treaty. In other words, no legal obligation exists requiring the discharge of the grantor's debts by the grantee in the absence of treaty stipulations so to do.

The obligation under such conditions arises in equity, if at all, and is based upon the established rule of national conduct, that the sovereign will not do injustice to an individual, and therefore will hear and consider the claims of the creditors. Therefore it is said that such debts are a charge upon the conscience of the sovereign. The force and effect of claims of this character depend upon the facts of each particular case. One fact to be considered is whether the sovereignty which created the obligation still remains in existence. If it does, and the obligation is a national one, the creditor has no claim. upon the conscience of the new sovereignty. Upon this question Hall on International Law says (4 ed., part 2, chap. 1, sec. 27):

No question therefore presents itself with respect to the general rights and duties of a new State. What, however, is its relation to the contract obligations of the State from which it has been separated? * * The fact of personality of a State

*

is the key to the answer. With rights which have been acquired and obligations which have been contracted by the old State as personal rights and obligations the new State has nothing to do. The old State is not extinct; it is still there to fulfill its contract duties and to enjoy its contract rights. The new State, on the other hand, is an entirely fresh being. It neither is nor does it represent the first person with whom others have contracted; they may have no reason for giving it the advantages which have been accorded to the person with whom the contract was made, and it would be unjust to saddle it with liabilities which it would not have · accepted on its own account.

Thus treaties of alliance, of guarantee, or of commerce are not binding upon a new State formed by separation; and it is not liable for the general debt of the parent State.

In a note to this text the author says:

The case also of the creation of a new State out of part of an old one is not distinguishable, so far as the obligation to apportion debts is concerned, from that of the cession of a province by one State to another. When the latter occurs, at least as the result of conquest, it is not usual to take over any part of the general debt of the State ceding territory. (Id., note 1, p. 99.)

The instance of Texas furnishes a precedent for guidance in this matter. Although the annexation of Texas included all its territory and terminated its sovereignty as an independent nation, the United States has never conceded that the debts of Texas existing at the time of annexation became a liability of this Government. The United States recognized the fact that said debts should be paid, and for that purpose permitted Texas to set aside 10,000,000 acres of public lands devoted to said payment. Afterwards, the United States took portions of said lands pledged to the payment of Texas debts, agreeing to pay therefor $10,000,000, three-quarters of which sum was to be paid to holders of Texas bonds, for which her customs duties were pledged. The claim that the United States was liable for the debts of Texas

came before the mixed commission, under the convention with England of 1853. The commission found that it did not have jurisdiction to determine the question, but an examination of the proceedings is of value. The claim was made on a bond secured by a pledge of the faith and revenue of Texas. It was admitted that the liability of the United States did not arise from the annexation of the territory, but from the fact that the United States was receiving the revenues of Texas, which had been pledged to the payment of the bonds. (Dec. of Com. Convention, 1853, pp. 405-520.)

The position of the United States was that the revenues pledged were the revenues of the Terus nation. That said revenues appertain to the government and not to the territory. That when Texas ceased to be a nation there ceased to be Texas revenues. That what the United States was collecting was United States revenue and a very different thing from revenues exacted by the Texas government or nation. That the difference is as substantial as the difference between the money or currency issued by the two nations.

If the United States was not willing to admit liability as to the debts of Texas, where a pledge existed, will it be willing to admit liability in the instance of the Philippines where a pledge does not exist?

Did the guaranty of the Spanish Government become a lien upon the revenues of the island of Luzon?

An examination of the concession or charter shows that no attempt is made therein to pledge either the public property or revenues of Luzon for the performance of said obligation of guaranty.

It

It is probably true that while Luzon was a Spanish dependency Spain utilized the revenues of the island in complying with the contract of guaranty, and for this purpose included the sum necessary to be paid in the annual budget of the state for the Philippines. The burden imposed upon the Philippines by the Spanish budget included not only general obligations but also sums for the various departments known as justice, war, treasury, navy, interior, and fomento, would be unavailing if a soldier in the Spanish army, who had served in Luzon and whose pay was in arrears, should apply for payment to the Government now possessed of the revenue funds of the island and base his application on the fact that he had served in Luzon during the time for which he claimed pay, and that as the annual budget for the island had included an item for the war department for years he had a lien on the revenues of the island for his pay. Yet the supposed contention of the soldier would have as much merit as the contention of the company herein.

But if the Spanish Government had pledged the future revenues of the island to the performance as the contract of guaranty, such pledge would not be a lien upon the fund which this Government is now collecting.

While the negotiations of the treaty of Paris were in progress, the Spanish commission, having failed to induce the United States to

assume the obligations of Spain in regard to the debts incurred for or on account of the territory ceded or relinquished, insisted that said debts should follow the territory and be paid from the revenues thereof. Attention was directed to the fact that Spain had issued 2,990,000 hypothecary bonds of the island of Cuba, and that the royal decrees on which said bonds were issued contain the following avowal:

The new bonds shall have the direct (especial) guarantee of the customs revenue, stamp revenue of the island of Cuba, direct and indirect taxes now levied or to be levied there in the future, and the subsidiary (general) guarantee of the Spanish nation.

The bonds themselves contain the following declaration:

Direct (especial) guarantee of the customs revenue, stamp revenue of the island of Cuba, direct or indirect taxes levied or to be levied hereafter, and the subsidiary (general) guarantee of the Spanish nation.

The Spanish Colonial Bank shall receive, in the island of Cuba, through its agents there, or in Barcelona, through the Spanish Bank of Havana, the receipts of the custom-houses of Cuba, and such amount thereof as may be necessary, according to the statements furnished on the back of the bonds, to meet the quarterly payment of interest and principal, shall be retained daily and in advance.

