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PANAMA CANAL TITLE
OPINION
OF THE

ATTORN E Y-GENERAL

UPON
THE TITLE PROPOSED TO BE GIVEN BY THE
NEW PANAMA CANAL COMPANY TO
THE UNITED STATES.
WASHINGTON:
GOV E R N M E N T P R IN TING of FICE.
1902. -
- OCTOBER 25, 1902.
The PRESIDENT,
Washington, D. C.
SIR: The act of Congress of June 28, 1902, entitled “An act to pro-
vide for the construction of a canal connecting the waters of the
Atlantic and Pacific Oceans,” having authorized you to purchase the
rights and property of the New Panama Canal Company of France
and to construct a canal across the Isthmus of Panama, in case you
should find that a satisfactory title can be given to the United States
by the company, and certain arrangements made with the Republic
of Colombia, with an alternative provision as to what is known as the
Nicaragua Canal route, I have, by your direction and to enable you.
to perform the first part of the duty so imposed upon you, made an
examination of the title proposed to be given by the company, and
respectfully submit my opinion thereon. - - *
To make this more intelligible, I think it well to premise a brief
summary of the history of the company, of its relations with another
Panama canal company of France, and of the negotiations and prepa-
rations which have been set on foot looking to a sale to the United
States. . - *
In 1878 a contract of concession, which has since been renewed from
time to time, was entered into between the minister of foreign affairs
of the Republic of Colombia and Lieut. Lucien Napoleon Bonaparte
Wyse. In the same year it was approved by a law of Colombia.
This contract of concession (see Exhibit C) describes Lieutenant
Wyse as a member and delegate of the committee of direction of
the civil International Interoceanic Canal Company, presided over
by Gen. Etienne Türr, and the acceptance of Lieutenant Wyse was
in the name of that company. The concession was of the exclu-
sive privilege to excavate across the territory of the Republic,
and to Operate for ninety-nine years from its completion, a mari-
time canal between the Atlantic and Pacific oceans. The canal was
to be completed and opened to public use within twelve years
after the date of the “formation of the universal anonymous com-
pany which shall be organized to construct it,” and the executive
power of the Republic was authorized to extend this time six years,
in case it should be found impossible to finish the canal within twelve
years. The public lands necessary for the excavation of the canal and
for the construction of a railroad, if it should be found convenient to
construct one, were granted, the lands to return to the Republic,
*... º 'º fºº 3
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4 PANAMA CANAL TITLE.
§
together with the canal and railroad, at the expiration of the conces-
sionary period. There was also granted a strip of land 200 meters
wide on each side of the canal; also 500,000 hectares of public lands,
with the mines that might be in them, to be selected by the company.
The canal was to be neutral, a maximum of charges was fixed, and the
Republic was to receive certain annual payments of money during the
life of the concession. The concessionaire was authorized to make
an arrangement with the Panama Railroad Company, and there were
other details favorable to the concessionaire, Colombia, and the general
public which might use the canal. *
This contract of concession was by its terms transferable, but was
absolutely forbidden to be ceded or mortgaged in any way to a foreign
nation or government. 4.
The concession was transferred by the concessionaire on July 5, 1879,
to M. Ferdinand de Lesseps, founder of the Universal Company of the
Interoceanic Canal of Panama, hereinafter referred to as the “old
Panama Canal Company.” This company began the work on the
canal and continued it until 1888, when, after the expenditure of a
vast amount of money, it became involved in financial difficulties and
was placed, in February, by the civil tribunal of the department of
the Seine in France (see Exhibit H) in charge of a liquidator, who was
authorized, among other things, to contribute or turn over the assets
to a new company, the organization of which was then contemplated,
and which will be referred to hereinafter as the “New Panama Canal
Company.” -
On December 26, 1890, a law of Colombia (Exhibit C) granted to
the liquidator of the old Panama Canal Company a prorogation of ten
years for the completion of the canal, providing as a condition that
he should transfer the whole of the assets of the company in liquida-
tion to a new company, which was to undertake the completion of the
work, and that the new company should be organized with a sufficient
capital, and should recommence the work of excavation not later than
February 28, 1893. This new law confirmed the contract of conces-
sion of 1878, and provided for the receipt by the Colombian Govern-
ment of 10,000,000 francs and, 50,000 shares in the proposed new
company. -
A law of Colombia of 1892, by article 1, authorized the executive
authority to modify the contract of December, 1890, between the minis-
ter of foreign affairs and the liquidator, concerning the prorogation
for the opening of the canal, and by article 2 authorized the executive
to extend the time for constituting the proposed new company and
recommencing the work, and provided:
If the Government does not make use of the authorization given by article 1 of the
present law, it is fully empowered to make a new contract, which will not require to
be approved by Congress. -
PANAMA CANAL TITLE. 5
The Executive made a contract in which a greater time, viz, until
October 31, 1894, was allowed for constituting the new company and
beginning the work, and it was therein declared that the term of ten
years mentioned in the prorogation of 1890 should begin upon the
organization of the company. The time for the beginning of the ten
years had not been specifically mentioned in the law of 1890. No sub-
sequent law of the Colombian Congress on the subject has been found.
The new company was constituted definitively on October 20, 1894. )
(See Exhibit J.) This would accordingly make the ten years end in |
The Executive power of Colombia, in April, 1900, undertook to grant
to the New Panama Canal Company a further extension of six years
from October, 1904. (See Exhibit C.) - .
After the judgment of the civil tribunal of the Seine of February 4,
1889, appointing a liquidator of the old Panama Canal Company and
authorizing him, among other liquidation proceedings, to contribute
to the projected new company the assets of the former, the liquidator
continued the work of the canal as liquidator, entering into arrange-
ments for that purpose with the contracting companies which had
been engaged in excavating, until the formation of the new company
in 1894, when he entered into a contract of contribution with the
founders of that company to turn over the assets.
This contract took the form of stipulations in the by-laws of the
New Panama Canal Company, articles 5, etc. (Exhibit I.) These
articles declared that the liquidator contributed to the new company
all the rights which had resulted for the company in liquidation from
the laws, decrees, and other acts of the Government of Colombia; all
the works, plants, workshops, buildings, hospitals, matériel, etc.,
belonging to his company; all the plans, drawings, studies, and docu-
ments of all kinds concerning the construction or operation of the
canal; the benefit of all contracts with third persons; all guarantee
funds on deposit; the whole to be the property of the new company.
The articles also contributed a large majority of shares of stock in the
Panama Railroad Company, a New York corporation, which shares
had been purchased by the company in liquidation; but this last con-
tribution was conditional; that is to say, should the canal be duly com-
pleted it was to remain good, but should the canal be attempted and
partly constructed by the new company, but not completed within the
time allowed by the concession, the shares were to return to the liqui-
dator; and should the new company vote not to attempt the construc-
tion of the canal, or vote to raise money for that purpose but fail to
get it, then an indemnity of 20,000,000 francs was to be paid to the
liquidator and the railroad shares to belong to the new company.
This contract of contribution stipulated in favor of the liquidation
of the old company 60 per cent of the net profits of the enterprise,
6 PANAMA CAN AL TITLE.
|
|
and this was to be reduced to 50 per cent if the canal should not be
attempted and if the unconditional title to the railroad shares should
be acquired by the new company in the manner that has just been
explained. (See Exhibits L and I.)
The rights as to the railroad shares were to remain inalienable by
the New Panama Canal Company until payment of the 20,000,000
francs or the complete construction of the canal within the time
allowed by the concession. There was also reserved to the liquidator
the right to a commission of inspection to examine the proceedings
of the new company.
In the interval between the appointment of the liquidator in 1889
and this contract of contribution of October, 1894, divers suits were
brought against the liquidator, which were the more embarrassing
because of the legal character of the old Panama Canal Company.
He accordingly applied to the French Parliament for a special law to
regulate the liquidation of the company, and such a law was passed
on July 1, 1893. (Exhibit B.) This law will be frequently referred to
hereinafter. - -
In the course of raising funds the old Panama Canal Company had
issued a great number of bonds of different kinds. (See Exhibit 13.)
The last issue before the company went into liquidation was an issue
of what have come to be known as “lottery bonds"—that is to say,
bonds which were also in a sense lottery tickets. These were author-
ized by another special law of France of June 8, 1888. (Exhibit F.)
Of the money received from the subscribers of these bonds, namely,
360 francs each, the old Panama Canal Company took 300 francs and
60 francs were turned over to another company, to be invested and
to provide both a sinking fund to reimburse the bonds from time to
time, and in the meantime to furnish funds to pay the prizes of the
lottery. This company is still in operation. Its members are the
subscribers to the lottery bonds themselves. (Exhibit 13.)
Another special law of France after the dissolution of the old Pan-
ama Canal Company authorized the liquidator to issue some of the
same lottery bonds. -
The bonds in his hands unissued were not among the rights con-
tributed by him to the New Panama Canal Company.
The latter company resumed the work on the canal immediately
upon organizing itself, having taken in a cash capital of 60,000,000
francs, subscribed by divers persons, including some of the old con-
tractors, some of the bondholders and stockholders of the old company
and some outside persons; and has continued the work until the pres-
ent time.
The liquidation of the old Panama Canal Company has likewise con-
tinued under the special law of July 1, 1893, concerning it.
In 1901 the question of a purchase of the rights and property of the -
New Panama Canal Company by the United States was much discussed
PANAMA CANAL TITLE. 7
ſº
in France and the United States, and on January 9, 1902, an official
offer (see Exhibit T) was made by the officers of that company to selli
to the Government of the United States all the property and rights of
the company on the Isthmus of Panama and its archives in Paris, for
$40,000,000. --~~~~~~~~~~T --
This offer had been authorized by vote of the general meeting of
stockholders of the company (see Exhibit T), and the liquidator and
the official representative (called the “mandataire”) of the bondhold-
ers of the old Panama Canal Company whose appointment had been
provided for by the special law of July 1, 1893, announced their consent
to the sale in formal proceedings in the civil tribunal of the Seine, by
which that law required all acts of the liquidator tending to alienate
the assets of the old company to be approved. -
The civil tribunal of the Seine approved such consent of the liquida-
tor by a judgment of March 19, 1902. (Exhibit 4.) ... •
A division of the $40,000,000 between the new company and the
liquidator was settled by arbitration, and the submission by the liqui-
dator of this matter to arbitration was approved by another judgment
of the civil tribunal of the Seine, dated August 2, 1901. (Exhibit O.)
One of the bondholders of the old Panama Company, a M. Donna-
dieu, went into court and asked the civil tribunal of the Seine to set
aside and annul its own judgment approving the consent of the liqui-
dator to the sale to the United States and questioning the new com-
pany’s right to sell; but the tribunal, by judgment of July 3, 1902
(Exhibit 5), decided that he had no right of action, because, under the
special law of 1893, he was represented for such purposes by the
mandataire of the bondholders, and that he had no right to question
the power of the New Panama Canal Company to sell, having no legal
relations with that company. . -
This judgment was confirmed upon the same reasons given below,
by judgment of the court of appeals of Paris of August 5, 1902.
(Exhibit 6.) -
For convenience in pursuing the investigation, all objections known
to have been stated in Congressional debates and elsewhere to the
satisfactory character of the title proposed to be given by the new
Panama Canal Company to the United States were formulated. (Ex-
hibit 1.) These were in the same terms communicated to the officers :
and lawyers of the company, in order that, while the investigation
was pursued and the conclusions herein stated reached independently
of them, they might draw up and submit whatever they saw fit by way
of comment upon those objections. They have recently handed me a
legal opinion or brief, a translation of which is among the papers
hereto annexed. (Exhibit 2.) . - -:
In addition to taking that step we have obtained, independently of
them, a special stenographic report of the oral arguments made in a
§
8 . PANAMA CANAL TITLE:
recently decided case in the court of appeals of Paris, in which the
sale of the canal property was opposed by one Donnadieu, as already
mentioned. (Exhibit 6.) - -
The objections referred to, except the last, which is that Congress
authorized a purchase only from the new company and not from the
old, whereas it is alleged that the property has become again that of
the old company, resolve themselves into reasons in support of the
following propositions: -
1. That the new company has not power to sell the canal and rail-
way property. - -
2. That the liquidator has not power to consent to such sale.
3. That the French courts have not power to authorize the liquida-
tor and new company, or either of them, to enter into the sale.
4. That, at all events, the United States would take the property as
a trust fund subject to the total obligations to the stockholders, bond.
holders, and the other creditors of both companies.
It will be convenient to examine the law bearing upon these four
propositions in their order:
I. The first is: That the new company has not power to sell the
canal and railway property. -
This requires a brief statement of the history and nature of such a
company, in view of the law of France. - -
Our conceptions of charters and corporations and privileges enjoyed
by corporations, as well as the notion of their being unable to act beyond
the ability infused into them by their charters, are here very mislead-
ing, but, notwithstanding this, there are abundant conceptions belong-
ing to our system which can enable us to understand these French
associations. - -
There once existed in France concerns similar to our corporations,
taking their character from royal and feudal institutions, but it is to be
remembered that France passed, more than a century ago, through a
revolution in which almost everything of that kind was destroyed as
though by fire. f
It was one of the acts of the French Revolutionary Convention to
declare “the liberty of industry.”
The New Panama Canal Company is an anonymous partnership or
association, composed of shareholders (Société Anonyme par Actions),
which, in view of its object, is of a noncommercial or nontrafficking
kind, but subjected by a law of August 1, 1893, to an act concerning
commercial associations passed in 1867, and to the Commercial Code
and the customs of commerce. All anonymous associations formed
since August 1, 1893, are subject to the same, and are, legally speaking,
commercial, though in fact not so. ** .
The old company is an anonymous partnership which voluntarily
took the form of an anonymous association of shareholders, but is not
ruled, and never was ruled, by the law of 1867 or the code and customs.
PANAMA CAN AL TITLE. 9
of commerce, but only by the Civil Code, having been formed before
August 1, 1893, and not being commercial in its object or business.
Anonymous associations or partnerships have not the names of the
partners, but a name merely descriptive of their object or business.
The essential or fundamental nature of both companies is that of vol-
untary partnership, as we understand that. The powers, accordingly,
are those which an individual Frenchman has under the general rules
of law—an individual merchant corresponding to the new company,
and an individual who is not a merchant to the old company. As an
individual can sell what belongs to him to whomsoever he pleases
(unless some third person has a claim such as properly warrants him in
opposing the sale in order to subject the property to a debt owing to
him, or the like), so one of these associations, of either kind, can ordi-
marily dispose of its property. - -
In the case of commercial associations proper, to which the new
company, the one we are now considering, has been assimilated and
added by the general law already referred to of August 1, 1893, the
legislature of France, in view of the usually large capital and the great
number of stockholders, bondholders, and other creditors, has imposed
a few restrictive rules (act of 1867 and amendment of August 1, 1893,
Exhibit 3) for the greater security of the partners and of third per-
sons, requiring publication of the by-laws, a certain amount of stock
to be represented at certain stockholders’ meetings, the paying up
of subscriptions, etc.; but these do not change the essential character
of the concerns as partnerships; do not establish any tie between them
and the Government, or any obligations from them to the Govern-
ment, and do not forbid the exercise of the liberty to dispose of the
property of the concerns as freely as an individual is able to dispose
of his, if no special law forbids and if he is solvent and not under some
particular contractual or other like obligation to retain the property.
This new Panama Company is quite solvent.
The act of 1867 already referred to provides, in section 21, the first
Section under the title of “Anonymous associations,” as follows:
21. In the future, anonymous associations may be formed without authorization
by the Government. They can, whatever may be the number of the associates, be
formed by a document of a private character (“Sousseing privé”) made in duplicate.
They are subject to the provisions of articles 29, 30, 32, 33, 34, 36 of the Code of
Commerce and to all provisions contained in this title.
Lyon-Caen and Renault, Treatise on Commercial Law, say that—
The law of 23d of May, 1863, modified the Code's requirement of the authorization
by administration to the extent of exempting from the requirement associations hav-
ing a capital exceeding 20,000,000 francs # * * the law of 1867, which has
repealed the law of 1863, has not set anonymous associations free to constitute them-
selves and to perform their functions as they may see fit. In the interest of stock-
holders and third persons it has imposed some rules (articles 41, 42, 47) which, from
the nature of things, are much the same as those that same law has established for
10 PANAMA CANAL TITLE.
associations of commandite par action. The legal regulation of the two kinds of
societies par actions (that is to say, having stock) has thus become the same in this,
that since then neither of them is submitted to a previous authorization or to the
surveillance of the administration, but they enjoy only a liberty regulated by the law.
In a judgment of July 19, 1899, the civil tribunal of the Seine, in
deciding a controversy between the liquidator of the old Panama Com-
pany and the company formed in 1888 to take care of the so-called
lottery bonds, discussed the different situation of a civil association
formed before 1893, such as was the old Panama Company, and that
of a more recent association, and held that the civil association for
taking care of the bonds did not “come under the control of the law
of July 24, 1867, which applies only to commercial associations.
* * * That it is the Civil Code alone which rules the civil associa-
tions to determine the rights and suits of those interested, whatever
form those civil associations may have taken in order to constitute
themselves; that the agreement shown by the by-laws, accepted by
all and by the company of Panama itself, is, therefore, the law of the
parties; that it has been observed in the calling and in the composi-
tion of the extraordinary general meeting of July 25, 1898, which,
consequently, can not be criticised from this point of view.”
But we are at present discussing the power of the new company to
sell, and it would seem to follow from what has been said that it has
the power, just as an individual would have power to sell his property,
unless some special statute has forbidden this or made it unlawful,
since it is a solvent company without bondholders, as appears from its
annual reports hereto appended. (Exhibit N.) It is essentially a
partnership, subject to a few statutory regulations about entirely dif- .
ferent matters. -
It has been suggested, however, that its contractual obligation to
the old company to pay 60 per cent of the earnings of the canal
restrains it. And this may well be true; but this contractual obliga-
tion of a partnership is the same as though an individual had agreed
to complete the canal and to pay the 60 per cent, and is therefore
such an obligation as can be released by the other contracting party.
If so effectually waived by the other contracting party, no one else
could complain or question. * -
Being a merely contractual obligation of a private partnership for
the benefit of another private concern, there is no principle of law
which would make the new company unable, with the consent of the
other contracting party, to make use of its liberty to dispose of what
belongs to it. There is no lack of power, or vires. -
Whether from the point of view of the bondholders and other cred-
itors of the old company, and the power of the liquidator, it is just
and lawful for him to set free the new company is a question to be
separately discussed hereinafter.
PANAMA CANAL TITLE. . 11
It has also been suggested that the so-called lottery bond law of 1888,
providing—- . &
ART. 3. All machinery necessary for the accomplishment of the work shall be
made in France. The raw materials shall be of French origin—
is a special law containing, by some implication, a prohibition to the
new company to sell to one who could not be expected to be subject
to such provisions of law, or else subjecting any purchaser of the
property of the new company to those provisions, so that he would
be bound to proceed accordingly. -
It has, besides, been supposed (but enough has been said to indicate
the error of that) that this law of 1888 is proof that the Government
of France is represented by or bound up with companies generally
in such a way that the express consent of that Government is neces-
sary to authorize any sale of the whole of its property by the new
COmpany. -
This law was purely exceptional, intended to give an unusual right
to the old company in the matter of issuing bonds, which are in effect
lottery tickets also, lotteries having been prohibited in France by a
law of 1836. -
The Government, as a compensation to the nation in general for
permitting this unusual thing, required the company so specially
privileged and benefited to use French machinery and materials. But
in view of the general relations of the Government to these free part-
nership associations, it would be going a long distance to see in this
an order intended to be addressed to any individual or other purchaser
of property from the company which was thus given the benefit of the
unusual privilege, and still more to deduce a mortgage or a lien
attaching to any property it might sell into whosesoever hands it
might come. - -
The French legislature by act of 1889—the company having dis-
solved and ceased to require to any great extent machinery and raw
materials—passed another law authorizing the liquidator to issue some
of the unsold bonds; but, of course, as bonds of the old company, which
still existed for the purposes of liquidation, and providing that in
case the liquidator should transfer or cede its assets to a company
organized for finishing the canal, the new company should not issue
the bonds which might at that time remain unsold otherwise than on
the conditions determined by the law of June, 1888, concerning the
minimum of the selling price and the payment of interest.
But the new company has remained a stranger to the lottery-bond
scheme. It has not enjoyed the privilege of issuing those bonds; the
still unissued bonds have been retained by the liquidator and were not
contributed by him to the new company, and they are no part of what
it is now proposed to sell to the United States.
T.2 PANAMA CANAL TITLE.
The nature of the provisions of law concerning materials and
machinery is such that the requirement to obtain these in France was
not in any way to benefit the bondholders or any other specific indi-
viduals, or even the French Government itself, but the people of
France indefinitely. - -
The expected benefit was a vague and indefinite one, reserved
by the Government as compensation for something which the now
proposed purchaser would not get, viz, the privilege of issuing lottery
tickets as an inducement to a loan the company had already a right to
get; and only the Government of France, which is acquiescing in
the proposed sale, with a full knowledge that the foreign purchaser
would not think of going to France for his materials, could ask that
such materials and machinery should be purchased in France. No
bondholder or stockholder or creditor can ask, or could possibly desire
to ask, that that order burdening the old company should be transferred
to a purchaser. It seems to be clear that no request from the Frénch
Government will be, or could justly be, made; and further, that if, by
the law of 1888, the legislature intended to say that any remote pur-
chaser of property from a free partnership concern must be a person
subject to the laws of France, or that no sale to a foreign company or
concern could be made, the legislature used no word to express that
idea. The United States will not be a French successor of this French
company, enjoying French privileges and bound by French law, but a
foreign purchaser of property belonging to it in a foreign country.
It may be remarked, in passing, that so far from the canal project
and undertaking being those of the Government of France as a Gov-
ernment, it is clear that the concession by Colombia was made, not to
France, but to private persons and a private company, and that the
concession itself forbids the belief that Colombia was willing, at the
time, to make the concession to or for any foreign government. The
canal is not in France, but in Colombia. It is not built in pursuance
of the governmental obligations of France to provide highways in
France for the French people. It is, in short, a canal of great public
interest in Colombia, which fact led Colombia to declare it a work of
public utility, so as to authorize the private concessionary to make use
of what we call the right of eminent domain, or forcible expropria-
tion of private property; but, as far as the nation and Govern-
ment of France are concerned, it is a canal in a foreign country
partially constructed by a private French concern in the nature of a
free partnership. .
France could have prohibited the French private company from
selling to outside persons or concerns, if it desired to retain the benefit
of the purchase of materials in France, but France can not make laws
directly binding either outside persons or property in Colombia after
PANAMA CANAL TITLE. 13.
it ceases to be owned by Frenchmen. However, France passed no
such law, and such companies, as we have shown, are left by her as
free to sell what they own either to Frenchmen or foreigners as indi-
vidual Frenchmen are. { •
But it is not sufficient to show that there rests in the New Panama
Canal Company, or in its associates or stockholders, somewhere, the
right to make this sale, or divest themselves of their rights in favor
of a new concessionary of Colombia, so far as their powers under the
law of France are concerned.
It is still necessary to know that the “general meeting” of stock-
holders, so called, which has authorized the offer, reserving the right
to itself to ratify the sale, has the power to so offer and ratify that
sale, and that it is not necessary to have unanimous action by the
shareholders. •
The “general meeting” of stockholders receives its powers from
the by-laws, and the by-laws are made by the original stockholders or
founders. It should always be kept in mind, in this connection, that
they are partners who have associated upon certain terms, and that
a partnership agreement can not be changed by less than all of the
partners.
Sometimes the by-laws (statuffs) delegate authority to the “general
meeting” to alter those by-laws in certain specified particulars. When
that is done the general meeting is, as it were, both a constitutional
convention and a legislature of the association. -
The Government of France, prior to 1867, authorized, through the
executive administration, the by-laws of commercial associations, to
which the New Panama Company, created in 1894, has been assimila-
ted by the act of August 1, 1893; but, as I have said, from 1867 only
certain very general regulations were prescribed by statute, and
otherwise the founders were left free to make such by-laws as they
saw fit.
There is nothing in the act of 1867 or the amendment of 1893 for-
bidding the most extensive powers to be conferred by the by-laws of
the founders upon the general meeting. -
On the contrary, the authors already quoted (same volume, sec. 864
say that the question is much discussed whether, in the absence Of any
delegation of power by the by-laws—i. e., when they are silent on the
subject—the general meeting has not this power of alteration. They
say it is pointed out that if “unanimity among the stockholders is
required, alterations of the most necessary character to the carrying
on and development of the association will be rendered difficult, even
impossible.” They say that it is also claimed that in the general meet-
ings, which have to deal with questions concerning a collective person-
..ality, there should be power to lay down the law, because the persons.
14 PANAMA UANAL 111DE.
composing the association have renounced their individual rights in
favor of the collective interest. They add, however:
we think, on the contrary, that, in the absence of a formal clause in the by-laws,
alterations in them can not be made except with the unanimous consent of the share-
holders.
It happens that the by-laws of the New Panama Canal Company are
not silent, but expressly give very extensive powers to the general
meeting which proposes to make the sale. Title 9 of those by-laws
(Exhibit I), under the heading “Amendments to the by-laws—Liqui-
dation,” has the following:
ART. 60. If experience shall show the expediency of modifying or adding to the
present by-laws, the general meeting shall proceed to do that in the manner set forth
in articles 61 and 62 hereof. . -
It may especially decide in regard to a reduction of the capital stock; a reduction
of the fixed duration of the association, an extension of it, or an earlier dissolution of
the association; its fusion with other associations; it may even effect all and any modi-
fications bearing upon the object of the association without, however, altering its
-6\SSél] Cé. - - - - -
ART. 63. In case of the dissolution of the company, the general meeting, on the
proposal of the council of administration, determines the method to be adopted for
liquidating or for the constitution of a new company; it appoints the liquidator or
liquidators, and can give them the most extensive powers.
Articles 61 and 62 referred to contain merely details (taken from
the regulations of the act of 1867) as to the composition of a general
meeting capable of carrying out article 60. - .
It would be a violation of article 60 to use the funds of the associa-
tion to build a canal in Spain. That would essentially alter the object
Or business to be carried on.
The general meeting thus has the power to amend or add to the
by-laws in any way not altering the business to be carried on, and
therefore to adopt by-laws giving itself or the president or council of
administration any powers concerning the sale of the assets that it
sees fit to give. - + .
Having all the powers of the shareholders, with the single exception
above mentioned, I do not see that a resolution directly authorizing or
ratifying the sale, if published in the manner required for amend-
ments of the by-laws, would be contrary to any law, violative of any-
one’s rights or in excess of the powers given to the general stockhold-
ers’ meeting by the by-laws above quoted. -
This great power was properly conferred by the founding partners
because of the impossibility of getting together for unanimous con-
sent the hundreds of thousands of partners. -
II. The next of the four propositions is—
2. That the liquidator has not the power to consent to such sale.
This involves somewhat more complex problems, but they do not
seem to be difficult of solution.
PAN AMA CAN AI. TITLE. 15
It might be sufficient to say that the civil tribunal of the Seine,
given by the general law and the special act of July, 1893, jurisdiction
of the persons and subject-matter, and being what we should call a
court of general jurisdiction, has decided that the liquidator has the
power to consent to the sale, and that the court of appeals, upon the
appeal of the only person who presented himself or claimed to have
presented himself within the time and manner allowed by that special
law, has decided against him on appeal.
He has a right (during a period of two months, now running) to ask
the Court of Cassation to nullify the judgment on appeal, which held
that even he had not presented himself in due time and manner and
that he had no right of action, even if he had been in time. But in
view of the objections which I have mentioned in the beginning of
this paper, it may be well to explain the validity of the judgment or
decision that the liquidator has the power to consent to the sale, its
conformity with French law, its reasonableness, and its effects with
regard to the stockholders, bondholders, and other creditors of the
Old company.
What is this liquidator and what are the powers of such liquidators?
The Civil Code, which, as we have seen, regulates the affairs of such
civil companies, contains very little with regard to their liquidation
or winding up, and almost nothing in restraint of the liberty of the
partners. (See title 9, “Of the contract of association.”) It is
almost wholly confined to the general rights and relations of indi-
viduals. It contains nothing about corporations or joint-stock compa-
nies or other artificial and privileged concerns. Its provisions about
the “contract of association” contemplate a mere voluntary partner-
ship instead of a statutory or artificial body in which the stockholders
have a limited liability, and apply to any and all free partnerships.
They should be read in the light, first, of the freedom of contract;
and, secondly, of the principle that third persons can be bound by
ample notice of the nature of the freely made partnership with which
they may deal. As the authors already quoted say, there is nothing
in the Civil Code or elsewhere to forbid (see secs. 1077–1082) a mere
partnership from taking the form of a commercial association and let
ting the world know that its private contract of association or part-
nership contemplates a limited liability. These authors say:
We believe, on the contrary, that the law of 1867 [which contemplates limited
liability of commercial associations] rules noncommercial associations as it does
commercial associations having stockholders, though constituted before the law of
August 1, 1893. - - -
We have seen, however, that the civil tribunal of the Seine has held
that it does not, and those authors themselves say that the greater
number of judicial decisions are that way. +
But it is recognized by these authors, and in the decisions of the
16 - PANAMA CANAL TITLE.
civil tribunal of the Seine, that the bankruptey laws and the laws
concerning the statutory institution known as “judicial liquidation”
have no application to the noncommercial associations constituted
before August 1, 1893, and that the question of their liquidation is left
altogether to the Civil Code. - -
The Civil Code, in turn, leaves it to the will of the proper tribunal,
and to the general provisions of law applicable to individuals, and
especially to individuals in the case of succession after death. About
the only express provisions in the Civil Code on the subject are the
following articles: - -
1871. The dissolution of associations having terms [of duration] can not be
demanded by one of the associates before the expiration of the terms unless upon
just grounds, as where one of the associates has failed to live up to his engagements,
or where an habitual infirmity renders him incapable of attending to the affairs of
the association, or in other similar cases, the legitimacy and importance of which
are left to the determination of the judges. (Civ., 1184–1865.)
The rules concerning partition of successions, the form of such partitions, and the
obligations which result therefrom among the coheirs apply to partitions among
associates. (Civ., 792, 815 et seq., 826; Code Procedure, 966 et seq.)
The liquidation or ordinary winding up of commercial associations
formed after 1867 is equally unregulated by statute, since it is neither
settlement by bankruptcy proceedings nor settlement by what is tech-
nically “judicial liquidation.” The authors quoted say (sec. 412):
It is not only from the syndic [in bankruptcy proceedings] that the liquidator of
an association differs, it is also from the judicial liquidator named in virtue of the
law of March 4, 1889.
And in section 364 they say:
The Code of Commerce (art. 64) supposes, it is true, an association in liquidation
where it speaks of associates who are not liquidators. Article 61 of the law of 24th
July, 1867, also expressly mentions liquidation. But no French statute has defined the
state of liquidation, nor established the rules to govern it; jurisprudence (that is, judicial
decision) has had to supply that omission, drawing inspiration from the general principles
of law and the mecessities of practice. -
It appears that the matter of liquidation or winding up being left
thus to the courts, they have, in a general way, followed the same plan
for civil or nontrading associations voluntarily constituted in commer-
cial form before 1893, such as the old Panama Company, as in the
case of commercial associations or the associations assimilated to them,
created since 1893. - -
Bankruptcy law, to repeat, applies in any event only to commercial
companies and individuals; the quasi-bankruptcy proceeding called
“judicial liquidation” is equally inapplicable to this Old Panama
Company, a noncommercial company created before 1893. We have
simply a dissolution and settlement of a partnership by the partners,
if they can agree unanimously, and if they can not, then under the
power of the courts on general principles of law, ea, necessitate.
PANAMA CANAL TITLE. 17
But what is left to the courts is the resolution of questions which
the laws do not themselves resolve, and the necessities of the case
nevertheless require to be resolved. This is very little, and we are
not to understand that because the partners can not agree and the
courts must be resorted to, the rights of all concerned, even their
rights of action, are ended or subject to the mere caprice of the
judge. It is quite otherwise. The Civil Code and the statutes and
recognized maxims govern as before, so far as it is possible to apply
them. Ordinarily all that the court does is to appoint a liquidator,
and authorize him generally to liquidate as he deems best.
The partnership is dissolved, though in a sense continuing to exist
(same authors, 372). Being resolved into its units, equal and having
rights well determined by the code, they liquidate themselves if they
can unanimously agree, or where their by-laws have provided for the
choice of a liquidator by the general meeting (as they usually do), he
liquidates. In cases in which they are not unanimous or have not pro-
vided for a liquidator, necessity requires the court to name one (same
authors, sections 368–369, where it is remarked that foreign codes
differ in permitting a mere majority to decide, if a majority can agree
upon a liquidator); and he is not an officer representing the court, but
the judicially selected representative or agent of the associates to
settle or wind up their affairs. a
The associates could give him all their unlimited powers of liqui-
dating. If they do not meet and agree unanimously—and this is
obviously impracticable among several hundred thousand scattered
stockholders—then the court gives him general powers or determines,
from among the powers of the associates or partners, what ones are to
be given, and these are confined to the requirements of liquidation or
winding up. -
This course, as I have said, is regarded as necessary to reach a liqui-
dation and the partition to which the individual associates or partners
are entitled (the code not having provided any method of reaching
those ends) in the absence of the concurrent, unanimous action of the
associates or partners. - - - .
If the creditors are dissatisfied they can (but not in the case of this
noncommercial association, constituted before 1893) apply for a dec-
laration of bankruptcy.
The authors already quoted say (secs. 377–379):
Foreign laws, which have concerned themselves with the liquidation of associa-
tions, have determined the powers of the liquidators and their obligations; it is not
so with us, for the simple reason that our Code of Commerce [and the same, as I have
said, is true of the Civil Code] has not treated of liquidation. As has been said above,
it belongs to the associates or to the tribunal, in naming a liquidator, to determine
his obligations and his powers. But it is important to inquire what they are, in case
the act of appointment is silent or incomplete on the question... * * * The liqui-
8751–02––2
18 PANAMA CANAL TITLE.
dator is an agent; he is chosen by the associates, or by the court, to represent the
dissolved society, to the end of terminating its operations, paying its creditors, recov-
ering the debts owing to it, and thus getting at the net assets which are to be parti-
tioned among the associates. * * * It is necessary to admit, without restriction,
that it is only the association (not the creditors) whom the liquidator represents. It
is not necessary to argue otherwise from judgments which confer powers the most evtem-
sive upon the liquidators for the realization and partition of the assets. The extent
of the powers of the liquidator can not take from the functions he performs their
essential character. As has been justly remarked, however considerable we suppose
the powers of the liquidator, they can not exceed those which belong to the asso-
ciates themselves. Who, however, can regard the associates as the agents or repre-
Sentatives of their creditors? - -
By a judgment of 4th February, 1889 (Exhibit H), a liquidator was
appointed, in pursuance of article 1871 of the Civil Code (above quoted),
for the Old Panama Company, for the reason that it was in difficulties,
practically insolvent, that a vain attempt had been made to obtain an
extraordinary general meeting, that the by-laws did not intend to,
and could not, deprive a shareholder of the right which article 1871
gave him, etc.; and the liquidator's appointment was “with powers the
most extensive, especially to cede or contribute to any new association
the whole or part of the association’s assets,” etc. - -
He was not, however, authorized by the court or by the special act
of France of 1893 to reorganize the old company, and has never
undertaken to do so. That would not be liquidating. -
It seems to have been supposed that the broad power given is some-
thing very extraordinary, and of doubtful validity. But the doubt, if
there be one, is certainly not as to the power to get rid of all the assets.
It is rather, it seems to me, as to the power to do other than that,
viz, to contribute to another company, with the result of an indefi-
nite postponement of the end of the liquidation or winding up; not
as to the power to turn over, or consent to have turned over, to a
purchaser for cash the Original or exchanged assets of the company,
but rather as to that of beginning and continuing the agreement of
contribution with the new company looking to future work on the
canal. Certainly, to sell the property and obtain cash with which to
pay the creditors and Satisfy the demands of the associates for a par-
tition of what remains, if anything, is one of the most ordinary and
obvious methods of liquidating in all countries.
However, either course would seem to be within the limits of legiti-
mate liquidation. The one adopted appeared to promise more to the
creditors and stockholders than that of selling offhand the remains of a
discredited enterprise and some machinery of little or no value for any
other uses. - -
But it seems to be supposed that, having made a contribution which
transferred the ownership of the canal property to a new company for
the price of 60 per cent of the net earnings of the completed canal,
the liquidator can not, under his original powers or under any power
{}
PANAMA GANAL TITLE. - 19
the court can add thereto, sell or dispose of or release for a cash con-
sideration this 60 per cent of expected earnings.
It is difficult to see wherein this property or right is more sacred or
inalienable than the canal itself, which was disposed of by the liquida-
tor in 1894 to the new company. * - - - -
If it is a debt owing to the old company, represented by the liquida-
tor, it is an asset of a very ordinary kind, such as a liquidator collects,
compromises, exchanges, or otherwise disposes of as seems best for
his principals. That is what it amounts to, so far as all but the rail-
road property is concerned, for the agreement of contribution, as
embodied in the by-laws of the new company, expressly provided that—
The present corporation shall become owner of the property and rights hereby ceded
and contributed on and from the day when it shall have been finally constituted,
except, however, what is to be stated hereinafter in regard to the Panama Railroad.
Neither is it apparent why, if the tribunal could have originally
authorized a sale of all the property or assets of whatever kind, it has
any less power to do so now. . .
If the title to the railroad stock is in any sense still in the old com-
pany, all the more clearly it can be sold by the liquidator as an ordinary
unexchanged asset, or quitclaimed by him to a purchaser from the
new company. * * | .
But it has been suggested that the proposed action of the liquidator
is a bad bargain for the associates and with regard to the creditors of
the old company; that he would be wiser to take his chances on the
60 per cent profits of the Panama Canal to be (possibly) constructed
by the French company, than accept the certainty of a cash payment
equal to the present value of the canal, the concession and the other
property. , - - -
Can the validity of the sale or disposal of every piece of property
embraced in the assets of a failing partnership depend upon the wis-
dom of it, or the validity of the court's authorization of such sale
depend upon that? Who, moreover, is to judge of the wisdom of this
act? . -
The liquidator has decided, the court has approved his decision and
published its approval, as the special act of July, 1893, required, and
but one among the stockholders and creditors attempted to make use
of the right to attack the judgment of approval, and that one, a bond-
holder, was told that his legal representative had appeared in court
and expressly approved the act and in so doing represented his inter-
ests as one of the bondholders, in pursuance of the special law of
France. Not one of the general creditors (if there are any such)
objected, and the mandałażre or representative of the bondholders has
repeatedly and formally approved. • -
Under these circumstances, it is to be presumed in fact that the
course is a wise, or, at least, reasonable one, from the standpoint of
20 . PANAMA CANAL TITLE.
those who are selling, even if it can be imagined that its wisdom or
unwisdom has any bearing upon the validity of the sale.
The bondholder, Donnadieu, who attacked the judgment of March
19, 1902 (Exhibit 4), approving the liquidator's consent to the sale,
was decided against on July 3 last (Exhibit 5), and the court of appeals
of Paris reheard the case and, adopting the reasons of the lower court,
repeated the decision against him on August 5 (Exhibit 6).
The judgment of approval of the consent of the liquidator to the
sale was rendered on March 19, 1902 (Exhibit 4), in pursuance of
articles 10 and 11 of the special law of July 1, 1893, which are as
follows:
ART, 10. All acts tending to alienate any assets of the company, all contracts entailing
a transfer or contribution of the whole or of a part of the assets of the concern, ema-
nating from the liquidator of the Universal Company of the Interoceanic Canal of
Panama, shall be subject to the approval of the civil tribunal of the Seine, which shall,
on the report of one of the justices, pass upon the question in open court. -
ART. 11. All decrees of approval or ratification rendered in accordance with the pre-
ceding article shall be published, within a term of ten days, in the “Journal Officiel.”
and in the “Journal Officiel” (Commune edition). - -
This decree may be attacked by the shareholders, by the mandalaire of the bond-
holders, and by other creditors of the company, within a delay of not exceeding one
month from the date of the publication aforesaid. The civil tribunal shall adjudicate
the question within the space of one month, as in the case of matters demanding an
immediate and summary adjudication. The appeal from such decision must be,
entered within ten days from the time of notification of said judgment to the party in
person or at his domicile. •.
This did not confer power upon the liquidator. It restrained the
practically unlimited power, he already had by subjecting some of
his specific acts to the judicial approval.
The words, briefly translated into the word “attacked”.in article 11
are “frappé de fierce-opposition.” Donnadieu, the bondholder of the
old company, has made this attack upon the judgment of approval, or
attempted to do so. - . . -
This proceeding called “fierce-opposition” is one by means of which
a person who is not party to the suit, but believes his rights violated
tº.
&
or injured by the judgment, can have it set aside. It can not,
under the general law, be made use of by one who, though not
actually a party, has been represented by one of the parties. The
special law concerning the liquidation of the Old Panama Company,
however, seems to have extended it to the stockholders of the old com-
pany, although represented by the liquidator, and to have extended it
to any possible general creditors (not bondholders), although appar-
ently represented by the mandațaºre of the bondholders, as may be
inferred from the second paragraph of article 1, taking away, or
rather suspending, their rights of action and, permitting them to sue
only in case the mandaffaire neglects or refuses to do so. But whether
general creditors are represented is obscure and not important in
PANAMA CANAL TITLE. - 21
\ .
regard to the present inquiry, since the general creditors were per-
mitted to oppose the judgment of approval and did not resort in any
single instance to the “fierce-opposition.” - -
The special law, so far as the judgment of approval is concerned, is
in some respects narrower than the general law, because, according to
that law, there is no limit of time for the proceeding of “fierce-oppo-
sition” by an outsider, and the time for appeals which, under the gen-
eral law, is two months, is cut down to ten days. In Beauchet's
Treatise on Procedure in Civil and Commercial Matters (third edition,
1891) we read:
1045. This extraordinary proceeding [“tierce opposition”] can be employed against
any judgment, whatever may be its nature and the jurisdiction of the court pro-
nouncing it. All the decisions in first instance, or final, of justices of the peace,
“prud 'hommes,” tribunals of commerce, civil tribunals and courts [that is, courts
of appeal] are subjected to it. The decrees of the court of cassation only are free
from it, according to the decisions of that court. As a decree of the supreme court
does not affect the basis or foundation [fondl of the litigation, it can not occasion
any serious and real harm.
1046. The law has not fixed any limit of time within which the tierce opposition
must be instituted. It has left this point to the control of the ordinary rules of pre-
scription. The tierce opposition can be employed as long as the right upon which
the third party bases it has not been taken away by the effect of any prescription
acquired against him, conformably to the ordinary law. **
The ordinary methods of attacking a judgment, according to Beau-
chet's Treatise on Procedure (secs. 945,946) are by appeal and opposition.
Opposition is a request to the court entering a judgment on default to
set it aside. There is no such judgment in the Donnadieu case. -
The extraordinary methods are, according to the same authority,
the “tierce opposition,” the “requête civil,” and the “pourvoi en
cassation.” . - .
The “requête civil” is an attack upon a judgment of a court of
appeals only, based upon fraud or improper conduct in connection
with the judgment. Nothing of the kind has been suggested, and this
may be dismissed from consideration. - •
An appeal has been taken and decided against Donnadieu. (Exhibits
5 and 6.) , - - . . . •
Tierce opposition has been explained—an application to have a judg-
ment set aside by one not a party to its rendition, because it violates
some legal right of his. Any judgment of any court can so be attacked,
provided a right of the applicant has been violated, except judgments
of the court of cassation. No one can, however, pretend that the
appellate judgment against Donnadieu violates any right of his, because
that affirmance can hardly affect any one but Donnadieu. Espe-
cially can not other bondholders or creditors of the old company escape
the statutory obligation to file their own tierce oppositions within
the month allowed by the special act, by attacking the affirming judg-
ment against Donnadieu. -
22 PANAMA CANAL TITLE.
This leaves nothing to be considered but Donnadieu's proceeding in
cassation, if he should institute one. .
The proceeding in cassation is not a general appeal, or even a writ
of error as we know the latter. The court of cassation annuls judg-
ments and remands cases, where the judgments violate the law, almost
wholly statutory. -
His case has two parts—one between him and the new company, the
other between him and the liquidator. .
He alleged that his rights would be violated by the new company’s
selling the property, and brought suit to restrain it. *
He alleged that the judgment approving the liquidator’s consent
violated his rights, and asked to have the judgment set aside.
Both parts were decided upon exceptions, instead of upon the two
questions he thus sought to raise. -
It was held that he was not allowed by the special law to file tierce
opposition to the judgment of approval, because he was a bondholder
and, as such, represented by the mandataire of the bondholders, and
because the special law allows tierce opposition only to the stockhold-
ers of the old company, the bondholders’ mandataire, and the other
creditors. -
This is the plain reading of that law. . -
He does not deny that bondholders are unable to have the tierce
opposition individually, but asserts that he is not a bondholder, but
ceased to be one by getting judgment for the amount of his bonds,
and so became one of the “other creditors.” : -
Certainly an American court, without regard to the question of an
alteration of his technical rights by getting a judgment of recovery on
his bonds, would say that, within the meaning of the special law, he
is a bondholder and that he is not what is meant by that law as an
“other creditor.” The meaning or “spirit” of the law is as impor-
tant to French courts as to ours. - -
The French courts denied that there had been any alteration of his
rights, and held that a man does not cease to be a bondholder because
he gets a judgment that his bonds shall be paid.
I see no reason to doubt that that sensible view is correct. -
Donnadieu will fail to reverse the court of appeals on the branch of
the case concerning the liquidator's consent, unless the court of cas-
sation believes that the liquidator has not the power to dispose of the
assets in question, with the approval of the lower courts, and concur-
rence of the mandataire of the bondholders, and further that his doing
so violates some law on the subject of liquidation or some law giving
rights to Donnadieu. - , &
And even if it should so believe, if it also believes that Donnadieu’s
individual tierce opposition was inadmissible under the law—the
only question decided by the judgment below—it would probably fail
PANAMA CANAL TITLE. 23
to annul the judgment refusing to admit him as being a judgment vio-
lating a law. .
With the manner of exercising the liquidator’s power of sale (if it
exists) the lower courts have, but the court of cassation has not, any-
thing to do. -
That the liquidator has that power I have attempted to show, and
shall merely add here that the special act of the French Parliament
expressly recognizes and sanctions both the power of the liquidator to
alienate the assets—a power which liquidators the world over possess—
and the authority of the lower courts to approve or disapprove a
particular use thereof. - * - .
As for the branch of the case alleging that the sale by the new com-
pany was beyond the powers of that company, the decision was that
Donnadieu, being merely a bondholder or creditor of the old company,
had no such legal relations with the new company as to be able to ques-
tion the power of that company as to the disposition of its property.
A similar judgment (on default) has recently been rendered in the
case of one Sautereau, an engineer, who claimed that certain plans of
his had been furnished to the liquidator and would be included in the
sale, and that the liquidator had not paid him for them. (Exhibit 7.)
It is needless to dwell upon this branch of the Donnadieu case,
because, even if he had no such relations with the new company as to
be able to raise such a question, there are others who can at least
raise it—namely, the stockholders and creditors of the new company
itself.
I have already indicated my opinion that they would raise in vain
the general question of the power of the company, with the consent of
the liquidator and mandataire of the bondholders of the old company,
to sell the canal property. It is only necessary to add that a creditor
of the new company, a solvent concern able and willing to pay any
debts it may owe out of its funds or out of the purchase price, can
not prevent a sale of the company’s property under any principle of
law or reason that has occurred to me, any more than an individ-
ual's debtor, if he is solvent, can prevent him from selling a horse or
a house. - - - - - .
As for the stockholders of the new company, they, being the com-
pany itself, and bound by the acts of their own duly authorized general
meetings and officers, could question nothing but the fact that their
by-laws did empower the general meeting to make such a sale. I have
already shown that, in my judgment, they clearly do.
III. But it is said that— - i • ' .
3. The French courts have not power to authorize the liquidator
and the new company, or either of them, to enter into this sale. -
It has been shown that they have undertaken to do so as to the liqui-
dator, but the French special law of July, 1893, is itself questioned
24 PANAMA CAN AI, TITLE.
as to its validity, and the French judgments as perhaps violations of
fundamental rights which are assumed to exist and assumed to be pro-
tected and guaranteed by French institutions. - -
The courts do not undertake to authorize the new company. That
company needed no judicial authorization. • ‘
It is not perceived that the vested right alleged to exist in the 60 per
cent net earnings in favor of the stockholders but, in reality, bene-
ficial to the bondholders and creditors of the old company, is any more
of a vested right than the right to the machinery formerly owned by
the old company, but transferred to the new. Of course, it is a vested,
and a valuable right. But the liquidation is still going on, and it is
proposed to realize on that asset, to dispose of it for cash to be paid to
the creditors and, after that, if sufficient (which it is not), to the stock-
holders. The stockholders are the debtors of the bondholders and
other creditors of the old company, and they will, after the receipt of
the price it is proposed to pay, be unable to pay their debts. They
are so now; that is the principal reason for the liquidation of their
concern.
But the act of July, 1893, does, so the French courts hold, exclude
the bondholders from individually objecting to the sale—at least by
formal proceedings in court. It has caused a single agent to be
appointed for them, however, and if there were any general objection
on their part, there is no reason to suppose that he would not act
accordingly and voice their sentiments. This would not lead, neces-
sarily, to a different result. The sale might well be approved, because:
their reasons were unsatisfactory to the court. -
It may seem strange that the French special law of 1893, by some
oversight, perhaps, permitted all the individual creditors, though
possibly represented by the mandațaire, and the individual stock-
holders, though certainly represented by the liquidator, to have a
hearing in court, and yet omitted to give one to the bondholders
individually. - .
But in view of the universal acquiescence of those general creditors
(if any exist), having identical interests with the bondholders, and of
all others concerned, including the legal representative of the bond-
holders, the probability is that the same end would have been reached
by the court. - -
However, such is the law passed by the Parliament of France, and
it remains to inquire whether it is invalid. ..
Nothing is more familiar to us than an adjudication by one of the
courts that a law regularly passed is invalid, null and void. But
when this first happened in our country it was regarded as a very
extraordinary thing.
In France, as in England, certain maxims have come to be regarded
as extremely sacred, and England is said to have an unwritten consti-
PANAMA CANAL TITLE, 25.
tution. To some extent the same may be said of France. But it is
not regarded as a necessary consequence that the power of the courts
is sufficient to set aside a law which they regard as violating those
maxims. t - - . -
Beauchet, under the heading of “General notions,” says:
With Montesquieu, writers, jurisconsults, philosophers, statesmen, political assem-
blies, have discussed the thesis of the coexistence and distinction of three powers in
the State—legislative power, executive power, judicial power. The number of writ-
ings to which this has given rise is considerable. * * * Thus the principle of
the separation of powers which, since the declaration of the rights of man, is con-
sidered as essential to every constitution, is applied not only to the relations of the
legislative power with the executive power, but also to those of the judicial authority
with the administrative, which is confounded, but improperly, with the executive
power. Supposing, then, that there exist three distinct powers in the State, let us
see rapidly how that separation has been established and what are the most impor-
tant consequences which follow from it. The judicial power has been distinct from
the legislative power since the decree of 16–24 April [August?], 1790, title 2, article
10. The subsequent constitutions of the 3d September, 1791, and 5th Fructidor,
year 3, renewed that distinction, and article 127 of the present penal code has sanc-
tioned it. From the principle established by the law of 1790 flow the following
consequences: - - f
1. The tribunals can not oppose the execution of the laws; they can not, as formerly
could the parliaments, remonstrate. **
2. It is forbidden to the tribunal to imitate the ancient parliaments by declaring
in advance and in a general manner in their decrees how they will decide in the
future such or such a question of law and thus create a special law for their own juris-
diction. If attempts of that kind have sometimes been made, the supreme court has
always suppressed them. (Code Civil, art. 5; Code Penal, art. 127.) 4:
3. All political deliberations are forbidden to the judicial bodies (law 30 August,
1883, art. 14, Sec. 2). Reciprocally, all mixing in the administration of justice is for-
bidden to the legislative power. This rule leads to several consequences which it is
sufficient to state: q
(1) The legislative chambers can not render any judgment except the Senate in a
case provided for by article 12 of the law of July 16, 1875 (trying the President of
the Republic). . -
(2) The legislature can neither reform nor nullify a judgment, even one irregularly
rendered. This right belongs only to the judicial authority obtaining jurisdiction
by legal methods of proceeding. -
(3) A new law can not disturb a matter irrevocably adjudicated according to the
preexisting law; the resulting situation constitutes an acquired right.
(4) A new law can not deprive the tribunal of a proceeding instituted before it
and of which it has jurisdiction, except in the case where the law announces the sup-
pression of the tribunal itself.
The judicial power is, in the second place, distinct from the administrative power,
and every invasion of the domain of the administration is severely prohibited. Arti-
cle 13 of title 2 of the decree of 16–24 August, 1790, the constitutions of 3d September
and 5th Fructidor, year 3, are clear on that point. This prohibition is in our day
sanctioned by the second section of article 127 of the Penal Code.
From these “general notions,” as the author calls them, it is evi-
dent that even the distinction between the three powers of govern-
ment is a thing to be evolved largely from codes and statutes which
26 - - PAN AMA CAN AL TITLE.
the legislative power makes and alters as it thinks best. Nothing is
more common than a law amending one of the codes.
In Riviere's French Codes, Ordinary Laws, Decrees, Ordinances
and Opinions of the Council of State (thirtieth edition, 1902), a work
which seems to be very complete, there is no regular constitution of
France, as we understand the name; but in its place we find “laws
constitutional and organic.” -
These were adopted in 1875, etc., after the establishment of the
present Republic, and can be amended only by the General Assembly,
as they themselves provide. This General Assembly is composed of
the two Chambers of Parliament sitting as one. -
These constitutional acts are confined to the organization of the
Government, and contain no provisions for the protection of private
rights. - -
No older constitution is printed in the work, although here and there
among the “ordinary laws” is an extract from some ancient constitu-
tion; among others, one concerning personal liberty and protection
from arbitrary arrest. :
It may be added, also, that the decisions of the French courts, as
those of the English courts, refer to numerous maxims of fundamental
justice or of settled practice in France, although it is practically true
that French judicial decisions on points of law are mere interpretations
and applications of statutory or written law. -
Among the French maxims referred to is the one that no person can,
in France, sue by an authorized agent, i. e., otherwise than in person.
But it is difficult to establish a negative, and it must suffice to say
that authority to delare a law, regularly passed and proclaimed, inef-
fective has not been found to exist in the French courts. It may be
added that Donnadieu might very well have resorted to an attack upon
the validity of the special law of 1893, if such a power in the courts
had existed; but he has made no suggestion of that kind.
It is not intended by this discussion to intimate that the special law of
1893 does violate any fundamental rights such as are looked upon either
in France or the United States as sacred. On the contrary, it seems
to be defective in regarding too much the rights of individuals and in
leaving to the admirable rules of the Code Napoleon questions which
might, to the advantage of all concerned, have been submitted to the
discretion of the civil tribunal of the Seine, to the ultimate, instead of
the merely conditional or provisional, determination of the mandațaire
of the bondholders, and to the decision of the liquidator. The winding
up of the old company might well have been made more summary and
more like a bankruptcy proceeding.
As it is, under that statute the original indebtedness of the old com-
pany remains, and will remain, entire as against it and its liquidator
until the last franc is paid; the creditors are not all or finally constituted
PANAMA CANAL TITLE. 27
&
as a body or mass, as they are in case of bankruptcy in France; indi-
vidual rights of action of all kinds were merely suspended and not
merged or ended, and a host of difficulties, which one of our legisla-
tures would probably have terminated without shocking the sense of
propriety of American lawyers, were left to plague the tribunals,
As an illustration, we see Donnadieu as late as 1898 undertaking to
sue the individual stockholders of the old association for the amount of
his bonds, and it is not at all certain that the attempt was unreasonable.
IV. But, supposing it proven or admitted that the title of the United
States would be valid or legally good in itself, it is said— -
4. That, at all events, the United States would take the property as
a trust fund, subject to the total obligations to the stockholders, bond-
holders, and the other creditors of both companies.
