It is generally conceded that the Federal Government, in wartime as well as in peacetime, possesses the power to appropriate private property for a public use. The limitations on this power are that the use to which the property will be put is in execution of a Federal purpose and that there be payment of just compensation (Rottschaffer, Constitutional Law, secs. 294, 301, 304). The power to appropriate has been extensively used, and nowhere, save by way of dictum in the alien property cases, is there any suggestion that the Government is constitutionally bound to return the property.

The Idle Foreign Merchant Vessels Act (50 U. S. C. App. sec. 1271), enacted in 1941, sets forth a procedure for requisitioning private property which is substantially analogous to the hypothetical remedy which we are considering. That act provides, in part (sec. 1):

***The President is authorized and empowered * * *to purchase, requisition, for any period during such emergency charter or requisition the use of, or take over the title to, or the possession of, for such use or disposition as he shall direct, any foreign merchant vessel which is lying idle in waters within the jurisdiction of the United States *** Provided, That just compensation shall be determined and made to the owner or owners of any such vessel ** [Emphasis added.]

While not conclusive, it is significant to note that the cases which has arisen under this act have not indicated any constitutional problems with respect to the provision that the remuneration to the former owners may be limited to just compensation. See, for example, United States v. Insurance Company of America (143 F. 2d 53 (C. C. A. 4, 1944)); The Maret (145 F. 2d 431 (C. Č. A. 3, 1944)). There appears to be no requirement that the property be returned to the former owners at the end of the emergency.

Furthermore, there is excellent Supreme Court authority for the proposition that the Government can requisition friendly alien property upon condition that it pay the former owner just compensation. Russian Volunteer Fleet v. United States (75 L. ed. 473 (1931)), was decided long before the Idle Foreign Merchant Vessels Act was promulgated. The Government requisitioned contracts for the construction of two vessels. The alien friend sued for just compensation, and the Court of Claims dismissed the petition. The Supreme Court, in reversing, held, page 476:

"The petitioner was an alien friend, and as such was entitled to the protection of the fifth amendment of the Federal Constitution (citing cases). Exerting by its authorized agent the power of eminent domain in taking the petitioner's property, the United States became bound to pay just compensation."

The Russian Volunteer Fleet case has been extensively cited for the proposition that alien friends are entitled to the protection of the fifth amendment; it seems to be equally good precedent for establishing the standard of redress which must be afforded former owners of requisitioned property-just compensation.

It should be observed, however, that in the situations discussed above, the private property was requisitioned solely because the Government had an affirmative need for it. But it must be recognized that, as a practical matter, the Government does vest alien property which may not be especially useful, that is, not especially useful in the same way as a particular tract of land taken by eminent domain, or a particular vessel taken under the Idle Foreign Merchant Vessels Act. One of the motivating factors in the vesting of alien property is the prevention of enemy use of the property; this objective may have nothing to do with the Government's need of the property. On the other hand, the Trading With the Enemy Act does set forth a procedure for "freezing" alien property, specifically designed to meet the situation in which the major purpose is the prevention of enemy use. Hence, it could be argued that the vesting (rather than freezing) of the property reflects a determination that its use is required for a public purpose. Nevertheless, the realities are often otherwise, and it is probably this factor which has caused several courts, in

See, for example, Annual Report, Office of Alien Property Custodian, fiscal year 1945, p. 1, which states:

"WARTIME OBJECTIVES

"During the course of the war it has been the primary function of the Office of Allen Property Custodian to mobilize in the interest of the war effort all productive enemy assets in the United States. With this aim in view the Custodian has taken title to, or placed under his control, chiefly enemy business enterprises, patents, real estate, and tangible personalty. He has also taken over other properties, not necessarily of value to the war effort, because they required active management to conserve their value.

41389-54 pt. 1-46

dealing with alien property cases, to express doubt as to whether the Government could lawfully discharge its obligation in respect of requisitioned property by merely establishing a procedure for compensation.

One of the cases in which such doubt was expressed is Sielcken-Schwarz v. American Factors 60 F. 2d 43 (CCA 2d, 1932), cert den. 77 L. Ed. 565 (1932)). The Custodian had vested the stock of a nonenemy and sold the stock to the defendant before plaintiff commenced any action. Plaintiff then sued the purchaser for the actual value of the stock, alleging that the sale was invalid. The court held the sale valid; it then continued, page 45:

"As to its validity, it is not necessary to say whether Congress could have authorized the sale of a citizen's property, merely by giving him a claim to the proceeds. That might be too far to go merely to avoid difficulties of administration; though even this is perhaps not wholly free from doubt, for much may be done which is in fact in excess of a power, if it be essential to its effective exercise."

