Mr. Seward to Lord Lyons.
My Lord: I have already acknowledged the receipt of your lordship’s note of the 28th of March last, concerning the claim by her Majesty’s government of damages in behalf of the owners of the steamship Labuan.
Before proceeding to give you the views of this government upon the questions actually submitted in your note, I deem it proper to review the correspondence between this department and your government touching the case of the Labuan, with a view to correct some conclusions in your lordship’s note which seem to me erroneous.
On the 1st of March, 1862, your lordship addressed me a note, with which was enclosed a copy of a letter which had been addressed to her Majesty’s consul at New York, by Messrs. J. H. Frerrick & Co., in which those gentlemen directed the consul’s attention to a statement in the New York Herald of the seizure of the Labuan, and inquired whether the Edmund Hawkins, a vessel in which they were interested, was liable to seizure if she should enter Matamoras for a purpose similar to that with which the Labuan had visited that port, namely, to ship cotton which had been purchased there by Messrs. De Jersey & Co., of Manchester, England. Your lordship remarked upon the subject that you were without any information concerning the capture of the Labuan, beyond the statement made in the letter of Messrs. J. H. Frerrick & Co., and therefore you would not importune me on the subject. Your lordship added that, being informed that the Labuan had arrived at New York, you did not doubt that if she should prove to have been unlawfully captured, prompt redress would be accorded.
I had the honor to answer your note of the 3d of March, 1862. Being then entirely ignorant of the circumstances of the transaction, I simply stated that no instructions had been given to capture neutral vessels, bonafide traders to Matamoras; and that if any such had been or should be captured, and the legality of the voyage should be judicially established, I presumed that due reparation would be made.
Your lordship favored me with a visit on the subject on the 7th of March, and in [Page 558] formed me that you had received despatches which had been sent by the British vice-consul at Matamoras to her Majesty’s consul general. I cheerfully agreed to read them, and, in compliance with my suggestion, you sent them to me unofficially in the course of that day, with a note saying that they would show the circumstances of the seizure of the Labuan, and explain the alarm you had verbally expressed to me in the morning with regard to the proceedings of the captain of the Portsmouth.
The first of those despatches bore the date of the 9th of February, 1862, and it stated, in effect, that the Labuan and her cargo were entered and discharged conformably with the regulations of the Mexican port of Matamoras, and cleared for Havana with a cargo of cotton and specie on the 24th of January; that the captain having proceeded from Matamoras to the mouth of the Rio Grande, with all the documents for his ship and cargo and a part of the latter for shipment, was detained inside of the river bar by tempestuous weather. The United States ship Portsmouth, Commander Swartwout, arrived there on the 1st of February, and a crew from her boarded the Labuan, lowered her colors, removed her from her moorings, and transhipped the cargo of a prize on board the Labuan. That on the morning of the 4th of February the Labuan had disappeared, and that on the 5th, when the vice-consul asked Commander Swartwout for an explanation, he answered that the Labuan had been sent to port for adjudication, and that the reasons would be made known before the competent tribunal. That when the consul insisted on a further explanation, Commander Swartwout replied that the Labuan had violated the blockade by loading cotton from Texas brought on board by a rebel steamboat, thereby giving aid and comfort to the enemy. That the vice-consul thereupon stated to Commander Swartwout that the cotton had been despatched from Matamoras, and that the Labuan lay in that port, and the commander said he did not care; that he knew the cotton had come from Texas; that Matamoras had no port; he would not be fooled, but would seize all cotton and every vessel carrying cotton and violating the blockade. That the vice-consul protested against the whole act as an outrage to the British flag; to which the commander rejoined with great impatience. In his communication the vice-consul admitted that the cargo was taken on board by steam-lighters belonging to citizens of the United States in Brownsville, Texas, by whose means most of the cargoes shipped from Matamoras are put on board the vessels which are to carry them, but said that the vessel lay in Mexican waters, and claimed that by the treaty of Guadalupe Hidalgo the neutral waters extend a maritime league north and south of the mouth of the Rio Grande. The consul enclosed with his communication the ship’s papers, protests and freight list of the Labuan.
