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.
Different considerations, however, apply if an insurgent government has attempted to confiscate debts due from those who are domiciled in its territory to their creditors, especially to their creditors who are domiciled in the territory of the nation from which the insurgent power is endeavoring to separate itself. The permanent effect of the acts of an insurgent government depends upon the success of the insurrection, and if the insurgent government falls, its acts fall, including its attempted confiscations.6 No effect will therefore be given to a payment during the Civil War, of a debt due to a resident and citizen of a state which adhered to the Union, during the Civil War, by a debtor who was a citizen and a resident of a state which adhered to the Confederacy, to the official of the Confederacy to whom such debtor was bound by law to make such payment;7 This result was reached on the theory that any alliance of one of the states of the Union was forbidden by the Federal Constitution; that the citizen of each state was, by the terms of the Constitution of the United States, entitled to all the privileges and immunities of citizens in the several states; that such act impaired the obligation of contracts; and that after the fall of the Confederacy, its acts of a public nature for the purpose of carrying on the war would not be recognized.8 A public sale of stock in a corporation organized and doing business in the state which adhered to the Confederacy, which stock belonged to citisens of states which adhered to the Union, as stock of alien enemies, will not be recognized after the end of the Civil War, no rights be held to pass under such sale; and the original stockholders will be held to be the stockholders in such corporation.9 Such a debt, however, is not discharged by the outbreak of the war,10 and the right of the creditor is said to revive at the termination of the war.11 While language is occasionally used which seems to indicate that the debt is suspended during the Avar, and that the right of the creditor revives, what is probably meant is that the war itself has no effect upon the validity, of the debt, and that its only effect grows out of the fact that one who is domiciled in the territory of a belligerent power can not maintain an action during the war in the courts of the other belligerent power.12
3 Wright v. Nutt, 1 H. Bl. 149.
4 0gden v. Folliott, 3 T. R. 726 [reversing, Folliott v. Ogden, 1 H. BL 123, and see discussion in Barclay v. Russell, 3 Ves. Jr. 424].
The effect of the act of sequestration passed by the various states of the United States during the Revolutionary War, was abrogated by the provisions in the treaty of peace which secured debts due to English creditors from Americans. Ware v. Hylton, 3 U. S. (3 Dall.) 109, 1 L. ed. 568; Hamilton v. Eaton, 2 Martin (N. Car.) 83.
5 Wolff v. Oxholm, 6 M. & S. 92.
6 Wlliams v. Bruffy, 96 U. S. 176, 24 L. ed. 716.
"Whatever de facto character may be ascribed to the Confederate government consists solely in the fact that it maintained a contest with the United States for nearly four years, and dominated for that period over a large extent of territory. When its military forces were overthrown, it utterly perished, and with it all its enactments. Whilst it existed, it was regarded, as said in Thorington v. Smith, 'as simply the military representative of the insurrection against the authority of the United States.' 8 Wall. 1; Keppel's Admrs. v. Petersburg Railroad Co., Chase's Decisions, 167.
"Whilst thus holding that there was no validity in any legislation of the Confederate states which this court can recognize, it is proper to observe that the legislation of the states stands on very different grounds. The same general form of government, the same general laws for the administration of justice and the protection of private rights, which had existed in the states prior to the rebellion, remained during its continuance and afterwards. As far as the acts of the states did not impair, or tend to impair, the supremacy of the national authority, or the just rights of citizens under the constitution, they are, in general, to be treated as valid and binding. As we said in Horn v. Lockhart (17 Wall. 570): 'The existence of a state of insurrection and war did not loosen the bounds of society, or do away with civil government or the regular administration of the laws. Order was to be preserved, police regulations maintained, crime prosecuted, property protected, contracts enforced, marriages celebrated, estates settled, and the transfer and descent of property regulated, precisely as in time of peace. No one, that we are aware of, seriously questions the validity of judicial or legislative acts in the insurrectionary states touching these and kindred subjects, where they were not hostile in their purpose or mode of enforcement to the authority of the national government, and did not impair the rights of citizens under the constitution/ The same doctrine has been asserted in numerous other cases." Williams v. Bruffy, 96 U. S. 176, 24 L. ed 716.
7 Williams v. Bruffy, 96 U. S. 176, 24 L. ed. 716.
See also, to the same effect. Short-ridge v. Macon. 61 N. Car. (U. S., C. C.) 302, Chase 138, 1 Abl. (U. S.) 58, Fed. Cas. No. 12812.
8 Williams v. Bruffy, 96 U. S. 176, 24 L. ed. 716.
9 Dewing v. Perdicuries, 96 U. S. 193, 24 L. ed. 654.
10 England. Coarg v. East India Co., 29 Beav. 300; Du Belloix v. Water-park, 1 Dowl. & R. 16.
United States. Foxcraft v. Nagle, 2 U. S. (2 Dall.) 132, 1 L. ed. 310; Hanger v. Abbott, 73 U. S. (6 Wall.) 532, 18 L. ed. 939; Semmes v Hartford Ins. Co., 80 U. S. (13 Wall.) 158, 20 L. cd. 490; Brown v. Hiatt, 82 U. S (15 Wall.) 177, 21 L. ed. 128.
Kentucky. Selden v. Preston, 74 Ky. (11 Bush.) 191.
Maryland. Bordley v. Eden, 3 Harr. & McH. (Md.) 167.
New Jersey. Mutual Benefit Life Ins. Co v. Hillyard, 37 N. J. L. 444, 18 Am. Rep. 741.
North Carolina. Hamilton v. Eaton, 1 N. Car. (pt. 1) 83.
The court divided on this question in Griffith v. Lovell, 26 Ia. 226.
"Better opinion is that executed contracts, such as the debt in this case, although existing prior to the war, are not annulled or extinguished, but the remedy is only suspended, which is a necessary conclusion, on account of the inability of an alien enemy to sue or to sustain, in the language of the civilians, a persona standi in judicio Flint v. Waters. 15 East. 260" [Quoted in Hanger v Abbott, 73 U. S. (6 Wall.) 532. 18 L. ed. 939.]
1 1 Coarg v. East India Co., 29 Beav. 300; Hanger v. Abbott, 73 U. S. (6 Wall.) 532, 18 L. ed. 939; Semmes v. Hartford Ins. Co., 80 U. S. (13 Wall.) 158, 20 L. ed. 490.
"Old decisions, made when the rule of law was that war annulled all debts between the subjects of the belligerents, are entitled to but little weight, even if it is safe to assume that they are correctly reported, of which, in respect to the leading case of Prideaux v. Webber, 1 Levinz 31, there is much doubt. Miller v. Prideaux, 1 Keble 157; Lee v. Rogers, 1 Levinz 110; Hall v. Wybourne, 2 Salkeld, 420; Aubrey v. Fortescue, 10 Modern 205, are of the same class and to the same effect. All of those decisions were made between parties who were citizens of the same jurisdiction, and most of them were made nearly a hundred years before the international rule was acknowledged, that war only suspended debts due to an enemy, and that peace had the effect to restore the remedy. The rule of the present day is, that debts existing prior to the war, but which made no part of the reasons for undertaking it, remain entire, and the remedies are revived with the restoration of peace." Hanger v. Abbott, 73 U. S. (6 Wall.) 532, 18 L. ed. 939.
12 See Sec. 2751.