;i38 ' i%:y A7 ■' d Ha CO ■ o — - — 1 n: ■ o^ — m ■ o — m 1^ — ': ■■1 — , ?2 /• 'V^^p=^=4 i 1 ■85 : |» ii El=4 a ^K. ■ae— > B ,C^H| 1 ^^E^^ u f \ Geneva A EN EVA /WVARD. ' \ TL-H-^l^. (3. /+-, J GEiNEVA AWAED. SOME OF THE REA^XS WPIY THE SUFFERERS OF LOSS BY "ALABAMA" DEPREDATIONS CANNOT JUSTLY BE EXCLUDED BY THE GOVERNMENT FROM A HEAIUNG BEFORE THE TRIBUNAL CHARGED WITH DISTRIBU- TION OF THE AWARD, BECAUSE THEY WERE UNDER- WRITERS. FIEST. The legal right of the underwriter to reclamation for destruction of insured . property ^ eqxialUj with that of the original oioner for destruction of uninsured property^ is indisputable. Indeed^ the strength of his right is made the excuse for his special exclusion. Tlie contract of marine assurance is, in substance, the same in all commercial countries, and it is distinguished from other insurance by two characteristics which deserve attention. Immediately upon the happening of a certain extent of loss or injury, the marine underwriter pays to his assured a "total loss," upon the basis of the full value of the prop- erty lost or injured. There is no abatement or delay for rccovcrv from savings or reclamations. And tlie merchant is supplied with jirompt iudL'innity against serious interrup- tion of his business and adventures, as well as against loss of the specific property insured. In corrcsponuenco with this duty, the underwriter ac- quires the absolute right to every hope or possibility of salvage or reclamation from, or by reason of, the property or its destruction or injury. In sliort, be at once replaces to the orio-inal insured owner the full value of his adven- ture (including, as a rule, the cost or premium of insurance), and thenceforth becomes owner, with every right and lia- bility incident to that relation. And as this legal change of ownership may date back to tlie fact of disaster upon the seas or on distant and difficult coasts, its operation some- times transfers, from the assured to liim, heavy burdens of expense in addition to the total loss paid by him. It will be seen, at a glance, of what consequence to the merchant, and the interests of commerce, these peculiarities of the contract are. An open effort to cancel or disregard them would meet with no favor in any commercial court or country, or with ai)y body of respectable merchants. And the obligation and right are so dependent upon each other, and closely interwoven together, that war upon the one must, in the end, be war upon the other. That these duties and rights of the underwriter have the sanction of elementary and universally recognized princi- ples of commercial law, will appear by reference to the treatises on insurance of Mr. Parsons, Mr. Phillips, or Mr. Arnould, or to any other approved text book. And na- tional reclamations, for injury or destruction to the insured property, are included in the rights which thus pass to the underwriter. (See Eandall v. Cochran, 1 Yes. 98 ; Com. cgys V. Yasse, 1 Pet. Rep. 193 ; Rogers v. Hosack's Execu- tors, 18 Wend. Rep. 318; Grade v. New York Ins. Co. 8 Johns. Rep. 237.) In the language of Mr. Webster: "There is no more universal maxim of law and justice " throughout the civilized and commercial world, than that "an underwriter, who has paid a loss on ship or merchan- "dise to the owner, is entitled to whatever may be received " from the property. His right accrues by the very act of "payment. And if the property or its proceeds be after- " wards recovered, in whole or in part, whether the recov- "ery be from the sea, from captors, or from the justice of " foreign states, such recovery is ibr the benefit of the un- "derwriter" (4 Webster's Works, page 156j. C t«* «•• • • . . • « It is hardly neceesarj to add that such a contract, so well and widely known, and so clearly defined in law and usage, and the parties to which are so competent to guard • their own interests in the making it, is not the proper sub- ject of violation or ex 7)0st facto perversion. Every risk underwritten during our civil war was underwitten with full knowledge, on the part of both merchant and under- writer, of these elemental riglits and duties; a knowledge which forbids repudiation of them by either party, or, we may add, by the Government which assumed to protect them both. SECOND. The trust or agency of the Government of the United States^ in the presentation and collection of the claims, is ^ i equally undeniable. ^ It is tlie duty of a civilized Government to seek redress, s;^ for its citizens, for wrongs attributable to other nations. Hcpressing private effort to enforce redress, the sovereign <«>, undertakes this species of international litigation. And ^ within reasonable bounds, he is responsible to every citizen "H to fairly prosecute his just rights. The theory that National intervention is in any sense a favor, to be granted or with- held at pleasure, is opposed to the fundamental principles of free representative Government. The Government of the United States, in express terms, ^ took upon itself this agency in behalt" of claimants, under- t^ writer and uninsured owner, for losses by "Alabama" depredations. From time to time, as vessels and cargoes y were destroyed by the cruisers, and paid for by underwriters, ^ the latter transmitted to the State department their claims, ^ accompanied by full proofs of the facts of destruction, and of the precise values destroyed. In each case the Secretary ^' of State responded, with an acknowledgment of their re- ceipt by him, and a substantial acceptance of the trust or duty of transmitting the claim "to the United States Min- ister at London, with a view to such reparation as may be justly due." (See letters of Hon. Wm. H. Seward, Secre- tary of State, to Underwriters, from October, 1803, onward, throughout the period of depredation.) And lest any claim should fail to be so intrusted to this agency, the State department, by circular or notice, dated September 22d, 1865, requested