The Secretary of State to the Ambassador in Cuba (Judah)

No. 216

Sir: The Department has received your despatch No. 176 of April 12, 1928 and enclosures, among which was a copy of a note from the Cuban Foreign Office addressed to the American Embassy under date of March 30, 1928,26 in regard to the claim of Mr. Charles J. Harrah.

The Department has again carefully reviewed the record in this case and it is forced to the conclusion that the allegations of the claimant, which were set forth with particularity in the Department’s instruction No. 720 of June 12, 1926, to the Embassy, have not been satisfactorily disposed of by the answers of the Cuban Government and that the facts set forth in the Department’s instruction No. 1036 of August 5, 1927, as constituting a prima facie showing for the claimant, still remain uncontroverted.

Upon the present record it appears to be affirmatively established:

That the railroad which was destroyed was built by claimant in 1908; that it was built as a permanent, narrow-gauge railroad, upon the public domain; that it was legalized by the Railroad Commission in 1912, and that the Commission had sole jurisdiction over the railroad [Page 910] and the determination of the manner of occupancy of the public domain by the railroad.
That the railroad was operated by Harrah and his agents from 1908 to 1917, a period of nine years, when pursuant to a decree of the President of Cuba confirming a previous order of the Treasury Department for the destruction of a temporary, portable railroad said to have been constructed subsequent to the construction of claimant’s railroad under authorization of a temporary permit granted to parties other than the claimant, claimant’s railroad was destroyed by the use of forcible means and with the aid and assistance of the national soldiers of Cuba acting in pursuance of the Presidential decree and the order of the Treasury Department. At the time the road was destroyed it was being operated under the judicial administrator appointed by the Court of First Instance of the East of Habana and was destroyed over the protests of the presiding judge of the Court.
That the railroad was built by claimant with his own money in 1908 and his title to the property was definitely and finally adjudicated by the courts of the Republic of Cuba in 1917, the Court of First Instance of the East of Habana also declaring that the railroad in litigation was not to be confounded with any temporary portable railroad such as was alleged to be the object of the order of demolition of the Treasury Department.
That claimant took all proper steps to obtain redress in the Cuban courts against the individual, one Carlos Manuel de la Cruz, who was actively engaged and had a personal interest in promoting the destruction of the railroad, but without avail, due to the immunity with which such individual was clothed by reason of his official character. The facts are that a criminal action based on a violation of the railroad law was brought in the Court of Instruction against Carlos Manuel de la Cruz, who represented the Secretary of the Treasury in the execution of the order of demolition, but the Court refused to proceed with the indictment of de la Cruz and thereupon an appeal was perfected to the Audiencia. The prosecuting attorney who investigated the matter found that de la Cruz had in fact violated the railroad law by directing the destruction of the property in question, but directed the Court’s attention to the fact that before he could be prosecuted it would be necessary to procure the consent of the Cuban Congress. The case was accordingly certified by the Audiencia to the Supreme Tribunal which in turn certified the facts to the Cuban Congress with the request that permission be given to prosecute de la Cruz. An investigation was made by a Committee on “Acts, Incompatibility, Incapacity and Authorization for Prosecution,” which recommended that the request of the Supreme Tribunal be denied on the ground that Carlos Manuel de la Cruz was a member of Congress. The Cuban House of Representatives thereupon refused to give the Court permission to prosecute de la Cruz and on March 24, 1919, so informed the Supreme Tribunal, which advised the Audiencia and the Court of Instruction of that fact, and the petition filed against de la Cruz was accordingly dismissed.

Referring to the statement of the Cuban Foreign Office that Mr. Harrah has a remedy in the local courts, to which he should address himself, it is the view of the Department that this is a case which [Page 911] does not fall within the rule requiring the exhaustion of local remedies before recourse to diplomatic interposition can be availed of, since the pertinent issues of law have become proper subject-matter for inquiry under accepted principles of international law and the pertinent issues of fact in the case, notwithstanding the mass of collateral issues that have been brought into the record subsequent to the first presentation of the claim to the Cuban Government, remain the same and have already to a large extent been determined in the claimant’s favor in the Cuban courts. According to the allegations of the Cuban Government the order of demolition was based upon and carried out solely on the grounds that the railroad was subject to the demolition order because it was built by the persons who obtained a temporary concession; that the concession lapsed after two renewals; that the railroad was a temporary, portable structure built on private property by the same persons who procured the temporary concession; that it was constructed subsequent to 1910, and that it was never legalized by the Railroad Commission; Whereas, it was found by the Cuban Courts in 1917, that the railroad which was sought to be made the object of demolition under the order of the Treasury and the Presidential Decree was built by a person who had no connection with the temporary concession. While the question as to the situs of the railroad was not an element of the case, before the courts, it may be observed that the Cuban Secretary of the Treasury later admitted that the railroad which was destroyed was located on the public domain. That official in a letter addressed to Mr. John Beck, counsel for the claimant under date of July 22, 1926, stated:

“even if the railway were destroyed by its agents there would be no basis for a claim against the State, as it is not necessary to apply to the courts to conserve and defend the public domain which the maritime terrestrial zone, whereon the Jaimanitas Railway was situated, undoubtedly is.”

