this country, to the extent that its tribunals will not give any redress for such confiscation, Wheaton's International Law, 813; The Santissima Trinidad, 7 Wheaton's Rep. 377; Aspinal, Q.C., and C. Russell, for the assignees of Grazebrook. The law of nations must be taken to be part of the law of every civilised country, at all events, to this extent, that its Courts will not recognise any contract made in despite of it, any more than they recognise contracts made in despite of municipal law. Though | certain classes of offences against international law have been made offences against municipal law, it does not follow that contracts founded on them would not have been void at Common Law, 1 Arnould's Marine Insurance, 771 (2nd ed.); and in such cases the Court, though it will not inflict a penalty on the contracting parties, will abstain from lending its direct assistance to either of them as it is asked to do here, The Tutela, 6 Rob. 177; 1 Duer on Marine Insurance, 623, 748. If the Court lends its direct assistance to a person infringing international law, it may be a grave question, Whether the belligerent will not have rights as against this nation? But further, the exportation of arms was prohibited by the Queen's Proclamation of the 13th of May, 1961. And as the Sovereign is empowered to issue such a prohibition, 16 & 17 Vict. c. 107, s. 150, the transaction in question is contrary to municipal law. [THE LORD CHANCELLOR.-The proclamation does not purport to be made in pursuance of that statute.] Some weight must be attached to the proclamation; though it cannot create a new offence or expose the subject to forfeiture of his goods, yet, where it relates to matters peculiarly within the prerogative of the Sovereign, as those relating to peace or war, the Court will refuse to give such assistance as is asked here, Bacon's Abridgment, tit. Prerogative, b. 405. The case of Sharpe v. Taylor (loc. cit.) is distinguishable. The illegality there was not of the essence of the contract, only incident to it. They also referred to Armstrong v. Armstrong, 3 M. & K. 45; Curtis v. Perring, 6 Ves. 739; 22 APRIL, 1865. THE LORD CHANCELLOR said: In the view of international law the commerce of nations is perfectly free and unrestricted. The subjects of each nation have a right to interchange the products of labour with the inhabitants of every other country. If hostilities occur between two nations, and they become belligerents, neither belligerent has a right to impose or to require a neutral Government to impose any restrictions on the commerce of its subjects. The belligerent power cer tainly acquires certain rights which are given to it by international law. One of these is the right to arrest and capture, when found on the sea, the high road of nations, any munitions of war which are destined for, and in the act of being transported in a neutral ship to, its enemy. This right, which the laws of war give to a belligerent for his protection, does not involve as a consequence that the act of the neutral subject in so transporting munitions of war to a belligerent country is either a personal offence against the belligerent captor, or an act which gives him any ground of complaint, either against the neutral trader personally, or against the Government of which he is a subject. The title of the belligerent is limited entirely to the right of seizing and condemning as lawful prize, the contraband articles. He has no right to inflict any punishment on the neutral trader, or to make his act a ground of representation or complaint against the neutral State of which he is a subject. In fact, the act of the neutral trader in transporting munitions of war to a belligerent country is quite lawful, and the act of the other belligerent in seizing and appropriating the contraband articles is equally lawful. Their conflicting rights are coex istent, and the right of the one party does not render the act of the other party wrongful or illegal. There is, however, much incorrectness of expression in some writers on the subject, who, in consequence of this right of the belligerent to seize in transitu munition of war whilst being conveyed by a neutral to his enemy, speak of the act of transport by the neutral as unlawful and prohibited commerce. But this commerce, which was perfectly lawful for the neutral with either belligerent country before the war, is not made by the war unlawful or capable of being prohibited by both or either of the belligerents; and international law only subjects the neutral merchant, who transports the contraband of war, to the risk of having his ship and cargo captured and condemned by the belligerent Power, for whose enemy the contraband is destined. That the act of the neutral merchant is in itself innocent is plain from the circumstance that the belligerent captor cannot visit it with any penal consequences beyond the judicial condemnation of the ship and cargo, nor can he make it the subject of complaint. This is well explained