US SUPREME COURT DECISIONS

1. A contract made by a consul of a neutral power with the citizen of a belligerent state that he will "protect," with his neutral name, from capture by the belligerent merchandise which such citizen has in the enemy's lines, is against public policy and void.

2. During the late rebellion, the President alone had power to license commercial intercourse between places within the lines of military occupation by forces of the United States and places under the control of insurgents against it. Hence the general orders of the officer of the United States, commanding in the department, could give no validity to such intercourse.

3. Where suit is brought upon a contract which is void as against public policy and the laws, a party who pleads such invalidity of it does not render the plea ineffective by a further defense in "reconvention" -- a defense of this sort, to-wit, that if the contract be valid, he himself takes the position of a plaintiff, and makes a claim for damages for its nonperformance.

During the late civil war, the City of New Orleans was in military occupation of the United States forces, and most of the neighboring cotton region around in military possession of rebel enemies. chanrobles.com-red

Page 74 U. S. 543

In this state of things, a circular of the Treasury of July 3, 1863, declared it to be the intention of that department to allow no intercourse at all beyond the national and within the rebel lines of military occupation. "Across these lines," was its language, "there can be no intercourse except that of a character exclusively military."

A Treasury regulation also said:

"Commercial intercourse with localities beyond the lines of military occupation by the United States forces is strictly prohibited, and no permit will be granted for the transportation of any property to any place under the control of insurgents against the United States."

This regulation was made under an act of Congress [Footnote 1] which, forbidding all commercial intercourse between territory proclaimed by the President to be in insurrection (which the territory about New Orleans had been, though New Orleans was not) and the citizens of the rest of the United States and enacting that all merchandise coming from such territory into other parts of the United States, should be forfeited, authorized the PRESIDENT to permit such intercourse in such articles for such time and by such persons as he might deem proper, providing, however, that such intercourse, so far as licensed, should be carried on only in pursuance of rules and regulations prescribed by the Treasury Department.

By the general orders of the Military Department of the Gulf, however, dated March 7 and September 3, 1863, the trade of the Mississippi within that department was permitted subject to such restrictions only as should be necessary to prevent the supply of provisions and munitions of war to the enemy. The products of the country were authorized to be brought to New Orleans and other designated points within the military lines of the United States and to be sold by the proprietors or their factors.

In this state of orders, civil and military, George Coppell, chanrobles.com-red

Page 74 U. S. 544

a British subject and acting British consul at New Orleans and trading there (William Mure being the consul), made a contract, through one James Gonegal, with a certain Hall, a citizen of Louisiana, residing like Coppell in New Orleans, but both being, at the time of the contract, in rebel territory, by which Hall agreed to "furnish" the said Coppell with a large number of bales of cotton, all of it being then in rebel territory, and owned chiefly by one Mann, also a citizen of Louisiana, resident apparently in the rebel region of it, cotton being at the time an article specially sought for by both combatants, shielded and preserved by each while it was in his own possession, and destroyed when found, without an ability on his own part to capture it, in possession of the other. By this contract, Coppell on his part agreed

"to cause said cotton to be protected and transported to New Orleans, and disposed of to the best advantage, paying to said Hall, first, the actual cost of it, with two-thirds of the net profits &c., without commissions, retaining one-third of the profits as his compensation."

Coppell now marked a large part of the cotton with his private mark, and soon afterwards issued certificates (the marks and other designations of the cotton being set forth on a document appended), in this form:

"HER BRITANNIC MAJESTY'S CONSULATE FOR THE STATE OF LOUISIANA:"

"Know all persons to whom these presents shall come, that I Wm. Mure, Esq., her Britannic Majesty's consul for the City of New Orleans and state of Louisiana, do hereby certify that on the day of the date hereof personally appeared before me Mr. James Gonegal, who being by me duly sworn, says that the twenty bales cotton, as described on the document hereunto attached, is the property of and belongs to a British subject, and is duly registered as such at this consulate."

"Given under my hand and seal of office, at the City of New Orleans, in the State of Louisiana, the eighth day of October, one thousand eight hundred and sixty-three."

"GEORGE COPPELL"

"H.B.M.'s Acting Consul"

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Under these "protections," and escaping destruction from either government or rebels, the cotton remained on Mann's estate in the rebel region and in his and Hall's charge until the rebel forces there surrendered to the government. The whole region coming thus again under the control of the United States and it becoming easy to transport cotton from the surrounding country to New Orleans and there to dispose of it to advantage at a rate of factorage much less than one-third the profits, Hall and Mann declined to furnish Coppell with the cotton. Coppell thereupon, in the court below, by petitions in which, referring to the contract as made "under the permission" expressed in military general orders and alleging that he had been able and desirous to bring the cotton to New Orleans at the time of the contract and that Hall and Mann had prevented him, to his damage $50,000, now demanded possession of the cotton "for the purposes enumerated in the agreement," or if he should be adjudged not entitled to such possession, then to have damages.

The defendants set up that the contract was null and void as being in violation of public policy of the laws of the United States and of the neutrality which Coppell, as a British subject, was bound to maintain. But that "if" it should be determined that the contract was valid, then that they, the said respondents, "assuming the positions of plaintiffs in reconvention," averred that Coppell was indebted to them in damages $70,000 for not having transported the cotton to New Orleans under British protection and sold it during the war, every of which things it was alleged that he was unable to do and none of which he had ever attempted or offered to do. And they prayed that he "might be cited to appear and answer this reconventional demand."

Coppell replied that he was the consul of Her British Majesty, that he did protect the cotton from all seizures which his agreement included, and that, as soon as the military situation permitted, he was ready and willing to perform all the stipulations of his agreement, and tendered the necessary chanrobles.com-red

Page 74 U. S. 546

means for the transportation of the cotton to New Orleans, which tender the defendants declined.

The court below charged:

1. That Hall and the plaintiff, both residing in New Orleans, the contract was valid under the law of nations.

2. That the military orders then in force authorized and gave validity to the contract.

3. That the demand for reconvention set up by the defendants

"cured any nullity or illegality in the contract, if any existed, and that, under the pleadings, the plaintiff might recover, notwithstanding such illegality."

And judgment having been given for the plaintiff for $29,644, the case was brought by the defendants here. chanrobles.com-red

Page 74 U. S. 548