deposit of funds received from foreign governments in payment of claims. These moneys, which for various reasons were withheld from immediate distribution, were occasionally deposited by the Secretary of State in private banks, where the money earned interest. Disputes sometimes arose as to the ownership of the increment, it being finally settled that as between the government and the claimant, the government and not the claimant had title to and the benefit of any accretions to the fund. In the case of the indemnity received from Venezuela under the subsequently reopened awards of the 1866 commission, Congress provided that the increment or accretions of the funds invested in banks should be credited to Venezuela and applied to the payment of the awards of the 1885 commission.2

The diversity and uncertainty in practice and the absence of Congressional authority for the deposit of funds received by the Secretary of State in payment of claims constituted the reason for the enactment by Congress, upon request of Secretary Olney, of the Act of February 27, 1896,3 providing for the deposit of funds in the Treasury, and for the procedure for their disbursement. In other respects, the Executive prerogative in the disposition of indemnities has not been affected. By the Act, Congress has exercised its jurisdiction, under municipal law, to provide for the disbursement of national funds. The Act reads as follows:

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"Hereafter all moneys received by the Secretary of State from foreign governments and other sources, in trust for citizens of the United States or others, shall be deposited and covered into the Treasury.

"The Secretary of State shall determine the amounts due claimants, respectively, from each of such trust funds, and certify the same to the Secretary of the Treasury, who shall, upon the presentation of the certificates of the Secretary of State, pay the amounts so found to be due.

1 Angarica v. Bayard, 127 U. S. 251.

2 Act of Jan. 21, 1895, 28 Stat. L. 635. In the Senate Report on this bill, it is declared that the investment of indemnities is unauthorized by law. Sen. Rep. 691, 52nd Cong., 1st sess., reprinted in Sen. Doc. 231, pt. 3, 56th Cong., 2nd sess., compilation of reports of Committees on For. Rel.

29 Stat. L. 32. See explanatory statement of Representative Hitt in the Congressional Record, 54th Cong., 1st sess., v. 28, pt. 2, p. 1058, reprinted in Sol. Op. In re Distribution of Alsop award, p. 45.

"Some account of the earlier practice in the disbursement of funds received in payment of international claims is found in Moore's Dig. VI, 1030-1031.

"Each of the trust funds covered into the Treasury as aforesaid is hereby appropriated for the payment to the ascertained beneficiaries thereof of the certificates herein provided for."

There are no reported cases under this statute, although suits have been brought under it involving the right of individuals to compel the action of the Secretary of State or the Secretary of the Treasury by mandamus or injunction; but in line with previous decisions of the Supreme Court, the Secretary of State's discretion had been held to be uncontrollable by either of these writs. Indeed, the only essential innovation inaugurated by the statute is to make a permanent appropriation of such funds deposited in the Treasury, as are ordered paid by the certificates of the Secretary of State. Moreover, the statute is merely declaratory in leaving the absolute and exclusive determination of the disposition of the funds to the discretion of the Secretary of State. Had the courts the power to restrain the Secretary of State, or the Secretary of the Treasury in the disbursement of moneys on the certificate of the Secretary of State, it would very substantially impair the Secretary of State's jurisdiction, having the effect of making the Secretary's determination merely a preliminary formality and placing the real power to determine the beneficiaries in the courts.

The statute of 1896 contemplates four operations by the Secretary of State in his control of indemnities: (1) the receipt of the money from the foreign government; (2) covering the money into the Treasury; (3) the determination of the amounts due claimants respectively from such funds; and (4) the certification of the same to the Secretary of the Treasury by the issuance of certificates.1

The first and second steps require no explanation, so that attention may at once be given to the third and fourth. The third operation imposes upon the Secretary of State 2 primarily and essentially a judicial function in the exercise of the municipal jurisdiction which attaches to the fund when received, rather than an executive function in the conduct of foreign relations. These judicial duties involve two processes: (a) the determination of who the claimants are, i. e.,

1 An excellent analysis of the Act of 1896 and the powers of the Secretary thereunder is to be found in the opinion of J. Reuben Clark, Solicitor, In re Distribution of Alsop award (1912), pp. 36-45.

2 The Secretary usually delegates these duties to the office of the Solicitor.

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.

2

* 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.3 In cases where corporations are beneficiaries, both

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.

*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.

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

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