Mr. Bryan to Mr. Hay.

No. 438.]

Sir: I have the honor to acknowledge the receipt of your telegrama of July 30, and to confirm Mr. Dawson’s replya of July 31 thereto; and to state that I had received on July 19, through the consular agent, a statement of the difficulty from Mr. E. H. Müller, an American citizen resident in Rio Grande do Sul, and the managing partner of Thomsen & Co. A copy is herewith inclosed. At the same time the legal statement of Mr. Midler’s Brazilian counsel was received.

It was clear to me that the attachment would greatly injure an important American business enterprise and, after carefully considering the legal question involved, that the firm of Thomsen & Co. would have a right to ask the Brazilian Government for damages through the diplomatic channel should it be enforced, accordingly I determined to take personal and unofficial action.

I received the following telegram from Consular Agent Vereker:

Rio Grande, July 25, 1902.

With reference to my letter of the 12th instant, Edward Müller has been summoned to pay the amount claimed by the Government under penalty of summary attachment, which is now imminent. Legal measures have been exhausted, and he represents the urgent necessity of intervention to avoid vexatious injury.

Vereker, Consular Agent.

and the following cablegram from Mr. Thomsen’s lawyer in New York:

New York, July 26, 1902.

Retained by Thomsen, American citizen, in inheritance tax matter. Believe proceedings illegal and threatened attachment oppressive and unconstitutional. Desire same prevented if possible.

Eugene Robinson.

Knowing that the attachment was in the hands of an executive officer of the State of Rio Grande for enforcement, and being confident of the friendliness of the eminent president of Rio Grande, Dr. Borges [Page 109] Medeiros, to American interests as shown during my visit there and repeatedly since, I ventured to send him the following telegram.

Petropolis, July 28.

I ask your excellency’s intercession with the minister of justice to delay the attachment against Thomsen & Co. until I shall have an opportunity to investigate the matter.

To this was received the following favorable response:

Porto Alegre, August 1.

Complying with your wishes, I have to advise you that I have taken measures in the direction of sustaining the inventory of Thomsen & Co. Cordial greetings.

Borges Medeiros.

On receipt of your telegram of July 30, Mr. Dawson went to Rio and called upon the minister for foreign affairs, asking for his good offices with the State authorities of Rio Grande. Dr. Magalhaes stated that the executive had no power to intervene with the administration of justice by the courts, and was reluctant to promise to take any action. At his suggestion Mr. Dawson left with the director-general the following memorandum note:

Rio de Janeiro, August 1, 1902.

Viscount Cabo Frio,
Foreign Office, Rio de Janeiro.

Dear Sir: I have just seen Dr. Magalhaes about the Thomsen penhora, according to your suggestion, and he has asked me to put our request in writing in the form of a note to you, so as to furnish a basis for telegraphing.

We ask respectfully that your department represent to the procurador especial de fazenda do estado do Rio Grande do Sul that his insisting upon an immediate penhora against Mr. Müller and the property under his charge will be unnecessary and unwise.

A penhora being a summary process, Mr. Muller will undoubtedly, after it is imposed, make a claim through our legation on the ground that he had no opportunity to have a court of law ascertain how much he and the firm he represents really owes on account of the inheritance tax of the former partner in the other firm.

A telegram to the procurador or his superior officers need not be in any sense an intervention. It would only be a request that he delay the matter of the penhora until it can be investigated, thus relieving the United States legation and your office of a tedious diplomatic claim.

This legation will insist that Mr. Muller promptly submit to the judgment of the Brazilian court, and will deeply appreciate anything Dr. Magalhaes may do to induce patience on the part of the procurador.

Please accept my thanks, etc.,

Thomas C. Dawson.

On the following day I saw the minister myself, and he guardedly told me that he had sent a telegram in the line suggested.

I inclose herewith a copy of a letter I have just sent the consular agent at Rio Grande do Sul.

In the absence of further instructions from the Department I shall continue to take such action as may seem likely to secure protection of the interests of Thomsen & Co. against injury.

I have, etc.,

Charles Page Bryan.
[Inclosure 1.]

Mr. Muller to Mr. Vereker, consular agent.

