818.51/1081: Airgram
The Chargé in Costa Rica ( Reed ) to the Secretary of State
[Received May 10—2 p.m.]
A–616. Reference the Department’s airgram No. A–434 of April 23, 1943, 6:00 p.m. According to an opinion furnished the United Fruit Company by a prominent local attorney and economist, internal emergency legislation protects certain debts incurred prior to December 17, 1931. However, according to this opinion, an unfavorable decision by the Court of Cassation would open the way for gold clause suits with respect to: 1) the external debt of Costa Rica; 2) obligations of coffee growers and other exporters where contracts were executed in “centavos oro americano”; 3) rental payments for real property stipulated in “centavos oro americano”; 4) other internal obligations executed in gold coin or with a “gold clause”, and executed after December 17, 1931.
As an example of the type of obligation which might become the subject of suit in the event of an unfavorable ruling, one of the attorneys of the Fruit Company checked local mortgage records, and found, from a cursory examination, some twenty-six mortgages which might be held to contain gold clauses.
The attorneys for the Fruit Company point out that inasmuch as many of these mortgages were executed after 1933, and still use [Page 129] the term “centavos oro americano”, it is further proof of their contention that the phrase is generally used to mean United States currency and not a gold clause. Attorneys for the Company are looking into other types of internal transactions in order to determine what other types of case might be considered to constitute material for a gold clause suit, and I shall inform the Department of the result of their investigations.
It is expected that the decision of the Court of Cassation will be handed down about September 1.
A second appeal of the Fruit Company before the Appellate Section of the Supreme Court has also been handed down and was unfavorable to the Company, as was the first decision. The attorneys for the Company are preparing a digest of the opinion which I will forward to the Department as soon as it is available.