1 Z. & F. Assets Realization Corporation; American Hawaiian Steamship Company (Intervener) v. Cordell Hull, Secretary of State and Henry Morganthau, Secretary of the Treasury; Lehigh Valley Railroad Company (Intervener), 31 Fed. Supp. 371; 114 Fed. (2d) 464; 311 U. S. 470.

2 For earlier proceedings of the Commission in these claims, see the articles entitled “The Arbitration of the Sabotage Claims against Germany,” this Journal, Vol. 33 (1939), p. 737; “The Sabotage Claims against Germany,” id., Vol. 34 (1940), p. 23.

3 With his answer, filed June 13, 1934, to the petition of May 4, 1933, the German Agent filed a motion asking the Commissioner “to rule that the American Agent should file a brief, bill of particulars, or some other written statement substantiating the contentions advanced in his petition for a rehearing.” The American Agent filed a reply to this motion on June 23, 1934, insisting that the German Agent should either rest his case or file such additional evidence as he desires and that thereafter “upon the completion of the proof, and not before, the respective parties be required to exchange briefs.” The German Agent filed a memorandum in response on July 26, 1934. The American Agent submitted the question to the Commission on August 6, 1934. The two National Commissioners, being in disagreement, submitted the matter to the Umpire who handed down an opinion, November 9, 1934, denying the motion of the German Agent for a bill of particulars, saying that it would be “unfair to require the American Agent to make his argument in advance of the presentation of proofs in opposition” and that the German Agent himself must determine which parts of the American evidence were relevant or not to the pending petition. (Opinions and Decisions, p. 1155.)

3a Opinions and Decisions, p. 1173.

4 The German Agent objected to argument by claimants’ counsel, although in the Electric Boat case (Docket 28), the Commission had heard claimants’ counsel with the acquiescence of the German Agent. The Commission upheld the objection. Thereupon the same counsel was appointed by the United States and was heard by the Commission, over the German Agent’s continued protest. (Martin’s Report, 1941; Washington Argument, 1936, pp. 34–37.)

At this argument the fraudulent aspects of the so-called Lyndhurst testimony and the Wozniak letters, as well as the Herrmann message, and other pieces of German evidence were fully argued.

5 This decision was signed by the Umpire and both Commissioners. (Opinions and Decisions, pp. 1175–1177.)

6 The Umpire’s decision of 1932 was concurred in by the German Commissioner, but the American Commissioner disagreed in a separate opinion. He agreed, however, with the Umpire and German Commissioner in the finding of the former that “ I may utterly disregard all the new evidence produced and still, if I deem this message [Herrmann message] genuine, hold Germany responsible in both cases [Black Tom and Kingsland].” (Opinions and Decisions, pp. 1016, 1029, 1035.) The Herrmann message was written with lemon juice in code in a magazine by Herrmann, an admitted German sabotage agent, who had fled to Mexico, and transmitted by him in April, 1917, to a co-saboteur in Baltimore, which message implicated them in the destruction of the “Jersey City Terminal” (Black Tom) and “Kingsland.” This was part of the evidence filed with the petition of July 1, 1931.

7 The German memorandum delivered to American Embassy in Berlin, May 28, 1936. In Report of American Agent to Commission, April 15, 1937.

8 The documents comprising the settlement reached at Munich, July 6–10, 1936, and the correspondence relating thereto are set forth in the Reports of the American Agent to the Commission, December 8, 1936 and April 15, 1937. See also the American Brief filed July 2, 1937 and Martin’s Report of 1941. The protocol of the Munich meeting ratified the settlement agreement as constituting “official action by the respective governments” and “an agreed statement” for the disposition of the matter before the Commission. It may be noted in passing that this settlement was not negotiated through the German Foreign Office, but was negotiated at the instance of Goering. This procedure was apparently distasteful to the Foreign Office, which never supported the settlement and was instrumental in blocking its execution. It may be recalled that in 1924 the German Agent made an offer of settlement of $18,000,000, including interest to that date, but this offer was coupled with conditions unacceptable to the United States. (Bonynge’s Report, 1934, p. 171.)

