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U.S. Supreme Court

United States v. Chemical Foundation, Inc., 272 U.S. 1 (1926)

United States v. Chemical Foundation, Inc.

No. 127

Argued December 9, 10, 11, 1925

Decided October 11, 1926

272 U.S. 1


1. A decree of the circuit court of appeals, entered prior to the taking effect of the Jurisdictional Act of February 13, 1925, and affirming dismissal on the merits of a bill by the United States to set aside, as unauthorized and fraudulently procured, sales of patent and other rights and properties seized pursuant to the Trading with the Enemy Act was reviewable by this Court on appeal (Jud.Code §§ 128, 241). Certiorari denied. P. 272 U. S. 5.

2. The purpose of the Trading with the Enemy Act was not only to weaken enemy countries by depriving their supporters of their properties, but also to promote production in the United States of things useful for the effective prosecution of the war. P. 272 U. S. 9.

3. The Act should be construed liberally to effect its purposes. P. 272 U. S. 10.

4. Congress has power to authorize seizure, and use or appropriation, of enemy properties without compensation to their owners. P. 272 U. S. 11.

5. Where German properties were seized and sold under the Trading with the Enemy Act, the Act (including its provision that, after war, enemy claims shall be settled as Congress shall direct) gave the former owners no rights in, or to question the adequacy of, the proceeds of sale. Moreover, the Treaty of Berlin prevents the enforcement of any claim by Germany or its nationals against the United States or its nationals on account of such seizures and sales. P. 272 U. S. 11.

6. The Act, as amended, (§ 12), vested the Alien Property Custodian with the powers of a "common law trustee" over all chanrobles.com-red

Page 272 U. S. 2

property other than money taken over by him, with power, under the President, to make any disposition of it "by sale or otherwise" and to exercise any appurtenant rights or powers "in like manner as though he were the absolute owner." A proviso regulated sales, requiring, inter alia, that they be public, to the highest bidder" unless the President, stating the reasons therefor, in the public interest shall otherwise determine."


(1) That a disposition of enemy patents, made at private sale to a corporation organized for the purposes of taking over and holding them as a trustee for American industries affected, of eliminating hostile alien interests and advancing chemical and allied industries in the United States through licenses under the patents free to the United States and upon equal terms to others, was within the authority granted by the Act to the President and the Custodian. P. 272 U. S. 9.

(2) That empowering the President thus to determine the terms of sale of enemy properties in the light of conditions arising in the progress of the War was not an unconstitutional delegation of legislative power. P. 272 U. S. 12.

7. Under § 5a, providing that the President may exercise any power conferred on him by the Act "through such officer or officers as he shall direct," the power to determine how enemy property should be sold could be delegated, and this also is constitutional. P. 272 U. S. 13.

8. An order of the President under § 5a is not invalid because it purports to "vest" the power in another, instead of "to act through" him, nor because of its failure to show that he was an officer, when he was in fact such, appointed by the President and confirmed by the Senate. P. 272 U. S. 13.

9. Orders made by the President's delegate describing enemy patents which had been seized by the Alien Property Custodian, and authorizing private sale thereof to the defendant "Foundation," held valid exercise of the President's power under § 12 of the Act. P. 272 U. S. 14.

10. Evidence claimed to show that such orders were induced by misrepresentation and made without knowledge of material facts, will not be reexamined in face of concurrent findings of two courts below to the contrary. P. 272 U. S. 14.

11. Such orders are supported by the presumption of official regularity, and the validity of reasons stated therein, or the basis of fact on which they rest, will not be reviewed by the courts. P. 272 U. S. 14. chanrobles.com-red

Page 272 U. S. 3

12. Order of the President held to have ratified and confirmed sales and transfers of patents made by the Alien Property Custodian. P. 272 U. S. 15.

13. In making such an order, the President is presumed to have known and acted in the light of the material facts. P. 272 U. S. 16.

14. Section 41 of the Criminal Code lays down a general rule for the protection of the United States in transactions between it and corporations to prevent its action from being influenced by anyone interested adversely to it. It is a penal statute, and is not to be extended to cases not clearly within its terms or to those exceptional to its spirit and purpose. P. 272 U. S. 18.

15. Section 41 of the Criminal Code is inapplicable to affect the validity of transactions carried out under authority conferred on the President by the Trading with the Enemy Act, whereby enemy patents were transferred, for prices less than their commercial value, from the Alien Property Custodian to the " Chemical Foundation," a corporation created as an instrumentality to receive and subsequently control the patents in the public interest, the Custodian being the president of the company and others representing the government being also representatives of the corporation, but none of them interested in it financially. P. 272 U. S. 17.

16. In such case, the rule forbidding sale of trust property by the fiduciary to himself or to a corporation of which he is the head does not apply. P. 272 U. S. 20.

17. In absence of statutory authority, stenographers' fees and expense of printing transcripts cannot be adjudged against the United States. P. 272 U. S. 20.

18. This immunity from costs is a sovereign prerogative which cannot be waived by the Attorney General or other government counsel in the case. P. 21.

19. Equity Rule 50 does not attempt to allow taxation of stenographers' fees against the United States. P. 272 U. S. 20.

5 F.2d 191 modified and affirmed.

Appeal from a decree of the circuit court of appeals which affirmed a decree of the district court (294 F.3d 0) dismissing the bill, on final hearing, in a suit brought by the United States to set aside transactions whereby patents, copyrights, etc., which had been seized as enemy property, were transferred to the defendant corporation by the Alien Property Custodian, chanrobles.com-red

Page 272 U. S. 4

acting, by direction of the President, under authority conferred by the Trading with the Enemy Act.


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