In another letter to the consul general, General Crawford, dated on the 9th of February, 1862, the vice-consul invoked protection of the shipping interests of her Majesty’s subjects at the port of Matamoras, mentioned the number of vessels lying there with cargoes, and complained of his inability to get a recognition of the rights of British vessels.
On the 8th of March, 1862, I had the honor to thank you for the paper, and, stating that I had no other information of the affair of the Labuan except newspaper reports, I engaged to ask the Secretary of the Navy for the facts, and on perusing it, to return the aforesaid paper to your lordship, and give you the opinion of this government on the questions arising in the case. I added on that occasion that if it should appear, as you thought it would, that the capture was manifestly illegal, I should not hesitate to acknowledge it, without waiting for a judicial examination; that such a departure from the customary mode of proceeding would seem to be required by the interests of the United States, inasmuch as it would prevent many captures likely to be made in similar circumstances, but that such a decision could not be made without a full knowledge [Page 559] and deliberate consideration of all the important facts as they might be presented by the capturing officer, as well as by the owners of the Labuan.
On the 12th of March, 1862, I received from the Secretary of the Navy the official reports of the capture of the Labuan. The flag officer, Captain McKean, having received the Labuan, with the reports, stated that under the circumstances the only proper course, as he thought, was to send the Labuan in for adjudication, and he at the same time enclosed a copy of the orders which he had given to Commander Swartwout previous to the capture of the Labuan, by which orders he was informed that no neutral vessel proceeding towards a blockaded port without contraband of war should be seized or detained, unless she had received specific notice of the blockade.
The report of Commander Swartwout stated that the Labuan had no regular papers.
On the 13th of March, 1862, in an unofficial note to your lordship, I observed that I was not satisfied of the legality of the capture, but that inasmuch as the Labuan had been sent to New York for adjudication, it seemed preferable that nothing further should be done in the matter until the result of the judicial proceedings should be known. I suggested that this course was the more eligible, because, if the capture should be held unjustifiable, it would be the duty of the court to award damages; that these could be paid only in pursuance of an appropriation to be made by Congress; and that the proceedings of that body would be more certain and expeditious if based upon a decree of a judicial tribunal than they would be upon an executive assumption, without judicial investigation, that the capture was unlawfully made.
At the same time, copies or originals of all the papers which your lordship had given me were transmitted to the United States district attorney at New York, with all the other papers received at this department, to be laid before the prize court, with a view to not only a just but also a speedy disposition of the case, which the attorney was requested to procure.
On the 23d of April I received a note from your lordship, to the effect that her Majesty’s government had had the correspondence under consideration; that the subject appeared to them to be one of a very serious aspect, as well in reference to the particular case itself as to the principles involved; and your lordship was instructed to demand the prompt release of the vessel, cargo, and papers, and compensation for all losses sustained.
On the 26th of April I had the honor to inform your lordship that that communication had been submitted to the President, and that, in view of the fact that the correspondence which had taken place concerning the case was chiefly unofficial, the President was of opinion that it was preferable that nothing further should be done by the executive until the result of the judicial proceedings at New York should be made known; and I further stated that the President was strengthened in this view by having read a despatch from the consul at Matamoras, a copy of which I gave you, which tended to prove that the cotton with which the Labuan was freighted was not neutral property, but was, in fact, fraudulently supplied by insurgent citizens of Texas. I farther endeavored to reassure your lordship that judicial assessment of damages would be vastly more easy and advantageous than an executive one. I further stated that I should avail myself of the best and easiest mode of testing the claim of the Labuan.
On the 26th of May the United States district attorney at New York announced to me the release of the Labuan and her cargo, by virtue of a decision of the prize court. In this communication the district attorney informed me that the court reserved for consideration the question as to whether damages should be allowed against the naval captors for the seizure. He said that the opinion of the court was oral, and was, in substance, as follows: That the papers on the ship showed both the vessel and her cargo to be neutral property; that the blockade was not effective; the ship Portsmouth, which was the only [Page 560] vessel on the station, had come upon it only on the 1st of February, 1862, the day when the capture was made, while the Labuan had been lying at anchor there since the 1st of January, then ultimo. The district attorney proceeded to promise me that, when a judgment on the question should be rendered, he would send me a copy of any written opinion that might then be pronounced.
