Court Opinion

ID: 3407831
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:24:23.665699+00
Date Added: 2024-06-11T09:24:16.706470
License: Public Domain

This is a suit in equity brought by the Trent Trust Company, Limited, to settle its accounts as trustee under the will and of the estate of Otto Ernst Isenberg, deceased. The issues involve the liability of the trustee to account for 670 shares of the capital stock of the Kekaha Sugar Company, Limited, an Hawaiian corporation, alleged to be the property of the trust estate and reported by the trustee to have been sold by the alien property custodian of the United States as property of enemy beneficiaries of the estate pursuant to the provisions of the Act of Congress of October 6, 1917, known as the Trading with the Enemy Act (40 Stat. L., c. 106, p. 411, as amended) and to the Executive Orders of the President of the United States supplementary thereto. The trial court found that the stock was a part of the trust estate; that at the time of the accounting it should have been in the possession of the trustee; that it had been lost to the estate through the negligence of the trustee in failing to reduce it to possession and the trustee was obligated to restore to the estate 670 shares of the capital stock of the Kekaha Sugar Company or in default thereof pay to the estate the value thereof at the time of trial together with dividends which had accrued on said stock with interest and referred the case to a master. The report of the master indicates the subjects of reference. On March 12, 1924, the master reported to the court the value per share *Page 686 
of the capital stock of the Kekaha Sugar Company, Limited, at the time of reference; the dividends that would have accrued and become payable on 670 shares of said stock upon and from December 3, 1918, to and including the 1st day of August, 1923, together with interest on said dividends from the respective dates on which they would have become due and payable, that is to say: Upon all cash dividends accrued upon 500 shares between December 3, 1918, and February 1, 1921, the master charged the trustee with interest from the respective dates upon which they became due and payable until February 1, 1921, at the rate of four per cent per annum and thereafter until August 31, 1923, at eight per cent per annum; upon all cash dividends that accrued upon 500 shares between February 1, 1921, and August 1, 1921, the master charged the trustee with interest from the date they were respectively due and payable until August 31, 1923, at the rate of eight per cent per annum; upon all cash dividends that accrued upon the 170 shares of Kekaha stock between December 3, 1918, and August 1, 1920, the master charged the trustee with interest from the date they respectively became due and payable to August 31, 1923, at the rate of eight per cent per annum; upon all cash dividends that accrued upon the said 170 shares between August 1, 1921, and August 1, 1923, the master charged the trustee with interest at the rate of six per cent per annum from the date that they respectively became due and payable to August 31, 1923 (August 31, 1923, having been adopted by the master for convenience in computation and upon the theory that interest would be computed by the court from that date to the date of its decree); that the value of the estate as it would have been at the time of reference had it contained 670 shares of the capital stock of the Kekaha Sugar Company, Limited, together with the dividends and interest which *Page 687 
the trustee should have then possessed (not including disbursements) was $455,029.24; that the value of the estate as it was on August 24, 1923 (including disbursements), was $127,532.85, disclosing a difference in value of $327,496.39, which, less income disbursements properly allowable to the trustee of $44,799.10, resulted in the sum of $282,697.29 as the difference in value of the estate as it was on August 24, 1923, and as it would have been if properly administered. The master in his report also recommended that the trustee be surcharged in the sum of $4,626.11 commissions actually received and that all trustees' commissions be disallowed, and reported the expenses of the reference, made up of the charge of the official reporter for attendance and preparation of a transcript of the evidence and mileage and witness fees of a witness called by the master. Upon return to the court the report of the master was, over the objections of the trustee, approved and his recommendations adopted, and on the 7th day of April, 1924, a decree entered accordingly. By the decree it was ordered that the Trent Trust Company, Limited, be and it was thereby removed as trustee and Charles S. Davis, Esq., appointed in its place and stead, and that the Trent Trust Company, Limited, forthwith restore and transfer to the estate and to its successor trustee 670 shares of the capital stock of the Kekaha Sugar Company, Limited, and in addition thereto forthwith pay into the estate the sum of $32,723.40 with interest at the rate of six per cent per annum from August 31, 1923, or, failing to forthwith transfer to said estate said 670 shares of the capital stock of the Kekaha Sugar Company, Limited, together with interest as stated, that it pay to said estate and transfer over and unto its successor trustee the sum of $287,323.40 together with interest at the rate of six per cent per annum from August 31, 1923; that it pay to the master for his services *Page 688 
rendered as such the sum of $7,500 and the costs reported in the sum of $1,414; that it be surcharged with all commissions claimed or charged by it as trustee and that it pay the costs of the proceeding taxed in the sum of $1,481. From this decree the trustee appealed to this court.
The trust of which the appellant was trustee was created by the will of Otto Ernst Isenberg which was admitted to probate by a judge of the circuit court of the first circuit of the Territory of Hawaii on December 29, 1902. The testator appointed William Pfotenhauer and Hermann Schultze executors and trustees of his will. The trustees were directed to set aside after the payment of debts and funeral expenses one-third of the remainder of the estate for the use and benefit of the wife of the testator and annually or oftener to pay the rent, issues and profits thereof to her for life. The trustees were further directed to divide the remaining two-thirds of the residue of the estate into as many equal portions as there should be children of the testator then living and pay over one such portion or the proceeds thereof to each of said children who should have then arrived at the age of twenty-five years and hold one of such portions for each of the remaining children respectively and annually or oftener pay the net income, issues or profits thereof to the children for whom the same were so held and as such remaining children should successively arrive at the age of twenty-five years pay to him or her the portion so held for him or her respectively (or so much thereof as should remain) together with the unapplied income thereof. The trustees were also directed upon the death of the wife to divide the principal of the one-third of the trust property set apart for her, or so much thereof as should then remain, together with the unapplied income thereof and hold the same upon the same trusts as *Page 689 
directed to be done with the other two-thirds of the trust property, provided that no child should receive his or her portion of the principal trust property until arriving at the age of twenty-five years. The trustees were given full power to sell any or all of the trust property and to invest the proceeds. The testator was survived by his wife and nine children, five of whom, including the son Paul Otto, were minors. On January 26, 1903, William Pfotenhauer and Hermann Schultze, the same men who were appointed executors and trustees by the will, were by a judge of the circuit court of the first circuit sitting in probate appointed the guardians of the respective persons and estates of the said minors. On September 18, 1905, the administration upon the estate of Otto Ernst Isenberg was closed, the executors discharged and the remainder of the estate ordered delivered to the trustees named in the will. This was done. The receipt of the trustees is dated January 1, 1906. On September 20, 1905, upon petition by the trustees made in that behalf the circuit court of the first circuit in equity by its decree of even date approved the apportionment by the trustees of the trust estate of said decedent in accordance with the terms of the trust. On April 25, 1913, George Rodiek, Esq., was appointed in place of William Pfotenhauer, deceased. On October 6, 1917, the date of the approval of the Act of Congress known as the Trading with the Enemy Act, the widow and children of the testator, with the exception of two sons Hans and Carl Isenberg, were residents of Germany. The two sons excepted were at that time adult American citizens residing in the United States. On January 31, 1918, all the property of the trust estate including certificates Nos. 36, 153 and 284 for 236, 31 and 233 shares respectively of the capital stock of the Kekaha Sugar Company, totaling 500 shares, theretofore held by the trustees as a part of the one-third *Page 690 
of the remainder of the estate of Otto Ernst Isenberg for the use and benefit of the wife of the testator, and certificates Nos. 42, 80 and 288 for 68, 22 and 80 shares respectively of the capital stock of the Kekaha Sugar Company, totaling 170 shares, theretofore included in that portion set apart by the trustees to be paid to Paul Otto Isenberg when he should arrive at the age of twenty-five years was delivered to the Trent Trust Company, Limited, appellant herein, then the depositary in Hawaii of the alien property custodian. All of said certificates of stock when so delivered were in the names of "William Pfotenhauer and Hermann Schultze, Trustees under the Will and of the Estate of Otto Ernst Isenberg, Deceased." The evidence nowhere discloses that said certificates were indorsed prior to delivery. On February 8, 1918, H. Hackfeld  Company, Limited, agent of Kekaha Sugar Company, and the Kekaha Sugar Company, pursuant to the requirements of section 7 of the Trading with the Enemy Act, made reports to the Trent Trust Company, Limited, as depositary of the custodian touching the estate of Otto Ernst Isenberg. On March 9, 1918, Hermann Schultze, as one of the trustees of the estate of Otto Ernst Isenberg, pursuant to the provisions of section 7 of the Trading with the Enemy Act, made the reports referred to in the majority opinion. Hans and Carl Isenberg were not referred to therein. Mr. Schultze at the same time also made the report to the custodian as guardian of the estate of Paul Otto Isenberg referred to in the majority opinion. Mr. Schultze included the 170 shares of the capital stock of the Kekaha Sugar Company in his report as trustee as well as in his report as surviving guardian. No reports were made by any one declaring Hans and Carl Isenberg to be enemies and nowhere in the history of the case does it appear that they were other than loyal citizens of the United States and residents thereof. On *Page 691 
