Now what is the effect in law? It is quite clear law according to the Prize Courts in this country, and in America too (and I think in Germany also), that goods which belong to an enemy when they are once shipped, and therefore become subject to the risk of capture at the hands of belligerents, will retain their enemy character until they reach their destination, and no transfer to a neutral will be effective so as to defeat the right of capture unless the transferee has actually taken possession of the goods. Now I think the destination of these goods, in the sense of that principle of law, was the destination of Hamburg. In my view the goods could not be transhipped from a German vessel on to another vessel with the destination changed so as to affect the rights of a belligerent. If that is not so, the effect of it would be that at the beginning of the war all cargoes upon German ships which might then be afloat, if they could be transferred, might legally be transferred to any neutral, and, therefore, all these cargoes would escape capture. That, I think, is not prize law. The doctrine has been laid down quite clearly in cases beginning with The Vrow Margaretha, 1 C. Rob. 336, and extending to later dates. I am not going through them; but perhaps it is as well to refer to two cases. In The Jan Frederick, 5 C. Rob. 127, 131, 140, the question was fully gone into by Sir William Scott, and he lays down the principles in general terms. I will cite a few passages only. "But in time of war this is prohibited as a vicious contract; being a fraud on belligerent rights, not only in the particular transaction, but in the great facility which it would necessarily introduce, of evading those rights beyond the possibility of detection. It is a road that, in time of war, must be shut up; for although honest men might be induced to travel it with very innocent intentions, the far greater proportion of those who passed, would use it only for sinister purposes, and with views of fraud on the rights of the belligerent. If the contemplation of war leads immediately to the transfer, and becomes the foundation of a contract, that would not otherwise be entered into on the part of the seller; and this is known to be so done, in the understanding of the purchaser, though on his part there may be other concurrent motives such a contract cannot be held good, on the same principle that applies to invalidate a transfer in transitu in time of actual war." And in discussing the question as to whether the contract was entered into bona fide, at the end of the judgment Sir William Scott pronounced as follows: "But

taking it to be a bona fide contract, yet being formed in transitu, for the purpose of withdrawing the property from capture, it does intimately partake of the nature of those contracts, which have in the repeated decisions of this, and of the Supreme Court, been pronounced null and invalid; and I pronounce this property subject to condemnation." The ground there put is this: to allow such transfers while the goods were in transit after the outbreak of war (and the same doctrine applies before the outbreak of war if it is imminent, or if the transaction takes place in contemplation of war) would be to encourage frauds on the rights of capture by belligerents. You cannot always prove the object in a man's mind. I have stated what, in the inference I draw, was one of the objects Goldschmidt & Zonen had in view in this case, but I cannot say that there is an absolute proof of it. But in order to close any investigation in the difficult matter of determining motives the law has pronounced that such transfers as this cannot be valid during war because it would be so easy thereby to defeat the rights of belligerents. There is only one other case that I want to refer to, namely, The Carl Walter, (1802) 4 C. Rob. 207. I cite that case because it illustrates the same principle and shows that it does not matter that the goods have been changed from one ship to another. Nor, in my view, does it matter that after the change of the goods from an enemy vessel to another constructive possession is taken by the master of the vessel and a destination for some other country substituted in the hope that the goods would not. be seized before their actual receipt or delivery. On both these grounds the ground of my inference as to the facts, and on the question of law-I hold that this transfer to Messrs. Goldschmidt & Zonen was invalid, and that the goods still partook of an enemy character at the time that they were upon the sea after they were transferred to the Dutch vessel and when they were seized.

One other circumstance must be adverted to. Counsel for the claimants contended that they were entitled to some protection because the goods were under the Dutch flag. In my view of the case the Declaration of Paris does not apply; but in any event, in the circumstances of this case, the Dutch flag had ceased to protect these goods. They were in port at the time they were seized, and, according to previous judgments in this Court, if the Declaration of Paris ever was a protection to this vessel (and I have expressed my opinion that it was not) it had

ceased to have any such effect at the time the goods were seized in port, after they were discharged from the Dutch ship.

I, therefore, condemn these goods or their proceeds.

NOTE. The transfer of enemy ships either in anticipation of war or in the midst of war offers so many opportunities for fraud that such transactions are regarded by prize courts with great suspicion. In the following cases vessels which had been transferred to neutrals were condemned for the reasons indicated: The Sechs Geschwistern (1801), 4 C. Robinson, 100 (seller retained right to repurchase after the war); The Vigilantia (1798), 1 C. Robinson, 1, The Embden (1798), 1 Ib. 16, The Ernst Merck (1854), Spinks, 98 (vessel transferred to a neutral continued in former trade); The Bernon (1798), 1 C. Robinson, 102, The Jemmy (1801), 4 Ib. 31, The Andromeda (1864), 2 Wallace, 481 (management of vessel retained by former owner); The General Hamilton (1805), 6 C. Robinson, 61 (transfer of enemy vessel in a blockaded port to a neutral); The Johann Christoph (1854), Spinks, 60, The Rapid (1854), Ib. 80 (no proof of payment of purchase price); The Tommi and The Rothersand (1914), L. R. [1914] P. 251 (vessel still flying an enemy flag). On the other hand, in The Ariel (1857), 11 Moore, P. C. 119, a sale which was admittedly made in contemplation of war was held valid because the transfer was undoubtedly bona fide. The decisions in The Baltica (1857), 11 Moore, P. C. 141 and The Bawean (1917), L. R. [1918] P. 58 were analyzed and distinguished in The Vesta (1921), L. R. [1921] 1 A. C. 774, and both in that case and in The Kronprinsessen Margareta (1920), L. R. [1921] 1 A. C. 486, the validity of the transfer of an enemy ship or cargo to a neutral is made to depend not only upon the fact that the former owner has parted with all his interest but that there has been an actual delivery, as contrasted with a transfer by documents, to the buyer.

