the journey are said by Lord Dunedin to be The Hoop (1799)1, Furtado v. Rogers (1802)2, and Esposito v. Bowden (1857)3, and all these cases are reviewed by him in his judgment in the case about to be discussed.

'From these cases,' says Lord Dunedin at p. 274, 'I draw the conclusion that upon the ground of public policy the continued existence of contractual relation between subjects and alien enemies or persons voluntarily residing in the enemy country which (1) gives opportunities for the conveyance of information which may hurt the conduct of the war, or (2) may tend to increase the resources of the enemy or cripple the resources of the King's subjects, is obnoxious and prohibited by our law.'

Let us apply this statement to some actual transactions. By contract made prior to the war a 'British resident' promises an 'enemy resident' to deliver a consignment of goods to him. on sale upon a date which falls during the currency of the war. Such a contract is ipso facto dissolved by the outbreak of war. But suppose that the date of delivery of the goods is such that the war may be over before the time comes for the natural performance of the contract. Suppose again that the parties to the contract in their anxiety to preserve the contract from the dissolving effect of war have introduced into it a clause whereby all performance shall be suspended during war and only resumed when the war is over. It is this last point which has been the subject of so much litigation during the recent war. There were in existence upon the outbreak of war a number of long term contracts for the delivery of ores of various kinds to German firms in which the parties had been astute to suspend the delivery of instalments in the event of war which presumably meant or included war between the British and German Empires. The group of cases in which this point has been recently considered has now been reviewed in the 1 I C. Rob. 196. See Chapter II at p. 32. 3 Bos. and P. 191.

2

3

7 E. and B. 763.

Ertel Bieber & Co. v. Rio Tinto Co. [1918] A. C. at p. 273.

5 Zinc Corporation v. Hirsch [1916] 1 K. B. 541 (C. A.); Distington Hematite Iron Co. v. Possehl & Co. [1916] 1 K. B. 811; Clapham Steamship Co.'s case [1917] 2 K. B. 639; Naylor Benzon & Co. v. Krainische Industrie Gesellschaft [1918] 1 K. B. 331; [1918] 2 K. B. 486 (C. A.).

House of Lords in the course of three of the most important of them1, and it is now possible to summarize the various grounds on which the law will hold such a contract dissolved, and not merely suspended. (The initial difficulty of bringing such a matter before the Courts at all during war is obviated by the Legal Proceedings against Enemies Act, 1915, enabling a British subject to obtain a declaration upon such a contract.) The principal grounds are (i) that

'a state of war between this kingdom and another country abrogates and puts an end to all executory contracts which for their further performance require, as it is often phrased, commercial intercourse between the one contracting party, subject of the King, and the other contracting party, an alien enemy, or any one voluntarily residing in the enemy country2.' But 'the word "intercourse" is sufficient without the epithet "commercial.""

(ii) That even if the suspensory clauses are adequate to suspend deliveries, there are other obligations in the contracts not covered by the suspension, for instance, arbitration, declaration of quantities and character, which must or might involve intercourse during the war. (iii) That even if the interpretation of the suspensory clauses is such as to suspend the entire operation of the contract during the war, the clauses would be contrary to public policy on the ground that they cripple the trading resources and operations of this country and enhance those of the enemy by ensuring to him a supply of raw materials upon the conclusion of peace. (iv) That, while deliveries during the war are illegal on ground (i) above mentioned, to hold that the British subject remained liable to make 'the deliveries, if any, which, according to the contract, fall to be made after the war is over' is to impose upon the parties a new contract (because during the war the quantity to be delivered must be uncertain) and would be contrary to the decisions of the House of Lords in Horlock v. Beals and Metropolitan Water Board v. Dick, Kerr & Co.4

1 Ertel Bieber & Co. v. Rio Tinto Co., and two other cases. [1918] A.C. 260. 2 Per Lord Dunedin [1918] A. C. at p. 267. 4 [1918] A. C. 119.

[1916] I A. C. 486.

The argument derived from the effect upon the resources of both parties and through them of their respective countries referred to in (iii) is not a mere echo of the Paris Resolutions of 19161, though possibly deriving some moral support from them. The effect of an immediate certainty of a future event is, or may well be, itself immediate and not merely future. 'It increases the resources of the enemy, for if the enemy knows that he is contractually sure of getting the supply as soon as war is over, that not only allows him to denude himself of present stocks, but it represents a present value which may be realized by mean of assignation to neutral countries2.'

Moreover, it cripples British resources by tying up quantities of raw materials, either indirectly as might be the effect of suspension, or directly in pursuance of a covenant not to sell to any one else such as existed in the Zinc Corporation Limited v. Hirsch contract. Lord Alvanley points out in Furtado v. Rogers that if the enemy is to receive his insurance indemnity after the war, he 'is very little injured by captures for which he is sure at some period or other to be repaid by the underwriter.'

