Papers Relating to the Foreign Relations of the United States, Transmitted to Congress with the Annual Message of the President, December 4, 1871
Mr. Fish to Mr. Akerman
Sir: I have the honor to inclose herewith a memorandum sent to me by Sir Edward Thornton containing an argument against the deduction from an installment of $100,000, payable to the British government on the 21st instant, of the sum of $27,061 97, claimed to be due from the Puget Sound Agricultural Company to Pierce County, Washington Territory, for taxes assessed in the years 1859 to 1869, upon lands in the occupation of said company, and of the further sum $34,243 25, claim for interest upon such unpaid taxes.
The only information which the Department has as to the purposes for which the taxes were imposed is derived from a letter from the honorable Messrs. Garfielde and Poland, the attorneys for Pierce County, and the accompanying statement and certificate of the clerk of same county, of the amount in which they are distributed under the heads of county tax, school tax, territorial tax, and road tax, copies of which are inclosed.
I have to request your opinion as to whether the law and the treaties referred to in the memorandum require the retention in the Treasury [Page 533] of a sum equal to the taxes before mentioned, and also whether the amount charged as interest upon the unpaid taxes is also to be retained.
I will thank you to return the memorandum when it shall have answered your purpose.
I have the honor to be, sir, your obedient servant,
Hon. A. T. Akerman, Attorney General.
Mr. Thornton to Mr. Fish
Sir: I have the honor to invite your attention to the act of appropriation for the consular and diplomatic services for the year ending June 30, 1872, and to that section of it which provides for the second and last installment of the amount awarded by the commissioners under the treaty of July 1, 1863, in satisfaction of the claims of the Hudson’s Bay and Puget Sound Agricultural Companies. To this section is added a proviso that before payment shall be made of the last installment, all taxes legally assessed upon any of the property of the Puget Sound Agricultural Company, covered by the said award before the some was made, and still unpaid, shall be extinguished by the said company; or the amount of such taxes shall be withheld by the Government of the United States from the sum appropriated as above.
You have recently been good enough to furnish me with a copy of an account showing the amount of taxes which are claimed by Pierce County, Washington Territory, to be due by the Puget Sound Agricultural Company on the lands with regard to which the award was made.
In accordance with your permission, I have now the honor to submit for your perusal a memorandum which I have caused to be drawn up relative to the above-mentioned taxes, and I am not without hopes that you will be persuaded that the amount thereof ought not, either legally or equitably, to be deducted from the final installment to be paid in September next.
I have, &c., &c.,
[Inclosure.]
As a claim has been made for the payment of taxes assessed upon the property of the Puget Sound Agricultural Company out of the sum awarded by the commissioners under the treaty of July, 1863, the following statement is offered to show that such a claim should not be allowed, and that it cannot be supported upon legal or equitable grounds.
It is not necessary to set out in detail the early history of the company, or the now admitted and adjudged fact of their possession of some 167,000 acres of land on the shores of Puget Sound, a large portion of which was open prairie, and in that thickly-wooded country very desirable for settlement.
Article IV of the treaty of June 4, 1846, provides that the farm lands and other property of every description belonging to the Puget Sound Agricultural Company, on the north side of the Columbia River, shall be confirmed to the said company. In case, however, the situation of those farms and lands should be considered by the United States to be of public and political importance, and the United States Government should signify a desire to obtain possession of the whole or any part thereof, the property so required shall be transferred to the said Government at a proper valuation to be agreed upon between the parties. The treaty of July 1, 1863, after reciting the foregoing provisions, and reciting that whereas it is desirable that all questions between the United States authorities on the one hand, and the Hudson Bay and Puget Sound companies on the other, with respect to the possessory rights and claims of these companies, and of any other British subjects in Washington and Oregon Territories, should be settled by the transfer of those rights and claims to the Government of the United States for an adequate money consideration, provided for the appointment of a joint commission to examine and decide upon all claims arising out of the provisions of said treaty of June 15, 1846. Article IV of the treaty of July 1, 1863, provides that “all sums of money which may be awarded by the commissioners, or by the arbitrators or umpire, on account of any claim, shall be paid by the one government to the other in two annual installments, whereof the first shall be paid within twelve months after the date of the award, and the second within twenty-four months after the date of the award, without interest, and without any deduction whatever.”
