Pierce Butler

“ The preferred stock is subject to redemption at par plus accumulated dividends, if any, and after such redemption net earnings not needed for working capital 'shall be used and devoted to the development and advancement of chemistry and allied sciences, in the useful arts and manufactures in the United States, in such manner as the board of directors may determine.' The holders of the common stock have all the voting power. ”

“ The chemical industries in question are closely related to the production of explosives, gasses, and other things directly used in waging war, as well as to the production of dyestuffs and medicines essential to the welfare of the people. At the outbreak of the war many necessary medicines and other substances, as well as most of the dyestuffs used in this country, were imported from Germany or were manufactured under patents owned by enemy Germans. ”

“ The former enemy owners have no claim against the patents or the proceeds derived from the sales. It makes no difference to them whether the consideration paid by the Foundation was adequate or inadequate. The provision that after the war enemy claims shall be settled as Congress shall direct conferred no rights upon such owners. Moreover the Treaty of Berlin prevents the enforcement of any claim by Germany or its nationals against the United States or its nationals on account of the seizures and sales in question. ”

“ A number of associations of manufacturers were formed for the advancement of such industries; they included in their membership the producers of nearly all the dyestuffs and like chemicals made in this country. Mr. A. Mitchell Palmer was the Alien Property Custodian until he was appointed Attorney General, March 4, 1919. In order to protect the United States against enemy and foreign control of its chemical industries and to stimulate production here, he favored the seizure and sale of the patents in question. ”

“ Violators are made punishable by fine and imprisonment. The United States lays much stress on these facts: Mr. Garvan, while director of the Bureau of Investigation, Joseph H. Choate, Jr., chief of the chemical division of that bureau, and Ramsey Hoguet, patent attorney for the Custodian, conferred with the representatives of the chemical industries to arrange to make the seizures and sales of the patents. Later, Mr. Garvan, then Custodian, acted for the United States in making the transfers to the Chemical Foundation, of which he was the President. ”

“ There is no support for a construction that would restrain the force of the broad language used. Congress was untrammeled and free to authorize the seizure, use or appropriation of such properties without any compensation to the owners. There is no constitutional prohibition against confiscation of enemy properties. ”

“ The corporation is required to enforce its rights and to protect the rights of its licensees. The authorized capital stock is $500,000, consisting of 5,000 shares of the par value of $100 each: 4,000 shares constitute nonvoting preferred stock, the holders of which are entitled to a cumulative dividend of 6 per centum per annum, and 1,000 shares constitute the common stock, the holders of which are entitled to dividends not exceeding 6 per centum per annum after dividends on the preferred stock have been provided for. ”

“ The complaint alleges that a number of domestic manufacturers as a result of war conditions had been able to combine and monopolize certain chemical industries in this country, and, fearing that at the end of the war German competition would destroy the monopoly, they conspired to bring about transfers and sales of the patents at nominal prices to themselves or to a corporation controlled by them; that the patents so obtained would control the industries in question and perpetuate the monopoly ”

“ Under the voting trust agreement, shareholders were divested of all voice in the control, business or affairs of the corporation. All shares are to be held by the voting trustee for 17 years, within which all patents will expire, And by charter provisions dividends were limited to 6 per centum per annum. Transferable certificates of beneficial interest were issued by the trustees to the shareholders, but these cannot be used to control the corporation. ”

“ The President's order also states that it was the intention of the Polk orders to authorize the Custodian to sell 'all choses in action, rights, interests and benefits under agreements and rights and claims of every character and description including rights to receive moneys by way of royalties or otherwise as compensation for the use of patents, trade-marks or trade-names which the Alien Property Custodian may have seized * * * and * * * determined to relate to the objects and purposes' of the Foundation. ”

“ The answer denies conspiracy and fraud, and asserts that the transfers were made in good faith and pursuant to law, and that they are valid. There was a trial at which much evidence was taken. The District Court dismissed the complaint (294 F. 300) , and its decree was affirmed by the Circuit Court of Appeals (5 F. (2d) 191.) Both courts found that no unlawful scheme, combination, or conspiracy was shown, and that there was no deception or fraud. ”

“ The contention that power to determine how enemy property should be sold could not be delegated to another is not sustained. This court has had occasion to consider a like question in Certral Trust Co. ”