Mr. Buck to Mr. Hay.
Tokyo, April 7, 1900.
Sir: I have the honor to inclose herewith copies of a communicationa and a memoranduma received from Mr. John Lindsley and Rev. E. S. Booth, claiming to act under instructions of the executive committee of the American Asiatic Society of Yokohama, in which they set out at length many reasons for complaint that the Japanese Government have failed to protect American perpetual leaseholders of property in the former foreign settlements in that port in their rights guaranteed by treaty. Their numerous complaints may be summarized in genera] as follows:
- That leases in perpetuity held by Americans in the foreign settlements have not been fully confirmed by the Japanese Government as stipulated by treaty, but rather avoided instead by requiring their registration as superficies (perpetual leases).
- That in requiring their leases of land to be registered at the kencho (prefectural office) and the buildings thereon at the saibansho (local court), and the charge of 2½ per cent of value of buildings on registration of a transfer of titles to such buildings, are in conflict with treaty provisions.
- That the tax now levied or any tax to be levied by the Japanese authorities on the buildings upon the land held under perpetual leases is a violation of treaty stipulations, properly construed; and that the method employed in estimating the value of buildings for taxation and the taxes so levied are unjust, and with other taxes are a hardship.
- That in consequence of long tenure and use of their lands and buildings under extraterritorial jurisdiction, not taxed and not disturbed by the Japanese Government or the local authorities, prescriptive rights have been acquired and now the Japanese Government, on assuming jurisdiction over their property, should be estopped from enforcing her tax laws upon the building as well as upon the lands.
- That in consequence of the failure of the Japanese Government to comply with treaty obligations in respect of their property rights, their holdings have depreciated in market value, and transactions in selling or mortgaging property are paralyzed.
1. In respect of the first ground of complaint, as summarized above, I have the honor to refer to my previous dispatches upon that subject—No. 364 of October 4 and No. 392 of December 29, 1899; also No. 394 of January 12 and No. 398 of February 5, last, and inclosures; also to the inclosed copy of a note of the minister of foreign affairs to the minister of France; also the inclosed cuttingsa from most of the newspapers published by foreigners in Yokohama and the leading newspaper of Kobe, which in respect to this matter are supposed to voice to a large degree the prevailing opinion of foreign residents in those cities, though not to be taken as evidence in coming to a conclusion on the merits of the case, and all except the Herald regard the course taken by the Government as substantially complying with treaty provisions, to wit: the Japan Weekly Mail of February 3 and 17, last (the latter a republication from the Daily Mail of February 12 and 14); the Daily Mail of the 2d and 5th ultimo; the Japan Daily Herald of February 5 and 12, last; the Daily Advertiser of the 1st ultimo, all published in Yokohama, and the Kobe Chronicle of the 5th ultimo.
In this connection I also respectfully refer in particular to “Regulations relating to foreigners in Japan,” a copy of which accompanied my dispatch No. 338 of July 29, last, under the head of “Registry of immovables” (imperial ordinances Nos. 329 and 333 of July 7, last), in which is prescribed the books of registry of land and other immovables; and with the same dispatch a “Notification of the department of justice (No. 41 of July 10, last) respecting registration; also the authority for the issuance of imperial ordinance No. 458, found in law No. 71 of March 18, 1899, which reads as follows:
With respect to the acquisition, loss, or transfer of property rights in immovables and ships, made by aliens or foreign legal persons before the operation of the revised treaties, the cases in which the registration of the said rights is necessary and the process of registration may be specially determined by imperial ordinance.
Also copies of pagesa of the register books of Yokohama; also copies of two reports, Nos. 1822 and 1829, from George H. Scidmore, esq., deputy consul-general at Yokohama, made on my request. (Mr. Scidmore [Page 326]is a member of the executive committee of the American Asiatic Society, with Mr. Lindsley and Mr. Booth, who present these complaints. Mr. Scidmore is regarded a good lawyer. He has been in the consular service in Yokohama since May, 1876, as consular clerk and then deputy consul-general, and has a good knowledge in respect to what he reports.)