all other claimants, ''without any delay," to " forward to this department statements of their claims." Certainly it h not to be questioned that the Govern- ment received from the "Alabama" claimants, under- writer and uninsured owner, their claims, in a manner and upon terms, precluding denial of the trust and agency. The claims were private propert}^, not available to the Government for any purpose other than to duly advo- cate them, as representative of the claimants. And from the time of receiving the first claim, in the fall of 1863, down to the final award, the Government distinctly occupied towards the claimants that precise relation, without suggestion to them of a pretense on its part to the contrary. The Government had not, and could not have, a trace of title to either of the merchant ships or cargoes destroyed, or to any reclamation for the destruction. Every claimant had the clear right, and was by all action of the Govern- ment toward him rightly induced, to regard the Government as his representative, and to rely upon its good faith in that capacity. In discharge of this duty of agent or representative of private claims, the Government, as it received them, did transmit them to the United States Minister at London, and cause them to be presented and ui-ged against the British Government. As so transmitted and urged, they were specific claims of, and iiv the name of, the private claimants, underwriter as well as uninsured owner, for 5 destruction of specific private property, with details of de- strnctiun and values destroyed ; and they were by the Government of the United States, to and against the British Government, formally and solemnly declared and insisted npon as "just and valid." (See the Diplomatic correspondence.) In addition to these direct private claims, tlierc after- ward grew np or were brought forward other claims, on the part of the Government itself, for war expenses and the like, and on the part of citizens, for increased cost of in- surance and the like, all which were, and throughout the proceedings were treated as, "indirect claims" for conse- quential damages. It was not pretended or suggested tliat these displaced the direct claims. On the contrary, they were stated as supplementary or additional grievances, for which other or additional reparation could be asked. And it would be safe to challenge the production of any com- munication by the Government of the United States, to either the British Government or private claimants, which supports the idea that the private claims were so displaced. Shortly before the making of the " Alabama " treaty, President Grant, in his message (December 5, 1870), recomrended to Congress a purchase from ("settlement" with) these private claimants, " so that the Government shall have the ownership of the pri'vate claims^ as well as the responsible control of all the demands against Great Britain," Such an official recognition by the Government, of the true " ownership," as distinguished from " responsi- ble control," should, of itself, estop the Government from disavowal of either. The claims thus specifically made by and received from claimants, underwriter and uninsured owner, and presented €0 nomine against Great Bi'itain, were beyond question, by the record of the Government and between the two Gov- ernments, as well as in the minds of ail men, part, and a substantial part, of the "claims growing out of acts com- mitted by the aforesaid vessels, and generally known as the Alabama claims," which, by the terms of the treaty of 6 Washington, were "referred " to the Tribunal of Arbitra- tion. (See article 1 of the treaty.) Accordingly these claims, as claims of private claimants, whether underwriter or uninsured owner, and with the proofs supplied by them, were laid before the Tribunal and there advocated, by the representatives of the United States, as grounds of pecuniary allowance of damage to be awarded against Great Britain. The proceedings before the Tribunal, the cases and arguments on either side, and the deliberations and rulings of the arbitrators upon them, deal with the private claims in harmony with this idea. Respect for our country and for ourselves as citizens forbids us to attribute to the Government or its representatives a purpose to deal with them otherwise; to make an insincere exhibit of the claims in order, not to have them allowed and paid, but to obtain by means of them money for wholly different uses. If it were supposable that such a pnrpose was enter, tained, it was a secret purpose, so far as regarded the court and its record, and Great Britain and the claimants. It would be unjustifiable toward each and all of them, and could have no proper place in or bearing upon the proceed- ings, and no possible relation to the award, otherwise than as ground for vacating it. THIRD. The case presented hy the Government of the United States before the Tribuncd lilainly shovjs the different lands of elaim in detail^ and which of them were -presented by the Government in its own right, and which as representative for private claimants. The claims, as stated by the American Commissioners, may be classified as follows: (Ist.) "The claims for direct " losses growing out of the destruction of vessels and their "cargoes by the insurgent cruisers." (2d.) National ex- pcnditures. (3d.) Loss by transfer of commercial marine to the British flag. (4111.) Enhanced payments of insurance (premiums). And (oth) cost of prolongation of the war. (See Case of United States, part 6.) "The claims for direct losses growing out of tlie de- " struction of vessels and their cargoes may be furtlier sub- " divided into:" (1st.) Claims for destruction of Govern- ment property ; (2d.) CLaims for the destruction of prop- erty under the flag of the United States ; (3d.) Claims for injuries to persons growing out of destruction to vessels. (See same.) A detailed statement was submitted, "showinof the " cruiser which did the injury, the vessel destroyed, the " several claimants for the vessel and for the carco, the "amounts insured upon each, and all the other facts" necessary to a decision. (See same.) And in this state- ment were contained the claims of all claimants for prop- erty destroyed, Mliether underwriter or individual owner, as claims held by them and prosecuted in their behalf. It will hereafter be seen that the second, third, fourth and filth general divisions of claim, as stated in the ease, were excluded by the Tribunal, leaving only the first (for "direct losses growing out of the destruction of vessels and "their cargoes") as the basis of a recovery. And so far from contesting the right of underwriter claimants of this class, the British Government conceded that " 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, upon the well-known principle " that an underwriter who has paid as for a total loss, ac- " quires the rights of the assured in respect of the suhject- " matter of insurance." (See counter-case of Great Bjitain, vol. 2, p. 385.) FOURTH. It is also undeniable that the " gross sum " awarded hy the Tribunal teas for, and only for, the direct damages sustained by the claimants, whether underwriter or unin- sured owner, for specific property destroyed by certain specified vessels. In the outset (June 19, 1872) the Tribunal decided and declared tliat the indirect claims " do not constitute, upon " the principles of international law applicable to such " cases, good foundation for an award of compensation or " computation of damages between nations, and should, " upon such principles, be wholly excluded from the con- " sideration of the Tribunal in maMng its award" Tiicreupon the representative of the United States Government stated to the Tribunal tliat this decision against the admissibility of claims for " first, the losses in the trans- " fer of the American commercial marine to the British " flag ; second, the enhanced payments of insurance, and, " thiid, tlie prolongation of the war, is accepted by the " President of the United States, as determinative of their "judgment upon the important questions of public law in- " volved. The agent of the United States is authorized to " say that consequently the above-mentioned claims will not " be further insisted iipon before the Tribunal by the United " States, and may be excluded frcm all consideration in " any award that may be made." As a final barrier against the possible reappearance, whether by accident or design, of the indirect churns, tlio Tribunal, upon suggestion of the representatives of the British Government, caused to be entered upon their record (June 27, 1872) the declaration " that the several claims for indirect doomages " " are and from henceforth shall be wholly excluded from the consideration of the Tribunal^ It is not seen how there could well have been a record more clear and irresistible to the effect, that not one dollar of the sum awarded was the result, or for account, of the indirect claims, whether of the United States or its citizens, or can lionestly be applied to their use. And whatever claim or purpose may aim at such diversion is far more de- cisively "indirect" and "inadmissible" than the claims themselves were decided to be. It then appears that, by the decisive act of the tribunal, conclusive upon both the Governments who were before it, the ^^consideration of the trihunaV and the ^'■making its moarcV^ were carefully and rigidly limited to the direct claims. None other were or could be elements of the sum awarded. To no intelligent and honest mind will it occur that any other can be admitted to partake of the award. Much less will it occur to such a mind that the defeated party revive the excluded claims can for secret use against its own citizens, by any profession of acceptance of the adverse decision from which there was no appeal. What were the " direct claims," which were thus the sole support and justifying cause of the award, has already sufficiently appeared. They were the claims, intrusted to the Government by private claimants, underwriter and un- insured owner, for property directly destroyed by the cruisers, including some like claims (insignificant in amount) of the Government itself, for property of ita own so de- stroyed. The damages involved in them were the same as, by settled rules of law, would be claimable between private litigants. And legal rules of legal right and property were appealed to by the parties, and were respected by the tribunal in its proceedings and judgments. The representatives of the United States, in their case, presented " a detailed statement of all the claims which " have as yet come to their knowledge, for the destruction " of vessels and property," showing " the cruiser which " did the injury, the vessel destroyed, the several claimants " for the vessel and for cargo, the amounts insured on each, " and all the other facts necessary to enable the tribunal to " reach a conclusion as to the amount of the injury cora- " mitted by the cruiser." The reply on the part of the British Government, con- 2 10 ceded that underwriters occupied the place of their assured, and were entitled to the same reclamation as would have been due to the original owner if uninsured, but insisted that in some instances both had been admitted as claimants for the same loss. And this allegation was met, on the part of the United States, with the statement, that, as prepared and submitted, the list of claims exhibited the valiies destroyed, and " the " several claimants " for such values or any parts of them, and that " a simple examination of the papers " would show where " such double claims were made, and it will " be found that very few if any of such claims exist, ex- " cept in case of some of the whaling ships which were " destroyed by the Shenandoah, there being none of this " class of double claims in the case of merchant ships