The Spanish commission contended that said bonds evidenced a mortgage debt secured by the future revenues of Cuba. (Sen. Doc., 3d sess., Fifty-fifth Cong., No. 62, pt. 1, p. 178.)

In rejecting this proposition the American Commission say:

As to that part of the Spanish memorandum in which the so-called Cuban bonds are treated as “mortgage bonds" and the rights of the holders as "mortgage rights," it is necessary to say only that the legal difference between the pledge of revenues yet to be derived from taxation and a mortgage of property can not be confused by calling the two things by the same name. * * * No more in the opinion of the Spanish Government, therefore, than in point of law, can it be maintained that that Government's promise to devote to the payment of a certain part of the national debt revenues yet to be raised by taxation in Cuba, constituted in any legal sense a mortgage. The so-called pledge of those revenues constituted, in fact and in law, a pledge of the good faith and ability of Spain to pay to a certain class of her creditors a certain part of her future revenues. They obtained no other security beyond the guarantee of the "Spanish nation," which was in reality the only thing that gave substance or value to the pledge, or to which they could resort for its performance. (Id., pp. 200, 201.)

If the contention of the American Commission is correct as to obligations wherein it is expressly declared that the revenues of Cuba are pledged to the performance of the contract, a like contention must prevail where the contract is silent as to a pledge of revenues.

The position taken by the American Commission in this matter was made known to the Executive and by him communicated to Congress. Congress ratified the treaty and the Executive approved such action. Thereby the position of the Commission was acquiesced in by the legislative and executive branches of the Government of the United States. It is not to be contemplated that the position will be adjudged untenable by the provisional government temporarily in charge of the civil affairs of the island.

The provisional government of the Philippines is bound to hold that said guaranty of the Spanish Government is not a lien upon the revenues of the islands.

Are the revenues of the Philippine Islands, now being collected by the provisional government, burdened with a trust in favor of the Manila Railway Company? • Has

If the phraseology of this question is changed so as to read, the railway company a proprietary interest or vested right in said revenues?” it will appear at once that the answer must be in the negative.

The claim which the company asserts is of inchoate right, even when urged against the Spanish Government, and relates to the personal obligation of that Government, being a naked promise without security.

As to such inchoate rights the Supreme Court of the United States say (Dent . Emmeger, 14 Wall., 312):

But inchoate rights, such as those of Cerre, were of imperfect obligation and affected only the conscience of the new sovereign. They were not of such a nature (until that sovereign gave them a vitality and efficacy which they did not before possess) that a court of law or equity could recognize or enforce them. When confirmed by Congress they became American titles and took their legal validity wholly from the act of confirmation and not from any French or Spanish element which entered into their previous existence.

This doctrine has a direct application to the matter under consideration. As the case now stands the company has the obligation of the National Government of Spain. Up to this time the representatives of the United States authorized to bind it have refused to assume said. obligation. The most the railway company can assert is that said obligation of the Spanish Government has now become a charge upon the conscience of the sovereign people of the United States. If it were conceded that said obligation had become a charge upon the conscience of the sovereign people of the United States, the manner in which and extent to which the duty so created is to be discharged must be determined by Congress.

The views set forth in the foregoing report were approved by the Secretary of War and the subsequent action of the War Department on this claim and others of similar character was in harmony therewith. 1394-03————13

IN RE PETITION OF THE COUNTESS OF BUENA VISTA FOR RELIEF FROM A CERTAIN ORDER OF THE MILITARY GOVERNOR OF CUBA; AND THE CLAIM OF DR. DON GUSTAVO GALLET DUPLESSIS FOR SIMILAR RELIEF AND INDEMNITY.

[Submitted August 8, 1900. Case No. 1136, Division of Insular Affairs, War Department.]

SYNOPSIS.

1. The authority heretofore possessed by Spanish officials to exercise the powers appertaining to offices created by the Crown of Spain for the purpose of administering the affairs of government in Cuba under Spanish sovereignty ceased upon the military occupation of the island by the forces of the United States being established.

2. The tenure of office of the Spanish officials heretofore exercising authority in Cuba is not property and therefore is not entitled to the protection to rights of property guaranteed by Article VIII of the treaty of peace.

3. Although the Crown of Spain was accustomed to sell a perpetual incumbency of certain of its offices, among them that of high sheriff of Habana, such right of incumbency was at all times subject to the higher right of the sovereign to reassume the exercise of the authority of the office whenever the public welfare required it.

4. The claim for indemnity for being deprived of said incumbency depends upon the terms of the contract with Spain; and as this contract was the personal contract of the Spanish State, its obligations did not pass with the transfer of sovereignty, and they were not assumed by the United States.

5. Whether or not the obligations of the Government of Spain incurred in Cuba are to be assumed by the government established by the people of Cuba is a question to be determined by that government when it assumes the exercise of independent sovereignty.

6. Whether or not the municipality of Habana became liable for the payment of indemnity in said matter by reason of proceedings had prior to the military occupation is a question which may properly be referred to the courts of Cuba. SIR: I have the honor to acknowledge the receipt of instruction to report on the above-entitled matters, and in response thereto I have the further honor to submit the following:

The facts out of which the controversy arises, as claimed by the complainants, are as follows:

In the year 1728 Don Sebastian Calvo de la Puerta bought at public auction, from the Spanish Crown, the office of "Alguacil mayor," or high sheriff, of the city of Habana. The office was declared to be perpetual and capable of passing by inheritance in the direct male line of descent and of being alienated by purchase and sale under certain conditions.

Upon the death of the purchaser aforesaid, the office and its emoluments passed by descent to his grandson, Don Francisco Calvo de la Puerta, whose title received royal confirmation by letters patent, dated May 22, 1783.

Eventually, the male issue of the incumbent of the office having become extinct, the office passed, by the permission of the Spanish