Papers Relating to the Foreign Relations of the United States, Transmitted to Congress with the Annual Message of the President, December 2, 1872, Part II, Volume III

XI.—Argument of Sir Roundell Palmer on the claim of the United States for interest by way of damages.

[undated.]

1. The question of the allowance of interest on the sums claimed in respect of their alleged losses by the United States, is one of grave importance, both in principle and in amount. It has not hitherto been discussed, with any precision or fullness, by either party. By Great Britain this demand has been simply demurred to in principle; it was thought premature to enter into any detailed argument on that subject until some liability should have been established, which would properly raise the question. The United States, in their Argument, presented on the 15th of June, have suggested (paragraphs 484–’5) some reasons why, if a gross sum is awarded, “interest” should be “awarded by the Tribunal as an element of the damage;” but these reasons are very short and vague, and no attempt has been made to develop them in such a manner as to be of any real assistance to the Tribunal.

2. It is necessary to bear in mind what it is which the Tribunal has power to do in this matter. Under the seventh Article of the Treaty, on finding that Great Britain has failed to fulfill any of the duties previously mentioned, in respect of any of the vessels, the Tribunal “may, if it think proper, proceed to award a sum in gross to be paid by Great Britain to the United States for all the claims referred to it.” If it does not award a sum in gross under this Article, the duty of examining and of ascertaining and determining the validity of all the claims brought forward, and “what amount or amounts shall be paid by Great Britain to the United States on account of the liability as to each vessel, according to the extent of such liability as decided by the Arbitrators,” will devolve upon Assessors, under the tenth Article.

It may be that the Tribunal has power to decide, if it should think it right and just to do so, that on all or some part of the principal amounts of the losses for which Great Britain may be found liable, when ascertained and determined by Assessors in the manner provided by the tenth Article, Great Britain should further be liable to pay interest at some rate or rates to be fixed, which interest would, in that case, have to be computed by the Assessors, and would be included in the sum or sums finally ascertained and determined by them as payable by Great Britain. But it is indisputable, on the other hand, that, under the ninth Article, the Tribunal has no power to direct any interest to be paid upon any gross sum which they may think fit to award. It is one gross sum only, to be paid in coin within twelve months after the date of the award, which they have power to allow. The Counsel for the United States appear to be sensible of this, when they assume in the passage of their Argument already quoted (page 484) that “interest will be awarded by the Tribunal, as an element of the damage;” the meaning of which evidently is, that they ask the Tribunal, when fixing the amount of the gross sum (if any) which they may award to be paid, to take into consideration, and to include in such gross sum, (among other “elements of damage,”) some allowance in respect of interest upon the losses for which Great Britain is held responsible.

3. When attention is directed to the nature of the process by which only the Arbitrators can arrive at any gross sum to be awarded against Great Britain, and to the materials or “elements” available to them for the purposes of such an award, it will be clearly seen that they cannot, without disregarding every principle on which the doctrine of interest ordinarily rests, make any such allowance. Instead of being “conformable to public law,” and “required by permanent considerations of equity and justice,” this demand can be demonstrated without difficulty to be just the reverse. The proofs, however, of this proposition will be better understood if, in the first instance, we ascertain the rules of civil jurisprudence, applicable to the subject of interest.

4. Putting aside those cases in which the liability of an individual to pay interest rests upon an express or implied contract, or upon positive legislation, it may be stated generally, that interest, in the proper sense of that word, can only be allowed where there is a principal debt, of liquidated and ascertained amount, detained and withheld by the debtor from the creditor after the time when it was absolutely due, and ought to have been paid, the fault of the delay in payment resting with the debtor; or where the debtor has wrongfully taken possession of, and exercised dominion over, the property of the creditor.

In the former case, from the time when the debt ought to have been paid, the debtor has had the use of the creditor’s money, and may justly be presumed to have employed it for his own profit and advantage. He has thus made a gain, corresponding with the loss which the creditor has sustained by being deprived during the same period of time of the use of his money; and it is evidently just that he should account to the creditor for the interest, which the law takes as the measure of this reciprocal gain and loss. In the latter case the principle is exacts the same; it is, ordinarily, to be presumed that the person who has wrongfully taken possession of the property of another has enjoyed the fruits of it; and if, instead of this, he has destroyed it, or kept it unproductive, it is still just to hold him responsible for interest on its value, because his own acts, after the time when he assumed control over it, are the causes why it has remained unfruitful.

In all these cases it is the actual or virtual possession of the money or property belonging to another, which is the foundation of the liability to interest. The person liable is either lucratus by the detention of what is not his own, or is justly accountable, as if he were so.

5. The rules of the Roman law, as to interest for non-payment of a debt due upon contract, are in strict accordance with the above statement: “In bonæ fidei contractibus, usuræ ex morâ debentur.” (Digest, lib. 32, § 2; lib. 17, § 3.) “Interest,” says Domat, (lib. 3, tit. 5, § 1,) “is the name applied to the compensation which the law gives to the creditor, who is entitled to recover a sum of money from his debtor in default.” (Cited in Sedgwick on Damages, page 234.)

The Code Civil of France in like manner (lib. 3, tit. 3, “Contrats et Obligations,” Art. 1146) provides that “les dommages et intérêts,” (which, in the absence of a stipulated amount between the parties, are limited, by Art. 1153, to the rate of interest fixed by law,) “ne sont dûs que lorsque le débiteur est en demeure de remplir une obligation;” and Art. 1139 detines the meaning of this expression: “Le débiteur est constitué en demeure, soit par une sommation, ou par autre acte équivalent, soit par l’effet de la convention, lorsqu’elle porte que, sans qu’il soit besoin d’acte, et par la seule échéance du terme, le débiteur sera en demeure.” The laws of Great Britain and America recognize the same principles.

6. Mr. Sedgwick, an American author, whose work “On the Measure of Damages” is highly esteemed, and of frequent reference in the courts of Great Britain, as well as in those of the United States, has a chapter (XV) on “Interest with reference to Damages.” At page 373 he says:

The allowance or infliction of interest often presents itself entirely disconnected from any question of contract; and, in this aspect, the subject cannot be omitted in any work which treats of compensation, for it is to be observed generally, to use the language of Lord Kenyon, that where interest is intended to be given, it forms part of the damages assessed by the jury, or by those who are substituted in their place by the parties.

The subject of interest is susceptible of very clearly defined division: first, where it can be claimed as a right, either because there is an express contract to pay it, or because it is recoverable as damages which the party is legally bound to pay for the detention of money or property improperly withheld; second, where it is imposed to punish negligence, tortious, or fraudulent conduct. In the first case it is recoverable as matter of law. In the second case it rests entirely in the pleasure of the jury.

He then states the rules of the English law, that “all contracts to pay undoubtedly give a right to interest from the time when the principal ought to be paid;” and that “where money is due, without any definite time of payment, and there is no contract, express or implied, that interest shall be paid, the English rule, independent of statute, is, that it cannot be claimed.”¹

This latter rule does not appear to be adopted in the greater number of the United States.

