APPENDIX.

NATIONALITY OF CORPORATIONS.

The national character of a corporation is primarily determined by the country under the laws of which it has been incorporated, and not by the nationality of its members (Janson v. Driefontein Consolidated Mines, Limited, 1902, A. C. 484).

Thus in Amorduct Manufacturing Company, Limited, v. Defries & Company, 1914, 31 T. L. R. 69, the Divisional Court held that a limited company registered in this country according to English law, was entitled to sue during this war although alien enemies held almost all the shares.

In Continental Tyre and Rubber Company (Great Britain), Limited v. Daimler Company, Limited, The Same v. Thomas Tilling, Limited, 1915, W. N. 44, it was decided by the full Court of Appeal (Buckley, L. J., dissenting) that a company incorporated under English law and carrying on business in this country had a right to sue during war, although all its shares except one were held by alien enemies, the one share being registered in the name of the secretary, a German, who had been naturalized here.

A supplementary incorporation in another country will not effect a change in nationality. Thus in Nigel Gold Mining Company v. Hoade, 1901, 2 K. B. 849, where a company registered in Natal, whose only property was a gold mine in the Transvaal, obtained a supplementary incorporation in the latter country in order to enable it to sue and be sued there in its corporate name, it was held to be a British company, and to be entitled to recover on a policy of insurance for a loss occurring during the South African war.

In Orenstein & Koppel v. Egyptian Phosphate Company, Limited, 1914, 2 S. L. T. 293, the pursuers were a company incorporated in Germany, but were also registered under the Companies (Consolidation) Act, 1908, as a foreign company trading in this country, and having a registered London office; but all their work was done in Germany. The First Division of the Scottish Court of Session held that the supplementary registration here did not give the pursuers a title to sue during the present war.

It would appear, however, that a corporation may have a commercial domicile in the country where it carries on business, and thus acquire an enemy character by continuing to conduct such business

therein after the outbreak of war between that country and Great Britain (Nigel Gold Mining Company v. Пloade, 1901, 2 K. B. 849: Lord Lindley's judgment in Janson v. Driefontein Consolidated Mines, Limited, 1902, A. C. 505; Netherlands South African Railway Company v. Fischer, 1901, 18 T. L. R. 116; see also De Beers C'onsolidated Mines, Limited v. Howe, 1906, A. C. 455, where it was held that a foreign corporation could "reside" in this country within the meaning of the Income Tax Act, 1853; but see the definition of enemy in Article 3 of the Trading with the Enemy Proclamation, No. 2, dated 9th September, 1914).

Trotter (Supplement, 1915), pp. 17, 18.

The Trading with the Enemy Amendment Act, 1914, 5 Geo. V. c. '12, contains provisions relating to an alien enemy's interests in companies. It enables an official, called the Custodian, who is to be appointed by the Board of Trade (section 1 (1)), and who in England and Wales is the Public Trustee (section 1 (2)), and in Scotland the Accountant of Court (London Gazette, 11th December, 1914) to collect the payments of dividends, interest, or share of profits due to an alien enemy by a person, firm, or company (section 2 (1)), and to hold such until the termination of the war, to be thereafter dealt with in such manner as the King may by Order in Council direct (section 5 (1)). Payment is compulsory on the party liable within fourteen days after 27th November, 1914, or within fourteen days after it is due, as the case may be (section 2 (1)). For the purposes of the Act the expression "dividends, interest, or share of profits means any dividends, bonus, or interest in respect of any shares, stock, debentures, debenture stock, or other obligations of any company, any interest in respect of any loan to a firm or person carrying on business for the purposes of that business, and any profits or share of profits of such a business, and, where a person is carrying on any business on behalf of an enemy, any sum which, had a state of war not existed, would have been transmissible by a person to the enemy by way of profits from that business is to be deemed to be a sum which would have been payable and paid to that enemy (section 2 (5)). Persons who have or control an enemy's property, real or personal (including any rights, whether legal or equitable, in or arising out of property, real or personal), are bound to disclose it to the Custodian under heavy penalties (section 3 (1)). Every company incorporated in the United Kingdom and every company which, though not incorporated in the United Kingdom, has a share transfer or share registration office in the United Kingdom must, within one month after the passing of the Act (27th November, 1914), by notice in writing communicate to the Custodian full particulars of all shares, stock, debentures, and debenture stock and other obligations

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of the company which are held by or for the benefit of an enemy; and every partner of every firm, one or more partners of which on the commencement of the war became enemies or to which money had been lent for the purpose of the business of the firm by a person who so became an enemy, must within the same period, by notice in writing, communicate to the Custodian full particulars as to any share of profits and interest due to such enemies or enemy. Heavy penalties are imposed on the company or partner failing to comply with this provision (section 3 (2)). No transfer made after 27th November, 1914, by or on behalf of an enemy of any securities is to confer on the transferee any rights or remedies in respect thereof; and no company or municipal authority or other body by whom the securities were issued or are managed must, except so far as provided in the Act, take any cognisance or otherwise act upon any notice of such a transfer (section 8 (1)). No entry must be made during the continuance of the war in any register or branch register or other book kept in the United Kingdom of any transfer of securities therein registered, inscribed, or standing in the name of an enemy, except by leave of a Court of competent jurisdiction or of the Board of Trade (section 8 (2)). No share warrants payable to bearer are to be issued during the continuance of the present war in respect of any shares or stock registered in the name of an enemy (section 8 (3)). Heavy penalties are imposed for contravention of these provisions upon the company or body in default, and upon every director, manager, secretary of the company or body who is knowingly a party to the default (section 8 (4)). "Securities" here mean any annuities, stock, shares, debentures, or debenture stock issued by or on behalf of the Government or by any municipal or other authority, or by any company or by any other body which are registered or inscribed in any register, branch register, or other book kept in the United Kingdom (section 8 (5)). Where, during the continuance of the war, any coupon or other security transferable by delivery is presented for payment to any company, municipal authority, or other body or person, and the company, body, or person has reason to suspect that it is so presented on behalf of or for the benefit of an enemy, the company, body, or person may pay the sum due in respect thereof into the High Court, and same is, subject to rules of Court, to be dealt with according to the orders of the Court, and such a payment is for all purposes to be a good discharge to the company, body, or person (section 7). During the continuance of the present war a certificate of incorporation of a company is not to be given by the Registrar of Joint Stock Companies until there has been filed with him either (a) a statutory declaration by a solicitor of the Supreme Court, or, in Scotland, by an enrolled law agent engaged in the formation of

