Mexico," in the last preamble recited that "whereas payments on awards of the said Special Mexican Claims Commission from funds paid to the Government of the United States by the Government of Mexico under the Special Claims Convention of April 24, 1934, should not, in justice to the beneficiaries, be deferred until the question of the jurisdiction of the claims now pending before the General Claims Commission, by virtue of the classification of such claims as general claims by the joint committee, shall have been finally determined in the manner provided for in the said convention of April 24, 1934, or in the said protocol of the same date" and it was resolved in Section 4 "upon certification to the Secretary of the Treasury of the awards of the Special Mexican Claims Commission, he shall proceed to make payments as provided for in Section 9 of the Act approved April 10, 1935." [Italics ours.]

Section 9 of the Act of April 10, 1935 (49 Stat. 149, C. 55) required the Commission upon completion of its work to report to the Secretary of State among other things, "a list of all claims allowed in whole or in part, together with the amount of each claim and the amount awarded by the Commission." The Secretary of State in turn is required to transmit a certified copy of the list of claims allowed to the Secretary of the Treasury, "who shall, after making the deduction provided for in Section 11 hereof (which has to do with the payment of the expenses of the Commission) distribute in ratable proportions, among the persons in whose favor awards shall have been made according to the proportions which their respective awards shall bear to the whole amount then available for distribution, such moneys as may have been received into the Treasury in virtue of the Convention of April 24, 1934. The Secretary of the Treasury shall follow like procedure with reference to any amounts that may thereafter be received from the Government of Mexico under the Convention of April 24, 1934." [Italics ours.]

Under the circumstances here disclosed the money paid into the Treasury of the United States by the Government of Mexico is a trust fund. The beneficiaries of that fund are those claimants who have received awards at the hands of the Special Mexican Claims Commission. The Secretary of State and the Secretary of the Treasury are designated to administer the fund. The Government of the United States has no claim to it and makes none. Regardless of the outcome of this litigation, the Government will receive none of the fund. The claims are not claims against the United States within the meaning of Tit. 31, Sec. 203, U. S. C. A. (Sec. 3477). Furthermore, Congress in the preamble to the Joint Resolution, quoted above, regarded the fund as a trust fund. Observe this significant language, "whereas payments on awards of the said Special Mexican Claims Commission from funds paid to the Government of the United States by the Government of Mexico.. should not, in justice to the beneficiaries, be deferred," etc.

The case of Doershuck v. Mellon, 60 App. D. C. 383, 60 Wash. Law Rep. 82, is in point. There it appears that by agreement between the United States and Germany a commission was established to determine the claims of American citizens against the German Government and German nationals under the terms of the 1921 treaty between the United States and Germany and the Treaty of Versailles.

This commission made an award to the Z and F Corporation of $817,134.85. A part of the fund so awarded was paid into the United States Treasury, and $400,000 thereof was paid by the Secretary of the Treasury to the Z and F Corporation. The plaintiff and others, asserting an interest in the fund, filed their bill against the Secretary of the Treasury and the Z and F Corporation, a nonresident of the District of Columbia, praying for an injunction and the appointment of a receiver to hold the fund pending determination of its ownership, and to declare a lien in favor of the plaintiff and others similarly situated.

The defendant, Z and F Corporation, pleaded to the jurisdiction. This plea was overruled. The Court of Appeals held that Section 105 of the District Code (1924), Tit. 24, Sec. 378 (1929), applied.

Mr. Justice Groner, delivering the opinion of the court, at pages 386–387, said: "It seems to us obvious therefore that, as to the fund thus created, the United States are not the debtor, and are neither paying nor undertaking to pay anything on their own account or from their own funds, but on the contrary have in their control a specially earmarked account for a special purpose as to which they are under no other responsibility than that of the ordinary stakeholder. There is no contention, and can be none, that this fund is not now, and has not been at all times since its receipt by the Secretary of the Treasury located in the District of Columbia. The bill so charged. In this aspect, we think it is clearly

personal property within the District . . . We think the situation is more nearly like that in Jones v. Rutherford, 26 App. D. C. 114, in which it was held that a check or draft in the hands of the Treasury and in which the United States have no interest is personal property within the meaning of Section 105."

The reasoning of the learned justice is applicable here. The fund is clearly personal property within the District of Columbia, and, therefore, within the jurisdiction of this court. In view of the allegations of the bill it was necessary that Bergh be made a party, and, as he is a nonresident, the provision of Section 105 may be invoked. See, also, Morgenthau v. Fidelity and Deposit Co., 68 App. D. C. 163, 66 Wash. Law Rep. 28.

