^r i ?■■ ^ ,: .. ta.. J, \ rt A ^^ ^T" The Alabama Claims. i^ #6^ Ury< J^ SY]>TOPSIS BY T. L. CLINGMAN, attorjXey for CERTAIN UNDERWRITERS. vJA.:srXJA-I^Y 18, 1876- WASrllNi'rrOH, D. C\: ) m'qill a withekow, i'rinteus and SrKBEOryPKUK. ') 1876. « « • « • • • • • " - • • • «• • • • . .• * • • • • • • • • • • ♦• . •• • •• • • » • • « : ••• • • • • ••• • «. -•• • • • !,• • • • • • •-• • • • • • • •• • • • • • • • • • • • • rx 4 ^' ■> u THE ALABAMA CLAIMS. The act of Congress approved June the 23d, 1874, con- tains a provision in the following words : " 1^0 claim shall be admissible or allowed by the court by or in behalf of any insurance company or insurer, either in its or his own right, or as assignee or otherwise in the right of a person or party insured, unless such claimant shall show to the satisfaction of said court that during the late rebellion the sum of its or his losses in respect to its or his war risks exceeded the sura of its or his premiums or other gains upon or in respect to such war risks ; and in case of any such allowance, the same shall not be greater ■ than such excess of loss." \j^ Such a provision as the above seems so singular in itself as to require explanation. If insurance companies or in- ^ surers have a legal or equitable claim to a share of the fund paid under the award at Geneva, it is difficult to see how that right would be lost by its profits or losses in its g^w- ^- eral business operations in that class of cases. No one could successfully contest the claim of a mcr- ^< chant or a hotel-keeper merely on the ground that in his ^'-, general business outside of the transactions with him he hud realized profits. Still less likely would an attorney, , who had collected a sum of monev for a banking corpora- "^ tion, be justified in withholding the money from hia client . for the reason tiiat it had made profits in its general busi- J^ ncss within the past four years. If, on the other hand, the Government of the United States should be the rightful owner, in every sense, of the ^ sum of money awarded at Geneva, it might undoubtedly ;; bestow such sums as it might think proper on corporations ^-i or individuals. It strikes the mind as singular, however. 425772 V 1 that among the many snfterers in the late civil war it sliould select insurance companies as the object of its bounty. It is still more surprising that it should have, as other provisions of this act declare, selected those who had sutfered from the acts of three ships especially named, to the exclusion of all sufferers from the depredations of a number of other ships equally destructive of the commerce of the United States. But it is still more remarkable that it should relieve those who were injured by the Shenandoah after she left the British port of Melbourne, and rigidly exclude the many who suffered from the action of the same ship before she entered that port. The provisions of the act in this view appear so extraordinary, not to say whimsical, as to require explanation. What are the real facts in the case? Was this money paid to the Government of the United States for its own use, or was the payment made to satisfy the claims of others? The fact is well known that the Government of the United States did present certain claims for indirect losses from the action of the Alabama and other Confed- erate cruisers, "in the transfer of a large part of the Amer- ican commercial marine to the British flag, in the en- hanced payment of insurance, in the prolongation of the war, and in the addition of a large sum to the cost of the war, and the suppression of the rebellion." But these "indirect claims" met with such decided opposition on tlie part of Great Britain that it seemed for a time that any settlement by arbitration might be defeated, unless the United States should consent to withdraw those claims. During the discussion, the Secretary of State, in a letter to General Schenck, dated April 23, 1872, used this lan- guage : "Neither the Government of the United States, nor, so far as I can hear, any considerable number of the American people, have ever attached much importance to the indi- rect claims, or have ever expected or desired any award of damages on their account. * * lu the correspondence, I have gone as far as prudence would allow in intimating that we neither desired nor expected any pecuniary award, and that we should be content with an award; that a State is not liable in pecuniary damages for the indirect results of a failure to observe its neutral obligations." At a subsequent period, before the Tribunal of Arbi- tration, on the 15th of June, the United States presented its Argument, while the British Argument was withheld, the British Agent asked for an adjournment, in order that the two Governments might arrive at some understanding as to the indirect claims. On June 19th the Arbitrators stated, "That after the most careful perusal of all that has been urged on the part of the Government of the United States, in respect to these claims, they have arrived, individually and collectively, at the conclusion that these claims do not constitute, upon the principle of international law, applicable to such cases, good foundation for an award of compensation or compu- tation of damages between nations; and