raised, having been the subject of evidence and discussion on the part of both parties, being at the same time germane and in fact essential to a proper determination of the claim under the memorial, and the court having finally adjudicated upon the subject, nothing remains to prevent the old adjudication from being to the fullest extent res judicata, or forbids that there should flow from that decision the consequences claimed by the United States.

THE DOCTRINE OF OVERRULED CASES.

Señor Mariscal adduces in his letter of November 28, 1900, to Mr. Powell Clayton (Diplomatic Correspondence, p. 31) the existence of overruled cases in our common law courts as proof that the rule of res judicata is not always adhered to in them. He has been led into this error by losing sight of the inherent and essential distinction between the rule of res judicata and the maxim stare decisis. When a doubtful or disputed principle of law has been decided by a court of last resort, men adopt it as a guide in their future transactions, and hence justice and public policy demand adherence to it when the same question is again presented, in other cases having different parties. It is said, in English and American jurisprudence, to be a rule of decision. From this rule of decision courts are at liberty but disinclined to depart. This is all briefly expressed in the maxim stare decisis. If, as sometimes occurs, the same court afterwards concludes that it erred in its appreciation of law, it reconsiders the doctrine previously announced and overrules its former opinion; "such cases are called overruled cases." They are overruled as authoritative expositions of the law, because the court is convinced that it erred in pronouncing them. They no longer constitute a rule of decision.

The doctrine of res judicata, on the other hand, applies only to subsequent litigation between the same parties or their successors in interest or estate, called their privies. Where disputed matters are once determined by the final judgment of a court of competent jurisdiction, such judgment is always, everywhere, and forever conclusive as to such matters between the same parties and those claiming in privity with them. To this rule, there is absolutely no exception. There are no overruled cases in the law of res judicata. If courts were at liberty to overrule decisions when relied upon as res judicata and thereby destroy the effects of such judgments as res judicata, this principle would have to be abandoned; the two propositions involving a contradiction in terms.

With this distinction in mind, Señor Mariscal will recognize his misapplication of his suggestion of overruled cases.

CONSIDERATIONS WITH RELATION TO THE MERITS OF THE CLAIM.

It is not our intention to argue at any length the details affecting the merits of the claim for the Pious Fund. The United States relies absolutely, and, as we believe, with entire justice, upon the fact that these merits have once been the subject of consideration and examination by an entirely competent tribunal, and that tribunal having passed thereon, the American Government is relieved from any necessity for detailed discussion. Even if this were not the correct view, we would

be excused from entering upon the consideration of the merits as an independent proposition, because this branch of the subject has been so thoroughly treated by the Messrs. Doyle, of counsel, who have shown that a reexamination of the merits would bring about as its necessary result a judgment against Mexico considerably larger than that formerly awarded.

Notwithstanding the foregoing, and as bearing upon the justice of the contentions made on behalf of the United States, there are two or three features of the case to which we believe we are justified in inviting attention, and the first of these is that

THE PIOUS FUND WAS AT ALL TIMES

CONSIDERED AS RELIGIOUS IN CHARACTER, AND ITS BENEFICIAL OWNERSHIP VESTED IN THE CHURCH AUTHORITIES.

We need not do more than advert to the origin of this fund, springing as it did out of the pious desires of religious Catholics for the conversion of the heathen of the Californias to the truths of Christianity. While the fund remained under the control of the Jesuits these objects were faithfully promoted. When the Jesuits were removed, and for the default of other trustees the Spanish Government assumed control, its first act was (July 12, 1772) to carry out the desires of the founders; for the King's order (Transcript, p. 456) declared that he had assumed "all the rights of patronage which belonged to the regulars of the said order, and also those which they might possess in common with those other orders, without prejudice to these being devoted to the same purposes which they were before the time of the expulsion.

When the Spaniards were expelled from Mexico the Mexican Government followed the same policy. We find that the law of May 25, 1832, already cited at large in this brief, provides the manner in which the Government shall lease the rural property belonging to the Pious Fund, and that (sec. 6) "the proceeds of such property shall be deposited in the mint of the Federal city, to be wholly and exclusively destined for the missions of the Californias." It was further particularly directed that the board of management, consisting of three persons, should include an ecclesiastic. Among its powers were:

9. To name to the Government the amounts which may be remitted to each one of the Californias in accordance with their respective expenses and their available funds.

