Societe Internationale pour Participations Industrielles et Commerciales, S. A. v. Rogers

PETITIONER:Societe Internationale pour Participations Industrielles et Commerciales, S. A.
LOCATION:Wolverine Tube, Inc.

DECIDED BY: Warren Court (1957-1958)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 357 US 197 (1958)
ARGUED: May 01, 1958
DECIDED: Jun 16, 1958

Facts of the case


Audio Transcription for Oral Argument – May 01, 1958 in Societe Internationale pour Participations Industrielles et Commerciales, S. A. v. Rogers

Earl Warren:

— United States.

Mr. Wilson.

John J. Wilson:

Mr. Chief Justice, may it please the Court.

The complaint in this case was dismissed with prejudice by the District Court at the pre-trial stage, the failure to comply with the discovery order in a situation in which due to no cause in the part of the petitioner, the petitioner was unable to comply with the order.

I should like to discuss a few of the procedural facts first before I come to the principles of law which I think are controlling here.

This petitioner is a Swiss Holding Corporation which filed suit in 1948 under the Trading with the Enemy Act to recover most of the stock of General Aniline & Film Corporation, an American Company.

The respondents filed answers in which they alleged that the petitioner was “enemy tainted” and did not own the property.

The requirements being that the petitioner was holding the property as “for IG Farben of Germany”.

Shortly after the complaint was instituted, cross motions were filed for discovery.

And the Court — the District Court required the custodian to disclose to the petitioner a quantity of some 23,000 relevant documents in its — his possession.

At the same time, the respondents had moved not only for the discovery of the petitioner’s own records and those of a wholly owned subsidiary but the records of a private Swiss bank known as Sturzenegger & Company in Basel, Switzerland with which the petitioner had close business relations.

It was the position of the petitioner that its records were relevant.

It made no resistance to the motion for the production of its own records.

It resisted vigorously the request that it produced the records of the Swiss bank upon the ground that it did not have possession, custody or control of those records as required by Rule 34 of the Federal Rules of Civil Procedure.

We also raised the point with the Court invoking the exercise of a benign discretion that due to the banking secrecy laws of Switzerland, it would be difficult if not impossible even should the bank voluntarily produce — would be willing to give up the records for us to obtain them for inspection.

We also resisted the imposition of this discovery order as far as the Sturzenegger Bank was concerned upon the ground of an inadequate designation of the records.

And so it happens that this element of control, which we say was never properly resolved against us and the proper designation of the records to be produce are basic difficulties here that appointed us throughout in this whole case.

Judge Laws heard arguments in our position to the production of the Sturzenegger records.

Now, Sturzenegger who was the managing partner of this private Swiss bank is one of the principal directors of the petitioner.Now, I think that had a great influence with the district judge in imposing upon the petitioner a requirement that it produce not only its own records but the records of this private Swiss bank.

Now, prior to the institution of our suit, an agency of the Swiss government known as the Swiss Compensation Office had made an investigation into the national character of both Sturzenegger and the petitioner and several reports were issued in which it was determined that these companies were Swiss in character.

The principal reason I believe why the respondents urge the Court to include in its discovery order against us, the requirement that we produce, the records of the private Swiss bank partnership, was because this business relationship which the petitioner had with the Swiss bank was not only that of having the Swiss bank as its house bank but it also had a participation in the partnership of this bank.

Now, the bank was a — had two partners and the participation of the petitioner in this case, not the Sturzenegger.

It was the unlimited partner, the general managing partner was a small Swiss Franc investment.

A corporation known as “Industry Bank,” which was not a bank but a Swiss corporation, was a limited partner with a large Swiss Franc investment.

And the petitioner in this case had what is known as a “sleeping participation,” a thing which is unknown to Anglo-Saxon law but has its roots perhaps in German law.

And we have maintained throughout that it is more akin to that of an investment than it is to a sound partner or any kind of a partner.

Now fortunately for us, we did not have to rely upon oral testimony as to the terms of the so-called partnership agreements.There were successively three or four, they have been before the Court, they had written out great detail.

No one has suggestion — suggested that they are any wise not genuine.

And those agreements spell out this very limited participation of the petitioner, practically no say in the management, a veto on certain kinds of unusual loans.

And upon the point of the ability to see the books and records of the partnership, a very unusual provision exists and that is it provides that the delegates of the respective participants, Industry Bank, the limited partner on the one hand, the petitioner with the participation on the other.

John J. Wilson:

Their delegates could examine the books and records of the partnership but they had to keep secret in which they saw.

Now, a very unusual provision to the point of view of Anglo-Saxon law but one which my implication spells out something of very great importance to us, namely, that the petitioner had no control over the books and records of the bank.

And thus, it was unable to produce them by contract or by law or by any other arrangement in Switzerland.

Despite our resistance of this imposition of this order upon us for discovery, we were ordered in 1949 to produce our own records and those records and the records of the Sturzenegger Bank.We made our examination of the Government’s records first.

The deposition of Dr. Sturzenegger which had been in progress prior to that time was resumed and completed to the extent of over 6000 pages of testimony.

We are now reaching the summer of 1950.

At this time, the gentlemen from the Department of Justice are proceeding to Switzerland for the purpose of making inspection which the Court directed.

Before they arrive there about the 15th of June 1950, the Swiss Federal Attorney who is the second man in command of the Justice Department of Switzerland, issued a confiscation order based upon what’s called Preventive Police Power in Switzerland and referring to the Bank Secrecy laws and the Economic Espionage laws of Switzerland and expressly seizing and confiscating all the records of the Swiss bank to prevent their disclosure to the Attorney General of the United States in this case.

Now, respondent’s counsel examined the records of the petitioner.Now, there is some contest as to whether they saw all of them but that’s not in dispute in this proceeding.

In the fall of 1950, a motion to dismiss was filed on the ground that we had not complied with the order for discovery.

And in the hearing before the District Court at that time, the district — the issue was raised as to whether the petitioner in this case had denied and conspired with the Government of Switzerland for the purpose of procuring this seizure order.

It was also argued that this was an illegal order.

It was also argued that the petitioner had done little or nothing to be relieved of the order.

Charles E. Whittaker:


John J. Wilson:

It was a constructive seizure only, Mr. Justice Whittaker.

But I think that the parties in this case have clearly dealt with the proposition as if it were an actual physical seizure.I think that this Court should regard it as the equivalent of an actual physical seizure.

Justice Laws — Judge Laws referred this matter to a special Master to take testimony but then ensued a very long proceeding in the cause of which it was found that there was oddly no evidence of any conspiracy between the Swiss Government and the petitioner in this case.

It was found that the seizure was valid under the Preventive Police Power of Switzerland.

It was found that the petitioner in this case had done everything which he could be expected to do to try and have them relieved of the order.

And on the basis of that report, the petitioner moved for its ratification.

The respondents came in and filed exceptions but renewed their motion to dismiss upon the ground that even if it were found that the petitioner were in entire good faith that our inability to produce these records had disrupted the established procedures which were in effect that when a litigant comes into court, it should be prepared to make full disclosure.

And despite our complete inability and our innocence in the situation, the suit should be dismissed.

In February of 1953, Judge Laws wrote an opinion in which he had adopted that philosophy.

He announced however that this was a novel doctrine and that he would give the petitioner an opportunity to try to get the records.

And so he extended the time for approximately three months.

In the meantime, certain petitions have been filed with the Swiss Federal authorities in an effort to try to pry these records loose.

And it began to develop that if we could obtain the waivers and consents from the bank customers who in Swiss — one of the owners of the banking secret.

Under the supervision of the federal government, these records might be released or some of them might be released.

So we pursued that course for several months in 1953 and we’re able to ship over here some 63,000 records within — sought more time because this is a very tedious process.

And it began to develop but not only did we need the primary records of the custom of the bank — primary consents of the custom of the bank.

John J. Wilson:

But if to payee of the check was involved, we call that a “secondary waiver.”

We needed his waiver and his will.

So in the fall of 1953, on one of our motions to extend the time ought to be relieved upon — of the order upon the basis of substantial compliance, the Court asked whether we could give any assurance as to whether we could then get full compliance.

I told the district judge that I could not give him that assurance but that I’d never given up hope and that was the opportunity to continue.

Strangely enough and this is a paradox in a case which is full of paradoxes that the district judge said I think from this situation in Switzerland where you lack control that you will never be able to get these records.

So we might as well save you this frustrating effort which you have been making for years and we have just dismissed the case finally.

Now, mind you if the Court please.

The paradox that I referred to is this element of control which Judge Laws had find — found only prima facie to exist when he issued the order in July of 1949 and which he had defined in order to support the legality of the discovery order under Rule 34.

He found later on that the absence of that control was the reason why we couldn’t produce and why we should be dismissed.

Now, as a result of that, we took an appeal to the Court of Appeals and the case was argued and submitted and decided in June of 1955.

It was affirmed in its entirety with the modification allowing us six months from the time that the mandate came down in which we tried to get the records.

Now, we intended to apply for certiorari and we stayed the mandate and did apply to this Court for certiorari.Certiorari was denied in January of 1956.

The six months began to run on the 24th of January 1956 and so we began again previously to — by this waiver and consent method to get records.

And by June of 1956, we had produced in this country and tendered for inspection almost 200,000 banking records of the Sturzenegger Bank.

Now, I said earlier and I don’t want to take too much time on it, our brief is clear on it, that the Court’s designation was unclear.

There was no designation of all the records of the bank.

There was a designation based upon certain language in the Swiss compensation and all the reports.

There’s a great controversy about how many records we had to produce.

There’d be a great controversy as to when we had made full production.I

can’t assure this Court for 200,000 of the full production but I don’t have to use any argument to submit that 200,000 are substantial compliance for the discovery order.

Charles E. Whittaker:


John J. Wilson:

Yes, indeed.

Time and time again, sir.

Time and time again.

Now, we came in —

William J. Brennan, Jr.:

And what did those — what did those records consist?

Two hundred thousand what?

John J. Wilson:

Banking records, correspondents, debit and credit tickets.

