant because it stated for the first time what evidence the appellants were required to adduce in support of their claims. The letter said that it was the appellants’ “obligation to substantiate with probative evidence,” within the three week deadline that the Department had imposed, (1) the identity of the claimants, (2) their stock, interests in Chinoin, (3) the total number of shares of Chinoin stock, and (4) current powers of attorney in favor of appellants’ counsel. App. at 13.

On August 21, 1979, counsel for appellants responded by submitting copies of the legislative history of 22 U.S.C. § 1631o, and information on Chinoin from the 1941 edition of Compass, a European reference work on business. App. at 15-16. Counsel explained that his efforts to obtain material about Chinoin stock from the Registry of Corporations in Budapest had not yet succeeded. Id. at 15. He also enclosed copies of powers of attorney in his favor and said that new authorizations would be forthcoming. Id. at 16.

The Department of Justice regarded this submission as “wholly unresponsive” to its July 26 letter. App.

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667 F.2d 188, 215 U.S. App. D.C. 145, 1981 U.S. App. LEXIS 16478, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dr-endre-ungar-v-william-french-smith-attorney-general-of-the-united-cadc-1981.