282
21406
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No. 38.
CEYLON.
BOARD OF TRADE to COLONIAL OFFICE.
(Received 6th May, 1916.)
Board of Trade, 1, Horse Guards Avenue. SIR.
Whitehall, London, S. W., 5th May, 1916. WITH reference to your letter of the 29th [26th] ultimo (No. 19986/1916),* with regard to difficulties which have arisen in connexion with the proposed liquida- tion of enemy firms in Ceylon, I am directed by the Board of Trade to state, for the information of the Secretary of State, that they would hesitate to advise what should be deemed included in the term business" assets, as it seems to them to be a question which can best be dealt with locally.
With reference to paragraph 3 of your letter, I am to state that the Board see no objection to the instruction which the Secretary of State proposes to give in the matter. In the event of legislation being found necessary the Board consider that the course suggested in sub-paragraph (b) would be the more convenient.
I am to add that the Board see no reason for differing from the views expressed in the concluding paragraph of your letter.
18938
No. 39.
STRAITS SETTLEMENTS.
I have, &c.,
J. G. WILLIS.
COLONIAL OFFICE to FOREIGN OFFICE.
[Answered by No. 44.]
SIR,
Downing Street, 6th May, 1916. I AM directed by Mr. Secretary Bonar Law to acknowledge the receipt of your letter, of the 19th of April,t relative to the sale of certain store buildings in Penang, partly owned by Mr. R. Sturzenegger, and to request you to call Secretary Sir E. Grey's attention to the fact that the buildings which are referred to in the Swiss Minister's note, a copy of which was trans- mitted with your letter under acknowledgment, are apparently the property of Messrs. Schmidt and Küstermann, of Penang, who are being liquidated as an enemy firm in accordance with the recommendations of the Report of the Interdepartmental Committee, Sir E. Grey's concurrence in which was indicated in the letter from the Foreign Trade Department of the Foreign Office of the 14th January ‡
2. I am to state that Mr. Bonar Law does not see any reason for making an exception in this case from the policy which was decided on in consequence of the Committee's report, particularly as Mr. Sturzenegger has been allowed by the Government of the Colony to set up in business independently of Messrs. Schmidt and Küstermann, whose business he therefore has presumably taken over to some
extent.
3. With regard to the position of Mr. Sturzenegger, I am to point out that, according to the statement in a despatch from the Governor of the Straits Settle- ments dated 23rd February, 1916 [128th January],§ all the non-enemy creditors of the firms of Messrs. Rautenberg, Schmidt & Company, of Singapore, and Messrs. Schmidt & Küstermann, of Penang, which are really one firm, have already been paid in full out of the other assets of the firm. This fact may possibly affect Sir E. Grey's views as to the desirability of carrying out the sale of the real estate. On the other hand, Mr. Bonar Law considers it undesirable to make exceptions from the general policy, if such a course can properly be avoided.
4. Mr. Bonar Law has had under consideration the question whether some arrangement could not be made to allow Mr. Sturzenegger to take his share of the real estate in specie. Any such arrangement appears, however, to be impossible, in view of the fact mentioned in the telegram from the Governor of the Straits
‡ 2808. § No. 26.
* No. 35.
+ No. 84.
43
Settlements of the 23rd of August, 1915,* a copy of which was sent to your Depart- ment with the letter from this Office of the 26th of August,* that Mr. Sturzenegger's share in the assets is a matter of account between himself and the Hamburg branch of the firm, which cannot be settled in the Straits Settlements.
5. In this connexion I am to invite reference to the letter from this Depart- ment of the 20th of December, 1915,† and to previous correspondence on the subject of the case of Messrs. Paul Scheerer & Company, of Trinidad, and to point out that a question might arise in the case of Messrs. Schmidt & Küstermann also as to whether the partnership had not been dissolved by the outbreak of war, and thus removed from the scope of the local Liquidation Ordinance. Sir E. Grey will remember that in the case of Messrs. Paul Scheerer & Company one of the partners was an enemy subject, i.e., a German, and the other a neutral citizen, a "German naturalized in America, but that although the Trinidad laws contain a provision similar to Section 34 of the Partnership Act, 1890, the Law Officers of the Crown advised that as both partners were domiciled in Trinidad the partnership was not extinguished by the outbreak of war, and was liable to be wound up under the local Ordinance.
6. The laws of the Straits Settlements also contain a provision similar to Section 34, but Mr. Bonar Law has no information with regard to the domicile of the three partners in this firm other than that contained in the Swiss Minister's note of the 14th April. It appears to him, however, that, whatever the domicile of the individual partners, the domicile of the partnership, which has its head office in Hamburg, must be regarded as in enemy territory, so that the outbreak of war would not cause its dissolution.
7.I am, moreover, to point out that the provisions of the Straits Settlements Alien Enemies Winding-up Ordinances, copies of which are enclosed, appear to apply to this case, whatever the domicile of the individual partners. In this con- nexion I am to ask that Sir E. Grey's attention may be drawn to Section 4 (1), of Ordinance XXIX. of 1914, and to the definition of "alien enemy" in Section 2. It would appear that, even if the partnership was dissolved by the outbreak of war, the trade which it carried on in the Colony was at the date of the commence- ment of the ordinance being carried on for the benefit of two "alien enemies within the meaning of the ordinance, since the two enemy partners would have had the right to call Mr. Sturzenegger to account for his dealings with their share of the partnership assets between the date of dissolution and the commencement of the ordinance. It would appear to follow, therefore, that whatever the domicile of the partners the affairs of the partnership can properly be liquidated under the ordinance.
15329
No. 40.
CEYLON.
I am, &c.,
G. GRINDLE
THE SECRETARY OF STATE to THE GOVERNOR. (Sent 6 p.m., 9th May, 1916.) TELEGRAM.
[Answered by No. 52.]
""'
Your despatch 7th March, 130,§ liquidation of Freudenberg & Company. Consider that all de Silva's debts, including that to Freudenberg, should be paid off in full if possible, and that liquidation may be continued till 31st March, 1917, in this and other cases. Suggest that possibly arrangement could be made by which all creditors, including Freudenberg, would agree to reduction of their claims pro rata.
Paragraph 5, your despatch, proposals approved.
As to distinction between private property and firm assets, it is desirable that all assets substantially involved in firm's business should be liquidated. I agree that references to Court on this question undesirable, and I suggest that legislation should be passed either :-
(a) Containing definition of assets to be liquidated sufficiently wide to
cover all such assets, or, preferably,
* 89078.
+ 56043.
Enclosure in No. 94.
§ No. 92.
PUBLIC
RECORD OFFICE
Reference :-
TLC.885/25
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-
COPYRIGHT PHOTOGRAPH-NOT TO
PUBLIC RECORD OFFICE, LONDON
44