Dear Sir: Referring to our verbal conversation I now beg to hand you herewith a letter directed to the Hon. Charles Page Bryan, minister plenipotentiary of the [Page 110] United States of North America at Rio de Janeiro, which I request you to kindly forward with such comments as the case may warrant. I would state to you that the question involved is the following:

Baron C. de Thomsen, senior of the firm of Thomsen & Co., of this city and New-York, died in New York in May, 1898. According to the laws of this State an inheritance tax of 11 per cent was to have been paid by the heirs to the State government on all funds and property which at the time of death belonged to the deceased in this country. The law further requires that whoever is authorized to liquidate the affairs of a deceased leaving property in this country is to hand in a statement of such account, showing clearly what property the deceased leaves here to the credit of his estate, so that the State can collect the tax of 11 per cent.

The affairs of the baron, whose interest in the firm of Thomsen & Co., as per contract, ceased on the 31st of December of the year of his decease, were liquidated by the then resident partner, Mr. Gustav Feddersen. As the law referred to had always been a dead letter, inasmuch as it had never been enforced, Mr. Feddersen undoubtedly was not aware of the existence of the same, liquidated the account of the baron and remitted the amount belonging to the heirs to the executors in New York, where the will of the baron was probated and the division of the estate made in conformity with the laws of the State of New York.

I will mention that the baron’s account on the 31st December, 1898, showed a balance to the credit of the deceased of Rs. 152,308$650, consisting of Rs. 147,308$650 in actual cash and Rs. 5,000$000, nominal value of shares of the Companhia Hydraulica here. The baron possessed no real estate in Brazil and had no interest in any other business enterprise in Brazil.

On January 1, 1899, a new firm under the same name of Thomsen & Co., with branch in New York, was constituted here, the son of Baron de Thomsen, Mr. Hugo Adelberto Thomsen, and Mr. Gustav Feddersen being general partners, and the widowed daughter of Baron de Thomsen, Mrs. Pepita Schiller, special partner. Mr. G. Feddersen then left for Europe in May, 1899, leaving the firm in my charge, who had hitherto been an employee of the firm. On January 1, 1900, I was admitted as partner, as was also Mr. H. Joh’s. Riedel, of New York.

I beg to say that Mr. H. A. Thomsen, hitherto a Brazilian, is now an American citizen; so is Mr. H. Joh’s. Riedel, and so am I—the former two by naturalization and I by birth.

About the middle of last year I was notified by the government of this State to pay within five days the inheritance tax due to the government by the heirs of the late Baron de Thomsen, the government claiming that I Was the legal representative of said heirs.

I naturally refused such payment, as I in no way whatever could be looked upon as the representative of the heirs of the late Baron de Thomsen. The law clearly states that such heirs should be personally subpoenaed to pay the taxes, which was impossible, the heirs being absent, and the government of this State was therefore bound to subpoena the heirs by diplomatic channels. In order, however, to save time I agreed to notify the heirs and acquaint them with the facts of the case; and they being perfectly willing to abide by the laws of this country and State, and in order to show such willingness they did not wait for a legal subpoena, but at once volunteered to send the statement of the baron’s account in this country at the time of his decease, authorizing me to pay the tax of 11 per cent on Rs. 152,308$650, amount referred to above, and if absolutely necessary also the exorbitant fine of 1½ per cent interest per month on the amount due, which fine according to law enters into force and is counted from one year after the death in case of nonpayment of the tax.

The government refuses to acknowledge the correctness of the statement as rendered and arbitrarily decides that the tax should be paid on the capital contributed by the baron when the last business contract was registered, which was done in the year 1894. The baron then declared his capital here to be Rs. 776,752$900, and upon this sum the government claims 11 per cent tax and 1½ per cent per month interest from May, 1899, to the day of payment, or a total amount of Rs. 158,667$314! In case of nonpayment I am threatened with attachment proceedings!

The only heirs of the baron, namely, his two children, Mr. H. A. Thomsen and Mrs. Pepita Schiller, are interested in the firm of Thomsen & Co., the former as senior partner and the latter as special partner, and the government now threatens to attach funds belonging to the firm, in order to collect an inheritance tax on the estate of the late Baron de Thomsen.

