Case ID: us-ct-cl_7/html/0097-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Davis", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(2 Court of Claims, p. 184; 8 Wallace R., p. 185.)
    George W. Lane, Appellee, v. The United States, Appellants.
    
      On the defendants’ Appeal.
    
    
      On fhe20th December, 1864, the claimant, resident within the loyal States, enters into an agreement with a Treasury agent to bring owl cotton from the insurrectionary States, which the Government agrees to purchase on arrival at Norfolk. The contract is supposed to be authorized by the Acts 13th July, 1861, and 2d July, 1864, (12 Slat. L., p. 255; 13 id., p. 377,) notwithstanding that the claimant resides in a loyal State. He receives apermit to pass through the lines, and does so, andproeures the cotton. On the voyage to Norfolk his vesselis stopped by naval officers. Before the cargo is released the toar ends, and the price of cotton falls. The vessel is libelled by the Government in a court of admiralty, but, on the final hearing, the libel is dismissed with costs, and the vessel with her papers ordered to be delivered to the owner. (This decree is not before the Supreme Court on the hearing of the appeal, but merely a finding of the fact by the court below.) The claimant brings his action on the ground that his services were equivalent to full performance, and that the defendants’ acts constituted a breach of their agreement. He also insists that the deirse of the court of admiralty dismissing the libel stops the Government from contesting the legality of the voyage. The Court of Claims sustains the action. Judgment for the claimant. The defendants appeal.
    
    
      I. Neither the acts of Congress nor the Treasury regulations thereunder authorized commercial intercourse during the rebellion, across the military-lines ; anda contract between aTreasury agent onbehalf of the Government and a person residing in a loyal State, that the latter should bring out cotton from an insurrectionary State for the joint benefit of the Government and himself was illegal and void. The traffic authorized by the Act 2d July, 1864, (13 Stat. L., p. 375, 5 8,) was traffic between the Government and one within the insurrectionary States, who at the time owned or controlled products there.
    H. How far a decree against the Government in a court of admiralty concludes it in another suit in another court, cannot be determined unless the record of the court of admiralty be before the Supreme Court on the appeal.
    
      Mr. Assistant Attorney-General Diclcey (with whom was Attorney- General Soar) for the appellants.
    
      Mr. T. J. D. Fuller for the appellee.
   Mr. Justice Davis

delivered the opinion of the court:

The object of this suit is to recover damages against the United States for an alleged breach of contract, made by the appellee, in December, 1864, with one Eisley, who was at the ■time the treasury agent at Norfolk, Virginia, for the purchase ■of the products of insurrectionary States. The case, as stated to the Court of Claims, is substantially this: that Eisley agreed to purchase, and Lane to sell and deliver within a reasonable time, at Norfolk, a large quantity of cotton, represented to be on the Chowan Eiver, in North Carolina, for which payment was to be made at the rate of three-fourths the sum per pound that similar grades of cotton were worth in New York on the day of its delivery in Norfolk. In order to carry out this agreement, Lane, alleging himself to be a resident of Baltimore, and a loyal citizen of the United States, purchased a steamer at the cost of eighteen thousand dollars, and, having obtained a military safe-conduct for himself, vessel, and crew to bring out the cotton, proceeded to Chowan Eiver, where he purchased and procured a valuable cargo of cotton, which he would have delivered in seasonable time at Norfolk, if the naval authorities of the United States had not forcibly seized and detained it. In course of time the property was released and restored to Lane; but he suffered a heavy loss in consequence of this detention, as cotton had declined in value, and when sold did not bring the price he could have got for it if he had been permitted to deliver it at Norfolk.

The United States are asked to make good this loss, caused, as it is charged, by the wrongful conduct of its naval officers.

It appears by the findings of the Court of Claims that Chowan Biver, in North Carolina, the place where the cotton was purchased, was within the lines held by the insurrectionary forces, and that the military safe-conduct protected as well the return as the outward voyage, for Lane was permitted to take out an outward cargo, under the supervision of a person, styled in the record a sub-agent of the purchasing agent at Norfolk, whose duty it was to retain possession of the cargo until he should have'received from Lane, on board the vessel, three times its value in cotton.

In the view we take of this case it is unnecessary to discuss the question — conceding the contract to be lawful — whether the action of the naval authorities could be a ground of claim for damages for a breach of this contract against the United States, because, in our opinion, the contract was unauthorized, and had no power to bind the Government.

At the time this contract purports to have been made, this country was engaged in war-with a formidable enemy, and, by a universally recognized principle of public law, commercial intercourse between States at wa-r with each other is interdicted. It needs no special declaration on the part of the sovereign to accomplish this result, for it follows from the very nature of war that trading between the belligerents should cease. If commercial intercourse were allowable, it would oftentimes be used as a color for intercourse of an entirely different character; and in such a case the mischievous consequences that would ensue can be readily foreseen. But the rigidity of this rule can be relaxed by the sovereign, and the laws of war so far suspended as to permit trade with the enemy. Each State settles for itself its own policy, and determines whether its true interests are better promoted by granting or withholding licenses to trade with the enemy. It being the rule, therefore, that business intercourse with the enemy is unlawful' unless directly sanctioned, the inquiry arises, whether there was any law of Congress in force at the time that sanctioned this transaction.

