Zealand for the cession of the sovereignty of their country, and the right of preemption over their lands to the Crown of Great Britain, it is distinctly affirmed of the native owners that their "title to the soil and sovereignty of New Zealand is indisputable, and has been solemnly recognized by the British Government." (Parl. Papers, 8th July, 1840, p. 37, et. seq.)

3. The treaty of Waitangi, which was the immediate result of Consul Hobson's negotiation, was, in effect, a treaty of union. It provided for the cession to Her Majesty of all the rights and powers of sovereignty, while confirming and guaranteeing to the chiefs and tribes of New Zealand the full, exclusive, and undisturbed possession of their lands and estates, and it reserved to Her Majesty the exclusive right of preemption over such lands as the proprietors thereof may be disposed to alienate."

4. The treaty has no reference to lands which the native owners had already alienated, at a time when New Zealand was in the position of an independent

state.

5. The Crown, in taking possession in 1840, found British subjects and others (to the number of about 2,000) in quiet and undisturbed possession of tracts of land, by virtue of purchases made direct from the acknowledged native owners. 6. In a proclamation issued by Governor Hobson, of even date with that proclaiming the Queen's sovereignty in New Zealand (January 30, 1840), it is notified to all Her Majesty's subjects that Her Majesty does not deem it expedient to recognize any titles to land in New Zealand which are not derived from or confirmed by Her Majesty."

7. Allowing that the power to confiscate existing purchases which this proclamation implies would be enforceable in the case of British subjects, the terms of the proclamation cannot be held to extend to subjects of other nations owing no allegiance to the Queen, and who had previously acquired land there. As Mr. Everett very clearly put it in his communication to Lord Aberdeen (December, 1843), "Whatever rights could be acquired to England by the assertion of sovereignty over the islands of New Zealand must be of course qualified by any preexisting rights of other nations. Neither the United States nor any power, if so disposed, would be permitted, without opposition by England, in establishing an exclusive sovereignty over previously independent islands in the Pacific Ocean, to proceed at pleasure to vacate purchases of land made by British subjects, or to interfere with other interests existing before such assertion of sovereignty was made."

* * *

8. Her Majesty's secretary of state, in his instructions to the governor of New Zealand (March, 1841), says that in the case of aliens where the fact of the purchase is undisputed, "the claim should be acknowledged.”

9. Without at present considering the blocks on which only one part of the purchase money has been paid, Mr. Webster (who is a citizen of the United States, and an alien in the meaning of the royal instructions) was, it is submitted, entitled to have his undisputed claims of 241,000 acres allowed in full. (See commissioners' report).

10. Of the claims admitted by the commissoners as undisputed, only 16,468 acres have been granted to Mr. Webster or to his assigns. It is contended that his title is indisputedly good to the remaining 226,624 acres.

11. The land having been disposed of by grants from the Crown in violation of these rights, the claimant is entitled to compensation, and he claims at the rate of £1 per acre.

NOTE. The claim argued above is quite independent of alleged rights arising out of incomplete purchases (amounting, it is stated, to 250,000 acres more), and special damages in respect of claimant's kauri timber taken and appropriated by the Crown.

W. BULLER,
Barrister at Law.

The above brief is by Walter Buller, esq., barrister at law, who resides at Christchurch, New Zealand.

[See Claims against Venezuela, Gen. Index.]

FIFTY-SECOND CONGRESS, FIRST SESSION.

May 18, 1892.

[Senate Report No. 691.]

Mr. Hiscock, from the Committee on Foreign Relations, submitted the following report:

The Committee on Foreign Relations, having had under consideration the bill (S. 2454) for the application of the accretions of the Caracas awards of 1868 to the new awards made in 1889 and 1890, beg leave to report:

The awards of the Caracas Commission, under the treaty of April 25, 1866, amounted to $1,253,310.30. As representing this sum, 360 certificates of award were issued in 1868, bearing interest at the rate of 5 per cent per annum. On these awards, in payment both of principal and interest, this Government, up to May 19, 1883, realized, out of drafts drawn by the Venezuelan Government, the sum of $400,047.80 in gold. Out of this sum the Department has paid to the claimants the sum of $158,836.24. The unexpended balance of the moneys received from Venezuela is thus $241,211.56. The amount of the fund held by the Department under the designation of the "Venezuela indemnity" is $358,713.93. The excess of $117,502.93 of the latter sum over the unexpended balance of the moneys actually received from Venezuela represents a profit or increment resulting from investments in bonds of the United States and dealings in gold in currency.