The motion to dismiss for lack of jurisdiction because "there is no property or res within the District of Columbia to give the court in rem jurisdiction" is overruled.

The motion to dismiss for lack of indispensable parties must be sustained. Clearly the presence of these claimants to whom awards have been made is necessary and indispensable to a complete determination of the controversy. The plaintiff is granted ten days in which to file an amended bill.

Since an amended bill is to be filed, the court suggests that a more definite allegation be made concerning the contract or agreement between the plaintiff and the claimants showing the rights accruing to the plaintiff by virtue thereof. Attention is also directed to the allegation in paragraph 8 of the bill "that funds have been provided by Congress for payment of the same and that such payment will be made in the very near future.' This allegation has been ignored by the court following the rule that matters alleged which are contrary to judicial knowledge are not admitted by motion to dismiss. A cursory examination of the Convention of 1934 and the Act of April 10, 1935, and also the Joint Resolution of August 25, 1937, will disclose that the Congress has made no appropriation for the payment of these awards. This the court judicially knows, and thus is able to determine that the fund in the Treasury was created for the specific purpose of paying the awards made by the Commission.

EXHIBIT B

WASHINGTON, D. C., July 18, 1942.

Hon. ELBERT D. THOMAS,

United States Senate,

Washington, D. C.

MY DEAR SENATOR THOMAS: I enclose herewith a brief memorandum which, I think, may be of interest in the consideration of the bill for the settlement of Mexican claims.

Yours very truly,

WALTER A. BETHEL,

MEMORANDUM FOR THE MEMBERS OF THE SUBCOMMITTEE CONSIDERING THE SETTLEMENT OF MEXICAN CLAIMS (S. 2528)

Bill S. 2528 will be a setback to the course of arbitration and the settlement of international claims by legal procedure. The distribution of the $40,000,000 fund has to be based on municipal and international law, and the important interests and rights of private citizens claiming to share in this fund are at stake. They should be determined by the judicial process and not by a fiat of legislation.

The famous case of Alabama Claims against Great Britain is a good precedent. In that case the fund obtained from Great Britain, namely $15,500,000, as a result of the arbitration of Geneva, was distributed by the Court of Commissioners of Alabama Claims established by the act of June 23, 1874. This court was composed of five members, all American citizens.

In the case of the American claims arising out of the Spanish War, a similar commission was set up. The payment of these claims was assumed by the United States in the treaty of peace, and no limited fund was involved. All of these

claims were heard and determined by a commission of five American citizens established under the act of Congress approved March 2, 1901. The provision establishing the Commission reads:

"That the President of the United States shall appoint, by and with the advice and consent or the Senate, five suitable persons learned in the law, who shall constitute a commission, whose duty it shall be, and it shall have jurisdiction, to receive, examine, and adjudicate all claims of citizens of the United States against Spain. *

*

It is thus seen that when Congress had the important matter of distribution of the Alabama claims money it provided for a court of five commissioners, and that when after its treaty with Spain it had assumed to pay citizens of the United States on their claims against Spain it again provided for the appointment of a commission of five members. In the matter of the special claims against Mexico it has been seen that Congress provided for a commission of three members. How different are the provisions of the present bill which permits the late claims arising under the provisions of the treaty of November, 1941 to be determined by one commissioner and even goes further in accepting as final and unappealable a personal appraisal of many hundreds of most important claims made by one man-the general claims by Mr. Underwood, the agrarian claims by Mr. Lawson. It is a matter of human experience that a court of multiple members renders better justice than a court of one member. And the judgment of a multiple court is always much more acceptable to the interested parties than the judgment of a single man.

It is true that cases of the greatest importance are decided by one judge in the courts of original jurisdiction in our country, but the interests of the litigants are preserved by the right to carry the case to a higher court on appeal or writ of error. Mr. English (representing the Department of State) said at the hearing: "It may be pointed out that in 1938 the United States and the Netherlands concluded a claims convention providing for a commission consisting of one arbitrator. In 1930 the United States and Sweden signed a claims convention providing for the adjudication of claims of Sweden against the United States by a single arbitrator. In 1925 the United States and the Netherlands concluded a convention setting up an international tribunal consisting of one arbitrator. The committee will recall that the Settlement of War Claims Act of 1928 set up a tribunal to adjudicate a large number of claims of German nationals against the United States. The tribunal consisted of one arbitrator designated as the War Claims Arbiter and he was authorized to enter awards in a total sum not in excess of $100,000,000."

