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ed. 135, 144; Tyler v. Defrees, 11 Wall. judicial proceeding wherein it has a 331, 20 L. ed. 161; United States v. Ju right and an opportunity to be heard; Toy, 198 U. S. 253, 49 L. ed. 1040, 25 that the shares were seized and are about Sup. Ct. Rep. 644; Brown v. United to be sold without any such proceeding States, 8 Cranch, 110, 3 L. ed. 504. or hearing, and in violation of subsist

The contention in appellant's brief ing treaty provisions; and that the that, because the President personally did seizure, as made, did not conform to not make the adjudication of the enemy designated provisions of the Trading ownership of the shares, the act of the with the Enemy Act, and the sale, as Alien Property Custodian in seizing the proposed, will not be in accord with othshares was without jurisdiction and void, er provisions of the act. is unsound.

After a full hearing the district court Confiscation Cases (United States v. overruled the objections urged against Clarke) 20 Wall. 92, 109, 22 L. ed. 320, the initial seizure; found from the 323; Selective Draft Law Cases (Arver proofs that the German corporation was v. United States) 245 U. S. 366, 389, 62 the beneficial owner, that the New York L. ed. 349, 357, L.R.A.1918C, 361, 38 corporation had no actual interest in the Sup. Ct. Rep. 159, Ann. Cas. 1918B, 856. shares, and that the contract between

The contention of the appellant that the those corporations, stressed by the Alien Property Custodian precluded him- plaintiff, “was not intended to represent self from seizing the 14,900 shares be- the real purpose of the parties at all, cause he had seized the rights of the but to serve as a cover for another purLeipzig company under the contract is pose; ” and as a result of the findings unfounded in fact and unsound in law.

the court held that neither the plaintiff Election of Remedies, Eng. Law Dict.; nor his corporation was entitled to any Cyc. Law Dict.; 15 Cyc. 252, 257; Re relief, and accordingly dismissed the bill. Garver, 176 N. Y. 386, 68 N. E. 667; The plaintiff then asked and was allowed Taussig v. Hart, 49 N. Y. 301.

a direct appeal to this court. His as

signments of error cover all the grounds Mr. Justice Van Devanter delivered on which the seizure and proposed sale

were attacked in the bill. the opinion of the court:

We shall assume, as did the district This is a suit to establish a claim to and prevent a sale of 14,900 shares of suit such as this in the right of his cor

court, that a stockholder may bring a the capital stock of the Botany Worsted

poration, where there are circumstances Mills, a New Jersey corporation, which justifying such respresentative action, were seized by the Alien Property Cus- and that the plaintiff has shown suffitodian under the Trading with the cient reason for suing in that capacity. Enemy Act as the property of a Ger- See Equity Rule 27, 226 U. S. p. 8, Appx., man corporation called Kammgarnspin- 57 L. ed. 1640, 33 Sup. Ct. Rep. xxv. nerei Stoehr & Co., Aktiengesellschaft. The plaintiff is a citizen of the United whether taken as originally enacted,

The Trading with the Enemy Act, States, residing in New York, and sues October 6, 1917, chap. 106, 40 Stat. at in the right of Stoehr & Sons, Incorpo- L. 411, Comp. Stat. $ 3115! a, Fed. Stat. rated, a New York corporation, of Anno. Supp. 1918, p. 847, [242] or as which he is a stockholder, his asserted since amended, March 28, 1918, chap. 28, justification for so suing being that the 40 Stat. at L. 459, 460; November 4, 1918, directors of the corporation are agentschap. 201, 40 Stat. at L. 1020; July 11, of the Alien Property Custodian, and 1919, chap. 6, 41 Stat. at L. 35; June 5, so far under his control that it would 1920, chap. 241, 41 Stat. at L. 977, is be useless to request them to bring the strictly a war measure and finds its sancsuit. The grounds for relief urged in the 1, § 8, cl. 11, empowering Congress "to

tion in the constitutional provision, art. bill are that the shares, although seized declare war, grant letters of marque and and proposed to be sold as the [241] reprisal, and make rules concerning capproperty of the German corporation, are