Moreover, it is established by the records of the Railroad Commission that the railroad was approved (legalized) by the Commission in 1912, and that there were filed with the Commission maps showing the location of the road as on the public domain.

The Secretary of Public Works, the Secretary of the Treasury and the Secretary of Agriculture, Commerce and Labor constituted the Railroad Commission. There is also in the records, a specific report of the Commission’s inspector, which set forth that the matter before the Commission in 1912 simply concerned the legalization of the road, since the official inspection showed that the road was already built and in operation.

The American Government has endeavored to present and discuss the claim on its merits and to set forth the facts with respect to the [Page 912] construction, operation and demolition of the railroad as such facts are disclosed by the statements of claimant and supported by official records of the Cuban Government, but thus far the Cuban Government has failed, not only to present convincing evidence to overcome or explain away the statement of facts thus presented and supported, but has brought into the record issues which seem to be irrelevant and which tend to confuse rather than clarify the basic issues in the case. These issues are as follows: (1) the identity of the railroad demolished under the Treasury Order, (2) the observance of due process of law in carrying out the destruction, (3) the justice of depriving the claimant of his property without just compensation. The irregularity and injustice of authorizing the claimant’s adversary to destroy the railroad on the ground of assertion of adverse ownership of the land without requiring such adversary to assert and sustain his title and rights in a court of law, and the usurpation by executive fiat of the jurisdiction of the court under whose orders the road was at the time being operated by a judicial administrator, should at once be apparent to the Cuban Government.

As to the present contention of the Cuban Government that the matter is one which should be presented to the Cuban courts for decision, it would seem only necessary to observe that since in connection with the destruction of the road the Cuban authorities wholly ignored the requests of the Court, that the Order of Demolition be not carried out, the Cuban Government is now estopped to assert that the matter is one for judicial determination. Furthermore, the question as to the possibility of a remedy in the Cuban courts was considered by the claimant before redress was sought through diplomatic channels. At that time the claimant consulted an eminent Cuban attorney who, in an opinion given in 1924, stated:

“If claim of indemnity for losses and damages is brought against the State, before the ordinary Courts, the State would be absolved in the end, based on the fact that the Government had acted as a political entity and its acts are not open to contention in an ordinary suit.

. . . . . . . . . . . . . .

“From a juridical point of view Harrah faces a wall that has no entrance. Cuban laws give him no loop-hole through which to attain redress for his wrongs and only diplomatic action, based on the responsibility of the Government, would result successfully.”

The facts of the case seem to be so clear and are so well within the knowledge of, or readily ascertainable by, the Cuban authorities, that it is difficult for the Government of the United States to understand why in the circumstances the Cuban Government should not readily recognize that the claimant has suffered an injustice through the summary and apparently irregular action taken with respect to his property and take steps to repair the damage which has been done to him. It is not [Page 913] perceived why difficulty should be experienced by the Cuban authorities in arriving at an equitable adjustment of the claim which would relieve the two Governments of what promises to be a source of continued annoyance. As the matter now stands it is apparent that the two Governments are so far apart in their respective positions as to the fundamental elements of the case that no appreciable progress toward a clarification of the facts seems possible through a further exchange of communications. The Government of the United States would, therefore, urge that the matter is one properly to be submitted to an arbitral tribunal for decision in accordance with the principles of international law, justice and equity. Such a tribunal should, in the opinion of this Government, be composed of three Commissioners of outstanding ability and integrity, one selected by the Government of Cuba, one by the Government of the United States, and the third, who should be a national of neither country, by agreement between the two Governments. This procedure would seem to be the most practical course, unless the Cuban Government would be willing to designate someone to negotiate directly with counsel for the claimant as to the amount to be paid as a compromise settlement.

You are requested to take the matter up with the Cuban Government along the lines indicated above and to impress upon that Government the strong desire of the Government of the United States to see this case brought to an early and satisfactory conclusion, and its feeling that the procedure which has been suggested will readily appeal to the sense of fairness of the Cuban Government.

As to the arbitral tribunal, you may state orally that, while your Government has not, of course, considered the personnel of a tribunal, you have in mind as the national Commissioners such men as Dr. Bustamante and Mr. Hughes, and as the presiding Commissioner a man of the standing of Dr. Maúrtua of Peru, or Dr. Fernández of Brazil. It is, of course, not known whether any one of these gentlemen would be willing to serve.

For your information and possible use in connection with this instruction, the Department is enclosing a copy of a letter of May 3, 1928, from counsel for the claimant.27

I am [etc.]

Frank B. Kellogg
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