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District Court of Appeal, Second District, Division 4, California.

IN RE: the ESTATE of Frieda HOGEMANN, Deceased. Robert F. KENNEDY, Attorney General, Appellant, v. UNITED CALIFORNIA BANK et al., Petitioners and Respondents.

Civ. 28158.

Decided: November 16, 1964

John W. Douglas, Asst. Atty. Gen., Francis C. Whelan, U. S. Atty., and Sherman L. Cohn and Pauline B. Heller, Attys., Dept. of justice, for appellant. Powers, Himrod & Pepys and Eric C. Pepys, Los Angeles, for petitioners and respondents.

This case involves an appeal filed by the Attorney General of the United States from portions of an order issued by the Superior Court for Los Angeles County on September 4, 1963, upon the second and final account and report of United California Bank, as Administrator C.T.A., and petition for distribution and for allowance of commissions and fees. The appeal relates to that portion of the court's order which divested the interests which the United States had acquired in the above estate by virtue of Vesting Order No. 16217, as amended.

Decedent, Frieda Hogemann, a resident national of Germany, died testate on or about May 13, 1942, leaving property in the State of California. Her will provided that 5/8ths of her residuary estate should go in equal shares to the children of Amalie Suhr (nee Hogemann) and to their issue per stirpes and the remaining 3/8ths in equal shares (1/8th each) to the two daughters of decedent's sister (Mrs. Meyer) and to the daughter of decedent's brother (Fritz Klamp) and to their issue per stirpes.

Letters of administration were issued and administration of the estate proceeded. On December 6, 1950, the Attorney General, acting pursuant to the powers conferred on him by the Trading with the Enemy Act (50 U.S.C.App. § 1 et seq.), and the various Executive Orders issued thereunder, executed Vesting Order No. 16217, vesting in him, under that act, the interests of six legatees, amounting to 19/24ths of the estate. On September 28, 1960, the administrator filed its first and final account and report, together with a petition for distribution, seeking the distribution of 5/24ths of the distributable estate to three legatees not involved in the Vesting Order, and the remaining 19/24ths to the United States pursuant to the Vesting Order. On October 27, 1960, the court made and entered an order which (treating the accounting as a current rather than a final account), approved the account and ordered distribution of the 5/24ths of the estate not involved in the Vesting Order but, because the German nationals affected by that order sought additional time to investigate its validity, withheld distribution of the 19/24ths of the estate herein involved. That order recited that

‘except for a determination of the rights, if any, of the legatees named in the Will of said decedent whose interests have been affected by said vesting order issued by the Attorney General of the United States, said estate is otherwise in a condition to be closed.’

On October 31, 1962, the administrator filed its second and final account and report and petition for distribution, again asking that the estate (after certain minor disbursements) be distributed to the United States pursuant to the Vesting Order. On September 4, 1963, the court made and entered the order herein appealed from, which order, purportedly pursuant to Public Law 87–846, 76 Stat. 1107, 50 U.S.C. App. § 41, decreed that the interests of the United States in the estate were divested by reason of the act cited. The matter of final distribution was put off calendar and, so far as appears of record before us, no order for the distribution of the portion of the estate herein involved has yet been made. The Attorney General, on behalf of the United States, has appealed from the order decreeing divestment of the interest of the United States.

The statute herein involved, enacted in October, 1962, reads as follows:

‘Pub.L. 87–846, 76 Stat. 1115, U.S.C.App. 41

Ԥ 41. Divestment of estates, trusts, insurance policies, annuities, remainders, pensions, workmen's compensation and veternans' benefits; exceptions; notice of divestment

‘(a) Subject to the provisions of subsection (b) hereof [of this section], all rights and interests of individuals in estates, trusts, insurance policies, annuities, remainders, pensions, workmen's compensation and veterans' benefits vested under this Act [sections 1–6, 7–39 and 41–44 of this Appendix] after December 17, 1941, which have not become payable or deliverable to or have not vested in possession in the Attorney General prior to December 31, 1961, are divested: Provided, That the provisions of this section shall not affect the right of the Attorney General to retain all such property rights and interests and to collect all income which is payable to or vested in possession in him prior to December 31, 1961.

‘(b) Nothing contained in this section shall divest or require the divestment of any portion of any such interest the beneficial owner of which is a natural person who has been convicted personally and by name by a court of competent jurisdiction of murder, ill treatment, or deportation for slave labor of prisoners of war, political opponents, hostages, or civilian population in occupied territories, or of murder or ill treatment of military or naval persons, or of plunder or wanton destruction without justified military necessity.

‘(c) At the earliest practicable time after the effective date of this Act, the Attorney General shal transmit to the lawful owner or custodian of any interest divested by this section written notice of such divestment.’