When, later on, the bishopric of California was created, article 6 of the law of September 19, 1836, provided:

The property belonging to the Pious Fund of the Californias shall be placed at the disposal of the new bishop and his successors, to be by them managed and employed for its objects or other similar ones, always respecting the wishes of the founders of

the fund.

When, still later, and on February 8, 1842, the Mexican Government reassumed the management of the Pious Fund, it particularly declared that the proceeds of the property assumed should be disbursed "in such way and manner as it shall direct for the purpose of carrying out the intention of the donor in the civilization and conversion of the savages.

Even when the fund was finally incorporated in the national treasury the Government, by the decree of October 24, 18+2, after insuring the payment of its revenues, declared that "the department in charge thereof

will pay over the sums necessary to carry on the objects to which said fund is destined, without any deduction for costs, whether of administration or otherwise."

At the still later period, April 3, 1845, when the Government undertook to retrace its steps, it recognized the interest of the bishops in the subject-matter, for it provided:

All debts due to and other property belonging to the Pious Fund of the Californias which may be still unsold shall be forthwith restored to the right reverend bishop of that see, and to his successors, for the purpose stated in the sixth article of the law of the 19th of September, 1836, without prejudice to the action which Congress may take with regard to such as may have been sold.

It is therefore too late to be argued, as it was before the former Mixed Commission, that the purposes of the Pious Fund were political, or that the Pious Fund constituted an arm of the Government as distinguished from an assistance in the performance of a religious function.

Passing, therefore, from this subject, we desire to add something to the view presented by the Messrs. Doyle with relation to

THE OBLIGATION RESTING UPON MEXICO TO PAY INTEREST UPON PRINCIPAL AND INTEREST OF ITS OLD INDEBTEDNESS TO THE PIOUS FUND.

It appears from an examination of the various statements with relation to the properties of the Pious Fund, referred to in the foregoing statement of facts, and more at large set forth in the places in the record pointed out by the index, that at the time of incorporation of this fund into the treasury Mexico owed to the Pious Fund on account of principal $539,872.25, and on account of interest upon various items embraced in the foregoing sum total the additional amount of $564,968.54.

It was argued on behalf of Mexico before the Mixed Commission, and we presume the argument will be renewed, that Mexico should not have been charged with the principal of the above amounts, because they constituted merely an original indebtedness against the Government of such character that a mixed tribunal could not give it any special precedence over other obligations owned by other bonded or money creditors of the Government. It was contended, furthermore, that for a like reason any claim based upon interest must fail, as well as for the further reason that a claim upon such interest would amount to the compounding of interest upon a debt due by Mexico.

From our point of view, even if the matter were otherwise debatable, the foregoing contentions may not be sustained. The Messrs. Doyle have pointed out that they are not sustainable, for the reason that Mexico constituted herself a trustee by virtue of her assumption of the Pious Fund properties. We believe this position to be absolutely unassailable, but we desire to add certain other considerations.

The language of the decree of October 24, 1842, deserves careful analysis. This decree, after reciting that the decree of February was "intended to fulfill most faithfully the beneficent and national objects designed by the foundress, without the slightest diminution of the properties destined to the end; and whereas the result can only be attained by capitalizing the funds and placing them at interest on proper securities," etc., first incorporates into the national treasury "the real estate, urban and rural, the debits and credits, and all other property belong

ing to the Pious Fund of the Californias." In our view, the purpose of this law was to cover the entire subject-matter, to absolutely wipe out the Pious Fund in its then existing form, and to start upon a fresh basis. From and after its passage there was not a Pious Fund consisting in part of certain indebtedness of the Government, with interest thereon, but there was, to all intents and purposes, a refunding of everything, and in the place of an aggregate of about $1,100,000 principal and interest, based upon the debt of the treasury, we were presented with a new principal of a like amount (excluding from our present calculation the real estate and other properties.) The debits due by the Government, being incorporated in the treasury, could no longer exist in their ancient form, and the only form they could assume was that of a new obligation to pay $1,100,000.

But what was the nature of this obligation? Was it to deliver over the principal of $1,100,000, or was it to pay interest thereon perpetually? The question is answered, as we believe, from a consideration of the following sections of the act.