or " property destroyed on merchant ships." Thus it is matter of record, that before this great inter- national Tribunal, not only were the claims of underwriters presented against Great Britain, as entitled to allowance and payment, but they were by the latter conceded to be rightful claimants for the values insured by them. And the record moreover contains the statement, on the part of the Government of the United States, that, with few and unimportant exceptions, the other direct claims presented by it were not in conflict with those of the underwriters. A tribunal like this, composed as it was, and proceed- ing to deal before the civilized world upon matters of dif- ference between two great commercial nations, would not have been the fitting place to venture upon defiance of universally recognized principles of commercial law. The experiment would have been dangerous in its effect upon the award, as well as upon the reputation of those who tried it. The Tribunal, after hearing the proofs and arguments, finally adjudged Great Britain responsible for the property destroyed by the " Alabama," " Florida," and " Shenan- doah," and their tenders, limiting the responsibility for the " Shenandoah," to the period after her arrival at Melbourne. And this adjudication, in harmony with the entire proceed- 11 ings, was a strict detailed finding of separate legal liability, for certain acts of specified vessels, upon the facts separately applicable to the case of each vessel. Of necessity and by the very tenor and terms of the finding, the idea of general alliance or complicity of Great Britain with the rebellion, is plainly inadmissible as a foundation of the award. It had already been disposed of by the amende honorable, in the treaty itself, accepted by the United States, " for the escape under whatever circum- " stances of the Alabama and other vessels from British " ports, and for the depredations committed by those ves- " sels," and again by the express terms of the treaty (Art. 7), which defined the issue to be " whether Great Britain has " by any act or o\\ri?,&\o\\ failed to fulfil a7iy of the duties,''^ &c., and finally by the formal judgment of the Tribunal excluding the indirect claims, whose chief apology or sup- port must be found in that idea. The case of the United States itself had defined the ground of liability to be, that " Great Britain failed to perform those duties, both gen- " erally and specifically, as to each of the cruisers, and that "■ such failure involved the liability to remunerate the " United States for losses thus inflicted upon them, upon " their citizens, and upon others protected by their flag." (See the Original Case of the United States, Part 1.) But it is enough to say, that a judgment of this definite and detailed character did not and could not rest upon a foundation of general or intentional complicity or alliance with the rebellion. It was the reverse of a judgment in favor of a nation for war, or participation in war, by an- other nation, and on the contrary was in truth, what every one supposed it to be, a recovery for specific neglects or violations of neutral duty. The only task remaining to the Tribunal, after the ren- dering of this judgment, was to assess, or cause to be as- sessed, the damages called for by the judgment. This the treaty authorized to be done either by the Tribunal itself, wiiich, if it thought proper, might " award a sum in gross^ ' to be paid by Great Britain to the United States, for all 12 " the claims referred to it " (Article 7), or through a board of assessors, appointed to assess the amounts in detail. These were simply two methods of reaching one and the same result; the ascertainment of the legal direct dam- ages sufiered by claimants, from destruction of their prop- erty, by the vessels for which Great Britain was held re- sponsible. That the choice of mode involved any result so startling and offensive to all notions of plain dealing and good faith, as the extinction or confiscation of the rights of these claimants, or the conversion to other uses of the dam- ages flowing from the destruction of their property, was never suggested to the claimants nor Great Britain nor the court. The suggestion, if made, would have been sufficient- ground for adopting that method which would most cer- tainly preclude the possibility of pursuing it. And no such extraordinary consequences can, upon any fair and honest construction, attend the selection between these two modes of assesstnent. The representatives of the United States Government presented to the Tribunal, as reasons for preferring the award of a sum in gross, the lapse of time since the losses were sustained. The original " wrongs to the sufferers by " the acts of the insurgent cruisers have been increased by " the delay in making reparation. It will he unjust to im- '■^ pose further delay and the expense of presenting claims " to another tribunal, if the evidence, which the United " States have the honor to present for the consideration of " these arbitrators, shall prove to he sufficient to enahle them " to determine what sum in gross would he a just compensa- " tion to the United States for the injuries and losses of " which they complain " (American Case, p. 480). Increase of loss to the " sufferers," by delay and expense of a sep- arate assessment, and sufficiency of the proofs submitted to the Tribunal, are the arguments put forward by the United States Government, to induce tlie selection of a trross award by the Tribunal itself. If we could imagine that any, purpose of confiscation of the award or its proceeds was then entertained, it certainly 13 was -not betrayed in this statement of reasons, which, on the contrary, is irreconcilable with such a purpose. What were the " original wrongs to sufferers by acts of insurgent cruisers," for which Great Britain owed " repara- tion ? " They were by the tribunal adjudged to be, and to be