“There is,” says Mr. Sedgwick, “considerable conflict and contradiction between the English and American cases on this subject. But, as a general thing, it may be said that while the tribunals of the former country restrict themselves generally to those cases where an agreement to pay interest can be proved or inferred, the courts of the United States, on the other hand, have shown themselves more liberally disposed, making the allowance of interest more nearly to depend upon the equity of the case, and not requiring an express or implied promise to sustain the claim. The leading difference seems to grow out of a different consideration of the nature of the money. The American cases look upon the interest as the necessary incident, the natural growth, of the money, and, therefore, incline to give it with the principal; while the English treat it as something distinct and independent, and only to be had by virtue of some positive agreement.”²

The American rules for the application of the principles recognized in their courts were thus stated by the Chief Justice of New York, in a case in which the whole subject was carefully examined:

From an examination of the cases, it seems that interest is allowed: (1) Upon a special agreement; (2) Upon an implied promise to pay it; and this may arise from usage between the parties or usage of a particular trade; (3) When money is withheld against the will of the owner; (4) By way of punishment, for any illegal conversion or use of another’s property; (5) Upon advances of money.³

In Connecticut, similar propositions were laid down:

(1) Interest will be allowed, when there is an express contract to pay it; (2) Such contract may fie inferred from usage, special or general; (3) Where there is a contract to pay money on a day certain, and the agreement is broken, interest will be allowed by way of damages, as on notes, &c.; (4) When goods are sold, to be paid for on a day certain, interest, in like manner, follows; (5) Where money is received for the use of another, and there is neglect in not paying it, interest follows; (6) Where money is obtained by fraud, interest is allowed; (7) Where an account is liquidated and balance ascertained, interest begins to run; (8) Where goods are delivered to be paid for, not at a day certain, but in a reasonable time, and there is unreasonable delay, interest is allowed; (9) But where there are current accounts, founded on mutual dealings, and no promise to pay interest, interest will not be allowed.⁴

With respect to the fraudulent detention of money, the rule acted upon as to interest by the courts of America generally is the same with that which now prevails in the English courts of equity. “Where money is received by a party who improperly detains it, or converts it to his own use, he must pay interest.” (P. 378.)

In all these cases, the money must be actually due, and the amount liquidated, that is, ascertained and fixed, or capable of being ascertained by a mere process of computation resulting from known facts, of which actual indebtedness is the legal consequence. With respect to claims for interest on unliquidated demands, the law of Great Britain and of the United States is the same.

“It is a general rule,” says Mr. Sedgwick, p. 377, “that interest is not recoverable on unliquidated demands. In an action for not delivering teas according to agreement, Judge Washington, at Nisi Prius, said, ‘It is not agreeable to legal principles to allow interest on unliquidated or contested claims in damages.’ ‘The rule is well-established,’ says Judge Parker, in the Supreme Court of New York, ‘that interest is not recoverable on running or unliquidated accounts, unless there is an agreement, either express or implied, to pay interest.’ So in Massachusetts, it is said, that ‘interest cannot be recovered upon an open and running account for work and labor, goods sold, and the like, unless there is some contract to pay interest, or some usage, as in the case of the custom of merchants, from which a contract may be inferred.’ And. so also, in Texas, interest is denied on an open account. So, in an action on a policy of insurance, if the preliminary proofs are so vague that the claim cannot be computed, interest is not allowable.”

At pages 385–387, Mr. Sedgwick considers another class of cases, under the head of “interest, when given as damages,” i. e., those in which it is not given properly “as interest,” under the control of the Court, and “allowed or disallowed upon certain rules of law;” but “where it is to be settled by the verdict of a jury,” and “given more strictly as damages.”

The cases in which this rule is applied are generally those in which the property of the plaintiff has been wrongfully taken possession of by the defendant:

This is generally so in actions of tort, as trover or trespass for taking goods, where interest is allowed at the discretion of the jury. So in an action of trespass, the Supreme Court of New York said: “The plaintiff ought not to be deprived of his property for years without compensation for the loss of the use of it; and the jury had a discretion to allow interest in this case as damages. It has been allowed in actions of trover, and the same rule applies to trespass when brought for the recovery of property.” So in Kentucky, in case of a fraudulent refusal to convey land; and so declared also in North Carolina in cases of trover and trespass.¹

It is to be observed that the action of “trover” here mentioned is a form of remedy under American and English law for the conversion by a defendant to his own use of the plaintiff’s property; and the action of “trespass” is another form of remedy, under the same laws, when a defendant has intruded, without right, upon the property of the plaintiff. In all the cases here contemplated the liability to be mulcted in interest as damages arises out of the exclusion of the owner from the enjoyment of his own property, by the direct act of the person from whom the damages are recovered, and who, by reason thereof, has himself enjoyed (or, but for his own willful default, might have enjoyed) that benefit of the property from which the owner has been so excluded. The principle on which a jury ought to proceed in giving or not giving interest by way of damages was thus explained by the Court of New York: “In two actions against a master of a ship for non-delivery of goods, it was held in New York that the jury might give damages if the conduct of the defendant teas improper; i. e., where fraud or gross misconduct could he imputed to him; but it appearing that such was not the fact, it was not allowed.”1

The principle thus thus laid down is in strict conformity with that stated in another American treatise of reputation upon the “Law of Negligence,” by Messrs. Shearman and Redfield:

§ 600. Exemplary, vindictive, or punitive damages can never be recovered in actions upon anything less than gross negligence. Of this there can be no doubt. * * * It is often said that exemplary damages may be awarded for gross negligence. But it should be distinctly understood that gross negligence means such entire want of care as to raise a presumption that the person in fault is conscious of the probable consequences of his carelessness, and is indifferent, or worse, to the danger of injury to the persons or property of others; and such appears to us to be the construction put upon these words by the Courts, in the cases referred to. It is only in cases of such recklessness that, in our opinion, exemplary damages should be allowed.

7. Let us now, with these principles of general jurisprudence in view, examine the circumstances of the present case, in order to see whether they present any just and equitable grounds or any sufficient materials on which interest by way of damages can be included by the Tribunal in any gross sum which they may think proper to award against Great Britain.

8. In the first place, this is not the case of a detention or delay in the payment of a liquidated debt or ascertained liability payable at a period which has elapsed; there was, in fact, no liability at all independently of the exercise of the judgment of Arbitrators upon a very novel, entangled, and difficult state of facts and public law. The claims made by the United States extended to many matters for which the Arbitrators have found Great Britain not responsible. The decisions of the Arbitrators against Great Britain have been mainly founded upon the conventional rules of judgment first introduced as between the two nations by the Treaty of 1871, though agreed by that Treaty to be retrospectively applied; and there are, down to this moment, no means of ascertaining, by any method of computation whatever, the actual amount of the liability properly resulting from those decisions.