tures on land and water." Brown v. in truth the property of the New York United States, 8 Cranch, 110, 126, 3 L. corporation; that, even if it does not owned. 504, 510; Miller v. United States them, it has a substantial interest in them (Page v. United States) 11 Wall. 268, under a pre-war contract between it and 305, 20 L. ed. 135, 144. the German corporation; that the shares It is with parts of the act which recannot be taken from it consistently late to captures on land that we now are with due process of law, as guaranteed concerned. They invest the President by the 5th Amendment, save through a with extensive powers respecting the

As re

sequestration, custody, and disposal of, vided by the terms of this act, and in enemy property. By § 5 he is in terms the event of sale or other disposition of authorized to exercise "any" of these such property by the Alien Property powers "through such officer or officers Custodian, shall be limited to and enas he shall direct." By $ 6 he is author- forced against the net proceeds received ized to appoint and “prescribe the duties therefrom and held by the Alien Propof” an officer to be known as the Alien erty Custodian or by the Treasurer of Property Custodian. By $ 7c, as amend the United States." ed November 4, 1918, direct provision for By $ 9, as twice amended, anyone, “not sequestering enemy property is made as an enemy or ally of enemy," claiming follows:

any interest, right, or title in any money "If the President shall so require any or other property so sequestered and money or other property including .. held, may give notice of his claim and choses in action, and rights and claims institute a suit in equity against the of every character and description owing Custodian or the Treasurer, as the case or belonging to or held for, by, on ac- may be, to establish and enforce his count of, or on behalf of, or for the claim; and where suit is brought, the benefit of, an enemy or ally of enemy money or property is to be retained by not holding a license granted by the the Custodian or in the Treasury, to President hereunder, which the Pres- abide the final decree. By § 12, as ident after investigation shall determine amended March 28, 1918, the Custodian is so owing or so belongs or is so held, is [244] clothed with "all the powers of shall be conveyed, transferred, assigned, a common-law trustee” in respect of all delivered, or paid over to the Alien Prop- enemy property coming into his hands, erty Custodian, or the same may be and is given authority, subject to the seized by the Alien Property Custodian; President's supervision, to manage and and all property thus acquired shall be dispose of the same, by sale or otherwise, held, administered and disposed of as as if he were the absolute owner, save elsewhere provided in this act.

as the power of disposal may be sus

pended by a suit under § 9. “Whenever any such property'shali spects the ultimate disposition of the consist of shares of stock or other ben-property or its proceeds, § 12 says: eficial interest in any corporation, [243] “After the end of the war any claim of association, or company or trust, it shall any enemy or of an ally of enemy to be the duty of the corporation, associa- any money or other property received tion, or company or trustee or trustees is- and held by the Alien Property Custosuing such shares or any certificates or dian or deposited in the United States other instruments representing the same Treasury, shall be settled as Congress or any other beneficial interest to cancel shall direct.” upon its, his, or their books all shares The President, by orders of October of stock or other beneficial interest | 12, 1917, and February 26, 1918, commitstanding upon its, his, or their books in ted to the Alien Property Custodian the the name of any person or persons, or executive administration of g 7c, includheld for, on account of, or on behalf of, ing the power to determine after invesor for the benefit of any person or per- tigation whether property was enemysons who shall have been determined by owned, etc., and to require the surrender the President, after investigation, to be or seizure of such as he should deteran enemy or ally of enemy, and which mine was so owned. In exercising this shall have been required to be conveyed, power the Custodian, after investigation, transferred, assigned, or delivered to the determined, in substance, that the Alien Property Custodian or seized by shares now in question, which then him, and in lieu thereof to issue certif- stood in the name of the New York coricates or other instruments for such poration on the books of the Botany shares or other beneficial interest to the Worsted Mills, belonged to the German Alien Property Custodian or otherwise, corporation, that it was an enemy not as the Alien Property Custodian shall holding a presidential license, and that require.