The Attorney General as appellant makes two basic contentions. First, he alleges that the court below lacked the jurisdiction to order the divestment of the interests acquired by appellant under the Trading With the Enemy Act. Second, he alleges that the provisions of Public Law 87–846 providing for divesting of certain interests in estates, ‘which have not become payable or deliverable to or have not vested in possession in the Attorney General prior to December 31, 1961’ did not authorize divestment in this case since those interests actually were payable to or deliverable to or vested in the possession of the Attorney General prior to December 31, 1961. Neither of these contentions, nor two other minor contentions hereinafter discussed, are valid.


The appellant maintains that the provisions of section 7(c) of the Trading With the Enemy Act leaves the matter of divestment wholly within the discretion of the Attorney General. That section provides:

‘The sole relief and remedy of any person having any claim to any money or other property heretofore or hereafter conveyed, transferred, assigned, delivered, or paid over to the Alien Property Custodian, or required so to be, or seized by him shall be that provided by the terms of this Act.’

Because of the omission of provisions for a judicial remedy in connection with divestment, and because of the provisions of section 7(c), appellant maintains that Congress intended to leave the matter of divestment wholly within the discretion of the Attorney General.

Appellant cites the case of Schilling v. Rogers (1960) 363 U.S. 666, 80 S.Ct. 1288, 4 L.Ed.2d 1478, as his authority. That case, however, is clearly not in point with the question before this court. It dealt with the interpretation of section 32(a) of the Trading With the Enemy Act, which section authorized the return in certain circumstances of property vested by the United States during World War II. Under that provision:

‘The President, or such officer or agency as he may designate, may return any property or interest vested in or transferred to the Alien Property Custodian * * *.’ [Emphasis added.]

The use of the subjunctive mood in section 32(a) evidences a probable intent on the part of Congress to grant the executive officer the discretion to decide whether or not property vested by the United States would be returned to the former owners.

No such discretion was granted the Attorney General by the Congress in section 41(a), which covers the facts of the present case. That section provides:

‘* * * all rights and interests of individuals in estates, trusts, insurance policies, annuities, remaninders, pensions, workmen's compensation and veterans' benefits vested under this Act * * * after December 17, 1941, which have not become payable or deliverable to or have not vested in possession in the Attorney General prior to December 31, 1961, are divested * * *’. [Emphasis added.]

It is clear that the Congress intended divesting the interest of the United States free and clear of any discretionary determination by the Attorney General. Had Congress desired to do otherwise, it could have easily employed the subjunctive mood in drafting the section as it had done in section 32(a).

Furthermore, section 32 sets out various determinations which the executive officer must make before the claimant is eligible to receive the property. Under section 41, the Attorney General is not required to make any such determinations concerning the eligibility of the claimants to receive the property before such property will be divested.

Lastly, the fact situation of Schilling v. Rogers, supra (1960) 363 U.S. 666, 80 S.Ct. 1288, 4 L.Ed.2d 1478, differs from that in the present case in that it involved a court order compelling the Attorney General to return the proceeds of certain property to the claimant whereas the presnet case involves a court order divesting the Attorney General of his interest in property not in his possession but rather in the custody of the court below. In other words, the order herein under review does not direct or require any act to be done by the Attorney General and, thus, involves none of the problems otherwise inherent in an attempt by a state court to control the officers of another sovereign; the order merely directs the court's own officer—the administrator—not to do an act, namely distribution to the Attorney General.


Next, the Attorney General contends that certain prerequisites to divestment have not been met.

He argues that, under section 41(b), there must be a prior finding that the German claimants have not been convicted of a war crime. However, as a reading of the statute discloses, the non-divestment of claims of war criminals is stated as an exception to the general over-all divestment created by subsection (a) of the statute, and not as a condition precedent. The burden of pleading and proving an exception is on the party seeking to rely thereon. Further, except in extraordinary cases, a party is not required to assume the burden of proof of a negative. Since the Attorney General made no attempt to plead or prove that any of the German nationals herein involved had, in fact, been convicted of any crime referred to in section 41(b), no issue was presented to the trial court and no finding was required or appropriate.

Appellant cites N. V. Handelsbureau La Mola v. Kennedy (1962) 112 U.S.App.D.C. 92, 299 F.2d 923. But that case merely points up the doctrine just stated. Handelsbureau involved an interpretation of section 9(a) of the Trading With the Enemy Act, a section which provided that a suit could not be brought under that section unless the claimant was ‘not an enemy or ally of an enemy.’ In other words, the statute there, unlike section 41(b), made the claimant's innocent status a condition precedent and not an exception. Reliance on that case here is misplaced.

