1. The declaration of war, April 6, 1917, immediately effected
dissolution of partnerships then existing between citizens of this
country and citizens of Germany. P.
271 U. S.
286.
2. During the war all intercourse, correspondence, and traffic
between citizens of the two countries which might advantage the
enemy was absolutely forbidden.
Id.
3. The purpose of this restriction is not arbitrarily and
unnecessarily to tie the hands of the individuals concerned, but to
preclude the possibility of aid or comfort, direct or indirect, to
the
Page 271 U. S. 273
opposing forces, and private rights and duties are affected only
so far as they are incompatible with the rights of war. P.
271 U.S. 287.
4. The rule that a liquidating partner must settle the
partnership affairs within a reasonable time and, after payment of
the partnership liabilities, divide the proceeds among the partners
according to their interests, applies to a partnership between
citizen and alien dissolved by war. P.
271 U. S.
289.
5. As settlement is legally impossible until the close of the
war, it is the right and duty of the respective partners to care
for and preserve the assets of the partnership in their possession
for their mutual benefit when the war is ended.
Id.
6. A
post-bellum accounting between such partners is
controlled by equitable principles, and the American partner is not
entitled, in virtue of his citizenship, to more favorable
consideration in the court of equity than is accorded to his alien
partner. P.
271 U. S.
290.
7. Where the German assets of a German-American partnership
which was dissolved by the war were cared for by the German
partners during the period of nonintercourse, but lost much of
their value owing solely to the great depreciation of the German
currency, while the assets in possession of the American partner,
by reason of the more fortunate state of American finances, had
preserved their original monetary value,
held, upon an
accounting:
(1) That the failure of the German partners to liquidate the
German assets and their continued use of them in the business
during the war were not grounds for holding them as purchasers of
the American's interest in such assets as of the date when war was
declared, their conduct not having been hostile nor inconsistent
with an honest effort to administer the property to the best
advantage of all concerned, and no loss having resulted from the
continuance of the business. P.
271 U. S.
290.
(2) That whether the accounting were taken upon the basis of
what the German partners did with the assets after war was declared
or of what they should have done, the loss was an ineluctable
consequence of the war, and must be borne by all the partners
equally.
Clay v. Field, 138 U. S. 464. P.
271 U. S.
292.
(3) That the German partners should be charged with the
American's share in the German assets at the exchange value of the
German mark on July 14, 1919, the date of the War Trade Board
regulation restoring the right of commercial intercourse between
citizens of the two countries, when settlement of the partnership
first became lawful, rather than at exchange value at the time of
accounting. P.
271 U. S.
295.
Page 271 U. S. 274
8. Where a partnership between citizens of two countries was
dissolved, and settlement suspended, by war, interest may be
allowed to one partner in lieu of unascertainable profits derived
from the assets by the other during the period of nonintercourse.
P.
271 U. S.
296.
9. Taxes levied by the German government on the share of an
American partner in partnership assets in Germany and paid by
German partners during the war
held chargeable to him in a
settlement of the partnership. P.
271 U. S.
297.
10. An authority from an American partner to his German partners
to make payments to his relatives from partnership funds was
cancelled by the outbreak of war between the two countries.
Id.
1 F.2d 419 reversed.
Appeals from a decree of the circuit court of appeals which
affirmed in part and reversed in part a decree of the district
court in a suit brought by the Alien Property Custodian for an
accounting of assets, part in the United States and part in
Germany, which appertained to a partnership existing on the
declaration of war.
Page 271 U. S. 284
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
These are several appeals from a decree of the court below
affirming in part and reversing in part a decree of the Federal
District Court for the District of Massachusetts. The suit was
brought by the Alien Property Custodian against Richard Mayer, a
naturalized citizen of the United States, two corporations,
organized under Massachusetts law, Karl B. Strauss, a naturalized
subject of Great Britain, and Edwin Reis and Anny Reis, in her own
right as widow and as trustee for two minor children of Ludwig
Reis, deceased, citizens and inhabitants of Germany, for an
accounting in respect of the interest of Mayer and the German
citizens in certain assets in the United States in Mayer's
possession and assets in Germany in the possession of the Germans,
alleged to belong to a partnership consisting of Mayer, Edwin Reis,
Karl B. Strauss and Ludwig Reis.