should, upon such principles, be wholly excluded from the consideration of the Tribunal in making its aw^ard, even if there was no dis- agreement between the two Governments as to the compe- tency of the Tribunal to decide thereon." {Correspondence respeclbif) Geneva Arbitration^ ih 152.) The same day the counsel of the United States advised Mr. Davis, the Agent, that the statement of the Trii)unal, in part quoted al)Ove, "must be received by the United States as determinative of its judgment upon the questions of public law involved." They therefore advised that the United States "should announce to the Tribunal that the said claims, covered by its opinion, will not be further in- sisted upon before the Tribunal by the United States, and may be excluded from all consideration by the Tribunal in making its award." [Correspondence respecting the Geneva Arbitration., p. 152.) At a sui)sequent meeting of the Tribunal, Mr. Davis, after receiving instructions from his Government, said: ((I The declaration made by the Tribunal, individually and collectively, respecting the claims presented by the United States for the award of the Tribunal, for, first, the losses in the transfer of the American commercial marine to the British flag; second, the enhanced payments of insurance; and, third, the prolongation of the war, and the addition of a large sum to the cost of the war and the suppression of the rebellion, is accepted by the President of the United States as determinative of their judgment upon the important question of public law involved. The Agent of the United States is authorized to say, that con- sequently the above-mentioned claims will not be further insisted upon before the Tribunal by the United States, and may be excluded from all consideration in any award that may be made." {See Correspondence respecting Geneva Arbilraiion, j^- lo^t- On the 27tli of June, the representatives of Great Britain, understanding thus from the Agent of the United States, "That the several claims particularly mentioned in that statement will not be further insisted upon before the Tri- bunal by the United States, and may be excluded from all consideration in any award that may be made, and assum- ing that the Arbitrators will, upon such statement, think fit now to declare that the said several claims are, and from henceforth will be, wholly excluded from their con- sideration, and will embody such declaration in their protocol of this day's proceedings," &c., expressed their satisfaction, and delivered their printed argument "with reference to the other claims, to the consideration of which, by the Tribunal, no exception has been taken on the part of Iler Majesty's Government." " Count Sclopis, in behalf of all the arbiti'ators, then de- clared that the said claims for indirect losses, mentioned in the statement by the agent of the United States on the 25th in St., and referred to in the statement just made by the agent of Her Britannic Majesty, are, and from henceforth, wholly excluded from the consideration of the Tribunal, and directed the secretary to embody the declaration in the protocol of this day's proceedings." (Protocol, vii, of June 27, 1872.) It is therefore indisputable that the claims of the United States for indirect losses, including "the enhanced pay- ments of insurance" {or war premiums) were wholly excluded from the consideration of the Tribunal. ISTo lansuao-e that could have been selected would have expressed this fact in stronger terms. The Tribunal then proceeded to consider the direct claims, which included two heads, viz: 1st. The claims for direct losses growing out of the destruction of vessels and their cargoes by the insurgent cruisers. 2d. The national expenditure in the pursuit of these cruisers. As to the sec- ond class of these claims, the decision of the Tribunal was as follows: "Whereas, so far as relates to the particulars of the in- demnity claimed by the United States, the costs of pursuit of the Confederate cruisers are not, in the judgment of the Tribunal, properly distinguishable from the general ex- penses of the war carried on by the United States ; the Tri- bunal is, therefore, of opinion, by a majority of three to two voices, that there is no ground for awarding to the United States any sum by way of indemnity under this head." The Tribunal proceeded to inquire which of the ships Great Britain should be held responsible for on account of her alleged negligence, and it was decided that she should be held accountable for the acts of the Alabama, the Flor- ida, and their tenders, and for the Shenandoali, from and after her departure from Melbourne. The representatives of the United States presented a carefully prepared statement, embracing the names of the sliips destroyed, with tlioir values, as well as of tliose of their cargoes, and the names of their owners, &c. This list specified the names of insurance companies, as well as of individual claimants. Indeed, it will be seen from the pub- lished correspondence of the Secretary of State that the cases of claims of insurance eompanies were, from the early 6 part of the war, presented and urged just as those of the private owners were. Before the arbitrators the commissioners of the United States referred to the fact