At an early period in the history of the war Congress legislated on this subject. By an act passed on the 13th of July, 1861, all commercial intercourse between citizens of States in insurrection and citizens of the rest of the United States was declared unlawful; but liberty was given to the President, in his discretion, to license trade with the enemy, if he thought it would conduce to the public interests to do so. In so far, however, as it was licensed by him, the manner of conducting it was left to be regulated by the Secretary of the Treasury. In the administration of this law we do not find any regulation prescribed by the Secretary of the Treasury allowing commercial intercourse within the rebel lines. On the contrary, the trade regulations which were issued by him on the 31st of March, 1863, and the 12th of September of the same year, expressly say that commercial intercourse with those parts of the insurrectionary States within the control of the rebels is absolutely forbidden. Has this policy since then been changed ? It certainly has, if .this proceeding was authorized; for if Eisley, in his capacity of Treasury agent, could lawfully contract with Lane, a citizen of a State not in rebellion, to purchase from him cotton in the country of the public enemy, which he did not own or control, but must procure after he got there, and had the power to assist him in this enterprise, by allowing him to take out a cargo of goods to facilitate the purchase of the cotton, and to furnish for his protection a sub-agent and a military safe-conduct, then it is clear the door was left open for general trading with the enemy. If one citizen of a State, not in insurrection, could lawfully obtain from a Treasury agent the right to transport goods to a place under the control of the insurgents, where he could exchange them for cotton or other products of the country, and could also have safe-conduct to take his property there, and to bring out the property he should buy, with the promise on the part of the agent to protect and purchase it, so could any other citizen — for in this matter equality must be the rule — and in this way it is easy to see a free commercial intercourse with the enemy would be opened, and a radical change effected in the manner of conducting the war. Was this result contemplated by Congress in the Act of July 2, 1864?

It is contended that the eighth section of this act, which says that it shall be lawful for the Secretary of the Treasury, with the approval of the President, to authorize agents to purchase for the United States any products of States declared in insurrection, conferred the power to license trading within the military lines of the enemy.

If this were so, and it was the intention of Congress to allow this trading, providing it was done on Government account, why was it not manifested by a specific provision in the law ? Why leave such an important change of policy to be inferred from the general words of the act, and the absence of express words of limitation'?

That the Secretary of the Treasury, who, it is natural to suppose, having the administration of the law in his hands, was, before it was passed, consulted about it, did not give this interpretation to it, is very clear, for, within a short time after the passage of the act, he adopted, with the approval of the President, a new series of rules regulating commercial intercourse, which were intended to supersede all others, and the third rule absolutely prohibits all 'intercourse beyond our military lines, and declares further, “ that no permit will be granted for the transportation of any property to any place'under the control of the insurgents.” (See Treasury Eegulations and rules for commercial intercourse, of July 29, 1864.)

It is argued, as the regulations which were issued on the 24th of .September following, for the express purpose of enforcing that provision of the act relating to the purchase for the United States of the products of insurrectionary States, do not, in terms, re-adopt this prohibition against non-intercourse, that, therefore, it was abandoned. But this does nob follow, for there is nothing in these regulations inconsistent with its continuance, and if not expressly revoked, it remained in force. Aside, however, from the construction adopted by the Secretary of the Treasury, we are able to see, by reference to other provisions of the same act, that Congress did not mean to change, by the eighth section, the non-intercourse policy which had prevailed. By the fourth section of this act the prohibitions of the Act of July 13,1861, were extended even to commercial intercourse by and between persons residing or being within the lines of national military occupation in districts declared in insurrection, u with each other;” and the ninth section reveals so much of the Act of July 13,1861, as made it lawful for the President to license and permit trade by private citizens, in such districts, •even within the Federal lines, except to supply the actual wants of the loyal people, and to authorize persons within the Federal lines to bring to tbe loyal States the products of their own labor, or of freedmen, &c.

The incorporation of these sections in the law is irreconcilable with the idea that Congress intended, notwithstanding theseprohibitions, to confer power on the Secretary of the Treasury to allow citizens of loyal States on Government account to trade'within the actual military lines of the insurgents. If this is not the nature of the power conferred, it is asked what authority did Congress intend to give the Secretary, and how was it to be exercised ü There is no difficulty in answering these questions and reaching the true meaning of this particular provision, when we consider the entire act, and the Treasury Regulations adopted to carry into effect the eighth section, in connection with the history of the times. The law was designed to remedy existing evils. The mischiefs attending private trading with the enemy, even in those parts of the insurrectionary districts which were for the time within our military lines, had been seriously felt in tlie conduct of the war, and the best interests of the country required that it should cease. It was deemed important, however, to still maintain some species of commercial intercourse with the insurgents, for it is well known that the Government desired to have, if it did not interfere with military operations, the products of the South, and particularly cotton, brought within our lines. To accomplish this end, and at the same time avoid the complications and embarrassments incidental to private trading, required the iuauguration of a new system. This was done by withdrawing from the citizen the privilege of trading with the enemy, and allowing the Secretary of the Treasury, with the approval of the President, to purchase through agents, for the United States, any products of States declared in insurrection. The inquiry is made, how could these agents purchase these products if private citizens were denied the right of trading in the insurrectionary districts, whether they happened to be within the National or Confederate military lines ? It would not do to let the Army be used for this purpose, and the only other way left open was to hold out inducements for the insurgents themselves to bring their products to us.