The second section, referring to the real estate and other property belonging to the Pious Fund of the Californias, directs its sale and acknowledges an indebtedness of 6 per cent per annum on the total proceeds of sale, the lands being capitalized at that rate. This section refers, we take it, to the real estate and other property capable of sale and not to the debts due by the Government, which, being incorporated into the treasury, became incapable of disposition.

The third section, however, refers to the whole subject-matter. The "revenue from tobacco," it says, "is specially pledged for the payment of the income, corresponding to the capital of the said fund of the Californias, and the department in charge thereof will pay over the sums necessary to carry on the objects to which said fund is destined," etc.

To what was the revenue from tobacco pledged? Not simply, we think, to the payment of moneys arising from the sale of real estate, but to the payment of an annuity which ought to be paid because of the possession by the Government of all the properties belonging to the Pious Fund of the Californias which were incorporated into the national treasury.

The Government at the time this act was passed was fully acquainted with all the properties owned by the Pious Fund. Had its own records been deficient, its attention but eight months previously had been directed to the fact the Pious Fund largely consisted of national obligations, and we are not, therefore, permitted to believe that the Government legislated in ignorance or that it only legislated over a part of the subject-matter, for the decree of October, 1842, recites that the prior decree "was intended to fulfill most faithfully the beneficent and national objects designed by the foundress, without the slightest diminution of the properties destined to the end.'

But what rate of interest should be paid because of the absorption by the Government of its own debts and overdue interest thereon? Surely the interest which was provided to be paid by section 2 was taken by the Government itself as a true measure of the advantage to be gained by it from the personal possession and extinction of the claim due by it to the Pious Fund. We have, therefore, in our opinion, the spectacle of the readjustment and recapitalization of the entire Pious Fund.

If this view were not correct, what position would we be obliged to

take? It would be, we submit, that while Mexico was willing to sell for its own temporary advantage and obtain the money from certain landed properties and to charge itself with interest thereon, it designed at the same moment to possess itself of all of the fund due by it to the Pious Fund of the Californias without rendering an equivalent, a supposition so offensive to the good name and credit of Mexico that we are by no means disposed to make it.

The view which we entertain is, as we believe, sustained by the language of the decree of April 3, 1845, which provided for the restoration of all the debts due to and other property belonging to the Pious Fund of the Californias which may be still unsold."

The tangible property of the fund may well have been sold. The debts due the fund by individuals may likewise have been sold, but it is not conceivable that the debts due by Mexico to the Pious Fund could have been disposed of. When a man buys a debt due by himself, while he may create a new obligation of a like amount, the old debt no longer has an existence. Mexico, therefore, even after the passage of the law of April, 1845, had she restored the tangible property yet remaining in her hands and in other respects carried out the purposes of that law, would still be obliged to account for interest upon the remainder of the fund sequestered to her uses.

We do not ignore the fact that upon the former hearings the representatives of Mexico insisted that it was out of the question that Mexico should have charged herself with 6 per cent interest upon the entire principal and interest due by her when she was only obligated under the terms of the loans made to her to pay, for the most part, a lesser rate. The suggestion, as it occurs to us, is without legal force. The possession of hundreds of thousands of dollars' worth of property which could immediately be turned into ready money constituted sufficient legal consideration for an undertaking to pay an advanced rate upon other moneys fairly due by her, or to pay interest where before none might properly have been chargeable. And the argument from a moral point of view is equally efficacious, for surely if the proper administrators of the Pious Fund were first to be deprived of the opportunity of administering property originally in their possession, and next, without consultation with them, that same property was to be converted into cash, and they were to be compelled to accept the promise of a government then of uncertain stability, nothing could be more proper than that this changed position should be compensated for by a certain though advanced interest. The same remark holds good as to the securities of private individuals drawing a rate of interest less than 6 per cent. It may well have been that obligations of this nature could have been sold by Mexico for a larger sum than her own obligations would bring, and, gaining as she might have done in Immediate cash by the transaction, she could well have afforded to promise to pay an increased rate of interest.

THE MORAL OBLIGATION RESTING UPON MEXICO.

Let us now, before closing this brief, consider for a moment the naked situation, forgetting all technical questions, such as might arise out of the doctrine of res judicata, or out of the construction of treaties, and regard only the fundamental position to which we must come, if the merits of the case are to be determined upon a basis of justice.

FR 1902, PT 3-16