Evening star. [volume] (Washington, D.C.) 1854-1972, 1900-01-11
IMPORTANT DECISION
The Policy of the United States in
the Philippines Defined.
RAILROADS. APPLICATION DENIED
Guarantees of Spain Not Binding
on This Country
JUDGE MAGOON'S REASONING

Acting Secretary Meiklejohn of the War
Department has denied the application Of
the Manila Railway Company Limited for
paymerr by the United States of interest
| on the capital invested In the railway own
ed aud operated by said company pursu-
ant TO guarantee of said interest by the
Spanish government. The Manila Rail-
way Company, Limited, a corporation or
ganized under the laws of Great Britain.
obtained concession from the Spanish
government for a railloa from Manila to
Dagupan in the Island of Luzon, a distance
Of about 13o miles. By the terms OF the
concession the Spanish government guaran-
teed a return of eight per centum per an
mum upon the capital invested in the rail-
road.
The claimants represent that the amount
originally SO invested was 81 aGI, 400 but
that the amount was subsequently in
creased, with the concurrence Of the Span
ish authorities, to 1888, 7oo.S9. The Spanish
government up to the time of the Spanish
American war fulfilled its obligations under
this contract by paying quarterly INSTALL
ments of the ~Ilbvention, as they accrued,
the amount varying with the earnings OF
the railway.
Contention of the Company.
The railway company contends that the
United States, by assuming sovereignty
over the Philippines, in accordance with the
terms of the treaty OF peace with Spain,
became bound tc respond to the obligations
Of the Spanish government under said con-
cession. The company, therefore claimed
that the United States should pay to IT the
amounts due on the subvention which have
accrued since the date Of the treaty OF
peace, aggregaung s23I ,06s.97 to September
SO, 1899
In disallowing the claim. Acting Secretary
Meiklejohn was guided by a careful and
comprehensive review of all the important
gal points involved, contained in an opiu-
ion rendered by Judge Charles E. Magoon
law officer of the division of customs and
insular affairs.
The Decision in Full.
The conclusions stated in that opinion,
which have been concurred in by the War
Department. are as follows:
Il. The funds of the United States SUBJ
ject to the orders Of the War Department
are not available for the payment of claims
based upon obligations of the government
OF Spain, even though it were conceded that
the United States had assumed such obl-
cations or otherwise become liable thereon
The executive branch of this govern
ment refuses TO consider the funds arising
from the revenues derived from the islands,
the sovereignty of which was oeded and
relinquiShed by Spain in the late treaty
of peace, as being the funds or properly
OF the United States. Said revenues are
collected for the purpose of defraying the
expenses OF maintaining peace and order
on said islands. by and through the pro-
Visionai government instituted therein pur-
suant to the requirements OF the laws of
war. Such funds are trust funds and must
be used for the purposes for which they
We're collected. They cannot be utilized 10
discharge the liabilities of the home gov
ernment Of the United States, neither orig
inal nor assumed.
% During the negotiations which result
ed in the treaty of Paris December TO-
1888 the Spanish commission proposed that
the government of the United States should
be holden TO all the rights and obligations
of the Spanish government created by the
railroad concession from Manila to Dag
upan. Said proposal was rejected by the
American commission, with the declaration
that they would not accept any articles
that required the United States to assume
the so-called colonial debts OF SPAIN but
IN respect of the Philippines, the American
commission agreed that their government
should pay to Spain the sum of $50 0ao 900
Proceedings of the commissions reviewed
and opinion arrived at that said payment
was in lieu of an assumption by the United
states OF the financial obligations of the
government of Spain created fer the benefit
Of the Philippines.
~. The position taken by the American
commission was approved by the President
and made known to Congress. That body
approved said position by ratifying the
treaty based upon said position. 1t is
therefore, TO be supported by the co-ordi-
not be adjudged untenable either by this
department or the provisional government
temporarily in charge of the civil affairs of
the islands.
Spanish Obligations Obsolete.
20. The contract obligations of Spain Gre
ated by the guaranty of interest on the
capital invested in the enterprise, included
in the concession now owned by the Manila
Railway Company, did not pass to and be-
come binding upon the United States by
operation Of international law upon the ces-
sion of sovereignty by Spain and the ac-
ceptance of sovereignty over said Islands by
the United States.
"6 Liability for debt arising upon the per-
sonal obligation of the general government,
unsecured by the mortgage OF the terri
tory ceded, does not pass with the sover-
eighty of territory unless stipulated for in
the treaty of cession. Such liability is part
Of the national debt of the nation making
the cession. The taking over of the whole or
any part thereof is an act of grace by the
succeeding sovereign. Its accomplishment
requires an affirmative act on the part of
such sovereign. The sole dependence of a
claimant desiring such grace is that the
equities of his cause will appeal to the con-
science of the new sovereign. Under the
distribution of powers made by our Consti-
tuition such acts of grace by the sover-
eighty Of the United States must be per-
formed by Congress.
81. The guaranty of the Spanish govern
ment, evidenced by the provisions of the
corcession to the Manila Railway Com
pany, is not a lien upon the Island of Lu-
zen.
'S. The revenues now being collected by
the provisional government Of the Philip
pine Islands are not burdened with trust
in favor of the Manila Railway Company
to secure the performance of the contract
obligations of the government of Spain"
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