Since the Japanese Government itself executed the leases and, so long as such leases should be held by foreigners, guaranteed their perpetuity, and in case such leases should be transferred to Japanese subjects (imperial ordinance 333 with dispatch 338) they are to acquire actual ownership—which latter fact may be taken as additional evidence of the recognition on the part of the Government of their perpetuity—and since actual ownership is now vested in the Government, it would seem that, so long as such leases were held by foreigners, no one but the Government itself could question the rights guaranteed by it, independent of the fact of treaty stipulations to hold inviolate and confirm all rights guaranteed by the terms of such lease.
Hence, in consideration of imperial ordinance 458 and the interpretation put upon it by the Japanese Government, as given by the minister of foreign affairs, together with the ordinances and regulations above cited, also the facts and opinions presented in inclosures herewith, have or have not leases held in perpetuity been confirmed as required by treaty?
Can rights under leases held in perpetuity, entered in the register provided for the registration of superficies, and entered as “superficies (perpetual leases”) be impaired by that method incident to registration, when the Government, the party of the first part, has guaranteed the rights specified in the leases and has declared by imperial ordinance that method of registration and has interpreted it to mean full compliance with treaty provisions in respect of such leases? If they are to be so impaired, the claimants are right in their contention.
What force there may be in the claim that by the expiration of the present treaty the Government or any individual who may possibly at that time Wave acquired the ownership of land held under perpetual lease will interpose in any way, so far as to work a denial of any right solemnly guaranteed by the Government in the leases themselves, seems to be speculative.
2. Concerning the second cause of complaint, the “notification (No. 41) of the department of justice” in Article II (with my dispatch No. 338 of July 29 last), in carrying out the law of registration in respect of land and buildings being separate and distinct kinds of property to be separately registered, applying to foreigners and Japanese alike, provides that “The local court shall prepare land registers relating to foreigners and foreign juridical persons and registers of buildings relating to the rights of foreigners and foreign juridical persons.”
It is claimed that the buildings, equally with the lands, are included in the word “property” in the provision of Article XVII of the treaty with the United States providing for the confirmation of existing leases; that any transfer of a perpetual lease of the land in conformity with the laws in the United States and in other countries carries with it all buildings upon it as a matter of course, as is clearly to be understood by a proper construction of treaty provisions. That the requirement in case of transfer of property, that the land and buildings are to [Page 327]be registered separately and in separate offices, will cause much inconvenience and vexation to foreign leaseholders I have no doubt; but the question arises whether Japanese or foreign laws should control in this respect. I think all foreigners object and naturally to this requirement as a hardship and an annoyance apart from any charge for registering a transfer of buildings. (See Scidmore’s statement No. 1822, above referred to, paragraph 8.) But in event that objection should be removed and land and buildings were included in one instrument of transfer and entered at one office in the same register, and the charge of 2½ per cent on value of buildings as now required to be paid should still be imposed, the most important cause of complaint would still exist, because the chief contention is that the buildings should equally be exempt from any form of taxation as the lands.
3. This leads to the third matter of complaint: That any tax whatever, whether the charge of 2½ per cent of value of buildings on transfer of lease, or any other public charge or tax on buildings for municipal purposes, is inadmissible under the treaty, and business and other taxes to be levied are cumulative and a hardship.
To fully understand what basis there is for such contention in respect to “house tax,” I beg to refer to the inclosed copy of the “Land regulations for the port of Yokohama,” the only regulations for foreign settlements not contained in the book of “Treaties and conventions of Japan,” which book is presumed to be in the library of the State Department; also copies of two titles of perpetual leasesa of property in Yokohama. (Forms of such leases at other ports are to be found in the book of “Treaties, etc.”)
