#### WILLIAM STEWART MACLEOD v. THE UNITED STATES.

[No. 27196.

Decided May 2, 1910.]

*On the Proofs.*

Merchants, subjects of Great Britain, doing business in Manila, ship- a cargo of rice from Saigon, China, to Cebu, Philippine Islands, after the signing of the treaty of peace, but before its ratification. The rice is shipped upon an American vessel and consigned to the claimant’s firm in Cebu. The government of the Philippine Republic is then in power and administering the civil affairs of the islands. Its officers refuse to allow the cargo to be landed until duties are paid. After Cebu passes into the possession of the United States the military collector of customs at Manila requires the claimants to pay to him duties upon the same cargo of rice and compels payment by refusing the claimants permission to do further business at the custom-house in Manila until the duties are paid.

I.The rule of international law is well settled that between the high contracting parties the exchange of ratifications has a retroactive effect confirming the treaty from its date, but that where individual rights are affected it is not to be considered' as concluded until there be an exchange of ratifications.

II.As between the high contracting parties the title of the United States to the island of Cebu vested on the 10th December, 1898, but so far as it may affect third parties the title did not vest until the 11th April, 1899, the date of the ratification of the treaty.

III. Technically a state of war existed between the United States and Spain until the- 11th April, 1899, notwithstanding that the protocol, 12th August, 1898, suspended active hostilities.

IV. Where British subjects were, doing business at Manila under the American flag, it being in the military possession of the United States, they owed temporary allegiance to the United States. For them to trade with Spanish belligerents was forbidden by international law.

V.Where the military authorities at Manila granted British subjects doing business there the privilege of trading with persons outside of the military lines, who were then belligerents upon condition that the duties hpon importations into all parts of the Philippine Islands should be paid at Manila, the exaction of these duties at a later date could be properly enforced.

*340VI. If tbe island of Cebu be regarded as American territory after the signature of the treaty of peace but before the exchange of ratifications and while it was still in possession of the Philippine Republic, it was nevertheless unlawful for British merchants doing business in Manila to trade with rebellious subjects of the United States in Cebu. The distinction between this case and *Rice*v. *The TJmted States*(4 Wheat. R., 246) pointed out.

VII. The action of the military collector of customs at Manila in collecting duties upon importations into Philippine ports in the actual possession of other authority than that of the United States was ratified by the *Act 30th June, 1906*(34 Stat., L., p. 036).

*The Reporters'1*statement of tbe case:

The following are the facts of the case as found by the court:

I. At and prior to the dates hereinafter mentioned, petitioner and Neil Macleod and Henry Anthony Macleod were in partnership under the firm name of Macleod & Co., doing a general mercantile business in the Philippine Islands and in other parts of the Orient, with their head office at Manila, P. I., where they also transacted such business. All the members of the firm were citizens and subjects, and petitioner still is a citizen and subject, of Great Britain, but he resides at Manila, P. I., and had so resided for several years prior to the dates hereinafter mentioned. Neil Macleod and Henry Anthony Macleod have deceased and petitioner is the only survivor of such partnership.

II. On the 13th of January, 1899, the claimant firm chartered at Manila from her owners, the Compania Maritima, the steamship Venus, an American registered vessel flying the American flag, and cleared her in ballast to Saigon, China, from whence she sailed on the 22d of January, 1899, with a cargo of 14,500 piculs of rice of 134 pounds per picul, consigned to the claimant firm at the port of Cebu, island of Cebu, in the Philippine Archipelago.

III. Previous to the above dates it had been the practice. of the military authorities at Manila to require resident importers at that port shipping rice to points other than Manila in the Philippine Islands not actually occupied by the *341military forces of the United States to present certified manifests covering such cargo and to pay the duties thereon to the United States military collector of customs at Manila, which "practice was matter of common knowledge and discussion among the business men of Manila.

IV. On or about the 18th of January, 1899, said military collector of customs at Manila was informed by certain business interests of that city that the claimant firm proposed to ship said cargo of rice by the *Venus*direct from Saigon, China, to the port of Cebu, and did not intend to enter said cargo or to pay duty thereon at Manila. The collector was further informed that said business interests were likewise engaged in the importation of rice into the Philippine Islands, and that they had, in carrying on such business, complied with the requirements imposed by the United States authorities, and had paid duties upon similar cargoes at Manila, and that under such unfair competition they would be unable to carry on further trade.

On the same date the collector of customs at Manila inquired of the United States consul at Saigon, by cable, as to the facts thus reported (Copy A, p. 68), and on January 21, 1899, received a cable reply from said consul confirming said report and informing him that the *Venus*would sail for Cebu upon the following day.

V. On January 23, 1899, the claimant firm was officially notified by said military collector at Manila that he had been informed of the sailing of the *Venus*direct to the port of Cebu with said cargo, and that a certified manifest of said cargo must be presented and the duties paid thereon at the custom-house at Manila.

VI. On January 24, 1899, the following letter was presented to said collector of customs at Manila by Henry A. Macleod, a member of the claimant firm, since deceased:

“ MANILA, *January %L 1899.*

“ Col. G. E. COLTON,

“ *Collector of Customs.*(Present.)

