its (the Government's) urgent expenses and to assist it to renew payments on the national debt". The Department will recall that in the agreement concluded between Secretary of the Treasury de la Huerta and the Presidents of five oil companies, representing American oil companies, on September 3, last, it was agreed to postpone until December 25, next, the payment of the export tax provided for by the above-mentioned Decree. (Please see the Embassy's despatch No. 4301, September 8, 1921). In this connection, I may refer also to the enclosure with the Embassy's confidential despatch No. 4465 of October 21, 1921,78 or to that part of it which refers to a provision in the so-called oil agreement which is reported to provide that the oil producers shall arrange with some banking syndicate to purchase Mexican bonds at an average market price of say forty or fifty and turn them over to the oil producers who in turn would pay them over at par to the Mexican authorities in payment of these export taxes. The local press has announced that these export taxes, which it is stated will amount to slightly more than twenty-two million six hundred thousand pesos, will be paid, but that the matter is receiving the active attention of General Obregon. In view of the reported depleted condition of the Treasury, it is believed that the Mexican authorities may now be easily dissuaded from the original plan to receive Mexican bonds in payment of these export taxes. Whether or not the oil producers will be able to pay these export taxes in cash at forty per cent of the scale set forth in the June seventh Decree, will probably be discussed in New York, in the very near future, between Mr. de la Huerta, the Secretary of the Treasury, and the Committee of Oil Executives. I am reliably informed that Mr. de la Huerta will proceed to New York for further conferences, in a few days, and that he will be accompanied by Mr. Eduardo Iturbide, the local representative of Speyer and Company, and Mr. Manuel Martinez del Campo. Yesterday's Excelsior published a special despatch from New York, dated December 12th, on the subject of the petroleum exportation tax as interrelated with the bonds representing Mexico's foreign debt. Among other things, the article recited that the matter of the deferred petroleum export tax payment is now being handled by means of cables; that rumors are current in Wall Street that the petroleum companies are encountering great difficulties in purchasing in the Exchange the bonds of Mexico's foreign debt that the Mexican Government insists must serve as payment of sixty per cent of the exportation imposts, inasmuch as it seems that the banks are monopolizing the bonds in question with the object of precluding the petroleum companies' delivering them to the Mexican "Neither printed. Government. In this connection, it is said that these companies have proposed to the Mexican Government to deposit a sum of money in the "Banco Nacional" representing the bonds whose acquisition is causing so much difficulty. I have [etc.] GEORGE T. SUMMERLIN 99 DECISION BY THE MEXICAN SUPREME COURT ON THE "AMPARO " CASE OF THE TEXAS COMPANY OF MEXICO 812.6363/926 The Chargé in Mexico (Summerlin) to the Secretary of State No. 4165 MEXICO, August 6, 1921. SIR: I have the honor to report that the Excelsior of today states that, after a series of conferences between General Obregon and some of the justices of the Supreme Court, it has been agreed that the Supreme Court will begin, during the coming week, to hand down its decisions in the hundred or more amparo cases instituted by the petroleum companies since the month of December, 1918, which decisions will establish whether or not Article 27 of the Federal Constitution 79 is or is not retroactive. The article states that the cases have been divided into groups, the principal five of which are the following: I. Cases of amparo against laws not yet being enforced. II. Cases of amparo against laws which have been put into force. III. Amparo arising out of denouncements made by third parties on petroleum property in accordance with the decrees of 1918,80 which provided that such denouncements might be made on proper ties which have not been manifested. IV. Amparos against the refusal of the Federal Executive Power to grant permission to drill new wells. V. Amparo against the issuance of titles to those making new denouncements. It appears that the intention of the court is to render a decision in at least one case of each of the above specified groups, concerning which the principal questions at issue are the constitutionality of the decrees of President Carranza, promulgated by virtue of the extraordinary power which he had in the Department of Hacienda, whereas the decrees referred to the Department of Industry and Commerce; and whether or not Article 27 of the Constitution is retroactive. 19 Foreign Relations, 1917, p. 951. 80 Ibid., 1918, pp. 702, 721, 743, 752, 759, 765, 766, 771. The article closes with the statement that the general impression is that the Justices of the Supreme Court are of the opinion that the cases should be decided in favor of the petroleum companies. I have [etc.] GEORGE T. SUMMERLIN 812.6363/978 The Chargé in Mexico (Summerlin) to the Secretary of State No. 4317 MEXICO, September 14, 1921. SIR: Supplementary to my despatch No. 4275, of September 2, 1921,81 in regard to the reported decision of the Mexican Supreme Court on amparo proceeding instituted by the Texas Oil Company against the Secretary of Industry, Commerce and Labor and the President of the Republic, for having issued a title of concession in favor of Rafael Cortina for lot No. 36, Zacamixtle, I have the honor to forward herewith a translation of the remarks of Associate Justice Benito Flores 81 in explanation of his vote on this case. The opinion on which the decision of the Supreme Court will be based and which will be signed by all of the members of the Court, has not yet been made public. It is reported that the Justices have held a number of secret