Compagnie Universelle de Telegraphie et de Telephonie Sans Fil v. United States Service Corp. 84 N. J. Eq. 604, 95 Atl. 187, 85 N. J. Eq. 601, 96 Atl. 292; Brown v. United States, 8 Cranch, 109, 3 L. ed. 504; Jellenik v. Huron Copper Min. Co. 177 U. S. 1, 44 L. ed. 647, 20 Sup. Ct. Rep. 559; Conrad v. Waples, 96 U. S. 284, 24 L. ed. 721; United States v. 1,756 Shares of Capital Stock, 5 Blatchf. 237, Fed. Cas. No. 15,961; Britton v. Butler, 9 Blatchf. 462, Fed. Cas. No. 1,903; United States v. 269 Bales of Cotton, Woolw. 262, Fed. Cas. No. 16,583; McVeigh v. Bank of the Old Dominion, 26 Gratt. 200. In determining the bona fides of the contract of sale as between the parties thereto and our government, it is important to take into account the state of the law, as understood at the time when the contract was entered into, with respect to the effect of a possible war on privately owned property within our jurisdiction.

Brown v. United States, 8 Cranch, 109, 3 L. ed. 504; Clarke v. Morey, 10 Johns. 68; 1 Kent, Com. **5666; Wheaton, International Law, 5th Eng. ed. 1916, p. 421, Camillus Letters, XVIII., XIX., and XXII.; 2 Westlake, International Law, 1907, pp. 36-48; 2 Twiss, Nations, §§ 49-56; 3 Phillimore, International Law, pp. 147, 148; 2 Oppenheim, International Law, 2d ed. § 102; Wolff v. Oxholm, 6 Maule & S. 92, 105 Eng. Reprint, 1177, 18 Revised Rep. 313; Porter v. Freudenberg [1915] 1 K. B. 857, 5 B. R. C. 548, [1915] W. N. 43. 84 L. J. K. B. N. S. 1001, 112 L. T. N. S. 313, 31 Times L. R. 162, 59 Sol. Jo. 216, 20 Com. Cas. 189, Ann. Cas. 1917C, 215; Alexander's Cotton (United States v. Alexander) 2 Wall. 404-419, 17 L. ed. 915-919; Hanger v. Abbott, 6 Wall. 532,

18 L. ed. 939.

The equitable title to the shares of the Botany Worsted Mills having passed from the Leipzig company to the New York company on February 20, 1917, the fact that the consideration was to be paid later, and that the shares of stock pledged as collateral security were to be redelivered from time to time as the in

Cohen v. New York Mut. L. Ins. Co. 50 N. Y. 610, 10 Am. Rep. 522; Sands v. New York L. Ins. Co. 50 N. Y. 626, 10 Am. Rep. 535; New York L. Ins. Co. v. Statham, 93 U. S. 24, 23 L. ed. 789, 19 Am. Rep. 512; Mutual Ben. L. Ins. Co. v. Hillyard, 37 N. J. L. 444, 18 Am. Rep. 741; New York L. Ins. Co. v. Davis, 95 U. S. 429, 24 L. ed. 454.

Stoehr & Sons, Inc., the owner of these shares, being an American corporation, was not an enemy or ally of an enemy within the meaning of the Trading with the Enemy Act. Consequently these shares of stock were not subject to capture or seizure under its terms, and the act of the Alien Property Custodian in condemning them as enemy-owned property, upon his determination that they were such, was without jurisdiction and void.

