A paragraph of the note, which in view of later circumstances sppears to bear on the last item in the list, is the following: My Government has further instructed me to reserve, for a later communication, further suggestions as to the action which might be considered necessary to meet the exigencies of the situation. I am instructed by my Government to add that the character of any additional statement which might be made to the Persian Government would be materially influenced by the action which that Government may immediately take on its own initiative to make such further redress be appropriate * * * The Persian Government gave complete and prompt satisfaction to the United States demands. A paragraph of its note of July 29, 1924, particularly relevant here, is the following: Considering the official status of Mr. Imbrie, the deceased, the Persian Government agrees with the suggestion of the United States Government that the body of Mr. Imbrie be accorded honors during the transportation. The Persian Government is concerned over this matter to such an extent that it would ship the remains of the deceased consul to America aboard a Persian man-of-war if Persia possessed one. But inasmuch as it is unable to do so, it agrees to pay the expenses which may be incurred by the dispatch of an American man-of-war to receive the remains Subsequently the body was returned to the United States aboard the U. S. S. Trenton. The matter of the expenses thus incurred was touched upon again in a note delivered to the Persian Government by the United States Chargé d'Affairs on November 9, 1924: One question which is now outstanding between the two Governments with respect to the late incident is that of the reimbursement for the ** * expenses, which the Persian Government in its note of July 29 has already expressed its willingness to meet. It is anticipated that the sum will approximate $110,000. My Government desires to effect a settlement of this question in a manner that will tend to promote the friendly relations between the two countries. It has, therefore, authorized me to propose that the Persian Government's undertaking in this matter be carried out by the establishment of a trust fund to be utilized for the education of Persian students at institutions of higher learning in the United States. Upon receipt of information that the Persian Government is prepared to carry out this suggestion the precise arrangements which could best be made to give effect thereto can easily be determined. My Government believes that the Persian Government will be in full agreement with its view that the plan suggested will result in promoting a closer relationship and a better understanding between the peoples of the two countries. The Persian Government replied affirmatively to this proposal in a note of November 15, 1924. Persia paid the sum of $110,000 to the United States in four equal installments beginning on December 24, 1924, and ending March 29, 1925. The United States, as will be shown below, has not as yet carried out the proposal to provide education for selected Persian students. The matter became dormant in diplomacy during the intervening years until it was revived in conversations with the Iranian Government in 1946 and 1947, during the tenure of Mr. George V. Allen (now the Assistant Secretary of State for Public Affairs) as Ambassador at Tehran. II. THE LEGAL PROBLEM President Coolidge, on February 19, 1925, transmitted to the Congress a letter from Secretary of State Charles E. Hughes seeking legislative authorization to use the funds for the purpose of educating Persian students. The House passed a joint resolution to that effect on March 2, 1925, but the Senate had not acted by the time the Congress adjourned on March 4. On January 6, 1926, President Coolidge again sought legislative action by transmitting to the Congress a letter from Secretary of State Frank B. Kellogg urging that the money be used for the envisaged purpose of educating Persian students. Appropriate legislation was introduced in the House on January 9, 1926, but was not acted upon. Thus the question of the status of the $110,000 was not immediately reviewed by the Congress. Meanwhile, the money was gathered into the Treasury and credited to miscellaneous receipts of the Department of State in 1925 under the following entry: ASSESSMENTS AND REIMBURSEMENTS Reimbursements by Persian Government for expenses of U. S. S. Trenton in returning to the United States body of Robert W. Imbrie, United States vice consul, $110,000. This action was taken notwithstanding the fact of the existence of the act of February 27, 1896, which provides: All moneys received by the Secretary of State from foreign governments and other sources, in trust for citizens of the United States or others, shall be deposited and covered into the Treasury. The Secretary of State shall determine the amounts due claimants, respectively, from each of such trust funds, and certify the same to the Secretary of the Treasury, who shall, upon the presentation of the certificates of the Secretary of State. pay the amounts so found to be due. Presumably, then, the money could have been covered into the Treasury to be held in trust for such Persian students as might present certificates of the Secretary of State. In point of fact, however, this was not done. Later the widow of Vice Consul Imbrie sought a share of the $110,000. This request was disposed of by legislation (Private Res. No. 7, 69th Cong.) awarding her as compensation, in addition to that. paid her by the Persian Government, $30,000 "out of any money in the Treasury not otherwise appropriated"-in other words, not out of the $110,000. The legislation also carried a stipulation foreclosing her from further claims in the case. In connection with this legislation the majority and minority reports of the Committee on Foreign Affairs (H. Řept. 985, 69th Cong.) examined the question whether the sum of $110,000 was held in trust for the education of Persian students. As a prelude to this question, it should be pointed out that the power of the Executive to make the