Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-10-27
Attorney General Knox Be
lieves Panama Company Can
Transfer Its Interest
SYNOPSIS OF HIS REPORT
The New French Company Believed to
Have Ample Power to Transfer the
Panama Canal Assets to the United
States The Title Believed to Be
Valid and Unencumbered.

new Panama Canal Company, submit
ted last spring for the sale of the canal
! for s40,000,000, it would receive thru
the parties in interest a valid and I'M
/ incumbered title to the property. This
decision was arrived at after thor
ough and exhaustive. investigation Of
the situation in Paris, first by special
attorney, Charles w. Russell, and later
| by the attorney general himself. The
attorney general formally submitted
the opinion to President Roosevelt Sat
urday. 1t makes about 800 pages. The
opinion first gives resume of the his
tory from the beginning of the conces-
sions in 1878, the formation of the De
| Lesseps company, etc.
1t then takes up the principal objec-
lions which have been made in this
country to the title proposed to be Civ
en- to the United States. These objec-
tons, it says, resolve themselves into
reasons in support of the following
propositions:
l. That the new Panama Canal Com
pany has not power to sell the canal
and railway property.
2. That the liquidator of the old Pa
mama Canal Company has not power to
consent to such sale.
3. That the French courts have not
power to authorize the liquidator and
the new company, or either of them, to
enter into the sale.
4. That, at all events, the United
States would take the property as
trust fund subject to the total obliga-
tons to the stockholders.
The bondholders, and the other cred
itors of both companies, the history and
nature of French companies Of the kind
in question are explained at length.
They are said to be altogether different
from our corporations. but to be easily
understood If looked upon as private
partnerships, which is their essential
character. The laws do not forbid the
exercise Of the liberty to dispose of
their property as freely as any individ-
ual disposes of his If no special law
forbids, and If he is solvent and not
under some particular contract, or 9TH
er like obligation. to retain the proper
ty. The new Panama company is quite
solvent and there is no.law forbidding
it TO SELL
The powers of the general meeting of
stockholders of that company are dis
cussad, and 1t is held to have derived
from the partnership agreement ample
power to sell, as it is proposing to do.
The liquidator of, the old comapny,
when he turned over the assets to the
new company. stipulated for 60 per cent
of the profits of the canal when fin
ished, and his power to consent to the
sale and give up his right to the 60 per
cent is discussed in the light of the
French law concerning the winding up
of such associations. and it is held that
under the general law of France and
the special act OF 1893 concerning the
liquidation of his company he has full
power to dispose of the assets of the
concern and consequently to consent to
the sale of the 60 per cent which is
part of those assets. 1t is held that the
old company is not in bankruptcy, or
in what is similar to bankruptcy under
French laws, but is governed by the
general law or civil code, which the
special law of 1893 already referred to
partially modifies. That law requires
the approval of the civil tribunal of the
Seine for all sales or alterations of the
assets, but does not prevent such alien
ations. That tribunal has approved the
consent of the liquidator to the sale and
on appeal by a bondholder Of the old
company the court of appeals of Paris
confirmed the decision, which held that
under the special law of 1893, a legal
representative of the bondholders had
been appointed by the court to repre-
sent them all, and that that represen-
tative who had formally announced his
consent to the sale was the only one au-
thorized under the special law to OPP
pose the judgment of approval on be-
half of the bondholders.
AS to the proposition that the United
States would be subject to the debts
and claims of the stockholders and
bondholders and other creditors of
both of the companies, the opinion
says:
LAS a general proposition it is not
or equity for subjecting purchaser of
an article sold as assets of failing
partnership (such as the old company
to the debts of the partnership. If such
were the law, there would be no pur-
ors would receive no payment of their
debts out of the proceeds nor stock
holders any dividends of residue"
Nevertheless the opinion exhaust
lively considers all possible mortgages
and other liens affecting the property
itself, real or personal, under French
or Colombian laws. 1t says there have
been mortgages and pledges of personal
property, and shows in detail what be-
came of them. AS to the proposition
that the United States can not take IT,
tie to the shares of stock of the Pana-
ma Railroad Company, a New York
corporation, which the Panama COM
pany proposes to sell with the canal
property, the opinion holds that the
government can take and hold any kind
of property it may have need Of, in
the same manner as an individual can;
that 1t could hold the shares as an in
dividual would hold them. AS for the
suggestion that the United States at all
events could not destroy the railroad, it
the intention of the French, if they
built the canal, to dispense with the
railroad.
AS to the objection that congress has
authorized a purchase from the new
company only and not from the liqui-
datofs, the opinion says:
Certainly, in view of the condition
of the title as hereinbefore explained,
the purchase will be from the new COM