Foreign Relations of the United States Diplomatic Papers, 1933, The British Commonwealth, Europe, Near East and Africa, Volume II
458.11 Dexter and Carpenter/157
The Minister in Sweden (Morehead) to the Secretary of State
[Received March 1.]
Sir: With further reference to the Department’s instruction No. 96 of February 23, 1932,8 relating to the claim of Dexter and Carpenter, Incorporated, against the Royal Administration of the Swedish State Railways, and in confirmation of my telegram No. 6 of February 11, [Page 724] 3 p.m.,9 I have the honor to transmit herewith a copy of a communication received from the Acting Minister for Foreign Affairs, dated February 9, 1933, in reply to my note No. 148 of March 10, 1932, informing me, after a detailed review of the case, and a consideration of each of the points brought out in my note, that if the submission of the case to a Swedish court is not satisfactory to the United States Government the Swedish Government is willing to submit the question to arbitration or to give earnest attention to any other proposal for a settlement, provided the points of view of the Swedish Government receive due and sufficient consideration.
The enclosures mentioned in the Royal Ministry’s communication of February 9, 1933, were not transmitted with it but were forwarded under separate cover, dated February 15, 1933, and were not received by the Legation until February sixteenth. In view of the number and length of the enclosures it was not possible to have them copied in quintuplicate in time to be included in the pouch of today’s date in which the copies of the communication are being sent to the Department in accordance with the statement made in my above-mentioned telegram. In order to make the enclosures available simultaneously to the Department one copy of each enclosure which the Royal Ministry for Foreign Affairs kindly furnished to the Legation, together with copies of a translation of the note of transmission are enclosed herewith.
In the first portion of the communication from the Acting Minister for Foreign Affairs, devoted to questions of fact, great importance has been attached to the Railway Administration’s disavowal of the actions of Mr. Gustav Lange Jr., the lawyer who filed suit against Dexter and Carpenter, Incorporated, in the name of the Royal Administration of the Swedish State Railways. The Legation is not in possession of the records of the court proceedings in the case, therefore it is not in a position to know how much, if any, of the material contained in the Royal Ministry’s communication has not been presented before. However, in view of certain passages in the opinion of Judge Hand quoted in the Department’s above-mentioned instruction, it would appear that in the main the facts are merely being restated, or certain ones only being selected and interpreted to fit the Railway Administration’s point of view, regardless of the fact that the same evidence had been presented in court in America and was not construed in accordance with the contention of the Railway Administration. This position with regard to individual facts in the case is entirely consistent with the attitude taken by the Swedish Government in connection with the whole case, namely, the refusal to recognize as binding on the Railway Administration a judgment of an American court.[Page 725]
One point which is made by the Royal Ministry for Foreign Affairs in its communication of February 9, 1933, for the first time in so far as the Legation is able to ascertain is that “in view of the unambiguous manner in which Dexter and Carpenter have maintained their claim against the Administration, prescription of that claim cannot, according to Swedish law, be considered to have been established”. Furthermore, the Railway Administration is reported as having declared to the Swedish Government that it does not consider it justifiable to raise nor is there any intention of raising the objection of prescription in any possible action against the Administration in Sweden within ten years from the latest time when Dexter and Carpenter’s claim was made or reiterated.
This point was made in reply to the statement brought out in the judgment of the Court of Appeals to the effect that the Railway Administration had not claimed sovereign immunity until after a sufficient number of years had expired to make possible a plea of limitation or laches against suing in Sweden. It is presumed that the position of the Railway Administration has been explained with a view to making the suggestion that the case be referred to a Swedish court seem less illogical than if it were to be expected that the Railway Administration would plead the statute of limitations, or the Swedish equivalent.
The Royal Ministry’s note of February 9, 1933, which indicates that my note of March 10, 1932, has not altered the position of the Swedish Government with regard to the payment of the claim, and in view of the fact that the proposal to refer the case to a Swedish court is not agreeable to the United States Government, could scarcely conclude otherwise than with the expression of the willingness to have the question submitted to arbitration, or to consider any alternate solution which the United States may wish to propose.
The Acting Swedish Minister for Foreign Affairs (Undén) to the American Minister (Morehead)
Monsieur le Ministre: In a note of March 10, 1932, addressed to Mr. Gyllenswärd, then acting Chief of the Department of Foreign Affairs, you have, acting under instructions from your Government, replied to Baron Ramel’s note of July 18, 1931,10 concerning the judgment rendered by an American court against the Royal Administration [Page 726] of the Swedish State Railways in favor of the American firm of Dexter & Carpenter, Inc., and at the same time you expressed the hope that the further consideration which the Swedish Government would give to this case, would lead to the adjudged amount, with interest, being paid.
In support of this renewed request you have given a detailed account of the court proceedings leading up to the said judgment. As a motive for giving this account you have specifically stated that in the opinion of your Government the assertions and conclusions set forth in Baron Ramel’s note of July 18, 1931, “are not supported by complete comprehension of the rather intricate, legal and factual situation out of which the claim arose”.
In view hereof I feel it incumbent upon me to point out at the outset that, before taking a standpoint to the question of whether there be proper cause for the Administration of the State Railways to comply with the judgment, the Swedish Government naturally have not only examined this question from a formal legal point of view but have also endeavoured to form an opinion as to the material justification of the claim sanctioned by the American court on the basis of American law and an American jury’s application thereof. In this connection I consider I ought not to omit to mention that two prominent Swedish lawyers, specialists in the field of the law of contract and one of them now member of the Supreme Court of Sweden, were commissioned to undertake an impartial investigation of the question whether, according to principles of Swedish law, the claim could be considered a just one. The previously announced standpoint of the Swedish Government in this case was based on the opinion of these experts.
In view of the fact, however, that the account given in your note of the course of events has been found to contain several errors or incomplete statements of fact in important respects, I deem it desirable, before proceeding to a discussion of the conclusions arrived at by your Government, to give the following supplementary account of the facts of the case.
1. The position of Mr. Beijer in relation to the Administration of the State Railways.
Owing to the difficulties existing in 1919 for the State Railways to obtain fuel for locomotives, the Administration in September of that year commissioned the chief of their Bureau of Supplies, Mr. A. Tausen, to proceed to the United States in order to investigate the possibilities of procuring coal. Mr. Tausen was not commissioned to conclude contracts for the purchase of coal but was only to transmit to the Administration the offers which he might be able to obtain.
Some time after Mr. Tausen’s arrival Mr. W. Beijer, managing director of the Swedish coal importing firm, G. & L. Beijer’s Import- & [Page 727] Exportaktiebolag, also arrived in America. With regard to Mr. Beijer’s mission in the United States, there appears to be some misapprehension on the part of your Government. Mr. Beijer together with the director of another well-known Swedish coal importing firm were officially commissioned by the Swedish Government to investigate the possibilities of importing coal from the United States for Swedish industry and for other home consumption, and had for that reason been given a passport by the Department of Foreign Affairs. But he had no commission from and was not acting for the Railways’ Administration. In order to illustrate the nature of the commission entrusted to Mr. Beijer I beg leave to transmit herewith a translation of the letter from the Department of Foreign Affairs to the Swedish chargé d’Affaires a. i. in Washington, in which an account is given of the reasons for Mr. Beijer’s journey (enclosure 1).11 I might also mention that in the records, deposited in the archives of the Department of Foreign Affairs, of a meeting held in the presence of the then Foreign Minister with representatives of Swedish industry and trade previous to the decision to send Mr. Beijer to America, no mention is made of and there is nothing to indicate that there was any intention that Mr. Beijer should have any commission from the Administration of the Railways. Through enquiries carried on in connection with the preparation of this note the Administration have recently confirmed that Mr. Beijer’s decision to proceed to the United States was not arrived at as the result of any consultations with the Administration.
