This section is from the book "The Constitutional Law Of The United States", by Westel Woodbury Willoughby. Also available from Amazon: Constitutional Law.
Military government of foreign territory by the armed forces of the United States may exist either as the result of hostile occupation in time of war, or by friendly international agreement, in time of peace. An instance of this last was the military occupation and administration of Cuba by the United States. The constitutional authority for thus employing our troops in foreign territory was derived not from the war powers of the President acting as commander-in-chief of the army and navy, for there was no existing war, but from the general powers of the United States as a sovereign State in all that relates to international relations.36
35 In this Chicago Railway Strike episode, as Professor Fairlie remarks in his National Administration, p. 38, the only novel feature was the use of the army for the enforcement of the comparatively recent statute prohibiting conspiracies against interstate commerce, and in the broader interpretation given to what constitutes an obstruction of the postal service. Before this when strikers had cut out passenger and baggage cars from a train leaving the mail cars undisturbed, it had been held that the mails were not interfered with. But in this case it was held that such an act did amount to an obstruction of the postal service.
For a detailed history of the instances in which federal aid has been extended in quelling domestic disturbances, see Senate Document No. 209, 57th Congress, 2d Session.
36 See ante, § 36.
The law of military occupation of foreign territory is that established by general international law. According to this, the power of the military commander is constitutionally supreme. For no act that he or his subordinates may commit can he or they be held civilly liable in the civil courts of the United States or of the State whose territory is occupied. The only limits to the military authority are those which international law and usage, upon the ground of humanity and justice, impose, and breaches of these are cognizable only in the military courts. As was said in New Orleans v. Steamship Co.37 and repeated in Dooley v. United States :38 "The conquering power has the right to displace the pre-existing authority, and to assume to such extent as it may deem proper the exercise by itself of all the powers and functions of government It may appoint all the necessary officers and clothe them with designated powers, larger or smaller, according to its pleasure. It may prescribe the revenues to be paid, and apply them to its own use or otherwise. It may do anything necessary to strengthen itself and weaken the enemy. There is no limit to the powers that may be exerted in such cases, save those which are found in the laws and usages of war. These principles have the sanction of all publicists, who have considered the subject."
"Martial law in a hostile country consists in the suspension by the occupying military authority of the criminal and civil law, and of the domestic administration and government in the occupied place or country, and in the substitution of military rule and force for the same, as well as in the dictation of general laws, so far as military necessity requires this suspension, substitution or dictation." 39
"The commander of the forces may proclaim that the administration of all civil and penal law shall continue wholly or in part, as in times of peace, unless otherwise ordered by the military authority." 40
37 20 Wall. 387; 22 L. ed. 354.
38 182 U. S. 222; 21 Sup. Ct. Rep. 762; 45 L. ed. 1074.
39 Lieber's Instructions for the Government of Armies of the United States in the Field.
During military occupation of foreign territory, though there is no obligation either by constitutional or international law, to establish courts or to permit the continued operation of local courts for the trial of ordinary civil and criminal cases according to local law, there is nothing to prevent this being done, and in fact, in modern times this is usually done. Indeed, the principle is now well established that, until expressly declared otherwise, local private law and the tribunals for its administration, continue in operation. But in all such cases the courts, whether established or allowed to continue, exist essentially as military courts, and the law which they enforce has validity only by military order and permission. For the first effect of military occupation is to sever, for the time being, all the former political relations of the inhabitants of the territory, and to destroy the de jure character of the former organs of government.
 
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