The partnership was formed sometime prior to the declaration of
war against Germany on April 6, 1917, and was existing at that
time. Mayer contributed to the partnership his American business,
worth slightly over 206,000 marks -- less than $50,000. The German
partners contributed about 2,655,000 marks. By the partnership
agreement, after payment of 4 1/2 percent on the capital
contributed and stipulated salaries, Mayer was to receive 20
percent of the profits, to be credited to his capital account. The
partnership agreement was made in Germany, and the principal seat
of the partnership was at Friedrichsfeld, Germany, with branches at
Manchester, England, and in Boston. At the time of the
declaration
Page 271 U. S. 285
of war, the partnership assets in Mayer's possession had grown
to a little over $910,000, and his share in the European assets
amounted to 2,414,056.12 marks. Of the amount in Mayer's
possession, between $500,000 and $600,000 consisted of a balance
remaining out of $2,500,000 sent to him by the German partners for
the purpose of buying cotton waste.
After the declaration of war, the American assets were seized by
the Alien Property Custodian, but, in a suit brought against that
officer, they were ordered redelivered to Mayer upon the ground
that he had a lien upon them for his share of the partnership
capital and profits.
Mayer v. Garvan, 270 F. 229,
aff'd, 278 F. 27. The value of the assets returned to
Mayer was $828,072.72; losses having occurred which are not
material to the present consideration.
In that case, the court held that, under the partnership
agreement, Mayer was entitled upon distribution to have out of the
assets of the partnership the amount of his capital investment,
together with 20 percent of the net profits earned by the
partnership, and was liable for 20 percent of all losses. There
was, however, no evidence of the actual value of the American
property or of the German of English property, nor of the
liabilities of the firm, and this suit for an accounting followed.
It is not disputed that the custodian is entitled to the American
assets after deducting therefrom the amount of Mayer's share in all
the assets.
The German partners entered an appearance in the present suit,
and produced at the hearing all the account books. The property in
Manchester had been seized by the English government and sold,
leaving debts on account of the English branch, amounting to
35,000, which were either paid or assumed by the German partners.
The district court found that, a few days prior to the declaration
of war, the value of the German mark in the
Page 271 U. S. 286
currency of the United States, according to the rate of exchange
then quoted, was about 18 cents. Thereafter, no rate of exchange
was quoted until July 17, 1919, at which time the exchange value of
the German mark was 7 7/8 cents. Thereafter, its value steadily
declined, until, at the time of the Act of Congress declaring the
state of war at an end on July 2, 1921, it was 1.35 cents, and when
the hearing was begun in the present case its value was .0048 of a
dollar. The district court determined that the German partners
should account for Mayer's share of the German assets at their
value on April 6, 1917, the American assets to be measured in terms
of the American gold dollar, and the German assets correspondingly
in terms of the German gold mark, which is the equivalent of 23.82
cents of the money of the United States, and upon this basis the
decree was entered. The circuit court of appeals, in affirming the
decree, adopted the same view.
Sub nom. Miller v. Mayer, 1
F.2d 419. And this presents the principal question in the case, and
the only one requiring extended consideration.
Appellants in Nos. 232 and 234 unite in the contention that the
declaration of war did not affect the title to the partnership
property, that, although the partnership was thereby dissolved, the
partners must suffer ratably from any depreciation in the value of
the German assets after the dissolution and before the accounting,
and that the accounting must be made upon the basis of the value of
such assets at the time of the accounting, the value of the mark
being taken at its then rate of exchange.
That the declaration of a state of war immediately effected a
dissolution of the partnership is well settled, and is not in
dispute. It is likewise settled that, during the war, all
intercourse, correspondence, and traffic between citizens of this
country and of Germany which would or might be to the advantage of
the enemy were absolutely forbidden.
Conrad v. Waples,
96 U. S. 279,
96 U. S. 287;
Briggs
Page 271 U. S. 287
v. United States, 143 U. S. 346,
143 U. S. 353.
The effect of War Trade Regulations No. 802, July 14, 1919, and No.
814, July 20, 1919, we shall consider further along.
The reasons for, and the limitations upon, the rule have been
frequently stated. War between nations is war between their
individual citizens. All intercourse inconsistent with a condition
of hostility is interdicted,
The Rapid, 8
Cranch 155,
12 U. S. 162,
for fear that it may give aid or comfort to, or add to the
resources of, the enemy. Moreover, as said by this Court in
United States v.
