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cargo, and, if so, whether it should direct the appellants' claim to be paid out of the proceeds to arise from the sale thereof.
It is worth while to recall generally the principles which have hitherto guided British courts of prize in dealing with a claim by a captor for condemnation. All civilized nations up to the present time have recognized the right of a belligerent to seize with a view to condemnation by a competent court of prize enemy ships found on the high seas, or in the belligerents' territorial waters, and enemy cargoes. But such seizure does not, according to British prize law, affect the ownership of the thing seized. Before that can happen the thing seized, be it ship or goods, must be brought into the possession of a lawfully-constituted court of prize, and the captor must then ask for and obtain its condemnation as prize. The suit may be initiated by the representative of the capturing state, in this country by the Procurator-General. It is a suit in rem, and the function of the court is to inquire into the national character of the thing seized. If it is found to be of enemy character the duty of the court is to condemn it; if not, then to restore it to those entitled to its possession. The question of national character is made to depend on the ownership at the date of seizure, and is to be determined by evidence. The effect of condemnation is to divest the enemy subject of his ownership as from the date of the seizure, and to transfer it as from that date to the sovereign or to his grantees. The thing—the res—is then his for him to deal with as he thinks fit, and the proceeding is at an end.
As the right to seize is universally recognized so also is the title which the judgment of the court creates. The judgment is of international force, and it is because of this circumstance that courts of prize have always been guided by general principles of law capable of universal acceptance rather than by considerations of special rules of municipal law. Thus it has come about that in determining the national character of the thing seized the courts in this country have taken ownership as the criterion, meaning by ownership the property or dominium as opposed to any special rights created by contracts or dealings between individuals, without considering whether these special rights are or are not, according to the municipal law applicable to the case, proprietary rights or otherwise. The rule by which ownership is taken as the criterion is not a mere rule of practice or convenience; it is not a rule of thumb. It lays down a test capable of universal application, and therefore peculiarly appropriate to questions with which a court of prize has
to deal. It is a rule not complicated by considerations of the effect of the numerous interests which under different systems of jurisprudence may be acquired by individuals either in or in relation to chattels. All the world knows what ownership is, and that it is not lost by the creation of a security upon the thing owned. If in each case the court of prize had to investigate the municipal law of a foreign country in order to ascertain the various rights and interests of every one who might claim to be directly or indirectly interested in the vessel or goods seized, and if in addition it had to investigate the particular facts of each case (as to which it would have few, if any, means of learning the truth), the court would be subject to a burden which it could not well discharge.
There is a further reason for the adoption of the rule. If special rights of property created by the enemy owner were recognized in a court of prize, it would be easy for such owner to protect his own interests upon shipment of the goods to or from the ports of his own country. He might, for example, in every case borrow on the security of the goods an amount approximating to their value from a neutral lender and create in favor of such lender a charge or lien or mortgage on the goods in question. He would thus stand to lose nothing in the transaction, for the proceeds of the goods if captured would, if recovered by the lender, have to be applied by him in discharge of his debt. Again, if a neutral pledgee were allowed to use the prize court as a means of obtaining payment of his debt instead of being left to recover it in the enemy's courts, the door would be opened to the enemy for obtaining fresh banking credit for his trade, to the great injury of the captor belligerent.
Acting upon the principle of this rule, courts of prize in this country have, from before the days of Lord Stowell, refused to recognize or give effect to any right in the nature of a "special" property or interest or any mortgage or contractual lien created by the enemy whose vessel or goods have been seized. Liens arising otherwise than by contract stand on a different footing and involve different considerations; but even as to these it is doubtful whether the court will give effect to them. Where the goods have been increased in value by the services which give rise to the possessory lien, it appears to have been the practice of the court to make an equitable allowance to the national or neutral lienholder in réspect of such services. In the judgment in The Frances (8 Cranch, 418), speaking of freight, it is said:
On the one hand the captor, by stepping into the shoes of the enemy owner of the goods, is personally benefited by the labor of a friend, and ought, in justice, to make
him proper compensation: and on the other, the shipowner, by not having carried the goods to the place of their destination, and this in consequence of the act of the captor, would be totally without remedy to recover his freight against the owner of the goods.
It, however, is unnecessary to deal with the question of liens arising apart from contract, the present case being one of pledge founded on a contract made with the enemy.
When the authorities are examined it will be found that they bear out the view that enemy ownership is the true criterion of the liability to condemnation. The case of The Tobago (5 Ch. Rob., 218) is in point. There the claimant was a British subject. In time of peace he had honestly advanced money to a French shipowner to enable the latter to repair his ship, which was disabled, and by way of security he had taken from the owner a bottomry bond. Afterwards war broke out with France and the vessel was captured. In the proceedings in the Prize Court for condemnation the holder of the bottomry bond asked that his security might be protected, but Lord Stowell, after observing that the contract of bottomry was one which the Admiralty Court regarded with great attention and tenderness, went on to ask: "But can the court recognize bonds of this kind as titles of property, so as to give persons a right to stand in judgment, and demand restitution of such interests in a court of prize?" And he states that it had never been the practice to do so. He points out that a bottomry bond works no change of property in the vessel, and says:
If there is no change of property, there can be no change of national character. Those lending money on such security, take this security subject to all the chances incident to it, and amongst the rest, the chances of war.
