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the beneficiaries entitled to indemnities, and (b) the determination of the amounts due them.

§ 156. Who are "Claimants " Entitled to Distribution of Funds.

Prior to 1896, it was the practice of the Secretary of State in distributing awards to pay the funds received by way of indemnity to those who had sustained the injury at the hands of the foreign government, or to those who held uncontested assignments or orders to pay, of record in the Department. Payment to assignees and vendees was made as a matter of convenience and favor to the parties. Contesting parties to a fund were referred to the courts, the Secretary's discretion enabling him in the meantime to pay those whom he regarded as primarily the claimants, or to withhold the money pending adjudication by the courts, the decisions of which he always respected.1

The statute of 1896 has not altered the Secretary's power or enlarged his jurisdiction. In the authority conferred upon him to "determine the amounts due claimants," the term "claimants" is construed, in accordance with the practice of the Department and of the courts,2 to embrace those who sustained the injury and in whose behalf the claim is prosecuted, i. e., those having the initial or primary rights, and not to extend to those who have secondary or derivative rights, arising by inheritance, assignment, or purchase from original claimants. The Secretary, therefore, being constituted a special tribunal for the determination of the persons who are claimants, need not concern himself, unless specially directed by Congress, with the adjudication of those manifold derivative or subsidiary rights arising out of the relation of creditor, stockholder, lienholder, attorney, agent, assignee in bankruptcy, receiver, and similar relationships. These secondary

1 The Secretary's power and right to withhold payment pending the result of litigation between conflicting claimants was sustained in Bayard v. White, 127 U. S. 246. The Executive's inability properly to adjudicate a conflicting claim, and his power to conserve the rights of all parties pending a settlement of their differences is recognized in Redfield v. Windom, 137 U. S. 637. See also In re Idler certificates, Opin. of Solicitor Partridge, 21 Sol. Op. 404, cited by Solicitor Clark.

* Frelinghuysen v. Key, 110 U. S. 63; Alling v. U. S., 114 U. S. 563; La Abra Silver Min. Co. v. U. S., 175 U. S. 423. By international commissions the term has been sometimes loosely used to cover the assignee, representative, agent or attorney actually prosecuting the claim.

claimants, who allege legal or equitable ownership in the fund, are properly referred to the courts, partly because the Secretary's jurisdiction is special and should be strictly construed, and partly because the Department of State lacks the legal machinery properly to conduct a judicial inquiry.1

§ 157. Conflicting Claims of Secondary Beneficiaries Usually Referred to Courts.

It is the established usage of the Department, therefore, to pay awards to the original claimant, as the entitled beneficiary of an indemnity, or, as a matter of convenience to the parties, to the uncontested assignee of record or proved heir or legatee. When, however, the Department has been notified of conflicting claims against the fund in its hands, even if not represented by assignments of record, the Department may and does frequently withhold payment for a reasonable time in order to allow the parties to settle their differences, amicably or in the courts.2

The Department primarily recognizes only original beneficiaries of an indemnity and those who hold uncontested assignments or orders to pay. Creditors of the beneficiaries, by judgment or otherwise,unless assignees of record-are remitted to their legal or equitable remedies in the courts, the Department respecting any final judgments they may obtain. In cases where corporations are beneficiaries, both

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1 Solicitor's opinion In re distribution of Alsop award, p. 40, citing Mr. Evarts, Sec'y of State, to the President, Aug. 13, 1879, Ex. Doc. 103, 48th Cong., 1st sess., 582, and La Abra Silver Min. Co. v. U. S., 175 U. S. 423. For a summary of cases involving litigations between persons holding derivative interests in a fund, see Solicitor's Opin. In re Alsop award, 28–30.

2 See Bayard v. White, 127 U. S. 246.

The Department does not recognize creditors' attachments upon awards, issued out of foreign courts, as liens, but leaves creditors to their ordinary recourse against their debtors in the courts. A foreign judgment transformed by suit into a domestic judgment would be recognized. An attachment cannot issue in courts of the U. S. against funds in the hands of the Secretary of State. In Italy, creditors' attachments against funds collected by the Minister of Foreign Affairs on behalf of private claimants seem to be issued by the courts. See Cerruti (Italy) v. Colombia, award of July 6, 1911, 6 A. J. I. L. (1912), 1023, 1027. Anzilotti states that a creditor can bring no judicial action against an undistributed award in the hands of the government, 13 R. G. D. I. P. (1906), 309.

stockholders and creditors are so remitted, the Department dealing only with the duly qualified representative of the corporation.

The Department has often had occasion to pass upon the validity of agreements between claimant and counsel with a view to establishing a lien upon the fund received in payment of a claim. Valid contracts for attorney's services in the prosecution of a claim having been construed by the courts as creating a lien upon the fund recovered,1 the Department has considered such contracts in the character of assignments of interest, and even when without agreement valuable services in the collection of claims were rendered by attorneys, the Department has protected the equitable interests of such counsel by the allowance of a reasonable fee.2 In the act creating the Court of Commissioners of Alabama Claims, Congress provided for reasonable compensation to attorneys or counsel, to be allowed as part of the judgment.3

The government usually considers as a lien upon awards, the expenses it may have incurred in the prosecution of a claim. These expenses are deducted before distribution of the award to claimants. Debts due to the United States by the claimant are always first liens, and may be deducted immediately.5

§ 158. Method of Proving Title as Claimant or Beneficiary.