Cohen v. New York Mut. L. Ins. Co. 50 N. Y. 610, 10 Am. Rep. 522; Alexander's Cotton (United States v. Alexander) 2 Wall. 404, 419, 17 L. ed. 915, 919; Risley v. Phoenix Bank, 83 N. Y. 318, 38 Am. Rep. 421, affirmed in 111 U. S. 125, 28 L. ed. 374, 4 Sup. Ct. Rep. 322; Planters' Bank v. Union Bank, 16 Wall. 496, 21 L. ed. 478; Conrad v. Waples, 96 U. S. 279, 24 L. ed. 722; Day v. Micou, 18 Wall. 156, 21 L. ed. 860; Shields v. Schiff, 124 U. S. 351, 31 L. ed. 445, 8 Sup. Ct. Rep. 510; Waples v. Hays, 108 U. S. 6, 27 L. ed. 632, 1 Sup. Ct. Rep. 80; Avegno v. Schmidt, 113 U. S. 293, 28 L. ed. 976, 5 Sup. Ct. Rep. 487; Fritz Schultz, Jr., Co. v. Raimes & Co. 99 Misc. 626, 164 N. Y. Supp. 454, affirmed in 100 Misc. 697, 166 N. Y. Supp. 567; Society for the Propagation of the Gospel v. Wheeler, 2 Gall. 105, Fed. Cas. No. 13,156; Bank of United States v. Deveaux, 5 Cranch, 61, 3 L. ed. 38; St. Louis & S. F. R. Co. v. James, 161 U. S. 545, 40 L. ed. 802, 16 Sup. Ct. Rep. 621; Stumpf v. A. Schreiber Brewery Co. 242 Fed. 80; Posselt v. D'Espard, 87 N. J. with the Enemy, pp. 33, 34; Bigelow v. Eq. 571, 100 Atl. 893; Huberich, Trading Forrest, 9 Wall. 339, 19 L. ed. 696.

In so far as the Alien Property Custodian undertook, as against Stoehr & Sons, Inc., a New York corporation, and, therefore, not an enemy or an ally of an enemy, ex parte, and without a legal proceeding based upon notice and a hearing or an opportunity to be heard in court, to take possession of the shares of stock

of the Botany Worsted Mills belonging to Stoehr & Sons, Inc., and to determine that such shares belonged to the Leipzig company or to any other enemy, his action was null and void, and in violation of the due process of the Federal Constitution.

McVeigh v. United States, 11 Wall. 259, 20 L. ed. 80; Windsor v. McVeigh, 93 U. S. 274, 23 L. ed. 914; Hovey v. Elliott, 167 U. S. 409, 42 L. ed. 215, 17 Sup. Ct. Rep. 841; Scott v. McNeal, 154 U. S. 34, 38 L. ed. 896, 14 Sup. Ct. Rep. 1108; Central of Georgia R. Co. v. Wright, 207 U. S. 127, 52 L. ed. 134, 28 Sup. Ct. Rep. 47, 12 Ann. Cas. 463; Londoner v. Denver, 210 U. S. 385, 52 L. ed. 1112, 28 Sup. Ct. Rep. 708; Denver v. State Invest. Co. 49 Colo. 244, 33 L.R.A. (N.S.) 395, 112 Pac. 789; Roller v. Holly, 176 U. S. 398, 44 L. ed. 520, 20 Sup. Ct. Rep. 410; Coe v. Armour Fertilizer Works, 237 U. S. 413, 59 L. ed. 1027, 35 Sup. Ct. Rep. 625; Chapman v. Phoenix Nat. Bank, 85 N. Y. 437; American Exch. Nat. Bank v. Palmer, 256 Fed. 680; Ochoa v. Hernandez y Morales, 230 U. S. 139, 57 L. ed. 1427, 33 Sup. Ct. Rep. 1033; Watts, W. & Co. v. Unione Austriaca i Navigazione, 248 U. S. 9, 63 L. ed. 100, 3 A.L.R. 323, 39 Sup. Ct. Rep.

1.

The contention that any title that might have accrued to the New York company under the terms of the contract of February 20, 1917, became devested on the passage of the Trading with the Enemy Act, is not tenable. If the interpretation sought to be given to that act by the defendants is correct, then the act, in so far as it undertakes by its fiat to devest such title, constitutes a deprivation of property without due process of law.

Cooley, Const. Lim. 444; Gilman v. Tucker, 128 N. Y. 190, 13 L.R.A. 304, 26 Am. St. Rep. 464, 28 N. E. 1040; Embury v. Conner, 3 N. Y. 511, 53 Am. Dec. 325; Cromwell v. MacLean, 123 N. Y. 474, 25 N. E. 932; Germania Sav. Bank v. Suspension Bridge, 159 N. Y. 362, 54 N. E. 33.

