1. The 8th section of the Act of July 2, 1864, which enacts that
it shall be lawful for the Secretary of the Treasury, with the
approval of the President, to authorize agents to purchase for the
United States any products of states declared in insurrection, did
not confer the power to license trading within the military lines
of the enemy
2. In connection with the regulations of the Treasury Department
and an executive order of the President issued in accordance with
the act, it authorized the insurgents to bring their cotton within
our lines, without seizure and with a promise on our part to buy it
from them, with liberty on theirs to go to the nearest Treasury
agent in an insurrectionary district to sell it, or if they
preferred to leave it under the control of someone who could go to
such agent and sell it for them, with leave to them also, by way of
further inducement, to purchase such articles of merchandise as
they needed, not contraband of war, to the extent of one-third of
the aggregate value of the products sold by them and to return with
them under a safe conduct.
3. By the regulations issued under the act, the purchasing agent
could not act at all until the person desiring to sell the Southern
products made application in writing stating that he owned or
controlled them, stating also their kind, quality, and location,
and even then the power of the purchasing agent before the delivery
of the products was limited to a stipulation (the form was
prescribed) to purchase and to the giving a certificate that such
application was made and to requesting safe conduct for the party
and his property.
4. A record of a judgment on the same subject matter, referred
to in a finding, cannot be set up as an estoppel when neither the
record is set forth nor the finding shows on what ground the court
put its decision whether for want of proof, insufficient
allegations, or on the merits of the case.
Appeal from the Court of Claims, the object of the suit having
been to recover damages against the United States for an alleged
breach of contract made by George Lane
Page 75 U. S. 186
with one Risley, who was at the time the Treasury agent at
Norfolk, Virginia, for the purchase of the products of
insurrectionary states.
The case, which depended in part on statutes, regulations of the
Treasury and a proclamation of the President, was thus:
ACTS OF 1861 AND 1863
By Act of July 13, 1861, section 5, "all commercial intercourse"
by and between states declared in insurrection and the citizens
thereof and the citizens of the rest of the United States was
declared unlawful except such as should be licensed by the
President and conducted under the regulations made by the Treasury
Department.
An Act of March 12, 1863, authorized agents of the Treasury
Department to collect "all abandoned and captured property,"
&c., and enacted that "all property coming" into any of the
United States not declared in insurrection
"from within any of the United States declared in insurrection,
through or by any person other than a Treasury agent or under a
lawful clearance by the proper Treasury officer, shall be
confiscated."
TREASURY REGULATIONS OF MARCH 31st, 1863
The Treasury regulations issued March 31, 1863, by their section
7, ordered thus:
"No permit shall be granted to transport to or from, or to sell
or purchase in any place or section whatever,
not within the
military lines of the United States Army."
Regulation 8, as revised and published September 12, 1863,
declared:
"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."
ACT OF 1864
By the 4th section of an Act of July 2, 1864, the prohibitions
of the Act of July 13, 1861, were extended to
"commercial
Page 75 U. S. 187
intercourse by and between persons residing or being within the
lines of national military occupation, in such districts declared
in insurrection, whether
with each other or with persons
being within such insurrectionary districts, but not within our
military lines."
Section 8 of this act provided that the Secretary of the
Treasury might authorize agents
"to purchase
for the United States any products of
states declared in insurrection
at such places therein as
shall be designated by him, at
such price as
shall be
agreed on with the seller, not exceeding the
market price thereof at the place of delivery nor exceeding
three-fourths of the market value thereof in the City of New York
at the latest quotations known to the agent purchasing."
Section 9 of this act
repealed so much of section 5 of
the Act of July 13, 1861, as made it
lawful for the President
to license or
permit such trade
by private
citizens and
traders except to supply necessaries to
loyal persons
within the federal lines, and to authorize
persons within the federal lines to bring or send to market in
loyal states products of their own labor or of the labor of
freedmen or others in their employment.
TREASURY REGULATIONS OF JULY 29th, 1864
On the 29th of July, 1864, rules were promulgated by the
Secretary of the Treasury, and by one of which
"commercial intercourse with localities
beyond the
lines of
actual military occupation by the United States
forces
is absolutely 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."
