BEHN, MEYER & CO., PLAINTIFF, VS. J, S. STANLEY ET AL., DEFENDANTS. AND LAZARUS G. JOSEPH AND A. N. JUREUDINI & BROS., APPELLANTS, VS. JOHN BORDMAN, J. M. MENZI, AND THE BANK OF…

OSTRAND, J.:

There is practically no dispute as to the facts in this case. On January 23,
1917, Behn, Meyer & Co., Ltd., a foreign corporation with a branch in the
Philippine Islands, brought an action against the Collector of Customs to
recover the possession of certain merchandise imported into the Islands and then
in the hands of the Collector. A. N. Jureidini & Bros, intervened in the
case and claimed title to the merchandise under a sale of the same ordered by
the British Admiralty Court of Alexandria, Egypt, in prize court
proceedings.

The Court of First Instance on February 28, 1918, rendered judgment in favor
of Behn, Meyer & Co., Ltd., on the ground that the title to the merchandise
originally rested in Behn, Meyer & Co., Ltd., and that no record of the
prize court proceedings showing that Behn, Meyer & Co., Ltd., had been
divested of the title had been presented in evidence. On appeal to the Supreme
Court the judgment was reversed and the case remanded to the court below with
instructions to allow Jureidini & Bros, a reasonable time within which to
obtain a duly certified copy of the decision of the Admiralty Court of
Alexandria, in which that court declared that the merchandise constituted lawful
prize.[1] A new trial was held on February 24, 1922, after which a judgment was
entered in favor of A. N. Jureidini & Bros. and against Behn, Meyer &
Co., Ltd., for the sum of P1,988 in damages and for the further sum of P1,988
for the value of the merchandise in default of delivery to Jureidini &
Bros.

In the meantime, on the 16th day of February, 1918, all the business,
property, and assets of every nature of the firm of Behn, Meyer & Co., Ltd.,
were taken over by the Alien Property Custodian of the United States under the
provisions of the Trading with the Enemy Act and by direction of the said Alien
Property Custodian, one W. D. Pemberton was appointed receiver and placed in
full charge of the business and assets of the firm.

During the month of January, 1919, the business of the Philippine branch of
Behn, Meyer & Co., Ltd., was liquidated and the property and assets of the
corporation in the Philippine Islands, including the goodwill, trade-marks,
accounts receivable, together with all vouchers, entries, and other proofs of
the indebtedness, such as the books of account, etc., were sold to one of the
intervenors herein, John Bordman, by the direction and under the supervision of
the said Alien Property Custodian, in accordance with the provisions of the
Alien Enemy Act, for the sum of P660,000, as shown by the letters and bills of
sale, Exhibits B, C, D, and E.

The intervenor herein, the Bank of the Philippine Islands, advanced to
Bordman the sum of P660,000, with which to purchase the said business, property,
and assets of the said Behn, Meyer & Co., Ltd., which sum was turned over to
W. D. Pemberton, the receiver appointed by the Alien Property Custodian.

On the 21st of February, 1919, Behn, Meyer & Co., Ltd., was declared by
the Alien Property Custodian to be an enemy not holding a license granted by the
President, and on the same date demand was made on the receiver to convey,
transfer, assign, deliver, and pay over to the Alien Property Custodian the net
proceeds of the sale and liquidation of the business, property, and assets
aforesaid, and by virtue of that demand, the said net proceeds in the sum of
P392,674.96 was on February 28, 1919, delivered to the managing director of the
office of the Alien Property Custodian in the Philippine Islands, as shown by
Exhibits F and G, which sum, as far as the record shows, is still in possession
of the Alien Property Custodian.

Execution of the judgment of February 24, 1922, in favor of A. N. Jureidini
& Bros, having been issued and returned unsatisfied, Jureidini & Bros,
on August 8, 1922, filed an ex-parte petition in the same case praying
that a receiver be appointed by the court to take charge of the estate and
effects of Behn, Meyer & Co., Ltd., and on August 10,1922, the Court of
First Instance issued an order appointing Lazarus G. Joseph receiver of the
property, assets and estate of the said firm, upon giving a bond in the sum of
P1,000.

On the 4th of September, 1923, the said Lazarus G. Joseph, as such receiver,
commenced an action in the Court of First Instance of Manila against the Bank of
the Philippine Islands and J. M. Menzi, being civil case No. 24892 of said
court, to annul the aforesaid sale of the business, property, and assets, etc.,
of the said Behn, Meyer & Co., Ltd., to John Bordman and to recover back the
property sold as property of the said Behn, Meyer & Co., Ltd., and for an
accounting and other relief.

On the 5th of September, 1923, the said Lazarus G. Joseph, in his capacity of
receiver, appeared in the present case in the Court of First Instance and
obtained an order directed to the said J. M. Menzi citing him to appear before
the court on a certain date to show cause why he should not turn over to the
said receiver the books of account of the said Behn, Meyer & Co., Ltd.

On September 14, 1923, John Bordman, J. M. Menzi, and the Bank of the
Philippine Islands filed in the same case a motion for permission to intervene
in the receivership proceedings solely for the purpose of vacating the order of
August 10, 1922, appointing a receiver for the property, assets, and estate of
the said Behn, Meyer & Co., Ltd., and alleging in support thereof that they
had a legal interest in the subject-matter of said receivership and an interest
against that of the parties to said proceedings.

At the same time the intervenors filed a verified motion setting forth the
facts hereinbefore stated and asking that the said order of August 10, 1922,
appointing the said Lazarus G. Joseph, receiver of the said Behn, Meyer &
Co. Ltd., be vacated and set aside on the ground that Jureidini & Bros.,
under the facts and circumstances stated, had no legal right to such
receivership and that the court had no jurisdiction to make such an appointment,
and that consequently its order to that effect was null and void.