9. The observations of Professor Bluntschli, in his paper on these claims, (“Revue de Droit International,” 1870, p. 474,) are material in this respect:

“À en croire,” he says, “plusieurs orateurs et écrivains américains, il irait de soi que le gouvernement de la Grande-Bretagne serait obligé de dédommager au moins ]es particuliers, dont la propriété aurait été détruite par l’Alabama, (ainsi que par la Florida, ou d’autres corsaires susdits.) À mon avis, ce point est loin d’être entièrement évident, et l’on pourrait singulièrement se tromper, en se fiant trop au succès réservé à ces réclamations privées devant un tribunal arbitral. Si l’union ne prend pas, comme état, ces réclamations privées sous sa protection, et si elle ne fait pas consister dans leur équitable apaisement la satisfaction que les États-Unis ont droit de réclamer de la Grande-Bretagne, dans ce cas, les particuliers intéressés n’ont absolument aucune perspective de dédommagement. D’après les règles du droit privé ordinaire, leurs prétentions seraient tout-à-fait vaines. Nulle part ils ne trouveraient un juge qui condamnerait le gouvernement anglais à payer une indemnité. * * * D’après les observations qui précédent, tout le débat se résume, non pas en un litige entre des particuliers auxquels la guerre a causé des pertes, et l’état de la Grande-Bretagne que l’on veut rendre responsable de celles-ci, mais en un litige entre la fédération des États-Unis d’un côté et la Grande-Bretagne. Et ce qui fait l’objet du litige, ce n’est pas un dommage matériel, mais la non-observation des devoirs internationaux de la part d’ un état ami et neutre.

As there was no liability which could properly be called a debt, or in respect of which any interest could be due upon juridical principles, so (on the other hand) there was no property belonging to the United States or their citizens, of which possession was at any time taken, or any enjoyment whatever had, by Great Britain, her officers, or her citizens, or by any persons under British protection, availing themselves of that protection to maintain such possession or enjoyment. The words of Professor Blüntschli, already quoted in a former argument, are here again material:

Il ne faut, d’ailleurs, pas perdre de vue que tous ces effets désastreux sont en premier lieu imputables, non pas au gouvernement anglais, mais aux croiseurs eux-mêmes. Personne n’accusera le gouvernement anglais d’avoir donné mission de détruire les navires de commerce américains, ou d’avoir, par ses agissements, entravé ou endommagé la marine américaine. Ce que l’on peut lui reprocher à bon droit, en supposant que les faits cités plus haut doivent être considérs comme avoués ou prouvés,) ce n’est pas un fait, mais une omission contre le droit. Sa faute ne consiste pas à avoir équipé et appareillé les corsaires, mais à n’avoir pas empêché leur armement et leur sortie de son territoire neutre. Mais cette faute n’a qu’un rapport indirect, et nullement un rapport direct, avec les déprédations réellement commises par les croiseurs.¹

Great Britain did not make or authorize the captures by which the citizens of the United States lost their property; they were never brought within her territory, so as to make her answerable for them on the principle of reception; nor had she, or her citizens, at any time, any profit or benefit whatever, or any possibility of deriving profit or benefit from any of them. Nor is it supposed to be possible that the Tribunal can be led to attribute any want of diligence, with which, in certain cases, Great Britain may in their view be chargeable, to any such motives or causes as, according to the analogy of private jurisprudence, would justify a jury or an Arbitrator in giving vindictive or penal damages. Every ground, therefore, on which (according to juridical principles) interest could be awarded as an element of damages, is wanting here.

11. Furthermore, independently of the facts affecting the nature and amount of the claims themselves, which will be hereafter referred to, there are other special considerations which, in the present case, appear to make it the duty of the Arbitrators, if they find Great Britain responsible at all in damages to the United States, to mitigate, in the exercise of a reasonable discretion, the amount of those damages; and certainly not to inflame or aggravate them by the addition of penal interest.

If the following arguments in the British Counter Case (p. 132) are held insufficient to exonerate Great Britain from all liability, they must at least be admitted to be of great weight and pertinence, as against any attempt to push the doctrine of compensation and indemnity, in this case, to an extreme length:

The whole responsibility of the acts which caused these losses, belonged, primarily, to the Confederate States; they were all done by them, beyond the jurisdiction and control of Great Britain; wrong was done by them to Great Britain, in the very infraction of her laws, which constitutes the foundation of the present claims. But from them, no pecuniary reparation whatever for these losses has been, or is now, exacted by the conquerors; what has been condoned to the principals, is sought to be exacted from those who were, at the most, passively accessory to those losses, through a wrong done to them, and against their will. The very States which did the wrong are part of the United States, who now seek to throw the pecuniary liability for that wrong solely and exclusively upon Great Britain, herself (as far, at least, as they are concerned) the injured party. They have been re-admitted to their former full participation in the rights and privileges of the Federal Constitution; they send their members to the Senate and the House of Representatives; they take part in the election of the President; they would share in any benefit which the public revenue of the United States might derive from whatever might be awarded by the Arbitrators to be paid by Great Britain. On what principle of international equity can a Federal Commonwealth, so composed, seek to throw upon a neutral, assumed at the most to have been guilty of some degree of negligence, liabilities which belonged in the first degree to its own citizens, with whom it has now re-entered into relations of political unity, and from which it has wholly absolved those citizens?

The American Union is not a single Republic, but is a Federation of States. The eleven States which joined the Southern Confederacy are also now joining in the present claims. Upon ordinary principles of justice, if Great Britain is held responsible for those claims, she would herself have a claim for indemnity against those eleven States; which, in their external relations toward herself and other countries, are represented by the Federal Government. If everything has been condoned to them by the Federal Government, and if their relations to that Government preclude Great Britain from having recourse to them for the indemnity which would otherwise be justly due to her, it is surely impossible to conceive a case in which there would be less justification for a discretionary and penal augmentation of damages, such as an allowance in respect of interest, in a proceeding for unliquidated damages, always is.

Another argument, arising from the peculiar circumstances of the present case, and which has also a strong bearing in favor of a reasonable modification of the liability of Great Britain, and, at all events, against any aggravation of that liability by the addition of interest as an element of damages, is thus stated in the British Counter Case, (p. 132:)

When any vessels, whether procured from Great Britain, or otherwise obtained, had become Confederate ships of war, the duty of repelling their hostile proceedings by all proper and efficient means (like the rest of the operations necessary for the conduct of the war) devolved exclusively upon the United States, and not upon the British Government. Over the measures taken by the United States for that purpose, Great Britain could exercise no influence or control; nor can she be held responsible in any degree for their delay, their neglect, or their insufficiency. Any want of skill or success, even in the operations by land, would have the effect of prolonging the period during which cruises of this nature could be continued. All losses, which might have been prevented by the use of more skillful or more energetic means, ought justly to be ascribed to a want of due diligence on the part of the Government of the United States, and not to any error, at any earlier stage, of the British Government. Causa proxima, non remota spectatur.