Lane, 8 Wall. 185,
75 U. S.
195:
"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 war is abnormal and exceptional, and, while the supreme
necessities which it imposes require that, in many respects, the
rules which govern the relations of the respective citizens of the
belligerent powers in time of peace must be modified or entirely
put aside, there is no tendency, in our day, at least, to extend
them to results clearly beyond the need and the duration of the
need. The purpose of the restriction is not arbitrarily and
unnecessarily to tie the hands of the individuals concerned, but to
preclude the possibility of aid or comfort, direct or indirect, to
the opposing forces. It is that purpose which gives birth to the
rule, and indicates its limits. The rule is simply "a belligerent's
weapon of self-protection."
Daimler Co. v. Continental Tyre,
etc., Co., [1916] 2 A.C. 307, 344. And it applies even where
the trading is with a loyal citizen, if he be resident in the
enemy's country, since the result of his action may be to furnish
resources to the enemy.
Id., 319;
Janson v.
Driefontein Consolidated Mines, [1902] A.C. 484, 505. The
whole tendency of modern law and practice is to soften the "ancient
severities of war," and to recognize increasingly
Page 271 U. S. 288
that the normal interrelations of the citizens of the respective
belligerents are not to be interfered with when such interference
is unnecessary to the successful prosecution of the war. Private
rights and duties are affected by war only so far as they are
incompatible with the rights of war.
See generally Kershaw v.
Kelsey, 100 Mass. 561, 568-574, where the question is
elaborately reviewed in an opinion by Mr. Justice Gray which has
several times received the approval of this Court;
Briggs v.
United States, supra, page
143 U. S. 353;
Williams v. Paine, 169 U. S. 55,
169 U. S. 72;
Birge-Forbes Co. v. Heye, 251 U.
S. 317,
251 U. S.
323.
Thus, where a contract has been performed before the advent of
war and nothing remains but the payment of money, the right to
collect is not destroyed, but only the remedy suspended until the
termination of the war.
Hanger v.
Abbott, 6 Wall. 532,
73 U. S. 537;
Brown v. United
States, 8 Cranch 110;
New York Life Ins. Co. v.
Statham, 93 U. S. 24,
93 U. S. 31;
Crutcher v. Hord and Wife, 67 Ky. 360, 366;
Mutual
Benefit Life Ins. Co. v. Hillyard, 37 N.J.Law, 444, 465.
Agencies, created before the war and not requiring intercourse
across the enemy's frontier, such as for the collection of debts,
preservation of property, and so forth, are not terminated by war.
See generally 74 U. S.
Smith, 7 Wall. 447,
74 U. S.
452-453;
Quigley's Case, 13 Ct.Cls. 367, 371;
Anderson v. Bank, 1 Fed.Cases 838, No. 354;
Lamar v.
Micou, 112 U. S. 452,
112 U. S. 464.
And in the case of contracts made before the war for the delivery
of goods, it is entirely lawful to make delivery during the war
within the United States. The thing forbidden is placing property
or money within the power of the enemy,
"not in delivering it to an alien enemy, or his agent, residing
here, under the control of our own government. . . . In such a
case, the interests of commerce are perfectly compatible with the
rights of war, and public policy does not forbid the transfer."
Buchanan v. Curry, 19 Johns. 137, 141.
And so here we have to deal not with a contract made during the
war or requiring commercial or other intercourse
Page 271 U. S. 289
across military lines, but with an adjustment of rights, after
the restoration of peace, under lawful articles of partnership
entered into before, and existing at the outbreak of, the war. The
advent of a state of war put an end to the partnership and
postponed all remedies relating to the dissolution, but it did not
petrify rights and duties resulting therefrom. Its effect only was
to suspend the enforcement of the obligation of each of the
partners in respect of the assets and past transactions of the
partnership, and the essential inquiry now is: what was the
obligation which resulted from the dissolution?
Upon the dissolution of a partnership, the general rule is that
the liquidating partner or partners must settle up the partnership
affairs within a reasonable time, and, after payment of the
partnership debts and liabilities, divide the proceeds among the
partners according to their interests.
Clay v. Field,
138 U. S. 464,
138 U. S. 473.
The rule is not different because the dissolution is the result of
war.
Stevenson & Sons v. Aktiengesellschaft, etc.,
[1918] A.C. 239, 246. But in the case of such a dissolution, in the
absence of legislation to the contrary, a settlement is legally
impossible until the close of the war, because of the rule
forbidding intercourse across the enemy's frontier and denying
access by enemy citizens to our courts, although it is entirely
compatible with the rule to recognize the right and duty of the
enemy partners to care for and preserve the assets of the
copartnership in the possession of each for their mutual benefit
when the war has ended. To say otherwise because an enemy may
realize a benefit after the war has come to an end is utterly to
misapply the principle upon which the nonintercourse rule is based
and to confound the suspension of the remedy with the loss of the
right.
