File No. 300.115/11231

The Consul General at London ( Skinner ) to the Secretary of State

No. 3355

Sir: I have the honor to enclose herewith a print of a prize court judgment made public on December 18, 1916, in the course of which the president of the prize court states the following principle:

Where goods are sent by sea, captors’ rights cannot be defeated by a mere transfer of legal ownership, by documents, without actual delivery of the goods themselves; such rights cannot be defeated unless and until the actual possession of the goods, as well as the property in them, has been changed before the seizure.

Accordingly the president decided that large quantities of goods purchased in Germany by American firms, and detained while being shipped from Germany to the United States, were enemy property, as well as of enemy origin, and he ordered their detention until the conclusion of peace, with liberty to the Crown to apply for an order for their sale, and the detention of the proceeds.

I understand that an effort will be made by some of the claimants to appeal to the Privy Council.

I have [etc.]

Robert P. Skinner
[Enclosure—Extract]

Judgment of Prize Court in the case of the “United States,” printed in “Lloyd’s List” December 18, 1916

The President, in giving judgment said: The Crown claims an order for the detention or sale of certain goods seized on a voyage from Copenhagen to the United States on the double ground (a) that the goods were of enemy origin, and (b) that they were enemy property.

[Page 495]

The application is made under Article IV, of the Reprisals Order in Council of March 11, 1915.

It is disputed that the goods were of enemy origin. But the claimants contended that they were neutral property, on the ground that before seizure the property had passed from the respective vendors in Germany to the respective purchasers in America.

The goods were despatched by the parcel mail on the United States, a Danish vessel.

They were goods of multifarious kinds, and not such as would be sent by mail in times of peace. It is well known in this Court that since the war the mails have been used for the clandestine transmission of contraband and other goods and merchandise from foreign countries to Germany, and of goods and merchandise of various kinds from Germany to foreign countries. . . .

The Reprisals Order in Council deals with maritime commerce between belligerents (and of necessary consequence with that commerce in relation to neutrals also) in a state of war.

As I have pointed out before, it does not add to the articles which are confiscable and subject to condemnation as maritime prize of war. In that respect it deals more tenderly and generously with neutral commerce than was done under the old and existing law of strict blockade. Under the latter, ships and cargoes were condemned out and out as prize on breach or attempted breach of blockade.

Under the Reprisals Order in Council the ships are released, and the cargoes or their proceeds, if sale is ordered, are only detained until the conclusion of peace.

But although there is this important distinction between the results of the working of the Order, and of the strict application of the law of blockade, it is obvious that the Order deals with maritime commerce during war upon the analogy of the law of prize. Indeed, it is under the international law of prize that the Order, as one of Reprisal, derives its validity.

It is essential, therefore, to see how the question of the passing of property was regarded by the International Law of Prize.

Stating the rule quite shortly it is this: Where goods are sent by sea, captors, rights cannot be defeated by a mere transfer of legal ownership, by documents, without actual delivery of the goods themselves; such rights cannot be defeated unless and until the actual possession of the goods, as well as the property in them, has been changed before the seizure.

Such transfers have been described as transfers in transitu. This does not mean transfers made only while the goods are on the seas, between the shipment and the delivery. I take some concrete cases. If goods of a contraband nature had been bought by the enemy in America before shipment at New York, in circumstances where the legal ownership would remain in a neutral vendor according to the law in time of peace, they could still be captured on the voyage to Germany to the enemy purchaser, on the ground that they would be his on delivery, on whatever vessel, neutral or otherwise, they might be carried. So if goods of any kind so bought were shipped on an enemy vessel, or on a British or Ally ship they would be capturable. It would be no answer to say that the matter had been so arranged that by Municipal Law the property would not pass until the goods had safely reached the hands of the enemy. The goods would be regarded in such cases as enemy property.

So in regard to goods shipped from the enemy country; if purchased by neutrals during a state of war, the contract is held invalid, and the property is deemed to continue as it was at the time of shipment, until the actual delivery. (See Pratt’s Story on Prize Courts, page 64.)

Having regard to the doctrine of continuous voyage, it makes no material difference that at the one end or the other there is a transit by land. And just as goods from New York to Germany intended to be delivered to the enemy are regarded as “enemy property,” so goods from Germany to New York are also regarded as “enemy property,” qua the rights of the captors. . . .