“ DeaR SiR: As your letter of yesterday to the Marítima re *Venus*duties concerns us they have handed it to us for reply. There was no secret made of the voyage of the *Venus.*She was openly dispatched for Saigon, there to load a cargo of rice for the Philippines.

*342“ Before leaving Manila we instructed the captain to furnish himself with U. S. consular papers *if ordered to Gebu*(orders being sent by cable) in case that port should be in possession of the U. \S. authorities on his arrival. We presume, therefore, that his papers are in order to cover this point.

“According to our last advices Cebu is in the hands of the •republican government and there are no American authorities there. We feel certain that the Cebu authorities will exact the payment of duties on the *Venus*cargo of rice, and we are informed that it will be exactly the same amount as if collected under the Manila tariff at present ruling.

“ In selling the cargo we had, in fact, to give a guaranty to the buyer .that the duty would not exceed that of the present Manila tariff. Now, if the duty be exacted by the Cebu authorities, we can not afford to pay it for a second time to you in Manila, and for our own protection. must protest against so doing, since it is through no fault of ours that the duty goes to the Cebu custom-house.

“ As our desire, however, is to pay all the respect we possibly can to your notification, we will, if you so instruct us, request our Cebu friends to protest against the payment of any duty in Cebu in view of the Cebu customs being at present under your control, according to your text under reply.

“ Regretting the present political situation which presents us with this complicated case, we remain, dear sir,

Yours, faithfully,

feigned)

“ Macleod & Co.”

YII. At the time of personally presenting the above letter Macleod informed said collector that a ship of the claimant firm was about to leave Manila for Cebu and would reach Cebu in time to head off the *Venus*before discharging; that his intention in so advising the collector was that the collector might take such steps as he thought most expedient in the interest of the Government, but that the claimant firm had no intention of deviating the *Venus*from her course or stopping the discharge of her cargo — that it was the claimant firm’s intention to carry out their contract with the buyers of the cargo at Cebu even at the loss involved in the payment of double duties.

The ship thus referred to by said Henry A. Macleod actually sailed upon the same day from Manila and arrived at Cebu on the 26th of January, three days before the *Venus*reached that port.

*343VIII. On the 25th of April, 1898, by an act of Congress (30 Stats., 364) war was declared between the United States and Spain.

Immediately thereafter war was waged by the contending powers, and among the early results thereof was the capture of Manila Bay and harbor, May 1, 1898, and the destruction or capture of the Spanish fleet by the forces of the United States.

Pursuant to the power vested in him by the Constitution and the said declaration of war, the President promulgated the following order:

“ WAR DEPARTMENT,

“ *Washington, July 13,1898.*

“ The following order of the President is published for the information and guidance of all concerned:

“ ‘ Executive Mansion, *July 12,1898.*

“ ‘ By virtue of the authority vested in me as Commander in Chief of the Army and Navy of the United States of America, I do hereby order and direct that upon the occupation and possession of any ports and places in the Philippine Islands by the forces of the United States the following tariff of duties and taxes, to be levied and collected as a military contribution, and regulations for the administration thereof, shall take effect and be in force in the ports and places so occupied.

“ ‘ Questions arising under said tariff and regulations shall be decided by the general in command of the United States forces in those islands.

“ ‘ Necessary and authorized expenses for the administration of said tariff and regulations shall be paid from the collections thereunder.

“ ‘Accurate accounts of collections and expenditures shall be kept and rendered to the Secretary of War.

“ ‘ William McKinley.’

“ Upon the occupation of any ports or places-in the Philippine Islands by the forces of the United States the foregoing order shall be proclaimed and enforced.

“ R. A. Alger, *Secretary of War.”*

Article III of the protocol of August 12, 1898, between the United States and Spain is as follows:

“ The United States will occupy and hold the city, bay, and harbor of Manila pending the conclusion of a treaty *344which shall determine the control, disposition, and government of the Philippines.”

Manila was opened to commerce as a port of entry August 20, 1898, and Iloilo was opened February 22, 1899; Cebu,, March 14, 1899; Zamboanga, Siassi, and Jolo, December 26,, 1899.

IX. The treaty of peace between the United States and the Kingdom of Spain was signed on the 10th of December,, 1898, but it was not ratified and proclaimed by the two countries until the 11th of April, 1899.

On the 25th of December, 1898, the Spanish flag was hauled down and the Spanish forces, civil and military,, evacuated the island of Cebu, having first appointed a provisional governor thereof. Forty-eight hours later a so-called republic under the name and style of the Kepública de Filipina, of which Aguinaldo was the head, composed of the native inhabitants, who had formerly been in insurrection against the Government of Spain, took possession of said island and proceeded to administer the public affairs thereof,, and maintained a government at Cebu, including the collection of customs, until the 22d of February following, when possession was surrendered to the United States.

For many years prior to December 25, 1898, the Kingdom of Spain had possessed and governed the island of Cebu and had maintained armed forces there for defense and the preservation of order.

At no time between the date of the declaration of war between the United States and the Kingdom of Spain and the 22d day of February, 1899, had an officer of the United States, either civil or military, or any armed force of the United States been in the island of Cebu, nor had the United States been in possession or occupation of the port of Cebu or any part of the island of that name; on the contrary, from the time of the declaration of war between the United States and the Kingdom of Spain to the 22d day of February, 1899, the Spaniards and the people of the island of Cebu successively had been in the actual physical possession of the island.

