Mr. William D. Guthrie, with whom Mr. D.T. Watson, Mr. R.S. Lovett, Mr. Maxwell Evarts, Mr. John F. Dillon, Mr. R.V. Lindabury and Mr. Bainbridge Colby were on the brief, for petitioners:

As to the power of the court to enter final judgment; this case does not fall under Smith v. Vulcan Iron Works, 165 U.S. 518, but under the exceptions in Mast, Foos Co. v. Stover Mfg. Co., 177 U.S. 485, 494, and see Brill v. Peckham Motor Truck Co., 189 U.S. 57, 63.

The Northern Securities Company, having been organized for an illegal purpose and having obtained possession of the railway stocks in pursuance of such purpose, could not thereby acquire the title to and ownership of the stocks.

The whole transaction was illegal, ultra vires and void from the beginning to the end. It was, legally speaking, a nullity — "an aggregate of nothings." Scovill v. Thayer, 105 U.S. 150; Ashbury Ry. Carriage Iron Co. v. Riche, L.R. 7 H.L. 653; Thomas v. Railroad Co., 101 U.S. 71; Oregon Ry. Co. v. Oregonian Ry. Co., 130 U.S. 1, 22; Penna. Co. v. St. L., A. c. R.R. Co., 118 U.S. 290.

The contract is void; the objection is not only that the corporation ought not to have made it, but that it could not make it, that the contract cannot be ratified or confirmed by the stockholders, because it could not have been authorized by them, and that no performance can give the unlawful agreement any validity by way of estoppel or otherwise, or be the foundation of any right. Central Transp. Co. v. Pullman's Car Co., 139 U.S. 24, 60; McCormick v. Market Bank, 165 U.S. 538, 550; California Bank v. Kennedy, 167 U.S. 362, 368; Pullman's Car Co. v. Transportation Co., 171 U.S. 138. In fact any contract made in violation of a statute is void, Gibbs v. Baltimore Gas Co., 130 U.S. 396, 410; Miller v. Ammon, 145 U.S. 421, 426; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 548, and it is vain to contend that any right can be acquired under such a contract. Montgomery v. United States, 15 Wall. 395, 399; Desmare v. United States, 93 U.S. 605, 612; Sprott v. United States, 20 Wall. 459, 461; United States v. Lapene, 17 Wall. 601, 602, 603; United States v. Grossmayer, 9 Wall. 72, 76; The Ouachita Cotton, 6 Wall. 521, 532; and cases cited in Bank of the United States v. Owens, 2 Pet. 527, 541.

Where the purpose and consideration of a contract have failed by reason of illegality resulting in corporate disability to perform, the vendor may rescind and is entitled to restitution of his title. Chapman v. Douglas County, 107 U.S. 348; Am. Table Works v. Boston Machine Co., 139 Mass. 5. When property is transferred for an illegal purpose which has been terminated, prevented or abandoned, the holder must return the property on demand. Louisiana v. Wood, 102 U.S. 294; Parkersburg v. Brown, 106 U.S. 487, 503. To deny a remedy to reclaim it, is to give effect to the illegal contract. Davis v. Old Colony Railroad, 131 Mass. 258, 275; White v. Franklin Bank, 22 Pick. (Mass.) 181; La Caussade v. White, 7 D. E. 535; Nat. Bank Loan Co. v. Petrie, 189 U.S. 423; Sittel v. Wright, 122 F. 434; Railroad Co. v. Railroad Co., 66 N.H. 100. The contract having been declared invalid no rights were acquired thereunder. Cases supra and Jacksonville c. Ry. Co. v. Hooper, 160 U.S. 514, 524; Dwight v. Brewster, 1 Pick. 50, 55. As to invalidity of contracts entered into in violation of statutes see Langdon v. Branch, 37 F. 449, 463; State v. Standard Oil Co., 49 Ohio St. 137, 183; People v. Chicago Gas Trust Co., 130 Ill. 268; People v. N.R.S.R. Co., 121 N.Y. 582; Cameron v. Havemeyer, 25 Abb. N.C. 438, 446; Unckles v. Colgate, 148 N.Y. 529; State v. Distilling Co., 29 Neb. 700.

The question of ownership of stock was involved and decided in the Government suit. 193 U.S. 197, 227; 307, 325, 353, 362. The decree authorized the return of the stock, and as it also decided that the combination was illegal it is vain to contend that any rights were acquired under the contract. Montgomery v. United States, 15 Wall. 395.

The extent and effect of the decision of any court, as res adjudicata or as a judicial precedent, must be ascertained, not merely from the decree or mandate, but also from the pleadings and the opinions delivered by the court. It is likewise proper to refer to the evidence before the court and to the arguments of counsel whenever necessary in order to determine exactly what points the court has ruled upon. The court is always at liberty to refer to its own records. Dimmick v. Tompkins, 194 U.S. 540, 548; Bienville Water Supply Co. v. Mobile, 186 U.S. 212, 217; Butler v. Eaton, 141 U.S. 240. Every question directly presented by the issues and discussed and passed upon in the opinions is as much a part of the decision and judgment of the court as if it had been expressly recited in its decree or mandate. So, the mandate of this court is always to be read in the light of its opinion, and it has never been the practice to recite in the mandate any of the points decided, but simply to declare the ultimate conclusion of affirmance, reversal, dismissal or qualification of the decree below. Last Chance Min. Co. v. Tyler Min. Co., 157 U.S. 683, 690; In re Sanford Fork Tool Co., 160 U.S. 247, 256; In re Potts, 166 U.S. 263; Baker v. Cummings, 181 U.S. 117, 126; Nat. Foundry c. Co. v. Oconto Water Supply Co., 183 U.S. 216, 234; Northern Securities Co. v. United States, 193 U.S. 332; Railroad Companies v. Schutte, 103 U.S. 118, 143.

As stockholders, the complainants were clearly not strangers to a litigation which involved the right of the corporation to carry out the objects for which it was organized and which affected the title to all its property, received from them. As depositors, they were represented by their custodian, agent or trustee as to its right to hold and the legality of its custodianship. All identified in interest and in privity with one of the litigating parties are concluded by a judgment and entitled to invoke its effect. New Orleans v. Citizens' Bank, 167 U.S. 371, 396. Even if the decision in the Government suit does not constitute res adjudicata in the strict technical sense, it undoubtedly should have been regarded as a controlling judicial precedent on the same facts sufficient to establish prima facie all that the complainants were called upon to show on the motion for a preliminary injunction. Brill v. Peckham Motor Truck Co., 189 U.S. 57, 59-63; American Bell Telephone Co. v. National Imp. Telephone Co., 27 F. 663, 664; Kerr v. New Orleans, 126 F. 920, 924.

