This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In determining the validity of contracts which are made during the war, a number of different factors must be considered, among them the nationality of the adversary parties to the contract, the domicile of the parties to the contract, the effect of such contract as enriching an individual who is an alien subject or is domiciled in the country of the enemy, and the effect of such contract as tending to aid the hostile government in carrying on the war. To which of these different factors the greatest weight will be given, depends in part upon the theory which is adopted by the court as the basis for holding certain of these contracts invalid.
In a number of cases a contract is said to be invalid whenever it involves trading with the enemy; 1but this general principle gives us but little help, since it affords no means of determining just what trade is or just who an enemy is.
2 See Sec. 2724 et seq. 3 See Sec. 2759 et seq. 1 Montgomery v. United States, 82
U. S. (15 Wall.) 305, 21 L. ed. 97; United States v. Lapene, 84 U. S. (17 Wall) 601, 21 L. ed. 603.
In some of the adjudicated cases, especial stress is laid upon the fact that upon declaration of war all the citizens of any country are, in theory at least, in relations of hostility to all the citizens of the enemy country.2 The theory that war makes every subject of one country an enemy of every subject of the enemy country, is, however, abandoned for most purposes, including the right of subjects of the belligerent country who are not actually enrolled in the land or naval forces of that country, to take part in active hostilities. The objection to contracts between citizens of hostile countries during war, arises out of the fact that such contract requires communication across the lines of war and requires for its performance, eventually, the enrichment of one or the other of such parties, rather than out of the fact that by reason of the declaration of war they become in fact enemies to one another, and that accordingly dealings between them are impossible.3 In the absence of special statutory restrictions, a contract between a subject of one state who is lawfully in the territory of the adversary belligerent, and a subject of such adversary belligerent, is valid even though made in time of war.4 If a citizen and resident of a state which adhered to the Union was actually sojourning in the South during the Civil War, it was held that he could enter into a valid lease of a plantation in such seceding state,5 and that he could be held liable after the termination of war in an action in the courts of a state which adhered to the Union, on such lease for the rent of such plantation, as well as for the value of personal property purchased in connection with such lease.6
2"War terminates all friendly intercourse between the citizens of hostile states. There can not be, as has been frequently said, 'a war for arms and a peace for commerce/ To suffer individuals to carry on commercial or friendly intercourse while the two governments are at war, would be placing the act of the government and the acts of individuals in contradiction with each other." Bishop v. Jones, 28 Tex. 294.
This theory has also been invoked in cases in which war is held to discharge a contract entered into before the outbreak of the war. Griswold v. Waddington, 16 Johns (N. Y.) 438.
3 Kershaw v. Kelsey, 100 Mass. 561. 4 Kershaw v. Kelsey, 100 Mass. 561. 5 Kershaw v. Kelsey, 100 Mass. 561.
6 Kershaw v. Kelsey, 100 Mass. 561. "The lease now in question was made within the rebel territory where both parties were at the time, and would seem to have contemplated the continued residence of the lessee upon the demised premises throughout the term. . . . No agreement appears to have been made as part of or contemporaneously with the lease, that the cotton crop should be transported, or the rent sent back, across the line between the belligerents, and no contract or communication appears to have been made across that line, relating to the lease, the delivery of possession of the premises or of the corn, or the payment of the rent of the one, or the value of the other. The subsequent forwarding of the cotton by the defendant's son from Mississippi to Massachusetts may have been unlawful, but that can not affect the validity of the agreements contained in the lease. Neither of these agreements involved or contemplated the transmission of money or property, or other communication, between the enemy's territory and our own. We are therefore unanimously of opinion that they did not contravene the law of nations or the public acts of the government, even if the plantation was within the enemy's lines; and that the plaintiff, upon the case reported, is entitled to recover the unpaid rent, and the value of the corn." Kershaw v. Kelsey, 100 Mass. 561.