March 11, 1918, the Trent Trust Company, Limited, as depositary in Hawaii of the alien property custodian, surrendered to the Kekaha Sugar Company the certificates of stock in said company theretofore delivered to it by Hermann Schultze and caused the company to issue to it in its name as such depositary in lieu of said pre-existing certificates two certificates, namely, Nos. 434 and 435 for 170 and 500 shares respectively. It does not appear from the record that the Trent Trust Company, Limited, as such depositary was previously or at all authorized by the alien property custodian to make such transfer. In June, 1918, the alien property custodian made the demands which are set forth in detail in the majority opinion. All of those demands in respect to the estate of Otto Ernst Isenberg, deceased, were addressed to Hermann Schultze as trustee of the estate of Otto Isenberg although Mr. Schultze in both his informal and formal reports to the alien property custodian notified the latter that George Rodiek was one of the trustees of the estate and gave his business address in San Francisco. On July 2, 1918, Hermann Schultze as the surviving guardian of Paul Otto Isenberg petitioned the court for the allowance of his final accounts and discharge as guardian, assigning as reasons therefor that Paul Otto Isenberg was an alien enemy within the meaning of the Trading with the Enemy Act; that all the property of the ward had on January 31, 1918, been turned over to the alien property custodian; that petitioner was a citizen of Germany. No citation was issued nor did Paul Otto Isenberg appear in person upon the hearing of the petition. On August 23, 1918, the petition was granted and the accounts of the guardian approved and the guardian discharged. Paul Otto Isenberg at the time of the filing of the petition had attained his majority. On July 2, 1918, Hermann Schultze and George Rodiek as trustees under the will *Page 692 
and of the estate of Otto Ernst Isenberg, deceased, petitioned the court that their accounts with said petition filed be settled and allowed and that they be discharged as trustees, reciting as grounds therefor that George Rodiek was absent from the Territory and residing in the State of California; that of the two-thirds of the estate set aside for the children of the testator all had been distributed to them except the respective portions deliverable to Dorothea and Paul Otto Isenberg, and that Helen L. Isenberg, the widow, Dorothea and Paul Otto Isenberg, being enemies, the property held by the trustees was on January 31, 1918, turned over to the "Alien Property Custodian, Trent Trust Company, Limited." None of the beneficiaries of the trust estate were cited to appear or appeared upon the hearing either in person or by attorney. Upon hearing had the court on August 23, 1918, approved the accounts and discharged the trustee. The trustees of the estate of Otto Ernst Isenberg, deceased, and the guardians and surviving guardian of the estate of Paul Otto Isenberg had previously filed annual accounts but the respective hearings had thereon were without notice to any of the parties in interest nor did they appear therein personally or by counsel. On October 31, 1918, the Trent Trust Company, Limited, upon its exparte petition in that behalf and without notice to the widow or any of the children of the decedent was appointed trustee under the will and of the estate of Otto Ernst Isenberg, deceased, the order to take effect upon its giving a bond in the sum of $120,000. A bond pursuant to the order was filed on November 8, 1918. On August 30, 1918, the alien property custodian forwarded through the Trent Trust Company, Limited, a formal acquittance to Hermann Schultze in which the alien property custodian acknowledged "the payment, conveyance, transfer, assignment and delivery to him of the 500 shares of Kekaha *Page 693 
Sugar Company, Limited." On November 11, 1918, Paul Otto Isenberg died intestate, unmarried and without leaving issue and such proceedings were thereafter had in the circuit court of the first circuit in respect to the estate of said deceased intestate that on, to wit, the 14th day of August, 1922, the Henry Waterhouse Trust Company, Limited, an Hawaiian corporation, was appointed administrator and qualified as such on August 31, 1922. The administrator entered its appearance herein. On January 17, 1919, the alien property custodian through his special representative, Richard Trent, the then president of the Trent Trust Company, Limited, sold at public auction the 670 shares of the capital stock of the Kekaha Sugar Company represented by certificates Nos. 435 and 434 for 500 shares and 170 shares respectively.
The accounts of the trustee which precipitated the controversy were filed October 26, 1921. These were the only accounts filed by it. They cover the period from the date of its appointment to and including August 19, 1921. The receipts and disbursements are segregated according to beneficiary — those pertaining to Helen L. Isenberg being contained in Exhibit A and those pertaining to Paul Otto Isenberg being contained in Exhibit B. The items are also segregated accordingly as they reflect the receipt or disbursement of principal or income. In Exhibit A, Schedule A (Helen L. Isenberg "Receipts," "Principal Account"), the trustee charged itself with the receipt from the alien property custodian of cash and securities in the sum of $120,121.32, stated therein to be the "proceeds of sale by Alien Property Custodian of 500 shares Kekaha Sugar Company stock and 1353 shares Pioneer Mill Company stock." By Exhibit A, Schedule C (Helen L. Isenberg "Disbursements" "Principal Account"), it appears that these proceeds of the sale of Kekaha and Pioneer stock were retained by the trustee and never *Page 694 
transferred to the alien property custodian but reinvested by the former and constituted a part of the trust estate of Otto Ernst Isenberg, deceased. By Exhibit B, Schedule A (Paul Otto Isenberg "Receipts" "Principal Account"), the trustee charged itself with the receipt of cash and securities in the sum of $38,445.58, stated therein to be the "proceeds of sale by Alien Property Custodian of 170 shares Kekaha Sugar Company stock and 381 shares Pioneer Mill Company stock." By Exhibit B, Schedule C, it appears that part of the cash received from the sale of the Kekaha and Pioneer stock was invested in Victory Loan Bonds and in Exhibit B, Schedule F (Paul Otto Isenberg "Recapitulation"), appears the note "All property of Paul Otto Isenberg turned over to the Alien Property Custodian as per receipt filed with voucher." In Exhibit B, Schedule D (Paul Otto Isenberg "Income Disbursements"), appears the item "1921, Feb. 24 Paid Alien Property Custodian being balance of accumulated income as of Feb. 24, 1921, $11,061.55." To these accounts the widow and the surviving children of the testator, including Hans and Carl Isenberg and Carl Laschinzky, husband and sole heir at law and devisee of the deceased daughter Berlita Isenberg Laschinzky, filed objections. The objectors at first claimed that there were 840 shares of Kekaha stock involved including 170 shares alleged by them to be held by the trustee for the benefit of Dorothea Isenberg von Koenigsmarck, who prior to demand had arrived at the age of twenty-five years. The objections in respect to these latter shares, however, were specifically withdrawn. The trustee filed a reply to the objections. Repetition of the allegations thereof is unnecessary. It is worthy of note, however, that the trustee herein denied that it knew of the status of Hans and Carl Isenberg as friends of the United States. Both parties by the pleadings filed and evidence adduced during *Page 695 
the progress of the trial treated the 670 shares of the capital stock of the Kekaha Sugar Company involved in this controversy as corpus of the trust estate of Otto Ernst Isenberg, deceased. It was only upon the hearing before the master that any question was raised as to whether the stock was in part income. By the answer of the trustee to the objections of the respondents it was alleged upon oath of its president that the 840 shares of the capital stock of the Kekaha Sugar Company, the subject of the answer, which included the 670 shares in dispute, were corpus of the trust estate. During the progress of the trial the parties so treated it. Likewise the court in its decision. Upon the hearing before the master, however, evidence was adduced showing a different situation, and although subsequently stricken by the master his ruling was made the subject of objections by the trustee to the adoption of the master's report. The court sustained the master and refused to consider the evidence. Refusal of the trial court to consider this evidence was assigned by the appellant as error. Considering this evidence in for the purposes of this appeal it would appear that of the one-third of the estate of Otto Ernst Isenberg apportioned and set aside by the trustees for the use and benefit of the widow Helen L. Isenberg there were originally but 236 shares of the capital stock of the Kekaha Sugar Company, and of the portion set aside by the trustees to be paid over to Paul Otto Isenberg when he should arrive at the age of twenty-five years there were originally but 68 shares of said stock; that on September 18, 1907, the capital stock of the Kekaha Sugar Company was increased from 600,000 to 800,000 shares by the issuance of 2000 shares of the par value of $100 each and offered to the stockholders at par (the stockholders of record were entitled thereby to purchase at par value one share for every three shares held); that *Page 696 
on December 3, 1907, the trustees availed themselves of the privilege and purchased on account of Helen L. Isenberg 78 shares and on account of Paul Otto Isenberg 22 shares (these purchases were effected by the trustees' borrowing the necessary funds from H. Hackfeld  Company, deducting the cost thereof from the respective incomes subsequently accruing to Helen L. Isenberg and Paul Otto Isenberg); that in 1909 the trustees sold 47 of the shares purchased for Mrs. Isenberg; that on October 14, 1912, the capital stock of the Kekaha Sugar Company was increased from 800,000 to 1,500,000 shares by the issuance of 7000 paid-up shares of the capital stock of the company to the stockholders of record as of that date (this entitled each stockholder to seven shares for every eight shares owned by him); that of the income represented by this stock dividend $15,347.55 had been earned by the corporation prior to the inception of the trust created by the will of Otto Ernst Isenberg; that rights to the stock dividend sold at a premium of $57.50; that after the issuance of this stock dividend the trustees bought on account of Paul Otto Isenberg 1.25 shares. Fractional shares were disposed of. It does not appear that the investments made by the trustees of income in stock of the Kekaha Sugar Company on behalf of Helen L. Isenberg were made at her request or subsequently ratified by her. Nor does it appear that any accounting was ever had between the trustees on the one hand and the guardian of the estate of Paul Otto Isenberg on the other in respect to the purchases of Kekaha stock made by the trustees on account of Paul Otto Isenberg or that any accounting has ever been had between the guardian and ward or his legal representatives as to the investment of income payable to the ward in shares of the capital stock of the Kekaha Sugar Company.