the New York corporation held the “The sole relief and remedy of any shares for its benefit; and in further experson having any claim to any money ercising this power the Custodian seized or other property heretofore or here- the shares and required the Botany after conveyed, transferred, assigned, Worsted Mills to transfer them to his delivered, or paid over to the Alien name on its books, in accordance with Property Custodian, or required so to the provision in § 7c, before quoted. be, or seized by him shall be that pro- One objection urged by the plaintiff is that the seizure permitted by the act, contrary, it distinctly reserves to any is confined to money or property "which claimant who is neither an enemy nor an the President, after investigation, shall ally of an enemy a right to assert and determine” is enemy-owned, etc.

, and establish his claim by a suit in equity that here there was no such determina- unembarrassed by the precedent exection by the President, but only by the utive determination. Not only so, but, Custodian. Whether the objection would pending the suit, which the claimant be good if it turned entirely on the words may bring as promptly after the seizure of § 7c, on which the plaintiff relies, we as he chooses, the property is to be reneed [245] not consider; for they ob- tained by the Custodian to abide the viously are qualified and explained by & result, and, if the claimant prevails, is 5, which very plainly enables the Presi- to be forthwith returned to him. Thus dent to exercise his power under § 7c there is provision for the return of prop"through such officer or officers as he may erty mistakenly sequestered; and we direct.” By the orders already noticed, the have no hesitation in pronouncing it President directed that this power bé ex- adequate, for it enables the claimant, as ercised through the Alien Property Custo- of right, to obtain a full hearing on his dian. It therefore is as the wor claim in a court having power to enforce relied on had been "which the Pres- it if found meritorious. ident, acting through the Alien Property

That the shares were transferred to Custodian, shall determine after inves- the Custodian's name does not affect the tigation" is enemy-owned, etc. In short, question, for, considering the nature of a personal determination by the Pres- the property, that was but an incident of ident is not required; he may act an effective seizure, and, if a return of through the Custodian, and a determina- the shares were ordered, a retransfer tion by the latter is in effect the act of would follow as of course. the President. Central U. Trust Co. v. Treating this as a suit under $ 9,Garvan, 254 U. S. 554, ante, 403, 41 Sup. the plaintiff having filed a notice of Ct. Rep. 214; Confiscation Cases (United claim under that section,-the next States v. Clarke) 20 Wall. 92, 109, 22 L. question is, Has the New York corporaed. 320, 323.

tion such an interest in the shares as The plaintiff further objects that the entitles it, or the plaintiff in its right, shares, although claimed by and stand- to demand that they be freed from the ing in the name of the New York cor- seizure? Whether it has any interest poration, which concededly was neither turns on the effect to be given to the an enemy nor an ally of an enemy, were contract between it and the German seized and transferred to the name of corporation, under which the plaintiff inthe Alien Property Custodian in virtuesists it became the owner or acquired a of a determination by an executive officer substantial interest. The district court, in an ex parte administrati proceeding as we have indicated, found that the that they belonged to an alien enemy,-i contract was not intended to affect the the gist of the objection being that the ownership as between the two corporashares could not be taken from the New tions, but to serve as a cover for someYork corporation consistently with due thing else, and that, after the contract, process of law without first according the German corporation remained, as it it a hearing on its claim in a court of had been before, the sole beneficial ownjustice. The objection rests on erro- The facts bearing on the question neous assumptions and is not tenable. are as follows:

That Congress, in time of war, may At the beginning of the World War, authorize and provide for the seizure and during its early stages, the Stoehr and sequestration, through executive family, consisting of a father and three channels, of property believed to be [247] sons, were engaged in business in enemy-owned, if adequate provision be New York as copartners under the name made for a return in case of mistake, is of Stoehr & Sons. The father and one son not debatable. Central U. Trust Co. v. were German subjects, residing in GerGarvan, supra. There is no warrant for many; one son, Hans E. Stoehr, was a saying that the enemy ownership must German subject residing in the United be determined judicially before the prop- States, and the remaining son, Max W. erty can be seized; and the practice has Stoehr, was a naturalized citizen of the been the other way. The present act United States, residing therein. All commits the determination of that ques

were shareholders in the German cortion to the President, or the represent- poration, and the father and son in ative through whom [246] he acts, but it Germany were among its chief officers. does not make his action final, On the All were directors of the Botany Worst

er.