2. The contracts for the purchase of coal.
Mr. Tausen, whose investigations regarding the possibilities of obtaining coal for the State Railways did not lead to any results, after a time received a communication from Mr. Beijer, who was then in America, stating that he had a firm offer of a considerable consignment of coal. On the basis of telegraphic communications, on the one hand from Mr. Tausen to the Administration, and on the other from Mr. Beijer to the offices of his company in Stockholm, an agreement was concluded by correspondence between the Administration in Stockholm and the firm of G. & L. Beijer’s Import & Exportaktiebolag on October 30–November 6, 1919, for the purchase of a consignment of 150.000 tons of coal at prices varying between $31:50 and 33:25 per ton, to be delivered c.i.f. certain ports in Sweden during a period of six months, begining November, 1919 (enclosures 2 and 3). The explanation of the circumstance that the Administration concluded the contract with G. & L. Beijer and not direct with an American seller is to be found in the fact that the purchase of coal was attended with great difficulties at this [Page 728] juncture and that the Administration had not succeeded in obtaining any offers of coal from American sellers.
G. & L. Beijer, who had business connections in America of many years’ standing had received an offer of a large consignment of coal from the American firm of Akerlund & Semmes. When, however, certain difficulties later arose for G. & L. Beijer with this firm, they instead made a contract on December 4, 1919, with the American firm of Dexter & Carpenter, Inc., for the delivery of the 150.000 tons of coal contracted for by the Administration through the correspondence of October 30– November 6, 1919. The prices according to this contract were $1 to $0:75 less per ton than those contracted for by the Administration. The deliveries were arranged to begin within thirty days from the raising of the then existing embargo on coal.
After Mr. Tausen’s and Mr. Beijer’s return to Sweden a contract was drawn up between the Administration and G. & L. Beijer’s Import- & Exportaktiebolag regarding the consignment in question (signed by the two parties on January 16/17, 1920, respectively), whereby certain modifications were made in their previous agreement of October 30–November 6, 1919 (enclosure 4). As regards the time of delivery, this contract stipulated that delivery was to take place within six months counted from February 1, 1920,—that is to say, before August 1, 1920. According to the contract the buyers were entitled to cancel the monthly quantities or parts thereof, which were not chartered or for which tonnage had not been reported for loading during the month when delivery was to take place (the contract between G. & L. Beijer and Dexter & Carpenter did not contain a corresponding clause). The prices were the same as those of the original contract of October 30–November 6, 1919, between the Administration and G. & L. Beijer and were stated to cover delivery c.i.f. certain ports; regarding the mode of payment the contract stipulated that, after G. & L. Beijer had announced a steamer as ready for loading, the Administration should pay the computed value of the cargo in advance, final settlement to be made later after receipt and approval of the cargo; G. & L. Beijer were to place a security for repayment of the advance in case of non-delivery. It might be mentioned in this connection that G. & L. Beijer endeavoured to induce the Administration to accept a stipulation regarding the time of delivery, corresponding essentially to the stipulation contained in the contract between G. & L. Beijer and Dexter & Carpenter; the Administration, however, did not consider themselves in a position to consent thereto.
Supplementary to this contract an agreement was entered into between the Administration and G. & L. Beijer’s bank, Aktiebolaget Göteborgs Bank in Stockholm, providing that the amount of each advance should [Page 729] be paid into G. & L. Beijer’s “American coal account” with the bank and that these funds were to be accounted for either by delivery of proper shipping documents, or in the case of a certain shipment not being effected, by delivery of dollar exchange purchased with the funds. This provision was intended to create the security stipulated for in the contract for non-fulfilment of delivery.
Dexter & Carpenter were paid by letter of credit opened by the Göteborgsbanken with the National City Bank of New York on instructions from G. & L. Beijer for each consignment.
3. The cancellation of the two contracts.
The embargo on coal in the United States was not raised until the beginning of May. This circumstance together with strikes at the coalmines etc., resulted in deliveries not being effected to the extent provided for in the contract between the Administration and G. & L. Beijer. At the expiration, on August 1, 1920, of the six months’ period stipulated in the contract for fulfilment of delivery, the Administration therefore decided to cancel their contract with G. & L. Beijer.
This, however, placed G. & L. Beijer in a difficult position, the time of delivery according to their contract with Dexter & Carpenter being dependent on the time of the raising of the embargo, and the full period being far from expiration on August 1. On the grounds that the Administration were oversupplied with coal and did not desire further consignments, G. & L. Beijer attempted to have the deliveries postponed, and at the end of September 1920 they finally cancelled their agreement with Dexter & Carpenter.
4. The origin of the law-suit of the Administration against Dexter & Carpenter.
The origin of the case between the Administration and Dexter & Carpenter is to be sought in certain events occurring in connection with the shipment of the cargo of coal on the S/S Alderman. On May 5, 1920, the Administration were notified by G. & L. Beijer that the S/S Alderman was ready for loading. The Administration paid in advance into G. & L. Beijer’s coal account with the Göteborgsbanken an amount corresponding to the stated value of the coal cargo, or $117,800:98. The Göteborgsbanken arranged a letter of credit with the National City Bank, which in their turn made payment of the amount due Dexter & Carpenter, or $114, 106:30, against delivery of certain documents, amongst which an insurance certificate delivered by the brokerage firm of Osborn & Co., stating that the cargo was insured in English companies to the amount of $125,500.
The S/S Alderman, however, after being loaded, on or about May 9, 1920, and while still in the port of Philadelphia, ran aground and had [Page 730] to be docked for repairs. On account hereof and owing to certain other circumstances the departure of the ship was delayed, and as a consequence of the long delay over-heating occurred in the cargo on July 20, 1920. The cargo had to be discharged and was then again reloaded. Further delays, however, occured and in September 1920 the cargo again caught fire. It was now found that the ship could not sail, and the damaged cargo was again discharged. On the initiative of representatives of the underwriters the cargo was put up for auction which, however, does not appear to have led to any results. In December 1920 the Shipping Board finally bought the cargo from the representatives of the underwriters at a price of $2 per ton, or in all $7.100, the ship thereupon being laid up.
At the outset there was a divergence of opinion between the Administration of the State Railways and G. & L. Beijer as to who should properly attend to the rights and interests of the cargo owners in the case of the S/S Alderman. In view of the fact that the coal had already been loaded and that insurance and other documents had been forwarded to the Administration, the Administration finally agreed to accept G. & L. Beijer’s standpoint that the ownership of the cargo had passed to the Administration, and the Administration then assumed chargé of the case. The Administration asked the Swedish Consul General in New York to aid them in the handling thereof. The Consul General, having no reason to foresee any particular complications, in his turn instructed Mr. Gustav Lange, Jr., to take over the case. The Consulate General had previously employed Mr. Lange in legal matters.
In compliance with his instructions, Mr. Lange seems to begin with to have directed his efforts towards obtaining payment of the insurance money. Having received information from Osborn & Co. as to the identity of the underwriters, he ascertained, however, that no real insurance policies existed, but only the aforementioned certificate; he therefore found that there were difficulties in the way of obtaining payment from the underwriters. In view hereof Mr. Lange had to consider what other means might be employed for obtaining indemnity for the damages resulting from the loss of the S/S Alderman and circumstances in connection therewith. Thus in a letter to the Consul General of January 14, 1921, he pointed out that a claim for damages could be made either on Osborn & Co., who had delivered the certificate (although in Mr. Lange’s opinion no real contract of insurance had been made) or on the National City Bank on the ground of its having paid the amount of the letter of credit to Dexter & Carpenter without demanding proper documents of insurance from them. In this connection Lange stated that he did not wish to waive any claim which the Administration might have against Dexter & Carpenter, the sellers of the cargo c.i.f. Malmö, the [Page 731] National City Bank for violation of instructions or Osborn & Co., adding that he at the same time wanted to press the claim against the insurance companies with all possible vigour.