So far as the stockholders, the bondholders, and the other creditors of
the new company are concerned, the stockholders, as we have seen,
would be bound by the action of their own proper representative, the
general meeting; as for the bondholders (leaving out of consideration
the bondholders of the Panama Railroad Company, who will doubtless
have to be considered and perhaps paid from the railroad earnings, or
otherwise, and the amount of whose bonds is given in the last report
of the Panama Railroad Company, hereto annexed) (Exhibit S), there
are no bondholders of the new company; and, as for its general creditors,
the company being a solvent and more or less flourishing concern, in
view of the value of the railroad property, the indebtedness to them
is said to be and must be small. It can be ascertained and paid by the
company before the sale is consummated, or by an arrangement to
apply to it a part of the purchase money.
As a general proposition it is not perceived how there could be any
law or equity for subjecting a purchaser of an article sold as assets of
a failing partnership (such as the old company) to the debts of the part-
nership. If that were the law, there would be no purchasers of such
assets, the creditors would receive no payment of their debts out of
the proceeds nor stockholders any dividend of a residue.
But it does not follow that the property has not become affected by
definite liens diminishing its value to the extent of the liens—in other
words, that the property itself, and no longer merely the new com-
pany or its vendee, has or will not become subjected to the equivalent
of mortgages in favor of bondholders and creditors of the old company.
It was accordingly deemed wise to make a careful scrutiny into all
possible defects of that kind, especially in view of the vast amount of
the old indebtedness. - *
These liens might be of three or more kinds—voluntary or contrac-
tual hypothecations or mortgages of real property; judicial hypoth-
ecations as the result of judgments inscribed in the office of the Keeper
of Hypothecations; and what may be called attachments or seizures
28 PANAMA CANAL TITLE.
by way of execution of personal property, and seizures of realty for
debt. - w g
The fact that the property, so far as it is important, is in Colombia
and not in France, would not prevent the existence of such liens, even
the judicial hypothecation, because it is doubtless true in Colombia, a
Latin country, as it is in France, that foreign judgments, after receiv-
ing the sanction of the domestic courts, lead to the judicial hypothe-
cation of real property. - -
It is here again that the special act of 1893 has been, perhaps, over-
careful of private rights or, at least, of private remedies. The Civil
Code (secs. 2114, et seq.) provides as follows:
2114. Hypothecation is a real right attaching to immovable property bound for the
discharge of an obligation; it is, in its nature, indivisible and subsists in entirety as
to all the immovables bound, as to each one, and as to every portion of those immov-
ables. It follows them into whose hands soever they may pass. (Code Civil, 1149,
1188, 1244, 1912, 2119, 2122, 2161, 2166, 2180, 2903, 2904.)
2116. It is either legal, judicial, or by agreement. -
2117. The hypothecation called legal is that which results from the law. The
judicial hypothecation is that which results from judgments or other judicial acts.
Conventional hypothecation is that which results from conventions, from the forms
of documents and from contracts. (Code Civil, 2121, 2123, 2124.)
2118. The following only are susceptible of hypothecation: (1) Immovable prop-
erty used in business (les biens immobiliers qui sont dans le commerce) and their accesso-
ries, regarded as immovable; (2) the usufruct of the same property during the time -
it continues. (Code Civil, 525 et seq., 578, 2125.)
2119. Movables, consequently, can not be hypothecated. -
2123. The judicial hypothecation results from judgments, whether in contested
cases or by default, definitive or interlocutory, in favor of him who has obtained
them. It results also from recognitions or verifications, made by judgments, of sig-
natures placed to an obligatory undertaking unauthenticated (sous Seing privé). It
can be made use of as to the present immovable property of the debtor and as to
that which he may acquire, except with the qualifications hereinafter expressed.
The decisions of arbitrators do not carry with them hypothecations, except as they
may be supplemented by a judicial order of execution. The hypothecation likewise
does not result from judgments rendered in foreign countries, except as these may have
been declared eacecutory by a French tribunal; without prejudice to any contrary dispo-
sitions which may exist in political laws or in treaties. (Code Civil, 307, 1350, 1351,
2114, 2124, 2148, 2160, 2168, 2428; Code Procedure, 147, 155, 193, 546.)
2133. The hypothecation acquired extends to all the improvements made in the
immovable property hypothecated. +. -
Bressolles, in a commentary on the special law of 1893, published in
1894, under the title Liquidation of the Panama Company, referring
to the judgment appointing the liquidator and declaring the association
to be noncommercial (it seems the tribunal of commerce about the
same time, a few days after that decision, in fact, decided otherwise,
but the court of appeals reversed this; Exhibit 8), says, page 24:
To hold the Panama Company a civil company was to declare it incapable of being
declared bankrupt [en faillite]. Its insolvency and the suspension of payment which
PANAMA CANAL TITLE. 29
had followed put it simply in the condition of “déconfiture,” but in 1889 the déconfiture
of civil associations, no more than that of individuals, had in our legal system any
regulation by law. Each of the creditors preserved in regard to the association the
plenitude of his rights; he had the right of individual action, not only to obtain a
condemnation against it, but to have himself paid in full the amount of his debt out
of the company’s assets, to the detriment of other creditors less active or less disposed
to go to the expense of suing. -
It is in consequence of these principles that several bondholders of the Panama
Company instituted proceedings immediately after the dissolution against the liqui-
dator, to obtain payment of the coupons overdue and reimbursements of the principal
of their bonds, relying for this latter purpose upon articles 1184 and 1188 of the Civil
Code. To these pleadings the liquidator confined himself to asking a postponement
in the discretion of the court, which was given him, but the plaintiffs gained their
cases, and notably a condemnation of the company to a total reimbursement of the
capital subscribed by them. (See especially judgment of the tribunal of the Seine,
25 June, 1890, Droit of July 4; judgment of 26 January, 1893, Droit of 29 January,
confirmed by decree of 29 June, 1893, Droit of 1 July.) (See Exhibit 10.)
The beneficiaries of these decisions promptly inscribed their judicial hypotheca-
tions [upon a building in Paris). Certain of them even proceeded to execution. It
is thus that Messrs. Laurillard & Fleury, who obtained the judgment of 25th June,
1890, seized, after the expiration of the postponement in the discretion of the court
[delai de grâce], a sum of 15,081 francs 50 centimes in the safe of the company. After
fruitless resistance by way of a reference, the liquidator proceeded to contest the
right of the plaintiff and demanded a decision affirming the nullity of the seizure as
being made of goods legally unseizable, but he failed in his pretensions (judgment of
the Civil Tribunal of the Seine, 9th February, 1892, Droit 10th February; confirm-
ative decree of 19th July, 1892, Droit 20th July). (See Exhibit 10.)
And the seizing creditors appropriated to themselves the sum seized in virtue of
the rules of the ordinary law (droit commun).
Besides the judicial hypothecations, there could be (as, in fact, there
have been) pledges of the personal property [mantissements]. The
Civil Code (art. 2071 et seq.) defines the rules concerning these.
There is also the turning over of realty in order that the fruits may
be obtained by the creditor (Code, 2085 et seq.); but the canal prop-
erty, except the railroad, was not producing any revenue, and the
railroad does not appear to have been, or to be now, in the hands of
other than the railroad company. Besides, the interest of the canal
company in the railroad is personal, not real—shares of stock.
The machinery, etc., in Panama was pledged by the liquidator to
the contracting companies working on the Isthmus, and to some of
these were pledged 30,500 shares of the railroad stock, but all these
matters were settled in order to turn over to the new company the
unincumbered railroad shares and machinery, etc., on the Isthmus.
The liquidator gives in his reports the details, dates, and circum-
stances of these transactions; and the personal property and plants,
etc., at Panama, and the railroad shares, are not now affected by man-
tissements entered into by the liquidator or old company.
The nantissements or givings in pledge are by actual turning over of
personal property and are not registered. The evidence of discharge
|
30 PANAMA CANAL TITLE.
is in the office of the liquidator, and the statements in his reports have
been verified by examining the original documents there. (Exhibits
9, 10, 11, 12.) - r
But the question of hypothecations of the real property, say nothing
of conventional hypothecations, remains to be discussed.
Strange as it may seem to us, no allusion is made in any of the
reports to an ordinary mortgage of the large amount of land given by
Colombia. As a source of revenue, to enable the company to construct
the canal, such a mortgage would seem to us very natural, but I have
found no reason to believe that it was resorted to. The record would
be in Panama, but it is improbable that no allusion should be made to
this in the numerous statements of assets, receipts, expenditures, etc.,
if such a mortgage had existed. The payment of interest would seem
to necessitate such allusions. - -
This may be accounted for by the yet uncompleted condition of the
actual transfer of lands by Colombia to the company and by the popu-
larity of the enterprise and the ease with which, up to within a short
time before the liquidation, it was possible to float bonds issued in
pursuance of the by-laws of the old company, article 24, which, by the
way, authorizes loans to be obtained on mortgage by the general
meeting. -
An examination has been made into the nature of the bond issues
and copies procured of the bonds themselves. (Exhibit 13.) No allu-
sion has been found on the bonds or in accounts of litigation or
º
elsewhere, to any mortgage or hypothecation of the real property
in Panama, except two unimportant judicial hypothecations or judg-
ments which can be inscribed as hypothecations. (Exhibit 9.) The
complete title to the lands, as I have said, has never really passed out
of Colombia, the expense of getting that title put into final form hav-
ing been one cause of the delay.
The reports of the liquidator up to two years ago (Exhibit 10) set
forth the judgments out of which judicial hypothecations might have
arisen, including judgments obtained in courts of Panama; whether
all of them or not is a question which has not been overlooked. (See
Exhibit 9.) - -
That law of 1893 merely suspended the rights of action of the indi-
vidual creditors and turned these rights over to the mandataire to be
exercised. If he did not or at any time does not exercise them by using
them to oppose or affirm something, the bondholders and general cred-
itors could or can do so, upon first demanding that he should act, and
giving him a month in which to make up his mind. :
He and they can sue (and have sued) the liquidator. With their
suits against third parties owing obligations to the old company we
are not particularly concerned. But theoretically he or they could
PANAMA CANAL TITLE. - 31
make use of the suspended proceedings, including any judicial hypoth-
ecations, against the liquidator and the property of the liquidation,
while it continued to be the property of the liquidation.
A number of judgments were obtained against the liquidator before
the act of July, 1893, by bondholders who sued to recover and ob-
tained judgment for the total of their subscriptions, coupons unpaid
up to December 14, 1888 (date of going into liquidation), and legal
interest. -
The number of suits is stated, and the names of the plaintiffs, in his
third report (Exhibit 10). These names are Joreau, Roger, François,
Donnadieu and Bougala, Debrys, Vaillant, Denovarre, Salleix-Laboige,
Doumic. Eighteen other plaintiffs are mentioned in the same report
as having made the same demand, but no judgments had been obtained
by them when all these were suspended by the law of July, 1893.
In the nine suits in which judgment had been rendered, the plain-
tiffs are all stated to have proceeded in virtue of their judgments to
garnishee or attach property in the hands of divers persons, and
Mademoiselle Joreau had attached unissued lottery bonds in the hands
of the liquidator. +. -
From these nine judgments the liquidator appealed, but on the
29th of June, 1893 (two days before the special law was passed), the
court of appeals affirmed the judgments (same report, Exhibit 10).
It is evident that between January 26, the date of the judgment
below, and July 1, even if the appeal had not intervened to suspend
previous proceedings in execution and make void those subsequent to
the notice of appeal (Beauchet, sec. 1014), it is improbable that much
was done in Panama in the way of registering judicial hypothecations.
After that the mandataire (for the benefit of all the bondholders)
could cause these judgments to be made executory by Panama judg-
ments, supposing the Colombian law to be identical with the French.
They were judgments and final, since it is evident that the liquidator
did not proceed to cassation to have them annulled. -
As these nine judgments might possibly have been for an enormous
amount, it was considered important to carefully examine them and
their results. . .
The real property—at least that in which we are interested (there
was some in Paris which, by suits in favor of some contractors,
became affected with judicial hypothecations and was sold)—was and
is not in France, but Colombia. - -
I append a certificate from the Register of Hypothecations of
Panama stating that no hypothecations are of record there. (Exhibit
14.) - . . .
It is theoretically possible, that, before the real estate ceased to
be that of the old company, these plaintiffs or the mandataire took
32 - PANAMA CANAL TITLE.
measures to establish judicial hypothecations under the law of Colom-
bia, and that to the extent of the indebtedness to them, with interest,
the real property there and all improvements that have been or may
be made in it, were mortgaged in this way. I am satisfied that such is
not the case. (See Exhibits 9, 10, 11, 12, 14.)
As for judgments subsequent to the act of 1893, of a similar char-
acter, it is possible that the mandataire, prior to the date of the contri-
bution to the new company, took a similar course, and also possible
that creditors, upon his failure, did the same. But the reports of the
liquidator indicate nothing of this kind, and the comparatively brief
interval between the appointment of the mandataire, M. Lemarquis
(July 4, 1893) and the date of the contribution (October 20, 1894) was
occupied with other things. Among these, were the successful proceed-
ings by him and the liquidator against contractors who had obtained
money of the company which it was alleged they were not entitled
to keep, and the urgent business of bringing about the establish-
ment of the new company, formed, not as has been said, of the same
personnel as the old company, but partly of contractors who had
worked for the old company and were being sued as its debtors by its
representative, the liquidator. With all these matters to be attended
to, the mandataire does not seem to have had time, if he had thought
it useful, to establish judicial hypothecations in Panama, either by
using the judgments of the nine plaintiffs above referred to or subse-
quent judgments based upon the like grounds of suit, prior to Octo-
ber 21, 1894. (Same Exhibits.) - -
After that time it seems clear that nothing could be done with either
the nine judgments or any later ones, in Panama courts, for the simple
reason that the liquidator and old company ceased to be the owners of
the real property there. -
There can not, of course, be created a judicial mortgage, or mort-
gage of any kind, as to property which does not belong to the mortgagor.
No system of law would tolerate that. -
If there are judicial hypothecations arising from judgments obtained
in France, all the judgments that could possibly give rise to them are
in Paris and practically all in the office of one tribunal. A careful
inquiry into the matter develops the fact that the judgments referred
to, even if they all led to judicial hypothecations, are for the insignifi-
cant total amount of about $100,000 and interest. (Exhibit 9.) But
I am satisfied that there are no such liens upon real property on the
Isthmus, except upon two buildings, and as to these buildings the
liquidator promises that the purchaser shall in some way be given a
clear title. (Exhibit 9.)
The fact that the title to the land on the Isthmus has never passed
from Colombia, and the absence of all allusion to a mortgage of them,
makes it reasonably certain that they are not mortgaged.
PANAMA CANAL TITLE. 33
The possession of the personal property in Panama by the new com-
pany, which does not seem to be doubtful, which possession must be
turned over to the United States at the time of purchase, is inconsis-
tent with mantissements or pledgings, which imply the loss of possession
by the pledgor.
Two lines in the Colombian treaty to the effect that the United States -
and the property purchased can not be proceeded against in the courts
of Colombia without the consent of the Government of the United
States, would put at rest all danger of litigation from those supposed
persons who, having some technical or concealed right, which in fair-
ness should be disclosed before the purchase, may possibly desire after-
wards to bring unjust actions. Congress can at present control all
suits against the Government in the United States. In my opinion,
however, the danger is purely imaginary.
V. The objection that the United States can not own the Panama
Railroad Company because it is a State corporation does not seem to
be very seriously relied upon. In the first place, the United States
does not propose to become the corporation, but to purchase a large
part of the stock already long owned by a canal company. That the
Government can own stock in a private corporation has been frequently
recognized by our courts. In fact, it is difficult to see why it can not
own any kind of property it may have need of, whether individual or
corporate. When it owns stock in a private corporation it puts itself
on a level with the other stockholders and is bound like them by the
charter. As this railroad is not in New York, but in a foreign coun-
try, it is not a highway of New York and so a public institution of
New York. But it is suggested that our Government contemplates
destroying the railroad and can not do that. But even conceding that
it could not (which is not admitted, however), there seems to be no
probability that the Government will ever dispense with the railroad.
It will continue to need it so long as the canal will be operated. At
all events, it is not so obvious that it will be destroyed that a good
title can not be taken now because that means its destruction. It may
be necessary, as it has been, to make it deviate somewhat from its
present line; it may become less remunerative property; but all that
is not material to the present question of getting a good title to some
of the shares of stock. The French, and particularly the civil
tribunal of the Seine, did not understand that the construction of
the canal by the French company would interfere with the railroad,
even as a paying conecrn. (Exhibit L.) -
If the ownership of the stock entails any conditions as to the con-
tinued use of the railroad, these can be performed or gotten rid of
with the consent of the State or minority stockholders interested.
I am now discussing merely the legal possibility of the Government’s
acquiring and holding the stock; and I think that is clear.
8751–02—3
34 PANAMA CANAL TITLE.
º
x,
W
VI. The objection that Congress has authorized a purchase only
from the new company, not the liquidator of the old company, seems
also to be unsound.
Our Supreme Court has frequently held that a law must have a
reasonable interpretation in view of its object and not be rendered
abortive, if that can be avoided. *
Certainly, in view of the condition of the title as hereinbefore
explained, the purchase will be from the new company, and the con-
sent of the liquidator will be at most a waiver of rights as to property
transferred to the new company.
But, if this were otherwise, it would be unreasonable to treat the
act of Congress as forbidding a purchase from the new company in
which it would be necessary for the old or the liquidator to join as
vendor. This would be to defeat, not to ascertain, the will of Con-
gress. What it wants is a good title from the owner of certain speci-
fied property, the owner being supposed to be, and being admittedly
in part, the new company; and it is entirely justifiable to buy from the
owner, although the ownership should be found not to be in the new
company. -
Whether we think it is in the new company or the old company
seems to me, as no one pretends that it is out of both, altogether
immaterial, since both join in the proposed sale.
The general meeting of the new company reserved the right to
ratify the sale, and accordingly it will be necessary to have further
action by it. Whether it should effect its transfer to the United
States through one formality or another, and what should be done as
to the two buildings on the Isthmus affected by judicial hypotheca-
tions, or as to the application of a small part of the purchase money
to the payment of creditors of the new company—these and other
details of conveyancing can be considered and disposed of at the
proper time. They in no way affect the present question. *
For the reasons I have given, I am of opinion that the United States
would receive a good, valid, and unencumbered title.
Very respectfully,
P. C. KNOx,
Attorney-General.
Exhibit
5;:
7
10.
11.
12.
G
H.
. Laws of 1867 and 1893 (France) concerning companies
. Judgment of March 19, 1902 (civil tribunal of the Seine), approv-
LIST OF PAPERS ANNEXED.
. Objections that have been stated - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
. Consultation of September 1, 1902, by Masters Limbourg, Du Buit,
Devin, Thieblin, and GOntard - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ing liquidator's consent to Sale- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
. Judgment of July 3, 1902 (civil tribunal of the Seine), deciding
against Donnadieu, the bondholder, on tierce opposition - - - - - -
. Argument before court of appeals of Paris in Donnadieu case and
decree of that court of August 5, 1902 - - - - - - - - - - - - - - - - - - - - - - - -
. Judgment of July 3, 1902 (civil tribunal of the Seine), deciding
against Sautereau and certificate of an attorney that he did not
appeal Within two months. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Judgment of March 8, 1889 (court of appeals of Paris), declaring
the civil character of the old Panama Canal Company. - - - - - - - -
. Certificates of August 21–30, 1902, by the liquidator, concerning
judicial and other mortgages, pledges of personal property, and
liens in general----------------------------- ** = = = * * * * * * * * * * * *
Extracts from reports of the liquidator, showing litigation in
France and Colombia, pledges, settlements with contractors, etc.
Judgment of July 26, 1894 (civil tribunal of the Seine), deciding
against Mlle. Joreau ---------. ------------------------------
Evidence as to pledges of Panamá Railroad shares - - - - - - - - - - - - - -
Includes: -
Certificate showing payment of dividends.
Agreement of April 27, 1895.
Agreement of March 24, 1900.
Ratification of the agreement of March 24, 1900, by stock-
holders’ meeting of the new company.
Judgment approving the agreement of March 24, 1900.
• List and specimens of bonds -----------------------------------
. Certificate of August 21, 1902, by the register of documents at
Panama, stating no mortgages against the New Panama Canal
Company --------------------------- • * * * * * * * * * * * * - - - - - - - - - -
. Extract from treatise on commercial law - - - - - - - - - - - - - - - - - - - - - - - -
. Special act of July 1, 1893 (France), relative to the liquidation of
the Old Panama Canal Company -----------------------------
. Concession of 1878 (Colombia) and extensions-- - - - - - - - - - - - - - - - -
. Evidence of payments to Colombia since December 31, 1893 - - - - -
. By-laws of the old Panama Canal Company - - - - - - - - - - - - - - - - - - - -
. Law of June 8, 1888 (France), authorizing the Old Panama Canal
Company to issue lottery bonds. -- - - - - - - - - - - - - - - - - - - - - - - - - - -
. Judgment of December 15, 1888 (civil tribunal of the Seine),
appointing provisional administrators of the old Panama Canal
Company-------------------------- , as * * * * * * * * * * * * = = ** * * * * * * - - -
Judgment of February 4, 1889 (civil tribunal of the Seine), dis-
Solving the old Panama Canal Company, and appointing a
liquidator
* * * * * * * * * * * * * * * * * * m sº s = * * * * * * * * * * * * * * * * * m ºr sº sº sº is as ºse ºs º ºs
I. By-laws of the New Panama Canal Company --- - - - - - - - - - - - - - - - - -
J. Minutes of the organization meetings of the New Panama Canal
K.
Company -------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Judgment of June 29, 1894 (civil tribunal of the Seine), approving
contribution by the liquidator to the New Panama Canal Com-
Pally - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
103
115
142
143
194
196
198
212
36 PANAMA CAN AI, TITLE.
- t & Page.
Exhibit L. Judgment of August 8, 1894 (civil tribunal of the Seine), deciding
against various tierce oppositions asking to have set aside the
judgments of June 29, 1894, approving the contribution by the
liquidator to the new company - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 232
M. Report of October 8, 1894, by commissaires appointed by the New .
Panama Canal Company to value the contributions made to it
by the liquidator - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 245
N. First and last reports (1895, 1901) of the council of administration
of the New Panama Canal Company- - - - - - - - - - - - - - - - - - - - - - - - - - 259
O. Judgment of August 2, 1901 (civil tribunal of the Seine), author-
izing the liquidator to consent to arbitration - - - - - - - - - - - - - - - - - - 275
P
. Resolution of December 23, 1901, of the council of administration
of the New Panama Canal Company, to agree to arbitrate with
the liquidator----------------------------------------------- 278
Q. Agreement of December 24, 1901, regarding arbitration - - - - - - - - - , 278
R. Award of arbitrators, February 11, 1902 - - - - - - - - - - - - - - - - - - - - - - - - 280
S. Last report (1901) of the board of directors of the Panama Railroad
Company --------------------------------------------------- 287
T. Official proposal of sale to the United States- - - - - - - - - - - - - - - A----. 309
U. Opinion of Maitre Dubint as to judgment creditors of the old
Panama Company ------------------------------------------ 311
V. Opinion of M. Waldeck-Rousseau as to the objections to the title
proposed to be given to the United States- - - - - - - - - - - - - - - - - - - - 313
|NOTE.
Besides the papers hereto appended, there were brought from Paris, among others,
the following documents, which have been carefully examined, with a view to dis-
covering any objections to the proposed title, but which it is deemed unmecessary to
translate or print:
(a) Evidence of payments to Colombia up to December 31, 1893. (For subse-
quent payments, see Exhibit D above.)
(b) Document of August 19, 1876, constituting the International Interoceanic Canal
Company (original company). • -
(c) Transfer of concession July 5, 1879, by the original company to the old Panama
Canal Company (now in liquidation).
(d) Last reports (1887–88) of the council of administration of the old Panama
Canal Company. - -
(e) Report of February 2, 1889, of the provisional administrators of the old Panama
Canal Company. * • *
(f) Judgment of February 13, 1890 (civil tribunal of the Seine), appointing M.
Monchicourt coliquidator with M. Brunet. -
(g) Judgment of March 8, 1890 (civil tribunal of the Seine), accepting resignation
of M. Brunet, and continuing M. Monchicourt as sole liquidator. -
(h) Judgment of July 21, 1893 (civil tribunal of the Seine), appointing M. Gau-
tron coliquidator with M. Monchicourt.
(i) Judgment of July 1, 1893 (civil tribunal of the Seine), appointing M. Lemar-
quis mandataire of the bondholders. -
(j) Judgment of February 18, 1889 (tribunal of commerce), holding that the old,
Panama Canal Company was of a commercial character.
(k) Certificate showing subscription of 60,000,000 francs of the capital stock of the
New Panama Canal Company. - r -
(l) Judgment of January 5, 1900 (civil tribunal of the Seine), appointing M.
Navarre temporary administrator of the New Panama Canal Company, and evi-
dence of his discharge December 27, 1900, and of the election of a new council of
administration. .
(m) Reports (1896–1900) of the council of administration of the New Panama Canal
Company. .
(n) Panama Railroad Company: Charter; by-laws; concession of 1867 from Colom-
bia; list of directors and officers; certificate showing amount of capital; report of the
board of directors (1900). (All in English.)
FXBIIIHIT 1.
OBJECTIONS THAT HAVE BEEN STATED.
1. That the obligation of the new company growing out of the con-
tribution of the canal is such that the company not being bankrupt,
but a going concern, claiming to be able to complete the canal, that
company can not free itself from the obligation by selling the property.
It must have been contemplated that the company would spend, in the
completion of the canal $150,000,000 or more, and that the completed
canal would pay large dividends and thus give the stock and bonds of
the old company large value. - -
2. That under the principles of law recognized in America a corpo-
ration chartered to carry on a work of national interest can not transfer
the whole of its property and rights to any one. The same principle
is supposed to apply to French corporations chartered to carry on
such affairs in France and the principle is supposed to extend to this
canal, although not in France. - -
3. It is claimed that the lottery bond law requiring materials for the
canal to be obtained in France, either shows that no sale to the United
States could be made under the law of France or only a sale subject to
that requirement. f
4. That the new company is simply the old one reorganized and,
therefore, upon principles of law recognized in America, has all the
obligations of the old one and can not give any title free from those
obligations, especially to the purchaser of the whole of its property
and rights. - -
5. That the French court has no jurisdiction to authorize a solvent
company to sell all of its property in violation of the existing agree-
ment to construct the canal, and the liquidator can not enter into a
contract by which the whole nature of the original contract of contri-
bution is changed, and the French court has no jurisdiction to authorize
him to do so. - .
6. If the United States should purchase the property of the new
company charged as it is with a trust, being the old company reorgan-
ized, suit could be brought in the United States by the cestuis que
trust, and under “Thomas v. R. R.,” 101 U. S., etc., the sale would be
treated as void because ultra vires, and the property taken to satisfy
the trust. (Central Transportation Company v. Pullman Palace Car
Company, 139 U. S., 24; Railroad v. Hooper, 160 U. S., 514.)
7. The Panama Railroad Company being a New York corporation
the Government of the United States can not become its owner for
similar reasons.
8. The new company can not sell without the consent of the French
Government, the enterprise being national. This national character
is shown by the declarations of Colombia in its concession that the
canal and railroad are of public utility, and the following in article 18
37
38 PANAMA CAN AI, TITLE.
of the canal concession, “As this enterprise is essentially international
for public utility, it is understood that it shall be always kept free
from political influences.” •
9. “In taking over a corporation, if such a thing can be done, we
take over the property subject to all encumbrances and become bound
to execute all its agreements.”
10. The contract of the liquidation for the stockholders and bond-
holders of the old company with the new company to pay for their
benefit 60 per cent of the net profits of operating the canal, fixed in
them a vested right to these net profits that no court and no legisla-
*g could violate. (Bedford v. Building and Loan Association, 181
U. S., 227.)
11. In Railroad v. Chicago Railroad Company (163 U. S., 581), the
Supreme Court say: “Railroad corporations possess the powers which
are expressly conferred by their charters, together with such powers
as are fairly incidental thereto, and they can not, except with the con-
sent of the State, disable themselves from the discharge of the func-
tions, duties, and obligations which they have assumed” (citing
Thomas v. Railroad Company, 101 U. S., 71).
12. An honest debt is never extinguished until it is paid, and we
can not place our feet in the shoes of the Panama Canal Company and
take over this property without first being satisfied that this debt is
paid, or that it has been released by the bondholders and stockholders
of that company.
13. Further, it is feared in a general way that the property in the
hands of a purchaser will be liable, or the purchaser will be liable, to
indefinite claims, liens, and demands of bondholders, stockholders, and
creditors of both companies. -
14. It is said that the law of Congress authorizes a purchase from
the new company and that the property has become again, Owing to
the recent agreements between the liquidation and the new company,
the property of the old company or liquidator. +
ExHIBIT 2.
CONSULTATION OF SEPTEMBER 1, 1902, BY MASTERS LIMBOURG, DU
BUIT, DEVIN, THIEBLIN, AND GONTARD.
The undersigned, advocates of the court of appeals of Paris, being
consulted, in view of divers objections made in America to the project
of cession of the Panama Canal by the new company to the Government
of the United States, upon the following questions:
1, Has the new company a certain and absolute title of ownership
to the concessions, the works of the canal, and all the other properties
which it is proposed to sell and transfer to the United States?
2. Has it the power to make that sale and transfer?
3. s it, from any point of view, a reorganization of the old com-
any -
p 4. Are the properties which it has acquired from the old company
burdened, since the contribution, with the debts and charges of the old
company; is it, in any manner whatever, bound by those debts and
charges?
5. Is the old or the new company a national company, with the conse-
quence that this national character restrains or diminishes the right
PANAMA CANAL TITT.E. 39
of ownership, of administration, and the power of sale of the proper-
ties of the company' -
6. Have the recent agreements between the new company and the
liquidator (December 24, 1901) and the judicial proceedures affecting
them, by which the liquidator has compromised with the new com-
pany as to the contractual obligations contracted by the latter toward
the former in the terms of the original contribution contract, invalidated,
or changed in any way whatever, the title of the new company acquired
by the original contribution, and had the liquidator the capacity to
conclude that agreement of the 24th of December, 1901?
7. Does the law of June 8, 1888, extend to the new company and
bind it? Will that law extend to its vendee and bind it? -
8. Does there exist in France a jurisdiction having competence to
revise the acts of the legislative power; especially can the law of
July 1, 1893, be declared void by any jurisdiction whatever?
Considering the questions submitted, together with all questions of
law that can arise from the project of cession, involved in a study of
the following three points:
1. Constitution, nature, and legal existence of the New Panama
Canal Company.
2. Existence and extent of its right of ownership over the prop-
erties which it is proposed to cede.
3. Existence and extent of its right of disposition as to those
properties; - -
It being proper, without regard to the order of the questions sub-
mitted, to proceed to a methodical and complete study of those three
points, and afterwards briefly to discuss the statements made in the
course of that study, and the conclusions to be drawn from them
which respond to the questions submitted, give the following opinion:
CHAPTER I.
CONSTITUTION, NATURE, AND LEGAL EXISTENCE OF THE NEW PANAMA
CANAL COMPANY.
The New Panama Canal Company was constituted definitively on
October 20, 1894.
By the terms of its by-laws, filed with Messrs. Lefebvre and Cham-
petier de Ribes, notaries at Paris, the 26th of June, 1894, it is an
anonymous commercial company governed by the laws of the 24th of
July, 1867, and 1st of August, 1893 (article 1 of the by-laws).
In France anonymous commercial companies formerly required an
authorization by the Government under article 37 of the Code of
Commerce. -
But this article was abrogated by the law of the 24th of July, 1867
(article 47), and article 21 of the same law provides that “in future
anonymous companies can be formed without the authorization of the
Government.”
Since then anonymous companies have been constituted freely in
France, without any intervention of the public authorities, by means
of the mere agreement of parties and the fulfillment of legal formali-
ties, namely, .
The by-laws of the company which form the compact are first
established thereby or by the founders of the company.
Then if a stock company is in question, there is an emission of shares
40 PANAMA CANAL TITLE.
of stock representing the capital; the company can not be constituted
until after the subscription of the total capital and the payment by
each stockholder of the fourth at least of the shares by him subscribed
(articles 1 and 24, law of July 24, 1867). -
This subscription and these payments are shown in a declaration
made by the founders of the companyin a notarial document (articles
1 and 24, law of July 24, 1867). -
A meeting, called the first general constitutive meeting, to which
are called all the shareholders, is convoked to establish the subscription
and the payment of one-fourth and to name commissaires charged to
make a report upon the contributions which do not consist of money.
(Articles 1 and 24, law of July 24, 1867).
A second meeting, called the second general constitutive meeting,
is afterwards convoked to hear and approve the report of the commis-
saires charged with verifying the contributions and to name the first
administrators. (Article 25, law of July 24, 1867.)
The company is at this moment definitively constituted; no more
remains but to fulfill the formalities of publication required by article
35 of the law of July 24, 1867, namely:
Deposit in the clerks’ offices of the tribunal of commerce and of the
justice of peace of the place in which the company is established of a
copy of the constitutive document, to which are annexed a copy of the
notarial document showing the subscription and payment of one-fourth,
a copy of the minutes of the deliberations of the general constitutive
meetings, a list of the names of all the stockholders of the company.
Finally, a copy of the constitutive document and of the papers
annexed is published in the newspapers designated to receive legal
announcements. (Article 56, law of July 24, 1867.)
These different formalities are to be fulfilled within a month of the
constitution of the company.
The French Government remains a complete stranger to the forma-
tion of companies. It is thus that the New Panama Canal Company
has been freely constituted, without the Government’s intervening in
any way in its formation. It has not been the subject of any special
law, and it has not had the benefit of any favor or any patronage of
the state.
This abstention does not appear only from the condition of the legis-
lation. It is put in relief by certain significant documents and under
solemn circumstances which it is not without interest to mention.
Already in 1880, a short time before the constitution of the Uni-
versal Company of the InterOceanic Canal, the French Government,
by a letter of its diplomatic representative in the United States, dated
March 22, officially declared to the Secretary of State of the United
States “that it was not in any manner interested in the enterprise and
that it did not propose to intervene in it or give it any support either
directly or indirectly.” (See opinion, Sullivan and Cromwell.)
Later, the Government anew exhibited in a manner more clear, at
the time the law of July 1, 1893, concerning the liquidation of the
Universal Company of the Interoceanic Canal was under discussion,
that it intended to remain a total stranger, in the future as in the past,
to the enterprise of the Panama Canal, an enterprise which it consid-
ered as one of pure and simple private concern.
Thus, in the session of March 4, 1893, of the Chamber of Deputies,
M. Deloncle having proposed an amendment to article 10, M. Bour-
PANAMA CANAL TITLE. 41
4
geois, keeper of the seals, minister of justice, opposed that amendment
as indicating a line of conduct to the liquidator, saying: “The Gov-
ernment and the public authorities have declared that they do not wish
to take any responsibility in this matter” (that of Panama), and adding,
with the assent of the Chamber, “If the amendment of M. Deloncle is
adopted, we depart from the attitude which the Government has con-
tinually followed up to the present.” (Good! good!) (Official Journal
of March 5, 1893, p. 846.) -
Thus, again, in the same session, M. Viette, minister of public
Works, opposing a motion presented by M. Moreau, looking toward
the formation of a commission of verification by the ministry of public
works, said, with the same assent: .
“I shall not constitute a commission in the name of the Government,
because the Government should remain a total stranger to the Panama
matter” (Good! good!). (Official Journal of March 5, 1893, p. 847.)
There is, then, but an examination to be made to learn whether the
new company, at the time of its formation, conformed to all the pro-
visions and formalities required, and whether, consequently, it was
regularly constituted. -
The legal conditions set forth above have been fulfilled, as follows:
1. The by-laws of the company were drawn up in a notarial docu-
ment in the presence of Masters Lefebvre and Champetier de Ribes,
notaries at Paris, the 26th of June, 1894. &
2. A public subscription of 600,000 shares, forming the money cap-
ital of the company (the 50,000 others being set apart to the Govern-
ment of Colombia), was opened on the 22d of September, 1894, and
completely subscribed. The fourth part of this subscription was paid
in by each shareholder.
3. The declaration of the subscription of the capital and payment of
one-fourth was received by Masters Lefebvre and Champetier de
Ribes, notaries at Paris, on June 29, 1894.
4. The first constitutive meeting, held October 4, 1894, recognized
the genuineness of that declaration and selected commissaires charged
to appraise the contributions made by M. Gautron. -
5. The second general constitutive meeting, held October 20,
approved the report presented by the commissaires and appointed the
first administrators. . .
At that moment the company was definitively constituted. -
Finally, to make sure that the formalities of legal publication were
carried out, it suffices to refer to the journal of legal announcements,
“Les Petites Affiches,” No. 730, October, 1894.
Thus is established in a manner beyond doubt both the commercial
character (altogether private) of the New Panama Canal Company and
the regularity of its constitution of date October, 1894.
Since that date its existence has continued without any interruption
or change, and the company is at present in possession of all its powers
and juridical rights. ; -
The incident of the appointment of M. Navarre as provisional
administrator in 1900, which may be misunderstood in the United
States, merits an explanation of its true character and its lack of all
importance. - 4. • -
In February, 1900, the members of the council of administration,
disagreeing in opinion, resigned in a body, and, not to leave the com-
pany without regular representation and direction, asked the tribunal
42 PANAMA CAN AI, TITLE.
of commerce to appoint a provisional administrator charged with con-
voking the general meeting of stockholders to elect a new council.
It was on this initiative that M. Navarre was appointed, and not on
the intervention of creditors or stockholders, nor by the spontaneous
action of the judicial authority. This appointment did not imply,
then, in any way, the suspension of the life of the company. (See judg-
ment of February 5, 1900.) -
M. Navarre made haste, conformably with his purely provisional
and tentative commission, to convoke the general meeting in order
that it might elect a new council.
And this council having been elected, he made report to it of his
administration, and his commission was at an end, and this incident,
wholly within the company, which had given occasion to his appoint-
ment, was closed. -
The proceeding taken in that matter is of frequent use. It is taken
whenever a council of administration considers it its duty to retire
spontaneously in the course of company transactions.
CHAPTER II.
EXISTENCE AND EXTENT OF THE RIGHT OF OWNERSHIP OF THE NEW
COMPANY AND THE PROPERTIES WHICH ARE TO BE THE SUBJECT OF
THE CESSION.
The right of ownership of the New Panama Canal Company as to
the concession of the interOceanic canal and the other properties which
it is proposed to cede to the Government of the United States is no
less clear than its own existence. -
This right results from the contribution made to it by the liquidator
of the Universal Company of the Interoceanic Canal when the new
company was constituted.
We have to dwell upon this contribution for the reason that the
greater part of the objections we are to examine are derived from a
misconception of its regularity, its character, its extent, and its effects.
This contribution, which is no other than a sale, was made by M.
Gautron, liquidator of the Universal Company of the Interoceanic
Canal, to the New Panama Canal Company, in the following terms.
(Article 5 of the by-laws.) -
Three questions can be stated apropos of the contribution thus
made: º
1. Had the liquidator the power to make it?
2. Has it been regularly made?
3. What are its effects? *
1. Question. Had M. Gautron, liquidator of the Universal Company
of the Interoceanic Canal of Panama, the right to make to the New
Panama Canal Company the contribution of the greater part of the
assets of the Universal Company ?
To clearly decide this question it will suffice to state with precision
the facts and applicable principles.
The dissolution Öf every company leads necessarily to the settlement
of its affairs. It is this settlement, preliminary to a distribution,
intended to prepare for one and to lead to one, by assuring the realiza-
tion of the company assets, which essentially constitutes liquidation.
PANAMA CANAL TITLE. 43
During this settlement the social being continues to exist. It sur-
wives for the requirements of liquidation. (Paul Pont, Traité des
Sociétés, No. 1930 et seq.; Vavasseur, Traité des Sociétés, No. 246;
Houpin, Traité des Sociétiés, No. 203; Cassation, May 29, 1865; Sirey,
1865, 1,325. See also Cassation, July 27, 1863, Sirey, 63, 1,457; Febru-
ary 3, 1868, Dalloz, 1868, 1, 225; December 22, 1868, Dalloz, 69, 1, 156;
March 23, 1870, Dalloz, 70, 1, 1415; March 6, 1872, Dalloz, 72, 1, 169;
February 8, 1875, Dalloz, 75, 1, 308; May 17, 1877, Sirey, 77, 1, 356;
August 16, 1880, Dalloz, 82, 1, 80; December 18, 1883, Sirey, 1886,
1, 27; March 11, 1894, Dalloz, 84, 1, 199; December 2, 1885, Sirey,
88, 1, 331; January 13, 1892, Sirey, 92, 1, 100; May 24, 1892, Sirey,
92, 1,469.) .
These are assured principles. " . -
But who is to make this settlement? Who will represent the social
body while it is going on? - .
Who, in other words, will be the liquidator? The French legisla-
tor has not established rules to govern the conditions of liquidation;
“he has referred to the condition of liquidation in several texts.”
(Code of Commerce, article 64; law of 1867, article 67.) He has not
regulated it or even defined it in any. Consequently, in default of
legislative provisions, it is from practice, general principles, decisions
of the courts, that we must ask the solution of the numerous difficul-
ties to which the business of liquidation gives rise. (Pont, No. 1934.)
“Being a mandataire (agent) of the company, which he represents in
the interest of the members, the liquidator ought, in principle, to be
appointed by them.” (Pont, No. 1. 937.)
No difficulty arises if the original company agreement designates or
permits to be designated the liquidator, or if the members are in
accord in choosing one. - r
But if they are too numerous to act themselves and do not get into
accord, there is litigation, and then it is necessarily requisite to apply
to public justice—to the tribunals—the civil tribunal if a civil com-
pany is in question, the commercial tribunal if a commercial company
is in question. (See Pont, No. 1942; Houpin, No. 205, and authorities
and decrees cited.) - - - -
The tribunal thus acquiring possession of the matter becomes sub-
stituted for the members; it acts in the plenitude of their rights; it
can then confer upon the liquidator all the rights that the circum-
stances seem to require him to have and the Original company agree-
ment permits. - -
Besides, although appointed by a court, the liquidator is none the
less the representative of the company in the interest of the associates,
responsible with regard to them for the execution of his commission
and free to act, under that responsibility, within the limits of his
powers, with the right, upon occasion, to ask to have those enlarged
by the tribunal from whom he obtains them.
As for the powers of the liquidator, it can be laid down as a general
proposition that, in the absence of special provisions or express reser-
vations, they extend to all acts, to all operations that may be necessary
for the settlement of the affairs of the company. (See Paul Pont, Traité
des Sociétés, Nos. 1934, 1952, et seq.) The measure of those powers
is obtained from the object he is charged to accomplish.
Consequently he has not merely the power of conducting the busi-
ness of the company. He has and should have the power of disposal,
44 PANAMA CANAL TITLE.
for that power is necessary to reach a realization of the assets and a
payment of the debts, which it is his business to accomplish. He can
alienate, and alienate even the immovable property of the company, at
least where there is no prohibition against that in the by-laws or in the
terms of his appointment. (See Pont, No. 1957; Houpin, No. 208;
Cas., July 24, 1871; Sirey, 1871, 1, 47.) -
Judicial decisions recognize, moreover, his power to realize the com-
pany assets by means of a contribution en bloc to a new company.
(See Cas., May 12, 1896; Off. Houilleres des Rives de Gier et Houilleres
de St. Chamand. Revue des Sociétés, 1896, 1, 356.) .
These principles having been established, let us turn to the facts:
The Universal Company of the Interoceanic Canal was constituted
on the 3d of March, 1881, under the anonymous form, with a capital
of 300,000,000, according to the by-laws received by Masters Cham-
petier de Ribes and Mavot de la Querantonnais, notaries at Paris, the
20th of October, 1880. -
On the 14th of December, 1888, it suspended payment and asked the
tribunal to appoint provisional administrators.
Appointed, these administrators called the stockholders to an extra-
Ordinary general meeting for the 26th of January, 1899, in order to
take such measures as the situation of the company required; that is
to say, to declare its dissolution and arrange for its liquidation. To
make sure of the quorum necessary to the valid constitution of that
meeting, that is to say, the one-half of the capital, making use of the
power given them by article 69 of the by-laws, the provisional admin-
istrators called to the meeting the owner of even a single share and
gave to their call all desirable publicity. (See first report of Monchi-
court, pp. 27 to 30). - -
Notwithstanding these efforts, the extraordinary general meeting
could not be regularly constituted, the half of the capital not being
found represented. ... • -
However, the meeting, such as it was, manifested its wishes by
adopting the following resolution:
“Third. The meeting, while it can not deliberate, announces the
desire that the Universal Company of the Interoceanic Canal of Pan-
ama may be dissolved, that a liquidator may be appointed, with the
most extensive powers to make any contract, cede part or the whole
of the present company’s assets, by way of contribution or otherwise,
to a new company, for the best interests of the company, and that
M. Brunet may be chosen as liquidator, with the power to ask in the
proper place for the addition of one or more other liquidators.”
It was in these circumstances that, the meeting of stockholders not
being able to constitute itself, the Universal Company being conse-
quently unable to act itself and to take the measures which the situa-
tion demanded, that is to say, to dissolve itself and put itself in the
condition of liquidation, certain of the stockholders asked the civil
tribunal of the Seine, conformably to article 37 of the law of July
24, 1867, to pronounce the dissolution and the placing in liquidation
of the Universal Company and the appointment of a liquidator for it.
In this state of affairs, by a judgment of February 4, 1889, the tri-
bunal pronounced the dissolution and the placing in liquidation of the
company, and named M. Brunet liquidator, “with the most extensive
powers, especially to cede or contribute to a new company the whole
or part of the company assets, to make or ratify with the contractors
PANAMA CANAL TITLE. - 45
for making the Panama Canal any agreement having in view the con-
tinuation of the work, and, with this end, to issue any bonds and make
any pledges of personal property.” *
This judgment was, in substance, but the carrying out, in spirit and
almost in language, of the resolution which the meeting of January 26,
powerless to validly deliberate, had passed under the form of an expres-
sion of desire. - & :
Thus the powers given to the liquidator, Brunet, clearly carry the
general right to alienate the company assets, and especially the right
to alienate them by way of contribution to a new company. *
Then we know how these powers were transmitted to M. Gautron.
We know, that is, how M. Monchicourt was named on March 8,
1890, as liquidator in place of M. Brunet, who had resigned; how
M. Gautron was joined with M. Monchicourt as coliquidator on July
21, 1893; how, finally, M. Gautron has remained since that date sole
liquidator of the Universal Company—always with the powers con-
ferred by the judgment of February 4, 1889.
Undoubtedly this careful explanation suffices to set at rest all doubt
of the power and the rights of Liquidator Gautron.
But this is not all.
This power of the liquidator, this right to cede, has been sanc-
tioned by the highest power we recognize in France, the legislative
authority. -
And this brings us to speak of the law of July 1, 1893, concerning
the liquidation of the Universal Company of the Interoceanic Canal of
Panama. - -
That law, passed by the Chamber of Deputies at its sessions of the
2d and 4th of March, 1893, adopted with amendments by the Senate
on May 29, 1893, returned to the Chamber and passed by it as it came
from the Senate on the 29th of June, 1893, was completed by its pro-
mulgation on July 2, 1893, conformably to the provisions of the decree
of 5th and 11th of November, 1870, concerning the promulgation of
laws and decrees. (Article 1, Civil Code.)
Its authority binds all; no one can contest its legality; our constitu-
tion does not contain a power analogous to that of the high court of
the United States. Only the legislative power can with us revise a
law regularly passed and proclaimed. -
. know under what circumstances that law of July 1, 1893, was
passed.
The Universal Company of the Interoceanic Canal of Panama has
assumed the anonymous commercial form, but it was a civil company
by reason of its object, and its form could not put out of sight that
character, as our legislation stood prior to August 1, 1893. It was
only at this last date that a new law decided that the anonymous com-
mercial form carried with it the commercial character of even com-
panies civil by their objects. -
The civil tribunal of the Seine was right in recognizing that civil
character in its judgment of February 4, 1889, naming M. Brunet as
liquidator. -
And the court of appeals of Paris, getting possession of an appeal,
not from the decision of the civil tribunal, but from a judgment of the
commercial tribunal of the Seine of February 18, 1889, denying that
character, recognized and formally declared, in its turn, by decree
of March 8, 1889, that the Universal Company of the Interoceanic
46 IPAN AMA CAN AL TITLE.
Canal of Panama constituted a civil company. (Paris, 1 ch., March 8,
1889, Receuil de Sirey, 1889, 2, 225.) #
The rules concerning the liquidation of commercial companies differ
from those applicable to civil companies. They render the former
liquidation more easy and rapid by simplifying the operations, and are,
from that fact, more favorable to the interests involved. The state of
the law did not in 1893 permit the liquidation of the Panama Company,
a civil company, to have the benefit of these rules, and the great value
of the enterprise, the enormous number of the shareholders, bond-
holders, and creditors, caused this legal impossibility to be regretted.
This gave rise to special measures for an exceptional situation, and a
special law arranged, upon fixed lines, the liquidation of the Panama
Company.
This law, asked for by the liquidator, M. Monchicourt, from 1892,
the subject of bills introduced by individual members (those of Ramel
and Roger de l’Aube), submitted finally by the Executive to the
Chamber of Deputies on the 20th of February, 1893, and adopted by
the Chamber and Senate, with some modifications, is the law of July 1,
1893. - -
After having, by a happy borrowing from the law of bankruptcy,
suspended by its first article all suits begun by bondholders and other
creditors of the Universal Company, whether against the liquidator as
such, against the administrators to enforce their responsibility, for
restitution against outside parties, or any other kind, as well as the
proceedings for preservation or execution against the properties of
the company, this law treats, under two different heads, of L
1. The liquidator.
2. The mandataire of the bondholders.
The title treating of the liquidator regulates for the best interest
of all the two important operations belonging to him—realization of
assets and distribution—placing the former under the authority and
control of the civil tribunal of the Seine. -
It is thus worded:
“Article 10. Every act of realizing assets, every contract carrying
a cession or contribution of the whole or part of the company assets
performed by the liquidator of the Universal Company of the Inter-
oceanic Canal of Panama, shall be submitted to the approval of the
civil tribunal of the Seine, which shall decide in public session, after
a report by one of the judges. -
“Article 11. Every judgment of approval rendered in pursuance of
the preceding article shall be published within ten days in the Official
Journal and the Official Journal (Commune edition).
“It may be attacked by tierce opposition within not to exceed one
month after the publication, by the stockholders, by the mandataire
of the bondholders, and by the other creditors of the company. The
tribunal shall decide summarily within a month. The appeal must be
interposed within ten days from the notification of the judgment to
the party personally or at his domicile.”
Is it not evident that in providing for and submitting to the approval
of the tribunal by these articles “contracts carrying a cession or con-
tribution of the whole or part of the company assets, made by the
liquidator of the Universal Company of the Interoceanic Canal,” the
legislator has recognized and in some sort consecrated, although that
was not necessary, the power and right acquired by the liquidator
TANAMA CAN AI. TITLE. 47
under the general rules of law, expressly referred to in the decisions
of the courts investing him with his functions, to alienate the com-
pany assets by way of contribution to a new company ? -
Thus, principles, the act of appointment, finally the special law, affirm
the power and the right of M. Gautron, and legitimize his interven-
tion in the constitutive agreement of the New Panama Canal Company,
for the purpose of contributing to that company part of the company
assets of the Universal Company. -
M. Gautron had, then, the power to make the contribution which he
did make.
In the title treating of the mandataire of the bondholders, the act of
July 1, 1893, provides for the protection of the most interesting credit-
ors of the Universal Company, the bondholders, during the course of
the liquidation of the said company. - -
On one hand, it gives to the mandataire alone the rights of action
belonging to the bondholders, and it accords to this mandataire, for
that purpose, the benefit of judicial assistance.
On the other hand, it leaves to all and to each of the bondholders the
right to intervene in the proceedings instituted by the mandataire and
to institute all proceedings, in case the mandataire, having been noti-
fied to proceed and given time for that purpose, neglects or refuses to
do so. -
Finally, it recognizes in the mandataire alone the right to proceed
to execution in case of judgments in favor of the bondholders, even
when they have acted upon his default, and individually obtained
judgments. But it provides at the same time that the mandataire
shall pay over to the liquidation all sums he may receive, and leaves
the bondholders, taken singly, the right to produce their claims before
the liquidator and receive directly all dividends which may be coming
to them. - -
Thus all dangers are provided against, it should be noted, without
the bondholders, to whom the most effective aid and protection are
afforded, being deprived of any advantage; they are merely prevented
from establishing, contrary to the natural law of equality, and we
may say, contrary to the most elementary equity, a situation of indi-
vidual preference to that of the mass of bondholders, by executing
for the exclusive ºbenefit of some, judgments which they may obtain
*
and by which all ought to profit. .
It may be drawn from this part of the law of July 1, 1893, that all
alienations consented to by the liquidator, with the approval of the
tribunal, are definitive and can be set up against all creditors, persons
in privity and stockholders of the Universal Company. All rights of
these different kinds of persons as to the assets of the Universal Com-
pany are irrevocably concluded by such an alienation. Their rights
no longer exist except as against the liquidator and only as to the
products of the liquidation.
SFCOND QLIFSTION,
REGULARITY OF CONSTITUTION.
M. Gautron, having power to make the contribution, as we have
demonstrated, it only remains to see if he has done so in conformity
with the formalities prescribed by the law of 1893.
48 PANAMA CANAL TITLE.
Has the liquidator asked and obtained the approval required by that
law; is the judgment of approval definitive? -
This approval was given by the civil tribunal of the Seine by judg-
ment of June 29, 1894, copied by Messrs. Sullivan & Cromwell as an
exhibit to their brief, pages 165 et seq. - -
The judgment of approval was published pursuant to article 11 of
the law in the Official Journal, and Official Journal (Commune edition)
in the issues of July 1, 1894. * -
The judgment was attacked by divers tierce-oppositions pursuant to
the text of said article 11.
The civil tribunal of the Seine, deciding upon these tierce-opposi-
tions, declared them without just foundation by a judgment of August
8, 1894, upholding in all its terms and provisions the judgment of
June 29, 1894. -
Finally, no appeal having been taken from the judgment of August
8, 1894, within the time allowed by article 11, that judgment has
passed into res adjudicata, and the approval given by the judgment of
June 29, 1894, has become definitive.
No one in France would be permitted to contest it.
THIRD QUESTION.
EFFECTs of THE CONTRIBUTION.
What are the effects of the contribution thus made?
In principle the contribution to a company of a certain and deter-
mined property or collection of properties carries an alienation, a trans-
fer of ownership, to the benefit of the company. - -
This transfer operates inter partes, according to general principles
of law, the obligation to contribute being an obligation to give by
the very force and effect of the agreement. * - -
That is, the contribution is in all respects similar to a sale (Articl
1845 of the Civil Code). Let us say, briefly, the contribution is a
sale. It is a sale in which the price may consist either in a fixed sum
or in a stipulation for part of the profits of carrying out the com-
pany’s project.
A contribution can be pure and simple. It can also be subjected to
conditions upon which it will be suspended or undone.
Briefly, here, as in the case of a sale, there is full and complete
liberty.
The agreements are the law of the parties.
This is the principle formulated in Article 1134 of the Civil Code,
an essential principle of our law, giving rise to numerous consequences
and applications, and never to be lost sight of in the present examina-
tion. - - -
This being stated, if we look at the agreements which have been
made we find: -
That the parties have stipulated “that the New Panama Canal Com-
pany shall be the owner of the properties and rights ceded and con-
tributed from the day of its definitive constitution,” with a single
reservation concerning the rights as to the Panama Railroad;
That the contribution of these latter rights, thus differing from that
of the other rights and properties, was made under a condition upon
which they were to return, the said rights to become fully vested in
PANAMA CAN AL TITLE. 49
the new company upon the completion of the canal or the payment of
the sum of Fr. 20,000,000, otherwise to return to the liquidation.
We have seen that the New Panama Canal Company was definitely
constituted on the 20th of October, 1894.
