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T r e a s u r y De par t me nt
FOREIGN FUNDS CONTROL
August 2, 1946

PUBLIC CIRCULAR NO. 31
UNDER EXECUTIVE ORDER NO. 83 8 % . AS AMENDED, EXECUTIVE ORDER NO. 9 1 1 3 ,
AS AMENDED, SECTIONS 3 ( a ) AND S ( b ) OF THE TRADING WITH THE ENEMY ACT,
AS AMENDED BY THE F I RS T WAS POWERS ACT. 1 9 4 1 . RELATING TO FOREIGN
FUNDS CONTROL.*
___________________________________________________________

ATTACHMENTS AGAINST BLOCKED PROPERTY

(1)
R e f e r e n c e i s made t o G e n e r a l R u l i n g No . 12 r e l a t i n g t o u n ­
licen sed transfers of blocked property.
R e f e r e n c e i s a l s o made t o
G e n e r n l R u l i n g No . 19 r e l a t i n g t o t h e r e l e a s e o f T r e a s u r y c o n t r o l s
o v e r p r o p e r t y v e s t e d b y the A l i e n P r o p e r t y C u s t o d i a n .
Tkis c i r c u l a r
d e a l s w i t h the e f f e c t o f su ch r e l e a s e on u n l i c e n s e d a t t a c h m e n t s l e v i e d
w i t h r e s p e c t t o b l o c k e d p r e y e r t y p r i o r t o the v e s t i n g t h e r e o f by the
Cdst od i a n .
(2)
Un d e r p a r a g r a p h ( 1 ) o f G e n e r a l R u l i n g No . 1 2 . i n t e r e s t s i n
b l o c k e d p r o p e r t y cannot be a c q u i r e d , t r a n s f e r r e d , or c r e a t e d by un­
l i c e n s e d " t r a n s f e r s ’*
.
No r may an u n l i c e n s e d t r a n s f e r b e t h e b a s i s
f o r t h e a s s e r t i o n o r r e c o g n i t i o n o f any r i g h t , r emedy, p o w e r , o r
p r i v i l e g e w i t h r e s p e c t t o , or i n t e r e s t in, any b l o c k e d p r o p e r t y .
(3)
An a t t a c h m e n t i s a • • t r a n s f e r ” .
See p a r a g r a p h ^ 5 ) o f G e n ­
e r a l R u l i n g No . 12 wh e r e t h e t e r m • t r a n s f e r " i s d e f i n e d as i n c l u d i n g
•
" t h e i s s u a n c e , d o c k e t i n g , f i l i n g , o r o t h e r l e v y o f o r u n d e r a ny j u d g ­
me n t , d e c r e e , a t t a c h m e n t , e x e c u t i o n , o r o t h e r j u d i c i a l or a d m i n i s t r a ­
t i v e p r o c e s s o r o r d e r , o r t h e s e r v i c e o f a n y g a r n i s h m e n t * ’.
An u n ­
l i c e n s e d a t t a c hm e nt , t h e r e f o r e , c an no t o p e r a t e to t r a n s f e r or c r e a t e
any i n t e r e s t i n b l o c k e d p r o p e r t y .
No r c a n i t s e r v e as a b a s i s f o r
t h e a s s e r t i o n or r e c o g n i t i o n o f any r i g h t , r e me d y , p o we r , o r p r i v i ­
l e g e w i t h r e s p e c t t o , o r i n t e r e s t i n , any b l o c k e d p r o p e r t y .
(4)
P a r a g r a p h ( 4 ) o f G e n e r a l R u l i n g No . 12 d o e s n o t c o n s t i t u t e
a l i c e n s e a u t h o r i z i n g t h e s e i z u r e o r c r e a t i o n o f any i n t e r e s t in
b l o c k e d p r o p e r t y by attachment p r o c e e d i n g s or o t h e r l e g a l p r o c e s s .