"The prohibition against doing anything for the benefit of an
enemy contemplates his benefit during the war, and not the possible
advantage he may gain when peace comes."
Daimler Co. v. Continental
Page 271 U. S. 290
Tyre, etc., Co., supra, p. 347;
Stevenson &
Sons v. Aktiengesellschaft, etc., supra, pp. 249, 253-254.
In the present case, the adjustment of the account as among the
partners is a matter in which the government, the war and the
exigencies of the war having passed, is no longer concerned save as
its rights and duties are represented by the Alien Property
Custodian. Except for the latter consideration, we are dealing with
a simple suit for an accounting among partners, to be determined by
the application of equitable principles.
Stevenson & Sons
v. Aktiengesellschaft, etc., supra, p. 248. The effect upon
these principles of the dissolution of the partnership by war is
certainly no greater than if it had been dissolved by death or
agreement.
Buchanan v. Curry, supra, pp 142-143. In either
event, the relation created by the dissolution in respect of the
assets is a fiduciary relation, and adjustments of rights and
liabilities of the partners
inter se are to be made in
accordance with the rules governing such relationships, and, in a
court of equity, the American partner,
ipso facto, has no
such exceptional privilege as will permit him to secure more
favorable consideration than that to be accorded to his alien
partners.
The argument for Mayer is that the German partners should be
treated as having purchased the German assets on April 6, 1917, and
compelled to account for Mayer's interest therein upon that basis
and as of that date. In support of that contention, we are referred
to the record in the original case of
Mayer v. Garvan,
supra, of which the district court in the present case took
judicial notice. That record has not been before us, but we accept
the statements contained in Mayer's brief in respect of its
disclosures, since they do not seem to be challenged by the other
parties. We are of opinion, however, that they fall short of
establishing a situation for applying the theory of a purchase of
the German assets by the German partners.
Page 271 U. S. 291
Undoubtedly the German partners, instead of liquidating,
continued to use the assets after the dissolution in a going
business, commingling old assets with new; also they took in a new
partner. The court of appeals said, and evidence is quoted from the
Garvan record to the effect, that the assets were taken over by the
German partners and thereafter treated as their own. The evidence
before us in the present record is to the effect that the business
in Germany was carried on during the war as it had been before,
that Mayer's share of the profits was credited to him annually in
the private ledger at Friedrichsfeld, and that a sum sufficient to
pay out Mayer's capital interest, as shown by the books, was
continuously carried on deposit in banks.
Precisely what are the facts in respect of this matter we need
not stop to determine, because, in view of the conclusion we have
reached, it is not material whether the German partners treated the
business as their own or as that of the old partnership. The
partnership was at an end, and their duty was to liquidate. They
could not carry on the business in any form so as to bind Mayer.
But Mayer must elect either to accept what was actually done with
the burdens and benefits or to enforce against his German partners
a liability based upon what they should have done. The decision
below and Mayer's attitude apparently proceed upon the latter
alternative, and in that view, in an ordinary case, he could justly
be given no more than what he would have obtained if the
liquidation had in fact been made within a reasonable time and the
amount of his share promptly paid over to him. Precisely at this
point the contention in Mayer's behalf breaks down, for it ignores
the circumstance, which differentiates this from the ordinary case,
that, even if the assets and been promptly liquidated, nothing
could have been paid to Mayer until after the removal or expiration
of the nonintercourse bar. Until that time, the amount
Page 271 U. S. 292
coming to Mayer necessarily would have been held by the German
partners in the form of German currency, or of securities or a bank
account payable in such currency, and the loss, so far as Mayer is
concerned, would have resulted nonetheless.
In this connection, the fact may not be disregarded that the
German partners dealt with a situation under the abnormal
restraints and perplexities of war, and it is fair to interpret
what they did in the light of that situation. So viewed, we are
unable to conclude that their acts were hostile to Mayer's ultimate
rights or inconsistent with an honest effort to do the best
possible thing with the property until the close of the war,
utilizing it, in the meantime, in a way which they conceived to be
to the best advantage of all concerned. It is clear that no loss
was sustained by the continuance of the business, but, on the
contrary, there was an asset gain. The great loss, which finally
resulted, and which was little short of being complete, was due
entirely to the depreciation in the value of the German mark, and
not to any lack of care or good faith on their part. Moreover, with
the exception of plant and machinery, relatively of small value,
the German assets during the entire time were in the form of German
paper currency or securities, bills receivable, etc., convertible
only into German paper currency, since there was no gold in
circulation and the paper currency was, by German law, legal
tender.