I have employed the best legal advice, and am told that the government is acting arbitrarily against the constitution of this Republic as well as against the laws of this State. The letter inclosed herewith and addressed to the United States minister at Rio is inspired by my lawyers and clearly states all the legal points at issue. I send it in its original form and inclose a copy of this my letter to you, in case you [Page 111] should think it advisable to forward the same. I would repeat that the heirs of the late Baron de Thomsen are willing to abide by the laws of this State and pay what is due to the government. The latter, however, is asking an extortionate sum in an arbitrary and illegal way; the law states that only if proof exists that the statement rendered is false, action can be taken against the heirs.

My counsel informs me, however, that the State government will not heed the laws; that for reasons best known to the authorities the latter will enforce their demands, even employing forcible and arbitrary means if the law is against them, irrespective of any consequences of their action, as has been done before, and I was therefore advised to ask the protection of my Government. It is only with great reluctance that I have now taken this step, but the question being one of the greatest importance, I respectfully request you to inform the United States minister, Col. Charles Page Bryan, of the occurrence, laying the whole matter before him in order to ascertain whether the minister can advise me in the matter, or possibly take steps to prevent arbitrary and illegal action by the State authorities who threaten to embarrass the firm I represent, and whose interest is left to my care, in the most serious way. It can be easily understood that attaching the firm’s property at random would interfere with its business and may seriously hurt its credit. Our interests here, as well as in the United States, are quite important, and I can not allow the government of this State to interfere with the same in an illegal and arbitrary way, but have no other means of defending the firm’s and my interest, but appeal to the United States Government, asking their representative to take my case into consideration, and if found worthy, of which I am convinced, kindly render me such assistance as the case requires.

Believe me, etc.,

Edw. H. Müller,
Resident Partner at Rio Grande do Sul of the Firm of Thomsen & Co.
[Inclosure 2.]

Mr. Bryan to Mr. Vereker, consular agent.

Sir: In reference to the Thomsen case I beg leave to acknowledge the receipt of your letters of July 12 and July 26, and of your telegram of July 25, and also of the following inclosures: Mr. Edward H. Midler’s letter to you of July 12, his reclamation directed to me of the same date, and his letter of July 25.

On receipt of your telegram of July 25, I directed a telegrama to Governor Medeiros, to which I received a favorable reply.a Copies of both telegrams are inclosed herewith. On July 26 I received a telegrama from the gentleman who I presume is the attorney for the Thomsen heirs in the United States. Of this also I inclose a copy. Up to this time I had received no instructions from my Government, and my action in telegraphing Governor Medeiros was, strictly speaking, not official. On July 31, during my absence, there was received at the legation a telegrama from the Secretary of State in Washington in regard to this matter, a copy of which I send you herewith.

Mr. Dawson at once went to Rio and saw the minister for foreign affairs, requesting him to represent to the State authorities of Rio Grande do Sul the advisability of reaching an amicable agreement with Mr. Müller, since, as you know, the Executive of Brazil has no power to interfere with the administration of justice by the courts. Any telegram sent by Minister Magalhaes would be necessarily nonofficial and in the form of a request and advice, not as an order. You will therefore see the necessity of you and Mr. Muller not allowing anyone else to know of the fact of Minister Magalhaes having sent the telegram. On August 2 I saw the minister myself and he guardedly told me that he had sent a telegram personally and unofficially in regard to the matter.

I sincerely hope that Mr. Muller will reach an amicable solution of the difficulty with the procurador and that in case the latter still refuses to come to any compromise, you and Mr Muller will go to Porto Alegre and see the minister of justice.

It is the rule of international law that a diplomatic intervention can not be made as long as the matter is pending in the courts. If the penhora should be enforced, Mr. Muller would almost certainly have a clear right to make a formal reclamation. In the present status of the matter the attitude of the legation and of the consulate [Page 112] must be that of friendly representations with a view to avoiding the necessity of such a reclamation.

Please communicate the contents hereof to Mr. Muller in acknowledgment of his letters, and assure him that I will continue to make every effort on his behalf.

I am, etc.,

Charles Page Bryan.
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