wrecked; and that she was adapted and used as a signalling ship for military purposes. She has, therefore, forfeited the protection claimed under the convention.

The decree of the court is that the Ophelia, being an enemy ship, is condemned as lawful prize.

THE SOUTHFIELD

British Prize Court

Decided July 15, 1915

(The Times Law Reports, Volume 31, page 577)

The President in delivering judgment said:

The questions arising for decision depend upon the effect of the intervention of a state of war upon the rights of capture of a belligerent in respect of goods sold by an enemy to a neutral while the goods and the ship in which they are laden are in transitu. The goods consisted of quantities of barley shipped before the war at a Russian port upon a British ship and consigned to a German port. During the voyage the goods were sold by enemy merchants to neutral merchants-viz., to two Dutch merchants, Heukers and Barghoorn, carrying on business at Groningen. The transactions relating to the sale to Heukers fell within the period from July 20 to July 28, 1914, and those relating to the sale to Barghoorn within the last week in July, 1914. Apart from any question depending upon the intervention of war, it is not disputed that the property in the goods had passed to the neutral purchasers before the capture. The contention of the Crown was that when war was declared between this country and Germany on August 4, 1914, the goods which were still in transitu became subject to capture by the Crown, and were confiscable at the time of the capture and seizure on August 8, notwithstanding the prior sales to the neutrals, on the ground that at the time of such sales war was imminent, or in contemplation of the enemy vendors.

It is important to examine closely the principle which governs the right of capture of goods transferred in transitu and to ascertain accurately its limits, as it is sometimes apt to be loosely stated.

In order to deduce the rule, it will be sufficient, I think, to refer to

two leading cases, and to one authorized text book. I take them in order of date.

In the Vrow Margaretha (1 C. Rob., 336) Lord Stowell pronounces upon the subject as follows:

In the ordinary course of things in time of peace-for it is not denied that such a contract may be made, and effectually made (according to the usage of merchants)—— such a transfer in transitu might certainly be made. It has even been contended that a mere delivering of the bill of lading is a transfer of the property. But it might be more correctly expressed, perhaps, that it transfers only the right of delivery; but that a transfer of the bill of lading, with a contract of sale accompanying it, may transfer the property in the ordinary course of things, so as effectually to bind the parties, and all others, cannot well be doubted. When war intervenes another rule is set up by courts of admiralty, which interferes with the ordinary practice. In a state of war, existing or imminent, it is held that the property shall be deemed to continue as it was at the time of shipment till the actual delivery; this arises out of the state of war, which gives a belligerent a right to stop the goods of his enemy. If such a rule did not exist, all goods shipped in an enemy's country would be protected by transfers which it would be impossible to detect. It is on that principle held, I believe, as a general rule, that property cannot be converted in transitu, and in that sense I recognize it as the rule of this court. But this arises, as I have said, out of a state of war, which creates new rights in other parties, and cannot be applied to transactions originating, like this, in a time of peace.

In the work of Mr. Justice Story on The Principles and Practice of Prize Courts, that celebrated jurist states the rule in the following passage (Pratt's Story, pp. 64-65):

* *

In respect to the proprietary interests in cargoes, though, in general, the rules of the common law apply, yet there are many peculiar principles of prize law to be considered; it is a general rule that, during hostilities, or imminent and impending danger of hostilities, the property of parties belligerent cannot change its national character during the voyage, or, as it is commonly expressed, in transitu. This rule equally applies to ships and cargoes; and it is so inflexible that it is not relaxed, eve in owners who become subjects by capitulation after the shipment and before the capture. The same distinction is applied to purchases made by neutrals of property in transitu, if purchased during a state of war, existing or imminent and impending danger 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. It is otherwise, however, if a contract be made during a state of peace, and without contemplation of war; for, under such circumstances, the prize courts will recognize the contract and enforce the title acquired under it. The reason why courts of admiralty have established this rule as to transfers in transitu during a state of war or expected war is asserted to be, that if such a rule did not exist, all goods shipped in the enemy's country would be protected by transfers, which it would be impossible to detect.

*

Lastly, in The Baltica (11 Moo. P. C., 141), in the judgment of the Lords of the Privy Council sitting to hear appeals in prize, Lord Kingsdown (then Mr. Pemberton Leigh) deals with the rule as applicable to ships and goods in the following passages:

The general rule is open to no doubt. 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.

