1 7 Peters, 51. In the course of his opinion Chief Justice Marshall said: “It is very unusual, even in cases of conquest, for the conqueror to do more than to displace the sovereign and assume dominion over the country. The modern usage of nations, which has become law, would be violated . . . if private property should be generally confiscated, and private rights annulled. The people change their allegiance; . . . but their relations to each other, and their rights of property, remain undisturbed. . . . A cession of territory is never understood to be a cession of the property belonging to its inhabitants. . . . The cession of a territory by its name from one sovereign to another . . . would be necessarily understood to pass the sovereignty only, and not to interfere with private property.”

2 Where the law in State X differs from that in State Y, State Y must, enforce those contracts which are valid by X law.

3 See Chas. Magoon, E.: The Law of Civil Government in Occupied Territory; Reports submitted to the U. S. Secy, of War (3d ed), 1903, p. 484 Google Scholar. Before the cession of Porto Rico to the United States the Board of Harbor Works of Ponce, Porto Rico, had made a deposit, required as security, of 27,503.06 pesos with the Spanish collector of customs, and this the collector of customs had apparently refused to return when Porto Rico was ceded to the United States. Mr. Magoon advised that the United States was not bound to make any compensation, but that the United States should support the claim of the Harbor Board against the Government of Spain for the amount in question.

4 Innumerable examples of this commonly adopted viewpoint might be cited. In speaking of concessions granting the exclusive right to lay cables, the United States Attorney General, in an opinion rendered on June 15, 1899, said:

“Concessions of this kind, which carry with them exclusive rights for a period of years, constitute property of which the concessionary can no more be deprived arbitrarily and without lawful reason than it can be deprived of its personal tangible assets.” (22 Op. 518.)

For a still better example, see the case of Sanchez v. United States (216 U. S. 167).

5 Many obligations, even though they clearly constitute property, cannot be enforced against the receiving state, as, for instance, in the Ponce Harbor Works case, cited in note 3.

6 See, for instance, Keith, Theory of State Succession, pp. 5, 6.

“The authorities are very much divided as to the meaning and propriety of the phrase ‘succession of States.’ Several (e.g., Gareis, Par. 16, pp. 59 ff., and Zorn, 32, 77) even deny that it ever takes place, and one (Liszt, Par. 23) only admits it in a few cases. Others maintain that it is a pure Action or metaphor, whether useful or otherwise. But the majority accept the doctrine of succession either in pure or modified form. . . .

“Among the publicists who evidently consider the phrase ‘succession of States’ a mere fiction or metaphor are Appleton, Gabba, and Gidel, who have produced valuable monographs on this important subject. But Huber, the most important of them all, does not hesitate to use the phrase ‘Staatensuccession’ as the title of his remarkable work. It must be admitted that these monographs are, for the most part, highly abstract and theoretical, and that their conclusions are often at variance with international practice.” (Hershey’s Essentials of International Public Law, p. 141, note 27.)

7 In the determination of this difficult question, which will be of unusual importance in the years following the coming European settlement, an examination of actual practice will be of far more value than a mere philosophical and theoretical discussion of general principles. Theories of succession have differed so widely that little is gained from collecting the theoretical views of text-writers; for this reason an examination will be made of decisions and opinions as they have occurred in actual practice. The United States judicial and administrative decisions have been chosen for this examination because of the comparative frequency with which questions of succession have arisen for official settlement within the United States.

8 It seems hardly necessary to cite cases to show that the benefit passes with the burden, i.e., where states succeed to the obligation of a concession, they likewise succeed to the rights and benefits to which the ceding state was entitled under the concession.

9 See Magoon’s Reports, pp. 571, 579.

The concession was held to be binding upon the United States even though the final decree granting the concession was not signed by the Spanish Governor General until Sept. 28, 1898, a month and a half after the signing of the peace protocol (Aug. 12, 1898), and at a time when Spain was making arrangements to withdraw from the island. No question of bad faith on the part of the Spanish authorities decreeing this concession was, however, suggested. Had the final decree granting the concession been granted after the signing of the definitive peace treaty on Dec. 10, 1898, another question would have been raised. The action of the United States War Department, of course, did not prevent the question of the validity of the grant under the Spanish law being raised in the Cuban courts.