William J. Brennan, Jr.:

That 200,000 individual slips, is that it or —

John J. Wilson:

Two hundred thousand — 200,000 separate pieces of paper or if a — if a document consisted of three papers, sheets, that would have only one number.

John J. Wilson:

Now, we —


John J. Wilson:

We had conceded more or less at the beginning that all the documents were relevant.

Now, it would turn out that all the documents were not relevant.

There was no sympathy upon the death of somebody, things like that in the file.

There’d be paid gas bills or electric bills.

But nevertheless, on the whole it was or less conceded that the — all the records of the Sturzenegger Bank called for by this discovery order.Now mind you that doesn’t mean all the records.

All the records called for were virtually relevant.

William J. Brennan, Jr.:

Well, is there any estimate of what the number of the documents would be that are relevant —

John J. Wilson:

No, sir.

There is no estimate.

And we have no access to the Swiss Bank’s records except as — as we may get them through these consents and waivers.

William J. Brennan, Jr.:

Well now was the release — were these 200,000 released with some consent of the Swiss authorities?

John J. Wilson:

Oh, yes.

It’s under the supervision of the Swiss authorities.

The bank had to keep photostatic copies.

The originals were sent to the United States.

We have them in our office.

William J. Brennan, Jr.:

But the decision what should be released was made by the Swiss authority?

John J. Wilson:

Yes, but largely based without question upon the waivers and consents of the customers.

There weren’t many —

William J. Brennan, Jr.:

That is to say a customer would waive and consent and then his records would be released to —

John J. Wilson:

Yes, yes.

William J. Brennan, Jr.:

And are there large numbers of customers?

John J. Wilson:

No, sir.

This private Swiss bank had a small number of customers and that’s one way that we began to solicit these waivers.

My opponent suggested a list of a 124 names which they said — they dare said represented the totality of all the customers.

So we started to solicit with those 124 names.

William J. Brennan, Jr.:

But can you say if how many customers are involved in the record released?

John J. Wilson:

I should say that it’s close to 125 or 150.

John J. Wilson:

Now, each time that we produce records we file an affidavit giving the names of the customers involved in the document.

They’re in the record in this case.

I didn’t help them but I’m sure that’s over 100.

Where is the production order printed?

John J. Wilson:

The production order is printed sir in the — in the first volume at 339.

Now, when we went in — or I should say that here he work — sir?


John J. Wilson:

Of course that’s always the practical inquiry.

My opponents argue that quantity is not important.

It’s quality.

And my answer to that is take a look at what we’ve given you, what we’ve offered you.

You see my opponents have never looked at these pages.

They have stood by with the assurance of the District Court that with this quantity of papers was now — it’s about a quarter of a million but they do not have to look at these records until every jot and tittle is produced.

Now, let me say that the question of production, substantial production is a secondary question in this case.

The constitutional question is by far, I submit, a more important question.

But I wanted to give you these factual details in order that you may understand what’s coming in the way of this constitutional argument.

William J. Brennan, Jr.:

Did you say Mr. Wilson that the Government had given you a list of 124 names —

John J. Wilson:

Yes, sir.

William J. Brennan, Jr.:

— whose records they thought were desired?

John J. Wilson:

They used the phrase, “We dare say that these names represent the totality.”

William J. Brennan, Jr.:

But I think you said that you produce the records to some 125 or more people.

John J. Wilson:

No, I would say, I’m guessing Mr. Justice Brennan but I think if we count it, it would be over 125 because we ran in the secondary waivers.

William J. Brennan, Jr.:

Well, how many of that 125 are the names of persons on the Government’s list of 124?

John J. Wilson:

Most of them, probably not every one of them but most of them.

William J. Brennan, Jr.:

What can you say how many of the Government’s list of 124 you did not produce?

John J. Wilson:

I should say a dozen maybe but that’s a guess, but I’m not too far off.

I don’t think.

Charles E. Whittaker:


John J. Wilson:

I would not like to assure Your Honor that we did, no.

I would think if I had to guess that we came might even close in the case of some instances of all —

Charles E. Whittaker:


John J. Wilson:

I don’t know.

Because you see, when we run into these secondary waivers and we weren’t sure that the waiver of Farben for example would release all of Farben’s records.

We think that it did 98% of it but there might be a few left there.

I do not wish to represent to this Court that we made a total production.

But I do want to represent to this Court that we made a very substantial production and that until these records are examined, we should not be kept in this position of dismissal until it is determined how serious, if it all, the omissions are.

Now, we have a plan if you please for the production of the balance.

In June, when we began to see that the six months were lapsing, we moved for more time, we reported this production.

By this time, we’ve had our Swiss associates who had certain contacts with the Swiss government and a plan was evolved whereby the Swiss government propose that a neutral investigator selected with the approval of the American court, the Swiss authorities, the Department of Justice and ourselves would go into the Sturzenegger Bank, see the balance of the records that are relevant, seek waivers of those people and in cases where they did not succeed then we might proceed by letters rogatory which would have the effect of invoking judicial assistance in the Swiss courts.

Now interestingly enough, the courts of the different cantons of Switzerland vary on this point but the Court of Basel where the Swiss Bank was located, would permit the invasion of banking secrecy in a court proceeding.

And so the scheme or plan which was proposed was one which would get us into the judicial stream in Switzerland by letters rogatory.

And thus, we hoped produce the remainder of the relevant Sturzenegger documents.

That plan was rejected by Judge Laws.

It was affirmed by the Court of Appeals and it was from the judgment of affirmance that we came to this Court.

Now by this time, we had produced as I say a quarter of a million papers.

The Government had made other elaborate discoveries.

They had taken Dr. Sturzenegger’s deposition as I said or 6000 pages.

They had made discoveries of their own.

We made a tender to the Department of Justice of these records remove the judge to hold a hearing to determine if these were not substantial compliance.

He summarily disposed of the matter by not granting our motions.

Now, the Sturzenegger books are very much in the minds of the Department of Justice.

And there were 110 Sturzenegger books involved which were never brought over but which we tendered to them to the extent that the waivers and consents permitted inspection.

So on about the 3rd of August of 1956, we made a tender of these records and of the Sturzenegger books to the extent available.And we asked Judge Laws to determine that this was substantial compliance, as I say, he refused to do it.

He maintained the same attitude that he did before as did the gentleman from the department that it wasn’t necessary for them to look at one paper until they could be assured of all of it.

Now, that’s my factual basis which I think will be adequate for my presentation of — of certain law points.

When the Court granted certiorari in this case, in its order it asks us to discuss amongst other things, the power of the Court — to dismiss and the propriety of the dismissal under Rule 37 for failure to obey in the absence of evidence and the finding of refusal to obey.

Now, we find the gradual thought with the basic findings in this case.

Time will not permit me to discuss those but we have set forth in our brief and in the appendix to our brief why we think Judge Laws made inadequate findings and no findings at all on the original order of discovery.

But if there is one thing about which there is no dispute in this case, it is that we had no power to produce these records.

Hugo L. Black:

Where did that show in the record presented for that dispute (Inaudible)?

John J. Wilson:

Well, from the composite of everything that’s said, Mr. Justice Black, I say without much fear of contradiction that the position of the respondent is that we did not have the physical capacity to produce these records after the seizure order if you understand.

Charles E. Whittaker:


John J. Wilson:


Now, there are three — there are three points of control in this case.

We attack control at the original level, the factual control, the lack of contractual control.

We also raised the question of lack of control as a result of the seizure by the Swiss Federal Attorney.

That’s the main element of control which I’m arguing today to this Court.

Now in this Special Master’s findings and conclusions, he reported also that the cause of the Swiss secrecy laws which made it necessary that the customers of banks shall consent to the release of banking secrets but there was a third reason why we lack control.

Now, we had no — neither the bank nor ourselves had the power to release those records without the consents of the customers.

Now, let me say at this point, if the Court please, that we are not invoking Swiss secrecy law here as a privilege.

We are well aware of the universal Anglo-Saxon doctrine that the law of the forum will determine the extent of the privilege.

We concede readily that there is no privilege of the United States with respect to banking secrecy.

And we are in no wise invoking banking secrecy as an excuse for production here.

Now, there’s a wide difference between us on that point because the Solicitor General I’m sure will argue to the direct contrary and he will use that as a premise as he does in his brief from which a series of conclusions to the opposite of our position as argued.

So we say that control that that the effect of Swiss secrecy laws here was to establish a fact of lack of control just the same as if these records had been burned or hidden otherwise destroyed.

The Swiss secrecy laws are of only secondary importance in this case.

Their effect is remote.

They created a condition upon these records which made them physically inaccessible to us.

Hugo L. Black:

You mean the lack of control, the lack of ability to produce?

John J. Wilson:

Yes, sir, I certainly do.

Another word Mr. Justice Black that I find (Inaudible) use of power.

They use it and we use it in the — in the Judiciary Act of 1789, possession and power.

And I’d like to think of control in the sense of the power to produce, the ability to produce.

Now, going back to your — the Court’s invitation as to what to discuss, we find that we deal with three elements here, Rule 37 which is the sanction rule for failure to comply in the discovery package of rules.

We find Rule 41 which is the rule for involuntary dismissal itself, the one which keeps the Court operating orderly.

And then we find the question of how much inherent power does the Court have.

Now interestingly enough, the district judge went on all three points.

The Court of Appeals (Inaudible) on the 37 point because the Rule 37 (b) on which he relies uses the words “refuses to obey.”

Judge Laws walked the word refusal into the word failure.

The Court of Appeals could not accept that.

John J. Wilson:

The Court of Appeals found a simple premise to their way of thinking in Rule 41 (b) where the word “failure” appears without the word “willful” or without any connotation of willfulness.

The Court of Appeals also invoked the inherent power of the Court.

My opponents in their brief seemed to have abandoned 41.

They gave lip service to 41.

They have gone back and attempted to support Judge Laws on refusal on this stupid definition that refusal means declination and declination means failure.

Charles E. Whittaker:


John J. Wilson:

I would think that actually Rule 41 is the dismissal rule.

I think 37 provide the ground rules, Mr. Justice Whittaker, for when to impose the sanctions.