On the 10th of September, 1869, the commissioners appointed under the said treaty rendered their decision, and awarded “as an adequate money consideration for the transfer to the United States of America of all the possessory rights and claims of the [Page 534] Puget Sound Agricultural Company, and in full satisfaction of all such rights and claims, there ought to be paid the sum of $200,000 at the times and in the manner provided in the 4th article of said treaty,” and appended to such award a form of deed of rebate, to be executed by said company, releasing all of their possessory rights and claims, and demands founded upon or growing out of the said treaties, or the possessory rights or claims of said company, before referred to. (See pages 30 and 31, printed opinions and awards.) The first installment of the said treaty and award was paid by the United States, as stipulated; for the payment of the second installment, Congress, in March, 1871, made an appropriation, with the following proviso: “That before payment shall be made of that portion of the entire sum awarded to the Puget Sound Agricultural Company, all taxes legally assessed upon any of the property of the said company covered by the said award before the same was made, and still unpaid, shall be extinguished by the Puget Sound Agricultural Company, or the amount of such taxes shall be withheld by the Government of the United States from the sum hereby appropriated.”
The amount of such unpaid taxes as appears from the certificate of the clerk of Pierce County, Washington Territory, filed with the Secretary of State, is $27,061 97, being the amount of taxes claimed to have been assessed upon the lands of the company from the year 1859 to the year 1869, inclusive, and there is claimed the further sum of $34,243 25 as penalties for the non-payment of such taxes at the times when claimed to have been assessed, making the total sum claimed $61,305 22. One question arises as to the effect of the proviso in said appropriation act, and whether the taxes alleged to have been legally assessed and still unpaid were so assessed, or if legally assessed, are still unpaid, and leads to the consideration of the following points:
1st. The lands were not subject to taxation, (a;) the said company, at the time and prior to the transfer of this territory by Great Britain to the United States, had simply possessory rights, but no legal title, which fact was determined by the said commissioners. Mr. Johnson, commissioner on the part of the United States, in his separate, opinion, (p. 26,) says: “There was never any grant of lands by the British government to this company,” a fact in the knowledge of both governments; and in commenting upon the language used in the 4th article, on p. 27, says: “Upon these principles of interpretation, I have no hesitation in saying that the intent of the parties, as manifested by the terms employed, included all the lands which apparently belonged to the company;” the term “belonging” is not a condition, and imparts none into the provision; it is used merely as a part of the description and designation of the property intended. Mr. John Rose, commissioner on the part of Great Britain, holds the like opinion, and held “that the term ‘belonging,’ used in the treaty, did not imply restriction to such property as the company could prove a legal title to,” (see p. 14;) and on 15 says: “I cannot accept the modified interpretation contended for by the United States, that it meant to confirm only what the company could prove a legal ownership in, or that in any case its claim must be confirmed to such lands as were actually inclosed. The company had no different title to the lands within inclosures from what they had to those over which their pastoral occupation extended; both rested upon the fact of possession and use.” After the transfer to the United States, the company obtained no title to the lands occupied by them. Mr. Johnson (p. 28 of the of inions) says: “The United States have never proceeded to confirm any lands whatever, as they stipulated they would.” It may be said that the proposition as stated by Mr. Johnson is too broad, as the United States did not absolutely and unqualifiedly stipulate to confirm these lands to the company, but reserved to itself the right, in case it should so desire, to obtain possession to said lands, and to have the same transferred to the United States at a proper valuation.
The treaty was of itself, therefore, no confirmation of title; the confirmation, if any, should be made by the legislative department of the government. Foster and Elan vs. Wilson, 2 Peters, 253; United States vs. Alvarada, 6 Peters, 691. The United States, however, in said treaty reserved the right to elect whether it would confirm the company in their rights or to possess itself of the lands at a proper valuation. The latter election was made, and therefore the treaty of July 1, 1863, was entered into, and therefore no title was ever granted to the company of these lands. The United States having elected to keep the lands under the provisions of said treaty of June 15, 1846, and the title being retained by the United States, no taxes could legally be assessed against them. This provision, although one universal rule in the United States, was, however, incorporated in the organic laws of Washington Territory, wherein it was provided that no tax should be imposed on the property of the United States. (G. U. S. Stat. 175, section 6.)
