13

Opinion of the Court

tion as to the currency in which the claims were to be paid had not been resolved when the Chinese Communists overran the mainland.

We think that the losses suffered by the plaintiffs did not result from any action of the United States but rather from circumstances beyond the control of any of the parties concerned. For the claims of the plaintiffs must be viewed realistically in the light of the history of events which took place in China during the period in question. The inescapable basic fact is that for many years prior to the treaty of relinquishment the Japanese forces had been in possession of eastern China and that immediately after Pearl Harbor they moved into the International Settlement at Shanghai and thereafter terminated the functioning of the Shanghai Municipal Council, interning the seven plaintiffs who were still there, and later establishing a puppet government of their own. Thus, it was the Japanese occupation and not the treaty of relinquishment which actually terminated the Shanghai Municipal Council as a functioning body and ended the plaintiffs' services to it. It thus appears that the relinquishment of extraterritorial jurisdiction by the United States and the giving up of its rights in the Shanghai International Settlement was but the recognition of an accomplished fact and of the inexorable march of history.

It is true, of course, that the plaintiffs have not realized anything upon their claims from the Chinese Government under the treaty of relinquishment. But this is primarily because of the tremendous inflation of the Chinese currency which took place during and after the war. The United States, however, was not responsible for this inflation. It was an economic fact of life in China during that period which affected everyone who lived there and which doubtless caused untold hardship and financial loss to millions. And the subsequent history of the Chinese National Government, its loss of China proper to the Chinese Communists and its retreat to Formosa, appears to have made further progress in the negotiations for settlement economically impossible.

We conclude that the claims of the plaintiffs are not supportable either at law or upon the broader moral principles of equity recognized in Burkhardt v. United States, 1949,

Findings of Fact

146 C. Cls.

113 Ct. Cl. 658. Whether or not anything should be paid to them as a gratuity rests, of course, within the sole discretion of the Congress. If the Congress should determine to authorize payments ex gratia to be made amounts appropriate to be paid are set out in Table 7 annexed to the findings of fact.

This opinion, together with the findings of fact which follow, will be certified to the Congress pursuant to Senate Resolution 257, 83d Congress.

LARAMORE, Judge, MADDEN, Judge; WHITAKER, Judge, and JONES, Chief Judge, concur.

FINDINGS OF FACT

The court, having considered the evidence, the report of Commissioner W. Ney Evans, and the briefs and argument of counsel, makes findings of fact as follows:

I. THE REFERENCE

1

1. During the first session of the 83d Congress 1 companion bills were introduced in the Senate (S. 2429) and the House of Representatives (H. R. 4924) "for the relief of certain American employees of the former Shanghai Municipal Council." The Senate bill has been referred to this court as hereinafter described.

2. (a) The opening sentence of S. 2429 would have directed the payment "*** to the persons hereinafter named the sums set forth after their respective names, or to their heirs, executors, or administrators ***."

(b) Twelve persons were listed, with amounts reflecting a total of $270,326.80, as follows:

(c) The bill would have declared that:

These sums represent the actual amounts due to said American claimants, without interest, of amounts deducted from their salaries and other amounts to secure

1 The year was 1953.

13

Findings of Fact

their retirement benefits arising out of their employment by the former Shanghai Municipal Council *

Continuing, the bill described the Shanghai Municipal Council as:

*** an international protectorate which had been sponsored and supported by the United States *** in conjunction with other treaty powers since 1844, and which was the governing body of the International Settlement at Shanghai until January 11, 1943 ***. The bill would have further declared that on January 11, 1943:

*** the American and British Governments signed treaties with China, without the prior concurrence of the other treaty powers, which provided for the rendition of the International Settlement at Shanghai without the necessary and essential safeguards to protect the vested interests of the above claimants *

Continuing, the bill said that the American and British Governments:

by agreeing [without the necessary and essential safeguards] that the Chinese Government should assume the obligations of the Shanghai Municipal Council to these claimants, deprived these American claimants of their legal remedies except to petition the Chinese Government for relief, which these claimants have done, to no effect

Summarizing, the statement in the bill concluded:

*** all of which was done in the general national interest of the United States*** but to the particular financial detriment of these individual American claimants. ***

3. (a) Comment on the bill by the Department of State was requested by the (Senate) Committee on the Judiciary." The departmental report was duly prepared and submitted to the Bureau of the Budget (Executive Office of the President) for clearance before its submission to the Senate Committee. After clearance the report was forwarded to

The Chairman of the Committee transmitted the request on July 22, 1953. The report of the Department of State was initially prepared in response to a request from the Chairman of the (House) Committee on the Judiciary with respect to the House bill, and was submitted to the Bureau of the Budget on July 22, 1953.