A stockholder is so far an integral part of the corporation that he is considered privy to any legal proceedings touching its status and powers. Sanger v. Upton, 91 U.S. 56. See also, Hawkins v. Glenn, 131 U.S. 319, 329; Glenn v. Liggett, 135 U.S. 533, 544; Great Western Telegraph Co. v. Purdy, 162 U.S. 329, 337; 3 Cook on Corporations, 5th ed. § 750; Herman on Estoppel and Res Judicata, 154, 165; Hale v. Hardon, 95 F. 747, 759; Hendrickson v. Bradley, 85 F. 508, 516; Wilson v. Seymour, 76 F. 678, 681; National Foundry Pipe Works v. Oconto Water Co., 68 F. 1006; Secor v. Singleton, 41 F. 725. As the Securities Company was the custodian or trustee of the railway shares deposited with it, it represented the complainants as its cestui que trustent and they are bound by the decree. Kerrison v. Stewart, 93 U.S. 155, 160; Graham v. Boston, Hartford Erie R.R. Co., 118 U.S. 161, 179; McCampbell v. Mason, 151 Ill. 500, 508; McElrath v. Pittsburg and Steubenville Railroad Co., 6 8 Pa. 37, 40, 41.

In the Government suit certain stockholders of different railroad companies were made defendants as of their respective classes. The judgment therefore bound the whole. Smith v. Swormstedt, 16 How. 288, 303.

The court below was in error in holding that the form and not the legal effect of the transaction was controlling.

The assertion of a legal conclusion under such circumstances never operates to estop a party from showing the real facts. Sturm v. Boker, 150 U.S. 312, 336; Mutual Life Ins. Co. v. Phinney, 178 U.S. 327, 342; Towle v. White, 29 L.T.N.S. 78; Heryford v. Davis, 102 U.S. 235, 243, 244, 246; Chicago Railway Co. v. Merchants' Bank, 136 U.S. 268, 280; McGourkey v. Toledo Ohio Railway, 146 U.S. 536, 569; McNamara v. Culver, 22 Kan. 661, 668; Pugh v. Davis, 96 U.S. 332, 336.

The bill and proofs in the Government suit were all to effect that the Northern Securities Company was organized to effectuate an illegal holding corporation.

In the case of an illegal trust and combination entered into and adjudged to be in violation of an act of Congress, particularly where, at the very inception of any such scheme, its legality is at once publicly challenged by the National Government, justice and sound public policy will be promoted by decreeing the restoration of the status quo, and not permitting distribution on the basis of alleged rights acquired under and by virtue of the illegal contract and in disregard and defiance of the pending litigation.

If Mr. Hill and his associates are to be judged as other men are judged and are to be presumed to have contemplated and intended the consequences of their own acts, there can be no escape for them from the conclusion that the present proposed plan of distribution is a willful and deliberate attempt to circumvent the decree in the Government suit, and was, in fact, all along, the alternative intended as part of their original unlawful scheme.

The Circuit Court in Minnesota did not intend to pass upon or to prejudice or prejudge the merits of a controversy which it declined to consider or decide.

There has been no equitable estoppel created for the benefit of the Northern Securities Company by what the company did or continued to do during the pendency of the Government suit and in defiance of the serious claim therein made, either as to sale of stock, all of the purchasers having notice of the situation, or by the receipt of dividends on the Northern Securities stock by the complainants. L. N. Railroad Co. v. Kentucky, 161 U.S. 677, 691; Scorille v. Thayer, 105 U.S. 143, 151; Central Transportation Co. v. Pullman Car Co., 139 U.S. 24, 60; Tieton v. Cofield, 93 U.S. 163. Illegal acts cannot be given validity by assenting to them or acting under them. If so, a statute could be abrogated by simply contracting to do the prohibited act. Cases supra and Thomas v. Railroad Co., 101 U.S. 71, 86; Veeder v. Mudgett, 95 N.Y. 295, 310.

The Northern Securities Company claims that because it now holds possession by virtue of an illegal contract between parties in pari delicto, the complainants and all other depositors can be allowed no standing in any court of law or equity to reclaim their property. This contention cannot be sustained. Its result obviously would be that the company might dispose of and distribute at will all the property it held without legal accountability to any one. Yarmouth v. France, 19 Q.B.D. 647, 653; Northrup v. Graves, 19 Conn. 548, 554; 2 Stephen Cr. Law, 4; McMullen v. Hoffman, 174 U.S. 639, 669. Complainants acted in good faith and belief that the Northern Securities Company was not an illegal combination. As to what Congress itself contemplated by the statute is uncertain. See Cong. Rec., 51st Cong., 1st Sess., vol. 21, Pt. 3, pp. 2460, 3146, 4089.

Where the illegal purpose cannot be continued and must necessarily be abandoned, the innocent owner of property transferred does not forfeit his legal rights so that he has become outlawed, and cannot maintain an action to recover his property, and the other party may retain the property free from accountability and convert it to his own use or dispose of it as he sees fit, and the one in possession is protected in appropriating the property by a maxim of equity. Nat. Bank Loan Co. v. Petrie, 189 U.S. 423.

The rule as to parties in pari delicto contemplates the existence of a delictum, that is, a wrongful act knowingly done, an intentional "transgression against positive law." Parties are not in pari delicto when there is concededly no intentional wrongdoing or crime. Even in criminal cases, satisfactory proof of a mistake of the law, honestly held in consequence of a reasonable, but erroneous, construction of a doubtful statute, often operates to prevent a conviction. Queen v. Tolson, 23 Q.B.D. 168, 171; Taylor v. Newman, 4 Best S. 89; Regina v. Allday, 8 C. P. 136; Rex v. Twose, 14 Cox C.C. 327; Reg. v. Sleep, 8 Cox C.C. 472; Regina v. Tinkler, 1 F. F. 513; Rider v. Wood, 2 E. E. 338; Buckmaster v. Reynolds, 13 C.B. (N.S.) 62; United States v. Conner, 3 McLean, 573; United States v. Pearce, 2 McLean, 14; Halsted v. State, 41 N.J.L. 552, 591; Cutter v. State, 36 N.J.L. 125; Stone v. United States, 167 U.S. 178, 188; Hedden v. Iselin, 31 F. 266; Iowa v. Sheeley, 15 Iowa 404; Commonwealth v. Bradford, 9 Metc. (Mass.) 268; State v. Hause, 71 N.C. 518; Dotson v. State, 6 Coldw. (Tenn.) 545.