TREASURY REGULATIONS OF SEPTEMBER 24th, 1864
On the 24th of September, 1864, general regulations for the
purchase, on government account, of products of insurrectionary
states were made by the Secretary of the Treasury, approved by the
President, by which Norfolk was made a purchasing point and the
special agent was required (by Regulation 7), to the extent of the
funds at his command,
Page 75 U. S. 188
to purchase
all products offered to him (of the
character which by his instructions he was authorized to buy),
"but
no liability of any character shall be
authorized or
assumed by any agent
for
or on account of
the government previous to the
actual
delivery of the products other than a stipulation to purchase
products
owned or controlled by applicants, at a
price
to be agreed upon at the place and date of delivery."
The form of this stipulation is given, and consists of a
certificate by the Treasury agent that he has
"agreed to
purchase" from C. D. property &c., "which he stipulates
shall be delivered to me,
unless prevented from so doing
by the authority of the United States," with a "request"
for "safe conduct."
By Rule 8,
"Whenever any person shall make application to the purchasing
agent in writing, setting forth that he '
owns or
controls' products, stating the kind, quantity, and
location thereof, or the date at which they will be delivered at
some specified location accessible to transportation,"
the purchasing agent was directed to give a certificate that
such application had been made, and request safe conduct for such
party and his necessary transportation to the location specified,
and for himself and products from the location specified to the
purchasing agent. (The form of this certificate is given.) Rule 9
provided that parties, having sold and
delivered products,
shall, upon their request, be furnished by the purchasing agent
with a certificate stating the character and quantity of articles
purchased, the price paid, the aggregate amount of payment,
the
place whence and
the route by which the property was
transported.
PRESIDENT'S PROCLAMATION, SEPTEMBER 24, 1864
On September 24, 1864, the President issued his proclamation
reciting that Congress had authorized the purchase for the United
States of products of states declared in insurrection and that the
Secretary of the Treasury had designated Norfolk and other places
named therein as places of purchase and had made regulations for
such purchases, and he therefore proclaimed that all persons,
except those in the service of the government,
"having in their
possession" such
Page 75 U. S. 189
products (and which said agents were authorized to
purchase), "and all persons
owning or
controlling such
products," are authorized to convey them to either of said
places of purchase, and "such products, so destined, shall not be
liable to detention, seizure, or forfeiture, while
in
transitu or awaiting transportation." And that
"any person having the certificate of a purchasing agent, as
prescribed by Treasury Regulation 8, is authorized to pass with
means of transportation to the points named in said certificate,
and to return therefrom with the products required for the
fulfillment of its stipulations."
And that "any person having
sold, and delivered to
a purchasing agent products of an insurrectionary
state,"
"and having in his possession a certificate of the fact, stating
the character and quantity of products, and the aggregate amount
paid therefor, as prescribed by Regulation 9, shall be permitted .
. . to purchase from any authorized dealer,"
at the place of sale, or any other place in a loyal state, any
"articles not contraband of war, nor prohibited by the War
Department, . . . to an amount not exceeding in value one-third of
the aggregate value" of products sold by him as certified by the
agent; and
"such articles may be transported by the
same route and
to the same place, from and
by which the
said
products sold and delivered,
reached the purchasing
agent,"
and
such goods
"shall have safe conduct, and shall not be subject to detention,
seizure, or forfeiture while being transported
to the places
and by the route set forth in said certificate."
Generals and military officers commanding districts, posts, or
detachments, and officers commanding fleets, flotillas, and
gunboats,
"
will give safe conduct to persons and products,
merchandise, and other articles duly authorized as aforesaid and
not contraband of war, or prohibited by order of the War
Department, or the orders of such generals commanding, or other
duly authorized military or naval officer made in pursuance
thereof."
The facts of the case, as found by the Court of Claims, were
essentially these:
The claimant, Lane, entered into contracts with the Treasury
Page 75 U. S. 190
agent at Norfolk, Virginia, for the delivery to the agent of a
large quantity of cotton, which was upon the Chowan River, in the
State of North Carolina, and
within the lines held by the
insurrectionary forces. The commander of the military district
gave safe conduct to the claimant, his vessel and crew, to bring
out the cotton. The claimant
also had a license to take out
certain articles, a schedule of which was attached to the safe
conduct given by the military commander.
The purchasing agent of the Treasury Department of Norfolk
appointed a sub-agent to proceed on board of the vessel and to be
in charge of the outward cargo contained in the schedule, and not
deliver the same to the claimant until he should have delivered to
such agent on board the vessel three times its value in cotton. The
outward voyage was made without hindrance, and having arrived at
Chowan River, the claimant delivered the cotton to the sub-agent on
board the vessel.
