Mr. FULTON. We are glad to have you here. Stay as long as you like. Mr. Sweeney, will you give the clerk your name and address as well as your present position and authorization by the Department? STATEMENT OF PAUL A. SWEENEY, CHIEF, APPELLATE SECTION, CIVIL DIVISION, DEPARTMENT OF JUSTICE Mr. SWEENEY. My name is Paul A. Sweeney. I am Chief of the Appellate of the Civil Division of the Department of Justice, here by the authorization of Deputy Attorney General Rogers. The reason, I assume, that I was asked to come was that I had supervision over the collection of these funds from the period of 1934 to 1952 Mr. FULTON. So you are speaking on policy from facts within your own personal observation as a Department member? Mr. SWEENEY. That is right. The Department has not prepared a statement to submit. We have sent letters to the chairman of this committee in response to different bills of which this present House Joint Resolution 130 is the outgrowth. Mr. FULTON. Would you just list the letters that have been sent, and we will make those part of the record in their chronological order? Mr. SWEENEY. The first letter was sent to the Honorable James P. Richards, chairman of the Committee on Foreign Affairs, under date of October 9, 1951. It deals with House Joint Resolution 142 of the 82d Congress, 1st session. That is the most discursive letter we have sent. It was signed by William A. Underhill, Acting Deputy Attorney General. (The letter referred to is as follows:) Hon. JAMES P. RICHARDS, DEPARTMENT OF JUSTICE, OFFICE OF THE DEPUTY ATTORNEY GENERAL, Chairman, Committee on Foreign Affairs, House of Representatives, Washington, D. C. My DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice relative to the joint resolution (H. J. Res. 142) to amend the joint resolution entitled "Joint resolution to provide for the adjudication by a Commisioner of claims of American nationals against the Government of the Union of Soviet Socialist Republics," approved August 4, 1939. The changes which the measure proposes are to amend section 9 to increase the salary of the Commissioner from $9,000 to $15,000 per year and to make available the sum of $50,000 rather than $25,000 for the payment of the expenses of the Commission. It also proposes to add five additional sections (secs. 11-15). Section 11 provides generally for public notice of the times within which claims should be filed, the entry of an award in respect of one or more items of the claim while deferring consideration on other items of the same claim, the certification to the Secretary of the Treasury of the copies of the awards made, and the deduction from the amount of each payment made of 3 percent as reimbursement for the expenses incurred by the United States. Section 12 provides the order of payment of the awards. Section 12 (a) (1) would give first priority to the claim of an American claimant against a Russian national in respect of which claim a judgment or an attachment had been obtained prior to November 16, 1933, against the Russian national, all or part of whose property has been recovered by the United States under the Litvinov assignment but limited to the extent of the property so recovered. The second priority would be for the payment of a claim of an American national against the Russian national, all or part of whose property in the United States had been collected by the United States pursuant to the Litvinov assignment, again limited to the property so recovered. Section 12 (a) (3) provides for the payment of all other claims, and the balance of such claims as has not been paid in full under sections 12 (a) (1) and 12 (a) (2). Section 12 (a) (4) provides that any balance emaining after the payments under (1), (2) and (3) shall be paid into the general fund of the United States Treasury. Section 12 (b) asserts that nothing shall be construed as an assumption by the United States of any liability to any claimant beyond the extent provided for in the joint resolution. Section 12 (c) provides that any claims based on bonds of the Soviet Government cr its nationals acquired by claimants for less than their face value shall be allowed by the Commissioner only to the extent of the actual consideration paid therefor. Section 12 (d) authorizes and directs the Secretary of the Treasury to pay the awards if the order of priority set forth in section 12 (a). Section 13 provides that all payments authorized under section 12 shall be disbursed from funds collected by the United States pursuant to the Litvinov assignment. Section 14 provides that the Commissioner shall apply the applicable principles of international law, justice, and equity. Section 15 is a definition section. All claims which the Soviet Government as successor to prior governments of Russia, or otherwise, had against American nationals were assigned to the United States by the so-called Litvinov assignment of November 16, 1933. In 1934 there were referred to the Department of Justice for collection all claims embraced by the Litvinov assignment. Thereafter, the Department conducted extensive litigation for the collection of those claims. In the course of that litigation a number of cases have been decided by the Supreme Court of the United States, by the Court of Appeals for the Second Circuit, by the Court of Appeals of New York and one by the Supreme Court of Ohio. Numerous other cases have been adjudicated by United States district courts or by various State courts of first instance. The proceeds