The trustee contends that by and upon the voluntary *Page 697 
surrender of Hermann Schultze, one of the trustees under the will and of the estate of Otto Ernst Isenberg, deceased, to the Trent Trust Company, Limited, as depositary of the alien property custodian, and by the subsequent demands of the alien property custodian upon said Schultze as one of such trustees, and by the demand of the alien property custodian upon said Schultze as the surviving guardian of the estate of Paul Otto Isenberg, legal title to the 670 shares of the capital stock of the Kekaha Sugar Company was transferred and vested in the alien property custodian and that he was authorized to sell the same; but if the legal title to the 670 shares of the capital stock of the Kekaha Sugar Company were not transferred to nor vested in the alien property custodian by reason of such voluntary surrender by said Schultze as such trustee and/or by such subsequent demands of the alien property custodian and the alien property custodian was without authority to sell the same such sale should be considered as having been made by the Trent Trust Company, Limited, as trustee under the will and of the estate of Otto Ernst Isenberg, deceased, pursuant to the express authority to sell conferred upon it by the terms of the will of the testator, the sale having been made with the express prior consent and subsequent ratification of said trustee. If the trustees, the predecessors of the Trent Trust Company, Limited, had been divested of the legal title to the stock in dispute and the legal title to the same legally transferred to the alien property custodian pursuant to the provisions of the Trading with the Enemy Act so that at the time of the appointment of the Trent Trust Company, Limited, as trustee, the legal title thereto did not vest in it as such trustee, nor by appropriate proceedings against the alien property custodian or otherwise could said stock have been reduced to possession by the trustee and the legal title thereto vested in *Page 698 
it and the sale of said stock was in all respects a legal sale then the trustee is not liable to account for said stock. If, however, the legal title to the stock in dispute was never divested from the trustees, the predecessors of the Trent Trust Company, Limited, nor legally transferred to the alien property custodian, but on the contrary vested in the Trent Trust Company, Limited, as trustee, upon its appointment as such, and the Trent Trust Company, Limited, as such trustee, negligently failed to reduce said stock to possession, by reason of which the same became lost to the estate of Otto Ernst Isenberg, then the Trent Trust Company, Limited, is liable for its failure to account for said stock unless the sale of the stock by the alien property custodian as contended by the Trent Trust Company, Limited, may be considered as having been made by it pursuant to the power of sale conferred upon it by the terms of the trust.
The primary question, then, is whether by the voluntary delivery by Hermann Schultze, one of the trustees who were the predecessors in trust of the Trent Trust Company, Limited, to the depositary in Hawaii of the alien property custodian of the property comprising the trust estate of Otto Ernst Isenberg, deceased, including the 670 shares of the capital stock of the Kekaha Sugar Company, Limited, in dispute or by the demands of the alien property custodian upon the Kekaha Sugar Company, Limited, and upon Hermann Schultze as trustee of the estate of Otto Ernst Isenberg, and upon Hermann Schultze as guardian of the estate of Paul Otto Isenberg, or any of said demands, the then trustees Hermann Schultze and George Rodiek were divested of the legal title to said stock and the same transferred to the alien property custodian.
The alien property custodian undoubtedly was authorized under the provisions of the Trading with the Enemy *Page 699 
Act to sell shares of the capital stock of private corporations owned by enemies, possession of which had been legally transferred to him by voluntary delivery in conformity with law and the Executive Orders of the President or by legal demand made by the alien property custodian. But in this case neither by the voluntary delivery of the trustees to the depositary in Hawaii of the alien property custodian nor by the several demands made by the alien property custodian was legal title to the 670 shares of the capital stock of the Kekaha Sugar Company which are in dispute legally transferred to the alien property custodian.
Under section 7 (d) of the Trading with the Enemy Act any person not an enemy or ally of an enemy who held any property for the benefit of an enemy not holding a license granted by the President, although not required so to do by the provisions of section 7 (c) of the Act, was authorized with the consent of the President of the United States to voluntarily transfer such property to the alien property custodian under such rules and regulations as the President might prescribe. On October 12, 1917, an Executive Order of that date prescribed the conditions under which such transfer might be voluntarily made. The rule which applies is Rule XXX and this rule was in effect on January 31, 1918, when the transfer of the stock was made by the trustee to the depositary. The rights of parties affected by demands are determined by the law and executive orders existing at the time of the service of demands. (Application of Miller, 288 Fed. 760, 767.) Equally so voluntary surrender could only be made in accordance with the law and executive orders existing at the time of such surrender. Rule XXX of the Executive Order of October 12, 1917, provides that any person desiring to make such a transfer to the alien property custodian under section 7(d) of the Trading with the *Page 700 
Enemy Act of property held for an enemy not having a license, etc., should file application with the alien property custodian for consent and a permit so to do and by said Rule was conferred upon the alien property custodian the authority to exercise the power and authority conferred upon the President by the provisions of section 7(d) of the Trading with the Enemy Act including consent to issue a permit upon such terms and conditions as were not inconsistent with law or to withhold or refuse the same. It does not appear that any application was ever made by the trustees or anyone else to the alien property custodian for consent and a permit to the transfer by the trustee to the depositary or that the alien property custodian ever issued a permit so to do. The burden to prove these facts rested upon the appellant. And in view of the subsequent demands made by the alien property custodian it is apparent that neither was any application ever made to the alien property custodian to voluntarily transfer this stock to him or to the depositary nor did the custodian ever consider the delivery of the stock to the depositary to be a valid transfer under the Act or the Executive Order of the President made subsequently thereto.
Nor did the legal title to the stock in question vest in the alien property custodian by virtue of the demands made by him. The legal status of the 670 shares of the Kekaha Sugar Company held by the trustees of the estate of Otto Ernst Isenberg assumes importance. Of the 500 shares held by the trustees for the benefit of Helen L. Isenberg 314 shares were corpus and 186 shares were income. This income stock was made up partly of stock dividends distributable to the equitable life tenant under the decisions of this court in the cases of Carter v. Crehore,12 Haw. 309, and Evans v. Garvie, 23 Haw. 651, and partly by purchases made by the trustees from income *Page 701 
and stock dividends thereon. Of the 170 shares held by the trustees for the benefit of Paul Otto Isenberg 90 shares were corpus and 80 shares were income. This income stock was made up in part of stock dividends distributable to the beneficiary as income under the Carter and Evans decisions, supra, and in part from stock purchased by the trustees from income distributable to the guardian of Paul Otto Isenberg and the stock dividends thereon. The legal title to this 670 shares of Kekaha stock at the time of the demands is of equal importance. At the time of the voluntary surrender by Schultze the 500 shares were represented by certificates Nos. 36, 153 and 284 in the names of William Pfotenhauer and Hermann Schultze as trustees under the will and of the estate of Otto Ernst Isenberg, deceased. At the time of the voluntary surrender by Schultze the 170 shares were represented by certificates Nos. 42, 80 and 288 in the names of William Pfotenhauer and Hermann Schultze trustees under the will and of the estate of Otto Ernst Isenberg, deceased. There is no showing that at the time of the surrender of the 670 shares by Schultze the certificates representing the same were indorsed as required by R.L. 1925, s. 3346. That section provides: "Whenever the capital stock of any corporation is divided into shares, and the certificates thereof are issued, transfer of the shares may be made by indorsement and delivery of the certificate. The indorsee shall be entitled to a new certificate upon surrendering the old one. And no transfer shall be valid, except between the parties thereto, until such new certificate shall have been obtained, or the transfer shall have been recorded on the books of the corporation, so as to show the date of the transfer, the parties thereto, their places of abode, and the number and description of the shares transferred." If the appellant relied upon the indorsement of these certificates by the *Page 702 
trustees in conformity with the provisions of the statute it was incumbent upon it to show it. It is not a subject of inference. In the absence of such a showing the presumption is to the contrary. The statute requirement must be complied with. (14 C.J., title "Corporations," 1049; Tafft v. Presidio, etc., Ry.Co., 84 Cal. 131.) Without a legal indorsement or legal surrender of this stock the Kekaha Sugar Company was without authority to issue a new certificate or certificates therefor. At the time of the alleged demands by the alien property custodian the legal title to all of the stock was in Hermann Schultze and George Rodiek as trustees and in the absence of demands, the legal effect of which was to transfer such stock to the alien property custodian pending the appointment of the Trent Trust Company, Limited, the legal title thereto vested in it as successor in trust of Schultze and Rodiek. Under the terms of the will of Otto Ernst Isenberg, deceased, his widow and enemy children had the following interests in the trust corpus of the trust created thereby: Helen L. Isenberg had an equitable life estate in one-third of the corpus set aside for her benefit. The enemy children of Otto Ernst Isenberg, including Paul Otto, were joint remaindermen in the trust corpus set aside for the widow. Paul Otto Isenberg had the present right to the income from 2/27 of the trust estate set aside for his benefit until he should arrive at the age of twenty-five years. He also had a remainder interest in the 2/27 of the estate set aside for his benefit, possession of which was deferred until he should arrive at the age of twenty-five years. Helen L. Isenberg was also the equitable owner of such of the stock dividends issued by the Kekaha Sugar Company as were distributable to her as income. She also had the right to approve the investment in Kekaha stock by the trustees of income distributable to her as equitable *Page 703 
life tenant and demand from them the delivery to her of said stock. Paul Otto Isenberg was the equitable owner of such of the stock dividends issued by the Kekaha Sugar Company as were distributable to him as income. He also after attaining majority was entitled to approve the investment by the trustees in Kekaha stock of income payable to the guardian while a minor and demand delivery of the same to him.
