Stoehr v. Wallace et al. is a minority stockholders bill filed in the United States District Court for the Southern District of New York to establish an alleged claim of an American corporation to certain shares of stock in another American corporation, which shares have been seized by the Alien Property Custodian as being owned by an enemy. The bill attacks the constitutionality of the act, and this point has been argued by an Assistant Attorney General and by the general counsel. A full answer had been prepared which is the result of the joint effort of the Bureau of Law, the Department of Justice, Judge George L. Ingraham, and Mr. John Quinn, the latter two of New York. The case has not yet been tried.

In re 26 Workmen's Compensation Cases.-These cases were pending before the Workmen's Compensation Board of Pennsylvania: the right of the Alien Property Custodian to intervene in such choses in action was sustained.

Zarnich v. Keiser Lumber Co. was a case pending before the Workmen's Compensation Board in Wisconsin where the right of the Alien Property Custodian was sustained to have a decree entered awarding to him the compensation otherwise due to enemy dependents.

Hau v. Heilker.-In this case a motion was made in the Common Pleas Court of Hamilton County, Ohio, to substitute the Alien Property Custodian for the enemy in an action to contest a will and the motion involved the right of the Alien Property Custodian to demand such a cause of action and prosecute the same. The motion was granted.

Keppelmann v. Keppelmann is a case pending in New Jersey. The State statute provides that every executor or administrator may take a refunding bond from any person entitled to receive a legacy or a distributive share of an estate. The question involved is whether this statute applies to payment upon demand of the Alien Property Custodian. The vice chancellor has decided adversely to the contention of this office, and the case has been appealed to the Court of Errors and Appeals, but not yet finally settled.

Among other classes of litigation handled by this office may be mentioned the following:

Bills to foreclose mortgages on enemy-owned property.

Suits under section 9 of the act to collect debts alleged to be owing by the

enemy.

Actions for wrongful death.

Partition suits.

Petitions to sell lands in payment of taxes.

Escheat proceedings.

Petitions to determine the validity of bequests to alien enemies.

Petitions to probate wills and to contest the validity of wills.

Accounting proceedings.

Petitions for the judicial construction of wills.

Claims in bankruptcy.

Proceedings to cancel mortgages where the judicial mortgage can not be produced.

Proceedings to establish liens against enemy property.

Bills to quiet title to real estate.

Petitions to sell land for the payment of debts.

Proceedings for the appointment of administrators and trustees.

CHAPTER XV.

BUREAU OF AUDITS.

HASKINS and SELLS, by HOMER A. DUNN, in charge.

The organization of the Bureau of Audits was not commenced until in January, 1918. Thereafter its development was shaped to the ends of responsiveness to the demands of other bureaus and of keeping pace with the trust account recording of enemy property taken

over.

The functions assigned to this bureau have been two-fold and may be briefly stated as follows:

1. Directions and supervision of examinations into books of account, records, and affairs of corporations, copartnerships, sole proprietorships, branches, and agencies in which there was a complete or controlling enemy interest, and as they could be arranged in cases wherein there was less than a controlling enemy interest.

2. Audit of the trusts and trust accounts for assurance that all property of which evidence of enemy ownership has been obtained actually came into your possession or control, and that proper disposition was made of such property by deposit in the United States Treasury, if in the form of cash or converted thereinto, or by placement in designated depositaries, if in other form than cash or not converted thereinto; and this applies to both principal and income.

Direction and supervision of examinations has involved, for purposes of thoroughness, analysis of the trust documents and related files of papers and correspondence. One of the results of such analysis has been cooperative aid to other bureaus, in bringing to their attention either evidences or indications of enemy property not reported or insufficiency of action in respect of enemy property already reported. Furthermore, these analyses have afforded information of a character useable in directing search for enemy property, in addition to which there has been search for evidence of failure to return and pay to the United States Government proper amounts of excess profits and or income taxes, determinations of additional amounts due to the Government on account thereof, and preparation of amended supplementary returns for filing with collectors of internal

revenue.

A summarization of these activities and the results derived therefrom is as follows:

Examinations completed
Total capital involved___.

118

$108, 702, 028. 06

At the close of the year 1918 there are 17 examinations in process about which directions have been given but in respect of which the results as to capital involved, additional enemy property, and additional Federal taxes can not be known until they are completed.

Analytical reviews of trust documents and relating papers and files have been made to the extent of 48 cases as preparation for the direction and supervision of examinations, but for which requests have not been received by this bureau. In some of these cases, however, cooperative assistance already has been given to other bureaus in calling attention to action which should be taken or to investigations which should be made looking to the development of additional enemy property.

Prior to the organization of this bureau, and for some time thereafter, so-called "audits" were directed from a department in another bureau to the extent of 33 in number and $14,149,340.08 in total capital involved, but these were not based on analysis of trust documents and files, nor were the objectives the discovery of enemy property or of additional taxes for the Government so far as the records or the results indicate.

Audit of the trust and trust accounts was not entered upon until well along in the year because of the active use of the documents and files in the Bureau of Trusts and the undesirability of disturbing the work of that bureau. Preparatory measures were taken, however, so that by the end of the year 1918 substantial progress has been made in the audit of such accounts, as indicated by the following table:

1 Includes $64,658,736.24 of Government securities purchased by Secretary of Treasury.

For reasons similar to those hereinbefore indicated, audit of the income derived from the enemy property has not been entered upon, it being considered more important to direct the energies and activities of the bureau first to auditing the principal of the trusts, especially in view of the hampering conditions of inability to obtain an adequate staff of competent audit clerks by reason of the shortage of supply created by war conditions and salary competition.

On January 1, 1919, the Bureau of Audits was discontinued and the duties of that bureau reassigned as follows: Division of examinations, D. F. Stark, chief, Washington, D. C., to the Bureau of Sales; division of audit, C. F. Dorney, chief, Washington, D. C., to the Bureau of Administration.

Under the direction of the Bureau of Sales the division of examinations will have charge of the assignment to public accountants of all examinations to be made in the interest of the Alien Property Custodian into the books of account, records, and affairs of corporations, copartnerships, and agencies, or businesses, and the analysis of the files as a necessary preliminary to the proper intruction of public accountants respecting the service which they are to render.

Bureaus and divisions finding need for examinations to be made into the books of account, records, and affairs of corporations, copartnerships, and agencies or business, should make requisition therefor on the division of examinations. In the event, however, the Alien Property Custodian is not in control, through the holding of a majority interest, a commitment for the cost or expense of the examination should first be obtained from the corporation, copartnership, agency, or business and should be delivered to the division of examinations with the requisition.

Under the director of the Bureau of Administration, the division of audit will have charge of the audit of the trust files and the trust accounts.