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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 date.
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 Gesellschafts. 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 4, 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 (111. 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.'
In another 6 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 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.
1  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.
4 Supra. 5 Borax Consolidated v. Vogel. The Times Newspaper, 16th January, 1919. 6 Fried Krupp A.-G. v. Orconera Iron Ore Co. (1919) 35 T. L. R. 234.
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 enemy. 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. Löwenfeld4 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 was manifestly to the benefit of this country that the landlord should receive it, and the Trading with the Enemy Proclamation of 9th September, 1914 (probably declaratory in this respect) authorized its receipt. The effect of war upon the landlord's covenants did not arise.
1 Chandler v. Webster (1904) 1 K. B. at p. 501 (one of the Coronation Seat cases).
2 Continho Caro & Co. v. Vermont & Co.  2 K. B. 587.
(ii) Contracts for Sale of Land. In Tingley v. Müller?, the Court of Appeal held that a power of attorney for the sale of leaseholds (expressed to be irrevocable for twelve months) given by a person who subsequently became an “enemy resident' by crossing the line of war into enemy territory, remained valid notwithstanding and was not thereby avoided; further that the agreement for the sale of the leaseholds which was entered into by the attorney after the principal had become an enemy resident' was valid, as it involved no intercourse with the enemy, so that the sale could be carried out, the proceeds being handed over to the Custodian. For the purpose of our argument, the date of becoming an enemy across the line of war in this case is equivalent to the date of the outbreak of war.
In the foregoing cases the obligation, so far from being abrogated, was not even treated as being suspended, and indeed any such decision would have been manifestly to the detriment of the British subject. We have yet to find and examine cases of suspension.
(i) In Robson v. Premier Oil and Pipe Line Co.2 the Court of Appeal refused to allow a proxy on behalf of an enemy corporation to vote in respect of shares held by it in an election of directors of an English company, and regarded the right of voting as in suspense during the war, but they refrained from saying whether the same principle would apply to “intercourse which could not possibly tend to detriment to this country or to advantage to the enemy.'
The fate of the 'enemy resident' shareholder's contract of membership with an English company is not yet clear, and it is hard to say whether it revives upon the termination of the war, or whether, following the partnership analogy, it is destroyed and he merely receives the value of his holding on the outbreak of war together with an allowance in respect of his share for the use by the company of its assets during the war as in the case of the enemy partner. It is clear at any rate that during the war the enemy resident' shareholder's rights to vote, to receive dividends, and to transfer his share, are in abeyance.
1  2 Ch. 144 (C. A.). See also remarks in Chapter III, p. 48. 2 (1915) 2 Ch. 124 (C. A.).
3 See Chapter VI, pp. 125–30. i Similarly contracts collateral to and in furtherance of illegal contracts are themselves illegal. Potts v. Bell (1800) 8 T. R. 548.
(ii) The case of a life insurance policy where the 'life' becomes an enemy resident'is considered later in Chapter VII.
Partnership is an instance of abrogation, although as we shall see when we examine it in detail in Chapter VII this is not equivalent to saying that the contract is destroyed, because there are certain incidental rights of property which are preserved. The partnership relation, however, ceases, and it would require a new agreement (express or implied) after the war to reconstitute it.
In cases of suspension of the obligation to perform (if any such there be) or in cases such as partnership where the contractual relation is destroyed but a proprietary right remains, have the Statutes of Limitation any application? It is submitted, No. They are statutes for the limitation of actions or rights of action, not rights of performance, and they can have no effect or bearing upon the suspension of a contract at all. That would amount to a confusion of the primary right to performance created by the contract and the secondary right of action which arises from a breach.
(2) We now come to contracts which it is attempted to make during war.
The general rule is that all contracts which ‘British residents' and 'enemy residents' separated by the line of war may attempt to make during war are illegal, void, and can never be enforced?. This is the rule of non-intercourse and applies to all transactions, by way of trading or otherwise. Lord Stowell's judgment in the case of The Hoop2 has already been quoted. Further illustration is given by Willison v. Patteson? where it is positively stated that ‘No contract can be enforced in a Court of British judicature which is made during the war and which is made by an alien enemy.' In that case a Frenchman resident in France, drew three bills of exchange upon the defendant a British merchant in London which, when accepted, he endorsed to the plaintiff, a British merchant resident in France, who now sued after peace was declared, the drawing, accepting and endorsing having all taken place while this country was at war with France; it was held that the plaintiff could not recover, and he himself was regarded as having been an alien enemy. That the rule of non-intercourse is not confined to cases of commercial transactions is clear from the judgment of the Court of Appeal in Robson v. Premier Oil and Pipe Line Company: “The prohibition of intercourse with alien enemies rests upon public policy, and we can see no ground either on principle or authority for holding that a transaction between an alien enemy and a British subject which might result in detriment to this country or advantage
2 Chapter II, p. 32.
to the enemy is permissible because it cannot be brought within in the definition of a commercial transaction.'
In this chapter we have been dealing with contracts between parties separated by the line of war. It will however have been noted that the prohibition of intercourse with the enemy has a geographical rather than a personal meaning, and thus we do not find it applied to enemy subjects in our midst who duly registered under the Aliens Restriction Act, 1914, and otherwise complied with the regulations of the Executive. There seems no reason to doubt that the contractual capacity
1 (1817) 7 Taunt. 439, 450. Antoine v. Morshead (1815) 6 Taunt. 237, must, it is submitted, be regarded as an exceptional case, in which the decision was largely due to the fact that the object of the transaction, namely to succour the needs of British prisoners of war in France, made a strong appeal on grounds of humanity. There a bill of exchange was drawn during war in France by one British prisoner in favour of another upon a British subject in England and then endorsed by the payee to a French subject in France, who on the declaration of peace obtained judgment against the acceptor in an English court.
2 (1915] 2 Ch. at p. 136; adopted by Lord Dunedin (1918] A. C. at p. 268.