Bearing in mind the legal status of the 670 shares of Kekaha stock in dispute, the legal title thereto at the time of the demands and the several interests of the enemy beneficiaries in the estate let us pause for the moment to again consider the demands that were actually made. The demands made in connection with the interests of Helen L. Isenberg and Paul Otto Isenberg were four: (a) Upon the Kekaha Sugar Company for all the right, title and interest of the Otto Isenberg Estate in and to 840 shares of the Kekaha Sugar Company; (b) upon Hermann Schultze, trustee of the estate of Otto Ernst Isenberg, for all the right, title and interest of Helen L. Isenberg in and to said estate; (c) upon Hermann Schultze, trustee of the estate of Otto Ernst Isenberg, for all the right, title and interest of Paul Otto Isenberg in and to said estate; (d) upon Hermann Schultze, guardian of Paul Otto Isenberg.
The demands affecting the surviving enemy children other than Paul Otto were in each instance directed to Hermann Schultze as trustee of the estate of Otto Isenberg for all the right, title and interest of the respective children in and to said estate. What was the legal effect of the demands so made? Seizure by demand and notice is analogous to garnishment and attachment. "The analogies of attachment and garnishment are directly in point." Kohn v. Jacob  Josef Kohn, 264 Fed. 253, 255. "The analogy of garnishment is directly in point." Miller *Page 704 
v. Rouse, 276 Fed. 715, 717. "They" (demands) "attach the property to make sure that it is forthcoming, if finally condemned, and do no more." Miller v. Kaliwerke A.A.G., 283 Fed. 746, 751. "It" (suit) "is analogous to the vacation of an attachment levied upon the goods of a third person. * * * To pursue the analogy of attachment, it would be as if the creditor," etc. Simon v. Miller, 298 Fed. 520, 524, 525. Sequestration and seizure is effected by demand. (In reMiller-Schaefer, 281 Fed. 764; Kohn v. Kohn, 264 Fed. 253.) Under section 7(c) of the Trading with the Enemy Act and Rules 2(a) and 2(c) of the Excutive Order of the President of February 26, 1918, the demand of the alien property custodian coupled with notice of the claim to the person to whom it is directed effects the seizure of and the transfer to the alien property custodian of the property demanded. (Kohn v. Kohn, 264 Fed. 253, 255;Miller v. Rouse, 276 Fed. 715, 716, 717.) The Act is directed to the sequestration and seizure of property of enemies defined as such in the Trading with the Enemy Act. (Stoehr v.Wallace, 255 U.S. 239, 243; Commercial Trust Co. v. Miller,262 U.S. 51, 53.) A demand is no broader than the reference contained in the demand to the property or interest demanded. (See the words "mentioned in the demand," par. 2(b) Executive Order February 26, 1918.) Intangible as well as tangible property is subject to seizure. (Garvan v. Marconi Wireless Tel. Co.,
275 Fed. 486, 488.) Shares of stock in an incorporated company standing on its books in the name of an enemy may be seized by demand upon and notice to the corporation. (Garvan v. MarconiWireless Tel. Co., 275 Fed. 486, citing Miller v. UnitedStates, 11 Wall. 268, 296; Columbia Brewing Co. v. Miller,
281 Fed. 289, 290; Miller v. Kaliwerke A.A.G., 283 Fed. 746, 751, affirming 276 Fed. 206.) The only demand upon Kekaha Sugar Company, *Page 705 
Limited, was for 840 shares of the capital stock of the Kekaha Sugar Company in the name of the "Otto Ernst Isenberg Estate." This demand was ineffective to transfer to the alien property custodian the legal title of the shares of stock in dispute. There was no stock in the name of "Otto Ernst Isenberg Estate." The estate was not an entity. The legal title to the stock was in the trustees. Nor was any demand made upon the trustees for their legal title to the stock. In order to secure the legal title to shares of stock in a corporation a demand upon the trustees must assert a right to the shares themselves or the certificates representing the shares. (Kahn v. Garvan, 263 Fed. 909, 912;Garvan v. $20,000 Bonds, 265 Fed. 477; Garvan v. CertainShares Int. Agr. Corp., 276 Fed. 206.) At the time of the alleged demands certificates representing the shares of stock in Kekaha Sugar Company, the legal title to which was vested in the trustees, had been surrendered to the Kekaha Sugar Company and new certificates issued in the name of the depositary. No certificates representing these shares were then in the possession of the trustees. Nor did the demand by the custodian of the right, title, interest and estate of the enemy beneficiaries, assuming such demand to have been effective to seize their respective equitable interests, operate to transfer to the custodian the legal title of the trustees. The trust created by the will of Otto Ernst Isenberg was an active and not a passive trust. The assignment by a cestui que trust of all his right, title and interest in a trust estate subject to an active trust does not pass legal title. (39 Cyc., title "Trusts," 237; Rea v. Steamboat Eclipse, 30 N.W. (Dak.) 159, 165;Jordan v. Thomas, 34 Miss. 72; McWilliams v. Gough, 93 N.W. (Wis.) 550, 551.) Hence a demand by the alien property custodian for the right, title and interest of an enemy cestui
in a trust estate *Page 706 
subject to an active trust does not transfer to the alien property custodian the legal title. Moreover, even if the trust were a mere passive one, it being composed of personalty, an assignment of an equitable interest therein would not operate to transfer to the assignee the legal title. The legal title of a trustee of a dry trust to personalty upon the death of the trustee descends to his legal representatives and not to the beneficiaries. (Schenck v. Schenck, 16 N.J. Eq. 174; Hill
v. Hill, 90 Neb. 43; Fox v. Fox, 250 Ill. 384.) Hence assuming that the trust as to income stock was passive an assignment by the cestui of all his right, title and interest therein would not operate to transfer the legal title of the stock to the assignee. No more so would a demand of the alien property custodian for the right, title and interest of thecestui vest in the former the legal title to the stock. Assuming that the demands of the alien property custodian were effective to sequester and seize the equitable interests of the enemy beneficiaries in the trust estate created by the will of Otto Ernst Isenberg, deceased, the alien property custodian merely stepped into the shoes of the beneficiaries and became substituted for them to the extent of their equitable interests. Equitable as well as legal interests were unquestionably subject to demand by the alien property custodian. (Keppelmann v.Palmer, 108 Atl. (N.J.) 432; In re Miller-Schaefer, 281 Fed. 764, 773; Kahn v. Garvan, 263 Fed. 909; Stohr v. Wallace,
269 Fed. 827, affirmed in 255 U.S. 239.)
The majority concludes that the seizure of the equitable estate of these enemy beneficiaries operated to seize the legal estate as well; that the equitable estate was the entire estate and the legal estate was a mere empty shell and cites in support thereof two cases, Meriwether v. United States, 13 Ct. Cl. 259, andStoddart v. United *Page 707 States, 6 Ct. Cl. 340. Neither, however, has any application. Both were cases of passive trusts. The former held that a deed directly from a husband to his wife, in the absence of statute permitting the same to be done, was according to the common law void, but inasmuch as the courts of the State of Tennessee, in which the property subject to the conveyance was situated, recognized such conveyance in equity the wife was properly a claimant to the fund in suit derived as rentals from land subject to the conveyance. In the latter case an agent of the claimant had invested certain funds held by him for the latter in cotton which was captured by the forces of the United States. The claimant brought suit for the proceeds. The court held that in looking to the loyalty of the claimant it could consider his equitable interest as the real interest. But the trust in the instant case was an active trust — extremely active. The trustees had the right to sell and reinvest the property of the estate. The opinion of the majority is based upon the theory that the right of the cestui in an active trust is a right in rem. On the contrary it is a right in personam.
