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M. Sturzenegger, who is of old Swiss descent, was before the outbreak of the War doing business in the Straits Settlements as partner of two Germans, Hr. Suhl, now interned in Australia, and Hr. Hasche, now at Hamburg. The names of the firms belonging to the three partners were Messrs. Rautenberg, Schmidt, & Company, of Singapore, and Messrs. Schmidt & Küstermann, of Penang. The particular shares of each partner of the property referred to above are: Hr. Suhl thirty-five per cent., Hr. Hasche, twenty-five per cent,, M. Sturzenegger forty per cent.

46

As the sale would greatly prejudice the interests of M. Sturzenegger and his Swiss customers, he sincerely hopes that the authorities, with the full permission of whom his firm had been formed after exclusion of all enemy" interests, will withdraw the order, and that the Legation will be in a position to inform him to that effect at an early date.

Swiss Legation,

14th April, 1916.

41

5. Mr. Bonar Law would be glad to be favoured with any observations of a general nature on the principles which the Board consider should be observed in dealing with cases of the kind mentioned in paragraph 5 of this letter, and in this connexion I am to observe that in other parts of the Empire he has not thought it necessary to include plantations and agricultural estates belonging to enemy subjects in the general liquidation of enemy businesses, since he considers that the planter is in a different position from the owner of a commercial establishment, the commercial connexion of the former with enemy territory being generally much less direct and less likely to endure. These considerations do not, however, apply in the case of plantations owned by and forming part of the business assets of enemy commercial houses, and it seems to Mr. Bonar Law that in such cases it will be desirable to sell the estates with the other assets of the business, unless it can be clearly shown in any particular case that the estates in question were not part of the partnership assets but were part of the private property of one or more of the partners.

I am, &c.,

G. GRINDLE.

PUBLIC RECORD OFFICE

Reference :-

TILL CO.885/25

سانسينيسا

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

PUBLIC RECORD OFFICE, LONDON

19986

No. 35.

COLONIAL OFFICE to BOARD OF TRADE (BANKRUPTCY DEPARTMENT). [Answered by No. 38.]

SIR,

Downing Street, 26th April, 1916. I AM directed by Mr. Secretary Bonar Law to request you to convey to the Board his thanks for the information contained in your letter of the 17th April* concerning the liquidation of enemy firms in British Colonies and Protectorates, and to say that he would be greatly obliged if he might be favoured with the Board's assistance with reference to certain difficulties which have arisen in connexion with the proposed liquidation of enemy firms in Ceylon, especially in regard to the business of Freudenberg & Company, which is by far the most important of the enemy firms in the Colony.

2. The position with regard to this firm is stated in the enclosed extract, marked At from a-report made by the Attorney-General on the subject. I am to explain, in amplification of the Attorney-General's statement, that the three sons of the founder of the firm, to whom the Attorney-General refers, are now the sole partners in the business, and that during the latter years of their father's life two of them were sole partners with him and the third was in the employment of the firm. Mr. Bonar Law has unfortunately no information as to whether the rent of that part of the building in the Fort which is not used as the office of the firm passes through the accounts of the firm.

3. It is undesirable to submit the question whether these properties are partnership assets to the Court for decision owing to the delay which has already occurred in instituting this liquidation and the difficulty of securing a rapid decision from the Court in the Colony. In these circumstances Mr. Bonar Law would propose, unless the Board see any objection, to instruct the Governor that the mills, the manure works and warehouses, and the whole of the building in the Fort referred to in the extract from the Attorney-General's memorandum, should be treated as assets of the partnership, and that, if necessary, legislation should be introduced, either (a) containing a definition of the assets to be included in the liquidation of enemy firms sufficiently wide to include the particular assets above mentioned, or (b) giving the executive absolute power to determine all questions of what are or are not assets of the liquidation firms.

4. Similar questions will arise in connexion with others of the enemy firms in Ceylon, as appears from a list of the assets of those firms contained in a report by the Deputy Inspector-General of Police at Colombo, an extract from which is enclosed and marked Bt An extract from a despatch of the Officer Administering the Government, which refers to this report, is also enclosed and marked C.§

* No. 88.

+ Paragraph 7 of the Memorandum in enclosure 1 in No. 82.

(d) in enclosure 2 in No. 82.

§ Paragraph 6 of No. 32 from "I enclose" to "Freudenberg firm."'

20626

No. 36.

CEYLON.

THE GOVERNOR to THE SECRETARY OF STATE.

(Received 4.54 p.m., 1st May, 1916.)

TELEGRAM.

[Answered by No. 40.]

WITH reference to your telegram of 10th February,* liquidation of enemy firms, would it not be desirable to make no distinction between estates and similar properties of a firm with several partners and those of either a private individual or a firm with only one partner?-ANDERSON.

19986

No. 37.

HONG KONG.

THE SECRETARY OF STATE to THE GOVERNOR.

(Sent 5.5 p.m., 1st May, 1916.)

TELEGRAM.

[Answered by No. 50..]

YOUR telegram 1st March, your despatch, Confidential, 7th March:† I' agree that trade-marks and goodwill should not be sold, and assume you will con- tinue policy suggested my telegram 29th October.‡

I withdraw proposal that no actions shall be allowed against liquidated firms after liquidation.

Private estates of partners should not be sold even in case of insolvency. I'note that you will introduce disclaimer, but do not understand proposal to save liability of liquidated firms under disclaimed contracts. If other party to contract allowed to prove in liquidation for injury caused by disclaimer, this proposal appears unnecessary.

I assume that real property and shares in public companies, in so far as they are not private property of partners, will be sold subject to rights of secured creditors. Bonar Law.

* No. 22.

No. 29 and 16796.

+ 47585.