422.11 G 93/1276

The Minister in Ecuador (Bading) to the Secretary of State

No. 136

Sir: With reference to the Department’s telegraphic instruction No. 9, of July 9, 5 P.M., relative to the suit brought against the Guayaquil and Quito Railway Company by Dr. José J. Estupiñán, in the name of the Government of Ecuador, for the recovery of 600,000 sucres alleged to have been deposited with said Company by the Government in December, 1909, I have the honor to state that I immediately transmitted to the President of Ecuador the views and reservations set forth by the Department, and enclose copy of my letter to him, dated July 11th,9 for the Department’s information.

I have now received a reply from the President, dated July 12, 1923, copy and translation of which I transmit herewith,9 in which the latter states that it is his loyal and honest opinion that the suit in question is in no way a violation of the contracts, as it is a matter foreign to the provisions thereof.

It is evident from the President’s reply that the Government holds that the deposit or payment in question had no antecedents, but was merely a temporary deposit pending the ratification or non-ratification of the contract between General Alfaro10 and Archer Harman. The contract not having been ratified, the agreement contained therein was without effect, and the 600,000 sucres should have been returned.

The Railway, on the other hand, holds that the 600,000 sucres was a repayment of a sum given to the Government in accordance with said contract, and that in view of its non-ratification the Government was bound to return said money to the Company.

If a starting point is taken in December, 1909, it is difficult to contest the opinion of the Government that the matter had nothing to do with the construction of the railway. But the origin of the whole [Page 931] matter was a sum of 600,000 sucres loaned to the Railway Company by General Alfaro for the completion of the line into Quito, prior to the Legislative Decree of November 1, 1908, and if this origin is considered it seems to me impossible to separate the case from the subject matter of the contracts.

I have [etc.]

G. A. Bading
  1. Not printed.
  2. Not printed.
  3. President of Ecuador.