This doubt was somewhat extended in Standard Oil Co. v. Markham (57 F. Supp. 332 (S. D. N. Y. 1944)). The claimant had brought a section 9 (a) suit to recover control of patents which had been vested by the Alien Property Custodian. While that action was pending, claimant brought this action to enjoin the Custodian from disposing of the patents until final determination of the section 9 (a) proceeding. The court recognized the unlawfulness of the Custodian's disposing of the patents, but refused the injunction on the basis that the plaintiff's fears were probably groundless. By way of dictum, the court stated, page 334:

"The existence of a right upon the part of claimant to regain his wrongfully seized property, and to do so completely, is essential to the constitutionality of the act." [Emphasis added.]

And the opinion of the circuit court of appeals in Uebersee Finanz-Korporation v. Markham (158 F. 2d 313 (CCA D. C., 1947)), presents another example of judicial reluctance with respect to restricting former owners to actions for compensation. The Government strenuously contended that alien friends, whose property was vested under section 5 (b) of the Trading With the Enemy Act, had no standing to sue for the return of their property, but were limited to actions for compensation under the Tucker Act. In denying this contention, the court stated, page 315:

"In any event, to sustain the Custodian's position not only would require a major job of statutory reconstruction, but would also as to the property of friendly aliens-raise grave doubts as to the constitutionality of the law."

And later, after surmising that Congress had refused to enact the Custodian's interpretation into law because it intended alien friends to be allowed to seek the return of their property, the court said, page 316:

"But even if that conjecture be dismissed, there is nothing to support the theory of the Custodian that the new legislation eliminated all remedy as to all foreign rights. For obviously such a purpose would run headlong into constitutional objections." [Emphasis added.]

On the other hand, Judge Edgerton, dissenting in the above case, stated, page 316:

"The Tucker Act (28 U. S. C. A. sec. 250), permits recovery in the Court of Claims on any claim 'founded upon the Constitution of the United States or any

****

law of Congress * * * [or] upon any contract, express or implied, with the Government of the United States And it is well settled by many deci sions of which we need only cite the last (Yearsley v. W. A. Ross (309 U. S. 18) that when the United States seizes the property of an individual, not an enemy, in pursuance of a public purpose, it impliedly promises to pay just compensation, and that promise is "just compensation" under the fifth amendment.' SilesianAmerican Corporation v. Markham, 2 Cir., 156 F. 2d 793, 797.)”

The Supreme Court affirmed the majority opinion in Clark v. Uebersee FinanzKorporation (92 L. Ed. 88 (1947)) without mentioning the possibility of unconstitutionality if the Government's interpretation were adopted. And, it may be significant to note that, in Silesian American Corporation v. Clark, (92 L. Ed. 81 (1947)), decided on the same date, the Supreme Court made the following comment, page 88:

"Title to other enemy assets in the United States, which were frozen by the Treasury Department, was not seized, but continued to remain with the enemy owners. Since war time objectives required only the immobilization of these assets, and no serious impairment of their value could result from lack of active management, this more general control by the Treasury has been considered adequate for war purposes." [Emphasis added.]

13

"The Constitution guarantees to friendly aliens the right to just compensation for the requisitioning of their property by the United States. Russian Volunteer Fleet v. United States, supra. We must assume that the United States will meet its obligations under the Constitution. Consequently, friendly aliens will be compensated for any property taken * * *” [Emphasis added.]

The above-quoted passage seems to be the most recent, as well as the most authoritative, statement dealing with the question; its implication is that compensation alone would be sufficient to discharge the Government of its constitutional obligations.

Mr. Bishop, writing in 62 Harvard Law Review 721, at page 751, in discussing the above quotation, points out that:

"It speaks of the nonenemy alien's right to just compensation' for the taking of his property. But such a right would seem not to exist, or at least to be redundant, if he may recover the property itself in a suit under section 9 (a) of the Trading With the Enemy Act, for in that case there would be no 'taking'." Although it is not clear that, under the present act, alien friends may sue to recover the property, it may be well to complete the picture by demonstrating that the case upon which the circuit court of appeals, in the Uebersee Case, based its view that limiting alien friends to an action for compensation would "raise grave doubts," does not wholly support that view. The court cited Becker Steel Co. v. Cummings (80 L. Ed. 54 (1935)). In that case, the Supreme Court stated, page 59:

"The seizure and detention which the statute commands and the denial of any remedy except that afforded by section 9 (a) would be of doubtful constitutionality if the remedy given were inadequate to secure to the nonenemy owner either the return of his property or compensation for it *** The implication that by the appropriation of private property to public use the United States undertakes to make just compensation for it * * * must likewise enter into the construction of a statute giving to a nonenemy a remedy for the seizure of his property as a war measure." [Emphasis added.]

The alterantive remedies which the Supreme Court appears to sanction, by the above statement, provide as clear an index of the constitutional limits as any yet enunciated.