It will be observed that the regulations of the several foreign settlements vary in terms, as also do the conditions set out in the forms of perpetual leases. In Yokohama and Nagasaki failure to comply with the conditions of annual payment of rent, etc., forfeits the land, and in addition the buildings thereon; while in Tokyo, Kobe, and Osaka, in case of failure of the annual payment of rent, proceedings are to be instituted against the leaseholder. Since in Yokohama and Nagasaki the leaseholders were required by regulations to erect buildings, and in case of default in the annual payment of rent they were to forfeit their leases and their properties, including buildings, were to revert to the Government, which fact is argued to be an additional reason to claim that the buildings are a part of the property and should, under the treaty, be exempt from taxation as well as is the land, may it not be to some degree reasonable and as fair, perhaps, to suppose that this provision was made because, under Japanese law, the land and buildings are distinct and separate properties, and the disposition of the land without specification as to the buildings does not include the buildings? And the buildings, being the absolute properties of leaseholders while the lands are not, may it not be inferred that the Japanese Government provided that on reentering into possession of the land the buildings thereupon should also revert as a penalty for the nonperformance of contracts by the leaseholders?
How much force should be given to the contention that since, in Article XVII of the treaty with the United States, the word “property “is used as applying to leases held by foreigners in perpetuity and the word “land” as applying to grants in perpetuity for public purposes, “reveals the fact in the one case that land and something [Page 328]attached to it was meant” and land only in the other, would seem to depend upon the intention of the high contracting parties to the treaty and the interpretation the two Governments may now put upon the text of that article.
It is contended that under articles 86, 87, and 242 of the civil code,a copied in full on page 18 of the memorandum under discussion, buildings are accessory to the land. Hence, under Japanese law as well as treaty stipulations, a transfer of a lease held in perpetuity necessarily, unless stipulated to the contrary, carries with it a transfer of the buildings, and for that reason no separate registration nor any charge therefor should be imposed upon them as separate and distinct properties. As to whether such argument is sound, as it would be under the laws of the United States perhaps, the opinions of some Japanese authorities will throw some light.
Interpreting article 87 of the civil code, Dr. Umé, professor of law in the Imperial University of Tokyo, and member of the code investgation committee, states: “An accessory has two necessary requisites, according to this article (87): 1. It must be for the constant use of its principal thing, as a key to a box or a bucket to a well. A thing used for a time is not an accessory, as a table or chair, to a house. 2. An accessory must be owned by the owner of the principal thing; that is to say, the owner of the two must be the same, else the accessory can not follow the disposal of the thing to which it is attached. This article of course shows the general rule that an accessory follows the principal thing. If there should be any contract or promise to the contrary, such contract or promise must be followed.”
Also the opinion of Mr. Okamatsu, lecturer on the civil code at the Tokyo Law School, the Meiji Law School, the Semmon Gakko, etc.: “To be an accessory a thing must fulfill the following five conditions: 1. It must be another thing than the principal thing. 2. It must be attached to another thing. 3. An accessory must belong to the owner of the principal thing. This provision is not found in foreign codes; but if the tenant of the land or the occupant of a building attaches to the land or building his own things for his own use, it is unjust that he should thereby forfeit his ownership of the things so attached. 4. An accessory must be for constant use. 5. The constant use must be for the sake of the principal thing.”
Interpreting article 242 of the civil code, Mr. Okamatsu states, after summarizing the provisions of the laws of most foreign countries relating to land and buildings thereon: “To acquire an accessory immovable with the principal immovable according to this article (242), the said accessory must fulfill the following conditions: 1. It must be attached fixedly and permanently to the immovable. 2. It must be attached to the immovable as an accessory (subordinate) to it. An ‘accessory’ (subordinate) here means a thing that is joined to another [Page 329]thing, is used for the same economical purpose, and can be regarded as one thing in the everyday life. If, therefore, there is no relation of superior and subordinate between the two immovables, and they are independent of each other, then they are two separate things, both in fact and in law, and can not be said to be attached to an immovable. Take, for example, a house. It is in nature attached to the land. But the ideas of our country up to the present day have regarded it as a thing independent of the land and not as belonging to the land. Hence the question of attachment to an immovable can not here arise.”
