In the Opinion of the Experts it is said that the Committee is convinced that it is just and desirable to demand from German industry, as a contribution to the reparation payments, the sum of at least 5 milliards goldmark to be represented by obligations secured by first class mortgages which are to bring five per cent annual interest and one per cent amortization. In a plan which the Committee has worked out regarding such industrial obligations it is stated that the obligations represent the liabilities of the individual enterprises which, as far as payment of capital, interest, and amortization-quota is concerned, should be secured by a first mortgage on investments and property of those enterprises issuing them (ausstellende Unternehmungen). The Committee of Organization, which was charged to work out in detail the plan of the Committee of Experts, and which was also empowered to propose certain changes, emphasized in the exposé of its Law-Project that the entire wealth of the industrial enterprises must be considered as a guaranty and must give effective security, both in the form of a mortgage on property which, according to German legislation, could become the object of a mortgage, and, in case of bankruptcy, in the form of preference claims (Vorzugsrecht) on property objects which could not be encumbered with a mortgage. The instructions of the Committee of Organization authorized it in case the Committee should find a concern too small to make the security (Bestellung) of a mortgage appear practical and desirable, to entirely exempt such an enterprise from participation in the payment of the five milliards. Pursuant to this provision, the Committee believed that it should exclude in its project commercial, financial, and insurance enterprises. The Committee based this viewpoint on the fact that hypothecary securities were the safest, and that many of the enterprises of the named categories offered only relatively unimportant securities of a hypothecary kind. When the project of the Committee of Organization, after having been accepted by the governments, was submitted to the German Reichstag, mention was made in the official exposé attached thereto of the difficulties caused by the regulation of hypothecary security for the obligations with reference to the clear and precise request contained in the Opinion of the Experts that the obligations be secured by a first mortgage on the investments and property of the enterprises which issue them. It was further emphasized that, in consideration of the clear provisions of the mentioned Opinion, it has been impossible to choose the otherwise desirable solution, i.e., to limit the real obligation to a certain part of the property, if the immovable property of an enterprise be of insignificant value in proportion to the total property of the entrepreneur. Since these different opinions were given during the international proceedings which led to the execution of the Industrial Charges Law and were incorporated later in the exposé which the German side furnished in favor of the acceptance of the law, they must be of great importance in any question of the interpretation of the law where it cannot be considered as sufficiently clear. The opinions mentioned show that in the different stages of the discussion of the question of German industrial charges special importance was attached to the hypothecary security for the charge of five milliards goldmark which it was intended to impose on German industry. If one examines what effect an acceptance of the German viewpoint would have, one cannot help but realize that, in the course of years, it would mean that an ever larger part of non-negotiable obligations would lack hypothecary security. With every new repartition, in the proportion as it transfers a part of the charge from the entrepreneurs having taken part in the first repartition to entrepreneurs who have not taken part, it would follow that the transferred part would remain without mortgage. In the exposé on the law given by the German Government it has been emphasized that new repartitions would often become necessary for many various reasons. As such reasons are given, partly the incompleteness adherent to the system of assessment for the property-tax for 1924, partly the uncertainty in the present period of reverse of German finances from the state of inflation to new currency, which period will presumably continue for some time; partly, at last, the fact that existing concerns will decline to a marked degree, indeed even disappear or, on the contrary, will expand considerably and new enterprises will spring up. According to the plan of amortization, the period of time required for the complete amortization of the charge is about 37 years from the date of the enforcement of the law. If we compare the situation of German industry at the time when the law was enforced with the situation of 37 years before, it will certainly be found that a large number of those concerns the entrepreneurs of which had taken part in the first repartition of the charge were not in existence 37 years ago. There is certainly no reason for assuming that during a period of 37 years to come German industry will not show a corresponding development and change. It can therefore be foreseen with certainty that, if the German viewpoint be accepted, a great part of the charge would, towards the end of the period, be wanting in hypothecary security. And if entrepreneurs who have taken part in the first repartition have later on increased their business capital (Betriebsvermögen) and consequently have been taxed higher, this increase [in taxes], it is true, would also increase the public charge on the properties which the entrepreneur possessed at the time when the law was enforced; but since afteracquired property would not be affected by the public charge, the result would be, also regarding these concerns, a decrease in hypothecary security. It has been remarked by the German side that in the majority of cases the refounding of companies does not also mean a refounding of concerns, and that even less often does it signify at the same time discontinuance of existing concerns, but that, on the contrary, the refounded companies generally (in aller Regel) take over existing concerns and do it in a way which will not result in the extinction of the public obligation. From this train of thought the German side seeks to draw the conclusion that there is no real cause for the fear of the Trustee that, if the German viewpoint be accepted, the non-negotiable obligations would be wanting more and more in hypothecary security. Against this one only needs to be reminded of the provision in § 49, paragraph 1, according to which, in case of transfer of the whole or part of the business capital (Betriebsvermögen) from one entrepreneur to another, the acquiring party is liable only for the annual payments (Jahresleistungen) which will be due up to the end of the calendar year in which presumably the new repartition will take place. If the acquiring party is an industrial entrepreneur who, according to the law, is to