Contracts with reference to property which is situated in the country of the enemy, are not invalid if they do not involve communications across the lines of war and if they are not intended to defeat the right of the country whose courts are asked to enforce such contract, to confiscate or to forfeit such property.7 A contract which is entered into between alien enemies who are resident in the territory of the enemy, for the sale and conveyance of realty, situated in the territory of the enemy, is not rendered invalid by the fact that they are alien enemies.8 A contract between two subjects of one of the belligerent powers who are domiciled in the territory of such power, for the sale of personal property which is situated in the territory of the other belligerent power, is not invalid if it does not operate to defeat the right of the country in which they are resident, to confiscate such property under its right in time of war.9 These principles were applied in the Civil War, and the courts of the United States upheld sales of realty which were situated within the limits of the Confederacy as between persons who were domiciled in the limits of the Confederacy,10 and also upheld sales of personalty which was situated within the limits of the Confederacy where the parties to such sale were both domiciled in states which adhered to the Union,11 as long as such sales did not interfere with the right of the United States to confiscate or to forfeit such property.
7 Conrad v. Waples, 96 U. S. 279, 24 L. ed 721.
See also, Corbett v. Nutt, 77 U. S. (10 Wall.) 464, 19 L. ed. 976; Briggs v. United States, 143 U. S. 346, 36 L. ed. 180.
8 Conrad v. Waples, 96 U. S. 279, 24 L. ed. 721.
See also, Corbett v. Nutt, 77 U. S. (10 Wall ) 464. 19 L. ed. 976.
9 Briggs v United States, 143 U. S. 346, 36 L. ed. 180.
10 Conrad v. Waples, 96 U. S. 279, 24 L. ed. 721.
See also, Corbett v. Nutt, 77 U. S. (10 Wall.) 464, 19 L. ed. 976.
1 1 Briggs v. United States, 143 U. S. 346, 36 L. ed. 180.
Furthermore, a resident alien owes only a temporary or local allegiance and owes no duty to take part in the war on behalf of the country in which he is domiciled; but a contract between a resident alien neutral made across the lines of war with an enemy subject, is just as objectionable as if it had been entered into by a subject of the country in which such alien was domiciled.12
The real objection to a contract between a resident of one of two hostile countries, and a resident of another is based upon the objection to allowing communication across the lines of war, and to enriching persons who are actually resident in the enemy's country, rather than on any theory of breach of allegiance.13
The rule that war renders certain contracts illegal is not confined to contracts the result of which would be to enrich the enemy in the individual transaction.14 An executory contract made during the war between a subject of the United States, who is a resident in the United States, and an enemy subject who was resident in an enemy country, has been held to be invalid, although such contract was not performed on either side until after the termination of the war.15 A letter written by a debtor who was a citizen of the state which adhered to the Confederacy, and sent through the lines of war to a citizen of a state which adhered to the Union, will not operate as a new promise to prevent the running of the Statute of Limitations.16 No action can be maintained on a note which was executed and delivered, during the war, by a citizen of a state which adhered to the Southern Confederacy, to a citizen of a state which adhered to the United States.17
12 Montgomery v. United States, 82 U. S. (15 Wall ) 395, 21 L. ed. 97.
13Esposito v. Bowden, 7 El. & Bl. 703; Montgomery v. United States, 82 U. S (15 Wall ) 395, 21 L. ed. 97.
"It is now fully established that, the presumed object of war being as much to cripple the enemy's commerce as to capture his property, a declaration of war imports a prohibition of commercial intercourse and correspondence with the inhabitants of the enemy's country, and that such intercourse, except with the license of the Crown, is illegal." Esposito v. Bowden, 7 El. & Bl. 763.
14 Scholefield v. Eichelber-er, 32 U. S. (7 Pet.) 586, 8 L. ed. 793; Rice v. Shook, 27 Ark. 137, 11 Am. Hep. 783; Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 639.
15Scholefield v. Eichelberger, 32 U. S. (7 Pet.) 586, 8 L ed. 793.
16 Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 639.
17 Rice v. Shook, 27 Ark. 137, 11 Am. Rep. 783.
Probably no one of these bases can be taken as the exclusive ground for declaring that trading with the enemy is illegal, and that contracts which amount to trading with the enemy are unenforceable. Probably a combination of the theories of breach of allegiance, of enriching the enemy, and of affording a means of communicating information which might aid the enemy will explain the results reached in the specific case,18 although the emphasis to be placed upon one or the other of these theories may vary with the individual case.