In support of this reasoning, various facts are referred to, at pages 138–140 of the same Counter Case, which show that numerous opportunities of arresting the progress of the Confederate cruisers were actually lost, through the remissness or fault (according to the judgment of their own official superiors) of the officers who ought to have performed that duty; and that the means employed by the Government of the United States for that object were on the whole inadequate for its energetic accomplishment. It would surely be of very dangerous example to hold that a belligerent power is at liberty (upon such an occurrence, e. g., as the enlistment of forty men of the Shenandoah on the night of her leaving Melbourne) to leave a vessel which has abused the hospitality of a neutral State, to harass the commerce of its citizens without the use of efficient means of prevention; relying upon an eventual pecuniary claim against the neutral State for the value of all the subsequent captures of that vessel, with interest to the day of payment.

12. Even if it were possible that interest could be held due, on account of delay of payment, in a case of unliquidated and unascertained claims of this nature, between nation and nation, it is obvious that the United States, and not Great Britain, are exclusively responsible for so much, at least, of the delay, as has been due to the rejection by the Senate of the United States of the Convention signed by Mr. Reverdy Johnson and the Earl of Clarendon, on the 14th January, 1869. (British Appendix, vol. iv, part 9, pp. 36–38.) That Convention provided for a reference to arbitration of all the claims of American citizens, arising out of the acts of the several vessels to which the present controversy relates.

It was the result of a careful negotiation, expressly authorized from the beginning to the end by the Government of the United States. Its form was several times altered to meet suggestions proceeding from that Government; and no such suggestion was made, before the final signature, which was not met by a practical concession on the part of Great Britain. If that Convention had been ratified in 1869, a settlement of all these claims would have taken place either three or, at least, two years since. It was, however, rejected by the Senate of the United States without so much as the communication, at the time, of any reason or explanation whatever to the British Government. (British Appendix, vol. iv, part 9, page 10, ad finem.) No reason or explanation has ever been offered which can alter the significance of this fact, or make it reconcilable with any conceivable view of justice, that, as against a Government which has never derived any profit or benefit, either directly or through its citizens, from any of the captures in question, the United States should claim interest for a delay due only to themselves. Great Britain, from the commencement of the negotiations between Lord Stanley and Mr. Reverdy Johnson in 1866, was always willing that these claims should be settled by arbitration; the difficulty (which appears to have originated in the suggestion by Mr. Sumner of those indirect claims, which are now excluded from the consideration of the Tribunal) was on the part of the United States alone. Can it be said that, if the delay, so caused, had lasted for twenty or for ten years, a claim by the United States for interest during that period could still have been maintained? If not, it cannot be maintained now; whether the delay is twenty years or two years, can make no difference in principle.

13. All the foregoing reasons belong to the general equity of the case, and are independent of all the objections to the allowance of interest as an element of damages or compensation, which arise out of the particulars of the claims, and the impossibility of ascertaining or defining them before this Tribunal.

14. The substantial claims (setting aside that of the United States for the alleged expenses of pursuit and capture) are those of the owners of ships and other property destroyed, and those of the insurance companies with whom the property lost was insured. The amount of both these classes of claims is stated in dollars of the currency of the United States at the respective times when the losses were sustained and the insurances paid. The value of the dollar currency was, during that whole period, enormously depreciated by reason of the war and of the suspension of specie payments in the United States. Its exchangeable value, as compared with the exchangeable value of the dollar in gold, during the period of specie payments before the war and also at the present time, was as 5,614 to 7,744, or, in round numbers, as 8 to 11.¹

All values of property computed in dollars of the forced paper currency, during that period, stood at proportionally higher figures than they would have done during the time of specie payments. The payment of all these claims,² so stated at their values in a forced paper currency, is now sought to be recovered against Great Britain at the nominal value of the same number of dollars converted into gold at the present rate of exchange; thus giving to every claimant a direct gain of above 27 per cent., by the difference only between the value of the dollar in which the losses were estimated, and the value of the dollar in which the payment is asked to be made. This gain is alone equivalent to the actual addition of interest, at the rate of 6 per cent. per annum, for four years and a half upon every claim.

15. With respect to the insurance companies, it must be remembered that, as against the losses which they paid, they received the benefit of the enormous war-premiums which ruled at that time; and that these were the risks against which they indemnified themselves (and, it cannot he doubted, so as make their business profitable upon the whole) by those extraordinary premiums. Would it be equitable now to reimburse them, not only the amount of all these losses, but interest thereon, without taking into account any part of the profits which they so received?

16. These remarks would hold good if an exact valuation of the claims were possible; but, before this Tribunal, neither an exact valuation of any part of these claims, nor any approximation to such a valuation, is possible. This consideration alone ought to be decisive against the demand of interest, as an element of damages, in any gross sum to be awarded by the Tribunal.

When this is held to be admissible in private jurisprudence, the estimate or computation of the amount to be added for interest is always founded upon some appropriate evidence, by which the Jury or the Court is enabled to fix a definite sum as the value of the principal subject for which compensation is due. Before interest can be computed, whether as a legal incident of a liquidated debt, or as an element in damages previously unliquidated, the principal sum must be known; and this, not by conjecture, not by accepting, without proof in detail, the amount at which the interested party may choose to state his own claim, (almost always excessive and exorbitant, and, as a general rule, purposely so overstated, in order to leave a very wide margin for a profit after all probable deductions,) nor by any merely arbitrary modification of that amount, but by such vouchers and proofs as, after the opposite party has had the opportunity of seeing and checking them, are deemed satisfactory. Where such vouchers and proofs are absent, or cannot be satisfactorily tested, all foundation for an allowance of interest, as an element of damages, necessarily fails.

17. In the present case, not only is it altogether impossible to ascertain, either accurately or proximately, any sum which can be taken by the Tribunal as representing the principal amount of the losses, for which Great Britain ought to be held responsible; but the figures which have been laid before the Tribunal on both sides show in a very significant manner what great injustice might be inadvertently done, and how largely any just measure of compensation or indemnity might be exceeded, if the Tribunal were either to assume some amount, arbitrarily fixed, as representing the principal of those losses, and then to add interest on that amount; or were, without any such attempt at exactness, to swell, by some undefined and arbitrary Addition under the notion of providing for interest, an award for a gross sum, founded on no distinct elements admitting of any computation. It does not require much attention to the particulars of the claims to see that they have been intentionally so stated, as to leave not only a wide margin for all those deductions, which the criticism of Great Britain might prove to be necessary, but ample room, after every such deduction has been made, for a large and full compensation and indemnity, without any further addition whatever. The British criticisms cannot and do not attempt more than to cut off manifest exaggerations of those claims, either by demonstrating the inadmissibility in principle of some of them, (e. g., the double claims, and the prospective earnings,) or by showing that others (e. g., the claim for gross freights) must, on principle, be reduced by manifestly necessary deductions, or by appealing to the known and ascertained values of shipping, &c., of the same classes before the war, as a standard of comparison to which estimates of losses, manifestly excessive, may be referred. But when the fullest effect has been given to all these criticisms, the remaining claims continue unvouched and untested, under circumstances in which every really doubtful and uncertain question of actual value is practically taken for granted, even by the reduced British estimate, in the claimant’s favor.