With respect to these principles, their Lordships are not aware that it is possible to raise any controversy; they are the familiar rules of the English prize courts, established by all the authorities, and are collected and stated, principally from the decisions of Lord Stowell, by Mr. Justice Story, in his "Notes on the Principles and Practice of Prize Courts," a work which has been selected by the British Government for the use of its naval officers as the best code of instruction in the prize law. The passages referred to are to be found on pp. 63, 64 of that work.

In order to determine the question it is necessary to consider upon what principle the rule rests, and why it is that a sale which would be perfectly good if made while the property was in a neutral port, or while it was in an enemy's port is ineffectual if made while the ship is on her voyage from one port to the other. There seem to

be but two possible grounds of distinction. The one is, that while the ship is on the seas, the title of the vendee cannot be completed by actual delivery of the vessel or goods; the other is, 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 the belligerent Powers, until the voyage is at an end.

The former, however, appears to be the true ground on which the rule rests. Such transactions during war, or in contemplation of war, are so likely to be merely colorable, 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. It is true, that in one sense, the ship and goods may be said to be in transitu till they have reached their original port of destination; but their Lordships have found no case where the transfer was held to be inoperative after the actual delivery of the property to the owner.

It might be argued that according to these authorities transfers in transitu are invalid against belligerent captors upon the intervention of war unless there is actual delivery before capture; or, in other words, that if war has intervened no transfer by documents alone can defeat

the right of capture. But in my opinion that proposition is too wide, and is not an accurate delimitation of the true rule. In the passages cited Lord Stowell speaks of "a state of war existing or imminent"; Mr. Justice Story of "a state of peace, without contemplation of war," and of “a state of war existing or imminent, and impending danger of war"; and Lord Kingsdown of "war, either actual or imminent," of "war unexpectedly breaking out" (contrasting it with "a time of peace, without prospect of war"), and of "transactions during war or in contemplation of war."

It is important to note the reasons for the rule which are elaborated by Lord Kingsdown thus:

Such transactions during war, or in contemplation of war, are so likely to be merely colorable, 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.

In my view the element that the vendor contemplated war, and had the design to make the transfer in order to secure himself and to attempt to defeat the rights of belligerent captors, is necessarily involved in the rule which invalidates such transfers. Sales of goods upon ships afloat are now of such common occurrence in commerce that it would be too harsh a rule to treat such transfers as invalid unless such an element existed.

I have been considering the rule in its application to the sale or transfer of goods, but it is well to note that special and highly artificial rules as to the transfer of vessels during or preceding a state of war are now laid down in the Declaration of London of 1909 as agreed to by the representatives of the Powers and as applied by the Orders in Council in this country. But these do not apply to goods or merchandise.

As to the facts in these two cases, it is abundantly clear that the neutral purchasers acted with complete bona fides throughout: they paid for the goods, and resold them to neutral customers of their own before war was declared. This would not necessarily conclude the matter. But I am also satisfied that the vendors did not have the war between their country and this country (to which the ship carrying the goods belonged) in contemplation when they sold the goods. The imminence of war between Germany and Russia has no materiality in considering these cases. In the light of after events the war with this country may

be spoken of as having been imminent, regarded from the point of view of time, in the last two weeks of July; but there is no evidence that it was regarded as imminent in its proper meaning of "threatening or about to occur" by them at that time; not only so, but I find after investigation in various directions, and on grounds which I deem satisfactory, that it was not in fact so regarded by them. What the hidden anticipation of the Government of the German Empire might have been upon the subject, it is not for me to speculate; but I may express my humble opinion that our intervention in the war upon the invasion of Belgium in defence of treaty obligations against the breach of such obligations by the invaders was a complete surprise even to their government.

Documents and facts which throw light upon the history of the days I have been dealing with between July 24 and August 4, 1914, are, L think, admirably collected and stated in a work called The History of Twelve Days, by Mr. J. W. Headlam.

On the grounds that the German vendors had no thought of the imminence of war between Germany and this country, and did not have such a war in contemplation at any time while the transactions of sale were taking place or before they were completed, I hold that the sales to the two Dutch merchants were valid and that the goods were not confiscable. And I decree the release to them respectively of the net proceeds of the sale of their respective goods, which are now in court.