As to whether the rule applicable to parties in pari delicto applies where the parties have acted in good faith and under a mutual mistake as to the law, see Spring Co. v. Knowlton, 103 U.S. 49; St. Louis Railroad v. Terre Haute Railroad, 145 U.S. 393; City of Detroit v. Detroit City Ry. Co., 60 F. 161, and Pullman Palace Car Co. v. Central Transp. Co., 65 F. 158.

Relief will be granted from the consequences of a mistake of law, whenever the mistake is clearly proved or admitted and, by reason of such mistake, the party against whom relief is sought would otherwise secure an unfair advantage. Moses v. Macferlan, 2 Burrows, 1005, 1012; Farmer v. Arundel, 2 W. Bl. 824; Bingham v. Bingham, 1 Ves. Sen. 126; Belt's Supp. 79; Bize v. Dickason, 1 D. E. 285; Earl of Beauchamp v. Winn, L.R. 6 H.L. 223; Re Saxon Life Assurance Society, 2 J. H. 408; Jones v. Clifford, L.R. 3 Ch. D. 779; Allcard v. Walker, 2 Ch. 369, 381; Griswold v. Hazard, 141 U.S. 260, 284; Spring Co. v. Knowlton, 103 U.S. 49, 60; Snell v. Insurance Co., 98 U.S. 85; Hunt v. Rousmanier, 8 Wheat. 174, 215; S.C., 1 Pet. 1, 17; State v. Paup, 13 Ark. 129, 138; Griffith v. Sabastian County, 49 Ark. 24, 34; Northrop v. Graves, 19 Conn. 548, 554; Stedwell v. Anderson, 21 Conn. 139, 144; Culbreath v. Culbreath, 7 Ga. 64; Underwood v. Brockman, 4 Dana (Ky.), 309, 317; Ray Thornton v. Bank, 3 B. Mon. (Ky.) 510; Stockbridge Iron Company v. Hudson Iron Company, 102 Mass. 45; Lowndes v. Chisholm, 2 McCord Ch. (S.C.) 455; Mortimer v. Pritchard, Bailey Eq. (S.C.) 505; Hopkins v. Mazyck, 1 Hill Ch. (S.C.) 242; 250; MacKay v. Smith, 27 Wn. 442.

When an illegal contract is sought to be specifically enforced or when damages are claimed for its breach, undoubtedly the sound rule is that the difference between malum prohibitum and malum in se is immaterial. Gibbs v. Baltimore Gas Co., 130 U.S. 396, 412.

But the distinction between malum prohibitum and malum in se has been often recognized by the courts when considering the right to recover property transferred under an illegal contract, upon disaffirmance or termination of the illegal transaction, under circumstances which result in a failure of consideration. Where the transaction involves moral turpitude, such as the giving of a bribe, or facilitating the commission of an immoral act or a heinous crime, the party is so clearly culpable and deserving of punishment that the courts will refuse to lend him any assistance against another party to the immoral transaction, but will leave both parties where their own immoral conduct has placed them. Where, however, the act involves no moral turpitude, but is merely malum prohibitum as distinguished from malum in se, relief has often been granted by restoring the status quo so far as practicable. Pratt v. Short, 79 N.Y. 437, 445. For distinction between malum prohibitum and malum in se see Stock Yards v. Railroad Co., 196 U.S. 217; Spring Co. v. Knowlton, 103 U.S. 49; McCutcheon v. Merz Co., 71 F. 787, 789; Parkersburg v. Brown, 106 U.S. 487; Bank v. Townsend, 139 U.S. 67, 75.

In this case the transaction was not malum in se. All the parties believed they were not violating the law. The transaction was not forbidden by the common law. In re Greene, 52 F. 104, 111; Mogul Steamship Company v. McGregor, Gow Co., 23 Q.B.D. 598, 619, 626; [1892] A.C. 25; United States v. Freight Association, 166 U.S. 290, 334; United States v. Joint Traffic Association, 171 U.S. 505, 572. It was also apparently legal according to the law of New Jersey where it occurred. New Jersey Corporation Act, revision of 1896, §§ 49, 51; Dill. on Corp. 88, 93; Trenton Potteries Co. v. Oliphant, 58 N.J. Eq. 507, 524; Ansboro v. United States, 159 U.S. 695. The transaction was at most malum prohibitum. Tappenden v. Randall, 2 B. P. 467, 470; Ex parte Bulmer, 13 Vesey, 313; White v. Franklin Bank, 22 Pick. (Mass.) 181; Lowell v. Boston and Lowell Railroad Corporation, 23 Pick. (Mass.) 24, 32; Washington Gas Co. v. Dist. of Columbia, 161 U.S. 316, 327; Hanauer v. Doane, 12 Wall. 342; Douglass v. Kavanaugh, 90 F. 373.

Where money or property has been deposited with a trustee or stakeholder the doctrine of in pari delicto does not apply. A mere custodian as was the Securities Company cannot take advantage of the illegality of the transaction but must return the property to the owners. Brooks v. Martin, 2 Wall. 70, 80; Planters' Bank v. Union Bank, 16 Wall. 483, 500; Block v. Darling, 140 U.S. 234; Pointer v. Smith, 7 Heisk. (Tenn.) 137, 144; Railroad v. Railroad, 66 N.H. 100, 131; Newbold v. Sims, 2 S. R. (Pa.) 317; Jeffrey v. Ficklin and Bennett, 3 Ark. 227, 236; Barrett v. Neil, Wright (Ohio), 472; Skinner v. Henderson, 10 Mo. 205; Walker v. Chapman, Lofft, 342; Wassermann v. Sloss, 117 Cal. 425; Morgan v. Groff, 4 Barb. (N.Y.) 524; Barnard v. Taylor, 23 Or. 416, 422; S.C., 18 L.R.A. 859; Kiewert v. Rindskopf, 46 Wis. 481; Douville v. Merrick, 25 Wis. 688; Bone v. Ekless, 5 H. N. 925; Wright v. Stewart, 130 F. 905, 921; Dauler v. Hartley, 178 Pa. 23; Mallory v. Oil Works, 86 Tenn. 598, 606; Dwight v. Brewster, 1 Pick. (Mass.) 50, 55; Sampson v. Shaw, Executor, 101 Mass. 145, 151; Morgan v. Beaumont, 121 Mass. 7; Clarke, Harrison Company v. Brown, 77 Ga. 606; Shannon v. Baumer, 10 Iowa 210; Taylor v. Bowers, 1 Q.B.D. 291; In re Cronmire, ex parte Waud, 2 Q.B. 383; Kinsman v. Parkhurst, 18 How. 289.