X. The *Venus*arrived at the port of Cebu on the 29th of January, 1899, and the officers of said native government de*345manded payment of duties on ber cargo from the resident agent of the claimant firm in the sum of 11,045 pesos and 50 cents, refusing to allow said cargo to be discharged until said payment was made.

Six days later, on February 4, 1899, said resident agent of the claimant firm at the port of Cebu paid the full amount of duties thus demanded under protest to the so-called republican government, and said cargo was thereafter discharged from the *Venus*and subsequently delivered to the purchaser thereof at the port of Cebu.

XI. The *Venus*thereafter took on new cargo and sailed for Manila, arriving at the latter port on February 12, 1899, consigned to the Compañía Marítima.

On the arrival of the *Venus*at Manila she was at first prevented by the American authorities from discharging her cargo without first paying the duties upon the Saigon cargo-discharged at Cebu, but very shortly thereafter was permitted to do so without such condition.

XII. March 4, 1899, the claimant firm made application to the collector of customs at Manila to “ open register to allow of steamship *Knivsberg*receiving cargo for Hong-kong,” but the collector of customs at Manila refused to receive further business from the claimant firm until the duties upon the Saigon cargo, discharged at Cebu, should be. paid.

Thereafter, on March 6, 1899, the claimant firm, through said Henry A. McLeod, paid under protest to the said United States collector of customs at Manila the sum of $5,518.89 in United States currency, being the same amount as that theretofore paid in pesos on February 6,1899, by the resident agent of said claimants upon the same cargo to the so-called republican government at the port of Cebu.

*Mr. Barry Mohun*and *Mr. Louis P. Miehener*for the claimant. *Dudley <& Miehener*and *J. N. Wolf son*were on the brief:

The title of the United States to the Philippine Archipelago, including the island of Cebu, did not vest as to third *346parties until the ratification of the treaty with Spain, April 11, 1899.

As between the high contracting parties, the title to the island of Cebu doubtless vested December 10, 1898, when the treaty was signed. “ But,” as was said by Mr. Justice Davis in *Haver*v. *Taker*(9 Wall., 84), “ a different rule prevails where the treaty operates on individual rights. The principle of relation does not apply to rights of this character, which were vested before the treaty was ratified.” The learned justice then goes on to state that, so far as third parties are concerned, the treaty is not to be considered as concluded until there is an exchange of ratifications, and he sets forth the reasons why that rule must obtain in a government like ours, where a treaty, which is to be a part of the law of the land, must be ratified by the Senate before it can become a law.

That case was cited with approval in *Dooley*v. *United States*(182 U. S., 222, 230) in the majority opinion, written by Mr. Justice Brown, in which it is said:

“ While it is true the treaty of peace was signed December 10, 1898, it did not take effect upon individual rights until there was an exchange of ratifications.”

From the time that treaty was signed the United States had the right, so far as the two high contracting parties were concerned, to possess and occupy everything ceded to it in the Philippines by the treaty. But that rule could not prevail against or operate on individual rights. See authorities before cited, and also *United States*v. *Arredondo*(6 Peters, 691, 738), in which the opinion was written by Mr. Justice Baldwin at a time when John Marshall was Chief Justice.

Doubtless it was in view of these well-settled principles of constitutional and international law that President McKinley, in his proclamation of July 12, 1898, copied at length in Bequest IV, ordered and directed that—

“ upon the occupation and possession of any ports and places in the Philippine Islands by the forces of the United States, the following tariff of duties and taxes, to be levied and collected as a military contribution, and regulations for the administration thereof, shall take effect and be in force in the ports and places so occupied.”

*347To make assurance doubly sure, the Secretary of War, in promulgating that executive order, used this language:

“ Upon the occupation of any ports or places in the Philippine Islands by the forces of the United States, the foregoing order shall be proclaimed and enforced.”

It is plain that the executive order took effect in Cebu only upon the “ occupation and possession ” of that port “ by the forces of the United States.” That occupation did not occur until February 22, 1898, more than three weeks after the native or insurgent Philippine authorities had required Mac-leod & Co. to pay duties to them on the cargo of rice, and the proclamation could not be made or enforced before that time, nor was an attempt made to do so.

On the occupation of a port “ by the forces of the United States,” the executive order was to be proclaimed and enforced according to the direction of the Secretary of War. Evidently it was the purpose of the President and the Secretary of War to have that order promulgated and enforced in the ports and places in the Philippines when and as occupied or possessed by the forces of the United States.

The cargo of rice did not enter Manila, nor in any way come under the jurisdiction of the authorities there, nor was it discharged at a point possessed or occupied by the United States. Such duties could only be “ levied and collected as a military contribution in the ports and places ” in the Philippines that were in the occupation and possession of the forces of the United States, for so it was ordered and directed by President McKinley. That order was violated by the military officials in Manila when they there made a levy and collection based on an importation in the port of Cebu before it was occupied and possessed by the forces of the United States. The military power was limited; it was to be exercised only “ in the ports and places so occupied.”

