File No. No. 763.72112/3491

The Secretary of State to Mr. Emil Schwarz of Messrs. Benjamin Schwarz & Sons, New York City

Sir: The Department has received your letter of April 11, 1917 wherein you state that you are a citizen of the United States; that for many years past you have conducted business in New York City in copartnership with several non-resident subjects of Austria-Hungary; that the active management of the business is solely in your hands and its operation is wholly in the United States; that your partners have contributed a certain amount of money to the copartnership capital, but take no active part in the management of the business, but receive a percentage of the profits for their contribution to the copartnership capital; that the firm’s business is the purchase and sale of merchandise; and that you desire, if possible, to continue business in the future in the same manner, as without the use of the capital contributed by your partners and the use of their credit, you will be seriously hampered in the operation of the business. Accordingly, you ask whether your rights or the rights of the firm, either in outstanding accounts or in the future operations of the business of the continental United States, are affected by the severance of diplomatic relations between the United States and Austria-Hungary, or will be affected in the event of war between the two countries.

It does not appear to the Department that the severance of diplomatic relations between the two Governments can, from a legal standpoint, affect the affairs of your firm to which you refer. The [Page 416] Department may call your attention to the rule generally enunciated by American courts that the effect of war is to dissolve a partnership between nationals of hostile nations. With respect to this matter the Department may refer you to the following cases: The William Bagaley , 5 Wall. 377; Matthews v.’ McStea, 91 U.S. 7; Griswold v. Waddington, 16 Johns. 438.

I am [etc.]

For the Secretary of State:
Frank L. Polk

Counselor