Mr. Buck to Mr. Hay.

No. 450.]

Sir: Referring to my dispatch No. 417, of the 7th of April last, transmitting complaints of Mr. John Lindsley and Rev. Eugene S. Booth, of the executive committee of the American Asiatic Society of Yokohama, respecting leases of land in perpetuity in the foreign settlements not having been confirmed as provided by treaty, and in [Page 338]respect to buildings thereon being taxed in violation of the true intent and meaning of treaty provisions, I have the honor to transmit herewith a communication and accompanying memoranduma from N. W. McIvor, esq., attorney for Messrs. Bower & Martin, giving a case in point involving the same questions, this day received. Having as yet received no instruction upon the general subject which was discussed at length in my No. 417, and the next outgoing mail closing to-day, without attempting to discuss in detail the argument submitted by Mr. McIvor, that the papers in the case may possibly be received at the Department in time for consideration before instruction is prepared in consequence of my dispatch No. 417, I forward them at once with a few observations only.

1. In respect to “Form of title and registration,” nothing in the argument set out in the inclosed memorandum, not heretofore presented in the memorandum forwarded with my dispatch No. 417, seems to be presented. The argument, however, is more able and is more forcibly presented. The reference to the position lately assumed by the British Government that the registration of titles as “superficies (perpetual lease)” is not entirely satisfactory (not that it is “not in any sense satisfactory,” as stated in the memorandum) as a substitute for titles held in perpetuity is true and the chargé d’affaires of Great Britain here has now been so instructed and has made such representation to the Japanese Government.

I may add in this connection that since the position taken by the British Government has become known a larger number of American property holders in Yokohama believe that titles held under leases in perpetuity have not been sufficiently confirmed.

2. As to “Separation of houses from lands for purposes of registration and taxation:”

On page 9 of the memorandum, paragraph marked “X,” in discussing the Japanese text of the treaties the words “fudosan “and “jisho “are dwelt upon to prove that the Japanese text, more closely than the foreign texts, establishes the conception of the union of the land and its buildings (fixtures). Notwithstanding the logic of the argument in that respect presented, that “there can be therefore no possible doubt as to what is included in its meaning”—to wit, the union of both land and buildings as one immovable, as claimed—is still in question. This point is discussed under summary No. 3 of memorandum of complaints in my dispatch No. 417. The opinion of the two Japanese law commentators therein cited were their interpretation of articles 86, 87, and 242 of the civil code, quoted on pages 12 and 13 of the memorandum herewith, and the question involved turns upon whether their interpretation is the correct one. The two Japanese were interpreting the provisions of those respective articles of the code since its adoption and as it now stands. Mr. Umé, one of the two commentators referred to, was one of the compilers of the code.

On page 16 of the memorandum is the statement that “it is admitted that the properties have always been freely sold and recorded, even at the ken-cho, as whole properties (including land and its improvements).”

I think that one would draw an erroneous inference from this statement, because until the new treaties went into operation I understand [Page 339]that the registry was made only at the respective consulates, and in case of registry of titles at the American consulate they were registered in full. Even if recorded at the ken-cho, they were entered as properties in land, giving metes and bounds, making no reference to and taking no cognizance of improvements whatever.

In respect to the position taken by Great Britain, as stated in closing paragraph (page 18) of the memoradum, it is true, as I am informed by the British chargé d’affaires, that his Government holds that the buildings on property held under perpetual lease should be considered as included with the land in making transfers, and should not be subject to taxation on registration any more than the land itself. Whether the French Government has yet made an interpretation of its treaty with Japan to the same effect I am not yet advised, though stated in the closing line of the memorandum as having been announced.

There seems to be some force in the general argument of Mr. McIvor, he having made as strong a statement in behalf of his client as possible, and if the treaties are to be interpreted in the light of law and custom in the United States, and if, when the treaty was made with Japan, it was understood and intended by the contracting parties that the status of property held under perpetual lease was to remain unchanged in any respect, touching taxation and registration when extraterritorial jurisdiction was given up, it would seem that the contention against separate registration of building and taxes thereon should prevail.

That the requirement that transfers of property should be registered as superficies (perpetual lease) is disappointing to some degree, is true, as I have stated in previous dispatches, and in conversation with the minister for foreign affairs on this subject he expresses a desire that some arrangement should be made by which actual ownership of property now held under lease in perpetuity can be effected to the satisfaction of the complaining leaseholders. I anticipate that at the next session of the Diet some law to that effect will be urged to be enacted.

I have, etc.,

A. E. Buck.
  1. Not printed.