Secondly, the Attorney General argues that, under section 41(c), a notice of divestment must be sent by him before the divestment is effective. But a reading of the statute effectively rebuts this contention. As we have pointed out above, no discretion as to divestment is granted to the Attorney General. Nor does the operative section (section 41(a)) require any act to be done by him, or any finding to be made by him. The congressional language (above quoted) is that the interests covered ‘are divested’—in other words, the divestment is immediate and by the Act of Congress itself, not by any administrative act thereafter to be taken.

The function of the notice provided for by section 41(c) is not that of creating the divestment—a result already accomplished by the statute—but rather of clearing the records of sundry debtors on whom the earlier vesting orders had been served. But a debtor need not wait for the notice and may, if it desires, proceed without it, if satisfied that the fund involved was, in fact, divested by the statute.


Appellant next contends that the property in question was payable or deliverable to or vested in possession of the Attorney General so as to preclude the operation of the divesting statute. However, under California law, money or property of an estate is not payable nor deliverable to, nor does it vest in possession in, the heirs or legatees until an order of preliminary or final distribution has beem made.

In the case of Trippet v. State (1906) 149 Cal. 521, 529, 86 P. 1084, 1087, 8 L.R.A.,N.S., 1210, the court stated:

‘It is the settled law of this state that upon the death of an owner of property, intestate, his estate at once descends to and vests in his heirs, subject to the possession of the administrator for all purposes of administration. [Citations.] But the heir must await the completion of administration and the determination of his heirship by the decree of administration before he can enter upon the enjoyment and possession of his vested right.’

At the time of distribution, the court must determine the persons to whom distribution is to be made and the portions or parts to which each is entitled. Estate of Buckhantz (1958) 159 Cal.App.2d 635, 324 P.2d 317. As pointed out above, the probate court has not yet made any decree of distribution determining whether are entitled all of the German beneficiaries are entitled to take under the will or the extent to which they are each entitled to take. Until such decree of distribution is made, it cannot be said that the legacy or property is payable to or distributable to or vested in the possession of anyone. When, and if, such an order of distribution ultimately is made, it necessarily will be after December 31, 1961, the last date on which the Attorney General must have been entitled to payment or delivery or on which the interests herein involved have vested in his possession.

The Attorney General refers us to a letter, written by then Deputy Attorney General White to the Senator in charge of the bill which ultimately became Public Law 87–846, suggesting the use of the language herein in question. But we find the letter, if anything, persuasive in favor of the order under review. The bill as originally introduced would have divested assets due but not yet collected; the Attorney General's suggestion made the fact of receipt, or right to receipt, the determinative date, but it did not discuss the issue now before us.

In addition, we are cited two California cases: Estate of Easter (1944) 24 Cal.2d 191, 148 P.2d 601; and Estate of Haney (1959) 174 Cal.App.2d 1, 9, 344 P.2d 16. However, these cases also are in favor of the order of the court below. Both opinions (we are especially referred to Mr. Justice Traynor's dissent in Easter) recognize the well established distinction between ‘vesting in interest’ and ‘vesting in possession.’ It was the latter language which the statute, incorporating the suggestion of the then Attorney General, used; but it is the former connotation which the present Attorney General would have us substitute in its place. The gifts to the German donees, in this case, did ‘vest in interest’ on the death of the testator; they will not vest in possession until a decree of distribution is hereafter made and entered.

Appellant contends, however, that a decree of distribution would have been entered by the superior court had respondents not unduly caused delay by requesting additional time to investigate the validity of the Vesting Order, against which order there then was no legitimate basis for attack. Appellant alleges that respondents were engaging solely in dilatory maneuvers. Even if this is the case, appellant's argument is no grounds for reversing the order of divestment. In the case of Berry v. Eyraud (1901) 134 Cal. 82, 83, 66 P. 74, 75, the court stated:

‘No doubt, as contended by appellants, the administrator has the right of possession and control as against the heirs during the administration, and I agree with appellants that it cannot be shown that this right to possession has been lost because the purposes of administration have been accomplished, and the estate is ready for distribution. Ordinarily, under such circumstances, the right of the heir is to force a settlement and distribution. But he cannot oust the administrator from the possession upon the ground that he unduly delays to close the administration.’

Since an heir cannot sue the personal representative for possession of the property before the estate is settled or a decree of distribution entered, then, perforce, until the latter events occur, the property in this case was neither ‘payable’ nor ‘deliverable to’ nor ‘vested in possession’ of any of the heirs nor of the Attorney General who claims under them, prior to December 31, 1961, the effective date of the divesting statute.

We concur with the trial judge in his order divesting the Attorney General of his interest in the property pursuant to Public Law 87–846.

The portions of the order appealed from are affirmed.

KINGSLEY, Justice.

BURKE, P. J., and JEFFERSON, J., concur. Hearing granted; BURKE, J., not participating.

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