The decision in The Mary (9 Cranch, 126) is to the same effect. Similarly, in The Aina (1 Spinks's Prize Cases, 8) the court refused to recognize or give effect to a mortgage on the ship captured, and the same point arose and was similarly decided in The Hampton (5 Wall., 372). Again, in The Battle (6 Wall., 498) the court refused to recognize a maritime lien for necessaries, a decision which was followed in The Rossia (2 Russ. and Jap. Prize Cases, 43). The Ariel (11 Moo. P. C., 119) was the converse case of an attempt to obtain condemnation, not of enemy goods, but an enemy lien on goods; it failed on the same principle. In that case Sir John Patteson said: "Liens, whether in favor of a neutral on an enemy's ship, or in favor of an enemy on a neutral ship, are equally to
be disregarded in a court of prize." All these cases were fully discussed by the President in The Marie Glaeser (31 The Times L. R., 8;  P. 218).2
Passing to cases which more resemble the present case, there is The Marianna (6 C. Rob., 24), in which the court refused to give effect to a contract of pledge on goods consigned to the agent of the pledgee. "Captors," says Sir W. Scott in that case, "are supposed to lay their hands on the gross tangible property, on which there may be many just claims outstanding, between other parties, which can have no operation as to them. If such a rule did not exist, it would be quite impossible for captors to know upon what grounds they were proceeding to make any seizure. * * * The doctrine of liens depends very much on the particular rules of jurisprudence which prevail in different countries. To decide judicially on such claims would require of the court a perfect knowledge of the law of covenant, and the application of that law in all countries, under all the diversities in which that law exists. From necessity, therefore, the court would be obliged to shut the door against such discussions and to decide on the simple title of property, with scarcely any exceptions." There is The Frances (8 Cranch, 418), in which the court refused to recognize or give effect to the rights of a consignee under the bill of lading for advances against the goods to which the bill of lading related. In that case the court laid it down that
In cases of liens created by the mere private contract of individuals, depending upon the different laws of different countries, the difficulties which an examination of such claims would impose upon the captors, and even upon the prize courts, in deciding upon them, and the door which such a doctrine would open to collusion between the enemy owners of the property and neutral claimants, have excluded such cases from the consideration of those courts.
There is another American case, The Carlos F. Roses (177 U. S. Rep., 655), in which the claim put forward by a neutral who had advanced money upon a cargo on a captured ship and who had received bills of lading covering the shipment was rejected.
It is difficult to distinguish the facts in any of the three cases last mentioned from the facts of the present claim by Messrs. Schröder and Co. Some stress was laid by the appellants upon the dissenting judgments in The Carlos F. Roses (supra), but a perusal of these judgments will show that they proceeded upon the assumption that in the circum
2 Printed in this JOURNAL for April, 1915, p. 531.
stances the general property in the goods had passed to the holder of the bills of lading. The case was decided before the judgment in Sewell v. Burdick (supra). Finally, The Hampton (5 Wall., 372) is a case in which the claim of a mortgagee on a ship was rejected.
Before adverting to the arguments by which the appellants seek to displace this weight of authority it is necessary to deal with a contention put forward by them that by their title as pledgees they are clothed with a sufficient ownership to bring their case within the rule. This contention is based upon the right of sale accorded to a pledgee by the law of England, by which, in the event of default by the pledgor in payment of his debt, the pledgee can sell the pledge without first having recourse to a court of law for authority to do so. This right, it is said, creates a "special" property in the pledge in favor of the pledgee and is a right in re constituting or equivalent to ownership and distinguishable in character from the mere right in rem possessed by a lien holder. It is first to be observed of this right to sell without recourse to a court of law that it is peculiar to the English law of pledge. It is thus precisely one of those matters which a prize court should leave out of consideration when applying to its decision general principles common to all systems of law to the exclusion of principles of municipal law.
The subject was very fully examined by Chancellor Kent in Lord Stowell's time in 1805, in a learned judgment declaring the decision of the Supreme Court of the State of New York (Cortelyou v. Lansing, 2 Cairnes' Cases in Error, p. 202): "I believe," he says, "that there is no country at present, unless it be England, that allows a pledge to be sold but in pursuance of a judicial sentence."
Secondly, it is to be observed that if the right clothes the pledgees with ownership, it precludes the court from making any decree at all of condemnation. The ownership by which a court of prize is guided cannot subsist both in the pledgees and in the pledgors.
If it exists in the appellants in the present case no decree can be made against them, for they are British subjects, and the interest left in the enemy subject cannot be condemned, for ex hypothesi it is not an interest which includes ownership. See The Ariel (11 Moo. P. C., 119) in which it was laid down that as a court of prize ignores a lien in favor of a neutral on an enemy's ship, so will it ignore a lien in favor of an enemy on a neutral ship. But when the nature of the right of a pledgee to sell is examined it will be seen that the so-called "special" property which it is said to create is in truth no property at all. This has been recog