In whatever aspect the case is viewed or upon whatever basis the
liability of the German partners be made to rest, the loss, in the
final analysis, was an ineluctable consequence of the war. Is it to
be borne by them alone or to be shared equally by all the partners
as a common misfortune beyond the power of any of them to turn
aside? That question justly cannot be solved by a strict
enforcement of the ordinary rule as in ordinary cases, for here we
are dealing with extraordinary and anomalous
Page 271 U. S. 293
conditions, as a result of which money values were swept away by
immense causes as much beyond the sway of the German partners as of
Mayer. Blame for such a situation rests upon neither, and equality
is equity.
This would appear more clearly if there were no American assets
and the German assets were alone concerned. In that event, a decree
compelling the German partners to account to Mayer upon the basis
of the full value of these assets at the outbreak of the war in
terms of gold, notwithstanding the destructive force of these
unavoidable circumstances, would be so obviously harsh and
inequitable as to shock the conscience of the Chancellor. But the
equities are not different because Mayer chances also to have in
his possession partnership assets, the greater part of which, it
may be said in passing, had been sent to him by the German partners
for trade purposes, which, by reason of the more fortunate state of
American finances, had preserved their original monetary value.
Upon the whole, we think the case is fairly ruled in principle
by
Clay v. Field, supra. In that case, the property of the
partnership consisted of a plantation in Tennessee. Prior to the
outbreak of the Civil War, one of the partners died. The surviving
partner continued, after his partner's death, to retain possession
of the plantation, together with the slaves upon it, and to operate
the property in good faith. When the war came a year or two later,
the plantation was in the theater of conflict and, at the close of
the war, the slaves had become free. The Court recognized the
general rule, as we have already stated it, that it was the
survivor's duty to settle up the partnership affairs within a
reasonable time and pay over to the representatives of the deceased
partner the amount due them. And the Court proceeded to say (pp.
138 U. S.
473-474) that:
"If he [the survivor] takes the responsibility of continuing the
business of the firm and using the property
Page 271 U. S. 294
of the partnership, he becomes liable for losses that may occur,
and it is in the option of the representatives of the deceased
partner either to insist upon a division of the profits which may
be made in thus carrying on the business or upon being paid the
amount of the deceased's share in the capital, with lawful interest
thereon, after deducting his indebtedness to the firm."
Strictly applied, the Court said, the rule would entitle the
representatives to call for an account of the share of the deceased
at the time of his death, with lawful interest. But, in view of the
anomalous circumstances and unexpected events, the Court declined
to enforce the rule, saying (p.
138 U. S.
474):
"In our view, equity, when called upon to settle the mutual
rights of the parties, may very properly mitigate the hardships of
the rule, especially when, as in this case, the loss has occurred
by public war."
It was recognized that the survivor
"might have sold the slaves and other property on terms which,
in the light of subsequent events, would have been greatly to the
advantage of his brother's estate, yet it seems clear from the
evidence that the reason he did not sell was that no opportunity
offered of effecting a sale of the plantation at what he deemed an
adequate price."
Under all the circumstances, this Court agreed with the trial
court that it would be a very hard application of the general rule
relating to a dissolution of partnership to compel the survivor or
his estate to account for the value of the slaves, which, in a
short time, were freed by operation of law and no longer articles
of property. It was therefore held that the surviving partner was
not accountable for the value of the slaves, but was accountable
for the fair rental value of the property, including that of the
slaves while they were slaves.
See also Tate v. Norton,
94 U. S. 746,
94 U. S.
747-748.