that it had been repeatedly set- tled b}' judicial decisions, both in England and America, that an insurer who had paid for a vessel as a total loss, was subrogated to the rights of the original owner. In other words, he became entitled to the " spes recwperandi" and might fairly claim all that the insured owner could have done if there had been no insurance on the property. The British commissioners admitted that such was the law of Great Britain, as well as of the United States, and in their Counter Case the following language is used : "The American Insurance Companies who have paid the owners as for a total loss are, in our opinion, entitled to be subrogated to the rights of the latter, according to the well- known principle that an underwriter who has paid as for a total loss, acquires the rights of the assured in respect of the subject-matter of insurance. This principle was ex- plained and acted on in the well-known English cases of Randall v. Cochran, 1 Ves., Sen., 98, and The Quebec Fire Insurance Company v. St. Louis, 7 Moore, P. C, 286, and is well recognized by the courts of America. On the other hand, it is equally clear that underwriters cannot be enti- tled to anything more than the assured themselves, for the claim of the former is founded on nothing else than their title to be subrogated to the rights which the latter pos- sessed, and which therefore cannot possibly be more ex- tensive than the claim which the latter would be entitled t(^ maintain. From these considerations two consequences follow: In the lirst place, where the claimant is the insur- ance company, and not the owner, compensation cannot be due for any sum exceeding the amount of the actual loss sustained by the owner, however much that sum may fall short of the amount paid by the company by reason of the property having been over-insured. In the second place, wherever the owner puts forward a claim for his loss at the same time that the insurance company also claims the money paid by them in respect of the same loss, such a double claim must at once be absolutely rejected, since to allow it would be in effect to sanction the payment of the loss twice over." (British Counter Case, p. 135.) In reply to the criticisms of the merits of the private claims by the British Counter Case, the following words are used in the United States Argument. The claims now under discussion (excluding those for increased war premiums) may be divided into two general classes : " Ist. Claims for the alleged value of property destroyed by the several cruisers. " 2d. Claims arising from damages in the destruction of property, but over and above its value. " Under the first class would be included (a) owners' . claims for the values of vessels destroyed ; [b) merchants' claims for the values of goods destroyed; (c) whalers and fishermen's claims for the values of oil or fish destroyed ; (d) passengers, officers, and sailors' claims for the values of personal property destroyed ; (e) the claims of Insurance Companies for the values of property destroyed, for which they had paid the owners in insurance * * * * The claims of Insurance Companies for the value of property destroyed, for which they have paid the owners the insur- ance, is the last division under the claims of the first class. We readily admit that whenever the owner put forward a claim for his loss at the same time that the Insurance Com- pany also claims the money paid by them in respect of the same loss, then only one value of the property destroyed can be allowed, but we insist that in all such cases the award should be equal to the full value of the property destroyed. " It was the intention of the United States, in jireparing the list of claims to indicate whenever double claims of this class occurred, when it was evident, upon a simple exam- ination of the papers, that such double claims were made, and it will be found that very few, if any, of such claims exist, except in the case of sonic! of the whaling vossels 8 which were destroj^ed by the Shencmdoah, there being none of this class of double claims in the case of merchant ships or property destroyed on merchant ships." [U. S. Argu- ment^ p. 554.) When the arbitrators proceeded to consider the detailed statement of the values of the ships, their cargoes, &c., it was seen that the estimate of the values as claimed by the Agent of the United States was much higher than that made by the experts on the side of Great Britain. The United States claimed $14,437,143.51, with interest thereon at seven per cent., as the gross sum that should be awarded. The Agent of Great Britain claimed that the proper sum to be awarded was $7,074,715, with such additional sum as the Tribunal might give as interest. At the session of the 30th of August, " the Tribunal hav- ing discussed in general the award of a gross sum, requested Mr. Steampfli, one of the arbitrators, to present for the next conference copies of a synoptical table," which he had prepared on the subject. (See Protocol, xxviii.) At the session of September 2d, the Tribunal, by a ma- jority of four to one, decided that interest should be ad- mitted as an element in the calculation of a sum in gross. Mr. Staempfii presented to the Tribunal the synoptical ta- ble which he had prepared as a proposition for the determ- ination of a sum in gross in the following words and figures : Estimate of 3Ir. Staempfii for the determination of a sum in gross. After the late British Allowance. Mean. American Table. Amount of claims $14,437,000 $7,074,000 $10,905,000 Expenditure in pursuit 6,735,000 940,000 Struck out. Struck out as such, but for wages 588,000 25 percent. on the values of vessels 400,000 $11,893,000 Prospective profits and interrup- tion of voyage 4,009,100 9 Round sura $12,000,000 Interest from the 1st January, 1864, to the 15th September, 1872. 