10 22 Op. 520.

11 In an opinion rendered on June .15, 1899, the United States Attorney General said:

“If, therefore, the Western Union Telegraph Company has an exclusive grant applicable to Cuba for cable rights, which grant has not expired, it would be violative of all principles of justice to destroy its exclusive right by granting competing privileges to another company.” (22 Op. 518.) This opinion was quoted by Mr. Magoon and followed by the United States War Department in its action regarding the Cuba Submarine Cable Co. (Magoon’s Reports, pp. 281, et seq.)

12 Enforceable state promises to convey definitely specified land situated within the ceded territory, where all the necessary conditions have been performed by the grantee, are exceptions not dealt with in this paper, since these cases are treated by the courts as involving perfected interests in land, i.e., equitable rights in rem, to which title has already passed, rather than as concessions or contracts. See article on “Change of Sovereignty and Private Ownership of Land,” this Journal, July, 1918, p. 475.

13 “Nor should we,” says Attorney General Griggs in 23 Op. 192, “in inquiring whether the nations have consented to a rule of law to the effect that contracts made by the old sovereignty for local and imperial objects shall be obligatory as such upon the new sovereignty, forget the extraordinary effects which must flow from such a law. What is there that may not be contracted for? What imaginable stipulations may not be made?”

14 Mr. Magoon, to whom the case was first referred for decision, seems to have felt that the payment of $20,000,000 by the United States to Spain relieved the United States Government of any liability for obligations undertaken by Spain for the benefit of the Philippines. But it is difficult to see how the United States could discharge its international obligations to third parties by the payment of any amount of money to Spain. (See Magoon’s Reports, p. 177.)

15 23 Op. 187.

16 Ibid., p. 181.

17 The Attorney General further held that the payment by the United States to the British concessionary of the remaining one–third would be a payment rather of grace than of legal right, which could not therefore be made without express authority from Congress.

18 The final disposition of the Manila Railway case was reached by an amicable settlement between the railway company and the United States War Department, in which a private arrangement was concluded satisfactory to both. (See 1 Moore’s Digest, 406.)

19 23 Op. 197.

20 Ibid., 451.

21 The subsequent history of the Cables company case was not satisfactory from the judicial viewpoint. The matter came up for consideration by the Attorney General of the Philippine Islands; in opinions rendered on January 14, 1902, and January 17, 1902, Mr. Wilfley, the Attorney General, held that the United States succeeded to Spain’s obligation to pay to the Cables company an annual subsidy of 4,600 pounds, and similarly succeeded to the corresponding benefits of priority in transmission of messages, half rate privileges of trans mission, and the right to a certain share in the profits. (See 1 Opin. Att. Genl. of Philippine Islands, 62 and 80.) The Cables company subsequently brought a claim against the United States Government in the United States Court of Claims which came up for decision in 1911. The United States moved to dismiss the petition on the ground that the plaintiff’s claims arose out of treaty stipulations with a foreign nation and hence were not cognizable by the Court of Claims. The motion to dismiss was overruled, on the ground that the plaintiff’s claims rested upon the theory of unjust enrichment or upon general international law (Australasia and China Tel. Co. v. U. S. 46 Ct. of Claims, 646). The case was argued upon the defendant’s demurrer in the following year. (Ibid., 48 Ct. of Claims, 33.) The court gave judgment for the defendant, but upon the ground that the court had no jurisdiction to try questions arising purely in international law. In view of the Paquete Habana decision (175 U. S. 677), some may find it difficult to agree with the holding of the court; but in any event, the decision did not purport to settle the question of international law involved.

22 See Magoon’s Reports, pp. 204 and 209.

23 O’Reilly de Camara v. Brooke, 209 U. S. 45.

24 I t is submitted that if the property test is adopted, the only just test of what constitutes property, in the absence of any universal international agreement, would be the law, not of the receiving, but of the ceding, state, just as the Percheman rule protects land titles which were valid and enforceable by the law, not of the receiving, but of the ceding, state.

