§ 154. American Judicial Authority. By the American act of October 6, 1917, to define, regulate, and punish trading with the enemy the word " enemy was defined to include among other things any "partnership or other body of individuals resident within enemy territory or doing business within such territory and any corporation incorporated within enemy territory or incorporated outside the United States and doing business in enemy territory." 1 But it contained no reference to corporations incorporated within the United States and in which enemy persons exercised the controlling interest. The assistant attorney-general of the United States, speaking on this point at a hearing before a sub-committee of Congress, said:

"We have specifically abstained in the bill from attempting to go behind the corporate charter. If the corporation is an American corporation, then it can do business in this country. . . . In England they attempted to go behind the charter of an English corporation and they attempted to hold that an English corporation which was controlled by German stockholders was an enemy within the purview of their Act, and they landed in inextricable confusion. . . . Here we have solved that by saying we will not go behind the corporate charter, no matter how many German stockholders there may be." 2

...

This view was in accord with American judicial authority. In the early case of the Society for the Propagation of the Gospel v. Wheeler Mr. Justice Story held that a British corporation composed of British shareholders might sue in the courts of the United States during the war of 1812, but the decision was based upon a technical point of pleading, and the opinion was no authority for the view that a domestic corporation composed of enemy aliens could not be an enemy itself. The decision was based on the ground that the averments as pleaded did not show that the members were actually attached to the enemy or resident in enemy territory, and the court could therefore reach the conclusion that "a British corporation could sue in our courts while we were at war with Great Britain, only by holding that the residence or national character of a corporation was not fixed by its place of inconporation, but that the courts may determine the character of the

1820.

"Hearings on H. R. 4960, 198, Sen. Doc. No. 111, 65th Cong., 1st Ses.
2 Gall. 105 (1814).

8

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corporation from the character of its members." 1 In the case of the Continental Tyre and Rubber Company v. Daimler referred to above, Lord Reading relied upon the decision of the United States Supreme Court in the case of United States v. Deveaux 2 for authority in refutation of the separate entity theory. In that case, he said, the Supreme Court decided that it could look beyond the corporate name and inquire into the character of the individuals who composed the corporation. The authority of this and the preceding case has recently been reëxamined at length by the New York supreme court in a case involving the right of a New Jersey corporation composed mainly of German subjects living in Germany, but a majority of the directors of which were residents of the United States, to bring an action in an American court during the existence of war between the United States and Germany.3 In upholding the right to bring the action the court expressed the opinion that the authority in the case of United States v. Deveaux had been much limited, if not overruled, by subsequent cases and that "at the present time the courts of this country are entirely wedded to the doctrine that the corporators of a corporation are conclusively presumed to be citizens of the same State as the corporation." The statements of Lord Reading and Lord Parker in the Daimler case, that the Supreme Court had laid down the principle that a court may look behind the corporate name to ascertain the character of the individuals composing it, was, said Justice Lehman, obviously not accurate,

"Throughout all these decisions," he added, "the courts have indicated practically unanimously that they regard a corporation as an entity separate and apart from its corporators; that its domicile is as a matter of law within the State of its creation; and that the courts will not regard it merely as an association of individuals or regard the domicile or character of the corporators as affecting the domicile or character of the corporation."

In so far, therefore, as the House of Lords announced a different rule in the Daimler case, it was not in accord with the doctrine of the American courts.

1 Quoted from the opinion of Lehman, J. of the New York supreme court, in the case of Fritz-Schultz Co. v. Raimes Co., 100 Misc. (N.Y.), 697 (1917). 2 5 Cranch 61.

3 Fritz-Schultz Co. v. Raimes Co., cited above.

The decision in this case was approved in Stumpf v. Scheiber Brewing Co., 242 Fed. 80 (1917). Cf. also Posselt v. D'Espard, 100 Atl. 893 (N.J. 1917).

§ 155. Trade with Enemy Houses in Neutral Territory Prohibited. British and French Policies at Variance. As has been said, the test at first adopted by the British government for determining enemy character for purposes of trade was the domicile of the person or house rather than his or its nationality. Thus by the proclamation of September 9, 1914, the expression "alien enemy" employed therein was declared to mean any person or body of persons of whatever nationality resident or carrying on business in the enemy country, but it did not include persons of enemy nationality who were neither resident nor carrying on business in the enemy country. In the case of incorporated companies, enemy character was declared to attach only to those incorporated in enemy territory. The proclamation also contained a proviso to the effect that where an enemy had a branch locally situated in British, allied, or neutral territory, not being neutral territory in Europe, transactions by or with such branch should not be treated as transactions by or with the enemy. According to this proclamation it was entirely lawful for British subjects to trade with enemy persons or branch houses in neutral countries outside Europe. Such persons or houses were deemed to possess a neutral nationality. But under the French rule, which made nationality rather than domicile the test of enemy character, trade between persons resident in France and enemy persons or houses in neutral countries was trade with the enemy and therefore unlawful.1