We hence conclude, with absolute assurance:
That from that date it became the owner of the properties con-
tributed, the definitive and unchangeable owner of all the properties
Other than the rights in the Panama Railroad, owner under the condi-
tion of finishing the canal or paying the Fr. 20,000,000 of the rights in
the Panama Railroad, this being the simple application of article 1583
of the civil code, according to which the ownership of the sold object
is transferred to the vendee as soon as the two parties have reached
an agreement as to the matter and the price, “although the price has
not been paid;’ -
That from the same date the Universal Company of the Inter-
Oceanic Canal of Panama, represented by its liquidator, has ceased to
be the owner of the properties contributed, except as to the condition
concerning the Panama Railroad, and that the ownership of the prop-
erties contributed has been definitely replaced in its assets by the price
of them—that is to say, by a right to a part of the profits which was
given in return for its contribution.
It can not be argued that this participation in the profits implies
any retention whatever of ownership by the liquidator.
The liquidator, contributor of the properties whose cession is pro-
posed, is completely deprived of his rights in the properties in favor
of the new company. According to French law, he who should con-
sent to that contribution in consideration of getting a certain number
Of paid-up shares, giving him rights equal to those of other share-
holders, would not less lose entirely the ownership of the properties
contributed, this ownership resting exclusively in the social being, the
new company; the concurrence of such contributor in a subsequent
sale of a part of the assets of that company is a thing unknown to
French law, and we are convinced that it is the same in every system
of law. The contributor has, in that case, only the rights belonging
to every stockholder, as long as he keeps possession of his shares, but
all personal right as contributor and former owner is definitively
annihilated as to him. - -
For much stronger reasons is this the case for a contributor who
in exchange for his contribution does not become a holder of shares
or parts of the company assets, and contents himself with a participa-
tion in the profits resulting from his contribution. Such a contribu-
tor becomes interested in the results; he does not possess a part of the
Ownership of the company funds, and his right is resolved into an obli-
gation to him of the company, of which he is not even a member.
The ownership resides, then, exclusively in the person of the com-
pany, distinct from that of the associates; neither they, nor, for a
stronger reason, one who is simply interested in the results, as is the
liquidator, possesses any particle of that ownership.
Nor can any argument be drawn, either, according to the same line
of thought, from the power stipulated in favor of the liquidator,
during the making of the canal, to have a commission of his own
charged to inspect the progress of the works, the gondition and care
of the materiel and immovable property, as well as the accounts con-
8751—02—4 i
50 PANAMA CAN AI, TITLE.
cerning these matters (article 5 of the by-laws), for this arrangement
is explained by the inability in which the legislator would otherwise
find himself, by reason of the very nature of his rights, to exercise,
during the period of construction, an inspection which the value of
the obligation owing to him nevertheless makes legitimate, and which
would not be sufficiently obtained during that period from a mere
examination of balances and writings. This power in no way nega-
tives the idea of a definitive alienation; on the contrary, the circum-
stance that it became the object of a special stipulation corroborates
the fact of a complete alienation of the ownership. If a single particle
of ownership remained in the liquidator, he could, as co-owner, inspect
without any stipulation.
Thus the contribution undoubtedly substitutes the New Panama
Canal Company in all the rights of ownership of the Universal Com-
pany of the Interoceanic Canal of Panama.
Is it by a counterstroke, substituted in the whole or a part of the
obligations and personal charges contracted or assumed by the latter
on account of the properties ceded?
No, beyond a doubt.
As a general rule, the personal obligations of a debtor burden only
his representatives properly so called, his representatives by law or
convention, such as the heir, the universal legatee, the vendee en bloc
of his situation with regard to assets and debts. He who becomes the
vendee of a particular object is subjected only to the real charges,
inherent in the said object, stipulated in the contract and inseparable
from its possession. 4.
A simple acquirer of properties, specified individually and by name,
the New Panama Canal Company can not be held bound except for the
payment of the price agreed upon; the personal obligations of its
vendor do not concern it.
To represent the new company as continuing the person of the Uni-
versal Company, whether we consider the new company as a reorgani-
zation of the Universal Company or we regard it as the acquirer of
the totality of the goods of the old company, would be to fall into a
manifest error as a matter of fact. This can be easily understood.
1. Nothing less resembles the reorganization of the Universal Com
pany than the formation of the new company, entirely distinct from
the preceding. In reality, French law and practice are unacquainted
with what in England and the United States is called reorganization.
Out of two things, one; either the old company exists alone and
complete, or a company entirely new has been constituted. In the
first place, we frequently see that the old capital is reduced in a greater
or less amount and a new capital is called in by subscription, but in
this case the company continues to exist as a moral person; mothing is
changed in its existence; its debts continue to burden it as in the past;
the creditors do not change their character, and at least if they have
not consented to a remission of the debts, their rights undergo and
can undergo no modification.
In the present case it is useless to insist upon showing that the Uni-
versal Company has not been reorganized; on the contrary, it has been
dissolved by judgments which have passed into the force of res adju-
dicata. It has then ceased to live except for the requirements of liqui-
dation, ordained by the same judgment; it is then true (to make use
of an expression, which this time is just) that no power in the world
PAN AMA CANAL TITLE. 51
can give back an active existence to the Universal Company. Its
liquidator has received a commission to realize its assets and pay its
debts by means of the product of realization and to the extent that.
that product will permit. He could not then, not having any author-
ity for that, reorganize the Universal Company, a thing he could not,
do without the concurrence of the old stockholders and the subscribers
to the new capital. Nothing of the kind has taken place. It can then
be affirmed that the new company is not a reorganization of the old
company, and that consequently the new company does not find itself
ipso facto burdened with the debts and engagements of the Universal
Company. * *
2. It is no more correct to say that the new company is the successor
by universal title of the Universal Company because it has taken all
the assets and by that very fact has become bound for all its engage-
ments.
As a matter of fact, it may be remarked that an important part of
the assets of the Universal Company—the lottery bonds—have not
been transferred to the new company. This circumstance alone puts
an end to the objection.
But it is proper to go further, for even admitting that the liquida-
tor of the Universal Company has transferred to the new company the
totality of the goods of the former, it would not result that the other
company is a universal successor bound for the debts, obligations, and
charges of the former company. *
It is not to be forgotten that the Universal Company was not solvent;
that it was, on the contrary, in judicial liquidation after having sus-
pended its payments; that a special law was necessary to withdraw
this liquidation from the pursuits of unpaid creditors and from the
forced sale of its properties. If it is an indisputable principle that he
who takes the whole assets of a debtor and substitutes himself for that
debtor by an agreement freely entered into between them, assumes the
totality of the debts, it is a principle no less indisputable that he who
buys the assets of a bankrupt or a person in judicial liquidation does
not owe anything to the creditors of the bankrupt beyond the price of
what he buys, a price it is the business of the liquidator to divide
according to the rights of those concerned.
| Such is the situation of the new company with regard to the liqui-
dator of the Universal Company and with regard to its creditors. This
is what has already been declared by the judgment of the 4th of Feb-
ruary, 1889, which pronounced the dissolution and the liquidation;
this is what has been confirmed by the law of the 1st of July, 1893.
And it is for that very reason—that is to say, that the creditors have
no other gage than the product of the realization—that the legislator of
1893, in order to guarantee the personal creditors of the Universal
Company against the consequences of a contribution which would
alienate their gage without giving them a sufficient compensation, did
not content himself with protecting them by the requirement of the
approval of the tribunal. It moreover, aside from any idea of fraud,
and merely for the defense of their interest, conferred the right to inter-
vene by way of tierce opposition to the judgment of approval, and
submit to the tribunal any objections they might have to the proposed
alienation.
Thus, the New Panama Canal Company has not been substituted in
the debts of the Universal Company of the Panama Canal. Those
52 PANAMA CANAL TITLE,
debts remain at the exclusive charge of the liquidation. The only
charges which burden it are those which were formally transferred
to it as conditions of the contribution (art. 5 of the by-laws). g
We find here only the charge of the sum remaining due to the
Colombian Government as the price of the prorogation of the con-
cession granted April 4, 1893.
There are no others.
Consequently, it is necessary to conclude, without hesitation, that
all the personal debts of the Universal Company, other than the above-
mentioned debt to the Colombian Government, remain at the exclusive
charge of the liquidation. -
This is especially true of the entire bonded indebtedness.
And that which we say of debts, a fortiori, we may say of the
charges not constituting debts properly so called, which the Universal
Company may have assumed in the course of its existence.
We desire to speak here especially of the charge imposed upon the
Universal Company by the law of June 8, 1888, concerning the issuing
of lottery bonds to buy in France the matériel necessary for the
works, a charge absolutely personal and connected with the use of the
lottery bonds, of which the new company does not possess one. This
obligation is, then, necessarily extinct with the life of the Universal
Company, upon which alone it rested, to the existence of which it
was in some manner inherent.
It is thus that the vendee of a house in course of construction does
not assume, by his purchase, the consequences of a contract which his
vendor has made with the contractor for its construction or with an
establishment for the furnishing of materials. A formal stipulation
is necessary for such a purpose. This could not be imposed upon the
new company by the liquidator of the Universal Company, and it has
not been imposed upon it, as a reading of article 5 of the by-laws
makes clear. -
We repeat that the lottery bonds, which were the occasion and the
raison d’etre of the obligation concerning the materials were excepted
from the contribution and have remained the exclusive property of
the liquidation. -
Thus the properties contributed passed into the hands of the New
Panama Canal Company absolutely free from the personal indebted-
ness and personal charges binding the Universal Company.
Let us add that these properties are, moreover, not burdened with
any privileged debt or mortgage, nor any jus in re or jus ad rem, and
that their transfer has been made regular, with regard to third parties,
by the fulfillment of the formalities required in Colombia.
Thus, and to recapitulate, on this third question, we conclude:
That the New Panama Canal Company is the owner of the proper-
ties and rights which it is proposed to cede to the United States of
America;
That these properties are free in its hands from all the engagements
and personal debts of the Universal Company of the InterOceanic
Canal of Panama; - - -
And that they are not and can not be burdened with any other debt
or charge than the privileged debts or mortgages which may have
been registered according to the laws of the Republic of Colombia.
Let us add, finally, that the transfer of the concession and properties
of the Universal Company of the Interoceanic Canal of Panama to
PANAMA CANAL TITLE. 53 .
the New Panama Canal Company has been formally recognized by the
Government of the Republic of the United States of Colombia.
The right of ownership of the new company has moreover been for-
mally confirmed by the prorogation of the concession granted on April
25, 1900, to the New Panama Canal Company by that Government.
(Brief of Sullivan and Cromwell, Exhibits, pp. 99 et seq.) -
CHAPTER III.
EXISTENCE AND EXTENT OF THE NEW PANAMA CANAL COMPANY’s RIGHT
OF DISPOSAL.
We have proven that the New Panama Canal company is the full
and complete owner of the concession and other properties the cession.
of which to the Government of the United States is proposed. -
Can it freely dispose of its properties and effect by itself the pro-
posed cession?
The right of ownership, “right to use and abuse,” according to the
Roman phrase, “right to enjoy and dispose of things in the most abso-
lute way,” according to the terms of article 544 of the Civil Code,
implies naturally the right to freely alienate.
That right is considered in France as of public interest. The owner
can not, in principle, renounce it by agreement. (Aubry & Rau, 11,
pp. 175–191; argument, art. 544, 1594, and 1598 of the Civil Code.)
It is immaterial, moreover, whether that owner is a physical being
or a moral being—a company. The principles and rules of decision
are the same. *
Then, in principle, and by the mere fact that we have proven the
right of ownership of the New Panama Canal Company, we can affirm
its right of free disposal. But we encounter here certain objections,
drawn, some from the very object and the existence of the company,
and others from the rights given to the liquidation of the Universal
Company by the original company agreement.
Let us examine them. - -
The objections taken from the object and existence of the company
are two— -
The first is based upon the fact that the proposed cession will put
Out of existence, along with the company assets, the very object of the
company.
It is clearly true that the making of the proposed cession by the
New Panama Canal Company to the United States will result in put-
ting an end to the company’s object and consequently draw with it the
dissolution of the new company. But there is nothing in this that,
either legally or under the by-laws, is impossible. In principle, a
company constituted with a view to a specified object and for a speci-
fied term should exist until the extinction of that object or expiration
tion of that term. (Article 1865 of the Civil Code.)
But that principle, whose strict application can be conceived of in
the case of associations of persons, can not be so rigorously enforced
in the case of associations of capitals, without presenting the most
serious inconveniences and even the greatest dangers, for there may
arise, in the course of the existence of a company, even of the most
flourishing kind, circumstances in which it will be advantageous and
expedient to put an end to the enterprise or transmit it to others by
54 PANAMA CANAL TITLE.
alienation. And the legislator has provided for that case in the law
of July 24, 1867, for anonymous companies. By the terms of article
31 of that law, “The meetings which are to deliberate upon the altera-
tion of the by-laws or on propositions to continue the company beyond
the term fixed for its duration, or its dissolution before that time, can
not be regularly constituted and can not deliberate validly unless com-
posed of a number of shareholders.representing the half at least of the
capital of the company.”
What does this signify, except to recognize in the general meeting—
that is to say, in a part only of the associates—the right to put an end
to the company existence for whatever reason may please it, whether
of expediency or some other kind, without regard to the nonaccom-
plishment of the object of the company or the noncompletion of the
term fixed’ (On the powers of the extraordinary general meeting,
Cassation of May 30, 1892, Journal des Sociétés, 1892, p. 405, Dalloz,
1893, I, 105, with note of M. Tholler; Cassation of January 29, 1894,
Journal des Sociétés, 1894, p. 209, and reasonings of Advocate-General
Desjardins. See also an article of Professor Wahl, Journal des
Sociétés, 1900, p. 193 et seq.) - - -
And it can not be said that the legislator had in mind in the said
article 31 only companies whose dissolution before the fixed time was
rendered necessary by the bad condition of their affairs. This would
be an error. It is the solvent companies he had in contemplation in
article 31 of the law of 1867. And the proof of this is in article 37 of
the same law, which provides in that article for the case in which a
company has lost, not its whole capital, but only three-fourths of its
capital: the legislator does not limit himself to authorizing the gen-
eral meeting to deliberate on the question of anticipated dissolution, it
prescribes that deliberation, and it orders that it shall be submitted to
a general meeting to which all the stockholders shall be admitted,
and which will validly deliberate if only the fourth part of the stock-
holders shall be represented in it.
Thus the anticipated dissolution of an anonymous company is pos-
sible, even where the by-laws are silent, notwithstanding article 1855.
A fortiori is it possible, beyond any manner of doubt, where the by-
laws themselves have expressly provided for it and expressly authorized
it. Such is the case for the New Panama Canal Company. -
Article 60 of the by-laws, reproducing as to this, article 31 of the
law of 1867, formally gives to the general meeting, constituted in the
manner specified by articles 61 and 62, the right to decide:
“The reduction of the duration, the prolongation, or the anticipated
dissolution of the company.” It gives it that right without qualifi-
cation, without condition. And as the agreement, as we have shown
above, is the law of the parties, this, which is part of the company
agreement, has established in this respect the power of the company,
giving to it, as we see, the greatest amplitude.
The general meeting, constituted in the manner prescribed by articles
61 and 62, can, then, dissolve the company for whatever reason seems
to it good. And if it can pronounce that dissolution pure and simple,
evidently it can also subject it to whatever condition, to whatever con-
tingency it sees fit; it can vote the alienation of the enterprise which
constitutes the company’s object in order to dissolve the company in
case the alienation takes place. Its will is sovereign. On one hand,
the anticipated dissolution, like every dissolution, carries with it
PANAMA CAN AL TITLE. 55
inevitably liquidation and the realization of the assets; on the other
hand, article 63 of the by-laws of the new company permits the general
meeting, in case of dissolution, to confer upon its liquidator or liqui-
dators the most extensive powers. t
From these premises we conclude: That the new company can
indisputably dissolve itself purely and simply, conferring upon its
liquidators the power to make the proposed cession; that not less
indisputably it can subject its dissolution to the condition of the making
of that cession; and we thus arrive at the conclusion that the new com-
pany can, notwithstanding its object and its term of duration, decide
upon the projected cession to the United States of America, and give
to its council of administration the power to make it, deciding at the
same time that upon its being made the company shall be ipso facto
dissolved. Thus disappears the first objection.
The second objection taken from the object of the new company,
concerns the character of that object.
The enterprise, the object of the new company, having a national
character, can not be ceded without the consent of the French Gov-
ernment. Such is the objection. It rests, as we have seen in the
explanations given in the first chapter of this paper, upon an altogether
erroneous assumption. - -
From the point of view of French statutory and other French law
the Panama Canal enterprise is an ordinary industrial enterprise,
essentially private, absolutely independent of the public authorities of
France, who have never intervened, either in its constitution or car-
rying it on.
It is necessary, besides, to beware of the phrase “national work,”
which does not convey a very clear idea to the mind and which has no
place in legal language. Without doubt one can say that a work is
national when from its nature or its size it may be of importance to
the whole country, may increase its fame with that of its citizens, its
influence, or its material prosperity. But these statements and the
legitimacy of the expression so made use of and which concerns the
moral Order of things, or mere sentiment, may be without any legal
significance. There is no national work in law except one that is car-
ried on directly by the nation itself; no national property except one
which belongs, properly speaking, to the nation. The enterprises of
individuals—and we know that the old and new Panama companies
were formed without any intervention of the State—are private things
and works. The fact that it may have a national character in Colombia
could not give the French Government a right which does not arise
from its own law.
The objection is, in fact, based on an abuse of the word “national.”
How can a work, because it is important to a foreign government,
come under the authority of another government from the simple fact
that subjects of the latter carry it on ? There exist in the world quite
a number of companies, purely private, that carry on in divers foreign
countries enterprises of public or national concern in those countries.
Such are, for example, the enterprises of railroads constructed by
French or English companies in South America. Such companies
have never been anything but private companies, and no one has ever
contested the right they have often made use of to alienate their enter-
prises to third persons whenever the concession does not prohibit
alienation. -
6
56 PANAMA CANAL TITLE.
The objection, then, has not any serious character, either in law or
in fact; it rests merely upon the word “national” turned away from its
true meaning. It has often been said in France that the Suez Canal
enterprise is a national enterprise. The company which carries it on
is, however, a private company absolutely mistress of its rights.
Besides, from the point of view of Colombia, the work of the new
company is not a national work; it is a private work, which is recog-
nized by the decrees of concession to be a private enterprise, capable
of being sold to any individual or company (article 21, law of May
18, 1878), of being ceded by one company to another (article 1, law of
December 26, 1890), and with regard to the free alienation of which
only one reservation is made—the case of a sale to a foreign govern-
ment (article 21, law of May 18, 1878).
The new company has no political character or obligation, and neither
France nor Colombia has set up any pretension of the kind.
We are, then, through with the objections taken from the object of
the company, and come now to those drawn from the rights granted to
the liquidation of the Universal Company by the original constitutive
agreement. -
This objection may be thus stated: -
By the terms of the stipulations made in its original company agree-
ment, the new company accorded to the Universal Company 60 per
cent of the profits of operating the canal in return for its contribution.
This 60 per cent is the price of the contribution.
That price can not be altered. -
But it would be an alteration to sell the concession and properties
that go with it for a fixed sum.
Then the sale is impossible.
Such is the objection.
Let us see what it is worth.
We remark in the first place that the liquidator could foresee, and did
foresee, when he was making the contribution to the new company of
the properties it is proposed to cede to the Government of the United
States, that the share in the profits of the operation of the canal which
he was stipulating for as compensation, as the price of his contribution,
might be replaced, in future contingencies, by another compensation.
In giving adhesion to the by-laws of the new company, in which he is
moreover a subscriber to shares payable in money, at the same time
that he is a contributor of property in kind, he should have considered
and he did consider, like all others interested, the meaning and effect
of article 60 of the by-laws, hereinbefore analyzed; he was acquainted,
besides, with article 31 of the law of July 24, 1867, which binds all
persons. He has, then, accepted in advance the eventuality of an
anticipated dissolution and, therefore, the possibility of an alienation
of the enterprise, rendering impossible for the future the carrying out of
the stipulation which gives him 60 per cent of the benefits of operation.
Yet it is to be observed that the liquidator made no special stipulation
in view of such an event; he did not require for himself a different
treatment from that of all others concerned. All will be obliged
to content themselves with some other benefit than that of receiving
shares of the annual profits and proceeds, if any. We see, then, that
from this first point of view the objection is already gotten rid of,
especially if it is added, in view of the texts of the law, that it is
impossible to conceive of a contract contrived in such a way that the
}-r -
PANAMA CAN AL TITLE. 57
parties would not be able to profit by favorable events in the future or
escape future perils, under the pretense that these events were not
specifically provided for.
We repeat, then, that the liquidator, having given adhesion to
article 60 of the by-laws, liquidation and alienation were things pro-
vided for between the parties, and therefore they are in no sense
impossible. *
We shall examine, in view of the fait accompli, the objection stated.
It will be explained away quite easily if, taking the hypothetical case
of a sale pure and simple, we leave out of view the particular case of
an alienation in the form of a contribution to an anonymous company.
It is incontestible in principle that a vendee can not, at his own will,
alter what he has engaged himself to give to the vendor as the price
of the thing sold. - -
But it is not less so that, if the vendee can not alone alter his promise
to the vendor, such an alteration can be agreed upon between them
without the rights of ownership of the vendee being in any way
changed.
It is very clear, for example, that if I buy a piece of immovable
property, agreeing to pay an annuity to the vendor, I can not, by my own
sole power, free myself by turning that annuity into a lump sum; but
I can certainly do so by agreement with my vendor without this alter-
ation of the price first stipulated affecting in any way the transmission
of ownership which takes place by virtue of the original contract.
(Article 1583 of the Civil Code.) § *
What can be done between individuals, physical beings, can be done
likewise between moral beings, between companies. There is no rea-
son for a distinction in the two cases, and it can not be supposed that
companies which are the great instruments of modern activity are in
a situation less advantageous than individuals.
But what is in fact the state of affairs here?
On one hand the new company has undertaken to do nothing with-
out the agreement and consent of the liquidator.
On the other hand, the liquidator, the subject of the cession having
been submitted to him by the new company, being desirous of favor-
ing negotiations the value of which his great experience and his knowl-
edge of the interests confided to him enable him to estimate, wishing
to give to those negotiations a support the more effective by reason of
his sharing the responsibility, has applied to the tribunal that com-
missioned him, and has asked of it to have settled by friendly arbitra-
tion the questions to which the cession might give rise as between the
liquidation and the new company, and especially the question of the
division of the price, and the tribunal, by judgment of August 2, 1901,
has given him the authority thus asked for. (See the text of the said
judgment; brief of Sullivan & Cromwell; exhibits, pp. 253 et. seq.)
Under these circumstances there was signed on the 24th of Decem-
ber, 1901, by the new company and the liquidator, M. Gautron, a
document setting forth the agreement between them. (See brief of
Messrs. Sullivan & Cromwell; exhibits, p. 261.)
By the terms of this document the parties—
Have determined (article 1) that “The New Panama Canal Company
shall be alone charged with carrying on the negotiations with the Gov-
ernment of the United States; ” that it “shall have all powers for
ultimately coming to terms with it, and for settling with it the price
and the conditions of the cession.”
58 PANAMA CANAL TITLE.
And they constituted (articles 2 to 4) an arbitration tribunal to decide
the question to be settled between them, the question of the division
of the price.
The arbitration tribunal rendered its decision on the 11th of Febru-
º (See brief of Sullivan & Cromwell; exhibits, supplement,
. 271. -
p i. and pausing here in the account of what was done, the agree-
ment by the liquidator to the alteration which the sale will make in
what is due him is clear and indisputable. -
If there is an alteration in what was settled by the original agree-
ments, this alteration made by agreement is undoubtedly valid and
lawful. -
The matter all comes, indeed, to a question of the power of the
liquidator, and after the examination of it already herein made that
power is no longer doubtful, provided only the special formalities are
followed which arise from his character as liquidator and from the
special law which governs him.
In the beginning he would have had the right, beyond a doubt, to
alienate the properties and rights of the liquidation for a fixed sum in
money; thinking to do better, he stipulated for a share of the profits.
Later, he believes it advantageous to sell that share of the profits,
to convert it into cash; why has he not the right to do so, provided he
conforms in that alienation to the character with which he is invested?
And why, if he can do that with a third party, can not he do it with
his vendee, and give up for a fixed sum a part of the profits which he
quite reasonably looks for Ž
How can it be maintained that, because in the beginning he thought
it advantageous to stipulate for a certain price in exchange for his
contribution, he can not, circumstances changing, alter also, in agree-
ment with his vendee, the price agreed upon?
In every country of the world, he who has the right to cede a thing,
to stipulate accordingly the price of that cession, has equally the right
to alter that price if the other party consents thereto.
Is it necessary to dwell longer upon this?
We believe not.
And we hold as certain that the liquidator of the Universal Company
can give a valid assent to the modification or transformation of the
rights arising in favor of the liquidation from the contribution he
made in its behalf, provided he gives it in accordance with the formal-
ities that were requisite for the validity of that contribution, the for-
malities, in a word, required to validate his acts of alienation.
'The question, the only question that can be made, is, then, as to the
observance of the requirements of the law of July 1, 1893.
And these formalities have been observed.
The liquidator, M. Gautron, gave the civil tribunal of the Seine
possession, according to the provisions of article 10 of the law of
July 1, 1893, of a request for approval of the award of the arbitrators,
and of the assent he gave to the modification to be made in the con-
tract of contribution entered into in 1894 between the liquidator and
the new company in order to allow the cession to the United States.
Within the month from the publication of the said judgment in the
Official Journal, and the Official Journal (commune edition) in con-
formity with article 11 of the law of July 1, 1893, a publication throw-
ing open for a month, for a month only, according to the same article
PANAMA CANAL TITLE. 59
the opportunity for tierce opposition to the stockholders, to the man-
dataire of the bondholders, and to the company’s creditors other than
bondholders; that is to say, to all interested and to the only ones who
could possibly be interested, one tierce opposition was interposed, only
On 62. '
The civil tribunal of the Seine was put in possession of that tierce
opposition, and at the same time of a prohibition served upon the
new company by the tiers opposant and notified by him to the Gov-
ernment of the United States of America. -
By judgment of July 3, 1902, the tribunal rejected the tierce oppo-
sition on the ground of its inadmissibility based upon the tiers oppo-
Sant’s character as a bondholder, the law of July 1, 1893, not giving
to bondholders the individual right to make the tierce opposition
provided for by its article 11, a ground of inadmissibility of public
order, which was obligatory upon the tribunal to take notice of and
enforce even if the liquidator had not made the point.
Let us observe, also, that in the discussions, with an enlightened
care for the well-understood interests of which he had charge, the
mandataire of the bondholders, M. Lemarquis, intervened, in order to
declare emphatically that he was fully in accord with the liquidator
and that it was deliberately and intentionally that he had omitted to
make use of the right of tierce opposition that he alone had on behalf
of the mass of bondholders. Let us also make a note of the fact that
by the same judgment, the tribunal, upon the request of the new
company, threw out the prohibition served by the tiel's opposants,
the two proceedings having been united. º
Finally, getting jurisdiction in its turn, the court of appeals of
Paris, by decree of August 5, 1902, confirmed in all respects the
judgment of July 3, 1902.
The approval given on the 19th of March, 1902, to the agreements
made has, accordingly, become definitive. Sº,
Consequently, no one is able to-day and no one will be able to
Criticise or put in doubt those agreements. The law of July 1, 1893,
the expiration of the time allowed to enter objections as authorized
by it, the force of res adjudicata, absolutely prevent anything of the
kind. * **
And these agreements formally recognize in the new company the
power to negotiate and to conclude alone with the Government of the
United States of America the cession in question.
Who, then, can reasonably doubt that it can validly do so?
CONCLUSIONS.
We have established that the New Panama Canal Company was regu-
larly constituted; that it is entirely distinct from the Universal Com-
pany of the Interoceanic Canal of Panama, at present dissolved and
in liquidation; that a dissolved company, with us, continues to exist
for the requirements of its liquidation, but only for those require-
ments, that it is dead in all other respects, and can not reorganize
itself in the English or American sense of the word—and we have thus
responded to the third question. -
We have established also that the New Panama Canal Company and
the Universal Company of the Interoceanic Canal of Panama, the one
a commercial company, the other a civil company, are both essentially
60 PANAMA CANAL TITLE.
private companies, not having in any degree in France a national
character—and thus is answered the fifth question.
We have then established: -
1. The regularity and irrevocable nature of the contribution made
by the liquidator of the Universal Company to the new company and
definitively approved by the civil tribunal of the Seine according to the
provisions of the law of July 1, 1893, showing that in France no juris-
diction can weaken the binding force of a law regularly promulgated
(question No. 8).
2. That by this contribution the new company became from the
moment of its organization the exclusive owner of the concession, of
the works of the canal, and of all the other properties it is proposed
to cede to the Government of the United States. That this ownership
is, in its hands, absolute, that it carries with it the effects set forth in
article 544 of the Civil Code; that it is not burdened with any charge
other than that stipulated in the contract of contribution; that is to say,
to pay either the price agreed upon or that which may be regularly
substituted.
3. That neither the new company, nor the property contributed to it,
is bound in the way of éither personal or real indebtedness in favor of
the liquidation, by any charge other than the above mentioned; that,
especially, no debts or charges of the Universal Company in favor of
bondholders, stockholders, or any other creditors weigh upon it.
4. That the rights granted by the New Panama Canal Company to
the liquidation of the Universal Company, in return for the contribu-
tion received from it, do not paralyze, in its hands, the right of free
disposal which is the natural incident of the right of ownership.
We have shown, further and superabundantly, as to this last point:
(a) That by the provisions of the agreements entered into between it
and the liquidator of the Universal Company, acting in the plenitude of
its rights, the new company has become, in all respects, alone charged
with negotiating, with coming to an agreement, with closing with the
Government of the United States, without, moreover, these arrange-
ments having invalidated or altered in any way its original ownership.
(b) That the document setting forth these agreements, and also the
full and entire assent of the liquidator of the Universal Company to
the proposed cession and the modification of the price of his contribu-
tion, has received, in accordance with the provisions of articles 10
and 11 of the law of July 1, 1893, a definitive approval.
From this we derive with absolute certainty answers to questions
1, 2, 4, 6, and 7:
That the New Panama Canal Company acquired, on the day of its
organization, an absolute and certain title to the concessions, to the
works of the canal, and to all the other properties which it is proposed
to cede to the United States (question 1); •
That that title of ownership was not invalidated or altered by the
agreements of December, 1901, entered into between the new company
and the liquidator of the Universal Company, acting in the plenitude
of his rights and under the definitive sanction of the civil tribunal of
the Seine, according to the provisions of the law of July 1, 1893
(question 6); •
That the New Panama Canal Company has the power to proceed by
itself alone to make the proposed cession (question 2);
That by this cession the United States will obtain the full and entire
ownership of the properties ceded;
PANAMA CAN AL TITLE. 61
That this ownership will be transmitted to them free and clear of all
the personal debts and charges of the Universal Company of the Inter-
oceanic Canal, and especially of all the bonded indebtedness of the said
company and of the obligation imposed upon it by the law of June 8,
1888, debts and charges which do not directly affect properties, but
the person, and consequently not on one hand following the proper-
ties when alienated and when contributed to the new company, nor on
the other hand being imposed upon the latter as a condition of that
contribution, and therefore not resting in any way upon the new com-
pany personally or upon its properties (questions 4 and 7);
We have shown finally, having in view a special objection belong-
ing to the third question, that the fact that the proposed cession will
put an end to the company’s object and carry with it, from the nature
of things, the dissolution of the new company, can not paralyze the
right of disposal of the new company, this company having from the
law and its by-laws the right to dissolve itself by anticipation.
And we conclude, formally, in affirming the absolute regularity of
the cession when made by the council of administration of the New
Panama Canal Company (or, say, by its members, specially delegated
to that effect), and ratified by extraordinary general meeting, which
meeting should, moreover, the cession having become definitive and
the company’s object at an end, pronounce the dissolution of the com-
pany and name some liquidators intrusted with receiving and distribu-
ting the price of the cession thus sovereignly agreed to by the company.
Deliberated at Paris the 1st of September, 1902.
(Signed.) LEON DEVIN,
- JFormer Batonnier.
H. DU BUIT.
Former Bałonnier.
LIMBOURG,
HENRI THIñBLIN,
PAUL GONTARD.
We, the undersigned general counsel in America of the New Panama
Canal Company, having participated in the conferences and studies
leading to the foregoing opinion, do hereby express our full concur-
rence therein.
Dated Paris, September 1, 1902.
- SULLIVAN & CROMWELL,
General Counsel.
EXIIIIBIT 3.
LAWS OF 1867 AND 1898 CONCERNING COMPANIES.
A LAW concerning companies, enacted on the 24th day of July, 1867.
COMPANIES OF COMMANDITE PAR ACTIONS.
(Art. 1 providing that, before being definitely constituted, the whole
stock must be subscribed and a part paid in, etc.; modified by the law
of August 1, 1893.)
ART. 2. The shares or coupons of shares are negotiable after the
payment of one-quarter. -
(Art. 3, making the Original subscribers and transferees responsible
for the balance when shares sold before one-half paid in; modified by
the law of August 1, 1893.)
62 PANAMA CANAL TITLE.
ART. 4. When an associate makes a contribution which does not
consist in money, or stipulates for his benefit special advantages, the
first general meeting appraises the value of the contribution or ground
for the stipulated advantages. The association is not definitely con-
stituted except after the approval of the contribution or of the advan-
tages given, by another general meeting after a new call for one.
The second general meeting can not pronounce the approval of the
contribution or of the advantages, except after a report, which shall
be printed and held at the disposal of the shareholders five days at
least before that meeting. The votes are taken by a majority of the
shareholders present. The majority must include a quarter of the
shareholders and represent a fourth of the company’s money capital.
The associates who have made the contribution or stipulated for the
advantages aforesaid can not vote at such meeting. On failure of
approval the association remains without effect with regard to all the
parties. The approval constitutes no obstacle to a suit based upon
fraud or wrongdoing. The provisions of the present article concern-
ing the verification of the contribution, which does not consist in
money, are inapplicable to the case in which the company to which
the contribution is made is formed among those only who are the
owners of the contribution in undivided shares.
%. X. * *
d º
ART. 17. The shareholders, representing the twentieth, at least, of
the company capital, can, in their common interest, authorize at their
expense one or several mandataires or agents to sustain, as plaintiff or
defendant, an action against the managers or against the members of
the council of surveillance, and to represent them in that case in court
without prejudice to the individual right of action of each of the
shareholders.
II. AN ONYMOUS COMPANIES.
ART. 21. In future, anonymous associations may be formed without
authorization from the Government.
Whatever be the number of associates or members, such companies
henceforth may be formed by document drawn up without notarial
aid, and made in duplicate. -
They will be governed by the provisions of articles 29, 30, 32, 33,
34, and 36 of the Code of Commerce (these articles are not restrictive
but concern the naming of the company, the division of the capital
into shares, the limitation of responsibility to the amount of the capi-
tal, and the like), and by those set forth under the present heading.
ART. 22. Anonymous companies are directed or managed by one or
more attorneys or mandataries delegated for the purpose for a specified
period of time, and whose powers are revocable; they may or may
not receive a salary, but are chosen from among the associates of the
Company.
These attorneys or representatives may, in turn, select a manager
from their own number, or, if the associations's by-laws permit,
they may delegate their own powers to an attorney unconnected with
the company, but for whose acts they remain responsible to the said
company.
ART. 23. The company can not be formed if the number of members
or associates is below seven.
PANAMA CANAL TITLE. - 63
ART. 24. The provisions of articles 1, 2, 3, and 4 of the present act
are applicable to anonymous companies.
In the case of anonymous companies, the declaration or statement
required of the manager by article 1 must be made by the founders
of the concern. This declaration or statement is submitted, together
with the documents in support of it, to the first general meeting,
which ascertains its genuineness.
ART. 25. In any case, a general meeting is to be called, by care of
the promoters of the company, subsequently to the establishment of
the subscription of the capital stock and of the payment of one-fourth
of the money capital. This meeting appoints the first administrators;
it appoints likewise, for the first year, the commissaires or supervisors
provided for by article 32 hereinbelow.
These administrators can not be appointed for more than six years;
they may be reelected, save where the by-laws stipulate to the contrary.
They may be named or designated by the by-laws, with an express
provision that their appointment shall not be submitted to the general
meeting for approval. In this case they can not be named for more
than three years.
The minutes of the meeting note the acceptance of the administrators
and commissaires or supervisors present at the meeting.
The due formation and establishment of the company dates from
this acceptance aforesaid. -
ART. 26. The administrators must own a certain number of shares,
to be determined by the by-laws of the company.
These shares are answerable as a whole as a guarantee for all the
acts of the management, even for the exclusively personal acts of one
of the administrators. . -
They are in the name of the holders (not to bearer), untransferable,
and bear a stamped indication of their nontransferability, and are
deposited in the company treasury. w
ART. 27. A general meeting is held, at least once a year, at the time
appointed by the by-laws. The by-laws determine the number of
shares which one must hold, either as owner or as attorney, in order
to obtain admission to the meeting; also the number of votes falling to
each shareholder in consideration of the number of shares held by him.
However, in those general meetings which are called for the purpose
of verifying contributions, of naming the first administrators, and of
ascertaining the genuineness of the declaration or statement made by
the founders of the company in accordance with the second paragraph
of article 24 hereof, every shareholder may, regardless of the number
of shares held by him, take part in the deliberations and cast the
number of votes determined by the by-laws; provided, however, the
said number of votes does not exceed ten.
ART. 28. In all general meetings a majority of votes shall carry. A
roll-call sheet is kept, to be signed by all members present. It bears
the names and residences of the shareholders, as well as the number
of shares held by each one of them.
This list is certified to by the presiding board of the meeting, and
is deposited at the main office of the company. It must be shown to
anyone applying to see it. •
ART. 29. General meetings called for other purposes than those set
forth in the two articles following must be attended by a number of
shareholders representing at least one-fourth of the capital stock.
64 - PANAMA CAN AI. TITLE.
Should the general meeting not receive this attendance, a new meet-
ing is called according to the forms and within the space of time pre-
scribed by the by-laws. The deliberations and acts of this new meet-
ing will be valid, whatever may have been the proportion of capital
stock therein represented by the shareholders present.
ART. 30. Meetings called to deliberate on the verifying of contribu-
tions, on the appointment of the first administrators, on the genuine-
ness of the declaration or statement made by the founders, as required
by paragraph 2 of article 24 hereof, must be attended by a number of
shareholders representing at least one-half of the capital stock.
In computing the capital stock, one-half of which must be repre-
sented at a meeting for verifying a contribution, contributions which
are free from this verifying requirement are alone to be taken into
account. . º
Should the general meeting represent less in its attendance than one-
half of the capital stock, it can take only a temporary decision. In
this case, a new general meeting is called. :
The temporary decisions taken by the first meeting are made known
to the shareholders by publication at two distinct times, at an interval
of eight days from each other, one month at least in advance of the
new meeting, said publication to be made in some newspaper desig-
nated to receive legal notices. The decisions in question become final
when they are confirmed by the new meeting, provided the attendance
at said meeting represents one-fifth at least of the capital stock.
ART. 31. Meetings having to deliberate on amendments to the
by-laws, or on motion to prolong the existence of the company beyond
the time agreed on, or to dissolve said company before the date ap-
pointed for such dissolution, are deemed to be regularly and duly held,
and their decisions are considered valid only when the attendance at
such meetings represents at least one-half of the capital stock.
ART. 32. The annual general meeting appoints one or more commis-
saires, whether members or not of the company, whose duty it will
be to present to the general meeting of the following year a report on
the situation and condition of the society or company, on the balance
sheet, and on the accounts presented by the administrators.
The approval of the balance sheet and of the accounts aforesaid is
null and void if it has not been preceded by this report of the said
commissaires or supervisors. -
In case the general meeting has failed to name the commissaires
or supervisors aforesaid, or in case one or more of the said officials be
prevented or refuses to serve, their appointment or substitution is
effected by an order of the president of the tribunal of commerce
sitting at the legal residence of the company, on the request of any
party interested, and after due summoning of the administrators.
ART. 33. During the three months next preceding the date set by
the by-laws for the holding of the general meeting the commissaires
or supervisors have the power and authority to look over the books
and to examine into the operations and workings of the company as
often as they may deem it expedient for the good of the concern.
They may at any time in urgent cases summon a general meeting.
ART. 34. Every anonymous company must draw up, once in six
months, a summary of its debit and credit accounts.
This summary is kept at the disposal of the commissaires or super-
WISOI’S.
PANAMA CAN AL TITLE. 65
Moreover, an inventory is drawn up every year, as required by
article 9 of the code of commerce, giving a statement of the personal
and real property of the company, besides a report of all debts due to
and by the company.
The inventory, the balance sheet, and the profit and loss accounts
are placed at the disposal of the commissaires at least forty days
before the general meeting. They are presented to this meeting.
ART. 35. At least fifteen days before the general meeting is held
every shareholder may view the inventory and the list of shareholders
at the main office of the company, and may require a copy of the
balance sheet summing up the inventory, as well as a copy of the com-
missaires’ report.
ART. 36. Every year an assessment of one-twentieth at least is made
and levied on the net profits for the purpose of forming a reserve
fund. *
This assessment will cease to be obligatory whenever the reserve
fund shall have reached a sum equal to one-tenth of the capital stock.
ART. 37. In case the company should have sustained the loss of
three-fourths of its capital stock, the administrators must call a general
meeting of all the shareholders for the purpose of considering the
advisability of dissolving the company. -
Whatever may be the decision taken by the company it is announced
by publication.
Should the administrators fail to call the general meeting aforesaid,
or in a case where the said meeting can not be brought together in a
regular manner, any party interested may petition the tribunals for a
dissolution of the company. sº
ART. 38. Dissolution may be decreed on the request of any inter-
ested party where for more than a year the number of members has
been less than seven. -
ART. 39. Article 17 is applicable to anonymous companies.
ART. 40. Unless they be authorized by the general. meeting, the
administrators are prohibited from either taking or preserving an
interest, whether direct or indirect, in an undertaking or in a contract
made with the company or in its behalf.
Every year a report is presented to the general meeting rendering
special account of the manner in which enterprises or contracts
authorized by it, in accordance with the terms of the preceding para-
graph, have been carried out or executed.
ART. 41. Any anonymous company, in the formation of which due
observance has not been had of the requirements set forth by articles
22, 23, 24, and 25 herein above, is null and void with regard to the
interested parties. -
ART. 42. When, in accordance with the terms of the preceding
article, the company or its acts and deliberations have been annulled,
the founders who were the cause of the nullity and the administrators
who were in office when the nullity was incurred are jointly responsi-
ble to third parties, without prejudice to the rights of shareholders.
The same joint responsibility may be decreed against those members
whose contributions or special advantages have not been verified and
approved, as prescribed by article 24, and in compliance there with.
ART. 43. The extent and effects of the commissaires’ responsibility
#. the company depend on the terms of the instrument appointing
them.
8751–02——5
66 º PANAMA CAN AL TITLE.
ART. 44. The administrators are responsible in accordance with law,
individually or jointly, as the case may be, to the company or to third
parties, for breach of the provisions of the present act, and for faults
committed by them in their management, such, for instance, as the
distributing or allowing the distribution of fictitious dividends, with-
Out Opposing the same. -
ART. 45. So far as they concern anonymous companies, the provi-
sions of articles 13, 14, 15, and 16 of the present act apply without dis-
tinction to those companies which are actually in existence and to such
as will be formed under the said present act. Such administrators as
may have brought about fictitious dividends in the absence of an inven-
tory, or by means of false inventories, will suffer the penalty provided
for such cases by No. 3 of article 15 against the managers of mixed
joint stock companies. [Articles 13, 14, 15, and 16 provided penalties
merely, especially for violations of articles 1, 2, and 3, and frauds in
connection with subscriptions, payments, etc.] -
The provisions of the last three paragraphs of article 10 are likewise.
applicable in so far as they concern anonymous companies. [Article
10 provides for a council of surveillance to report irregularities, etc.]
ART. 46. Anonymous companies now existing shall continue, so long
as they endure, to be governed by the provisions to which they are
subject. -
On obtaining the authorization of the Government, and observing
the forms prescribed for the modification of their by-laws, they may
transform themselves into anonymous companies within the terms of
the present act.
ART. 47. Companies having a limited liability may transform them-
selves into anonymous companies within the terms of the present act
by observing the conditions stipulated for the modification of their
by-laws.
Articles 31, 37, and 40 of the code of commerce, and the law of
May 23, 1863, concerning companies with limited responsibility, are
hereby repealed.
III. SPECIAL REGULATIONS FOR COMPANIES WITH VARIABLE CAPITAL.
ART. 48. The by-laws of any company may provide for an increase
of the capital stock, either by successive payments made by the mem-
bers or by the admission of new members, and for a decrease of the
capital stock by a withdrawal, either total or partial, of the contribu-
tions made. -
Companies whose by-laws shall contain the said provisions shall be
governed, in addition to the general regulations governing them in
view of their nature, by the provisions of the following articles:
ART. 49. The by-laws governing the company shall not provide for
a capital stock in excess of the sum of two hundred thousand francs.
This may be increased from year to year by the general meeting,
though no one increase thus decided upon shall exceed the sum of two
hundred thousand francs.
ART. 50. The shares or fractions of shares shall be in the name of
the holder (not to bearer), even after they may have been fully paid.
They shall be negotiable only after the final formation of the
company.
Such negotiation can be effected only by a transfer on the books of
the company, and the by-laws may vest either in the council of admin-
PANAMA CAN AI, TITLE, 67
istration or in the general meeting the power of opposing such transfer.
(See law of August 1, 1893, article 6.)
ART. 51. The by-laws shall fix a sum or amount below which it shall
be unlawful to reduce the capital stock by withdrawal of contributions
as provided by article 48.
This sum or amount shall not be less than equal to one-tenth of the
capital stock. - - -
The company shall be deemed finally formed and constituted only
after the payment of one-tenth at least of the capital stock.
ART. 52. Any associate may withdraw from the company when he
sees fit, save where there is an agreement to the contrary and save
where this would entail a breach of paragraph first of the preceding
article. -
It may be stipulated that the general meeting shall have power to
decide, by the majority required for a modification of the by-laws,
upon the striking off from the list of members or associates one or
more of the names thereon. - -
An associate who ceases to belong to the company, whether of his
own accord or as the result of the decision of the general meeting,
shall remain responsible to the associates and to third parties for all
the obligations existing at the time of his withdrawal, during a period
of five years occurring next after said withdrawal.
ART. 53. Whatever be the form of the company, its administrators
shall be the proper parties to represent it before the courts. -
ART. 54. The company shall suffer no dissolution on account of the
death, retirement, interdiction, bankruptcy, or failure (déconfiture) of
one of the associates; it will continue in full force between, and as
to, the other associates. * -
IV. RULES TOUCHING THE PUBLICATION OF AFTICLES OF AGREEMENT.
ART. 55. Within the space of one month from the formation of any
commercial company or association, there shall be deposited in the
office of the peace justice court, and in that of the tribunal of com-
merce within whose jurisdiction the company is formed a duplicate
of the articles of agreement constituting the basis of the comp : ny, if
these articles are unauthenticated, or a certified copy of the same if
they have been acknowledged before a notary. { -
In the case of mixed joint-stock companies (en commandité) and of
anonymous companies, there shall be appended to the said articles of
agreement (1) a copy of the notarial document showing the subscrip-
tion of the capital stock and the one-fourth payment prescribed by
the present act; (2) a certified copy of the decisions adopted by the
general meeting in the cases provided for by articles 4 and 24.
Moreover, there must be joined to the articles of agreement, when
the company is an anonymous one, a duly certified and authenticated
list of the subscribers, giving the name, surname, occupation, residence
of each one, as well as the number of shares held by each associate.
ART. 56. A copy of the articles of agreement and of the appended
documents is published, within the space of one month aforesaid, in
one of the newspaper's designated for legal notices. g
This publication in said newspaper shall be proved by a copy of the
paper in question, duly certified to by the printer, authenticated by
the mayor, and recorded within three months from the date thereof.
A failure to observe the prescriptions of the preceding article and
68 PANAMA CANAL TITLE.
present article will nullify the entire proceedings as to the associates
of the company; but no breach of any of said prescriptions may be
pleaded by the members as against third parties.
ART. 57. The copy above-mentioned must contain also the names
of associates other than shareholders; the official name adopted by the
company and the locality of its legal residence; the names of such
associates as are authorized to manage, direct, and sign for the com-
pany; the amount of the capital stock and the amount of the values
furnished or to be furnished by the shareholders; the date of the
launching of the company and that of its intended dissolution, as well
as the time at which the deposits of documents aforesaid were made
in the offices of the peace justice court and of the tribunal of commerce.
ART. 58. The copy must state whether the company is one under a
collective name, or en commandite simple, en commandite by shares,
or anonymous, or one with variable capital.
If the company is anonymous, the copy must state the sum of capital
stock paid in species and the sum paid otherwise than in specie,
together with the amount of pro rata assessment which must be levied
on the profits in order to constitute the reserve fund of the company.
Finally, if the company is one with variable capital stock, the copy
must indicate the sum or amount below which the said capital stock
can not be lawfully reduced.
ART. 59. In case the company have several establishments doing
business in various districts, the deposit prescribed by article 55 and
the publication required by article 56 must be made in each district
where such establishments exist.
In such cities as are divided into several districts it will be sufficient
to make said deposit in the office of the peace justice court within
whose jurisdiction or district lies the chief of these establishments.
ART. 60. The copy of the acts and documents deposited is to be
signed, in the case of public official documents, by the notary; in
the case of documents under private signature merely by the associates
in collective name, by the managers of associations en commandite, or
mixed joint stock companies, and by the administrators in the case of
anonymous companies.
ART. 61. The formalities prescribed and penalties imposed by arti-
cles 55 and 56 apply to:
All acts and resolutions looking to the amendment of the company’s
by-laws, to the prolongation of the company’s existence beyond the
period of time originally agreed upon and fixed, to dissolution before
the expiration of the said period of time, and to the manner of winding
up the affairs of the concern, to any change in the official name of the
company or to any change among, or withdrawal of, members.
Such decisions as are arrived at in the cases provided for by articles
19, 37, 46, 47, and 49, herein above set forth, are also governed by the
requirements of articles 55 and 56. (Art. 19 concerns associations en
commandite.) -
ART. 62. The following documents are not subject to the deposit
and publication requirements aforesaid: Documents setting forth an
increase or decrease of the capital stock, made in accordance with the
terms of article 48 herein above, or the withdrawal of members other
than managers or administrators, such withdrawal taking place within
the terms of article 52 hereof.
ART. 63. In the case of mixed joint-stock companies or of anony-
mous companies, any person may demand a view of the documents
PANAMA CAN AL TITLE. 69
deposited in the office of the peace justice court and of the tribunal
of commerce, and may even demand, at his own cost, a certified copy
of the said documents, from the court clerk or from the notary in
charge of the same.
Likewise any person may, for a sum not exceeding one franc,
demand at the legal residence of the company a certified copy of its
by-laws.
Finally, a copy of the deposited documents must be publicly exposed
in the offices of the company.
ART. 64. In all acts or documents, invoices, notices, publications,
etc., whether printed or /o/ographic, emanating from anonymous com-
panies or from mixed joint-stock companies, the official name of the
concern must always be followed by these words, written out in full
and legibly: “Anonymous company,” or “Maced joint-stock company,”
together with the amount of the capital stock. -
In case the company has availed itself of the right granted it by
article 48 hereof, this must be shown by the addition of the following
words, “with variable capital stock.”
Any breach of the preceding requirements is punished with a pen-
alty or fine of not less than fifty nor more than one thousand francs.
ART. 65. Articles 42, 43, 44, 45, and 46 of the Code of Commerce
are hereby repealed.
LAW OF AUGUST 1, 1893, AMENDING LAW OF JULY 24, 1867, CONCERN-
ING ASSOCIATIONS HAVING SPHARES OF STOCK. -
ARTICLE 1. Paragraphs 1 and 2 of article 1 of the law of July 24,
1867, are modified as follows: -
Paragraph 1:
“Associations of commandite can not divide their capital into shares.
or parts of shares of less than 25 francs when the capital does not
exceed 200,000 francs, of less than 100 francs when the capital exceeds
200,000 francs.”
Paragraph 2:
“They can not be definitively constituted except after subscription
of the total capital and the payment in cash by each shareholder, of
the amount of the shares or parts of shares subscribed by him, when
they do not exceed 25 francs, and of the quarter at least of the shares
when they are of 100 francs and over.”
2. Article 3 is altered thus: -
“The shares are in shareholders’ names [i. e., not to bearer] until
fully paid up (entière liberation). The shares representing contribu-
tions shall be free (considered paid up) from the time of the definitive
organization. These shares can not be withdrawn, and are not nego-
tiable before two years after the definitive organization of the associa-
tion. The owners, intermediate transferees, and the subscribers are
bound in solido for the amount of the shares. Every subscriber or
shareholder who has transferred his share, ceases, two years after the
transfer, to be responsible for the payments not called for.”
3. To article 8 are added the following provisions:
“The suit to have declared the nullity of the association or of acts
and votes subsequent to its constitution, is inadmissible when, before
suit brought, the cause of nullity has ceased to exist. The action to
enforce responsibility for the facts from which the nullity resulted,
70 PANAM A CAN AL TITLE.
ceases also to be admissible when, before suit brought, the cause of
nullity ceases, and if, besides, three years have elapsed since the
date when the nullity arose. If, to put an end to the nullity, a general
meeting should be called, the action of nullity will not be admissible
after the date of the regular calling of that meeting. Actions of nul-
lity against acts constituting the association are prescribed in six years.
This prescription can not be made use of before the expiration of the
ten years following the promulgation of the present law.”
4. To paragraph 1 of article 27 is added the following:
“Owners of shares less than the number determined to qualify for
admission to meetings can unite to make up the proper number and
be represented by one among them.” -
5. In paragraph 1 of article 42, for the words “responsible in solido
to third persons without prejudice to the rights of shareholders” is
substituted the following: “responsible in solido to third persons and
to the shareholders for the damage resulting from that annulment.”
To the same article is added the following paragraph:
“The action for nullity and that upon responsibility resulting from
it are subjected to the provisions of article 8 above.” *
6. To the law are added the following provisions:
%
“DIVERS PROVISIONS.
“ART. 68. Whatever ºray be their objects, associations of commandiffe
or (ºnonymous associations w/7ch shall be constituted ºn the manner gºven
Žn the Code of Commerce or in the present ſaw are subjected to the laws
and customs of commerče. - - -
“ART. 69. Hypothecation (mortgage) can be consented to in the
name of every commercial association by virtue of the powers result-
ing from its act of formation, even when that is a now notarial docu-
ment, or from votes or authorizations taken or made in the manner
prescribed by the said act. The document of hypothecation shall be
authenticated as provided in 2127 of the Civil Code.
“ART. 70. In cases in which associations have continued to pay the
interest or dividends of stock, bonds, or other certificates of obligation
by Way of a drawing by lot, they can not repeat these sums when the
certificate is presented for reimbursement.
“TRANSITORY PROVISIONS.”
EXHIBIT 4.
JUDGMENT OF MARCH 19, 1902 (CIVIL TRIBUNAL OF THE SFINE),
APPROVING LIQUIDATOR'S CONSENT TO SALE.
>{ ºt * * e w e º V- - e -
GAUTRON, IN mºrrºw CAPACITY, l First division. First section.
ex f.p., - J - *
NEW PANAMA CANAL COMPANY. | No. 4.
REPUBLIC OF FRANCE, In the name of the people of France:
The civil tribunal of first instance of the department of the Seine,
sitting at the palace of justice, renders in open and public session of
its first division, the judgment the tenor of which is as follows:
Hearing of Wednesday, March 19, 1902.
