693.11245/31
The American Minister in China ( Johnson ) to the Inspector General of Chinese Customs ( Maze )52
My Dear Sir Frederick: I have received your letter of January 18, 1934, in reference to the American cases in which the Legation feels that the Customs authorities have acted arbitrarily. I have again gone into this matter with care, and regret that I cannot accept the position of the Customs on a number of the issues involved in these cases.
As to the Socony-Vacuum case at Lungkow, I have noted your comments and have also examined a despatch from the Foreign Office enclosing copy of a lengthy communication from your Inspectorate General to the Ministry of Finance. I am interposing no objection to the acceptance by the American company of the proposed arrangement for the settlement of this case, but for the sake of the record and to avoid any future misunderstanding as to our position, I am noting my exception (1) to the deduction of the $500 penalty, (2) to the confiscation of the American cargo on the grounds of purely technical violations of Customs rules by the transporting junk when there was no evidence or even reasonable suspicion of an intention to smuggle or to engage in clandestine trade or to defraud the Customs revenue, and (3) to the denial of the right of joint investigation under the Rules of 1868.
In the Frazar case at Tsingtao, I can find nothing to justify the action of the Commissioner of Customs in denying Customs facilities to the American firm and in detaining cargo destined to them. The [Page 580] provisions of Article XLVI of the British Treaty of 1858, quoted by you, can not in any way be construed to authorize the measures taken by the Commissioner at Tsingtao in derogation of the treaty rights of the American Company and of the extraterritorial jurisdiction of the United States.
To put it quite frankly, the Commissioner is seeking by the measures he has taken, to coerce the American Company into submission to the “summary jurisdiction” of the Customs in the duty dispute, and I can not acquiesce in any such coercive measures. I have no doubt that in many cases traders may in general prefer to submit to the “summary jurisdiction” of the Customs rather than find themselves obliged to answer to Customs charges in their national courts; but when an American merchant challenges such “summary jurisdiction” of the Customs it certainly is not competent for your Commissioners to apply coercive measures to enforce it. On the contrary, I contend that the remedy of the Customs against the American company must be sought in proper proceedings in the American court of competent jurisdiction.
I note the statement of your understanding “that the United States Court for China holds the view that the Chinese Government cannot take legal proceedings in any Consular Court of the United States in China against United States citizens.” I fail to find any decision or dictum to that effect in any of the published cases of the United States Court for China. I am aware that an “opinion” to that effect was rendered by the Attorney General of the United States in 1855,53 based upon the treaties and statutes then in force, but such an opinion is in no sense binding on our courts and the question is one which can only be determined by the Court on proper pleadings.
My attention has been directed to a case in the British Supreme Court in 1917, in which the Commissioner of the Chinese Maritime Customs at Shanghai brought an action against the Shanghai Dock and Engineering Company, Ltd., for certain short-paid Customs duties. The procedure of the Customs in that case, in bringing action against the Company in the court of competent jurisdiction, appears to have been entirely correct. I fail to understand why in a similar dispute with the Frazar Company resort should be had to the measures adopted by the Commissioner at Tsingtao rather than to the orderly processes of the courts.
Although the case in the British Supreme Court referred to above involves questions similar to those raised in the present duty dispute, I am not prepared to express to the American Company any opinion on the question of the legal responsibility of the Company in the present case, which, unfortunately, has been so seriously complicated by [Page 581] the action of the Tsingtao Commissioner in withdrawing Customs facilities and detaining cargo in no way involved in the dispute.
You state in your letter that recent developments in the Frazar case indicate that “… it is not complicated by any question of the complicity of Customs employees”, and “… that there are no grounds for suspecting that any Customs employee was involved in this fraud on the revenue.”54 While the Commissioner of Customs at Tsingtao apparently has not interested himself in facilitating the prosecution of the Customs t’ing-chai in the Tsingtao court, I am informed that the judgment of acquittal in that court has been appealed by the Procurator and that the appeal is now before the High Court at Tsinan. I may add for your confidential information that the investigations continued by the Frazar Company have developed new evidence in reference to the alleged forged seal which I am led to believe will satisfactorily establish complicity of a Customs employee in the case.
I have noted your suggestion that it is wiser to attempt to adjust differences in a spirit of mutual accommodation rather than by invoking the treaties, and that you are always ready to give the fullest hearing to any representations made in this way. I am glad to have this assurance, but in connection with the Socony-Vacuum case and the Frazar case I regret that the Legation’s communications to your Inspectorate General apparently received only pro forma consideration and the Legation was therefore under the very unpleasant necessity of addressing its protests to the Ministry of Foreign Affairs.
I regret that in the Frazar case there appears to be no disposition on the part of the Customs to restore to the American Company the Customs facilities to which it is entitled under the treaties, nor to arrange the matter of the cargo detained by the Commissioner at Tsingtao, and I am, therefore, again under the necessity of addressing a further note of protest to the Ministry of Foreign Affairs in this case in a continued effort to obtain just consideration for the American firm.
Yours sincerely,