The contention of the Northern Securities Company that the illegal contract had been executed, and that this precluded any relief to the complainants, is fallacious and cannot be sustained. Northern Securities Co. v. United States, 193 U.S. 197, 357.

A universally recognized exception to the rule concerning parties in pari delicto is that the courts will permit the recovery of property delivered and held under an illegal contract which has been terminated in fieri, when the public interests will be advanced thereby. Starke's Exrs. v. Littlepage, 4 Rand. (Va.) 368; O'Conner v. Ward, 60 Miss. 1025, 1037; 5 Thompson on Corp. § 6410; 2 Pomeroy's Eq. § 941; Story's Eq. Jur. § 298.

These complainants can follow the common Northern Pacific stock obtained by the Northern Securities Company by the conversion of the preferred stock. Where specific property belonging to another is changed by a custodian, bailee, trustee or agent into other property or funds, the original owner is entitled to follow it as long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fail. National Bank v. Insurance Co., 104 U.S. 54, 68. See also Silsbury v. McCoon, 3 N.Y. 379, 390; McLarren v. Brewer, 51 Me. 402, 404.

The real nature of the transaction was not changed by the conversion of stock. It was not an independent subscription for bonds.

The issue of the convertible certificates, the retirement of the preferred stock, and the conversion of the convertible certificates into common stock, are shown to have taken place all on the same day as part of one transaction and the securities are traceable. This was the only way it could be done under the laws of Wisconsin and the corporate powers of the Northern Pacific Railway Company. Weidenfeld v. Northern Pacific Ry. Co., 129 F. 305; Laws Wisconsin, 1895, ch. 244, § 10; Scovill v. Thayer, 105 U.S. 143; Hamor v. Taylor-Rice Engineering Co., 84 F. 392; Trevor v. Whitworth, L.R. 12 App. Cas. 409, 416.

There is no merit in the fierce attack made on behalf of the Securities Company upon the motives of the complainants in instituting this suit and the announcement that if complainants prevailed and recovered their property, the so-called Union Pacific Railroad System would secure control of the Northern Pacific Railway Company nor should this consideration influence the court, change the rules of law, and produce a different result than if this feature did not exist.

This court will not consider the motives of parties in instituting legal proceedings to protect their alleged legal or equitable rights. Dickerman v. Trust Co., 176 U.S. 181, 190; South Dakota v. North Carolina, 192 U.S. 286, 311. There is an uncontradicted statement in the record that the roads are not parallel and competitive. And see also Louisville and Nashville v. Kentucky, 161 U.S. 677, 698. The real competitive lines are the Great Northern and the Northern Pacific and it has been the motive of those in control of the Great Northern to stifle competition.

If the railway shares deposited are not to be returned but to be regarded as assets of the Securities Company then the corporation should sell the stocks and make the distribution in cash. Mason v. Pewabic Mining Co., 133 U.S. 50, 63; Kean v. Johnson, 9 N.J. Eq. 401, 408, 409; Coler v. Tacoma Railway and Power Co., 64 N.J. Eq. 117, 125; S.C., 54 A. 413. It is so in the case of a partnership. Lindley on Part., 555, and much stronger are the reasons for such course in the case of a corporation. 4 Thompson on Corp. § 4548; 2 Cook on Corp. § 671. As to § 54, Corporation Act of New Jersey, Revision of 1896, see Beals v. Hale, 4 How. 37, 54.

Mr. D.T. Watson also for petitioners:

This court, in the Government case decided that the Securities Company was not the lawful purchaser or absolute owner of the capital stock of the Northern Pacific Railway Company assigned to it by appellants, but held it as custodian for the appellants. 193 U.S. 325, 334, 346, 353, 361, 365, 390, 400. The decree authorized the return of the stock to the original stockholders of the constituent companies. The Securities Company cannot hold the railway stock and prevent giving relief to complainants under the doctrine of in pari delicto.

By the affirmance of this court the decree of the Circuit Court became the decree of this court and binding upon all parties and privies and other courts. In re Potts, 166 U.S. 265; Durant v. Essex County, 101 U.S. 555; Sandford c. Co., Petitioner, 160 U.S. 247. The opinion of this court is part of the record and may be freely resorted to to determine what this court has decided. Foundry Co. v. Water Co., 183 U.S. 217; Baker v. Cummings, 181 U.S. 124; Mining Co. v. Mining Co., 157 U.S. 683, 690; So. Pac. Co. v. United States, 183 U.S. 519, 532; United States v. Norfolk Railway Co., 114 F. 686; Russell v. Russell, 129 F. 434; West v. Brashear, 14 Pet. 342; DeSollar v. Hanscome, 158 U.S. 221; Cromwell v. County of Sac, 94 U.S. 359; Strong v. Grant, 2 Sup.Ct. D.C. 222; Fulton v. Pomeroy, 111 Wis. 668; Barton's Suit in Equity, 150; Equity Rule, 86; Putnam v. Day, 22 Wall. 66.

As parties by representation in the Government case, complainants are entitled in their own right to plead or give in evidence against, and as binding upon, the Securities Company, the conclusions in that case on the same questions which arise in this — even if the cause of action, parties, testimony and measure of relief in the two suits are different. Cromwell v. County of Sac, 94 U.S. 352; Lumber Co. v. Buchtel, 101 U.S. 638; So. Pac. R.R. Co. v. United States, 168 U.S. 48; Black on Judgments, 609, 614; Burlen v. Shannon, 99 Mass. 202; Railway Co. v. Schutte, 103 U.S. 143; Duchess of Kingston Case, 20 Howell's State Trials, 355.

The appellants, as parties by representation in the Government case, are entitled in their own right to set up and assert the decree in that case as against the Northern Securities Company in this case. Story Eq. Pl. § 372; 2 Daniel's Ch. Pl. Pr. 1539; Wilton's Appeal, 97 Pa. 393; Griffin v. Spence, 69 Ga. 397.