December 5, 1885, a new convention was entered into between the Governments, and the claims for which certificates had already been issued were reexamined with other claims, and in 1890 new awards were made by the Washington Commission, in part confirming and in part canceling the Caracas awards. Since May 19, 1883, previous to which all payments were made by this Government, the increment from the unexpended balance has been the sum already stated, $117,502.93. The investment of the money paid by Venezuela to this Government was unauthorized by law. At the time it was believed to be justified under section 2659, Revised Statutes. The practice, however, of the investment by this Government of funds paid to it under treaty for the satisfaction of claims of our citizens has been discontinued. There is no well-established precedent for this Government giving a foreign government the benefit of increment on funds paid for the satisfaction of claims of her citizens, and, in the judgment of your committee, to apply this increment upon the awards of the Washington Commission, necessarily for the benefit of Venezuela, is contrary to our national custom. It should, however, be taken into consideration that Venezuela is not strong financially, and when she will pay the awards of the Washington Commission is somewhat speculative. Under the treaty she has ten years in which she may make such payments. It will be borne in mind that on account of the reexamination of the Caracas awards by the Washington Commission our citizens have suffered great delay in receiving the money due them. The last payments to the claimants under the Caracas awards were make in May, 1876. This long delay was due to the fact that the awards were assailed as fraudulent in part.

It is difficult to see any equitable claim that our Government has to this increment, and in view of the fact of the long time that the American claimants have waited and must wait for their money, the equitable

proposition is presented that this increment should be distributed to them, though the Government of Venezuela receives the benefit of it in lessening the amount of its indebtedness. As an equitable claim under all the circumstances it is proper that whatever expenses this Government has incurred in respect to these awards against the Venezuelan Government should be deducted from this increment, and your committee therefore report the bill with the recommendation that it do pass with this amendment:

The Secretary of State be, and he is hereby, directed to ascertain and settle the amount expended by this Government in respect of the convention of April 25, 1866, and of the commission thereunder, and of the convention of December 5, 1885, and the commission thereunder, and deduct the same from the accretions upon the money paid to this Government by Venezuela, and the balance of said accretions he is hereby authorized and directed to apply to the payment of the new awards of the Washington Commission under the treaty of December 5, 1885, and to credit the Government of Venezuela under said new award on account of said accretions diminished as aforesaid, as well as with the principal of said funds.

[See Claims against Venezuela, Gen. Index.]

FIFTY-THIRD CONGRESS, SECOND SESSION.

April 14, 1894.

[Senate Report No. 330.]

Mr. Turpie, from the Committee on Foreign Relations, submitted the following report:

The Committee on Foreign Relations, having had under consideration the bill (S. 756) relating to the disposition of the accretions upon the moneys received by the Government of the United States from that of Venezuela in the course of the payment of the Caracas awards, beg leave to report as follows:

The amount of the awards made by the Caracas commission under the treaty of April 25, 1866, in favor of this Government against Venezuela was $1,253,310.30. Representing this sum 360 certificates were issued to claimants, whose accounts were then examined and allowed, dated in 1868, and bearing interest at the rate of 5 per cent per annum. On these awards, toward the payment of principal and interest thereof, our Government, up to May 19, 1883, had realized from drafts drawn in our favor by Venezuela the sum of $400,047.80 in gold, out of which our Department of State, which received and had custody of the award fund, has paid to claimants $158,836.24.

The unexpended balance of the moneys thus received from Venezuela toward payment of the first award is $241,211.56. The amount of the fund held by the Department under the designation of "Venezuela indemnity" is $358,713.93. The excess of $117,502.93 of the latter sum over the net amount received from Venezuela represents the profit or increment resulting from the investment of the moneys so received in United States bonds, being the interest and premium thereon realized by the Department. This increment or profit constitutes what are known as the accretions, and the disposition of these accretions is the object of the pending bill.

Very soon after the making of the Caracas awards above referred to the Government of Venezuela commenced to enter complaints against the awards rendered by the commission, remonstrated against

the gross frauds and rank injustice of some of the judgments rendered against it, asked a suspension of payments under it, and demanded a new treaty and a new commission for the reexamination of the claims allowed. Although at first very little attention was paid to this complaint, and Venezuela continued to pay under protest, yet our Government, after the payment or partial payment of two installments of the award under the old convention, did suspend its further expendi ture thereof to claimants and entertained the proposition for a new treaty and commission on the subject of these claims.

It was not until December 5, 1885, that a new convention was entered into between the two Governments, after which the claims for which certificates of allowance had been already issued were reexamined, and new claims also were heard and determined, and in 1890 new awards were made by the Washington Commission under the second treaty aforesaid, in part confirming and in part canceling the Caracas allowance, and making other additional awards in the premises.

