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.
A debt arises out of a transaction which is performed on one side; and if such debt is owing from a citizen to an alien enemy, the transaction has been performed by the alien enemy. Debts which are due and owing by a citizen who is domiciled in the country of his nationality, to an alien enemy who is domiciled in the country of his nationality, may be confiscated by the country of the debtor during the war.1 While such right has not been exercised, at least where the belligerent power was able to discharge all the obligations assumed by the treaty of peace at the end of the war, its existence is still recognized.2 After the Revolutionary War, acts of confiscation by Georgia were upheld by the English courts,3 although no effect was given to a confiscation under the New York statute between the Declaration of Independence and before the treaty by which the independence of the American colonies was recognized.4 However, the courts of a state of which a creditor is a citizen and a resident, have refused to recognize a decree of the government of the enemy state of which the debtor was a citizen and a resident by which such debtor was required to pay such debt into the treasury of the state.5
17 Clapham Steamship Co. v. Naam-looze Vennootschap Handels-en Trans-port-Maatschappij Vulcaan , 2 K. B. 639).
See also, Esposito v. Bowden, 7 £1. & Bl. 763; Robson v. Premier Oil & Pipe Line Co. , 2 Ch. 124.
2 Stevenson v. Aktiengesellschaft fur Cartonnagen-Industrie , 1 K. B. 842.
3 M'Grath v. Isaacs, 1 Nott & M'C. (S. Car.) 563 [on subsequent hearing, 2 M'Cord L. 26].
1 Wright v. Nutt, 1 H. BL 137.
For the effect of war on public debts, see The Effect of War on Public Debts and on Treaties, The Case of the Spanish Indemnity, by John B. Moore, 1 Columbia Law Review, 209.
2 "In former times the right to confiscate debts was admitted as an acknowledged doctrine of the law of nations, and in strictness it may still be said to exist, but it may well be considered as a naked and impolitic right, condemned by the enlightened conscience and judgment of modern times." Hanger v. Abbott, 73 U. 8. (6 Wall.) 532, 18 L. ed. 939.
"It remains to consider the objection urged on behalf of the plaintiff in error that the acts of congress under which these proceedings to confiscate the stock have been taken are not warranted by the constitution, and that they are in conflict with some of its provisions. The objection starts with the assumption that the purpose of the acts was to punish offenses against the sovereignty of the United States, and that they are merely statutes against crimes. If this were a correct assumption, if the act of 18G1, and the fifth, sixth and seventh sections of the act of July 17, 1862, were municipal regulations only, there would be force in the objection that congress has disregarded the restrictions of the fifth and sixth amendments of the constitution. Those restrictions, so far as material to the argument, are, that no person shall be held to answer for a capital or otherwise infamous crime unless on a presentment or indictment of a grand iury; that no person shall be deprived of his property without due process of law; and that in all criminal prosecutions the accused shall enjoy the right to a speedy and public trial by an impartial jury of the state and district wherein the crime shall have been committed. But if the assumption of the plaintiff in error is not well made, if the statutes were not enacted under the municipal power of congress to legislate for the punishment of crimes against the sovereignty of the United States; if, on the contrary, they are an exercise of the war powers of the government, it is clear they are not affected by the restrictions imposed by the fifth and sixth amendments. This we understand to have been conceded in the argument. The question, therefore, is, whether the action of congress was a legitimate exercise of the war power. The constitution confers upon congress expressly power to declare war, grant letters of marque and reprisal, and make rules respecting captures on land and water. Upon the exercise of these powers no restrictions are imposed. Of course the power to declare war involves the power to prosecute it by all means and in any manner in which war may be legitimately prosecuted. It therefore includes the right to seize and confiscate all property of an enemy and to dispose of it at the will of the captor. This is and always has been an undoubted belligerent right. If there were any uncertainty respecting the existence of such a right it would be set at rest by the express grant of power to make * rules respecting captures on land and water. It is argued that though there are no express constitutional restrictions upon the power of congress to declare and prosecute war, or to make rules respecting captures on land and water, there are restrictions implied in the nature of the powers themselves. Hence it is said the power to prosecute war is only a power to prosecute it according to the law of nations, and a power to make rules respecting captures is a power to make such rules only as are within the laws of nations. Whether this is so or not we do not care to inquire, for it is not necessary to the present case. It is sufficient that the right to confiscate the property of all public enemies is a conceded right. Now, what is that right, and why is it allowed? It may be remarked that it has no reference whatever to the personal guilt of the owner of confiscated property, and the act of confiscation is not a proceeding against him. The confiscation is not because of crime, but because of the relation of the property to the opposing belligerent, a relation in which it has been brought in consequence of its ownership. It is immaterial to it whether the owner be an alien or a friend, or even a citizen or subject of the power that attempts to appropriate the property. In either case the property may be liable to confiscation under the rules of war. It is certainly enough to warrant the exercise of this belligerent right that the owner be a resident of the enemy's country, no matter what his nationality. The whole doctrine of confiscation is built upon the foundation that it is an instrument of coercion, which, by depriving an enemy of property within reach of his power, whether within his territory or without it, impairs his ability to resist the confiscating government while at the same time it furnishes to that government means for carrying on the war. Hence any property which the enemy can use, either by actual appropriation or by the exercise of control over its owner, or which the adherents of the enemy have the power of devoting to the enemy's use, is a proper subject of confiscation." Miller v. United States, 78 U. S. (11 Wall) 208, 20 L. ed. 186.