1. Stock is presumed to be owned by the person registered as
owner on the company's books, and when stated to be held by the
registered owner for another named person, the latter is presumed
to own the whole beneficial interest. P.
273 U. S.
188.
2. A demand of the Alien Property Custodian upon a corporation
for transfer to himself of every right, title, and interest of an
alien enemy in shares of stock
construed as a demand for,
and as a symbolic seizure of, the shares. P.
273 U. S.
188.
Page 273 U. S. 183
3. By the Act of November 4, 1918, it was made the duty of a
corporation to cancel old certificate and issue new ones for shares
seized by the Custodian before or after the date of the Act. P.
273 U. S.
192.
4. Under that Act, the right of the Custodian to new
certificates did not depend upon surrender of the old ones. P.
273 U. S.
192.
5. To require a corporation so to transfer enemy-owned shares,
without surrender of the old certificates, was within the war power
of Congress, and did not deprive of due process the corporation
issuing the shares or the company acting as its registrar, they
being protected by § 7(e) of the Trading with the Enemy Act, and
nonenemy owners by § 9. P.
273 U. S. 193.
So
held where certificate and bylaws allowed transfer
only by the holder or his attorney upon surrender and cancellation
of the old certificates, conditions also imposed by the company's
charter, and when the company had its transfer office, and its
shares listed on an exchange, in New York, by the law of which it
need not issue certificates without surrender of old unless the old
were lost or destroyed, and where the company's registrar, a New
York Trust Company, as a condition to being accepted by the
exchange, was obliged not to register transfer without surrender of
outstanding certificates.
Affirmed.
Appeal from a decree of the district court, in a suit by the
Alien Property Custodian under the Trading with the Enemy Act,
requiring the Great Northern Railway Company and the Central Union
Trust Company, registrar of its stock, to transfer shares of stock
held by aliens, and to issue and countersign new certificates
therefor in the name of certain trust companies as depositaries for
the Custodian.
Page 273 U. S. 184
MR. JUSTICE BRANDEIS delivered the opinion of the court.
This is a suit under § 17 of Trading with the Enemy Act, October
6, 1917, c. 106, 40 Stat. 411, 425, 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 § 238 of the Judicial Code as it stood prior to the effective
date of the Act of February 13, 1925.
During the war, the Great Northern filed with the Custodian,
from time to time, the reports required by § 7(a) of the Act. All
of these reports except one contained lists of persons who were
registered owners of specified numbers of shares and were believed
to be enemies.
Page 273 U. S. 185
One report stated that Lieber & Co., believed to be an
enemy, was believed to be the beneficial owner of shares standing
in the name of A. Biederman & Co. All these reports stated that
the actual location of the certificates representing said shares
was unknown to the company. In consequence of these reports, the
Custodian made upon the Great Northern demands in writing in
respect to the shares therein referred to. All these demands were
made during the war, and all were in substantially the same form.
The construction and effect of that document are the principal
matters in controversy. The part of it requiring special
consideration is this:
"To Great Northern Railway Company, Address 32 Nassau St., New
York, N.Y.:"
"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
Page 273 U. S. 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."
"This demand is supplementary to any demand which may hitherto
have been made upon you, accompanied by the presentation of
certificates which represent shares or beneficial interests, for
the transfer into my name as Alien Property Custodian, of such
certificates, or for the transfer thereof into the name of any
nominee of me as Alien Property Custodian, and this demand shall
not prejudice or affect any demand accompanied by such certificates
which has been, or which may hereafter be, made."
The Custodian admitted that, during the war, there was no
request specifically for the cancellation of the old
Page 273 U. S. 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,
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
Page 273 U. S. 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 § 7, recovery by the Custodian of
property demanded by him is limited by the scope of the demand.
Compare Sutherland v. Guaranty Trust Co., 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, 276 F. 715,
717.
First . The main question is whether the Custodian had,
by the demand above set forth, taken action which could legally
serve as a basis for the specific request for the certificates made
after the war. The demand must be read in the light of the then
existing legislation, of its formal title or designation, of the
extracts of the Executive Order embodied in it, and of the reports
of the Great Northern out of which it originated. And these reports
must be read in the light of the fact that stock is presumed to be
owned by the registered owner, and that, where stock is stated to
be held by the registered owner for another named person, the
latter is presumed to own the whole beneficial interest.
Compare Turnbull v. Payson, 95 U. S.
418,
95 U. S. 421;
Keyser v. Hitz, 133 U. S. 138,
133 U. S. 149;
Finn v. Brown, 142 U. S. 56,
142 U. S.
67.
Page 273 U. S. 189
The omission from the demand of the request for a new
certificate is susceptible of a simple explanation. At the times of
the earlier demands, § 12 of the Act, as amended by Act March 28,
1918, c. 28, § 1, 40 Stat. 423, 460, made it the duty of
corporations to transfer seized shares upon its "books into the
name of the Alien Property Custodian" only if his demand was
"accompanied by the presentation of the certificates which
represent such shares." The Custodian was unable to present the old
certificates. Consequently a request for the new certificates would
not have been inserted in the demand, even if the instrument had
contained an express recital of the determination that the enemy
owned the whole interest in the shares and that the whole interest
had been seized. It was not until the amendment of November 4,
1918, that the corporation was required to cancel the old
certificates and issue the new ones, whenever enemy property
consisted of
"shares of stock or other beneficial interest . . . standing
upon its . . . books in the name of any person . . . or held . . .
for the benefit of any person . . . who shall have been determined
by the President, after investigation, to be an enemy . . . and
which shall have been required to be conveyed, transferred,
assigned, or delivered to the Alien Property Custodian or seized by
him. . . ."