In the first of the above-mentioned instances (the United States and the Netherlands, 1938) the controversy was merely one between the two Governments as to the sufficiency of payment for military supplies (53 re. S. Stat., pt. 3, p. 1564).

In the second instance mentioned (the United States and Sweden, 1930) there was involved only a claim of a Swedish ship corporation for losses incurred in the detention in the United States ports of two of its ships (Treaties. U. S., p. 4653). In the third instance mentioned (the United States and Netherlands, 1925) the arbitration related not to claims but to the sovereignty over the Isle of Palmas (Treaties, U. S., p. 4512).

It is true that the Settlement of War Claims Act of 1928 authorized one man to determine the amount of payment that should be made for seizure during the World War of German property in the United States territory-ships, patents, and radio installations. This was not an arbitration but a determination by the United States as to what it would pay to German nationals.

In none of these cases mentioned by Mr. English was there a property right of a single American citizen involved. It may be said, however, that it is not uncommon when two nations have a controversy over a matter involving a private right for them to refer it to the sovereign of a neutral country for determination. That sovereign whether he be king or president probably in no case acts personally but upon the advice of his best jurists. I can find no instance where claims of a miscellaneous nature have been referred to a single arbitrator.

WALTER A. BETHEL.

WASHINGTON, D. C., July 13, 1942.

Hon. ELBERT D. THOMAS,

Chairman of the subcommittee of the Senate Committee on
Foreign Relations in the matter of the settlement of Mexican Claims.

MY DEAR SENATOR THOMAS: In accordance with your request at the hearing on July 10 that I present a draft of bill in accordance with my testimony I attach hereto the proposed draft.

This draft is in accordance with the one suggested by Mr. Woolsey in his testimony except that section 3, subparagraphs (c) and (d) are wholly eliminated as well as the whole of Mr. Woolsey's section 8. It is thus seen that my proposal differs from the one submitted by Mr. Woolsey, in that the appraisals made by Mr. Underwood and Mr. Lawson are all to be examined and decided by a threeman commission. I have indicated these changes by taking a draft of the bill as amended by Mr. Woolsey and by drawing a red pencil through the parts that

I think should be eliminated. The basis of my suggestions is my conviction that all claims should be adjudicated and that such adjudication should be made by a three-man commission.

It may be observed that in recommending that there be a decision by a threeman commission on those claims which thus far have been appraised but not adjudicated, as well as the new claims coming under the treaty of November 1941, I am in accord with Dr. Nielsen.

It may further be observed that the draft submitted by Mr. Woolsey as well as my own appended hereto leave the old special claims undisturbed and provide that those still to be adjudicated shall be paid from the $40,000,000 fund; and that the provisions respecting a three-man commission follow closely the act of April 10, 1935, establishing the Special Mexican Claims Commission.

Yours very truly,

WALTER A. BETHEL.

A BILL To provide for the settlement of claims of the Government of the United States on behalf of Amer. ican nationals against the Government of Mexico comprehended within the terms of agreements concluded by the United States and Mexico

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Settlement of Mexican Claims Act of 1942".

SEC. 2. For the purposes of this Act

(a) The term "General Claims Commission" means the Commission established pursuant to the Convention between the United States and Mexico signed September 8, 1923 (43 Stat. 1730).

The term "General Claims" means claims within the purview of that Convention.

(b) The term "Special Claims Commission" means the Commission established pursuant to the Convention between the United States and Mexico signed September 10, 1923 (43 Stat. 1722), and the term "Special Claims" means claims within the purview of that Convention.

(c) The term "Agrarian claims agreement of 1938" means the agreement between the United States and Mexico effected by exchange of notes signed on November 9 and November 12, 1938, respectively.

(d) The term "Agrarian Claims Commission" means the Commission established pursuant to the Agrarian Claims Agreement of 1938.

(e) The term "person" shall include an individual, partnership, or corporation. (f)_The term “United States" when used in a geographical sense shall include the United States, its Territories, and insular possessions (including the Philippine Islands) and the Canal Zone.

(g) The term "American nationals" includes (1) persons who are citizens of the United States, and (2) persons who, though not citizens of the United States, owe permanent allegiance to the United States, (3) corporations incorporated within the territory of the United States.

SEC. 3. For the purposes of this Act, the following determinations heretofore or hereafter made with respect to claims of American nationals shall be regarded as final and binding.