It is not necessary that all the parties to the Government suit should be the same in the subsequent litigation. Thompson v. Roberts, 24 How. 240; Smith v. Kernochen, 7 How. 217; Wilson v. Buell, 117 Ind. 315, 318; Wells on Res Adjudicata, § 35; Lawrence v. Hunt, 10 Wend. 80; Freeman on Judgments, § 154; 1 Greenleaf, § 523; Green v. Bogue, 158 U.S. 478, 502.

Where there are several grounds of recovery or defense on which the decree may have been rested, it will be conclusive on the specific findings, which led up to the proposition, on which the court decided the case, and what that ground was may be determined by evidence aliunde where the decree itself is silent on it. Russell v. Place, 94 U.S. 606; DeSollar v. Hanscome, 158 U.S. 216; Flint Nat. Bk. v. Covington, 129 F. 798; Hawes v. Water Co., 5 Sawyer, 287; Corcoran v. Ches. Canal Co., 94 U.S. 741.

The former opinion and decree of this court is conclusive even on this court when the same case comes back here, and certainly so where that former opinion and decree is set up as conclusive in another litigation where the parties are not all the same, and where the complainant in the former case, the United States, is not a party to the second. Roberts v. Cooper, 20 How. 467, 481; Barney v. Winona c. R.R. Co., 117 U.S. 231; United States v. Camon, 184 U.S. 574; Thompson v. Maxwell c. Co., 168 U.S. 456; Yazoo c. Ry. Co. v. Adams, 180 U.S. 7; Great Western Tile Co. v. Burnaham, 162 U.S. 343; Chaffin v. Taylor, 116 U.S. 567; Clark v. Keith, 106 U.S. 464; Supervisors v. Kenniott, 94 U.S. 498; Tyler v. Maguire, 17 Wall. 283.

The appellants were by representation parties and privies in the Government case, as stockholders of the Securities Company, as of class represented by Morgan, Hill and others, as cestuis que trust, and as stockholders of the Northern Pacific Railway they are therefore in their own right entitled to set up the findings and conclusions of this court in that case as res adjudicata in any subsequent litigation between themselves and the Northern Securities Company so far as regards the issues raised and decided in that case. 3 Cook on Corp. § 750; Hendrickson v. Bradley, 85 F. 516; Foundry Co. v. Water Co., 68 F. 1007; Wilson v. Seymour, 76 F. 681; Herman on Estoppel, 154-165; Secor v. Singleton, 41 F. 725; Gt. West. Tel. Co. v. Purdy, 162 U.S. 329; Hawkins v. Glenn, 131 U.S. 319; Glenn v. Williams, 60 Md. 93, 116; Hancock Bank v. Farmers, 176 U.S. 640; Sanger v. Upton, 91 U.S. 56; Whitman v. Bank, 176 U.S. 560; Flash v. Conn, 109 U.S. 371; Hall v. Hardon, 95 F. 759; Fruit Co. v. Railroad Co., 89 F. 24; McElrath v. P. S.R. Co., 68 Pa. 40; Shaw v. Railroad Co., 105 U.S. 605; Kerrison v. Stewart, 93 U.S. 160; Vetterlein v. Barnes, 124 U.S. 169; Beals v. Railway Co., 133 U.S. 290; Kent v. Lake Superior Co., 114 U.S. 90; Manson v. Duncannon, 166 U.S. 542; Smith v. Swormstedt, 16 How. 288; McIntosh v. Pittsburg, 112 F. 705; Willoughby v. Chicago c. R.R. Co., 50 N.J. 609.

Complainants in this case are entitled to set up and plead as res adjudicata the findings, conclusions and decree of this court in the Government case as hereinbefore enumerated, even if the cause of action in the Government case was different from the cause of action in the present case.

The decision in the Government case caused the present litigation. This case is the child of that parent. The parties to the present case, the appellants and the Northern Securities Company, were parties to the Government case, and in the same capacity.

The subject matter of the present litigation is 717,320 shares of the capital stock of the Northern Pacific Railway Company, and this identical capital stock was the stock which the complainants assigned to the Northern Securities Company for the purpose of carrying out the combination.

The averments of the bill and answers in the Government case distinctly raised, inter alia, as material numerous questions upon which the controversy turned, questions which are in substance, the same as are now restated in somewhat different form.

These stocks in the two railroad companies which, as averred in the bill in the Government case, and as found by this court, were transferred by Hill, Morgan and other stockholders to the Securities Company in pursuance of, and to perfect the illegal combination to restrain trade and commerce, included the stock owned by the Oregon Short Line Railroad Company and held in the name of Harriman and Pierce as trustees, being the identical stock in controversy in this case.

This court had before it in the Government case all the testimony which was before the Court of Appeals in the present case as to the manner in which, and the purpose for which, the Securities Company acquired the Oregon Short Line stock in the Northern Pacific Railway Company, and this included the evidence of Mr. Harriman.

Not only did the pleadings sharply raise the issues in the Government case which are also in this case, — and this court discussed these issues and decided them, — but the evidence in the Government case, including all of Mr. Harriman's, supported the conclusions of this court on those issues.

The so-called permissive portion of the decree certainly did authorize the return by the Securities Company to the individual stockholders who assigned to the Securities Company the identical stock so assigned. If it was Northern Pacific stock, then Northern Pacific stock was to be returned.

The St. Paul opinion of Judge Thayer misconstrued the St. Louis decree as the St. Louis court did not make, as the controlling question in the case, the distinction between the real, substantial ownership and the mere holding of the railroad stocks as custodian that this court did.

The Court of Appeals erred in deciding that this court did not even "incidentally" consider the question of ownership and deciding this case as if the Government case had not arisen.

The equities of the case are with complainants.

All parties fully believed this plan to be lawful and really beneficial to commerce, but this court adjudged it was a violation of the Sherman Act, and made a decree which restrained the Securities Company from carrying out the scheme and rendered the railway stock worthless in its possession. This necessitated a dissolution of the Securities Company, as the Supreme Court foresaw.

Evidently, the scheme having failed, this put every one in statu quo, ante as to the transfer to the Securities Company of their respective stocks — and this could only be done by retransferring to each his stock, the Securities Company still holds it — each still holds his Securities Company stock. The retransfer is simple. If there be strangers who came in afterwards and who have equities, do what is fair to them.

