Source: https://caselaw.findlaw.com/us-supreme-court/273/182.html
Timestamp: 2019-04-21 15:33:10+00:00

Document:
[273 U.S. 182, 183] Walker D. Hines, of New York City, for appellants.
The Attorney General and Mr. Assistant Attorney General Letts, for appellee.
This is a suit under section 17 of Trading with the Enemy Act, October 6, 1917, c. 106, 40 Stat. 411, 425 (Comp. St. 3115 1/2 i), which confers upon the district courts jurisdiction to enter 'such orders and decrees, and to issue such process as may be necessary and proper in the premises to enforce the provisions of this act.' It was brought on February 7, 1925, in the federal court for southern New York. The Alien Property Custodian was the plaintiff; the Great Northern Railway way Company and the Central Union Trust Company the defendants. The relief sought is that the Great Northern be ordered to cancel upon its books and records designated certificates for shares of its stock standing in names of or held for enemies; that it issue new certificates therefor in the names of certain trust companies as depositaries for the Custodian; that the Central Union be ordered to countersign the new certificates as Registrar of Transfers; and that the new certificates so countersigned be delivered to the Custodian without his presenting and surrendering the old ones. The defendants entered a general appearance. On the pleadings and facts stipulated, the court entered a final decree, which required the issue, countersigning, and delivery of the new certificates without presentation or surrender of those outstanding. Rights arising under the Constitution and treaties are alleged to have been violated. On this ground, a direct appeal was taken to this Court under section 238 of the Judicial Code (Comp. St. 1215), as it stood prior to the effective date of the Act of February 13, 1925 (43 Stat. 936).
'I, A. Mitchell Palmer, Alien Property Custodian, duly appointed, qualified, and acting under the provisions of the act of Congress known as the 'Trading with the Enemy Act,' approved October 6, 1917, and the executive orders issued in pursuance thereof, by virtue of the authority vested in me by said act, and by said executive orders, after investigation do determine that Albertine, Baroness Schauenburg ( name of enemy or ally of enemy), whose address is Friedburg, Baden, Germany (last known address), is an enemy (not holding a license granted by the President), and has a certain right, title, and interest in and to 12 shares of preferred (common, preferred) stock standing on your books in the name of Albertine, Baroness Schauenburg.
'I, as Alien Property Custodian, do hereby require that you shall convey, transfer, assign, and deliver to me as Alien Property Custodian, to be by me held, administered, and accounted for as provided by law, every right, title, and interest of the said enemy in said stock, including in respect to the said stock the right which the said enemy may have, (a) to receive all notices issued by you [273 U.S. 182, 186] to the holders or owners of similar stock, shares, or certificates; ( b) to exercise all voting power appertaining to such stock, shares, or certificates; (c) to receive all subscription rights, dividends, and other distributions and payments, whether of capital or of income, declared or made on account of such stock, shares, or certificates.
'I, as Alien Property Custodian, do hereby further require that you note the substance of this demand upon your stock books and/or stock ledger, and that you furnish a copy of this demand to the registrar and/or transfer agent, if any, of the stock in respect to which this demand is made.
'I, as Alien Property Custodian, do hereby further require that within ten days from the service of this demand upon you, you report to me any and all acts which you have done, or omitted to do, pursuant to the requirements of this demand.
'Until otherwise directed, you will remit to the Alien Property Custodian at Washington, by check payable to his order, all payments, whether of capital or income, now or hereafter declared or due on account of such stock, shares, or certificates, and you will direct such notices in respect to the said stock, shares, or certificates to the Alien Property Custodian.
The Custodian admitted that, during the war, there was no request specifically for the cancellation of the old [273 U.S. 182, 187] certificates and the issue of new ones. He contended that the President determined, as set forth in the original demand, that the persons in whose names the shares were registered, or those for whom the shares were held, were enemies not licensed, each having a certain right, title, and interest in and to the specific shares; that, by the demand, he duly seized these shares and the alien's interest therein; that thereby the Custodian secured legally a control over the shares as complete and effective as the control given the Custodian over chattels physically seized; that this is true, although prior to the Act of November 4, 1918, c. 201, 1 (40 Stat. 1020), Congress had not provided any method for enforcing the issue of new certificates without surrender of the old; that, when the Trading with the Enemy Act was so amended, he became entitled to have new certificates for the shares delivered to him without the presentation or surrender of the old ones; that, having thereafter duly requested their issue and delivery to him, he was entitled to the relief prayed for.
The companies admitted that, after the war and before institution of the suit, there was a request, appropriate in form. They denied that the determinations and the demands made during the war were duly made. But their defense was rested mainly on the claim that the corpus of the shares, as distinguished from an undefined interest therein, was not seized or demanded during the war. They contend that by the original demand the President determined only that the enemy had some interest; that the instrument did not constitute a symbolic seizure of the shares; and hence that it did not create such a right as could serve as a basis for compelling their transfer to the Custodian, or the cancellation of the old certificates and the issue of the new ones. They insist that the determination of some interest is not equivalent to determining that the shares belong to or are held for the enemy; that any interest held by the enemy, however [273 U.S. 182, 188] remote or contingent, might satisfy such a determination and yet the shares in fact belong to and be held for another, not an enemy; that a demand upon the corporation to assign such an undefined interest is not a demand that the shares themselves be transferred; and that this interpretation of the document is supported by the fact that the Custodian made, at the time, no effort to obtain a new certificate, and in fact expressly indicated that he was not making any such effort. The companies' further contention is that, as applied to the facts stipulated, the act as amended did not purport to require cancellation of the old and delivery of new certificates, and that, if it did, it denied due process, and hence was void under the Fifth Amendment.