The closing lines of the opinion of Mr. Okamatsu, in respect to article 242, underlined as above, if a proper interpretation of that article of the code, would seem to destroy the argument of the complainants based on their interpretation of the code in respect of accessories. I know of no Japanese decision or opinion in conflict with the opinions of Mr. Okamatsu and Dr. Umé upon the subject of accessories under Japanese law.
If the interpretation of Article XVII of the treaty must be interpreted in the light of and in conformity with the laws of the United States, then it would seem that the argument of the complainants should hold good.
Further, it will be observed that the land regulations for Yokohama provide for the foreign holders of perpetual leases to levy taxes upon their lands and buildings for lighting and cleaning streets and for a police force. Since, under extraterritorial jurisdiction, it was provided that they might tax their own property, including buildings, for the purposes stated, now that their power to tax has ceased to exist, can the claim that the Japanese authorities, under whose jurisdiction they now are, have no right to tax their buildings for municipal purposes hold good? Are foreign leaseholders, in consequence of now having come under Japanese jurisdiction, free from any obligation to pay taxes levied by the Japanese authorities though they may not have levied a tax upon themselves as provided by the regulations while under extraterritorial jurisdiction?
The French treaty with Japan is cited and Article XXI is quoted in support of the claim of exemption from tax on buildings as well as land. While that article of the French treaty is considered somewhat stronger in expression, as implying that the word “propriétés” was intended to include buildings, than Article XVII of the United States treaty, yet the French minister here, who contends for exemption from the “house tax,” expresses much uncertainty of success. The matter is still pending and he is awaiting instructions, in doubt whether he will be supported by his Government in his claim. Neither the German nor the British minister has confidence of the success of such contention, and, I understand, have not objected formally to the imposition of the tax on buildings. Both have stated that they did not see much hope of success of such claim of exemption. Meantime the Japanese Government has not announced any decision upon the question.
In my dispatch No. 365, of October 6 last, it will be remembered that I stated that I had made no claim of exemption from the registration tax on value of buildings because of doubt of the grounds upon which to base such a claim. In instruction No. 260, of November 6 last, acknowledging the receipt of both that dispatch and my No. 364, of October 4, I was not directed in respect of what action, if any, I was to take upon that question in particular; but the clause of that instruction [Page 330]which stated that, “in the assignment of leases between private parties for private purposes, citizens of the United States are subject to the same registration fee or charge as is imposed on Japanese subjects, unless the original leases specify to the contrary,” I understand to mean, not only that the charges made on the registration of buildings when transferred with or without the land (which is hereinbefore discussed), but also that other taxes by the Japanese authorities on buildings on the property of a foreign holder of a perpetual lease for municipal or other purposes could be required to be paid, the same as if a Japanese subject held the property instead, since the leases themselves do not stipulate to the contrary.
As to the manner of estimating the value of buildings for taxation and the taxes so levied being unjust, and numerous other taxes and charges a hardship, there seems to be, under treaty stipulations, no legal ground of complaint. The same method, as I am informed, is employed in estimating the house tax of Japanese subjects and the same rate of tax levied, the tax law applying to Japanese and foreigners the same. In this respect it seems that no charge of discrimination against foreigners can successfully be made, and it will be observed that no such charge is specifically made in the memorandum of complaints. Whether these taxes may be unjust, and with numerous other taxes a hardship or excessive, is shown in some respects by the following inclosures: The statementa of Mr. John McLean, vice and acting consul-general of the United States at Yokohama, giving value of land and buildings owned by him in the foreign concession of the Bluff; also in respect to the property which is now occupied by the consulate and the taxes paid thereon; also the statement of Mr. Scidmore, No. 1822, above cited, in respect of the value of the property of the Grand Hotel, the Yokohama Club, and the Oriental Hotel, all on the Bund and within the foreign settlement, and the taxes paid on the land of each, respectively. As to other taxes sought to be levied being cumulative or excessive—the business tax, income tax, and other charges complained of—laws No. 32 and 33, inclosed with my dispatch No. 359,a of September 27, 1899, in respect of “business tax” and “revised income tax law,” will furnish definite information.