I think the machinery for dismissal is in 41 (b).

Now — then all the parties were embracing this nebulous undefined inherent power because willfulness was not written into that and it looked like this was something that was most simply dealt with.

Now, my answer is twofold.

My answer is that whether it’d be under 37, whether it’d be under 41 or whether it’d be under inherent power, there must always be the element of willfulness.

And if the element of will —

William O. Douglas:

I suppose if you stop there (Inaudible), the case such as the end of the Sturzenegger — Sturzenegger?

John J. Wilson:


William O. Douglas:

Dr. Sturzenegger’s refusal that that would be the (Inaudible)

John J. Wilson:

We — we had an affiliation.

And of course the judges found prima facie that we had control over the Sturzenegger plan.

So I think his refusal would have been regarded as our refusal.

William O. Douglas:

Yes, so if he stopped there that would be the end.

John J. Wilson:

That would have been the end of it.

What — as I — as I want to emphasize while we do not abandon our attack on the original discovery order, our main predicate here today is that the seizure order by the Swiss Federal Attorney had deprived us of control.

Now, when Judge Laws made his final order of decision of dismissal, he found conclusively said he that we had control over the Sturzenegger papers but for the seizure order of the Swiss Federal Attorney.

So he recognizes the same predicate upon which I rely here today.

Now, I was saying to the Court that all three of these sources of power are dependent upon willfulness.

If you go back to Rule 41 (b) where this — it says “if you fail to obey an order,” that’s the order under which cases are dismissed for one of prosecution.

But certainly, if a lawyer and his client knows that a case is called — to be called at 10 o’clock tomorrow morning.

On the way to the Court as tomorrow morning, they have to do an automobile accident and they end up in the hospital at 09:50.

And the judge dismisses the case because they’re not there at 10.

It had passed 10 if he’s told that he will vacate the dismissal.

John J. Wilson:

The absence of the word “willfulness” from the word “fail” in Rule 41 (b) is not going to change the inherent moral requirements that there shall be some kind of deliberate action or its equivalent wanting this or something of that sort.

So one cannot flee from 37 to 41 to inherit power and get away from the inherent proposition here that there must be willfulness.

Now, I was interested in an opinion that was rendered by the Eighth Circuit in the case in which they made a quick distinction between two cases which I’m going to discuss.

I’m talking about the Hovey against Elliott case decided by this Court in 167 U.S. and Hammond Packing Company against Arkansas in 212 U.S.

Written 12 years apart by the late Chief Justice White.

In the Hovey case, one of the parties was ordered to pay money over to the other party which was in a semi-custodial allegiance.

The party willfully refused to pay the money over and the Court struck his answer from the case.

And this Court held that that wasn’t unconstitutional deprivation of due process.

This Court said that that was punishment and punishment may not be imposed so as to deprive a litigant of his day in court.

They could have fined Elliott in Hovey against Elliott.

They could have sent him to jail perhaps but they could not strike his answer because that — that deprives him in his day in court.

Now 12 years later in Hammond Packing Company against Arkansas, the question came up of an Arkansas antitrust statute which provided in Section 8 for discovery and which provide in Section 9 for striking the answer of the respondent if he disobeyed the discovery.

Hammond Packing said they thought the law was invalid and they refused to make discovery and the answer was struck and that case came to this Court.

And that case came to this Court on the basis of Hovey against Elliott saying that this was punishment.

This Court said that’s not punishment.

This time we deal with presumptions.

We pass upon the merits in effect of the case.

We do not strike the answer.

The answer was not struck because of punishment.

The Court went on to say that a bona fide effort to comply and inability to comply would exonerate the defendant.

And therefore he had nothing to worry about it and the sanctions of the statute could not be imposed in that kind of a situation.

But if he deliberately refused then what the law does is to raise a presumption that he hasn’t got a good defense, a presumption of the untruthfulness of his defense and in striking the answer under those conditions.

He’s had his day in court.

It’s the same as sustaining a demurrer to an — to a declaration.

It’s the same as sustaining a motion for a directed verdict at the end of the plaintiff’s case.

The presumption which this Court recognized and espoused in Hammond Packing Company against Arkansas was to the effect that a man who willfully disobeys in that situation, it must be because he has it in the defense.

It’s something like flight in a criminal case.

It’s those reasonable inferences that can be drawn.

And the striking of the answer there was held not to be punishment but to be a perfectly valid disposition of that case having met the requirements of due process by having given that defendant his day in court.

Now, that’s our situation.We stand before the bar of this Court completely innocent.

John J. Wilson:

We have been held by the — all the lower courts to be free from guilt in this connection.

It has been determined that we were in good faith, that we were incapable of producing these records and I remind the Court what I said a few moments ago, which is to the effect that when the judge finally dismissed us in this case, he did so because he said, “I might as well bring this thing to an end.”

You can’t produce these records.


John J. Wilson:

I’m coming to that.

That case by the way is cited in the margin in National Union against Arnold with this Court which I wanted to discuss next before I sit down.

I want to save a few moments of my time, Mr. Chief Justice if I may for rebuttal.

The case is Peitzman against City of Illmo, 141 F.2d 956.

It’s cited by this Court in the majority opinion in the — in the National Union case.

Now, the — the Court in that case reached the right result and I’m a little unfair in cutting them off at one sentence.

But I do want to read the one sentence to — to demonstrate my point.

The Court said defendants urge that the order in fact punishes them for a contempt of court but there’s a distinction between striking a pleading as punishment for a contempt of court and striking it for violation of a rule of procedure.

Now, that’s hardly a full disposition of this problem.

It isn’t whether it’s a rule of the procedure which did it.

It’s not whether a statute authorized the striking.

It’s whether the circumstances under which the pleading has struck is such that the party has had his due process, has had his day in court before that occurred.

Now, National Union against Arnold in 254 U.S. written by Mr. Justice Burton as I remember is cited by our opponents for the proposition of the inherent power of the Court.

I welcome the arrival of National Union against Arnold.

I think it speaks more eloquently than I could ever begin to speak in support of the reasons why dismissal was improper in this case.

In National Union against Arnold, a defendant had a verdict against him and a judgment against him for several hundred thousand dollars.

He took an appeal without a supersedeas.

And during the appeal, there was a supplemental proceeding which located certain assets.

He was ordered to turn those assets over to the winning party.

He refused to do so.

The appeal was struck.

And the question came to this Court on the basis of Hovey against Elliot that that was the punishment and the punishment was a deprivation of due process.

Now, this Court — and the Court was divided upon it.

There was a dissenting opinion by Mr. Justice Black and per curiam by Mr. Justice Douglas.

On the main point, once you’ve got over the main point, the other points were easy as they point.

The main point was, is the right of an appeal part of the due process package.And the majority of this Court held that it wasn’t.

John J. Wilson:

So you brushed aside and probably brushed aside Hovey against Elliot as not being of value in that case because due process was not involved.

The man you said had had his day in court but the other facts of the case are equally eloquent.

In the Arnold case, there was willfulness of the grossest character.

In our case, we have no willfulness at all.

In the Arnold case, not only were you satisfied about the day in court but you said, “We do not think that this is the imposition of punishment for a criminal contempt but only a coercive measure to enforce the judgment.”

Now, take those words and try to apply it into the case at bar and not one of them thinks.

The District Court in this case said you can’t comply.

Therefore, dismissal was not for coercive purposes.

It has been the feeling of both courts that we — below that we couldn’t comply.

The result is that you end up very squarely with the imposition of punishment on the Hovey against Elliot.

And that’s what we are suffering here.

We haven’t had our day in court, our day in court on the issue over whether or not this possession of control is not the question I’m arguing.

Our day in court as to whether there was a lawful vesting in this case of this property.

Why the very bottom of the Trading with the Enemy Act, the very basis for the Trading with the Enemy Act is that one who says that he is not an enemy shall have his day in court to litigate the validity of the seizure.

There was no administrative hearing in this case.

There was an ex parte determination that this vesting should take place.

And for 10 years now while we’ve been accused a very kind of effort and delay which I deny in every sense of the word.

I will reply to my very worthy opponents for whom I have great respect.

But 10 years, every effort has been made to deprive the judiciary of an opportunity to look into the merits of this seizure.

Earl Warren:

Mr. Solicitor General.

J. Lee Rankin:

Chief Justice, may it please the Court.

Before going further, I’d like to call the attention of the Court to the fact that the interveners involved in the Kaufman case are expressly not covered by this order that is Judge Laws expressly provided that this order of dismissal would not affect the interveners who are not in custody or control of these records.

Secondly, I think that we need some more facts in order to be able to examine the problems in this case.

We start off with the proposition first that there is no question, there is no debate about the proposition that these concerns were with — were controlled by Germans, by I.G. Farben up to 1940.

There is no issue between us on that.

It’s clear the record is without dispute.

William J. Brennan, Jr.:

You mean by these findings, Mr. Solicitor, both the Petitioner and the Swiss Bank?

J. Lee Rankin:

The — the control in the — is in — is combined as to the Swiss Bank and Chemie, the petitioner, and Sturzenegger.

And Sturzenegger appears over with his predecessor, Greutert, who also was the manager of the bank before he died.

As one of the directors of the petitioner, Chemie, and then there was Gadow, who was the director of the petitioner, Chemie.

J. Lee Rankin:

And Gadow was the brother-in-law of Hermann Schmitz, the Chairman of the Board of I.G. Farben.

And the set up was that Gadow or Sturzenegger and one other signature, either Gadow and Sturzenegger together or Greutert, his predecessor or Sturzenegger and one of his clerks could always bind the petitioner as to any action on behalf of the petitioner.

Now until 1936, this bank which was just a small private bank only had 50 to 100 customers.

And all of these customers, mind you, all of them were I.G. Farben connected.

They were either I.G. Farben or they were connected with I.G. Farben.

So I want you to see the picture here of the interlocking of this private bank that’s used in all of these transactions.

And the petitioner and why these courts in examining this matter over a period of almost 10 years now saw fit to say that you can’t come into court in this country and try out this case without producing all of the records that will show the enemy taint that appears in this picture.


