702.1211/1114
Memorandum by Mr. Joseph R. Baker, of the Office of the Solicitor for the Department of State
On October 30, 1922, a conference was held before the Acting Secretary, participated in by Mr. Jerome Hess of the firm of Hardin and Hess, New York City, attorneys for the Obregon Administration in Mexico in the suit recently brought in the New York Supreme Court by the Oliver Trading Company against that Administration; by Mr. Frank L. Polk, representing New York bankers who have recently made an arrangement with the Obregon Administration regarding the service of Mexican bonds; by Mr. Matthew E. Hanna, Chief of the Mexican Division, and Mr. Joseph R. Baker of the Solicitor’s Office.
Mr. Hess stated that the attachments which have been levied in connection with that suit upon property of the Mexican Consulate General in New York, the financial agency of Mexico in New York, and the property in that city of the National Railways of Mexico, have aroused intense feeling in Mexico and are considered as an affront against the Nation.
When told by the representatives of the Department present that it appeared that the attachment against the property of the Consulate General had been or was about to be lifted, Mr. Hess stated that he had not been informed that such action had actually been taken. Thereupon Mr. Hanna informed him of the message just received by telephone from New York stating that an order was about to be signed to that effect.
However, Mr. Hess added that while this information was gratifying, yet it did not cover the entire situation.
Mr. Polk stated that the attachments in question had been served upon bankers who were supposed to have in their possession funds of the Obregon Administration and that he was of the opinion that if these attachments remained in force, it would disrupt the arrangements made as aforesaid for the service of the Mexican bonds and compel the transfer of negotiations to this end from the United States to a foreign country such as England or Belgium. He further pointed out that if the plaintiff in this litigation should make his attachments hold, a multiplicity of suits against the Obregon Administration might be expected in the United States in which attachments might be levied against Mexican consular and other property.
Reference was made to a recent decision in the Appellate Division of the Supreme Court of New York in a suit brought by one [Page 713] Wulfsohn against the Russian Socialist Federated Soviet Republic (195 N. Y. Supp. 472) that an unrecognized foreign government is a foreign corporation aggregate and like a foreign corporation which has failed to comply with the requirements of the general corporation law and tax; law, it cannot sue but may be sued in our courts. As bearing, upon the effects of this decision, Messrs. Polk and Hess argued that there is a large distinction between the respective positions of Mexico and Soviet Russia vis-à-vis the United States, since informal relations are maintained with the Mexican Administration, which has in the United States its embassy, consuls and other representatives, while no such relations are maintained with Soviet Russia. Mr. Baker remarked that there undoubtedly was a distinction in fact but that the distinction in law was more difficult to see.
Mr. Polk stated that the British courts had refused to entertain suits against the Soviet Government and Mr. Baker stated that this might be based upon the fact that the British Board of Trade, a quasi governmental institution, had made a trade agreement with the Soviet Government, thus extending some measure of recognition.
Mr. Hess stated that he was present from a desire to arrive at some friendly solution of the problems arising out of the suit and attachments and that from his information he believed the judge who granted the attachments had acted pro forma, was inclined to regret such action and might welcome an opportunity to vacate the attachments. Mr. Hess therefore proposed that the Department might think it appropriate to communicate with the Governor of New York in an effort to have the Attorney General of that State go before the court as amicus curiae and make some statement to the effect that while the Obregon Administration was not recognized by this Government, yet the Mexican Nation was so recognized and that the United States maintains friendly though informal relations with that Nation.
The Department’s representatives stated that it desired to compose the existing difficulties but of course did not desire to do any injustice to the Oliver Trading Company, an American corporation, and Mr. Baker stated that even if the Mexican Administration were recognized by this Government, the Department according to its precedents would hardly be justified in taking any action on behalf of a business concern like the National Railways of Mexico, even though controlled by the government. Mr. Polk apparently acquiesced in this view, referring to the Department’s position with respect to government owned merchant vessels.
Finally the Acting Secretary stated that the Department was concerned over the existing difficulties and would consider what remedial action, if any, it was in a position to take.