• Appeadix B; - Sac. 3 ( a ) . 40* S t a t . 4 1 2 ; Sac. 5 ( b ) , 40 S t a t . 415 aad 9661 Sac. 2, 4 « « « a t . 1;
54 S t a t . 17*: 55 S t a t . | M ; Ex. Order | M * . A pril 10, 1 * 40 , aa aatndtd by Ex. Order #7**',
Juae 14. 1 94 1. Ex. Order I U 2 , J«*jr M , 1941, Ex. Ordar 896 3. Dec. 9 ,
194 1. am* Es. Order
• H I . Dae. 2 * . 1941: Ex. Order 9 1 f J . Ja ly • .
1941 . a« aaeaded by Ex. Order 9SCT, Juae « .
* * 4 S : E e f a l e t tena, A pril |#. 1 * 4 0 . ae aaeaded June 1 4 . 1 9 4 1 , J a l y 2 « . 1 9 4 1 , aad M r u n
19. 1 9 4 « .




- 2 -

T h i s p a r a g r a p h m e r e l y i s a f o r m a l s t a t e m e n t o f t he p o s i t i o n w h i c h t he
T r e a s u r y De par t me n t has a lw a ys t a k e n w i t h r e s p e c t t o l i t i g a t i o n a f ­
f e c t i n g b l o c k e d p r o p e r t y — t h a t i t d o e s not d e s i r e t o i n t e r f e r e w i t h
s u c h l i t i g a t i o n s o l o n g as i t i s c l e a r l y u n d e r s t o o d t h a t the j u d i c i a l
p r o c e s s c a n n o t , w i t h o u t a l i c e n s e or o t h e r a u t h o r i z a t i o n from the
S e c r e t a r y o f the T r e a s u r y , o p e r a t e t o t r a n s f e r or c r e a t e any i n t e r e s t
in b lo c k e d p r o p e r t y .
Thus t h e p r o v i s o o f p a r a g r a p h ( 4 ) s p e c i f i e s
t h a t “ no a t t a c h m e n t , j u d g m e n t , d e c r e e / l i e n , e x e c u t i o n , g a r n i s h m e n t ,
or other j u d i c i a l p ro ce s s s h a ll con fer or c r e a t e a g r e a te r r i g h t ,
p ow er , or p r i v i l e g e w i t h r e s p e c t t o , or i n t e r e s t in, any p r o p e r t y
i n a b l o c k e d a c c o u n t t h a n t h e o wn e r o f s u c h p r o p e r t y c o u l d c r e a t e o r
c o n f e r b y v o l u n t a r y a c t p r i o r t o t h e i s s u a n c e o f an a p p r o p r i a t e l i cense.'*
In i s s u i n g p a r a g r a p h ( 4 ) , t h e T r e a s u r y D e p a r t me n t d i d not
u n d e r t a k e t o d e c i d e f o r the c o u r t s whether t h e y s h o u l d e x e r c i s e j u ­
risdiction.
I t s i m p l y p r e s c r i b e d t h a t j u r i s d i c t i o n c o u l d be e x e r c i s e d
o n l y o n t h e b a s i s t h a t i f a T r e a s u r y l i c e n s e was n o t i s s u e d , t h e j u ­
d i c i a l p r o c e s s c o u l d n o t o p e r a t e t o t r a n s f e r o r c r e a t e any i n t e r e s t i n
b l o c k e d p r o p e r t y , nor c o u ld i t be t h e b a s i s f o r the a s s e r t i o n o r r e c o g ­
n i t i o n o f any o t h e r r i g h t , r e m e d y , p o w e r , o r p r i v i l e g e w i t h r e s p e c t t o
the

property.

