Watts, Watts & Co. v. Unione Austriaca Di Navigazione

Upon review of an admiralty ease, the court has jurisdiction to make such disposition of it as justice may require at the time of decision, and therein must consider changes in fact and in law which have supervened since the decree below was entered. P. 21. In a libel in 'personam, brought by a British against an Austro-Hungarian corporation, while their countries were- at war and the United States was a neutral, to recover for coal furnished before the war by the libelant to the respondent in Algiers, jurisdiction was obtained by attachment of a ship (for which a bond was substituted); but, after answer and submission of the cause upon agreed facts and proof of foreign law, the District Court declined to proceed, because of prohibitions placed by. the belligerent countries on payment of debts to each other’s subjects, and dismissed the libel without prejudice. This country having entered the war after the case came to this court— Held: (1) That the libelant as a co-belligerent had a right to maintain the suit against the respondent, an 'alien enemy, and that jurisdiction should not be declined as an act of discretion. P. 21.. (2) That respondent, though an alien enemy, was entitled to defend, and that, in view of the non-intercourse laws and the actual impossibility of free intercourse between residents of this country and of - Austria-Hungary, further prosecution should be suspended until through restoration of peace, or otherwise, adequate presentation of respondent’s defense should become possible. P. 22.

CERTIORARI TO THE CIRCUIT COURT OP APPEALS POR THE SECOND CIRCUIT. The case is stated in the opinion. The drafts did. not'constitute a novation or waiver. . The Emily Souder, 17 Wall. 666. The obligation sued on is in essence for goods sold and delivered — an obligation justiciable in any civilized country, Cuba R. R, Co, v. - Crosby, 222 U. S. 473, 478, and one peculiarly within the jurisdiction of every maritime tribunal which could obtain jurisdiction over the defendant by attachment or otherwise. If the debt had been assigned to a subject of any power not at war with England, no question could have been raised against enforcement here. The Anna Cath-arina, 4 C. Rob. 107, 112-113. The respondent, conceding the obligation to pay, appeared generally and expressly admitted the jurisdiction of the court. The objection raised, on the trial, viz, that as a subject of Austria, and because of an alleged Austrian moratorium, it should not be compelled to pay to a British subject, should have been pleaded.. It was personal to the respondent, not going to the subject-matter of the suit, and the court, sua sponte, could not have made it. Undér well-settled principles, any objection to the court’s taking jurisdiction over respondent’s person was waived. But the courts below have erroneously allowed the respondent to come in and go out at will. Cf. Porto Rico v. Ramos, 232 U. S. 627, 632. They should have adjudicated the case in regular course. Our admiralty courts take jurisdiction, in proceedings between foreigners either in rem or in personam, notwithstanding the contract in suit was made and to be performed, or the tort complained of was committed, ’n a foreign country or on the high seas. The only requisite is jurisdiction of person or property. The Maggie Hammond, ' 9 Wall. 435; The Titanic, 233 U. S. 718; The Jerusalem, 2 Gall. 191; Thomassen v. Whitwell, 9 Ben. 113; Bernhard v. Greene, 3 Sawyer, 230; Mason v. Blaireau, 2 Cranch, 240; Cooper v. Newman, 14 Wall. 152; The Napoleon, O'c. ■ 208; Davis v. Leslie, Abb. Adm. 123; Bucher v. Klorkgelev, Abb. Adm. 402; Fairarieve v. Marine Ins. Co.. 94 Fed. Rep. 686; The Attualita, 238 Fed. Rep. 909. Although in some suits between foreigners our admiralty courts may have discretion to decline jursidiction, this is not such a case. The discretion referred to is not absolute but has been strictly defined by this court. The Maggie Hammond, 9 Wall. 435, 456, 457; The Belgenland, 114 U. S. 355. . . This suit is plainly'outside the exceptions enumerated in The Belgenland, supra, and within the rule laid down in that opinion, at pp. 368, 369. The controversy is com-munis juris, the parties do not belong to the same foreign nation, and, further, most of the coal was bought and used in carrying on trade between Trieste and New York, which gave' the United States an interest in the transaction as directly supporting its commerce. See The Belgen-land, p. 366; and The Jerusalem, 2 Gall. 191. The District Court’s decision in effect gives extraterritorial force to the Austrian"war law to bar the claim of a British subject who had secured jurisdiction according to. our practice. Strict neutrality required that we disregard the war measures of all belligerents and apply our laws, since neither party had any claiin to