the company, that the company is not formed for the purpose or with the intention of acquiring the whole or any part of the undertaking of a person, firm, or company the books and documents of which are liable to inspection under the Trading with the Enemy Act, 1914, 4 & 5 Geo. V. c. 87, section 2 (2), or (b) a license from the Board of Trade authorising the acquisition by the company of such an undertaking (section 9 (1)). Where such a statutory declaration has been filed, it is not lawful for the company, during the continuance of the present war, without the licence of the Board of Trade, to acquire the whole or any part of such undertaking; and heavy impenalties are imposed on doing so (section 9 (2)). The undertakings here referred to are those (a) of a firm, one of whose partners was immediately before or at any time since the commencement of the present war a subject of, or resident or carrying on business in, a State for the time being at war with Great Britain; or (b) of a company of which one-third or more of the issued capital or of the directorate immediately before or at any time since the commencement of the present war was held by or on behalf of or consisted of persons who were subjects of, or resident or carrying on business in, a State for the time being at war with Great Britain; or (c) of a person who was or is, or of a firm or company which were or are, acting as agent for any person, firm, or company trading or carrying on business in a State for the time being at war with Great Britain (Trading with the Enemy Act, 1914, 4 & 5 Geo. V. c. 87, section 2 (2)). For the purposes of the Trading with the Enemy Amendment Act, 1914, 5 Geo. V. c. 12, "enemy" has the same meaning as in any Proclamation issued by the Crown dealing with trading with the enemy for the time being in force; and "commencement of the present war" means as respect any enemy the date on which war was declared by the Crown on the country in which that enemy resides or carries on business (section 14 (2)). In the application of the Act to Scotland the necessary change of terminology is made (section 14 (3)). The Act does not seem to apply outside the United Kingdom. Its other relevant provisions will be found in their appropriate place in this book.

Trotter, p. 56-60. (Supplement, 1915.)

Companies and Corporations.-We have seen that a political office had no soul or energy, in the eyes of Coke. Can a fictitious-(or, if one prefers, ideal)-person have a national character? Can it be said of a company whose shareholders and directors are all alien enemies, that it is of British nationality?

An ambiguity lurks in the question. That the organisation is "British," in the sense that is subject to the ordinary rules of British company law, instead of to the peculiar rules which have quite re

cently been imposed upon the management of companies incorporated abroad, tells us nothing with regard to the propriety or otherwise of assimilating it to ordinary British subjects. The mere fact that those who carry it on must do certain things, and that their liabilities will be measured in certain ways, does not give us any guide as to its position in war. The fact that a motor-car is registered in England, especially if that is its only place of registration, may loosely be said to make it a "British" car. But, if it is the property of a Frenchman, it would be much more truly stated to be a French car. The fact is, the term "nationality" is in these cases used in a loose and popular sense. It would be extremely dangerous to draw legal conclusions from such ambiguous language. Suppose, again, that the company is first incorporated in England, or the car built there. Such an interesting event does not make the car or the company "British" in any sense comparable to that in which a British subject is British. We are told that an English incorporated company, being a pure creation of English law, must necessarily be British by nationality. There is no abstract reason why it should. English law may manufacture a conception. But it does not necessarily mean to invest it with any national virtue.

Moreover, supposing for the sake of argument that we admit that it does entertain that benevolent intention-what really happens when a trading company is incorporated? Is some ideal institution launched upon an expectant world-some imaginary-real entity which embodies the aspirations of thinkers, philanthropists, or else some abstract conception independent of any particular person's interests?

We know it is not so. The interests of the company are simply the interests of the shareholders. Incorporation is nothing more than a device to enable them to avoid paying their debts in full.

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In maintaining the necessity of inquiring into the actual composition of a company, one is of course faced by the case of Salomon v. Saloman. That case if it may be said, was perfectly rightly decided. The legislature having enacted that Frankensteins might create monsters, we must put up with the consequences, and not complain if these enable persons to do by this means what they could not lawfully do otherwise. But the rule against contracting with an alien enemy does not rest on any unlawfulness of dealings with individual enemies, but on the hard fact that it is impossible to have litigation with them. They have no persona standi in judicio. Therefore it is that they cannot contract, or enforce or be held to their contracts. Bynkershoek pointed this out centuries ago. It is difficult, if not impossible, for them to appear among the enemy. If, therefore, a company is managed by enemy directors, or if it is composed of enemy shareholders, the rule eadem ratio, eadem lex

1 [1897] A. C 22. Cf. Munkittrick v. Perryman, 74 L. T. 149.