Professor Ames in one of his lectures contained in 1 Harvard Law Review 402, says: "What is meant by an equitable estate is, strictly speaking, not an estate (i.e., any ownership in theres itself) at all, — it is a right in personam as distinguished from the right in rem possessed by the owner of a true estate. What is called a conveyance of an equitable estate is really only the assignment of a chose in action." Professor C.C. Langdell in his article in 1 Harvard Law Review 55, 59, entitled "A Brief Survey of Equity Jurisdiction," says: "There are, however, true equitable rights, and also true equitable wrongs, the latter being violations of equitable rights. A true equitable right is always derivative and *Page 708 
dependent, i.e., it is derived from, and dependent upon, a legal right. A true equitable right exists when a legal right is held by its owner for the benefit of another person, either wholly or in part. Such a right may be defined as an equitable personal obligation. It is an obligation because it is not ownership; and because it is relative, i.e., it cannot exist without a correlative duty; and it is personal because the duty is imposed upon the person of the owner of the res (i.e., of the legal right), and not upon the res itself. And yet courts of equity frequently act as if such rights were real obligations, and even as if they were ownership. Indeed, it may be said that they always so act when they can thereby render the equitable right more secure and valuable, and yet act consistently with the fact that such right is in truth only a personal obligation. For example, a personal obligation can be enforced only against the obligor and his representatives; but an equitable obligation will follow the res which is the subject of the obligation, and be enforced against any person into whose hands the res may come, until it reaches a purchaser for value and without notice. In other words, equity imposes the obligation, not only upon the person who owned the res when the obligation arose, but upon all persons into whose hands it afterward comes, subject to the qualification just stated. But the moment it reaches a purchaser for value and without notice, equity stops short; for otherwise it would convert the personal obligation into a real obligation, or into ownership. Why is it, then, that equity admits as an absolute limitation upon its jurisdiction a principle or rule which it yet seems always to be struggling against, namely, that equity acts only against the person, — aequitas agit inpersonam? One reason is (as has already appeared) that equity has no choice or option as to admitting this limitation upon its *Page 709 
jurisdiction. Another reason is that if equitable rights were rights in rem, they would follow the res into the hands of a purchaser for value and without notice; a result which would not only be intolerable to those for whose benefit equity exists, but would be especially abhorrent to equity itself. Upon the whole, it may be said that equity could not create rights in rem if it would, and that it would not if it could." Walter G. Hart, Esq., in his admirable article in 28 Law Quarterly Review 290, entitled "The Place of Trust in Jurisprudence," at pp. 293, 294, quotes Professor Maitland as follows: "Equitable estates and interests are not jura in rem * * *. For reasons that we shall perceive by and by they have come to look very like jura in rem; but just for this very reason it is the more necessary for us to observe that they are essentially jura in personam, not rights against the world at large but rights against certain persons. * * * The Chancery moulded equitable estates and interests after the fashion of the common law estates and interests. * * * We may well say, therefore, that a cestui que trust has rights which in many ways are analogous to true proprietary rights to jura inrem. But are they really such? We must begin with this, that the use or trust was originally regarded as an obligation, in point of fact a contract, though not usually so called. If E enfeoffsT to his (E's) use the substance of the matter clearly seems to be this, that T has undertaken, has agreed, to hold the land to the use of E. * * * The law of trusts (formerly uses) begins with this, a person who has undertaken a trust is bound to fulfil it. We have no difficulty in finding the ground for this — the trustee, the feoffee to uses, is bound because he has bound himself. This is the original notion. The right of cestui que
trust is the benefit of an obligation." In speaking of Professor Holland Mr. Hart at p. 291 says: "Professor *Page 710 
Holland, however, whom we may regard as the leading modern exponent of Austin's school, is quite clear and explicit. His view is that the right created by a trust is a species of primary or antecedent rights in personam." In concluding his article Mr. Hart makes the following observation: "It seems, then, when we examine the matter, that those who maintain that a cestuique trust has jus in rem are confuted by their own explanations of that term; that the view expressed by Holland, Langdell, and Maitland is the true gospel, namely, that his right ought to be regarded as jus in personam, since, although it can be enforced against a great many people, it cannot be enforced against everybody."
In view of the rights of the enemy beneficiaries in this estate the conclusion is inevitable that none of them had any interest in specific property forming a part of the trust corpus. That property was subject to sale and investment and until accounting and discharge of the trustee no title to any specific res
vested in them. To be sure the alien property custodian under the arbitrary powers conferred upon him by section 7 of the Trading with the Enemy Act might seize any property, irrespective of the condition of the legal title, as enemy-owned property and relegate the enemy or his legal representatives to the remedies provided by section 9 of the Act. But applying the analogy of garnishment or attachment to effect an immediate seizure of a trust res in which an enemy cestui que trust had an equitable interest the demand must be for the res itself. Instances of such demands may be found in Kahn v. Garvan, 263 Fed. 909, 913; Keppelmann v. Palmer, 108 Atl. (N.J.) 432; Stohr v.Wallace, 269 Fed. 827; Garvan v. $20,000 Bonds, 265 Fed. 477. A demand for the "right, title and interest" of an enemycestui que trust in a trust estate does not in law change the substance or the incidents of the *Page 711 
right itself. It neither enlarges nor contracts the rights seized. "Upon these assumptions, it is necessary briefly to consider the nature of the `right, title, and interest' which was the subject of the putative capture. It did not profess to be greater than the right of the enemies as cestuis que trustent,
and it did not in law change the substance, or the incidents, of the right itself, any more than if, for example, it had been an unliquidated claim for breach of contract. Nor, indeed, could the alien property custodian under such a demand, or unless he asserted a legal right to the securities themselves, by capture change the character of the enemy's right as obligee." (It will be noticed that Judge Learned Hand, the author of this decision, is observant of the character of the right of the cestui as "oblige.") "* * * Such a demand neither enlarges nor contracts the rights seized." Kahn v. Garvan, 263 Fed. 909, 912. The legal effect of a demand of the "right, title and interest" of acestui que trust is to place the alien property custodian in the shoes of the enemy cestui, vesting in the former the rightsin personam against the trustee formerly enjoyed by the latter. "If it be a chose in action, subject to an accounting as a condition of its assertion, he must submit to some judicial determination between himself, as captor, and the trustee as obligor." (Here again Judge Hand observes the character of the obligation of the trustee.) "* * * If so, the alien property custodian, as cestui que trust, might pursue against the trustee all the remedies which the enemy might have pursued, if an alien friend. Among such rights is a bill to compel an accounting upon showing that the period had arrived for distribution, and as a condition of reducing the right to possession." Kahn v. Garvan, 263 Fed. 909, 912. "The other demand made on the 23d day of September, 1919, determined that the alien, Ruth Marcuse, *Page 712 
had `a certain right, title, and interest as a beneficiary under the will of Callman Rouse,' and this was duly demanded, the demand operating as a capture, just as did the other of even date. However, this capture did no more than substitute the custodian in the place of the beneficiary." (Such demand did not operate upon any specific property comprising a trust res but is confined to the interests of the cestuis in the trustres.) "It did not profess to determine what her rights were as such, and in the absence of such determination there is no specified fund or obligation on which the capture can operate. The capture has put the custodian in the place of Ruth Marcuse, but he must work out his rights in accordance with the determination; he becomes entitled to all rights which she had as beneficiary under the will of Callman Rouse and no more."Miller v. Rouse, 276 Fed. 715, 716. This is especially so where as here the trustees are vested with the power of sale and reinvestment. Moreover, until the respective rights of trustee and cestui que trust have been judicially determined neither the cestui nor his privy, in this case the alien property custodian, has any present right of possession of any specific property composing the trust res.
In Allen v. Merrill, Lynch  Co., 194 N.W. (Mich.) 131, 133, the trustees under a will brought a bill to remove a cloud from their title occasioned by attachment and execution levied upon the interest of a beneficiary of the trust prior to the settlement of a trust estate. The court held: "It is also contended that the designated period of the trust has long since expired, and therefore the trust should be ended, the estate vested in the beneficiaries, and the trustees discharged. With their levies under attachment and execution vacated, the defendants Merrill, Lynch  Company stand as mere judgment creditors of one beneficiary of the trust and, *Page 713 
as such, they are in no position to call the trustees to account, or to invoke the law for the ending of the trust and the vesting of the estate in the beneficiaries. If the trustees have not filed annual accounts, as provided by statute, the law opens the way to compel them to do so, but it would be of no advantage to the defendants in this case to have such an order herein." InCheyney v. Geary, 45 Atl. (Pa.) 369, 370, one Adams, an equitable remainderman, assigned to one Stewart all his interest in the trust estate in and to the mortgages of which the same was composed. This assignment was recorded in the office of the recorder of deeds and the latter, in compliance with law, noted the assignment upon the margin of the record of each of the mortgages recorded in his office. The trustee brought a bill to strike from the records the entry of the assignment. The court held: "It is too plain for argument that Stewart, as assignee of the interest of Charles P. Adams in the trust estate of his grandfather, had no interest in the individual securities which constituted the trust fund in the hands of the trustee. It was the duty of the trustee to invest and reinvest the moneys of the trust, so as to keep the same invested at all times, in order to procure an income. But in the execution of the duties of the trustee the cestui que trust had no right to interfere, nor could his assignee do so. When, therefore, the latter caused a notice of the assignment to be written on the margin of the record of each one of the securities held by the trustee, he was interfering directly and actively in the management of the trust."
This same general principle is recognized in Kahn v.Garvan, 263 Fed. 909, at 912, where the court said: "Conversely, the trustee has the right, before distributing theres, to file a bill for a voluntary statement and settlement of his accounts (Mildeberger v. Franklin, *Page 714 130 A.D. 860, 115 N.Y. Supp. 903), so that he may get a valid discharge and close up the estate." In Miller v. Rouse, 276 Fed. 715, 716, the court said: "It" (demand) "did not profess to determine what her rights were as such, and in the absence of such determination there is no specified fund or obligation on which the capture can operate."