by Vattel in the following passage. Speaking as a belligerent Power, he says: Quand j'ai notifié aux Puissances neutres un déclaration de guerre à tel ou tel peuple, si elles veulent s'exposer à lui porter des choses qui servent à la guerre, elles n'auront pas sujet de se plaindre au cas que leurs marchandises tombent dans mes mains, de même que je ne leur déclare pas la guerre pour avoir tenté de les porter. Elles souffrent, il est vrai, d'une guerre à laquelle elles n'ont point de part, mais c'est par accident. Je ne m'oppose point à leur droit-j'use seulement du mien, et si nos droits se croisent et se nuisent réciproquement, c'est par l'effet d'une nécessité inévitable. Ce conflit arrive toujours dans la guerre." Vattel must here be considered as speaking of the acts of the subjects of a neutral Power, and not of the neutral Government itself, for the supplying of warlike stores to a belligerent by a neutral State would clearly be a breach of neutrality. The same doctrine as to the freedom of the commerce of the neutral subject is more explicitly stated by Mr. Chancellor Kent, in the first volume of his "Commentaries," page 142, and was most distinctly affirmed in a celebrated decision of the Supreme Court of the United States. The language of Chancellor Kent is clear and comprehensive-"It is a general understanding, grounded on true principles, that the Powers at war may seize and confiscate all contraband goods without any complaint on the part of the neutral merchant, and without any imputation of a breach of neutrality in the neutral sovereign himself. It was contended on the part of the French nation, in 1796, that neutral governments were bound to restrain their subjects from selling or exporting articles contraband of war to the belligerent Powers. But it was successfully shown, on the part of the United States, that neutrals may lawfully sell at home to a belligerent purchaser, or carry themselves to the belligerent Powers, contraband articles subject to the right of seizure in transitu. This right has since been explicitly declared by the judicial authorities of this country. The right of the neutral to transport, and of the hostile Power to seize, are conflicting rights, and neither party can charge the other with a criminal act." The material passage of the judgment, as given in the 7th vol. of Wheaton's Reports, is the following "There is nothing in our laws, or in the law of nations, that prohibits our citizens from sending armed vessels, as well as munitions of war, to foreign ports for sale. It is a commercial adventure which no nation is bound to prohibit, and which only exposes the persons engaged in it to the penalty of confiscation." fide, send the ship so armed and equipped for sale as merchandise in a belligerent country, and will not, in so doing, violate the provisions or incur the penalties of the Foreign Enlistment Act. It is true that under the provisions of the Act of the 16th & 17th Vict. c. 107, Her Majesty has power by proclamation or order in council to prohibit the exportation of certain goods, including arms, ammunition, gunpowder, naval and military stores, but no order in council or proclamation was made in the terms or under the special authority of this statute. Great reliance, however, was placed by the counsel for the respondents on the Queen's proclamation of the 13th of May, 1861, although it was admitted that it could not be treated as made under the authority of the lastmentioned statute. I need not observe that the object of a proclamation is to make known the existing law, and that it can neither make nor unmake law. But in truth the proclamation of 1861 is directed, and very properly, to two objects-first, to declare that the provisions of the Foreign Enlistment Act would be strictly enforced; and, secondly, not to prohibit the exportation of warlike stores, but to warn the subjects of the realm that if any subject carried contraband of war to either belligerent, he would incur the penal consequences of the law of nations, and would receive no protection or relief from these consequences (that is, from capture and condemnation) at the hands of Her Majesty. The proclamation has no effect whatever on the legality of this adventure. I am of opinion, therefore, that this adventure between the bankrupt and the petitioner was a lawful contract, and that the ordinary rights of property result from it. Consequently, I am of opinion that the goods in which the proceeds of the adventure were invested belong to the petitioner and the bankrupt, according to their several interests in that adventure and their contributions to the same, and I shall remit the case to the Commissioner with the following declaration— Minute.-Reverse the order of the Commissioner. Declare that there was a valid partnership between the bankrupt and the petitioner in the adventure described in the petition, and that the accounts of the partnership ought to be taken, the partthe proceeds applied in payment of the debts of nership property sold or otherwise disposed of, and the partnership, and the surplus divided according to the interests of the petitioner and the bankrupt respectively. Lord Chancellor. 