agreement with the Persian Government in settlement of the American claims, and the finality of the agreement, were not in dispute. Under the doctrine as laid down in State of Russia v. National City Bank of New York (69 Fed. 2d 44, 48): The President of the United States is entrusted with the right of conducting all negotiations with foreign governments and is the judge of the expediency of instituting, conducting, or terminating such negotiations in respect to claims against foreign governments. Agreements of such adjustments or settlement of such claims are not submitted to the Senate. The question was as to the content-not as to the authority or finality-of the agreement with Persia. The majority view was that the idea of the trust fund was not material to the payment and receipt of the $110,000. To quote the essence of this view: Our Government in its note of July 26, 1924, made five demands, among which was the payment of the expenses in the dispatch of the U. S. S. H. Repts., 81-1, vol. 5-74 A paragraph of the note, which in view of later circumstances appears to bear on the last item in the list, is the following: My Government has further instructed me to reserve, for a later communication, further suggestions as to the action which might be considered necessary to meet the exigencies of the situation. I am instructed by my Government to add that the character of any additional statement which might be made to the Persian Government would be materially influenced by the action which that Government may immediately take on its own initiative to make such further redress be appropriate * The Persian Government gave complete and prompt satisfaction to the United States demands. A paragraph of its note of July 29, 1924, particularly relevant here, is the following: Considering the official status of Mr. Imbrie, the deceased, the Persian Government agrees with the suggestion of the United States Government that the body of Mr. Imbrie be accorded honors during the transportation. The Persian Government is concerned over this matter to such an extent that it would ship the remains of the deceased consul to America aboard a Persian man-of-war if Persia possessed one. But inasmuch as it is unable to do so, it agrees to pay the expenses which may be incurred by the dispatch of an American man-of-war to receive the remains. Subsequently the body was returned to the United States aboard the U. S. S. Trenton. The matter of the expenses thus incurred was touched upon again in a note delivered to the Persian Government by the United States Chargé d'Affairs on November 9, 1924: One question which is now outstanding between the two Governments with respect to the late incident is that of the reimbursement for the ** * expenses, which the Persian Government in its note of July 29 has already expressed its willingness to meet. It is anticipated that the sum will approximate $110,000. My Government desires to effect a settlement of this question in a manner that will tend to promote the friendly relations between the two countries. It has, therefore, authorized me to propose that the Persian Government's undertaking in this matter be carried out by the establishment of a trust fund to be utilized for the education of Persian students at institutions of higher learning in the United States. Upon receipt of information that the Persian Government is prepared to carry out this suggestion the precise arrangements which could best be made to give effect thereto can easily be determined. My Government believes that the Persian Government will be in full agreement with its view that the plan suggested will result in promoting a closer relationship and a better understanding between the peoples of the two countries. The Persian Government replied affirmatively to this proposal in a note of November 15, 1924. Persia paid the sum of $110,000 to the United States in four equal installments beginning on December 24, 1924, and ending March 29, 1925. The United States, as will be shown below, has not as yet carried out the proposal to provide education for selected Persian students. The matter became dormant in diplomacy during the intervening years until it was revived in conversations with the Iranian Government in 1946 and 1947, during the tenure of Mr. George V. Allen (now the Assistant Secretary of State for Public Affairs) as Ambassador at Tehran. II. THE LEGAL PROBLEM President Coolidge, on February 19, 1925, transmitted to the Congress a letter from Secretary of State Charles E. Hughes seeking legislative authorization to use the funds for the purpose of educating Persian students. The House passed a joint resolution to that effect on March 2, 1925, but the Senate had not acted by the time the Congress adjourned on March 4. On January 6, 1926, President Coolidge again sought legislative action by transmitting to the Congress a letter from Secretary of State Frank B. Kellogg urging that the money be used for the envisaged purpose of educating Persian students. Appropriate legislation was introduced in the House on January 9, 1926, but was not acted upon. Thus the question of the status of the $110,000 was not immediately reviewed by the Congress. Meanwhile, the money was gathered into the Treasury and credited to miscellaneous receipts of the Department of State in 1925 under the following entry: ASSESSMENTS AND REIMBURSEMENTS Reimbursements by Persian Government for expenses of U. S. S. Trenton in returning to the United States body of Robert W. Imbrie, United States vice consul, $110,000. This action was taken notwithstanding the fact of the existence of the act of February 27, 1896, which provides: All moneys received by the Secretary of State from foreign governments and other sources, in trust for citizens of the United States or others, shall be deposited and covered into the Treasury. The Secretary of State shall determine the amounts due claimants, respectively, from each of such trust funds, and certify the same to the Secretary of the Treasury, who shall, upon the presentation of the certificates of the Secretary of State, pay the amounts so found