Where as here the respective rights of trustee and cestui quetrustent are unliquidated the alien property custodian by his demand of the "right, title and interest" of the cestuis in the trust estate acquired merely the rights of the cestuis and similarly as they must work out those rights. At the time the demands were made by the alien property custodian upon the trustee in the instant case the only existing present rights of possession were those of Helen L. Isenberg to the income accruing from one-third of the trust estate set aside for her benefit and of Paul Otto Isenberg to the income accruing from 2/27 of the trust estate set aside for his benefit. None of the enemy children of Otto Ernst Isenberg as to the one-third of the estate set aside for the benefit of the widow, in which they were joint remaindermen, nor Paul Otto, as to the 2/27 of the estate set aside for his benefit, had any present right of possession. On the contrary possession was vested in the trustees and the right of possession was deferred in the former instance until the death of the widow and in the latter instance until Paul Otto should arrive at the age of twenty-five years. The demand of the alien property custodian upon Herman Schultze as one of the trustees (assuming such demands to have been effective) did not operate to vest in the alien property custodian any interest in the shares of the capital stock of the Kekaha Sugar Company held by the trustees as part of the corpus of the estate. None of the enemycestui que trustent *Page 715 
had a present right of possession of said stock and the demand for the "right, title and interest" of the enemy cestui quetrustent did not attach to any specific securities included in the trust fund. Nor did the demands of the alien property custodian (assuming them to have been legally effective) operate to vest any title in him in that portion of the shares of stock in Kekaha held by the trustees as income. The rights of thecestui que trustent were unliquidated. It does not appear from the record that the purchases of Kekaha by the trustees on account of Helen L. Isenberg were with her prior knowledge or consent or subsequent ratification. The purchase by the trustees of Kekaha stock from income payable to the guardians of Paul Otto Isenberg, a minor, never had the approval of the probate court which has jurisdiction of the estates of minors. All of the annual or periodical accounts were settled ex parte and without notice. They were interlocutory only and did not constitute a final adjudication of the rights and obligations of the parties concerned. Such accounts are only prima facie correct and are subject to correction for errors and mistakes. (Estate of A.Enos, 18 Haw. 542, 546; Estate of D.H. Davis, 22 Haw. 436, 439; Estate of Lalakea, 26 Haw. 243.) The trustees, moreover, were entitled to an accounting before distribution. (Mildeberger v. Franklin, 115 N.Y.S. 903; Kahn v. Garvan,
263 Fed. 909, 912.) The distributable interests of the beneficiaries were subject to trustees' commissions.
Active duties devolved upon the trustees until the final termination of the trust. By the demands, therefore, of the alien property custodian upon Hermann Schultze as one of the trustees of the estate of Otto Ernst Isenberg (assuming such demands to have been effective) the alien property custodian acquired the following present rights of possession of the enemy cestui quetrustent: *Page 716 
(a) To receive the income payable to Helen L. Isenberg; (b) to receive the income payable to Paul Otto Isenberg until he should arrive at the age of twenty-five years; (c) to demand of the trustees the performance of their obligation, including an accounting and a vesting order in respect to stock representing income. Whether the respective interests of the enemy children of Otto Ernst Isenberg in that portion of the trust corpus in which the widow, Helen L. Isenberg, had an equitable life interest, or the interest of Paul Otto Isenberg in the portion of the trust estate, the income from which was payable to him until he should arrive at the age of twenty-five years, were contingent or vested remainders I deem immaterial to the issues. If contingent they were not demandable. (Farmers' Loan  Trust Co. v. Miller, 2 Fed. (2d) 493, 496.) If vested, until the respective rights of the trustee and cestuis were judicially determined, no present rights in any particular portion of the trust res were distributable to the alien property custodian. Until distribution those rights were merely in the nature of the enforcement of the obligation of the trustee. The custodian was merely vested with the right, title and interest of the respective enemy cestui quetrustent in the trust estate and not in any particular property comprising the trust. And until distribution (assuming that the custodian was entitled under section 12 of the Trading with the Enemy Act to sell the intangible equitable interests of the enemycestui que trustent) he never, as I shall dwell on hereafter at more length, sold the right, title and interest of any of the enemy cestuis in the estate of Otto Ernst Isenberg. If seized by him, these interests remain vested in him undisturbed by the sale of 670 shares of Kekaha stock. And if this be so the trust estate and the duties of the trustee in respect to the trustres in all respects remain *Page 717 
the same. If the demands operated to reduce the number of beneficiaries to three where there had previously been nine, the duties of the trustee remain unaltered.
The demand upon the surviving guardian of Paul Otto Isenberg, who prior thereto had attained majority, for the "right, title and interest" of the ward in the estate of the ward did not operate to transfer to the alien property custodian the legal title of the trustees in the 170 shares of the Kekaha Sugar Company, Limited, the legal title to which was vested in the latter, although said shares of stock included undistributed investments of income distributable to the guardian during the ward's minority. The trustees made these investments charging the costs thereof against themselves as guardians. The legal title thereto was in the trustees. The trustees were entitled before delivery to an accounting with the surviving guardian of the ward. No accounting was ever had. The guardians did not have the legal title to said shares of stock. The demand upon the surviving guardian was a vain act.
It is interesting at this point to note the effect of the majority decision upon the interest of Paul Otto Isenberg. It will be remembered that Paul Otto died in November, 1918, prior to arriving at the age of twenty-five years. As I understand the decision of the majority it holds in effect that notwithstanding the fact that the enjoyment by Paul Otto of his interest in the estate was deferred until he should arrive at the age of twenty-five years, the interest, being a vested one, was transferred to the alien property custodian and hence whether Paul Otto arrived at the age of twenty-five years or not such interest vested in the alien property custodian and was transferred to his assignee by the sale of January 17, 1919. Upon the death of Paul Otto Isenberg the demand of the alien property custodian unquestionably failed *Page 718 
to have any further force or effect. The custodian by virtue of that demand stepped into the shoes of Paul Otto Isenberg but the latter not having arrived at the age of twenty-five years the former was not in a position to enjoy that portion of the estate which would have been delivered to Paul Otto in the event of his attaining that age. So that whether the interest of Paul Otto be vested or contingent the custodian acquired no interest therein until Paul Otto would have attained the age of twenty-five years. Upon the death of Paul Otto his interest, whatever it was, descended to his heirs. The demand of the custodian could not operate to sequester their interests.
As to the equitable life interest of Helen L. Isenberg the position of the majority is even more confusing. If her equitable life interest in the estate of Otto Ernst Isenberg was sold then she ceased to be a beneficiary in the estate and the purchaser or purchasers of her interest became beneficiaries in her place and stead. This, however, has not occurred. On the contrary the accounts of the trustee show that since her restoration Helen L. Isenberg has received all income from the proceeds of the sale of 500 shares of the capital stock of the Kekaha Sugar Company.
The Trent Trust Company was negligent in failing to reduce to possession the 670 shares of the capital stock of Kekaha Sugar Company belonging to the trust estate. The fact that the custodian was substituted in the place of the enemy cestui quetrustent did not alter the situation. Upon its appointment the duty devolved upon it to execute the trust until terminated. It is the duty of a trustee to reduce the property of the trust estate to possession. (39 Cyc., title "Trusts," 321; Butler v.Carter, 5 L.R. Eq. Cas. 276, 280; Ex parte Ogle, 8 L.R. Ch. Ap. Cas. 711, 717; McGachen v. Dew, 15 Beav. *Page 719 
84, 51 Eng. Repr. 468, 469; In re Reinboth, 157 Fed. 672, 674;Speakman v. Tatem, 48 N.J. Eq. 136, 149.) This duty applied not only to the Kekaha stock which was corpus but also to stock dividends distributable to the life tenant as income which formed a part of the trust estate until delivered and also to the Kekaha stock purchased from income and dividends thereon. There is no showing that the investments made by the trustees from income payable to Mrs. Isenberg were with her prior consent or subsequent ratification. The stock dividends deliverable to Paul Otto as beneficiary were a part of the trust fund of the estate until delivered. Kekaha stock representing investments of income and dividends on the same was part of the trust estate until delivered. Paul Otto attained his majority in 1915. The stock was previously in the name of the trustees. If the trustee had performed its duty upon examination it would have been informed of that fact. Having been in the name of the trustees it wasprima facie a part of the trust property. The trustees' right of possession was superior to every one but Paul Otto.
The seizure by the alien property custodian was not and was not intended to be absolute confirmation. The ultimate disposition of seized property under the terms of the Trading with the Enemy Act was subject to the subsequent determination by Congress. The substitution of the custodian for the enemy cestui que trustent
did not mean permanent substitution. Congress might and could at any time grant to enemy cestui que trustent the privilege of again enjoying the rights previously seized. It was the duty of the trustee not alone to preserve the trust estate for the benefit of the custodian and the citizen cestui que trustent
but also for the benefit of the enemy cestui que trustent
should Congress restore to them their rights. Such duty was particularly pertinent *Page 720 
to the facts of the instant case. By the terms of the Act itself (Sec. 9(b) subpar. 1) a citizen who was a resident of Germany and hence under the terms of the Act an enemy upon resuming residence in a neutral country or in the United States was entitled to restoration of property seized. Paul Otto Isenberg was born in the Hawaiian Islands prior to July 3, 1894, the date of the adoption of the constitution of the Republic of Hawaii, of parents residing therein. Although Otto Ernst Isenberg, his father, was a German he was not engaged in any diplomatic or official capacity under the Emperor of Germany during his residence in the Hawaiian Islands. Hence under the decision inMacfarlane v. Collector of Customs, 11 Haw. 166, 172, Paul Otto was a citizen of the Republic of Hawaii. Under section 4 of the Organic Act he automatically became a citizen of the United States. Paul Otto was not a national of Germany and was eligible at any time of fulfilling the status of a claimant under section 9 (b), subpar. 1.
Subsequent to the passage of the Trading with the Enemy Act Congress pursuant to the provisions of section 1 thereof by amendment created new classes of enemies who might under the provisions of section 9 (b) as amended be restored in whole or in part to property seized. (See amendments of June 5, 1920 (41 Stat. L. 977); February 27, 1921 (41 Stat. L. 1147); December 21, 1921 (42 Stat. L. 351); December 27, 1922 (42 Stat. L. 1065), and March 4, 1923 (42 Stat. L. 1511).)