PANAMA CAN AL TITL H}. - 71
The COURT, In view of the request presented by Gautron, in his
official capacity of liquidator for the Universal Interoceanic Canal Com-
pany of Panama, said request being signed by De Bieville, his solicitor
and worded as follows:
To the honorable president and justices of the first division of the civil tribunal of the depart-
ment of the Seine: - --,
The petitioner, M. Pierre Gautron, liquidator of the Universal Interoceanic Pan-
ama Canal Company, residing at the office of the liquidation, Chaussée d’Antin
street, No. 42, having de Bieville as solicitor, has the honor to state:
That negotiations are pending between the New Panama Canal Company and the
United States Government for the transfer to said Government of the whole of the
rights and property owned by the New Panama Canal Company on the Isthmus of
Panama as well as its maps and records in Paris.
That these negotiations have resulted in an offer made by the new company to
the United States of America for the transfer of said property in return for the sum
of $40,000,000 (i. e., about 205,000,000 francs), said offer to remain in force until
March 8, 1903.
That the liquidator of the Universal Interoceanic Panama Canal Company has
been informed of the negotiations and the offer above referred to.
That certain differences having arisen between the new company and the petitioner
in his capacity of liquidator, M. Gautron, in his said capacity, has been authorized
by decree of the civil tribunal of the Seine, dated August 2, 1901, to compromise
. the New Panama Canal Company upon all legal questions which might arise
relating: º
First. To the determination of the price and conditions to be proposed to the
eventual purchaser of the concession and the canal works and all the assets of the
new company. --
Second. To the division between the new company and the liquidation of the
proceeds of the sale, in case that sale be effected.
That the arbitrators have decided:
First. That the liquidator of the Universal Interoceanic Canal Company of Panama
should, before the final division, take out of the price of the sale of the enterprise to
the United States Government, the sum of 20,000,000 francs.
Second. That after this sum has been taken out, the New Panama Canal Company
should, for its part, take out the sum of 5,000,000 francs.
Third. That the balance of the said sum should be divided between the parties
entitled in the proportion of 60 per cent thereof for the liquidator of the Universal
Interoceanic Canal Company of Panama and of 40 per cent thereof for the New
Panama Canal Company. g
That the liquidator, as well as M. Lemarquis, the legal representative of the bond-
holders, has received a certain number of notifications and oppositions to the sale
emanating from opponents to the proposed transfer to the United States Government.
That at this time the new company (in view of the position assumed by the oppo-
nents of the Panama Canal enterprise, and of the objections raised by them), requests
the liquidator to petition for the approval by the court under the provision of the law
dated July 1, 1893, and so far as the liquidation is concerned, of the agreement
entered into between the new company and the liquidator for the sale to the Gov-
ernment of the United States of America, of the whole of the property of the cor-
poration on the Isthmus, as well as the maps and records in Paris, for the sum of
$40,000,000 (about 205,000,000 francs), and subject to modifications to be procured from
the Government of Colombia as to articles 21 and 22 of the concessionary contract.
That the liquidation of the old Panama Canal Company is therefore directly inter-
ested in the proposed transfer, since the larger portion of the eventual proceeds of
the sale will be turned over to it.
That under article 10 of the act of July 1, 1893, all acts tending to alienate any
assets of the old company, all contracts entailing a transfer or contribution of the
whole or a part of the assets of the old concern, emanating from the liquidator of the
Universal InterOceanic Canal Company of Panama, shall be subject to the approval
of the civil tribunal of the Seine, which shall, upon the report of one of the justices,
pass on the question in open court. -
Now, therefore, your said petitioner in his official capacity respectfully requests
and begs that it please the honorable president and justices of this court to approve
So far as the liquidation of the Universal Interoceanic Canal Company of Panama is
concerned, the offer made by the New Panama Canal Company with the assent of
the liquidator, to the Government of the United States of America, to transfer to said
Government all rights and property owned by the new company on the Isthmus of
Panama as well as its maps and records in Paris for the sum of $40,000,000 (i. e.,
72 PANAMA CAN AL TITLE.
about 205,000,000 francs), said offer to remain in force until March 8, 1903, and the
eventual proceeds of the sale to be divided according to the award made by the arbi-
trators, subject, however, to the modification to be secured from the Government of
the Republic of Colombia, as to articles 21 and 22 of the concessionary contract.
And to order that their decree shall be published according to act of July 1, 1893.
Under all reservations; and it will be justice.
(Signed) . DE. BIEVILLE.
In view of the documents exhibited, namely:
The order issued by the president of the court, dated March 18,
1902, appended to said petition, directing “that the petition be com-
municated to the attorney for the Republic, and that M. Le Berquier,
justice, is hereby appointed to make a report. Done at the palace Öf
justice, Paris, March 18, 1902, and signed Ditte.”
The conclusions of the attorney for the Republic likewise appended
to said petition, which are as follows: “The attorney for the Repub-
lic does not object. Rendered in the attorney’s office March 18, 1902.
Signed Pezous.”
Articles 10 and 11 of the act of July 1, 1893. .
And having heard Justice Le Berquier in his report and Mr. Rome,
deputy attorney for the Republic in his conclusions;
And after having deliberated in conformity with the law, judging
in first resort;
Whereas, under article 10, of the act of July 1, 1893, all acts of
realization of assets, all contracts entailing a transfer or contribution
of the whole or of part of the assets of the concern, emanating from
the liquidator of the Universal Interoceanic Canal Company shall be
subject to the approval by the civil tribunal of the Seine;
Whereas Gautron, in his capacity of liquidator of the Universal
Panama Canal Company, prays that the court confirm, as far as the
liquidation is concerned, the offer made by the New Panama Canal
Company, with his own assent to the United States Government to
transfer to the latter all its rights and property as well as its maps
and records in Paris, for the sum of $40,000,000;
Whereas it appears from the documents in the case that such request
should be granted;
For these reasons: -
Confirms, so far as the liquidation of the Universal InterOceanic
Panama Canal Company is concerned, the offer made by the New Pan-
ama Canal Company, with the assent of the liquidator to the United
States Government, to transfer to said Government the whole of the
property and rights owned by the New Panama Canal Company on
the Isthmus of Panama, as well as its maps and records in Paris, for
the sum of $40,000,000 (i. e., about 205,000,000 francs), said offer to
remain in force until March 4, 1903, the actual proceeds of the sale to
be divided according to the award made by the arbitrators, subject to
the modification to be secured from the Government of the Republic
of Colombia as to articles 21 and 22 of the concessionary contract.
Orders this decree to be published according to the act of July 1,
1893. \ .
(Signed) . DITTE and BARUſ.
Done and decreed by Messrs. Ditte, president; Monier, vice-presi-
dent; Le Berquier, judge; in the presence of Messrs. Chauvin and
Planchenault, special judges; Rome, substitute for the attorney for
the Republic, assisted by Barué, clerk, on Wednesday, March 19, 1902.
In consequence of the above, the President of the Republic of
PANAMA CAN AI, TITLE. 73
France instructs and directs all sheriffs, when requested, to enforce
the above decree, attorneys-general and the attorneys for the Republic
in the courts of first instance to give them assistance, and all com-
manders and officers of the public force to give them the aid of arms
when legally requested.
In witness whereof the minute of this decree was signed by the
president and the clerk.
Recorded at Paris April 2, 1902, folio 86, division 11. Received
9 francs 38 centimes. -
(Signed) BARTOSZEWSKI.
By the court:
(Signed) FIOQUET.
EXHIBIT 5.
JUDGMENT OF JULY 8, 1902 (CIVIL TRIBUNAL OF THE SEINE), DECIDING
AGAINST DONNADIEU, THE BONDHOLDER, ON TIERCE OPPOSITION.
[No. 1. Taken from the minutes of the clerk's office of the civil tribunal of first instance of the
department of the Seine, sitting in the palace of justice at Paris.]
GAUTRON
(Q)6/"S7/S First chamber, first section. 3d July, 1902.
DONNADIEU.
The civil tribunal of first instance of the department of the Seine,
sitting in the palace of justice at Paris, has rendered in public session
of the first chamber of that tribunal the following judgment:
Session of Thursday, the 3d of July, 1902. -
Between M. Gautron, liquidator of the Universal Company of the
Interoceanic Canal of Panama, residing at the headquarters of the said
company in liquidation, 42 rue Chaussée d’Antin, defendant in tierce
opposition, appearing, submitting brief and arguing by Me. Thiéblin,
advocate, assisted by Me. de Bieville, solicitor, on one part,
And, first, the New Panama Company, an anonymous company,
having its headquarters at Paris, rue Louis le Grand No. 7, acting
through its president and the members of its council of administra-
tion, plaintiff, appearing and filing a brief by Me. Dubourg, solicitor,
Second. M. Emmanuel Donnadieu, proprietor, residing at Chateau
de Blomac (Aude), fiers opposant, defendant, appearing and submitting:
brief by Me. Caillet, solicitor, º
Third. M. Lemarquis, residing at Paris, 3 rue Louis le Grand, act-
ing in his own name and as mandataire of the bondholders of the com-
pany of the InterOceanic Canal of Panama, intervenor, appearing and
submitting brief by Me. Charneau, solicitor, on the other part; without
their said present characters being able to prejudice in any manner
the rights and respective interests of the parties.
POINTS OF FACT.
1. Terce opposition.— M. Donnadieu claiming that he was a creditor
of the company in liquidation of the Interoceanic Canal of Panama, for
a principal sum of 135,624 francs 99 centimes, and the interest on said
sum, by virtue of a judgment of this tribunal of January 25, 1893,
confirmed by a decree of the court of Paris of June 29, 1893, both
recorded; that the liquidator of the Panama Canal Company had con-
74 PANAMA CAN AI, TITLE.
tributed to an anonymous company called the New Panama Canal
Company, in June, 1894, by agreements approved by judgments
recorded here June 29 and August 8, 1894, the concession of the canal,
the works executed on the Isthmus, the materieſ, the plans and draw-
ings, the rights of the company in liquidation as to the Panama Rail-
road, etc., for the price of 60 per cent of the profits to arise from
carrying on the canal; that the new company had, in January, 1902,
made an offer to sell to the Government of the United States of Amer-
ica for $40,000,000, the totality of its properties and rights on the
Isthmus and its plans and archives, that is to say, what the liquidator
had contributed; that M. Gautron as liquidator had given his consent
to that offer and had asked the approval of it by the tribunal, which
had been accorded by judgment of March 19, 1902, in conformity with
the law of July 1, 1893; that according to the provisions of article 11
of the said law M. Donnadieu had a right to attack by tierce opposi-
tion that judgment of approval and that he intended to make use by
the present proceeding of that right; that in effect there were sub-
mitted to the approval of the tribunal by article 10 of the law of July
1, 1893, all acts in realization of assets, all contracts carrying a cession
or contribution of the whole or part of the company’s assets, pro-
ceeding from the liquidator of the Universal Company of the Inter-
Oceanic Canal of Panama; that the offer made to the Government
of the United States did not emanate from the liquidator of the Uni-
versal Company, but from the new company; that it did not carry and
will not carry a cession of the assets of the Universal Company in
liquidation, since the properties offered had already been ceded by the
liquidation of [toº] the new company by the approved contribution
made to it by the liquidation in June, 1894; that in considering as a
cession of part of the assets of the company in liquidation the consent
given by the liquidator to the offer made by the new company, an
assent which constituted undoubtedly the abandonment of important
rights, the approval thereof could only be asked and obtained after
agreement made between the new company and the liquidator to regu-
late the conditions of that cession and fix the price of the compensation
for the rights ceded; that such an agreement, which would itself be a
subject for approval, did not appear to exist; that, in any case, it was
not such an agreement which had been approved; that such an agree-
ment was not examined at the time of the judgment of March 19, 1902,
and could not be, as was intended by the law of July 1, 1893 (Art. II),
discussed before the tribunal by the creditors of the liquidation;
that, consequently, there was no subject-matter for approval and
the judgment of 19 March, 1902, should be set aside; that, on the
merits, as an additional point, the tribunal should not have
approved the offer of the cession which the new company was without
power to make; that, indeed, the new company, an anonymous com-
pany and a moral person had life and power only within the limits of
its by-laws and had not the power to carry on operations not comprised
within the objects of the company; that article 20 of the by-laws of
the new company limits the objects of the company to the construction
and carrying on of the canal and its accessories; that consequently the
company had not the right to sell what it was its business to carry on.
to perform an act which not only was outside of its object, but even
rendered it unable to carry out that object; that the assent of the
liquidator could not give it power in this respect; that the power of
PANAMA CANAL TITLE. - 75
the company depended on its by-laws, and that the company could not
alter them, and in that way acquire the power which it lacked; the
general law and the company compact itself (art. 60) forbade the altera-
tion of its object in its essence, a fortiori the suppression of it; con-
sidering also, and as an additional point, if the company had the power,
it had not the right to sell the canal; that, indeed, this canal and its
accessories had been contributed to it by the liquidation in exchange,
especially, for the granting to it of 60 per cent of the profits to arise
from carrying on the canal; that the new company could not, conse-
quently, suppress the remuneration promised by it to the contributor
by suppressing the source of the benefits to be divided and by replac-
ing them with the price of the sale, over which the by-laws did not
give any right to the contributor. - -
Considering that the disposing part of the judgment of the 19th of
March, 1902, in saying that the ultimate price of the cession should be
divided conformably to the decision of the arbitrators, left it to be
understood that this question had been submitted to a tribunal of arbi-
tration, but that there was in this a violation of article 3 of the law of
the 1st of July, 1893, which provides that all acts proceeding from the
liquidator should be placed before the civil tribunal of the Seine, and
that the tribunal ought not indirectly to sanction by its judgment this
violation of law. -
Considering that the plaintiff was a creditor of the liquidation of the
Universal Company, which had contributed the canal to the new com-
pany; that he was interested in maintaining the conditions of that
contribution, which was made in his interest and had been made in
conformity with the law of July 1, 1893, passed to protect him; that,
after a judgment of approval designed to protect his rights, he was,
accordingly, justified in requiring respect for the by-laws, which were
the guarantee of third persons, as well as the rule for the associates,
the execution of the contract of contribution and obedience to the
law; that he had then a right to oppose the approval of a combination
which violated at once the by-laws, the contract, and the law.
Considering, on the other hand, that it is proper to remark that the
new company after having proclaimed and caused to be established by
the most eminent engineers the possibility of constructing the canal
and of obtaining profit from it, had never made the least effort to
accomplish its work; that it appeared never to have thought of any-
thing but to assure to its stockholders the reimbursement of their
shares, and the sale to the United States was not undertaken by it except
because it wished to procure, not only that reimbursement, but also
very important profits; that such a result would not be reached except
by a sacrifice of the creditors of the liquidation reduced to the receipt
of an insignificant dividend for the benefit of financiers who, it should
not be forgotten, had paid up the shares of the new company which
they held, not with their own funds, but with those which they had
improperly received from the new (?) company and which the courts had
condemned them to reimburse; that this enrichment of themselves to
the detriment of the liquidation would, besides, be obtained at the
price of the abandonment of an undertaking rightly called national;
that thus, then, and from all points of view, there should not have
been an approval.
Done by document of Thiellement, bailiff at Paris, dated April 23,
1902, to make summons on M. Gautron, as liquidator above mentioned,
d
76 PANAMA CAN AI, TITLE.
to appear within eighteen full days, as by law allowed, and through
the aid of the solicitor constituted duly before the president and judges
composing the civil tribunal of the Seine sitting at the palace of justice
of Paris at 11 o’clock in the morning, in order, for the reasons above
IV (? I) . - -
[Asks of the tribunal] to have M. Donnadieu admitted as tiers
opposant to the judgment of the 19th of March, 1902, to declare that
the offer made by the Universal Company (sic) to the Government of
the United States of America was not susceptible of approval accord-
ing to the provisions of article 10 of the law of July 1, 1902; as an
additional point on the merits, to declare that the ultimate cession
of the canal by the new company was beyond the powers of that com-
pany; to declare that the cession offered violated the by-laws of the
new company and the rights which belonged to the liquidation of
the Universal Company in consequence of its contribution; to declare
that the liquidator had not been and was not able to carry a matter
tending to cause his rights to be respected before any other tribunal
than the civil tribunal of the Seine, especially before the tribunal of
arbitration; to declare that the cession offered was contrary to the
rights and the interests of the creditors of the liquidation of the Uni-
versal Company of the Interoceanic Canal of Panama. Consequently,
to declare, as a matter of law, and on the merits, that there should not
have been the approval, asked for by Gautron as liquidator so far
as concerns the liquidation of the Universal Company, of the offer
made by the new Panama Canal Company, with his assent, to the Gov-
ernment of the United States of America, of all the property and
rights on the Isthmus of Panama, together with the plans and archives
of Paris for $40,000,000. Consequently, to set aside purely and sim-
ply the judgment of March 19, 1902, to which the tierce opposition
was made; and to condemn M. Gautron as liquidator in the costs.
Upon this summons, which contained the constitution of M. Caillet,
solicitor for M. Donnadieu, M. de Biéville was constituted solicitor
for M. Gautron as liquidator by act done at the palace on the 28th of
April, 1902. -
II. The demand of release from the prohibitions against the sale of
the Panama Canal. -
The New Panama Canal Company claims that according to the act
done out of court, through Thiellement, bailiff of Paris, dated the 18th of
February, 1902, appearing by copy, M. Donnadieu had made prohibition
to the plaintiff company to proceed with the sale of the canal of Panama,
of the concession, and of its accessories, with the declaration that, in
default of the said company’s acceding to this prohibition, he would
proceed by all legal means as well against it as against the proper public
authorities of the United States of North America, to have established
adjudged and sanctioned the invalidity of the proposed sale; that, on
the other hand, according to another act done out of the court through
the instrumentality of the same bailiff, dated February 2, 1902, served
upon the ambassador of the United States as representative of the
Government of the United States of North America, as appears from
the notification made to the plaintiff by copy of the said document,
through Thiellement, bailiff, dated the 26th of February, 1902,
appearing by copy, the said M. Donnadieu declared that he opposed
the cession of the canal of Panama, declaring that if, notwithstanding
his protestation, agreements concerning that cession were concluded,
PANAMA CANAL TITLE. 77
he would contend for their invalidity, and would proceed before all
competent jurisdictions to have such invalidity adjudged and sanctioned;
that, moreover, by the terms of the aforesaid notification made to the
plaintiff company by document of Thiellement, bailiff of Paris, of the
26th of February, 1902, M. Donnadieu declared that he summoned
the administrators of the New Panama Canal Company to bring to the
knowledge of the stockholders of the said company in the general
meeting convoked to deliberate on the project of the cession of the
canal to the United States, his protestation and the document above
mentioned, served at his request by M. Thiellement, bailiff of Paris,
on the 18th of February, 1902; that by the notification addressed to
the ambassador of the United States, M. Donnadieu caused, without
right, grave prejudice to the new company by paralyzing the ultimate
exercise of an indisputable right; that the reasons given by M. Donna-
dieu do not bear examination; in the first place, M. Donnadieu, in his
pretended character as creditor of the liquidation of the Universal Com-
pany of the Panama Canal, could not allege the existence of any legal
tie between him and the New Panama Canal Company, which is not his
debtor, of which he is not a bondholder; that the defendant has not,
then, any character authorizing him to invoke either the by-laws of
the New Panama Canal Company under the general principles of law in
order to interfere in the carrying on of the company and to interpose
himself between the plaintiff company and third persons with whom it
may have occasion to carry on business, nor any character authorizing
him to invoke the agreement which took place between the new company
about to be formed and the liquidation of the Universal Company based
upon the indebtedness of the latter to him, except on condition of estab-
lishing that the liquidation was not (sic) injuring the rights derived by
it from this agreement; that the contrary was demonstrated by the agree-
ment between the two companies, which agreement was sanctioned
by a judgment rendered in the chamberof the council of the civil tribunal
of the Seine the 19th of March, 1902, duly recorded, binding on him in
conformity with the law of July 1, 1893; considering, moroever, and
as an additional point on the merits, that the by-laws of a company,
in the part which determines the object of the company, are not and
can not be in contradiction to a decision of the general meeting which
puts an end by alienation to that object; that by such a decision the
general meeting did not transgress or modify the company compact;
that, on the other hand, the contributor of property in kind to a com-
pany about to be formed, the author of stipulations relative to that
contribution, remained the sole judge of the consequences which the
alienation by the company of the property contributed might carry
with it, as affecting the original stipulations; that, in the present case,
the consent of the liquidator of the Universal Company having been
obtained and approved by judgment, which gave him power as has
been said above, no one of those interested in whatever way in the said
liquidation could be admitted to criticise or contradict that assent,
except under the conditions and within the time and according to the
forms provided by the law of the 1st of July, 1893; that M. Donnadieu,
in contempt of those provisions, had committed an act of unjustifiable
aggression against the new company by the notification of the 26th of
February, 1902, to the ambassador of the United States; that this
proceeding was purely vexatious; that it had caused and would
cause hereafter a very grave prejudice to the company; that this
78 - - PANAMA CAN AI, TITLE.
aggression should be severely condemned and reparation ordered
commensurate with the injury. Done by document of Viequet,
bailiff at Paris, dated the 25th of April, 1902, duly recorded, notify-
ing to M. Emanuel Donnadieu, proprietor above named, and summon-
ing him to appear within eight full days and the additional time
allowed for distance, and by the instrumentality of the solicitor con-
stituted before the president and the judges composing the civil tribu-
nal of the Seine sitting in the palace of justice at Paris, at 11 o'clock
of the morning, for the reasons above stated [asks the tribunal]:
to have it declared and adjudged that M. Donnadieu was without
character authorizing him to serve the Government of the United
States in the person of its ambassador at Paris with the document of
the 26th of February, 1902; to have it declared and adjudged in addi-
tion that M. Donnadieu was without just grounds for the said act; to
have a release, purely and simply, as far as may be necessary, from
the prohibitions contained in the said document as well as in two other
documents served upon the New Panama Canal Company, one dated
the 18th and the other the 26th of February, 1902; to declare them
null and void and of no effect; to have M. Donnadieu condemned to
make reparation for the injury done, upon a statement of the damages
to be hereafter furnished; to have him condemned to the payment of
10,000 francs provisionally; to have M. Donnadieu condemned in all
the costs. On this summons, which contains the constitution of Me.
Dubourg as solicitor of the plaintiff company, Me. Caillet, solicitor,
was constituted for M. Donnadieu by act done at the palace on the 3d
of May, 1902. By instrumentality of Me. Dubourg, a record was
drawn up and the cause inscribed on the general roll of the clerk’s
office, was distributed to this chamber, before which Me. Dubourg gave
notice to Me. Caillet, solicitor of M. Donnadieu, by a document of
the palace, dated the 19th June, 1902, for the audience of Wednesday,
11th of June, 1902. At this audience Me. Caillet submitted a brief
as to the exceptions taken and afterwards a brief on the merits, where-
upon the matter was placed on the roll of this chamber. -
III. The joining of the causes and the intervention of M. Lemarquis
as mandataire. - t
Me. Caillet, solicitor of M. Donnadieu, not following up the tierce
opposition, M. De Biéville, by document of the palace dated 7th of
June, 1902, served upon Me. Caillet and Dubourg a brief asking that
it might please the tribunal: -
Considering that the judgment rendered in the first chamber of the
civil tribunal of the Seine the 19th of March, 1902, approved, as far
as concerned the liquidation of the Universal Company of the inter-
Oceanic Canal, of Panama, the offer made by the new company, with
the assent of the liquidator, to the Government of the United States
of America to cede to the said Government all the properties and
rights belonging to the new company on the Isthmus of Panama, as
well as the plans and archives at Paris, for the price of $40,000,000
(205,000,000 francs or thereabouts), the said offer to remain good
up to the 4th of March, 1903, the ultimate price of the cession to be
divided conformably to the decision of the arbitrators and with the
reservation of alterations to be obtained from the Government of
the Republic of Colombia so far as concerns articles 21 and 22 of the
contract of concession; considering that this judgment was published
conformably to the law of the 1st July, 1893; considering that M.
Emmanuel Donnadieu, calling himself a creditor of the new company
PAN AMA CAN AL TITLE. 79
of the Interoceanic Canal of Panama, entered tierce opposition to
the judgment; that he asked of the tribunal to declare formally that,
the offer made by the new company to the Government of the United
States was not susceptible of approval according to the terms of
article 10 of the law of July 1, 1893; that he asked, additionally,
a declaration of the invalidity of the ultimate cession of the canal
by the new company as beyond the powers of that company and
made in violation of the by-laws of the new company, of the rights
which belong to the liquidator; that, consequently, he demanded
of the tribunal to set aside purely and simply the judgment of
the 19th March, 1902, attacked by tierce opposition; but, considering
that M. Donnadieu was a creditor of the liquidation of the Universal
Company of the Interoceanic Canal of Panama in the character of a
subscriber to or holder of bonds; considering that the right to enter
tierce opposition to the judgment rendered in conformity with article
10 of the law of July 1, 1893, did not belong to him; that article 10
of the said law provided that every judgment of approval should be
published, and that it could be attacked by tierce opposition within a
month from the publication, by the stockholders, by the mandataire of
the bondholders, and by the other company creditors; that thus the
holders of the bonds were excluded from the right of entering tierce
opposition; that this is reserved in the general interest to their man-
dataire; considering that M. Lemarquis, acting under responsibility.
and under the control of the tribunal, has entered no tierce opposition
to the judgment of the 19th of March, 1902; that under these circum-
stances tierce opposition was closed to the bondholders represented by
their mandataire; considering that, on the other hand, no other tierce
opposition was entered to the said judgment either on the part of the
stockholders or on the part of the company’s creditors; that, under these
circumstances the judgment of the 19th of March, 1902, regularly
published, became definitive; for these reasons [asks the tribunal] to
declare M. Donnadieu, in his character of subscriber to or holder of
bonds of the Universal Company of the Interoceanic Canal of Panama,
inadmissible to make tierce opposition to the judgment of the 19th of
March, 1902, and to condemn him to the costs, out of which to be
allowed the fees of Me. De Biéville, solicitor. - -
By the instrumentality of Me. de Biéville this brief was submitted,
and, after being noted at the clerk's office, was deposited in this cham-
ber, before which Me. de Biéville gave notice to Me. Caillet, by docu-
ment of the palace dated the 11th June, 1902, for the audience of
Wednesday, the 18th of June. At that audience Me. Caillet submitted
a brief on the exceptions and a brief on the merits, whereupon the
matter was put brm the roll of the chamber. By document of the
palace of the 23d of June, 1902, Master Caillet served on Me. de
Biéville, solicitor, a brief asking that it might please the tribunal:
Considering that the liquidator of the company of the Interoceanic
Canal of Panama only opposed the tierce opposition entered by M.
Donnadieu to the judgment of approval of the 19th March, 1902, by
an objection of inadmissibility; that he claimed that M. Donnadieu was
a bondholder and had not, in that character, the right to enter tierce
opposition; that the exercise of this right and of all others belonged only
to the mandataire whom the law imposed upon the holders of bonds;
that he added that M. Lemarquis not having made use of the right of
tierce opposition, the judgment of the 19th March, 1902, became defini-
/
80 PAN AMA CAN AL TITLE.
tive; but, considering that M. Gautron, as liquidator, commits, in these
propositions, the double error of fact and of law; considering, as a
matter of fact, that M. Donnadieu was not a bondholder; that by judg-
ment of the civil tribunal of the Seine of the 25th of January, 1893,
confirmed by the decree of the court of Paris of the 29th of June,
1893, the contract of loan as between M. Donnadieu, of the Panama
Canal Company, had been rescinded as against the borrowing company,
which had been condemned to the reimbursement of the sums due from
it in consequence of that rescission; that M. Donnadieu was not, there-
fore, a holder of bonds, voided representatives of a canceled contract,
but a creditor by virtue of the judgment and decree above referred to;
that he has, then, remained master of his rights and was not repre-
sented as to the exercise of them by a legal mandataire of the holders
of bonds; that, moreover, even had M. Donnadieu remained a holder
of bonds (which he has not), he would not less have the right to enter
tierce opposition; that the law of July 1, 1893, article 2, provides that
every bondholder shall have the right to institute individually and at
his risks and perils any suit which the mandataire shall have refused
or neglected to institute within a month following the notification to
him to proceed; that by document of the 19th of February, 1902,
M. Donnadieu, after having notified M. Lemarquis of the prohibition
which he had caused to be served upon the New Panama Canal Company
against selling the canal and its concession, had summoned the said
Lemarquis to take ‘all useful measures to prevent the consummation
of the projected sale, declaring to him that, in default of his opposing
the proposed sale and even in concurrence with him, M. Donnadieu in-
tended, by all legal means, by all useful proceedings, to oppose the said
sale; that, consequently, and even if (which is not so) M. Donnadieu
was represented by M. Lemarquis, he would have the right to make
use, in default of his having done so after being notified to proceed,
of the right of action contemplated and provided for by the law of
July 1, 1893, in the case provided for by articles 10 and 11 of the
said law, and which, in the present instance, tended to prevent the
projected sale of the canal to the United States of North America;
that, consequently, the tierce opposition of M. Donnadieu, from what-
ever point of view regarded, was admissible; that the objection of
inadmissibility made by the liquidator should be rejected; consider-
ing that the judgment of approval of the 19th of March, 1902, to
which tierce opposition was made, was rendered upon the considera-
tion of the decision of the arbitrators which fixed the manner of
division of the price of the canal, a decision which the judgment con-
templates in its disposing part; considering that this decision should
be turned over to the discussions upon the tierce opposition, for
the reason that it was communicated to the tribunal in support of
the request for approval; that it presented, moreover, a capital point
of interest with regard to the decision to be arrived at, the interest of
the creditors to accept or reject the proposed cession depending in
great part on the profit which might result for them and especially on
the proportion of the price which would be reserved to them; consid-
ering, however, that, notwithstanding all friendly efforts and especially
a summons dated the 20th of June, 1902, M. Gautron, as liquidator,
refused to communicate to M. Donnadieu that decision of the arbitra-
tors; that he should have been compelled to make that indispensable
PANAMA CANAL TITLE. 81
communication; for these reasons [asks the tribunal] to declare Gau-
tron as liquidator without just grounds for his point of inadmissibility;
to declare the tierce opposition admissible, and, before proceeding to
the merits, to declare that upon the day for the judgment to be ren-
dered Gautron as liquidator shall be bound to communicate to M. Don-
nadieu in due form the decision of the arbitrators adduced by him in
support of his request for approval and considered in the disposing
part of the judgment of the 19th March, 1902, to which the tierce
opposition has been made, on pain of 500 francs per day for delay,
after which a decision to be rendered; to declare that, until such com-
munication shall have been made, a hearing should be refused to said
Gautron as liquidator; and to condemn him in the costs of that inci-
dental proceeding, with the fees of Me. Caillet, solicitor. By docu-
ment of the palace of justice dated the 25th June, 1902, Me. Caillet
served on Me. Dubourg, Solicitor, a brief asking that it might please
the tribunal: .
Considering that the New Panama Canal Company desired to have
it adjudged that M. Donnadieu was, first, without character or stand-
ing; second, without legal right to make opposition to the sale of the
canal to the United States; that it contends that the notifications, pro-
tests, and prohibitions made on his request constituted acts of unjusti-
fiable vexatious aggression, that had caused an injury for which it
demanded reparation; considering that M. Donnadieu acted in virtue
at Once of his right which was personal to him, and by way of exer-
. the rights of the liquidation of the Universal Company, his
ebtor.
SEC. I. Considering that the by-laws of anonymous companies were
not made merely to regulate the rules of the associates among them-
selves; that they are also the law of the company with regard to third
persons; that the publicity required for by-laws has no other raison
d’être; considering that, on the other hand, anonymous companies,
associations of capitals, excluding all notion of persons, have no active
life or power except within the limits and within the objects which the
by-laws creating them determine; that outside of those limits an anony-
mous company has no existence or power, and the acts which it con-
cludes are radically void; that this voidness is absolute and can be
invoked by anyone interested who has the character or standing to do
this by the mere fact of his interest; that Donnadieu had, consequently,
the character to ask to have pronounced the invalidity of the sale of
the canal consented to by the new company, because that sale deprived
him of 60 per cent of the profits of carrying on that canal reserved to
the creditors of the Universal Company; that he had a character to
protest against the project of such a cession, to oppose its realization;
considering that the new company recognized that, in principle, Don- .
nadieu was admissible to make use on behalf of the Universal Com-
pany, his debtor, of the right of action which the latter derived from
its contribution, but that it contended that, in fact, he was not in a
position to make use of it, the liquidator having made use of that right
of action in consenting to the cession of the canal; but considering that
Gautron as liquidator, far from having made use of the rights given
him by the stipulations concerning his contributions, had, on the con-
trary, abandoned them in consenting to the cession of the canal; that,
consequently, Donnadieu was undoubtedly admissible to exercise the
8751–02—6
82 FAN AMA CAN AL TITLE.
neglected rights; considering that it remains to be shown that Donna-
dieu had just grounds for instituting his two proceedings
SEC. II. Considering that the new company recognized that its object
was to carry on and not to sell the canal, but that it contended that it
had nevertheless the right to sell because the sale put an end to the
object of the company, and therefore did not entail any modification
of that object; but considering that this is a mere juggling with words;
that the company had power and capacity only to carry out its object;
that is to say, to construct and carry on the canal; that it had none to
take a profit out of selling it; that the sale was possible only after a
regular dissolution of the company, by an act of liquidation and in
realization of the assets, but that the stipulations concerning the con-
ditions of the contribution of the canal had not permitted, and did not
permit, the company to dissolve itself and to abandon, in the actual
state of affairs, the construction of the canal, to the detriment of the
contributor and of those in privity with him; that the sale was, there-
fore, impossible and did not come within the powers of administration
and of disposition belonging to the company life.
SEC. III. Considering that, in violating the stipulations concerning
the contribution of the canal, and injuring the rights of the contributor
and of his creditors, which the new company does not even attempt to
deny or to explain away, it seeks only to take refuge behind the
exception of inadmissibility drawn from the judgment of approval of
the 19th of March, 1902, and from the law of July 1, 1893; but con-
sidering that the judgment of the 19th of March, 1902, was rendered
only after the notifications which are here criticised of the 18th, 19th,
and 26th of February, 1902; that it could not then diminish or sup-
press the rights which M. Donnadieu had to make those notifications;
considering, on the other hand, that the approval confermplated by the
law of July 1, 1893, providing solely for the case of a cession consented
to by the liquidator of the whole or a part of the assets of the liquida-
tion, can not govern a contract which is only to take place between the
United States and the new company, nor allow to the latter or the
liquidation, with which there was no contract of alienation of assets,
advantages made for the benefit of its creditors; that Donnadieu who
had, besides, attacked the judgment of the 19th of March, 1902,
by tierce opposition had therefore just grounds to make use of the
right of action which the liquidator deserted and to attack at need, by
virtue of article 1167 of the Civil Code, the gratuitous abandonment
consented to by the liquidator of the advantages which constitute almost
the only important assets coming to the creditors. For these reasons
[asks the tribunal] to declare that in making the notifications which
have been criticised M. Donnadieu was only making use of his rights;
to declare that M. Donnadieu was personally admissible to take advan-
tage of the lack of power in the new company to cede the canal; to
declare that M. Donnadieu was admissible, by the terms of article 1166
of the Civil Code, to make use of the rights neglected by the liqui-
dator, his debtor; to declare that he is also admissible to attack, by
virtue of article 1167 of the same code, the abandonment of his rights,
by his debtor; consequently to declare that the new company, consti-
tuted to construct and carry on the canal is without power to dispose
of it by alienation; to declare, consequently, null and void the offer of
cession proposed to the United States of North America; to declare
that the new company is without right to free itself from the price
PANAMA CAN AL TITLE. t . 83
due from it by reason of the contribution of the canal by selling the
canal to a third person who would obtain all the benefits of it; to
declare, from this new point of view, the offer of cession of the canal
null and void; to reject all the requests, points and arguments of the
new company, and to condemn it in all the costs, allowance therefrom
to be made of the fees of Me. Caillet, solicitor. By document of the
Palace of the 25th of June, 1902, Me. Charneau served on Me. Caillet
and Me. De Bieville a brief as to intervention, in which he constituted
himself as representative of M. Lemarquis, mandataire, and asking
that it should please the tribunal:
Considering that Lemarquis, as mandataire of the Panama bond-
holders, properly intervenes in the pending case between M. Gautron
as liquidator and M. Donnadieu; considering that the cession proposed
to the United States of North America, to which M. Gautron has con-
sented, is favorable to the interests of the bondholders, for these reasons
[asks the tribunal] to admit M. Charneau as solicitor for M. Lemarquis
as mandataire; to admit M. Lemarquis’ intervention in joining 77, with
the conclusions submitted by the liquidator and in approving fully the
wºnderstanding entered into between the liquidator and the Wew Panama,
Company with the object of making a cession of the enterprise to the
Government of Worth America for the sum of $40,000,000, and to allow
the costs of suit as may be proper.
By document of the Palace dated June 28, 1902, M. Caillet served
On MM. Charneau and de Biéville a brief, asking that it might please
the tribunal: & . - .
As to the intervention of M. Lemarquis, considering that M. Lemar-
quis justifies his intervention upon this single ground, quoting his own
words, “Considering that the proposed sale to the American Govern-
ment, to which M. Gautron has assented, is favorable to the interests
of the bondholders;” considering that the tribunal, in order to decide
concerning the admissibility of this intervention, ought to examine the
interests on which is founded the intervention; that in this case that
interest, as M. Lemarquis says, proceeds from the advantage of the
proposed cession; that the tribunal then finds itself forcibly called upon
to examine if the proposed cession is or not favorable to the bond-
holders and all other creditors, such as M. Donnadieu; that this exam-
ination requires the production of the papers concerning the said
cession, and consequently the communication to the Fº in
papers which the tribunai saw before rendering the judgment of
approval of the 19th of March, 1902; papers with which M. Lemar-
quis was, of course, acquainted, but the communication of which
to M. Donnadieu was refused. For these reasons before reaching a
decision, either with regard to the admissibility, or on the merits, of
the intervention of M. Lemarquis [asks the tribunal] to declare that
the papers concerning the proposed cession of the canal and the
approval given by Messrs. Gautron and Lemarquis to that cession,
especially the arbitration decision considered in the disposing part of
the judgment of March 19, 1902, shall be in legal form communicated
to M. Donnadieu, and this on pain as against Messrs. Gautron and
Lemarquis of constraint by a fine of 500 francs per day of delay, dur-
ing a month, after which judgment to be rendered; and to condemn
them in solido to the costs, allowing therefrom the fees of Me. Caillet,
solicitor. After several postponements the cause has come on to be
heard at the session of this day. At this audience the advocates of the
84 PANAM.A. CANAL TITLE.
/*
parties, assisted by their solicitors, have presented themselves at the
bar, have restated and enlarged upon the points previously submitted
by them, and have asked judgment for their respective clients. The
public attorney has been heard as to his views. In this state of the
matter, the cause presents for adjudication the following questions:
POINTS OF LAW.
AS TO THE TIERCE OIPPOSITION.
V
Should the tribunal admit M. Donnadieu as tiers opposant to the
judgment of the 19th of March, 1902% Doing so, should it declare
formally that the offer made by the new company to the Government
of the United States of America was not susceptible of approval under
the terms of article 10, of the law of July 1, 1893?
As a subsidiary matter, on the merits, should it declare that the ulti-
mate cession by the new company is beyond the powers of that com-
pany; declare that the cession offered violates the by-laws of the new
company and the rights belonging to the liquidation? Should it
declare that the liquidator had not been and was not able to make use
of a proceeding tending to secure respect for his rights before any
other tribunal than the civil tribunal of the Seine, and especially before
an arbitration tribunal? Should it declare that the cession offered was
contrary to the rights and to the interests of the creditors of the liqui-
dation of the Universal Company of the Interoceanic Canal of Panama?
Should it say, consequently, that there was no warrant, either as to
form or on the merits, for the approval asked by Gautron as adminis-
trator so far as concerns the liquidation of the said Universal Company
of the offer made by the Universal Company of the Panama Canal,
with his consent, to the Government of the United States of America,
of all its property and rights on the Isthmus of Panama, as well as the
plans and archives at Paris, at the price of $40,000,000?
Should it, consequently, set aside purely and simply the judgment
of the 19th of March, 1902, to which tierce opposition was made?
Should it, on the contrary, declare Donnadieu, in his character of
subscriber to or holder of bonds of the Universal Company of the
Interoceanic Canal of Panama, inadmissible to make tierce opposition
to the judgment of March 19, 1902?
As to the demand for release from prohibitions to the sale of the
Panama Canal, should the tribunal declare and adjudge that M. Donna-
dieu was without character or standing to serve on the Government of
the United States, in the person of its ambassador at Paris, the docu-
ments of the 26th of February (sic), 1902?
Should it declare and adjudge, additionally, that M. Donnadieu was
unfounded in the legal grounds alleged for that act? . . .
Should it order a release, pure and simple, so far as necessary, from
the prohibitions contained in the said document and in two others
served upon the New Panama Canal Company, one dated the 18th and
the other the 26th of February, 1902? -
Should it declare them null and of no effect? Should it condemn
M. Donnadieu to repair the injury caused, upon a statement of the
damages to be afterwards furnished?
"'Should it condemn him to the payment of 10,000 francs provi-
sionally? ~ *
PANAMA CAN AL TITLE. 85
Should it, on the contrary, declare the New Panama Canal Company
inadmissible and unfounded in its demand, and reject it? .
As to the intervention of M. Lemarquis as mandataire: Should it
pronounce admissible that intervention as to his joining in the request
of the liquidator, as to his approving in all respects the arrangement
between the liquidator and the New Panama Canal Company with a
view to the cession to the Government of the United States for the
sum of $40,000,000?
Should it, on the contrary, before proceeding to judgment as to
the admissibility or merits of the intervention of M. Lemarquis,
declare that the papers concerning the proposed cession of the canal
and the approval given by Messrs. Gautron and Lemarquis to that
affair, especially the award of the arbitrators, considered in the dispos-
ing part of the judgment of March 19, 1902, shall be, in legal form,
communicated to M. Donnadieu, and this on pain as against Messrs.
Gautron and Lemarquis in solido of 500 francs per day of delay during
a month, after which judgment to be rendered? What as to costs?
Record of the case as drawn up and signed by De Biéville.
The tribunal having heard, as to their points and arguments, Gontard,
advocate, assisted by Dubourg, solicitor, of the New Panama Canal
Company, acting through its president and the members of the coun-
cil of administration; Derche, advocate, assisted by Caillet, solicitor
of Emmanuel Donnadieu; Henri Thiéblin, advocate, assisted by De
Biéville, solicitor of Gautron, as liquidator; Charneau, solicitor of
Lemarquis as mandataire; the public attorney having been heard, and
after having deliberated according to law, judging in ordinary matter
and in first resort, the causes being united on account of the connec-
tion between them, and pronouncing by one and the same judgment:
1. As to the intervention of Lemarquis.-Considering that Lemar-
Quis, mandataire of the bondholders of the Panama Canal, is admissible
to intervene in the present proceeding according to the terms of article
11 of the law of July 1, 1893. .
2. As to the fierce opposition of Domnadieu to the judgment of this
chamber of March 19, 1902. –Considering that by the terms of articles
10 and 11 of the law of July 1, 1893, a judgment of approval, such as
that of March 19, 1902, can be attacked by tierce opposition only by
the persons enumerated in the latter of the said articles; that is to say,
by the stockholders of the Universal Company of the Panama Canal,
by the mandataire of the bondholders, and by the other company cred-
itors of the same company, whence it follows that the bondholders are
not admissible to make tierce opposition to the said judgment; that this
inadmissibility results at the same time from the text of article 11, above
mentioned, and from considering together that article and article 2,
paragraph 4; that, on one hand, by the terms of article 11, tierce oppo-
sition is to be put in within not to exceed a month from the publication
of the judgment, and, on the other hand, article 2, paragraph 4, only
permits to the bondholder who wishes to sue individually, where the
mandataire of the bondholders may have refused or neglected to sue,
to begin his action within the month which shall follow the notifica-
tion to sue addressed to the mandataire by the bondholder; that the
irreconcilability of these two periods allowed demonstrates that the
law of July 1, 1893, did not give the right of tierce opposition to
the bondholders of the Universal Company of the Panama Canal.
Considering that Donnadieu is nothing else than a bondholder, not-
86 - PANAMA CAN AL TITLE.
withstanding his denials; considering that he acted in the proceeding
which terminated in a judgment of this tribunal of January 26, 1893,
confirmed on appeal by decree of June 29, 1893, as holder of: First,
241 bonds of the Panama Canal Company, 5 per cent, issued in 1882, at
437.50 francs, producing an annual interest of 25 francs and payable in
seventy-five years, at 500 francs; secondly, 10 bonds of the same com-
pany, called 3 per cent, issued in 1883, at 285 francs, producing an
annual interest of 15 francs, and payable at 500 francs; thirdly, 15
bonds, 6 per cent, first series, issued in 1886, at 450 francs, producing
an annual interest of 30 francs, and payable in forty-two years at
1,000, by way of drawing by lot. And that, by the terms of said
judgment and decree, Donnadieu obtained judgment against the liqui-
dator for the sums hereinafter stated, being the amounts of the bonds
of which he was and is yet to-day the holder, to wit:
First, 105,437 francs 50 centimes, the amount of 241 bonds; secondly,
629 francs 1 centime, the amount of the sinking-fund payment accrued
on them; thirdly, the part of the coupons unpaid of said bonds, from
July 15 to December 14, 1888; fourthly, the sum of 2,850 francs,
the amount of 10 3 per cent bonds issued at 285 francs; fifthly, the
sum of 149 francs 80 centimes, the amount of the sinking-fund pay-
ment accrued on them; sixthly, the portion of the unpaid coupons of
the same bonds from October 15 to December 14, 1888; seventhly,
the sum of 6,750 francs, the amount of 15 6 per cent bonds, first series,
at 450 francs each; eighthly, the sum of 1,569 francs, the amount of
the sinking-fund payment accrued on them, calculated at 104 francs 60
centimes each; ninthly, the portion of coupons unpaid of the said bonds
from November 15 to the 14th of December, 1888; whence it follows
that very far from there having been a novation effected in favor of
Donnadieu, and the nature of his credit as against the liquidation of
the Panama Canal Company having been changed, the judgment
and the decree aforesaid did, on the contrary, settle and sanction,
in favor of Donnadieu, the credit resulting for him from the bonds
of which he was the holder in such way that he remains, since the
judicial decision, what he was before; that is to say, a holder of
bonds of the Panama Canal Company, who can act only within the
limits and under the conditions prescribed by the law of July 1, 1893;
considering, moreover, that Donnadieu so well understood this that in
a former suit brought by him against the liquidator and the legal
mandataire of the bondholders of the Panama Canal Company, a pro-
ceeding terminated by judgment of this chamber of March 17, 1898,
Donnadieu presented himself and acted as holder of Panama Canal
bonds, and as a creditor of the said Panama Canal Company in the
character of subscriber to the bonds above enumerated; considering
that Donnadieu is no better grounded in invoking, in the said char-
acter of bondholder of the Panama Canal Company, article 2, para-
graph 4, whence he claims to draw the right to make use, in his
individual name and at his risks and perils, of the present proceeding
which the mandataire of the bondholders is alleged to have neglected
to institute within the month after the notification to do so, which
Donnadieu claims to have addressed to him by documents by Thielle-
ment, bailiff at Paris, on February 19, 1902; considering that it results
from the very text of the points submitted by Donnadieu, that by the
terms of said document of February 19, 1902, Donnadieu, after hav-
ing notified Lemarquis of the prohibition which he had the day before
PANAMA CANAL TITLE. 87
made to the New Panama Canal Company to sell the canal and con
cession, summoned Lemarquis to take all useful means to prevent the
making of the proposed sale, declaring to him that, in default of his
(Lemarquis’) opposing the proposed sale and even in concurrence
with him (Lemarquis), Donnadieu intended to oppose it himself by all
legal ways and all useful suits. Considering that the said notification
can not be considered as fulfilling the requirements of article 2, of the
law of July 1, 1893, as to tierce opposition to the judgment of March
19, 1902, since it preceded by a month the very judgment to which
Donnadieu claims to make tierce opposition, in default of Lemarquis
doing so; considering, consequently, that the tierce opposition of
Donnadieu to the judgment of March 19, 1902, is not, from any point
of view, admissible. -
3. As to the demand of the New Panama Canal Company against
Donnadieu for release from terce opposłłżon and for damages.—Con-
sidering that according to document of Thiellement, bailiff at Paris, of
February 18, 1902, Donnadieu made prohibition to the New Panama
Canal Company to proceed to the sale of the said canal, of the conces-
sion and its accessories, and that, on the other hand, by another docu-
ment of the same bailiff dated February 26, 1902, served on the
ambassador of the United States, at Paris, as results from the serving
upon the New Panama Canal Company of a copy of the said docu-
ment, Donnadieu declared his opposition to the cession of the canal,
with the declaration that if, notwithstanding his protestations, agree-
ments concerning that cession should be concluded, he would contend
for their invalidity and would proceed before all competent jurisdic-
tions to have that invalidity shown, adjudged, and sanctioned. Con-
sidering that there exists no legal tie between Donnadieu and the New
Panama Canal Company; considering" that it results from what pre-
cedes that Donnadieu, in his said character of bondholder of the old
Panama Canal Company, was represented in all the negotiations of the
liquidation of the old Panama Canal Company with the new company
by Lemarquis, mandataire of the bondholders, and that he does not
even allege that there was between Lemarquis or Gautron and the
new company any collusion, which alone would have given Donnadieu
a right of individual action under article 1167 of the Civil Code: con-
sidering, consequently, that Donnadieu served without right and abu-
sively, the notifications out of court of February 18, 19, and 26,
1902; considering that in serving said documents, and especially
that upon the ambassador of the United States, he committed a
wrong and caused the New Panama Canal Company an injury, for
which he should make compensation, under article 1382 of the Civil
Code; considering that the tribunal has at present the data neces-
sary to determine the extent of the injury and to estimate the
amount due therefor. For these reasons it admits Lemarquis’s inter-
vention; declares Donnadieu’s tierce-opposition to the judgment of
March 19, 1902, inadmissible and rejects it; declares that Donnadieu
was without right and without legal character to serve the New Pan-
ama Canal Company and the Government of the United States with
the aforesaid documents of February 18, 19, and 26, 1902; allows, so
far as necessary, a release, pure, simple, complete, and definitive from
the prohibitions contained in the said documents of Thiellement of
the 18th, 19th, and 26th of February, 1902; declares the said prohi-
bitions void and of no effect; condemns Donnadieu by way of repara-
88 PANAMA CANAL TITLE.
tion for the injury caused by him to the New Panama Canal Company
by the abusive notifications, hereinbefore annulled, to pay to said
New Panama Canal Company as damages 500 francs; declares the
parties, respectively, unfounded in all their other demands and propo-
sitions and rejects them; condemns Donnadieu in all the costs, includ-
ing those of the intervention of Lamarquis; makes allowance in said
costs in favor of de Biéville, Dubourg, and Charneau, Solicitors, as
requested. t
The minutes of the present judgment have been signed at the end:
Ditte and Barué. -
Done and adjudged in public audience of the first chamber of the
civil tribunal of first instance of the Department of the Seine, sitting
in the palace of justice at Paris, by Messrs. Ditte, president; Monier,
vice-president; Le Berquier, judge; in presence of Messrs. Chauvin,
substitute judge, and Rome, substitute of the attorney of the Republic,
assisted by Barué, clerk, the 3d July, 1902.
In consequence, the President of the French Republic commands
and orders all bailiffs, upon request, to put the present judgment into
execution; the general public attorney and attorneys of the Republic
near the tribunals of first instance to aid therein; all commandants
and officers of the public force to lend forcible assistance when law-
fully requested. -
In faith whereof the minutes of the present judgment have been
signed by the President and by the clerk.
On the margin of said judgment is a note of its recording, as follows:
“Recorded at Paris the 12th of July, 1902, folio 2, case 8. Received,
18 francs 75 centimes.” -
(Signed) * RECH,
The Receiver.
By the tribunal:
Compared.
COQUET.
EXIIIBIT 6.
ARGUMENT BEFORE COURT OF APPEALS IN DONNADIEU CASE, AND
DECREE OF THAT COURT OF AUGUST 5, 1902.
[Shorthand report made by the court stenographer for Uinited States Department of Justice.]
Session of 5th of August, 1902, of the court of appeals of Paris.
M. Lefebvre de Viefville, president; M. Fremont, advocate-general.
M. DONNADIEU
Q),
THE PANAMA CANAL COMPANY.
ARGUMENT OF MASTER THIFRLIN.
. I am going to read to you, gentlemen, the judgment which has been
rendered by the tribunal, the confirmation of which we ask of you.
M. Donnadieu is a bondholder of the Panama Company; he has
attacked by way of tierce-opposition the judgment which was rendered
by the tribunal of the Seine in the month of March, 1902, a judgment
which authorized the liquidator of the Panama Company to associate
himself in the negotiations instituted with the New Panama Canal
PANAMA CAN AL TITLE. 89
Company by the Government of the United States for the cession of
the Panama Canal to the Government of the United States. We have
asked the tribunal to declare that M. Donnadieu, in the character of
a bondholder of the Panama Company, was not entitled to make such
tierce-opposition under the terms of article 11 of the law of 1893,
which creates a special situation outside of the ordinary law.
At the same time the New Panama Canal Company summoned M.
Donnadieu before the tribunal in order to have it declared (M. Don-
nadieu had put in his opposition to that cession, to that sale, which
opposition had been notified to divers persons, by M. Donnadieu, and
especially to the Government of the United States in the person of
its ambassador, in which notifications he declared that he opposed the
sale and that he would demand that it should be declared null and
Void) the New Panama Canal Company summoned M. Donnadieu
before the tribunal to have it declared that his opposition was inad-
missible, that no attention should be paid to it; it demanded against
M. Donnadieu, a condemnation in damages for the prejudice occasioned
by the attitude which he had thus taken. . .
The following, gentlemen, is the judgment which was rendered by
the tribunal: 4 *:::
The cases being united on account of their connection with each other and deter-
mining by one and the same judgment, etc. * * * -
M. Donnadieu has appealed from this judgment, but he has been
obliged to recognize that the reasoning of the judgment is altogether
unobjectionable. It may be summarized as follows:
The tribunal has passed upon a request made by M. Gautron, as
liquidator of the old Panama company, to be authorized to sell accord-
ing to the project, according to the negotiations, to sell in concurrence
with the new company the concession of the Panama Canal and the
works which have been accomplished.
The law of 1893 requires the publication of that judgment, in order
to give notice to those who º wish to oppose it; but at the same
time the law of 1893 limits the right of opposition; it limits it in the
matter of time. Article 11 only permits, in effect, the tierce opposi-
tion to that judgment to be put in within a month from the date of
its publication. After that time all tierce opposition is inadmissible,
and the judgment has acquired, with regard to all persons, the author-
ity of res adjudicata. -- - -
The law of 1893 limits the tierce opposition likewise with regard to
persons. There are only three classes of persons who, according to
the terms of article 11 of the law of 1893, can put in tierce opposition;
these are stockholders of the old company, the mandataire of the bond-
holders who represents all the bondholders, and the other creditors of
the company.
M. Donnadieu put in his tierce opposition within the month, but it
remains to inquire whether M. Donnadieu comes within one of the
three classes referred to. -
He is not a stockholder; he is not a mandataire of the bondholders.
Is he one of the other creditors of the company ? -
He maintains that he was a creditor of the company and was not a
bondholder, because, before the law of 1893, which has prohibited
individual suits, he had, making use of the running of the clock which
the legislature saw fit to interrupt, attacked a judgment against the
liquidation based upon the bonds of which he was a holder.
90 PANAMA CAN AI. TTTI, E.
Then said he: “I am no longer a holder of bonds. I am a creditor
who is the holder of a judgment. I am a creditor of the company.”
The tribunal answers: “Not at all; you are always a holder of bonds,
only a holder of bonds who has had the advantage to have received,
before the law of 1893, a recognition of his situation as bondholder
and to have it settled by a judgment which has passed into the condi-
tion of res adjudicata; you are decidedly a bondholder; but if you are
a bondholder, you can not put in tierce opposition, because the man-
dataire alone can do that.”
Here, gentlemen, I find an objection which was invincible by M.
Donnadieu, and which has prevented him from proceeding in the way
of his appeal. It is that this has already been adjudged by yourselves.