25 See 42 Court of Claims, 458.

26 The case was cited with approval in 46 Ct. of Claims, 653.

27 See Hagoon’s Reports, p. 454.

28 This case must not be confused with a somewhat similar case which arose in the Philippines. The claimant, in the latter case, held, under the Spanish law, a monopolistic license or concession granting him for five years the right to the exclusive manufacture of hemp by steam. The Attorney General, whose opinion was sought as to whether the claimant’s monopoly should be protected after the cession of the Philippine Islands to the United States, held that the monopoly was binding upon the United States (22 Op. 617). This case, however, depends upon the special terms of Art. 13 of the Spanish–American Peace Treaty of 1898, which says:

“The rights of property secured by copyrights and patents acquired by Spaniards in the Island of Cuba, and in Porto Rico, the Philippines, and other ceded territory, at the time of the exchange of the ratifications of this treaty, shall continue to be respected.” It was not disputed that under the Spanish law, although probably not under the American law, this “patent” constituted a valid “property right.”

It is also open to question whether the patent right in this case was not granted in order to stimulate industrial progress and invention in the Philippines and therefore for the sole benefit of the Philippines.

29 See an article upon the “Cuban bonds” in the Anglo Bascon Review for June, 1899, by Hon. Whitelaw Reid, a member of the American Commission which negotiated the Treaty of Paris of 1898. Speaking of the “Cuban bonds,” issued by the Spanish Government to the extent of about $300,000,000, to the payment of which Spain pledged the revenues received by her from the Island of Cuba and her own guarantee, Mr. Reid says:

“But the fact was that these were the bonds of the Spanish nation, issued by the Spanish nation for its own purposes, guaranteed in terms ‘by the faith of the Spanish nation,’ and with another guarantee pledging Spanish sovereignty and control over certain colonial revenues. Spain failed to maintain her title to the security she had pledged, but the lenders knew the instability of that security when they risked their money on it. . . . The Spanish contention that it was in their power as absolute sovereign of the struggling island to fasten ineradicably upon it for their own hostile purposes unlimited claims to its future revenues would lead to extraordinary results. Under that doctrine any hard-pushed oppressor would have a certain means of subduing the most righteous revolt and condemning a colony to perpetual subjugation. He would only have to load it with bonds, issued for his own purposes, beyond any possible capacity it could ever have for payment. Under that load it could neither sustain itself independently, even if successful in war, nor persuade any other power to accept responsibility for and control over it. It would be rendered impotent either for freedom or for any change of sovereignty.”

Regarding the “Philippine debt” Mr. Reid says: “Warned by the results of inquiry as to the origin of the Cuban debt, the American Commissioners avoided undertaking to assume this en bloc. But in their first statement of the claim for cession of sovereignty in the Philippines they were careful to say that they were ready to stipulate ‘for the assumption of any existing indebtedness of Spain incurred for public works and improvements of a pacific character in the Philippines.’ Not till they learned that of this entire ‘Philippine debt’ (only issued in 1897) over one–fourth had actually been transferred to Cuba to carry on the war against the Cuban insurgents, and finally against the United States, and that the moat of the balance had probably been used in prosecuting the war in Luzon, did the American Commissioners abandon the idea of assuming it.”

An article upon the same subject, even more interesting because it comes from the pen of a foreign writer belonging to a country which was not at the time in a friendly mood towards the United States, appeared in Die Nation of Berlin on April 22, 1899, by von Bar. The article is summed up by Westlake as follows: “Von Bar arrives at the conclusion that Cuba, whether her position— at that time uncertain—was to be more or less independent of the United States, would remain liable for so much of the loan money charged on her by Spain as had been spent on railways, harbors and other works of civilization for her benefit, but that neither Cuba nor the United States would be liable for so much as had been spent in maintaining her dependence by force. Spain, too, would be bound to furnish both to the victors and to her creditors, from her archives, the information necessary for so dividing the debt. In the same article von Bar points out that even where a debt remains chargeable on a ceded province or a conquered territory the new government cannot be fettered in its control of the taxation, or be obliged to admit the interference of an agency introduced by the displaced government; and that therefore a specific security on the customs levied within the province or territory by the state to which it belonged, and a stipulation for the payment to a particular bank of any revenue comprised in the security, must fall to the ground.” (Westlake’s International Law, Vol. 1, p. 79, note 1.)