15, 18 MARCH, 22 APRIL, 1865. } Ex parte MAYON. Re WOOD. I take this passage to be a very correct representation of the present state of the law of England also. For if a British shipbuilder builds a vessel of war in an English port, and arms and equips Bankruptcy-Partnership-Conversion of Joint her for war bona fide on his own account, as an article of merchandise, and not under or by virtue of any agreement, understanding, or concert with a belligerent Power, he may lawfully, if acting bonâ into Separate Estate. It is incompetent for one of two partners to assign to the other his share of the partnership property, so as to But a mere promise to pay, will not uphold such a convert the joint estate into the separate estate of the latter; The test of bona fides in such a transaction is, that it does not defeat or delay creditors. The bankrupts, Messrs. Wood & Greenwood, were partners in the business of brick-making; and also had an agreement for a lease of a colliery, the working of which was expected to be a profitable undertaking. In the month of August, 1863, they were in great pecuniary difficulties. On the 18th of November, 1863, a trader-debtor summons was taken out against them for a debt of 2507.; and in the same month several writs for large sums were issued against them. They were also indebted to one Goode on bill transactions to the extent of 1,5007. On the 9th of December, 1863, they applied to Goode to renew these bills, or make them an advance of money, but this he declined to do, whereupon the bankrupts determined to dissolve partnership, and a deed was prepared and executed on the same day, whereby Greenwood assigned the whole of the partnership property to Wood, taking from Wood a covenant to pay the partnership debts. This deed appeared to have been executed in the expectation that Wood would obtain advances on the colliery, and be enabled to work it profitably. In the result, however, the colliery proved a failure, and at the date of the execution of the deed, both the partnership estate and the estates of the separate partners were insolvent. Wood & Greenwood having been adjudicated bankrupts, on a petition presented on the 24th of December, 1863, a petition was presented by the joint creditors, praying that it might be declared, either that the attempted dissolution of partnership of the 9th of December was invalid as against them, or, in the alternative, that there was no joint estate, so that in either case they might have recourse to the separate estate of the partners. The Commissioner dismissed the petition: and from his decision the present appeal was brought. Bacon, Q.C., and De Gex, for the appellants, the joint creditors. This deed defeats and delays the joint creditors: it is in fact, a fraudulent preference of one class of creditors-viz., the separate creditors of the partnership. It has always been held, that it is unlawful to withdraw an estate from the mode of distribution appointed by law and, in this point of view, the deed is fraudu lent, within section 67 of the Bankrupt Act of 1849. : It is true that such deeds have been supported in cases where a money consideration passes: the reason being, that then there is a fund in medio available for creditors, Ex parte Marshall, 1 M. D. & D. 575; Baxter v. Pritchard, 1 Ad. & E. 456 ; Ex parte Ruffin, 6 Ves. 119; Ex parte Williams, 11 Ves. 3; but here both the parties are insolvent. The second alternative in the prayer of the petition was not argued. Daniel, Q.C., and Fry, for the separate creditors, relied on Ex parte Ruffin, loc. cit., and the two other cases before Lord Eldon, cited Ex parte Peake, 1 Madd. 346; This deed could not be fraudulent. It was not even Ex parte Ruffin, loc. cit., and other cases of that class. Little, for the assignees, took no part in the argu ment. Bacon in reply. The transaction of the 9th of December, was in itself an act of bankruptcy. This could not be alleged in Ex parte Ruffin, loc. cit.; there the assigning partner was solvent, and a year and a half elapsed before the bankruptcy, a time sufficient to make the change in the partnership notorious. The transaction here is clearly calculated to disturb the administration in bankruptcy; it is, therefore, fraudulent in the sense in which that word is used in the Bankruptcy Acts; namely, not with reference to the intentions of the persons engaged in it, but with regard to the effects which would follow if the transaction were upheld. Further, the deed is voluntary. Now the principle of law embodied in the 13th of Eliz., and also the principle expressed and declared by the 67th section of the Bankrupt Act of 1849, entirely forbade his Lordship holding that this assignment was anything but a fraudulent conveyance-fraudulent against creditors-a transaction which could not have effect given to