9 Opinions and Decisions, pp. 1177–1178.

It had long been a custom to settle claims by stipulation (called “agreed statement”) between the two agents, subject to approval of the Commission. The Munich settlement provided for this procedure. The majority of the claims before the Commission had been settled in this way and some of the largest awards were based upon such settlements, such as the settlement in the Underwriters case, involving some $105,000,000. (Decisions and Opinions, 1926–1932, App., p. iii.)

10 Certain German holders of awards of the War Claims Arbiter under the War Claims Act of 1928, also filed protests. The American Agent opposed these protests on the ground, which had never previously been accorded to any claimant before this Commission. If granted, it would appear only equitable that the sabotage claimants should be allowed to intervene and be heard in opposition to all of the awards theretofore made by the Commission; for the payments already made on those awards had depleted the fund in the Deposit Account so that it was a question whether the sabotage claimants, if they succeeded in obtaining awards, could be paid in the same proportion. Besides, intervention would put the sabotage claimants to much additional work and expense in maintaining their claims against all comers instead of against their only legal opponent, namely, Germany.

15 The information as to Stein’s adverse report was first given to the Umpire orally by the German Commissioner, was later hinted at in Osborn’s letter to the German Agent of April 21,1932 (and his affidavit of August 13,1932), and suggested in the German Commissioner’s letter to the Umpire of May 18, 1932 enclosing Osborn’s letter. It appears that Stein charged (in a letter of November 4,1932 to counsel) that his adverse report on the age of the Wozniak letters and the Herrmann message had been suppressed by the claimants for whom he was witness. This was the first time the claimants or American Agent had heard of such a report, which turned out to be similar to that of Osborn. (Opinion, American Commissioner, June 15, 1939, pp. 252–261).

15a Id., pp. 257, 261.

16 Martin’s Report, 1941. In the 1932 argument, Osborn’s fee was stated by the then German Agent to be $5,000, but in the 1936 argument, the German Agent said that before the 1932 argument Osborn had received $6,500 and had an agreement to receive $6,000 more.

17 The Treaty of Berlin gave the United States the advantage of certain provisions of the Treaty of Versailles, including Parts VIII-X, Art. 240 and Art. 304, Annex 7, regarding the production by Germany of information for the use of the Reparations Commission and the Mixed Arbitral Tribunals. The order of May 1, 1929, provided, “ . . . that it is the interest of both governments that all evidence material to any of such issues and available to, or which can reasonably be made available to, either government, should be submitted to the Commission. . . .” The order further stated that upon disagreement of the Commissioners, “The Umpire holds that all records throwing any Ught on the origin, the purpose, or the application of the cable of January 24–25,1915 [authorizing sabotage in the United States], here referred to, are material. In the opinion of the Umpire the request by the American Agent for their production was not intended as a reflection on and is not in fact a reflection on the German Government. On the contrary, the Umpire is persuaded that the German Government, in its desire to make a full disclosure of all facts material to a correct decision of these cases, will prefer to produce such of the documents requested as may exist rather than to take the risk of being misunderstood because of failure to produce them.” (Martin’s Report, 1941.)

In its unanimous decision of 1930, the Commission said:” It is well recognized that Governments who have agreed to arbitrate are under obligation in entire good faith to try to ascertain the real truth. . . . We believe the present German Government was entirely prepared to bring out the truth and to take the consequences, whatever they might be.” (Opinions and Decisions, pp. 968–969.)

18 These companies were engaged in or connected with the commercial submarine service of the Deutschland and their files were part of the testimony taken in court of Henry G. Hilken, former German Consul in Baltimore, and were by stipulation of August 18, 1933, left in custody of his attorney, F. J. Singley, of Baltimore.

19 Anton Dilger was a native-born American and son of Brigadier General Dilger of the Union Army, and a graduate of John Hopkins. Anton established in 1915 a laboratory for the propagation of disease germs in Chevy Chase, Maryland, a suburb of Washington, D. C. Among other activities, Anton came to the United States on an espionage mission in July 1917, on his way to Mexico to aid in German General Staff work in that country, including invasion of the United States. For his services he was awarded the “Iron Cross of the Second Class.” (Martin’s Report, 1941.)