18. In illustration and proof of the preceding observations, the following important extract from the Report of Messrs. Cohen and Young, appended to the British Argument or Summary, (pp. 46–47,) containing matters, not of opinion, but of fact, which the Arbitrators may verify for themselves merely by referring to the several documents in which the claims of the United States have been at different times stated, is here subjoined:

“It will be useful,” they say, “to make some observations which present themselves on comparing, with the ‘Revised Statement,’ the original list of claims which was sent by Mr. Seward to Mr. Adams in August, 1866, and also the extension of this, as presented by the President to the House of Representatives in April, 1869, and which are to be found in the fourth volume of ‘The Correspondence concerning Claims against Great Britain transmitted to the Senate of the United States.’

“These lists of claims not only strongly confirm the opinion we expressed in our First Report, that the estimate we there made of the value of the vessels was probably a very liberal one, but also show in a remarkable manner how, since the year 1866, the claimants have in most cases enormously increased their estimate of the losses alleged to have been sustained by them.

“We will cite some of the more striking instances—calling the list of claims sent to Mr. Adams the ‘Original List.’ the List presented to the House of Representatives the ‘United States Amended List,’ the Statement,¹ on which we have already reported, the ‘Former Statement,’ and the Revised List of Claims² on which we are now reporting the ‘Revised Statement.’

“The Alert.—The claim as stated in the ‘Original List’ amounted to $57,859; in the ‘Revised Statement’ (p. 1) it amounts to $202,726. In the ‘Original List’ there was a claim of $30,000 for ‘interruption of voyage;’ but now, in addition to that amount, there is claimed a sum of $144,869 for ‘prospective earnings.’

“The Anna Schmidt.—This vessel was in the ‘Original List’ valued at $30,000, which is somewhat less than the average valuation we have allowed in proportion to her tonnage, but in the ‘Revised Statement’ (p. 13) the sum claimed in respect of the vessel is double that amount.

“The Golden Eagle.— In the ‘Original List’ the owners claimed for the vessel $36,000, and for freight $26,000. Our average estimate in proportion to her. tonnage was about $45,000. In the ‘Revised Statement’ (p. 40) the owners claim $86,000 for vessel and freight, thus increasing their claim by nearly 50 per cent.

“The Highlander.—She was a vessel of 1,049 tons, and was in ballast. In the ‘Original List’ two insurance companies advanced claims for insurances to the extent of $30,000, which was probably about the value of the vessel; but in the ‘Revised Statement’ (p. 46) the owners put forward an additional claim for the ship to the extent of $84,000 This claim is, however, far less extravagant than the claim for freight, which in the ‘Original List’ amounted to $6,000; whereas in the ‘Revised Statement’ it exceeds $68,000, and is advanced without any deduction whatever, although the ship was in ballast at the time of her capture. It will be found that at pages 6 and 27 of our First Report we have specially commented on the character and extent of the extraordinary demands put forward in respect of this vessel.

“The Ocean Rover.—In the ‘Original List’ the owners claimed $10,400 for value of ship, loss of oil on hoard, and damages for breaking up of voyage. The claims now advanced in the ‘Revised Statement’ (p. 68) in respect of the same losses exceed $193,000, the difference between the original claim and the more recent one being made up entirely of ‘double claims for single losses.’

“The Kate Cory.—In the ‘Original List’ the owners claimed $27,800 for the value of the brig, outfit, and oil on board, and there was also a claim of $1,820 for the value of ‘reasonable prospective catch of oil.’ In the ‘Revised Statement’ (p. 51) the amounts insured have, as usual, been added to the claims by the owners, and there has been inserted a claim of $19,293 for loss of prospective catch, so that the original claim for $29,620 has grown to $56,474.

“The Lafayette No. 2.—In the ‘Original List’ the owners valued the ship and outfit at $24,000, which is less than our average valuation according to her tonnage; and the secured earnings at $10,475; but in the ‘Revised Statement’ (p. 55) the claim put forward in respect of ship and outfit and secured earnings is more than $89,000; and the prospective earnings, which were in the ‘Original List’ valued at $33,446, are now estimated at a sum exceeding $50,000. The original claim for $69,471 has grown to $141,858.

“The Rockingham.—The claim in the ‘Original List’ amounted to $105,000, whereas the claim in the ‘Revised Statement’ (p. 74) exceeds $225,000. This is also one of the vessels which we selected in our First Report (page 23) as a striking example of the exorbitant nature of some of the claims. There can be no doubt that the original claim was very extravagant, but in the ‘Revised Statement’ it has been doubled by improperly adding the insurances to the alleged values.

The Union Jack.—In the “Original List” it is stated that G. Potter, after deducting the amount received from the Atlantic Insurance Company, claims the sum of $7,584; but in the “Revised Statement” (p. 111) he claims the sum of $34,526, without making any deduction for insurances, although the insurance companies at the same time claim $32,014 in respect of the amount insured by them; and it therefore clearly follows that a sum, at any rate exceeding $26,000, is claimed twice over.

The Catherine.—In the “Original List” the owners claimed about $45,000 for vessels and secured earnings, but made no claim in respect of prospective earnings. Now, in the “Revised Statement,” (p. 229,) there is a claim put forward of $35,329 for loss of vessel and cargo, over and above $31,676, the alleged amount of insurances by the owners, which is also at the same time claimed by the insurance company. In addition to this there is a claim for prospective earnings exceeding $19,600, so that the original claim of $45,805 has now grown to the enormous sum of $272,108.

The Favourite.—She was a bark of 393 tons. In the “Original List” the Atlantic Insurance Company, as insurers and assignees of the owners, claimed for loss on vessel and outfit $40,000, which there can be little doubt was the full value. In the “Revised Statement” (p. 240) the claims in respect of the vessel and outfit amount altogether to $110,000. The master, in the “Original List,” claimed $1,498 for the loss of his effects; but now he claims for the loss of his personal property, $2,239, and for loss of interest in oil and bone, $2,709.

The Isaac Howland.—In the “Original List” the claim for prospective earnings was $53,075, but in the “Revised Statement” (p. 247) it has grown to nearly four times that sum, namely, to $196,158. Moreover, in the “Original List,” the owners claimed $65,000 for ship and outfit, subject to abatement for insurance; whereas, in the “Revised Statement,” they claim the same sum, but protest against any diminution of claim by reason of insurance obtained by them, although the insurance companies claim at the same time the whole amount insured by them.

The Genial Williams.—In the “Original List” the owners claimed $40,503 as damages by the destruction of the vessel, over and above $44,673, the amount of insurances received by them. In the “Revised Statement” (p. 241) there is added to the amount of insurances a sum of $85,177, the claim being in this manner all but doubled. There are also added the following claims: A claim by the owners for prospective earnings amounting to $196,807; a claim by the master for loss of prospective catch, time, and occupation, amounting to $20,000; a similar claim by the mate, amounting to $10,000; another claim of $30,000 for insurances on vessel and outfit; and finally, the sum of $16,000 for insurances by the owners on the vessel’s prospective earnings. In this manner the original claim, which was less than $66,000, has grown to the sum of $406,934, and has therefore been increased more than sixfold.

