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.
The application of the foregoing principles to the various types of contract ordinarily renders them invalid wherever they involve the formation of the contract by communications across the lines of war, wherever the performance involves crossing the lines of war, or wherever the contract is one which will tend to aid the public enemy; while other types of contract are ordinarily held to be valid. No effect can be given to a recognition of a pre-existing indebtedness by means of a communication across the lines of war.1 The fact that such communication will be to the advantage of the citizen of the country in which the case is tried, does not alter the general rule as to the invalidity of the contract or the transactions which are formed by communication across the lines of war.2 No action can be maintained on a note which was executed and delivered during the war, and which was executed by a citizen of a state which adhered to the Southern Confederacy, to a citizen of a state which adhered to the United States.3 No action can be brought upon a note which was given during the war by a citizen of one of the belligerent powers who is domiciled therein, to a citizen of the other belligerent power, who was domiciled therein, even though such note was given for a valid pre-existing debt.4 If such a note is given for a prior valid indebtedness, it has been held that such note might be sufficient consideration for a promise made after the war to pay such note.5 In this respect a contract of this sort, although invalid if entered into by a communication across the lines of war, is not treated as the ordinary illegal contract is treated.6 No effect can be given to an acknowledgment of a debt by a communication across the lines of war for the purpose of preventing the operation of the Statute of Limitations.7
6 Daniels v. Tearney, 102 U. S. 413, 26 L. ed. 187.
7 Daniels v. Tearney, 102 U. S. 415, 26 L. ed. 187.
8 Daniels v. Tearney, 102 U. S. 415, 26 L. ed. 187.
1 Rice v. Shook, 27 Ark. 13T, 11 Am. Rep. 783; Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 639.
2 Rice v. Shook, 27 Ark. 137, 11 Am. Rep. 783; Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 639.
3 Rice v. Shook, 27 Ark. 137, 11 Am. Rep. 783.
4 Wright v. Graham, 4 W. Va. 430.
5Ledoux v. Buhler, 21 La. Ann. 130.
6 An illegal contract is generally held not to be a sufficient consideration for
A contract of sale which is made by communications either in person or by agent, between a seller who is domiciled in one of the belligerent countries, and a purchaser who is domiciled in the other of the belligerent countries, is invalid.8 A contract by which a debtor who resides within the lines of the Confederacy, agrees to purchase cotton for his creditor, who resides within the Union lines, in satisfaction of a debt which existed when the Civil War began, is illegal and such purchase by the debtor does not pass title to such cotton to the creditor.9 If the contract is made by communications across the lines of war between persons who are domiciled respectively in the territory of the belligerent powers, the fact that the goods are not delivered until after the termination of the war does not prevent the contract from being illegal.10 A contract by which American subjects agree during the time of war to purchase goods from one who is a subject of the hostile power, and who is domiciled in the territory of such power, is illegal even if the goods are not delivered until after the termination of the war, and an agent of the subject of the United States who transmits such order to the purchaser and who advances the money therefor, can not recover against the purchasers.11
If the contract is not only made by communication across the lines of war, but also involves performance by the transportation of goods across the lines of war, such contract is even more clearly illegal.12 A contract by which one who resides within the Confederate lines agrees to sell and deliver goods to one who resides within the Union lines, is illegal.13 a subsequent promise (see Sec. 1040), unless the illegal contract is entirely eliminated by the new contract (see Sec. 1041).
7 Perkins v. Rogers, 35 Ind. 124, 9 Am. Rep. 630 (obiter).
8 Scholefield v. Eichelberger, 32 U. S. (7 Pet.) 586, 8 L. ed. 703; United States v. Grossmayer, 76 U. S. (9 Wall.) 72, 19 L. ed. 627; Montgomery v. United States, 82 U. S. (15 Wall.) 395, 21 L. ed. 97; Williams v. Gay, 21 La. Ann. 110; Haney v. Manning, 21 La. Ann. 166; Irwin v. Levy, 24 La. Ann. 302; Nelson v. Trigg, 3 Tenn.. Cas. 733; Rhodes v. Summerville, 51 Tenn. (4 Heisk.) 204.
9 United States v. Grossmayer, 76 U. S. (9 Wall.) 72, 19 L. ed. 627.
10 Scholefield v. Eichelberger, 32 U. S. (7 Pet.) 586, 8 L. ed. 793.
11 Scholefield v. Eichelberger, 32 U. S. (7 Pet.) 586, 8 L. ed. 793.
"The consideration fatal to the claim of the plaintiffs, that the letter on which these advances were made was in itself a nullity, and could not be made the basis of a contract, on which this court would entertain a suit; the purchases made under it could add nothing to its validity, nor were these goods ever the property of these plaintiffs, for they were purchased for these defendants, and finally shipped to them as their goods, not those of the plaintiffs. The plaintiffs advanced the money; with them the contract was for money paid and expended, but in the purchase and sale of the goods they were but the agents, carrying into effect a contract between the seller and these defendants."Scholefield v. Eichelberger, 32 U. S. (7 Pet.) 586, 8 L. ed. 793.
No recovery can be had for services which are rendered in the formation or in the performance of such contracts.14 No recovery can be had for services rendered as agent in purchasing cotton from persons residing within the Confederate lines for persons residing within the Union lines,15 or for services rendered as an agent in attending to transporting cotton from the Confederacy to the Union lines and for selling it in the Union lines.16 No recovery can be had for animals which were sold for the purpose of hauling goods across the Union lines during the Civil War.17 No recovery can be had for services in hauling goods through the Union lines during the Civil War.18
The fact that one of the parties who is domiciled in the territory of one of the belligerents is not an enemy, but a neutral, does not render such contract valid.19
One who is domiciled in the territory of one of the belligerent powers, can not appoint an agent to act in the territory of the other belligerent power during the period of the war.20 While such agent has no power to bind his principal by executory contracts, it has been held that if a payment is made to such agent during the time of the war, and such agent pays such money over to his principal after the war, the principal can not collect such indebtedness again from the debtor.21