20 At an informal meeting of the Commission and the agents on November 30, 1937, the American Agent offered to rest his case on the merits and go to a decision, but the German Agent refused.

21 In his letter of March 1, 1939, to Commissioner Garnett, Dr. Huecking alleged that his retirement “comes at a moment when our deliberations are still in an absolutely preliminary state and at a time when any possible question of agreement or disagreement is necessarily still in the remote distance. . . . “ In his letter of the same date to the Umpire he charged the latter, first with introducing a totally fresh point at this stage of the deliberations without according an opportunity to the defendants to make known their views, and second, with entertaining a “bias” in the case and having “no longer an open mind.” He said it was impossible for him to cooperate in a procedure which “no longer offers to both sides equally the usual guarantee of a decision arrived at in a really judicial way.” (Opinions and Decisions, 1939, App., p. i.)

In his reply of March 2,1939, to Dr. Huecking, the Umpire said: “ I do not expect to enter into any controversy with respect to the statements contained in your letter other than to say that they are unjustified and, in my opinion, present a wholly false picture of our deliberations with respect to a motion pending before the Commission” (Id., p. vi).

The retirement was not notified to the State Department by the German Embassy until March 24,1939, and in none of the correspondence was anything said about the appointment of a successor.

22 American Commissioner to Dr. Huecking, March 3,1939, Opinions and Decisions, 1939, App., pp. v-vi. See also American Commissioner to Secretary of State, March 3, 1939, id., p. vi, and Opinion of American Commissioner, June 15, 1939, id., pp. 4–5.

23 This agreement to investigate the merits may seem quite contrary to the procedure laid down in the decisions of 1935 and 1936 (that the reopening and the merits should be determined in separate proceedings) but is reconciled by the alternative in the 1936 decision, namely, “unless Germany shall agree to a different course,” and in the decision of 1935 “if the parties were in agreement that this course should be followed.”

24 Transcript, Record on Appeal, pp. 290–291.

25 The full correspondence is printed in Opinions and Decisions, 1939, App., except letters of retired German Commissioner to American Commissioner, March 3, 1939, and German Chargé d’Affaires to Secretary of State, July 11, 1939, which two are printed in the Transcript of Record on Appeal to United States Court of Appeals, District of Columbia, pp. 290–294.

26 A meeting of the Commission was called for June 15,1939, and in his response (June 10, 1939) to the notice the German Agent said, “in view of the note addressed by my Government to the Department of State today, I shall not appear at the meeting.” In his note of June 10, the German Chargé referring to the proposed meeting, said, “Since the withdrawal of the German Commissioner, Dr. Victor Huecking, on March 1st of this year, of which I notified the American Government by a note to your Excellency of March 24th of this year, the Commission has been incompetent to make decisions and that consequently there is no legal basis for a meeting of the Commission at this stage. By direction of my ‘ Government, I advise you that the Government of the Reich will ignore the decision to call the meeting on June 15th, as well as any other act of the Commission that might take place in violation of the International Agreement of August 10, 1922 and the generally established rules of procedure.” (Opinions and Decisions, 1939, pp. ix-x).

27 The Commissioner’s opinion of 310 printed pages reviews the authorities and precedents and analyzes the voluminous evidence.

28 Printed in this Journal, Vol. 33 (1939), p. 770.

29 This was a reaffirmation of the decision of March 30, 1931, which supported the position of the German Agent at that time, as to the right and practice of the Commission to function as a three-man body. See this Journal, Vol. 34 (1940), p. 26.

30 American Commissioner’s opinion, Opinions and Decisions, 1939, p. 306.

31 Id., p. 310.

32 This is a reaffirmation of the principle of the Umpire’s decision of December 15, 1933.

33 See footnote 6, supra, p. 284. In his note of October 3,1939, the German Chargé denied such admission by the German Agent “by whom alone such an admission could be made” (Opinions and Decisions, 1939, App., p. xix). The German Agent clearly implied as much in the 1931 argument (pp. 88, 90) and the 1932 argument (p. 187).