19. One more subject remains to be dealt with. The United States, in their Argument, (page 220,) have appealed to certain historical precedents. After stating, in a passage already referred to, (and to which, it is hoped, a full and sufficient reply has been made,) that they conceive this demand of interest, as an element of damage, to be “conformable to public law, and to be required by paramount considerations of equity and justice,” they add:

Numerous examples of this occur in matters of international valuation and indemnity.

Thus, on a recent occasion, in the disposition of Sir Edward Thornton, British Minister at Washington, as Umpire of a claim on the part of the United States against Brazil, the Umpire decided that the claimants were entitled to interest by the same right which entitled them to reparation. And the interest allowed in this case was (45,077 dollars) nearly half of the entire award, (100,740 dollars.)

So, in the case of an award of damages by the Emperor of Russia in a claim of the United States against Great Britain under the Treaty of Ghent, additional damages were awarded in the nature of damages from the time when the indemnity was due. In that case, Mr. Wirt holds that, according to the usage of nations, interest is due on international transactions.

In like manner Sir John Nicholl, British Commissioner in the adjustment of damage between the United States and Great Britain under the Jay Treaty, awards interest, and says:

To re-imburse to claimants the original cost of their property, and all the expenses they have actually incurred, together with interest on the whole amount, would, I think, be a just and adequate compensation. This, I believe, is the measure of compensation usually made by all belligerent nations for losses, costs, and damages occasioned by illegal captures.

20. There can be no greater fallacy, and there is also none more familiar to the practical experience of jurists, than this kind of general reference to precedents, which, when the facts are examined, are found to differ from the case to which they are sought to be applied, in all or some of the most essential points, upon which the question in controversy depends.

Let us now examine these “examples” in their proper historical order, which has been inverted in the Argument of the United States.

21. The earliest in date is that of the claims under the “Jay Treaty,” i. e., the Treaty between Great Britain and the United States, signed at London, on the 19th November, 1794. That Treaty contained two Articles applicable to different descriptions of claims. The sixth Article was in these terms:

Whereas it is alleged by divers British merchants and others, His Majesty’s subjects that debts to a considerable amount, which were bonâ fide contracted before the peace still remain owing to them by citizens or inhabitants of the United States, and that, by the operation of various lawful impediments since the peace, not only the full recovery of the said debts has been delayed, but also the value and security thereof have been, in several instances, impaired and lessened, so that, by the ordinary course of judicial proceedings the British creditors cannot now obtain, and actually have and receive, full and adequate compensation for the losses and damages which they have thereby sustained; it is agreed that, in all such cases where full compensation for such losses and damages cannot, for whatever reasons, be actually obtained, had, and received by the creditors, in the ordinary course of justice, the United States will make full and complete compensation for the same to the said creditors; but it is distinctly understood that this provision is to extend to such losses only as have been occasioned by the lawful impediments aforesaid, and is not to extend to losses occasioned by such insolvency of the debtors or other causes as would equally have operated to produce such loss if the said impediments had not existed, nor to such losses or damages as have been occasioned by the manifest delay or negligence, or willful omission, of the claimant.

This Article having relation to debts actually and bonâ fide due and payable by American to British subjects, and of which the payment had been delayed and prevented by legal impediments opposed to the recovery of such debts by the policy and legislation of the Government of the United States, it is apparent not only that the claims, being liquidated, admitted of the computation of interest upon them in the most proper sense of that word, but also that they were such as entitled the claimants to interest upon the strictest principles of private jurisprudence, which here necessarily furnished the rule, the responsibility for these private debts being expressly assumed, on grounds of public policy, by the Government of the United States. The British Commissioners, under this Article (being a majority) accordingly decided, in the case of Messrs. Cunningham & Co., (18th of December, 1798,) that interest ought to be awarded “for the detention and delay of payment of these debts during the war as well as in time of peace, according to the nature and import, express or implied, of the several contracts on which the claims were founded.” From this decision the American Commissioners, Messrs. Fitzsimons and Sitgreaves, on the 21st December, 1798, recorded their dissent, their objections being most strongly urged with reference to the allowance of interest during the time of war; and, on the 11th January, 1799, they followed up this dissent, and another protest made by them, in a different case, by withdrawing from the Board and altogether suspending the proceedings of the Commissioners on that description of claims.

22. The seventh Article of the same Treaty provided for the settlement, by Commissioners, of two other classes of claims. The first class consisted of claims by citizens of the United States:

Whereas complaints have been made by divers merchants and others, citizens of the United States, that, during the course of the war in which His Majesty is now engaged, they have sustained considerable losses and damage, fry reason of irregular or illegal captures or condemnations of their vessels and other property, under color of authority or commissions from Sis Majesty; and that, from various circumstances belonging to the said cases, adequate compensation for the losses and damages sustained cannot now be actually obtained, had, and received, by the ordinary course of judicial proceedings: it is agreed that, in all such cases where adequate compensation cannot, for whatever reason, be now actually obtained, had, and received by the said merchants and others in the ordinary course of justice, full and complete compensation for the same will be made by the British Government to the said complainants. But it is distinctly understood that this provision is not to extend to such losses or damages as have been occasioned by the manifest delay or negligence, or willful omission of the claimants.

The Commissioners appointed “for the purpose of ascertaining the amount of any such losses and damages” were to “decide the claims in question according to the merits of the several cases, and to justice, equity, and the laws of nations.” Sir John Nicholl was one of those Commissioners, and he concurred (on the grounds stated in the Argument of the United States) in awarding interest on the ascertained amount of “the original cost of the property of the claimants,” and “all the expenses which they had actually incurred.” This, again, was a case of the award of interest on a principal value, actually ascertained and proved to be recoverable by appropriate evidence, in respect of property, belonging to citizens of the United States, which had been seized and appropriated, and unjustly detained, and (in some cases) sold or otherwise disposed of for their own benefit, by persons acting under the public authority of the Crown of Great Britain. In both these essential points this precedent of 1794 stands in direct opposition and contrast to the claims now before the present Tribunal.

23. The second class of claims, under the seventh Article of the Treaty of 1794, consisted of claims of British subjects who complained “that, in the course of the war, they had sustained loss and damage by reason of the capture of their vessels and merchandise taken within the limits and jurisdiction of the United States, and brought into the ports of the same, or taken by vessels originally armed in ports of the said States.”

As to these vessels, the Government of the United States entered into an engagement (by Mr. Jefferson’s letter to Mr. Hammond of September 5, 1793) with the British Government, to “use all the means in their power” for the restitution of such of them (and such only) as had been brought into ports of the United States after the 5th of June, 1793, on which day M. Genét, the French Minister, received notice from the President of the United States that he was prohibited from bringing in such prizes; a promise being added that compensation should be made for some particular vessels acknowledged to be within that category, as to which Mr. Jefferson expressly admitted that “for particular reasons” his Government had “forborne to use all the means in their power for their restitution;” and in like manner for any others, as to which they might subsequently think fit to exercise a similar forbearance.

