- (1) No person shall by virtue of any transfer or assignment of any negotiable instrument, debt, or other chose in action, or delivery of any coupon or other security transferable by delivery, or transfer of any other obligation, made in his favour by or on behalf of an enemy, whether for valuable consideration or otherwise, have any rights or remedies against the person liable to pay, discharge or satisfy the negotiable instrument, debt, chose in action, security or obligation, unless he proves that the assignment, delivery, or transfer was made before the nineteenth day of November, nineteen hundred and fourteen, and any person who knowingly pays, discharges or satisfies any negotiable instrument, debt, or chose in action so transferred or assigned, or any security so delivered, or any obligation so transferred before the said date, shall be deemed to be guilty of the offence of trading with the enemy within the meaning of the principal Act.
- (2) Without prejudice to the provisions of the foregoing Sub-section, where a bill of exchange or other negotiable instrument bears the indorsement of an enemy and the indorsement does not purport to have been made before the fourth day of August, nineteen hundred and fourteen, the person presenting or seeking to enforce payment thereof shall have on him the burden of proving that he is not collecting the bill or negotiable instrument for or for the benefit of an enemy.
- (3) Nothing in this Section shall be construed as validating any assignment, delivery or transfer which would be invalid apart from this Section.
§ 7.0 P.M.
§ Sir J. SIMON
I beg to move, in Subsection (1), to leave out the words "transfer or" ["no person shall by virtue of any transfer or assignment of"]
I think it will be for the convenience of the Committee if I state in a very few words what will be the effect of adopting in Clause 6 the Amendments which stand in my name. The Clause was criticised by some on the Second Reading, and in view of the criticisms then made and others I have received since, the Clause has been to a large extent redrafted. The Rules of Order require that these things should be done one at a time. I am glad to say that we have now passed to what I trust will prove to be calm waters. The Clause does not deal with the Custodian. We 1209 have said "good-bye" to the Custodian. We have now reached a part of the Bill which is quite as important, and I am not sure that it is not more important, if our object is to prevent trading with the enemy. Clause 6 is designed to invalidate transfers or assignments of any kind of rights which Germans or other enemies had at the beginning of the War against Englishmen, if the assignee comes forward and endeavours to enforce that which the German himself could not have enforced at all. If I may just read what would be the effect of my Amendments if they are put into Sub-section (1), I will do so. I know it is a little long, and I ask the Committee kindly to give me their very close attention while I read it. The Clause will then run in this way:—(1) No person shall by virtue of any assignment of any negotiable instrument, debt, or other chose in action or delivery of any coupon or other security transferable by delivery, or transfer of any other obligation, made or to be made in his favour by or on behalf of an enemy, whether for valuable consideration or otherwise, have any rights or remedies against the person liable to pay, discharge, or satisfy the negotiable instrument, debt, chose in action, security, or obligation, unless he proves that the assignment, delivery, or transfer was made by leave of the Board of Trade, or was made before the commencement of the present War, and any person who knowingly pays, discharges, or satisfies any negotiable instrument, debt, or chose in action so transferred or assigned, or any security so delivered, or any obligation so transferred after the said date shall be deemed to be guilty of trading with the enemy within the meaning of the principal Act.The substantial effect of it is that we substitute the beginning of the present War for 19th November. I think that is quite right, because I do not see why a neutral, who has acquired since the beginning of the present War a claim against someone in this country which the German himself could not enforce, should get any better rights than the German has. But there is obviously one exception which must be made if this is to operate from the beginning of the present War—that is, the case where, in the interval between the beginning of the War and the introduction of this Bill, the neutral has not merely acquired but has acquired bonâ fide and for 1210 a valuable consideration. Not only is that obviously fair to the neutral, who, after all, in this matter has to be considered, but you may also have a case where the neutral has handed the property on again—it may be to a British subject—all in good faith and within the law and quite unaware that this was going to be passed by Parliament at the end of November. So I propose to add this proviso:—Provided that this Sub-section shall not apply where the person to whom the assignment, delivery, or transfer was made, or some person deriving title under him, proves that the transfer, delivery, or assignment, or some subsequent transfer, delivery, or assignment, was made before the nineteenth day of November, nineteen hundred and fourteen, in good faith and for valuable