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was apparently still resident in Austria, and in October 1914 upon their joint petition they had obtained a decree of separation a mensa et thoro.

Princess Thurn and Taxis v. Moffitti and Schaffenius v. Goldberg1 were recently followed in the Divorce Court, where Horridge J. allowed a husband who was an enemy subject, domiciled in England, registered and interned, to petition for dissolution of marriage.

1 Supra.

Kraus v. Kraus & Orbach (1919) 35 T. L. R. 637.

CHAPTER IV

EFFECT OF WAR ON CONTRACTS

GENERAL PRINCIPLES

In this chapter and the next we propose to consider some of the general principles governing the effect of war upon contracts and purported contracts either between parties separated by the line of war? or between parties who are both on this side of the line of war.

We shall find it convenient to adopt the following classification, always bearing in mind that though for the lack of a better and for the sake of brevity we use the word 'resident,' it includes, and indeed will more often denote, a person carrying on business, and often implies no more than voluntary and temporary presence in a particular country: A. Contracts between British and Enemy Residents: (1) in existence at the date of the outbreak of war,

(a) when a right of action has already then accrueda;

(6) when no right of action has then accrued; (2) attempted to be made during war. 1 The expression ‘line of war' appears to have been imported from the United States of America. Janson's case and the Duchess of Sutherland's case, quoted in Chapter III at pp.49 and 57, afford some authority for saying that the imaginary line is drawn round the several enemy territories and not round the British Empire.

2 The use of the expressions 'executed contract' and 'executory contract' has been avoided in attempting to analyse the effect of the outbreak of war upon contracts, because, with the greatest respect for the many eminent judges and text-book writers who use them in this connexion, they seem to us not merely to be unhappy for the reason pointed out by Mr Edward Jenks in the Digest of English Civil Law, Book II, Part I. p. 93, but to have led to some confusion of thought during the past five years. 'Executed' means ' performed,' but in this expression it is used to mean ' performed by one party only'; a contract which is executed' or 'performed by both parties' (the natural meaning of the term) has become a matter of history and has no concern for the lawyer. 'Executory' means

still to be performed,' but in this expression it is used to mean 'still to be performed by both parties.' In neither case is the term adequate to convey the meaning assigned to it by those who use it. On the other 2 (1902] A. C. 484. 3 Hanger v. Abbott (1867)6 Wallace 532; Scott's International Law Cases, 500. 2 6th ed., Vol. 1. p. 53 n. See also Pollock, Principles of Contract, 8th ed., p. 86, n. and L. Q. R. (1904) xx. 168.

B. Contracts between Allied and Enemy Residents.
C. Contracts between Neutral and Enemy Residents.
D. Contracts between British Residents (or persons resident

in British, Allied, or Neutral Territory). (The expression 'resident' is not a very happy one but at least has the merit of avoiding a longer one and of emphasising that we are now using the territorial rather than the personal test of British, allied, neutral, or enemy character.)

A. CONTRACTS BETWEEN BRITISH AND ENEMY RESIDENTS. (1) In existence upon the outbreak of war.

(a) Now if a right of action has already accrued to either party, the question of its enforcement will turn upon the procedural capacity of the 'enemy resident' under the rules we have discussed in the two preceding chapters. If it is he who committed the breach, he can be sued during the war if he can be served; if it is the ‘British resident' who has committed the breach, then we have seen that apart from very exceptional circumstances the 'enemy resident' will be unable to sue during the war. In that event it is clear, it is submitted, from Ex parte Boussmaker1 and Janson's case that his right of action will revive upon the declaration of peace.

Thereupon, two subsidiary questions of importance arise. Firstly, have the statutes of limitation been running against him during the war? Secondly, assuming the right of action to result in a debt which normally carries interest, has interest been accruing during the war?