The sale to a neutral of an enemy ship of war lying in a neutral port is invalid, The Minerva (1807), 6 C. Robinson, 396, even though it has been dismantled and fitted up as a merchant ship, The Georgia (1867), 7 Wallace, 32.

France, Germany and Russia have heretofore treated all transfers of enemy vessels made after the outbreak of war as absolutely invalid. Austria-Hungary and Japan have followed the Anglo-American rule as to the recognition of transfers which can be shown to be bona fide. But the Great War has cut across this alignment and has resulted in the curious situation that whether a transfer is recognized as valid or not depends on which member of a group of allied states passes upon it. Thus the Dacia, a German vessel lying in an American port and purchased by an American citizen after the outbreak of war and admitted to American registry, would be regarded under the old British rule as an American vessel since there was nothing in the facts to impeach the good faith of the transaction and the sale had been completed by delivery to the purchaser. But the vessel was captured by a French cruiser and was condemned as a German vessel by the French Prize Court. See the decision in Am. Jour. Int. Law,

IX, 1015. The Anglo-American rule whereby the validity of a transfer is determined by its bona fide character is preferable to the rule followed by France, Germany and Russia, but it is eminently desirable that the nations should be in agreement upon some rule. The Declaration of London, Art. 56, provides that a transfer after the opening of hostilities is void, "unless it is proved that such transfer was not made in order to evade the consequence which the enemy character of the vessel would involve." In its practical application this amounts almost to an adoption of the French rule, for most of the transfers of vessels from enemy to neutral flags after the outbreak of war are for the purpose of evading the consequences of enemy character. Furthermore, to throw upon the purchaser the burden of proving an innocent state of mind on the part of the seller at the time of the transfer an event which may have happened many months before the capture is to require a practical impossibility. If the purchaser can show that there was a genuine transfer in which the vendor parted with all his interest in the vessel and that the transfer of ownership was completed by delivery, the purchaser's title should be everywhere recognized. In The Edna (1919), L. R. [1919] P. 157, Lord Sterndale considered the case of a vessel which had been transferred from the Mexican to the German flag just before the outbreak of war. Immediately after hostilities began, it was reconveyed to a Mexican company controlled by Germans, who sold it to an American corporation. Lord Sterndale held that as the purchase was bona fide on the part of the American corporation, it was not a transfer made in order to avoid the consequences to which an enemy vessel would be exposed. On appeal the Judicial Committee was also convinced that there had been a complete and bona fide transfer and ordered the vessel's release, [1921] 1 A. C. 735.

For an excellent treatment of the subject see J. W. Garner, "The Transfer of Merchant Vessels from Belligerent to Neutral Flags," Am. Law Rev. XLIX, 321. See also Int. Law Topics, 1906, 21; Ib. 1913, 155; Int. Law Situations, 1910, 108; Russell T. Mount, "Prize Cases in the English Courts Arising out of the Present War," Col. Law Rev. XV, 316, 567; Cobbett, Cases and Opinions, II, 144, 163; Hyde, II, 551, 564; Moore, Digest, VII, 404.

SECTION 4. THE RIGHTS OF INTERMEDIATE PARTIES.

THE ODESSA.

JUDICIAL COMMITTE OF THE PRIVY COUNCIL OF GREAT BRITAIN. 1915. Law Reports [1916] 1 A. C. 145.

Consolidated Appeals from two decrees of the Prize Court reported as to the Odessa, [1915] P. 52.

(England)

[All that pertains to the Woolston is omitted.] The appellants in both appeals were bankers carrying on business in London. The cargo [of the Odessa], consisting of nitrate of soda, was sold by a Chilean firm to a German company carrying on business at Hamburg, and was shipped in May, 1914, "bound for Channel for orders." In June, 1914, the appellants accepted bills of exchange for 41,153l. 1s. 5d. (the price of the cargo) drawn by the sellers, and as security received and held the bill of lading which made the cargo deliverable to them or to their assigns. On August 4, 1914, while the ship was on her voyage, war broke out between Great Britain and Germany, and on August 19, 1914, the ship was captured at sea. A writ was issued by the Procurator-General claiming that the ship and cargo belonged to enemies of the Crown and were liable to confiscation as lawful prize. The appellants claimed the cargo alleging that it was their property and/ or as holders of the bill of lading for full value.

The President of the Probate, Divorce and Admiralty Division (Sir Samuel Evans), held that the cargo was the property of the German company and that the appellants were merely pledgees and not entitled to have the cargo released to them; he therefore made a decree condemning the cargo as lawful prize.

LORD MERSEY. Their Lordships are of opinion that the learned President was right in the inferences which he drew from the facts, namely, that the general property in the cargo was in the German company, and that the appellants were merely pledgees thereof at the date of the seizure. The appellants indeed did not dispute the correctness of these inferences, but what they say is that, though correct, they do not justify a decree which has the effect of forfeiting their rights as pledgees. Thus the question in the appeal is whether in case of a pledge such as existed here a Court of Prize ought to condemn the cargo, and, if so, whether it should direct the appellants' claim to be paid out of the proceeds to arise from the sale thereof.

It is worth while to recall generally the principles which have hitherto guided British Courts of Prize in dealing with a claim by a captor for condemnation. All civilized nations up to the present time have recognized the right of a belligerent to seize, with a view to condemnation by a competent Court of Prize,