The duties were lawfully paid to the local authorities in Cebu and it was unlawful for the United States to require the second .payment thereof in Manila.

For more than a month prior to the payment of the duties in Cebu, that port and the entire island had been in the control and exclusive possession of the native or insurgent gov*348ernment, bearing the name of the “ República de Filipinas,” as we have already seen. The island had been taken by the natives from the Spanish, December 25,1898, and it remained in the exclusive and passive possession of the native government from that time until February 22, 1899. The so-called “ [Republic ” discharged all the ordinary functions of government during that period that were familiar to the people there, including the collection of customs duties, the receipt and disbursement of public moneys, and the maintenance of armed forces. These facts bring this case within the doctrine of *United States*v. *Rice*(4 Wheaton, 246, 253-255). This case has been cited and followed in numerous cases; among them are *Coleman*v. Tennessee, 97 U. S., *536; Ford*v. Surget, 97 U. S., 612; *Baddy*v. Hunter, 171 U. S., 393; *De Lima*v. BidweTl, 182 U. S., 182. See numerous other cases referred to in Rose’s Notes on United States Reports, 859, 860, and 861.

The rules of law governing other nations, and declared by the United States to exist as against other nations, are the rules which should be applied to the United States in this case.

It follows that Macleod & Co. were justified in paying the duties exacted by the native or insurgent authorities in Cebu,, and that the United States had no right to complain because the duties had been paid in that way in a j)ort which it had not occupied or possessed.

It follows, also, that the United States had no right or authority in law to enforce the payment of the same amount to its customs officials in Manila as duties on that cargo — a cargo that had been discharged in a port not in the occupation or possession of the forces of the United States. The duties were lawfully paid in Cebu, and the United States had no right to compel the second payment in Manila or anywhere else. The doctrine of “ occupation ” so clearly and tersely stated in the executive order, as well as in the Rice case and the dispatch from Mr. Fish to Mr. Nelson, was crystallized in article 42, Hague Convention, 1899, as follows :

“ A territory is considered as occupied when as a fact it is placed under the authority of the army of the enemy. The occupation only extends to the territories where this authority is established and can be maintained.”

*349The occupation of Manila, 1,500 miles away, and the presence of armed forces there, did not create an occupation of Cebu. Our authority in Cebu was not established or maintained, nor even attempted until February 22, 1899.

The payment of the duties in Manila was made to the military forces of the United States there present, under a protest duly made, and in order that the business of Macleod *&*Co. with the custom-house might be resumed as described in Kequest VII.

The executive order of July 12, 1898, by the Commander in Chief of the Army and Navy of the United States, required the payment of duties as a military contribution, and directed that all questions arising should be decided by the general in command of the United States forces in the Philippine Islands. Subsequently, General Otis was appointed military governor of the islands, and military officials performed the functions of government in them, including the collection of duties. The military arm was everywhere present, visible, active, and insistent. In such a situation, as it seems to us, a protest would be useless and therefore not required by law as a condition precedent to the maintenance of a right of action. The law never requires a useless or unnecessary thing to be done. That statement is axiomatic. The military law was supreme, it superseded the local law, it dominated every act, law, person, and thing. (Wheaton’s International Law, 3d ed., 469.)

In the presence of military law all other laws lie prostrate. The will of the soldier takes the place of the law of the land. The sword alone is ruler. In such conditions “ the laws are silenced by the noise of arms,” as was said by Sir James Mackintosh.

In view of these considerations, we submit that a protest against the exaction and collection of money as duties by military forces would be a legal absurdity, or, at best perfectly useless, and therefore not required as a condition precedent to the enforcement of a right to recover the money thus exacted and paid.

We may turn naturally from the consideration of the enforcement of military law to the legal conditions which exist *350in a state of war. We have not seen a more complete consideration of the latter subject than is to be found in the opinion of Judge Nott, in *Reeside’s ease*(2 C. Cls. R., 23-27), and note.

A very clear statement of the doctrine was made by Judge Wright speaking for this court, in the *Warner, Barnes ds Go. ease*(40 C. Cls. R.), citing *Matthews*v. McStea, 91 IT. S., 9; *Prize*eases, 2 Black., 635; *Marmitón*v. Dillin, 21 Wall., 73.

Nevertheless, Macleod & Co. appealed to Her Britannic Majesty’s .consul to make their protest, and that official, acting for them on March'6, 1899, and concurrently with the payment of the duties, presented to the United States officials a carefully drawn protest, which is copied in Request VII. In that way, if a protest can be said to have been necessary or useful, Macleod & Co. protected their rights and made themselves sure of the support of the Kingdom of Great Britain, if needed. A more solemn act of protest is not known to the mind of man. The money was paid under protest, therefore, and about that question there can be no cavil. *(De Lima*v. BidweTl, 182 U. S., 1,174-180; *Downes*v. Bidwell, 182 U. S., 244, 247.)

The detention of the ship *Vemos*in Manila, on her return voyage from Cebu, coupled with a demand for money, was a duress of property. It was a possession of personal property, and a demand of payment as the condition for its release. This is such duress as gives to the party suffering it a right of action for recovery of the money paid.