1 In August, 1915, the French government issued a circular containing a list of houses considered as being of enemy nationality or enjoying in respect to the enemy the position of personnes interposées, and situated in neutral countries. The list was subdivided into four parts corresponding to the principal divisions of the world, in each of which neutral countries were arranged in alphabetical order and under each of which followed a list of houses with which Frenchmen were forbidden to trade. Other houses were added from time to time, and French traders were warned that the fact that an enemy house was not on the list did not legalize trade with it. In trading with houses in neutral countries they would do well, therefore, to satisfy themselves of their innocent character. As to houses in Switzerland certain relaxations from the rule were made. The list as originally published filled eight pages in the Journal Officiel (August 6, 1916, pp. 7052 ff.) and it became, says Clunet, the “breviary" of French traders (Clunet, 1916, p. 1510). The French charged that the policy of "black listing" enemy firms in neutral countries had already been adopted by the Germans, and the Lokal-Anzeiger of April 1, 1916, was quoted as authority for the statement that German watch-makers had boycotted Swiss watch-makers who were suspected of selling watches to enemy houses. Clunet, Le Commerce avec L'Ennemi et les Listes Noires, Jour. de Droit Int., 1916, p. 1507. Italy likewise forbade its nationals at home as well as those residing abroad to trade with "black-listed" houses in neutral countries.

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As compared with British merchants, French merchants were thus placed at a disadvantage, and there was some complaint that the allied governments were not pursuing a common policy in respect to trade with the subjects of a common enemy resident in neutral territory.

§ 156. British "Black List" Legislation. The British government thereupon decided to adopt the policy of France, and by an Act of Parliament of December 23, 1915,1 the government was authorized to prohibit by proclamation all persons residing in the United Kingdom from trading with " any persons or bodies of persons not resident or carrying on business in enemy territory or in territory in the occupation of the enemy

whenever by reason of the enemy nationality or enemy association of such persons . . . it appears expedient to His Majesty so to do." The act further provided that any list of persons or bodies of persons with whom such trading was prohibited might be varied or added to by an order made by the Lords of the Council on the recommendation of a secretary of state. The provisions of the various trading with the enemy acts were extended to apply to all such persons or bodies of persons. Thus the ancient Anglo-American test for determining the status of enemy persons was abandoned, and the continental test of nationality was substituted. "Enemy persons" henceforth were to include not only those residing in enemy territory, but also persons of "enemy nationality and association" residing in neutral countries, and the same penalties were prescribed for trading with the latter as with the former. In pursuance of the authority thus granted, the government proceeded to issue a list of persons and firms in neutral countries, with which trade was forbidden. The total number of such persons and firms is said to have exceeded fifteen hundred.2 As originally published, the "black list" contained the names 1 Text in Diplomatic Correspondence with Belligerent Countries, European War, No. 3, p. 54.

The lists were published from time to time in the London Gazette. According to Syren and Shipping, an English marine journal, the number of "black-listed persons and firms in the various countries was as follows: Spain, 167; Brazil, 140; Netherlands, 120; Argentina and Uruguay, 95; Morocco, 88; Portuguese East and West Africa, Guinea, and Rio Muni, 87; Japan, 86; United States, 85; Norway, 83; Portugal, 79; Sweden, 72; Netherlands and East Indies, 70; Ecuador, 69; Persia, 56; Greece, 59; Philippines, 44; Peru, 41; Chili, 35; Bolivia, 22; Cuba, 10; Central America, 5; Paraguay, 3; Colombia, 1. It will be noted that Japan, an ally of Great Britain, is included in the list, while Switzerland is omitted.

of eighty-five persons and firms in the United States.1 The publication of the "black list" caused the persons and firms affected to address protests to their governments, and in the United States, in particular, it provoked widespread criticism.

§ 157. The American Representation and the British Reply. On January 25, 1916, the secretary of state of the United States in a communication 2 to the American ambassador at London stated that the new Trading with the Enemy Act was pregnant with possibilities of undue interference with American trade." The act had been formed, he said, without " a proper regard for the right of persons domiciled in the United States, whether they be American citizens or subjects of countries at war with Great Britain, to carry on trade with persons in belligerent countries." The ambassador was requested to call the attention of Sir Edward Grey to the " grave apprehensions entertained by the American government and to present to him a formal reservation of the right of the government to protest against the application of the act in so far as it affected the trade of the United States. In a communication dated February 16, 1916,3 the British foreign office explained the purpose and scope of the act and gave assurances that the powers which it conferred on the government would be exercised with every possible regard for neutral commerce. The act was framed, it was said, with the object of bringing British trading with the enemy regulations into greater harmony with those adopted by the French government since the commencement of the war,

1 The list is published in the New York Times of July 19, 1916. The information on the basis of which the American firms were black-listed appears to have been furnished by their agents in Great Britain. The board of trade requested all such agents to furnish information concerning the nationality of the persons composing their firms, together with lists of their stockholders and their addresses, the number of shares held by each, etc. The requests for this information called forth strong protests from the American firms to which they were addressed. Cf. the Cong. Record of January, 1916, p. 106.

2 The text of this communication and the other correspondence between the American and British governments regarding the so-called "black list" measure, down to May 10, 1915, may be found in a white paper issued by the department of state, entitled Diplomatic Correspondence with Belligerent Countries relating to Neutral Rights and Duties, European War, No. 3, printed and distributed August 12, 1916, pp. 54-84. See also two British white papers entitled Trading with the Enemy (Extension of Powers) Act, 1915, Misc., No. 11 (1916), Cd. 8225, and No. 36 (1916), Cd. 8353.

Text, ibid., pp. 56-57.