If they could be induced to do this, we would obtain their products which we needed, and in the manner of obtaining them would avoid the evils inseparable from private trading. The inducements for the insurgents to pursue this course were' very strong, for besides the liability of having their principal product — cotton—confiscated or destroyed, they were, as is well known, in want of many of the necessaries of life. They were substantially told in the Begulations of the Treasury Department, “ If you will bring your cotton within our lines, we will not only not seize it, but will buy it from you, and you are at liberty to go to the nearest Treasury agent in an insurrectionary district to sell it, or, if you prefer, you can leave it under the control of some one who can go to the agent and sell it for you.” If this were not enough to accomplish the object, the President of the United States, by way of further inducement, in an executive order of the same date with the Treasury Begulations, said to them, “ You can purchase such articles of merchandise as you need, not contraband of war, to one-third of the aggregate value of the products sold by you, and return with them, and I will guarantee you safe-conduct.” Why this limited permission to buy, after the delivery of the products, unless the privilege was for the benefit of the insurgents "1 If private persons, living in the Loyal States, could engage in a venture like this of the claimant, they would need, as he did, to make the venture remunerative, to take with them a cargo of goods to exchange for Southern products; but there was no authority for this. The permission of the President is limited to the taking of a return cargo, bought with part of the proceeds of Southern products, previously sold and delivered to a purchasing-agent of the Treasury Department. Indeed, so particular is the direction on this subject, that the military officer commanding at the place of sale, was not authorized to permit a person who had sold Southern products to buy merchandise, unless he exhibited to him a certificate of the purchasing-agent, setting forth the fact of the purchase and sale, the character and quantity of products, and the aggregate amount paid therefor.

Enough has been said, without pursuing this investigation further, to show there is nothing in the act itself, the Begulations of the Treasury Department, or the order of the President,, to justify Bisley in dealing, in the manner he did, with Lane. It follows, therefore, that the voyage itself was illegal, as were the contracts and arrangements by which it was undertaken, and that the vessel and cargo were properly seized for being engaged in illegal trading with the enemy.

Although Eisley was not authorized iu making any contract with a person occupying the status of Lane, still, if he were, he could only do it in the manner and for the purposes pointed out in the Treasury Eegulations.

By these regulations the purchasing-agent could not act at all until the person desiring to sell Southern products made application, in writing, that he owned or controlled them, stating their kind, quality, and location, and then the power of the purchasing-agent before the delivery of the products was limited to a stipulation (the form is prescribed) to purchase, and to the giving a certificate that such application was made, and requesting safe conduct for the party and his property.

There is nothing in the petition, or the findings of the court below, to show that Lane complied with these provisions. On the contrary, it is clear from his own statement that he neither owned nor controlled the cotton when he contracted to sell it, but that, after the contract was made, he procured it within the rebel lines. Neither the law, nor the regulations through which it was administered, were intended to protect a speculation of this sort. The purchasing agent had no authority to negotiate even with any one in relation to the purchase of Southern products, unless at the time of the negotiation he either owned or controlled them. (See Eegulations for the purchase of products of insurrectionary States on Government account, of September 24, 1864, and executive order same date.)

The Court of Claims find that no proceedings were taken against the cotton, and that it was restored to the claimant, but that the vessel was libeled at the instance of the United States, in the Supreme Court of the District of Columbia, where a decree, with costs, passed in favor of the claimant. It is argued, and so ruled by the court below, that this decree concludes the United States. But the inquiry arises, how far the United States are concluded by it? The record of the admiralty court is not before us, and we only know from the record in this case, that that court refused to render a decree of forfeiture against the vessel, and awarded costs against the United States.

On what ground the court puts its decision — whether for want of proof, insufficient allegations, or on the merits of the case— we have no means of determining.

It may well be that the United States could not re-seize the vessel, or take further proceedings against the cotton, and yet, at perfect liberty to litigate the right of the claimant to damages, in a direct proceeding brought against them to test that ■question.

There is nothing in this record to show that the Supreme Court of this District, in decreeing to the claimant the restoration of his vessel, adjudicated on the question of. his right to damages. As that court had the power to award damages— and the record is silent on the subject — it is clear, either that the court refused damages, or that the claimant did not insist ■on the court considering the question.

The United States are, therefore, not concluded on this point, and the case is relieved of all difficulty.

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