(a) Decisions rendered by the General Claims Commission, or its extensions except any decision as to which the United States has filed a petition for rehearing (b) Appraisals agreed upon by the Commissioners designated by the Govern ments of the United States and Mexico, respectively, pursuant to the General Claims Protocol between the United States and Mexico signed April 24, 1934 (48 Stat. 1844);

(c) Decisions rendered pursuant to this Act by the American Mexican Claims Commission established by section 5 hereof.

SEC. 4. The Secretary of State shall, as soon as possible, certify to the Secretary of the Treasury lists of the awards or appraisals made in favor of American nationals referred to in subsections (a), (b), (c), and (d) of section 3 of this Act. SEC. 5. (a) There is hereby established a commission to be known as the American Mexican Claims Commission (hereinafter referred to as the "Commission") which shall be composed of three Commissioners learned in the law to be appointed by the President. Such Commission shall have jurisdiction to examine and decide on their merits, as herein provided, all claims of American nationals against the Republic of Mexico, not heretofore decided as provided in section 3, which fall within the following categories:

(1) Claims filed by the United States with the General Claims Commission established in accordance with the Convention signed September 8, 1923, including any claims decided by said General Claims Commission or its extensions in which the United States filed a petition for rehearing;

(2) Agrarian claims which arose after August 30, 1927, and before October 7, 1940, including those which were referred to in the exchange of notes signed by the Mexican Government and the Government of the United States on the 9th and 12th of November 1938, respectively;

(3) Agrarian claims which are predicated upon provisional expropriation decrees signed between August 31, 1927, and December 1, 1938, inclusive, but not published prior to December 1, 1938, and which were not filed with the Agrarian Claims Commission;

(4) Claims which arose after March 1, 1924, the date of the exchange of ratifications of the convention of September 8, 1923, and notices of which were not filed with the General Claims Commission prior to August 30, 1927;

(5) All other claims arising after August 30, 1927, and before October 7, 1920, which involve international responsibility of the Mexican Government in consequence of damage to, loss, or destruction of, or wrongful interference with property of American nationals: Provided, however, That the Commission shall not have jurisdiction to pass upon and decide the following:

(i) Claims arising after August 30, 1927, and growing out of the acts of Mexican authorities with relation to the petroleum properties;

(ii) Claims growing out of injuries essentially personal, originating after January 1, 1927, and before the date of the signing of the convention of November 19, 1941;

(iii) Claims arising from lack of payment of the principal sum or of interest on bonds issued or guaranteed by Mexico which were not presented before the Commission established in accordance with the convention signed September 8, 1923;

(6) Claims or parts of claims found to be within the Special Claims Convention of September 10, 1923, by the General Claims Commission established under the convention of April 24, 1934, or by the Commission herein created;

(7) Claims which were brought to the attention of the Department of State or its agencies prior to the expiration of the periods specified in the conventions of September 8, 1923, for the filing of claims or parts of claims, but which, because of error or inadvertence, were not filed with or brought to the attention of the proper commission within the said periods.

(b) After the Commission shall have determined the amount allowable on account of each claim in paragraph (6) of this section it shall reduce the amount by 43 per centum (that being the same percentage basis that the final awards of the Special Mexican Claims Commission were reduced in accordance with the provisions of section 4 of the Act approved April 10, 1935) and shall enter a final award in the reduced amount without interest.

(c) All claims in the foregoing categories may be presented for losses or damages suffered by American nationals by reason of losses or damages suffered by any foreign corporation, company, association, or partnership in which such nationals have, or have had, a substantial and bona fide interest: Provided, That an allotment to the claimant by the corporation, company, association, or partnership, or such other evidence of his proportion of the loss or damage suffered, be presented by the claimant to the Commission.

SEC. 6. (a) The President shall designate one of said Commissioners as Chairman of the Commission. Not more than two of such Commissioners shall be members of the same political party, and none shall heretofore have passed on any of the claims. Each Commissioner shall be a citizen of the United States, shall hold office until the functions of the Commission are terminated, and shall receive a salary at the rate of $9,000 a year. Any vacancy that may occur in the membership of the Commission shall be filled in the same manner as in the case of an original appointment. Two members of the Commission shall constitute a quorum for the transaction of its business. All decisions by the Commission shall be by a majority vote.

(b) The Commission shall have a secretary, and such additional legal, clerical, and technical assistants as may be approved and appointed by the Secretary of State, and at the rates of compensation fixed by him.

SEC. 7. (a) Before taking up his duties, each Commissioner shall make and subscribe a solemn oath or declaration that he will carefully and impartially examine and decide on their merits all claims in accordance with the evidence and the terms of the said convention of September 8, 1923, the said convention