M. Laplante had previously desired to make tierce opposition to a
judgment, which was entered as between the mandataire of the bond-
holders and the liquidator. He also was a bondholder. His demand
was denied for several motives, and especially for one taken from the
application of article 11 of the law of 1893. That judgment bears date
of the 10th of May, 1899, and it has been confirmed by adoption of the
reasoning of the lower court in a decree of your own of the 25th
of April, 1900. if the court wishes, here are the motives which were
adopted: - -
That in the second place the tierce opposition, where it is restrictively admitted by
the law of 1893, is permitted by the articles above mentioned only to the persons
whom they enumerate—that is to say, the stockholders, the mandataire of the bond-
holders, and the other company creditors. -
That it is not allowed to the bondholders taken singly. * * *
These are the very terms which have been reproduced in the judg-
ment here appealed from, and consequently you have already, gentle-
men, admitted the truth of this proposition.
M. Gautron has been under the necessity of making as against M.
Donnadieu this point of inadmissibility. This was not, you under-
stand very well, from fear of the judgment as to its merits, for the
reasons upon which M. Donnadieu made his tierce opposition to that
judgment were reasons devoid of every kind of foundation. There was
another reason of a public nature. M. Gautron was not able to mis-
understand the provisions of the law of 1893 which protect the liquida-
tion, and he is bound to seek to have maintained the course of decision
referred to in order that there may not be other cases of tierce
opposition put in at inopportune times to embarrass the liquidation of
the Panama company.
It is in this state of affairs that, confining myself to the rôle which
belongs to me—that is to say, the examination of the judgment so far
as the tierce opposition is concerned with it—that I ask you to perse-
were in your course of decision of 1900 and to confirm by adoption of
the reasons given below the judgment appealed from. -
ARGUMENT OF MASTER INIMIBOUT.G.
Two words, gentlemen, if the court will permit, in order to explain
the attitude taken to-day before it by the legal mandataire of the bond-
holders, and in order to say why he has not made use in this case of
the right which belongs to him by the special law of 1893, and which
belongs to him alone, to make tierce opposition to the judgment of
approval rendered by the tribunal of the Seine.
PANAMA CAN AI, TITLE. - 91
When the cessions made by the liquidator of the old Panama Canal
Company, gentlemen, could be the object of different opinions as to
their merits, M. Lemarquis has made use of the special right which
the law of 1893 gave him. It is thus that when the liquidator
demanded approval for the cession which he proposed to make to the
new Panama Company of all the assets of the company, M. Lemarquis
made tierce opposition to the judgment of approval.
It is not, gentlemen, that M. Lemarquis criticised that cession; it
was on account of a very delicate scruple and out of respect for the
interest of the involuntary principals which the special law had given
him, in order to permit them to present their observations upon inter-
vening in the proceeding of tierce opposition, if they judged it
advisable.
It could then be a question whether it was more to the interest of
the bondholders to continue the enterprise or to have an immediate
settlement.
To-day the situation is no longer the same. No doubt can be had
upon the merits of the proposed cession. There are but two possible
solutions—either the sale of the enterprise or the construction of the
canal. .
But the construction of the canal will require the creation of
resources which can only be obtained by an appeal to the public. No
one will venture to try that, and I do not believe that M. Donnadieu
himself, if a request of that kind were made to him, would respond to
an appeal for funds. It is necessary then to be resigned to the sale, and
it is because that is the better proceeding, the better solution, for the
interest of the holders of bonds that M. Lemarquis has abstained from
making tierce opposition to the judgment of approval. .
ARGUMENT OF MASTER GONTAIRE).
GENTLEMEN: You know from the explanations which have been
given you by Master Thieblin that the new Panama Canal Company has
proceeded against M. Donnadieu to have thrown out the opposition
notified by him to the company itself and to the ambassador of the
United States of America at Paris. r
The tribunal, put in possession of our demand, declares that M. Don-
nadieu is without right and standing to notify the said opposition, and
So far as necessary, following the reasonings which we have sub-
mitted, throws out the opposition and notifications referred to.
In the judgment, gentlemen, there are two reasons given in support
of that decision. The first is that M. Donnadieu is without right and
standing.
In effect, M. Donnadieu-you know this from the explanations
which have been made to you—is not a stockholder of the new com-
pany of the Panama Canal, and he is no more one of its creditors.
The PRESIDENT. In his brief submitted he maintains that the new
Panama Canal Company, whose advocate you are, could not without
violating its by-laws cede the canal. -
Master GONTARD. I will furnish explanations on that point. I am
explaining very rapidly the reasonings of the tribunal, reasonings
which seem to me absolutely conclusive.
These reasons are that M. Donnadieu is inadmissible because with-
out right and without standing with regard to the company. He is
92 PANAMA CANAL TITLE.
without right and standing, I say, on one hand because he is not a
stockholder of the new company, on the other hand because he is not
a bondholder of it. - .
Consequently M. Donnadieu has no right to make any opposition,
any notification whatever, unless it be in exercising the rights of his
own debtor, namely, the old company (article 1166), or in bringing a
direct personal action which might belong to him in case of collusion
(article 1167 of the Civil Code). - -
As to article 1166 there can be no question, for the excellent reason
that a creditor can not make use of the rights of his debtor except
where the latter does not himself act. But in the present instance the
debtor does act, since that debtor is the liquidation of the old Panama
Company, and since it is an act of M. Gautron that M. Donnadieu
pretends to criticise by way of tierce opposition.
As for article 1167, there is no question for the excellent reason that
M. Donnadieu does not dare raise his voice with regard to any collu-
sion of any kind whatever as existing between M. Gautron or M.
Lemarquis—always solely mindful of the interests which have been
confided to them—and the New Panama Canal Company. -
As a result he is absolutely inadmissible, certainly so, and to sum
up (permit me to make use of this consideration which has been devel-
oped by the advocate of the Republic in the first instance), M. Don-
nadieu, by his notification or his opposition, undertakes to make use
of a power which does not belong to him, a power to make Opposition
at a given time, when to that opposition the law of 1893, which has
just been analyzed for you, puts an insurmountable obstacle.
Is it to be said that I would have any distrust of going to the founda-
tion of the matter and considering the two observations which M.
Donnadieu has made in his reasonings on appeal after having already
indicated them in the court of first instance? By no means, and I am
going to demonstrate that to you.
What are these objections? There are two of them. He says to
you on one hand: The New Panama Canal Company can not cede the
canal.
It can not cede the canal? Why? What reasons does he give? It
can not cede the canal because, according to the terms of its by-laws,
its object is the carrying on of the canal; because by the terms of
article 60 of the same by-laws it can not change this object as to its
essence, and because the sale of the canal would place the company in
a position where it would be impossible to carry it on, and conse-
quently to carry out what was its object. It can not change that
object, says M. Donnadieu, it can not suppress it by the sale; conse-
quently the sale is not possible.
You understand very well that it is easy to push this reasoning to
an absurdity in order to show its error, for this reasoning conducts
to nothing less than to condemn to life companies which, not having
accomplished their object, have a greater interest in ceasing to exist
during the time fixed for their duration. t
This is, so to speak, an absurdity arising from the by-laws of the
company, but here there is more; it is that our adversary forgets that
by the terms of article 60 of the by-laws which he invokes so far as it
forbids the company to modify its object, he forgets that in the same
article 60 the anticipated dissolution of the company is provided for,
PANAMA CANAL TITLE. - 93
and consequently the right of the company to put an end to its company
life when it has an interest in so doing is provided for.
Then, if the anticipated dissolution is contemplated by the by-laws,
the company has the right to put an end to the company life; conse.
quently the right to proceed to liquidation and sale of the concessions
which belong to it. It appears to me, gentlemen, that on this point
there can be no doubt in the mind of any man of good faith who wishes
to examine the by-laws of the New Panama Canal Company.
Jonsequently, where does there appear any transgression of the
social compact if we place ourselves absolutely in the position M. Don-
nadieu takes and admit that he has the right to discuss here our social
compact, in a thing which is in reality but the application of the com-
pact itself? . -
The sale, he says, is the suppression of the company’s object. But
he ought to continue further; it is the anticipated dissolution. But
the anticipated dissolution is foreseen by the by-laws; it is lawful and
possible. Then the sale of the canal is possible and lawful in the same
circumstances as the anticipated dissolution. This first argument, then,
is not serious. - -
There is another which, I believe, is not contained in the reasonings
on appeal which have been communicated to me. It was made use of
by M. Donnadieu in the court of first instance, and may be stated thus:
It is that the stipulation which took place between the new company
and the liquidation of the old company obliged the New Panama Canal
Company to carry on the canal. - -
This is the reasoning: By the terms of the by-laws, as compensation
for the contribution made by the liquidation of the old company to the
new company, it was allowed 60 per cent of the benefits of carrying
on the canal. The new company, says M. Donnadieu, can not free
itself from this 60 per cent; it can not free itself by selling the canal;
then it can not sell the canal. -
You will remark, gentlemen, that this is the first argument repro-
duced under another form; consequently the response which I have
had the honor of indicating for the first argument applies to the second.
But let us go further.
In what is stated, there is an error which belies the right of antici-
pated dissolution given to the new company by article 60, as also the
provisions of another article of the by-laws, article 5, which contem-
plates the case of the nonexecution of the canal. -
Hence the sole question which presents itself in the case of a sale is
the question of the division of the price, upon which the by-laws con-
tain nothing in express terms, but upon which the by-laws impliedly
contain some information, a question which has been settled by the
arbitration to which allusion has been made in the documents of tierce
opposition presented by M. Donnadieu. I venture to observe also that
the contributor of property in kind to the company about to be formed,
who has been the author of the stipulations concerning the contribu.
tion, is the sole judge of the consequences which the alienation of the
whole or part of the properties may carry with it in respect of the
stipulations which he has made.
In the present case, the assent of the liquidator, the contributor to
the new company, an assent shown by the judgment of approval accord-
ing to the terms of the law of July 1, 1893, is of such a nature as to
94 - PANAMA CAN AI. TITLE.
safeguard all rights, all interests. And the fact itself, gentlemen, that
M. Gautron has intervened in the negotiations, he being the liquidator
of the old company, that M. Gautron, on the other hand, is protected
in the arrangements to which he has given his assent by the high
approval given by the tribunal according to the terms of the law of
1893, causes to disappear all objection under this heading and all
uncertainty.
In conclusion (here I return to the argument made by M. Thieblin),
it is necessary to recognize that no one interested is admissible to crit-
icize or contradict the assent given by M. Gautron except under the
terms of the law of July, 1893, that M. Donnadieu is not at all within
the terms of that law, and that from this point of view M. Donnadieu
can not make any objection. -
Thus, you see, M. Donnadieu, who is inadmissible, very certainly,
as a result of his lack of standing (qualité), who can not exercise the
action oblique of article 1166, which does not belong to him be it
remarked, in the presence of a debtor who himself exercises the right,
M. Donnadieu, who can not pretend to make use of the suit allowed
by article 1167 for the excellent reason that he will not venture to
pronounce the word “fraud,” which would be necessary for that suit,
M. Donnadieu, not admissible, is certainly on the merits without good
grounds of proceeding, for the argument which he develops (there are
two of them, but he develops only one, since the two are inconsistent
with each other), the argument taken from article 60 falls, because that
article permits the company to dissolve itself by anticipation.
Then, independently of general principles which conduct us to this
solution, we have the texts themselves, which very certainly show the
lack of foundation for the objection of M. Donnadieu. .
It is with these short observations that I persist confidently in the
reasonings which I have submitted in writing.
The PRESIDENT. Outside of the opposition made by M. Donnadieu,
is there any opposition to the sale, made by some of the stockholders?
M. THIEBLIN. None, and there was no tierce opposition in the period
of one month, consequently I am in the presence of all, and all persons
are bound.
In the most general way, the judgment which approved on the 19th
of March, 1902, the project of cession, is a judgment which has
acquired the authority of res adjudicata; it is unattackable.
The PRESIDENT. Mr. Advocate-General, what are your reasonings?
Advocate-General FREMONT. I think there should be confirmation.
The PRESIDENT. The decree will be rendered at the resumption of
the session. - | -
The session is suspended.
DECREE OF THE COURT.
Adopting the reasons of the first judges, which respond sufficiently
to the conclusions of the parties.
Confirms in all its provisions and condemnations the judgment
appealed from. -
Rejects all contrary reasonings of Donnadieu.
Condemns the appellant in the fine and costs.
PANAMA CAN AI, TITLE. 95
EXEIIRIT 7.
JUDGMENT OF JULY 8, 1902 (CIVIL TRIBUNAL OF THE SEINE),
DECIDING AGAINST SAUTEREAU.
[3d of July; First chamber, No. 2—First section.]
THE FRENCH REPUBLIC, IN THE NAME OF THE FRENCH PEOPLE.
The civil tribunal of first instance of the department of the Seine,
sitting in the palace of justice at Paris, has rendered in public session
of the first chamber the following judgment, session of 3d July, 1902.
Between the New Panama Canal Company, an anonymous associa-
tion having its headquarters at Paris, Rue Louis le Grande, No. 7, act-
ing through the president and members of its council of administration,
Plaintiff, appearing, briefing, and arguing by Maitre Gontard, advo-
cate, assisted by Maitre Dubourg, Solicitor,
On the one part,
And M. Sautereau, engineer, dwelling at Paris, Rue Tarthout, 14,
proceeding as well in his personal name as in the name and character
of alleged “director of the International Association of Studies for
the Accomplishment of the Panama Canal,”
Defendant, appearing by Maitre Vorgeot, solicitor, in default, not
having sumitted his brief,
On the other part, -
Without the present characters of the parties being able to preju-
dice in any manner their respective rights and interests,
POINT OF FACT.
The plaintiff alleging that according to a document out of court
through the instrumentality of Baudin, bailiff at Paris, dated the
20th of December, 1901, served upon the plaintiff, M. Sautereau
declared his opposition to the sale as well as to the putting into execu-
tion of a project for the construction of the canal adopted by the
new company, which he declared to be his property or that of those
in privity with him, adding that he made all reservations to obtain all
recoveries that he might be entitled to; -
That, in support of his opposition, M. Sautereau alleged, especially,
that, after several years of alleged studies, the new company had
adopted a definitive project for the accomplishment of a canal at
Panama, which was an exact and complete reproduction of a project
submitted by him to the liquidation of the first Panama Canal Com-
pany, which constituted, he said, a veritable spoliation of his rights
and the rights of those interested with him—the International Asso-
ciation of Studies for the Accomplishment of the Panama Canal, of
which he was the founding director;
That M. Sautereau complains, consequently, of never having received,
notwithstanding his reiterated demands, any reimbursement nor any
remuneration whatever for all the work, studies, proceedings of all
kinds, etc., undertaken by him on behalf of the liquidation of the first
Panama company; and because, although these things constituted a
notable part of the assets of the new Panama company, the latter pro-
posed to sell them to the Americans in disregard of his rights;
96 PANAMA CANAL TITLE.
But that there did not exist any legal relation, (“lien de droit,”)
between M. Sautereau in his aforesaid characters and the plaintiff
company; - - -
That the opposition above mentioned was made without legal title
or authority; that it is proper to establish its nullity and to declare a
release therefrom pure and simple.
Done according to document through the instrumentality of Eignet,
bailiff at Paris, dated 25th April, 1902, recorded, to serve notice upon
M. Sautereau to appear within eight full days allowed by law and
through the instrumentality of an advocate constituted at the session of
and before the president and judges composing the civil tribunal of the
Seine, at the palace of justice at Paris, 11 o’clock in the morning, in
order, for the above-stated reasons,
To have declared null and of no effect the opposition notified at the
request of M. Sautereau in the characters aforesaid, served by him
upon the company plaintiff according to document of Baudin, dated
at Paris, 20th December, 1901;
And to have decreed release pure and simple, entire and definitive,
therefrom; and to have M. Sautereau condemned in all the costs,
under all the reservations and notably reserving all damages.
Upon the summons which contains the constitution of Maitre Du-
bourg, solicitor for the New Panama Canal Company, M. Vorgeot,
solicitor, was constituted for M. Sautereau, according to document of
the palace, dated 2d May, 1902. -
Record was drawn up by M. Dubourg, solicitor for the plaintiff,
and the case, entered upon the general roll of the clerk’s office, was
distributed to the civil tribunal of the Seine, before which, according
to document of the palace, dated 9th June, 1902, M. Dubourg gave
notice to his confrère for Wednesday, 11th June following, for argu-
ment. :
On said day, and after several successive postponements, M. Vorgeot,
solicitor, not having filed his brief on the merits, and the matter hav-
ing been called up regularly at the session of this day, M. Gontard,
advocate, assisted by M. Dubourg, Solicitor of the plaintiff, presented
himself at the bar of the court, and required finding of default against
M. Sautereau and Maitre Vorgeot, his solicitor, for not having filed
his brief, and adjudication of the proposition of his original pleading.
The public minister has been heard as to his conclusions. In this
condition the case presents for adjudication the following question:
POINT OF LAW .
Should the tribunal declare default against M. Sautereau and Maitre
Vorgeot, his solicitor, for failing to file brief, etc.?
Should it declare null and of no effect the opposition notified at the
request of M. Sautereau in the characters in which he appears to the
plaintiff company, according to the document of Baudin, bailiff, at
Paris, dated 20th December, 1901?
Should it order release therefrom pure and simple, entire and
definitive? -
Should it, on the contrary, declare the New Panama Canal Company
inadmissible or unfounded in its demands and dismiss it?
What as to costs?
With all reservations. Document submitted. For original. Signed
Dubourg. -
PAN AMA CAN AI, TITLE. 97
The tribunal, having examined and heard the various propositions
and pleadings of Gontard, advocate, assisted by Dubourg, solicitor of
the New Panama Canal Company, acting through its president and the
council of administration;
The public ministry having been heard, after having deliberated
according to law, judging in an ordinary matter and in first resort:
Declares default against Sautereau and Vorgeot, his solicitor, for
not having filed a brief, and gives judgment of default in favor of the
plaintiff; -
Considering that according to a document out of court, served
through Baudin, bailiff at Paris, dated 20th December, 1901, upon the
New Panama Canal Company, Sautereau declared himself opposed to
the sale as well as the putting into execution of a project for con-
struction of the canal by the new company; that he claims it to be his
property or that of those interested with him, adding that he made all
reserves to obtain all recoveries which might belong to him;
Considering that in support of his opposition Sautereau alleges espe-
cially that after several years of alleged studies the New Panama Canal
Company adopted a definitive project for the accomplishment of a
canal, which will be the exact and complete reproduction of the project
submitted by him to the first Panama Canal Company, which will con-
stitute, he says, a veritable spoliation of his rights and of the rights
of those interested in the International Association of Studies for the
Accomplishment of the Panama Canal.
Considering that Sautereau complains in consequence that he has
never received, notwithstanding his repeated demands, any reimburse-
ment nor any remuneration for all his work, studies, proceedings of all
kinds, etc., undertaken by him on account of the liquidation of the
first Panama company, and because, while these works constitute a
notable part of the assets of the New Panama Canal Company, the latter
proposed to sell them to the Americans in contempt of his rights;
But, considering that there exists no legal relation between Saute-
reau in his characters aforesaid and the plaintiff company;
That the opposition above stated was made without title or authority;
That it is proper to establish its nullity and to declare pure and
simple release for it for these reasons;
Declares null and void the opposition notified at the request of Sau-
tereau in his characters aforesaid to the plaintiff company by docu-
ment of Baudin, bailiff at Paris, dated December 20, 1901;
Decrees a release therefrom pure and simple, entire and definitive,
and condemns Sautereau in all the costs, from which an allowance is
made for Dubourg, solicitor, who has demanded it. -
(Signed) DITTE and BARUğ.
Done and adjudged by Monsieur Ditte, president; Monier, vice-
dent; Le Berquier, judge; -
In presence of M. Chauvin, substitute judge; M. Rome, substitute,
assisted by Barué, clerk, the 3d July, 1902. .
In consequence, the President of the French Republic commands
and orders all bailiffs required to do so to put the present judgment in
execution, etc.
8751–02
7
98 PANAMA CANAL TITLE.
CERTIFICATE OF SERVICE—PANAMA COMPANY AND SAUTEREATU,
I, the undersigned, Firmin Paul Dubourg, attorney of the Civil
Tribunal of the Seine, residing at Paris, No. 5 Place St. Michel,
Certify that a judgment rendered by default for failure to defend
by the First Chamber of the Civil Tribunal of the Seine, on Thursday,
July 3, 1902, recorded, between:
The New Panama Canal Company, a joint stock company, having its
principal office at Paris, No. 7 rue Louis-le-Grand, acting by and
through the President and members of its Board of Directors,
Plaintiff, for whom I appeared, .
And M. G. Sautereau, engineer, residing at Paris, No. 14 rue
Taitbout, a party as well in his personal name as in the name of, and
calling himself “Manager of the Société Internationale d’Etudes pour
l'achèvement du Canal de Panama,”
Assisted by Me Norgeot, attorney, *
Which judgment dissolved the prohibition served at the request of
M. Sautereau, in his official capacity, upon the company making appli-
cation, according to notice of Baudin, Court Officer at Paris, dated
December 20, 1901,
Was served upon the attorney, by notice in court of the date of
July 11, 1902, and upon the party, according to the return of Peignet,
Court Officer at Paris, under date of July 15, 1902, recorded.
And that there has been no opposition to, nor appeal from the said
judgment, to my knowledge. . ' .
In testimony whereof I have delivered the present certificate to serve
and avail, according to law.
PARIs, September 22, 1902. DUBOURG.
EXEIIIBIT 8.
JUDGMENT OF MARCH 8, 1889 (COURT OF APPEALS OF PARIS),
DECLARING THE CIVIL CHARACTER OF THE OLD PANAMA COM-
PANY.
[Taken from the minutes of the clerk's office of the court of appeals of Paris.]
(This document is very long, containing a recital of the proceedings
below, briefs, arguments, etc. Only the concluding part is here
i. º remainder being on file, in French, in the Department of
Justice.
The court, after having heard at the session of March 5, instant, as
to their respective propositions and arguments,
Denier, advocate of Brunet, liquidator of the Universal Company of
the Interoceanic Canal of Panama, assisted by Dumas, solicitor;
Crarieux, advocate of the Company of Public Works and Construc-
tions, assisted by Dethemont, solicitor;
Levasseur, advocate of Menier Mehut, assisted by Durnerin, solic-
itor, †
As well as the propositions of M. Manuel, advocate-general;
And after having deliberated according to law,
The announcement of the decree was postponed until this day.
Passing as well upon the appeal interposed by the liquidator of the
Universal Company of the Interoceanic Canal of Panama against the
Company of Public Works and Constructions, from the judgment of
PANAMA CANAL TITLE. - 99
the tribunal of commerce of the Seine of the 18th February, 1889,
as upon the intervention of Menier Mehut; .
No complaint of nullity or objection of inadmissibility having been
submitted or contended for as against the appeal; -
Considering that by the judgment of 18th February, 1889, the tri-
bunal of commerce of the Seine declared itself competent to pass upon
the demand of the Company of Public Works and Constructions
against the Panama Company, and decided that this company is com-
mercial; *
That a previous decision of the civil tribunal attributed, on the con-
trary, to this company the civil character;
Considering that the civil or commercial character of the company
depends exclusively upon the object of the company and not upon the
particular form which it has pleased the parties to give it;
That this is so, even when the parties have employed a form which,
like that of an anonymous company, is more especially affected by
companies of commerce;
That the division of the company capital into shares, and loans by
way of bonds, do not constitute a method of appeal (to the public),
which is exclusively reserved to companies of commerce, and which
can not be employed except upon condition of being submitted to the
commercial jurisdiction;
That it is proper to examine the object, and, consequently, to inquire
into the legal character of the anonymous interoceanic company of
Panama;
Considering that, according to the terms of the law of the Congress
of May 18, 1878, the Government of the United States of Colombia
conceded to an international civil company the exclusive privilege of
opening across its territory a maritime canal between the two oceans,
with power to constitute within two years a universal anonymous
company charged with its construction;
That article 2 of the by-laws of the company thus constituted
states that the object of the company is: - -
First. The constitution of a maritime canal on a large scale.
Second. The operation of said canal and divers enterprises belong-
ing to it. -
Third. The construction and operation of all lines of railroad that
the company may think well to construct or buy in the neighborhood
of the canal for the good of the enterprise. º
ºrth The exploitation of the lands granted and of the mines in
them, {}
The whole under the clauses and provisions of the law of Congress;
That from these provisions, as well as from the acts of concession
and the by-laws of the concessionary company, it appears that the
principal end contemplated by the parties was the opening of a navi-
gable way between the two seas; that is to say, the execution of pub-
lic works of general interest tending to have for a result the putting
sº value immovable property making part of the public land of the
State; --> - - -
That the fact that a company has been subrogated for a limited time
to the rights of the State can not change the nature of the enterprise
and take away the civil and immovable property character which it
would undoubtedly have preserved if the Government of Colombi
had taken charge of its direction; :
*
gºt tº &
* *
~,
• r * s
&
100 PANAMA CANAL TITLE.
That it is proper to examine whether the primitive character and
principal object of the concessionary company were modified by other
CºlllSéS .
In the first place, the distinction proposed by the lower judges
between the construction and operation of the canal should be con-
demned. - -
From the point of view of the object of the company those two
businesses go together. - -
That the operation consists principally in the reception of payments
which are nothing but the necessary remuneration of the capital
invested for the construction and the indispensable means for realizing
on that; *
That the distinction between the operation and the construction
being left out, it remains to examine under what circumstances both
of them are to be effected in the future;
That it is maintained that by the terms of article 2 of the by-laws
above referred to the company performs an act of commerce:
First. As undertaker of the constructions.
Second. As undertaker of transportations.
Third. As exploiting the mines and lands granted.
On the first point, considering that the company is not charged by
the act of concession merely to construct a canal which it is to abandon
to the State at the end of the work:
That a contract has been made from which it results that the company
charged with its construction is to remain in possession and benefit
from the products of operation during ninety-nine years, dating from
the day of its opening;
That thus it constructs not in reality for the benefit of another, but
for its own benefit, and in its own interest as well as for that of the
Colombian Government whose associate it remains;
That it should, consequently, be assimilated to an individual con-
structing for himself, and in his own proper interest; -
That an enterprise done under these conditions can not be considered
a commercial act under the terms of articles 632 and 633 of the Code
of Commerce.
On the second point, considering that the Interoceanic Company of
Panama does not propose to transport travelers and merchandise by
land or by water as a carrier and railroad company or a steamboat
company: - -
That the principal object and the characteristic object of the com-
pany is not transportation, but a way destined for transportation on
which will be received dues of toll; ;
That these rights or receipts will be received on a tariff fixed by the
law of concession by virtue of a delegation of the sovereign State;
This latter does not perform an act of commerce, if it receives them
itself; - *
f That it is the same as to the company which is regularly substituted
or it;
That, finally, the receipt of dues or tolls on canals does not consti-
tute in itself an act of commerce subject to the consular jurisdiction;
That it is vainly objected that paragraph 3, article 2, of the by-laws
provides for the construction and operation or purchase of a railroad
line in the neighborhood of the canal for the good of the enterprise;
...: ; That it results from the express terms of this paragraph, as from the
a
• *
BAN AMA CANAL TITLE. - 101
general spirit of the company’s by-laws, that it is only for the object
of favoring the principal enterprise and assuring its execution that
the accessory and assistant of a railroad called auxiliary has been con-
templated in the contract; - &
That this can not have the effect to modify the primordial and essen-
tial character of the company; *
That if it is true that the lnterOceanic Company has bought the
greater part of the shares of the railroad from Panama to Colon,
which serves not only for the works of the company but effects the
transportation of travelers and merchandise from one sea to the other,
the documents produced to the court establish that this company
remains distinct from the canal company; . - -
That it possesses a director-general of administration and accounts
of its own;
That its company seat is in New York;
That its juridical individuality has not disappeared, to confound itself
with that of the canal company;
And that such would not be the effect of the holding by the latter
of a number more or less considerable of shares, varying according to
the changes of the financial situation. *
On the third point:
Considering that the nation of Colombia has given to the Inter-
oceanic Company as an aid for the execution of the work 500,000 hec-
tares of public land with the mines they may contain;
The exploitation of this domain, not yet commenced, can not in any
event constitute a commercial enterprise;
That there is only in effect the putting into value of immovables
and mines; - º
That admitting that the division and the sale of the whole or part
of the domain by the establishment of alternate lots on the coasts of
the canal and seas presents the characteristics of a speculation, besides
being lawful and contemplated by the concession, it does not consti-
tute an act of commerce, but an act, or series of acts, of dealing with
immovable property, the character of which is purely civil;
That if the statements of articles 632 and 633 concerning acts of
commerce are not restricted, they should not be extended by analogy
to objects not of the same nature; that is to say, immovable in their
eSSenCe:
That they exclude, necessarily, operations concerning immovables
and those concerning mines, which are ruled by special law;
That for want of general arguments, taken from article 2 of the by-
laws, it is maintained that a commercial character of the Interoceanic
Company can be demonstrated from divers and detailed provisions
contained in the act of concession; I
That there is especially pointed out the faculty given to the company
to receive payments for repair, pilotage, towage, deposit, and storing,
and the obligation accepted by it to transport on the line of the canal
the agents of the Colombian Government;
Considering that these divers provisions and receipts, of insignificant
importance in comparison with that of toll, which is connected with
them, have only an incidental character; -
That they belong to the principal object of the enterprise without,
however, absorbing it or modifying it; -- -
That if, as the result of circumstances not yet arisen, the company
102. PANAMA CANAL TITLE.
should be required to perform some acts of a commercial nature, it
would not result that the primordial and essential character of the
civil company constituted by the by-laws would be annihilated;
e That the company would find itself only placed in the situation of
an individual, not a merchant, who, as the result of certain acts con-
templated by the Code of Commerce, might become, as an exceptional
matter, subject to the tribunal as to the exception.
As for what concerns the transportation on the Isthmus of agents of
the Colombian Government; - - - -
Considering that the obligation to make that transportation gratui-
tously was imposed upon the company by article 8 of the concession;
That it is one of the charges for that concession, and not an act of
commerce;
That from the preceding considerations, it arises that the Inter-
oceanic Company of Panama is not in fact either a constructor or
undertaker of work for the benefit of another;
That whatever may be the character of certain accessory clauses and
detailed provisions inserted in the by-laws and in the act of concession,
the principal and dominant object of the company is not commercial;
That its legal character is that of a civil company concerned with
immovables, subjected, as all other companies concerned with immov-
ables, mines, or canals, to the jurisdiction of ordinary law;
That it is of no consequence that divers proceedings were introduced
heretofore before the tribunal of commerce without any exception
having been taken as to its jurisdiction;
That it is established that a great number of other litigations have
already been taken before the civil tribunal; -
And that the exception for want of jurisdiction ratione materiae is a
matter of public order and can always be invoked;
For these reasons, and without its being necessary to pass upon the
objection of inadmissibility interposed to the intervenor; -
Annuls the judgment of the tribunal of commerce of the Seine of the
18th February, 1889; - - - *...**
Deciding anew, discharges the appellant from the condemnations and
dispositions of which he complains; -
Receives Menier Mehut as intervenor in the proceeding;
Declares that by reason of its principal object, the company of the
InterOceanic Canal of Panama is a civil company concerned with
immovables; - - * -
Declares that the tribunal of commerce was without jurisdiction of
the demand against it by the Company of Public Works and Con-
structions; -
Orders the parties before the proper tribunal for the matter to be
passed upon; l . -
Dismisses the Panama Company, the Company of Public Works and
Constructions, and Menier Mehut as to all other demands, exceptions,
and propositions; - - * •
Orders the restitution of the fines to the Panama Company;
Condemns the Company of Public Works and Constructions in the
costs in the first instance and appeal; -
Condemns Menier Mehut for the costs of his intervention;
Settles the costs of the Company of Public Works and Constructions
in the intervention at — ; - -
PANAMA CAN AL TITLE. - 103
Those of the Panama company in the first instance at —
On appeal at -
On the intervention at - -
These comprising the dues of qualification, record, of the minutes,
cost and notification of the present decree;
Allowance made in the said expenses for fees of Bethemont and
Dumas, solicitors, who have required this, upon their showing what
may be due them; -
Done and pronounced in the court of appeals of Paris, Friday,
May 8, 1889, at the public session of the first chamber, where were
present and sitting:
M. de Viefville, president.
MM. de Laborie, Merlier, Gues, Caze, Robert, and Pilet des
Jardins, counsellors. r - -
In the presence of M. Harel, substitute for the general attorney.
Holding the pen, Me. Pioge, clerk of the session. - -
The minutes of the present decree have been signed by the president
and by the clerk of the session.
On the margin is to be read: Registered at Paris, March 13, 1889,
page 83, case 19. Received 37 francs 90 centimes. (Signed:) Druilhet.
Copy conforming to the original: the chief clerk.
- ADM. LOICHEMOLLE.
Examined for the authentication of the signature of Me. Loichemolle,
clerk of the court of appeals of Paris, on the opposite page.
Paris the 26th of August, 1902.
For the first president: -
- EDM. AUBRY.
FXHIBIT 9.
CERTIFICATES OF AUGUST 21–30, 1902, BY THE LIQUIDATOR, CONCERN-
ING JUDICIAL AND OTHER MORTGAGES, PLEDGES OF PERSONAL
PROPERTY, AND LIENS IN GENERAL. (SEE ALSO EXHIBIT 12.)
Q. (a) What proceedings in courts, including the court of cassation,
º taken place since those set forth in the sixth report of the liqui-
ator? . -
A. In France two proceedings had not yet received final settlement
at the date of the sixth report of the liquidator, November 14, 1900:
1. The affair of Gautron, liquidator, against the council of manda-
taires of the civil company for the redemption of new bonds, third
series (issue of March 14, 1888). (See sixth report, pp. 18 to 21.) The
court of appeals of Paris, by decree of July 17, 1901, has confirmed
the judgment in favor of the liquidator. The council of mandataires
has appealed to cassation against that decree.
2. The affair of Von Berg. (See sixth report, p. 21.) Messrs. Von
Berg & Co. claimed from the liquidator the sum of 190,577 francs,
with interest from May 5, 1888, as the price of a steam excavator, of
a transporter, and accessory implements, etc. By judgment, dated
August 7, 1901, the civil tribunal of the Seine condemned the liqui-
dator to pay Messrs. Von Berg & Co. only the sum of 6,000 francs.
On November 15, 1901, Messrs. Von Berg & Co. appealed from that
104 IPANAMA CANAL TITLE.
decision. The matter is pending before the court of appeals of
Paris. -
Paris, August 21, 1902. -
GAUTRON,
The Ziquidator of the Universal Company
of the Interoceanic Canal.
Q. (b) What mortgages, judicial or other, affected the immovable prop-
erty of the canal company on July 1, 1893% What has been done
since with regard to them by the mandataire, or the creditors, or the
bondholders in France or in Colombia? -
A. On the 1st of July, 1893, the Universal Company of the Inter-
oceanic Canal represented by the liquidator did not possess any immov-
able property in France. In Colombia, the immovable property which
it possessed on the Isthmus has not been the object of any execution
proceeding. e -
PARIs, August 21, 1902.
GAUTRON,
The Liquidator of the Universal Company
of the Interoceanic Canal.
Q. (6) What mortgages, attachments, or other equivalent things
existed on July 1, 1893, as to personal property?
A. The liquidator has stated in the fourth report, pages 15 to 21,
the situation of the movable assets of the old company on July 1, 1893.
The lottery bonds, unissued and remaining in his hands, were seized
by Messrs. Baudouin, Piza Lindo & Co., contractors of the old com-
pany, by divers bondholders, and by the registration office.
Thirty thousand five hundred shares of the Panama Railroad Com-
pany were pledged to divers contractors of the old company to
guarantee the payment of the sums due for work done after the
dissolution of the Universal Company of the Interoceanic Canal.
Messrs. Baudouin, Piza Lindo & Co. took at New York measures to
secure their rights which paralyzed the rights of the liquidator as to
the Panama Railroad Company.
The fourth report indicates, on pages 16 et seq., how the liquidator
successfully obtained: -
1. The release from the seizures at the instance of Messrs. Baudouin,
Piza Lindo & Co. and divers bondholders, of the lottery bonds remain-
ing on hand; .
2. The abandonment of the measures taken by Messrs. Baudouin,
Piza Lindo & Co. as to the shares of the Panama Railroad Company;
3. The return by the contractors of the 30,500 shares of the Panama
Railroad Company which had been given to them as a pledge.
Tables annexed to the present note show the sums paid to divers
creditors of the old company in order to render absolutely free the
movable assets of the liquidation.
It is proper to add that the registry office seized the lottery bonds
remaining on hand, in order to secure the payment of the stamp and
transfer taxes upon the shares and bonds of the old company. The said
dues amounted to the sum of 5,185,595 francs, 35 centimes. The law of
July 1, 1893, article 12, remitted that debt of the liquidation. (See
third report, p. 177.) Consequently the liquidator obtained from the
PANAMA CANAL TITLE. 105
registry office a release from the seizures it had caused of the lottery
bonds remaining on hand.
PARIs, August 21, 1902.
: GAUTRON,
The Liquidator of the Universal Company
of the Interoceanic Canal.
Q. (d) What mortgages, judicial or other, or attachments or other
equivalent things, affecting the movable or immovable property, have
come into existence since July 1, 1893% t -
A. In France the movable property of the Universal Company of
the Interoceanic Canal represented by the liquidation has not been the
object of any proceedings in execution since the 1st of July, 1893.
The liquidation possesses no immovable property in France.
In Colombia, the liquidator finds himself at the present moment
in presence of three proceedings, the first phases of which are set
forth in the sixth report of the liquidator: The affair of Schuber,
sixth report, p. 23; the affair of Icaza, sixth report, p. 26; the affair
of Domingo Diaz, sixth report, p. 24. (See sixth report, pp. 23 to 26.)
In the matters of Schuber and Icaza, M. Schuber caused to be seized
and sequestered the building of the director of the New Panama Canal
Company; the heirs of M. Pablo de Icaza caused to be seized and
sequestered the building of the company. At the end of a great num-
ber of decisions upon contests, by the Colombian judges—decisions
which declared void the seizure and sequestration of these immovable
properties—General Alban, governor of Panama, considered it for the
interest of the Colombian Government to have established the inalien-
ability of the two immovable properties seized, which by the terms
of the act of concession (Law 28 of May 18, 1878, article 23) were
to return to the Colombian Government in case of the forfeiture of
the concession. Consequently, on October 5, 1901, the governor
instructed the official attorney at the tribunal of Panama to introduce,
in the name of the nation, a tierce opposition of exclusion as to the
immovables seized.
A Colombian judge declared that opposition inadmissible, basing
his decision on the fact that General Alban did not represent the
Colombian Government. As a matter of fact, the seizure and seques-
tration of the two immovables continues, but the liquidator has been
informed, by a letter of March 24, 1902, that the Government of
Bogotá ordered the official attorney at Panama to introduce a new
tierce opposition in the name of the nation. The order as to this
tierce opposition was inserted in the Official Journal. Finally, as a
result of that tierce opposition, the superior tribunal of Panama by a
decision of May 7, 1902, setting aside its previous decision, suspended
the judgment which established the seizure and sequestration and
ordered notification to be given to the liquidator.
If, as there is reason to hope, the Colombian Government causes the
immovables of the company to be declared inalienable and nonseizable,
the liquidator will have only to await the notifications ordered by the
superior tribunal.
Affair of Domingo Diaz, sixth report, p. 24. The supreme court of
Bogotá rejected the application en cassation presented by the liquida-
tor. An expert examination being necessary to determine the lands
106 PANAMA CANAL TITLE.
in regard to which the recovery of M. Diaz will be founded, the liqui-
dator reserves the right to defend before the experts the rights of the
Universal Company of the Interoceanic Canal. .
In a letter of February 1, 1902, the advocate of the liquidator in-
formed him that there was reason to believe that the papers in the
Domingo Diaz matter were lost at the time of the attack by the
ºian revolutionists upon the postal courier between Bogotá and
Honda.
In any event, in the three affairs of Schuber, Icaza, and Domingo
Diaz, the liquidator is ready to take the steps, and if need be to make
the sacrifices, necessary to prevent the Government of the United
States, if it shall acquire the canal, from being disturbed in the enjoy-
ment of the immovable properties which will be ceded to it.
Paris, August 21, 1902.
GAUTRON,
The Liquidator of the Universal Company
of the Interocednic Canal.
Q. (e) What judicial or other mortgages, attachments, liens, or the
like exist in favor of creditors, bondholders, stockholders, or the
liquidator at the present time? . *.
A. There exists at the present time no mortgage, seizure, pledge,
or other thing for the benefit of creditors, bondholders, or shareholders
upon the assets of the liquidation.
Paris, August 21, 1902.
- GAUTRON,
The Liquidator of the Universal Company
of the Interocean?o Canal.
Q. (f) What has become of the Donnadieu affair of 1898?
A. As has been stated in the sixth report, pages 17 and 18, the
the claim of M. Donnadieu to have communicated to him by Messrs.
Lemarquis, mandataire of the bondholders, and Gautron, liquidator
of the Universal Company of the Interoceanic Canal, the documents
useful for an action to obtain payment of the company assets, espe-
cially the register showing transfer of the shares of the said company
(Universal Company of the Interoceanic Canal), was denied by a judg-
ment of the civil tribunal of first instance of the Seine, dated March
17, 1898. (See sixth report, p. 79.)
This judgment was confirmed by a decree of the court of appeals of
Paris of August 4, 1898. (Sixth report, p. 77.) This decree was
executed and has become final. - -
Paris, August 21, 1902.
GAUTRON,
The Liquidator of the Universal Company
of the Interoceanic Canal.
Q. (g) Why was it necessary to have the law of June 8, 1888, con-
cerning lottery bonds?
A. The circumstances in which the old Panama Company solicited
the authorization to issue lottery bonds are set forth in the first report
of the liquidator, pp. 6 and 7. • . -
The last loans proposed to the public had partially failed. On July
PAN AMA CANAL TITLE. 107
26, 1887, the company had offered for subscription 500,000 bonds, 6 per
cent, at 440 francs, repayable at 1,000 francs. The public subscribed
only 258,887 bonds. § March 14, 1888, the company put out 350,000
bonds at 460 francs, payable at 1,000 francs. The public subscribed
only 112,483 bonds. • ‘ .
The company thought that a loan would have more chance of success
if it was presented in the form of bonds giving a right to considerable
prizes, the payment of which would be guaranteed by a special arrange-
ment. But in France lotteries are prohibited, generally, by a law of
May 21, 1836, by article 1 thus worded: “Lotteries of all kinds are
prohibited.”
A special law, analogous to those that have authorized, the city of
Paris, the Credit Foncier of France, and the Suez Canal Company to
issue lottery bonds, was necessary to get rid for the Panama Company
of the prohibition decreed by the law of May 21, 1836. The law which
authorized the Panama Company to issue lottery bonds, voted by the
Chamber of Deputies and the Senate, was promulgated on June 8, 1888.
Paris, August 21, 1902.
\.
GAUTRON,
The Ziquidator of the Universal Company
of the Interocednic Canal.
Q. (/) Have there been any other bond issues authorized by laws
specially passed for that purpose, and has there been other authority
granted to the old company; and was there ever any authorization or
surveillance of the old company by the public administration?
A. No other issue of bonds of the Universal Company of the Inter-
Oceanic Canal, represented by the liquidator, has been authorized by
a special law. The only authorizations are those which have been
accorded:
1. By the law of June 6, 1888, to the Universal Company of the
InterOceanic Canal, then solvent, to issue lottery bonds. . .
2. By the law of July 1, 1889, to the liquidator of the Universal
Company of the InterOceanic Canal, to negotiate the lottery bonds
without limitation of price and without interest.
The Universal Company of the InterOceanic Canal, represented since
February 4, 1889, by the liquidator, being a company absolutely pri-
vate, the Government (administration) has no right to exercise any sur-
veillance. When the Universal Company was solvent, it was subject
to no control by the Government (administration), but the judicial
power had the right to repress infractions of its by-laws, and of the
laws governing companies, which it might have committed. The
judicial power never had to make use of that right.
Since the dissolution of the company the liquidator, representing
the Universal Company of the Interoceanic Canal, finds himself placed
under the control of the civil tribunal of the Seine which appointed
him and has had the power to dismiss him. The law of July 1, 1893, .
has specially regulated, as concerns the liquidation of the Universal
Company of the Interoceanic Canal, the conditions of that control.
Paris, August 21, 1902. -
GAUTRON.
The Zágºdator of the Universal Company
of the Interocednic Canal.
108 PANAMA CAN AI, TITLE.
Definitive settlement of the accounts of the contractors.
Dates of agreements
Sums due * .
Names Of contractors. after and %h tº: #. Dates and nature of the payments effected.
- * . agreement. | P.Q.M., 94 * r t - -
agreements.
. JFrCún.6s. -
American Contract- || 2,279, 537.70 | Agreement of Dec. Payment of Jan. 10, 1891: Fl'Clºcs.
ing and Dredging 31, 1890, prior to Cash. . . . . . . - - - - - - - - - - - - - - - - 1,500,000.00
COmpany. the law of July 1, Turning over of dividends
1893. on 3,000 shares P. R. R. . . 217,037. 70
7,500 lottery bonds, at 75
francs each. ... ---------. 562, 500.00
Total ---------------- .... 2,279, 537.70
Baratoux, Letellier 2, 269,009. 33 || Agreement of Aug. Payment of Nov. 29, 1894:
& Co. - 8, 1894; approved 18,270 lottery bonds, at
Aug. 10. 124.18% francs each . . . . . . 2,268,905, 63
Cash----------------------- 103. 70
Total -------------------- 2,269,009. 33
E. Jacob. . . . . . . . . . . . . 2, 126,366.01 | Agreement of Aug. Payment of Nov. 29, 1894:
8, 1894; approved 17.122 lottery bonds, at
Aug. 9. 124.18% francs. . . . . . . . . . . . 2, 126,338. 37
Cash. ---------------------- 27.64
- Total… 2, 126, 366.01
Artigue Sondereg- || 1,921,004, 88 || Agreement of Aug. Payment of Nov. 29, 1894: .
ger & Co. 14, 1894; approved 15,657 lottery bonds, at
Aug. 17. 122.68% francs. . . . . . . . . . . . 1,920,918. 18
Cash----------------------- 86. 70
Total -------------------- 1,921,004, 88
G. Eiffel . . . . . . . . . . . . . 7, 147,264. 33 Adjustment of Jan. Payment of Nov. 29, 1894: - 7–
26, 1894; approved 57,178 lottery bonds, at 125 -
June 29, 1894. francs . . . . . . . - - - - - - - - - - - - 7, 147,250.00
Cash:---------------------- 14.33
Total .................... 7, 147,264. 33
As to Messrs. Vignaud, Barbaud, Blanleuil & Co., they claimed of the
liquidation: (1) Payment for their work, 1,336,154 francs; (2) damages,
15,066,000 francs; (3) the reimbursement of the guarantee funds held
by the company, 1,283,547.20 francs; altogether, 17,685,701.20 francs,
and the restoration of their guarantee deposit, consisting of 37,748
francs of 3 per cent French State annuity (rente), with arrears.
On its side, the liquidation presented itself as a creditor of those
contractors on account of failure to carry out their contracts, claiming
in return a sum of 8,658,705.65 francs.
An agreement dated March 7, 1896, approved by the tribunal of
commerce (judgment of March 23, 1896), and by the civil tribunal of
the Seine (judgment of May 22, 1896), has put the parties into accord.
The contractors have only entered into possession of their guaranty
of 37,748 francs of rentes, and have abandoned all their other preten-
sions. The liquidation, on its side, renounced its claims, on condition
that it should remain in possession of the back receipts obtained by it
on that guarantee fund, to wit, 84,933 francs, and that it should receive
the back receipts obtained by the Caisse of Deposits and Consignments
on the guaranty since the day of the deposit, to wit, 188,740 francs.
This arrangement was carried into effect on June 6, 1896.
Paris, August 22, 1902.
GAUTRON,
The Ziquidator of the Universal Company.
†: )
M. DOumic
List of creditors obtaining judgments
PANAMA CANAL TITLE.
the InterOceanic Canal.
109
against the liquidation of the Universal Company of

Date Of the judgments .
Names Of the & * * * * * e Amount of
arl H and designation of Kind of indebtedness. i. * Result.
Creditors. the tribunal. judgments.
EON DPIOI.D.E.R.S. -
F')'CºnCS.
Laurilliard . . . . . Civil tribunal of the 20 new bonds, 1st series. 9,000.00 | Paid 10,631.25 francs
Seine; judgment of Interest. . . . .* * * * * * * * * = - - - 1,631, 25 Aug. 25, 1892.
June 25, 1890. - -
G. Fleury . . . . . . . . . . . . do ---------------- 5 bonds, 4 per cent. . . . . . 1,665.00 | Paid 2,001.07 francs
Due from sinking fund. . 29.00 Aug. 27, 1892.
Interest ----------------- 307,07
Veuve Mille . . . . . . . . . . do ---------------- 17 bonds, 5 per cent. . . . . 7,437.50 | Paid Nov. 12, 1892,
11 bonds, 3 per cent. . . . . 3, 135.00 after an agreement
1 bond, 4 per cent. . . . . . . 333.00 reducing the debt
Due from sinking fund-- 215. 12 by one-fifth, 10,609.20
Coupons . . . . . . . . . . . . 2 * * * * 9. 44 francs.
Interest. . . . . . . . . . . . . . . . . 2, 131.50
Total.------------- 13,261.56
Mlle. Joreau . . . .
M. Roger
M. Francois. . . . .
M. DOnnadieu - -
Heirs Of Vaillant
M. DenOvare - - - -
M. Pichot. - - - - - -
M. Delaplace . . .
M. Laporte
M. Gesnys
M. Pilon
Mne. Wve. Le-
pecheux.
Mſ. Dubar . . . . . . .
M. Raffard - - - - - -
M. BOnhoure - - -
Mlle. Tanies - - - -
M. Chappellier. .
M. Estagerie - . . .
Mne. Wve. Sar-
razin.
M. Sassier. . . . . . .
Mme.Vve. Brion
Mme. Wve. Petit.
M. Jamain
* * * * * * * *
All these individual suits and the proceedings resulting from them are to-day suspended
Ú/ ré(tson of the provisions of the law of July 1, 1893.
of Oct. 18, 1894, the liquidator obtained from the bondholders, who had instituted some
Seizure orders and evecution orders, a discharge and a desisting from their appeals, in
) return for the reimbursement pure and simple of the costs, fees, amd outlays of the pro-
ceedings of all kinds in which they had obtained judgments against the liquidation,
leaving at their charge the ea:penses and outlays of the proceedings in which they failed.
Judgments of the first chamber of the civil tribunal of the Seine since the law of July 1,
1893, have decided that the oppositions interposed by these bomdholders are without
object and cam have mo effect.
More than that, by an agreement

DIVERS CREDIT-
ORS IN FRANCE.
NerCam, c O n-
tractOr.
Piza Lindo, &
Baudouin,
COntraCtOrS.
Marolle, civil
engineer.
MuracGioli, con-
traCtor.
Civil tribunal of the
Seine; judgment of
Dec. 12, 1889.
Civil tribunal Of the
Seine; judgment of
Mar. 26, 1890.
Civil tribunal of the
Seine; judgment of
May 21, 1890, judg-
ment of June 17,
1891.
Civil tribunal of the
Seine; judgment of
Apr. 11, 1893.
Work done and damage
Caused.
Ditching work
Work of surveying 250,-
000 hectares of land
granted by Colombia.
Payment of account....
Praſm.cs.
350,000.00
a204,970.76
405,705.00
3,380. I5
Received 366,497 francs
for principal and
interest from the
product of the im-
movable property,
46 Rue Caumartin.
Received 101,012.10
francs from the pro-
duct of the sale of the
immovable property
On the Rue Cau-
martin, and 90,000
francs in Cash Oct.
18, 1894. -
By agreement of July
5, 1892, M. Marolle
consented to receive
300,000 francsin pay-
ment Of all accounts.
This transaction Was
approved July 13,
1892, the payment
made July 28, 1892.
These sums with in
terests are together
4,016 francs; paid
Sept. 4, 1894.
a Including the amount retained as guaranty, 107,023 francs.
110
PANAMA CANAL TITLE.
List of creditors obtaining judgments against the liquidation of the Universal Company of
the Interocednic Canal—Continued. -
- Date of the judgments |. -
Nº. * | * and designation of Kind of indebtedness. ſº Result.
CTCCIlúOTS. the tribunal. JuCig kJ e
DIWERS CRED-
IT O R S IN
FRANCE—ct'd.
JFrancs.
Von Berg & Co...] Civil tribunal of the Price of excavator, 6,000.00 The case is on appeal.
Seine; judgment of transporter, and a C-
Aug. 7, 1901. cessory implements,
DIVERS CRED-
ITORS IN CO-
LOMBIA. -
PéSOS. - -
Metivier-Roch- Tribunal of Com- || Work . . . . . . . . . . . . . . . . . . . 200,001. 53 The liquidator having
et, contractor. merce of Panama; appealed from the
judgment of July judgment, Messrs.
16, 1890. Metivier-ROChet Of-
fered to settle. An.
agreement approv-
ed by the superior
tribunal of the dis-
trict Of Panama,
Sept. 13, 1890, fixed
at 98,000 piasters the
sum to be paid by the
liquidation to settle
all accounts, includ-
ing interest a nºd
C O St S; p a y ment
made Sept. 19, 1890.
Tanguy, con- Tribunal of com- || Work of excavation; 124, 268.33 The liquidation set-
traCtOr. merce of Panama; COntraCt rescinded tled with M. Tanguy
judgment of May Jan. 3, 1888. July 23, 1892, by
19, 1892 means of 120,000 pe-
sos deposited on
Jan. 3, 1888, with M.
. Ehrm a n n as
guaranty Of the
compensation which
$ might be allowed.
Transaction approv-
ed by the superior
• , tribunal Of Panama.
July 25, 1892.
Schuber Bros...] Superior tribunal of Occupation by the com- 28,339. 67 | See special note,
- Panama; judgment pany of a part of the
of July 13, 1899. property of Said Juan
Diaz Caballero.
Domingo Diaz. -| Superior tribunal of Occupation of a part of (a) See special note.
Panama; decision the property “Huerta -
of June, 1899. del Gallo.”
Icaza (the heirs) Civil tribunal of the Condemnation for the 41,225.00 DO.
first district of Pan- benefit of the compa- - ' - &
ama; judgment Of ny of 2 hectares 42
Sept. 6, 1897. ares of the property
“Cerro de San Juan,”
bélonging to their
father.
- a 2 Square meters Occupied.
Certified to be correct, August 22, 1902. -
- GAUTRON,
The Jāquidator of the Univ
ersal Company.
STATEMENT OF BONDHOLDERS WHO BEGAN PROCEEDINGS AGAINST THE LIQUIDATION TO SECURE REIMBURSEMENT FOR THEIR BONDS, BUT DID
- NOT OBTAIN JUDGMENTS. -
Statement of judgments, attachments, and injunctions against the Universal Company and the liquidator.
Sums claimed.
Num- - - . COSt Of FOr the Total
Name of bondholder. ber of Nature of bonds. issue ROr the alm Oulnt For amount Of Remarks.
bonds. \}}.} \,..., W.A & Value Of due from GOlll) OllS claims.
bonds. sinking pons.
fund.
* * * Francs. Frames. Fºrd??cs. Francs. Jº'clºcs.
M. Pichot. . . . . . . . . . . . . . 671 || 3 per cent . . . . . . . . . . . . 285. 00 191,235.00 | 10,051.58 |. . . . . . . . . . -
- 280 || 4 per cent - - - - - - - - - - - - 333. 00 93,240.00 1,400.00 - - - - - - - - - - 295, 926.5s (Service made, Feb. 4, 1893. Affair taken from the roll of
* * * it the tribunal (suppressed) Oct. 31, 1895.
284,475.00 11,451.58 . . . . . . . . . .
