Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1897
[Untitled]
To the Senate:
I transmit herewith, in response to the resolution of the Senate of February 24, 1897, a report from the Secretary of State in relation to the claim of M. A. Cheek against the Siamese Government, with accompanying papers.
Washington, March 2, 1897.
The President:
In answer to the resolution of the Senate, dated February 24, 1897, requesting that that body be furnished with “all the information in possession of the Department of State relating to the claim of M. A. Cheek against the Siamese Government,” I have the honor to say that the correspondence on file in this Department relating to the claim of M. A. Cheek against Siam is so voluminous that it is physically impossible to place copies of it before the Senate during the continuance of the present session. There are not less than 2,000 pages of typewritten matter. The resolution, moreover, does not call specifically for correspondence, but for information. I submit, therefore, as a substitute for the full correspondence, a brief synopsis of the case, together with copies of the most recent communications that have passed between the two Governments:
synopsis.
April 23, 1889, Dr. M. A. Cheek, a citizen of the United States, residing in Siam, entered into the following agreement with Prince Warawan Nakorn, who represented the Government of Siam:
- First. That His Royal Highness Prince Warawan Nakorn agrees to advance to Dr. M. A. Cheek the sum of 600,000 ticals to be used in the working of teak forests and the purchasing of teak wood.
- Second. That Dr. M. A. Cheek shall, by the way of security, execute a bill of sale mortgage in favor of His Royal Highness Prince Warawan Nakorn on all teak wood now belonging to Dr. M. A. Cheek, according to a schedule accompanying this agreement, and on all teak wood which may be worked or purchased by him during the currency of this agreement; also on 76 elephants now belonging to Dr. Cheek and on all elephants which may be purchased by, or which may become the property of Dr. M. A. Cheek during the currency of this agreement. Dr. Cheek shall pay to His Royal Highness Prince Warawan Nakorn interest at the rate of 7½ per cent per annum on all moneys advanced to him by His Royal Highness Prince Warawan Nakorn.
- Third. That Dr. Cheek will deliver at Bangkok, at an estimated price of 3 pikot, all wood which may be worked or purchased by him; upon the arrival of the wood at Bangkok the estimated price of 3 pikot shall be released and Dr. Cheek may at any time after such delivery draw from His Royal Highness Prince Warawan Nakorn the amount of money so released for carrying on the work up country.
- Fourth. That at the end of each season (about the 31st of March) Dr. Cheek shall make up his books and render a statement of the amount of wood in stock, the value of such wood, and the actual cost of wood delivered at Bangkok during the season; the difference between the actual cost of the wood delivered at Bangkok and the estimated cost of 3 pikot shall be debited or credited as the amount may be found to be greater or less than the estimated cost of 3 pikot. In reckoning the cost of the wood delivered at Bangkok, Dr. Cheek shall include all expenses incurred in the handling of the wood. Dr. Cheek shall receive no salary.
- Fifth. That Dr. Cheek shall have the management of the working of the teak forests, and of the buying and selling or disposing of the wood. Dr. Cheek will sell the wood at Bangkok, or will cut up and ship the wood as may be most profitable to the parties to this agreement, provided that the wood is not sold at a price of less than 3 pikot. Dr. Cheek shall not sell the wood at a less rate than 3 pikot, except with the knowledge of His Royal Highness Prince Warawan Nakorn. If the wood can not be sold at a price amounting to 3 pikot, His Royal Highness Prince Warawan Nakorn shall have the option of taking the wood over the rate of 3 pikot, or disposing of it.
- Sixth. That Dr. Cheek shall make up the books of the teak business on the 31st of March of each year, and the profits realized shall be divided as follows: His Royal Highness Prince Warawan Nakorn shall receive one-third and Dr. M. A. Cheek shall receive two-thirds of the net profits.
- Seventh. That during the currency of this agreement all forest leases now held by Dr. Cheek, or which may be acquired by him, shall become the property of His Royal Highness Prince Warawan Nakorn.