to be due. Presumably, then, the money could have been covered into the Treasury to be held in trust for such Persian students as might present certificates of the Secretary of State. In point of fact, however, this was not done. Later the widow of Vice Consul Imbrie sought a share of the $110,000. This request was disposed of by legislation (Private Res. No. 7, 69th Cong.) awarding her as compensation, in addition to that paid her by the Persian Government, $30,000 "out of any money in the Treasury not otherwise appropriated"-in other words, not out of the $110,000. The legislation also carried a stipulation foreclosing her from further claims in the case. In connection with this legislation the majority and minority reports of the Committee on Foreign Affairs (H. Řept. 985, 69th Cong.) examined the question whether the sum of $110,000 was held in trust for the education of Persian students. As a prelude to this question, it should be pointed out that the power of the Executive to make the agreement with the Persian Government in settlement of the American claims, and the finality of the agreement, were not in dispute. Under the doctrine as laid down in State of Russia v. National City Bank of New York (69 Fed. 2d 44, 48): The President of the United States is entrusted with the right of conducting all negotiations with foreign governments and is the judge of the expediency of instituting, conducting, or terminating such negotiations in respect to claims against foreign governments. Agreements of such adjustments or settlement of such claims are not submitted to the Senate. The question was as to the content-not as to the authority or finality of the agreement with Persia. The majority view was that the idea of the trust fund was not material to the payment and receipt of the $110,000. To quote the essence of this view: Our Government in its note of July 26, 1924, made five demands, among which was the payment of the expenses in the dispatch of the U. S. S. H. Repts., 81-1, vol. 5-74 Trenton to Persia, which afterward was ascertained to be $110,000, and that on July 29, 1924, the Persian Government agreed to these demands in full and that the matter then became a closed contract * * * At that time there was no mention of the use of this $110,000 as a trust fund for the education of Persian students, and no such request was made by the Persian Government, but when tendered was accepted by them on December 15, 1924, for which they expressed appreciation. * On this point the minority report contended: To concede that the Executive had full power and authority to arrange the understanding embodied in the July notes is to admit that authority existed to modify the arrangements in the subsequent exchange of notes. This same view is reflected in Department of State memorandum accompanying the Secretary of State's letter of July 15, 1949, requesting this legislation: became The trust agreement, represented by the exchange of notes effective November 15, 1924. Every payment made thereafter was made on the basis of this trust. The first payment by the Iranian Government was not made until December 24, 1924. By that date this Government and the Iranian Government had already agreed that the money to be paid was to be charged with a trust for the education of Iranian students in the United States. The files of the Department indicate that on January 15, 1925, the Solicitor, Mr Hyde, sent a memorandum to Under Secretary Grew in which he said, on the receipt of the first of four monthly installments, that the sum "is being paid by the Persian Government following and presumably in reliance upon an assur ance given by the Secretary of State through the charge d'affaires, with the approval of the President, that this sum will be applied to the education of Persian students in the United States. The question, dormant for almost a quarter century, was revived when the Department of State on March 31, 1948, sought the establishment of a trust fund of $110,000 in the Treasury of the United States for the purpose of defraying the cost of educating Persian students, with a corresponding charge to the appropriation "Refund of moneys erroneously received and covered." This request was denied by the Comptroller General on April 16, 1948 (27 Ops. Comp. Gen. 641). The Comptroller General ruled in the light of the original covering of the funds into the miscellaneous receipts of the Treasury and of the fact that the Executive had earlier sought specific legislative authorization for establishing a separate trust fund, such action could not be taken without specific legislative authorization. The Department of State then properly sought such legislative authorization, and the present bill is the result. The Department's memorandum further explores the legal aspects: When the drafts received from the Iranian Government, charged with the trust referred to, were deposited in the Treasury a countervailing entry should have been made setting the fund up as a trust fund. The failure to do this, irrespective of whose fault or oversight that was, cannot change the legal and equitable nature of the obligation of the United States Government, nor remove the fiduciary character of the fund. It constituted a trust res in intention, and under the elementary rules of equity it remained and still remains a segregable trust res in the Treasury of the United States. The fact is the fund has always been considered as intact in the Treasury whenever the question has arisen and must be considered as intact now. It is the view of this Department that $110,000 of the general fund of the Treasury must therefore be considered impressed with a fiduciary obligation to constitute a segregable fund which as a trust res can be traced under the usual rules governing the tracing of assets. No action has ever been taken by Congress or by the Executive which deliberately or intentionally misappropriated the $110,000 fund or announced the intention of this Government to repudiate the obligation into which the Secretary of State on the authority of the Fresident entered with the Iranian Government |