IV. CONSTITUTIONALITY OF AMENDING THE TRADING WITH THE ENEMY ACT TO ENABLE THE ATTORNEY GENERAL TO DISPOSE OF PROPERTY OVER WHICH SUITS ARE PENDING

Having surmised that Congress might have constitutionality limited the remedy for claimants, whose property was vested by the custodian, to an action for compensation, we turn to the question of whether Congress, having already provided that the property shall be retained pending the outcome of the suit, can validly amend the act so as to permit the Attorney General to dispose of the property, relegating the claimant to an action for just compensation. The proposed amendment would be tantamount to a repeal of a portion of section 9 (a). In determining the constitutionality of such an amendment, we are no longer solely concerned with problems peculiar to the Trading With the Enemy Act; we are entering a broader field-covering the general concepts of retroactivity and sovereign immunity.

The Constitution does not expressly prohibit the enactment of retrospective legislation, except in situations involving criminal proceedings. Nevertheless, it has long been established that there is one type of retroactive law dealing with civil affairs, which raises constitutional problems. The fifth amendment has been interpreted to prohibit Congress from passing any statute which operates to divert "vested rights."

The term "vested right" is exceedingly difficult to define. Its definition varies according to the field of law to which the term is applied. For this reason it is difficult to predict whether a right will be held to be vested or not, by analogizing dissimilar fact situations. However, the Portal-to-Portal Act, which destroyed certain rights granted by the Fair Labor Standards Act, recently gave rise to extensive consideration of the concept of vested rights. In Ferrer V. Waterman S. S. Corp. (76 F. Supp. 601 (D. C. P. R. 1948), one of the many cases dealing with that subject, the court adopted the following definition of a "vested right," page 602:

"Without reference to a dictionary definition we would define it as a right so fixed, that it is not dependent on any future act, contingency, or decision to make it more secure ***. The right of appellees at the time of the rendition of the judgment of the courts contained in the decree was not fixed in the sense

that it was settled. It was an inchoate right, which would become vested upon the happening of one of two events, viz, an affirmance of the decree of the trial court * ** or by the expiration of the period allowed at the time in which to take an appeal."

While no direct authority has been found on the point, it seems that the claimants would not have a vested right in the property itself. This results from the fact that reacquisition is contingent upon proof of total freedom from enemy taint. Until a court decrees that the claimants are entitled to the return, it could not be said that their rights in the property are vested. At the time of the seizure, the President had the power to use, administer, liquidate, sell, or otherwise dispose of the vested property, and it has been consistently held that the title passes to the Government from that moment. Of course, it may be argued that the power thus granted is considerably lessened as of the time the claimant initiates his section 9 (a) proceeding; for, from that moment, the act directs the Government to hold the property pending determination of the suit.

Following this reasoning, it may be surmised that, although the claimant may have no vested right in the property, he has an assurance that no disposition will be made of it until his claim has been adjudicated. This is little more than the right to bring an action to recover the property. But it is this right which the proposed amendment will extinguish. Our question now becomes, Is the right to sue for the return of the property a vested right, protected against retroactive withdrawal?

We have now reached another refinement of the concept of "retroactivity"; as stated in United States v. National City Lines (80 F. Supp. 734, 738 (S. D. Cal. 1948)):

"The principle which forbids application of new enactments or revisions to pending actions applies to statutes dealing with substantive rights only (citing cases). At times, it is difficult to draw a distinct line between substantive law and procedure. And many procedural changes have, historically, had a lasting effect on substantive rights ***." [Emphasis added.]

So, it appears that the question of whether the right which the claimants have is protected against divestment by the fifth amendment may depend upon whether it is to be considered substantive or merely procedural or remedial. In this connection, American Jurisprudence states that:

"As a general rule, **✶ ✶ the legislative branch of Government, whether Federal or State, may pass retrospective laws, such as, in their operation, may affect suits pending and give to a party a remedy which he did not previously possess, or modify an existing remedy * * *" (11 Am. Jur. sec. 382).

In United States v. Standard Oil Co. of California (21 F. Supp. 645 (S. D. Cal. 1937) ; affd. 107 F. 2d 402 (CCA 10th 1938); cert. den. 84 L. Ed. 1036), the United States brought suit to be declared the owner of certain oil lands. Some of the language of the opinion of the district court is apposite, pp. 660, 661:

"While a litigant may acquire a vested right to be compensated for loss immune from legislative encroachment by retroactive statute (citing cases), no vested right exists in the measure of compensation *** [Italics added.]