- Eighth. That all teak wood now held by Dr. Cheek (except 4,400 logs to be delivered to the Borneo Company, Limited) and all wood worked by him during the currency of this agreement shall be dealt with according to the terms of this agreement.
- Ninth. That this agreement shall remain in force for a period of ten years from the date of signing unless Dr. Cheek shall at any time settle up the account and pay to His Royal Highness Prince Warawan Nakorn such sums of money as may be due to His Royal Highness Prince Warawan Nakorn from him.
- Tenth. That Dr. Cheek shall, from time to time, advise His Royal Highness Prince Warawan Nakorn of all transactions connected with the working and purchasing and selling of the wood.
- Eleventh. It is hereby agreed that no liabilities for losses incurred in the management of the business shall be shared by His Royal Highness Prince Warawan Nakorn.
Warawan Nakorn.
Marion A. Cheek.
Witness:
Devawongse.
On the same day Cheek executed to the same representative of Siam the following instrument, which is designated by the parties as a “bill of sale mortgage.”
I, Marion A. Cheek, resident of Chiengmai, for and in consideration of the sum of six hundred thousand (tls. 600,000) ticals to be paid to me and on my account by H. R. H. Prince Warawan Nakorn, according to the terms of articles of agreement drawn up and signed this 23rd day of April, 1889, by and between H. R. H. Prince Warawan Nakorn of the first part and Marion A. Cheek of the second part, do hereby grant and sell unto H. R. H. Prince Warawan Nakorn and his assigns forever the teak wood and elephants according to a schedule hereto annexed, the said teak wood and elephants being my lawful property.
Provided, nevertheless, and this mortgage is upon the condition that if the said M. A. Cheek shall pay or cause to be paid to H. R. H. Prince Warawan Nakorn, or his assigns, the said sum of six hundred thousand (tls. 600,000) ticals with interest thereon at the rate of seven and one-half (7½ per cent) per cent per annum from the date of the payment of the same to M. A. Cheek or on his account by H. R. H. Prince Warawan Nakorn, then this mortgage shall be void, otherwise to remain in full force and effect.
And provided further, That until default be made by M. A. Cheek in the performance of the conditions of this mortgage or in the performance of the conditions of the said articles of agreement for the working of teak wood drawn up and signed this 23rd day of April, 1889, by and between H. R. H. Prince Warawan Nakorn and [Page 463] M. A. Cheek, it shall he lawful for M. A. Cheek to retain possession of and to have the management of the said teak wood and elephants, to use the same for the joint benefit of H. R. H. Prince Warawan Nakorn and M. A. Cheek according to the conditions of the said articles of agreement hereinbefore mentioned.
M. A. Cheek.
Witness:
Devawongse.
(Here follows a list of Cheek’s property to which the lien was to attach.)
The amount named in the above quoted instruments, to wit, ticals 600,000, was paid to Cheek. January 23, 1890, the Siamese Government advanced Cheek ticals 200,000 additional, upon terms set forth in the following instrument:
This agreement, made the 23rd day of January, 1890, supplementary to the agreement of the 23rdof April, 1889, between His Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse of the one part, and Dr. M. A. Cheek of the other part.
Whereas under the agreement of the 23rd of April, 1889, entered into between His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse and the said Dr. Cheek, a sum of six hundred thousand ticals (tls. 600,000) was advanced to the said Dr. M. A. Cheek by His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse for the purposes specified therein; and whereas the said Dr. Cheek is now desirous to have a further advance of two hundred thousand ticals (tls. 200,000) in addition to the sum of six hundred thousand ticals (tls. 600,000) already advanced by His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse under the agreement aforesaid; and whereas His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse agrees to advance the same;
Now it is mutually agreed between the said parties as follows:
- First. That for the considerations already expressed and specified in the aforementioned agreement of the 23rd of April, 1889, His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse advances the sum of two hundred thousand ticals (tls. 200,000) to the said Dr. M. A. Cheek (of which receipt is hereby acknowledged), and the said Dr. M. A. Cheek hereby agrees and promises to pay to His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse interest at the rate of seven and a half (7½ %) per cent per annum on the said sum of two hundred thousand ticals (tls. 200,000).