34 Minutes of June 15, 1939. Order of June 15, 1939, by Umpire and American Commissioner, Opinions and Decisions, 1939, p. 313.

The German Chargé emphatically protested the decision and order in a short note to the Secretary of State dated July 11, 1939, elaborated into a long reasoned note, dated October 3, 1939 (Transcript, Record on Appeal, pp. 195–216, 291–294). The latter note and the Secretary of State’s reply of October 18, 1939, were transmitted to the American Commissioner by the Department of State on the latter date (Id., p. 216).

In his acrimonious note of July 11, the German Chargé referred to the “Rump Commission,” the “Canadian parties” and the “American Umpire” and stated in brief that the issues of Germany’s responsibility and the amount of damages had been reserved for later stages of the proceedings, that there was no disagreement on the motion for awards which would allow the Umpire to act, that the proceedings since March 1, including the decision on the pending petition, were void as well as any awards to be made thereunder. He concluded with “the expectation of my Government that the Government of the United States will cooperate with the German Government in order to restore the basis upon which the work of the Commission can be accomplished in a regular way.”

The German note of October 3, 1939, is too long and detailed to be summarized.

Certain American awardholders protested to the Commission and the Department of State against the decision and any further proceedings leading to awards in the absence of a full Commission.

35 In his note of July 11, 1939, the German Chargé denied both that by the withdrawal “the Commission has become ‘functus officio’ and has thereby lost its competence,” and that “during the vacancy . . . the American Commissioner, whether alone or jointly with the American Umpire, can exercise functions which the governmental agreement has entrusted to the two National Commissioners for joint exercise.” (Transcript, Record on Appeal, pp. 198–199.)

36 Opinions and Decisions, 1939, pp. 10–20, citing Colombia v. Cauca (1903), 190 U. S. 524 (s.c, U. S. Cir. Ct. 106 Fed. 337; U. S. C. C. A. 113 Fed. 1020) and cases cited; Atchison &c. Co. v. Brotherhood &c, 26 Fed. (2d) 413; Witenberg, L’Organisation Judiciaire la Procédure el la Sentence Internationale, 1937, p. 281, par. 24; Merignhac, Traité Théorique el Pratique de L’Arbitrage International, pp. 276–7; Phillimore, Commentaries upon International Law, Vol. Ill, p. 4; and numerous decisions in commercial arbitration.

37 3 Moore Int. Adj., Mod. Ser., p. 170; Z. & F. Reply-Brief before U. S. Sup. Ct., App. B, Answer of John Bassett Moore.

38 Germany also deposited bonds in the TJ. S. Treasury in the face value of approximately $505,000,000 to cover the balance of the awards, on which she has paid about $21,000,000 and defaulted on the rest as they came due.

39 Hearings, Senate Finance Committee, 70th Cong., H. K. 7201, Jan. 23–26, 1928, pp. 134–9, 191–5, cited in affidavit of H. H. Martin, Transcript, Record on Appeal, pp. 83–4.

40 Report, Secretary of Treasury, June 30, 1939, p. 76.

41 In his note of October 3, 1939, the German Chargé objected that questions respecting the amount and proof of the damages had been reserved for a later stage of the proceedings and that “the German Agent had not taken any stand with respect to the American evidence on the amount of damages and had not introduced opposing evidence of any kind.” He cited the decisions of 1935 and 1936 as allowing further proceedings on the merits and the decision of 1933 against closing the record “without consent or over objection.” (Opinions and Decisions, 1939, App., pp. xxiv-xxvi).