4. In the matter of prescriptive rights claimed to have been acquired by long tenure and use of property in the foreign settlements under extraterritorial jurisdiction, while my opinion is that that contention is not well founded, I need not discuss the question pending instruction from the Department.
5. Finally, in respect of the fifth subject of complaint—that because of the failure of the Japanese Government to comply with treaty obligations, about which statements of grievance in general and particular are set forth and because of which it is claimed that property has depreciated in value so much that no real estate transactions are made—my information on inquiry is that, of American residents, property holders, in Yokohama only about one-third are in support of this and other complaints, and not a majority even of the American Asiatic Society, for which the two gentlemen addressing me speak, except the complaint touching the requirement for separate registration of buildings and lands at separate offices in a transfer of perpetual leases including buildings. The president of that society, Mr. J. R. Morse, and Mr. Scidmore, [Page 331]a member of the executive committee in whose behalf these complaints are submitted, and others have personally expressed to me their impatience with the course taken by the complainants in general, but have submitted to it that the questions raised might, once for all, be settled at the Department of State. They say that the reason for the paralysis of trade in perpetual lease property is largely due to the agitation by the leaseholders themselves, and that of course property can not have the market value it should have when the holders discredit their titles.
In remarking generally on these complaints I think I am justified in saying that some of our American residents in Yokohama who hold perpetual leases, together with a large proportion, perhaps a majority, of property holders among the British and German subjects, have from the first been opposed to treaty revision by which extraterritoriality has now been abolished. They have constantly been apprehensive concerning their fate when the new treaty should go into operation. They have been looking for and expecting trouble under Japanese control; and it is not to be wondered at when it is considered for how many years they have lived in Japan but not of it, so independent and free from vexatious taxes and many other burdens incident to city life in their own country. They have regarded the Japanese as inferiors and now, being under the control of Japanese law and Japanese officials, some of them, though unwittingly no doubt, are inclined to exaggerate their troubles. Having little confidence in the purposes of the Japanese Government and local authorities, it is hard for them to adjust themselves to their new conditions. That they already have had and will continue to have some reason to complain of inefficient local officials is not to be denied; but in my opinion they have no sufficient reason to suspect the good faith of the Government, which seems to be earnest in the desire and purpose to demonstrate to the world that Japan has not been received into the family of nations too soon.
Though of some specific claims and items of complaint set forth in the memorandum no special mention has been made, I think they are substantially covered by my statements in respect to the various classes of complaints, together with the inclosures and the laws and regulations to be found at the Department.
That imperial ordinance No. 458 is disappointing, and that the term “superficies” (perpetual lease) is used instead of simply “perpetual lease” gives occasion of complaint because of ambiguity of definition is true; and if the conclusion of the State Department should be that, in consideration of treaty stipulations, there is sufficient ground for further appeal to the Japanese Government for a more specific and direct confirmation of leases held in perpetuity, I shall, of course, press the matter with vigor, as I also shall in event of instructions to do so in respect of any other of the matters of complaint. I desire to do all in my power to protect American interests and that every right guaranteed to them by treaty shall be made secure; and I would be pleased if it were possible for American residents to remain as free from taxation as they were under extraterritorial jurisdiction.
I have, etc.,
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referred to are as follows:
- Article 86. Land and things fixed to it are immovable (fudō-san, the word used in the Japanese text of the treaty with France). All other things are movables. Obligations performable to bearer are deemed to be movable.
- Article 87. If the owner of a thing attaches to it another thing owned by him for permanent use in connection with it, the thing attached becomes an accessory. The accessory thing is subject to all dispositions made of the principal thing.
- Article 242. The owner of an immovable thing (fudō-san) acquires the ownership of a thing which is attached to it as an accessory, but this does not affect the rights of a person who by virtue of a special title has attached the thing to the other.
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