M. Noyelle. . . . . . . . . . . . . 38 - - - - - do ---------------- 333.00 12,654.00 190.00 - - - - - - - - - - 12,844.00 | Service made Feb. 6, 1893. Affair taken from the roll of
the tribunal Oct. 31, 1895. -
M. Delaplace . . . . . . . . . . 10 | New, first series....... 450.00 4,500.00 | 1,046.60 |.......... ". . ' ' . - - t
-—' 10 | New, second series. . . . 440.00 4,400.00 753. 50 |- - - - - - - - - - 10, 700, 10 Service made Feb. 9, 1893. Affair taken from the roll Of
- 3 * ~ * * the tribunal Nov. 15, 1895.
8,900.00 1,800. 10 ||-----.....
M. Laporte . . . . . . . . . . . . 15 || 3 per Cent . . . . . . . . . . . . 285. 00 4, 275.00 300.00 - - - - - - - - - - -- *
3 | New, second series ...| 440.00 1, 320.00 300.00 - - - - - - - - - - 6, 195. 00 ſº made Feb. 6, 1893. Affair taken from the roll of
- - ; I wo. the tribunal Nov. 15, 1895. .
5,595.00 600.00 - - - - - - - - - -
M. GeSnys . . . . . . . . . . . . . 5 5 per Cent - - - - - - - - - - - - 437. 50 2, 187.50 13.05 49, 10 |
5 || 3 per Cent . . . . . . . . . . . . 285.00 1,425.00 74. 90 11. 75 ini floºm c Y’a i r +c , * : , **
a 2 | Lottery bonds. . . . . . . . 360, 00 720.00 |- - - - - - - - - - - - 16.25 4,497. 55 ſNo jud; nº Affair taken from the roll of the tribunal
\ | \ Nov. 10, 1895.
- 4,322. 50 87.95 77. 10
M. Pilon - - - - - - - - - - - - - - - 2 || 4 per cent ------------ 333. 00 666. 00 11.94 int-vior fit gº tº ~~ gº -
- 3 || New, first series. . . . . . . 450.00 |_ 1,350.00 313.80 } 15.86 2,357.60 | Service made Mar. 24, 1893. No judgment.
- 2,016.00 325. 74 15.86
Mme. Wve. Lepècheux. 2 |. ---- do ---------------- 450, 00 900. 00 209.20 | 1,129.80 2,239.00 | Service made Feb. 8, 1893. No judgment.
E


Statement of judgments, attachments, and injunctions against the Universal Company and the liquidator—Continued.
STATEMENT OF BONDHOLDERS WHO BEGAN PROCEEDINGS AGAINST THE LIQUIDATION TO SECURE REIMBURSEMENT FOR THEIR BONDS, BUT DID .
NOT OBTAIN J UDGMENTS_Continued.
Sums claimed.
Num- - COst Of - For the Total -
Name of bondholder. ber Of Nature Of bonds. issu e R’Or the alm Ount FOr amount of Remarks,
| bonds. º Value of due from , 9. claims.
bOnds. sinking Coupons.
- fund.
Francs. Francs. Jºrancs. Francs. Francs.
M. Dubar . . . . . . . . . . . . . . 12 || 4 per Cent . . . . . . . . . . . . 333. 00 3,996.00 60.00 | . . . . . . . . . .
11 | New, first series . . . . . . 450.00 4,950.00 1,150.60 |. . . . . . . . . .
5 | New, second series...| 440.00 2,200.00 376, 75 . . . . . . . . . . . -
a 9 || Lottery bonds claim- 360. 00 3,600.00 ||------------|---------- 16,333.35 | Service made Feb. 8, 1893. No judgment. a
ed wrongly for 400 -
francs. - -
14,746.00 1, 587.35 |... . . . . . . .
M. Raffard. . . . . . . . . . . . . 24 || 3 per Cent ------------ 285.00 6,840.00 359, 52 |... . . . . . . .
- 3 | New, first SeſleS - - - - - - 450, 00 1,350.00 313.80 - - - - - - - - - - 8,863. 32 Service made Feb. 13, 1893. No judgment.
8, 190.00 673.32 |... . . . . . . .
M. Bonhoure . . . . . . . . . . 29 || 5 per cent . . . . . . . . . . . . 437. 50 12,673.007 . . . . . . . . . . . . . . . . . . . . . . -
148 || 3 per Cent - - - - - - - - - - - - 285. 00 42,180.00 |. . . . . . . . . . . . . . . . . . . . . .
18 New, first series . . . . . . 450. 00 8, 100.00 2,000
* T $. e S i rac, * - - •) F- -: - •ºt g
#|Nº.: #} §::::::::::::::::::: 80,653.00 Service made Feb. 14, 1893. No judgment. b
ſt 20 | Lottery bonds . . . . . . . . 360. 00 7, 200.00 |... ---------|---------.
78,653.00 2,000
Mlle. Tanies . . . . . . . . . . . - 20 || 5 per Cent - - - - - - - - - - - - 437. 50 8,750.00 52.20 - - - - - - - - - - -
70 || 3 per cent . . . . . . : - - - - - 285. 00 19,950.00 | 1,048, 60 |. . . . . . . . . . s
39 || New, Second Series . . . 440.00 15,600.00 2,928. 65 |- - - - - - - - - - 48,329.45 Service made Feb. 14, 1893. No judgment.
** 44, 300.00 || 4,029.45 |..........
M. Chappellier . . . . . . . . 10 ; per cent - - - - - - - - - - - - 285. 00 2,850.00 149.80 . . . . . . . . . . *
50 per cent - - - - - - - - - - - - 437. 50 21,875.00 130. 50 |- - - - - . . . . . - rio a a k-\ 1 R, 1 $ y - tha
40 | New, first series . . . . . . 450.00 18,000.00 || 4, 184.00 |. . . . . . . . . . 47, 189. 30 ſº Feb. 15, 1893. Not put on the roll of the
* 42,725.00 || 4,464. 30 |.......... - - -
M. Estagerie . . . . . . . . . . . 34 | Divers b on d's not |.......... 13,932.00 1, 355.03 || 3, 760.00 19,047. 03 Service made Feb. 10, 1893. Affair taken from the roll
* º specified. . Of the tribunal NOv. 15, 1895.
Mme. Wve Sarrazin - - - - 40 || 5 per cent . . . . . . . . . . . . 437. 50 17,041.00 104.40 4, 500.00 21,645.40 Service made Feb. 21, 1893. Affair taken from the roll
- of the tribunal Nov. 15, 1895. -
E

$
:
OO
M. Sassier
Mme. Wve. Brion. . . . . . . . . . . . . .
Mme. Wve. Petit- - - - - - -] . . . . . . . .
M. Jamain-------------|--------
* * * * * * * * * * * * * | * * * * * * * *
* * * * * * * * * * | * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * : * * * * * * * * * * * * * * I e º sº as º ºs = < * * * *
* * * * * * * * * * L = a me m = m ms as ºn º ºs ºn an as i = * * * * * * * * * * *
* = tº s = * * * * *s sº es: º as as ºs º an º ºs e s m = | * * * * * * * * * * * *
* * * * * * * * * *
{ These four Suits were taken from the roll Of the tribunal
Nov. 3, 1894.
576,820.68
a The lottery bonds do not constitute titles to indebtedness against the liquidation, except as to the coupons; so also the new bonds, third series.
Certified to be correct.
Paris, August 28, 1902.
The
GAUTRON,
Liquidator of the Universal Company.
STATEMENT OF BONDHOLDERS WHO OBTAINED CON DEMNATIONS AGANs, *E LIQUIDATION OF THE UNIVERSAL COMPANY OF THE INTEROCEANIC
ANAL. -
- º Due from *
,, . Number an H--- rs a 4. COst Of Value Of * ~ 1-5 AmOunt Of * *
Name of bondholder. Of bonds. Nature of bonds. issue. bonds. sº judgments. Date of judgments.
- Frctmcs. Francs. Francs. Jºrcincs.
Mlle. Joreau. . . . . . . . . . . 265 || 4 per Cent . . . . . . . . . . . . . . . . . . 333. 00 88,245.00 1,582.05
20 || 5 per cent ------ - - - - - - - - - - - - 437. 50 8,750.00 52. 00 --
40 | New, first series . . . . . . . . . . . . 450. 00 18,000.00 4, 184.00 Judgment of Jan. 26, 1893, requiring, moreover, the pay-
40 || New, Second Series - - - - - - - - - 440.00 17,600.00 3,012.00 || 153,424.25 ment of interest dating from Dec. 14, 1888, according to
40 || 3 per Cent . . . . . . . . . . . . . . . . . . 285. 00 11,400.00 599. 20 the law.
143,995.00 9,429.25 |
M. Roger -------------. 36 |- - - - - do---------------------- 285. 00 10,260.00 539. 28 *
ºr pº &
8 5 per Cent * * * * * * * * * * * * * * * * * * 437. 50 3, 500. 00 20. 88 14, 320. 16 DO.
13,760.00 560. 16
M. François . . . . . . . . . . . 40 || 5 per Cent - - - - - - - - - - - - - - - - - - 437. 50 17,500.00 | 104. 40
42.] 3 per Cent - - - - - - - - - - - - - - - - - - 285. 00 11,970.00 629. 16
10 | New, second series . . . . . . . . . 440.00 4,400.00 753.00 35, 356. 56 DO
33,870.00 1,486. 56
M. Donnadieu - . . . . . . . . - 241 || 5 per Cent - - - - - - - - - - - - - - - - - - 437.50 | 105,437.50 629. 01
10 || 3 per cent - - - - - - - - - - - - - - - - - - 285. 00 2,850.00 149.80
15 New, first Series. . . . . . . . . . . . . 450.00 6, 750.00 1, 569.00 117,385.31 DO.
115,037.50 2, 347.81
º:




Statement of judgments, attachments, and injunctions against the Universal Company and the liquidator—Continued.
STATEMENT OF BONDHOLDERS WHO OBTAINED CONDEMNATION *Aºs. THE ºuipATION OF THE UNIVERSAL COMPANY OF THE INTEROCEANIC
ANAL–COntinued. -
T r - w ! ---, 1-3 > r3 f i
Name of bondholder. Of bonds. Nature Of bonds. issue. bOnds. * judgments. Date of judgments.
r Francs. Frames. Pramcs. Frames. -
M. BOugala . . . . . . . . . . . . 30 | New, second series . . . . . . . . . 440.00 13, 200.00 2,259.00 15,459.00 Judgment of Jan. 26, 1893, requiring, moreover, the pay-
ment of interest dating from Dec. 14, 1888, according to
the law.
M. Debrys . . . . . . . . . . . . . 260 || 5 per cent . . . . . . . . . . . . . . . . . . 437. 50 113,750.00 678.60
20 || 4 per cent - - - - - - - - - - - - - - - - - - 333.00 6, 660.00 119.40
20 | New, first series. . . . . . . . . . . . . 450.00 9,000.00 2,092.00 || 132,300.00 DO.
129,410.00 2,890.00
Heirs of Vaillant - - - - - - 98 || New, second series . . . . . . . . . 440. 00 43,120.00 || 7,379. 40
2 | New, second series (amort- | 1,000.00 2,000.00 |. . . . . . . . . . . .
ized Or sunk). 52,499. 40 DO.
45, 120.00 7,379. 40 |
M. DenOVarre . . . . . . . . . . 1 | New, first series - - - - - - - - - - - - 450. 00 450.00 104. 60 554. 60 DO.
COnSOrtS DOulmic - - - - - - 10 || 5 per cent - - - - - - - - - - - - - - - - - - 487. 50 4,375.00 26, 10
16 || 3 per Cent . . . . . . . . . . . . . . . . . . 285. O0 4, 560, 00 239.68
12 || 4 per cent - - - - - - - - - - - - - - - - - - 33. 00 3,996.00 71.64 -
27 | New, first series . . . . . . . . . . . . 450. 00 12, 150.00 2,824. 20 38, 548.62 Judgment of Mar. 23, 1893.
20 | New, second series . . . . . . . . . 440.00 8,800.00 1,506.00
33,881.00 || 4,667. 62
Salleix Laboige - - - - - - - 29 || New, second series, served 440.00 725. 00 Judgment of Jan. 26, 1893. Not served upon the liquida-
Number
Cost Of
Value Of
JDUle from
AmOunt Of
* * * * * * * * * *
pleadings for.
13, 261.70
573, 109.60
tion.
Certified to be correct.
Paris, August 30, 1902.
GAUTRON,
The Løguidator of the Universal Company.
H

PANAMA CANAL TITLE. 115
EXEHIBIT 1 O.
EXTRACTS FROM REPORTS OF THE LIQUIDATOR SHOWING LITIGA-
TION IN FRANCE AND PANAMA, PLEDGES, SETTLEMENTS WITH
CONTRACTORS, ETC.
[No. 1, third part.]
MANAGEMENT OF M. BRUNET, FEBRUARY 4, 1889, TO MARCH 8, 1890.
M. Brunet came into office on the 4th of February, 1889. On this
date the situation of the enterprise on the Isthmus was most critical.
The liquidator found it impossible to continue the works, the sudden
stoppage of which, the sending away of several thousands of work-
men might bring about serious troubles and irreparable disasters.
The contractors could not leave their workshops and reconcile their
workpeople from one day to the next, and they were not disposed to
give up these workshops and the matériel until after their respective
situations had been definitely settled.
In short, the general state of public opinion and the disposition
manifested in the financial world at the commencement of 1889 was of
such a nature as to justify the liquidator in thinking that the transfer
of the work to a new company was not absolutely impossible. It was,
therefore, necessary to proceed with a certain amount of prudence and
not definitively compromise, by too prompt action, the whole future of
the undertaking.
On the other hand, if this favorable hypothesis was not realized, it
was the duty of the liquidator to attempt to take up again and con-
tinue the work by means of the formation of a company of construction.
The work already done, the considerable quantity of matériel
brought to Colombia and in place for working, had an incontestable
value if used to continue the excavation of the canal; it would have
been quite a different matter had the scheme been definitively aban-
doned. Also, the works must be taken care of, the matériel preserved
on a line of plants of 75 kilometers. For this resources were deficient.
A seizure made by one of the contractors on the Isthmus, the company
of public works and constructions, of money in the hands of two com-
panies in Paris, debtors of the Panama Company, made sums of money
which would have been very useful to the liquidator unavaila le.
The liquidator suddenly found himself deprived of large capital
which he expected to have at Panama, and on which he had counted
to pay the necessary expenses on the Isthmus. About the 10th to the
15th of February, 1889, the directors of the Panama Company, con-
trary to the instructions of the liquidator, had paid, under the influence
of a panic and exaggerated fears, to all the employees working on the
. Isthmus, three-quarters of the indemnity in proportion to the length
of their service which the company were liable for in the case of dis-
missal of the workmen. The total amount of the payments thus made
was 1,582,000 francs. However interesting may have been the situa-
tion of those employees, these payments still left remaining the obli-
gation to bring back to France these workmen and were untimely,
occurring as they did just at the moment when the liquidator had
scarcely at his disposal the necessary funds to avoid the whole aban-
donment of the scheme and the disastrous consequences of that.
On the other hand, the liquidator could not attempt in the future to
form a company for the accomplishment or finishing the canal without
116 PANAMA CANAL TITLE.
having previously caused the formation of a commission of examina-
tion which would have for its task to render an account of the value
of the work accomplished, of the machinery, materials, etc., and give
an opinion as to whether the work could be accomplished, and under
what conditions. It was necessary to provide for the expenses of such
an investigation and to take steps during it and afterwards, if it should
be necessary, to provide for the protection of the work already done
and for keeping in condition the machinery, etc.
Above all it was important to avoid any sudden interruption of work
on the Isthmus. After the 9th of February, 1889, the liquidator had
entered into, with four large contracting firms—namely, MM. Artigue,
Sonderegger & Co., Baratoux, Letellier & Co., M. Eiffel, Jacob—the
agreements and pledges (nantissements) prepared by the temporary
administrators and authorized by the tribunal.
The same day he gave them bills of exchange representing the amount
they had earned since the suspension of payment up to the 9th of
February. The work which was to follow was also to be settled by
means of bills accepted by the liquidation.
The 18th of February and the 23d of March, 1889, the liquidator
entered into identical arrangements with M. Slaven, president of the
American Contracting and Dredging Company, in that case the pledge
consisting of the deposit of 3,000 shares of stock of the Panama Rail-
road Company, which pledge was made in the American manner.
By means of these successive agreements the work has been con-
tinued on the Isthmus up to various dates, reaching from the 15th of
March to the 15th of May, 1889. -
But the liquidator had another mission to fulfill. In appointing him
the civil tribunal had given him “the most extensive powers, notably
to cede or contribute to the new company all or part of the company’s
assets, to make or ratify with the contractors of the Panama Canal all
agreements, having for their object to assure the continuation of the
Work.” -
On the supposition that the work was to be soon resumed, as on the
supposition that the liquidator could only effect the establishment of a
company to accomplish it, it was of the highest interest to disengage
the liquidation from contracts which had been entered into with bur-
densome conditions, with a view to assure the very prompt construc-
tion of the canal with locks, and which would bear º upon any
company disposed to undertake the continuation of the work. More-
over, the liquidator was not able to repossess the workshops and
machinery, etc. (matériel), which had been turned over to the con-
tractors by the company except after having arranged the respective
claims of these contractors.
The conditions on which those arrangements were made varying
according to the original arrangement with each contractor it is proper
to consider them separately. -
It must be remembered that all the canceling of contracts had taken
place without the liquidator’s according to the contractors any indem-
nity for loss of profits or other causes.
COMPANY OF PUBLIC WORKS AND CONSTRUCTIONS.
The company of public works and constructions had remained adverse
to all the arrangements made between the provisional administrators
PANAMA CANAL TITLE. 117
and the other large contractors. They had brought several suits both
before and after the suspension of payment.
1. On the 6th of September, 1888, they summoned M. Ferdinand de
Lesseps and the council of administration of the Panama Company for
damages before the tribunal civil of the Seine on account of certain
expressions in the report presented on the 1st of August to the ordi-
nary general meeting of stockholders. . *
2. On the 7th of September, 1888, they summoned the Panama Com-
pany before the tribunal of commerce of the Seine to be condemned
to the guarantee of the sum of 609,139 francs claimed from the company
of public works and constructions by M.M. E. Jacquemin and associates,
subcontractors. s * -
3. On the 13th of October, 1889, the society of public works and
construction raised the figure of the preceding demand to 13,335,903.55
frâncs. They also demanded, in view of the situation of the company,
to be guaranteed by it against the claims of subcontractors, and
claimed the reimbursement of expenses occasioned by the stopping of
the works.
4. The canal company, acting on the advice of its provisional admin-
istrators and administrative council, on the 7th of January, 1889,
summoned the society of public works and construction before the
tribunal of commerce for payment of 8,702,756.30 francs.
6. However, under date of the 13th of December, 1888, the society
of public works and construction had made seizures by way of gar-
nishment, limited finally to 2,000,000 francs by an order of the presi-
dent of the civil tribunal, of debts owing to the Panama Company by
two credit companies. Thus, as has been said above, this opposition
paralyzed resources of which the liquidator had great need.
On the 28th of February, 1889, there took place between the liqui-
dator and the company of public works and constructions a transaction
on the following basis: -
1. All accounts without exception between the parties are to be
settled by allowing to each of them the sums held by them at the date
of the agreement.
2. The parties are to desist from all suits against each other.
3. All previous agreements are revoked.
4. The plants with all the machinery, etc., the machinery on hand
for replacing the worn or broken machinery, the fittings and supports
of the machinery, the dwelling houses, the other buildings, magazines,
etc., existing at the said plants are to be turned over to the liquidation
in the condition in which they may be and such as they shall be at the
time of the turning over. .
5. The final deficiency as to articles to be furnished, so far as they
have been furnished, or are yet to be furnished by the canal company, for
the establishments of the company of public works and constructions
shall be settled at a sum arranged in view of the present condition of
the canal company, the articles to be turned over to the canal company
in full ownership.
6. The company of public works and constructions charges itself
with the settlement of the accounts of Jacquemin, and desists com-
pletely from the demand which it has made against the company as
guarantor.
7. The company of public works and constructions likewise renounces
all claim against the company on account of the ultimate claims of its
workmen.
118 PANAMA CANAL TITLE.
8. The canal company will reimburse the amount deposited as secu-
rity and the guaranty retained, which belonged to the company of
public works and constructions.
9. The company of public works and constructions withdraws from
all the opposition it has instituted.
10. The parties reciprocally abandon all rights of recovery and claims.
This agreement has been approved by a judgment of the Tribunal of
the ºne. dated 5th of March, 1889; registered on the 19th of the same
month.
CONCERN OF VIGNAUD, BARBAUD, BLANLEUIL & CO.
At the time of the suspension of payment the position of these con-
tractors was such that it was necessary for the canal company during
several months to provide for the payment of their workmen.
On account of the condition of the company, the provisional admin-
istrators were compelled to limit, and finally to stop, that favor. On
the 23d April, 1889, Messrs. Vignaud, Barbaud, Blanleuil & Co. pro-
ceeded against the liquidator to have their contracts annulled, for the
payment of 16,000,902 francs 8 centimes, and for the reimbursement
of the sum of 2,265,000 francs, representing their security and money
retained as guaranty. The liquidation has made a cross demand,
amounting to 8,658,705 francs 65 centimes.
During the course of these proceedings the company of Vignaud,
Barbaud, Blanleuil & Co. has been thrown into judicial liquidation by
a judgment of the tribunal of commerce, dated May 4, 1889.
The tribunal has converted the judicial liquidation into a bankruptcy
proceeding, by judgment of June 15, 1889.
M. Mauger, the bankruptcy syndic, has revived the suit on June 26,
1889, and submitted propositions of settlement. The negotiations had
not terminated at the time of the resignation of M. Brunet.
Accordingly, the suit is still pending before the civil tribunal.
The liquidator has since made definitive arrangements with the five
contracting concerns who, on the request of the provisional adminis-
trators and afterwards his own request, consented to continue the
works on the Isthmus. These five concerns are MM. Artigue, Son-
deregger & Co.; Eiffel; Baratoux, Letellier & Co., Jacob, and The
American Contracting and Dredging Company.
CONCERN OF ARTIGUE, SONDEREGGER & Co.
On the 25th of April, 1889, the liquidator canceled the contract
with Messrs. Artigue, Sonderegger & Co. on the following conditions:
1. Messrs. Artigue, Sonderegger & Co. abandon all their rights to
damages of any kind that may be due from the company.
2. The canal company recovers all the machinery, etc., and acces-
sories in the condition in which they may be found, and discharges
the concern from all responsibility for them.
3. The ultimate arrangement as to the work actually performed shall
be arranged in conformity with the contracts. And to determine the
quantity exactly of cubic meters excavated, there shall be a joint
measurement on the ground.
According as the results of that verification shall give a cubic meas-
ure greater or less than that actually paid for by the company, there
is to result a debit or credit for Messrs. Artigue, Sonderegger & Co.,
who are to pay all expenses. -
PAN AMA CANAL TITLE. 119
The settlement shall be by bills (traites).
4. All preceding agreements, with the exception of the transac-
tion constituting the pledge of 9th of February, 1889, are annulled.
and canceled. .
This agreement has been executed; the measurement on the ground
has taken place and the contracting concern has been found to be a
debtor for the sum of 319,264.66 frs, which it has paid in bills on
the 26th August, 1889.
CONCERN OF MI. EIFFEL.
The definitive arrangement with M. Eiffel took place on the 11th of
July, 1889. After an examination of their respective claims, the
parties agreed upon the following points:
1. The two parties hold themselves free of all engagements, under
reserve of the regulation provided in No. 4 hereinafter and under
the benefit of the restitution which is hereinafter explained.
M. Eiffel has received from the company allowances on account and
advances, to be repaid for the putting in place and furnishing of the
things necessary for the construction of 8 locks.
These allowances and advances were to cover not only the value of
the supporting works and the articles but also the expenses attending
their preservation and alteration up to the completion of the canal
work if the canal work had been carried to a conclusion. They com-
prise, besides, a part of the remuneration of the contractor up to the
finishing of the locks.
It has resulted from reports made from the Isthmus, by order of the
liquidator, that M. Eiffel has complied with his engagements so far as
concerns the installations and the articles necessary for the construc-
tion of the 8 locks, but the interruption of the work put a stop to the
expenses hereinabove mentioned and left the contractor a portion of
the benefits which did not arise from a finished work. +
In these circumstances it appeared just to the liquidator to make
M. Eiffel restore a part of the allowances. This restitution has been
fixed by agreement at the sum of 3,000,000 francs, which M. Eiffel
has paid to the liquidation; that is to say:
- Francs.
In money------------------------------------------------------------ 2, 280,082
In notes ------------------------------------------- - - - - - - - - - - - - - - - - - - 300,000
By abandoning the money retained as guaranty by the company - - - - - - - - 419,918
3,000,000
2. M. Eiffel turns over to the liquidator all the large and small
matériel, the machines, constructions, implements, supplies of all
sorts, as well as the tracks, dams, supporting works, houses, buildings,
magazines, sheds, etc., all of these in the condition in which they may
be on the Isthmus, without any exception or reservation.
M. Eiffel puts at the disposition of the liquidator in the condition
of manufacture in which they may be the materials of all kinds
destined for the locks, and at present in the plants on the Isthmus,
or in the shops and factories of M. Eiffel and the shops of those fur-
nishing them to him in France.
The inventory of the matériel shall be delivered within eight days
to the liquidator, who will take charge of said things.
M. Eiffel will remain chargeable for one year with the expense for
rent of the ground on which these materials are or may be placed.
120 PANAMA CANAL TITLE.
M. Eiffel becomes personally responsible for all claims which may
be made by those furnishing the materials to him on his order; he
can not, on this ground, have any recourse against the company.
3. The company, which has already taken charge of the material
and installations in the condition in which they were found, gives
M. Eiffel a release of responsibility for them; there shall be settled a
definitive arrangement as to the work which has been done by
M. Eiffel. -
4. The debit or credit which may result therefrom for M. Eiffel will
represent the settlement of all accounts. The settlement shall be in
bills returned by M. Eiffel, or in acceptances by the liquidator if
M. Eiffel is found to be a creditor. -
5. The liquidator will restore within three days after the judgment
of confirmation the bills and values belonging to M. Eiffel either as
guaranty retained or as security.
6. The pledging of February 9, 1889, is continued in force.
7. The present agreements will be definitive after they have been
approved by the tribunal at the instance of the liquidator.
8. Each party shall pay half of the expenses of registration and
approval by the tribunal.
This agreement was approved by a judgment of the tribunal of the
Seine dated July 31, 1889, registered the 6th of August following.
In execution of article 4 of this convention the status of the work
done by the concern has been established by the parties acting in
accord, and M. Eiffel has been recognized as a creditor to the amount
of 853,896.75 francs, which has been paid him in bills accepted by the
liquidator. -
CONCERN OF BARATOUX, LETELLIER & CO.
The arrangement with Baratoux, Letellier & Co. has been concluded
on the 23d October, 1889, on the following conditions: -
1. The parties are held released from all engagements whatever and
renounce on both sides all claims;
2. The contractors abandon to the canal company a part of the
matériel and installations belonging to them;
3. The company takes charge in the condition in which they are
found all matériel and installations which belong to it and releases
the contractor from his responsibility; - -
4. The definitive settlement of the amount of work performed by
the contractors has resulted in a credit of 433,585.72 francs in favor of
the contractors;
The liquidator accepts, up to that amount, bills drawn by MM.
Baratoux, Letellier & Co.
5. The pledge of February 9, 1889, is continued in force;
6. All accounts are respectively closed and ended;
7. The agreement will be definitive after approval by the tribunal.
This convention has been approved by a judgment of the civil tri-
bunal of the Seine, dated November 20, 1889, registered December 7
of the same year.
CONCERN OF JACOB.
The dissolution of the contract with the Jacob concern could not be
effected by M. Brunet on account of the number and large amount of
the claims presented by the contractor.
PANAMA CAN ATL TITLE. 121
The examination of these claims was commenced by M. Brunet
before he ceased to act, but their settlement remained in suspense and
is being arranged at present.
AMERICAN CONTRACTING AND DREDGING COMPANY.
The settlement of the affairs of this concern requires waiting for an
expert examination now going on to determine the cubic excavation
done by them in a limited section of the canal.
This controversy was not arranged by M. Brunet during his incum-
bency, and is still under discussion.
Besides these five great concerns there existed contracts of less
importance, the definitive settlement of which had not been accom-
plished on account of disagreements between the company and the
contractors. These are the contracts with Nercam and Piza, Lindo,
Baudouin & Co. -
NERCAM CONCERN.
M. Nercam, charged in the month of January, 1886, with works
of derivations to the canal, demanded the dissolution of his contract,
the payment for the work executed, and compensation for the injury
which had been caused him, to the total amount of 1,200,000 francs.
By judgment of December 11, 1889, the civil tribunal of the Seine
has declared the contract dissolved and has condemned the liquidation
to pay to this contractor, for the two chief reclamations, a total sum of
º francs, but to accord to the liquidator a delay of a year to free
imself.
PIZA, LINDO & BAUDOUIN CONCERN.
An identical solution has intervened for these contractors, charged
like the preceding with works of derivations on the canal, who claim
307,023 francs, though on March 26, 1890, the civil tribunal of the
Seine pronounced the dissolution of the contract and condemned the
liquidation to pay to that concern a sum of 204,970.76 francs, in which
total were 107,023 francs, the amount of the retained guaranty, and
gave the liquidator a year in which to settle.
The retaking of matériel by the agents of the liquidation on the
Isthmus and the restoration of the plants have given rise to no
complication.
[Extract from second report of the liquidator.]
On the 2d of December, 1890, a seizure was made, or attachment in
the hands of the Lottery Bond Company, of prizes due and to become
due to the liquidation upon bonds held by that company. % +
The individual proceedings taken by several shareholders created
many difficulties, which would only increase if a solution was not
arrived at without delay. *
On the other hand recent publications by journals in America and
Colombia revealed the fact that the United States, knowing how much
more rapidly and inexpensively the Panama Canal can be built than
any other, was awaiting the moment when it could get the benefit of the
work commenced and bring it to a conclusion with small expense with
out taking any account of the efforts and the sacrifices previously made.
122 PANAMA CAN AL TITLE.
The Republic of Colombia was commencing to regard with a less
hostile eye the American views.
The civil tribunal of the Seine, doing what an extraordinary general
meeting of the stockholders of the Panama Company had not been able
to do, since such a meeting had been found to be impossible, gave the
liquidator the most extensive powers—“ notably to cede or contribute
to any new company the whole or part of the company assets.”
In some months, perhaps in some weeks, the difficulties experienced
by the liquidator would have increased to such a point as to render
impossible the execution of this mission (mandat).
It was necessary, then, quickly to arrive at one of two solutions:
The constitution of a new company for the construction of the canal,
Or, all hope of recommencing the work being finally abandoned, the
liquidation to be finished (la liquidation effective). Assuredly, not-
withstanding the expressed wishes of a great many bondholders, it was
not to be expected that Parliament would guarantee or patronize an
undertaking which is of a private character. * * * It did not suit
the Government or Parliament to cause hopes to arise which might
Once again transform themselves into cruel deceptions. .
But it was not to be overlooked that there exists an amount of
material, machines, etc. (un matériel), which was very important, and
which has no value if the work of the canal is not resumed, and a total
of Works, constructions, materials, workshops, which return to Colom-
bia if there should be a complete abandonment of the enterprise
unhappily interrupted.
THE JACOB CONCERN.
M. Jacob claimed from the liquidation for damages resulting from
the breach of his contract: The concession to other concerns or execu-
tion by the company itself of works which should have been given to
him; failure to receive in due time or condition matériel to be furnished;
delay in the execution of certain dredgings; payment of bills for articles
intended to replace others, etc.; the stopping of the work by the fault
of the company; a material error in accounts; loss by exchange of
money, and finally for expense of preservation and protection of
matériel, a sum of 8,826,973.22 francs.
The liquidator considered that all these demands should be resisted.
It appeared to him after a revision of the invoices that there was due to
the concern only the sum of 553,065.50 francs. There was to be added
to that sum the guaranty in the safe of the company and belonging to
M. Jacob, 250,000 francs.
As a result a transaction took place between the liquidator and M.
Jacob on July 25, 1890. -
The definitive statement of the sum remaining due to the latter to
settle all accounts has been arranged at 803,065.50 francs.
The liquidator has accepted, to that amount, bills drawn by M.
Jacob and bearing 3% per cent interest, the said notes guaranteed by
special pledge (mantissement) of the shares of the Panama Railroad
Company already turned over to the contractor.
M. Jacob has abandoned to the liquidation all the matériel, installa-
tion and construction implements, movable property, and supplies of
whatever kind belonging to him on the Isthmus.
PAN AMA CAN AI, TITLE. 123
The parties have reciprocally released each other from every engage-
ment and renounced all ulterior claims. This convention has been
approved by a judgment of the civil tribunal of the Seine, dated July
30, 1890. - *
MáTIVIER-ROCHET CONCERN.
In the course of a controversy between the contractors and the com-
pany the latter has placed in the hands of MM. Ehrmann & Co.,
bankers at Panama, a guaranty of 100,000 piasters.
As a result of an expert examination the liquidation was condemned
On July 16, 1890, by the tribunal of commerce of Panama to pay the
contractors 200,001 piasters 53 centimes.
The liquidator having appealed from that decision, M.M. Métivier
and Rochet made offers of settlement. It has been agreed that the
liquidator is to pay, to settle all accounts, including interests and
expenses, 98,000 piasters, and withdraw from the hands of MM.
Ehrmann & Co. 2,000 piasters. This agreement was approved the 13th
of September, 1890, by the superior tribunal of the district of Panama
and has been executed.
AFFAIR OF THE AMERICAN CONTRACTING AND DEEDGING COMPANY.
Mr. H. Slaven, representing this concern, claimed for work per-
formed since the dissolution of the Panama company the payment for
which was guaranteed by titles subscribed the 8th of January, 6th of
March, 11th of June, 1889, and by a pledge of
Francs.
3,000 shares of the Panama Railroad stock - - - - - - - - - - - - - - - - - - - - - - - - - - 2, 579,510. 56
Interest----------------------------------------------------------- 132,091.97
His guaranty retained --------------------------------------------- 300,000.00
In addition, on account of a litigation prior to the dissolution of the -
Panama company ----------------------------------------------- 600,000.00
3, 611, 602. 53
At the end of December, 1890, the obligations subscribed and sev-
eral times renewed not having been paid when due, Mr. H. Slaven
manifested his intention of realizing on his pledge.
The importance was realized of maintaining in the hands of the
bondholders the ownership of the shares in the American Railway;
inspired with this thought, the liquidator sought means to set free the
3,000 shares held by Mr. H. Slaven.
By the terms of an agreement of the 31st of December, 1890, exe-
cuted on the 10th of January, 1891, the liquidator turned over to Mr.
H. Slaven:
FrancS.
In money and dividends received on the Panama Railroad shares - - - - 1, 717,037.70
7,500 lottery bonds at their value on January 10, 1891. - - - - - - - - - - - - - - - 562, 500.00
2, 279, 537. 70
Mr. H. Slaven has surrendered to the liquidation the obligations
which he has in his hands and the 3,000 shares of railroad stock and
the parties have renounced all claims.
Admitting, which is improbable, that the 7,500 lottery bonds would
have been realized at 75 francs, this agreement resulted in the aban-
donment by Mr. H. Slaven of a sum of 1,332,064.83 francs of his
pretensions.
124 PANAMA CAN AL TITLE.
MAROLLE AFFAIR.
On the 20th of March, 1889, M. Marolle, civil engineer, to whom
had been confided the admission of proceeding in concurrence with
two Colombian engineers to the work of measuring, marking, and
platting of the 250,000 hectares of land conceded to the Panama Com-
pany in execution of the law of concession of 18th of May, 1878, sued
the liquidation for payment of
- Francs.
1. The second half of the sum he claimed to be due to him for his services. 405, 705. 00
2. Payment for a supplementary measurement not contemplated by the
agreement with the company - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 205, 313.75
611,018.75
By judgment of the 21st of May, 1890, the tribunal of the Seine has
disallowed the second claim of M. Marolle and has suspended his claim
for payment, giving the liquidator four months in which to examine
and have the Colombian Government examine the plats made by
Marolle, and has condemned the liquidation to pay M. Marolle pro-
visionally 250,000 francs, giving him until December 31, 1890, to make
payment. At the expiration of that suspension M. Marolle demanded
of the tribunal the execution of the judgment of the 21st of May, 1890,
and the payment of his credit, namely, 405,705 francs. The liquidator
claimed that the condemnation of the 21st of May, 1890, was only con-
ditional; that the condition, that is to say, the delivery of exact plats
prepared in conformity to the requirements of the Colombian laws and
signed by the two Colombian engineers, had not been complied with.
The tribunal, by judgment of June 17, 1891, held that the matter
was res judicata and condemned the liquidator to pay M. Marolle the
balance of his credit, ‘‘ but only on the day on which M. Marolle shall
have given him possession of plats signed by the two official colleagues
and complying with the conditions required for submission to the
approval of the Colombian Government.” 's
This putting into possession has not taken place.
NERCAM AFFAIR.
The civil tribunal of the Seine, by judgment of December 11, 1889,
condemned the liquidation to pay M. Nercam, former contractor of
the Panama company, the sum of 305,000 francs for work and damages,
and gave the liquidator a year in which to pay.
At the expiration of that time the heirs and representatives of M.
Nercam, who had inscribed a mortgage under the judgment upon the
immovable property in the Rue Caumartin, proceeded to the seizure
of that immovable, which was already effected by several other judi-
cial mortgages. -
A judgment of March 28, 1891, having converted the sale upon
seizure into a sale upon judicial publication, the immovable property
was put up for sale the 13th of June, 1891, at the fixed minimum of
1,500,000 francs, and did not find a purchaser. A new offer was made
at the reduced price of 1,000,000 francs without resulting in bids on
the 12th of August, 1891, and the affair was postponed. The mortgage
creditors showed great impatience and a new offer of sale is to be
expected soon.
PANAMA CANAL TITLE. 125
AFFAIR OF LAURILLIARD, FLEURY, AND OTHERS.
Some few bondholders of the Panama Company have obtained before
the justice of the peace in some instances and before the civil tribunal
of the Seine judgments which have condemned the liquidator to pay
them the amounts of their coupons overdue and the amount of their
bond. e’
The liquidator has solicited and obtained from these tribunals sus-
pensions, during which he hoped to realize combinations which by
improving the fate of the bondholders might perhaps do away with
the personal feeling which has been shown in the prosecutions.
Events have not permitted the liquidator to attain that end before
the expiration of the suspensions accorded by the tribunals, and two
bondholders have proceeded successively to the attachment of movables
of the liquidation, lottery bonds not issued, and a sum of 15,081.50
francs in money. .
The liquidator instituted before the court a demand to have declared
void these different seizures of movables which constitute the necessary
implements of the liquidation, on sums declared unseizable by a stat-
ute, on property which the liquidator alone has the power to negotiate.
These proceedings are pending.
The liquidator has considered it his duty to defend step by step and
to the last extremity the assets of the liquidation against proceedings
by individuals, and not to contribute to have those assets become the
prize of the race course and be absorbed by certain creditors whose
situation enables them to make advances, to the detriment of all the
others. .
Further reference will be made hereafter to the situation created by
these isolated proceedings and to the necessity of getting them disen-
gaged. -
AFFAIR VIGNAUD, BARBAUD, BLANLEUIL & CO.
The action between this concern and the liquidation is still pending.
VARIOUS PROCEEDINGS IN COLOMIBIA.
Various proceedings are still pending in Colombia; the controversies
in court permit one to hope they can be regulated in France by means
of transactions which will be submitted to the confirmation of the civil
tribunal of the Seine; as the others before the judges in Colombia con-
form to a legislation and a procedure very different from ours, the
liquidator can not anticipate what will be the issue of them.
[Third Report of the liquidator.]
The third report of the liquidator (made after the Parliament had
been induced to pass the act of July, 1893, and after the formation of
the new company had begun) contains the following:
The litigation has had extensive progress in the period between
November 12, 1891, and July 1, 1893, the date of the promulgation of
the law concerning the liquidation. I consider it my duty to give
here, as in my preceding reports, an exposition of these matters.
126 PANAMA CANAL TITLE.
NERCAM AFFAIR. “
At the auction of August 12, 1891, the immovable property of the
Panama company, No. 46 Rue Caumartin, Paris, did not find a pur-
chaser at the minimum price of 1,000,000 francs. It was again offered
for sale at the the minimum of 800,000 francs, without result, on the
9th of December, 1891. Finally on February 13, 1892, M. Jules
Jaluzot became the purchaser for 600,050 francs.
A settlement was made among the mortgage creditors as to the said
sum of 600,050 francs, and resulted in a friendly arrangement, as the
result of which several debts of the company have been entirely
extinguished. - -
These are those of: (1) M. Fleury; (2) M. Nercam, suitor; (3) M.
Ehrmann, transferee of a part of the Nercam debt; (4) MM. R. T.
Sonderegger & Co. (contract as to work at Bohio-Soldado).
Finally, Messrs. Baudouin and Piza Lindo, admitted for a credit of
208,721.59 francs, received only a sum of 101,079 francs.
AFFAIR OF VIGNAUD, BARBAUD BLANLEUIL & CO."
The situation has not changed.
AFFAIR MAROLLE. “
This matter has been settled. -
Carrying out the provisions of the judgment of June 17, 1891, that
is to say, the turning over by M. Marolle of plans signed by his two
official colleagues, and conforming to the conditions necessary for
submission to the approval of the Colombian Government, M. Marolle
has claimed the payment of his credit, that it is to say, 405,705 francs.
On July 5, 1892, there took place between M. Marolle and M. Mon-
chicourt a transaction by the terms of which the liquidator agreed to
pay to M. Marolle, after approval of such agreement by the court, a
sum of 300,000 francs to settle all accounts.
This transaction was approved by judgment of the council chamber
of the court dated July 13, 1892, and has been executed by payment
to M. Marolle on the 28th of the same month.
VARIOUS PROCEEDINGS IN COLOMBIA."
Traffey transaction.—Among other proceedings brought before the
Colombian tribunal against the Panama company, or the liquidator,
eight have been terminated by a transaction concluded at Paris with
M. Trufley, representing the various parties interested.
These affairs were of different kinds; they consisted:
1. In demands in regulation of accounts and indemnities of canceled
contracts by the contractors or work people of the enterprise, Brochet
& Giani, Gay, Papis, Panzani;
2. In a demand for indemnity, introduced by an agricultural and
industrial Society called Playa de Flor, on account of the loss of a sloop
belonging to it; *
3. Finally, in a demand for indemnity on account of dismissal made
by an agent of the company named Pellissier, and by the widow of
another agent, Mme. Girod.
a See of Second Report.
|PAN AMA CAN AIL TITLE. 127
The demands of the contractors and workmen and of the Playa de
Flor Company were stated in piasters, and amounted to a total of
919,601 piasters. Those of M. Pellissier and Mme. Girod, stated in
francs, represented the sum of 6,333 francs. After a transaction, dated
March 11, 1892, all these proceedings have been terminated by a pay-
ment consented to by the liquidator of a round sum of 120,000 piasters,
that is to say, 444,000 francs, at 3.70 francs the piaster, which the agent
of the parties interested charged himself with dividing among them.
The payment was to be effected after approval by the tribunal by
transmitting to M. Trufley of 5,208 lottery bonds, the value of each
bond calculated at 85.25 francs (note these bonds were then quoted on
the bourse at 72 francs).
This transaction was presented to the tribunal for approval, but the
chamber of the council, by judgment of 25th of August, 1892, did not
consider itself required to approve it except as concerned the affair of
Gay, in which a minor was found to be interested, holding as to the
rest, “that it belonged to the liquidator according to the terms of the
powers which have been conferred upon him to enter into transactions
(de transiger), if he finds it useful without authorization by the courts.”
Tanguy affa.”. –According to a contract of May 28, 1884, the com-
pany had conceded to M. Amédée Ligée a lot of lands to be excavated,
calculated by the contract at 200,000 cubic meters, at a place called
“Les Buttes de Pena Blanca,” between kilometers 21 k. 870 m. and 23
This contract was transferred after the death of M. Ligée to M. Tanguy
by a substitution dated 24th October, 1884.
According to an agreement of the 3d of January, 1888, this contract
was dissolved, but the parties not being able to agree as to their
respective accounts, the Canal Company obliged itself by the said con-
vention to turn over provisionally to the safe of M. Henry Ehrmann,
banker at Panama, the sum of 120,000 piasters as guaranty for the
indemnities which might be allowed to M. Tanguy by a definitive deci-
sion of the courts having jurisdiction. M. Tanguy carried his demand
for indemnity before the Colombian judges, and after a long proceeding
there was, on May 19, 1892, a judgment of the tribunal of commerce
of Panama condemning the liquidator to pay M. Tanguy the sum of
124,268.33 (piasters). -
The representative of the liquidator in advising him of that decision
informed him, after having taken the advice of the counsel of the liqui-
dation at Panama, that this judgment if taken before the appellate
tribunals could only be confirmed, and that the amount would only be
augmented by a condemnation in the costs, while on the other hand
it was possible to settle by abandoning to M. Tanguy the 120,000
piasters on deposit with M. Ehrmann.
But the liquidator was served with oppositions at Paris of the
sums due to M. Tanguy, oppositions not made regular by proceedings
at Panama, and consequently without effect according to the juris-
prudence of the Colombian tribunals, The liquidator, after having
brought the facts to the knowledge of the opposing parties and having
waited the time necessary to permit these to regularize their pro-
ceedings, caused to be submitted to the Colombian judges the question
of the validity of these oppositions. -
On July 19, 1892, the superior tribunal of Panama judging in last
resort declared void and of no effect the attachments in Paris.
In consequence a transaction was concluded on July 3, 1892, by the
terms of which this affair was terminated by the abandonment to M.
128 PANAMA CAN AL TITLE.
Tanguy of the 120,000 piasters on deposit with M. Ehrmann. This
transaction was approved by judgment of the superior tribunal of
Panama dated July 25, 1892. -
Dua, affair.—By the terms of a contract dated October 1, 1888,
M. A. Lux engaged himself to furnish to the company 40,000 ties for
ordinary railroad tracks. The delivery of these 40,000 ties was to be
effected as follows: Twenty thousand ties within three months from
the signature of the contract, that is, as extreme limit by the 1st of
January, 1889, the 20,000 others in the following two months, extreme
limit March 1. If at that date the delivery was not completely made,
M. Lux was to incur a penalty without any legal proceedings (de plein
droit) of 500 piasters.
The delivery not having been accomplished within the prescribed
time, M. Lux was directed by order from the company’s officials dated
March 8, 1889, to suspend the furnishing of ties until further orders.
M. Lux, claiming that the delay in the delivery was caused by the
company, and moreover, that he had a right to continue the delivery
upon paying the penalty of 500 piasters, sued the company before the
Colombian tribunal for the payment of 44,711.80 francs, value of the
31,937 francs remaining to be delivered, and 15,000 piasters by reason
of the damages for nonreception of the ties, to wit: a total of 59,711.80
francs. - -
The tribunal of commerce of Panama sustained in part the claims of
M. Lux and condemned the liquidation to pay to M. Lux the sum of
44,711.80 francs, representing the value of the 31,937 ties to be deliv-
ered, rejecting the demand for damages. This decision carried on
appeal before the superior tribunal was set aside and the company was
discharged from the condemnation pronounced against it. Finally,
the court of cassation at Bogotá getting jurisdiction confirmed the
sentence of the superior tribunal.
A
PROCEEDINGS INSTITUTED BY WARIOUS BONDHOLDERS.
1. Joreau affair.—Mlle Joreau, bondholder, obtained on January
26, 1893, from the civil tribunal of the Seine a judgment condemning
the liquidator to pay her—
(1) The amount paid by her for her subscription to divers bonds of
the company; -
(2) Damages representing the amount of the sum promised as antic-
ipated reimbursement (prime d’amortissement) due on those bonds;
(3) The unpaid coupons up to December 14, 1888;
(4) The legal expenses.
This judgment gave to the liquidator five weeks in which to pay, a
time during which all proceedings were to be suspended.
This time having expired, the liquidator, in view of the vote of the
Chamber of Deputies on the bill presented by the Government on
March 6, took an appeal from that judgment.
In contempt of that appeal Mlle Joreau caused the seizure, on March
8, at the headquarters of the liquidation, of unissued lottery bonds.
The liquidator immediately introduced a proceeding to nullify that
seizure, which is now pending before the tribunal. The court of
appeal by decree of June 29, 1893, simply and without change con-
firmed the judgment of January 26.
PANAMA CAN AI, TITLE. - 129
Mlle Joreau has caused the service, in virtue of her judgment, of
attachment orders upon divers persons. -
2. Roger affair.—This affair is identical with the Joreau affair.
François affair.—The same as the Joreau affair.
AJonnadieu and Bougala affairs. —The same.
APebrys affair.—The same.
Affair of the heirs of Vaºllant.—The same. -
10enovarre affair. –The same. The same proceedings, the same
appeal, the same measures to secure execution (mésure conservatoire),
only M. Denovarre has proceeded by opposition. -
3. Sallelæ-Laboðge affair.—An affair analogous to the Joreau affair.
Judgment of the same day, January 26, 1893, not yet notified (signifié).
No measure to secure means of execution.
4. Donºmic affair.—An affair analogous to those of Joreau and
others. -
5. Dźwers bondholders.--M.M. Pichot, Noyelle, Delaplace, Laporte,
Gesnys, Pilon; Wve. Lepècheux, Dubar, Raffard, Bonhoure; Mlle.
Taniès, Chappellier, Estagerie; Wve. Sarrazin, Sassier, Brion, Petit;
M. Jamain. -
Proceedings introduced by the above mentioned with the same object
as the Joreau suit. The affairs are pending.
N. B.-M. Estagerie has considered himself authorized by his bonds
themselves and without judicial permission to enter an opposition in
the hands of M. Silvestre, notary at Tulle, as to the sums which may
be due to the liquidation. - -
Same situation as to M. Sassier, Mme. Wve Brion, M. Jamain, and
Mme. Petit. In these cases the oppositions have been served upon
Messrs. Hugo Oberndoerffer, Eiffel, Baihaut, and others. All these
individual suits and the measures taken in pursuance of them are to-day
suspended in consequence of the promulgation of the law of July 1,
1893, which will be discussed hereinafter. ".
J/uraccioló affair.—M. Muraccioli, contractor, sued the liquidator
on the 21st of October, 1892, for payment of an account of 845 piasters
4 centavos, representing 3,380.15 francs, at 4 francs the piaster, fixed
by the plaintiff.
The liquidator, while recognizing the principle of the demand, claimed
to owe only 3,274. 53 francs, the piaster being worth, according to him,
3.875 francs.
The tribunal, by judgment of April 11, 1893, condemned the liquida-
tor to pay M. Muraccioli the sum of 3,380.15 francs. -
The judgment was notified to the liquidator the 23d of May, 1893.
It has not been executed.
This action is also suspended as a result of the promulgation of the
law of July 1, 1893. - .
Jºeinach affair.—On December 3, 1892, the liquidator, in view of
the actions and rights which he might have to make use of against the
succession of Baron de Reinach, served notice upon his heirs and M.
Imbert, provisional administrator of his succession, prohibiting them
to proceed without his presence with the operations of accounting
liquidation and division of the succession. -
Moreover, on August 27, 1893, the liquidator sued M. Imbert, admin-
istrator of the succession of Reinach, for restitution of the sum of
9,253,792.59 francs, received by M. Reinach on account of (1) participa-
8751–02–9
130 PAN AMA CAN AL TITLE.
tion in the syndicates of the different issues of bonds of the Panama.
company; (2) payment of expenses of publication for the said issues;
(3) payment of commission by the concerns Cubtill, De Lungo, Wat-
son & Van Hattum, Artigue, Sonderegger & Co., and Eiffel.
Cornelius //ere affair.—M. Imbert, provisional administrator of the
succession of Baron de Reinach, instituted before the civil tribunal of
the Seine a suit against M. Cornelius Herz, to have it declared that
seven pieces of real property situated at Paris, and appearing to belong
to Mme. Cornelius Herz, were in reality the property of M. Cornelius
Herz and should be replaced among his assets. -
By means of conclusions notified the 19th of June, 1893, the liquida-
tor intervened in the proceedings to join in the demands of M. Imbert.
Subsequently to this date M. Gautron, appointed coliquidator, intro-
duced conclusions to revive the action.
M. Lemarquis, mandataire of the bondholders, also intervened in
the proceeding.
On February 15, 1894, the civil tribunal of first instance of the Seine
rendered a judgment (judgment sustaining the demands quoted).
The tribunal also found itself possessed, by the action of M. Lemar-
quis, mandataire of the bondholders, of a demand for restitution of
the sum of 600,000 francs received by Cornelius Herz from the Panama
company. •.
MM. Monchicourt and Gautron intervened in that proceeding. By
a judgment, also rendered February 15, the tribunal admitted the inter-
ventions of MM. Monchicourt and Gautron in their official characters
and suspended judgment to await the definitive result of criminal pro-
ceedings against Cornelius Herz, reserving a decision as to costs.
On the 10th of March, 1894, a transaction took place between M.
Imbert, judicial administrator, and the succession of M. de Reinach,
M. Lucien de Reinach, Mlle Juliette de Reinach, M. Gautron, coliqui-
dator of the Universal Company of the Interoceanic Canal of Panama;
M. Lemarquis, mandataire of the bondholders of Panama, and Mme.
Bianca Saroni, wife of Cornelius Herz, acting as well in her own name
as the authorized agent of her husband. -
This transaction will be submitted for approval to the tribunal con-
formably to the requirements of the law of July 1, 1893.
Bitºhaut affair.—Madame Baihaut, following up a proceeding insti-
tuted by her husband, introduced before the civil tribunal of the Seine
an action for separation of property. The liquidator intervened in that
action in the character of eventual creditor of M. Baihaut. The action
was pending when, on March 31, 1893, there was rendered a decree of
the assize court [the court ordered him and others to reimburse to the
liquidation the sum of 375,000 francs received by M. Baihaut]. Upon
considering these intervening matters, the civil tribunal passed upon
the demands of Mme. Baihaut. By judgment of March 28, 1893, the
tribunal pronounced the separation of properties, admitted the inter-
vention of M. Monchicourt, declaring as to the rest that the operations
of the liquidation could not take place except in his presence or after
due notice to him. t -
The beginning of the operations of the liquidation, at the instance
of Mme. Bajhaut, took place on April 10, 1893, with the aid of M.
Bertrand, notary. The liquidator caused himself to be represented
there. It is not known at present what sum the liquidator will be able
to recover from the personal property of M. Baihaut.
PANAMA CAN AL TITLE. 131
Cottu affair. —On March 27, 1893, Mme. Cottu introduced an action
for separation of goods against her husband, Henri Cottu. By conclu-
sions notified the 16th of April, 1893, the liquidator intervened in that
action. By judgment of May 15, 1893, the tribunal pronounced the
separation of goods between husband and wife, admitted the interven-
tion of the liquidator, and ordered that the operations of liquidation
were to take place only in the presence of M. Monchicourt. The
liquidation is proceeding. -
Hugo Oberndoerffer affair.—On May 9, 1893, the liquidator sued M.
Oberndoerffer for restitution of the sum of 3,931,354.45 francs received
by him by reason of: (1) Participation in the syndicates for the issue
of the bonds of March 14 and June 26, 1888; (2) commissions for plac-
ing bonds and aid in the issue of June 26, 1888; (3) payment of expenses
of publication. The affair is pending. º
Wyse affair.—In May, 1890, the liquidator confided to M. Lucien-
Napoleon Bonaparte Wyse the mission of going to Bogotá to negotiate
with the Colombian Government for a prorogation of the concession
accorded on the 18th of May, 1878, for the construction of the canal
Of Panama. -
On his return to France, after having obtained the prorogation on
the conditions which the liquidator has explained in his second report
M. Wyse claimed from the liquidator the payment of his fees. On
account of this payment a disagreement arose between M. Bonaparte-
Wyse and the liquidator, M. Bonaparte-Wyse placing his case before
the first chamber of the civil tribunal of the Seine.