In the same letter Mr. Lange requested the Consul General to ask the Administration whether they wished him to proceed against the National City Bank, Dexter & Carpenter, Inc. and Osborn & Co. and, if so, to provide him with the necessary authorization. In a later letter he suggested that the Administration should also assert their rights against G. & L. Beijer.
After receipt of Mr. Lange’s abovementioned letter, a certified extract of which is herewith enclosed (enclosure 5), the Administration telegraphed instructions to the Consulate General on February 16, 1921, (enclosure 6) to proceed further with the presentation of their claim against Osborn & Co. or the insurance companies; the Administration confirmed this cable by letter to the Consul General of February 18, 1921, the contents of which were transmitted to Mr. Lange by the Consulate General on March 7, 1921 (enclosure 7). In this connection the Administration wrote that in the first place the firm of Osborn & Co., who had signed the certificate of insurance, should be requested to pay out the amount of the insurance, $125,500, or else to produce the original policies, so that claim might be made against the insurance companies. In response to Mr. Lange’s request for certain documents the Administration transmitted, inter alia, a power of attorney for Lange to proceed against Osborn & Co. and the insurance companies—ten in all—, indicated in the power of attorney (enclosure 8). On the other hand the Administration forwarded no power of attorney to Mr. Lange to proceed against the National City Bank or Dexter & Carpenter.
In a letter to the Consulate General in New York on June 15, 1922, a translation of which (enclosure 9) was forwarded to Mr. Lange by the Consulate General on June 30, 1922, the Administration stated that, if insurance for the full amount actually had been taken out, and if at the time when this was done no reason could have been found to question the solvency of the underwriters, the Administration could not see how proceedings could be opened against the National City Bank, Dexter & Carpenter or G. & L. Beijer, since, if proper insurance had been taken out, the sellers had fulfilled their obligations in so far as insurance was concerned. In the opinion of the Administration the course now open was to proceed against the underwriters.
On August 30, 1922, the Administration received a cable from the Consulate General, dated August 29, 1922, stating that Mr. Lange had opened proceedings against the National City Bank, Dexter & Carpenter, etc. The text of this cable was as follows: “After having exhausted every [Page 732] possible means of settling now Lange suing everybody concerned including City Bank and Dexter & Carpenter.”
This cable was understood by the Administration to be intended merely to supply information regarding the state of the case. There was no request for an answer or for a telegraphic power of attorney to sue the National City Bank and Dexter & Carpenter. The Administration assumed that a letter would be forthcoming containing a more detailed account of the situation regarding the insurance of the S/S Alderman cargo as well as a request for a power of attorney to be used in the suit announced against the National City Bank and Dexter & Carpenter. Not being familiar with American court procedure the Administration did not conceive the possibility of Mr. Lange’s instituting suit on behalf of the Administration without having received a specific power of attorney to do so. The Administration was further confirmed in this view by the fact that Mr. Lange had previously asked for and obtained a power of attorney to institute proceedings against Osborn & Co. and the insurance companies. They consequently refrained from taking further steps in the matter until they had heard from Mr. Lange.
Subsequently, on January 3, 1923, the Administration received a letter from the Consulate General, dated December 19, 1922, with which was enclosed a letter from Mr. Lange of December 18, 1922 (enclosure 10). In this letter Mr. Lange informed the Consulate General that he had commenced an action in the United States’ District Court for the Southern District of New York against the National City Bank, Dexter & Carpenter, Inc. and the various members composing the firm of Osborn & Co. The Administration, being thus confronted with an accomplished fact, were still without any details as to how the case had been dealt with by Mr. Lange. The letter contained, however, a statement by Mr. Lange to the effect that, when he had received the answers of the various defendants and had had an opportunity to examine them, he would forward copies of the various pleadings or extracts therefrom to the Administration, so as to enable them to familiarize themselves with the nature of the action.
5. Correspondence exchanged between the Administration of the State Railways and Mr. Lange during the first stage of the proceedings.
With a letter to the Administration of June 7, 1923, the Consulate General forwarded a letter from Mr. Lange together with a copy of Dexter & Carpenter’s answer in the suit instituted by Mr. Lange; with a letter from the Consulate General of June 14, 1923, the Administration received a copy of the answer of the National City Bank.
Not yet having received the text of Mr. Lange’s complaint, the Administration cabled to the Consulate General on June 21, 1923, for a copy thereof (enclosure 11). In compliance herewith the Consulate General forwarded a copy of the complaint with a letter of June 23, 1923.[Page 733]
On examining this document, an extract of which is enclosed herewith (enclosure 12), the Administration were surprised to find that Mr. Lange had under paragraph 6, contrary to the actual facts, declared that G. & L. Beijer had purchased the consignment of coal shipped on the S/S Alderman from Dexter & Carpenter for the account of the Administration; and further that under paragraph 12 he had stated that the coal was to be delivered according to the contract between the Administration and Dexter & Carpenter. In paragraph 6 Mr. Lange had also declared that the purchase of the coal in question was made on April 6, 1920.
After having gone through the court documents forwarded by Mr. Lange, the Administration in a letter to the Consulate General of July 17, 1923, transmitted to Mr. Lange on August 1 of that year (enclosure 13), pointed out that they had in the present case no relations whatever either with the National City Bank or with Dexter & Carpenter. The coal shipped on the S/S Alderman was purchased from G. & L. Beijer who in their turn and on their own account had purchased it from Dexter & Carpenter in conformity with a contract concluded between them, G. & L. Beijer, and Dexter & Carpenter. In the opinion of the Administration, G. & L. Beijer had, when contracting for the coal with Dexter & Carpenter by no means acted on their behalf or as their agents; the Administration had not remitted any documents or made any statements to the effect that G. & L. Beijer when signing the contract with Dexter & Carpenter were the representatives or agents of the Administration. The Administration further declared themselves entirely unable to understand why Mr. Lange had sued the National City Bank, Dexter & Carpenter and Osborn & Co., as there were actually policies of insurance covering the cargo of S/S Alderman; they desired to learn what motives had actuated Mr. Lange in adopting this procedure; at any rate the Administration had not given Mr. Lange any authorization or power of attorney to open proceedings against Dexter & Carpenter.
In a letter to the Consulate General of August 7, 1923, a translation of which was transmitted to Mr. Lange on August 25 (enclosure 14), the Administration thereupon sent a commentary, point by point, on the court documents forwarded by Mr. Lange.
As regards paragraph 6 of Mr. Lange’s complaint the Administration pointed out, referring to the previous letter of July 17, 1923, that G. & L. Beijer had, independently and for their own account, contracted with Dexter & Carpenter for the purchase of coal, part of which was the cargo shipped on the S/S Alderman, and they had thus not acted as agents or representatives for the Administration. G. & L. Beijer had [Page 734] under a special contract between them and the Administration, in their turn sold the coal purchased from Dexter & Carpenter to the Administration. Consequently Mr. Lange’s statements under this paragraph were not correct.
As regards the way in which the coal purchased by the Administration from G. & L. Beijer should be paid, the Administration in the same letter gave the above related account concerning their agreement with G. & L. Beijer; they criticized Mr. Lange’s statement on this point as being in contradiction with the facts. They further stated that the Aktiebolaget Göteborgs Bank, in arranging for a letter of credit to be opened with the National City Bank, did not act as their representative. The Administration finally expressed the opinion that it would have been desirable for them to have been given an opportunity to go through the prospective complaint before the suit was started.