It is well settled that, where a party has possession or control of the property of another, and refuses to surrender it to the control and use of the owner, except upon compliance with an unlawful demand, money paid to emancipate the property is regarded as paid under compulsion and may be recovered back. See the cases above cited, and the numerous other cases reviewed in *Adams*v. Schiffer, 11 Colorado, 15; *Same*ease, 7 Am. St. Rep., 207, 208; note to *Matter*v. Greenlee, 26 Am. Dec., on p. 377.

Even if the payment had not. been made to a military officer, but had been made to a civilian customs officer, it would not have been voluntary, as is held in the notable case of *Robertson*v. *Frank*(132 IT. S., 17, 23).

*351*Robertson*v. *Frank*was quoted from and applied in *Rush's case*(35 C. Cls. B.., 223, 238) ; In that case the claimant was a letter carrier, having relations with a superior officer in civil life. This court held that his act in signing a waiver was not a voluntary act, and that he had the right to recover. Here the duress was far more impressive in character than in either of the cases above named.

The *Venus*was held until the money claimed as duties was paid. The *Knivsberg*was not allowed to be registered so she could take a cargo to Hongkong. Macleod & Co. were denied the privilege of doing business with the customs officers of the United States in Manila, the capital of the Philippine Archipelago. As merchants engaged in a large trade all through the Philippines and the Orient, it was absolutely essential to their honor, and to their existence as a business firm, to transact such business as that above described. Every avenue was closed against them. The only way to escape was by the payment of the money demanded. If this did not constitute duress, the word is meaningless.

It is now well settled that a payment to prevent an apprehended injury to business is a payment under duress, and may be recovered back. *(Swift Co.*v. *United*States, 111 U. S., 22, 28-30.)

The cases on this subject are collected in 22 Am. & Eng.. Ency., 2d ed., 613; and 2 American & English Cases Annotated, note, pages 825, 827. Among the cases not cited by the Supreme Court in the *Swift*case, but squarely in point,, are the following: *American Brewing Co.*v. *St.*Louis, 187 Mo., 367; *Ratterman*v. *Am. Exp.*Co., 49 O. St., 608; *Scottish Union Ins. Co.*v. LLerriott, 109 Iowa, 606; *Baker*v. *Cin*cinnati’, 11 Ohio St., 534; *Guetzkow*v. Breese, 96 Wis., 591; *Catoir*v. *Watterson,*38 O. St., 319; *Westlake*v. *St.*Louis, 77 Mo., 47.

*Mr. Frederick De C. Faust*(with whom was *Mr. Assistant Attorney-General John Q. Thompson)*for the defendants:

The general right of a military commander, under the war power, to govern territory of the enemy after its conquest and prior to the ratification of a treaty of peace is not open *352to question. *(Gross*v. Harrison, 16 How., 164; *Dooley*v. *TJmted*States, 182 U. S., 222; 2 Halleck Inter. Law, p. 444; *New Orleans*v. *Steamship Go.,*20 Wall., 387-393; see also *Thirty Hogsheads of Sugar*v. Boyle, 9 Cr., 191; *Fleming*v. Page, 9 How., 603; *American Ins. Go.*v. Canter, 1 Pet., 511; *De Lima*v. Bidwell, 182 U. S., 1; *Fourteen Diamond*Rings, 182 U. S., 176.)

It is conceded that the military forces of the United States did not take actual possession of the island of Cebu until after the first jjayment of the duties had been made to the native insurgents, but that fact does not affect the point at issue in this case.

The question here is as to the right of the military commander, in time of war, to prescribe rules and regulations governing importations of merchandise by residents of Manila, claiming the protection of the United States, into the enemy’s territory.

The claimants concede that the title of the United States to the Philippine Archipelago, including the island of Cebu, did not vest as to third parties until the ratification of the treaty of peace with Spain on April 11, 1899. It is equally true that while the treaty of peace was signed December 10, 1898, title to the archipelago did not vest as between the high contracting parties until the exchange of ratifications took place on April 11, 1899; for, as will be recalled, the protocol of August 12, 1898, suspending active hostilities between the two countries expressly limited the occupation of the United States to the city, bay, and harbor of Manila pending the conclusion of a treaty which should determine the future control, disposition, and government of the islands. (30 Stats., p. 1742, art. 3.)

The treaty itself expressly provided that the cession of the entire archipelago should not become effective until the treaty was ratified and peace proclaimed by the two nations. It is therefore obvious that until such ratification the islands continued to be a Spanish possession and therefore hostile territory.

It is settled law that trade between the subjects of belligerent countries, or between inhabitants of territory militarily *353■occupied by one of the belligerents, with the inhabitants of other portions of the enemy’s territory, stands absolutely interdicted by the fact of war. All such commercial intercourse is prohibited and illegal unless, governmentally sanctioned. (See Wharton’s International Law Digest, vol. 3, p. 238; Wheaton’s International Law, p. 422; *Montgomery*v. *United*States, 15 Wall., 395; Birkhimer on Military Government and Martial Law, p. 229.)

As stated in the excellent opinion of the military governor, after receiving instructions from the authorities whose protection they claimed, virtually interdicting the proposed proceeding, the claimants deliberately and defiantly declared their intention of entering Cebu direct from Saigon, even if required to pay the penalty which the United States notified them would be exacted.

