The Consul at Shanghai (Pilcher) to the Ambassador in China (Stuart)35

No. 341

Sir: I have the honor to enclose36 for the Embassy’s information a copy of a letter dated November 29, 1947 from the Standard-Vacuum Oil Company, concerning difficulties it is encountering in effecting transfer of title to real property which it has purchased from an American citizen, a retired employee of the company. It will be noted that the Shanghai Bureau of Land Administration refused to accept the application for registration of the transfer on the ground that the buyer and seller must first obtain the prior express approval of the Land Bureau for the sale, in accordance with Articles 18, 19 and 20 of the Revised Land Law.

An officer of the Consulate General called on Commissioner Chu P’ing of the Bureau of Land Administration on December 3, 1947 to discuss this matter. It was pointed out to him that under the terms of Article IV of the Sino-American Treaty of 1943 there could be no doubt that the only case in which an American owner of land whose rights are protected by the Treaty must obtain prior permission for sale is in case of transfer to a person of a third (i. e., non-American and non-Chinese) nationality. The Commissioner said that he was not familiar with the case and had no knowledge of the Bureau’s refusal to accept the company’s application, but that he would look into the case.

Strangely, the Commissioner himself raised a question which apparently was not at issue between the company and the Bureau, and which, in the Consulate General’s opinion, indicates either a complete misunderstanding of the meaning of the Treaty or a desire on the part of the Chinese authorities to nullify entirely the provisions of Article IV thereof guaranteeing existing rights and titles to real property. [Page 1405] Commissioner Chu inquired the state of domicile of M. C. Guss, the former owner and seller of the property, intimating that in his opinion Mr. Guss’s right to obtain a new deed of ownership and consequently his right to transfer a fee simple title would depend on the terms of the law of his domicile in so far as it affects the right of a Chinese to acquire and own land, under Article 18, of the Revised Land Law.

The Consulate General’s officer expressed surprise at this suggestion, pointing out that it raised anew a question which had been considered by the United States Government as settled long ago, at the time the Treaty was signed; that in effect such a view if adopted and enforced would nullify the provisions of Article IV of the Treaty; and that if the Bureau of Land Administration intended to adopt such an interpretation it would be necessary for the Consulate General immediately to take up the matter with the Embassy and Department of State. Commissioner Chu was referred to the regulations issued by the Executive Yuan (Character Chung No. 768) early this year for confirmation of the Consulate General’s understanding of this point.

On December 4, 1947, the Consulate General addressed a letter to Commissioner Chu concerning the case of the Standard Vacuum Oil Company, stating its position in writing. A copy of this letter is enclosed for the Embassy’s information. No reply has yet been received but according to oral information from the Land Administration the question raised by the company’s application is being referred to the Ministry of Land Administration for decision.

Since the matter is being referred to Nanking, the Consulate General suggests that it might be wise for the Embassy to inform the appropriate Chinese authorities of its views in order that they may be taken into consideration before a decision is made. The question raised in this specific case is, in the Consulate General’s opinion, of far-reaching importance, affecting the rights of all American land owners who are protected by the Treaty; and the second question raised by the Commissioner himself appears to be of even more fundamental importance, involving as it does the good faith of the Chinese Government’s pledge to guarantee the validity of real property rights and titles existing at the time of the conclusion of the Treaty.

Respectfully yours,

James B. Pilcher
  1. Copy transmitted to the Department by the Embassy in China without covering despatch; received about February 27, 1948.
  2. Enclosures not printed.