Finally, M. Bonaparte-Wyse claimed a million, of which the liquida-
tor refused to pay the whole amount, alleging that M. Bonaparte-Wyse
had not fulfilled his orders in the conditions provided, and that a por-
tion of the amount could not be exacted. The liquidator offered
400,000 francs. -
By a judgment of the 11th of January, 1894, the tribunal condemned
the liquidation to pay M. Bonaparte-Wyse the sum of 400,000 francs
in full settlement of all claims.
ACTION OF THE LIQUIDATORS AGAINST THE ADMINISTRATORS OF THE
OLID UNIVERSAL COMPANY OF THE INTEROCEANIC CANAL.
During the month of August, 1893, MM. Monchicourt and Gautron,
both acting in the name of and as liquidators of the Universal Company
of the Interoceanic Canal of Panama, summoned the former administra-
tors of the said company before the civil tribunal of first instance of the
Seine for the payment of damages to be fixed by accounting for mis-
management, and demanded a provisional condemnation of 50,000,000
francs. -
TRANSACTION WITH M. EIFFEL.
On the 11th of August, 1893, M. Lemarquis, mandataire of bond-
holders entered an action against M. Eiffel for 18,000,000 francs, and
asked that the judgment might be also in favor of the liquidators of
the Panama Company. - - - -
On the 26th of January, 1894, a transaction took place between
MM. Monchicourt and Gautron, liquidators of the Panama Company,
M. Lemarquis, mandataire of the bondholders, and M. Eiffel.
This transaction will be submitted to the approval of the tribunal in
conformity with the law of July 1, 1893.
132 PANAMA CAN AL TITLE.
[Fourth report of the liquidator.]
In this connection I have the honor to remind the tribunal that,
since the month of August, 1894, I have made a series of arrangements
with the different contractors the terms of which, after having exam-
ined the accounts of each one, I have undertaken to pay in lottery
bonds, warning each of them that the remittance of these bonds could
not take place until after I had obtained, either by judicial authority
or friendly arrangement the release of the attachments upon these
lottery bonds.
BARATOUX, LETELLIER & CO.
Agreement of the 8th of August, judgment of 10th of August, pay-
ment in lottery bonds at their market value within fifteen days preced-
ing the agreement, increased by 3 francs.
Francs.
Debt settled at - - - - - - - - - - - - - - - - - - - - - - - - - - - - ------------------------ 2, 269,009. 33
Lottery bonds to be delivered, 18,270, at 124 francs 18.75 centimes. . . . 2, 268,905. 63
Cash balance------------------------------------------------------ I03. 70
Total.-------------------------------------------- ----------- 2, 269,009. 33
JACOP SUCCESSION.
Agreement of the 8th of August, 1894, approved on the 9th of
August, payment in lottery bonds at their market value within fifteen
days preceding the agreement, increased by 3 francs, the value not
being less than 120 francs.
Francs.
Debt settled at ------------------------------------ - - - - - - - - - - - - - - - - 2, 126,366.01
Lottery bonds to be delivered, 17,122, at 124 francs 18.75 centimes. - - - 2, 126, 338. 37
Cash balance------------------------------------------------------ 27. 64
Total ------------------------------------------------------- 2, 126, 366.01
ARTIG UE SONIDE REGGER & CO.
Agreement of August 14, 1894, confirmed August 17, payment in
lottery bonds at their market value within fifteen days preceding the
agreement, increased by 3 francs.
FrançS. -
Debt settled at - - - - - - - - - - - - - - - - - - - - - - - '• * = a- - - - - - - * * * * = - - - - - - - * * * * * * = 1,921, 004. 88
Lottery bonds to be delivered, 15,657, at 122 francs 68.75 centimes. - - - 1, 920,918. 1s
Cash balance--------------------------------------- --------------- 86. 70
Total.------------------------------------------------------ 1,921, 004. 88
I also settled the debt due M. Eiffel in execution of the transaction
of the 26th of January, 1894, approved by the tribunal, the bonds to
be accepted by M. Eiffel at the price of 125 francs.
Francs.
Amount due to him ----------------------------------------------- 7, 147,264. 33
Lottery bonds, 57,178, at 125 francs--- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7, 147,250.00
Cash balance------------------------------------------------------ 14.33
Total ------------------------------------------------------- 7, 147,264. 33
PANAMA CAN AI, TITLE. 133
The contractors gave me the bills which they held, and by an act
received the same day by Me. Mégret, notary, they gave their dis-
charge from the sequestration constituted on the 9th of February,
1889, and released the pledge (mantissement) which was conceded to
them on the 30,500 shares of the Panama Railroad Company, and Me.
Chéramy, the pledge-holder, handed me the titles to these shares.
In execution of the engagements which I made in the by-laws, I have
transferred to the new company of the canal of Panama the rights of
the liquidation in the railroad from Panama to Colon; I took the neces-
sary steps to assure myself of the inalienability of these rights and of
their eventual return to the liquidation in the circumstances provided
for by article 5, paragraph 3, of the by-laws, etc.; in accord with the
council of administration of the New Panama Company, the Comptoir
National d’Escompte has been named as trustee to hold said rights.
It then remained for me to pay the second quarter of the 158,950
shares of the new company subscribed by the liquidation.
I was obliged, in this case, to pay an interest of 6 per cent on account
of delay (article 12 of the by-laws) from the 31st of October, 1894, on
a sum of 3,973,750 francs.
I employed for the payment of these shares all the available resources
of the liquidation and the sums resulting from various payments and
transactions.
M. Imbert, liquidator of the De Reinach succession, paid, in May,
1894, to M. Lemarquis, mandataire of the bondholders, the sum of
1,000,000 francs in virtue of the transaction with M. Cornelius Herz
and the De Reinach succession. a * -
The heirs of Barbé paid to M. Lemarquis, in December, 1894, the
sum of 500,000 francs in execution of a transaction of August, 1894.
On the 7th May and 4th December, 1894, conformably with article
5, paragraph 2, of the law of July 1, 1893, M. Lemarquis paid these
two sums, forming a total of 1,500,000 francs to the credit of the liqui-
dation, into the “Caisse des dépôts et consignations.”
I received, on the 31st of December, 1894, the amount of the judg-
ment pronounced against M. Baihaut, namely, 534,791.60 francs.
Finally, after the 30th of June, 1895, M. Lemarquis paid to the credit
of the liquidation, as realized from the transaction with M. Cornelius
Herz, various sums amounting together to 1,335,868.33 francs.
Under these conditions I was enabled to pay to the new company,
in settlement of the second quarter, on the 158,950 shares which have
been ascribed to the liquidation, 3,973,750 francs.
I have thus been able to pay the first two quarters of all the shares
of the new company subscribed by the liquidation, and have paid the
interest for delay, without having recourse to the alienation of any
lottery bonds.
[Fourth part.]
VARIOUS MATTERS.
To complete the recital of the litigation (situation contentieuse) of
the liquidation I must mention the following facts: .
1. From the time of the constitution of the civil company for the
amortization of the lottery bonds the headquarters of that company
were established at the property possessed by the Panama Company,
at Rue Caumartin, Paris, and the latter company was charged with
134 PAN AMA CAN AL TITLE.
effecting, free of charge, the payment of the sums due to the civil
company on the lottery bonds, and to assure, free of charge, the issuing
of the bonds and the drawings.
After the liquidation of the Panama Company, and the sale of the
property in the Rue Caumartin, the civil company was obliged to trans-
fer its head offices to the branch of the Comptoir National d’Escompte
of Paris, 2 Place de l'Opéra, and to charge that establishment to assure
the issuing of bonds and drawings. -
The council of mandataires of the civil company demanded of the
liquidation the sum of 150,000 francs as guaranty of the expenses of
the administration, as well for the past as for the future.
The judgment of the 3d August, 1894, which sanctioned the agree-
ment made in regard to the settlement of the balance of the lottery
bonds, fixed the sum to be paid by the liquidation at 130,000 francs.
This judgment has been executed.
The civil society for the amortization of the new bonds, third series,
of the Old Panama Company (issue of March, 1888) was in the same
situation as the civil society for the amortization of the lottery bonds.
It was obliged to assure the issuing of bonds and the drawings, which
could no longer be done free of charge by the liquidation.
It claimed from the liquidation: -
- - Francs.
Advance for acquiring a wheel, expenses of putting numbers on the wheel, etc. - 5, 280
Expenses of administration up to 1894 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,000
To assure, in the future, the expenses of administration and of drawings - - - - 50,000
Total ------------------------------------------------------------- 56,280
The Tribunal by judgment of August 3, 1894, condemned the liqui-
dation to pay:
Francs.
For acquiring a wheel, etc - - - - - - - - - - - - - - - - * * * * * * * * * * * * * * * * * * * * * * * = * * * * * - - -? 5, 280
Expenses of administration and drawings, as well in the past as in the future. 20,000
This judgment has been executed.
[Fifth report of the liquidator.]
IITIGATION IN FRANCE.
Affair Vignand, Barbaud, Blam!euil dó Co.—This affair received a
definitive solution by means of a transaction under date the 7th of
March, 1896, entered into between the liquidator of the Panama Com-
pany, the judicial mandataire of the bondholders, M. Bonneau, in the
capacity of liquidator of the company of current accounts and deposits,
and MM. Vignaud, Barbaud, Blanleuil & Co.
MM. Vignaud, Barbaud, Blanleuil & Co. demanded of the liquida-
tion the payment of a total sum of 16,402,154 francs, made up as
follows: . .
Francs.
1. Balance of the price of their work - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1, 336, 154
2. Damages --------------------------------------------------------- 15,066,000
Total -------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 16, 402, 154
PANAMA CAN AL TITLE. 135
They demanded besides, the restitution of their security in govern-
ment annuities (that is 37,748 francs of 3 per cent rente of the French
Government) with the back receipts or interest on them and the reim-
bursement of the sum of 1,283,547.20 francs arising from the guaranty
held by the Old Panama Company. •
The liquidation, on its side, claimed to be a creditor of MM. Vignaud
Barbaud, Blanleuil & Co., by reason of the inexecution of their con-
tracts, and claimed from them the sum of 8,658,703.65 francs. Finally,
M. Bonneau, judicial liquidator of the company of current accounts and
deposits, intervened in the name of that company as the creditor of
MM. Vignaud, Barbaud, Blanleuil & Co. - -
In this situation, the parties being desirous of putting an end to the
suit in which they were engaged, concluded a transaction on the fol-
lowing basis:
M. Bonneau was authorized to withdraw from the Caisse dépôts et
consignations the sums and values which had been deposited there and
which represented the securities of MM. Vignaud, Barbaud, Blanleuil
& Co., and the back interest arising on them.
M. Bonneau was authorized to realize on the 37,748 francs of 3 per
cent annuity which constituted the bond given by MM. Vignaud,
Barbaud, Blanleuil & Co. From this realization, increased by the
amounts withdrawn in money, M. Bonneau takes a sum of 900,000
francs which was acquired to the company of current accounts and
deposits. -
This sum has been applied: e
1. To reimburse to the company of deposits and current accounts
the amount in principal of a credit given to MM. Vignaud, Barbaud,
Blanleuil & Co. of 250,000 francs. -
2. To give back to the same company the sum of 650,000 francs put
up as security for Vignaud, Barbaud, Blanleuil & Co. s
The liquidation of the Panama Company has kept the back interest
received by them on the 3 per cent annuity (French Government rentes)
of 37,748 francs, namely, 84,933 francs, and has received besides from
M. Bonneau the sum of 188,740 francs for the back interest of the
said annuity paid in by the Bank of France and the Caisse of consign-
ations, successively depositaries of the values.
This transaction was approved by the judge commissaire of the judi-
cial liquidation of the company of current accounts and deposits and
approved by the tribunal of commerce (judgment of 23d of March,
1896) and by the tribunal of the Seine (judgment of 22d of May, 1896).
Leſnarquis affair, mandałażre of bondholders, against the //quidation.—
In the month of August, 1893, M. Lemarquis, judicial mandataire of
bondholders, summoned the liquidation for payment of the sum of
1,777,111,600 francs, with interest, this sum representing the amount
of all the bonds issued by the Universal Company of the interoceanic
canal, even in the form of lottery bonds. This proceeding had for its
object the determination by the tribunal of the basis of the distribu-
tion to be made by the liquidator. It raised, as well from the point of
view the calculation of the debt of coupons and that of the sinking
payments as from the point of view of the admissibility, as a debt of
the liquidation, of the lottery bonds and others of which the amorti-
zation is guaranteed by civil companies, very delicate questions and a
complicated accounting. M. Lemarquis and myself have united our
efforts in order that the decision of the tribunal should not be delayed.
136 PAN AMA CAN AL TITLE.
Affair Derenne and associates against the liquidation.—On the 26th
December, 1896, M.M. Derenne, Le Voyer, and others, holders of
bonds in the Old Panama Company, summoned me before the tribunal
of the Seine, asking that it might be ordained that in the space of
time that it might please the tribunal to fix—
M. Gautron should proceed to the distribution among the creditors and bond-
holders of the assets such as they exist in the hands of the liquidator, reserving the
amount necessary to make the final payment for the stock of the New Panama
Company. -
To have determined by the tribunal, the conditions of the speediest possible real-
ization of the assets, in view of the long time since the placing into liquidation of the
company, and the necessity for finishing it before the original subscribers disappear.
To have it decreed that the lottery bonds be distributed pro rata among the bond-
holders according to their ascertained rights, and if this could not be done by the
distribution in kind that they should be sold, reserving to the bondholders of the
company the right of preemption according to the precedents already established by
the tribunal.
To have M. Lemarquis bound with the liquidator by a common judgment.
M.M. Derenne and associates summoned the mandataire of the bond-
holders to have the judgment made a common one. 3. *
Various bondholders have intervened in this suit to oppose the
claims of MM. Derenne and Le Voyer and others. It is not proper
to discuss here a claim that has been submitted to the decision of
the tribunal. -
X- * +. * * + *
. (The sixth report of the liquidator quotes at length the decision of
the tribunal denying all of the demands of MM. Derenne, Le Voyer,
and others.) - -
Jºurra/be affair. –On the 22d of November, 1895, Mme. Maria
Iturralbe wrote from Panama to the liquidator to inform him that her
father, Dr. Mateo Iturralbe, deceased, was the owner, under the
terms of a notarial act registered at Panama, of an island at Maria-Sala;
that at the commencement of the canal works the agents of the old com-
pany occupied the ground and destroyed the plantations which were
there; that her father had claimed the value of the ground and also
an indemnity for the plantations destroyed; that the company had
admitted the claim but objected that it would be necessary as a pre-
liminary to proceed to measure the property in order to fix the value
of the ground on the basis of a price paid in a similar affair of a
M. Buitrayo; that she accepted these conditions.
The claim of Mme. Iturralbe was terminated by a transaction under
date the 27th of March, 1896, by the terms of which the liquidation paid
to Mme. Iturralbe a sum of 300 piasters in settlement of all claims.
Affair of Messrs. Schuber Bros. –MM. Schuber Bros., citizens of
the United States of America, are proprietors of an estate called
“Juan Diaz Caballero,” situated at Panama. .
On the 9th of December, 1891, they sued the liquidation before the
Colombian tribunal for payment of a sum of 150,000 piasters, reduced
in June, 1896, to 134,868 piasters, the old Panama Company having
made use of a portion of their estate for the construction of a road
from Panama to Corozal. There was included in the sum claimed,
the value of the materials taken by the company from their estate, and
damages for the injury caused to them by the destruction of the fences,
the clearing away of the Woods, the excavations, soundings, etc.
This affair gave rise to a complicated proceeding, and entailed numer-
PANAMA CANAL TITLE. - 137
ous judicial decisions rendered by the civil tribunal of Panama, the
superior tribunal of the same town, and the supreme court of Bogotá.
All attempts at an amicable arrangement up to the present have
failed. The suit is continuing. -
Affair of Domingo Diaz. –In 1885, at the time of the construction of
the central hospital of Panama, the Universal Company of the Inter-
oceanic Canal having acknowledged that a part of the property called
“Huerta del Gallo,” was necessary to them for the installation of
dwellings for the doctors, chemists, and others, asked the proprietor,
M. Ehrmann, to authorize their occupation of the said property.
M. Ehrmann accorded this authority gratuitously. -
In 1888 M. Ehrmann sold the property “ Huerta del Gallo” to M.
Domingo Diaz, who claimed as belonging to him, the portion of the
ground taken by the old company. . -
The action between M. Domingo Diaz and the liquidation is pending
at Panama. -
[Sixth report of the liquidator.]
LITIGATION IN FRANCE.
Affairs of Derenne, Le Voyer, and associates against the /?quidation.—
On the 26th of December, 1896, M.M. Derenne, Le Voyer, and others
summoned the liquidator before the civil tribunal of the Seine to have
him ordered to immediately make among the creditors and bond-
holders the distribution of the assets remaining in his hands, and notably
the lottery bonds, and to have determined the conditions of the realiza-
tion of the assets.
By judgment of the 30th of December, 1897, the tribunal declared
Derenne, Le Voyer, and their consorts inadmissible and unfounded in
their demands and conclusions, dismissed them, and condemned them.
to pay all costs. - -
MM. Derenne and consorts took an appeal from this judgment by
notification of Le Breton, bailiff, dated the 25th of March, 1898.
But they did not follow up this appeal, but withdrew from it by doc-
ument of Le Breton, bailiff, dated March 30, 1898, upon payment of
their costs by the liquidator. ‘- *
Affair of Zemarquis, mandałażre of the bondholders, against the ///u?-
dator.—The suit begun by M. Lemarquis, August 3, 1893, against
MM. Monchicourt and Gautron had for its object to have determined
by the civil tribunal of the Seine the basis of the distribution which
the liquidator would have to make among the different bondholders of
the old Panama Company.
* -Sº- * 9.
º: 4 * * *
M. Lemarquis took an appeal. The court of appeal passed upon the
respective appeals of the liquidator and mandataire. * * *
In conformity with this decree of the court of appeal and after the
depositing by the expert of a modified report, the tribunal of the Seine,
by a judgment dated August 1, 1900, has definitively fixed the basis
of the distribution for the different kinds of bonds issued by the Uni-
versal Company of the InterOceanic Canal. the tribunal ratifying in all
respects the report of Cagnat, expert, deposited in the clerk’s Office the
138 PANAMA CAN AL TITLE.
7th of July, 1900, and concerning the bonds of 1882, 5 per cent, and
the bonds of 1884, 4 per cent, -
Ratifying in all respects the report of Cagnat, expert, deposited in
the clerk’s office 19th of January, 1900, and concerning the new bond,
third series, and the lottery bonds, but only as to the part of his report
prepared on the basis established by the definitive judgment of March
2, 1899: --
Declares that it is not necessary to consider or pass upon the remain-
der of the said report made contrary to the basis fixed by the said
gentlemen:
Declares that at the time of the distribution of the assets in the man-
ner prescribed by article 6 and following of the law of July 1, 1893, the
holders of paid-up bonds of the hereinafter-mentioned issues who shall
produce them at the place of liquidation within the time allowed by
the law shall be admitted upon the following basis: Issue of 1882, 5
per cent, 450.62 francs per bond; issue of 1883, 3 per cent, 302.41
francs per bond; issue of 1884, 4 per cent, 343.54 francs per bond;
issue of 1886, 6 per cent new bonds, first series, 557.10 francs per
bond; issue of 1887, 6 per cent, new second series, 508.28 francs per
bond; issue of March 14, 1888, new bonds, third series, 390.35 francs
per bond; issue of June 26, 1888, lottery bonds, 295.65 francs per
bond; and this with the interest on the said sums calculated from
December 14, 1888;
The sums, principal and accessory, remaining due to pay completely
what they are entitled to.
Affair of Laplante against the liquidation–Tºerce opposition to the
judgment in the Derenne affair.—By document dated June 27, 1898,
M. Laplante acting in his capacity as heir of Mlle. Joreau, in her
lifetime owner of a number of bonds of the Universal Company of
the Interoceanic Canal, has introduced tierce opposition to the judg-
ment rendered the 30th of December, 1897, in the suit by Messrs. De-
renne and consorts, and has taken up, appropriating them to himself,
the conclusions submitted by these latter. -
By the same document he summoned before the civil tribunal of
the Seine M.M. Gautron, liquidator of the Universal Company of the
ºniº Canal, and Lemarquis, mandataire by law of the bond-
olders. -
By judgment of May 10, 1899, the civil tribunal of the Seine declared
the tierce opposition of M. Laplante inadmissible on this ground,
principally, that he was a party to the judgment of December 31, 1897,
since he was represented therein by Lemarquis, who acted in that suit
only in the character of mandataire of the holders of the bonds, and
who, as such, united in his hands all the rights of individual action of
these latter. - -
On June 30, 1899, M. Laplante appealed from that judgment. The
court of appeals, by decree of April 25, 1900, confirmed in all respects
the judgment of May 10, 1899. -
Affºr of Donnadieu against M.M. Gautron and Lemarquis.--M.
Donnadieu, the owner of a certain number of bonds of the old Pan-
ama Company, by document of the 5th of March, 1897, summoned
M. Lemarquis, legal mandataire of the bondholders of the Panama
Company, to institute suit against the stockholders of the Civil Panama
Company for payment of the company’s debts. M. Lemarquis not
having begun any action of that kind, M. Donnadieu had the right,
IPAN AMA CAN AL TITLE. - • 139
according to the terms of article 2, section 4, of the law of July 1,
1892, to exercise himself that right of action at his own risk and peril;
but in order to do so, and to know who were the stockholders of the
company, it was indispensable to him to have knowledge of certain
documents, and especially of the list of transfers of the shares of the
Panama Company. M. Lemarquis, if he had instituted such an action,
would have had the right to require from the liquidator the communi-
cation of those documents.
M. Donnadieu, pretending to be subrogated to the legal mandataire,
claimed to have the same right to that communication.
#. - * * * k *
By judgment of the first chamber of the civil tribunal of the Seine,
Donnadieu was declared inadmissible and unfounded in his demands,
dismissed, and condemned to pay the costs. - }
M. Donnadieu took an appeal from this judgment by document of
April 1, 1898. -
By decree of the first chamber, dated August 4, 1898, the court of
appeals of Paris, adopting the reasons of the law court, decided against
the appellant. -
Affair of Gautron against the council of mandata?res of //e civil
company of redemption of the new bonds, thºrd series (issue of March
14, 1888).-(This was an attempt of this redemption company to dis-
solve, the liquidator interposing a protest. The company abandoning
that plan then attempted to reduce its capital stock, which was also
protested against, but the general meeting of the company undertook
to carry out their plan. The civil tribunal of the Seine decided that
the resolution of the general meeting was illegal, and forbade “the
defendants to put into execution the said resolution, and especially to
withdraw from the Bank of France all government bonds (rentes), in
order to divide them among the bondholders of the company.” The
Council of mandataires appealed, and the affair was pending in the
court of appeals when this sixth report of the liquidator was written.
See Exhibit 9 for further proceedings.) - • ‘
Affair of Von Berg dº Co. against the liquidator.—By a notification
of March 6, 1899, MM. Von Berg & Co. instituted before the civil
tribunal of the Seine against the liquidation a demand of payment of
190,577.20 francs, representing— º
1. The price of a steam excavator, a transporter, and the accessory
implements; -
2. The expenses of the voyage and stay in the Isthmus of MM. Von
Berg & Co., or their representative, for the putting in place of this
apparatus. w -
They demanded, besides, interest on the said sum to date from the
summons made by them on the Universal Company of the Interoceanic
Canal on May 5, 1888.
The liquidator opposed the demand, and maintained that according
to the contract between M.M. Von Berg & Co. and the Universal
Company of the Interoceanic Canal the price of the apparatus was to
be paid only after its delivery “in a good state of working and after
receipt in the conditions determined.”
These conditions had never been complied with. The affair is pend-
ing before the tribunal.
Affair of Fourmont against the liquidator.—M. Fourmont proceeded
against the liquidator on the 15th of June, 1895, and against M. Eiffei
*:
140 PAN AN A CAN AL TITLE.
in conjunction with him, for payment of a sum of 9,000,000 francs,
which he claimed to be due him as damages on account of the copying
of his patent, No. 162947, to his prejudice.
This summons remained without being followed up during four years.
On the 7th of July, 1899, M. Fourmont served M. Gautron with his
corrected conclusions, asking the tribunal that—
Whereas by his initial proceeding M. Fourmont claimed from M.
Gautron as liquidator and M. Eiffel a sum of 9,000,000 francs by way
of damages; -
And whereas it was by error that this condemnation was demanded
against M. Eiffel, who was not a party in the matter;
And whereas, on the other hand, in order to ascertain the merits
and the amount which M. Fourmont has a right to demand, it is
proper to send the matter before a judge of the tribunal for him to
fix the sum of the damages to which he is entitled: - . . .
For these reasons to declare M. Fourmont’s demand to apply to M.
Gautron as liquidator, and not to M. Eiffel, and, before deciding the
matter, to send it before such one of the judges as the tribunal may
See fit, to fix the amount of the damages.
The liquidator considers that the contention of M. Fourmont already
made several times does not rest upon any serious foundation. The
affair is pending before the civil tribunal of the Seine.
LTTIGATION . IN COLOMBIA.
The affair of Sc/ºther Bros. against the //u/dation.—On December 9,
1891, the Schuber Brothers sued the liquidator before the Colombian
tribunals for 150,000 piasters, which sum was reduced by them in
June, 1896, to 134,868 piasters, in reparation of a damage which the
Universal Company of the Interoceanic Canal had caused them by
opening on their land the road of Corozal. (Fifth Report.)
By a decision of July 26, 1898, the judge of first instance condemned
the liquidator to pay MM. Schuber Brothers 45,935 piasters 95
centavos. The liquidator appealed from this decision, and the superior
tribunal of Panama, judging in last resort, reduced to 28,339 piasters
67 centavos, the amount of the condemnation pronounced against the
liquidator.
M.M. Schuber Brothers and the liquidator not having proceeded to
the court of cassation, the superior tribunal, by a judgment of July
13, 1899, Ordered the Panama Company in liquidation to pay to M.
Henry Schuber, as representative of the company of Schuber Broth-
ers, the sum of 28,339 piasters 67 centavos and the legal interest on
that sum from June 30, 1899, to the day of payment, with the costs
of the present proceedings. -
On the request of M. Henry Schuber, dated September 25, 1899, and
by judgment of September 27, 1899, the superior tribunal of Panama,
in conformity with the said request, to the effect that there should be
delivered to M. Schuber a letter rogatory to avoid the injury to him
which would result from the delays incident to sending the matter
through the diplomatic channel, decided in favor of this request, and
that there should be an order delivered to the interested party. The
notification of it was ordered.
In execution of this decision, on the 9th of October, 1899, the judge
of the court delivered a letter rogatory addressed to the competent
PANAMA CANAL TITLE. - 141
authority in civil matters of the city of Paris, which was requested to
notify the judgment of July 13, 1899, to the representative of the
Universal Company of the Intel oceanic Canal, to require of him the
payment of the sum required to execute the judgment, and in default
of payment to require of him to furnish, under oath, property which
could respond to the demand.
The judgment of July 17, 1889 (sic; should be 1899), that of Sep-
tember 27, 1899, and the letter rogatory of October 9, 1899, were
served upon the liquidator by a document of Marecat, bailiff at Paris,
on the 14th of March, 1900, at the request of M. Schuber.
The judgment of condemnation not having been notified through
the diplomatic channel, and this procedure not being in conformity
with French law, according to which judgments rendered in foreign
tribunals can not receive execution in France, except after they have
been declared executory by French tribunals, the liquidator reserves
to himself, should M. Schuber carry out the formalities prescribed by
French law and ask the exeguatur of the judgment which he has
obtained in Colombia, to take the advice of counsel, as to the attitude
which the exceptional position in which the law places him requires
him to take.
Affair of Domingo Diaz against the liquidator.—At the time of the
construction of a hospital at Panama in 1885, the Universal Company
of the Interoceanic Canal obtained from M. Ehrmann the gratuitous
permission to occupy a part of his property called “Huerta del Gallo,”
in order to place there a certain part of the hospital administration.
M. Domingo Diaz, to whom M. Ehrmann sold his property, claimed
as belonging to him the land occupied by the company. (See Fifth
Report.) . -
The claim of M. Domingo Diaz was rejected by a judgment of the
tribunal of first instance of Panama, dated April 22, 1848 (sic).
M. Domingo Diaz took an appeal from that decision.
Contrary to all expectation, the superior tribunal of Panama, by a
decision of June, 1899, condemned the liquidator to pay to M. Diaz
the sum of 2 piasters per square meter of the land claimed by him
according to a calculation by experts, with the legal interest since the
day on which the plaintiff entered into possession of the land up to
the day when he shall be paid its value.
The liquidator proceeded to the court of cassation. The affair is
pending before the supreme court at Bogotá.
Affair of Carreno against the liquidator.—Some years ago the Uni-
versal Company of the Interoceanic Canal was condemned to indemnify
Mme. Carreno for the damages caused to her by the company upon
her property called ‘‘Honduras,” requiring her to make proof of the
damages in a new proceeding. - -
Dr. Jesurum, calling himself a transferee of the right of action of
Mme. Carreno, started a new proceeding.
* %. * * + %. -Sè.
**
As a result, the liquidator paid on July 30, 1900, to the agent of Dr.
Jesurum the amount of 1,008.96 francs. The affair is terminated.
Affair of ſcaza against the liquidator.—The heirs of M. Pablo Elias
de Icaza claim that by virtue of a judgment dated December 16, 1886,
their father had taken from him, for the benefit of the Universal Com-
pany of the Interoceanic Canal of Panama, 2 hectares, 42% ares, being
part of the property called “Carro de San Juan.” They add that this
142 PANAMA CANAL TITLE.
taking of property was done with the fixing by judgment of an indem-
nity of 1 piaster 7 centavos per square meter of land; that is, 41,225
piasters for the 24,250 meters condemned.
They claim also that the judgment of December 16, 1886, was noti-
fied to the company on January 16, 1887, that it did not take an appeal
from that decision and has not paid the amount within the time fixed
by the judgment. -
As a result, they have obtained from the civil tribunal of the first
district of Panama, dated September 6, 1897, a judgment ordering
a seizure against the Panama Canal Company in favor of the heirs of
Icaza to the amount of 41,225 piasters, and that on default of payment
the company against whom the order for seizure is made shall name a
depositary and an expert valuer of the property to be seized, and in
default of its making that nomination this shall be done by the trib-
unal or by some one designated by it for that purpose.
The tribunal at the same time ordered the notification in due form
of its judgment. º -
The judgment was notified to the liquidator through the diplomatic
channel on the 18th of June, 1898.
Since that time the parties have not taken any steps.
EXHIBIT 11.
JUDGMENT OF JULY 26, 1894 (CIVIL TRIBUNAL OF THE SEINE), DECID-
ING AGAINST MILLE, JOREAU.
FRENCH REPUBLIC, IN THE NAME OF THE FRENCH PEOPLE.
The civil tribunal of first instance of the department of the Seine,
sitting in the palace of justice at Paris, has rendered in public session
of the first chamber the following judgment:
Session of July 26, 1894. - - -
Between M. Jean Poire Gautron * * * and Mlle. Joreau,
etc. * * * -
Considering that by virtue of a judgment rendered by this chamber
January 26, 1893, condemning Monchicourt, in his character of liquidator
of the Universal Company of the Interoceanic Canal of Panama to pay
to Mlle. Joreau the principal sum of 153,169 francs 40 centimes, and,
according to documents of Thiellement, bailiff at Paris, dated February
24 and 25, 1893, Mlle. Joreau has served injunction or garnishment
papers upon the civil association for sinking Panama Canal lottery
bonds and upon the director of the bureau of deposits and consign-
ments, as to all the sums they have received or may receive, due to
Monchicourt as liquidator by whatever right; that these papers have
been served, but Mlle. Joreau has not proceeded in her suit to have
them declared valid; -
That Gautron, become liquidator of said company, demands that
the opposition proceedings referred to may be declared without object
in view of the law of July 1, 1893: |
Considering that article 1 of that law has suspended from the date
of its promulgation all pending suits begun against the liquidation by
bondholders and all other creditors, and all proceedings for securing
execution against the property, movable or immovable, of the com-
pany, even those in course of being executed;
PANAMA CANAL TITLE. , - 143
Considering that this provision has for its object, as shown besides
by what led up to it, to prevent certain creditors from creating rights
of preference as against other creditors, and to make certain the prog-
ress of the liquidation by reserving to the liquidator alone the right
to realize the assets for the benefit of all, in view either of a legal
division among all creditors or of the contribution in the common
interest, to a new association, to be made under the supervision of
the mandataire of the bondholders and the courts, and within the con-
ditions specified by articles 10 and 11 of the law;
That the proceedings either of execution or preservation of means
of execution, taken before that law, are then altogether without object;
That they can not produce any effect whatever in favor of those
who have instituted them; that the defendant (Mlle. Joreau) admits that
she has no right of preference as to the sums garnisheed, and that the
liquidator has not the right to pay her; ... •
That she does not demand to have the validity of her garnishment
proceedings declared; .
That she maintains, nevertheless, that the garnishment exists, and
that, without opposing the distribution among all the creditors of the
values garnisheed, she objects to the liquidator’s disposing of them in
any other manner;
Considering that this pretension is condemned by the formal and
absolute prescription of the first article of the law of July 1, 1893;
That a proceeding suspended can not have any effect; that conse-
quently, aside from the power which will belong to them at the time
of the distribution, to produce as legitimate expenses, acts done under
the reign of the old law, the creditors opposing here, like the credi-
tors resorting to garnishment, have no other rights than that which
article 11 recognizes for all creditors indiscriminately, namely, that of
presenting to the tribunal, in the course of any proceeding for approval
(homologation), the reasons which may appear to them good for
opposing the adoption of such or such mode of realizing the assets, or
the contribution to an association of those assets; - -
That it is proper, consequently, without its being necessary to pro-
nounce release from the garnishee proceedings, to decide that they are
altogether without object. - -
On the additional demand of Gautron for damages, considering, etc.
* * * º: º: * * .
For these reasons declares that the proceedings of the defendant,
having been suspended by the law of July 1, 1893, the garnishment
has become altogether without object and can not produce any effect;
declares consequently that it constitutes no obstacle to the delivery
of the sums garnisheed to the liquidator. - -
%. * . * & * * *
IEXEHIBIT 12.
IEVIDENCE AS TO PLEDGES OF PANAMA RAILROAD SHARES.
PARIs, August 29, 1902.
Certificate showing that all the dividends paid upon the shares of
the Panama Railroad Company have gone into the treasury of the
New Panama Canal Company, and that all votes in the meetings of the
144 PANAMA CANAL TITLE.
Panama Railroad Company represented by said shares have been cast
by the New Panama Canal Company, without any exception.
I certify by these presents that all the dividends declared and paid
by the Panama Railroad Company since the month of October, 1894,
upon all the shares transferred by the liquidator to the new company
in virtue of the sale made by article 5, section 4, of the by-laws, have
been paid to the New Panama Canal Company and have not remained
in the possession of the liquidator. • ‘
The dividends paid by the Panama Railroad to the liquidator on the
shares pledged in his hands have been paid immediately by the liqui-
dator to this company, as results from letters of April 9, 1901, and
June 16, 1902. -
I certify likewise that during all the time since the month of Octo-
ber, 1894, all the votes to be cast at the general meetings of the said
company for those shares have been cast exclusively by the new com-
pany, and that the liquidator has never been called to vote as owner of
those shares.
MARIE,
The Chief of General Accounts.
For the liquidator, by procuration:
- HENRY SOUD.
. . PARIS, June 16, 1902.
NEw PANAMA CANAL COMPANY, ſºaris. .
MR. PRESIDENT: I have the honor to transmit to you here with
inclosed, after having made it payable to the Order of your honorable
company, a check for $137,068, sent to me by the Panama Railroad
Company for the dividend on the shares which you have deposited as
a pledge, in virtue of our agreement of March 24, 1900. .
Please acknowledge receipt.
Accept, Mr. President, the assurance of my distinguished consid-
eration. -
GAUTRON, The Liquidator.
Certified as correct.
The chief of general accounts: . -
4. - MARIE.
PARIs, April 9, 1907.
NEw PANAMA CANAL COMPANY, Paris.
MR. DIRECTOR-GENERAL: I have the honor to transmit to you,
after having made it payable to the Order of your honorable company,
a check for $137,068, addressed to me by the Panama Railroad Com-
pany, as dividend of 2 per cent upon the shares which you have
deposited with me as a pledge, in accordance with our agreement of
March 24, 1900.
Please acknowledge receipt, and accept, Mr. Director-General,
assurance of my distinguished consideration. -
GAUTRON, The Liquidator.
Certified as correct. -
The chief of general accounts: -
MARIE.
PANAMA CAN AL TITLE. 145
AGREEMENT OF APRIL 27, 1895, BETWEEN THE LIQUIDATOR, THE
NEW PANAMA CANAL COMPANY, AND THE COMPTOIR NATIONAL
D'ESCOMPTE CONCERNING PANAMA RAILROAD SHARES.
Between the undersigned
1° M. Jean Pierre Gautron, judicial administrator of the civil tri-
bunal of the Seine, residing at No. 13, Rue Tronchet, Paris,
Acting in the name of and as liquidator for the Compagnie Uni-
verselle du Canal Interocéanique de Panama, whose head office is
situated No. 63 bis Rue de la Victoire, Paris,
Appointed to that office by judgment given by the chamber of the
counsel of the tribunal of the Seine the 21st day of July, 1893,
On the one part
2°. The New Panama Canal Company, an anonymous company, hav-
ing its head office No. 7, Rue Louis-le-Grand, Paris,
Represented by Messrs. Chanove and Jonquière, administrators,
who are specially empowered to sign this present contract by a reso-
lution adopted by the council of administration of said company dated
fifth March last, copy of which is hereto annexed.
Of the second part
3° And the Comptoir National d’Escompte, an anonymous company,
whose head offices are situated No. 14, Rue Bergère, Paris,
Represented by M. Th. Berger, a member of the council of admin-
istration, and M. Alexis Rostand, manager, who is specially empow-
ered to sign this present agreement by a resolution adopted by the
council of administration of the said company, dated March thirteenth
last, copy of which is hereto annexed, -
Of the third part. - r
With a view to assuring the fulfillment of the conditions under
which M. Gautron has transferred to the new company, in accordance
with the terms of its by-laws, received by Messrs. Lefebvre and
Champetier de Ribes, notaries of Paris, the 26th June, 1894, 68,534
shares in the Panama Railroad, and to provide against any inconven-
ience which might arise from a conflict between the French and Ameri-
can laws—
It has been agreed as follows:
ARTICLE 1.
M. Gautron and the new company constitute as amicable depository
for the 68,534 shares of the Panama Railroad the Comptoir National
d’Escompte in Paris, in the name of which the said shares shall be
enrolled, by virtue of the pure and simple transfers which shall be
signed by M. Gautron with the briefest delay possible.
ARTICLE 2.
The Comptoir National d’Escompte shall collect the dividends and
remit the amount to the new company after deduction of the commis-
sion which is allowable to it and all charges whatsoever incurred by
said collections.
8751–02 10
146 T’ANAMA CAN AI. TITLE.
ARTICLE 3.
The Comptoir National d’Escompte shall issue its order, in the man-
ner usual in America, for the exercise of the right of vote in the general
meeting of the Panama Railroad Company, and for the constitution
of all accredited agents in connection with said company, to persons
designated by the New Panama Canal Co., said company bing at any
time able to modify said designation and having the sole right to give
all attorneys or agents the instructions which said company may deem
advisable.
ARTICLE 4.
The said shares shall remain deposited with the Comptoir National
d’Escompte during the whole of the period of nontransferability stip-
ulated by the by-laws of the new company.
In the event of the realization of the different contingencies provided
for by said by-laws, the Comptoir National d’Escompte undertakes to
sign all transfers of the 68,534 shares in question conformably with the
collective requests which will be addressed to said Comptoir National
d’Escompte by the liquidator and the new company, these requests and
these only liberating the said Comptoir National d’Escompte.
In the event of any disagreement the Comptoir National d’Escompte
shall conform to the decision of the civil tribunal of the Seine and of
the court of appeal of Paris, to which courts is given to the extent
necessary formal jurisdiction. -
$
ARTICLE 5.
The Comptoir National d’Escompte accepts and undertakes to fulfill
the mission conferred upon it by the above articles.
ARTICLE 6.
As compensation for its trouble and care the Comptoir National
d’Escompte shall be paid annually the sum of two thousand francs.
All charges or disbursements whatsoever, especially judicial expenses
resulting from the establishment of its mandate, as well as all preju-
dicial consequences which might arise from its quality of apparent
proprietor shall be paid over on the first demand of said Comptoir
National d’Escompte.
The whole shall be paid half by the liquidation and half by the new
company, said parties being guarantee the one for the other with
respect to the Comptoir National d’Escompte.
Made in triplicate at Paris, the twenty-seventh day of April, in the
year one thousand eight hundred and ninety-five.
Approved, the Writing, Read and approved,
Signed: J. JonquièRE. Signed: G. CHANOVE.
Approved, the writing, - Read and approved,
Signed: GAUTRON. COMPTOIR NATIONAL.
- D’ESCOMPTE DE PARIS.
A Director, The Manager,
Signed: BERGER. Signed; ALEXIS ROSTAND.
IPANAMA CANAL TITLE. ** 147
AGREEMENT OF MARCH 24, 1900, BETWEEN THE LIQUIDATOR AND
THE NEW PANAMA CANAL COMPANY CONCERNING PANAMA RAIL-
ROAD SHARES.
Between the undersigned: -
M. Choron, in the name and as representative of the New Panama
Janal Company, an anonymous company, whose principal office is at
Paris, Rue Louis-le-Grand, No. 7; -
M. Choron, specially authorized for the purposes of these presents,
by action of the council of administration of the said New Panama Canal
Company, copy of which has been hereto annexed,
Of the one part,
And M. Jean Pierre Gautron, judicial administrator of the civil
tribunal of the Seine, acting in the name of and as liquidator of the
Compagnie Universelle du Canal Interocéanique, whose office is at
Paris, Rue de la Chausée d’Antin, No. 42,
Of the other part,
Has been settled, agreed, and reviewed and stated beforehand, as
follows:
The by-laws of the Compagnie Nouvelle du Canal de Panama were
executed before Me. Lefebvre, at Paris, June 26th, 1894.
A party to the said by-laws was M. Gautron, in his character as
liquidator, who made to the said Compagnie Nouvelle du Canal de
Panama the transfer and contributions stated in article 5, paragraphs
1, 2, 3 and 4.
This transfer and these contributions were made under certain
reservations and conditions, expressed in the same article 5, to-wit,
especially;
3d. The rights of every nature in the Panama Railroad, belonging to the liquida-
tion and contributed by M. Gautron under section 4 of this article shall become
the property of the present company from and after the stockholders' meeting
provided for by article 75 hereof, without any pecuniary compensation, but upon
the expressed condition that the canal be constructed within the time fixed by the
agreement of concession. Upon default in completion within such time, said rights
shall revert to the liquidation.
If, contrary to all expectation, the meeting in question should not take the neces-
sary action for the completion of the canal, or if the course of action adopted by the
meeting can not be carried out, the said rights in the railroad shall remain the prop-
erty of the present company, but it shall pay to the liquidation the sum of 20 mil-
lion francs by way of indemnity, and the share of profits set apart for the liquidation
shall be half the profits of the present company, without other deductions than
those provided in secs. 2 and 3 of article 51 hereof.
Now, article 75 provides that—
When the amounts expended, as well for the work done upon the canal as for the
discharge of the burdens resulting from the contribution of M. Gautron, shall
reach about one-half of the cash capital of the company at the minimum, a special
technical commission thereto appointed at a proper time shall pronounce upon the
results obtained from the work already done and upon the conclusions to be drawfi
therefrom as to the remainder of the enterprise.
This commission shall be composed of two members appointed by the council of
administration of the present company, and of two persons appointed by the liqui-
dation of the old Compagnie Universelle du Canal Interocéanique. These four
members shall appoint a fifth, who shall be president of the commission, and if they
can not agree this president shall be appointed by the president of the tribunal of
commerce of the department of the Seine. -
The council of administration shall be required to make public the opinion of
this commission, and to call an extraordinary general meeting of stockholders in
the manner provided in articles 61 and 62 hereof. -
. This meeting shall consider the ways and means tending to insure the completion
of the work and the stipulations contained in article 5, sec. 4, No. 3, hereof.
148 º PANAMA CANAL TITI, E.
The parties explain, for clearness, that the time mentioned in para-
graph 3 of article 5 of the by-laws, and which is fixed by the agree-
ment of concession, means the time granted and to be granted by the
agreement of concessions and by the various agreements of extension.
Two of the conditions set forth in the article above quoted have
been fulfilled, to-wit: The expenditure of one-half the corporate capi-
tal, at the minimum, and the formation of the technical commission.
This commission went to the Isthmus, there to proceed to the perform-
ance of its duties, and the results of the study to which it devoted itself
are clearly favorable to the completion of the canal.
The Compagnie Nouvelle du Canal de Panama is, therefore, ap-
proaching the time when it must face the conditions under which, after
publication of the report of the commission, it will have to call the
extraordinary general meeting provided for by article 75 of the by-
laws of incorporation.
But it is of opinion that, under the present circumstances, there
would be the greatest advantage in postponing the calling of this
meeting and deferring the final decisions provided for by article 75
above quoted. - * -
M. Gautron, in his character as liquidator, moved by the idea which
has always guided the liquidators of the Compagnie Universelle du
Canal Interocéanique in their efforts to assure the completion of the
enterprise, efforts constantly encouraged by the majority of the cred-
itors, by the public authorities, and by the courts, considers that it is
to the true interest of the liquidation to accept the views of the Com-
pagnie Nouvelle.
In this state of the facts the parties have united upon the agree-
ments hereinafter set forth:
ART. 1.
The assembling of the general meeting, called to take final action,
in conformity with article 75 of the by-laws of the Compagnie Nou-
welle, may be postponed for not more than three years from the date
on which these presents shall become binding.
The Compagnie Nouvelle can not delay the calling of this meeting
without, beforehand, coming to an agreement with the liquidator on
this point. -
• ART. 2.
In case either of the two situations mentioned in the second para-
graph, § 3 of article 5 of the by-laws should arise, the credit of 20
millions which would exist for the benefit of the liquidation shall be
paid, principal and interest, by means of the income of all the rights
and part interests belonging at that time to the Compagnie Nouvelle
in the railroad from Panama to Colon, operated by an American com-
pany, called the Panama Railroad Company, whose principal office is
at New York, and at latest in a period of 15 years from the date when
the credit arises. .
The credit of 20 millions in question shall bear three per cent interest
from said date.
ART. 3.
To insure the payment of the credit to the liquidation, principal and
interest, the Compagnie Nouvelle de Panama undertakes to give as a
PANAMA CAN AL TITI, E. 149
pledge (nantissement) for the benefit of the liquidator, the rights and
part interests belonging to it in the railroad from Panama to Colon as
they are set forth in article 5 of the by-laws, and to apply to the pay-
ment of this credit the entire revenue arising from the rights and
part interests in question, after deducting only the expenses necessary
for the running of the debtor company, which deductions shall be
fixed at the beginning of each fiscal period, by agreement between it
and the liquidator, after verification of the accounts of the preceding
fiscal period. -
These presents shall not become binding until after the regular
pledging, to the satisfaction of the liquidator, of this security which
shall be applied to the benefit of the liquidation, until full payment
of the credit of 20 millions, principal and interest.
ART. 4. .
Until full payment of the credit to the liquidator, principal and inter-
est, all revenues arising from the Panama Railroad shall be applied,
with the consent of M. Gautron, to the extinguishment of said credit.
As soon as M. Gautron’s credit shall have been extinguished, an
extraordinary general meeting of the Compagnie Nouvelle shall be
called to reduce the capital of this company to a figure equal to the
amount of actual assets at that time, so as to enable said company
immediately to dispose of and distribute its not income, as well for the
benefit of the liquidator as for that of the shareholders.
In conformity with the second paragraph of section 3 of article 5 of
the by-laws of the Compagnie Nouvelle, taken in connection with article
51, the sinking fund, for the benefit of the shareholders, for the capital
stock of the Compagnie Nouvelle du Canal de Panama, will not form
part of the charges to be deducted from the annual income of the
enterprise.
ART. 5.
No alteration in previous agreements is made, other than such as
result from the present contract, which annuls and supersedes the
agreement made under date of August 9th, 1899, and approved by the
council of administration at its meeting of August 30th, 1899.
ART. 6.
The present agreement shall not become binding until after being
submitted to the approval of a general meeting, called under the pro-
visions of articles 60, 61, and 62 of the by-laws, and, thereafter, to the
approval of the civil tribunal of the Seine.
ART. 7.
The expenses of recording, approval, and, in general, all expenses
and fees which the present contract may occasion, shall be borne by
the Compagnie Nouvelle du Canal de Panama. -
Done in duplicate at Paris, March twenty-fourth, one thousand nine
hundred. -
The writing approved. The writing approved.
Signed: L. CHORON. Signed; GAUTRON.
150 PANAMA CANAL TITLE.
RATIFICATION OF THE AGREEMENT OF MARCH 24, 1900, BY STOCK-
HOLDERS’ MEETING OF NEW COMPANY.
NEW PANAMA CANAL COMPANY.
Taken from the report of the extraordinary general meeting of
stockholders of the New Panama Canal Company, held July 7, 1900,
at Paris, in the building of the Philosophical Association (Sociétés
Savantes), 8 Rue Danton.
g FESOLUTION.
The general meeting, after having heard the report of the council
of administration, approves the contract made between the new com-
pany and the liquidation of the Universal Company of the InterOceanic
Canal of Panama, dated March 24, 1900, and authorizes the postpone-
ment of the extraordinary general meeting provided for by article 75
of the by-laws to a time not later than three years from the date when
the said contract shall become definitive; it authorizes also the coun-
cil of administration to incur the expenses necessary for the continua-
tion of the enterprise until such meeting shall take place.
Certified to be in conformity with the original. M
- . Bó,
President of the Council of Administration.
DECREE APPROVING THE AGREEMENT OF MARCH 24, 1900.
[Official Journal of the French Republic, Tuesday, August 7, 1900.]
Publication made by M. Gautron, liquidator of the Universal Com-
pany of the Interoceanic Canal of Panama, in conformity with articles
10 and 11 of the law concerning the liquidation of the said company
of July 1, 1893. -
Public session of the first chamber of the civil tribunal of first
instance of the department of the Seine on Wednesday, August 1, 1900.
The tribunal: Upon the request presented by Gautron, acting in
his character of liquidator of the Universal Company of the Inter-
Oceanic Canal of Panama.
The said request signed “De Bieville,” his solicitor, and reading
thus: “To the president and judges composing the first chamber of
the civil tribunal of the Seine, etc.,”
And the documents having been produced;
Having seen the order of the president dated July 30, 1900, put at
the end of the said request and reading: “That this be communicated
to the attorney of the Republic in his office and we commit to M.
Laporte, Vice-president, to make his report, Paris, July 3, 1900.
Signed, Baudouin; ”
Having seen the written conclusions of the attorney of the Republic
also put at the end of the said request, the said conclusions reading
thus: “The attorney of the Republic does not oppose, Paris, August
1, 1900. Signed, Servin;”
Having seen articles 10 and 11 of the law of July 1, 1893;
After having heard at the session M. Laporte, vice-president, in his
report, and M. Servin, substitute of the attorney of the Republic, in
his conclusions; -
After having deliberated according to law;
Considering that the agreement in question, which the extraordinary
general meeting of stockholders of the new company of the Panama
Canal has, moreover, approved by resolution of July 7, of the current
PANAMA CANAL TITLE. 151
year, appears to be in conformity with the interests of the liquidation,
and advantageous for the company;
That, consequently, it is proper to give it approval,
For these reasons,
Approves, purely and simply, the agreement entered into between
the liquidator of the Universal Company of the Interoceanic Canal of
Panama and the new company, dated March 24, 1900, in order that
this agreement may be executed according to its form and tenor.
Done and adjudged by MM. Baudouin, president; Laporte, Vice-
president; Le Berquier, judge. In the presence of MM. Chauvin,
substitute judge; Servin, substitute, assisted by Lasnier, clerk.
Copy conforming to the Original. -
(Signed) A. DE BIEVILLE.
EXEIIIBIT 13.
LIST AND SPECIMENS OF BONDS.
List of different bond issues of the Universal Company of the Interoceanic Canal.

Number
Dates Of iSSueS.
Kind Of bonds.
Number
Of bonds
Offered.
of bonds
Sub-
scribed.
Cost Of
ISSUle.
Inter-
eSt.
JRemarks.
A—Sept.
B —Oct.
7, 1882
3, 1883
C—Sept. 25, 1884
D—Aug. 3, 1886
E—July 26, 1887
F—Mar. 14, 1888
G—June 26, 1888
H—July 27, 1889
5 per Cent ... .
3 per Cent . . . .
New - - - - - - - - - -
New, second
Series.
New, third se-
ries.
Bonds, lottery
Lottery bonds
250,000
600,000
387,387
500,000
500,000
350,000
2,000,000
b357,894
250,000
600,000
387,387
72, 375
458, 802
258,887
89,802
849, 205
478,922
Francs.
437. 50
285. 00
a 333. 00
DiverS.
450, 00
440.00
460.00
360, 00
Divers.
25
15
20
20
30
30
30
15
15
difference
To the issue of Sept. 25, 1884,
there were subscribed 218,-
245 bonds Only. The re-
mainder, viz, 69,142 bonds,
were negotiated. On the
Stock exchange. Later, in
1886, 72,375 bonds of the
second series of the same
kind, created by a decision
of Apr. 9, 1886, were also
placed at the Stock ex-
Change.
The number of bonds Sub-
scribed or placed was 112,-
483. Making use of the
right given by the condi-
tions of subscription to the
lottery bonds, SOme sub-
scribers exchanged, 22,681
bonds, third series, for lot-
tery bonds, which brought
89,802, the number of bonds
Of the third series.
These lottery bonds were is-
sued in Virtue Of the law. Of
July 15, 1889; they make
part of the two millions of
bonds created in June,
1888, but without interest.
|Besides the issue of July
27, 1889, the liquidators
have transferred some lot-
tery bonds in payment to
some creditors, and espe-
cially to the contractors.
It is this that explains the
between the
number of bonds placed
and the number of bonds
offered for subscription.
a And divers.
Certified to be exact.
b To be taken in payment of lottery bonds.
PARIs, August 25, 1902.
Liquidator of the Universal Company, by procuration:
(Signed)
HENRY BOUDET.
152 PANAMA CAN AL TITLE.
Specimens of bonds issued.
Printed specimens of each and all of the issues of bonds were brought
from Paris, and are described as follows:
No. 1, bonds, 5 per cent, issue of September 7, 1882.
No. 2, bonds, 3 per cent, issue of October 3, 1883.
No. 3, bonds, 4 per cent, issue of September 25, 1884.
No. 4, bonds, new, issue of August 3, 1886.
No. 5, bonds, new, second series, issue of July 26, 1887.
No. 6, bonds, new, third series, issue of March 14, 1888.
No. 7, bonds, lottery, issue of June 26, 1888.
No. 8, lottery bonds, issue of July 27, 1889.
Upon the bonds of issue No. 1 the language used is: .
Universal Company of the Interoceanic Canal of Panama. Anonymous Company.
Company capital, 300,000,000 of francs. Issue of 250,000 bonds, authorized by the
general meeting of 29 June, 1882. Bonds of 500 francs, 5 per cent, to the bearer.
Redeemable at par in 75 years. No. —. Paris, 15 January, 1883. By authori-
zation: An administrator: The president-director: Ferd. de Lesseps.
On the coupons of the same we find:
Universal Company of the Interoceanic Canal of Panama. Bond No. —. Cou-
pon of 12 francs 50 centimes, falling due the 15 July, 1899, etc.
On the back of the bond is a table of sinking-fund payments, with
dates of payment and the numbers of bonds to be redeemed.
On bond issue No. 2 the wording is practically the same, the issue
being of 600,000 bonds at 3 per cent. There is a similar table as to
sinking fund on the back.
The language of the third issue is practically the same, the issue
being of 387,387 bonds at 4 per cent. A sinking-fund table is also
found on the back.