This doctrine, however, of the present value to the enemy of some post-war benefit is both specious and dangerous. It is easy to argue as in the passages above quoted that the certainty of a post-war benefit may strengthen the enemy's immediate resistance, but does not the rule that private enemy property on land, e.g. debts, rights of action already accrued, etc., is not confiscable have precisely the same effect? If everything which might benefit the enemy during or after the war is to be illegal and forbidden on grounds of public policy, then might it not follow that private enemy property on land is confiscable, that rights of action accrued to enemies on the outbreak of war are destroyed and not suspended, and that the preamble of the Trading with the Enemy Amendment Act, 1914, 'for preserving' by means of a Custodian with a view

to arrangements to be made at the conclusion of peace, such money and certain other property belonging to enemies' is a grim joke? Lord Parker made some remarks in the case of Daimler Co. v. Continental Tyre and Rubber Co.1 upon the heresy of arguing that 'acts otherwise lawful might be rendered unlawful by the fact that they may tend to the enrichment of the enemy when the war was over,' but he explained their limited application at a later date2.

A good illustration of the long term contract type of case and of the method of handling it which has now received the approval of the House of Lords, will be found in Naylor Benzon & Co. v. Krainische Industrie Gesellschaft3. The facts are such as to raise most of the points common in these cases, and the judgment of McCardie J. reviews all the relevant authorities. It appears to have been delivered two days before the House of Lords gave judgment in the three Rio Tinto Co.'s cases, but the conclusions are the same and it cites a wealth of authorities.

Ertel Bieber & Co.'s case has formed a precedent for numerous similar judicial declarations that contracts of this nature were abrogated and avoided on the outbreak of war. In the course of one of these cases 5 counsel read the following translation of an extract from the Chemiker-Zeitung of November 30, 1918:

'All contracts for delivery made before the war or prolonged during the same, which relate to oversea goods, are to be considered according to a judgment of the Imperial Supreme Court of 15th October, 1918 (III. 104/18) as abrogated in consequence of the complete revolution in all the conditions of commercial intercourse through the unforeseen duration and extension of the world-war.'

6

In another an ingenious but unsuccessful attempt was made to avoid the consequences of the Ertel Bieber & Co. precedent by suggesting that a contract for the supply of iron 1 [1916] 2 A. C. at p. 347.

2 [1918] A. C. at p. 284. Note, however, the effect they produced upon the Court of Appeal in Tingley v. Müller [1917] 2 Ch. 144 (C. A.).

3 Supra.

• Supra.

5 Borax Consolidated v. Vogel. The Times Newspaper, 16th January, 1919. • Fried Krupp A.-G. v. Orconera Iron Ore Co. (1919) 35 T. L. R. 234.

ore over a period of 99 years was analogous to a lease and should be treated as a 'concomitant of the rights of property' and so not abrogated.

Having thus ascertained that the general rule is abrogation, we may inquire how abrogation takes effect. It seems safe to say that the effect is the same as when a contract is discharged by supervening impossibility of performance, discussed in the next chapter.

'The parties thenceforth are both free from any subsequent obligation cast upon them by the agreement, but, except in cases where the contract can be treated as rescinded ab initio, any payment previously made and any legal right previously accrued according to the terms of the agreement will not be disturbed1.'

Abrogation is not the same thing as avoidance ab initio, and rights of action already accrued will be dealt with on the lines previously discussed in this chapter.

The disability of the alien enemy to sue can in effect be removed by the appointment by the Board of Trade of a controller under the Trading with the Enemy Amendment Act, 1916, who thereupon is able to collect the assets of the enemy person, firm, or company and to sell them and for those purposes to sue (for instance, for the price of goods sold) without being defeated by the plea of alien enemy2. But the effect of such an appointment is not to revive dissolved contracts3.

So much for the present for cases of abrogation. We have now to find cases where the contract is not abrogated, and we have been warned by Lord Dunedin that they will probably be contracts which are 'the concomitants of rights of property.'

(i) Contracts of tenancy. In Halsey v. Löwenfeld1 the Court of Appeal held that a British landlord resident here could recover from a tenant who had become an 'enemy resident' the rent accruing due during the war upon a pre-war lease. No illegal intercourse was involved in such payment, for it

1 Chandler v. Webster [1904] 1 K. B. at p. 501 (one of the Coronation Seat cases).

2 Continho Caro & Co. v. Vermont & Co. [1917] 2 K. B. 587.

3 Per Younger J. [1918] 2 Ch. at p. 389.

4 [1916] 2 K. B. 707 (C. A.).