As to the answer of Dexter & Carpenter the Administration advanced inter alia
that the agreement between G. & L. Beijer and Dexter & Carpenter had not been approved or confirmed by the Administration; the Administration had had no reason to do so in as much as they had only transactions with G. & L. Beijer;
that the statement according to which the Administration had authorized Dexter & Carpenter to apply on their behalf for a licence for shipping coal on the S/S Alderman, was not correct;
that the Administration, having had nothing to do with the agreement between G. & L. Beijer and Dexter & Carpenter, had had no occasion to occupy themselves with the question of the insurance of the S/S Alderman, nor had they done so in fact; the insurance question was entirely a matter between G. & L. Beijer and Dexter & Carpenter;
that the Administration, not having had a contract with Dexter & Carpenter, had not been in a position to refuse to comply with such a contract, and finally
that the Administration refused to admit the counter-claim made by Dexter & Carpenter.
The contents of the Administration’s letter to the Consulate General of July 17, 1923, having been transmitted to Mr. Lange, Mr. Lange replied in a letter to the Consulate General dated August 18, 1923, which was forwarded by the Consulate General to the Administration. In this letter, an extract of which is herewith enclosed (enclosure 15) Mr. Lange stated inter alia:
He regretted that a misunderstanding had arisen between him and the Administration as to the manner and capacity in which G. & L. Beijer were acting. He had always appreciated and did still appreciate that the Administration had stated on April 13, 1921 (Mr. Lange here refers to a letter of March 30, 1921, from the Administration to the Consulate General), that the Administration had bought the coal from [Page 735] G. & L. Beijer and had had no dealings with Dexter & Carpenter. The Administration had repeated this statement on May 26, 1923 (reference is here made to a letter of May 8, 1923, from the Administration to the Consulate General). In looking over the papers Mr. Lange had, however, found that it could be successfully contended that G. & L. Beijer had acted as agents of the Administration. Having, however, now been definitely and unambiguously informed of the relations between the various parties Mr. Lange had amended the complaint accordingly. He had omitted any statement that G. & L. Beijer had acted as agents of the Administration and had laid his action upon a slightly different theory from the one which he set forth in his original complaint.
Mr. Lange further declared that the Administration had, as stated in their letter, never specifically authorized Mr. Lange to take any proceedings except against Osborn & Co. But Mr. Lange’s opinion in this case, as well as in all other cases handled by him, was that a client, particularly a foreign client, gives his attorney considerable discretion as to the theory upon which such client’s rights should be protected and the persons against whom such protection should be sought. Even if G. & L. Beijer had not acted as agents of the Administration when purchasing the coal from Dexter & Carpenter, this latter firm was, according to Mr. Lange, responsible to the Administration. In Mr. Lange’s opinion the cause of action as pleaded by him after being informed that G. & L. Beijer had not acted as agents of the Administration was sound and he was very confident of the prospects of recovery of the Administration. From the letter of the Administration Mr. Lange had gained the impression that the Administration would prefer to discontinue the pending action against the National City Bank, Dexter & Carpenter and Osborn & Co. He would, however, not advise such discontinuance.
On receipt of this letter from Mr. Lange the Administration was confronted with the question whether to allow Mr. Lange to proceed with the action instituted by him against Dexter & Carpenter and the National City Bank without any authorization or to discontinue this action. In view of the opinion expressed by the American lawyer the Administration arrived at the conclusion that the action should not be discontinued and thereupon declared in a letter to the Consulate General of October 15, 1923, that the Administration would not oppose Mr. Lange’s proceeding with the action in question.
A further reason for the continuance of the action was that Mr. Lange had, at a personal meeting with representatives of the Administration, made the following oral declarations,
that the Administration could not discontinue or recall the action against Dexter & Carpenter without their consent, and[Page 736]
that, even if the Administration were to discontinue their action, Dexter & Carpenter would be entitled to have their counter-claim against the Administration dealt with by the court.
With reference to the passage in your note where you state that the Administration knowingly had caused their lawyer to place the action on the basis that the contract was concluded with Dexter & Carpenter by G. & L. Beijer as agents for the Administration, the following may also be submitted.
With a letter of October 5, 1920, to the Consulate General in New York the Administration had already forwarded the bill of lading and the insurance certificate received by them. By another letter to the Consul General, dated the following day, a translation of which is enclosed herewith (enclosure 16), the Administration among other documents transmitted an extract from the contract between the Administration and G. & L. Beijer as well as a copy of the account of G. & L. Beijer against the Administration. In this connection the Administration made the following statement: “As appears from the foregoing the Administration concluded the contract with the firm of G. & L. Beijer, Stockholm, which firm in their turn had made a contract with Dexter & Carpenter, Inc., New York, for the delivery of coal”. The Consul General immediately handed these documents to Mr. Lange.
In a letter to the Consul General, dated January 14, 1921, Mr. Lange declared that in his opinion Dexter & Carpenter, who were the original sellers of the coal and had sold it c.i.f. and who were under obligation to furnish and deliver insurance, were liable because they had not furnished it.
In a letter of August 22, 1921, an extract whereof is herewith enclosed (enclosure 17), Mr. Lange further declared, that G. & L. Beijer had purchased the cargo of coal from Dexter & Carpenter and that, from what Dexter & Carpenter had said from time to time, they had had considerable business dealings with G. & L. Beijer. Mr. Lange said that he assumed that G. & L. Beijer had sold the cargo of coal in question to the State Railways after payment therefor had been made to Dexter & Carpenter through the National City Bank. Later on in the same letter Mr. Lange states that it might be well for the Administration to protect their legal rights also against G. & L. Beijer in that they undoubtedly sold this coal to the Administration c.i.f. and that, if Dexter & Carpenter did not effectuate the contract but failed to deliver insurance documents when they received payment for the cargo, G. & L. Beijer had not fulfilled their contract with the Administration in that they likewise failed to deliver documents.—From these statements of Mr. Lange the Administration could gather no other impression but that Mr. Lange realized that G. & L. Beijer had acted independently when purchasing the coal [Page 737] from Dexter & Carpenter and not as agents of the Administration. Had they been agents, they could not, of course, be liable as sellers.
It might also be mentioned that, in response to a telegraphic request from the Consulate General, the Administration forwarded a full text of the contract of January 16/17, 1920, between the Administration and G. & L. Beijer with a letter of February 23, 1923, a translation of which was transmitted to Mr. Lange by the Consulate General on March 9 of that year (enclosure 18).
The Administration thus furnished Mr. Lange with correct information regarding the legal relations between the Administration and G. & L. Beijer on the one hand and G. & L. Beijer and Dexter & Carpenter on the other, and it would seem to be equally clear that this information was correctly apprehended by Mr. Lange.
That the Administration did not instruct Mr. Lange to put forward any statements in conflict with this information or that they had cognizance of the fact that such statements had been put forward, would seem to be evident from the correspondence adduced.
6. The allegation that the Administration is of the nature of a corporation.
With regard to the passage in your note where you comment upon the fact that the Administration had in Mr. Lange’s complaint been termed a corporation, I would like to state the following:
The Administration of the State Railways is a State institution. On account of the special administrative functions devolving on the Administration, they enjoy, as is the case with other similar Swedish State institutions, a very independent position in relation to the Government. Within the scope of their general instructions they are thus entitled to decide on their own responsibility matters of considerable importance; they administer their own funds and may sue and be sued in courts of law.
The discrepancy between Swedish and American legal nomenclature renders it difficult clearly and exactly to define the legal status of the Administration of the State Railways from the point of view of American law.
When Mr. Lange asked for information as to the status of the Administration, he was furnished by the Administration with a certificate from the Secretary General of the Department of Justice regarding the rights of the Administration to proceed in and before any courts of law and other authorities on behalf of the State Railways in any matter pertaining to the recovery of debts and the obtaining of damages (enclosure 19). The Administration assumed that Mr. Lange only desired official proofs regarding their competence to take legal proceedings [Page 738] and made no close investigation of the significance in different respects of the American term “corporation”.