only, the destruction of specific property by direct act of the cruisers. Who were the sufferers ? Kone other than the lawful owners, whether underwriter or uninsured owner, of the property destroyed. What was the evidence alleged " to be sufficient to enable '' the tribunal to ascertain the srross amount of damao-es to which these sufferers were en- titled ? Simply the proofs of destruction and values de- stroyed, supplied by the private claimants, underwriter and uninsured owner, to the Government of the United States, and by it, as their agent or representative, presented to and used before the tribunal. It is incredible that this plea of the United States iu be- half of these " sufferers," and this use of their rights of rec- lamation, for their property destroyed, and of the evi- dence " supplied by them, in support of these rights, can now be made the basis of an arbitrary denial of those rights and conversion of the money obtained by means of that evidence. Upon the question of the amount of damages, which should constitute the gross sum to be awarded, the Govern- ment of the United States presented to the tribunal detailed lists or bills of particulars, alphabetically arranged byname of each vessel destroyed, with the exact original sum claimed for that destruction and interest computed on this original sum, and asked that the footing of these sums and interest be the amount awarded. The British Government submitted counter-statements, criticising estimates and items, objecting to interest, and arriving at a less sum total. The tribunal decided to allow interest and, from the two sets of estimates and statements, arrived at their own computation of damages. And all items for " prospective injuries," " costs of the pursuit of the cruisers," " double 14 claims for the same loss," and " gross freights " exceeding " net freights," were disallowed. In no case, and by no act of the tribunal or in its pro- ceedings, was there a discrimination between underwriter and uninsured owner. The legal right of each was fullj recognized, and the legal damages of both were reckoned in all the statements and computations. The only basis and test of computation was the value destroyed, and there was no practical difference between these two species of owners, except that as a rule the values claimed by under- writers were more accurately stated and better proved, by means of the documents upon which they had themselves paid the same values to their assured. B}'^ this process, and vvith the aid of the evidence sup- plied by the private claimants, the tribunal was enabled to arrive " at an equitable compensation for the damages which have heen sustained^'' and declared that " it is preferable to adopt the form of adjudication of a sura in gross, rather than to refer the subject of compensation for further discus- sion and deliberation to a board of assessors." And it de- creed " $15,500,000 in gold as the indemnity to be paid by Great Britain to the United States for the satisfaction of all the claims referred to the consideration of the tribunal." The record of the tribunal would seem too plain to ad- mit of reasonable doubt of its purport. All claims, direct and indirect, were before it for final determination. The indirect claims were in the outset pronounced against, re- jected, and excluded from consideration. The direct claims were taken up and considered, and limited to the legal damages directly caused by certain specified vessels. The computation of tliese damages was then discussed and care- fully considered until (after elimination of certain duplicated and indirect items) " an equitable compensation for the damages which have been sustained " was arrived at. And then a final decree was made awarding this compensation, and pronouncing such allowance to be the end of all the questions and differences submitted. The language of the award furnishes no apology for a contention that the compensation awarded is a fund de- 15 livered to the Government of the United States in its own right, or for indefinite general account of all claims, whether or not " presented to the notice of, or made, preferred, or laid before the tribimal." The declaration that all these claims were " finally settled, barred, and inadmissible," ■ was simply the agreed result of the award by the terms of the treaty submitting them to the arbitration. There is no room for equivocation as to what claims were barred as "inadmissible," and what were intended to be satisfied by the compensation awarded. The solemn adjudication of the tribunal having "wholly excluded" the " indirect" claims "from the consideration of the tribunal in making its award," the Government of the United States recorded its recognition of the finality of the exclusion in the explicit statement that the " above mentioned claims will not be further insisted upon before the tribunal by the United States, and mav be excluded from all consideration in any award tliat may be made." Thenceforth, the indi- rect claims, by whomsoever made, and whatever their foundation .or merit, had no place in the proceedings, ex- cept to be " barred" as "inadmissible." If it be true that an ae-ent received secret instructions to prevent counsel from binding the Government to any special mode of distribution, it cannot alter the case. No sucli instructions were before the court or the adverse party. Nor could they qualify the record, or convert th^ rights of private citizens to public use, or change the duty of the Government or its public position and action, or annul the decree obtained by it in the open light of day, upon the faith of this position and action. Neither the writer of the letter, nor the receiver of it, nor the counsel upon whom it reflected, could control the court or its de- cisions, or the just construction and effect of tliose decisions. The allowance of certain claims and rejection of all others by the authorized tribunal at Geneva, stamped upon tlie money resulting from this aHowance its true charactei', which could not be eft'aced or changed by a department at Washington, or by covert diplomacy between it and its / own sub-agent, except at the cost of the national liouor. 