Under well-settled principles of international law this flagrant and willful violation of regulations, lawfully prescribed by the military authorities, clearly rendered both ship and cargo liable to confiscation. This conclusion was reached by the military board in its first consideration of the claim, but that board also held that no other remedy was open to the Government, and that the subsequent exaction of the duties in controversy was therefore without warrant of law.

This conclusion, we think, was clearly erroneous upon the principle that the greater punishment includes the lesser; for it seems obvious that a commander who could confiscate .a ship and cargo could certainly impose a lesser penalty and lawfully exact the payment of prescribed duties which the claimants not only had been expressly warned would be exacted, but which, from common report, they must have known had been paid by their competitors at Manila in similar cases.

The claimants insist, however, that the duties exacted by the United States at Manila were unlawful under the well-settled rule of law that where duties are once paid in a part of . a country in possession of an enemy they can not again be legally collected when the enemy withdraws or is expelled therefrom, citing in support of their position *United States*v. *Rice*(4 Wheat., 246, 253, 255) and a letter of instructions *354from Mr. Fish, Secretary of State, to our minister to Mexico, printed in 1 Wheaton’s International Law Digest, 29-30.

However, neither the principle laid down nor the authorities cited have any application to the case at bar, since the facts involved were altogether different.

In each of the cases cited the person to whom the goods were consigned, and from whom collections were afterwards attempted to be exacted upon the withdrawal of the enemy, were residents of territory in possession and occupation of an enemy by military conquest. Such persons were, of course, bound by such laws, and only such laws, as the enemy chose to recognize or to impose while its occupation continued.

In the case at bar, however, the merchandise Avas consigned, not to a third person but to the claimants themselves at a branch house which they maintained at Cebu. The principle in the authorities cited, therefore, has no application here, for the reason that the claimants were not inhabitants of Cebu, but were residents of Manila, claiming and conducting their business under the protection of the United States at Manila. Their obligation of obedience was due, therefore, not to the Kingdom of Spain, nor to its rebellious subjects at Cebu, but to the United States, under whose protection they lived.

But it is declared that the order of the President of July 12,1898, as Commander in Chief of the United States forces, expressly limited the collection of the prescribed tariff of duties and taxes to be levied and collected as military contributions to such ports and places as were in the actual occupation and possession of the United States, from which it is argued that no authority for the imposition of any duties or taxes existed in the islands except as specified in that order.

Obviously this contention is entirely without merit. The order in express terms specifies a rule of conduct for the military commander at ports and places in actual occupation and possession of the United States forces. The discretion of the military commander, however, was left wholly unimpaired to make such rules and regulations governing trade with enemies’ territory not actually occupied or possessed, as the exigencies of the occasion required. Moreover the collection here complained of was exacted at Manila, which was a port in the actual occupation and possession of the United States.

*355. Should the court, however, overrule our first contention and hold that the title of Spain to the Philippine Islands passed to the United States *prior*to the ratification of the treaty, then it is insisted that upon the evacuation of Cebu by the Spanish forces that island became domestic territory, within the meaning of the term as used in the tariff acts, and became subject to whatever legislation Congress chose to impose as to customs duties, and, further, that the act of June 30, 1906, completely ratified and legalized all collections theretofore made by the provisional governor.

In passing upon the scope of this ratification act, in the opinion sustaining its validity, Mr. Justice White, in *United States*v. *Heinszen*(206 U. S., 382), speaking for the Supreme Court, said :

“As the text of the act of Congress is unambiguous and manifests as explicitly as can be done the purpose of Congress to ratify, the case comes to the simple question whether Congress possessed the power to ratify which it assumed to exercise.”

Counsel for claimants deny the application of the ratification act, however, to the case at bar, and insist that inasmuch as Cebu was in the possession of a so-called *de facto*native government, to whom the duties were first paid, that it was beyond the power of Congress to authorize a second collection of such duties at Manila; therefore that Congress could not, by a subsequent act, ratify illegal acts of its agent which it could not have authorized in the first instance.

This contention rests upon the principle announced in *The United States*v. Bice, supra, and similar cases, wherein it was held that territory occupied by a recognized belligerent was, during such occupation, foreign territory within the meaning of tariff acts, and that duties could not be exacted upon goods imported during such occupation after the withdrawal of the belligerent forces. But that principle can not be applied to this case, for it was invoked and the same authorities cited by the Government to justify the collection of duties upon goods brought from the Philippines into this country, after the ratification of the treaty, but before the adoption by Congress of a system of tariff duties for those *356islands, and it was lield that after title passed to the United .States there was nothing in the Philippine insurrection of .sufficient gravity to give to the islands the character of foreign countries within the meaning of the tariff act.

That means that there was no such firm possession by an organized hostile power as made Castine a foreign port in the war of 1812. *(United States*v. *Eice,*4 Wheat., 246-254; *Lincoln*v. *United States,*197 U. S., 428.)

The Supreme Court, in considering the effect of the armed resistance of the native inhabitants upon the title conveyed by the United States to Spain, said in the case of *Fourteen Diamond Bings*v. *United States*(183 U. S., 180-181):

“ The sovereignty of Spain over the Philippines and possession under claim of title had existed for a long series of years prior to the war with the United States. The fact that there were insurrections against her or that uncivilized tribes may have defied her will did not affect the validity of her title. She granted the islands to the United States, and the grantee in accepting them took nothing less than the whole grant.

