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Argument for Petitioners.

selves 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 Fed. Rep. 516; Foundry Co. v. Water Co., 68 Fed. Rep. 1007; Wilson v. Seymour, 76 Fed. Rep. 681; Herman on Estoppel, 154-165; Secor v. Singleton, 41 Fed. Rep. 725; Gt. West. Tel. Co. v. Purdy, 162 U. S. 329; Hawkins v. Glenn, 131 U. S. 319; Glenn v. Williams, 60 Maryland, 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 Fed. Rep. 759; Fruit Co. v. Railroad Co., 89 Fed. Rep. 24; McElrath v. P. & S. R. Co., 68 Pa. St. 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 Fed. Rep. 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

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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

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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.

1902, had notice

Whoever bought stock after March 10, 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 Fed. Rep. 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

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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,

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to hold a deposited stock, to collect dividends, etc. The Securities Company is in pari delicto with the complainants. was an active party to the illegality.

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

Property delivered under an illegal contract cannot be reovered 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 Alabama, 200; Thornhill v. O'Rear, 108 Alabama, 299; Inhabitants &c. v. Eaton, 11 Massachusetts, 368; Atwood v. Fisk, 101 Massachusetts, 353; Myers v. Meinrath, 101 Massachusetts, 366; Horton v. Buffington, 105 Massachusetts, 399; Cranson v. Goss, 107 Massachusetts, 439; Traders' Bank v. Steere, 165 Massachusetts, 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. St. 139; Moore v. Kendall, 52 Am. Dec. 145; Cohn v. Heimbauch, 86 Wisconsin, 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 Fed. Rep. 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 Fed. Rep. 946; McIntosh v. Wilson, 81 Iowa, 339; Atwood v. Fisk, 101 Massachusetts, 353; Bruer v. Kansas Ins. Co., 100 Mo. App. 549; Ellicott v. Chamberlin, 38-N. J.