7. Have the Administration of the State Railways asserted that they concluded a contract with Dexter & Carpenter?
Your presentation of the course of events in the case opens with the indication that when the Administration instituted proceedings against Dexter & Carpenter, they alleged that Dexter & Carpenter breached a contract made with the State Railways; this is taken by you to mean that the Administration eo ipso asserted that there was a contract between them and Dexter & Carpenter. Seeing, however, that the purport of the point in Mr. Lange’s complaint, to which you refer in the above-mentioned communication, seems to have been misunderstood in important respects, I deem it incumbent on me, in order to correct this misapprehension, to submit that Mr. Lange having been sworn before the Court (cfr published proceedings of second trial of the case, page 452) made the following statement.
When Mr. Lange filed the complaint on March 23, 1923, he had never heard of any contract between G. & L. Beijer and Dexter & Carpenter dated December 4, 1919, nor did he hear of that contract until he received the answer of Dexter & Carpenter to which was attached a copy of the contract in question. The allegation in the original complaint as to the contract, which G. & L. Beijer as agents of the Administration had concluded with Dexter & Carpenter, did not relate to Dexter & Carpenter’s contract with G. & L. Beijer but to a contract according to which a letter of credit had been arranged for the payment of the cargo shipped by S/S Alderman. (Mr. Lange stated in the complaint that the coal was purchased on April 6, 1920. He manifestly intended to say May 6, 1920, or the day when a letter of credit was arranged for the payment of the cargo of the S/S Alderman.) He was never informed by the Administration or anybody else of the contract concluded between Dexter & Carpenter and G. & L. Beijer on December 4, 1919. He did not immediately forward to the Administration a copy of the complaint filed by him at the court. The reason for his not doing so was, that he thought he would wait until he had received all the answers and then forward the entire collection of documents. By a letter from the Consulate General of November 23, 1920, he had received an extract of the contract between the Administration and G. & L. Beijer together with an invoice of Dexter & Carpenter to G. & L. Beijer concerning the cargo of the S/S Alderman. By letter to the Consulate General of February 23, 1923,—thus before the counter-claim of Dexter & Carpenter had been raised—the Administration had forwarded a complete copy of the contract of January 16/17, 1920, between the Administration and G. & L. Beijer. Mr. Lange was never told or instructed by the Administration, [Page 739] or anybody acting for the Administration, to insert in the original complaint the allegations contained in paragraphs 6 and 12 (that is to say the paragraphs containing the allegations that G. & L. Beijer had acted on behalf of the Administration).
The “contract” referred to by Mr. Lange’s complaint is consequently the contract concluded in May 1920, according to which a letter of credit was arranged for the cargo shipped by the S/S Alderman and not the contract concluded on December 4, 1919, as you seem to have assumed.
8. The contract between G. & L. Beijer and Dexter & Carpenter denominated “the State Railways Administration contract” by both the above-mentioned firms.
From your note it seems that the fact that G. & L. Beijer and Dexter & Carpenter have in their correspondence designated the contract concluded on December 4, 1919, as “the State Railways Administration contract”, has greatly contributed to the final issue of the case. This being so it seems desirable to point out that the way in which the contract was designated by the parties cannot possibly be any concern of the Administration. As a matter of fact, it can be assumed that this designation was chosen for the sake of brevity since the Administration was the ultimate recipient of the coal and not in order to give any legal characterization of the contract. It may be mentioned that between G. & L. Beijer and Dexter & Carpenter there had been concluded several other contracts for the delivery of coal, of which at least one was current at the same time as the one designated “the State Railways Administration contract”, and this second contract was designated “the Gasworks’ contract”.
Even assuming that G. & L. Beijer had intended to suggest some kind of agency for the Administration, they can only have meant an agency of the kind which is dealt with in the Swedish law of April 18, 1914, chapter 2, articles 4 and 56, the text of which here follows in translation.*
Article 4. “For the purposes of this law a ‘Kommissionär’ is one who has undertaken for the account of some other person, but in his own name, to sell or to purchase goods, securities, or other movable property. The person on whose behalf the sale or the purchase shall take place is called a ‘Kommittent’ (principal).
If the ‘Kommissionär’ is a merchant and if the ‘Kommission’ entrusted to him consists in the sale or the purchase of goods in the ordinary routine of business, he is called a commercial ‘Kommissionär’ and the ‘Kommission’ a commercial ‘Kommission’.
Article 56. Through a contract concluded with a third party by a ‘Kommissionär’ on behalf of his principal, but in his own name, the said [Page 740] party obtains a claim only against the ‘Kommissionär’, but not against the ‘Kommittent’ (principal).
A third party can base no rights against the ‘Kommissionär’ or his creditors on the fact that the ‘Kommissionär’ has a claim on the ‘Kommittent’ (principal) or has already received from him goods or money in fulfilment of the contract.”
That at any rate those interested in this matter clearly understood the real purport of the contracts in question, should with full clarity appear from the enclosed summary of extracts from the correspondence between the Administration and G. & L. Beijer on the one hand and between G. & L. Beijer and Dexter & Carpenter on the other (enclosure 20).
In this connection it may also be pointed out that the printed records of the second hearing of the case before the United States’ District Court for the Second District of New York show, that Mr. William H. Carpenter, who had acted as vice president and cashier of the firm of Dexter and Carpenter, when called upon as a witness, in answer to questions from Mr. Lange stated inter alia the following:
Previous to December 4, 1919, Dexter & Carpenter had at various times several business transactions with G. & L. Beijer. Thus they had had commercial relations with G. & L. Beijer in the beginning of September, 1919. To the best of Mr. Carpenter’s recollection his company had been in business relations with G. & L. Beijer since 1915 (cfr printed documents, p. 186). Neither Mr. Carpenter himself nor, as far as he knew, any other member of the company’s staff had ever met any functionary of the Railway Administration. Nor had any letter or telegram ever been dispatched to the Railway Administration by Dexter & Carpenter. The name of the State Railways was not to be found in the books of Dexter & Carpenter nor in any bill of lading or account or otherwise in any of the company’s documents, with the only exception of the correspondence between G. & L. Beijer and Dexter & Carpenter concerning the contract of December 4, 1919 (v. pp. 205, 206). Dexter & Carpenter had effected several shipments under the said contract. All accounts concerning these shipments had been rendered to G. & L. Beijers. In the case of every shipment G. & L. Beijer had been indicated as the consignees (v. p. 225). In the book-keeping of Dexter & Carpenter no difference had been made between earlier contracts concluded between G. & L. Beijer and Dexter & Carpenter and the contract of December 4, 1919 (v. p. 207).
Questioned by Mr. Lange whether Dexter & Carpenter had ever sent any account to or put forward any claim against the Administration in connection with the contract of December 4, 1919, before Dexter & Carpenter received the original complaint in the present case, Mr. Carpenter [Page 741] said that Dexter & Carpenter had not until then taken any steps with a view to taking proceedings against anybody in this matter (v. p. 249). Dexter & Carpenter had not previously formulated any demand such as they had in the counter-claim, either against G. & L. Beijer or against the Railway Administration. Dexter & Carpenter had known that they had a claim, but they had not presented it (v. p. 249).
It appears from the printed records concerning the first trial of the case that Mr. Lange, when examining Mr. Carpenter as a witness, had demanded that Mr. Carpenter should produce any letter or telegram wherein Mr. W. Beijer mentioned or explained to Dexter & Carpenter that it was on the account of the Administration and on their behalf that he concluded the contract of December 4, 1919. To this Mr. Carpenter answered that such a letter or telegram did not exist (v. p. 705).
The said printed records also prove that Mr. Carpenter said that he had never read the complaint of the plaintiff in this case. Mr. Carpenter had certified the answer on oath. This document had been drawn up by the lawyers of Dexter & Carpenter and they had said that the answer was correct; and Mr. Carpenter had agreed that this was the case (v. p. 712).
