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U.S. Supreme Court

United States v. Grossmayer, 76 U.S. 9 Wall. 72 72 (1869)

United States v. Grossmayer

76 U.S. (9 Wall.) 72




1. Intercourse during war with an enemy is unlawful to parties standing in the relation of debtor and creditor as much as to those who do not.

2. Conceding that a creditor may have an agent in an enemy's country to whom his debtor there may pay a debt contracted before the war, yet the agent must be one who was appointed before the war. He cannot be one appointed during it.

3. A transaction originally unlawful -- such as a person's unlawful trading in behalf of another with an enemy -- cannot be made lawful by any ratification.

Elias Einstein, a resident of Macon, Georgia, was indebted, when the late rebellion broke out, to Grossmayer, a resident of

Page 76 U. S. 73

New York, for goods sold and money lent, and while the war was in progress a correspondence on the subject was maintained through the medium of a third person who passed back and forth several times between Macon and New York. The communication between the parties resulted in Grossmayer's requesting Einstein to remit the amount due him in money or sterling exchange, or, if that were not possible, to invest the sum in cotton and hold it for him until the close of the war.

In pursuance of this direction -- and, as it is supposed, because money or sterling exchange could not be transmitted -- Einstein purchased cotton for Grossmayer, and informed him of it, Grossmayer expressing himself satisfied with the arrangement. The cotton was afterwards shipped as Grossmayer's to one Abraham Einstein at Savannah, who stored it there in his own name in order to prevent its seizure by the rebel authorities. It remained in store in this manner until the capture of Savannah in December, 1864, by the armies of the United States, when it was reported to our military forces as Grossmayer's cotton, and taken by them and sent to New York and sold.

Grossmayer now preferred a claim in the Court of Claims for the residue of the proceeds, asserting that he was within the protection of the Captured and Abandoned Property Act.

That court considering that the purchase by Elias Einstein for Grossmayer was not a violation of the war intercourse acts set forth in the preceding case, decided that he was so, and gave judgment in his favor. The United States appealed.

Page 76 U. S. 74

MR. JUSTICE DAVIS delivered the opinion of the Court.

Grossmayer insists that he is within the protection of the Captured and Abandoned Property Act, but it is hard to see on what ground he can base this claim for protection. It was natural that Grossmayer should desire to be paid, and creditable to Einstein to wish to discharge his obligation to him, but the same thing can be said of very many persons who were similarly situated during the war, and if all persons in this condition had been allowed to do what was done in this case, it is easy to see that it would have produced great embarrassment and obstructed very materially the operations of the army. It has been found necessary, as soon as war is commenced, that business intercourse should cease between the citizens of the respective parties engaged in it, and this necessity is so great that all writers on public law agree that it is unlawful without any express declaration of the sovereign on the subject.

But Congress did not wish to leave anyone in ignorance of the effect of war in this regard, for as early as the 13th of June, 1861, it passed a Non-intercourse Act, which prohibited all commercial intercourse between the states in insurrection and the rest of the United States. It is true the President could allow a restricted trade if he thought proper, but insofar as he did

Page 76 U. S. 75

allow it, it had to be conducted according to regulations prescribed by the Secretary of the Treasury.

There is no pretense, however, that this particular transaction was authorized by anyone connected with the Treasury Department, and it was therefore not only inconsistent with the duties growing out of a state of war, but in open violation of a statute on the subject. A prohibition of all intercourse with an enemy during the war affects debtors and creditors on either side, equally with those who do not bear that relation to each other. We are not disposed to deny the doctrine that a resident in the territory of one of the belligerents may have, in time of war, an agent residing in the territory of the other to whom his debtor could pay his debt in money or deliver to him property in discharge of it, but in such a case, the agency must have been created before the war began, for there is no power to appoint an agent for any purpose after hostilities have actually commenced, and to this effect are all the authorities. The reason why this cannot be done is obvious, for while the war lasts, nothing which depends on commercial intercourse is permitted. In this case, if Einstein is to be considered as the agent of Grossmayer to buy the cotton, the act appointing him was illegal because it was done by means of a direct communication through a messenger who was in some manner not stated in the record able to pass, during the war, between Macon and New York. It was not necessary to make the act unlawful that Grossmayer should have communicated personally with Einstein. The business intercourse through a middleman, which resulted in establishing the agency, is equally within the condemnation of the law.

Besides, if, as is conceded, Grossmayer was prohibited from trading directly with the enemy, how can the purchase in question be treated as lawful when it was made for him by an agent appointed after his own disability to deal at all with the insurgents was created?

It is argued that the purchase by Einstein was ratified by Grossmayer, and that being so, the case is relieved of difficulty; but this is a mistaken view of the principle of ratification, for a transaction originally unlawful cannot be made any better by being ratified.

In any aspect of this case, whether the relation of debtor and creditor continued or was changed to that of principal and agent, the claimant cannot recover.

Page 76 U. S. 76

As he was prohibited during the war from having any dealings with Einstein, it follows that nothing which both or either of them did in this case could have the effect to vest in him the title to the cotton in question.

Not being the owner of the property, he has no claim against the United States.

The judgment of the Court of Claims is reversed and the cause is remanded to that court with directions to enter an order dismissing the petition.

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