30 See, for instance, the discussion in Magoon’s Reports, pp. 638, 639, 642, 643.

31 See below, p. 737.

32 Westlake (Vol. 1, p. 74) would seem to make no distinction between the two.

33 “In considering what the attitude of a conqueror should be toward such concessions, we are unable to perceive any sound distinction between a case where a state acquires part of another by cession and a case where it acquires the whole by annexation.” (Report of Transvaal Commission, Par. 9. The report may be found in Parliamentary Papers, 1901, South Africa, Cd. 623.)

Westlake says: “It is generally agreed that the rules of state succession as affecting the right to things and other civil rights are the same in the case of the extinction of a state as in that of a partial cession of territory.” (International Law, Vol. I, p. 74.)

34 Although perhaps the language is a little too extreme, and therefore slightly misleading, this general principle was expressed by the Attorney General in an opinion rendered on July 27, 1899. He there said: “If in the granting of a right or privilege the sovereign has retained an iota of authority which may affect its untrammeled exercise and enjoyment, the right is not of the nature of an absolute one, but wholly of an inchoate and imperfect quality. As to inchoate, imperfect, incomplete, and equitable rights, the succeeding sovereign is the absolute dictator. They cannot be exercised against his sovereignty, but only by his grace, and his affirmative exercise is necessary to the validity of the concession.” (22 Op. 54.9.) After quoting the foregoing passage, Magoon adds: “By parity of reasoning it would seem that, if at the time the title passed from one sovereignty to the other, anything remained to be done by the concessionaire which affected the untrammeled exercise and enjoyment of the right, then such right is not of the nature of an absolute one, and cannot be exercised against the new sovereignty excepting by its grace extended by an affirmative act.” (Magoon’s Reports, p. 640.)

35 22 Op. 546.

Subsequently, however, the claimant was granted a revocable license to utilize the water power in question by the United States Secretary of War. Since the rights in the stream had belonged to the Spanish Crown, and therefore passed to the United States, they could not be permanently granted away except by Congress, although a revocable license granting the use of them could be issued by the Secretary of War during the time the territory was under military occupation. The license thus granted was subsequently revoked, and the matter disposed of by the civil government of Porto Rico created by Congressional enactment. (Magoon’s Eeports, p. 495.)

36 Magoon’s Reports, p. 531.

37 22 Op. 554.

38 The final authority to determine whether a public contract is a vested and perfected concession which survives the change of sovereignty, or a mere imperfect interest, lies, of course, in the courts of the receiving state; but it is believed that in the two above cases the Attorney General correctly stated the law. In the case of Michael J. Dady & Co., who claimed a concession to lay the sewers and to pave the streets of the city of Havana, the Attorney General held that any rights of Dady & Co., which “could properly be called vested rights,” should be protected; but since the question was an exceedingly nice one and there was no compelling necessity for a determination of the matter, the Attorney General refused to decide whether the claimants did hold a vested and perfected right or a mere imperfect and inchoate interest, leaving that question for the Cuban courts to decide. (22 Op. 526.)

39 International Law, Vol. 1, p. 78.

40 Magoon’s Reports, p. 596. See, also, Halleck’s International Law (3d ed.), Vol. 2, Chap. 33, See. 24.

41 2 2 Op. 525. See also Magoon’s Reports, p. 637.

42 22 Op. 529.

43 Magoon’s Reports, p. 534. In this case the municipality of Sancti Spiritus had granted in 1897 to one Gutierrez, a concession to build a market house, and a monopoly preventing the free buying and selling of market –supplies outside the market house. Mr. Magoon held that the concession could not be specifically enforced against the municipality.

To the same effect, see Magoon’s Reports, p. 573: “In the same way the rights of the parties claiming under this concession, whatever they may be, are suspended if the exercise of said rights endangers the public health.”

44 Westlake’s International Law, Vol. 2, p. 92.

45 23 Op. 427.

46 Magoon’s Reports, p. 412. The Secretary of War, to whom the State Department referred the matter, wrote: “I am of the opinion that if the existence of the alleged contract were established the alleged liability, if any exists, would attach to the municipality of Manila, and would not attach to the military government of the Philippines nor the Federal Government of the United States. The municipality of Manila is a municipal corporation, and, as such, may be sued in the courts. The controversy between Messrs. Merry weather & Sons and the city of Manila stands on the same footing as a like controversy between individuals. The questions involved are of a kind and character usually resolved by judicial proceedings. Therefore the parties secure an adequate remedy by applying to the courts.”