- Second. That as a security for the payment of the said sum of two hundred thousand ticals (tls. 200,000) so advanced by His said Royal Highness Krom Mun Naradhip Prabhandhbhongse the said Dr. M. A. Cheek hereby agrees to mortgage, under the bill of sale hereto annexed, all his properties as specified in the schedule attached to the bill of sale to the said His Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse.
- Third. That the provisions of Clauses II, III, IV, V, VI, VII, VIII, IX, and X of the aforesaid agreement of the 23d of April, 1889, entered into between the said Dr. M. A. Cheek and His said Royal Highness Prince Krom Mun Naradhip Prabhandhbhongse shall in all respects be applicable to this present agreement as if they were inserted therein, in so far as they are not contrary to the terms of this present agreement.
In witness whereof, the parties hereto have signed and sealed this present agreement on the date first above written.
Naradhip.
M. A. Cheek.
Witness:
Devawongse.
Estimating a tical to be worth 50 cents in currency of the United States, the whole amount advanced to Cheek by Siam upon the terms set forth in the contracts quoted was $400,000.
It appears from Cheek’s memorial that he had, previous to any of these agreements with Siam, leased large tracts of teak forest in Upper Siam, which he needed capital to work. The capital needed was furnished to him by the Government of Siam, as above shown. In explanation of the legal effect of his contracts with Siam Cheek sets forth the usages of the industry upon which he entered in Siam. It requires, according to his statement, about three and a half years to get a log of teak timber from the stump to the market in Bangkok. The logs are first girdled, then cut, and then dragged to the nearest stream by [Page 464] elephants. Thence they are floated, first singly and afterwards in rafts, down these steams into the main river, which carries them to Bangkok. In the dry season the small streams are too shallow to float the logs, and they lie where they are cut until the arrival of a season of sufficient water to float them.
At the time of his agreement with Siam, Cheek had logs in all stages of progress toward the market. At the end of the first year of his contract with Siam he paid the interest for that year upon the money advanced. The second year, ending March 31, 1891, was a dry year and very little timber was got into market. Cheek was compelled to employ the proceeds of his second year’s sales in keeping up the work in the forests, it being necessary to make advances to his employees and subcontractors. In view of these facts the Siamese Government indulged Cheek in consideration of his promise to pay compound interest on the advancement for the second year—that is, the interest due was added to the principal.
The next season, ending March 31, 1892, was worse than the preceding, and Cheek failed a second time to pay the interest on the Siamese advancement. The proceeds of his sales for that year were in fact insufficient to keep the forest work going on, and he was compelled to raise additional funds by some means. He had at this time, according to his statement, a sufficient quantity of logs in the forests and in the streams to pay, when sold, the full amount of the advancement made to him by Siam, both principal and interest, and to leave a handsome surplus for himself.
Cheek endeavored to get money from the Bombay-Burmah Trading Corporation by a sale for cash of logs to be delivered the following season (1892–93). Since Cheek’s agreement with Siam compelled him to dispose of his logs in a manner therein specified, his proposal to the Bombay-Burmah Trading Corporation required the sanction of the Siamese Government, which was refused. Cheek then sought relief from another lumber company called the Borneo Company, and made with that company a provisional arrangement by which for a reasonable commission, in addition to the actual cost of transportation, that company undertook to transport during the coming season all the teak logs in the water at the time of the negotiation, and all others which Creek might be able to put into the water. He had at that time 12,000 logs in the streams and hoped to put in 8,000 more, making in all 20,000 logs to be transported by the Borneo Company. Cheek valued these logs at rupees 48 to 50 each, and he expected to raise on them at least rupees 576,000—estimating the rupee at 33⅓ cents, amounting to about $192,000. This provisional arrangement was also subject to the ratification of the Siamese representative, and was rejected by him.