The daughters of Otto Ernst Isenberg, similarly as Paul Otto, were born in the Hawaiian Islands prior to July 3, 1894, and under the provisions of the constitution of the Republic of Hawaii and the Organic Act previously adverted to became citizens of the United States. It is true they married Germans. The respective dates of their marriages do not appear from the record. *Page 721 
If as the majority holds the interests of the enemy children in the one-third of the trust estate set aside for their mother were vested remainders then the money or property concerned though acquired from a subject of Germany was acquired prior to January 1, 1917, and the daughters of Otto Ernst Isenberg though married to Germans were entitled to restoration under the provisions of section 9(b), subpar. 2 of the Trading with the Enemy Act. Moreover, if neither Paul Otto nor his sisters were respectively qualified for restoration under the provisions of section 9(b), subpars. 1 and 3, they all may have been entitled to restoration according to and subject to the limitations of section 9(b), subpar. 9.
The primary obligation of the trustee was to reduce the trust corpus to possession. As previously said the beneficiaries had the right in personam to enforce the execution of the trust by the trustee. That right inhered in the custodian and in the event of the restoration of the enemy children also in them and whenever and by whomever called upon it was the duty of the trustee to have and hold the title and possession of the property composing the trust estate. To excuse the failure by the trustee to reduce the trust corpus to possession and to justify its failure to have the same in its possession the burden rested upon it to show a legal seizure by the custodian not only of the equitable title but of the legal title and the elimination of the enemy cestui que trustent absolutely as beneficiaries of the trust estate.
The duty of the trustee was clear and unqualified. The means of its execution equally so. Section 9 of the Trading with the Enemy Act provided a complete remedy for the recovery by the trustee of the legal title to the 670 shares of the capital stock of Kekaha Sugar Company. (Columbia Brewing Co. v. Miller, 281 Fed. 289, 291; Garvan v. Marconi Wireless Tel. Co., 275 Fed. 486, *Page 722 
488; Garvan v. Certain Shares Int. Agr. Corp., 276 Fed. 206;Miller v. Kaliwerke A.A.G., 283 Fed. 746, 758; Stoehr v.Wallace, 255 U.S. 239, 246.) The Trent Trust Company, Limited, was a corporation organized and existing under the laws of the Territory of Hawaii. It was a citizen of the United States. It was therefore qualified under the provisions of section 9(b), subpar. 1, of the Trading with the Enemy Act to institute necessary proceedings for the recovery of the legal title to this stock.
The claim of the trustee that the purported sale by the alien property custodian should be considered as having been made by the trustee under and pursuant to the express authority to sell conferred upon it by the terms of the will of the testator is without merit. The purported sale of stock was made by the alien property custodian and not by the trustee. The claim is a mere pretense and an afterthought. The protestations of the trustee that the sale was made for the best interests of the estate are false in the light of the correspondence between Richard Trent, the president of the Trent Trust Company, acting in his capacity as special representative of the alien property custodian, and the custodian. Moreover, the defenses interposed by the trustee of sale by the custodian on the one hand and a denial of such sale on the other are absolutely inconsistent. If as the trustee contends the surrender or demands vested title in the alien property custodian a sale could not be made by the trustee. An analysis of the power of sale conferred upon the trustee shows the fallacy of the contention. The power as granted contemplated a discretion by the trustee. Whatever discretion was exercised was that of the custodian. A trustee of a trust estate cannot delegate his discretion to a third person. (Graham v. King,
50 Mo. 22, 24.) It is true that after the trustee exercises the discretion reposed in him and *Page 723 
determines to make the sale under the power reposed in him to that effect agents may execute the details of the sale. But the alien property custodian was not the agent of the trustee. Nor was any prior consent given to such sale by the trustee. It was never communicated to the custodian prior to the time the sale was ordered to be made and then it referred only to 500 shares. Holding as I do that neither the voluntary surrender by Schultze nor the subsequent demands of the custodian operated to vest in the custodian the legal title to the 670 shares of Kekaha stock in dispute, the sale by the alien property custodian was absolutely void. Being void the trustee could not ratify such sale. To say that the alien property custodian sold the "right, title and interest" of the enemy cestui que trustent in the estate of Otto Ernst Isenberg or the 670 shares of Kekaha stock belonging to the estate has no foundation either in law or in fact. There was no pretense of a sale of any interest in the estate. Correspondence and advertisements of sale or pretended sale all refer to stock. Moreover they refer to stock owned by Helen L. Isenberg and Paul Otto Isenberg and not to stock belonging to the trust estate. The cable of the custodian of December 19, 1918, ordering Mr. Trent to proceed with the sale, while referring to Mr. Trent's letter of December 6 previous, was predicated upon and referred to the list accompanying the letter of Mr. Trent to the custodian of September 25 previous. That list refers to stock held by certain enemies and includes as enemies Helen L. Isenberg and Paul Otto Isenberg as the owners of 500 shares and 170 shares respectively of the Kekaha Sugar Company. The list makes absolutely no reference to stock in Kekaha Sugar Company, the title to which was vested in the trustees of the estate. Hence the order of sale referred to the sale of Kekaha stock owned by the persons named. *Page 724 
There were no shares of the capital stock of Kekaha Sugar Company so owned. Moreover, there was no direction by the custodian to sell any Kekaha stock held by the trustees.
The best test of whether or not a sale was made of the stock in dispute is whether a purchaser at the pretended sale upon refusal of the custodian to make delivery could have successfully demanded and recovered any shares of Kekaha stock belonging to the Isenberg estate. A sale is a contract. The contract in the instant case is to be made up from the instructions of the custodian to his representative and the advertisement of sale made in compliance therewith. Nowhere does it appear that the subject-matter of the contract was 670 shares of Kekaha stock held by the trustees of the Isenberg estate. And the denial of the custodian that he sold the Kekaha stock belonging to the estate of Otto Ernst Isenberg to the contrary of being immaterial is extremely material when considered in the light of the question of intention of the alleged vendor. Facts are singularly absent upon which a contract of sale may be predicated. In the face of the denial of the custodian that he made the sale nothing remains. Moreover, the legal title of the trustee to this 670 shares of the capital stock of the Kekaha Sugar Company has never been transferred to any of the pretended purchasers. The will provides that the trustees "pay over one such portion (or the proceeds thereof) to each of said children who has then arrived at the age of twenty-five years." To "pay over" means to convey. Title does not vest in the beneficiaries by operation of law. To have transferred this stock to the beneficiaries required a conveyance by the trustee. (Green v. Grant, 32 N.E. (Ill.) 369, 371.) This equally applies to an alleged assignee of a beneficiary.
The trustee contends that if it as such trustee has been *Page 725 
guilty of a breach of trust and is liable to account for 670 shares of the capital stock of the Kekaha Sugar Company, in the event of its failure so to do, in the absence of proof of fraud it should not be held liable for any damages, the price obtained for the stock having been the then reasonable value thereof; and at most should it appear that the price obtained upon the sale of said stock was less than its real market value the trustee should be held liable only for 2/9 of the difference in respect to 500 shares, the legal as well as the equitable interests of all of the enemy children having been seized by the alien property custodian with the exception of the interests of the two sons Hans and Carl. Where the beneficiaries of a trust estate demand the production by the trustee of shares of stock in a private corporation in specie, and this may be done, the measure of damages upon default is the value of the stock at the time of the trial. (Fenwick v. Greenwell, 10 Beav. 412, 50 Eng. Repr. 640, 646; In re Reinboth, 157 Fed. 672, 674; O'Meara v. N.Amer. Min. Co., 2 Nev. 633, 637, 647.) The objectors demanded restoration of the stock. This is not a case of conversion. Any other rule of compensation would be unjust and inequitable. "The plaintiff asks for the stock itself, not for damages. If the court finds he is entitled to the stock, but defendant cannot transfer the stock, because it has none to transfer, then there can certainly be but one rule or measure of damages: that is to decree as much as would buy the same amount of stock at the time the decree is rendered, for the money comes in lieu of the stock — stock which should be transferred at or after the decree, and it is wholly immaterial what that stock may have been worth at any former period. * * * He has not, however, chosen to bring his action for damages, but for the stock itself. Why should he then be permitted to recover more than the stock, or *Page 726 
its value at the time it would have been delivered to him under the judgment, if the defendant had it in his power to deliver it? It is perfectly clear that the plaintiff must be entitled to some relief beyond the delivery of the stock, if he is entitled to a money judgment for more than its value at the time of trial. But here the plaintiff prays for a delivery of the stock, and as it was shown that the defendant did not have it in his possession, a money judgment for its highest market value after conversion is rendered against the defendant. In our opinion, the plaintiff was only entitled to a judgment for a delivery of the stock, or in case delivery could not be had, then its value at the time of the trial." O'Meara v. N. Amer. Min. Co., 2 Nev. 633, 637, 647.
The trustee further contends that the objectors should not be permitted to acquiesce in the sale by the alien property custodian of shares of the capital stock of the Pioneer Mill Company, Limited, an Hawaiian corporation, prior to surrender held by the trustee as a part of the estate distributable to Helen L. Isenberg and Paul Otto Isenberg, the market value of which has since said sale depreciated, and repudiate the sale by the alien property custodian of 670 shares of Kekaha stock, the market value of which since said sale has appreciated, but should be required to adopt or reject the sale by the alien property custodian as a whole. Cestui que trustent by the waiver of one breach of duty by their trustee are not estopped thereby to assert the liability of their trustee for another breach of trust although both are similar in character and committed at or about the same time. The breach herein complained of is not the sale of Kekaha stock but the failure of the trustee to reduce the same to possession. The sale itself was absolutely void.