"When a right of action exists and has matured into a cause of action, a legislative enactment which affects the remedy is valid even if the remedy remaining is less efficacious and, in actual practice, may result in a smaller recovery than before. Provided, of course, a remedy is left which allows a means of compensation for actual loss. As said in Gibbes v. Zimmerman, supra (78 L. Ed. 342): "The appellant says the act of March 9 arbitrarily deprives him of a remedy for the enforcement of stockholders' liability, which remedy was his property, and was taken from his without due process. But although a vested cause of action is property and is protected from arbitrary interference the appellant has no property, in the constitutional sense, in any particular form of remedy; all that he is guaranteed by the fourteenth amendment is the preservation of his substantial right to redress by some effective procedure. (Citing cases)." [Italics added.]

The general rule with respect to retroactive statutes seems to be that, so long as some reasonable remedy is left to the litigant, the modification of a remedy previously granted does not constitute a denial of due process. In addi tion to that rule, there is a related body of law dealing with the more limited question of the validity of withdrawing or modifying remedies which have been granted against the Government. Under it, the basic consideration is soVereign immunity.

It is elementary that the sovereign cannot be sued without its consent. As a corollary of that doctrine it has been held that the right of action against the sovereign is not a vested right since the consent may be withdrawn at any time.

Lynch v. United States (78 L. Ed. 1434 (1934)), is one of the landmark cases dealing with the relationship between vested rights and sovereign immunity. The case involved war risk insurance, for which the insured had paid monthly premiums. After the death of the insured, Congress repealed the act by which the United States undertook to make compensation to the beneficiary. The court determined that the beneficiary's right had become "vested," and the case turned on whether Congress had sought to abrogate the right or merely the remedy. The Supreme Court held that, since Congress had attempted to repeal the right, the act was unconstitutional. But the court explicitly stated that, had Congress merely withdrawn the remedy, there would be no violation of the fifth amendment, because it is within the power of Congress to withdraw the consent of the United States to be sued. The court's language, in this respect, was sweeping, page 1442:

"Although consent to sue was thus given when the policy issued, Congress retained power to withdraw the consent at any time. For consent to sue the United States is a privilege accorded; not the grant of a property right protected by the fifth amendment. The consent may be withdrawn, although given after much deliberation and for a pecuniary consideration (citing cases). The sovereign's immunity from suit exists whatever the character of the proceeding or the source of the right sought to be enforced. It applies alike to causes of action arising under Acts of Congress, *** and to those arising from some violation of rights conferred upon the citizen by the Constitution.” [Emphasis added.]

In the alien property situation, the initial act of the Government was to seize the property. The seizure might have been unconstitutional unless some remedy had been provided for citizens and alien friends. Therefore, the validity of the retention may depend upon the continued existence of some form of remedy. We have assumed that the payment of just compensation is a sufficient remedy to meet the constitutional requirement for the initial seizure. If that assump tion is correct, no objection can be raised concerning the validity of the retention, so long as a remedy of at least that magnitude is afforded. The only objection available would be directed to the withdrawal of a particular remedy which was not initially required in order to make the seizure valid. In other words, the most strenuous objection which could be raised if the proposed amendment is enacted is not that the enactment makes the retention of the property unconstitutional, but only that the withdrawal itself is invalid. But the Lynch case seems to answer that objection by the statement that the "right" to sue the United States is not proteced by the fifth amendment, because it is not a property right; hence the consent may be withdrawn.

See also Duke Power Co. v. South Carolina Tax Commission (81 F. 2d 513 (CCA 7 1936)); Hamevig v. United States (84 F. Supp. 743 (Ct. Cl. 1949)); and Wilner v. United States (68 F. 2d 442 (CCA 7 1934)), a companion case of Lynch v. United States, in which the court quoted the following sentence, page 445: "A party cannot have any vested right in a remedy conferred by an act of Congress to prevent Congress from modifying it or adding new conditions to its

exercise."

The doctrine of the Lynch case was affirmed in Cummings v. Deutche Bank (81 L. Ed. 545 (1937)), a case involving compensation for enemy property which had been vested. After World War I, Congress enacted the Settlement of War Claims Act, permitting enemies to seek a return of property which had been rested from them. Congress later passed a joint resolution declaring that such property should be retained by the Custodian until the German Government made suitable provisions for the satisfaction of the claims of American nationals against it. The plaintiff here, an enemy alien, contested the constitutionality of the joint resolution. The court held that the consent of the United States to be sued, although revocable at any time, had not been revoked. Nevertheless, recovery was denied on the ground that the qualification of the right, imposed by the resolution, was valid-since the claimants were enemies.

Pilueger v. United States (121 F. 2d (C. C. A. D. C. 1941), cert. den. 86 L. Ed. 497 (1941)), also involved the Trading With the Enemy Act, but there was no problem of withdrawal of a remedy. For that reason it is perhaps more pertinent to the question discussed in the preceding section of this memorandum; however, because of its relationship to the Lynch case, it is presented here.