The sale of the shares of stock belonging to the New York corporation, in the absence of an adjudication in a proceeding duly instituted and conducted in accordance with due process, threatened by the Alien Property Custodian, and the limitation of its eventual relief and remedy upon such sale to the net proceeds received therefrom by the Alien Property Custodian or by the Treasurer of the United States, as provided by the Act

of November 4, 1918, were likewise violative of due process.

Ex parte Milligan, 4 Wall. 2, 18 L. ed. 281; Ex parte Orozco, 201 Fed. 117; Re McDonald, 49 Mont. 471, L.R.A.1915B, 988, 143 Pac. 947, Ann. Cas. 1916A, 1166.

There having been no adjudication by the President, after investigation, that any of the shares in controversy belong to an enemy or ally of an enemy, the act of the Alien Property Custodian, condemning them as enemy-owned, was without jurisdiction and void.

Runkle v. United States, 122 U. S. 543, 30 L. ed. 1167, 7 Sup. Ct. Rep. 1141; Truitt v. United States, 38 Ct. Cl. 398; Risley v. Phoenix Bank, 83 N. Y. 318, 38 Am. Rep. 421; Chapman v. Phoenix Bank, 85 N. Y. 437; Thompson v. Whitman, 18 Wall. 457, 21 L. ed. 897; Scott v. McNeal, 154 U. S. 47, 38 L. ed. 902, 14 Sup. Ct. Rep. 1108.

Independently of the impairment of the constitutional rights of Stoehr & Sons, Inc., the proposed sale would likewise violate the true intent and meaning of the Trading with the Enemy Act

American Exch. Nat. Bank v. Palmer, 256 Fed. 680; The Zamora [1916] 2 A. C. 77, 85 L. J. Prob. N. S. 89, 114 L. T. N. S. 626, 32 Times, L. R. 436, 60 Sol. Jo. 416, Ann. Cas. 1916C, 233.

The complainant, as a minority stockholder of Stoehr & Sons, Inc., has the right to maintain this action in his representative capacity, in view of the fact that the directors of that corporation are the nominees of the Alien Property Custodian, who, by reason of his possession of a majority of the stock, controls the affairs of that corporation.

Dodge v. Woolsey, 18 How. 331, 15 L. ed. 401; 2 Machen, Corp. §§ 1165, 1166.

The Alien Property Custodian having elected to seize the cause of action of the Leipzig company against the New York company for the unpaid purchase price for the 14,900 shares of the Botany Worsted Mills, he thereby precluded himself because of the election made to seize the 14,900 shares of stock transferred to the New York company, his election to recognize the transaction as a sale being inconsistent with the position taken by him in the present case.

Fowler v. Bowery Sav. Bank, 113 N. Y. 450, 4 L.R.A. 145, 10 Am. St. Rep. 479, 21 N. E. 172; Whalen v. Stuart, 194 N. Y. 505, 87 N. E. 819; Moller v. Tuska, 87 N. Y. 166; Bach v. Tuch, 126 N. Y. 53, 26 N. E. 1019; Morris v. Rexford, 18 N. Y. 552; Acer v. Hotchkiss, 97 N. Y.

The claim that appellant cannot maintain this suit in his representative capacity because of the provisions of § 9 of the Trading with the Enemy Act, or because of alleged noncompliance with the 27th Equity Rule, proceeds on an erroneous theory.

Hawes v. Oakland (Hawes v. Contra Costa Water Co.) 104 U. S. 450, 26 L. ed. 827; Doctor v. Harrington, 196 U. S. 579, 49 L. ed. 606, 25 Sup. Ct. Rep. 355; Delaware & H. Co. v. Albany & S. R. Co. 213 U. S. 435, 53 L. ed. 862, 29 Sup. Ct. Rep. 540; Ex parte Young, 209 U. S. 123, 52 L. ed. 716, 13 L.R.A. (N.S.) 932, 28 Sup. Ct. Rep. 441, 14 Ann. Cas.

Marsh v. Whitmore, 21 Wall. 178, 183, 22 L. ed. 482, 484; 3 Pom. Eq. Jur. §§ 1077, 1078; Twin Lick Oil Co. v. Marbury, 91 U. S. 592, 23 L. ed. 331, 3 Mor. Min. Rep. 688; Hayward v. Eliot Nat. Bank, 96 U. S. 618, 24 L. ed. 858; Indianapolis Rolling Mill v. St. Louis, Ft. S. & W. R. Co. 120 U. S. 256, 30 L. ed. 639, 7 Sup. Ct. Rep. 542; Hammond v. Hopkins, 143 U. S. 250, 36 L. ed. 145, 12 Sup. Ct. Rep. 418; Hoyt v. Latham, 143 U. S. 566, 36 L. ed. 264, 12 Sup. Ct. Rep. 568.