consideration.The effect of that will be that in so far as the enemy has already transferred or assigned to a neutral, not in good faith or for valuable consideration in order to hand the property over, but merely to put it in a neutral name in order to have a trustee who is not an alien enemy, the fact that he has already done it will not help him. On the other hand, if the transfer which has already taken place is a transfer which has been made bonâ fide and for valuable consideration to a neutral, of course we must accept and recognise a right which has already occurred. But for the future I propose that we shall say that from 19th November, that is the day when the Bill was introduced, it will not make any difference, bonâ fide or not bonâ fide, valuable consideration or not valuable consideration. No third party will be able to acquire from an enemy, while war is going on, a claim of any sort against persons in this country which the enemy himself could not enforce. I may be wrong. I believe everyone does not take the same view as I do, that this provision and the provision which immediately follows, about negotiable instruments, are going to do a great deal more to produce an effective interference with the financing of our enemy during the War than a great many of these rather elaborate and threatening provisions, which some of us have been discussing in the earlier Clauses of the Bill. Both are valuable, but my own belief, and it is based on good information, is that if we can only pass this Clause quickly we may do a very great deal in order to produce that financial stringency which we are entitled 1211 to produce, and we shall do it without in the least inflicting any wrong upon any neutral or, of course, any British subject. A neutral who has already acquired such an interest will be entitled to enforce it if he got it bonâ fide for valuable consideration, and we now give neutrals fair notice that if they buy a German claim against this country they have bought something which is a mere stroke of the pen.
§ Sir J. SIMON
Yes. Even to-day or to-morrow, for all I know, there may be an enormous transfer between the time of which I am speaking and the time the Royal Assent is secured. But as we wish to do nothing but what is quite fair, we do not choose a date in that case which is earlier than the date of the introduction of the Bill. Sub-section (2) is going to deal with negotiable instruments. It is a difficult case to deal with. I am anxious that we should not do anything which will in the least undermine or prejudice the unrivalled reputation of bills drawn on London. We propose to shift the burden. The present law is that if you are the holder of a negotiable instrument, the mere fact that you hold it is, until the contrary is proved, enough to show that you are the bonâ fide holder for value, and have the full rights which that gives you. All we propose is that if a man comes forward and demands payment here in London on a London acceptance against the acceptor, and if it appears that the bill, by its endorsements, has been in the hands of an enemy, the inference should not be drawn, merely because a neutral holder presents it, that therefore he is a bonâ fide holder for value, but it will be proper that the burden should be the other way. In a great many cases it will not make the slightest difference. But there are very many cases where London acceptances were in the hands of the enemy at the outbreak of War, and, of course, cannot be collected direct, but they are collected by being sent forward to some neutral bank simply for collection. They are not transferred over in the proper sense of the term; they are merely put in the hands of a neutral bank for collection, and we make no complaint, of course. If a Swiss bank, or an Italian bank, does that business they are quite entitled, only we 1212 intend to stop it in future, and Sub-section (2) is devised to deal with the case of negotiable instruments. If the Committee think that the changes which I now propose are an improvement, I hope we may consent summarily to make those changes. In order to satisfy any lingering suspicion, I will add, in justice to those who have helped me, that the Sub-section that I now have on the Paper is the result of a good deal of discussion in which I have been helped by Members in various parts of the House, to whom I am extremely grateful.
§ Mr. CAVE
The Amendments which the Attorney-General has on the Paper to this Clause and Clause 8 entirely meet my criticism, and are, I think, a very great improvement indeed. I have been very anxious that the transfer of shares and debts which have taken place by enemies since the War began should be avoided. I have heard of a good many such cases, and since I put my Amendment down, making the Clause retrospective, I have heard of a good many more and I am confident that they exist in considerable numbers. I am equally sure they ought to be avoided, as it is now proposed, and that the two Clauses ought to be made retrospective. At the same time it is only fair to protect transactions where any party, either the original transferee or the subsequent transferee, has given value for the transfer of the debts, and the Amendments in the form in which they appear on the Paper will have that effect. I hope we shall adopt all the Attorney-General's Amendments as they come up, because taken altogether they make a very great improvement.