ed Mills, and Hans E. Stoehr and Max | $5,000 was to be retained by the German W. Stoehr were directing and control- corporation, and neither corporation ling its affairs, one being its treasurer was to have “any further claim against and the other its secretary. It was a the other" by reason of the contract. manufacturing concern with large hold- Possibly the stipulated price was less ings, had a well-established and exten- than the actual value; but, however this sive business, had been paying large may have been, the assets and situation dividends and gave promise of contin of the New York corporation were such uing to do so. The German corporation that it reasonably could not have been acquired the 14,900 shares in that com- expected to make the required payments. pany long prior to the war, and in 1915, After the contract the dividends acafter the war became flagrant in Europe, cruing on the shares were not paid to transferred them to Hans E. Stoehr and the New York corporation, but were Max W. Stoehr, to be held in trust for credited to it in a “special” account on it as the beneficial owner. Stoehr & the books of the Botany Worsted Mills, Sons, the copartnership, also had 5,690 this being directed by Hans E. Stoehr, shares in that company, and these, with president of the former and treasurer the 14,900, constituted a majority of its of the latter. stock.

War was declared by Congress April Diplomatic relations between the 6, 1917, 40 Stat. at L. 1, chap. 1, and United States and Germany were sev- the Trading with the Enemy Act was ered February 3, 1917, and, as was com- passed October 6th following. Up to monly understood, war between them the latter date no preparation was made was then imminent. The Stoehrs took for making the first payment under the that view and began to adjust their af-contract, although it was to be about fairs accordingly. They caused the $1,000,000. Under the act it became the New York corporation to be organized, duty of every domestic corporation to and on February 19, 1917, transferred to report fully whether it owed any money it the entire assets and business of their to or held any property (249) for an copartnership, taking in exchange all of enemy, and also whether any of its shares its capital stock, and putting the same were owned by or held for an enemy. In in a five-year voting trust as a means the report of the New York corporation, of protecting and preventing a severance signed by Max W. Stoehr, the 14,900 of their interests. On the following day, shares covered by the contract were not February 20, 1917, the contract relating reported as held for the German corporato the 14,900 shares in the Botany tion, nor was the stipulated price or any Worsted Mills was made, and the shares part thereof reported as owing to that were immediately transferred its corporation. But in the report of the books to the name of the New York cor- Botany Worsted Mills, signed by Thomas poration. [248] In that transaction Hans Prehn, it was said that that company E. Stoehr acted for the German corpora-, had "reason to believe" that the German tion and the directors of the New York corporation had an interest in the corporation for it,—the directors being shares. This led to an insistent call for Hans E. Stoehr, Max W. Stoehr, George full information, and resulted in some G. Roehlig, and Alfred de Liagre, the correspondence and several conferences last two being relatives of the Stoehrs. at the Alien Property Custodian's office, The attorney wbo had advised and as-in all of which Herbert Heyn representsisted them in transferring the coparted the New York corporation and the nership assets and business also advised Botany Worsted Mills,-he being the and assisted them in this. The shares attorney who had advised and assisted were worth approximately $5,000,000; the Stoehrs in adjusting their copartnerand yet the initial payment was only ship affairs and in making the contract. $5,000, and even that was paid by mere February 5, 1918, while Heyn was atbook entries. The full stipulated price tending one of the conferences, Hans E. was the book value of the shares, with Stoehr, as president of the New York good will and other intangible assets corporation and treasurer of the Botany eliminated, and was payable in five fu- Worsted Mills, sent to him, for use at ture annual instalments. The stock cer- the conference, a list of the latter comtificates, transferred as just stated, were pany's stockholders, in which the Gerleft in the custody of the German cor- man corporation was described as having poration as collateral security. If pay- 14,900 shares and the New York corment was not made when due, nor poration as having only 5,685. In an within sixty days after demand, the accompanying letter he said: “The shares were to be retransferred, the majority of the stock of the Botany

