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.
If the agency is of such a nature that the exercise of authority thereunder is not prejudicial to the interests of the country in whose courts it is sought to enforce such transactions, the respective interests of the principal and the agent will be considered. Since communication between the principal and agent has become impossible by reason of the outbreak of war between the countries in which they are respectively domiciled, it is legally impossible, on the one hand, for the principal to revoke the powers of his agent or to modify them, since to do so he must give notice to the agent, and in some cases he must also give notice to third parties of such revocation or modification of authority.1
14 Tingley v. Muller , 2 Ch. 144 I following, Porter v. Freudenberg (1915), 1 K. B. 857; and applying, Daimler Co. v. Continental Tyre and Rubber Co. (1016), 2 A. C. 3071.
15 Pope v. Chafee, 14 Rich. Eq. (S. Car.) 60.
16 Montgomery v. United States, 82 U. S. (15 Wall.) 395, 21 L. ed. 97; United States v. Lap6n6, 84 U. S. (17 Wall.) 602, 21 L. ed. 603.
17 Stiles v. Easley, 51 111. 275; Mc-Cormick v. Arnspiger, 38 Tex. 569.
1 See Sec. 1743.
Since such notice can not be given legally after the outbreak of the war, the courts are obliged to consider the nature of the agency and the presumed intention of the principal to continue such agency on the one hand, or to discontinue it on the other, as his own interests may require, and to give effect to such presumed intention. If the continuance of the agency will be clearly beneficial to the principal who has become an alien enemy, and if it will not be detrimental to the interests of the state in which it is sought to enforce the contract, such agency will be regarded as continuing,2 at least if the agent is willing to exercise his former authority.
The outbreak of war does not terminate the authority of an agent whose principal has become an alien enemy, if such authority is to collect and to preserve the money or property of his principal, but not to transmit it, and if the exercise of such authority will not prejudice the interests of his principal.3 The authority of the agent to collect and to preserve the property of his principal, is presumed to survive the outbreak of war, only if the manifest interest of the principal requires that it should survive.4 If it is not shown that an insurance company, which is created by a state which adhered to the Union during the Civil War, requested an agent, who was a citizen of a state which adhered to the Confederacy and who was domiciled therein, to continue to act as its agent during the Civil War, and if it is shown that such person refused to continue to act as such agent, a tender of premiums to such agent by a policyholder who was a citizen of such state which adhered to the Confederacy and who was domiciled therein, is inoperative to keep the policy of insurance in effect.5 In cases of this sort, the presumed interest of the principal seems to outweigh the interest of the policyholder. At the same time. the refusal of the agent to continue to act would be sufficient to terminate his authority as against a third person in time of peace, whether or not his refusal rendered him liable to his principal; and accordingly as against a third person his refusal should have the same effect in time of war. Power to collect a prior debt is said not to be terminated by the outbreak of the war between the country of the principal and the country of the agent.6
2 United States. Ward v. Smith, 74 U. S. (7 Wall) 447, 10 L. ed. 207; Douglas v. United States, 14 Ct. Cl. 1.
New Jersey. Keppelmann v. Keppel-mann, 80 N. J. Eq. 300, 105 Atl. 140.
Mew York. Buchanan v. Curry, 19 Johns. (N. Y ) 136.
Tennessee. Maloney v. Stephens, 53 Tenn (11 Heisk.) 73S.
Virginia. Manhattan Life Ins. Co. v. Warwick, 61 Va. (20 Gratt ) 614; I'ale v. Wall, 03 Va (22 Gratt.) 424; Mutual Benefit Life Ins. Co. v. At-woods Admx., 65 Va. (24 Gratt.) 407; Small's Administrator v. Lumpkin's Administrator. 60 Va. (28 Gratt.) 832.
3 United States. Ward v. Smith, 74 U. S. (7 Wall.) 447, 19 L. ed. 200; Douglas v. United States, 14 Ct. CI. 1.
New Jersey. Keppelmann v. Keppelmann, 80 N. J. Eq. 300, 105 Atl. 140.
New York. Buchanan v. Curry, 19 Johns.' (N. Y.) 136.
Tennessee. Maloney v. Stephens, 58 Tenn. (11 Heisk.) 738.
Virginia. Manhattan Life Ins. Co.
v. Warwick, 61 Va. (20 Gratt.) 614; Hale v. Wall, 63 Va (22 Gratt.) 424; Mutual Benefit Life Ins. Co. v. At-wood's Admx., 65 Va. (24 Gratt.) 497; Small's Administrator v. Lumpkin's Administrator, 69 Va. (28 Gratt.) 832.
4 New York Life Ins. Co. v. Davis, 05 U. S. 425, 24 L. ed. 453; Keppelmann v. Keppelmann, 80 N. J. Eq. 390, 103 Atl. 140.
"That war suspends all commercial intercourse between the citizens of two belligerent countries or states, except so far as may be allowed by the sovereign authority, has been so often asserted and explained in this court within the last fifteen years that any further discussion of that proposition would be out of place. As a consequence of this fundamental proposition, it must follow that no active business can be maintained, either personally or by correspondence or through an agent, by the citizens of one belligerent with the citizens of the other. The only exception to the rule recognized in the books, if we lay out of view contracts for ransom and other matters of absolute necessity, is that of allowing the payment of debts to an agent of an alien enemy, where such agent resides in the same state with the debtor. But this indulgence is subject to restrictions. In the first place, it must not be done with the view of transmitting the funds to the principal during the continuance of the war: though, if so transmitted without the debtor's connivance, he will not be responsible for it. Washington, J., in Conn v. Penn. Pet. C. Ct. 406; Buchanan v. Curry, 10 Johns. (N. Y.) 141. In the next place, in order to the subsistence of the agency during the war, it must have the assent of the parties then to - the principal and the agent. As war suspends all intercourse between them, preventing any instructions, supervision or knowledge of what takes place, on the one part, and any report or application for advice on the other, this relation necessarily ceases on the breaking out of hostilities, even for the limited purpose before mentioned, unless continued by the mutual assent of the parties. It is not compulsory, nor can it be made no, on either side, to subserve the ends of third parties. If the agent continues to act as such, and his so acting is subsequently ratified by the principal, or if the principal's as-sent is evinced by any other circumstances, then third parties may safely pay money, for the use of the principal, into the agent's hands, but not otherwise. It is not enough that there was an agency prior to the war. It wou'd be contrary to reason that a man, without his consent, should continue to be bound by the acts of one whose relations to him have undergone such a fundamental alteration as that produced by a war between the two countries to which they respectively belong; with whom he can have no correspondence, to whom he can communicate no instructions, and over whom he can exercise no control. It would be equally unreasonable that the agent should be compelled to continue in the service of one whom the law of nations declares to be his public enemy. If the agent has property of the principal in his possession or control, good faith and fidelity to his trust will re-quire him to keep it safely during the war, and to restore it faithfully at its close. This is all." Insurance Co. v. Davis, 05 U. S. 425, 24 L. ed. 453.