On the 28th of May, 1862, I communicated a copy of this letter of the district attorney to your lordship. Certainly I did not then doubt, nor do I now think I had any reason to doubt, that the owners and claimants of the Labuan and her cargo would, without any delay, lay their claims for damages and costs before the prize court, and ask its judgment for the same. Had they done so; the amount of the award could have been examined by the parties themselves, and by this government, and, with any change of the sum which should have been found necessary to perfect justice, it could and it would have been promptly submitted to Congress at the last session, with a proper request for the needful constitutional appropriation. Thus the case rested in the court.
On the 12th of October, 1862, the Hon. Mr. Stuart, who, during your absence from Washington, was charged with the affairs of your legation, advised me by a note that he had informed the parties interested of the order of the court. He enclosed a copy of letters from Messrs. Bailey & Leetham, the owners, and Messrs. De Jersey & Co., the charterers of the Labuan, forwarding certified copies of affidavits and declarations, setting forth their respective claims in the case. Mr. Stuart informed me that he was instructed by her Majesty’s government to say that a sentence merely restoring the vessel to its owners, without the costs of the litigation and the damages incident to detention, would fall very far short of justice, or, quoting my own language, that due reparation to which the sufferers by this wrongful and unjustifiable violence were entitled; and Mr. Stuart, under instructions, added that the claimants are entitled to whatever damages have been occasioned by the act of the wrong-doer, according to precedents in Great Britain and the United States; that her Majesty’s government can scarcely suppose the court will fail to apply this principle, and to condemn the captor in damages as well as costs. Mr. Stuart proceeded to say that the peculiar circumstances attending the case of the Labuan warrant her Majesty’s government in appealing to the United States for immediate compensation, both of the charterers and owners, directly from the government.
Mr. Stuart, after reciting the circumstances of the seizure, proceeded to say: “Lord Lyons appears, from one of his despatches to Earl Russell of the 15th of March last, to have pointed out emphatically and carefully to the Secretary of State that sending in for adjudication would largely increase the expenses already incurred, and add to hardships and inconvenience already suffered by this innocent ship; that it might be necessary that the claims should be submitted to persons professionally competent to decide upon them, but the damages ought to be assessed upon the principle that the seizure and the detention were, throughout, without a pretext of legal justification.”
On the 16th of October 1 transmitted a copy of Mr. Stuart’s letter, with the enclosures, to the United States district attorney at New York, in accordance with a note which, on the 14th, I had had the honor to address to Mr. Stuart, in which I informed him that there was, in my judgment, no reason to doubt that the court would render justice to the claimants.
I did not at that time doubt that the claimants had followed, or, at least, would follow, their claim before the court, which, as it seemed to me, had every facility and competency to award damages to the claimants; and, under a belief that when the claimants should have moved the court to a decree of damages, that decree would then be brought to the attention of this government by the claimants or by your lordship, the transaction passed out of my thoughts, and it was not recalled until on the 28th of March last, when I received a note concerning it from your lordship.
[Page 561]I find in this note the remarks that the sending back this vessel (the Labuan) to the prize court for further adjudication, as to costs and damages, is, even if technically correct, a practical evasion of the plain duty cast upon the government of the United States to make, without delay, all the reparation in its power for an act of hostility towards a neutral and friendly state, condemned alike by the government and the legal tribunals of the United States; that the delay which has been already occasioned, by the sending of the case back to the prize court, is, in the opinon of her Majesty’s government, a serious addition to the injuries already sustained by the owners of the Labuan; and also that her Majesty’s government feel bound to observe that it is no small aggravation of the injury to the owners, that, by reason of the delay occasioned by referring the case again to the prize court, the payment of the compensation to be awarded to them must, in all probability, be deferred until the reassembling of Congress.
Such was the reply given by the British government on the 28th of March, 1863—twenty-four days after the adjournment of Congress—to the decision of this government, communicated to your lordship on the 14th of October, one and a half months before Congress assembled.