1. At 5 per cent, during eight years and eight and one half months. 8 X $600,000=34,800,000 81 X 50,000= 425,000 5,225,000 17,225,000 Eventually one year's interest more 17,825,000 2. At 6 per cent, during eight years and eight and one half months. 8 X S720,000=$5,760,000 8ix 60,000= 510,000 6,270,000 18,270,000 Eventually one year's interest more 18,990,000 3. At 7 per cent, during eight years and eight and one half months. 8 X S840,000=$6,720,000 8ix 70,000= 595,000 7,315,000 19,315,000 Eventually one year's interest more 840,000 20,155,000 Round sum $20,000,000 At the same session, Sir Alexander Cockburn, as one of the Arbitrators, presented a memorandum criticising the estimate of Mr. Staempfli, and he also presented his own estimate or table, as follows : Table in reference to the estimate of Mr. Stacmpfli. Total United States claim in the last revised tables $14,437,143 2 10 Necessary reduction to be made from the above supposed total : Double claims $1,682,243 New claims 1,450,000 One half i^ross freidit 503,576 3,635,819 Makins the total reduced claim-- 10,801,324 As against the British estimate of - 7,464,764 The mean of these two sums is-- 9,133,044 Add to this Mr. Staempfli's al- lowance in lieu of prospec- tive catch : One year's wages 588,000 Twenty-live per cent, on the value of vessels 400,000 988,000 $10,121,044 At the same session, " after a detailed deliberation, a majority of the Tribunal, of four to one, decided, under the Vllth article of the Treaty of Washington, to award in gross the sum of $15,500,000, to be paid in gold, by Great Britain to the United States, in the time and manner pro- vided by the said article of the Treaty of Washington." (See Protocol xxix.) If, to the estimate of Sir Alexander Cockburn, there be added interest at the rate of six per cent, for the period of eight years, eight and one-half months, the sum will be $15,409,285. It thus appears that the sum in gross actually awarded was not $100,000 above this amount. An exam- ination of the whole case shows conclusively that the award was made to meet the individual losses, the detailed state- ment of which was presented by the United States to the Tribunal. In his statement on the part of the United States as a reason why all the items of individual losses should be cs- 11 timated in the award, Mr, Davis spoke in the following words : "III. The United States make claim for all the undi- vided shares of a ship, whether the owner of the share, however small, makes claim or not, because the United States will be obliged to indemnify all the owners, in case the Tribunal shall accord a gross sum to the United States. If this were not done there would be an evident injustice." After the decision of the Tribunal had been made an- nouncing the result, Mr. Davis, in his dispatch to Mr. Fish, dated Paris, 2l8t of September, 1872, giving a report of his action as agent of the United States, saj^s, (see Report, as recently published, p. 10 :) "The neutral Arbitrators and Mr. Adams, from the be* ginning of the proceedings, were convinced of the policy of awarding a sum in gross. " For some weeks before the decision was given I felt sure that the Arbitrators would not consent to send the Case to Assessors until they should have exhausted all efforts to agree themselves upon the sura to be paid. " We therefore devoted our energies towards securing such a sum as should be practically an indemnity to the sufferers. Whether we have or have not been successful, can be determined only by the final division of the sum." Why was there an anxietj' felt to secure a sum in gross? If a sum in gross should not ])e awarded, it was provided by article 10 of the treaty that the cases should go to a Board of Assessors, at which both Governments might be represented by their counsel. As this board might sit for three years it was felt on both sides desirable to avoid a second tedious examination of so large a number of claims to be canvassed and discussed by the agents of both Gov- ernments. These reasons were assigned by the Secretary of State and pressed on the attention of the representatives of the United States, and finally [)revailcd to induce the Tribunal to award the sum in gross. Does the form of the award as thus made so chatigo its character as to relieve the Government of its obligation 12 to indemnify those for whose losses the money was un- doubtedly paid by Great Britain ? Suppose that an attor- ney who was claiming damages for the loss of a ship should say to the court, that, as there were many owners of the ship whose shares varied greatly ia amount, and tlierefore the ascertaining the value of their several shares would be very tedious, and delay