Whoever bought stock after March 10, 1902, had notice pendente lite and is concluded by the decree. Tilton v. Cofield, 93 U.S. 163. Hill, Morgan and Company are taking the property and seeking shelter behind either one of two innocent holders. They control the Securities Company and therefore owe complainants good faith but having induced complainants to put their stock into the Securities Company now they intend to avail of the situation to make money and secure control of the railway companies for themselves.

The Securities Company cannot compel complainants to accept Great Northern stock in lieu of their Northern Pacific. The stockholders of a corporation upon dissolution cannot be compelled to accept a distribution of their share of the assets in kind. Post v. Beacon c. Co., 84 F. 369, 375; Mason v. Pewabic Mining Co., 132 U.S. 50, 58.

As to when the Circuit Court of Appeals may, on an appeal from an interlocutory decree, enter a final one, see Forsythe v. Hammond, 166 U.S. 512; Smith v. Vulcan Iron Works, 165 U.S. 524; Mast, Foos Co. v. Stover Mfg. Co., 177 U.S. 494; Britt v. Peckham Motor Co., 189 U.S. 58, from which it appears that the present case is not one where the Circuit Court of Appeals on an appeal from an interlocutory order granting a preliminary injunction, could enter what is practically a final decree, and finally dispose of the case on the merits.

The necessity for a hearing in the ordinary way where each side could put in all its proofs, cross-examine witnesses, compel the attendance of hostile witnesses and the production of all books and papers, is not only apparent from the complications in this case, but is further shown by the inaccuracy which the Circuit Court of Appeals fell into in finally considering and passing on the case merely on an interlocutory hearing and upon ex parte affidavits.

Mr. Elihu Root, with whom Mr. Francis Lynde Stetson was on the brief, for respondent:

Everything in the record, by mere recital and without argument, shows that in fact and by intent of both parties, there was a sale of the Northern Pacific stock to the Securities Company in consideration of a stockholder's interest in that company, and a large sum of money — i.e., the issue to Harriman and Pierce of $824,918 shares of the stock and the payment to them of $8,915,629 in cash.

The complainants are estopped from asserting that the Securities Company is a trustee or bailee. They have publicly held out the Securities Company to be the owner of the railway stocks, and have induced innocent third persons to acquire interests in the corporation in reliance thereupon.

But whether the Securities Company be a vendee or a custodian, the complainants are not entitled to recover the Northern Pacific stock. The transaction was in contravention of public policy and a penal statute, and their demand for the return of the stock by them delivered for such illegal purpose, is barred by the rule In pari delicto potior est conditio defendentis et possidentis. The complainants cannot avoid the bar of the rule, if the Securities Company be regarded as vendee. The complainants and the Securities Company are in pari delicto.

Neither can the complainants avoid the operation of the rule by treating the Securities Company merely as custodian, to hold a deposited stock, to collect dividends, etc. The Securities Company is in pari delicto with the complainants. It was an active party to the illegality.

The complainants assisted in placing the control of the railway companies in the hands of the Securities Company, and in maintaining that status until the decree in the Government suit was affirmed by the Supreme Court. This executed the illegal purpose to such a degree as to bar the assertion of any right to withdraw the property deposited.

Property delivered under an illegal contract cannot be recovered back by any party in pari delicto; certainly not in any case where the contract has been executed in whole or in part. Scott v. Brown, L.R. [1892] 2 Q.B. 724; Hill v. Freeman, 73 Ala. 200; Thornhill v. O'Rear, 108 Ala. 299; Inhabitants c. v. Eaton, 11 Mass. 368; Atwood v. Fisk, 101 Mass. 353; Myers v. Meinrath, 101 Mass. 366; Horton v. Buffington, 105 Mass. 399; Cranson v. Goss, 107 Mass. 439; Traders' Bank v. Steere, 165 Mass. 389; White v. Hunter, 23 N.H. 128; Ellicott v. Chamberlin, 38 N.J. Eq. 604; Hope v. Linden Assn., 29 Vroom, 627; Allebach v. Hunsicker, 132 Pa. 139; Moore v. Kendall, 52 Am. Dec. 145; Cohn v. Heimbauch, 86 Wis. 176; Bank of U.S. v. Owens, 2 Pet. 527; Vandalia case, 145 U.S. 393; Central Co. v. Pullman Co., 139 U.S. 24; Equitable Society v. Wetherill, 127 F. 946; Pomeroy's Equity Juris, § 939; Addison on Contracts: Domat.

After delivery of the property for an accepted consideration, the contract has ceased to be executory, even though it was entered into with the expectation of a continuity of benefits no longer susceptible of complete realization. Kearley v. Thomson, L.R. 24 Q.B.D. 742; Herman v. Jeuchner, L.R. 12 Q.B.D. 561; Harse v. Pearl L. Co., L.R. [1904] 1 K.B. 558; Vandalia case, 145 U.S. 393; Equitable Society v. Wetherill, 127 F. 946; McIntosh v. Wilson, 81 Iowa 339; Atwood v. Fisk, 101 Mass. 353; Bruer v. Kansas Ins. Co., 100 Mo. App. 540; Ellicott v. Chamberlin, 38 N.J. Eq. 604 ; Pollock, Principles of Contract, 364; Miller v. Larson, 19 Wis. 463; Martin v. Wade, 37 Cal. 168.

The indisposition of the court to grant relief is not limited to the cases in which the plaintiff is endeavoring to enforce the contract; a party exhibiting the contract merely to denounce it as illegal will be denied judicial assistance. Taylor v. Chester, L.R. 4 Q.B. 309; Brindley v. Lawton, 53 N.J. Eq. 259; Hope v. Linden Association, 29 Vroom, 627; Herman v. Jeuchner, L.R. 12 Q.B.D. 561; Kearley v. Thompson, L.R. 24 Q.B.D. 742; Harse v. Pearl Co., L.R. [1904] 1 K.B. 558; Hill v. Freeman, 73 Ala. 200; Watkins v. Nugen, 45 S.E. 262; McIntosh v. Wilson, 81 Iowa 339; Atwood v. Fisk, 101 Mass. 353; Myers v. Meinrath, 101 Mass. 366; Bagg v. Jerome, 7 Mich. 145; White v. Hunter, 23 N.H. 128; Ellicott v. Chamberlin, 38 N.J. Eq. 604; Markley v. Village, 51 N.E. 28; Moore v. Kendall, 52 Am. Dec. 145; Equitable Life Assurance Society v. Wetherill, 127 F. 946.