J. Lee Rankin:

No, I got — Mr. Justice Harlan, we got findings that they were not in bad faith in collaborating or acting with the Swiss to hold the papers back.

What I want to point out to the Court and have you understand is that the whole plan of this program, this conspiracy of cloaking that’s involved in this case was to first use this private bank and have the benefit of these secrecy laws and not have to develop or present the records because of these laws.

And they’ve used them for various purposes throughout the history of this transaction.

Now, without —

William O. Douglas:

Are the findings on there, is that your inference?

J. Lee Rankin:

That’s the inference.

Now, without any saying any claim at all — and that — that is decided against us that they persuaded the Swiss to hold these records back under their laws.

That holding is against us.

But nevertheless, there’s no question that what this record is full of showing that the purpose of using this very private bank was to gain the benefit time after time in cloaking activities all over the world of the secrecy laws of the Swiss.

And it is though they put themselves in a deliberate position of using these laws in their business and now claiming that the laws keep them from supplying the facts in this case.

Felix Frankfurter:

Am I to infer from that that there was a forethought on this, there was a design that — there’s an imaginative projection into the future that the time would come when they could get the comfortable protection of the Swiss secrecy laws through the operation of the Swiss secrecy laws upon the bank?

J. Lee Rankin:

It wasn’t only projected in the future.

It was presently done.

They used this bank for what —

Felix Frankfurter:

Perhaps by going to the facts.

When did the relationship between the petitioner and the bank in order in the future when the time comes for this kind of litigation utilize the protection of the secrecy law and invoke against the bank, when did that begin?

J. Lee Rankin:

It started back in 1928 when they became one of the so-called “Sleeping Partners” in this private bank.

Felix Frankfurter:

Well, in the suggestion that 1928 on, there was the forethought on this that it would be profitable one of these days to have a connection with a bank as to which the Swiss government may invoke the clause of secrecy.

J. Lee Rankin:

The fourth — the thought is beyond that that they thought that it would be beneficial at that very moment to conceal from their own government —

Felix Frankfurter:

In 1928?

J. Lee Rankin:

In 1928 for taxation purposes and all kinds of currency transactions.

And the other benefits that they could obtain from having the secrecy laws that they would run their transactions through this private bank rather than their own bank which was owned by these parties too.

J. Lee Rankin:

The House Bank of Farben was even owned 64% by these people.

Felix Frankfurter:

That almost carries the suggestion that the Swiss government was uncooperative with this Government in favor of somebody who tried to evade its own laws.

J. Lee Rankin:

Well, we have the problem Mr. Justice Frankfurter, the fact that these laws obviously are beneficial to banking transactions in Switzerland.

And there isn’t any question about it and the — the Swiss government has a right to have such laws and provide cloaks and secrecy and so forth and various people take advantage of them.

But what I’m trying to get across and indicate here is that if people do their business in that way and for that purpose of secrecy, they shouldn’t be able to come into an American Court and say, “We won’t give you our records so that you can find the facts about this transaction because of these very laws that they wanted to use.”

William J. Brennan, Jr.:

Mr. Solicitor, so I understand that the secrecy of the Swiss law was availed of the high facts from whom, the Swiss government or the German government?

J. Lee Rankin:


William J. Brennan, Jr.:

In 1928?

J. Lee Rankin:

And also from their own stockholders.

They would run —

William J. Brennan, Jr.:

Who are they — who are the “They”?

J. Lee Rankin:

The petitioner.

William J. Brennan, Jr.:

The Petitioner?

J. Lee Rankin:

Yes, the petitioner in the first place until 1936.

The petitioner was in a desk drawer of the private bank and there wasn’t — even though the petitioner was organized in 1929.

It had no existence as far as its affairs were concerned except to be in these private bank drawers and their files were intermingled.

And the Greutert and Sturzenegger, the managers of the private bank would write letters to themselves.

They would write letters to Chemie in which they would write them then they would answer their letters for Chemie and put them in the files.

Felix Frankfurter:

Are — are you saying that the purposes of their own, for their own selfish business, call it what you will, the purposes of their own, these petitioners disabled themselves from carrying out such an order as the order to produce in this case.

That’s in effect what you’re saying.

J. Lee Rankin:

That’s an effect what I’m saying.

Felix Frankfurter:

Now, what I want to know, are there any findings to that effect?

Were there any — any cases in the record on which the Court — this Court can proceed with that as a starting point?

J. Lee Rankin:

Well, there’s no question whether the findings are clear that they have these papers that the Swiss Compensation Office had these very papers for months in which they asked these people, all about them, and examine this whole question that the record shows the fact that they deliberately use this bank for cloaking transactions covering Greece, Romania.

They used it for covering —

Felix Frankfurter:

These places, these petitioners use this bank for cloaking transactions of their own unrelated to this present thing, is that right?

J. Lee Rankin:

Well, it was related also to Farben.

Felix Frankfurter:

All right.

J. Lee Rankin:

Farben through the petitioner using the bank in which there is a common interest all of the time.

Felix Frankfurter:

And — and there is that interlocking interest of which you speak.

J. Lee Rankin:


Felix Frankfurter:

Through a bank designed by these petitioners for purposes of their own whether I’m looking at it for this litigation or not, all in that, designed by these petitioners for purposes of their own which to the knowledge of these petitioners may subject the bank to a veto on the part of the Swiss government for the production of the document, is that right?

J. Lee Rankin:

That’s right.

Felix Frankfurter:

And I find it difficult if all that is so, why we should have a finding of good faith —

J. Lee Rankin:

Well —

Felix Frankfurter:

— you have a very specialized meaning.

J. Lee Rankin:


The finding of good faith is related only to the fact that they are not collusive in getting the —

Felix Frankfurter:

At this time, these petitioners at this time are not using their own powers to tell the bank not to produce or to tell the Swiss government not to relay.

J. Lee Rankin:

That’s right.

Felix Frankfurter:

That’s all (Voice Overlap) —

J. Lee Rankin:

That’s — that’s our contention and I think that’s fully justified.

Hugo L. Black:

But if that’s true, what is the basis on this Court?

When did the judgment against him for failing to produce?

It would seem we might have raised some other issues.

It seems here as I understand the accusation the judgment is rendered only for the failure to produce.

J. Lee Rankin:

That’s right.

And it’s based upon the fact that they didn’t produce records which their only excuse is laws of another country which are not binding in this form at all.

And therefore, there cannot be a fair trial of this case without that production and since it’s apparent that they’re not going to produce from their failure for this long term of years, after a number of extensions.

The order was made to dismiss the case with prejudice after —

Hugo L. Black:

I want to excuse as I understand you is at this time, this time they didn’t do it here, if we don’t have them, we can’t get — we can’t get them here and you say that the Court rendered a judgment to dismiss the case for failure to produce something they could not produce.

J. Lee Rankin:

Well, if it’s just as though their excuse was that we don’t feel like it today as far as the law is concerned.

Hugo L. Black:

I don’t understand that.

The issue on which the judgment rests is that they failed to produce them.

J. Lee Rankin:


And they —

Hugo L. Black:

And I understand that you say that you accept the finding, the only reason they failed to produce it at this time is because they couldn’t.

J. Lee Rankin:

Well, I — I don’t accept the finding that it’s based on the assumption they couldn’t if you mean by that that they had legal excuse not to.

Hugo L. Black:

If they had good faith, they could do it, they’re trying to construe it.

J. Lee Rankin:

Well — but the excuse they gave is not — is as though they gave no excuse in this Court.

Hugo L. Black:


J. Lee Rankin:

Because that is not in accordance with the law of this country.

There is no such right, no such privilege, the law of Switzerland and in regards to secrecy is no excuse and they had a duty to produce and the fact that they couldn’t because of that is as though they say we won’t in the legal effect of it.

Hugo L. Black:

I can understand how you might have a right to decide against the litigant on — of he had defrauded the Government in advance of an order to produce.But how can you get a judgment against him for failure to produce when you have to admit that you couldn’t do it?

J. Lee Rankin:

Well, the fact that he can’t do it is because of a law that has no recognition in this forum.

He is —

Tom C. Clark:

Suppose it does and the fact still remains into the Court of Justice, a judgment is rendered against him by failure to produce something that they can’t produce.

J. Lee Rankin:

Well, it’s also rendered from — for the reason that this Court that was trying the case and the Court of Appeals is not only interested in their having a fair trial but in both parties having a fair trial.

And it was impossible in this case for both parties to ever have a fair trial without these records.

Tom C. Clark:

How can you penalize one when neither one of them could produce it and make one of them lose this lawsuit on that basis?

I’m not saying (Inaudible).

How can you put him in and not condemn to whatever it is?

Say you just can’t see the name so you won’t produce these papers.

He says, “I can’t.”

You say, “I know that.

We can’t either.”

But you’ve got to stop the lawsuit.

J. Lee Rankin:

Well, the fact is that he takes his business through the Swiss Banks and places in the secrecy upon himself.

And he runs —

Felix Frankfurter:

May I — he’s always simplifying.

I want to see how — what the reach of your argument is.

Suppose concededly without any participation, not any — the remotest responsibility so far as responsibility there have been in his work, these documents had been destroyed.

These documents, physical documents in the possession of the Swiss Bank had been destroyed, had been physically made non-existence by somebody for reasons of its own, some official of the bank wanted to cover up their falsification and whatnot.

But it’s all in there that he would have to concede the present petitioner had no relation or whatever not to the remote to the unavailability, the physical unavailability of the documents.

But it is a fact that they did utilize in the way which was indicated this fact as a means of doing this interlocking cover up business.

Would you say there that what before their fact of having done business with the bank is not — that it wouldn’t be there and therefore they wouldn’t have been destroyed?

J. Lee Rankin:

No, I think that’s —

Felix Frankfurter:

It was not.

J. Lee Rankin:

— the different case.

Felix Frankfurter:

Different case and that’s what you’re saying in this case that this was a corporate and part of an intercoporate relation in trying (Inaudible), American Holding Company.

Felix Frankfurter:

And to utilize this reticulated scheme for carrying on business and therefore knowingly subjected themselves to the kind of legal power that the Swiss government has acted.