I think all of us who take an interest in the Bill ought to be very grateful to the Attorney-General and the other Gentlemen whom he has consulted for the very excellent manner in which it is proposed to amend this Clause. I have the greatest possible pleasure in not moving any of my several Amendments because I think practically every one of the points is quite as well, if not better, met than by those Amendments or by others in other parts of the Bill.
§ The CHAIRMAN
Before putting the Attorney-General's Amendment, the hon. Member (Mr. Radford) has two Amendments on the Paper. I think they are also dealt with, but I ought to call attention to them.
§ Mr. BUTCHER
Before you call the other Amendments may I suggest one in which I think one point has escaped notice. If these Amendments are carried I think you would want, after the words "after the said date," the words "without leave of the Board of Trade." The penalty ought to follow upon paying this debt or obligation if it is transferred after the commencement of the War without leave of the Board of Trade.
§ Sir J. SIMON
I do not quite see that at the moment. The Clause consists of two parts. The first is a prohibition against certain transfers, and the second is a penalty if you disregard the prohibition. Does not the word "sole," in the second part, bring in all you want? However, if we put it in as it stands, it would be very easy to put right.
§ Mr. RAWLINSON
I am not in the least objecting to the alterations, as far as I understand them, of Clause 6, but my hon. and learned Friend (Mr. Cave) is rather classing with them the alterations in Clause 8. I will not anticipate further than to say there is a distinction between the two Clauses. The class of case I want to protect in Clause 8—I think it may require it in Clause 6, too—is this: If a person under Clause 8 transfers, say, London and North-Western stock next month, he will receive on his transfer the name either of a neutral or a British subject. There is, therefore, nothing which will put him on inquiry. But his title will be liable to be voided if it can be shown that in August or September a transfer has been made from an enemy to a neutral, and from the neutral to someone else, we will say in October or November, as the case may be, unless he can show that value has been given before 19th November. That, of course, will be almost impossible for him to do. It may be that in commercial transactions that would not be a real reason, but we are dealing with registered shareholders. It does seem to me that some way might be devised by the Government to avoid the throwing of doubt in these transactions. For that reason, I am certainly rather frightened at the sweeping retrospective Clause which the Attorney-General is proposing in both these cases.
§ Amendment negatived.1214
§ Amendments made:
§ In Sub-section (1), after the word "made" ["made in his favour"], insert the words "or to be made."
§ After the word "made" ["or transfer was made before"], insert the words "by leave of the Board of Trade or was made before the commencement of the present War."
§ Leave out the words "negotiable instrument" ["satisfies any negotiable instrument"].
§ Leave out the words "transferred or" ["so transferred or assigned"].
§ Leave out the word "before" ["before the said date"], and insert the word "after."
Insert, at the end of Sub-section (1), the words
Provided that this Sub-section shall not apply where the person to whom the assignment, delivery, or transfer was made, or some person deriving title under him, proves that the transfer, delivery, or assignment, or some subsequent transfer, delivery, or assignment, was made before the nineteenth day of November, nineteen hundred and fourteen, in good faith and for valuable consideration.
Insert, at the end of Sub-section (1):
(2) No person shall by virtue of any transfer of a negotiable instrument made, or to be made, in his favour by or on behalf of an enemy, whether for valuable consideration or otherwise, have any rights or remedies against any party to the negotiable instrument unless he proves that the transfer was made before the commencement of the present War, and any party to the negotiable instrument who knowingly discharges the instrument shall be deemed to be guilty of trading with the enemy within the meaning of the principal Act.
Provided that this Sub-section shall not apply where the transferee, or some subsequent holder of the instrument, proves that the transfer, or some subsequent transfer, of the instrument was made before the nineteenth day of November, nineteen hundred and fourteen, in good faith and for valuable consideration.
§ Leave out Sub-section (2).
§ Clause, as amended, ordered to stand part of the Bill.