16 The sum awarded was, by the award itself, expressed to be "compensation for tlie damages sustained," and these "damages" were, by the judgments of the tribunal and throughout the proceedings before it, computed as, and limited to, direct losses by actual destruction of specific property, whether of underwriter or uninsured owner. And the choice of a " sum in gross," in preference to a detailed assessment, was not only advocated by the Gov- ernment of the United States as a method to avoid unneces- sary delay and expense, but is in the award described as a ^\forrri of adjudication^ Having due regard to the facts, and remembering the avowed purposes for which it was asked by tlie United States and selected by the tribunal, it should not be neces- sary to treat as serious the idea that the "form of adjudi- cation" was designed, or can operate, to reverse or nullify emphatic and deliberate judgments of the tribunal upon the diflPerent classes of claim, and the limits and character of the damages to be computed, or to convert the "equita- ble compensation, for the damages" which were allowed, into a cliarity fund, for arbitrary bestowal upon claims which were disallowed, or were never before the tribunal, or originate in the hope of^such a bestowal. FIFTH. Mutual underwriting societies stand upon the same footing in all points of merit or equity as uninsured owners. Leaving out of view, for the moment, the facts and the record and great principles of right which forbid exclu- sion, it will still appear that there is not even the shadow of excuse for discrimination against these societies. The principal New iTorlt mutual marine companies have, as such, prosecuted their business with success and 17 credit, since about the year 1842, when they were char- tered. During that period of over thirty years, the great number of interested and intelligent merchants, dealing with them, have had abundant opportunity to test the reality and value of their mutuality and abundant power to correct any failure to carry it into effect. The plan of organization is prescribed by the charters, and is perfectly intelligible, and a brief explanation of it will be attempted. Each society, receiving premiums, undertaking risks and paying losses and expenses, transacts its business through each year, and, at the end of the year, a statement is made by the trustees of the society, in which receipts or assets are compared with expenditures and liabilities. The surplus, if any, is ascertained, and forms a percentage upon the premiums of the year, and each dealer, or premium ])ayer, receives a scrip certificate for his proportionate share or percentage of it. The funds, represented by this scrip, remain with the society until, by the yield of new scrip from the business of subsequent years, the society can safely redeem it. The principal is then paid off to the scrip holder and meanwhile he receives six per cent upon it. If the business of a later year proves disastrous, this scrip (until redeemed) is liable to make good the deficiency or to abatement on account of it. One of the New York societies has, for many years, been able to pay off its scrip at the end of three or four years. Annually, there has been an issue of scrip to the dealers of the last preceding year, and a redemption of the oldest scrip, issued to the dealers of the third or fourth pre- ceding year. With other societies the periods vary, but the principle and practice is the same in all. In neither of the societies is there, or can there be, stock or stockholder, or a dollar of property not held for account of the dealers or premium payors. And that the account- ability has been honestly and scrupulously satisfied is best proven by the history of the societies, through the thirty 3 18 years of their existence, and their firm hold upon the con- fidence of the merchants. In truth and in efiect, these societies are nothing else than organizations, in and by means of which the many merchants have combined with each other their risks, sav- ings and reclamations. Tliere is no conceivable just dis- crimination, against their equity, in favor of that of the single and uninsured merchant, whose wealth or great ex- tent of business have enabled him to be his own insurer, and to add to his gains what would have been the cost of insurance. The aggregate losses and reclamations of such an asso- ciation of merchants are of the same character, and entitled to the same consideration, as are those of their single fa- vored competitor. Their inability to separately encounter risks of loss, and consequent association to meet their risks collectively, can, by no possible rule of justice or equity, operate to annihilate their aggregate legal rights. No rule of justice or equity, applicable to the one owner, has not the same application to the combination of owners. Such of the assured as brought into the association " Alabama " risks have shared, to the fullest extent, in all savings and reclamations from the property of their asso- ciates ; and an eff'ort on their part to exclude these asso- ciates from the like participation in " Alabama " reclama- tions, would be dishonorable as well as unlawful. It should carry with it its own instant condemnation. Every payor of what are termed war premiums to one of these societies burdened the other dealers (upon inland or other risks not exposed to capture) with a share of his losses and dangers. And he has also received back from the common fund, so made up by all the associates, a substantial percentage of all premiums paid by him. A demand on his part, for the money awarded upon claims of the society, is opposed not only to the record, but to every rule of fair