The Commissioners, under this part of the Article, refused all compensation to the owners of British vessels taken by French ships of war or privateers originally armed in ports of the United States, which were either brought by the captors into American waters before the 5th of June, 1793, or were destroyed at sea, and never brought at all into ports of the United States. As to the other cases, in which compensation was given, it does not appear, from any materials accessible to the Counsel of Her Britannic Majesty, whether interest upon the ascertained value of any British prizes brought into ports of the United States after the 5th of June, 1793, and not restored pursuant to Mr. Jefferson’s letter, was, or was not, awarded. Assuming such interest to have been awarded, the reason is obvious. The values of these prizes were ascertained and determined by the Commissioners upon appropriate evidence; and the interest (if any) was calculated upon those ascertained amounts. The engagement of the Government of the United States had made the amounts so ascertained debts directly due to Great Britain by the United States upon the footing of an express contract, from the moment at which the prizes, being within the power of the United States, ought to have been restored according to the terms of Mr. Jefferson’s letter, but were, “for particular reasons,” purposely allowed by the United States’ Government to remain in the hands of the captors. This was strictly a case of a debt due and of a willful delay and default in payment; according, therefore, to ordinary juridicial principles, it was right that it should be recovered with interest.

24. The next in order of the historical precedents is that of the claims under the Treaty of Ghent. The following is the history of that case:

During the war between Great Britain and the United States, in 1812–’13, the British forces took possession of certain private property (principally slaves) of American citizens. The first article of the Treaty of Ghent (1814) contained a positive engagement by Great Britain for the restitution of “slaves, or other private property,” so taken, which might remain in British possession at the time of the exchange of the ratifications of the Treaty. “In violation of this Treaty, the slaves and other property of American citizens,” says Mr. Wirt, the American Attorney-General, in his opinion of May, 1826, now quoted by the United States, “were carried away in the year 1815, and have been detained from them ever since. They have thus lost the use of this property for eleven years.”¹ In October, 1818, differences having arisen between the two countries on this subject, a Supplemental Treaty was signed in London, by the 5th Article of which, after stating that “the United States claim for their citizens, and as their private property, the restitution of, or full compensation for, all slaves, &c.,” it was referred to the Emperor of Russia to decide between the parties, “whether, by the true intent and meaning of the aforesaid article (i. e., Article I of the Treaty of Ghent) the United States are entitled to the restitution of, or full compensation for, all or any slaves as above described.” The Emperor of Russia made his award, deciding that the United States were “entitled to a full and just indemnification for the slaves and other property carried away by the British forces, in violation of the Treaty of Ghent”²

A convention was afterward (July, 1822) signed between the United States and Great Britain at St. Petersburgh, under which commissioners of claims were appointed for the purpose of carrying the award of the Emperor into effect.

Under this Convention, the British and American Commissioners disagreed upon the question, whether interest ought or ought not to be ah lowed upon the ascertained value of the slaves, from the time when they were taken away in the manner which the Emperor of Russia had determined to be a violation of the Treaty of Ghent. These conflicting views of the Commissioners were supported on each side by the law officers of their respective governments. Mr. Wirt, the American Attorney-General, insisted “that interest at least was a necessary part of the indemnity awarded by the Emperor;” that, “without it, a just indemnification could not be made.” “The first act of dispossession being thus established to be a wrong, is the continuance of it,” he asked, “of that dispossession for eleven years, no wrong at all? Is it consistent with that usage of nations, which Sir John Nicholl recognizes, to redress an act of wrongful violence by the return, at any length of time, of the naked value of the article at the date of the injury?” And he states his conclusion thus: “Upon the whole, I am of opinion that the just indemnification awarded by the Emperor involves not merely the return of the value of the specific property, but a compensation also for the subsequent and wrongful detention of it, in the nature of damages.” (Opinions of Attorneys-General of the United States, vol. ii, pp. 29, 31, 32, 33.)

It is instructive, on the other hand, to observe the views upon the question of principle, applicable to the claim of interest, (independently of the construction of the Treaties, the Emperor’s award, and the Convention of St. Petersburg,) which were expressed by the eminent Law-Officers of the British Crown. Sir Christopher Robinson was then King’s Advocate, and Sir John Copley (afterwards Lord Lyndhurst) and Sir Charles Wetherell were Attorney and Solicitor-General. The King’s Advocate (19th May, 1825) thought that, on general principles, interest was not payable. He referred to the same rules of private jurisprudence, which have been stated in an earlier part of the present argument:

The rules of law, so far as they may he applicable to this question, do not favor claims of interest, except under special circumstances, as in cases of agreement, expressed or implied, or of the possession and enjoyment of intermediate profits, or of injury, properly so termed, in respect to the tortious nature of the act, for which the compensation is to he made.

He proceeded to illustrate these rules, from the laws of England and of the United States, and added:

The principles of the General Law of Europe, as derived from the Civil Law, and adopted in the several countries, correspond with this exposition. “Interest of money is not a natural revenue, and is only, on the part of the debtor, a punishment which the law inflicts upon him for delay of payment, (‘usura pecuniæ quam percipimus, in fructu non est, quia non ex ipso corpore, sed ex alia causa est, id est nova obligatione.)¹

“Usuræ non propter lucrum petentium, sed propter moram solventium infliguntur.”²

In the result he regarded the question as entirely depending upon the true interpretation of the Treaties and the Convention of St. Petersburgh, and considered that these instruments did not support, but were, on the contrary, at variance with the claim.

The views of Sir J. Copley and Sir C. Wetherell (10th November, 1825) were in some respects different from those of Sir C. Robinson. After referring to the First Article of the Treaty of Ghent, and to the Emperor’s award as to its construction, they said:

In the removal, therefore, of the slaves in question, this engagement has been infringed, and the parties injured by such infringement are entitled to compensation. It must be obvious, however, that the bare restitution or payment of the value of the slaves, after an interval of so many years from the period when they ought, according to the agreement, to have been restored, will not form, by any means, an adequate compensation to the owners for the loss they have sustained by the breach of this Article of the Treaty; and we think the addition of interest to the value of the slaves, such interest being calculated from the period when they ought to have been given up, is a fair and moderate mode of estimating the damage sustained by the injured parties. In our municipal law, where a party contracts to deliver personal property at a particular time, or where he unjustly detains the goods of another, he may be compelled to deliver such property, or to pay the value, and further to pay damages for the detention. If, therefore, the question had rested here, we should have been of opinion, upon this general reasoning, that the claim to interest ought to have been allowed by the Commissioners. But upon adverting to the Treaty of London, to the award of the Emperor, and to the Convention of St. Petersburgh, we are led to a different conclusion.

