Mr. Buck to Mr.
Hay.
United
States Legation,
Tokyo, October 4,
1899.
No. 364.]
Sir: I have the honor to inclose herewith a
copy of a note addressed by me to the Japanese minister of foreign
affairs concerning the registration of transfers by assignment of titles
to property held under perpetual leases in the foreign settlements of
the country.
[Page 316]
It seems to me that the requirement of payment, as a revenue to the
Government, of 2½ per cent of the value of any property held under a
perpetual lease, confirmed by the treaty, is inadmissible—that such a
burden placed upon the property should not be borne by the assignee, who
should stand in the same position in respect to such property, in all
respects, as the original holder.
That a title to property under a perpetual lease should be registered as
a superficies, thereby restricting the uses of the property, and,
perhaps, the duration of its use, seems to me clearly inadmissible, as
it certainly would change the conditions contained in the original
lease.
Though I may possibly be in error in my position in respect to the
registration tax of 2½ per cent of the value of the property since there
is no law compelling an assignee to register, I am confident that I am
correct in my opinion as to the registration of property as a perpetual
superficies being in violation of treaty stipulations in respect of such
property.
Awaiting notification of the decision of the Japanese Government in reply
to my note, I have the honor to ask instructions upon the questions
involved, that I may make no mistake should I insist upon the Japanese
Government recognizing the correctness of the position I have already
taken.
I have, etc.,
[Inclosure.]
Legation of the United States,
Tokyo, September 30, 1899.
No. 164.]
Sir: Referring to the brief conversations
we have had recently in respect of the registration tax of 2½ per
cent upon the value of property held by foreigners in the respective
foreign settlements in Japan under perpetual leases by the
Government, which, as I am informed, is required by the registering
officers to be paid in registering any transfer or assignment of
such leases; and also in respect of such registration of such
perpetual leases being required to be made as perpetual superficies,
I have thought it best to express to your excellency in writing, in
short, some views touching these matters now entertained by me.
By the stipulations made in Article XVII of the treaty between the
United States and Japan in respect of the several foreign
settlements whereby such settlements are incorporated with the
respective Japanese communes, it appears that existing leases in
perpetuity in foreign settlements must be confirmed, and that any
new conditions whatever imposed by the Government are in
contravention of the rights of the holders of real property under
such leases. If I correctly understand the full import of the
foregoing stipulations, the 2½ per cent of the value of the property
so held, if imposed in registering a transfer of title, is a tax
upon the property not contemplated, and, as it would seem, is
inadmissible. The imposition of such a tax by so much reduces, in
effect, the value of the property and changes the original
conditions of the lease itself, which stipulates a certain sum to be
paid annually to the Government—an annual tax upon the land, and the
only tax, as it appears to me (except certain municipal taxes
provided for in the leases themselves and in the agreements entered
into between the Government and the representatives of the treaty
powers), that, under the provisions of the treaty, can rightfully be
levied upon it by the Government. It seems that the leaseholder
fully complies with the terms of the contract of lease made between
the Japanese Government and himself when he annually pays his
stipulated rent; and in registering a transfer or assignment of a
perpetual lease, such additional sum to be paid to the Government by
the assignee on the value of the property so transferred, though
called a registration tax, is an additional tax upon the property
for revenue, which, however, would not be the case if a fixed
registration fee only was required, without regard to value, upon
all transfers of property alike in compensation for the work done in
registering, in which no additional income to the Government from
the property was to be derived.
I may add that while the forms of the deeds of title giving leases of
perpetuity in the foreign settlements vary in their wording in some
nonessential particulars, the titles in all cases are granted by the
Government not only to the original holders,
[Page 317]
but, in terms, to their heirs and assigns as
well, and, as I conceive, no tax should be imposed by the Government
upon the heirs or assigns of the original lease in addition to that
imposed upon the original lessee. It may be claimed that the
registration of a transfer of an assignment of title to an assignee
is not made obligatory by law and is to be registered or not at the
option of the assignee; but to protect his title against a third
party (who through fraud by the original holder of the property
might acquire a second assignment of title which would be good if
first registered), he must have his assignment registered for his
protection and is thereupon compelled to pay 2½ per cent of the
value of the property not contemplated in making the original grant
of the title, which was made, as already stated, not only to the
original holder but to his heirs or assigns, thus, in my view,
imposing in effect an additional condition upon the title confirmed
under the treaty.
The registration of such perpetual leases at the Saibansho by which,
if I am correctly informed, such leases are to be registered as
perpetual superficies, will also, in my opinion, change the
conditions of the original contracts of lease, inasmuch as a
superficies, if I correctly understand the meaning of that term,
restricts the holders of such a lease to uses of the land in certain
respects, and. in some contingencies, though declared perpetual,
will restrict its duration also, and consequently impairs the value
of the property. By the terms set out in the original perpetual
leases the leaseholders have the perpetual use of the lands for all
purposes whatever and for all time, provided they keep up their
annual payments as stipulated in the original contracts of
lease.
Knowing that your excellency’s Government does not intend or desire
to put any additional burden upon citizens of the United States
holding property in the foreign settlements under their perpetual
leases not warranted by the treaty between the two countries, I have
the honor to submit to your excellency the foregoing statement for
such consideration as the merits of the questions involved will
warrant.
I avail, etc.,