on

Worsted Mills ... is held by parties | 1918, an attorney who had been looking who are alien enemies,”-a statement into the contract made an oral report, which was true if the 14,900 shares be- in the course of which he called in queslonged to the German corporation, and tion the purpose with which the contract not true if they belonged to the New was made, and said it "would not hold York corporation. Four days later water.” Max W. Stoehr, although presHeyn, with the approval in writing of ent, said nothing in support of the conHans E. Stoehr as such president and tract. Not until he [251] ceased to be an treasurer, wrote to the Alien Property officer of the corporation did he manifest Custodian, saying of the purpose with any opposition to the seizure. His only which the New York corporation was explanation of his silence while he reformed: “The immediate occasion for mained a director is that he feared he the organization of the corporation in would lose that position if he took any February, 1917, was this: It was as other course. sumed that if there was a declaration of The district court, after reviewing the war between the United States and proofs at length, concluded that the conGermany, the partnership [of Stoehr & tract was not prompted by commercial Sons] would probably have to cease, motives, nor based on an estimate of [250] being dissolved by reason of the mutual advantages, and was not intendalien-enemy character of Eduard Stoehr, ed as a genuine business transaction, but the father, and George Stoehr, the broth- was made to avoid inconveniences which er, the results of such dissolution being, of otherwise might ensue from a state of course, obviously unfortunate and con- war; and that the parties intended to ceivably disastrous; ” and saying of the leave the beneficial ownership in the 14,900 shares: “Regarding the contract German corporation, and not to pass it for the purchase of said 14,900 shares to the New York corporation. We reach by Stoehr & Sons, Incorporated, from the same conclusion. On no other theory Stoehr & Company, of Leipzig, Ger- can the acts of those who were concerned many, it has been fully explained that be explained or their declarations reconthe control of Botany might be imperiled ciled. The mere recitation of the facts by a state of war, because the voting makes this so plain that we refrain from right on stock of alien enemies, or in any special discussion of them. which alien enemies had the beneficial in- The treaty provisions relied on (arterests (as was the case with said 14,900 ticles 23 and 24, July 11,1799, 8 Stat. at shares), was doubtful under the deci- L. 174) relate only to the rights of mersions of the courts, and, if deprived of chants of either country "residing in the the voting right, the control of Botany other" when war arises, and therefore are might be lost. This contract was made without present application. with reference to the control of Botany Of the objections specially directed as between its stockholders, and had, of against the proposed sale, it is enough course, no reference to the status of such to observe that as the New York corcontrol so far as the Alien Property poration does not own or have any inCustodian is concerned. Such status is terest in the shares, it is not in a not affected whether such shares are in position to criticize or attack the sale; Stoehr & Company, the Leipzig corpora- and, of course, a stockholder suing in tion, or in Stoehr & Sons, Incorporated, its right is in no better position. the New York corporation. While Decree affirmed. Botany is managed in this country, considerably more than a majority of its stock is controlled by alien-enemy interests."

(252) ST. LOUIS, IRON MOUNTAIN, & Max W. Stoehr, the plaintiff, was a SOUTHERN RAILWAY COMPANY and director and the secretary of the New United States Fidelity & Guaranty ComYork corporation from the time it was pany, Appts., organized until October 14, 1918. He participated in making the contract re-J. F. HASTY & SONS, Mount Olive Stave lating to the 14,900 shares and signed

Company, Pulaski Cooperage Company, it as secretary. The shares were seized

and the Henry Wrape Company. in April, 1918, and he knew of the seiThe other directors at that time

(See S. C. Reporter's ed. 252-256.) He regularly attended their

Appeal from district court Federal meetings, but did not suggest to them

question supplementary decree. that the corporation had an interest in 1. A supplementary decree of a Federal the shares. At a meeting in August, I district court in a subordinate proceeding

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