Compagnik Universelle de Telegraphie et de Telephonie Sans Fil v. United States Serv. Corp.

• Decision Date: 03 August 1915
• Parties: COMPAGNIK UNIVERSELLE DE TELEGRAPHIE ET DE TELEPHONIE SANS FIL v. UNITED STATES SERVICE CORPORATION et al.
• Court: New Jersey Court of Chancery

95 A. 187

COMPAGNIK UNIVERSELLE DE TELEGRAPHIE ET DE TELEPHONIE SANS FIL

v. UNITED STATES SERVICE CORPORATION et al.

Court of Chancery of New Jersey.

Aug. 3, 1915.

Bill for specific performance by Compagnie Universelle de Telegraphie et de Telephonie Sans Fil against United States Service Corporation and others. Plea of alien enemy overruled, and the defendants not disclaiming directed to answer.

George Zabriskie, of New York City, John R. Hardin, of Newark, and Henry G. Gray, of New York City, for complainant. Samuel Untermyer, of New York City, Robert H. McCarter, of Newark, and Abraham Benedict, of New York City, for defendants.

STEVENS, V. C. The bill is filed to compel the specific performance of a contract to convey (inter alia) land at Tuckerton, N. J., on which has been erected a radio-telegraph station.

The contract, which bears date September 30, 1912, is made between Retired Rear Admiral Hugo Emsmann and Professor Doctor Engineer Rudolph Goldschmidt, acting as directors of the Hoch Frequenz-Machinen Aktiengesellschaft für Drahtlose Telegraphie of Berlin, Germany, and M. Jean Bourdelongue and M. Ernest Sins, acting for Compagnie Universelle de Telegraphie et de Telephonie Sans Fil, of Paris, France. It was entered into at Paris, and, speaking generally, it was agreed between the Prussian company, under the abbreviated name of "Homag," and the French company, under the abbreviated designation "C. U. T. T.," that the German company conveys (in the present tense) certain patents of invention taken out or applied for in the United States, England, Austria, Belgium, Canada, Denmark, France, Italy, Russia, Sweden, Spain, and Brazil, for the production of high frequency currents specially intended for wireless telegraphy and, under reservations, certain patents taken out or applied for in Germany. Also, "the benefit of the studies, researches, proceedings, agreements, acquisitions and work (acquisitions et travaux) done by the Homag, under its name or under any name whatever, with a view to the promotion or exploitation of a radio telegraphic station in the United States of America." Also, certain other rights not very material to the present inquiry.

Article 2 provides "that the sale takes place in consideration of 2,500,000 francs" which has been actually paid, and 50,000 founders' shares of the French company which have been duly delivered; and article 3 provides that the French company "shall have the full right and enjoyment of the property and rights sold from this day on."

The article which specially concerns the present inquiry is article 7. It provides for the installation of a radio-telegraph station in the United States. It reads in part:

"It is expressly agreed that the work of construction and installation of said station shall be carried on and directed by the 'Homag' acting in the name and for the account of the 'C. U. T. T.' under its supervision and control. * * * It is well understood, however, that the 'Homag' cannot obligate the 'C. U. T. T.' for a total of the expenditures made or incurred relative to this station to a sum greater than 2,000,000 francs except by agreement with the 'C. U. T. T.' The 'C. U. T. T.' shall have the right at all times to itself take over the direction of the work."

There is another clause providing that, if in nine months after the completion of the installation "communication between the United States of America and Europe by the transmission of three thousand words in twenty-four consecutive hours shall not have been realized, both parties being present, the 'C. U. T. T.' shall have the right to require that the 'Homag' shall repurchase this radio telegraphic station from it at the cost price."

The bill, after setting forth the contract and the payment of the consideration, viz., 2,500,000 francs and 50,000 founders' shares in the French company, alleges that since its execution the patents which it was recited in the contract had been applied for, and certain other patents, in the United States, have been issued to the defendant Goldschmidt, in the United States, and are being used in the Tuckerton station; and that the work of construction at Tuckerton has been completed; and that the defendant Meyer has been put in possession. The absent defendants were brought in by order of publication. They have all appeared. The United States Service Corporation and Meyer have filed disclaimers, and the defendants Homag and Goldschmidt have filed a plea. The case comes up on the sufficiency of this plea. It states first that the Tuckerton station communicates and can communicate only with the Prussian station at Eilwese, and that to give the French company present possession would be to close it and prevent Germany, among other things, from communicating directly with the United States. But this objection seems to be met by the further statement in the plea that the Navy Department of the United States, pursuant to an act of Congress, entitled "An act to regulate radio communication," on September 9, 1914 (Act Sept 9, 1914, c. 287, 37 Stat. 302), assumed exclusive control of the station, which is being operated under the supervision of a naval officer in charge thereof, and that all tolls for messages are being collected by the government of the United States, which holds the same in trust.