47 See Vilas v. Manila, 220 U. S. 345. This case held that “while military occupation or territorial cession may work a suspension of the governmental functions of municipal corporations, such occupation or cession does not result in their dissolution”; and that “the cession by the treaty of 1898 of all the public property of Spain in the Philippine Islands did not include property belonging to municipalities, and the agreement against impairment of property and private property rights in that treaty applied to the property of municipalities and claims against municipalities.”

The property, as well as the obligations of municipalities, remains unaffected by a change of sovereignty. The ownership of public land and belongings held by municipalities before cession, does not pass by cession to the receiving state, but remains in the municipalities. See Magoon’s Reports, pp. 383 and 388, and cases there cited, from which he concludes that “The municipalities of Cuba now possess the same rights of property as they possessed under Spanish sovereignty” (p. 388). So, in Townsend v. Greeley, 5 Wall. 326, the United States Supreme Court held that “the treaty of Guadalupe Hidalgo, between the United States and Mexico, does not divest the pueblo, existing at the site of the city of San Francisco, of any rights of property or alter the character of the interests it may have held in any lands under the former government. I t makes no distinction in the protection it provides between the property of individuals and the property held by towns under the Mexican Government.”

Of course, as need hardly be said, municipalities after cession are subject to whatever regulations or laws the new sovereign may care to impose upon them.

48 The Paquete Hahana, 175 U. S. 677.

49 See Pitt Cobbett’s Leading Cases on International Law (3d ed.), Vol. 1, pp. 21, 22.

50 Ibid., p. 18.

51 See, for instance, Nabob of the Carnatic v. The East India Co., 1 Vesey Junior, 371, 2 Vesey Junior, 56; Elphinstone v. Bedreechund, 2 State Trials, N. S. 379; Rajah of Coorg v. East India Co., 29 Bevan, 300; Doss v. Secretary of State for India, L. R., 19 Equity, 509; Singh v. Secretary of State for India, L. R., 2 Indian Appeals, 38; Rustumjee v. The Queen, 2 Q. B. D. 69; Secretary of State for India v. Kamachee Boye Sahiba, 13 Moore, P. C. 22.

52 1905 Transvaal Supreme Court Reports, 586.

53 The case is sometimes cited to prove that the obligations arising under concessions will not survive cession; but the judgment does not support this conclusion. The facts were as follows: Between 1889 and 1893 certain concessions were granted to the plaintiff by Sigcau, then ruler of Pondoland, of railway, mineral, land, and trading rights in that country. In 1894 Pondoland was formally annexed to the British dominions, nothing being said as to concessions in the treaty of annexation. Subsequently the plaintiff brought an action against the Premier of Cape Colony under the Crown Liabilities Act of 1888 for the enforcement of his concession; and the colonial court having decided against him, he appealed to the Privy Council in England. The Privy Council dismissed the appeal. The case can hardly be cited as an authority to prove that concessions will not bind the receiving state; for the court showed that the concessionaries “never in fact obtained possession of the lands or exercised the rights which these documents purported to convey” (p. 577); and also it appeared that “the said concessions had not been carried into practical effect, and that they created no legal obligations which could be enforced in a Court of law against the government of Cape Colony, inasmuch as the said Sigcau might at any time have repudiated the said rights and privileges which he had granted to the appellants, and there would have been no remedy for such repudiation open to the said appellants” (p. 573). But above all, the court held that there was “a more complete answer to any claim arising from these instruments. The taking possession by Her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of State and treating Sigcau as an independent sovereign—which the appellants are compelled to do in deriving title from him. It is a well–established principle of law that the transaction of independent States between each other are governed by other laws than those which municipal courts administer.”

54 “Upon this part of the case there is a series of authorities from the year 1793 down to the present time, holding that matters which fall properly to be determined by the Crown by treaty or as an act of State are not subject to the jurisdiction of the municipal courts, and that rights supposed to be acquired thereunder cannot be enforced by such courts.” Per Lord Alverstone, C. J.