Findings of Fact

146 C. Cls.

the Senate Committee with a separate memorandum setting forth the (contrary) views of the Bureau of the Budget.* (b) The departmental report contained the following:

*** It is the opinion of the Department that although no obligation exists on the part of the United States Government to pay the claims of these Americans a considerable measure of justification can be adduced on humanitarian grounds for the appropriation by the Congress of funds with which to make ex gratia payments to meet the minimum bona fide claims of these persons.

(c) The memorandum which the Bureau of the Budget forwarded to the Department of State for transmittal to the Senate Committee with the departmental report contained the following:

***The Bureau of the Budget sees no justification for the enactment of this bill. The United States has neither a legal nor an equitable obligation to pay an advance on a claim of this kind against another government.

***

4. (a) On May 27, 1954, the Senate Committee on the Judiciary favorably reported Senate Resolution 257 (83d Congress, 2d session), providing for the referral of S. 2429 to this court “*** pursuant to sections 1492 and 2509 of title 28, United States Code ***.”5

(b) The committee report accompanying S. Res. 257 contained the following: "

6

The Bureau of the Budget returned the report to the Department of State on January 4, 1954, together with a memorandum of its own views, and the Assistant Secretary of State forwarded both the departmental report and the Bureau memorandum to the Chairman of the Senate Committee on January 8, 1954.

The text of S. Res. 257 follows: "Resolved, That the bill (S. 2429) entitled, 'A bill for the relief of certain American employees of the former Shanghai Municipal Council', now pending in the Senate, together with all accompanying papers, is hereby referred to the United States Court of Claims pursuant to sections 1492 and 2509 of title 28, United States Code; and said court shall proceed expeditiously with the same, in accordance with the provisions of said sections, and report to the Senate, at the earliest practicable date, giving such findings of fact and conclusions thereon as shall be sufficient to inform the Congress of the nature and character of the demand, as a claim legal or equitable, against the United States, and the amount, if any, legally or equitably due from the United States to the claimants."

The report also included, as attachments which were "made a part" thereof, (1) the letter of January 8, 1954, from the Assistant Secretary of State to the Chairman of the Committee; (2) the memorandum of January 4, 1954, from the Assistant Director for Legislative Reference of the Bureau of the

13

Findings of Fact

* The Committee on the Judiciary, after thorough study, and a hearing on the part of a subcommittee of the committee, came to the conclusion that there were certain equities in favor of these claimants, but neither the subcommittee nor the full committee had the time or the facilities to determine to what extent the United States should assume this obligation and, therefore, recommends that this matter be submitted to the Court of Claims for the discerning treatment it renders in congressional reference cases.

(c) S. Res. 257 was adopted by the Senate on June 1, 1954, and was promptly transmitted to the court. On June 3, 1954, notices pursuant to Rule 14 were issued by the Clerk.

II. CLAIMANTS; CLAIMS; OFFSETS; GENERAL

5. (a) Claims have been asserted here by seven of the persons listed in S. 2429 and on behalf of three others by their personal representatives. Two of the individuals so listed failed to respond to the Clerk's notice of the reference."

(b) As hereinafter used in these findings the term "plaintiffs" is descriptive of the ten persons named in S. 2429 by whom or on whose behalf claims have been presented in this proceeding.

6. Each of the plaintiffs was at one time employed by the Shanghai Municipal Council and, with the exception of Mrs. Rose E. Lane, each was an American citizen at the time of such employment.8

7. There is no evidence to suggest that the United States was responsible for or in any way concerned with the recruitment of persons employed or to be employed by the Shanghai Municipal Council.

8. (a) At the time of the Japanese attack on Pearl Harbor, on December 8 (Shanghai time), 1941, seven of the plain

Budget; and (3) a brief “submitted to the committee, which sets forth in some detail the history of the International Settlement as well as the events which brought about the claim on the part of these American citizens."

R. M. Jordan and J. J. Surel.

She ac

Mrs. Lane married an American citizen in Shanghai in 1924. quired American citizenship by naturalization on November 27, 1942, some 18 months after her retirement from the Council's service and the beginning of her residence in the United States. Without such residence naturalization had been impossible.

The evidence is not concerned with when or why any of the plaintiffs went to live in Shanghai.