9. The date when immunity was claimed.
As to the question referred to in your note concerning the claim for sovereign immunity, with regard to the counter-claim of Dexter & Carpenter, put forward by the Administration during the legal proceedings, the fact is that the Administration had no knowledge of the grounds on which the District Court rejected the said claim, until they received on April 29, 1929, a letter from the Consulate General, of April 16, 1929, transmitting a copy of the decision of the Court of Appeals. The Administration had not till then been informed by Mr. Lange that the claim for sovereign immunity must be put forward by an accredited diplomatic representative.
10. Summary of the facts submitted above.
Summing up what I have already said, I beg to state the following points:
Mr. Lange instituted legal proceedings against Dexter & Carpenter without any power of attorney or authorization from the Administration.
The Administration have not instructed or asked Mr. Lange to claim, in a possible lawsuit against Dexter & Carpenter, that G. & L. Beijer had acted as the Administration’s agent.
Mr. Lange’s complaint was not, before its presentation to the Court, submitted to the Administration for scrutiny or otherwise communicated to them.[Page 742]
Mr. Lange did not, before the beginning of the lawsuit against Dexter & Carpenter, inform the Administration of his intention to contend that G. & L. Beijer, in buying coal from Dexter & Carpenter, had acted as the agents of the Administration.
When the Administration received Mr. Lange’s complaint—which was not until July 1, 1923, and only on their special request—they immediately contested the accuracy of Mr. Lange’s assertion as to G. & L. Beijer’s agency.
Thus the Administration did not, as is stated in your note, knowingly permit Mr. Lange to base the lawsuit on an allegation to the effect that G. & L. Beijer concluded the contract with Dexter & Carpenter in the capacity of agent of the Administration.
Mr. Lange stated in his complaint that it was on or about April 6, 1920, (evidently Mr. Lange, owing to a clerical error, gave this date instead of May 6, 1920, or the day when the letter of credit for the payment for the cargo of the S/S Alderman was arranged) that G. & L. Beijer on the account of the Administration and as their agent bought the coal shipped by the S/S Alderman from Dexter & Carpenter. This statement of Mr. Lange can manifestly not have in view or refer to the contract concluded on December 4, 1919, between G. & L. Beijer and Dexter & Carpenter.
Mr. Beijer, managing director of G. & L. Beijer, stated in a letter to the Administration that neither he himself nor his company had at the time in question been authorized by the Administration to buy coal on behalf of the Administration.
In Dexter & Carpenter’s books neither the State Railways nor the Administration were entered as the contracting party with Dexter & Carpenter in respect of the contract concluded on December 4, 1919, between G. & L. Beijer and Dexter and Carpenter.
Dexter and Carpenter did not send to or receive from the Administration any cable or written communication concerning the said contract, nor has any representative of this firm come into contact with any member of the Administration’s staff.
The accounts delivered by Dexter & Carpenter concerning the coal shipped in accordance with the contract in question were all addressed to G. & L. Beijer and not to the Administration.
Dexter & Carpenter have previously, viz. before December 4, 1919, on several occasions sold coal to G. & L. Beijer.
As regards Dexter & Carpenter’s book-keeping entries referring to the selling agreement with G. & L. Beijer of December 4, 1919, and the deliveries effected in accordance with this contract, no difference was made between the said contract and other contracts concluded by Dexter & Carpenter with G. & L. Beijer.[Page 743]
After G. & L. Beijer had informed Dexter & Carpenter of the cancellation of the contract, Dexter & Carpenter, in a letter to G. & L. Beijer, declared their intention to make G. & L. Beijer responsible for the loss which might arise for Dexter & Carpenter as a result of the cancellation of the contract. The letter does not contain a single word to the effect that Dexter & Carpenter believed themselves entitled to be indemnified by the Administration.
During the whole period from the cancellation of the contract till the presentation of the answer by Dexter & Carpenter, this firm did not in any way give any indication that they had any claim to indemnity on account of the cancellation of the contract. Only as a result of a mistake committed by the American lawyer in claiming, contrary to the actual facts, that G. & L. Beijer, when buying the coal shipped by the S/S Alderman had acted as an agent of the Administration and on their account, did Dexter & Carpenter, or rather their lawyers—profiting by this mistake—claim that the responsibility for the cancellation of the contract rested with the Administration.
The decision of the Administration to let Mr. Lange continue the action, instituted by him without authorization, is founded not on the approval or adoption by the Administration of the contract between G. & L. Beijer and Dexter & Carpenter, but on the fact that Mr. Lange—having been informed that the Administration had not commissioned G. & L. Beijer to buy coal on their behalf from Dexter & Carpenter and having accordingly amended his complaint—recommended the continuation of the proceedings on the new basis, in this connection particularly emphasizing, that a discontinuation of the Administration’s action would not prevent the hearing of the counter-claim of Dexter & Carpenter.
The Administration did not give Mr. Lange any statement to the effect that the Administration were a corporation. It only transmitted to him a certificate to the effect that the Administration were entitled to institute and conduct proceedings in questions regarding the State Railways, independently and without previously submitting the case to the Government.
The Administration were not informed of the District Court’s pronouncement with regard to the claim to immunity until April 29, 1929.
A Criticism of the Expressions of Opinion in the American Minister’s Note of March 10, 193212
After this supplementary account of the facts of the case I will proceed to a scrutiny, in the light of these facts, of certain observations in [Page 744] your note as to what appears from the files on the matter in the State Department.
- As has previously been pointed out, Mr. Beijer’s commission did not include any authority to buy coal on behalf of the Administration.
- As has also previously been advanced the contract of January 16/17, 1920, was the final form of the agreement which was arrived at in virtue of G. & L. Beijer’s offer made in the communication of October 30, 1919, and the Administration’s acceptance of the same. The application to the Administration for licences for coal referred to the agreement in question, which G. & L. Beijer, according to what they have informed the Administration, intended to fulfill by means of deliveries from Dexter & Carpenter.
- It is correct that the coal bought in virtue of the agreement between G. & L. Beijer and Dexter & Carpenter of December 4, 1919, was intended by G. & L. Beijer for delivery to the Administration—but not impossibly perhaps to others also—and also that the Administration were aware of this, but from this it naturally does not follow that the Administration bought coal from Dexter & Carpenter. As has previously been shown, on the contrary, the case was that G. & L. Beijer bought the coal from Dexter & Carpenter to effect with it the deliveries to the Administration which G. & L. Beijer had undertaken.
- As stated above, it is correct that the coal bought by G. & L. Beijer from Dexter & Carpenter was intended for the use of the State Railways. Whether anything occurred during the preliminary negotations between G. & L. Beijer and Dexter & Carpenter which would indicate that G. & L. Beijer bought coal on behalf of the Administration and as their agent, is a matter on which it is impossible for the Swedish Government and the Railway Administration to express an opinion. In any case, as has been previously advanced, the facts of the case are that the Administration did not give G. & L. Beijer any commission to close on behalf of the Administration any agreement for the purchase of coal either with Dexter & Carpenter or with any other party.
- The circumstance that the Administration inspected and passed the cargoes which G. & L. Beijer notified that they intended to deliver to the Administration is quite natural, since the Administration were to receive the cargoes, and can obviously not afford the least support for the view that the cargoes in question were purchased by the Administration from Dexter & Carpenter.
- It was not the Administration which paid for the coal in America. The Administration paid for the coal in Sweden by placing the due amount to the account of G. & L. Beijer at the Aktiebolaget Göteborgs Bank. This bank then transferred the amount in question to the [Page 745] National City Bank, to be paid out against delivery of the shipping documents to G. & L. Beijer’s sellers, Dexter & Carpenter.