play and jus- tice. And when the further demand is made that the money, justly due to one of these societies, shall be made the prey, not merely of a small part of those who have 19 been associated in it, but of similar claimants, who nevci' dealt with or were associated in it at all, the demand reaches monstrous proportions of unreason and injustice. The argument that high rates of premium were charged, and should now be rectified, is mainly untrue in fact, and, in any event, is clamor rather than aro-ument. In the case of one of the largest of the underwriter claim- ants, the average rate of premium, charged upon all risks during the five years of war, did not exceed two and one- lialf per cent. The average rate, upon all risks (compara- tively few in number), of capture only, averaged less than two per cent., except in one year when it slightly exceeded three per cent. A few exceptional cases of exceptional charge, for peculiarly hazardous risks do not make a rule for guidance. When the Shenandoah was known to have burned several whaling vessels, and to be in pursuit of the Behrings Straits fi.eet, those who, at that late day, wished to transfer the imminent danger from themselves to the underwriter, could hardly expect to do so upon ordinary terms of compensation. It wag not unlike the case of one who delays to insure his house until the block is on fire. The duty of adjusting the terms of admission to the mutual societies was intrusted to the proper ofllcers, and their action, at the time and with the facts before them, is not now lawfully or properly the subject of review. But the aggregate of these exceptional cases forms only a slight part of the aggregate of the capture risks only. And in the case at least of tlie company referred to, those who obtained them received from the society, in casli payment of losses, sums exceeding the aggregate of their premiums, and, in addition thereto, received dividends for a large percentage of tliese premiums. By actual figures they were gainers from the association, and should be the last to deny justice to their associates, who thus far have lost by the fellowship. And when truly understood and pre- sented, it is found, in every case, that the plan of the asso- ciation furnishes the only just, safe and honest guide for dealing with its aftairs. 20 In sliort, the rule of law is the only rule of equity on this subject. The vast majority of individual members have no security for their rights, except through the asso- ciation, and the maintenance of its lawful rights. The losses paid by the mutual societies for " Alabama " depre- dations, equally with other losses, fell upon the entire com- mon fund, made up by all the associates, upon terms of ex- press and well understood contract, requiring the restoration to that common fund of all savings and reclamations. And those who ask se])arate consideration for themselves, or ask to share in the reclamations of societies of which they were not members, ask that to which they can upon no theory be honestly entitled. Few in number, but clamorous in pursuit of special gain, they confuse the judgment of those who listen to them. Tiie many thousands, whom they seek to wrong, rely upon the just and legitimate representation of their rights, through the societies, and are silent. SIXTH. Any distrihution of the sum aicarded, upon tenns ex- cluding legal holders of rights of reclamation^ for the damages allowed, from a fair and equal hearing before the audititig and distributing tribunal, loould be partial, arbitrary and unjust. It would be inconsistent with the honor of the nation and good faith toward the Tribunal and Great Britain, as tvell as toward the claimants. And no such distribution can discharge the Government of its trust, or supply for its treasury an acquittance entitled to respect in the future. It is incumbent upon the administrators of civilized Governments to render to private citizens, in respect of their private rights, the same justice, and upon the same principles, as would be decreed .by courts of justice between private litigants. And in some instances this duty is 21 recognized to the extent of subjecting national ships (as is the case with Great Britain) to the ordinary admiralty jurisdiction and salvage decrees, upon equal terms with the property of private merchants. Anything other or less than this justice is injustice, and is subversive of the system of responsible Go vernmeut, administered for the due main- tenance of law and order. If the gross sum, awarded by the Geneva Tribunal, were intrusted to a depositary or agent other than a Govern- ment, shielded by its mere sovereignty from ordinary judi- cial process, no intelligent mind will doubt what would be the safe and honest line of duty of the depositary. He would frankly recognize the truth, that the sum deposited was not his own money, nor disposable at his own will and pleasure. He would examine the record to learn what claims were before the Tribunal, and which of them were " excluded " as " inadmissible," and which were " consid- ered " and estimated in making the award. Finding that, in express terms, the Tribunal had limited its computation and award of damages to speciiic property, directly destroyed by acts of specified vessels, he would confine his attention to the claims of those asserting title to that property and the rights of reclamation for its de- struction. He would thus obtain the clear and reliable guidance of definite boundaries of claim and claimant, outside of which no part of the sum awarded could justly or properly be demanded. If he found within those bound- aries, conflicting estimates of value, or conflicting claims to the same value, he would insure justice to the claimants, and a safe and honorable discharge for himself, through the intervention of some competent judicial authority, proceeding to hear the parties interested and to determine their respective rights, in