Solicitor General Frierson and Mr. George L. Ingraham argued the cause and filed a brief for appellees:

The act of Congress known as the Trading with the Enemy Act was passed under the express power given to Congress by art. 1, § 8, of the Constitution. Selective Draft Law Cases (Arver v. United States) 245 U. S. 366, 62 L. ed. 349, L.R.A.1918C, 361, 38 Sup. Ct. Rep. 159, Ann. Cas. 1918B, 856; Cox v. Wood, 247 U. S. 3, 62 L. ed. 947, 38 Sup. Ct. Rep. 421; Schenck v. United States, 249 U. S. 47, 63 L. ed. 470, 39 Sup. Ct. Rep. 247; Schaefer v. United States, 251 U. S. 466, 64 L. ed. 360, 40 Sup. Ct. Rep. 259; Northern P. R. Co. v. North Dakota, 250 U. S. 135, 63 L. ed. 897, P.U.R.

v. South Dakota, 250 U. S. 163, 63 L. ed. 910, 4 A.L.R. 1623, P.U.R.1919D, 717, 39 Sup. Ct. Rep. 507; Commercial Cable Co. v. Burleson, 250 U. S. 360, 63 L. ed. 1030, 39 Sup. Ct. Rep. 512; Hamilton v. Kentucky Distilleries & Warehouse Co. 251 U. S. 146, 64 L. ed. 194, 40 Sup. Ct. Rep. 106; Dakota Cent. Teleph. Co. v. South Dakota, 250 U. S. 163, 63 L. ed. 910, 4 A.L.R. 1623, P.U.R. 1919D, 717, 39 Sup. Ct. Rep. 507.

The right of the United States to confiscate and capture enemy property in the United States is not presented on this appeal, but the Constitution expressly gives to Congress, by art. 1, § 8, the power to declare war and make rules concerning captures on land and water, and also the power to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and the Trading with the Enemy Act, so far as it provides for the capture and sequestration of all property of enemies, is a valid exercise of that power.

States) 11 Wall. 268, 304, 20 L. ed. 135, Miller v. United States (Page v. United 144; Tyler v. Defrees, 11 Wall. 331, 20 L. ed. 161; The Sally, 8 Cranch, 382, 3 L. ed. 597; Brown v. United States, 8 Cranch, 110, 3 L. ed. 504; The Rapid, 8 Cranch, 155, 3 L. ed. 520; The Venus, 8 Cranch, 253, 3 L. ed. 553.

The contract between the Leipzig corporation and Stoehr & Sons, Inc. having been made in contemplation of the declaration of war between the United States and the German Empire, such contract providing that the German enemies of the United States were to have the custody of the shares of stock therein provided for, and were to receive all the consideration to be paid therefor, to carry out the contract,-it was within the definition of "trading with the enemy," and was therefore unlawful after the declaration of war.

New York L. Ins. Co. v. Statham, 93 U. S. 24, 22 L. ed. 789, 19 Am. Rep. 512: The Carlos F. Roses, 177 U. S. 655, 44 L. ed. 929, 20 Sup. Ct. Rep. 803; The Benito Estenger, 176 U. S. 568, 44 L. ed. 592, 20 Sup. Ct. Rep. 489; The Frances, 8 Cranch, 359, 3 L. ed. 589; The Venus, 8 Cranch, 253, 3 L. ed. 553.

The contract is void and unenforceable because Hans E. Stoehr, who attempted to execute the agreement on behalf of the Leipzig company, was the president and interested in the New York company, and thus, occupying a fiduciary relation

ed. 135, 144; Tyler v. Defrees, 11 Wall. 331, 20 L. ed. 161; United States v. Ju Toy, 198 U. S. 253, 49 L. ed. 1040, 25 Sup. Ct. Rep. 644; Brown v. United States, 8 Cranch, 110, 3 L. ed. 504.