All the rights the company had, therefore, in these lands were possessory with the contingency of such rights being extinguished at the option of the United States upon certain conditions, which contingency happened when the United States made its election. That there is no justification in law for this claim is apparent, and from the following facts which appear in the evidence presented to said commission it will appear that there is little claim in equity.
After the treaty of 1846, American citizens and others who had been naturalized, or had declared their intention to become such, began to settle upon the lands in the occupation of the said company, claiming the right so to do under the laws of the provisoional [Page 535] government of Oregon granting lands, and afterward under the act of Congress, September 27, 1850, and its various amendments granting lands to actual settlers in Oregon and Washington Territories.
The number of settlers having increased, a county was formed which embraced within its limits all the lands occupied by the company in 1846, the county seat of which, named Steilacoom, was located on these lands. The boundaries of the county were afterward changed, and it was altered in size until it contained very few settlers except those who had located their claims on these lands or who were living in the towns of Steilacoom and Steilacoom City, also situated upon them. The county commissioners of this county in 1850 assessed a tax upon these lands which was paid without protest, In 1852 a tax of $645 12 was assessed and paid under protest. In 1857 taxes were assessed on 163 square miles at a valuation of $500,000, of $4,999, including a road tax of $1,250 and a school tax of $249, which was also paid under protest. The taxes of 1858 were assessed on the same quantity of land at the same valuation, amounting to the sum of $7,250 02, which was also paid under protest. The taxes for the year 1859 were assessed at the sum of $7,250, of which amount the company paid $304 under protest, as before, leaving the remainder of said tax unpaid. The total amount of taxes paid by the company up to that time amounted to the sum of $14,595 14; (see evidence of Wm. T. Falmer, on page 113 of Puget Sound Agricultural Company.) The quantity of land contained in 163 square miles being 104,320 acres, a valuation of $500,000 makes the assessed valuation of the lands $4 79- ½ per acre, and the rate of taxation $1 45 per hundred dollars of such valuation. In a new and agricultural community this rate of taxation was monstrous and the valuation for the purpose of taxation equally so; it was, in fact, almost tantamount to confiscation. In comparison with the usual rates of valuation in other portions of the United States, these lands have been woth in market from $6 to $8 per acre. These same lands were, however, afterwards assessed by the same commissioners at $1 per acre, and one of them afterward stated under oath that they were worth only 50 cents per acre.
For the entire possessions of said company, including 167,040 acres in Pierce County and 3,000 acres in Cowlitz County, the company was awarded the sum of 200,000. There is one other fact to be stated in this connection. That although there were nearly two hundred persons on the company’s lands, claiming them as settlers, and although there were several settlers in the county outside of the limits of the company’s possessions, yet no assessment was made on any lands except those belonging to the company; and with the exception of a small revenue derived from the taxation of personal property the entire revenue of that county was obtained from the land so assessed to the company at the foregoing oppressive rates, and of which lands only a small portion were actually used by the company. The payment of these taxes by the company was made a distinct claim before the joint commission both in the memorial and in the proof, and was argued upon the hearing in the arguments of council, yet it now here appears in the opinion or award of the commissioners what disposition was made of the subject by the commissioner, for the reason that the items which found the aggregate balance fund to be due, and awarded in favor of said company, are not stated; neither does it appear from such opinions or award, whether the taxes now claimed from the year 1859 to 1869, inclusive, were claimed on the part of the United States. It may, however, be properly urged, that as the commission had full and ample jurisdiction over the subject-matter of this claim, the award so made should be final. It will be observed that the commissioners were appointed under the treaty of 1863, to examine and decide upon all claims arising out of the treaty of June 15, 1846, and especially under the expressed desire of the United States, to obtain the possessory rights of said company in said lands, and that all sums of money which might be awarded by said commissioners should be paid by the one government to the other in the manner prescribed without any deduction whatever.