accordance with established prin- ciples of law. It would not occur to him to pay out the money upon claims, or for purposes, which did not enter into the con- sideration of its award, nor to warp the distribution of it by prejudices or favoritisms respecting the character or '22 condition of distributees. Nor would he be advised that a process of judicial distribution, crippled by arbitrary con- ditions, and denying a fair and equal hearing to lawful claimants, would be pleadable by him against the further demands of those claimants. If however, he sought to defy or evade these plain rules of right conduct, the at- tempt would expose him to speedy correction by the courts of justice. It is believed to be the clear and unavoidable duty of the Government to freely do what such a private depos- itary would be compellable to do. It lias no other or greater rightful power in the premises than he wonld bave. And the assertion of other or greater power would be pro- tected solely by the inability of the courts of justice to deal with a sovereign wrong-doer, and would be simply unlawful despotism. Considerations founded npon capricious or superficial notions of irregular equity, in opposition to conceded fun- damental principles of legal right, are inapplicable. There is no equity, known to the law or to any court of equity, which does not obey and respect those principles, or which, upon any pretext whatever, confiscates the property of one to the use of another, or permits the collector of dam- ages, flowing from the destruction of sucli property, to re- gard his collections as a fund for his own use, or for ex- penditure upon favorites, or upon any other than those lawfully entitled. The money awarded at Geneva is compensation for the destruction of private property, the ownership of which is for the most part undisputed, and, where dis- puted, can be judicially determined. The collection of the money by the United States does not and cannot change the character of the compensation, nor the just legal rights of the claimants to it. And the distribution of it is matter of honor and good faith, not of charitable or other caprice. It cannot be necessary or useful to combat the idea, that misjudgment or misfortune, in the conduct of business, 23 can properly entitle to participation those who would othervvise be disentitled. The property and rights of the one are as sacred and unimpeachable as of the otlier. In proportion as an underwriter comprehended tlie dan- ger to American commerce from " Alabama " depredations, and the duty to afibrd relief by combined effort, he was first and freest in accepting the risks, with all perils, rights and benefits naturally and justly incident to such accept- ance. The course pursued by him tended to the safety of commerce, and should not subject him to reproach or hos- tile judgment, in comparison with a competitor who, for any reason, declined or hesitated to pursue the same course, and perhaps changed to be loser upon the one risk, or few risks, which he was induced to accept. And it would be fullv as iust and reasonable to make the same discrimina- tion between the uninsured owner of one ship or cargo de- stroyed by the "Alabama " and the uninsured owner of many ships or cargoes, one of which was so destroyed. In trntii, every argument of tiiis kind simply leads back to the original and only safe guide in dealing with prop- erty questions. Departure, in any direction, from great principles of legal right, as approved and administered by the courts of justice, can result only in arbitrary injustice, discreditable to the nation, and injurious to the best inter- ests of its citizens. The eloquent and unanswerable protests of Senators Thurman, Conkling and Bayard, and their associates in the Senate, and of llepresentatives Poland, Tremain, Potter and AVoodford, and their associates in the House, during tiie debates of the first session of the forty-third Congress, expose this injustice so clearly and fully that there shoukl be no need of further discussion of it. And the declaration of Senator Ba3'ard, that it cannot prevail except "at the cost of the honor of the Government of the United States," will command general concurrence from those who take the pains to understand the subject. Underwriter claimants cau rest assured that their right to a fair hearing, before the distributing court or commis- 24 sion, is supported by every consideration of law and justice and national good faith. The terms upon which they undertook tlie risk of the " Alabama " depredations un- doubtedly vested in them the reclamations. They promptly and honorably fullilled their part of the contract by pay- ment of the losses caused by the depredations. The Gov- ernment, in their name and behalf, took charge of their reclamations, and has recovered and collected the damages flowing from them. It cannot deny to them their just and lawful share of the damages recovered. If, through mis- information or misconception, so clear a wrong and so evident a breach of good faith prevails for the moment, it will nevertheless remain a duty and necessity of the Gov- ernment to give subsequent redress. Its treasury will ob- tain, through such an injustice, no voucher or acquittance which can hereafter be respected or available. And its ultimate justice will not persist in refusing to account, for the proceeds of private rights, with those whose just and legal title to them is so certain and clear that it cannot be avoided, except by express prohibition of access to the court or tribunal, intrusted with distribution of the proceeds. New York, February, 18Y6. C. A. HAND. k Ihis book IS JJUli on the last date stamped below .^KBlBt^^. Tt: I V JUNl 1962 Form L-0 257H-2,'43(5205) UNIVERSITY of CAUi^ OKi'-Oifi t .PCSOUTMa,^ PLEASE DO NOT REMOVE THIS BOOK CARD J |3 lo — ^iLIBRARY^.r University Research Library rWi^lii^ B 8 e a B t 8 U ts u s e £ s a c f.^4'0^lA.'SRARyMc,ury -J >