J. Lee Rankin:


That’s exactly the system that they anticipated that was operating, all they were using it and could only have this kind of result.

But did the Court make any findings on that theory?

J. Lee Rankin:

It found that they —

And entered to its — its determination that the — that the case should be dismissed.

J. Lee Rankin:

Well, it found that the — there was no excuse in the claim of the Fifth — of the Swiss law.

Yes, but as — as I read its opinion that was on — not on the theory of any special relationship.

It was on the theory that there was no excuse in the courts of this country to plea the laws of a foreign country for inability to produce —

J. Lee Rankin:

That’s right.

— which is wholly a proposition, wholly unrelated to the particular factual setting which you say distinguishes the case from the case Justice Frankfurter put to you.

J. Lee Rankin:

Well, I think that the fact that the — the records as Justice Frankfurter presented are not available at all.

It’s in complete distinction from — and I don’t think the Court was considering that problem if the records were destroyed so nobody — no one could possibly get it.

That would be something else.

Well, supposing the records had been taken by the British and lodge it to the Bank of England for some reason and then these people go to the bank and say, “We’d like to have this.

We need them.”

And the Bank of England says, “No, we want them for our security grounds and whatnot.”

J. Lee Rankin:

I don’t think the Court would —

Would that would have been an excuse?

J. Lee Rankin:


I don’t think the Court would have entered any such order then.

But then — then your position seems to me again to come back to the proposition is because of the special facts that surround the relationship of these people to the Swiss Bank —

J. Lee Rankin:

Well —

— that you have to stand on that if there are no findings made to that effect.

I believe it even goes far than that Mr. Justice Harlan in that — if they were an innocent Swiss doing business under those laws and if they come into the courts of this country and say, “We ran our business through the Swiss Bank and we can’t get these records because of the Swiss secrecy laws and so forth,” the Court said that the fact that there are such laws in Switzerland as choosing between whether the burden of that should fall upon their national or our national was that it should fall upon their nation even if that person did not anticipate in advance and tried to gain any special benefits but just happened to be in Switzerland, a national of it (Inaudible) and was transacting some business with the bank but he would still be unable to produce those because of the laws of his country restricting them which our country doesn’t recognize at all and he would be governed by the laws —

Felix Frankfurter:

Isn’t it an alternative either or is that — he must make a choice here just as you’ve just indicated that even this case must be dismissed or we can go on without these records in this litigation.

A — are those the only — is that the only choice?

J. Lee Rankin:

I think if I can develop that I can show you that it’s impossible in this record and that it was plainly conceived by the parties when they proceeded as they did that there wouldn’t be any place that this — the facts about these cloaking transactions and their operations of this company and the enemy taint that’s evidence here by the Swiss Compensation Office report could be found except this very place and that’s why they do business that way.

Even — the record even shows that back in 1937, the German government inquired in regard to some of the transactions of Farben with this bank and Farben directed Greutert, the manager of the bank on how to answer their letter and say that Swiss secrecy laws will not permit the disclosure of such information.

Charles E. Whittaker:

That’s in this record?

J. Lee Rankin:


Charles E. Whittaker:


J. Lee Rankin:

Well, we’re — in regard to the record, we’re involved in a situation that’s a discovery proceeding as distinguished from a trial on the merits, so that you have affidavits and you have the 23,000 papers that we have already disclosed to them in accordance with the Court’s order fully and all of those are here.

Now, what their answer might be to that if there is any isn’t here because there isn’t any trial in the merits.

But that is — there isn’t any question with what — as far as the record is concerned that is exactly what happened.

But to that very reason.

I suppose the District Court refrained from making any findings on any of these things that you’re talking about.

J. Lee Rankin:

Well, I don’t think that the District Court would ever try to find the — the merits of these particular matters because that would have to be a trial on the merits.


J. Lee Rankin:

But the difficulty we have in this case is that they didn’t run their transactions in 1936 as I’ve told you.

They got Chemie out of being just a desk drawer transaction in the private bank.

From that time on, they moved it into another street backing up to the private bank so they could go backdoor to backdoor.

And —

Charles E. Whittaker:

To the law — the law (Inaudible) plus the transaction as already shown sufficient to create an (Inaudible) would support the deposit of this bank by design in anticipation of present secrecy values against its own government and against the day when some catastrophe like war might occur.

J. Lee Rankin:

Yes, the — the record is even beyond that.

It has discussions in which Farben tells the Finance Ministry of Germany exactly the kind of plan that they want to follow about cloaking some of these transactions, about helping to build up the German armament program under — with the Norsk Hydro in light metals in Norway after they occupied Norway, how they used Paris’ concern that — that this petitioner had in occupied France to transact business of Farben.

And Farben managed it all the time.

These records replete with that and it shows that Sturzenegger cloaked transactions in various countries that he suggested one of his associates to cloak for South American transactions that they cloak for India, Britain, Australia and England and they even had a transaction in Holland where they had a cloaking and where they operated in occupied territory.

All of those things are indications of enemy taint.

Now beyond that, all of these various transactions, they were bear shares up to 1945 and they will run through this bank even when Chemie after 36 when it was fully established.

They didn’t run these transactions in regard to the stock through Chemie.

Beyond on their books, they’re in the bank’s books according to the — the Swiss Compensation Office.

Charles E. Whittaker:

Can you conclude — there’s no answer to say that the findings of present inability because of the Swiss law to produce these papers instantly when by design preceding in an — and possible anticipation with this very situation.

They put themselves in that position.

J. Lee Rankin:

Well, that’s our position.

They — they put —

Charles E. Whittaker:

That’s what you’re arguing.

J. Lee Rankin:

That’s right.

And that they had a program deliberately and it’s all related in detail in these letters to their own finance ministry when they told about — they even talked about seizure of their assets and how they wanted to conceal them so that it wouldn’t be known to — even the United States and Great Britain about where these assets were so that they could take them.

And therefore, they developed in detail this program of how they would use these various schemes.

Hugo L. Black:

Was this — suppose this evidence in the record, (Inaudible).

As I understand what you’re saying is that they’re justified in dismissing this case not because they failed to produce when they could have produced but because they failed to produce — when they couldn’t produce as a result of their own previous activities.

Is that what you’re saying?

J. Lee Rankin:

Well, that’s the effect of it.If — it’s just as though I think the courts would find that if I would take some material that was a matter of discovery and would deliberately drop it in the Potomac River that the courts would say, “Well, it’s too bad for you.”

Hugo L. Black:

Well, suppose you’ve had that and dismissed this case by finding that you didn’t produce it but had made no findings and you dumped into the river.

Would we have to look at the records and see if he did dump it into the river or should we wait for the findings and wait for the case to be tried so that we could — we could get to the facts?

J. Lee Rankin:

Well, the facts are replete here very complete because —

Hugo L. Black:


J. Lee Rankin:

Because the — well —

Hugo L. Black:

Is there any findings that they disabled themselves by their previous activities from producing this at that time when they were unable to produce?

Felix Frankfurter:

May I ask a question, Mr. Justice Black?

What do you conceive to be the function of these findings as a matter in this case?

J. Lee Rankin:

I —

Felix Frankfurter:

What — what is their relation to our problem?

J. Lee Rankin:

My conception of the Master’s findings was that he found that they were not in conspiring with or in collaboration with the Swiss Government in getting the order by the federal attorney that they couldn’t deliver these records.

Felix Frankfurter:

Well, I understand your position.

What I want to know is whether this broader issue on which Justice Black inquired, whether this broader issue that they disable themselves and therefore it couldn’t produce not because it was beyond their physical or legal capacities but because — by their own willfulness.

Was that not an issue before the Master’s?

Why — why wasn’t that an issue in the proceeding in which he wrote these findings?

J. Lee Rankin:

Well, that didn’t appear to be an issue at any time before the Master.

The Master, the —

Felix Frankfurter:

But I — I want to know why it wasn’t.It seems to me if what you’re saying is that they couldn’t produce by their own conduct, by virtue of their own disabling conduct.

That simply bears on the question of — of good faith in a larger aspect to be sure that good faith in 1952 but good faith in producing a situation so that there’s nothing to produce in 1952.

J. Lee Rankin:

Well, I think the record is so complete about that part of it and the fact that that was the whole scheme and program from the beginning and that this was really just a Farben place of — a banking operation that there was never any issue about the —

Felix Frankfurter:

That seemed to me if you’re right about that a fortiori should have been — it was an issue.

You see it’s so obvious that — that it is a complete answer but it wasn’t made.

J. Lee Rankin:

We have the additional factor in the case that they come with their claim in 1940 to the Treasury in which they asked to have certain of the stocks sent over to them and recognize their ownership, the Treasury in the United States.

And they attached to that claim a large number of papers including about half of them in which they are papers of the bank to support their claim before this Government asking for a certain prop, the recognition of their ownership of certain shares.

Now, when they file their administrative claim in this case, there are some 40 different papers that they file and better than a half of those are papers, purported copies of papers with this very bank, joint transactions in order to make their chain of title.

Then when they — they present their claim to the Allied Military authorities in — in Berlin to try to get back the title to their stock and lender bank, the Farben House Bank, there that was taken over by the Government when we occupied Germany.

J. Lee Rankin:

They put about — they put some 50 papers there and involved 17 different people there in transaction with this very bank in support of that claim.

Then when they — Sturzenegger testifies before the — in his deposition, he proceeds to say that he will waive on behalf of some 75 different persons, any claim of secrecy in connection with that.

Then he backs up on that waiver and says that he doesn’t want to agree to that after he goes along with his deposition for a while.

And he asserts later during the deposition that the secrecy laws prohibited even answering questions.

And we take that to the Court and Judge Bailey held that that was no excuse that he had to answer the questions so that we find that as a matter of fact whenever they can use the Swiss secrecy laws for their benefit, they seemed to be no handicap at all.

They can produce the papers for their claim.

They can produce them for the Treasury.

They can produce them for the Allied Military authorities.

But when we need them to trace out step by state — step, the ownership of the stock and the enemy taint that’s replete in this record of cloaking of all kinds, we can’t have them.