The question upon which the British and American Commissioners and Law-Officers had thus differed was eventually settled, upon terms of compromise, by another Supplementary Convention between the two countries. But supposing that the question had been unembarrassed by any difficulties in the construction of the express Treaty engagements upon the subject, and that it ought properly to have been determined, on general principles, in accordance with the views of Mr. Wirt, Sir John Copley, and Sir C. Wetherell, it is plain that these views rested upon the simple and ordinary ground that property of ascertained value, which Great Britain had in her actual possession at the time of the ratification of the Treaty of Ghent, and which, by that Treaty, she had expressly contracted and engaged to deliver up to the United States, had been wrongfully and permanently detained in violation of that engagement. The case, in these respects, was precisely similar to that under the latter clause of the Seventh Article of the Treaty of 1794.

25. Before parting entirely with this precedent, it does not seem out of place to refer to some other forcible observations, made by Sir Christopher Robinson, in an earlier opinion given to the British Government on the same subject, on March 18, 1825:

The subject of interest presents a question of considerable importance and delicacy, and to which it will be difficult to apply the analogy of rules derived from legal proceedings, independent of the political considerations, which may have regulated the conduct of the Power making compensation in the particular case. In that view, it seems to be a reasonable distinction which is raised, that Sovereign Powers do not usually pay interest, unless they stipulate so to do. The obligations of Governments for civil injuries are matters of rare occurrence, and depend, in form and substance, as much on liberal concessions, or on reciprocal engagements, as on the intrinsic justice or equity of the claim. They are usually compensations (compromises?) made on questions in doubt, after considerable intervals of time, by which interest is much enhanced. They are also compensations for the acts of others; for the consequences of error or misunderstanding rather than of intentional injury; and for cases in which no profit or advantage has accrued to the party by whom such compensation is made. Considerations of this kind seem to require that, if interest is to be paid as part of the compensation by Treaty, it should be matter of special arrangement as to amount and particulars; and the reasonableness of that expectation supports the distinction suggested, that, where no such stipulation is made between Sovereign Powers, interest shall not be considered as due.

26. These are the words of a jurist (the reporter of the celebrated judgments of Sir William Scott, Lord Stowell) who was particularly conversant with questions of Public and International Law. Of the numerous examples of the allowance of interest between nations, without special agreement, which are supposed by the Counsel of the United States to exist, he was evidently not aware. Instances may, indeed, be found, (some before, and some later than 1825,) in which claims of individuals for interest, as a legal incident of liquidated debts and obligations have been held proper to be considered, and to be allowed if found just. There are also other instances, in which a State, acknowledging itself to have made default in the payment of its own liquidated pecuniary debts and obligations to the citizens of another State, or acknowledging itself to be responsible for the wrongful appropriation and detention, by its officers or people, of property belonging to the citizens of another State, has expressly contracted to make payments or restitution, with interest at an agreed rate. But Her Britannic Majesty’s Counsel, after careful inquiry from the best sources of information, has failed to become acquainted with any instance in which interest has yet been allowed as an element of damages between nation and nation in the settlement of unliquidated claims (to recur to the words of Sir C. Robinson) “for the acts of others, for the consequences of error or misunderstanding, rather than of intentional injury; and for cases in which no profit or advantage has accrued to the party by whom compensation is made.”

27. The third and latest precedent, cited by the United States, is that of the recent award of Sir E. Thornton between Brazil and the United States, in the case of the ship Canada.

In the year 1857 the Minister of the United States at Rio demanded compensation from the Government of Brazil for “an outrage committed on the high seas, near the Brazilian coast, by a body of Brazilian soldiers, upon a whale-ship called the Canada, sailing under the flag, and belonging to citizens, of the United States.”¹ The matter continued pending for some years, and, eventually, on the 14th March, 1870, a Convention was concluded between Brazil and the United States, by which this question was referred to the arbitration of Sir Edward Thornton, then and now Her Britannic Majesty’s Minister at Washington.

Under this reference Sir Edward Thornton made his award, dated the 11th July, 1870, by which he found the following facts to be established by the evidence laid before him, viz: that, on the 27th November, 1856, the Canada grounded upon a reef of rocks within Brazilian jurisdiction; that, during the four following days, proper means were used by her captain and crew, with every prospect of success, to get her off; but that, on the 1st of December, a Brazilian officer, with fourteen armed men, boarded her, superseded the authority of the Captain, and forcibly prevented the further prosecution of the efforts which were being made to save the ship; that she would, in fact, have been saved, but for this improper interference of the officers of the Imperial Government of Brazil, and that she was lost through that interference; for which reason, he held the Imperial Government to be responsible for the value of the property so destroyed. He then proceeded to determine, according to the evidence before him, (which included proper particulars of her age and classification, and valuations of different dates,) the principal sum, representing the value of the ship at the time of her loss, and the actual cost of her outfit. He rejected all claims for prospective catch and earnings; he allowed some small sums for necessary expenses incurred by the crew in traveling; he also allowed to some of them moderate sums for three months’ wages; and he allowed interest at 6 per cent. from the date of the loss, as the necessary result (in his judgment) of the liability of the Brazilian Government for the principal amount.

This decision, like those before examined, proceeded upon ordinary juridical principles. The Brazilian Government, by their officers and soldiers, had wrongfully taken possession of, and had, in effect, destroyed, a United States ship within their jurisdiction, which was entitled to their protection. For the full value of the loss so inflicted upon subjects of the United States, they became immediately and directly responsible, as much as if they had seized and detained the ship, under circumstances enabling them to restore it to its owners. Restitution of the ship itself being impossible, a full compensation and indemnity became actually due, from the moment of the loss; and the payment of this compensation and indemnity, though promptly claimed, was for many years delayed. The amount of the principal loss was properly investigated and accurately determined, and the interest given was accurately computed upon that amount.

28. In every point of importance, with respect to the principles involved, this last precedent (like those which had gone before it) stands in absolute contrast with the present case. In this, as in the earlier cases, (to sum up the whole matter shortly,) those elements were found to be present, which were juridically necessary to constitute a right to interest; and interest was accordingly given as a matter of strict right. In the present case all these elements are absolutely wanting; and, instead of them, others are present, the effect of which is not to support, but to repel, the claim of interest, even if the appeal is made, not to any rule or principle of public law, but to the exercise of a reasonable and equitable discretion.

Roundell Palmer.

1. “On the Measure of Damages,’ p. 376.
2. Page 383.
3. Page 380.
4. Page 380.
1. Page 386.
1. Page 473. The italics in this passage are in the original text.
1. British Summary, p.68.
2. The exceptions are few, and of no importance to the argument.
1. Presented with the American Case, on December 15, 1871.
2. Presented with the American Counter Case, on April 15, 1872.
1. Opinions of the Attorneys-General of the United States, vol. ii, p. 32.
2. The statement of the United States that the Emperor awarded either “damages” or “additional damages in the nature of damages from the time when the indemnity was due” is entirely erroneous. The reference to the Emperor was only to determine a disputed question on the construction of the Treaty of Ghent.
1. Domat, Tit. “Interest,” lib. i, p. 121.
2. Ibid., p. 419.
1. Dispatch of Mr. Fish to Mr. Blow, communicated to Baron Cotegipe on the 28th December, 1869.