White v. Mechanics Securities Corp.

Background

A group of private creditors brought lawsuits to collect on notes issued by the Imperial German Government. They sued to take money from funds that the United States had seized during the war and placed with the Alien Property Custodian and the Treasurer under the Trading with the Enemy Act. The defendants argued that courts lacked authority to decide such claims, that there was no proof the funds belonged to Germany, and that the United States had competing claims that should be paid first.

Reasoning

The Court considered whether private people could use the statute to recover debts from property the government had taken from an enemy and whether the United States could claim a superior right to those funds. The Court said Congress, through the Act, authorized suits by non-enemies and did not reserve any priority for the United States. Because the money had been seized and Congress had declared how to deal with it, private claimants could press their claims. The Court also held that sworn admissions by the Custodian and Treasurer that certain sums belonged to the Imperial Government were evidence supporting the claim.

Real world impact

This ruling lets individual creditors go to court to get money held by the United States that is traceable to an enemy government. It means the government cannot automatically take priority over such seized funds under the statute, and courts will treat official sworn statements about the funds as proof unless contrary evidence appears. The decision affirmed lower-court decrees in several related cases.