of this litigation have been deposited in a special account with the Treasury Department, which account at the present time shows a balance of approximately $7,500,000. There remains outstanding only one group of claims, namely, those against the National City Bank of New York. That group of claims has been settled with the National City Bank upon rather complicated terms which involve the final disposition of certain thirdparty claims against funds in the National City Bank which generally are considered to fall within the Litvinov assignment. Many of these third party claims have already been settled, agreements have been reached in principle as to the settlement of the remaining third party claims, and it is expected in the near future that the last of this litigation will be completed by the payment to the United States by the National City Bank of approximately $1 million. This will terminate the litigation under the Litvinov assignment, insofar as this Department is concerned, and should result in a balance in the Treasury of approximately $8,500,000. In the course of this litigation the Department has consistently represented to the courts, pursuant to a letter of March 26, 1938, of R. Walton Moore, counselor of the Department of State, that the “Department of State has always had in mind that whatever funds are recovered as a result of that [Litvinov] assignment, would be made available, in whole or in part, to American private claimants." The Supreme Court in United States v. Pink (315 U. S. 203, 207), accepted the Government's argument that the Litvinov assignment was a method adopted by the executive department for alleviating in the United States the rigors of the Soviet nationalization program and that Congress, by the joint resolution of August 4, 1939, tacitly approved the executive policy. In Steingut v. Guaranty Trust Company (58 F. Supp. 623, 634), Judge Rifkind again accepted this argument. It would accordingly appear that the funds which had been collected pursuant to the Litvinov assignment might appropriately be disbursed in whole or in part to American claimants against Russia now that the litigation under the Litvinov assignment substantially has been concluded. Such a disposition of the proceeds realized would accord with the representations heretofore made by the Government to the courts. During the course of the litigation involving these assigned claims, contentions have repeatedly been advanced that the Government has been depriving the American claimants and foreign claimants of vested rights which they have obtained through attachments and judgments which during the period of nonrecognition were regarded as valid, at least by the State courts of New York in which State most of the litigation took place. It has been the Government's contention that such claims were required to give way to its overall policy of marshaling assets for the purpose of providing funds for a global settlement of claims of American nationals against Russia. This contention largely was adopted by the Supreme Court in United States v. Pink, supra, at least insofar as the claims of foreign nationals are concerned. The claims of American nationals have never squarely been passed upon, possibly because some claims have been compromised and possibly because they were never brought into square conflict with the litigation being conducted by the United States and because section 977 (b) of the New York Civil Practice Act, which provided a State scheme for disposing of the assets of nationalized foreign corporations recognized no difference between American and foreign claimants. It seems clear, however, that the policy of the United States, as evolving out of the litigation and as represented to the courts, is that the funds are to be devoted to the payment of American claimants only, i. e., American claimants who have owned the claims since their inception and not those American claimants who have either acquired the claims from foreign nationals for speculative purposes or have had title to such claims assigned to them for the purpose of bringing suit thereon in the United States, although the beneficial interest in the claim was retained by the foreign national. The last group of claims, of course, are in reality claims of foreign nationals and as such have been disregarded by the courts whenever those claims have come in collision to the claims asserted by the United States. It is believed that the proposed joint resolution, insofar as it makes the funds available exclusively to American nationals comports with the position which the Government has consistently taken and is a proper disposition of the funds. It is also believed that should any of these American nationals have been in the position to have claimed priority in payment, by virtue of an attachment or judgment against a Russian national, prior to the date of the Litvinov assignment, those parts of the resolution providing for priority in payment of such claims out of funds formerly belonging to such Russian nationals would not be inequitable. It is believed, however, that certain objections exist to the terminology of section 12 (a) (1) and (2). As a result of the litigation conducted by the United States and particularly the decision of the Supreme Court in United States v. Belmont, (301 U. S. 324), United States v. Pink (315 U. S. 203), the Court of Appeals for the Second Circuit in Steingut v. Guaranty Trust Co., (161 F. 2d 571), the District Court for