File No. 812.6363/211

Vice Consul Bevan to the Secretary of State

No. 1590

Sir: I have the honor to transmit herewith a copy of a new oil decree and its English translation issued by General Cándido Aguilar, the military governor of the State of Vera Cruz, on January 15, 1916, amplifying his decree of August 3, 1914, a copy of which was transmitted to the Department in despatch No. 1182 on August 14, 1914.6

Most of the oil lands in the State of Vera Cruz are now in the hands of foreigners. There are a great many oil men who have invested large sums in subsoil leases, with a view to transferring their leases to oil companies at a profit. Under this new decree it will now be impossible to transfer oil leases without first obtaining the authorization of the governor of the state. This authorization can be obtained only by making a trip to Jalapa, Vera Cruz, and then only after incurring expenses in proportion to the amount involved in the transaction. A representative of one of the [Page 756] large oil companies recently leased a piece of oil property from a Mexican citizen. Before the deal could be consummated the permission of the governor had to be obtained. A copy of the contract was submitted through the regular channels to the governor for examination and approval. The governor decided that the property was worth 100 per cent more than was offered by the company and refused to approve the contract.

I have [etc.]

Thomas H. Bevan

Decree of General Cándido Aguilar

(From El Dictamen, Veracruz, January 16, 1916.)

General Cándido Aguilar, Governor of the State of Veracruz, to the inhabitants thereof, know ye:

That using the faculties with which I am invested, and whereas; the reasons and motives of this Government in issuing the Decree No. 3 in Tuxpam, August 3, 1914, still subsist, by reason of which this said decree still responds to a social necessity and should be maintained in vigor, and

Whereas the fundamental principle that inspired said decree demands that it be made general in two ways: amplification so that it shall cover not only the contracts to which it refers, but also all those covering any land within the limits of the State, and also generalization to cover lands situated not only in the cantons stated in said decree, but within the area of the State.

Whereas to effectively give sanction to the fundamental disposition in the decree in question, it is necessary to establish not only the indirect penalties of confiscation and others fixed thereby, but also to create a civil sanction by virtue of which the lack of authorization which it decrees must be obtained for the execution of contracts referred to, may affect the existence of rights and obligations arising from such contracts for which it is necessary to give to the authorization referred to, the legal character of a formality extraneous to the contract but thus constituted an element thereof, necessary for its validity, in accordance with civil legislation, and

Whereas in the practice of the application of the decree above mentioned it becomes necessary to adopt regulations to clear up some of its precepts and to fix the administrative steps which must be followed to obtain the authorization prescribed by the decree, now, therefore, I have seen fit to decree the following:

  • Art. 1. No contract of sale, lease, mortgage, quit-rent or of any other character covering any land situated within the boundaries of the State of Veracruz or which affects directly or indirectly such lands, shall be made, unless the parties shall previously obtain the authorization of the State Government thereto.
  • Art. 2. The owners or possessors of lands situated within the limits of the State who have acquired rights of any sort whatsoever to such lands by virtue of any contract of the nature mentioned in the foregoing article shall not cede, transfer or alienate to third persons or to companies in return for stock or in any other manner, the lands or rights acquired by virtue of such contracts, nor the contracts themselves, without previously obtaining the authorization of the State Government thereto.
  • Art. 3. For all legal effects, it is declared that the authorization referred to in the two foregoing articles is a formality, extraneous to the contract in question, but necessary for its validity. Therefore the contracts lacking this formality are null, shall produce no legal effect of any sort whatsoever, give rise to no rights, obligations or rights of action whatsoever between the contracting parties nor to or against third parties, and cannot be inscribed in the Public Property Register.
  • Art. 4. To obtain the authorization referred to in Arts. 1 and 2 hereof, the contracting parties shall apply in writing to the State Government, where the [Page 757] administrative file in the matter shall be made up with the fallowing proceedings:
    With the petition (solicitud) properly complying with the terms of the law, shall be presented the document that sufficiently proves the legal personality of the petitioner, a draft of the contract proposed to be entered into, with the stipulations and clauses that have met with the agreement of the parties, and maps of the lands in question.
    When the State Government shall deem necessary it shall also demand the exhibition of the title deeds covering the land.
    The State Government may direct that there be carried out on the land in question, direct inspection, examination and check of documents and other proceedings necessary to identify the reality, establish in a clear manner the rights the parties have therein through anterior deeds or by virtue of the contract itself, and in general to provide against doubts or differences in the interpretation and compliance with the contract.
    The State Government shall refuse its authorization if the contract shall appear unjust or prejudicial to any of the parties thereto, when the development to be carried on thereunder redounds exclusively to the benefit of the unnationalized companies to the prejudice of the Mexican citizens, when (the contract in question) tends to solidify the predominance of foreign capital constituting a menace to the integrity or the progress of the nation, or in other cases when the contract is against the true interests of the State.
    The State Government shall aid, to suppress and modify the clauses of the proposed contract presented for authorization, in accordance with the provisions of the foregoing article, notifying the parties in writing. The parties may then appear again with such observation as they deem opportune and so continue until an agreement is reached.
    Authorization shall be granted on the understanding that, when the contract is executed, it shall be strictly in accord with the terms of the proposed contract presented and the modifications which have been deemed pertinent.
    When the contract shall be finally executed in public document or private deed, it shall begin with a literal repetition of the oficio of the State Government granting its authorization, without which requisite the contract shall fall within the prescriptions of Art. 3 of the decree.
  • Art. 5. Contracts executed up to now without the authorization referred to in this decree, and in which it does not appear that this lack is due to bad faith on the part of the parties thereto, shall fall within the prescriptions of Art. 3; but all such contracts may be revalidated with the approval of the State Government.
  • Art. 6. Such approval shall be granted in cases in which previous authorization would be granted, and by the proceedings mentioned in Art. 4 with the following modifications:
    A true copy of the executed contract shall accompany the petition.
    In order to introduce therein the modifications agreed upon, and to insert the oficio proving the authorization, the parties shall execute a complementary public or private deed, which shall form an integral part of the text of the original contract, which shall serve for all legal effects, it being understood that without the complementary contract, the original shall fall within the prescriptions of the 3d article hereof.
  • Art. 7. If bad faith shall appear in the execution of contracts made without the authorization provided for by this decree, such contracts shall fall within the prescriptions of Art. 3 hereof and the lands covered thereby shall be forthwith confiscated, but rights shall be reserved for those who may enjoy them, to proceed against those persons who may be responsible civilly or criminally.
  • Art. 8. Lands object of clandestine contracts shall also be confiscated, as shall lands object of contracts the execution of which has been in any manner hidden from the State Government.
  • Art. 9. Notaries who shall authorize deeds containing contracts covered by this decree without complying with the provisions of fraction VII of Art. 4 hereof, shall pay the damages caused and in case of insolvency, shall be suspended for two years.
  • Art. 10. The persons in charge of public registries who shall register contracts falling within the provision of this decree which shall not contain the oficio of authorization from the State Government shall be suspended for two years.
  • Art. 11. For the effects of the law it is hereby declared that all persons who take part directly or indirectly in the execution of contracts referred to in this decree, shall be considered to be Mexicans, whatever their nationality or origin, and may not in any case allege the defense of foreign citizenship nor ask protection or aid from foreign diplomatic or consular officers, nor from the Government of other countries, nor have any more rights than the laws of the country concede to Mexicans.
  • Art. 12. In the proper department of the State Government there shall be a registry book, in which shall be noted the authorizations or refusals thereof, granted under this decree, and in it the contracts whose authorization has been solicited shall be copied in full.
  • Art. 13. The authorizations or approvals referred to by this decree shall not incur any tax whatsoever, and shall be granted without cost to the parties.

Transitory Article: This decree shall have effect from the date of its publication.

C. Aguilar

Manuel Garcia Jurado,
The Secretary General of the Government