it, because it would have the effect of delaying and defeating the joint creditors of an insolvent person in their attempts to recover and make available the property of that person. Applying, therefore, that test to the matter, his Lordship must hold that there was no bona fides in this transaction; that the assignment was fraudulent and void; that it did not operate as a conversion of the bankrupts' property into the separate estate of Wood; and that the whole of the property as it existed belonging to the bankrupts at the date of that deed, must still be considered as re THE LORD CHANCELLOR said, that he would now state his present impression of the case. It must be taken on the evidence, that on the 9th of December the partners were insolvent, both individually and as partners. Taking, then, the principle of the Common Law, as embodied in the statute of Eliz., it would seem to be incompetent for one partner to make, and the other to accept, such an assignment, both being insolvent at the time. Again, having regard to themaining the joint property of the partners, and must be principle embodied in the Bankrupt Act of 1849, it would seem to be fraudulent within the meaning of that Act, because it had for its object the disposition of the joint property, so as to defeat or delay the joint creditors, from whom the joint property would be taken if this deed were upheld. Again, having away regard to the fact that voluntary assignments were void as against creditors, this deed could not be considered as having been made for valuable consideration, for the covenant for payment of debts, which it contained, was that of an insolvent. His Lordship was, therefore, of opinion that this transaction could not be regarded as bond fide and valid within the cases before Lord Eldon, and that the property, therefore, remained partnership property. He would, however, reserve his final judgment. 22 APRIL, 1865. THE LORD CHANCELLOR now said: The question which arose was, whether it was competent to Greenwood to make, and to Wood to receive, an assignment of the partnership property, which would have the effect of converting the joint estate into the separate estate of Wood, and would, therefore, have the effect of withdrawing from the joint creditors that property to which they were entitled, and which would also have the effect of taking from Greenwood's separate creditors any separate property that Greenwood might be found entitled to in that joint property, after the joint debts were paid. The case was learnedly argued with reference to several decisions of Lord Eldon; but the principle of all these decisions was that which was shortly stated by Lord Eldon in Ex parte Williams (loc. cit.), where he very concisely stated that every one of these transactions depended entirely upon the bona fides. The question, therefore, to be answered was simply this, whether an assignment of this nature could be made bona fide by a partner when the partnership was in a state of insolvency, and the partners themselves were equally insolvent in their separate character. administered and distributed as such under the bankruptcy among the joint creditors. Lord Chancellor. 25 APRIL, 1865. { HUTTON v. THE SCAR- Company - Memorandum of AssociationPreference Shares-25 & 26 Vict. c. 89, ss. 12, 50. A memorandum of association contained the words, "The nominal capital of the company is 120,0007., divided into 12,000 shares of 101. each”. Held, that the shareholders must all be on an equality: Held, also, that the company could not give to some of the 12,000 shares a preference dividend : Semble, such equality being the basis of the memomemorandum so as to destroy the equality. randum, the company could not by any mode alter the Articles of association provided for declaring a dividend "to be paid to the shareholders in proportion to their shares":— Held, that this proportion must be an equal one: Semble, also, that the company had no power, under 25 & 26 Vict. c. 89, s. 50, to alter the articles so as to make the proportion unequal. This was a motion by way of appeal from an order of Kindersley, V.-C., restraining the defendants from issuing with a preferential dividend any of the shares in the Scarborough Cliff Hotel Company (Limited), which remained unissued. The articles of association contained a power enabling the company to increase their capital, but did not contain a power enabling them to alter the memorandum of association. Resolutions giving the directors power to issue all the unallotted shares with a preferential dividend, were passed unanimously at two meetings. The facts are fully stated in the report of the case in the Court below, 5 N. R. 503. The Attorney-General, Glasse, Q.C., and Bury, for company was 120,0007., divided into 12,000 shares of the defendants. The shares proposed now to be issued never existed, and were never part of the capital of the company mentioned in the memorandum. The proposed scheme did not alter a word of the memorandum of association, which