Cheek was then left without funds to pay the interest on the Siamese advance or to continue his work. August 20, 1892, the Siamese Government notified our consul general at Bangkok that all of Cheek’s timber arriving after that elate would be taken over as the property of the Government. At the same time a Government official seized the logs already in Bangkok and others belonging to Cheek which had reached a place higher up the river called Chainat. This official continued to seize logs as they came down. September 11, 1892, the Siamese representative telegraphed Cheek, who was up in the forest country:
Wood received. Will be sold at public auction. Proceeds in bank until your settlement.
Cheek protested, but in vain.
Cheek claims that under his contracts with the Siamese Government, as construed in accordance with the usages of the enterprise in which he was engaged, annual interest was to be paid upon the money advanced to him only when the season had been good and he was able to raft his logs. In bad years the partner or lender who had advanced the capital was required by local custom to let the interest go over until a good season, when all past dues would be liquidated. Failure to pay interest at the end of a year in which it was impracticable to market the timber was not, Mr. Cheek claims, a breach of contract justifying any proceeding in the nature of foreclosure.
Cheek makes the further point that the summary method adopted by the Siamese Government was unlawful and injurious to him, even if he had been legally in default.
The logs seized by the Siamese Government were sold at auction at much less than their value, and the proceeds appropriated by the Government. The next season, the winter of 1892–93, proved to be favorable for rafting timber, and had Cheek been permitted to go on with his work without molestation from the Government he would have been able to bring down all the logs he had cut, in value, as estimated by him, of rupees 640,000, about $214,000. Even if the logs had been held in Bangkok without sale they could have been used as a basis of credit under Clause III of the agreement, to the extent of rupees 380,000, about $126,666, an amount in excess of all that the Siamese Government could at that time, by any construction of the agreement, have claimed from Cheek. But for this premature, arbitrary, and illegal action of Siam, Mr. Cheek contends, he would have been able to provide for current expenses, to pay off all interest due, and 100,000 rupees of the principal debt, besides keeping up the credit with his foresters and contractors which he had been so many years building up and carefully maintaining.
Not content with the summary seizure of all Cheek’s logs that came down the river, the Siamese Government, July 15, 1893, published the following royal proclamation:
July 15, 1893, Chow Mun Raj abut, chief of the mahathai (department of the north), and commanding officer of the province of Chiengmai, has received orders from Phya Song Suradet, chief commissioner of the Lav Chieng States, that the following notice be published:
Whereas the minister of the royal treasury has sent an official letter No. 596/5892 dated the 9th September, 1892, contents as follows:
“Formerly Dr. M. A. Cheek made a written agreement and borrowed a large amount of money from the royal finance department for the purpose of working forests, and mortgaged forests, wood in forests and in streams, elephants, implements for forest work and debtors all and singular as security for the royal treasury with sundry conditions as set forth in said agreement.
“Afterwards Dr. M. A. Cheek violated the agreement in many particulars. Therefore Chow Mun Mahatlek was appointed commissioner of the royal treasury, with full power of attorney to act for the minister of finance in the province of Chiengmai. Therefore, anyone a debtor or creditor of Dr. M. A. Cheek, or who has charge of elephants or teak wood or implements for forest work, let him report to Chow Mun Mahatlek, commissioner at Chiengmai of the royal treasury, within the period of fifteen days from the date of this notice. If anyone is a debtor or has charge of elephants or teak wood or implements for forest work, let him give a correct report to the commissioner within the time appointed. The commissioner will deduct, relinquish, forego a suitable portion (of the debt). If afterwards it be ascertained that elephants, wood, implements for forest work, or debtors be concealed, secreted, removed, or falsely reported, and proper account be not rendered to the official, the said officer will prosecute in court (such offender), and they will be fined according to the law.”
(Seal of Chow Raj abut.)
