lished principles of prize law that the national character of goods cannot be changed during the course of a voyage, or as is commonly said, in transitu, or after the date when hostilities have become imminent. Consequently a transfer of goods by sale or otherwise from an enemy to a neutral during the existence of war, or from a prospective enemy when war has become imminent, is considered invalid and the ownership is deemed to continue as it was at the time of shipment until the actual delivery. This customary rule has been incorporated in the prize codes and regulations of many States and was strictly applied by the Prize Courts of many of the belligerents during the World War.

Sec. 367. Transfers Before Outbreak of War. Case of the "Southfield." The question first came before the British Prize Court during the late war in the case of the Southfield,1 which involved the validity of the capture of certain goods which had been sold by German merchants to Dutch merchants between July 20 and 30, 1914, and which were seized on a British ship on August 4 after the outbreak of war between Great Britain and Germany. The Dutch merchants had paid for the goods and had resold them to customers of their own before the outbreak of the war and had apparently from first to last acted with complete bona fides. The Crown, however, claimed condemnation of the goods on the ground, as alleged, that the transfer of ownership had been made when war was imminent and expected and that the sellers knew it and made the sale in order to protect the goods against probable capture. After adverting to the decision of Lord Stowell in the case of the Vrow Margarita (1 C. Rob. 336; 1 Eng. P. C. 149), the authority of Judge Story in his Principles and Practice of Prize Courts (Pratt's ed. pp. 6465) and the decision of the Privy Council in the case of the Baltica (11 Moo. P. C. 141; 2 Eng. P. C. 628), where the general rule had been laid down that transfers of goods made during the imminence or expectation of war were invalid as against the right of capture, Sir Samuel Evans came to the conclusion that the vendors did not have in contemplation the outbreak of war between Germany and Great Britain when they sold the goods and consequently the transfer of ownership was not invalid and the goods must be released. In the light of subsequent events, he said, war with Great Britain might be spoken of as imminent "regarded from the point of view of time, in the last two weeks 'III Lloyd 404; I Br. & Col. Pr. Cas. 332.

of July"; but there "was no evidence that it was regarded as imminent in its proper meaning of 'threatening or about to occur,' by German merchants at that time." As throwing light upon the facts, he referred to Headlam's History of Twelve Days. Sir Samuel also took occasion to point out that in this case he was dealing with a transfer of goods and not of vessels and that "the special and highly artificial rules as to the transfer of vessels during or preceding a state of war" as laid down in the Declaration of London were inapplicable to goods or merchandise.

Sec. 368. The Same. Case of the "Daksa." In the case of the Daksa, which involved the validity of the seizure by the British on August 10, 1914, of a quantity of barley which had been sold while at sea by its German owners on August 1 to French purchasers when war between Germany and Austria on the one hand and France on the other was imminent, the Judicial Committee affirmed the decision of the Prize Court at Gibraltar that while the transfer had been made in fraud of the rights of French captors, the parties did not have in mind any expectation of war between Great Britain and Germany and therefore the transfer was not invalid as against the British captors. The opinion of Sir Samuel Evans in the case of the Southfield was approved by the Judicial Committee, which emphasized that a transfer induced by apprehension of war is not void; it merely cannot be set up against those in fraud of whose rights it is deemed to have been made. In this case the transfer could not be deemed to have been in fraud of their rights of British captors, because there was nothing to show or to establish a presumption that the transferor was induced to make the transfer because of apprehension of war between Great Britain and Germany. Lord Parker discussing the effect of such transfers and the onus and nature of proof to establish innocence, said:

"First, where a transfer of goods at sea is induced by apprehension on the part of the transferor at the outbreak of hostilities between the State to which he owes allegiance and another State, such transfer is deemed to be in fraud of the belligerent rights of the latter State; and should such hostilities subsequently arise, and the goods be seized as prize, the transferee cannot at any rate if he were aware of the apprehension which induced the transfer-set up his own title in order to shew that the goods had at the date of seizure lost their enemy character. Secondly, if at the date of transfer the circumstances were such as to give rise to a general apprehension of war, the onus is on the transferee to prove the complete innocence of the transaction. It will not

1 V, ibid., 317; II, ibid., 358.

be enough to prove his own innocence. He must prove also that the contract was not induced by apprehension of war on the part of the transferor. Thirdly, the transferee may discharge this onus by shewing that the transfer was pursuant to a contract made at a time when no such hostilities were apprehended."1

Sec. 369. Necessity of Delivery. Case of the "Kronprinsessan Margareta." In the case of the Kronprinsessan Margareta and other vessels 2 Sir Samuel Evans reaffirmed and applied the "well-established" rule of English prize law that the national character of goods cannot be changed during or in imminence of war so as to defeat the belligerent right of capture. Referring to the character of the rule, he said:

"As Lord Kingsdown said, in the judgment delivered in the Privy Council in the Baltica (1857), (11 Moo. P. C. 141, at pp. 145, 146; 2 Eng. P. C. 628, at pp. 630, 631), the general rule is open to no doubt. He there stated it in precise and unambiguous terms as follows: 'A neutral while a war is imminent or after it has commenced is at liberty to purchase either goods or ships (not being ships of war) from either belligerent, and the purchase is valid, whether the subject of it be lying in a neutral port or in an enemy's port. During a time of peace, without prospect of war, any transfer which is sufficient to transfer the property between the vendor and vendee, is good also against a captor, if war afterwards unexpectedly break out. But, in case of war, either actual or imminent, this rule is subject to qualification, and it is settled that in such case a mere transfer by documents which would be sufficient to bind the parties, is not sufficient to change the property as against captors, as long as the ship or goods remain in transitu.'