No language could be used more clearly showing the intentions of the high contracting parties to submit all claims pertaining to such lands, whether in favor of the company or in favor of the United States, and the balance of such accounts when adjusted was to be paid to whichever party was found to be indebted to the other, without any deduction whatever; in other words, the award of such commission was to be final and conclusive.
In determining the value of the rights of the company in these lands, it was proper to consider any liens or charges in the nature of taxes held by the United States, or its Territories, if any such existed legally; in fact the commission could arrive at the true result in no other way, and the presumption of law would be that every element that entered into the proper adjustment of such accounts was considered by the commission in making their award. It is not to be presumed that this proviso was enacted by Congress for the purpose of reviewing the proceedings of the high contracting parties, made under the solemn obligations of a treaty, or to change or modify the obligations so made, and when it is so conclusively shown that the subject-matter of the claim now set up was embraced in the scope of the submission to the commission organized under said treaty; and the award having been made, such award should not be disturbed [Page 536] without indisputable proof of the injustice thereof; the principle of res adjudicata ought to apply to this claim.
It may be added that taxes legally assessed are a charge upon the land taxed, and it is in the nature of a proceeding in rem, and that under the laws of Washington Territory the remedy to be pursued in the collection of taxes upon the refusal of the owner of the lands is by sale of the lands subject to such taxes; and in case no sale can be effected, it is the duty of the county to purchase the lands for the amount of the delinquent taxes, (see section 20, page 335 of Laws Of Washington Territory, 1854.) In this case, however, the company were adjudged by the commissioners to have no legal title, and in their award were directed to convey to the United States no title, but all their possessory rights and claims without any covenants of warrantee or title whereby every lien and charge held by the United States or any of its Territories became extinguished by merge in its own title.
It is therefore insisted that the said proviso does not and should not defeat the payment of the money appropriated for the fulfillment of the obligations assumed under the provisions of said treaties, and that a refusal to pay such award would be a violation of one of the most solemn forms of obligations entered into by one government with another.
As to that portion of the bill rendered and filed with the Secretary of State claiming $34,243 25 as penalties for the non-payment of said taxes, it is only necessary to direct attention to the proviso in said appropriation act, which provides that all taxes legally assessed and still unpaid shall be extinguished by the said company, or the amount of such taxes shall be withheld. The penalties are no portion of the taxes assessed, and therefore not embraced in the terms of such proviso; it is proper, however, to add, in connection with this branch of the case, the following narration of facts: The company having, as heretofore stated, for several years paid the taxes assessed against their lands, although protesting and insisting that there was no legal authority for such assessment for the purpose of having a judicial determination of such rights. In the year 1859, the company appeared before the board of county commissioners of Pierce County and objected to the excessive valuation and to the right to tax at all, desiring a judicial examination of the question of the liabilities of the lands that had been in their occupation and possession in 1846 to be assessed to them for taxation. The objection was overruled, and the tax was ordered to be levied upon such lands at a valuation of $1 per acre. From this order an appeal was taken to the district court of Washington Territory and there affirmed, from whence the cause was taken to the supreme court of the Territory, in which court the order of the county commissioners was affirmed in the year 1862. From this judgment a writ of error was presented to the Supreme Court of the United States, which court, at its December term, 1867, without any decision upon its merits, dismissed the writ of error on account of a defect in the writ. In the mean time an injunction was granted enjoining the collection of any taxes that might be assessed against the lands, which suit was continued, by the mutual consent of all parties, until the question of the right of taxation so raised should be determined. In the taxes for which the claim is made are those claimed to have been assessed in 1859, and since up to and including the year 1869, the year in which the commissioners made their award, before whom the company urged the same question upon the taxes they had paid prior to the year 1859. The parties having failed to obtain the decision of the Supreme Court upon that point, therefore, so long as the proceeding was pending, there could be no return made of taxes as delinquent, and the penalties charged could not attach. It is evident that the payment of taxes was all that was contemplated originally by Congress. It would, under the circumstances, be unconscionable to compel the payment of more than the taxes as legally assessed, and there is no rule of construction which can construe a statute providing for the payment of one sum to include other sums.