This embargo completed the demolition of Cheek’s business, and left him a ruined man in the midst of the fourth year of his ten year contract with Siam.
The questions which, according to the claimant, are involved are (1) the legal relations of the two parties to the contract—whether Cheek was a partner with Siam or a mere borrower of money; (2) whether Cheek was legally in default at the time the Siamese Government seized and sold the logs and published the manifesto of July 15, 1893; (3) whether the Siamese Government adopted a lawful remedy in case it should be found that Cheek was in default and was liable to a legal proceeding for the recovery of money due that Government.
In relation to the third point, it is contended for Cheek that the local law of Siam provided an adequate judicial remedy against him; and that the consular court of the United States was also a forum clothed with powers ample for the purpose of enforcing his obligations to Siam. The summary method of proceeding resorted to by Siam was Cheek claims, in violation of Siamese law and also of the treaty between Siam and the United States. Cheek’s losses are estimated by him at rupees 1,607,331 ($535,777). From this amount he deducts the principal and unpaid interest of the Siamese advancement to him, amounting to rupees 1,266,218, leaving a total claimed by Cheek as damages of rupees 341,113 ($113,704).
the Siamese reply.
The Siamese Government has filed an elaborate reply to Cheek’s claim, and alleges large indebtedness on the part of Cheek’s estate as still existing and unpaid. According to the statement of Siam, Cheek was deeply in debt when the Siamese Government came to his relief in 1889. A considerable portion of the 800,000 ticals advanced to him was paid to his creditors and the residue thereof was applied to the timber business. On his first failure to pay interest (March 31, 1891) he was given as a favor another year in which to pay it. At the end of the second year (March 31, 1892) Cheek not only was unable to pay the accrued interest for the two preceding years, but he had not sufficient funds to continue the business, and was unable to raise money except by methods which involved the Siamese Government as his surety. Seeing that his financial condition was hopeless and that the only means of obtaining repayment of even a part of the money advanced to him was by immediate action, the Siamese Government decided to seize such timber as should come down the river and apply the proceeds to the indebtedness. The argument for Siam apologizes for, rather than defends, the order of July 15, 1893, which placed an embargo upon Cheek’s business and destroyed it.
Siam’s view of the case is apparently that when Cheek violated the conditions on which money was advanced to him by failing to pay the interest accrued thereon, the transfer of property made in the “bill of sale mortgage” became absolute, so that Siam in seizing the logs seized the property of the Government, and not the property of Cheek. It is declared in the Siamese argument that there is no law of mortgages in Siam, and therefore no procedure in the nature of foreclosure; that seizure and appropriation by an officer of the royal treasury was the legitimate and the only method of enforcing the rights of Siam as against Cheek in this case.
Cheek had, besides the logs seized by Siam, other property in upper Siam, which was also included in the “bill of sale mortgage.” This [Page 467] property was not seized by the Siamese Government, and when Cheek died it went into the hands of his administrator. Siam contends not only that the seizure of Cheek’s logs and the other acts of the Government were lawful, but that the proceeds derived therefrom were insufficient to pay Cheek’s indebtedness to Siam. The property now in the hands of Cheek’s administrator is claimed by Siam as being subject to the “bill of sale mortgage” above referred to, and responsible for the amount of indebtedness still unliquidated. In other words, Siam has presented a counterclaim against Cheek.
nature of the cuse, not the merits, stated.
I have undertaken in this brief outline of the Cheek case to show the nature only of the controversy, and not to indicate the merits of either claimant. The merits of the case can be determined only from a study of the entire mass of evidence and consideration of the elaborate arguments filed on both sides. These will be presented later should the Senate desire, after reading this brief review of the case, to take it upon its merits.
I append hereto copies of the recent correspondence, which will show the present status of the negotiation for the settlement of this claim. The two Governments have agreed substantially upon settlement by arbitration, but the details and formalities remain to be completed.
Respectfully submitted.
Washington, March 1, 1897.