On her return voyage, the vessel and the cargo were seized by
order of a naval commander on duty in the inland waters of North
Carolina. After being detained several days, the vessel and cargo
were released. She again set off on her course towards Norfolk, and
before arriving there was again seized by the order of the admiral
commanding the squadron in those waters.
The vessel was afterwards sent to Washington, D.C., where she
was libeled, at the instance of the United States, in the Supreme
Court of the District of Columbia, sitting in admiralty, where,
however, a decree, with costs, passed for the claimant. No record
of that suit, however, was produced here.
No proceedings were ever taken against the cotton, and it was
ultimately, though after some months' detention, restored to the
claimant. It was then taken to New York, but the price of the
article had greatly fallen during the detention, and the price
received on the sale of it was correspondingly less than if the
voyage had not been arrested and if the cotton had been sold on its
prompt completion.
The United States were now called on in the suit to make
Page 75 U. S. 191
good the loss caused by the wrongful conduct of its naval
officers.
Upon the facts, the Court of Claims ruled, among other
things:
That the contracts with the agent of the Treasury, for the sale
and delivery of the cotton, were valid and lawful contracts.
That the seizure and detention of the claimant's vessels and
cargo by the officers of the navy were unlawful and
unauthorized.
That the judgment of the court of admiralty was conclusive; that
the voyage was a lawful and proper one, and conducted according to
the prescribed regulations of the trade in which the claimant and
his vessel were engaged.
That such acts constituted a breach of the contracts between the
claimant and the United States, and entitled him to such damages as
he sustained thereby.
Page 75 U. S. 194
MR. JUSTICE DAVIS delivered the opinion of the Court.
In the view we take of this case, it is unnecessary to discuss
the question -- conceding the contract to be lawful -- whether the
action of the naval authorities could be a ground of claim for
damages for a breach of this contract against the
Page 75 U. S. 195
United States because, in our opinion, the contract was
unauthorized, and had no power to bind the government.
It appears by the findings of the Court of Claims that Chowan
River, in North Carolina, the place where the cotton was purchased,
was within the lines held by the insurrectionary forces, and that
the military safe conduct protected as well the return as the
outward voyage, for Lane was permitted to take out an outward
cargo, under the supervision of a person, styled in the record a
sub-agent of the purchasing agent at Norfolk, whose duty it was to
retain possession of the cargo until he should have received from
Lane on board the vessel, three times its value in cotton.
At the time this contract purports to have been made, this
country, was engaged in war with a formidable enemy, and by a
universally recognized principle of public law, commercial
intercourse between states at war with each other is interdicted.
It needs no special declaration on the part of the sovereign to
accomplish this result, for it follows from the very nature of war
that trading between the belligerents should cease. 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 the rigidity of this rule can be relaxed by the
sovereign and the laws of war so far suspended as to permit trade
with the enemy. Each state settles for itself its own policy and
determines whether its true interests are better promoted by
granting or withholding licenses to trade with the enemy. It being
the rule, therefore, that business intercourse with the enemy is
unlawful unless directly sanctioned, the inquiry arises whether
there was any law of Congress in force at the time that sanctioned
this transaction.
At an early period in the history of the war, Congress
legislated on this subject. By an act passed on the 13th of July,
1861, all commercial intercourse between citizens of states in
insurrection and citizens of the rest of the United States was
declared unlawful; but liberty was given to the President, in his
discretion, to license trade with the enemy
Page 75 U. S. 196
if he thought it would conduce to the public interests to do so.
Insofar, however, as it was licensed by him, the manner of
conducting it was left to be regulated by the Secretary of the
Treasury. In the administration of this law we do not find any
regulation prescribed by the Secretary of the Treasury allowing
commercial intercourse within the rebel lines. On the contrary, the
trade regulations which were issued by him on the 31st of March,
1863, and the 12th of September of the same year, expressly say
that commercial intercourse with those parts of the insurrectionary
states within the control of the rebels is absolutely forbidden.
Has this policy since then been changed? It certainly has if this
proceeding was authorized, for if Risley in his capacity of
Treasury agent could lawfully contract with Lane, a citizen of a
state not in rebellion, to purchase from him cotton in the country
of the public enemy, which he did not own or control, but must
procure after he got there, and had the power to assist him in this
enterprise by allowing him to take out a cargo of goods to
facilitate the purchase of the cotton and to furnish for his
protection a sub-agent and a military safe conduct, then it is
clear the door was left open for general trading with the enemy. If
one citizen of a state not in insurrection could lawfully obtain
from a Treasury agent the right to transport goods to a place under
the control of the insurgents, where he could exchange them for
cotton or other products of the country, and could also have safe
conduct to take his property there and to bring out the property he
should buy, with the promise on the part of the agent to protect
and purchase it, so could any other citizen -- for in this matter
equality must be the rule -- and in this way it is easy to see a
free commercial intercourse with the enemy would be opened and a
radical change effected in the manner of conducting the war. Was
this result contemplated by Congress in the Act of July 2,
1864?