the Southern District of New York in Steingut v. Guaranty Trust Co. (58 F. Supp. 623), and United States v. National City Bank (90 F. Supp. 488), it has been established that funds of Russian corporations, nationalized by the Soviet Government have passed to the Soviet Government and, in turn, passed to the United States by virtue of the Litvinov assignment. The only funds which the United States had ever recovered or could recover under the assignment are funds which prior to the assignment belonged to the Soviet Government. Accordingly, the introduction to section 12 (a), which states "In order to prevent the confiscation or expropriation of money and property applicable to payment of claims of American nationals and in order to preserve the vested rights of American nationals" seems hardly to be an accurate description of the funds which the United States has recovered. So far as we are aware, with the possible exception of Steingut v. Guaranty Trust Co., supra, there is no decision which has held that a vested right of an American national was destroyed by any claim asserted by the United States pursuant to the Litvinov assignment. It is believed that this introduction is unnecesary and that it is enough to state that "the claims allowed by the Commissioner shall be paid in the following order." In section 12 (a) (1) the same misconception continues. It provides for priority in payment to an American national who has a claim against a Russian national on which claim a judgment or an attachment had been obtained prior to November 16, 1933, against the Russian national "all or part of whose property in the United States has been recovered or collected by the United States under the Litvinov assignment" and later that such claims shall be first paid up to an amount aggregating "the amount of the property of the debtor Russian national which has been collected by the United States under the Litvinov assignment." As pointed out, the United States had collected no property of a Russian national, but only money or property belonging to the Soviet Government and assigned by it the United States. If it be intended to mean that the money or property to which the section refers belonged to a Russian corporation prior to the nationalization of that corporation and thereafter passed to the Soviet Government then the section should be amended so to read. As it now reads, that group of claiments might take nothing because the United States has acquired no property from a Russian national pursuant to the Litvinov assign ment. The same observations apply to section 12 (a) (2) where the second order of priority provides for the payment to American claimants against Russian nationals where no judgment or attachment has been obtained. It is not believed that the definition section (15 (3)) adequately cures this defect. Section 12(c) requires that any claims based on bonds of the Soviet Government or its nationals, acquired by claimants for less than their face value shall be allowed only to the extent of the actual consideration paid therefor. So far as we can assume there are few, if any, claims based on bonds of the Soviet Government or its nationals. The main claims as developed by the litigation are dollar bonds or notes of the Czarist or Provisional Governments of Russia. There has been considerable speculation in these bonds, and it is believed that in these circumstances the provision is a proper one. It is suggested that after the words "Soviet Government," there be inserted the words "or prior Governments of Russia." Again it is not believed that the definition section (15 (1)) cures this defect, as it might well be taken to refer to such governments as the Denekin, Kolchak, etc., governments. Finally, it would seem desirable to resolve certain ambiguities which would arise from the necessity of construing together the existing provisions of the 1939 joint resoluton and the new provisions which would be added. In particular, section 4 bars the Commissioner from considering any claim "which shall not have been presented to him within 12 months from the date he enters upon the duties of his office," while new section 11(a) permits him to fix "the limit of time within which claims may be filed." Section 6 allows the Commissioner only 2 years to complete his work. In view of the proposed amendment to the joint resolution it is not clear whether it is intended to repeal section 6. Section 10 provides that expenditures under the 1939 enactment shall be a first charge on the funds in question, while new section 11(d) provides that 3 percent shall be deducted from each claim paid "as reimbursement for the expenses incurred by the United States." Subject to the foregoing comments, the Department of Justice finds no objection to the enactment of the measure. The Director of the Bureau of the Budget has advised that there is no objection to the submission of this report. Yours sincerely. WM. AMORY UNDERHILL, Acting Deputy Attorney General. Mr. FULTON. Did you say discouraging or discursive? Mr. SWEENEY. It was not intended to be discouraging. The next letter is dated April 3, 1952. It is signed by the Assistant Attorney General A. Devitt Vanech. It deals with House Joint Resolution 364, 82d Congress, 2d session. (The letter referred to is as follows:) DEPARTMENT OF JUSTICE, OFFICE OF THE DEPUTY ATTORNEY GENERAL, Hon. JAMES P. RICHARDS, Chairman, Committee on Foreign Affairs, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice relative