The installments upon the awards made by this new commission have been paid as they accrued, and are yet in process of payment by Venezuela, but the accretions for the accumulated period of time, during which Venezuela still paid but our Government had, owing to causes above stated, ceased to expend, remain yet to be disposed of. American citizens, claimants under the second award, now request that these increments be paid to them upon their certificates of allowance issued under the Washington Commission.

It is well settled, both by civil and common law, that accretions, especially such as the interest or gain upon money, follow the principal and become a part of it, and they belong to the owner of the principal, unless it is otherwise provided by legislation or by the agreement of the parties. But this rule, strictly considered as at law, would not afford, as we think, a satisfactory solution of the question in argument. Under this strictly legal construction the money, after it had been paid to the United States, became undoubtedly, as between the two Governments, our property, and as these increments all accrued since such payments, they were, under the same reasoning, our own. But for various causes hereinafter stated we have been led to take an equitable rather than a strictly legal view of the condition of the fund and of the parties interested therein at the time of these transactions.

The Government of the United States received and held the moneys in question only for one purpose that was, to disburse them to its own citizens in liquidation of their claims as adjudged against Venezuela. It neither had nor claimed any proprietary right therein, or any other interest save that involved in the expenditure thereof.

Taking into consideration the respective positions of the three parties to the transaction-Venezuela, the United States, and the claimants under the treaty-the first is the payor, the last are the payees, and the United States was, and is, a naked trustee or bailee of the fund for purposes of distribution.

The real owners and beneficiaries of the fund are that class of claimants whose claims were allowed under the provisions of the treaty by the commission created thereby. Being equitable owners of the fund, they are in like manner owners of the usufruct or accretions. Without express provision therefor in some law or treaty, we do not think it can be rightfully claimed that our Government should retain any part of the principal or the increment of the fund as percentage or commission, chargeable against our own citizens for the distribution thereof; nor without a similar provision could such a charge be equitably main

tained against the Government of Venezuela. There is no such provision, and it follows that the status of our Government herein is that of a voluntary trustee, a bailee, or depositary, without hire, and it best accords with the good faith and dignity of the Republic that this position should remain unchanged.

These views are supported by the practice of this Government in similar cases. In the case of the Geneva award, of what were known as the Alabama claims, Congress directed by law, similar to the enactment provided for in the pending bill, that the interest realized and accrued upon the award fund by its investment for the period of time between the date of payment thereof by Great Britain and its expenditure by this Government in liquidation of the judgments rendered by the commission should be dealt with as a part of the principal. (See U. S. Stat. L., vol. 22, sec. 9, p. 99.)

It seems herefrom that Congress treated these accretions as a diplomatic trust fund, in respect to which our Government had no obligation except that of its lawful disbursement to the claimants.

This action followed the ordinary rule in private transactions between individuals, which is that the trustee is forbidden either to take or 'make any profit or gain by the increment of the trust fund in his hands. Such increase inures to the benefit of the beneficiaries of the trust. A just view of international equity demands the application of the same principle in this case.

In the same case-that of the Geneva award-it was somewhat later enacted "that the premium realized upon the sale of certain bonds in which the said fund had been invested, namely, the sum of $385,100.07," should be used and expended as part of the original fund. (U. S. Stat. L., vol. 24, sec. 5, p. 78.)

And in this case of the Venezuela indemnity fund it will be seen by inspection of the reports heretofore made by the Secretary of State of its condition that the accretions of interest have been always accounted a part of the fund. (See House Ex. Doc. No. 208, Forty-seventh Congress, first session, p. 8.)

And in the same document it appears that the Secretary of State added to the principal, as a part of it, the item of interest earned up to May, 1876, and also the items "accumulation of interest" and "advance on bonds." And it appears from the same report of Secretary Frelinghuysen that, in the installment paid out and distributed to claimants under the Caracas award in May, 1876, the "interest earned" by the fund in his hands up to that time was also actually expended by him— thus it was dealt with in every way as a part and portion of the principal. It is true this payment was made under the first award, but that does not affect the force or authority of the precedent.

The investment which produced these accretions was not made under section 3659 of the Revised Statutes, or under any law of the United States, but rather under the personal discretion of the Secretary of State, who doubtless intended by such action to provide for Venezuela some return by way of set-off against the interest accumulating upon the awards against her during the prolonged pendency of the question of reopening and reexamining the original awards.

The awards against Venezuela in favor of our citizens under the Washington commission, like those of the Caracas commission, bear interest at the rate of 5 per cent until paid. Venezuela is not a wealthy or very numerous nation, and is one of the family of free American States with which we have had always the most amicable relations, and it would seem, under the circumstances, that the fund