Assuming (without deciding) that this court would not, during the continuance of the war, compel a specific performance of the agreement because its effect would be to cut off direct communication with the German Empire, it is obvious that, in view of the control assumed by the United States government, no such result would follow. I therefore dismiss this part of the plea from further consideration.

The substance of the remainder of the plea is that this court ought not now to entertain the suit because it would be unlawful, according to the laws of their respective countries, for the subjects or citizens of Germany or France to perform the decree, if made. On this, there is this observation: It Is one thing to decline jurisdiction and turn the parties out of court altogether, and quite another to stay the trial, if a fair trial cannot be had, because of the absence of material witnesses or for other reasons.

The question now to be considered is whether the court should dismiss the bill. At the outset of the discussion, it is to be remembered that the suit has been instituted in the court of a neutral, and not in the court of a belligerent Reasons that would suffice to suspend the right of action in the latter may not be applicable in the former.

The cases cited have been those arising in the courts of one of the belligerents. They are numerous, and their result, as far as they bear upon the present controversy, has been thus summed up by Judge Veeder in the very recent case of Watts, Watts & Co. v. Unione Austriaca di Navigazione, 224 Fed. 188, in the United States District Court. He says:

"The law of nations, as judicially declared, prohibits all intercourse between citizens of the belligerents which is inconsistent with the state of war between their countries. No transaction injurious to their own government may be entered into or continued by them. Ordinary commercial intercourse is therefore incompatible with a state of war, since every act and contract which tends to increase the enemies' resources is absolutely interdicted, and this includes every kind of trading or commercial dealing, whether by transmission of money or goods, or order for the delivery of either, directly or indirectly or by contracts in any form looking to or involving such transmission. Every such contract made during war is illegal and void. Since, however, aid to the enemy is the touchstone of Illegality, discrimination is permitted in the case of contracts made before the outbreak of war. Further performance which inures to the aid of or involves any dealing with the enemy is illegal. If from its character the contract is incapable of suspension it is dissolved. But, where such interruption of performance does not go to the root of the transaction, the contract is merely suspended during the war. The alien enemy is not civiliter mortuus; he is merely in a state of suspended animation. When the war ends, the mutual obligations of performance and right of action revive. Where therefore such a contract has been entered into with an alien enemy before the outbreak of war and has been performed on his side, the war merely suspends his remedy; in other words, he cannot sue upon it during the existence of hostilities. If, on the other hand, performance of the contract is on the side of the other party, he can enforce the contract (particularly such as require for performance payment of money only) in the courts of his own country during the continuance of war, provided of course a cause of action has accrued. The reason why the rule debarring action on the part of an alien enemy plaintiff can have no application where the parties are reversed is plain. The rule is based upon the obvious ground that it is contrary to public policy for the courts of a belligerent country to render any assistance to an alien enemy to enforce rights, which, but for the war, he would be entitled to enforce to his own advantage and to the detriment of his opponent. It is apparent therefore that to hold that a subject's right of action against an alien enemy in his own country is suspended would be to defeat the very object of the suspensory rule and to turn a disability into a relief."

The following, among others, are leading cases on the subject: Mutual Benefit Life Ins. Co. v. Hillyard, 8 Vr. 444; Kershaw v. Kelsey, 100 Mass. 561, 97 Am. Dec. 124, 1 Am. Rep. 142; Esposito v. Bowden, 7 El. & Bl. 763; Jansen v. Dreifontaine Consolidated Mines, [1902] A. C. 484; Briggs v. United States, 143 U. S. 346, 12 Sup. Ct. 391, 36 L. Ed. 180; Williams v. Paine, 169 U. S. 55, 18 Sup. Ct. 279, 42 L. Ed. 658.

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