the court for a long pe- riod of timQ, and therefore he would be content if a sum were awarded for the ship as a whole sufficient, however,, to cover all the losses, and that he would out of this amount be able to settle with his clients according to the value of their several claims, and should the court award at his request a sum in gross, would such attorney be authorized to retain this money for his own use or bestow it on some other clients whose cases he had recently lost? A mere statement of such a case shows the absurdity of such a pro- ceeding. Is the situation of the Government of the United States in respect to the fund awarded really different in substance and the principles of natural justice from the one above stated? But it has been said that the Government of the United States cannot be an attorney for its citizens. To make it appear that the Government was not in this transaction, in substance and in fact, a representative, agent, guardian, or attorney of its citizens, would require that a construc- tion should be resorted to far more strict than that de- manded upon the principles of the resolutions of 1798. Chief Justice Kent, in the case of Gracie v. The New York Insurance Companj^, in delivering the opinion of the court, said: "If France should at any future period agree to and actually make compensation for the capture and condemnation in question, the Government of the United States, to whom the compensation in the first instance would be payable, would become trustee for the party hav- ing the equitable title to the reimbursement; and this would clearly be the defendants, (the underwriters,) if they should pay the amount." A number of authorities rnii'ht be found to this effect. 13 With respect to these claims, the Government of the United States forbade individuals to apply to Great Britain for redress, and claimed the exclusive right to present thera. President Grant, too, in his message of Decembers, 1870, recommended Congress to make a settlement with these private claimants, " so that the Government shall have the ownership of the private claims as well as the responsible control of all the demands against Great Britain." After the confirmation of the Treaty at Washington, the State Department called upon all its citizens having claims known severally as " Alabama claims," to present them to the Department of State. Its letter bears date September, 1871, and calls on all persons having these claims to pre- sent, "to do so without delay," because "the time for presenting the Case of the United States expires on the 16th of December next." At its previous conference, with reference to this matter, similar grounds were taken by the Government, and the like language used. During the proceedings before the Arbitrators with respect to all those claims, the Government occupied a similar attitude. It seems difffcult to distin- guish its case from that of a law firm that should in this city advertise for business claims of a certain class, except that the liability of the United States on the principles of justice is greater, inasmuch as it possessed a power that no law law firm has of preventing its citizens from pre- senting their claims through any other agency than its own. The Government undoubtedly obtained this money by presenting the claims of its citizens for injuries done them, and insisted that insurers, who had paid for the property destroyed, were entitled to stand in the position of the ori- ginal owner. It was by including the claims of insurers that nearly one-half the sum awarded was obtained. Can it honestly now repudiate its former acts and refuse to pay to those whose claims were in fact considered, estimated for, and allowed as fully as any other class of (claimants? Those op[)Osin'^^ tln' payuu-nt lo iimlriw lilcrs n by the present board, will amount to more than ten millions. Certainly it is apparent that the surplus will amount to six or eight millions. When this has been ascertained, it will be for our Gov- ernment to decide whether it will return this excess to Great Britain, as an individual does an overplus of money paid by mistake, or whether it will retain it in the Treas- ury for the benefit of the consumers of the country gen- erally who sustained losses by the vs'ar. If it should re- gard this last suggestion as inconsistent with its dignity, it might divide the surplus among such enterprises as the Centennial celebration, and the Wiishington and Lincoln monuments, or it may even, if it thinks fit, bestow the money upon such other classes of its citizens as claim to have been especially injured during the war, or at least who have shown the greatest anxiety to possess it. Note. Gentlemen who may not have leisure to examine the different volumes published will, besides other able argu- ments, find the subject fully treated in the speeches of Senator Thurman, delivered in the Senate May 11, 1874, and of the Hon. Lyman Tremaiu, in the House, June 9, 1874. To this last speech is appended a statement era- bracing the numerous vessels with their cargoes, their val- ues, and the claimants for indemnity. 3 1158 01288 4192 UC SOUTHERN REGIONAL LIBRARY FACILIT " lip I llll I! II! Ill I I II ll{ II II I III I I III 11 AA 000 518 946 9 I II ■/^ >>■::. . Vi^ X