In all such cases the defendant's possession is a sufficient answer to the plaintiff's demand; both because such possession stands as the equivalent of a title in the defendant, and because to discourage such transactions, courts will be deaf to the clamor of a complainant in pari delicto. Myers v. Meinrath, 101 Mass. 366; Horton v. Buffington, 105 Mass. 399; Bagg v. Jerome, 7 Mich. 145; Smith v. Bean, 15 N.H. 577; Watkins v. Nugen, 45 S.E. 262; McIntosh v. Wilson, 81 Iowa 339; Traders' National Bank v. Steere, 165 Mass. 389; Harris, Sunday Laws, § 169.

The condition of the possessor is so much better than that even of the original owner, that the possessor can recover the property not only from a stranger but from such original owner, if by chance the latter has been able to repossess himself of the property. Kinney v. McDermott, 55 Iowa 674; Smith v. Bean, 17 N.H. 577; Thompson v. Williams, 58 N.H. 248; Cohn v. Heimbauch, 86 Wis. 176.

The distinction between mala in se, and mala prohibita has been abandoned, but were this otherwise, there is authority for regarding as malum in se any act contravening public policy and a penal statute. Irwin v. Curie, 171 N.Y. 409, 415; Gibbs v. Gas Co., 130 U.S. 396; McMullen v. Hoffman, 174 U.S. 639; Equitable Society v. Wetherill, 127 F. 946.

The doctrine of locus paenitentiae is available only to those who seasonably seek to make restitution and to withdraw from their illegal executory contract. Laches is a fatal vice. Vandalia case, 145 U.S. 393; Union T. Co. v. Illinois Co., 117 U.S. 434; In re Great Berlin S. Co., 26 Ch. D. 616; Hardwood v. Railroad Co., 17 Wall. 80; Twin Lick Oil Co. v. Marbury, 91 U.S. 587; Grimes v. Sanders, 93 U.S. 55, 62; Haywood v. Nat. Bank, 96 U.S. 611, 617; McLean v. Clapp, 141 U.S. 429, 432; Hoyt v. Latham, 143 U.S. 553, 567; Townsend v. Vander-worker, 160 U.S. 171; Ward v. Sherman, 192 U.S. 168; Rugan v. Sabin, 53 F. 415, 418; Kinney v. Webb, 54 F. 34; Boston R.R. v. New York R.R., 13 R.I. 264; Kitchen v. St. Louis Ry. Co., 69 Mo. 224; Peabody et al. v. Flint, 6 Allen, 56; Dunphy v. Travelers' Assn., 16 N.E. 426; Graham v. Birkenhead, 2 McN. G. 156.

The rigor of the rule against the complainant is never relaxed out of consideration for him, but only when necessary to promote equity and justice. Pullman Co. v. Central Co., 171 U.S. 138; Spring Co. v. Knowlton, 103 U.S. 49.

In cases presenting no such special considerations of equity, justice or public policy, a party even to an unexecuted illegal contract cannot recover back money paid or property delivered thereunder. Scott v. Brown, L.R. [1892] 2 Q.B. 724; In re Great Berlin S. Co., 26 Ch. D. 616; McIntosh v. Wilson, 81 Iowa 339; Bruer v. Kansas Ins. Co., 100 Mo. App. 540; Thompson v. Williams, 58 N.H. 248; Markley v. Village, 51 N.E. 28; Storz v. Finkelstein, 46 Neb. 477.

As to Northern Pacific preferred stock retirement see Hackett v. Northern Pacific Ry. Co., 36 Misc. 583. Mr. John G. Johnson, with whom Mr. John W. Griggs and Mr. W.P. Clough were on the brief, also for respondent:

On appeal from an interlocutory decree granting a special injunction in a suit for establishing title to property, if the record fully and fairly discloses the case on the point of title, the Appellate Court not only may, but rightfully should, determine the question of the injunction upon the merits of plaintiff's claim. The action of the Circuit Court of Appeals in this case was controlled by that rule, and proceeded upon it. 1 High on Injunction, 3d ed. § 7; Knoxville v. Africa, 47 U.S. App. 74; Bissell Co. v. Goshen Co., 43 C. C.A. 47; Shinkle v. Louisville Nashville, 62 F. 690; Mast, Foos Co. v. Stover Mfg. Co., 177 U.S. 485.

If, up to the time of argument of the appeal in the Circuit Court of Appeals, plaintiffs had been entitled to a stay of the pro rata plan of distribution, until opportunity could be given for fair argument and advisement upon the law points involved in their claim, such right was exhausted by their opportunity to be heard in the Circuit Court of Appeals.

In the Circuit Court of Appeals, therefore, the whole case for an injunction, pendente lite, was thrown back upon the first ground of the Circuit Court, viz., "grave and difficult" questions of fact, for ultimate determination.

The bill claims two distinct parcels of stock, one of which complainants never owned.

Plaintiffs' claims are self-contradictory and can be established, if at all, only under rules of common law. Equity rules cannot be invoked in their support.

The facts constituting title to the stock in controversy necessarily consist of, and are limited to, the things said and done, and mutually intended, by Harriman and Pierce on the one part, and the Securities Company on the other. As all material facts in regard to those sayings, doings and mutual intentions appear in this record, the entire case, on both sides, relating to title, must be here and can be disposed of.

The Union Pacific owns the Oregon Short Line. The latter owns the Oregon Railway and Navigation Company.

As to effect of acquisition of control of the stock of a competing road made by a railway company, and by the stockholders of a railway company see the Pearsall case, 161 U.S. 646; Kentucky v. Louisville Nashville, 161 U.S. 676.

Plaintiffs in effect ask the court to place control of the Northern Pacific system of railways in the hands of the Union Pacific Railroad Company. Of the relative geographical positions of the Union Pacific and the Northern Pacific Railway systems, and of the public laws of the several States on the subject of railway combinations, as well as of the Federal laws on the same subject, the court will take notice without proofs.

The burden of proof is on plaintiffs to show, by proper evidence, that the sale to Securities Company was different from what, on its face, it appears to have been. No such proof was tendered.

Plaintiffs really found their claims on what they assert to have been adjudicated in the Government suit, and not on what was actually done and intended by the parties. The plaintiffs were strangers to that suit.