It is contended that the 8th section of this act, which says
that it shall be lawful for the Secretary of the Treasury, with the
approval of the President, to authorize agents to purchase for the
United States any products of states declared in insurrection,
Page 75 U. S. 197
conferred the power to license trading within the military lines
of the enemy.
If this were so, and it was the intention of Congress to allow
this trading providing it was done on government account, why was
it not manifested by a specific provision in the law? Why leave
such an important change of policy to be inferred from the general
words of the act and the absence of express words of
limitation?
That the Secretary of the Treasury, who, it is natural to
suppose, having the administration of the law in his hands, was,
before it was passed, consulted about it, did not give this
interpretation to it, is very clear, for within a short time after
the passage of the act he adopted, with the approval of the
President, a new series of rules regulating commercial intercourse,
which were intended to supersede all others, and the third rule
absolutely prohibits all intercourse beyond our military lines and
declares further, "that no permit will be granted for the
transportation of any property to any place under the control of
the insurgents." (
See Treasury Regulations and Rules for
Commercial Intercourse of July 29, 1864.)
It is argued, as the regulations which were issued on the 24th
of September following for the express purpose of enforcing that
provision of the act relating to the purchase for the United States
of the products of insurrectionary states do not in terms readopt
this prohibition against non-intercourse, that therefore it was
abandoned. But this does not follow, for there is nothing in these
regulations inconsistent with its continuance, and if not expressly
revoked, it remained in force. Aside, however, from the
construction adopted by the Secretary of the Treasury, we are able
to see, by reference to other provisions of the same act, that
Congress did not mean to change, by the 8th section, the
non-intercourse policy which had prevailed. By the 4th section of
this act, the prohibitions of the Act of July 13, 1861, were
extended even to commercial intercourse by and between persons
residing, or being within the lines of national military occupation
in districts declared in insurrection, "with
Page 75 U. S. 198
each other," and the 9th section repeals so much of the Act of
July, 1861, as made it lawful for the President to license and
permit trade by private citizens in such districts, even within the
federal lines, except to supply the actual wants of the loyal
people and to authorize persons within the federal lines to bring
to the loyal states the products of their own labor or of freedmen
&c.
The incorporation of these sections in the law is irreconcilable
with the idea that Congress intended, notwithstanding these
prohibitions, to confer power on the Secretary of the Treasury to
allow citizens of loyal states on government account to trade
within the actual military lines of the insurgents. If this is not
the nature of the power conferred, it is asked what authority did
Congress intend to give the secretary, and how was it to be
exercised? There is no difficulty in answering these questions and
reaching the true meaning of this particular provision when we
consider the entire act and the Treasury regulations adopted to
carry into effect the 8th section, in connection with the history
of the times. The law was designed to remedy existing evils. The
mischiefs attending private trading with the enemy, even in those
parts of the insurrectionary districts which were for the time
within our military lines, had been seriously felt in the conduct
of the war, and the best interests of the country required that it
should cease. It was deemed important, however, to still maintain
some species of commercial intercourse with the insurgents, for it
is well known that the government desired to have, if it did not
interfere with military operations, the products of the South, and
particularly cotton, brought within our lines. To accomplish this
end, and at the same time avoid the complications and
embarrassments incidental to private trading, required the
inauguration of a new system. This was done by withdrawing from the
citizen the privilege of trading with the enemy, and allowing the
Secretary of the Treasury, with the approval of the President, to
purchase through agents, for the United States, any products of
states declared in insurrection. The inquiry is made, how could
these agents purchase these products if
Page 75 U. S. 199
private citizens were denied the right of trading in the
insurrectionary districts, whether they happened to be within the
national or Confederate military lines? It would not do to let the
army be used for this purpose, and the only other way left open was
to hold out inducements for the insurgents themselves to bring
their products to us.