The trustee further contends that it is not liable for dividends that would have accrued upon the 670 shares *Page 727 
of Kekaha stock or for interest thereon from the respective dates upon which they would have become due and payable. The liability of the trustee to account to the court is independent of and superior to the liability of the trustee to comply with the demands of the alien property custodian. The issues involved herein are directed to the former. That the trustee after accounting to the court for dividends may be obligated by reason of the previous demands of the alien property custodian to pay them to the latter is immaterial. The primary obligation is to account to the court of its appointment for the income which it should have received. Where as here shares of stock in a private corporation are lost to the trust estate through failure of the trustee to reduce them to possession the estate should be reimbursed in the aggregate amount of the income that would have accrued to the trust estate from such shares by way of cash dividends had the shares been reduced to possession by the trustee together with interest from the respective times that said dividends were due and payable. If the demands of the alien property custodian were not effective in law to seize the equitable interests of the enemy children of Otto Ernst Isenberg in the trust estate created by their father the trustee was liable to account for these dividends as a part of the trust corpus of the estate unincumbered by any demands.
The trustee further contends that the court erred in adopting such portions of the report of the master as depended upon the following erroneous computations and charges: (a) That the master in computing the value of the trust estate as it would have been upon the date of reference, if properly administered, included the proceeds of the sale by the alien property custodian of 381 shares of the capital stock of the Pioneer Mill Company, Limited, which had been turned over to the alien property *Page 728 
custodian; (b) that the master improperly charged the trustee with the sum of $11,061.55, paid by the trustee to the alien property custodian as income accrued subsequent to the death of Paul Otto Isenberg upon property prior to demand held by the trustee for the benefit of said decedent; (c) that incorrect rates of interest were applied. These objections will be considered seriatim. (a) In computing what the value of the estate of Otto Ernst Isenberg would have been had it been properly administered the proceeds of the sale by the alien property custodian of shares of stock in the Pioneer Mill Company belonging to the trust estate and distributable to Paul Otto when he should have arrived at the age of twenty-five years, which were transferred by the trustee to the alien property custodian, were properly included. The proceeds of the sale of the 381 shares of the capital stock of the Pioneer Mill Company were transferred by the Trent Trust Company, Limited, to the alien property custodian. These 381 shares had the same status in respect to the estate as the Kekaha stock. Of the one-third of the estate set aside for Helen L. Isenberg there were originally 149 shares of Pioneer. Of the portion of the estate set aside for Paul Otto Isenberg there were originally 42 shares of Pioneer. In 1912 the capital stock of the Pioneer Mill Company was increased from $2,750,000 to $4,000,000 and the par value changed from $100 to $20. In 1916 the capital stock was increased to $5,000,000. In both instances the increase represented stock dividends. The 1912 stock dividend was declared partly by writing up assets and partly from profits which had accrued since the inception of the trust. The 1916 stock dividend was declared entirely from accrued profits. Applying the rule adopted in this jurisdiction in the cases of Carter v. Crehore, supra, and Evans v. Garvie,supra, of the Pioneer stock held for the benefit of Helen *Page 729 
L. Isenberg, after the adjustment of fractional shares, 1066 shares were corpus and 287 shares were income. Of the Pioneer stock held for the benefit of Paul Otto Isenberg, after the adjustment of fractional shares, 300 shares were corpus and 81 shares were income. The breach by the trustee in respect to Pioneer stock was the same as in the case of the Kekaha stock. The practical result of this proceeding is that the breach of the trustee to reduce the Pioneer stock to possession must be considered similarly as its breach to reduce the Kekaha stock to possession. Were the court to take any other position a trustee would profit by his own negligence. The trustee similarly as in the case of Kekaha stock was guilty of a breach of trust in failing to reduce the 381 shares of Pioneer stock to possession. It might be that were the same rule of damages applied to the breach by the trustee of its duty to reduce the Pioneer stock to possession the trustee would only be liable in default of the restoration of said stock for the value thereof at the time of reference plus dividends accrued and interest. But in the absence of evidence that the proceeds of sale of the Pioneer stock were greater than its market value at the time of reference plus dividends and interest the basis of computation should not be disturbed. (b) Assuming that the demands of the alien property custodian operated to sequester the income payable to Paul Otto Isenberg and that such income as had accrued was payable to the alien property custodian all income that accrued after the death of Paul Otto, in the absence of additional demands, was payable to the administrator of his estate and the Trent Trust Company, Limited, having on or about August 1, 1920, been advised of his death in November, 1918, previous, wrongfully paid to the alien property custodian the income which accrued subsequent to November, 1918, and which it had in its possession *Page 730 
at the time it was advised of his death. (c) The trustee is chargeable with eight per cent upon all dividends that would have accrued upon 670 shares of Kekaha stock. The trial court assumed that the equitable interests of Helen L. Isenberg and of her enemy children had been seized by virtue of the demands of the alien property custodian upon Hermann Schultze, one of the trustees of the estate of Otto Ernst Isenberg. Thus far I have also so assumed. But the demand of the alien property custodian was not made upon both trustees but only upon one trustee and hence the equitable title of the enemy children was never seized. The income of the estate vested in both trustees; not in Schultze alone. In order to effect a valid attachment the demand of the alien property custodian must be made upon all of the trustees in whom is vested the legal title of the trust corpus. Where the control and disbursement of moneys are in and devolve upon joint trustees sequestration can only be had upon notice to all of the joint trustees. (Frizzell v. Willard, 37 Ark. 478, 482.) The persons upon whom demand must be made and persons upon whom service of demand may be made should not be confused. Demand and service of demand are two separate and distinct propositions. (Miller v. Rouse, 276 Fed. 715.) The statutory rate of interest in Hawaii for money detained is eight per cent. (R.L. 1915, s. 3585.)
The trustee further contends that the court erred in surcharging it with all commissions received and the disallowing of commissions payable to the trustee as such. Without going into the question of propriety of the charges of commissions it is sufficient to say that by the uniform decisions of this court commissions have been disallowed all fiduciaries who have been faithless to their trusts. Statutory commissions are provided by way of compensation for the proper execution of trusts and *Page 731 
where a trustee negligently fails to perform his duties commissions are properly disallowed. (Estate of Lalakea,26 Haw. 243, 273, 274; Re Crowell, Late a Minor, 27 Haw. 439, 451, 452, 457; Re Trask Minors, 27 Haw. 343, 361; GuardianshipIsaac Kaiu, 17 Haw. 517, 519; Guardianship of Hoare, 14 Haw. 443, 448; Estate of Lazarus, 13 Haw. 242, 245; Estate ofAlina, 13 Haw. 388; 630; Estate of Akana, 11 Haw. 420, 422.)
The trustee also contends that the court erred in removing it from office. The negligence of the trustee in failing to reduce to possession the 670 shares of Kekaha stock belonging to the trust estate without more was sufficient to justify its removal.
The error assigned to the allowance of a master's fee of $7500 is without merit. At first I was inclined to doubt the reasonableness of the fee allowed to the master. But after examining the evidence adduced before him and his report thereon I am convinced of its fairness. Although the master held an official position and was otherwise engaged the hearings were held after hours and in the evenings. The work is not to be measured by the actual number of hearings. The report shows lengthy and arduous endeavor. Most of the evidence was directed to the issue raised by the trustee that sales of stock upon the open market at or about the time of reference were not fair reflections of the value of such stock due to the effect of pending litigation upon stock in a corporation of small capitalization, the shares of which were closely held, and that the intrinsic value should control. This required many hearings and the examination of involved calculations. The report shows a painstaking analysis of the evidence and a masterly handling of the figures submitted. The fact that neither party took exceptions to the value placed by the master upon shares of the Kekaha Sugar Company and that the only *Page 732 
exceptions to his report were those presented here under the assignments of error is a commentary on the thoroughness of his services and the learning and ability that he applied to his labor. The costs of reference to the master were properly chargeable against the trustee. The expense of reference made necessary by default of a trustee may properly be charged against him as a part of the expenses of litigation. (Re Estate ofAlina, 13 Haw. 388, 391.)
Finally as to jurisdiction. The trustee contends that the circuit court in equity was without jurisdiction of the subject-matter of the cause for the reasons (1) that the alien property custodian was not made a party to the cause; (2) that the objectors' only remedy was under section 9 of the Trading with the Enemy Act and (3) that under the Treaty of Berlin, signed August 25, 1921, Germany undertook to compensate her nationals in respect to the sale of their property by the alien property custodian under the Trading with the Enemy Act and such of the objectors as were German nationals were without remedy in the premises. The circuit court in equity had jurisdiction of the parties and the subject-matter of the proceeding and neither section 9 of the Trading with the Enemy Act nor the provisions of the Treaty of Berlin apply. The proceeding was one in equity to settle the accounts of a trustee. The objectors made no claim against the alien property custodian. The decree does not affect the alien property custodian. The proceeding did not involve as between these parties the claim of a national of Germany against the Trent Trust Company for compliance with a legal demand but the negligent failure by it as trustee to reduce the property of the trust estate to possession.
The decree appealed from should in all respects be affirmed. *Page 733