For the assumed adjudication in their favor, plaintiffs rely not on the decree, but upon the opinion of Mr. Justice Harlan which does not, however, mean what plaintiffs claim, and their alternate theory, that the title of Securities Company was subject to a condition, since broken, is unsupported by fact, law or adjudication.

Where there has been a transfer of property, illegal from any cause, and possession has been delivered to the person to whom the title under the transfer was intended ultimately to go, the transaction has become executed on the part of the transferrer, and he cannot thereafter repudiate it and reclaim the property because of the illegality.

This rule governs under all forms of illegality; whether in doing something which the laws positively prohibit, or something which they merely omit to allow. Thomas v. Railroad Co., 101 U.S. 71, 83; Vandalia case, 145 U.S. 393, 399, 408; Central Co. v. Pullman Co., 139 U.S. 24.

When complainants had transferred the Northern Pacific shares to the Securities Company, and the latter had made payment of the price therefor by handing over to them the cash and the certificates for its own stock, coming to them, nothing remained executory between the parties save the implied mutual obligations concerning the Northern Securities stock resulting from the relation of corporation and stockholder, thus created.

Mr. Thomas Thacher also submitted a brief for respondent:

The injunction pendente lite can be justified only upon the theory that it is a necessary incident to the granting of such final relief as the complainants appear to be entitled to. The right to such final relief must appear; if not, the injunction was error. If such right did not appear, the question of granting or denying the injunction was not addressed to the discretion of the court. If, upon the record, it does not appear that the complainants are entitled to recover this stock the order appealed from was erroneous and should be reversed. Brooklyn Club v. McGuire, 116 F. 783; Home Ins. Co. v. Nobles, 63 F. 643; Central Stock Yards Co. v. L. N.R.R. Co., 112 F. 823; Stevens v. M., K. T. Ry. Co., 106 F. 771; Amelia Milling Co. v. Tennessee C.I. R. Co., 123 F. 811.

In some cases "a probable right" is deemed enough. New Memphis Gas Co. v. Memphis, 72 F. 952; Indianapolis Gas Co. v. Indianapolis, 82 F. 245; Reduction Works v. California Co., 94 F. 694; Georgia v. Brailsford, 2 Dallas, 402; or a " prima facie right" Charles v. Marion, 98 F. 166; Cosmos Exploration Co. v. Grey Eagle Oil Co., 104 F. 20; Utah N. C.R.R. Co. v. Utah N. C. Ry. Co., 110 F. 879. As to preservation of status quo see Allison v. Corson, 88 F. 581; Denver R.G.R.R. Co. v. United States, 124 F. 156; Haddon v. Dooley, 74 F. 429; Cartersville Light Co. v. Cartersville, 114 F. 699; Cohen v. Delavina, 104 F. 946; Newton v. Levis, 79 F. 715; West. U. Tel. Co. v. Pennsylvania R.R. Co., 123 F. 33.

On appeals from injunction orders the court will not only consider the merits but dismiss the bill, if it can see that the complainant is not entitled to final decree. Smith v. Vulcan Iron Works, 165 U.S. 518; Mast, Foos Co. case, 177 U.S. 485; Castner v. Coffman, 178 U.S. 168; Knoxville v. Africa, 77 F. 501; Bissell Co. v. Goshen Co., 72 F. 545.

If the argument of the complainants, therefore, still rests upon the theory of res adjudicata, that is upon the effect of the decrees in the Government suit, or upon any other theory concerning which the facts are substantially undisputed, this court, finding such theory unsound, will not simply reverse the injunction order, but dismiss the bill.

It was not the legal effect of the decree in the Government suit that title to the stocks of the Northern Pacific Railway Company and the Great Northern Railway Company, which the Securities Company now holds, never passed to the last-named Company. See opinions 193 U.S. 197, 321, 324, 327, 334, 344, 357.

It does not follow as matter of law, from the facts shown by the record, including the decree, that title to these stocks did not pass to the Securities Company. The transaction was not void because illegal. Harris v. Runnels, 12 How. 79; Mining Co. v. National Bank, 96 U.S. 641; National Bank v. Mathews, 98 U.S. 621; National Bank v. Whitney, 103 U.S. 99; Logan County Bank v. Townsend, 139 U.S. 67, 76; Thompson v. St. Nicholas Nat. Bank, 146 U.S. 240, 251; Scott v. Deweese, 181 U.S. 202, 211; Burck v. Taylor, 152 U.S. 634, 648; Frits v. Palmer, 132 U.S. 282; McBroom v. Investment Co., 153 U.S. 318; Jarvis Trust Company v. Willhoit, 84 F. 514; Central Trust Co. v. Columbus Ry. Co., 87 F. 815; Terminal Co. v. Trust Co., 82 F. 134; Chattanooga S.R. Co. v. Evans, 66 F. 809, 815.

The Sherman Anti-Trust Act expressly contemplates that contracts may be made in violation of the statute under which property will be owned.

Nor was the transaction void because ultra vires.

The law of New Jersey as declared by its courts is that an executed ultra vires transaction is not void. Cam. Atl. R.R. Co. v. May's Landing c. R.R. Co., 48 N.J.L. 530, 567.

The place of the transaction in this case was New York, and the New York law is to the same effect as that of New Jersey — that an executed ultra vires transaction stands as valid. Whitney Arms Co. v. Barlow, 63 N.Y. 62; Woodruff v. Erie Ry. Co., 93 N.Y. 609; Rider Life Raft Co. v. Roach, 97 N.Y. 378; Bath Gas Light Co. v. Claffy, 151 N.Y. 24; Vought v. Eastern Bldg. c. Assoc., 172 N.Y. 508.

In the Federal courts, with respect to the passing of title, the law is the same. See National Bank cases above referred to.

Even if the transaction in which the Oregon Short Line Railroad Company parted with the stock was void because illegal or ultra vires, nevertheless the complainants could not recover. Equitable Life Assurance Society v. Wetherill, 127 F. 947; Smith v. Bean, 15 N.H. 577; Myers v. Meinrath, 101 Mass. 366; Vandalia case, 145 U.S. 393; Higgins v. McCrea, 116 U.S. 671; White v. Barber, 123 U.S. 392; Horton v. Buffington, 105 Mass. 399.

The transaction has never been abandoned. The Securities Company claims the ownership which was thus acquired and proposes to exercise the rights of such ownership by distributing the stocks as surplus assets among its stockholders.