Stern v. Newton

180 Misc. 241, 39 N.Y.S.2d 593, 1943 N.Y. Misc. LEXIS 1552
CourtNew York Supreme Court
DecidedFebruary 5, 1943
StatusPublished
Cited by5 cases

This text of 180 Misc. 241 (Stern v. Newton) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stern v. Newton, 180 Misc. 241, 39 N.Y.S.2d 593, 1943 N.Y. Misc. LEXIS 1552 (N.Y. Super. Ct. 1943).

Opinion

Pecora, J.

Plaintiff brought an action against the defendants, partners in a firm trading as Hallgarten & Co., to recover possession of certain securities héld in an account with said Hallgarten & Co., in the name of “ A. J. Stern & Cie, en liquidation ” (hereinafter called the Company). ■ A. J. Stern & Cie was a general partnership doing a private banking and stock brokerage business, organized and existing under the laws of France, and maintained its office in the city of Paris, in what is now [243]*243occupied France. The Company, as appears from its title, had gone into liquidation, sometime in 1938. After the commencement of this action, defendants moved to implead the Company pursuant to the provisions of section 287-b of the Civil Practice Act. On May 18, 1942, an order was entered in this court, directing that the Company be brought into the action as a party defendant, and that service of a supplemental summons on the impleaded defendant be made by publication, and by mailing copies of the requisite papers to the impleaded defendant in care of the Secretary of the Treasury, at Washington, D. C., in accordance with rule 52 of the Eules of Civil Practice. The order further provided that the securities, which are the subject matter of the action, should be held by the original defendants to the credit of the action until final judgment, then to be disposed of in accordance therewith.

The requirements of the order were fully complied with. Upon failure of the impleaded defendant to appear, plaintiff moved in this court for judgment for the relief demanded in the complaint. The motion, returnable on August 24, 1942, was adjourned several times at the request of the Department of Justice, acting for the Alien Property Custodian. On September 21, 1942, the Alien Property Custodian moved for leave to intervene as a defendant in this action. He alleged that on September 19, 1942, pursuant to the Trading with the Enemy Act, as amended (U. S. Code, tit. 50, Appendix, § 1 et seq.), and to Executive Order No. 9193, he issued Vesting Order No. 155, which vested in the Alien Property Custodian the securities sought by plaintiff in the present action.

Before the decision upon his application to intervene, the Alien Property Custodian made another motion for summary judgment under rules 113 and 114 of the Eules of Civil Practice, predicated on the assumption that the motion to intervene would be granted. Plaintiff makes the preliminary objection that the motion for summary judgment is premature. It is true that the intervener’s motion Under rules 113 and 114 is based upon a pleading not technically in the case; it is, therefore, to that extent premature. (Bobrose Developments, Inc., v. Jacobson, 251 App. Div. 825; Carner v. Manufacturers Trust Co., 248 App. Div. 770; Apperson Realty Gorp v. Wolosky, 156 Misc. 29.) However, since this court is granting the motion to intervene, and since the parties have addressed themselves fully to the merits of the controversy, it would seem an utterly useless procedure merely to deny the motion without prejudice, only to have the application brought on de novo upon the [244]*244identical papers. The court therefore has consolidated both plaintiff’s and the intervener’s motions for judgment.

The motion to intervene is granted. A third claimant may intervene in any interpleader proceeding to assert a claim to the property, even though the original pleadings do not indicate the existence of such claim or name him as a party to the action. (Edison Electric Illuminating Co. v. Frich Co., 146 App. Div. 605. See, also, Bourne v. State Bank, 106 Fla. 46; Bolton v. Baldwin, 57 S. W. 2d 957 [Tex.].)

The Alien Property Custodian urges that the effect of the Vesting Order was to entitle him as such Custodian to immediate possession of the securities, and that this right to possession cannot be blocked by judicial inquiry into ownership or status. The Vesting Order contains a finding that the securities are property which is payable or deliverable to, or claimed by A. J. Stern & Cie, in liquidation which is a French corporation [sic] having its place of business in Paris, France;” further, that to any extent that such French company is a person not within a designated enemy country it is controlled by, or acting for or on behalf of or as a cloak for a designated enemy country (Germany), and that the national interest of the United States requires that it be treated as a national of such designated enemy country (Germany). The Vesting Order then vests the securities to be held, used, administered, liquidated, sold or otherwise dealt with in the interest of and for the benefit of the United States.” Finally provision is made for any person, except a national of a designated enemy country, who asserts a claim, arising as the result of the Vesting Order, to file a notice of claim with the Alien Property Custodian.

It seems clear that the Company was properly determined to be a National ” of a “ designated enemy country ” within the definition of section 10 of Executive Order 9095 (as amd. by Executive Order No. 9193), and section 5 of Executive Order 8389 (as amd. by Executive Order No. 8998). Certainly the language of Executive Order 9095 closes the door to any inquiry at this stage as to the correctness of the determination by the Alien Property Custodian on that point. It specifically provides that such determination shall be final and conclusive as to the powers of the Alien Property Custodian to exercise any of the power or authority conferred upon me [the President] by section 5 (b) of the Trading with the Enemy Act, as amended.” The exigencies of war create many sudden stresses and emergencies. In such periods, the national security is paramount. It might well be imperiled if, in the case of the [245]*245seizure by our government of enemy owned or controlled property, the effectiveness thereof should be suspended while claims or rights to the property were in . process of judicial determination.

The plaintiff contends, however, that the Alien Property Custodian may capture only that property of the enemy national which the latter owned, or in which he had an interest, at the time of the service of the Vesting Order. Since the default of the Company occurred before the issuance of the Vesting Order, plaintiff asserts that he became entitled to the securities on such default, and that therefore defendant Company at that time had no right, title or interest in the securities. That position is untenable. The rights of the parties were not determined on the day of the default. A determination in this action could only be had by judgment. Section 493 of the Civil Practice Act is applicable here, since there has not been personal service of the summons. As was said in Bullard v. Sherwood (85 N. Y. 253, 256): The very requirement of an application to the court implies a judicial determination of the proper judgment to be rendered which is not at all controlled by the legal conclusions of the pleader. But the result is different Avhere no application is necessary.” (See, also, McClelland v. Climax Hosiery Mills, 252 N. Y. 347; Matter of Laughlin, 255 App. Div. 927.)

Since in the case at bar application to the court was necessary for judgment, and since the granting of a judgment Avould not have been solely a ministerial act, the securities did not ipso facto become the property of the plaintiff upon default.

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Bluebook (online)
180 Misc. 241, 39 N.Y.S.2d 593, 1943 N.Y. Misc. LEXIS 1552, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stern-v-newton-nysupct-1943.