New York Trust Co. v. Island Oil & Transport Corp. 34 F.2d 655 (2nd Cir. 1929) Island Oil had several Mexican subsidiaries, and owned all their stock. They were in financial trouble and mortgaged their stock in the subsidiaries. At the same time, in order to fix their books, Island had one of their subsidiaries sell a large quantity of nonexistent oil to Island Oil, and then had Island Oil owe the subsidiary a lot of money. Island Oil went bankrupt and their subsidiaries were sold off to pay their debts. A new owner, New York Trust, took over one of the subsidiaries. New York Trust demanded that Island Oil pay the money they owed to the subsidiary. Island Oil argued that the contract between themselves and the subsidiary was a scam and not enforceable. The Trial Court found for Island Oil. New York Trust appealed. The Trial Court found that the "contract" to sell the oil to Island was a sham, and no actual oil was sold. Therefore the contract is void. The US Supreme Court affirmed. The US Supreme Court found that the contract was simply part of a plan to deceive third persons. The general rule illustrated in this case is that contracts are only enforceable if they are legitimate. If a contract is made as part of a scam, then it is non-enforceable, even if it meets all of the requirements to be a contract.