55 In 1877, on the annexation of the Transvaal, the British Government assumed responsibility for the debts of the Transvaal, including debts for warlike stores, amounting to 30,381 pounds and debts to banks of 28,946 pounds (Parl. Paper C 2144, p. 278) ; and on the annexation of Burma claims for goods actually supplied to the government of the annexed state prior to annexation were paid, although incomplete contracts were not recognized and “all cases were treated strictly on their merits.”

56 The report may be found in Parliamentary Papers, 1901, South Africa, Cd. 623; pp. 6–8.

57 Westlake’s International Law, Vol. 1, p. 81. Pitt Cobbett, in speaking of the same sentence, says: “The Report, whilst purporting to accept the judicial view, nevertheless qualifies this, in effect, by the admission that ‘the modern usage of nations tends in the direction of the acknowledgment of such contracts,’ and that ‘the best modern opinion favors the view that as a general rule the obligations of the annexed State towards private individuals should be respected.’“ Pitt Cobbett’s Leading Cases on International Law (3d ed.), Vol. 2, p. 241.

58 “This concession appears to have been lawfully entered into, and honestly carried out. The railway performs a useful service to the principal industry of the country in facilitating the immigration, and will form an important link in the chain of communication with the Northern Territory, to which it will presumably be extended.” Parl. Papers, 1901. So. Africa, Cd. 623, p. 59.

59 For a detailed report of the facts of the case, and criticism of the action of the British Government, see Sir Thomas Barclay’s Problems of International Practice and Diplomacy, p. 47. Sir Thomas Barclay seems to have in mind, however, rather the physical assets of the railway company than the value of the concession belonging to it.

60 Fiore says: “The annexing government succeeds to the rights and obligations resulting from contracts regularly stipulated by the ceding government in the relative public interest of the territory ceded.” 1 Fiore, No. 356, p. 313.

Also see, for instance, the judgment of the Court of Cassation of Florence rendered on July 26, 1878, in which the court said: “The principles of public law provide that when it is a case of partial cession of territory the obligations contracted by the state with regard to the ceded territory pass with that territory to the state which succeeds”; and again on December 15, 1879, the same court said: “By public law, the state which succeeds in one part of the territory of another state is bound, independently of special conventions, by the obligations legally contracted by the latter regarding the territory in which it succeeds.”

After citing various expressions to the same effect by leading jurists, Keith, in his Theory of State Succession, adds:

“In addition to the jurists there is a formidable list of treaties. The treaty of 10th November, 1859, confirms railway concessions granted by the Austrian Government (Art. 2) and recognizes all contracts regularly made by that Government (Art. 9). The treaty between France and Sardinia of 23rd August, 1860, states (Art. 5) that France succeeds to the rights and obligations resulting from contracts regularly made by Sardinia for objects of public interest concerning especially Savoy or Nice. The treaty of 30th October, 1864, between Austria, Prussia and Denmark contains (Art. 17) a precisely similar stipulation, as does the treaty of 3rd October, 1866, between Austria and Italy (Art. 8). England, in ceding the Ionian Islands in the treaty of 29th March, 1864 (Art. 7), stipulated that Greece should take over all contractual obligations; so all trading and mineral concessions by the Government were safeguarded by the treaty for the cession of Heligoland of 1st July, 1890 (Art. 9). The concessions of British subjects in Swaziland were guaranteed by Art. 7 of the Convention with the Transvaal of 10th December, 1894. The United States treaty with Spain of 10th December, 1898, provided for the recognition of contracts and concessions, including patents and copyrights. So the Bank of Annecy, in Savoy, is confirmed in its concessions by Art. 6 of the treaty of the 23rd August, 1860, while Art. 8 of the same treaty protects patents. The treaty of the 3rd October, 1866, contains (Art. 10) a similar recognition to that of the treaty of Zürich regarding railway concessions. The treaty of the 11th December, 1871 (Art. 10), confirms patents granted to Frenchmen in Alsace-Lorraine; the treaty of 1st July, 1890, recognizes Lloyd’s signalling rights in Heligoland (Art. 12–6), besides other Government concessions. It may also be added that the Prussian Government in taking over Hanover, Hesse, Frankfort, Nassau and Schleawig–Holstein (Royal Patents of 3rd October, 1866, and 12th January, 1867), which are cases of annexation by conquest, took over and recognized all Government concessions and contracts.” Keith’s Theory of State Succession (1907), pp. 66, 67.