No formal procedure is required for establishing before the Department a person's right as a beneficiary of a fund. Such person is simply required to furnish the Department with a statement adequately setting forth his interest, accompanied by such documentary or other proof as may be necessary, e. g., proof of identity, a duly executed assignment, an exemplified copy of a will and record of probate proceedings, or letters of administration. Before making payments to

1 Wylie v. Coxe, 15 How. 415; Bachman v. Lawson, 109 U. S. 659.

2 Twenty per cent of the award was considered as a reasonable fee in the case of the ten seamen of the schooner C. H. White, in whose behalf an award of $3,000 was received from Russia.

3 Act of June 23, 1874, § 18, 18 Stat. L. 249; Bachman v. Lawson, 109 U. S. 659. 4 Infra, § 161.

5 See Alling v. U. S., 17 Ct. Cl. 311, reversed in 114 U. S. 562 on jurisdictional grounds.

an administrator, the Department requires evidence that he has filed adequate bonds as administrator with the appropriate court, and in addition a bond covering the amount of the payment to be made by the Department, the bond sometimes having to be approved under the seal of the court. This additional bond must also be filed by the assignee of an administrator. It appears that in a few cases a bond in double the amount of the payment to be made, running to the Department or to the Government, has been required as a condition of payment, the purpose of the bonds being, naturally, to insure the ultimate receipt of the money by those entitled thereto, and thus to relieve the Department of all responsibility in the matter, moral as well as legal. Attorneys or representatives of entitled beneficiaries must file powers of attorney as a condition of payment.

Occasionally, before making a payment, the Department gives notice of a proposed payment to persons claiming an interest in the fund, when such notice had been requested. This is not, however, the usual practice, and it has been done in exceptional cases only.

The Secretary of State being properly regarded as having jurisdiction to pass only upon the rights of those who are initial or primary beneficiaries, and recognizing only these primary claimants and those holding uncontested instruments of transfer of interest or assignment from them, the Secretary has on numerous occasions declined to admit any assertion of a lien upon the funds in his hands by those holding secondary or derivative interests by virtue of certain legal relationships with the original claimant. If the primary beneficiaries have no such lien or legal right, a fortiori those holding derivative interests are without such rights so long as the funds are in the hands of the government. The complicated questions of law and fact which are incidental to the determination of the various kinds of derivative rights are best left to the jurisdiction of the ordinary courts of justice, where the proper machinery for their adjudication is provided.2

1 Notwithstanding the fact that the statute denominates the moneys received from foreign governments as "trust funds," no court has yet granted the claimant the equitable rights of a cestui que trust, nor held the government liable as a trustee. The statute is believed merely to express the moral obligation inherent in the receipt of the funds.

2A summary of cases in which suits have been brought against beneficiaries of

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While the Secretary of State has, as a matter of convenience, usually undertaken to pass upon claims against awards when the case seems clear, he has, in more complicated cases, taken the position that he could refer the claimants to the Court of Claims for the establishment of their various interests. In many cases, such claimants have been referred to the ordinary courts.2 Prior to the Act of 1896, the Secretary either deposited the money in a bank, by agreement with the parties, or withheld payment, to await the decision of the court. Under the Act of 1896, upon such a reference to the courts, the Secretary may suspend the issuance of his certificate upon the Secretary of the Treasury.

$159. Method of Making Payment.

Having himself determined or become satisfied by the decision of a court, who the entitled claimants are, and the amounts due them respectively, the Secretary of State then issues his certificate to the Secretary of the Treasury, who, according to the statute, must pay the amounts mentioned in the certificates to the ascertained beneficiaries thereof, the statute itself making the necessary appropriation for this purpose. These certificates are issued to the original claimants, or, as a matter of grace and accommodation to the parties in interest, to persons holding uncontested assignments, orders for payment, powers of attorney, or other instruments evidencing a direction and willingness on the part of the original beneficiary to have the sum so paid. When the assignment or order is contested by the person granting it or his successor, and the parties cannot agree or decline to sub

awards or their successors by those holding derivative rights to a fund is presented in Solicitor's Opin. In re Alsop award, 28-30.

Although no case has been found where the Secretary has actually submitted a case of this kind to the Court of Claims, he has made the suggestion to claimants on several occasions, and it would seem clear that he has the right so to refer contesting claimants, without their consent, under § 2 of the Bowman Act, Mar. 3, 1883, 22 Stat. L. 485 and § 12 of the Tucker Act, Mar. 3, 1887, 24 Stat. L. 505. See Billings v. U. S., 23 Ct. Cl. 166, 173.

'Bayard v. White, 127 U. S. 246; Porter v. White, 128 U. S. 235; 21 MS. Sol. Op. Dept. of State, 404, cited by Solicitor Clark; Solicitor's Opinion In re Distribution of Alsop award, pp. 28-30.

'Solicitor's Opinion In re Distribution of Alsop award, p. 43.

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