Here, the case for the German partners, if anything, is
stronger, for, during the nonintercourse period, there never was a
time when, so far as appears, Mayer's share
Page 271 U. S. 295
could have been converted into anything but German marks, or
when it was legally possible to pay the amount to Mayer. As soon as
the nonintercourse restriction ceased to be operative, however,
such payment became lawful, and an obligation arose on the part of
the German partners to make it, since Mayer's share, long prior to
that time, had been identified and was separable from the body of
the assets. It was, in effect, a trust fund in respect of which the
German partners then owed the duty of prompt settlement. The war
was formally declared to be at an end by the Act of July 2, 1921,
but the right of commercial intercourse and of communication
between citizens of this country and Germany was restored by the
War Trade Board regulation of July 14, 1919, as amended July 20,
1919. We therefore conclude that the German partners should be
charged with the amount of Mayer's share of the German assets at
the exchange value of the German mark on July 14, 1919. The
evidence in the record shows that, on July 17th, three days later,
the exchange value was 7 7/8 cents, which seems near enough to the
designated date. The depreciation of the German mark was so great
that to compute its American monetary value on a nominal par basis
would be to indulge in a pure fiction, and exchange values must be
resorted to as the only available method of measurement. The
conclusion that the exchange value of marks in American money is to
be taken as of the time when commercial intercourse, and therefore
settlement, first became lawful, rather than at the time of the
accounting, finds support by analogy in many decisions.
See,
for example, Hicks v. Guinness, 269 U. S.
71,
269 U. S. 80;
S.S. Celia U.S.S. Volturno, [1921] 2 A.C. 544;
In re
British American Continental Bank [1922] 2 Ch. 575;
Societe des Hotels v. Cumming, [1921] 3 K.B. 459;
Di
Ferdinando v. Simon, Smits & Co., [1920] 3 K.B. 409;
Lebeaupin v. Crispin, [1920] 2 K.B. 714.
In fixing the date upon which exchange should be calculated, the
inevitable delay which must result before a
Page 271 U. S. 296
judicial taking of the account must be given weight. If the
liability be treated as having crystallized at the time indicated
above, them a definite date is fixed for the ascertainment of
exchange, and the amount when found may be awarded without regard
to the fluctuations in the possible date of accounting.
Lebeaupin v. Crispin, supra, p. 723. In England, the rule
has been applied in a winding-up proceeding upon the ground that a
date must necessarily be fixed on which liabilities are to be
treated as definitely ascertained for the purpose of properly
conducting the later winding-up of the company's affairs.
In re
British American Continental Bank, supra, p. 582. And the rule
is the same whether the contract is to be performed in England or
out of England, on the ground that there should not be varying
rules in such cases.
Lebeaupin v. Crispin, supra, p.
723.
The remaining questions in dispute require only brief
consideration.
The district court held that it was impossible to calculate the
profits which should be equitably assigned to Mayer's share in the
German assets, and that, since there could be no payment to him
during the period of nonintercourse, interest could not be allowed
him upon such share, applying the rule laid down in
Brown v.
Hiatt, 15 Wall. 177. But the question there arose
in respect of a debt which became payable during the progress of
the Civil War, and the Court held that, since the debt could not be
paid until the termination of the war, interest upon it could not
be exacted. Here, we are not dealing with the question of interest
upon a debt, or really with interest at all except as a term of
convenience, but with that of an allowance in lieu of
unascertainable profits, to which the rule in the
Hiatt
case has no application.
Stevenson & Sons v.
Aktiengesellschaft, etc., supra, p. 256. An award should have
been made to Mayer, calculated upon the basis of interest in lieu
of profits.
Page 271 U. S. 297
The district court allowed the German partners a credit for
266,432.40 marks paid by them to the German government during the
war for taxes levied against Mayer's partnership interest in 1914,
1915, and 1916. It appears that, if the tax had not been paid,
Mayer's share would have been liable to seizure by the tax
collector. The circuit court of appeals reversed the ruling of the
district court and disallowed the item. The obligation was one
which apparently arose before the war, and, in the view we have
taken of the relation of the German partners to Mayer's interest in
the assets, we think the payment was properly made to protect the
fund, and that the district court was right in allowing credit for
it.
Payments made during the war to relatives of Mayer do not rest
upon like considerations, and we agree with the action of the
circuit court of appeals in disallowing them. These payments were
based upon directions, said to be of a continuing character, given
before the war, but which were brought to an end by the advent of
war. This results not on the ground that the payments were contrary
to public policy, but upon the ground that the outbreak of
hostilities produced such a fundamental alteration in the relations
of the parties that we cannot assume a continuance of authority to
make such payments in the absence of evidence of Mayer's assent
thereto.
Insurance Co. v. Davis, 95 U. S.
425,
95 U. S. 429.
Williams v. Paine, supra, p. 73.
In respect of other items either allowed Mayer or disallowed the
German partners, we see no reason to differ with the conclusions of
the circuit court of appeals.
Decree reversed.