I suppose this reference to Mr. Hughes, the Master, was made for the purpose of determining whether what should be done about the failure to produce.

J. Lee Rankin:

The —

— there was a hearing on good faith and to guide the Court in what sanctions if any should be applied or so forth.

Is that right?

J. Lee Rankin:

Well, the — the limited — the hearing was limited only to the question of good faith in connection with this order.

Now, that is quite different.


J. Lee Rankin:

Yes — no, the order — there had been an order by the federal attorney that the — the records could not be delivered up and that was not a physical taking but it was an order that the federal attorney had made and the Court recognized that these nationals were bound by it by his finding but if the hearing was limited to that.

Now, what all was done in regard to how they set up this whole matter and that they were planning to use this very device was so apparent in the record.

There was — it didn’t appear there’d be any reason for a hearing in regard to that.

The — they’ve — even after they got the petitioner established as a holding company in 1936, they continued to run every single stock transaction through this private bank and the only possible purpose, the only inference you can possibly draw from it is that they want to have this covered.

And of course it’s revealed by their own letters to their Finance Ministry when they say they hardly want to cloak all these various transactions.

So it’s — it’s very apparent that there are all kinds of enemy taint that appears in these records that have been produced.

We can’t trace out the ownership of the stock but there’s no question that went up to 1940.

It was Germany and that’s clearly established.

Then the question is what happened between 1940, in April of 1942 when the investment took place.

How in the world did it get to be?

This is $100 million we’re talking about.

How did it become Swiss all of a sudden after it was German until 1940?

And then we have —

Hugo L. Black:

That’s the issue of tax —

J. Lee Rankin:

That’s right.

Hugo L. Black:

— case.

J. Lee Rankin:

But — but I’m only pointing this out to show you how it’s impossible to try this case fairly toward — certainly toward the other party of the Government without these records when this is the only place when these — for these transactions ran through.

Hugo L. Black:

But Mr. Justice Frankfurter’s question that — that your answer to it that means (Inaudible).

J. Lee Rankin:


Hugo L. Black:


If — if I assume that if a person goes out to hide (Inaudible) conceals his income into court and say, “I can’t produce” if they ask him to produce and said that he can’t produce them.It could be shown that he was not acting in good faith because he concealed those papers himself.

But if you then find from evidence that he’s acting in good faith, why doesn’t that refute your argument that you are making here that he was himself responsible for the situation which made it impossible to produce at the moment.

J. Lee Rankin:

Well —

Charles E. Whittaker:

May I ask that connection?Was there a finding of good faith in that question?

J. Lee Rankin:

Well, I don’t think there was any finding of good faith on that question.

I think the faith — the only finding —

Hugo L. Black:

But if not, shouldn’t there be before we are called on to act.

J. Lee Rankin:

Well, it seems that the record is so clear on this point because here is the lender bank, that’s one — the private bank of Farben in Berlin.

Now — and so part of the scheme, they put 64% of that bank in this Swiss banking concern.

Now, certainly this — anybody that’s working with this case, any court has got a right to assume there’s plenty of banking arrangements available in Germany for Farben to use without having to go into the Swiss bank and a private bank that only has Farben people in it at that.

But in addition to it, they had their own house bank, this lender bank, which they ran through a lot of transactions.

And also this record shows that they instructed all the remittances to be sent through this bank and not even have a sign on it that they had any connection with Farben.

That’s clear in this record that they gave it, it’s an expressed instruction to everybody that remitted one cent to them during the war period that they shouldn’t even indicate who had — that Farben had any ownership whatsoever.

Now, why in the world would they do that if they weren’t trying to hide and keep secret exactly what they were doing the — for the purposes of their currency, taxation and all the rest?

And then they tell this banker just how to answer the question when their own government inquires.

Felix Frankfurter:

Mr. — Mr. Solicitor, the risk of redundancy and I can bring together the questions of Justice Black and Justice Harlan and my own because I think this is so far as I’m concerned, part of the whole problem.

Are you — you’ve made — in taking two legal positions, I do not say contradictory, they’re — they’re complementary.

You say and I can understand that argument well.

This is a dispute between Swiss nationals and the American government, interest of the United States that are being pursued in a litigation in the United States necessary for the fair determination of that litigation of some documents located in Switzerland.

As to those documents, the Swiss Government consulting its own national policy and says, “We won’t allow you to produce it,” and you say that’s too bad.

You have to choose between the interest of the United States and (Inaudible).

And the Swiss national will also be entitled to due process in the United States that these documents are essential and this Government for his own interest refuses to give him that support to vindicate his interest and this Government, the judiciary of the United States has a right to say in the interest of fair administration of justice gives (Inaudible).

Thats’ — that’s one of your positions, isn’t it?

J. Lee Rankin:


Felix Frankfurter:

If it wouldn’t be so, you’d say, in the case these documents were in England, the Bank of England, as being put by Mr. Justice Harlan, you say that would be different?

J. Lee Rankin:

That would be a different case.

Felix Frankfurter:

Now, a totally different — a totally different line of approach you made to wit — to be sure the Swiss government if they know this bank for its own means.

They can’t produce these documents and to be sure the Swiss government to be respected in pursuing (Inaudible) our — our state department (Inaudible) going to persuade it and then needs time to pass.

What you say that is all irrelevant.

It is immaterial.

You, the petitioner make yourselves in the position for your own interest whereby you made in — whereby you’d be invoked, whereby you brought into action this national policy of system.

And therefore in effect, you disabled yourself from heeding the judicial demand of the United States Court.

That’s your other position, isn’t it?

J. Lee Rankin:

Well —

Felix Frankfurter:

Now, I say if that is so, if that’s the line and if you say the record is replete with proof of that line of argument then I don’t for the life of (Inaudible) why all these perfectly futile, useless reference to the Master and his conclusions on page 545 (1), the verdict upon plaintiff to show good faith in the effort to keep efforts to comply to this Court’s order (Inaudible) to produce the papers of Sturzenegger or — and Company for inspection by the Government.

Two, because you’re the plaintiff, efforts were made in good faith as where the plaintiff made the effort which a reasonable man was made to decide and to choose effective compliance that this Court ordered.

Three, in the opinion of the Master, the plaintiff had to stay in the burden of proof based upon it and had shown good faith in its effort.

I say that with reference to those findings of the Master, in that whole proceeding, one could demur in the old fashion way and say whatever?

J. Lee Rankin:

Well —

Felix Frankfurter:

That’s your argument.

You say whatever, don’t you?

J. Lee Rankin:

Well, we said at that time more than that because we said that there was a further lack of good faith in this regard that they claimed — you — you’ve heard counsel described all of his waivers that they were — they have secured.

And they secured some and the record shows that there are good many that they didn’t so they couldn’t produce a good many of these papers that they’re talking about, they say.

But we said, here you are you have — you say that the waivers are available but you haven’t even asked anyone whether or not they waived.

You’ve made no effort or whatsoever to get any waivers from anybody.

You haven’t even appealed this order of the federal attorney as the law provides that you have a right to.

How can you say you’re acting in good faith when you did not even try those things, let alone these other claims —

Felix Frankfurter:

You’re now attacking the finding and I understand (Voice Overlap) —

J. Lee Rankin:


I agree that I can’t but I want to show you why we claimed that there was a lack of faith in that area because they hadn’t tried to get any waivers and they haven’t ever tried to appeal and they — we claim that Chemie, the petitioner, could also have a right to appeal as well as Sturzenegger and that neither one of them have.

And later, they both appealed and they were both turned down and later they went to work on waivers and so forth, but that was the issue before the Master in regard to the matter.

There’s a pretty broad finding here, Number 8, no collusion anytime that has shown between the plaintiff and the Swiss government that goes beyond the narrow — the narrow interpretation of some of the other (Inaudible).

J. Lee Rankin:

Well, I’m not — I’m trying to adhere to the line, Mr. Justice Harlan that we don’t — we think the findings are against us on the proposition that there was any collusion that — that they produced this federal attorney’s order.

Well, we do think the record is replete with a showing that that — the whole plan was to use this private bank and the secrecy that could be obtained not only for this purpose which they were smart enough to anticipate too as this record shows but also for the day by day benefits.

J. Lee Rankin:

I’ll show you how it worked instead of running it through the regular bank accounts.

They also ran it through what they called “custodian accounts” or sort of joint venture accounts in which they wouldn’t even have to set that up on the bank records when they made their public statements about the assets and the liabilities of the bank.

And then they would run these various — these items through the account in that manner and they wouldn’t have to account to the petitioner’s stockholders for the earnings on those items.

So that they held those — those amounts in those special custodian accounts and the record, there’s no dispute about this that they would keep that amount never account to their stockholders until they were short on earnings otherwise and then they would pull it out of the special account and pay a dividend out of it so that they got out of accounting to their stockholders, accounting to the tax authorities, accounting to the public generally for — in regard to the bank statement and whatever obligation they would have to German authorities and its currency control.

All of those things they got out by using this bank, this device instead of running it through the ordinary way.

Does your argument know the extent of saying that the representations to the Court that they cannot comply because of the situations which it is not a good faith representation but simply a cover up or saying that they won’t — they don’t want to comply in the respects that they have not finished up?

J. Lee Rankin:


You don’t go that —

J. Lee Rankin:

We don’t claim that.

The only element of that that there is — there is a considerable contradiction in this case and they are being able to — whenever they want to present a claim like they have with their administrative claim when they filed with the Treasury and when they filed in Germany in making claims, they always seemed to be able to get all the records out of this bank to which — that would give their chain of title.But when we need them to try to check back on their story and prove this enemy taint and ownership, we just can’t possibly get it.

Felix Frankfurter:

May I ask what — why do we not find the — the statement you’ve just made adjudicated by the two lower courts?

J. Lee Rankin:

Well, I think that the two lower courts thought that the matter of due process in this case involved the matter — the question of fair trial to both sides.

Felix Frankfurter:

And why didn’t they — why (Inaudible) so far as I know.

Why do we not find even the District Court or the Court of Appeals that the — the lines of exposition that you just made?