(5)
The T r e a s u r y D e p a r t m e n t has a l w a y s c o n s i d e r e d t h a t arhen t h e
A1 i e n P r o p e r t y C u s t o d i a n ha s v e s t e d a n y p r o p e r t y , i t w o u l d n o t b e i n
t he n a t i o n a l i n t e r e s t f o r t h e T r e a s u r y D ep artm en t t h e r e a f t e r t o g r a n t
l i c e n s e s a u t h o r i s i n g th e c r e a t i o n or a c q u i s i t i o n o f any i n t e r e s t in
the p r o p e r t y .
F o r m e r l y i t was t h e p r a c t i c e off t h e D e p a r t m e n t , w h e n ­
e v e r i t was n o t i f i e d b y t h e C u s t o d i a n t h a t a p a r t i c u l a r p r o p e r t y had
b een v e s t e d , t o is s u e a s p e c i f i c r e l e a s e t o ' t h e C us t o d i a n o f a l l c o n ­
t r o l o f t h e p r o p e r t y u n d e r E x e c u t i v e O r d e r s N o s . 8 3 8 9 and 9 1 9 3 .
P a r a g r a p h ( 1 ) o f G e n e r a l R u l i n g N o . 19 c o n s t i t u t e s a g e n e r a l r e l e a s e
o f s u c h c o n t r o l i n t h e c a s e o f a l l Germ an a n d J a p a n e s e p r o p e r t y v e s t e d
b y the C us todian.
P a r a g r a p h ( 2 ) o f the G e n e r a l R u l i n g ia i n t e n d e d t o
m ake i t c l e a r t h a t a r e l e a s e o f c o n t r o l o v e r a n y v e s t e d p r o p e r t y t o
the A l i e n P r o p e r t y C u s t o d i a n , whether b y s p e c i f i c r e l e a s e or by r e a s o n
off t h e G e n e r a l R u l i n g , o p e r a t e s a s a f i n a l d e n i a l b y t h e S e c r e t a r y o f
t h e T r e a s u r y o f a n y p e n d in g a p p l i c a t i o n f o r l i c e n s e o r o t h e r a u t h o r ­
i s a t i o n r e l a t i n g t o s u c h p r o p e r t y and t h a t no a p p l i c a t i o n f o r a l i ­
ce n s e a u t h o r i s i n g the c r e a t i o n ,
a c q u i s i t i o n , or t r a n s f e r o f any i n ­
t e r e s t in su ch p r o p e r t y w i l l t h e r e a f t e r be e n t e r t a i n e d or g r a n t e d .
T he p a r a g r a p h i s t h u s a f o r m a l s t a t e m e n t o f wh a t has a l w a y s b e e n t h e
p o s i t i o n off t h e T r e a s u r y D e p a r tm e n t - - n a m e l y , t h a t o n c e b l o c k e d p r o p ­
e r t y has b e e n v e s t e d b y t h e C u s t o d i a n , t h e r e i s no l o n g e r any p o s s i ­
b i l i t y t h a t an u n i i c e n s e d a t t a c h m e n t may r i p e n t h r o u g h t h e i s s u a n c e o f
* T r e a s u r y l i c e n s e i n t o a s e i z u r e a nd a c q u i s i t i o n o f a n i n t e r e s t i n
su ch b l o c k e d p r o p e r ty .
(
I n v i e w o f t h e f a c t t h a t t h e A l i e n P r o p e r t y C u s t o d i a n has
p u b l i c l y a n n o u n c e d h i s i n t e n t i o n o f v e s t i n g a l l Ge r ma n and J a p a n e s e
p r o p e r t y in the U n i t e d S t a t e s , i t w i l l be the g e n e r a l p o l i c y o f the
T r e a s u r y D e p a r t m e n t m ot t o g r a n t a n y l i c e n s e s a u t h o r i z i n g t h e c r e a t i o n
o r a c q u i s i t i o n t h r o u g h l e g a l p r o c e s s o f a n y i n t e r e s t i n b l o c k e d Germ an
or Japan ese p r o p e r ty .
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JOSEPH J .

O'CONNELL,

JR.

Acting Secretary of the Treasury


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102