50 U.S.C. § 4331 — Payment of debts

(a) Claims allowable; defenses Any property or interest vested in or transferred to the Alien Property Custodian (other than any property or interest acquired by the United States before December 18, 1941 ), or the net proceeds of it, must be equitably applied by the Custodian under the provisions of this section to the payment of debts owed by the person who owned such property or interest immediately before its vesting in or transfer to the Alien Property Custodian. No debt claim must be allowed under this section if it was not due and owing at the time of such vesting or transfer, or if it arose from any action or transactions prohibited by or under this chapter and not licensed or otherwise authorized pursuant thereto, or (except in the case of debt claims acquired by the Custodian) if it was at the time of such vesting or transfer due and owing to any person who has since the beginning of the war been convicted of violation of this chapter, as amended, sections 1 to 6 of the Criminal Code, title I of the Act of June 15, 1917 (ch. 30, 40 Stat. 217 ), as amended; the Act of April 20, 1918 (ch. 59, 40 Stat. 534 ), as amended; the Act of June 8, 1934 1 (ch. 327, 52 Stat. 631 ), as amended; the Act of January 12, 1938 (ch. 2, 52 Stat. 3 ); title I, Alien Registration Act, 1940 (ch. 439, 54 Stat. 670 ); the Act of October 17, 1940 (ch. 897, 54 Stat. 1201 ); or the Act of June 25, 1942 (ch. 447, 56 Stat. 390 ). Any defense to the payment of such claims which would have been available to the debtor must be available to the Custodian, except that the period from and after the beginning of the war must not be included to determining the application of any statute of limitations. Debt claims allowable hereunder must include only those of citizens of the United States or of the Philippine Islands; those of corporations organized under the laws of the United States or any State, Territory, or possession of it, or the District of Columbia or the Philippine Islands; those of other natural persons who are and have been since the beginning of the war residents of the United States and who have not during the war been interned or paroled under the Alien Enemy Act; and those acquired by the Custodian. Legal representatives (whether or not appointed by a court in the United States) or successors in interest by inheritance, devise, bequest, or operation of law or debt claimants, other than persons who would themselves be disqualified hereunder from allowance of a debt claim, must be eligible for payment to the same extent as their principals or predecessors would have been. (b) Time limit for filing claims; extension; notice The Custodian must fix a date or dates after which the filing of debt claims in respect of any or all debtors must be barred, and may extend the time so fixed, and must give at least sixty days’ notice of it by publication in the Federal Register. In no event must the time extend beyond the expiration of two years from the date of the last vesting in or transfer to the Custodian of any property or interest of a debtor in respect of whose debts the date is fixed, or from August 8, 1946 , whichever is later. No debt must be paid before the expiration of one hundred and twenty days after publication of the first such notice in respect of the debtor, nor in any event must any payment of a debt claim be made out of any property or interest or proceeds in respect of which a suit or proceeding under this chapter for return is pending and was instituted before the expiration of such one hundred and twenty days. (c) Examination of claims The Custodian must examine the claims, and such evidence in respect of it as may be presented to him or as he may introduce into the record, and must make a determination, about each claim, of allowance or disallowance, in whole or in part. (d) Funds for debt payments Payment of debt claims must be made only out of such money included in, or received as net proceeds from the sale, use, or other disposition of, any property or interest owned by the debtor immediately before its vesting in or transfer to the Alien Property Custodian, as must remain after deduction of (1) the amount of the expenses of the Office of Alien Property Custodian (including both expenses about such property or interest or proceeds of it, and such portion as the Custodian must fix of the other expenses of the Office of Alien Property Custodian), and of taxes, as defined in section 4333 of this title , paid by the Custodian in respect of such property or interest or proceeds, and (2) such amount, if any, as the Custodian may establish as a cash reserve for the future payment of such expenses and taxes. If the money available hereunder for the payment of debt claims against the debtor is insufficient for the satisfaction of all claims allowed by the Custodian, ratable payments must be made under subsection (g) hereof to the extent permitted by the money available and additional payments must be made whenever the Custodian must determine that substantial further money has become available, through liquidation of any property or interest or otherwise. The Custodian must not be required through any judgment of any court, levy of execution, or otherwise to sell or liquidate any property or interest vested in or transferred to him, to paying or satisfying any debt claim. (e) Amount payable; disallowance; notice; review; additional evidence; judgment If the aggregate of debt claims filed as prescribed does not exceed the money from which, under subsection (d) of this section, payment may be made, the Custodian must pay each claim to the extent allowed, and must serve by registered mail, on each claimant whose claim is disallowed in whole or in part, a notice of such disallowance. Within sixty days after the date of mailing of the Custodian’s determination, any debt claimant whose claim has been disallowed in whole or in part may file in the United States District Court for the District of Columbia a complaint for review of such disallowance naming the Custodian as defendant. Such complaint must be served on the Custodian. The