J. Lee Rankin:

I don’t think they had to go that far because —

Felix Frankfurter:

But if they didn’t go that far on the other ground that raises a question about which the Court is inquiring.

I don’t see why you call it going that far because what you just said is that they’ve been so skillful in their manipulation in the heart of the matter of it that — that they disabled themselves (Inaudible).

That’s really the heart of it, is it?

J. Lee Rankin:


Felix Frankfurter:

And of course they couldn’t produce the bank because they saw do it that the banks were subject to the control of the Swiss government which might well prevent them from giving up those documents and they were shrewd enough beginning with 1928 to create that situation.

That is your position, isn’t it?

J. Lee Rankin:

Yes, but I also have the position that I tried to describe in the case of the ordinary Swiss Roschmann who does his — his banking business with his Swiss bank and is a national of Switzerland.

And by reason of that when he wants to prove something, he’s unable to produce the records because —

Felix Frankfurter:

I — I don’t mean to reject that.

I didn’t mean in my own mind or in what I said to reject that.

J. Lee Rankin:

Well —

Felix Frankfurter:

That’s a very different — that’s — that’s a nice and clear legal question whether in a litigation in this country documents become relevant.

They were incapable of being produced because the Government of the National refuses whether that’s too bad but the American interest prevails.

J. Lee Rankin:

Well —

Felix Frankfurter:

I understand that but that’s a very different argument.

J. Lee Rankin:

Yes, but what I was trying to point out was that the Court went that far and felt that that was sufficient that is was necessary as a matter of due process that both sides have a fair trial.

Felix Frankfurter:

I’m thinking of the possibility that that argument might be rejected.

J. Lee Rankin:

Well, it — there’s always that possibility of course.

Felix Frankfurter:

And therefore, if — and if that is rejected I mean that’s — I don’t know what — what I think about it.

But if that is rejected the question is whether the other (Inaudible) which you — to which you’ve directed our attention in the road of — of really lack of good faith intrinsically, isn’t it?

J. Lee Rankin:


Felix Frankfurter:

That’s really you’re argument.

J. Lee Rankin:

That’s right.

Felix Frankfurter:

I’m just saying.

J. Lee Rankin:

I — I think that the — the action of the Court should not be lightly discarded because of the fact that it seems to me that the Court basically was saying it’s clear from this — in this case, in the records that are before it that that’s impossible to try to find out the truth about enemy taint and — and enemy ownership of this stock without knowing the facts in this particular bank and getting all of these records.

William J. Brennan, Jr.:

Well Mr. Solicitor, you keep suggesting that basically it is the courts who are interested in both sides having a fair trial.

J. Lee Rankin:


William J. Brennan, Jr.:

Do I get an implication from that that the Government feels that even though we could establish its defense without these figures and nevertheless that because of that point of view, this was properly dismissed?

J. Lee Rankin:

It’s my belief that the Court was satisfied here that they — that this case — these papers were decisive and so held and it would be impossible for the Government to trace out this enemy taint like the case —

William J. Brennan, Jr.:

Well, you’ve said so many things that I haven’t cited — of course to read this record.

J. Lee Rankin:


William J. Brennan, Jr.:

But you said so many things to indicate that on the phase of it, there’s ample proof here that this taint existed which I understood you to mean must lead to the conclusion that the Government could establish its defense without difficulty just on the record as it stand.

Am I wrong in that?

J. Lee Rankin:

Well, I think that the Government would not want to claim that it had the record to trace out that there was no change in ownership that ever occurred before this got over to be a Swiss in these papers.

And I don’t think that a court would want to hold in this case without examination of these other records that the claim of these — that the petitioner that it — that the Swiss own the stock now would be determined on this record as it is because there’s no question about the German ownership up to 1940.

The Swiss Compensation Office report would indicate that as much as $100 million of Farben money ran through this bank at various times and whether or not how it ever got over to be Swiss is only explained by a very short statement in the report in which they indicate that this — a large sum of money about $130 million francs was made by the Swiss by using Farben assets and getting special tips on what investments to make and so forth.

And that’s all there is and they don’t break it down to show how the transactions were or anything about it.

Now, I would think that any court would hesitate on this record alone to decide that the claim of the Swiss that they did somehow get to own the stock was untrue without these records in which they say it’s clear from this record, these various transactions —

William J. Brennan, Jr.:

Well, then you are saying that the Government’s defense is for possibly prejudiced by inability to gather these records, is that it?

J. Lee Rankin:

Yes, and that’s the Court’s finding that these records would probably be decisive of the question.

Could I ask you on that?

How could that statement be made at this stage when as I understand it neither the Government nor the Court has looked at the records that have already been produced?

How — for all that we know, it may be that if you went through those records, you would find adequate proof short of getting anything more to establish your case.

J. Lee Rankin:

Well, let me tell you what happened to us when we got — when we got the petitioner’s records.

We found that he — they manufactured their books and they had — they had record books that clearly showed that when they had the originals they had 13 journals and it showed references back and forth.

J. Lee Rankin:

It’s all set out in the record.

The ones they gave us were only 11 books.

And on the cover page, the inside cover page of each one of these journals, it says the date — that the stationer delivered the book to the petitioner and the date of the delivery is anywhere from one month to 22 months after the dates of the entries inside.

Then when they delivered the other papers to us there are over 9000 we were able to check on, but they didn’t deliver it all.

They came up later with some 5000 additional.

Now, you — in this kind of a matter where you’re trying to run out cloaking transactions, you’re trying to run out items of investment in stocks and bonds over a long period of time from at least 1936 and it goes back at least 1931 on.

You could take any item down the line.

They even talked about giving us book and they’ll blank out the lines they can’t get consent to.

And if I could do that in any kind of a case and just blank out the lines where the transaction ran back the other way could be absolutely meaningless.

You just can’t run out of cloaking transaction in that manner.

Now, they suggest to us that we should — the other thing they suggest is that we have a — a person that’s appointed by the Swiss Government sworn to assist the Swiss secrecy law.He’s going to abide by that.

He’s going to examine these records and then he’s going to determine relevancy.

Now, just think what that means to American Court.

Here’s a man, a Swiss, he’s going to determine relevancy for an American Court.

And If I could determine relevancy, I don’t think the judicial function would amount too much for the Court but he is going to decide that.

And then we’re going to try according to plan.

We’ll go into the Court and see if by letters rogatory we can force them to give these up in spite of the Swiss laws and we’ll see how many we get and then we run down the various transactions.

And of course, if anybody is going to give us manufactured books because there isn’t any question for what we have here, we’re not going to get the key transactions that tell what they did in the cloaking.

And that’s the reason we haven’t got these books and did it — this isn’t — all these just happened in six months ago.This is going on for practically 10 years.

And if they could afford to let us see these books in every piece of paper and it would sustain their claim, they’ve been here long ago.

There’s $100 million involved.

Charles E. Whittaker:

Mr. Solicitor General, as a possible (Inaudible) to the action of the Court in dismissal under Rule (Inaudible), he could have stayed the further trial of the case until he ordered to produce the indictment, did he not?

J. Lee Rankin:

Yes, Mr. Justice Whittaker.

There’s only one problem in that that I think the Court should be aware of and that is the restriction on the Government doing anything with the property during a time there’s any pending litigation.

Charles E. Whittaker:

What restriction?

J. Lee Rankin:

The statutes.

Charles E. Whittaker:

Perhaps in this day, they could sell it.

J. Lee Rankin:

No, the statute provides that as long as there’s pending litigation, you can’t.

Charles E. Whittaker:

The Trading with the Enemy Act?

J. Lee Rankin:


J. Lee Rankin:

And so, as far as they’re concerned, if they can get that kind of an arrangement, they’re just as well off as though they just defeat or doing anything with it so that the Court had to face up eventually to the proposition that they’re either going to have a fair trial in this or not.

Hugo L. Black:

It seems to me like a practical matter on the subject of what you are arguing with this.

The Government believes this is enemy tainted.

They can’t prove it without these papers that they should not be allowed to speak though or should be allowed to get a judgment against it because they have (Inaudible) of the Government in placing the papers beyond the control of the Government.

And if that can prove it, that is kind of a separate and distinct cause of action from your (Inaudible) one that should be litigated before you should have a judgment rather than have it dismissed on (Inaudible).

J. Lee Rankin:

Well, I — I think legally the problem is that the — they have to comply with the —

Hugo L. Black:

But they can’t —

J. Lee Rankin:

Trading — Trading with the Enemy Act.

Hugo L. Black:


J. Lee Rankin:

And it’s — the burdens on them to prove their case and if — to bring in their papers.

Hugo L. Black:

If the burden is on them to prove their case and they don’t prove it well, the Government will be heard but they don’t produce the papers.

J. Lee Rankin:

Well, the difficulty is that the discovery rules, the whole concept of our trial procedure under discovery rules is to try to get at the facts and the truth.

And the reason for allowing discovery in advance of trial is to try to search out what the real issues are and the facts are so that you can prepare for trial.

Now, we —

Hugo L. Black:

That is the point here where you’ve had their papers and they say we can’t produce it.

You have no way to get it.

You say that there’s evidence in the record from which somebody could find if they look at it that it is because of a fraud they’re perpetrating on the Government and that they have placed this all into a special situation to disable the Government from proving its case.

J. Lee Rankin:

Well, we also say that if they’re perfectly innocent that the Swiss law of secrecy is contrary to the law of the United States, they have to — they have come into this forum to sue.

They’re coming affirmatively here.

Therefore, they have to comply with the law of the forum in regard to procedure and the law that forum is that you make discovery not only that you have a trial on the merits but before you get to that point you’ve got to let the other fellow have the record so he can prepare for trial.

Now, that’s —

Hugo L. Black:

You’ve got — that would be the proposition (Inaudible).

Is it the law of America contrary to that (Inaudible) that a person who can’t produce papers shall be thrown out of Court because of that?

Felix Frankfurter:

On the assumption that you just made a minute ago that he is innocent.

You say — you say because on the assumption even that — that he’s innocent, that we’re dealing with an innocent plaintiff, the law of the forum, the law of the United States is discovery.