If they could be induced to do this, we would obtain their
products which we needed, and in the manner of obtaining them,
would avoid the evils inseparable from private trading. The
inducements for the insurgents to pursue this course were very
strong, for besides the liability of having their principal product
-- cotton -- confiscated or destroyed, they were, as is well known,
in want of many of the necessaries of life. They were substantially
told in the Regulations of the Treasury Department,
"If you will bring your cotton within our lines, we will not
only not seize it, but will buy it from you, and you are at liberty
to go to the nearest Treasury agent in an insurrectionary district
to sell it, or if you prefer, you can leave it under the control of
someone who can go to the agent and sell it for you."
If this were not enough to accomplish the object, the President
of the United States, by way of further inducement, in an executive
order of the same date with the Treasury Regulations, said to
them:
"You can purchase such articles of merchandise as you need, not
contraband of war, to one-third of the aggregate value of the
products sold by you, and return with them, and I will guarantee
you safe conduct."
Why this limited permission to buy, after the delivery of the
products, unless the privilege was for the benefit of the
insurgents? If private persons, living in the Loyal states, could
engage in a venture like this of the claimant, they would need, as
he did, to make the venture remunerative, to take with them a cargo
of goods to exchange for Southern products; but there was no
authority for this. The permission of the President is limited to
the taking of a return cargo, bought with part of the proceeds of
Southern products, previously sold and delivered to a purchasing
agent of the Treasury Department. Indeed, so particular is the
direction on this subject, that the
Page 75 U. S. 200
military officer commanding at the place of sale, was not
authorized to permit a person who had sold Southern products to buy
merchandise, unless he exhibited to him a certificate of the
purchasing agent, setting forth the fact of the purchase and sale,
the character and quantity of products, and the aggregate amount
paid therefor.
Enough has been said, without pursuing this investigation
further, to show there is nothing in the act itself, the
Regulations of the Treasury Department, or the order of the
President, to justify Risley in dealing in the manner he did, with
Lane. It follows, therefore, that the voyage itself was illegal, as
were the contracts and arrangements by which it was undertaken, and
that the vessel and cargo were properly seized for being engaged in
illegal trading with the enemy.
Although Risley was not authorized in making any contract with a
person occupying the status of Lane, still, if he were, he could
only do it in the manner and for the purposes pointed out in the
Treasury Regulations.
By these regulations the purchasing agent could not act at all
until the person desiring to sell Southern products made
application, in writing, that he owned or controlled them, stating
their kind, quality, and location, and then the power of the
purchasing agent before the delivery of the products was limited to
a stipulation (the form is prescribed) to purchase, and to the
giving a certificate that such application was made, and requesting
safe conduct for the party and his property.
There is nothing in the petition or the findings of the court
below to show that Lane complied with these provisions. On the
contrary, it is clear from his own statement that he neither owned
nor controlled the cotton when he contracted to sell it, but that
after the contract was made, he procured it within the rebel lines.
Neither the law nor the regulations through which it was
administered was intended to protect a speculation of this sort.
The purchasing agent had no authority to negotiate even with anyone
in relation to the purchase of Southern products, unless at the
time of the negotiation he either owned or controlled them.
Page 75 U. S. 201
(
See Regulations for the purchase of products of
insurrectionary states on government account, of September 24,
1864, and executive order same date)
The Court of Claims find that no proceedings were taken against
the cotton, and that it was restored to the claimant, but that the
vessel was libeled at the instance of the United States, in the
Supreme Court of the District of Columbia, where a decree, with
costs, passed in favor of the claimant. It is argued, and was so
ruled by the court below, that this decree concludes the United
States. But the inquiry arises how far the United States are
concluded by it. The record of the admiralty court is not before
us, and we only know from the record in this case that that court
refused to render a decree of forfeiture against the vessel and
awarded costs against the United States.
On what ground the court put its decision -- whether for want of
proof, insufficient allegations, or on the merits of the case -- we
have no means of determining.
It may well be that the United States could not re-seize the
vessel, or take further proceedings against the cotton, and yet be
at perfect liberty to litigate the right of the claimant to
damages, in a direct proceeding brought against them to test that
question.
There is nothing in this record to show that the Supreme Court
of this District, in decreeing to the claimant the restoration of
his vessel, adjudicated on the question of his right to damages. As
that court had the power to award damages -- and the record is
silent on the subject -- it is clear, either that the court refused
damages, or that the claimant did not insist on the court
considering the question.
The United States are therefore not concluded on this point, and
the case is relieved of all difficulty.
The judgment of the Court of Claims is reversed, and this cause
is remanded to that court, with directions to enter
An order dismissing the petition.