“ If those in insurrection against Spain continued in insurrection against the United States, the legal title and possession of the latter remained unaffected.

*“*We do not understand that it is claimed that in carrying on the pending hostilities the Government is seeking to subjugate the people of a foreign country, but, on the contrary, that it is preserving order and suppressing insurrection in territory of the United States. It follows that the possession of the United States is adequate possession under legal title, and this can not be asserted for one purpose and denied for another. We dismiss the suggested distinction as untenable.”

In order to sustain the claimant’s position in this aspect of the case, it would be necessary to hold not only that although the Philippine Islands had become domestic territory, it was beyond the power of Congress, prior to the actual occupation of each island, to provide that rice should only be imported into the Philippines by residents of Manila upon condition that prescribed duties should be first paid at Manila and denying to importers who failed to do so the right to do further business at the Manila custom-house.

*357A somewhat analogous contention was raised and decided by the Supreme Court in *Fleming*v. *Page*(9 How., 603), wherein it was said:

“ It is very well understood to be a part of the law of nations that each nation may designate, upon its own terms* the ports and places within its territory for foreign commerce, and that any attempt to introduce foreign goods elsewhere within its jurisdiction is a violation of its sovereignty. It is not necessary that such should be declared in terms or by any decree or enactment, the expressed allowance being the limit of the liberty given to foreigners to trade with such nation (p. 196).”

The plenary power of Congress to legislate as to its territorial possessions has been so thoroughly discussed and is now so firmly established by the decisions of the Supreme Court in the so-called “ Insular cases ” that further discussion upon that subject is unnecessary.

BakNey, J.,

delivered the opinion of the court:

This is a suit by the plaintiffs to recover $5,578.89, the amount of certain import duties collected from them by the United States military collector of customs at Manila upon a cargo of rice shipped from Saigon, China, to the island of Cebu, Philippine Islands, in Januarjq 1899, after the signing of the treaty of peace between Spain and the United States, but before its ratification. The plaintiffs are subjects of Great Britain and at the time stated were importers of general merchandise in the Philippine Islands and other ports of the Orient, with headquarters at Manila.

The cargo was shipped upon the Venus, an American vessel flying the American flag, direct from Saigon, China, to the port of Cebu, consigned to the plaintiff firm, and airived on the 29th day of Januar3q 1899. On the 25th day of December previous the Spanish military forces evacuated the island of Cebu, the officers of the civil government leaving at the same time. Within forty-eight hours thereafter the native inhabitants organized a government for the island, the same being a branch of the so-called Philippine republic, of which Aguinaldo was the head. This government continued to administer the civil affairs of the island, including *358the collection of customs, until the 22d of February following, when possession was delivered to the United States. Upon the arrival of the *Venus*at the port of Cebu duties upon the cargo were demanded of the plaintiffs by this provisional government, refusing to allow the same to be landed until the duties were paid. In compliance with said demand, but under protest, the plaintiffs paid duties on said cargo in the sum of $5,578.89.

Thereafter the military collector of customs at Manila demanded of the plaintiffs payment to him of the customary duties levied by the military authorities in the Philippine Islands- upon the said cargo landed at Cebu and refused them permission to do further business at the custom-house at Manila until said duties were paid. The claimants thereupon paid the said collector, under protest, the duties thus demanded, which were the same in amount as had previously been paid to the provisional government at Cebu when the cargo was discharged.

It is contended by the defendants (1) that the collection of the duties in question at Manila was a valid and lawful exercise of the war power vested in the military commander of the United States forces in the Philippine Islands; (2) that, even if otherwise, the collection of said duties was fully ratified and confirmed by the act of Congress approved June 30, 1906 (34 Stat., 636), commonly known as the Spooner Act. Both of these contentions are disputed by the plaintiffs.

The rule of international law seems to be well settled that between the high contracting parties the exchange of ratifications has a retroactive effect, confirming the treaty from its date. But a different rule prevails where individual rights of third parties are affected, and as to them it is not considered as concluded until there has been an exchange of ratifications. *(Haver*v. *Yaker,*9 Wall., 32.) As was said by Mr. Justice Brown in *Dooley*v. *United States*(182 U. S., 222, 230):

> “ While it istrue that the treaty of peace was signed December 10, 1898, it did not take effect upon individual rights until there was an exchange of ratifications.”

*359Under the foregoing rules, as between the high contracting parties, the title of the United States to the island of Cebu vested on the 10th day of December, 1898, the date of the treaty of Paris, but in so far as this question of title affects third parties, the title did not vest until the 11th day of April, 1899, the date of the ratification of the treaty. From the foregoing rule it would appear that technically a state of war existed between the United States and Spain until the 11th of April, 1899, in so far as that relation would affect third parties; and this notwithstanding the protocol of August 12, 1898, the only effect of which was to suspend active hostilities until a treaty was concluded. In view of this fact we do not see that it makes any difference in the decision of this case whether we consider the island of Cebu as belonging to the United States or as belonging to Spain at the time of the importation of the merchandise by the claimants. If Spanish territory, then the claimants who, though British subjects, were doing business at Manila, a port within the military jurisdiction of the United States, were trading with belligerents of the United States, which is forbidden by the rules of international law. *(Wheaton's International*Law, 422; *Montgomery*v. *United States,*15 Wall., 395.)