I immediately applied to the United States district attorney at New York to know whether any decision had been made by the prize court in the case of the “Labuan,” in regard to damages and costs. In reply I have received the decree of the court, made on the 21st day of May, 1862, a copy of which I subjoin. From this decree I learn that the cause was argued by counsel for the claimants, and that the court decided that the vessel was not a lawful prize; and it was decreed that the vessel and cargo be restored to the claimants without delay, and that the court reserved all questions of costs and damages for the future adjudication of the court; and that although this reservation was made, and although the district attorney had been in possession of all the papers touching the question which your lordship had put into my hands for the purpose of submitting them to the court, yet that the claimants had never in any way moved the court with any application for the award of damages. I think no one would have expected the court to proceed to the reserved question of damages without a motion thereto by the claimants or their counsel. And I think the President would have found it difficult to satisfy Congress concerning any award of damages that this department might have made, while the question of damages was judicially remaining before the prize court through the inactivity of the claimants.
From the review of the correspondence which I have now given, it may be ascertained how far the action of this government is obnoxious to the reflections in which, under the direction of her Majesty’s government, your lordship has indulged.
I freely admit that I believe the claimants entitled to damages and costs. I am not prepared, upon the information I now have, to deny that the damages ought to be assessed upon the very principle for which you contend, namely, that the seizure and the detention were throughout without a pretext of legal justification. I am, at the same time, unprepared to admit that proposition in its full extent, without a review of the testimony which the court has among its records, for the purpose of adjudicating upon that very question. I now learn from the district attorney that the court delivered no written reasons for their decree of restitution, and that the alleged reasons for the decree which were furnished to me by that officer, and which, as hereinbefore set forth, although probably they are correctly stated, were taken by him from an unauthorized newspaper publication, and which I am therefore unable to accept definitively as authentic.
I think that it is perfectly regular and legal to wait for the court to decree the damages. I know no reason to doubt, and I do not doubt, that the court will [Page 562] decide the question with more exact justice than this department, or any other executive department, could perform that duty. I think also that it can decide upon the subject with at least as much of certainty of absolute justice as any commission of merchants could do, and can do so with more ease, because it can even command the testimony of such mercantile persons. I believe that if the owners of the “Labuan” had moved the court, as they had a right to do, they would have obtained a decree which could have been reviewed and made the basis of a recommendation for appropriation by Congress at its last session. I do not hold, and I have never held, that the decree which the court may make on the subject of damages will be absolutely conclusive against your government in regard to the amount. But I do think it would be not only proper, but eminently useful, to have the judgment of the court concerning the amount of damages, and the principles of the judgment, for examination, if it shall finally be found necessary for this department to ascertain and state the sum which shall be paid, and so actually to commit the nation for the amount that the Congress shall appropriate in satisfaction of the claim.
In conclusion, I am authorized by the President to inform your lordship that the district attorney will be immediately instructed to give notice to the claimants or their counsel, as he may be able, of an early day when he will move the court to proceed to consider and determine what damages and what costs shall be awarded to the claimants of the ship “Labuan” and her cargo for her unlawful seizure, and to place before the court on that occasion all the proofs which have been furnished to this government by her Majesty’s government; and in pursuance of such notice, the district attorney will be instructed to prosecute the question of damages and costs to a decision, whether the claimants appear or not.
When that decision shall have been obtained, its effect will be immediately communicated to your lordship. If it shall be satisfactory, it will be recommended to Congress to make an appropriation for the payment of the sums awarded. If unsatisfactory, I shall then receive with entire pleasure any objections to it that may be made by or on behalf of the claimants, or on behalf of their government; and if I shall not be able to adjust the amount satisfactorily to both governments without a reference to impartial mercantile persons, I shall then be prepared to consider, with the most entire respect, the expediency of such a reference, with directions that the referees shall report so seasonably as to admit an application to Congress at the next session for its authority to pay the damages and costs which shall thus finally be ascertained.
For your lordship’s information I append the note touching the proceedings of the prize court, which I have received from the district attorney of the United States at New York.
I have the honor to be, with high consideration, your lordship’s obedient servant,
Right Hon. Lord Lyons, &c., &c., &c.