40 Stat. 1021. 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.
The form used indicated clearly, in parts other than that quoted
above, the intention to seize the whole property. It was entitled:
"Demand on Corporation for Stockholders' Interest without
Presentation of Certificates. Demand by Alien Property Custodian
for Property."
Page 273 U. S. 190
Preceding that part of the document addressed specifically to
the Great Northern quoted above, were printed the following
"Extracts from Executive Order of February 26, 1918":
"Sec. 1(c): The words 'right,' 'title,' 'interest,' 'estate,'
'power,' and 'authority' of the enemy, as used herein, shall be
deemed to mean respectively such right, title, interest, estate,
power, and authority of the enemy as may actually exist and also
such as might or would exist if the existing state of war had not
occurred, and shall be deemed to include respectively the right,
title, interest, estate, power, and authority in law or equity or
otherwise of any representative of or trustee for the enemy or
other person claiming under or in the right, of, or for the benefit
of, the enemy."
"Sec. 2(a): A demand for the conveyance, transfer, assignment,
delivery, and payment of money or other property, unless expressly
qualified or limited, shall be deemed to include every right,
title, interest, and estate of the enemy in and to the money or
other property demanded as well as every power and authority of the
enemy thereover."
"Sec. 2(c): When demand shall be made and notice thereof given,
as hereinbefore provided, such demand and notice shall forthwith
vest in the Alien Property Custodian such right, title, interest,
and estate in and to and possession of the money or other property
demanded and such power or authority thereover as may be included
within the demand, and the Alien Property Custodian may thereupon
proceed to administer such money and other property in accordance
with the provisions of the 'Trading with the Enemy Act' and with
any order, rules, or regulations heretofore, hereby, or hereafter
made by me or heretofore or hereafter made by the Alien Property
Custodian."
"Sec. 3(d): The Alien Property Custodian may exercise any right,
power, or authority of the enemy in, to,
Page 273 U. S. 191
and over corporate stock, shares, or certificates representing
beneficial interests owing or belonging to or held for, by, on
account of, or on behalf of or for the benefit of an enemy,
including (1) the right to receive all notices issued by the
corporation, unincorporated association, company, or trustee which
issued such stock, shares, or certificates, to the holders or
owners of similar stock, shares, or certificates, (2) the right to
exercise all voting power appertaining to such stock, shares, or
certificates, and (3) the right to receive all subscription rights,
dividends, and other distributions and payments, whether of capital
or income, declared or made on account of such stock, shares, or
certificates, regardless of whether or not such stock, shares, or
certificates be in the possession of the Alien Property Custodian
and regardless of whether or not such stock, shares, or
certificates have been transferred to the Alien Property Custodian
upon the books of the corporation, association, company, or trustee
issuing the same."
Following the provisions of § 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,
254 U. S. 566,
254 U. S. 569.
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
Page 273 U. S. 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, August 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.
The seizures made before November 4, 1918, were equally
effective with those made after. It is urged that so to hold gives
retroactive effect to the amendment of that date. But this is not
true. The amendment does not enlarge the scope of the seizure. No
substantive right is thereby affected. The amendment confers merely
the adjective right to require of the corporation delivery of the
usual evidence of effective possession of shares. The right
conferred is comparable to providing a new judicial remedy for an
existing substantive right. As was said in
Cox v. Hart,
260 U. S. 427,
260 U. S. 435:
"A statute is not made retroactive merely because it draws upon
antecedent facts for its operation."
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, § 12 of the original Act 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
Page 273 U. S. 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 § 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., 275 F. 486;
Garvan v. Certain Shares of International Agricultural
Corp., 276 F. 206;
Columbia Brewing Co. v. Miller,
281 F. 289;
Miller v. Kaliwerke Aschersleben
Aktien-Gesellschaft, 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 bylaws 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 § 178 of the Personal Property Law
of New York 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
Page 273 U. S. 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.
The decisions of this Court and provisions made in the Act
dispose of this contention. Protection to the rights of owners
other than enemies was provided for by § 9.
Stoehr v.
Wallace, 255 U. S. 239,
255 U. S. 243,
255 U. S. 246;
Central Trust Co. v. Garvan, 254 U.
S. 554,
254 U. S. 567,
254 U. S. 569.
Neither the railway nor the registrar has any interest in the
shares. They are protected in making delivery of the new
certificates by § 7(e) of the Act, which provides:
"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."
"Any payment, conveyance, transfer, assignment, or delivery of
money or property made to the alien property custodian hereunder
shall be a full acquittance and discharge for all purpose of the
obligation of the person making the same to the extent of
same."
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, 276 F. 206;
Miller v. Kaliwerke Aschersleben
Aktien-Gesellschaft, 283 F. 746.
Affirmed.