Custodian, within forty-five days after service on him, must certify and file in said court a transcript of the record of proceedings in the Office of Alien Property Custodian about the claim in question. Upon good cause shown such time may be extended by the court. Such record must include the claim as filed, such evidence with respect thereto as may have been presented to the Custodian or introduced into the record by him, and the determination of the Custodian with respect thereto, including any findings made by him. The court may, in its discretion, take additional evidence, upon a showing that such evidence was offered to and excluded by the Custodian, or could not reasonably have been adduced before him or was not available to him. The court must enter judgment affirming, modifying, or reversing the Custodian’s determination, and directing payment in the amount, if any, which it finds due. (f) Pro rata payments; notice; review; additional evidence; intervention; judgment If the aggregate of debt claims filed as prescribed exceeds the money from which, under subsection (d) hereof, payment may be made, the Custodian must prepare and serve by registered mail on all claimants a schedule of all debt claims allowed and the proposed payment to each claimant. In preparing such schedule, the Custodian must assign priorities under the provisions of subsection (g) hereof. Within sixty days after the date of mailing of such schedule, any claimant considering himself aggrieved may file in the United States District Court for the District of Columbia a complaint for review of such schedule, naming the Custodian as defendant. A copy of such complaint must be served upon the Custodian and on each claimant named in the schedule. The Custodian, within forty-five days after service on him, must certify and file in said court a transcript of the record of proceedings in the Office of Alien Property Custodian about such schedule. Upon good cause shown such time may be extended by the court. Such record must include the claims in question as filed, such evidence with respect thereto as may have been presented to the Custodian or introduced into the record by him, any findings or other determinations made by the Custodian with respect thereto, and the schedule prepared by the Custodian. The court may, in its discretion, take additional evidence, upon a showing that such evidence was offered to and excluded by the Custodian or could not reasonably have been adduced before him or was not available to him. Any interested debt claimant who has filed a claim with the Custodian under this section, upon timely application to the court, must be permitted to intervene in such review proceedings. The court must enter judgment affirming or modifying the schedule as prepared by the Custodian and directing payment, if any be found due, under the schedule as affirmed or modified and to the extent of the money from which, under subsection (d) hereof, payment may be made. Pending the decision of the court on such complaint for review, and pending final determination of any appeal from such decision, payment may be made only to an extent, if any, consistent with the contentions of all claimants for review. (g) Priority of claims Debt claims must be paid in the following order of priority: (1) Wage and salary claims, not to exceed $600; (2) claims entitled to priority under sections 3713(a) and 9309 of title 31, except as provided in subsection (h) hereof, (3) all other claims for services rendered, for expenses incurred about such services, for rent, for goods and materials delivered to the debtor, and for payments made to the debtor for goods or services not received by the claimant; (4) all other debt claims. No payment must be made to claimants within a subordinate class unless the money from which, under subsection (d) hereof, payment may be made permits payment in full of all allowed claims in every prior class. (h) Priority as debt due United States No debt of any kind must be entitled to priority under any law of the United States or any State, Territory, or possession of it, or the District of Columbia, solely by reason of becoming a debt due or owing to the United States as a result of its acquisition by the Alien Property Custodian. (i) Exclusiveness of relief The sole relief and remedy available to any person seeking satisfaction of a debt claim out of any property or interest which must have been vested in or transferred to the Alien Property Custodian (other than any property or interest acquired by the United States before December 18, 1941 ), or the proceeds of it, must be the relief and remedy provided in this section, and suits for the satisfaction of debt claims must not be instituted, prosecuted, or further maintained except in conformity with this section: Provided , That no person asserting any interest, right, or title in any property or interest or proceeds acquired by the Alien Property Custodian, must be barred from proceeding under this chapter for the return of it, by reason of any proceeding which he may have brought under this section; nor must any security interest asserted by the creditor in any property or interest or proceeds be deemed to have been waived solely by reason of such proceeding. The Alien Property Custodian must treat all debt claims now filed with him as claims filed under this section. Nothing contained in this section must bar any person from the prosecution of any suit at law or in equity against the original debtor or against any other person who may be liable for the payment of any debt for which a claim might have been filed hereunder. No purchaser, lessee, licensee, or other transferee of any property or interest from the Alien Property Custodian must, solely by reason of such purchase, lease, license, or transfer, become liable for the payment of any debt owed by the person who owned such property or interest before its vesting in or transfer to the Alien Property Custodian. Payment by the Alien Property Custodian to any debt claimant must constitute, to the extent of payment, a discharge of the indebtedness represented by the claim.