"He discusses two alternative grounds for the rule, one being that, while the ship is on the seas, the title of the vendee cannot be completed by actual delivery; and the other that the ship and goods, having incurred the risk of capture by putting to sea, shall not be permitted to defeat the inchoate right of capture by belligerents until the voyage ends. He gives the preference to the former ground, and amplifies it in the following passage: 'Such transactions during war, or in contemplation of war, are so likely to be merely colourable, to be set up for the purpose of misleading, or defrauding captors, the difficulty of detecting such frauds, if mere paper transfers are held sufficient, is so great that the Courts have laid down as a general rule, that such transfers without actual delivery, shall be insufficient; that in order to defeat the captors the possession as well as the property must be changed before the seizure.''

He added that even if the doctrine of the common law governing the passing of property in time of peace were applicable in the

1Compare in this connection the rule laid down by the Privy Council in the case of the Edna (supra, Sec. 315), relative to the nature of proof required in respect to the transfer of vessels.

'VI Lloyd 222; II Br. & Col. Pr. Cas. 409.

present case, he would hold that the property had not passed to the neutral claimants and would have to be condemned. Upon appeal the decision was affirmed by the Judicial Committee. Lord Sumner after referring to the rule "which refuses to recognize transfers of the ownership of moveables afloat from an enemy transferor to a neutral transferee when unaccompanied by actual delivery of the goods" as one which had been well settled for about one hundred and fifty years, thus described the history and nature of the rule:

"The rule against recognising transfers of enemy goods while at sea, if unaccompanied by actual delivery and transfer of possession, is so well established and is now so ancient that its authority cannot be questioned or its utility impugned for the purpose of a judicial determination. Its application assumes that the circumstances of the shipment and the dealings with the shipping documents, and otherwise, are not such as to make the shipment itself an actual delivery of the goods to the transferee through his agent the carrier. It assumes also that a documentary transfer has taken place in good faith by a real and not a sham transaction, and that in pursuance of that transfer rights have been acquired by the transferee which in other courts not bound by such a rule would be valid and enforceable. With sham transactions Courts of Prize would deal in another fashion; with incomplete transactions insufficient to transfer rights no Court would deal at all. The expression 'mere paper transaction,' sometimes used, does not imply that something unreal or ineffectual in itself is under discussion. It serves to draw attention to the fact that the transaction is unaccompanied by any dealing with the goods themselves, such as by its overt or notorious character would serve to inform the captor as to the subject which he seizes and the nature of the right, if any, which he may be entitled to acquire in consequence. The history and the theory of the rule, neither of which is now very clear, are too inconclusive to add weight to the rule itself or throw light on its true application. It appears to have been regarded as a particular example of a wider principle that the national character of moveables cannot be changed while they are at sea by any independent dealings or occurrences. Thus in the Negotie en Zeevaart, decided on appeal in 1782, the question was whether a ship, which went to sea a Dutch ship, had ceased to bear that national character when she was taken, because the Dutch colony of Demerara, from which she sailed, had before her capture become British by capitulation to the British Crown. It was held that she had not. This was followed in the Danckebaar Africaan, where the question was whether the capitulation of the Cape of Good Hope, which had taken place after the ship sailed, but before her capture, and had made British subjects of the Dutch owners, had not also entitled them to claim their ship on arrival at the Cape as prize on the ground that there had been in fact a capture of British property. So strict was the rule even then that the claimants, although British subjects themselves at the time of capture, could not

VIII, ibid., 248; III, ibid., 803.

be heard to assert that title against the presumptions arising when the ship sailed. Shortly afterwards it was accepted in the Vrow Margaretha that there was no recorded instance of a claim being sustained for goods purchased of an enemy in transit in time of war, for the practice of the High Court to look only to the time of shipment was already invariable."

Sec. 370. Transfers in Transitu. Case of the "Dirigio" and Other Vessels. In this case Lord Sterndale held that the rule of prize law that property cannot pass from an enemy to a neutral during transit does not apply in certain cases.2

Specifically, he refused to condemn certain goods shipped by a German firm in New York during the war to a neutral firm in Copenhagen with the intention that they should be forwarded to Germany. The Crown relied upon the established rule of prize law that property cannot pass from an enemy to a neutral during transit. The goods being enemy property at the time of shipment they remained such at the time of seizure and were not entitled to the protection of the Declaration of London. But on the ground that the shipments came within the exceptions referred to, they were released. Adverting to the third exception to the general rule, namely, where the documents are not handed over owing to accidents to business and not because of any intention on the part of the vendors to reserve the jus disponendi, Lord Sterndale stated that "the question of when property passes is one of the intention of the parties" and he thought the intention here was that it should pass to the neutral consignees when the goods were placed on board the ship and that from that moment the master held the goods as bailee for the person named in the bill of lading. This was equivalent to delivery and differed from the case of goods on a ship, which were still the property of the enemy at the time of sailing and which were transferred during the course of the voyage.

Sec. 371. The Same. Case of the “United States." On the other hand, the British Prize Court interpreted the rule respecting transfers in transitu to apply to other transfers than those merely made at sea between shipment and delivery. Thus in the case of the United States Sir Samuel Evans, referring to some "concrete cases," said:

3

"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

1 VIII, ibid., 395; III, ibid., 430. They are mentioned, supra, Sec. 356. * VI, ibid., 170; II, ibid., 390.