have his own applied. If, as declared by our Government, commerce in munitions of war with the enemies of Germany was not unneutral (c/. Northern Pacific Ry. Co. v. American Trading Co., 195 U. S. 439), how can it be said that the enforcement of admitted simple contract obligations, having nothing to do with war, infringes neutrality? The failure of the courts to adjudicate this case is. not comity, but á breach of comity. The defense is in reality a plea .of alien enemy, which so long ago as 1799 was said by Lord Kenyon in Casseres v. Bell, 8 Term Reports, 166, to be “an odious plea.” Raised in the courts of a neutral nation, such a plea was absurd and should have been as unsuccessful a it is odious. Notwithstanding that whep the case was tried we knew no alien enemies, this court is called upon by this defense to discriminate in favor of the Austrian Government against Englishmen. Since the obligation itself is not affected by the prohibition, it seems clear enough that the prohibition at most goes only to the party who shall sue. An alien enemy has no right to sue in the courts of a king with whom his own sovereign is at war, because a personal disability of suing under such' circumstances attaches to an alien. Daimler Co. v. Continental Tyre & Rubber Co., [1916] 2 A. C. 307, 316. There is not any such disability in an alien friend. • It is elementary, however, that the matter of parties is to be governed by the law of the forum, and a question of personal jurisdiction of a defendant may be waived. A civil moratorium will be recognized in a foreign court as the law at the place of payment, provided it is not inconsistent with the public policy of the forum, and is otherwise enforceable. Rouquette v. Overman, L. It., 10 Q. B.-525. But there was no local moratorium prohibiting payment in England,' where payment in this case should have been made, nor in Algiers where it might have been made. No rule of law which has hitherto been recognized can be invoked to call for the enforcement in this country of the Austrian prohibition as a.moratorium. It was not intended to relieve Austrian subjects from the immediate pressure of debts, as is the case of ordinary moratorium decrees, nor intended to benefit them at all. Jf was promulgated for the avowed purpose of injuring British •merchants’ commerce and property in connection with war, and is highly penal. It is immaterial that Great Britain, enacted 81101131' but less stringent prohibitions. Robinson & Co. v.- Continental Ins. Co. of Mannheim, [1915] 1 K. B. 155. The courts of one country will not enforce or recognize the penal laws of another. The Austrian proclamation has no. extraterritorial operation. Comity in its true sense is limited to enforc.ing substantive rights, Wharton, Confl. of Laws, 3d ed., § 428A, vol. 2, pp. 938-939; Rorer, Interstate Law, p. 7; accruing under some foreign law which is analogous to the law existing in the State where , the litigation arises. Effect cannot be given to the defense unless this Austrian war measure is enforced as a part of our municipal law. To do this would be the very denial of comity. The reasons stated by the District Judge have been strongly disapproved in Compagnie Universelle de Telegraphie v. United States Service Corporation, 84 N; J. Eq. 604; s. c., 85 id. 601. Confiscation of the debt in Austria, even if such proceedings had been taken, could not have any extraterritorial effect. Baglin• v. Cusenier Co., 221 U. S. 580; Hall, International Law, 4th ed., p. 459. If- as the respondent argues the effect of the giving of the drafts was to. transfer the place of payment from Algiers to London, , which the libelant denies, it does not avail .as a defense. Under the law of England, as set forth in the King’s Proclamation, known as "Trading with the Enemy Proclamation No. 2,” issued on September 9,1914, express permission was given to one In the position of the' libelant to receive payment from an enemy, without being guilty of a prohibited transaction. Oronstein‘& Koppel v. Égyptian Phosphate Co., [1914] 2 Scotch L. T. 293; Trotter’s Lav/ of Contract During War, 428; Ingle v. Mannheim 'ins. Co., 31 T. L. R. 41, [1915] 1 K. B. 227. Further, under British law, if jurisdiction could have been obtained over the defendant, the libelant could have maintained an action for the amount due for the coal in the English courts. Robinson & Co. v. Continental Ins. Co. of Mannheim, supra; Ingle v. Mannheim Ins. Co., supra; Leader v. Direction Der Disconto Gesellschaft, 31 T. L. R. 83, [1915] 2 K. B. 154. Our iaw is the same as .the English law in this regard. McVeigh v. United States, 11 Wall. 259, 267, citing Bacon’s Abr., Tit. Alien, d; Story’s Equity Pleadings, § 53; Al-brecht v. Sussman, 2 Yesey & Beam, 323; Dorsey v. Kyle, 30 Maryland, 512, 522; cf. Pollock on Contracts, 8th ed., p. 100; Compagnie Universelle de