to the joint resolution (H. J. Res. 364) to amend the joint resolution entitled "Joint resolution to provide for the adjudication by a Commissioner of Claims of American nationals against the Government of the Union of Soviet Socialist Republics," approved August 4, 1939. This resolution is similar to the resolution (H. J. Res. 142) on which this Department submitted a report to your committee on October 9, 1951. The suggestions made in that report appear to have been incorporated in this resolution. It may be of interest to the committee to know that since the report of October 9, 1951, the last of the so-called Litvinov claims being handled by this Department have been terminated and the sum of $1,023,711.95 has been collected and forwarded to the Treasury Department for appropriate deposit. The resolution contains changes in addition to those suggested in the report of this Department of October 9, 1951. Subsection (1) of section 1 would amend the title of the joint resolution of August 4, 1939 (50 Stat. 1199) by adding the following language: "or against a Russian national which prior to its nationalization, owned or was entitled to property in the United States." Subsection (2) of section 1 would amend the first paragraph of the 1939 joint resolution by authorizing the Commissioner to determine the validity and amounts of the claims of American nationals against the Government of the Union of Soviet Socialist Republics arising prior to November 16, 1933, and also to adjudicate claims of American nationals "against a Russian national which prior to its nationalization owned or was entitled to property in the United States, which has been collected or was recovered by the United States under the Litvinov assignment." The purpose of these amendments would seem to be to enable the Commissioner, without a specific finding of an international delinquency, to make an award in favor of an American national who had a claim against a Russian national whose former property was taken over by the United States under the Litvinov assignment. While doubtless the international delinquency could be established, it simplifies proceedings to omit the necessity therefor, particularly since the general tenor of the proposed legislation indicates a desire to provide for the payment of such claims and proposed section 11 (a) would provide for preferential payment of certain classes of such claimants. There appears to be no objection to these amend ments. As suggested in report of October 9, 1951, subsection (4) of section 1 would provide for the amendment of section 4 of the 1939 resolution to eliminate any divergence in the time limitation for presenting claims. However, as it now reads, the proposed amendment would omit the language "The decisions of the Commissioner shall be in writing, and shall be final and conclusive as to the merits of all cases decided." It is assumed that this omission was a result of inadvertence and was not intended to provide for judicial review of the Commissioner's findings either under the Administrative Procedure Act or otherwise. On the assumption that it is intended to make the decision of the Commissioner final, as usually is the case with respect to commissions of this character, it is suggested that subsection (4) of section 1 of the resolution be amended to read as follows: "(4) By amending section 4 to read as follows: "Before entering upon his duties the Commissioner shall take a solemn oath faithfully and impartially to examine the claims and to give his decision in accordance with his best judgment and with such principles of law, justice and equity as may be applicable, including international law. The decision of the Commissioner shall be in writing, and shall be final and conclusive as to the merits of all cases decided." It may be that the proposed section 10 (c) would not accomplish its intended purpose, i. e., that the Commissioner shall certify to the Secretary of the Treasury for payment certified copies of awards entitled to priority. Proposed section 11 (d) requires the Secretary to pay such an award upon its presentation. Inasmuch as the ultimate outcome of the Commissioner's arbitration may be such that general claimants will receive only a fractional amount of their established claims, it is suggested that proposed section 10 (c) be amended to read as follows: "(c) The Commissioner shall give preference to the disposition of those claims entitled to priority of payment under section 11(a)(1) and shall as soon as practicable certify to the Secretary of the Treasury copies of all awards made in respect of such claims without awaiting the adjudication of those claims payable under section 11(a) (2).” It is assumed that the language "warrant of attachment" appearing in proposed section 11 (a) (1) contemplates a valid perfected attachment and one which would constitute a lien of substantially the same character as that conferred by a judgment. In order to resolve any doubt as to the meaning of the quoted words, it is suggested that the words "attachment lien" be substituted for the words "warrant of attachment" appearing on page 4, line 2 of the resolution. On page 4, line 5 of the resolution, it is suggested that the word "who" should read "which" and that on page 6, line 13, the word "governments" should read "government." Except as noted above, the Department of Justice finds no objection to the enactment of this resolution. Sincerely, A. DEVITT VANECH, Deputy Attorney General. |