It may be assumed that under section 7 recovery by the Custodian of property demanded by him is limited by the scope of the demand. Compare Sutherland v. Guaranty Trust Co. (C. C. A.) 11 F. (2d) 696; and that the demand made after the war, if it stood alone, would not avail the Custodian. Compare Miller v. Rouse (D. C.) 276 F. 715, 717.
It is true that the demands for some of the shares were not made until after November 4, 1918, and that in them the request for the new certificates might have been made. But, in view of war conditions, it is not surprising that the modification of the form in use was not promptly made, and that the old form continued in use.
Following the provisions of section 3(d) of the Executive Order, the Custodian enumerated in its demand upon the Great Northern substantially every right which the sole owner of shares could exercise, except the right to receive a certificate representing the stock and the right to dispose of the same. His request should be construed as a demand for delivery of the shares, because it extended to everything which the legislation permitted prior to the amendment of November 4, 1918. The Custodian sought possession, not title. Central Trust Co. v. Garvan, 254 U.S. 554, 566 , 569 S., 41 S. Ct. 214. The term seizure as used in this connection connotes merely the taking of possession. Hence there was no occasion to define the extent of the enemy's ownership. The demand operated as a symbolic seizure.
The claim of the Custodian to have the new certificates does not rest, as has been argued, upon post-war action [273 U.S. 182, 192] taken by him; or upon a construction of the Joint Resolution of July 2, 1921 (42 Stat. 105), officially declaring the war at an end; or upon any provision of the Treaties of Peace, Auguest 24, 1921, 42 Stat. 1946; August 25, 1921, 42 Stat. 1939. The Custodian's claim and the decree rest wholly upon the demands made during the war. Since the Custodian's possession of the shares was completed before the end of the war, it is immaterial that the demand for new certificates was not made until after the war. The Act of November 4, 1918, had made it the duty of the corporation to cancel the old certificates and to issue new ones, whenever the Custodian had seized shares. Section 5 of the Joint Resolution of July 2, 1921, reserved to the Custodian all property which before that date had come under his control.
Second. The companies contend that, even after the amendment of November 4, 1918, the act did not purport to confer upon the Custodian the power to demand new certificates without surrender of the old. As seen above, section 12 of the original act (Comp. St. 3115 1/2 ff) made it the duty of the corporation to transfer shares or certificates into the Custodian's name only if the old certificates were surrendered. It is [273 U.S. 182, 193] true that this condition was never in terms removed from that section. But it was necessarily removed when the Act of November 4, 1918, amended section 7(c) by requiring the corporation to issue new certificates whenever the Custodian had demanded the shares of alien enemies. See Garvan v. Marconi Co. (D. C.) 275 F. 486; Garvan v. Certain Shares of International Agricultural Corp. (D. C.) 276 F. 206; Columbia Brewing Co. v. Miller (C. C. A.) 281 F. 289; Miller v. Kaliwerke Aschersleben Aktien- Gesellschaft (C. C. A.) 283 F. 746.
Third. The companies contend that the act, so construed and applied, deprives them of due process, since it confers upon the Custodian rights not possessed even by the owners of the shares. It is urged that the owners of stock in the Great Northern took it subject to the provision inserted in the certificate that it is 'transferable only on the books of the company in person or by attorney upon surrender of this certificate'; that the Great Northern's by-laws provide that its shares 'shall be transferred only on the books of the company by the holder thereof in person or by his attorney upon surrender and cancellation of certificates for a like number of shares'; that these conditions were imposed by it under its charter, a special act of the Legislature of Minnesota; and that they constitute property attributes inhering in the shares and in the stock certificates which are evidences thereof; that the Great Northern shares are listed upon the New York Stock Exchange and the company maintains in New York on office for transferring certificates of its stocks; that section 178 of the Personal Property Law of New York (Consol. Laws, c. 41) provides that, except where a certificate is lost or destroyed, the corporation shall not be compelled to issue a new certificate until the old certificate is surrendered to it; and that the Central Union, registrar of Great Northern stock, is under agreement with the New York [273 U.S. 182, 194] Stock Exchange, whereunder such registrar, as a condition of being accepted by the New York Stock Exchange, is obligated not to register the transfer of certificates of Great Northern without surrender of the certificates outstanding therefor.
'No person shall be held liable in any court for or in respect to anything done or omitted in pursuance of any order, rule, or regulation made by the President under the authority of this act.
The requirement that the company make complete delivery to the Custodian of the possession of the shares including the usual indicia was well within the war powers of Congress. See, also, Garvan v. Certain Shares of International Agricultural Corporation (D. C.) 276 F. 206; Miller v. Kaliwerke Aschersleben Aktien-Gesellschaft (C. C. A.) 283 F. 746.
Mr. Justice SUTHERLAND, Mr. Justice SANFORD, and Mr. Justice STONE, dissent.

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