sessions in regard to this opinion, but that no agreement has yet been reached as to the actual wording of the document. It appears that each member of the Court rendered a separate "dictamen " in the argument explaining his vote, and it now becomes necessary to harmonize these several "dictamens". Until the opinion is made public it will not be possible to say what was decided in this case, however, I am reliably informed that the facts of the case are as follows: The Texas Oil Company obtained by assignment a lease of a certain tract of land authorizing the Company to explore and exploit the petroleum and carbide gases of the sub-soil. The lease had been executed by the owners of the land prior to May 1, 1917, the date the Constitution of that year became effective. The Company failed to manifest the lease within the first fifteen days of August, 1918, as required by the Carranza Decree of July 31, 1918,82 and was, by this failure, subject to denouncement. It was denounced by Rafael Cortina and the denouncement was accepted by the Department of Industry, Commerce and Labor. The Texas Oil Company asked for amparo against the act of the Government in admitting the denouncement and based the amparo on the grounds that it had acquired the lease of the lands prior to May 1, 1917, and that the lease was protected under the mining laws of 1884, 1892 and 1902 [1909?], which reserved to the owner of the surface of the land the right to explore and exploit the coal and petroleum and carbide gases that might be found in the subsoil of the lands. The District Court refused the amparo and the Company appealed to the Supreme Court for revision, and the Supreme Court by unanimous decision granted the amparo. It is stated, therefore, that the only point decided by this case is that leases for the exploration and exploitation of petroleum and carbide gases in the sub-soil of lands, which leases were granted prior to May 1, 1917, by the owners of the land described in the leases, are to be protected under the provisions of Article 14 of the Constitution of 1917, which declares that: "No law shall be given retroactive effect to the prejudice of any person whatsoever ", and that the Carranza Decree of July 31, 1918, was retroactive in its effects and, therefore, its application to the case before the Court is prohibited by Article 14 of the Constitution. It is reported that all of the various arguments of the Supreme Court Justices in this case appear to be confined strictly to the protection of leases made prior to May 1, 1917, and that these arguments seem to indicate the distinction between "rights acquired and "rights in expectancy". It might, therefore, appear that the owners of lands who have not leased them for petroleum purposes, or who have not themselves developed the oil on their own lands, prior to May 1, 1917, would not be protected. It is stated that the decisions of the Mexican Supreme Court are not precedents and that another Court or the same Court can in the future decide a similar case precisely to the contrary. However, in view of the declarations of General Obregon in regard to nonretroactivity, it is hardly probable that this decision will be reversed during the present administration. I have [etc.] GEORGE T. SUMMERLIN 812.6363/1007 The Chargé in Mexico (Summerlin) to the Secretary of State No. 4352 83 MEXICO, September 27, 1921. [Received October 14.] SIR: In confirmation of my telegram No. 186 of to-day, I have the honor to forward herewith copy and translation of the Mexican Supreme Court decision, made public last night, in the amparo case of The Texas Oil Company against the Secretary of Commerce, Industry and Labor and the President of the Republic. The local press reports that the decision bears the signature of all eleven of the Supreme Court Magistrates. The decision appears to confirm the validity of the Executive Decrees of July 31, August 8th and 12th, 1918,8* establishing certain taxes and prescribing certain rules for the exploitation of petroleum, by virtue of the extraordinary powers in financial matters conferred on the Executive by the Congress; and states that the fourth paragraph of Article XXVII of the Constitution, in so far as it relates to petroleum and all hydro-carbons, solid, liquid or gaseous, is not retroactive as regards rights legitimately acquired prior to May 1, 1917. I have [etc.] GEORGE T. SUMMERLIN [Enclosure-Translation ] Decision of the Mexican Supreme Court in the "Amparo" Case of the Texas Company of Mexico, August 30, 1921 88 In view of the amparo applied for by Licentiate Adalberto Ríos as attorney for the Texas Company of Mexico, S.A., against acts of the President of the Republic and of the Department of Industry, Commerce, and Labor, because, according to the complainant company, such acts seek to deprive it of its rights and interfere with its peaceful possession of lot number 36, in Zacamixtle, Municipality of Tancoco, Canton of Tuxpam, State of Vera Cruz, in violation of articles 14, 16, and 27 of the General Constitution of the Republic; and RESULTING, first: The attorney in the complaint in reference sets out that the Texas Company of Mexico, S.A., acquired the right to explore and exploit petroleum in respect of the lot aforesaid; that, while the company was in possession of and exercising said rights, Mr. Rafael Cortina, by virtue of the decree of August 8, 1918, covering petroleum matters, issued by the President of the Republic by virtue of the extraordinary powers granted him by the Congress of the Nation in matters pertinent to the Department of Hacienda, denounced the aforesaid lot in the Tuxpam Agency of the Department of Industry, Commerce, and Labor; that said denouncement being accepted, it followed the legal course prescribed by the aforesaid decree until it came before the Department of Industry for revision, the complainant company having duly protested against 85 Foreign Relations, 1918, pp. 752, 759, and 766, respectively. File translation revised. 86 'Published in El Universal, Sept. 27, 1921. |