His country forbids him, too bad, and so we decide against if he’s innocent one part is a little bit wrong, but if — on the other facts, one part isn’t wrong, something else is wrong.

J. Lee Rankin:

Well, if — if he is innocent and he doesn’t produce his papers, he still has not complied with the discovery and that is one of the requirements of our court.

William J. Brennan, Jr.:

Well, didn’t you say, Mr. Solicitor that — I don’t know whether you said this has already been done or that you apprehended that it could be done that they can manage to produce the papers that support their claims but deny their ability to produce the papers that would support your defense.

J. Lee Rankin:

That’s what’s happened up to date.

They have — the record is clear that they did produce the papers three different times in regard to these various transactions within this very bank.

William J. Brennan, Jr.:

In other words, that supports their claims.

J. Lee Rankin:


Hugo L. Black:

But it’s not your defense.

J. Lee Rankin:

But they — nothing to help our defense.

We had to get that from other places as much as we could and we’ve got to in order to really have our defense, we’ve got to find every piece of paper that shows this transaction in and out of this bank that this — this party is interested in.

William J. Brennan, Jr.:

Well, have you ever been told why it is the secrecy laws have not prevented their production of the papers that support their claim?

J. Lee Rankin:

No, we haven’t.

There’s no indication.

Felix Frankfurter:

Mr. Solicitor, may I trouble you to leave with the clerk a reference to or if it’s in the record.

I want to find it.

I’d like to see the terms of reference to the Master, the Master.

If it wasn’t printed in the record, if not would you — if it’s not printed, would you mind filing with the clerk a copy of the (Inaudible)?

J. Lee Rankin:

I’ll be glad to do that.

John J. Wilson:

May it please the Court.

Earl Warren:

Mr. Wilson, you may proceed.

John J. Wilson:

May I dispose of a question of Mr. Justice Brennan of the implications of it.

The petitioner here has gotten no paper from the Sturzenegger Bank after the seizure order.

Is that — I want the Court to understand that beyond any question.

The suggestion that the petitioner can get records when it chooses and must be divided — I don’t concede it but at least the point must be divided chronologically.

William J. Brennan, Jr.:

Well, now you say no paper.

I thought you told us there were 200,000 pieces of paper that’s given.

John J. Wilson:

Through the waiver system.

But the suggestion of the Solicitor General that the petitioner can always get the documents from the bank that it wants in its own favor but can’t get these for performance of this discovery order.

I want to clear up immediately the proposition that we have gotten no document except by the waiver procedure since the Swiss Federal Attorney levied his confiscation order in 1950.

Now with respect to documents that we’ve gotten earlier than that, they were principally documents which had to do with our own business and us getting them from the bank was naturally in effect a waiver of consent by ourselves of the Swiss secrecy.

William J. Brennan, Jr.:

What about the books that seemed to have been printed after the entry?

John J. Wilson:

Yes, I — I want to take those up in — in several sequences.

I wouldn’t want to miss commenting upon that for the world, Mr. Justice Brennan.

If you’ll let me come to it in my regular order, I’ll promise to do it before my time is up.

My greatly respected friend here, the Solicitor General, has naturally had to absorb a very large record in a very short time.

John J. Wilson:

And I mean no reflection upon him when I criticize some of his allusions to the record.

I do not have to remind the Court there’s been no trial here.

I do not have to remind the Court that there’s been no findings of enemy taint.

But I would like to remind the Court that I disagree with many of the factual statements that the Solicitor General had said.

And believe me when I say it.

I suggest nothing but pressure time it is (Inaudible).He speaks about the communications from the Farben to the Financial Ministry of Germany as evidence in this case.

I want to remind the Court that the reason that’s in this record is that when Sturzenegger was on the stand, he was showing one of those documents which our Government had gotten out of Germany after the fall of Germany.

And he was asked if he could identify it and he said that he couldn’t.

And I say to the Court that there is printed in this record literally hundreds of pieces of materials that are no proof of anything in this case, that have not been offered in evidence, that have not even been identified by the witness who was shown here.

And I’ve given you some examples of it at the bottom of page 7 in foot — 7 (a) of our appendix of a footnote to our brief.

Now in the Appendix of 7 (a), I could stand here for hours if the time permitted and the Court permitted to demonstrate that most of what the Solicitor General has offered here as enemy taint has not been established.

Why I was — I was astounded to hear him say that our client was German up to 1940.

There isn’t a word of truth in support of that statement.

The only event that happened in 1940 was that there was a cancellation of a contractual relationship between Farben and the plaintiff having to deal with reciprocal rights.

Farben had an option to acquire the investments of Chemie in exchange for which Chemie was guaranteed by Chemie’s stockholders, they are guaranteed by Chemie, the same dividend rate as Farben was.

But it was not the question of Chemie being German until 1940.

I don’t deny for one moment that the inception of Chemie in this case was largely German.

What the admitted evidence in this case and by that I mean the deposition, the credible depositions that are not in dispute show the evolution of the Swiss.

And then as the years went by, they began to throw off this German (Inaudible).

And long before 1940, this corporation seized to be controlled by the Germans.

And the single event that occurred in 1940, which the Solicitor General points to as a date when they seized to be German was only this dividend guarantee contract that I spoke to you about.

About the books, the duplicate set of books, Mr. Justice Brennan, about the 9000 missing records that issue is yet unresolved.

What happened was this.

With the Justice Department took the position that the plaintiff had failed to produce these proper books and some 9000 documents.

They didn’t move to dismiss which always surprised me.

I never knew — I wonder why they didn’t at that time move to strike this down for some kind of a simple act.

They moved for a second discovery order against Interhandel, Chemie, the petitioner.

And at that time, we were fighting over whether this was a duplicate set of books and we were fighting over whether there were 9000 documents missing when Judge Laws issued his decision of February 19, 1923.

At that point, I moved that we stay everything until we get through this main battle.

Now, we’ve never gotten back on that fight.

John J. Wilson:

We don’t concede there’s any duplicate set of books here.

With regard to the 9000 records that we — that is claimed that we withheld, we went back and looked again.

Mind you, if the Court please, we produced 41,000 documents, 70,000 microfilms were taken of our client’s records.

Isn’t there a margin for error there that’s possible that it won’t be denominated bad faith of crookedness?

We went back when we said that we had given them 9000 documents and we began to dig.

And what did we find?

We found that other 9000, some 5000 were second and third and fourth carbons of documents of which they’ve gotten the first carbon already.

And we were in the middle of explaining the absence of the other 4000, some of which we were producing piecemeal when that proceeding was stopped.

I submit the Solicitor General has no right to mention that matter to this Court.

That matter is in the lap of the District Court for decision.

Now, if I have several moments later — left, I would like to return to the observations of Mr. Justice Frankfurter when he posed two complementary observations.

One was with respect to the national being responsible for the conduct of its nation.

That’s — that problem is — that question is in this case.

I wouldn’t be fair with the Court if I didn’t face up to its existence.

What we have on the one hand, no charge that the Government of Switzerland has acted in bad faith.

And we have on the other hand, no proof that the petitioner has acted in bad faith.

And we’ve searched the authorities and I’m sure that our respondent’s have searched the authorities.

And there isn’t a case that we found in the books wherein peacetime.

In the course of Anglo-Saxon jurisprudence, a national in a transaction of this sort would be responsible for the conduct of its nation.

Felix Frankfurter:

What do you do with a case like Kronprinzessin Victoria?

John J. Wilson:

The Victoria, if the Court please, is a very simple case in which there was not even a discovery order.

The — in the — in the Kronprinzessin Victoria, one of the British prize cases, in that case, the claimant to the cargo has leave to produce and be given time and he was given time and he didn’t produce.

And the case was decided on the merits because of the absence of the evidence.

The case is simply easily distinguishable —

Felix Frankfurter:

There were for those — there were very important observations by Lord Sumner about the — the difficulties of Swiss — Swedish law not allowing the production of those documents which might have sustained the case of the claimant against the captain.

John J. Wilson:

Yes, sir.

There’s no doubt about it and I — I’m — I’m glad, Your Honor, brought up the British cases.

I hope the Court will bear with me a moment or two that I may discuss it.

I think that one of the British cases is extremely troublesome to us.

It is not the Kronprinzessin Victoria, it’s the Antilla.

John J. Wilson:

The Antilla — and I think we misstated our position in our brief on the Antilla.

I think the Antilla was decided not on the merits because we argued in our brief that all the British prize cases despite the fact that the claim was struck.

The Court went on and decided on the merits.

Felix Frankfurter:

There is that difference.

But I was referring to the — to the general observation as to the claims that can be made by a national that my country prevents me from putting in a case which if I could put in would enable me to win.

John J. Wilson:

In every one of the British prize cases including the Kronprinzessin Victoria, including the Antilla, including the Stjernblad, including the Margareta and all of those cases, they did not have the factual problem — questions they have here.

The Swede and every one of those cases had possession of his own records.

He declined to produce them because he was afraid of the Swedish War Trade Law.

That was the imposition of the foreign privilege.

That is now the problem here.We have lost possession.

Also Mr. Justice Frankfurter, I want to remind you that the British cases on Prize were not troubled with due process one bit.

And yesterday morning, I was troubled about the Antilla.

I thought we had overstated our position in our brief in the Antilla and we discovered strangely enough, another citation to Antilla that was not called to the Court’s attention by either side.

The Antilla went to the — went to the — to the Privy Council and it will be found in 1919 A.C. at 250.

William J. Brennan, Jr.:

1919 —

John J. Wilson:

1919, Appeals Cases 250, October 15, 1918 and that case, clarified somebody’s thinking on my part as to whether the Antilla was decided on the merits or not.

I don’t concede any defeat, if the Court please, as a result of this discovery because I still say the British prize cases do not hurt us for several reasons.

What I do want to remind the Court when you do read the Appeals Case in 1919, you will find the Privy Council said there was first of all the step taken by the Court of punitively striking out the claim.

Now, if anybody says in this case that we maybe punitively struck out then Hovey against Elliot raises its hand in opposition to that.

And we are suffering the loss of due process.

Thank you.