Upon hearing, the Court of First Instance, under date of September 26, 1923,
entered an order, the dispositive part of which reads as follows:

“For the foregoing and the interests of J. M. Menzi, John Bordman and the
Bank of the Philippine Islands in this proceeding having, in the opinion of the
court, been shown, that of Bordman consisting in his having acquired through
purchase for the sum of P660,000 all the interests, rights, choses in action,
books, vouchers of the herein plaintiff; that of J. M. Menzi in his having been
designated by said Bordman to take charge of said properties and books in his
name; and that of the Bank of the Philippine Islands in its having furnished the
sum of money with which said Bordman made the purchase, it is hereby adjudged to
permit said parties, as they are hereby permitted and authorized, to intervene
in this case; and-the court having reached the conclusion that it has not, and
did not have, any jurisdiction to appoint a receiver in view of the fact that
all of the properties of the said plaintiff had been sold by the Alien Property
Custodian in accordance with the Act of Congress hereinbefore mentioned; it is
hereby adjudged that the order of this court of August 10, 1922, appointing
Lazarus G. Joseph, receiver, should be, as it hereby is, set aside. Let the bond
given by said receiver to secure the faithful performance of his duties be
cancelled, and J. M. Menzi is held to be under no obligation to deliver to the
aforesaid Lazarus G. Joseph, the books under said Menzi’s charge which formerly
belonged to the plaintiff Behn, Meyer & Co., Ltd.”

No exception was taken to this order neither by the receiver nor by Jureidini
& Bros., but on October 1, 1923, their counsel filed the following motion
for reconsideration:

“Come now the Receiver and A. N. Jureidini & Bros. in the above entitled
case and move this court that the court reconsider the resolution of this court
dated September 26, 1923, and, thereafter order the delivery of the books to the
said receiver.”

On December 3, 1923, the motion for reconsideration was denied, exception
duly taken and the case is now before us upon appeal from the two orders last
mentioned.

The appellants contend that the court below erred in permitting the appellees
to intervene inasmuch as (a) a final judgment had been entered in the
case and (b) the appellees had no legal interest in the matter in
litigation. Neither one of these points is, in our opinion, well taken. The
appellees intervene only in the receivership proceedings which still were an
open issue and did not attempt to interfere in the part of the case which was
covered by the final judgment. They claimed no interest in the con- troversy
between Jureidini & Bros, and Behn, Meyer & Co., Ltd., but that Bordman
and the Bank of the Philippine Islands had a vital interest in the subsequent
receivership is clearly shown by the fact that one of the first actions of the
receiver appears to have been the institution of an action against them to annul
the sale made by the Alien Property Custodian to Bordman, thus disturbing the
latter in his property rights and threatening the lien held by the bank upon the
property sold. As to the appellee Menzi, it, is sufficient to say that he was
brought into the present case by the receiver himself on the order to show cause
why he did not turn over and deliver to said receiver the books of account of
Behn, Meyer & Co., Ltd. We fail to find any error or abuse of discretion on
the part of the court below in permitting the intervention.

Appellants further maintain that the court erred in holding that the
appointment of the receiver was in excess of its jurisdiction. This contention
is also untenable. As soon as Behn, Meyer & Co., Ltd., was declared an
“enemy not holding a license granted by the President of the United States,” it
became the duty of the Alien Property Custodian to take possession of its
business and all its assets within United States territory, and we must
presume that this duty was duly performed and that all such assets are now
either actually or constructively in the possession of the Alien Property
Custodian and under his control. If so, they are beyond the jurisdiction and
control of the Philippine Courts. Section 7 of the Trading with Enemy Act as
amended provides as follows:

” ‘The sole relief and remedy of any person having any claim to any money or
other property heretofore or hereafter conveyed, transferred, assigned,
delivered, or paid over to the Alien Property Custodian, or required so to be,
or seized by him shall be that provided by the terms of this Act, and in the
event of sale or other disposition of such property by the Alien Property
Custodian, shall be limited to and enforced against the net proceeds received
therefrom and held by the Alien Property Custodian or by the Treasurer of the
United States”

Section 9 of the Act provides that anyone “not an enemy or ally of enemy”
claiming any interest, right, or title in any money or other property so
sequestered and held, may give notice of his claim and institute a suit in
equity against the Custodian or the Treasurer, as the case may be, to establish
and enforce his claim; and where suit is brought, the money or property is to be
retained by the Custodian or in the Treasury, to abide the final decree. The
same section further provides:

“Except as herein provided, the money or other property conveyed,
transferred, assigned, delivered, or paid to the Alien Property Custodian shall
not be liable to lien, attachment, garnishment, trustee, process, or execution,
or subject to any order or decree of any court.”

Section 17 of the same Act provides:
“That the district courts of the
United States are hereby given jurisdiction to make and enter all such rules as
to notice and otherwise, and all such orders and decrees, and to issue such
process as may be necessary and proper in the premises to enforce the provisions
of this Act, with a right of appeal from the final order or decree of such court
as provided in sections one hundred and twenty-eight and two hundred and
thirty-eight of the Act of March third, nineteen hundred and eleven, entitled
‘An Act to codify, revise, and amend the Jaws relating to the
judiciary.”

The only jurisdiction given to the Courts of First Instance of the Philippine
Islands is in regard to criminal offenses under said Act, as shown by section 18
thereof. Had it been the intention of Congress to give the Philippine courts
jurisdiction over civil litigation in regard to property under the control of
the Alien Property Custodian, the Act would, of course, have so stated. The
orders appealed from are affirmed, with the costs against the appellants. So
ordered.

Johnson, Street, Malcolm, Avancena-, Villamor, Johns, and
Romualdez, JJ., concur.