Telegraphie v. United States Service Corporation, supra. In no case was jurisdiction declined by our courts in their discretion where denial of .justice or hardship upon the libelant would result. They have consistently taken and held jurisdiction where no other courts were available, regardless of the pressure of business,, and in some instances of the protests of consuls of foreign countries whose subjects were involved in the litigation. ' Chubb v. Hamburg-American Packet Co., 39 Fed. Rep. 431; The Amalia, 3 Fed. Rep. 652; Boult v. Ship Naval Reserve, 5 Fed. Rep. 209; The Walter D. Wallet, 66 Fed. Rep. 1011; The Attualita, 238 Fed. Rep. 909; The Troop, 118 Fed. Rep. 769; The Noddleburn, 30 Fed. Rep. 142; The Lady Furness, 84 Fed. Rep. 679; Áktieselskábet K. F. K. v. Rederiaktiebolaget Atlantan, 232 Fed. Rep. 403; The City of Carlyle, 39 Fed. Rep. 807; The Sirius, 47 Fed; Rep. 825; Bolden v. Jensen, 70 Fed. Rep. 505; The Ucayali, 164 Fed. Rep. 897; The Ester, 190 Fed. Rep. 216. Gold-. man v. Furness, Withy & Co., 101 Fed. Rep. 467, distinguished. There is no suspension of claims- agamst. an enemy in the home forum or an allied forum for debts due uuder executed contracts. Halsey v. Lowenfeld, [1916j 2 K. B. 707; Robinson & Co. v. Continental Ins. Co. of Mannheim, [1915] 1 K. B. 155. Hiatt v. Broion, 15 Wall. 177; Janson v. Driefontein Consolidated Mines, [1902] A. C. 484; and Trotter, Law of Contract During War, p. 39, refer to exec-utory contracts only. By the writ of certiorari the case has been removed to this court and is here to be tried de novo. The subject of an ally seeks to recover an admitted debt from the subject of an enemy. The suit should be sustained. Irvine v. The Hesper, 122 TJ. S. 256, 266; Reid v. American Express Co., 241 U. S. 544; Caperton v. Bowyer, 14 Wall. 216, 236; Daimler Co. v. Continental Tyre & Rubber Co., [1916] 2 A. C. 307; the District Court’s opinion in this case, and cases there cited, 224 Fed. Rep. 188, 193; Taylor v. Carpenter, 3 Story, 458; Société Anonyme Beige v. Anglo-Belgian Agency, [1915] 2 Ch. 409, 414. If the court must take jurisdiction, against its better judgment, merely because it has the power to do so, there is no .discretion.. The claim that respondent admitted jurisdiction is erroneous. The courts in each casé between foreigners, in connection with contracts made and to be performed abroad, should decide whether it is proper and will promote justice to take jurisdiction. This principle is clearly stated in The Maggie Hammond, 9 Wall. 435, and The Belgenland, 114 U. S. 355, which make it clear that “the question is one of discretion in every case.” In the case at bar a controversy communis juris has been modified by the war statutes of belligerent nations. The exercise of discretion will not be disturbed on appeal, .unless that discretion has been abused. Earnshaw v. United States, 146 U. S. 60; Sun Cheong-Kee v. United States, 3 Wall. 320; Silsby v. Foote, 14 How. 218; The Belgenland, supra; The Dos Hermanos, 10 Wheat. 306, 310, 311. This is so in trials de novo. The Eliza Strong, 130 Fed. Rep. 99; Bearse v. Three Hundred and Forty Pigs of Copper, 2 Fed. Cas., p. 1192. In refusing to take jurisdiction the court committed no breach of comity. Irrespective of war complications, where an action is brc ght by a non-resident against a non-resident, in connection with a contract'which is made and to be performed outside of the United States, the District Court, in its discretion, ordinarily does not. take jurisdiction if one party objects. Qoldman v. Furness, Withy & Co., 101 Fed. Rep. 467. '. .Not only are all of the reasons of convenience opposed to the trial of such cases "here, but an American court is hot the appropriate forum to pronounce upon questions of foreign law, especially where the parties are all foreigners. .Foreign law is difficult to prove, and .in cases of doubt the court should be slow to assume that the.law of these countries is the same as that of the United States. . Cuba B. B. Co. v. Crosby, 222 U. S. 473. ' The' complications of the war have strengthened and emphasized the reasons for refusing to take jurisdiction, •War prevents intercourse between belligerents and suspends the payment of debts, so that .belligerent nations in modern times do not consider it necessary to confiscate debts. In recent times it has been customary to confiscate only property at sea; but. there can be no question ab.out the right of a belligerent to confiscate every kind . of enemy property within its reach, on land and on sea, ' including the debts owed by its subjects. 