Doubtless the military authorities of the United States could grant permission so to trade, and it seems had done so in this case. But they had granted this privilege upon the condition that the duties upon importations into the different ports of the Philippine Islands must be paid at Manila. This condition the claimants failed to comply with in the first instance, and the exaction of these duties at a later date was well within the authority of the military commander at Manila.

*As*to the duties and obligations of the claimants while •doing business at Manila under the American flag, it hardly needs citation of authorities to the effect that for the time being they owed allegiance to the military authorities of the United States at that place. Any lawful regulation imposed by the collector of that port was as binding upon them as though they had been native-born citizens. *(Taylor's International*Law, 467; *Carlisle*v. *United States,*16 Wall., 147.)

*360It is true that Cebu was not then in the actual “ occupation and possession ” of the United States as prescribed by the executive order of July 13, 1898, but Manila was so occupied and possessed; and trade elsewhere by American citizens or aliens doing business at Manila and under the American Hag was forbidden except upon the condition that Manila should be considered the port of entry for the payment of duties upon importations. For the purpose- of exacting this condition all of the ports of the Philippine Islands were occupied and possessed by the military authorities of the United States.

It was said by the military board at Manila, to- which this matter was referred, that the remedy of the United States on account of this infraction of trade was the confiscation of the *Venus*and her cargo and not the collection of duties. We do not think so. It does not appear from the findings that there was any secrecy about this transaction. This regulation as to the payment of duties at Manila was a matter of common knowledge among' those doing business there. Before the arrival of the *Venus*at Cebu the claimants had an interview with the military collector of customs at Manila in which the payment of duties on this importation was discussed, and at- which time the claimants themselves suggested the interruption of the *Venus*before its arrival at Cebu, that the collector might thereby take such steps as he thought most expedient in the interest of the government. If in connection with this fact we take into consideration the letter of claimants to the collector of customs under date of January 24, 1899 (set forth in Finding VI), the next day after this interview, in which they say that they will request their Cebu friends *“*to protest against the payment of any duty in Cebu *in view of the Cebu, customs being under your*control,” it may well be presumed that the claimants were not willfully violating the regulations of the collector at Manila and expected to pay their duties there if required so to do.

If we take the other view of this controversy, that the island of Cebu was American territory at the time of the-importation of the merchandise, the case of the claimants is *361certainly no better. In that-event, our possession and occupation of the Philippine Islands was no less a mere military occupation, subject to such rules and regulations as the military authorities might prescribe, one of which was the one alréady mentioned, that all duties should be paid at the port of Manila. If the claimants were willfully disobeying these regulations and were secretly trading with rebellious subjects of the country under whose flag they were doing business, they certainly have no cause for complaint when only penalized by being called upon to pay the prescribed duties. If the more lenient view is taken as above, then they were only somewhat reluctantly obeying a lawful regulation.

Much reliance is placed by the claimants upon the case of *Rice*v. *United States*(4 Wheat., 246). In that case it appeared that Castine, Me., was captured by the British forces. September 1, 1814, and remained in possession of the enemy until after the ratification of the treaty of peace February,. 1815. During that period the British Government exercised all civil and military authority at that place, including the collections of customs upon importations. Upon the reestablishment of American authority there, the. collector of customs claimed the right to collect American duties upon goods which had already paid duties to the British military government above mentioned, but this right was denied by the Supreme Court in that case. There was nothing in that case analogous to the case at bar. Although the report of the case does not show who the importer was who had paid these duties to the British authorities, he was doubtless a citizen of Castine, who for the time being was subject to such laws and regulations as the military power there might prescribe; or, perhaps, a citizen of Great Britain or .some neutral power who was carrying on a lawful trade with the inhabitants of Castine. Certainly it could not have been an American citizen, dr an alien doing business at another American port, carrying in merchandise to Castine under an American flag.

If there was any doubt about the authority of the military collector of customs at Manila to collect duties upon importations, at other ports, though in the actual possession of a temporary authority, the act of June 30, 1906 (34 Stat., 636), *362as construed by the Supreme Court in *Heinszen*v. *United States*(206 U. S., 370), ratified this collection. In that case Mr. Justice White, speaking for the court, said:

> “ That where an agent, without precedent authority, has exercised in the name of a principal power which the principal had the capacity to bestow, the principal may ratify and affirm the unauthorized act, and thus retroactively give it validity when rights of third persons have not intervened, is so elementary as to need but statement.” (Id., 382.)

There can be no doubt of the authority of this Government at that time to prescribe such conditions as it saw fit upon trade under its own flag with the different .ports in the Philippine Islands. Its agent prescribed the conditions mentioned under which the duties in question were paid, and if we admit, as we do not, that he exceeded his authority in so doing, they were subsequently ratified and affirmed.

Judgment will be entered dismissing the petition.

Howry, J., was not present at the trial, of this case and took no part in its decision.