did not prescribe equality, but left the relations of the shareholders to be dealt with by the articles of association. Neither was the scheme inconsistent with the articles of association, but if it was, it was passed in the manner pointed out by the 50th section of the Companies Act, 1862, and, therefore, altered pro tanto the articles of association. It was a matter of internal regulation which had been agreed to at general meetings of the company, and, therefore, the Court would not interfere, Lord v. The Governor and Company of Copper The scope of the Companies Act of 1862, as of that of 1856, was to enable three-fourths of the shareholders to bind the rest, 107. each, and there was nothing which gave the company power to alter that 5th section-nothing which enabled them, by resolution or otherwise, to alter the relative positions and rights of the holders of those 12,000 shares. The holders of those 12,000 shares were necessarily inter se equal, having equal rights and privileges. The scheme proposed to divide them into two halves, and to put the latter half in priority over the former. No such inequality was contemplated by the memorandum. As the alteration of the memorandum was not provided for by the articles, it could only be arrived at under the 50th section of the Act, which enabled the company, by special resolution, to alter the articles. But if there was nothing which enabled the company to alter the basis of the memorandum, such a power could not be acquired under that section. Moreover, it was impossible for the company, by one resolution, both to insert the power in the articles and to act upon it. On the second question, what was proposed to be done clearly interfered with the 72nd section of the Bryon v. The Metropolitan Saloon Omnibus Com- articles of association. That section involved the rule, pany, Limited, 3 De G. & J. 123, 127. that the dividend to be paid to all the 12,000 share Baily, Q.C., Sir H. Cairns, Q.C., and Speed, for holders should be paid to them in proportion to their the plaintiffs, were not called upon. THE LORD CHANCELLOR said: The directors had no doubt acted bona fide, but they had hit on a mode of raising additional capital which was not justified by the Act of Parliament. He could not adopt the view, that it was a matter of internal regulation. The shareholders had contracted to stand on a perfect equality, but the proposed scheme divided them into two classes, one of which was to be entitled to a dividend in priority to the other. This was not a matter concerning the regulation of internal affairs, but altered the relative condition of the shareholders. There were three questions which arose-first, whether the memorandum of association did not interfere with what was proposed to be done; secondly, whether the articles of association did not interfere with what was proposed to be done; and, thirdly, whether what had been done was done consistently with the powers of alteration given by the statute, and whether the course pointed out by the statute had been pursued. The memorandum of association was the funda mental basis of the company, and could not be altered except under the 12th section of the Companies Act, 1862, which enabled the company to do so if the articles of association contained provisions to that effect. Any company, therefore, might alter their memorandum so far as was allowed by that section, if shares, and in no other way. Each one of the 12,000 shareholders was to receive an equal and mutually proportionate dividend, the amount of which was to be regulated according to the entire number of shareholders; and each shareholder was to stand on an equality with all the others. But if, as was proposed, one half were to receive a large dividend before the others received any, no proportion was observed. His Lordship considered that what was proposed to be done would strike the 72nd section out of the regulations. He would not conclusively determine that that could not be done, but his present impression was, that the section could not be struck out of the articles for the purpose of introducing any inequality or want of proportion among the shareholders. He must confirm the order of the Vice-Chancellor, and refuse the motion, with costs. SR promised his brother's children that, if they would execute a deed, he would bequeath to them "at least as much as they would get under their father's will” :— Held, that such promise, though verbal, constituted a they were authorised to do so by their articles of association. But in the regulations or articles of associa-binding obligation, and ought to be specifically pertion appended to the memorandum of association in the present case, there was nothing which enabled the company to alter the memorandum. By the 5th section of the memorandum, the nominal capital of the formed. This was a suit instituted by the widow and children of George Ridley, to obtain from the estate of Samuel Ridley compensation in satisfaction of a promise |