Scottish Court of Session Decisions

This is an action of count, reckoning, and payment at the instance of Nelson Clements, sometime of Texas, and presently of No. 24 Chester Square, London, against Mr John Macaulay, merchant, carrying on business, and now or lately residing at New Orleans in America. The action arises out of

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a joint adventure which was entered into between the pursuer, the defender, and other parties in 1862, the purpose of which was to convey cotton from Texas to the West Indies, and to carry back munitions of war for the use of the Confederate Government. A ship was chartered for that purpose, and made one or two voyages, but was finally destroyed by the Federal cruisers. The adventure was to a certain extent successful. The defender was the manager of it, and the pursuer claims his share of the concern from the defender, in whose hands the proceeds are. The defender pleaded forum non competens, that the only proper and competent form for determining the rights of the parties, under the agreement or joint-stock adventure in question, is the appropriate tribunal of the State in which said agreement was entered into, and the action ought to be dismissed in respect this Court is an inconvenient and incompetent forum. He farther pleaded—“In respect that the joint adventure in question was undertaken by citizens of the United States of America, for the purpose, inter alia, of furnishing supplies and munitions of war to be employed by citizens of the said States against the Government thereof, the claim founded on the said joint adventure cannot be enforced in the Courts of this country, and the present action should be dismissed.”

The Lord Ordinary (Barcaple) gave effect to the plea of forum non competens, and in the note appended to his interlocutor he observed—

“The defender maintains that he has a good defence against the action upon its merits, on the ground that the contract founded on was illegal, and altogether invalid, according to the law of the country in which it was entered into; and he contends that this is a question of American law which cannot be conveniently or satisfactorily disposed of by the courts of a foreign country. This is undoubtedly a relevant allegation, in support of the plea of forum non competens. The question is, whether it is sufficiently borne out by the nature of the case. The defender cannot be deprived of the benefit of his defence—that the contract was illegal, and ought not to be enforced. If the Court undertakes to decide in the cause, it must investigate and dispose of that ground of defence; and if it plainly appears that it cannot do so, except at a great disadvantage, in this case between foreign parties, in relation to a foreign contract and questions of foreign law, it will act consistently with recognised principle by remitting the parties to the courts of their own country. Of course no necessity for doing so in respect of this question as to the legality of the contract would arise if it could be made to appear that its legality is not to be judged of by the law of America. It was attempted to assimilate the case to that of an action on a contract contrary to the fiscal laws of a foreign State of which the Court where the remedy is sought does not take cognisance. But this is not a question of evidence, or of the conditions on which the remedy will be given, such as occurs in the class of cases referred to. It relates to the inherent and original validity of the contract. The Lord Ordinary does not in the slightest degree anticipate the judgment which is to be pronounced on the plea of illegality of the contract; but whether it is given effect to or rejected, he thinks it must be upon grounds which, though necessarily depending on the law of America, should be recognised wherever the parties may be litigating. Reference was made to the principles of public international law, as if the Court might find in them the means of deciding as to the legality of the contract without having recourse to the law of America. But the Lord Ordinary thinks that this case does not involve, even incidentally, any question of public law which regulates the rights and relations of States towards each other, and the resulting rights and relations between a belligerent State and the private citizens of a neutral State. The question which the Court is here asked to entertain and determine is between two private parties, both citizens of the same State. It relates to a contract of joint adventure into which they entered as mere private traders, and the object of the action is to obtain an accounting by the defender of his whole actings and intromissions under the contract. There is here involved no matter of international right or public law. The defender alleges that the contract is illegal according to the laws of the State within whose territory it was entered into. But the alleged illegality of the contract does not consist in its being inconsistent with the relation between the State of which the contracting parties are citizens and other States, but in the violation of their allegiance to the sovereign power of their own country. This must be exclusively a question of municipal law wherever it may happen to be tried. Any question as to the legality of a contract entered into here by citizens of this or any other neutral country, for running a blockade, or exporting munitions of war to a belligerent State, is, of course, proper for the jurisdiction of our courts—the question being whether it is illegal by the law of this country. In determining this question, reference will be made to the relation of the sovereign, by treaty or general public law, to the belligerent powers, in order to ascertain whether such a contract entered into in this country is inconsistent with the duty of citizens, and therefore illegal by our municipal law. The way in which such a question may arise is well illustrated by two very recent English cases— Ex parte Chavasse in re Grazebrook, 22d April 1865, 34 L. J. Bkr. 17, and the Helen, 7th November 1865, 1 Law Rep., Ad. and Ecc. 1. In both of these cases a plea founded on the alleged illegality of a contract similar to that which is now in question, but entered into in this country, was considered and disposed of. In the present case the question has no reference to the international relations at all. It is simply whether the contract was essentially illegal by the law of the country where it was entered into, and of which the parties to it were citizens. If the case is to be entertained by this Court, that law must be ascertained. The courts of this country cannot undertake to judge for themselves in that matter. They could be conceived to do so only upon the assumption, altogether opposed by the pursuer, that there is no specialty arising out of the Federal constitution of the United States, or out of the de facto relative position of the States, at the date of the contract. It is no part of the functions of the courts of this country to judge between citizens of a foreign State in regard to their relative rights and duties as citizens of their own country. If, in the complicated transactions of trade, or otherwise, it shall become necessary to determine matters of that kind, in order to enable the courts here to exercise their jurisdiction in suits properly before them, they must be ascertained, like other points of foreign law, by referring to authorities competent to expound that law. While this is the course that must be taken if the Court is to judge in the matter, the Lord Ordinary thinks that in sound judicial discretion it should not undertake to investigate the foreign law in the present case, but leave it to the parties to have that matter discussed in the courts of their own country. It is the constitutional law of the foreign State, affecting the principles of its government, of which this Court is asked to judge, in order to determine a question of private contract. It is conceivable that even such a question may by necessity be forced upon the tribunal of another country; but no such necessity can exist where, as in the present case, there is ample occasion to consider whether this is the appropriate forum. In maintaining his right to have the case adjudicated upon in this Court, the pursuer is driven to suggest that it may not now be decided in his own country upon the same view of the law which would have been enforced in Texas at the date of the contract. This implies that he declines to have it disposed of by the existing law of the country of both himself and the defender, and of the contract. The Lord Ordinary thinks that

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such a contention is untenable. If in disposing of the question reference ought to be made to a former political state of matters, it is to be assumed that will be done by the courts of the country whose law is to be administered. They must be best informed, and are indeed alone competently informed, as to the constitution of that country, and the legal effect of the political events which have taken place there. The Lord Ordinary does not conceive that this Court could do anything in the matter, except receive competent evidence as to how it would be determined if now decided by the American tribunals. It is strictly a question of their law, and that of a constitutional kind, with which a foreign court can have least to do. And it is not the less so that it arises ont of a civil contest, which was recognized by this and other neutral countries as a state of war importing the rights and duties of belligerents and neutrals. Such recognition affected international relations, but it could not affect the political nature of the contest, or the rights and duties of American citizens in reference to it.”

The defender having reclaimed, the Court unanimously altered the Lord Ordinary's judgment.