1 Kent, Com., 64, 65; Brown v. United States, 8 Cranch, 110, 122, 124; Porter v. Freúdenberg, [19Í5] 1 K. B. 857, 869; The Bapid, 1 Gall. 295. Baglinv. Cusenier Co., 221 U. S. 580; Hall, International Law, p. 458, .distinguished. . It is clear, therefore, that the rights and liabilt+V -i of ' the parties in the case at bar have been vitally altered by the declaration of war. Their contracts and rights of property are suspended, and,. in addition, the Austrian Government has the clear right to confiscate the credits of the libelant, by ordering the respondent to pay to the Austrian Government itself. Such á confiscation ’would destróy the right of the libelant to recover from the respondent. If the courts do not recognize this suspension of obligations, confiscation of debts by belligerents will be stimulated, which is undesirable. Austrian law having forbidden any payments to English citizens, during the war, under penalty of imprisonment and fine, and England having similarly forbidden her citizens to make payments to Austrians, it can hardly be supposed that this court would undertake to order a foreign corporation, in such a case as this, to commit a crime against the laws of its own country. To have taken jurisdiction would have amounted to an abuse of discretion. The only case cited for the proposition that the United Státes should entertain a suit between citizens of belligerent nations, during war, is Compagnie Universelle de Telegraphie v. United Statés Service Corporation, 84 N. J. Eq. 604, a case distinguishable, among other reasons, as involving a contract for the sale of land in the United States, to be performed here. This court does not give extraterritorial force to a German or Austrian law when it recognizes the fact that the defendant is absolutely prohibited, by the law of his own country, from paying the debt sued upon, and is subject to heavy penalties if he does so. The power of a government to prohibit its own citizens from doing any treasonable act beyond its own boundaries is well illustrated by the cases where the courts of one State have restrained citizens of that State from bringing suit in another State or in a foreign country. Cole v. Cunningham, 133 U. S. 107; Riverdale Mills v. Manufacturing Co., 198 U. • S. 188; French v. Hay, 22 Wall. 250, 252; Dehon v. Foster, 4 Allen, 545, 550; Matter of Belfast Shipowners Co., [1894] 1 L. R., Ir. 321; Lord Portarlington v. Soulby, 3 M. & K. 104, 108; Canada Southern R. R. Co. v. Gebhard, 109 U. S. 527. As for there being a trial áe tt<wo here, Ifvine v. The Hes-per¡ 122 U. S. 256, 266, and Reid vt American Express Co,, 241 U. S. 544, botlr hold that an appeal to the Circuit Court of Appeals is t 'ch a trial, but neither so holds of a review of that court’s decision on certiorari. The trend ..of legislation is to have cases disposed of in the Circuity Court of Appeals as far as possible. But, were jurisdiction discretionary, it should be declined, because of the foreign character of the parties and the contract, and the inaccessibility of witnesses, — reasons accentuated by the war, and to avoid which the parties inade .a stipulation whose construction is now in dispute. TThat one is not obliged to perform a contract made . before the war;, when its performance has become illegal, see The Teutonia, L. R., 3 A. & E. 394; s. c. L, R., 4 P. C. 171, 181, 187; The Rapid, 1 Gall. 295., The important point to note is that the relations which exist between individual enemies during'war are treated by a general rule, and individual instances are not considered to determine whether some person in this country, or the country as a whole, will be benefited thereby. All debts are suspended during war, and no interest then accrues because the obligation is wholly suspended. See Hifitt v. Brown, 15 Wall. 177, (which is not distinguishable as involving an executory contract, since the money • was due during the war): DuBellpix v. Lord Waierpark, 24 Rév. Rep. 628, 630, s. c. 1 Dowl. & Ry. 16-20; Rederpi . Actien Gfesellschaft Oceana v. Cluiha Shipping Co¿, 226. Fed. .Rep. 339, 342. ' The fact that an express permission was given in Eng- . land to enable creditors to sue under the policy laid down in Great Britain for this war, is evidence of the general rule that during war* contracts are suspended.. See Robinson & Co. v. Continental, Ins. Co. of Mannheim, [1915] IK. B. 155. The McVeigh Case, 11 Wall. 259, and the authorities cited in it do not in any way affect the^question whether contractual obligations are suspended during.war. , Authorities cited by libelant, and in the District Judge's opinion, to show that there is no suspension of' claims against recovery in the,home forum or an allied forum, do not support the- ássertíon; some of them sustain the •contention of the respondent. See Hangar v. Abbott, 6 Wall. 532,. 539, et seq.; Janson v. Brief ontein Consolidated Mines, [1902] A. C. 484, 499; Caperton v. Bowyer, 14 Wall. 216, 236; Robinson & Co. v. Continental Ins. Co. of Mannheim, supra. Libelant cannot recover since the drafts were not surrendered. The Emily Souder, 17 Wall. 666; Ramsay v. Allegre, 12 Wheat. 611, 613.