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. Eq. 571, 100 Atl. 893; Huberich, Trading Forrest, 9 Wall. 339, 19 L. ed. 696. with the Enemy, pp. 33, 34; Bigelow v.

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.

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.

Miller v. United States (Page v. United States) 11 Wall. 268, 304, 20 L. ed. 135, L. ed. 161; The Sally, 8 Cranch, 382, 3 144; Tyler v. Defrees, 11 Wall. 331, 20 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 bave 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

to the Leipzig corporation, was transferring to a corporation of which he was president and in which he had an interest, the property of the Leipzig corporation.

Marsh v. Whitmore, 21 Wall. 178, 22 L. ed. 482; Wardell v. Union P. R. Co. 103 U. S. 651, 26 L. ed. 509, 7 Mor. Min. Rep. 144; Davis v. Las Ovas Co. 227 U. S. 80, 57 L. ed. 426, 33 Sup. Ct. Rep. 197; Munson v. Syracuse, G. & C. R. Co. 103 N. Y. 58, 8 N. E. 355; Billings v. Shaw, 209 N. Y. 265, 103 N. E. 142; Lum v. McEwen, 56 Minn. 278, 57 N. W. | 662; Continental Securities Co. v. Belmont, 206 N. Y. 7, 51 L.R.A.(N.S.) 112, 99 N. E. 138, Ann. Cas. 1914A, 777; Brooklyn Heights R. Co. v. Brooklyn City R. Co. 151 App. Div. 465, 135 N. Y. Supp. 990.

Appellant cannot maintain this suit as a stockholder of the New York corporation, to enforce the right of the corporation.

Post v. Buck's Stove & Range Co. 43 L.R.A. (N.S.) 498, 119 C. C. A. 214, 200 Fed. 918; O'Connor v. Virginia Pass & Power Co. 184 N. Y. 46, 76 N. E. 1082; Heinz v. National Bank, 150 C. C. A. 592, 237 Fed. 942; Brewer v. Boston Theatre, 104 Mass. 378; 10 Cyc. 965967; 7 R. C. L. pp. 491, 492; 6 Fletcher's Cyc. Corp. § 4065; Leslie v. Lorillard, 110 N. Y. 519, 1 L.R.A. 456, 18 N. E. 363; Hawes V. Oakland (Hawes v. Contra Costa Water Co.) 104 U. S. 450, 26 L. ed. 827; Fleitmann v. Welsbach Street Lighting Co. 240 U. S. 27, 60 L. ed. 505, 36 Sup. Ct. Rep. 233; United Copper Securities Co. v. Amalgamated Copper Co. 244 U. S. 261, 61 L. ed. 1119, 37 Sup. Ct. Rep. 509.

Mr. John Quinn also argued the cause, and, with Mr. Paul Kieffer, filed a brief for appellees:

The contract was not intended by the parties to take effect according to its terms, but was in fact a sham and a device for the purpose of transferring from an anticipated enemy alien, to a corporation of the United States, the apparent legal title to the stock, without transferring or intending to transfer the real ownership of the stock.

[1918] A. C. 578, 87 L. J. P. C. N. 8. 114, 118 L. T. N. S. 519, 34 Times L. R. 309, 14 Asp. Mar. L. Cas. -268; Schaungut v. Udall, 93 Ala. 302, 9 So. 550; Bendetson v. Moody, 100 Mich. 553, 59 N. W. 252; Borland v. Walker, 7 Ala. 269; Loeschigk v. Addison, 19 Abb. Pr. 169.

Even on the face of the contract, the ownership in the stock did not pass.

Williston, Sales, 1909, § 262; Beardsley v. Beardsley, 138 U. S. 262, 265–267, 34 L. ed. 928, 929, 11 Sup. Ct. Rep. 318; Hereyford v. Davis, 102 U. S. 235, 243, 244, 26 L. ed. 160, 162, 163; 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, 353, 356, 3 L. ed. 587, 588; Hopkins v. Davis, 23 App. Div. 236, 48 N. Y. Supp. 745; Dunnigan v. Crummey, 44 Barb. 528; Anderson v. Read, 106 N. Y. 344, 13 N. E. 292; Decker v. Furniss, 14 N. Y. 615; Hatch v. Standard Oil Co. 100 U. S. 124, 131, 25 L. ed. 554, 556.

The contract became void and was abrogated and dissolved on April 6, 1917, when the United States declared that it was at war with Germany.

Trotter, Law of Contract during War, revised ed. London 1915, § 12; 7 Moore, International Law Dig. 1906; Zine Corp. v. Hirsch [1916] 1 K. B. 541, L.R.A. 1917C, 650, 85 L. J. K. B. N. S. 565, 114 L. T. N. S. 222, 32 Times L. R. 232, 21 Com. Cas. 273; Ertel Bieber & Co. v. Rio Tinto Co. [1918] A. C. 260, 8 B. R. C. 734, 87 L. J. K. B. N. S. 531, 118 L. T. N. S. 181, 23 Com. Cas. 243, 34 Times L. R. 208; Naylor, B. & Co. v. Krainische Industrie Gesellschaft [1918] 1 K. B. 331; Distington Hematite Iron 85 L. J. K. B. N. S. 919, 115 L. T. N. Co. v. Possehl & Co. [1916] 1 K. B. 811, S. 412, 32 Times L. R. 349; The William Bagaley, 5 Wall. 377, 407, 18 L. ed. 583, 589; Gates v. Goodloe, 101 U. S. 612, 619-621, 25 L. ed. 895, 897, 898; Lamar v. Micou, 112 U. S. 452, 464, 28 L. ed. 751, 754, 5 Sup. Ct. Rep. 221; United States v. Dietrich, 126 Fed. 674; Griswold v. Waddington, 10 Johns. 438; Abell v. Penn Mut. L. Ins. Co. 18 W. Va. 438; 10 Moore, International Law Dig. p. 244.

The seizure of the 14,900 shares under the provisions of the Trading with the Enemy Act was not in violation of the due process provisions of the Constitution.