42 The German answer of Nov. 3,1927, filed Nov. 14, to one of the Kingsland underwriters’ claims had alleged that the Agency Company’s nationality was not American. But the German answer to the Agency Company’s claim dated Dec. 14, 1927, raised no objection to the Company’s nationality. The issue was definitely raised by German motion filed Dec. 7, 1936 (nine years after memorial was filed) to dismiss for lack of jurisdiction the petition of May 4, 1933 as to the Agency Company; American answer, December 28, 1936 and brief, January 22, 1937; German notice, March 18, 1937 withdrawing motion; German memorandum, April 27, 1937 renewing motion; German brief, January 12, 1939, four days before the date of oral argument. In the abortive settlement at Munich in July, 1936, Germany raised no question of nationality.

43 Opinions and Decisions, 1939, p. 315.

44 The Knox-Porter Resolution of July 2, 1921, 42 Stats. 105, incorporated in the Treaty of Berlin of August 25,1921, the parts of the Treaty of Versailles incorporated in the Treaty of Berlin, and the Claims Agreement of 1922.

45 Opinions and Decisions, 1939, p. 319.

46 Decisions and Opinions, pp. 189, 160 respectively.

47 Opinions and Decisions, 1939, p. 320. Citing also Society &c. v. New Haven, 8 Wheat. 464; U. S. v. Northwestern Express Co., 164 U. S. 686. It may be noted that the Settlement of War Claims Act of 1928 provided for claims of “German nationals” which were defined as including partnerships, associations, or corporations “organized under the law of Germany” (Sec. 22 (b)).

48 The German answer filed January 17, 1928, stated, “Claimant’s allegations . . . are not contested.” The head office and managing control and all of claimant’s property was located in the United States and the great bulk of its business was transacted here. No question of enemy character or control was involved.

49 American answer filed December 28, 1936.

50 Hamburg-American Co. v. IT. S., 277 U. S. 138; Behn, Meyer & Company v. Miller, 266 U. S. 457; and other cases.

51 R. E. L. Vaughan Williams, 49 Law Quart. Rev., 1933, p. 334.

52 Opinions and Decisions, 1939, pp. 323–4.

53 114. Fed. (2d) 464. The Secretary of State certified the awards after the filing of this suit, but prior to the service of the process on him.

The Z. & F. Company had also protested the awards to the Secretary of State and the Secretary of the Treasury by letter of June 23, 1939, and had notified the Secretary of State and the Secretary of the Treasury by letter of October 25, 1939, that suit would be brought and injunction sought. (Brief of Petitioner, p. 17.)

The Lehigh Valley Railroad Company was later joined as Intervener Defendant and the American Hawaiian Steamship Company, a holder of prior awards, as Intervener Plaintiff.

54 31 Fed. Supp. 371.

55 114 Fed. (2d) 464. As to the status of parties before the Mixed Claims Commission, the court said: “That tribunal dealt only with the two governments, had no relations with claimants, and could take cognizance only of claims presented by or through the respective governments. No claimant, individual or corporate, was entitled to present any demand or proofs directly to the Commission. No evidence could be considered except such as was furnished by or on behalf of the respective governments. While the claims of individual citizens presented by their respective governments were to be considered by the Commission in determining amounts, the whole purpose of the agreement was to ascertain how much was due from one government to the other on account of the demands of their respective citizens. Each government, when it entered into the compact under which the awards were made, relied on the honor and good faith of the other for protection, so far as possible, against frauds and impositions by the individual claimants. As between the United States and Germany, indeed as between the United States and American claimants, the money received from Germany was in strict law the property of the United States, and no claimant could assert or enforce any interest in it so long as the government legally withheld it from distribution. . . .

Although an individual claimant may have a moral right to participate in an award, . . . as a matter of strict legal or equitable right he has none, and Congress is under no legal or equitable obligation to pay any claim. Therefore, it is only when such a claimant has been permitted by Congress to participate in such an award that he has any standing to invoke judicial relief. Then, and only then, may he invoke the jurisdiction of the court to determine questions involving ownership, or apportionment between claimants of the amounts awarded.”

56 Mr. Justice Roberts, being Umpire of the Mixed Claims Commission, did not sit in the case.

57 The decision of the Supreme Court is printed at page 394 of this journal.

58 See the decision of the Court of Appeals, 114 Fed. (2d) 464.