Dealing with the first of these questions, there is on the one hand a decision of the U.S.A. Supreme Court in 18673 which says No; the statutes do not run. ‘Peace,' it is said in that case, 'restores the right and the remedy, and as that can not be if the limitation continues to run during hand, ‘executed consideration' and 'executory consideration' (the former an act, the latter a promise-Anson, Law of Contracts (14th ed.), p. 21, n.) are useful expressions, and the misfortune is that the epithets should have been transferred from 'consideration' to 'contract. 1 (1806) 13 Ves. 71.

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the period the creditor is rendered incapable to sue, it necessarily follows that the operation of the statute is suspended during the same period.' To the contrary, there is a dictum by Lord Bramwell in De Wahl v. Braune?, where in the year 1856 the wife (apparently within the realm) of an alien enemy resident in Russia sought to sue in her own name upon a contract, urging that her husband was civiliter mortuus and not allowed to sue; Bramwell B. said: 'It may be that the effect of our judgment would ultimately be to bar the action by reason of the Statute of Limitations, but the inconvenient operation of that statute is no answer and does not take the case out of the general rule.' Judgment was given for the defendant. The case is not however an express decision on the point under discussion.

In the dearth of precedent, it is submitted that the American view is right and should be followed in this country. Otherwise it seems a mockery to talk of suspension as was done in Janson's case. There is no express English authority, but the editor of Lord Lindley's Law of Companies follows Lord Bramwell's dictum and considers that the enemy resident's right of action may be barred by the Statute of Limitations during the war. There appears to be no reason why the operation of this statute should not apply equally mutatis mutandis to a right of action on contract and to a right of action in tort. * To come to the second point, assuming the right of action

to result in a debt which normally carries interest, will interest run during the war and be recoverable on its conclusion ? This subject was very fully considered in the year 1909 in an article in the Law Quarterly Review by Mr C. N. Gregory entitled 'Interest on Debts during War,' wherein, after an examination of both English and American decisions, the conclusion arrived at is that where debtor and creditor are separated by the line of war, interest ceases to run during the

1 25 L. J. (N.S.) Ex. 343; see also Derry v. Duchess of Mazarine (1697), I Ld. Raym. 147.

3 (1909) xxv. 297.

war whether the obligation to pay interest is express or implied by lawl. But the Trading with the Enemy Amendment Act, 1914, s. 2, provides that any interest which would have been paid to an enemy but for the state of war shall be paid to the Custodian to be preserved—a provision which might be thought to contemplate the accrual of interest on pre-war debts but could receive an interpretation which would fall short of that.

So far there is no direct English authority, and the question cannot be regarded as settled. On the one hand English law protects the principal sum due to the enemy and helps a British or neutral subject to recover a principal sum due from the enemy, and “it is difficult to see on what principle the interest is to be forfeited if private property is to be respected' Indirectly the matter has been discussed in two English cases during the war. In the first3 Younger J. directed that the Custodian of the British assets of an enemy company should pay interest upon debts upon which by contract interest should be allowed, and, the contract falling to be interpreted by German law and being certainly one which apart from war would carry interest, he declined to disallow interest upon the ground of a German war proclamation purporting to cancel interest during the war on debts due to enemies of the German Empire. In the second4—a partnership case discussed in Chapter VII -it was not necessary to give a direct answer to the question of interest under discussion, but the decision that an enemy partner is entitled to some allowance (which presumably may take the form either of interest or a share of the profits) in respect of the use by the non-enemy partner of the assets of the firm during the war, would seem to show that there is nothing in the English law repugnant to the idea of an enemy creditor receiving interest when he ultimately receives his debt. Several of their lordships appear to take the view that no difference in principle exists between the payment of interest

1 See also L. Q. R. (1904) xx. 167.
2 Per Lord Finlay L.C., at [1918] A. C. p. 245.
3 In re Fried Krupp Actien-Gesellschaft (1917] 2 Ch. 188.

4 Hugh Stevenson & Sons v. Actien-Gesellschaft für Cartonnagen Industrie [1918] A. C. 239.

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