- By means of a careful scrutiny of the correspondence of the Administration on this matter—in which the Department of Foreign Affairs has had access both to the documents placed at their disposal by the Administration and to the files of the Consulate General in New York—the Department of Foreign Affairs have established that in none of the communications despatched by the Administration did they deal with the agreement between G. & L. Beijer and Dexter & Carpenter, as if the Administration and not G. & L. Beijer were the other party to the contract with Dexter & Carpenter. During the whole time the Administration have considered that they were in contractual relations only with G. & L. Beijer. In this respect I venture to refer you to the abovementioned letters to G. & L. Beijer concerning the contract of January 16/17, 1920. It seems also difficult to understand why the Administration—if they had really been the other contracting party to the agreement of December 4, 1919—should have avoided appearing openly as the other contracting party with Dexter & Carpenter, but instead allowed G. & L. Beijer to appear as such.
- It has never been claimed against the Administration by G. & L. Beijer that the Administration were bound by the agreement between G. & L. Beijer and Dexter & Carpenter of December 4, 1919; and Dexter & Carpenter made no assertion in the matter previous to the defence prepared by Dexter & Carpenter’s lawyers. Not until the Administration were informed of this defence had they any reason to deny that the Administration were bound by or had anything to do with the agreement in question; and, as has been stated above, the Administration did at once, when it had received information on the matter, deny the assertion as to the responsibility of the Administration based on the agreement in question.
Neither in communications to Dexter & Carpenter nor to G. & L. Beijer have the Administration stated that they cancel any agreement with Dexter & Carpenter. On the other hand the Administration, on August 2, 1920, cancelled their contract with G. & L. Beijer, which the Administration undoubtedly had the right to do in virtue of the annulment clause contained in the contract.
In view of the observations contained in your note with regard to the argumentation advanced by the Swedish Government in Baron Ramel’s note for rejecting the American Government’s previous presentation of the matter I beg to adduce the following.
Concerning point 1.
Since what is advanced in your note on this point indicates that the [Page 746] statement in Baron Ramel’s note here referred to has not been rightly understood, I deem it desirable to set forth its purport more in detail.
In Baron Ramel’s note it was set forth that from the point of view of international law, the Swedish Government are not under obligation to recognize the judgment of the American court against the Administration. The question has been regarded from two points of view: with reference to the right of immunity of the Administration, and with reference to prevailing principles regarding the recognition of foreign judgments against private persons and corporations which have not the right of immunity.
As regards the claim to immunity I would recall that during the proceedings the Administration made a motion to dismiss the counterclaim of Dexter & Carpenter because the Railways were an agency of the Government and the counter-claim was not maintainable against them without their consent. This motion was overruled. The mere allegation of agency, unsupported by any claim of immunity proceeding directly from the sovereign and unvouched for by the Government of the United States was held to be insufficient. Consequently, the Railway Administration, according to the American courts, have failed to file a proper plea of immunity from suit, answered the counter-claim and thus voluntarily consented to the exercise of the jurisdiction.
The Swedish Government cannot but regard this as an argumentation the tenability of which is very doubtful from the point of view of international law. I venture to point out that in most other countries the Administration’s claim to immunity would have been allowed although not presented through diplomatic channels. Cfr the following pronouncement in the American Journal of International Law 1931 p. 83:
“To the ever-increasing confusion of doctrine which makes up the law of sovereign immunity, the courts of the United States have added procedural complications which, though not as weighty, are nevertheless as puzzling as any of the substantive rules. Of recent years the United States Supreme Court and the lower Federal courts have often had occasion to consider the method whereby the question of immunity was raised. The result has been the evolution of a set of rules so vaguely defined in the decisions as to offer little guidance to the bench and bar, and withal of interest to the scholar who finds that these rules exist in no other judicial system”.
The other point of view from which Baron Ramel, in the note referred to, considered the matter was whether the Administration, apart from the principle of immunity, are under obligation to recognize an American judgment. On this point I venture to advance the following:
Swedish law, in principle, does not admit the right to recognition and enforcement of foreign judgments which direct a sum of money to the successful party. The Administration are—according to the rules of [Page 747] Private International Law in force in Sweden—no more than any private person or private enterprise under obligation to recognize a foreign judgment as definitely decisive as regards the claim.
In Baron Ramel’s note it was stated that the Administration based their opinion that they were prevented from carrying the judgment into effect, inter alia on the grounds now given, in that the Administration do not consider that, according to the regulations governing their activities, they can satisfy a claim which they do not find materially justified and which has not been submitted to a Swedish court of law.
With reference to this statement it is asserted in your note that the Swedish Government, as a reason for their refusal to respect their “obligation” to respond to the judgment of the American court, have referred to the regulations governing the activities of the Administration. But the line of thought in the Swedish note is that, from the standpoint of Swedish law, the foreign judgment is not satisfactory evidence of the existence of an obligation, in the same way as, in a similar matter, a Swedish judgment is not as a rule—from the standpoint of foreign countries—in itself proof of the existence of an obligation.
With regard to the principle of the recognition of foreign judgments I venture to advance further that States take very different standpoints in this matter (cfr. The British Yearbook of International Law 1932 p. 51). Some States refuse, in principle, to give any effect to a foreign judgment. Other countries, whilst admitting the right to recognition and enforcement, only do so in theory and virtually deny it in practice. A third group is composed of those which, in principle, recognize foreign judgments, but hedge the concession round with so many conditions and exceptions that recognition is only granted, in the absence of treaty rights, to the judgments of a very limited number of countries. In a fourth group of countries there is, theoretically, no definite recognition of foreign judgments, but in practice it is more easy than in countries, belonging to the preceding groups, to secure enforcement.
The conclusion of the author of the above-mentioned article is that “each country has its own views of the matter, which often amount, in practice, to a refusal to grant any recognition whatsoever to foreign judgments” (p. 65).
As this is the position, it cannot be maintained that the Administration—quite apart from their claim to immunity—is, according to any accepted universal principle in Private International Law, under obligation to respond to the American judgment. Under the circumstances the Swedish Government cannot recognize the American Government’s view that the Swedish Government are legally and morally obliged to direct the Administration to respond to the judgment.[Page 748]
In view of the statement in the judgment of the Court of Appeals in the suit for attachment, that the claim to sovereign immunity had been made when a sufficient number of years had expired to make it possible to claim prescription as an objection to execution in Sweden, I venture to point out that, in view of the unambiguous manner in which Dexter & Carpenter have maintained their claim against the Administration, prescription of that claim cannot, according to Swedish law, be considered to have been established; furthermore, the Administration have declared to the Swedish Government that they do not consider themselves justified in raising—in any possible future action against the Administration in Sweden within 10 years from the latest time when Dexter & Carpenter’s claim was made or reiterated—any objection to prescription, nor do they intend to do so.
Concerning point 2.
With regard to the statements in your note under this point, I consider that I may confine myself to a reference to the account given above of the course of events.
To the extent that the demand for the satisfaction of the present claim is based, as made in your last note, not only on the fact that a judgment exists, but also on an exposition of the material justification of the claim of the American firm, I would remark that in your note the presentation of the facts in this complicated matter are, as has been shown above, incomplete and misleading in important particulars.
I would further remark that one of the two juries before whom the matter was brought upheld Dexter & Carpenter’s claim. But the other jury disallowed the claim and thus did not consider it justified. Under such circumstances it cannot therefore be a matter of surprise that the Administration insists on the matter being tried also by a Swedish court of law.
On this point you express the opinion that a State institution is not entitled, in the same manner as a private individual, to plead the rule that within the State territory foreign judgments are not valid and cannot be enforced. It is advanced as an argument that a State, in order to protect itself against executive measures in the territory of another State, is entitled to assert its right to sovereign immunity and therefore—this seems to be your line of thought—should be under obligation to submit unreservedly to a foreign judgment. Without entering upon a more detailed scrutiny of this argument, I venture to maintain that it does not give expression to general practice. Nor have, if I am correctly informed, e.g. the United States’ Shipping Board considered themselves under obligation to recognize, without a new trial before an American court, the judgments of foreign courts as to their liabilities.[Page 749]
Concerning point 3.