The contention in appellant's brief that, because the President personally did not make the adjudication of the enemy ownership of the shares, the act of the Alien Property Custodian in seizing the shares was without jurisdiction and void, is unsound.

Confiscation Cases (United States v. Clarke) 20 Wall. 92, 109, 22 L. ed. 320, 323; Selective Draft Law Cases (Arver v. United States) 245 U. S. 366, 389, 62 L. ed. 349, 357, L.R.A.1918C, 361, 38 Sup. Ct. Rep. 159, Ann. Cas. 1918B, 856. The contention of the appellant that the Alien Property Custodian precluded himself from seizing the 14,900 shares because he had seized the rights of the Leipzig company under the contract is unfounded in fact and unsound in law. Election of Remedies, Eng. Law Dict.; Cyc. Law Dict.; 15 Cyc. 252, 257; Re Garver, 176 N. Y. 386, 68 N. E. 667; Taussig v. Hart, 49 N. Y. 301.

Mr. Justice Van Devanter delivered the opinion of the court:

This is a suit to establish a claim to and prevent a sale of 14,900 shares of the capital stock of the Botany Worsted Mills, a New Jersey corporation, which were seized by the Alien Property Custodian under the Trading with the Enemy Act as the property of a German corporation called Kammgarnspinnerei Stoehr & Co., Aktiengesellschaft. The plaintiff is a citizen of the United States, residing in New York, and sues in the right of Stoehr & Sons, Incorporated, a New York corporation, of which he is a stockholder, his asserted justification for so suing being that the directors of the corporation are agents of the Alien Property Custodian, and so far under his control that it would be useless to request them to bring the

suit.

The grounds for relief urged in the bill are that the shares, although seized and proposed to be sold as the [241] property of the German corporation, are in truth the property of the New York corporation; that, even if it does not own them, it has a substantial interest in them under a pre-war contract between it and the German corporation; that the shares cannot be taken from it consistently with due process of law, as guaranteed by the 5th Amendment, save through a

judicial proceeding wherein it has a right and an opportunity to be heard; that the shares were seized and are about to be sold without any such proceeding or hearing, and in violation of subsisting treaty provisions; and that the seizure, as made, did not conform to designated provisions of the Trading with the Enemy Act, and the sale, as proposed, will not be in accord with other provisions of the act.

After a full hearing the district court overruled the objections urged against the initial seizure; found from the proofs that the German corporation was the beneficial owner, that the New York corporation had no actual interest in the shares, and that the contract between those corporations, stressed by the plaintiff, "was not intended to represent the real purpose of the parties at all, but to serve as a cover for another purpose;" and as a result of the findings the court held that neither the plaintiff nor his corporation was entitled to any relief, and accordingly dismissed the bill. The plaintiff then asked and was allowed a direct appeal to this court. His assignments of error cover all the grounds on which the seizure and proposed sale

were attacked in the bill.

court, that a stockholder may bring a We shall assume, as did the district suit such as this in the right of his corporation, where there are circumstances justifying such respresentative action, and that the plaintiff has shown sufficient reason for suing in that capacity. See Equity Rule 27, 226 U. S. p. 8, Appx., 57 L. ed. 1640, 33 Sup. Ct. Rep. xxv.

The Trading with the Enemy Act, whether taken as originally enacted, October 6, 1917, chap. 106, 40 Stat. at L. 411, Comp. Stat. § 3115 a, Fed. Stat. Anno. Supp. 1918, p. 847, [242] or as since amended, March 28, 1918, chap. 28, 40 Stat. at L. 459, 460; November 4, 1918, chap. 201, 40 Stat. at L. 1020; July 11, 1919, chap. 6, 41 Stat. at L. 35; June 5, 1920, chap. 241, 41 Stat. at L. 977, is strictly a war measure and finds its sanction in the constitutional provision, art. 1, § 8, cl. 11, empowering Congress "to declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water." Brown v. United States, 8 Cranch, 110, 126, 3 L. ed. 504, 510; Miller v. United States (Page v. United States) 11 Wall. 268, 305, 20 L. ed. 135, 144.

It is with parts of the act which relate to captures on land that we now are concerned. They invest the President with extensive powers respecting the