[Untitled]
Sir: We have the honor to inclose certified statement of the amount of taxes due from the Puget Sound Agricultural Company to Pierce County, in Washington Territory.
By the act of Congress appropriating money to pay the balance due said company the amount of taxes due by said company is to be withheld to meet such indebtedness.
We respectfully request to be notified of your action in the premises.
Mr. Poland’s address is St. Johnsbury, Vermont; that of Mr. Garfielde, for the present, Olympia, Washington Territory.
With great respect, your obedient servants,
Hon. Hamilton Fish, Secretary of State.
[Page 537]Statement of delinquent taxes due Pierce County, Washington Territory, by the Puget Sound Agricultural Company, on 161,000 acres of land, from the year 1859 to 1869, inclusive.
| Year | Delinquent taxes. | Number of acres. | Values of land. | Total assessment against land. | County tax. | School tax. | Territorial tax. | Road tax. | Total tax. | Total tax with 275 per cent. added. | Total taxes with 175 per cent. | Total amount for each year. |
| 1859 | Puget Sound Agricultural Company | 161,0000 | $164,000 00 | $164,000 00 | $690 00 | $319 97 | $40 00 | $402 00 | $1,451 98 | $5,444 92 | $5,444 92 | |
| 1860 | do | 161,0000 | 161,000 00 | 151,000 00 | 644 00 | 322 00 | 40 26 | 402 51 | 1,408 78 | {With 250 per
ct. 4,930 76} |
4,930 73 | |
| 1861 | do | 161,0000 | 201,250 00 | 201,250 00 | 805 01 | 402 50 | 201 15 | 402 50 | 1,811 16 | {With 225 per
ct. 5,886 27} |
5,886 27 | |
| 1862 | do | 161,0000 | 201,250 00 | 201,250 00 | 1,006 25 | 402 00 | 201 15 | 201 25 | 1,811 25 | {With 200 per
ct. 5,433 75} |
5,433 75 | |
| 1863 | do | 161,0000 | 201,250 00 | 201,250 00 | 800 00 | 400 00 | 200 00 | 400 00 | {Government
tax 362 25} |
{Total
tax. 2,162 25} |
$5,946 18 | 5,946 18 |
| 1864 | do | 161,0000 | 201,250 00 | 201,250 00 | 1,006 25 | 402 50 | 402 50 | 402 50 | {Total
tax. 2,213 75} |
{Total tax
with 150 per cent. 5,534 37} |
5,534 37 | |
| 1865 | do | 161,0000 | 201,250 00 | 201,250 00 | 1,509 75 | 402 60 | 805 20 | 402 60 | 3,120 15 | {With 125 per
ct. 7,020 33} |
7,020 33 | |
| 1866 | do | 161,0000 | 201,250 00 | 201,250 00 | 1,509 37 | 603 75 | 603 75 | 402 50 | 3,119 37 | {With 100 per
ct. 6,238 74} |
6,238 74 | |
| 1867 | do | 161,0000 | 215,400 00 | 215,400 00 | 1,409 75 | 603 75 | 704 88 | 402 50 | 3,120 88 | {With 75 per
ct. 5,461 54} |
5,461 54 | |
| 1868 | do | 161,0000 | 210,110 00 | 210,110 00 | 1,610 00 | 603 75 | 805 00 | 402 50 | 3,421 25 | {With 50 per
ct. 5,131 87} |
5,131 87 | |
| 1869 | do | 161,0000 | 201,250 00 | 201,250 00 | 1,610 00 | 603 75 | 805 00 | 402 47 | 3,421 22 | {With 25 per
ct. 4,276 52} |
4,276 52 | |
| Total amount due | 61,305 22 |
Territory of Washington, County of Pierce, ss:
I hereby certify that the foregoing is a true and correct transcript of the delinquent tax rolls, “so far as relates to the delinquent taxes of the Puget Sound Agricultural Company,” of Pierce County, Washington Territory, with the percentage added thereto according to law, as fully and amply as the same appears of record in my office.
In witness whereof I have hereunto set my hand and affixed the seal of the said Pierce County, Washington Territory, on this the 11th day of April, A. D. 1871.