I have difficulties in understanding how the American Government can categorically deny—and it appears that the opinion expressed under this point cannot be otherwise understood—that the question whether in reality a contract was at all concluded between the Administration and Dexter & Carpenter depends on the nature of the legal relations which existed between the Administration and G. & L. Beijer. The question on which the whole litigation turned was whether Mr. Beijer in closing the contract of December 4, 1919, acted as an agent for the Administration, or whether he acted on his own account. The American Government seems, moreover, to take another standpoint in this matter than the court which rendered judgment in the case. Thus it may be pointed out that the judge in his chargé to the last jury declared, inter alia that the jury had to decide whether the contract of January 16/17, 1920, was an honest contract between the Administration and G. & L. Beijer as an independent party.
Manifestly the nature of this legal relationship, having arisen in Sweden between two Swedish parties, should not reasonably be judged otherwise than according to Swedish law. In view of the statement in your note under this point regarding the order in time between the agreement entered into between the Railway Administration and G. & L. Beijer and the contract of December 4, 1919, I would here interpose the remark that, as has previously been pointed out, the contract of January 16/17, 1920, was in all essentials only a confirmation of the agreement already entered into between the Railway Administration and G. & L. Beijer by the correspondence of October 30–November 6, 1919.
As regards the reason why the action was instituted against Dexter & Carpenter I venture to refer to the foregoing. As has previously been pointed out, it is, further, not correct that the action was started on the basis of the agreement between G. & L. Beijer and Dexter & Carpenter of December 4, 1919. In his complaint Mr. Lange did not refer to this agreement but stated that the coal shipped by the S/S Alderman had been bought on or about April 6, 1920. In this connection it might be pointed out, that the reasons why Mr. Lange found it expedient to institute proceedings against Dexter & Carpenter at the time, were, on the one hand, that he feared that the claims he considered he could make against them might become subject to prescription, and on the other that Dexter & Carpenter had rejected his proposal that, pending the outcome of his actions against Osborn & Co. and the insurance companies, they should admit that the claim be not considered as waived.
The Administration did not consider that they had any grounds for taking action against G. & L. Beijer until it had been established that insurances covering the cargo of the S/S Alderman had not been duly [Page 750] taken. The reason which had led Mr. Lange to institute proceedings against Dexter & Carpenter, viz. the risk of prescription of a possible claim, did not exist in this case.
With regard to the assertion that the Administration had acted as though they were in contractual relations with Dexter & Carpenter, reference is made to the foregoing.
Concerning Point 4.
Obviously in Baron Ramel’s note the presumption is that proceedings should be instituted against the Administration—what claims Dexter & Carpenter may deem expedient to make against G. & L. Beijer is a matter of no concern to the Swedish Government—and the question which it is presumed in Baron Ramel’s note that Dexter & Carpenter should submit to a Swedish court, is evidently the question whether G. & L. Beijer acted as agents of the Administration, thus creating obligations for the Administration. The conclusion drawn in your note from the statement that a final judgment in such an action would be obligatory for the Administration, viz. that the Administration and G. & L. Beijer are, for the purposes of liability in this case, one and the same, is thus entirely incorrect, inasmuch as this very question would be the object of proceedings instituted in Sweden.
In this connection I consider that I ought also again to emphasize the fact that the Administration did not advance or claim any right against Dexter & Carpenter in virtue of the agreement between G. & L. Beijer and Dexter & Carpenter of December 4, 1919.
Concerning Point 5.
What was said in Baron Ramel’s note in respect of the question here adverted to was of course not, in itself, intended to be an argument touching the material correctness of the American judgment pronounced in the case. The statement was only intended to point out that, even according to American conception of international law, an American court has not in principle been considered competent to deal with an action against a foreign state institution. This fact has constituted a further reason for the Swedish Government not to consider the judgment as definitely binding.
As a summary of what has been advanced above, I venture to state the following.
The Administration of the Swedish State Railways have given the most emphatic assurances that they did not empower or otherwise commission G. & L. Beijers Import & Export Aktiebolag to conclude agreements on their behalf for the purchase of coal with Dexter & Carpenter or with any other American firm.[Page 751]
Neither from what appears from the printed records of the proceedings, nor from anything else that has transpired in the matter, has the other party been able to show that the Administration gave G. & L. Beijer such a power of attorney, nor that the Administration have made any declaration or explanation in other form or acted in any way such as to show the existence of such a commission.
The only support whatever that it has been possible to advance for the existence of such a commission was, firstly, Mr. Lange’s assertion to that effect in his original complaint, and secondly, certain statements in the correspondence between G. & L. Beijer and Dexter & Carpenter.
With regard to Mr. Lange’s assertion, he himself declared under oath before the court that it was made as the result of a misapprehension on his part, and he at the same time gave an explanation of how it was possible for such misapprehension to arise.
As to the statements in the correspondence between G. & L. Beijer and Dexter & Carpenter, these can of course in no circumstances be binding on the Administration. As has been advanced before, these statements can, moreover, without difficulty be explained, without their being taken to imply that G. & L. Beijer were the agents of the Administration.
It will also be manifest that the Administration cannot be considered to have “adopted” or “ratified” the contract entered into between G. & L. Beijer and Dexter & Carpenter. If the Administration had done so, then evidently the contract made between the Administration and G. & L. Beijer could not have embodied clauses which are in direct conflict with the terms of the former contract. The whole of the correspondence produced in the matter shows, besides, that the Administration confined themselves entirely to their own contract with G. & L. Beijer; it is in accordance with this latter contract that the Administration insisted upon fulfilment of delivery, and it was with express reference to the terms of that contract that the contract of delivery was cancelled.
One of the two juries to which the matter was submitted, and which had in all essentials the same material to consider, found that the Administration were free of liability as regards the above-mentioned contract. It cannot be a matter of surprise that the second jury’s verdict in a contrary sense could not be accepted by the Administration. The Administration have availed themselves of the same possibilities that are open to private Swedish parties, in referring to a Swedish court of law.
The reason why I have now dealt with this matter in great detail is that your note, both in respect of the facts of the case and as regards the Administration’s motives for their actions, contains assertions which would be inexplicable if your Government had been in possession of complete and impartial information in the matter.[Page 752]
The Swedish Government have noted that, according to the view advanced in your note, the Swedish Government’s reference to a submission of the case to a Swedish court is to say that the judgment of the court of the United States constitutes a denial of justice or that the Swedish Government refuses to comply with the legal and moral obligation resulting from that judgment. This statement involves an arbitrary and untenable construction of the Swedish Government’s attitude, as will appear from the above explanatory statements as to the previous note of the Swedish Government. If, however, the United States Government are of the opinion that the standpoint of the Swedish Government, when referring the matter to a Swedish court, is in conflict with international law, then the Swedish Government are equally as willing as they are under obligation to allow this question to be decided by international arbitration.
The Swedish Government are, further, prepared to give earnest attention to any other proposal from the Government of the United States for a settlement of this question, provided that the points of view of the Swedish Government receive due and sufficient consideration.
- Ibid., p. 582.↩
- Not printed.↩
- Foreign Relations, 1931, vol. ii, p. 1014.↩
- The enclosures referred to in this communication are not printed.↩
- There being no exact equivalents in English legal nomenclature to the Swedish (and German) terms “Kommission”, “Kommissionär”, “Kommittent”, these have been retained in the English text. [Footnote in the original.]↩
- Not printed; for substance, see instruction No. 96, February 23, 1932, to the Minister in Sweden, Foreign Relations, 1932, vol. ii, p. 582.↩