take part in the charge at a new repartition, this entrepreneur will take part, to be sure, in the next new repartition of the personal charge with an amount corresponding to his business capital (Betriebsvermögen). But if the acquiring party is a newly founded concern, or generally speaking, a concern which has not taken part in the first repartition, its immovable property would, in case the German viewpoint be accepted, not be affected by the public charge; and this might be the case even if this new concern had acquired immovable property which formerly had been affected by the personal charge. This is at least the view which has been advanced by a German commentator (Geiler, Industriebelastungsgesetz, p. 250), and it might not be easy to refute this opinion, if the German viewpoint is accepted at all. Hence the fact cannot be disputed that, according to the German viewpoint, an ever increasing part of the charge would lose its hypothecary security during the course of years, and if the opinion of the German commentator just mentioned is correct, there would even be means by which to hasten, through some intentional measures, the exemption of the older enterprises from the public charge. Since then an acceptance of the German viewpoint would lead to results which are in obvious contradiction to the purpose which has been the fundamental starting point of the Committee of Experts and of the Committee of Organization, and since no provision in the law necessarily demands the interpretation advanced by the German side, I must reject it. (Signed) MARC. WALLENBERG. AMERICAN AND BRITISH CLAIMS ARBITRATION TRIBUNAL SARAH B. PUTNAM (Fishing Claim—Group 2) Award rendered at Washington, November 6, 1925 * Great Britain held liable in damages for the enforced giving up of the voyage of an American fishing vessel due to the refusal of Newfoundland authorities to recognize a fishing license issued by the Canadian authorities under the terms of a modus vivendi agreed to between the Governments of Great Britain and the United States. This is a claim for damages due to refusal of Newfoundland authorities to recognize a fishing license issued by the Canadian authorities under the terms of a modus vivendi agreed to between the Governments of Great Britain and the United States. The modus vivendi provided for "annual licenses" to be issued either by the Canadian authorities or the Newfoundland authorities, to be recognized by each when issued by either. A difference of opinion developed between the latter governments as to whether licenses should be issued to be valid for one year from their dates or should be made to expire on the 31st of December. Ultimately the Newfoundland Government, as we interpret the minutes of the Council, agreed to recognize past Canadian licenses issued to be good for one year from their date, and the Canadian Government agreed for the future to issue licenses expiring on December 31. It appears, however, that the Newfoundland customs officials received no orders to recognize Canadian licenses, accordingly when the vessel in question, which held a regularly issued Canadian license expiring on July 25, 1889, presented itself at the Port of Ferryland in Newfoundland in June 1889, the local customs authorities refused to recognize the license. After trying at two other ports, at each of which the authorities refused to recognize the license, and after information that the vessel would be seized if attempt was made to act under it, the master gave up fishing and sailed for his home port with a partial cargo. In the answer it is set up (a) that the master should have paid for a Newfoundland license under protest and reclaimed the money, (b) that it is not shown that the master, even if denied his right to procure bait in Newfoundland, could not have procured it elsewhere, (c) that the abandonment of the fishery was not a natural or probable result of the refusal of the Newfoundland authorities to recognize the license, (d) that the license was not Established in pursuance of the special agreement signed at Washington, August 18, 1910 (Supplement to this JOURNAL, Vol. 5, pp. 257–267). Arbitrators: Alfred Nerincx, Sir Charles Fitzpatrick, Roscoe Pound. Agents and Senior Counsel: United States-Fred K. Nielsen; Great Britain-Sir Cecil J. B. Hurst. Previous decisions of the Tribunal will be found printed in this JOURNAL, Vol. 7, pp. 875890; Vol. 8, pp. 650–655; Vol. 15, pp. 292–304; Vol. 16, pp. 106–116, 301–333; Vol. 18, pp. 814-844; Vol. 19, pp. 193-219, 790-803. Headnotes supplied by the Managing Editor. valid in Newfoundland, and (e) that the damages claimed are "remote, speculative, contingent, and incapable of assessment." As to the first contention, we find that the master communicated at once by telegraph with the State Department at Washington. Obviously that government could not acquiesce in the proposition that the terms of the modus vivendi should be set aside by requiring two licenses where but one annual license was provided for. We think the master was not bound to proceed in any other way than by asserting his rights under the license and the modus vivendi and referring the matter to his own government. Upon the second and third contentions, there seems to us sufficient evidence that denial of the right to procure bait in Newfoundland compelled abandonment of the fishing voyage. With respect to the fourth contention, quite apart from any question of the binding force of the modus vivendi and its provision for "annual licenses" to be recognized both in Canada and in Newfoundland, the action of the Council of Newfoundland on October 15, 1888, above referred to, seems to us to be decisive. 1 As to damages, the questions raised are the same as those considered in the cases of the Horace B. Parker (Claim No. 76) 1 and the Thomas F. Bayard (Claim No. 77) 2 and call for no further comment. We award the sum of $8,625, claimed by the United States for enforced giving up of the voyage. The claim, originally put forward for a possible second and third voyage, which were not attempted, were very properly abandoned by the United States. Done at Washington, D. C., November 6, 1925. The President of the Tribunal, A NERINCX. THE HORACE B. PARKER (Fishing Claim-Group 2) [Claim No. 76] Award rendered at Washington, November 6, 1925 Great Britain held liable in damages for failure of an American fishing vessel to obtain a cargo, and for loss of bait, by reason of the refusal of the Newfoundland authorities to permit the exercise of the right of making repairs as secured to American fishermen by the treaty of 1818 between Great Britain and the United States. This is a claim for damages by reason of the refusal of the Newfoundland authorities to permit exercise of the right of making repairs as secured to American fishermen by the proviso to Article 1 of the Treaty of 1818. The evidence is somewhat in conflict. For the purpose of decision we accept the version of the British case as to what the claimant sought to do. The riding sail of the vessel having been blown away in boisterous weather, the master 1 Infra. 2 Infra, p. 380. |