The language of the fourth issue is practically the same, except that
it states that an issue of 458,802 bonds was authorized by the general
meeting of July 29, 1885, and that the bond is a new one and is redeem-
able at 1,000 francs.
The fifth series contains language similar to the fourth, except that
on the back, instead of the sinking fund table, we find the following:
Extract taken from the prospectus of issue: The new bonds of the second series
are redeemable at 1,000 francs in 48 years, by drawings every two months (six
drawings per year), the 15 September, 15 November, 15 January, 15 March, 15 May,
and 15 July.
But the first drawing will take place on the 30 September, 1887, instead of the 15.
After the first year 6,000 bonds will be redeemed; that is, 1,000 bonds at each
drawing; the number of bonds redeemed will increase progressively every year
until the end of the operation.
The language of the sixth issue has the following:
Universal Company of the Interoceanic Canal of Panama. Anonymous company,
with capital at 300,000,000 of francs, and Civil Company for Sinking the Bonds of
the Panama Canal. Issue of March, 1888, with responsibility limited to what is put
into the company. Issue of 350,000 bonds, authorized by the general meeting of 29
July, 1885. New bond to bearer, payable at 1,000 francs. The reimbursement
at 1,000 francs is guaranteed by certificatés of French Government annuities (rente
française), bought by the Civil Company of Sinking, formed of all the subscribers of
the present loan; according to the terms of the document drawn up before Me.
Champetier de Ribes and his colleague, notaries at Paris, 3 March, 1888.
On the back of the bond appears the following:
Taken from the by-laws of the Civil Company of Sinking, according to the docu-
ment received by Me. Champetier de Ribes and his colleague, notaries at Paris.
PANAMA CANAD TITLE. 153
Article first. There is formed, by these presents, between the appearers, a civil
Company.
There shall be on the same footing as the appearers, as members of this Civil Com-
pany, all the future subscribers to the issue of March, 1888, of the bonds of the
company of the Interoceanic Canal of Panama.
Subscription to every bond of that issue will carry the adhesion of the subscriber to:
the present by-laws and his admission as a member of the company, as stipulated in
the prospectus of the issue.
Art. 2. The company has for its object:
To syndicate the subscribers of the new issue of the company of the Panama Canal;
to take charge of the sinking of the said loan by means of the retention which the
subscriber will make upon each bond by him subscribed of a sum of 70 francs 28 cen-
times, which he will pay to the Civil Company;
And by means of the capitalization of interest, to itself perform the operation
of reconstituting the capital and the business of redemption of the bonds issued by
means of a drawing by lot.
Consequently: -
Upon the capital of issue of each new bond the company will receive the sum of
; ſº 72 centimes, and the Civil Company 70 francs 28 centimes, destined to sink
the loan.
Art. 3. The company will have for its name:
Civil Company for Sinking the Bonds of the Panama Canal, issue of March, 1888,
with responsibility limited to what is put into the company.
* -X. -X- -X- * -X- +
Art. 6. The contribution of each associate is limited to his putting in of 70 francs
28 centimes per bond, which will be furnished at dates above fixed; beyond that
every call for funds is prohibited.
In any event, a member can not be responsible to third persons beyond what he
thus puts in. -
The company funds are made up of the combination of the sums received by the
company upon each of the 350,000 bonds offered for subscription. If all the 350,000
bonds are not subscribed, the company funds will be reduced accordingly.
The seventh series, that of the lottery bonds, (and the eighth series
is substantially identical, with the exception that it has stamped upon
it the words “Certificate issued in virtue of the law of 15 July, 1889;
not productive of interest,” with the title of the liquidator of the old
company, and the signature of Brunet by procuration) contains the
following: - -
Universal Company of the Interoceanic Canal of Panama. Anonymous company
with a capital of 300,000,000 of francs, divided into 600,000 shares of 500 francs; and
civil company with responsibility limited to the company capital for the sinking of
the lottery bonds of the Panama Canal, issue of 26 June, 1888. Loan of 720,000,000.
Loan authorized conformably with the provisions of the law of 21 May, 1836, by the
law of 8 June, 1888, but without any guarantee or responsibility of the State. Pub-
lic subscription to 2,000,000 lottery bonds, carrying 15 francs per year, payable
semiannually the 1st of December and the 1st of June of each year, and redeemable
by lot, or at 400 francs, within the maximum time of 99 years. The redemption of
400 francs and the payment of the lots will be guaranteed by a deposit of rentes
française [Government annuities], or of other obligations [titres] guaranteed by the
French Government. Provisional certificate to the bearer negotiable. No. —.
Of an obligation of a paid-up bond of 60 francs.
The Universal Company of the InterOceanic Canal has received - - - - - - - - - - - - - - - 50
The Civil Sinking Company------------------------------------------------- 10
The amount of capital, to wit, 300 francs, are to be paid on the dates and in the
proportions shown opposite in such a manner that on each of the bonds en-
tirely free [paid up), the part of the Universal Company of the Interoceanic
Canal Will be ------------------------------------------------------------ 300
And that of the Civil Sinking Company - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 60.
This last sum, being destined to assure the payment of the lots and to constitute
the sinking capital at 400 francs of all bonds regularly freed in conformity
with the terms of the prospectus of the issue and of the by-laws of the Civil
Company.
Paris, the 26 June, 1888.
154 PANAMA CAN AL TITLE.
On the margin we read, with reference to the numbers 2, 3, 4, 5, 6,
7 (alluding to payments of 60 or 45 francs), the following:
Payment of 60 francs from 20 to 25 August, 1888.
Francs
Amount with stamp ------------------------------------------------------ 60. 10
To be deducted interest at 4% on 20 August, deducting charges- - - - - - - - - - - - - - . 26
Net payment-------------------------------------------------- - - - - - - - - - - - 59.84
Of which 10.00 for the civil company,
And 49.84 for the company.
Total 59.84.
Received by —.
The *
S Representing the company of the Interoceanic Canal and the Civil Company of
inking.
On the back of the bond we find:
[Extract from the by-laws of the civil association for sinking the lottery bonds, issue of June 26
Hºorains to document made before Maitre Champetier de Ribes and his colleague, notaries at
ARTICLE 1. There is formed by these presents a civil company
among the appearers and all the subscribers and future possessors of
lottery bonds, to be created by the Universal Company of the Inter-
Oceanic Canal of Panama.
ART. 2. The association has for its object:
To syndicate all the subscribers and future possessors of the lottery
bonds of the approaching issue of the Universal Company of the Inter-
Oceanic Canal of Panama. -
To secure the payment of the prizes hereinafter stated, and the
sinking of the loan in ninety-nine years at the outside by means of
the retention by the subscriber upon each bond subscribed by him of
a sum of 60 francs, which he will pay over to the civil association.
And by means of a capitalizing of interest to perform itself the
business concerning the prizes and the work of reimbursing the capi-
tal upon the following bases:
Six drawings per year from the 16th of August, 1888, to the 15th
of June, 1913 (first drawing the 16th of August, 1888). Three prizes
of 500,000 francs, 3 prizes of 250,000 francs, 6 prizes of 100,000
francs, etc. - -
August 16: Francs.
1 prize------------------------------------------------------------- 500,000
1 prize------------------------------------------------------------- 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs---------------------------------------------- 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
October 15:
1 prize------------------------------------------------------------- 250,000
1 prize------------------------------------------------------------- 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs---------------------------------------------- 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
PANAMA CANAL TITLE. 155
1 prize------------------------------------------------------------- 500,000
1 prize------------------------------------------------------------- 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs---------------------------------------------. 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------. 50,000
February 15: -
1 prize------------------------------------------------------------- 250,000
1 prize------------------------------------------------------------- 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs---------------------------------------------- 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
April 15:
1 prize------------------------------------------------------------- 500,000
1 prize------------------------------------------------------------- 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs---------------------------------------------- 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
June 15:
1 Prize ------------------------------------------------------------ 250,000
1 prize ------------------------------------------------------------ 100,000
2 prizes of 10,000 francs--------------------------------------------- 20,000
2 prizes of 5,000 francs-------------------------------------------- ... 10,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------. 50,000
Per year, 366 prizes, amounting to 3,390,000 francs.
During the first twenty-five years the drawings of bonds repayable
with prizes will constitute the sole sinking.
Four drawings per year from August 16, 1913, up to the complete
sinking of the bonds. - --
Two prizes of 500,000 francs, 2 prizes of 250,000 francs, 4 prizes of
100,000 francs, etc.
August 16: Francs,
1 prize ------------------------------------------------------------ 500,000
1 prize ------------------------------------------------------------ 100,000
1 prize ------------------------------------------------------------ 10,000
1 Prize ------------------------------------------------------------ 5,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
November 15: - .
1 prize ------------------------------------------------------------ 250,000
1 prize ------------------------------------------------------------ 100,000
1 prize ------------------------------------------------------------ 10,000
1 Prize ------------------------------------------------------------ 5,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
February 15: -
1 prize ------------------------------------------------------------ 500,000
1 prize ------------------------------------------------------------ 100,000
1 prize ------------------------------------------------------------ 10,000
1 Prize ------------------------------------------------------------ 5,000
5 prizes of 2,000 francs---------------------------------------------- 10,000
50 prizes of 1,000 francs--------------------------------------------- 50,000
May 15: -
1 prize ------------------------------------------------------------ 250,000
1 prize -------------------------- = * * * * * * * * * * * * * ~ * * * * * * * ~ * * * * * * * * * * * 100,000
1 prize ------------------------------------------------------------ 10,000
1 prize ------------------------------------------------------------ 5,000
5 prizes of 2,000 francs---------------------- - - - - - - - - - - - - - - - - - - - - - - - - 10,000
50 prizes of 1,000 francs. - - - - - - - - - - - - , se - e = * * * * * * = <= * * * = * * * * * = * * * * * * * * * * 50,000
156 PANAMA CAN AL TITLE.
In this second period, independently of the sinking which will take
place each year by the payment of prizes, the sinking at 500 francs
will commence in 1913, according to a table which will be drawn up
by the council of mandataires of the civil association and the Panama
Canal Company.
The reimbursement at 400 francs of the bond drawings and prize is
included in the payment of the prize and not added thereto.
ART. 5. The association takes the name of “The Civil Association,
with responsibility limited to the capital invested, for sinking the lot-
tery bonds of the Panama Canal, issue of June 26, 1888.” * * *
ART. 8. The contribution of each member is limited to the putting in
of 60 francs per bond, which will be furnished at the dates above deter-
mined. Beyond that contribution all appeals for money are forbidden.
In no case can the member be responsible with regard to third per-
sons beyond that contribution. -
The company’s funds are composed of the union of the sums received
by the civil association. * * *
ART. 12. The rights and obligations belonging to the bonds follow
them into the hands in which they may be found.
Subscription or possession of a bond carries ipso facto adhesion to
the by-laws of the association and to the resolutions of the general
meeting of the associates. * * *
GENERAL CONDITIONS.
Subscribers who fully pay up their bonds by making the payment
required in the time fixed therefor—that is to say, from the 5th to the
10th of July, 1888, will have the right to a coupon of 7 francs 50
centimes, to fall due the 1st of December, 1888.
The subscribers will have at all times after the payment aforesaid
the right to anticipate the total of payments with conversion of inter-
ests at 4 per cent per year. In this case the payment will be stated
upon the provisional bond which they will preserve up to the 15th of
December, 1889.
From the 16th of December, 1889, the provisional bonds will be
exchanged for definitive ones, without conformity of numbers. The
definitive bonds will alone take part in the drawing of the 15th of
February, 1890. -
The payment of the prizes will take place a month after each draw-
ing, with deduction of all amounts remaining due.
The successive payments on the provisional bonds will be received
at the headquarters of the company and at those of its correspondents
in France and abroad.
The payments in arrears will be charged with an interest of 5 per
cent a year. .
The provisional bonds on which the required payments shall not have
been effected may be sold at the Bourse of Paris, without notice to the
delinquent, a month after the becoming due of the payment, for the
account and at the expense and risk of the delinquent; in all cases they
can not be made regular again except by payment of an amount repre-
senting the compound interests necessary to reimburse the capital of
sinking and that of the guaranty of the prizes. In case of their
drawing prizes, the holders of bonds not so made regular are deprived
of the right to the amount due for sinking them and to the benefit of
the prizes.
I’AN AMA CAN AL TITLE. 157
The definitive bonds shall have semiannual coupons of 7 francs 50
centimes falling due the 1st of June and the 1st of December, payable
at the headquarters of the company at Paris and at those of its corre-
spondents in France and abroad.
EXEIIIBIT 14.
CERTIFICATE OF AUGUST 21, 1902, BY THE REGISTER OF DOCUMENTS
AT PANAMA, STATING NO MORTGAGES AGAINST THE NEW PANAMA
CANAI, COMPANY.
REPUBLIC OF COLOMBIA.
The undersigned, register of public and private documents of the
district of Panama, on the verbal request of Dr. Inocencio Galindo,
and after having examined the books of registration No. 3, containing
the records of mortgages for the period from 1887 until this day,
certifies:
That there is no record of a mortgage affecting the properties of the
New Panama Canal Company.
Panama, August 21, 1902. -
(Signed) CARLOS BARONA.
Charges received (decree 1209 of 1901): Examination of books,
$0.85; authentication, $2.40; total, $3.25.
(Signed) CARLOS BARONA.
EXEIIIBIT A.
EXTRACT FROM TREATISE ON COMMERCIAL LAW.
By LYON-CAEN and RéNAULT.
Third edition, volume 2, sections 666–667, A. D. 1900.
The associations in which the associates were bound only to the extent of their
contributions and could transfer their shares at will did not appear in France under
the name of anonymous associations; that name was reserved for associations which
the associations “en participation” of the present time represent. The associations
now in question were not regulated either by the ordinance of 1673 or by any general
law. The King alone, by individual edicts, authorized the creation of associations
in which the associates were bound only to the extent of the total of their contribu-
tions and in which the shares of the associates were transferable; these were gener-
ally called companies. Each edict contained the particular rules applicable to the
association; very commonly the royal authority had a right of intervention in the
affairs of the association; frequently, besides, the edict was not limited to authorizing
the creation of an association. It conferred a monopoly. This practice was in con-
formity with the ideas of the old régime, in which a right was often recognized
under the form of a privilege. Thus inventors, writers, were only protected on
condition of having obtained a royal privilege. But there were in France, even
before the Revolution, some associations having shares of stock (par actions) created
without the intervention of the royal power. Thus, in 1750 there was created the
association par actions called the Chamber of Insurance of Paris, which added to its
name the following: “Established as a private company (en corps de compagnie par-
ticulière) by a document of association.” ” * * After the proclamation of the
liberty of industry by the law of March 2, 1791, numerous companies were formed in
France. * * * The convention considered these associations as instruments of
speculation, injurious to the public credit. A decree of 26–29 Germinal, year 2, Sup-
pressed the existing companies and forbade the formation of any in the future, under
any pretext or any name. The previous decree of 24th August, 1793, had already
suppressed all associations the capital of which wested upon shares of stock issued to
bearer (actions aw porteur) on negotiable property or on subscriptions capable of
being transferred. But it permitted the formation in the future of associations
of this kind with legislative authorization. Following notions more correct, the
158 TANAMA CANAL TITLE.
directory abrogated, two years later, the decree of Germinal, year 2, by the law of
30 Brumaire, year 4. This law, in permitting the constitution of associations with
shares of stock, did not establish any rule as to their formation or their proceedings.
As a result, the courts rendered some extraordinary decisions, notably holding that
the stockholders were bound personally and in solido. * * * The proposed code
(of commerce) recognized, by the side of the association under a collective name and
the association en commandite, the association with shares of stock, and with the
view of preventing as much as possible the frauds to which that kind of association
can lend itself, the project of the code required, for the formation of associations with
shares of stock, the previous authorization of the Government (i.e., of the executive
administration). * * * The courts and chamber of commerce demanded that
the lawmakers should distinguish two classes of associations with shares of stock,
One class to be authorized by the Government, the other to be free; and this distinc-
tion the code of commerce adopted. It recognized associations with shares in which
there are only stockholders (Sociétés anonymes), and associations in which there are
both associates, who are personally responsible, and stockholders (commandites par
actions). The former were subjected to the authorization of the Government; the
latter could be formed in freedom (art. 37 et 38, Code Commercial). The code of
1807 did not contain any special restrictive rule either as to their constitution or
their proceedings.
Section 669 says:
The authorization necessary for anonymous associations was given in the manner
prescribed by regulations of the public administration—that is to say, a decree ren-
dered upon the advice of the council of state (art. 37, Code Commercial). The lat-
ter received the project of the by-laws of the future company, and could advise that
they should be approved and the association authorized, or not to authorize it until
after modification of the by-laws, or to refuse the authorization altogether.
The Government (the executive administration) was not required to give any rea-
Son for its decision. * * * The code not containing more than some very sum-
mary rules concerning the legal character of anonymous associations, concerning the
form (art. 40) of authenticating the document constituting the association, and con-
cerning the publicity to be given to the document (art. 45), the Government (execu-
tive administration) had full liberty to require or not the insertion in the by-laws
of clauses which seemed good to it, taking into account the amount of the capi-
tal, the nature of the operation contemplated, and all other circumstances, which
were left to its consideration and disposition. (The author adds this note: “This
merits remark, because in several countries in which previous authorization was
required for anonymous associations and for the associations of commandite par
action the laws contained in themselves numerous restrictive rules to which all these
associations were bound to submit.”) As a matter of fact, however, the council of
state adopted a system of rules (jurisprudence), in the light of which it required or
rejected always, or nearly always, certain clauses of the by-laws. The administra-
tion could retract the authorization it had given, which it commonly did when an
association violated its by-laws. For certain associations the administration named
supervisors charged with the duty of overseeing their proceedings. The authoriza-
tion necessary for creating the association was likewise required for all modifications
afterwards made in the by-laws.
EXEIIRIT B.
SPECIAL ACT OF JULY 1, 1893 (FRANCE), RELATIVE TO THE LIQUIDA-
TION OF THE OLD PANAMA CANAL COMPANY.
An Act Relative to the Złºwºdation of the Universal Company of the
- Panama Interoceanic Cana/. i
The Senate and the Chamber of Deputies have adopted and enacted,
and the President of the Republic promulgates, the following law:
ART. 1. From the date of the promulgation of the present law, all
actions now in course of procedure that have been brought by holders
of bonds issued by the Universal Company of the Panama Inter-
oceanic Canal, or that have been brought by any creditors of the said
Company, whether against the liquidator in his official capacity, or
against the Administrators to enforce their responsibility, or against
PANAMA CANAL TITLE. 159
third parties for restitution, or arising in any other manner whatsoever,
are hereby declared suspended. The plaintiff may follow up and prose-
cute said actions only by complying with the requirements of articles
2 and 3.hereof. .
All proceedings concerning attachments and execution, even those
now in course of enforcement and procedure, against the personal or
real property of the said company, are likewise suspended.
I.
BOND OR OBLIGATION HOLDERS’ ATTORNEY.
ART. 2. All rights of action, of any character whatever, accruing to
owners of bonds emitted by the Universal Company of the Panama
InterOceanic Canal, whether against the liquidator in his official capacity,
or against the administrators to enforce their responsibility, or for a
right to restitution arising from any other cause, shall be enforced and
sued on by an attorney or mandataire appointed for the purpose, on
request of the Attorney of the Republic for the jurisdiction of the
Civil Tribunal of the Seine, by a decree in Chambers.
In case there should arise a divergence or opposition of interests
between the different classes of bondholders, one or more special
mandataires may be appointed in the manner and form just above pro-
vided. The powers of the mandataires may be revoked at the same
request and in the same manner. There shall be no appeal from or
recourse against said orders or decrees. sº
However, any bondholder shall have the right to enter an action for
damages in connection with a criminal matter, or to intervene in pro-
ceedings instituted by the attorney or mandataire aforesaid, at his own
expense and cost, without in any way delaying the proceedings or
judgment.
Moreover, every bondholder shall have the power to bring any
action, in his individual right and at his own risk and peril, which
the attorney shall have refused or failed to enter within one month
after he shall have been notified and requested to enter the same.
Suits brought by the attorneys or mandataires shall not block the
right of action on the part of the Company, belonging to the liquidator.
The attorneys shall have power to call on the liquidator for communi-
cation of all documents tending to shed light on the facts; their legal
residence shall be the jurisdiction within which shall be carried on the
winding up or liquidation of the company’s affairs; the tax costs arising
from the exercise of their official duties shall be defrayed from the
credits of the liquidation, so far as this may be done without impairing
the reimbursement to the latter of the sums which it shall have advanced.
ART. 3. All actions emanating from the liquidator, or from the attor-
neys, or from interested parties individually, shall be brought before
the Civil Tribunal of the Seine. Such proceedings as may arise from the
distribution of the assets shall be brought likewise before this tribunal.
Suits instituted by parties intervening in damages shall remain in the
jurisdiction where already the prosecution has been inaugurated.
ART. 4. The mandataire shall have of right the “judicial assistance
privilege’ in the carrying on of actions and in the executing of deci-
sions which he shall have obtained. Likewise he shall enjoy the same
in all interventions asking for damages, and in the case of all record-
ing-taxes which might be otherwise exacted. On his request, pre-
sented to the Attorney of the Republic, advocates and bailiffs shall be
160 PANAMA CAN AL TITLE.
appointed, in the manner and form prescribed by article 13 of the
law dated January 22nd, 1851. -
However, the “judicial assistance privilege” shall not extend to
costs of transportation for judges, for Government officials or for
experts, nor to the latter’s fees, nor to witness fees. As to stamp
duties, costs of recording and court costs in general, the Treasury
shall exact them from the debtor only, after the payment of such
judgment as shall have been obtained by the mandataire.
ART. 5. The mandataire shall have power to compromise or to desist
from an action, though he may do so only after consulting with three
jurists appointed by the Attorney of the Republic; and all compro-
mises or withdrawals of actions shall have to be ratified and approved
by judicial decree rendered in Chambers. $.
He alone shall have power to levy execution on judgments pro-
nounced by the Court, or to receive the sums obtained on compromise,
whether such compromise have been obtained on his own demand or
On that of obligation holders acting in an individual capacity; all sums
thus received shall be deposited by him at the bureau of deposits
º consignments, and the liquidator shall give him due quittance
therefor.
II.
THE LIQUIDATOR.
ART. 6. Before proceeding at all to distribute the assets of the
company, the liquidator shall publish in the “Journal Officiel” and in
the “Journal Officiel (Commune edition)” a notice, calling on all par-
ties interested to produce their claims against the company and their
proofs thereof, within the space of six months, under pain of becom-
ing barred from bringing any action on the said claims.
The production of the claims and the transmission of proofs in sup-
port thereof may be made by simple registered letter.
ART. 7. The liquidator shall proceed to verify and to admit said
claims in the manner and form prescribed by articles 495 and 497,
first paragraph, of the Code of Commerce.
ART. 8. Should the claim be contested, notice of this fact shall be
sent by registered mail to the claimant in question, and the latter shall
have a term of three months within which he must institute proceed-
ings before the Civil Tribunal of the Seine, in order to have his claim
adjudicated.
Judgment must oe pronounced thereon within the space of one
month, as in the case of matters demanding immediate and summary
adjudication. An appeal from such decision must be entered within
ten days from the notification of said judgment either to the party in
person or at his domicile.
ART. 9. The distribution of all dividends arising from an action
brought by the company or from actions brought by the attorney or
mandataire of bondholders, or from any other source whatever, shall
be made by the liquidator, who alone shall have competency to receive
opposition or objections to the same.
ART. 10. All acts tending to alienate the assets of the company, all
contracts entailing a transfer or contribution of the whole or of a part
of the assets of the concern, emanating from the liquidator of the
Universal Company of the Panama Interoceanic Canal, shall be subject
PANAMA CANAſ, TITLE. 161
to the approval of the Civil Tribunal of the Seine, which shall, on the
report of one of the Justices, pass on the question in open Court.
ART. 11. All decrees of approval rendered in accordance with the
preceding article shall be published, within a term of ten days, in the
“Journal Officiel” and in the “Journal Officiel (Commune edition)”.
This decree may be attacked by the shareholders, by the mandataire
of the bondholders, and by the other creditors of the company, within
a delay not exceeding one month from the date of the publication
aforesaid. The Civil Tribunal shall adjudicate the question within
the space of one month, as in the case of matters demanding an
immediate and summary adjudication. The appeal from such decision
must be entered within ten days from the time of notification of said
judgment to the party in person or at his domicile.
ART. 12. The Universal Company of the Panama Interoceanic Canal,
the civil company formed for the purpose of redeeming the obligations
or bonds of the Panama Canal (issue of March, 1888), and the civil or
non-trading company for the redemption of the lottery bonds of the
Panama Canal, are hereby exempted from the payment of all stamp
duties, and of all transfer or transmission taxes now due or to become
due on any shares or bonds of the said companies.
ART. 13. Beginning with the date of the promulgation of the present
law, no limitation in bar of actions in damages shall begin to run against
the creditors of the Panama Canal Universal Company, until the com-
plete distribution of the assets realized. *.
ART. 14. Shareholders, subscribers or buyers of stock having
acquired title to the same before the company was placed into the
hands of a liquidator, provided they represent at least one-twentieth of
the capital stock, may join a common interest and entrust one or more
attorneys or mandataires with maintaining any action and with repre-
senting them in Court. -
The present law, deliberated upon and adopted by the Senate and
Chamber of Deputies, shall be enforced as a law of the State.
Done at Marly-le-Roi, on the 1st day of July, 1893.
CARNOT.
By the President of the Republic:
The Keeper of the Seals, the Minister of Justice, E. GUERIN.
The Minister of Finance, P. PEYTRAL.
EXIIIBIT C.
CONCESSION OF 1878 AND EXTENSIONS,
WYSE CONCESSION, MARCH 20, 1878.
[Diario Oficial of Bogota, Wednesday, May 22, 1878.]
CONTRACT FOR THE CONSTRUCTION OF AN INTEROCEANIC CANAL ACROSS
COLOMIBIAN TERRITORY.
Eustorgio Salgar, secretary of the interior and of foreign relations
of the United States of Colombia, duly authorized, of the one part,
and of the other part Lucien N. B. Wyse, chief of the Isthmus Scien-
tific Surveying Expedition in 1876, 1877, and 1878, member and dele-
gate of the council of administration of the International InterOceanic
8751—02—11
162 PANAMA CANAL TITLE.
\
Canal Association; presided by General Etienne Türr, in conformity
with powers bestowed at Paris, from the 27th to the 29th of October,
1877, which he has exhibited in legal form, have celebrated the follow-
ing contract: - t - -
ARTICLE 1. The Government of the United States of Colombia
grants to Mr. Lucien N. B. Wyse, who accepts it in the name of the
International InterOceanic Canal Association, represented by their coun-
cil of administration, the exclusive privilege for the construction across
its territory, and for the operating of a canal between the Atlantic and
Pacific Oceans. Said canal may be constructed without restrictive
stipulations of any kind.
This concession is made under the following conditions:
1st. The duration of the privilege shall be for ninety-nine years from
the day on which the canal shall be wholly or partially opened to the use
of the public, or when the grantees or their representatives commence
to collect the dues on transit and navigation.
2d. From the date of approbation by the Colombia Congress of the
present contract for the opening of the interoceanic canal, the Govern-
ment of the Republic can not concede to any company or individual,
under any consideration whatever, the right to construct another canal
across Colombian territory which shall connect the two oceans, nor
construct one itself. Should the grantees wish to construct a railroad
as an auxiliary to the canal, the Government (with the exception of
existing rights) cannot grant to any other company or individual the
right to build another interoceanic railroad, nor do so itself, during
the time allowed for the construction and use of the canal.
3d. The necessary studies of the ground and the route for the line
of the canal shall be made at the expense of the grantees by an inter-
national commission of individuals and competent engineers, in which
two Colombian engineers shall take part. The commission shall deter-
mine the general route of the canal and report to the Colombian Gov-
ernment directly, or to its diplomatic agents in the United States or
Europe, upon the results obtained, at the latest in 1881, unless unavoid-
able circumstances clearly proven should prevent their so doing. The
report shall comprise in duplicate the scientific labor's performed and
an estimate of the projected work.
4th. The grantees shall then have a period of two years to organize
a universal anonymous company, which shall take charge of the enter-
prise and of the construction of the canal. This term shall commence
from the date mentioned in the preceding paragraph.
5th. The canal shall be finished and placed at the service of the public
within the subsequent twelve years after the formation of the company
which will undertake its construction, but the executive power is
authorized to grant a further maximum term of six years in the case
of encountering vis major, and if after one-third of the canal is built,
the company should find it impossible to conclude the work in the said
twelve years. - , -
6th. The canal shall have the width, depth, and all other conditions
requisite in order that sailing vessels and steamships measuring up to
140 meters long, 16 meters in width, and 8 meters in draught shall,
with lowered topmast, be able to pass the canal. .
7th. All public lands which may be required for the route of the
canal, the ports, stations, wharves, moorings, warehouses, and in gen-
eral for the construction and service of the canal, as well as for the
PANAMA CANAL TITLE. 163
railway, should it be convenient to build it, shall be ceded gratis to
the grantees. - -
8th. These lands shall revert to the Government of the Republic,
with the railroad and canal, at the termination of this privilege; there.
is also granted for the use of the canal a belt of land Gwo hundred
meters wide on each side of its banks throughout all the distance which
it may run, but the owners of lands on its banks shall have free access
to the canal and its ports as well as to the right of use of any roads
which the grantees may open there; and this without paying any dues
to the company. - . . . . . . . .
9th. If the lands through which the canal shall pass, or upon which,
the railroad may be built, should, in whole or in part, be private prop-
erty, the grantees shall have the right to demand their expropriation
by the Government according to all the legal formalities in such cases.
The indemnity which shall be made to the landowners, and which shall
be based on their actual value, shall be at the expense of the company.
The grantees shall enjoy in this case, and in those of temporary occu-
pation of private property, all the rights and privileges which the
law allows to the nation.
10th. The grantees may establish and operate at their cost the tele-
graph lines which they may consider useful as auxiliaries in the build-
ing and management of the canal.
11th. It is, however, stipulated and agreed that if, before the pay-
ment of the security determined upon in article 2, the Colombian
Government should receive any formal proposal, sufficiently guaran-
teed, in the opinion of the said Government, to construct the canal in
less time and under more advantageous conditions for the United States
Of Colombia, said proposal shall be communicated to the grantees or
... their representatives, that they may be substituted therein, in which
case they shall be preferred; but if they do not accept such substitu-
tion, the Colombian Government, in the new contract which they may
celebrate, shall exact, besides the guarantee mentioned in article 2,
the sum of three hundred thousand dollars in coin, which shall be
given as indemnity to the grantees.
ART. 2. Within, the term of twelve months from the date at which
the international commission shall have presented the definite results
of their studies, the grantees shall deposit in the bank or banks of
London, to be designated by the national executive power, the sum
of seven hundred and fifty thousand francs, to the exclusion of all
paper money, as security for the execution of the work. The receipt
of said banks shall be a voucher for the fulfillment of said deposit.
It is understood that if the grantees should lose that deposit by virtue
of the stipulations contained in clauses 2 and 3 of article 22 of the
present contract, the sum referred to, with interest, shall become ºn
toto the property of the Colombian Government. After the comple-
tion of the canal, said sum, without interest, which latter will in this
case belong to grantees, shall be paid into the treasury, for the
expenses which may have been incurred or may be incurred for the
construction of buildings for the public services. -
ART. 3. If the line of the canal to be constructed from sea to sea
should pass to the west and to the north of the imaginary straight
line which joins Cape Tiburon with Garachiné Point, the grantees
must enter into some amicable arrangement with the Panama Railroad
Company, or pay an indemnity, which shall be established in accord-
164 PANAMA CAN AI, TITLE.
ance with the provisions of law 46, of August 16, 1867, “approving
the contract celebrated on July 5, 1867, reformatory of the contract
of April 15, 1850, for the construction of a railroad from one ocean
to the other through the Isthmus of Panama.” -
In case the international commission should choose the Atrato or
some other stream already navigable as one of the ends of the canal,
the ingress and egress by such stream, and the navigation of its waters,
so long as it is not intended to pass through the canal, shall be open to
commerce and free from all imposts. *
ART. 4. Besides the lands granted in paragraphs 7 and 8 of article 1
there shall be awarded to the grantees, as an aid for the accomplish-
ment of the work, five hundred thousand hectares of public lands,
with the mines they may comprise, in the localities which the company
may select. This award shall be made directly by the national execu-
tive power. The public lands situated on the seacoast, on the borders
of the canal or of the rivers, shall be divided in alternate lots between
the Government and the company, forming areas of from one to two
thousand hectares. The measurements for the allotment or locating
shall be made at the expense of the grantees and with the intervention
of Government commissioners. The public lands thus granted, with
the mines they may hold, shall be awarded to the grantees as fast as
the work of construction of the canal progresses, and in accordance
with rules to be laid down by the executive power. .
Within a belt of two myriameters on each side of the canal, and
during five years after the termination of the work, the Government
shall not have the right to grant other lands except the said lots until
the company shall have called for the whole number of lots granted by
this article.
ART. 5. The Government of the Republic hereby declares the ports
at each end of the canal, and the waters of the latter from sea to sea,
to be neutral at all times; and consequently in case of war among other
nations, the transit through the canal shall not be interrupted by such
event, and the merchant vessels and individuals of all nations of the
world may enter into said ports and travel on the canal without being
molested or detained. In general, any vessel may pass freely without any
discrimination, exclusion, or preference of nationalities or persons on
payment of the dues and the observance of the rules established by the
company for the use of the canal and its dependencies. Exception is to
be made of foreign troops, which shall not have the right to pass without
permission from Congress, and of the vessels of nations which, being
at war with the United States of Colombia, may not have obtained the
right to pass through the canal at all times, by public treaties wherein
are guaranteed the sovereignty of Colombia over the Isthmus of Panama
and over the territory whereon the canal is to be cut, and the immunity
and neutrality of the said canal, its ports, bays, and dependencies and the
adjacent seas.
ART. 6. The United States of Colombia reserve to themselves the
right to pass their war vessels, troops, and munitions of war at all times
and without paying any dues whatever. The passage of the canal is
strictly closed to war vessels of nations in a state of open hostility with
one or more other nations, and which may not have acquired, by pub-
lic treaty with the Colombian Government, the right to pass through
the canal at all times. -
ART. 7. The grantees will enjoy the right during the whole time of
PANAMA CAN AL TITLE. 165
the privilege to use the ports at the termini of the canal, as well as
intermediate parts, for the anchorage and repair of ships, and the
loading, depositing, transshipping, or landing of merchandise. The
ports of the canal shall be open and free to the commerce of all nations,
and no import duties shall be exacted, except on merchandise destined
to be introduced for the consumption of the rest of the Republic. The
said ports shall, therefore, be open to importations from the commence-
ment of the work, and the custom-houses, and the revenue service
which the Government may deem convenient for the collection of duties
on merchandise destined for other parts of the Republic, shall be
established, in order to prevent introduction of smuggled goods.
ART. 8. The executive power shall dictate, for the protection of the
financial interests of the Republic, the regulations conducive to the pre-
vention of Smuggling, and shall have the power to station, at the cost
of the nation, the number of men which they may deem necessary for
that service.
Out of the indispensable officials for that service, ten shall be paid
by the company, and their salaries shall not exceed those enjoyed by
employés of the same rank in the Barranquilla custom-house.
The company shall carry gratis through the canal, or on the auxiliary
railway, the men destined for the service of the nation, for the service
of the state through whose territory the canal and railroad may pass, or
for the service of the police, with the object of guarding against foreign
enemies, or for the preservation of public order, and shall also trans-
port gratis the baggage of such men, their war materials, armament,
and clothing which they may need for the service assigned to them.
If the company has not ships or tugboats it will pay the passage of
these same men across the Isthmus with their baggage, munitions,
arms and equipment. - -
The subsistence of the public force which may be deemed necessary
for the safety of the interoceanic transit shall likewise be at the expense
of the company. - -
ART. 9. The grantee shall have the right to introduce, free of import
or other duties of whatever class, all the instruments, machinery, tools,
fixtures, provisions, clothing for laborers which they may need during
all the time allowed to them for the construction and use of the canal.
The ships carrying cargoes for the use of the enterprise shall enjoy
free entry at whatever point shall afford them easy access to the
line of the canal. - .
ART. 10. No taxes, either national, municipal, of the State, or of any
other class, shall be levied upon the canal, the ships that navigate it,
the tugs and vessels at the service of the grantees, their warehouses,
workshops, and offices, factories of whatever class, storehouses,
wharves, machinery or other works or property of whatever character
belonging to them, and which they may need for the service of the
canal and its dependencies, during the time conceded for its construc-
tion and operation. The grantees shall also have the right to take
from the public lands the materials of any kind which they may
require without paying any compensation for the same.
ART. 11. The passengers, money, precious metals, merchandise, and
articles and effects of all kinds which may be transported over the
canal shall also be exempt from all duties—national, municipal, transit,
and others. The same exemption is extended to all articles and
merchandise which may be deposited, on conditions to be stipulated
166 PANAMA CAN AI, TITLE.
with the company, in the storehouses and stations belonging to them
in the case of interior or exterior commerce.
ART. 12. Ships desiring to pass through the canal shall present at the
port of the terminus of the canal at which they may arrive their respec-
tive registers and other sailing papers prescribed by the laws and public
treaties, so that the vessels may navigate without interruption. Ves-
sels not having said papers, or which should refuse to present them,
may be detained and proceeded against according to law.
ART. 13. The Government allows the immigration and free access
to the lands and plants of the grantees of all the employés and work-
ingmen of whatever nationality, who may be contracted for the work
or who may come to engage themselves to work on the canal, on con-
dition that such employés or laborers shall submit to the existing
laws and to the regulations established by the company. The Gov-
ernment promises them support and protection, and the enjoyment of
their rights and guarantees, in conformity with the national constitution
and laws, during the time they may sojurn on Colombian territory.
The Colombian manual laborers and other workmen employed on
the work of the canal shall be exempt from all requisitions and mili-
tary service, national as well as of the state.
ART. 14. In order to indemnify the grantees of the construction,
maintenance, and working expenses incurred by them, they shall have,
during the whole period of the privilege, the exclusive right to estab-
lish and collect for the passage of the canal and its ports the dues for
light-houses, anchorage, transit, navigation, repairs, pilotage, towage,
hauling, storage, and of moorage according to the tariff which they may
issue, and which they may modify at any time under the following
express conditions:
1st. They shall collect these dues, without any exceptional favor,
from all vessels in like circumstances.
2d. The tariffs shall be published four months before their enforce-
ment in the Diario Oficial of the Government, as well as in the capitals
and the principal commercial ports of the countries interested.
3d. The principal navigation dues to be collected shall not exceed
the sum of ten francs for each cubic meter resulting from the multi-
plication of the principal dimensions of the immerged hull of the ship
in transit (length, breadth, and draught).
4th. The principal dimensions of the ship in transit, that is to say,
the maximum exterior length and breadth at the water line, as well as
the greatest draught, shall be the metrical dimension inserted in the
official permits of navigation, excepting any modifications supervening
during the voyage. The ship's captains and the company’s agents may
demand a new measurement, which operations shall be carried out at
the expense of the petitioner; and,
5th. The same measurement, that is to say, the number of cubic meters
contained in the parallelopipedon circumscribing the immerged hull
of the ship, shall serve as a basis for the determination of the other
accessory dues. - :
ART. 15. By way of compensation for the rights and exemptions
which are allowed to the grantees in this contract, the Government
of the Republic shall be entitled to a share amounting to five per cent
of the gross receipts obtained by the enterprise, by virtue of the rights
established or which will be established in conformity with article 14,
during the first twenty-five years after the opening of the canal to the
PANAMA CANAL TITLE. 167
use of the public. From the twenty-sixth up to the fiftieth year, inclu-
sive, it shall be entitled to a share of six per cent; from the fifty-first to
the seventy-fifth to seven per cent; and from the seventy-sixth to the
termination of the privilege to eight per cent. It is understood that
these shares shall be reckoned, as has been said, on the gross income
from all sources, without any deduction whatever for expenses, interest
on shares, or on loans or debts against the company. The Government
of the Republic shall have the right to appoint a commissioner or
agent, who shall intervene in the collections and examine the accounts,
and the distribution or payment of the shares coming to the Govern-
ment shall be made in due half-yearly installments. The product of
the five, six, seven, and eight per cent shall be distributed as follows:
Four-fifths of it shall go to the Government of the Republic and the
remaining one-fifth to the government of the State through whose
territory the canal may pass. . . .
The company guarantees to the Government of Colombia that the
share of the latter shall in no case be less than the sum of two hundred
and fifty thousand dollars a year, which is the same as that received
as its share in the earnings of the Panama Railroad, so that if in any
year the five, six, seven, or eight per cent should not reach said sum,
it shall be completed out of the common funds of the company.
ART. 16. The grantees are authorized to require payment in advance
of any charges which they may establish; nine-tenths of these charges
shall be made payable in gold, and only the remaining one-tenth part
shall be payable in silver of twenty-five grammes, of a fineness of 900 m.
ART. 17. The ships which shall infringe upon the rules established
by the company shall be subject to the payment of a fine which said
company shall fix in its regulations, of which due notice shall be given
to the public at the time of the issue of the tariff. Should they refuse
to pay said fine, nor furnish sufficient security, they may be detained
and prosecuted according to the laws. The same proceedings may be
observed for the damages they may have caused.
ART. 18...If the opening of the canal shall be deemed financially pos-
sible, the grantees are authorized to form, under the immediate pro-
tection of the Colombian Government, a universal joint stock company,
which shall undertake the execution of the work, taking charge of all
financial transactions which may be needed. As this enterprise is
essentially international, and for public utility, it is understood that it
shall always be kept free from political influences. * -
The company shall take the name of “The Universal Interoceanic
Canal Association;” its residence shall be fixed in Bogota, New York,
London, or Paris, as the grantees may choose; branch offices may be
established wherever necessary. Its contracts, shares, bonds, and
titles of its property shall never be subjected by the Government of
Colombia to any charges for registry, emission, stamps, or any similar
imposts upon the sale or transfer of these shares or bonds, as well as
on the profits produced by these values.
ART. 19. The company is authorized to reserve as much as 10 per
cent of the shares emitted, to form a fund of shares, to the benefit of
the founders and promoters of the enterprise. Of the products of the
concern the company take, in the first place, what is necessary to cover
all expenses of repairs, operations, and administration, and the share
which belongs to the Government, as well as the sums necessary for
the payment of the interest and the amortization of the bonds, and,
168 . PANAMA CAN AL TITLE.
if possible, the fixed interest or dividend of the shares; that which
remains will be considered as net profit, out of which 80 per cent at
least will be divided among the shareholders. -
ART. 20. The Colombian Government may appoint a special dele-
gate in the council of administration of the company whenever it may
consider it useful to do so. This delegate shall enjoy the same advant-
ages as are granted to the other administrators by the by-laws of the
company. -
The grantees pledge themselves to appoint in the capital of the
Union, near the National Government, a duly authorized agent for the
purpose of clearing up all doubts and presenting any claims to which
this contract may give rise. Reciprocally and in the same sense, the
Government shall appoint an agent, who shall reside in the principal
establishment of the company situated on the line of the canal; and,
according to the national constitution, the difficulties which may arise
between the contracting parties shall be submitted to the decision of
the federal supreme court.
ART. 21. The grantees, or those who in the future may succeed them
in their rights, may transfer these rights to other capitalists or financial
companies, but it is absolutely prohibited to cede or mortgage them
under any consideration whatever to any nation or foreign government.
ART. 22. The grantees, or their representatives, shall lose the right
hereby acquired in the following cases: -
1st. If they do not deposit, on the terms agreed upon, the sum which
by way of security must insure the execution of the work. -
2d. If in the first year of the twelve that are allowed for the con-
struction of the canal the works are not already commenced, in this
case, the company shall lose the sum deposited by the way of security,
together with the interest that may have accrued, all of which will
remain for the benefit of the Republic.
3d. If at the end of the second period fixed in paragraph 5 of Arti-
cle 1 the canal is not transitable, in this case also the company shall
lose the sum deposited as security; which, with the interests accrued,
shall remain for the benefit of the Republic.
4th. If they violate the prescriptions of Article 21; and,
5th. If the service of the canal should be interrupted for a longer.
period than six months without its being occasioned by the acts of
God, &c.
In cases 2, 3, 4, and 5 the federal supreme court shall have the
right to decide whether the privilege has become annulled or not.
ART. 23. In all cases of decisions of nullity the public lands men-
tioned in clauses 7 and 8 of Article 1, and such lands as are not settled
or inhabited from among those granted by Article 4, shall revert to
the possession of the Republic in the condition they may be found in,
and without any indemnity whatever, as well as the buildings, mate-
rials, works, and improvements which the grantees may possess along
the canal and its accessories. The grantees shall only retain their cap-
ital, vessels, provisions, and in general all movable property.
ART. 24. Five years previous to the expiration of the ninety-nine
years of the privilege the executive power shall appoint a commis-
sioner to examine the condition of the canal and annexes, and, with
the knowledge of the company or its agents on the Isthmus, to make
an official report, describing in every detail the condition of the same
PANAMA CAN AL TITLE. - 169
and pointing out what repairs may be necessary. This report will
serve to establish in what condition the canal and its dependencies
shall be delivered to the National Government on the day of expiration
of the privilege now granted.
ART. 25. The enterprise of the canal is reputed to be of public
utility. - -
ART. 26. This contract which will serve as a substitute for the pro-
visions of law 33, of May 26, 1876, and the clauses of the contract
celebrated on the 28th of May of the same year, shall be submitted
for the approval of the President of the union and the definite accept-
ance by the Congress of the nation. -
In witness whereof they sign the present in Bogotá, on the 20th
March, 1878.
EUSTORGIO SALGAR.
LUCIEN N. B. WYSE.
BOGOTA, March 23, 1878.
Approved. -
The President of the union:
- AQUILEO PARRO.
The secretary of the interior and of foreign relations:
- EUSTORGIO SALGAR.
To the Honorable Secretary of the Interior and Foreign Relations:
I have the honor to inform you that I accept each and all of the
modifications introduced by Congress to the contract which I cele-
brated with Señor Eustorgio Salgar, your worthy predecessor in the
department of the interior and foreign relations, for the construction
of the interoceanic canal, which contract was approved by the executive
power under date of March 23 last. - -
The modifications to which I have alluded are those recorded in law
No. 28 of the 18th instant.
I hasten to lay this declaration before the Government of Colombia,
so that it may be taken in consideration, in order that said law may
be effective in all its parts.
Bogota, May 18, 1878.
- LUCIEN N. B. WYSE,
Chief of the Internaţional Scientific Commission
for the Survey of the /s/hºnºus, Member and
Delegate from the Council of Administration of
the /mferoceanic Canal Association. -
170 PANAMA CANAL TITLE.
EXTENSION OF CONCESSION DECEMBER 26, 1890.
ADDITIONAL CONTRACT MODIFYING THAT OF MARCH 23, 1878, APPROVED BY LAw 28
- OF THE SAME YEAR.
|Law 107 of 1890–December 26.]
Jaffension of ten years for the opening of the 'nterocedºc canal across
. ºs Colombian territory.
THE CONGRESS OF COLOMBIA, Decrees:
ONLY ARTICLE. The contract modifying that of March 23, 1878,
for the opening of an inter-oceanic canal across Colombian Territory,
concluded between H. E. the Minister of Foreign Affairs, and Mr.
Lucien N. B. Wyse, Special Representative of the Liquidator of the
Compagnie Universelle du Canal de Panama, is approved in all its
parts, which contract is literally as follows:
Antonio Roldan, Minister of Foreign Affairs, duly authorized by
his Excellency, the President of the Republic, hereinafter called the
“Government,” of the one part, and Lucien N. B. Wyse, Naval Com-
mander, Engineer, original Concessionary of the inter-oceanic canal,
and Special Delegate of the Liquidator of the Compagnie Universelle
du Canal de Panama, under powers of attorney executed at Paris, May
16, 1890, hereinafter called the “Concessionary,” of the other part,
have agreed to modify the Contract of March 28. 1878, for the open-
ing of an inter-Oceanic canal across Colombian Territory, approved
by law 28 of the same year, in accordance with the following stipula-
tions: - .
ARTICLE FIRST: The Government grants to the Liquidator of the
Compagnie Universelle du Canal de Panama, an extension of ten years,
within which the canal is to be finished and put in public operation;
the said extension is consented to, subject to the following conditions:
First. The Concessionary agrees to transfer all the assets of the
Company in liquidation to a new company which shall undertake the
completion of the work of the Inter-oceanic Canal. -
Second. The new company shall be formally organized with a cap-
ital sufficient for this purpose, and shall resume the work of excava-
tion in a serious and permanent manner, not later than February 28,
1893. - - -
Thºrd. The Concessionary, or his successors, shall furnish monthly
to the National Government of Panama the sum of ten thousand
(10,000) piastres, in Colombian coin of 0.835, for the maintenance of
two hundred and fifty (250) men of the Military Garrison of the Depart-
ment of Panama, whom the Government undertakes to assign for the
preservation of order, and for the security of the line of the canal
during the work of excavation, and upon its termination for the pro-
tection of inter-oceanic transit.
In case the Company should have need of a greater number of men
of the public forces, the govermènt will assign them to said service,
taking them from the Military Garrison of the Department, but the
additional expense occasioned by this increase, reckoned upon the
basis already established, shall also be borne by the Company.
The company binds itself to furnish places for the lodging of the
troops upon points on the line at which the Government has none of
its own. The last part of article 8 of the original contract for the
privilege is modified in these respects.
PANAMA CAN AL TITLE, 171
Fourth. The navigation of the lakes which may form part of the
canal shall be free to small vessels, in accordance with the regulations
which the company may prescribe for this purpose. The latter shall
not be responsible for the inherent risks of this navigation. The
internal regulation of the lakes shall be settled by the Government at
the proper time, taking into account the general interests of the
enterprise. - .
F.7%h. The company binds itself to reestablish public transit at the
mouth of the Rio Grande, by means of bridges or boats, as it shall con-
sider most practicable, and if, in consequence of the number of vessels,
passage should become hereafter too difficult, the company, shall
reestablish it between Emperador and Arraijan to the satisfaction of
the Government. -- - .
ARTICLE SECOND. Beside the public lands granted gratis by the con-
tract of 1878, the expropriation of lands, buildings, and plantations
which shall prove necessary to the canal and its dependencies, shall be
made by the Government on account of the company in conformity
with the 9th condition of article first of the aforesaid contract,
approved by law 28 of 1878. . . . . . -
Such expropriations shall be made with all speed which the legislation
of the country upon the subject permits; the expropriated real estate
shall be immediately delivered over to the concessionary or his
SUICCéSSOI’S. . -
ARTICLE THIRD. The Government also undertakes to take the neces-
sary steps for restoring to the new company the complete enjoyment
of the lands belonging to the company in liquidation unlawfully occu-
pied by private persons, and to procure a judicial decree that all per-
sons who, without previous consent, shall have built or planted upon
the lands bought by the company in liquidation for the purpose of
works of excavation, installation, and unloading, shall have no right to
any indemnity.
ARTICLE FOURTH. As compensation for the services which the Gov-
ernment agrees to render, in accordance with the two preceding articles,
the concessionary, or his successors, shall pay to the Government ten
million (10,000,000) francs in gold, and shall issue to it gratis, in addi-
tion, five million (5,000,000) francs in ten thousand (10,000) dividend
bearing shares of the new company of five hundred (500) francs each,
full paid, having the right to no other dividends than those which are
declared on ordinary shares; the said ten thousand (10,000) shares shall
remain attached to their respective stubs until the other shares shall be
full paid; but, upon notice to the company, the Government shall have
the power, when it shall see fit, to assign or pledge them.
The ten million (10,000,000) francs to which this article refers shall
be paid by the concessionary, or by his successors, in five (5) equal
annual installments; the first being paid three (3) months after the
new company for the completion of the canal shall be fully organized,
in conformity with the second condition of article first. From this
sum shall be deducted two million five hundred thousand (2,500,000)
francs, as well as the interest accrued up to the date of the present
contract, which the Government owes to the company in liquidation
for the loan of 1883, the deduction being made in the first place for
the purpose of fixing the amount of the five (5) installments just men-
tioned. By this payment the said loan shall be finally discharged.
ARTICLE FIFTH. A special member, whom the Government has the
172 PANAMA CANAL TITLE.
right to appoint in the company’s council of administration in conform-
ity with article twenty of the contract in force, shall enjoy in the new
company to be organized for the completion of the canal the same
advantages and compensation granted to the other administrators by the
charter of the company, but neither the said appointee nor the official
agent of the Government residing in the Isthmus, shall make any pub-
lication relative to the company without the express authorization of
the Government. -
ARTICLE SIXTH. If the new company for the completion of the
canal shall not be organized, and if the work of excavation on the
canal shall not be resumed within the period fixed by the second con-
dition of article first, the contract in force shall lapse and the Republic
shall enter into the possession and enjoyment, without the necessity of
a previous judicial decree, and without indemnity, of the works of the
canal and its annexes, which revert to it in accordance with article
third of the contract of 1878.
Sec. 1st. It is understood that the contract shall also lapse and the
provisions of this article shall become applicable if the company for
the completion of the canal not being organized before February 28,
1893, the legal representative of the Compagnie Universelle du Canal
Interoceanique, or his successors, abandon the maintenance of the
works, plant, and buildings now existing upon the Isthmus and belong-
ing to the company.
ſec. 2nd. The maintenance of the property specified in the preced-
ing paragraph shall be considered abandoned when the legal repre-
sentative of the Compagnie Universelle du Canal Interoceanique, in
liquidation, or his successors, shall discharge the force of employees
which he now has on the Isthmus, or shall cease to make the neces-
sary expenditure for preventing the loss or deterioration of the said
property. -
Sec. 3rd. It is, moreover, understood that the buildings, plant, works,
and improvements which are to become the property of the Republic
under the circumstances provided in this article, and in conformity
with article 23 of the contract of 1878, shall be inalienable, and are to
be in good condition, subject to deterioration arising from use, from
unavoidable causes, or from accident.
ARTICLE SEVENTH. As soon as the company for the completion of
the canal shall be legally organized, and shall have resumed the work,
in conformity with the provisions of the second condition of article
first of this contract, the Government shall assign to it in the depart-
ment of Panama the two hundred and fifty thousand (250,000) hectares
of public lands to which it has been already declared by decisions of
the Executive power to be entitled, and shall issue to it the respective
patents, provided that the legal formalities in the premises be accom-
plished on the part of the company. # .
ARTICLE EIGHTH. The security of seven hundred and fifty thousand
(750,000) francs deposited by the canal company in accordance with
article second of the contract in force, shall be maintained as a guaranty
for the fulfillment of the obligations arising from the said contract,
and of those assumed by the concessionary under the provisions of the
present contract.
ARTICLE NINTH. All rights and obligations created by the contract
of March 23, 1878, for the opening of an interoceanic canal across
Colombian territory, approved by law 28 of the same year, shall con-
*n
PANAMA CAN AL TITLE. 173
tinue in full force and vigor without other restrictions and modifica-
tions than those contained in the present contract.
ARTICLE TENTH. In order that the present contract may have full
force and effect, it shall be submitted to the approval of His Excellency
the President of the Republic, and to that of Congress.
Done in duplicate, at Bogotá, the 10th day of December, one thou-
sand eight hundred and ninety.
ANTONIO ROLDAN.
LUCIEN N. B. WYSE.
EXTENSION OF CONCESSION, APRIL 4, 1893.
CoNTRACT OF EXTENSION.
[Diario Oficial of Bogota, April 5, 1893—No. 9125.]
Contract grantºng eatension to the Panama Canal Company—in.
/?quidation.
Between MARCO F. SUAREz, Minister of Foreign Affairs, duly
authorized by his Excellency, the Vice-President of the Republic, and
in accordance with the powers granted to the Executive Power by Law
91 of 1892, hereinafter called “ the Government,” of the one part,
And FRANCOIS MANGE, Engineer, Administrator of the operations of
the liquidation on the Isthmus, Special Representative of the Liquidator
of the Compagnie Universelle du Canal de Panama, under powers of
attorney granted him at Paris, January 24, 1893, hereinafter called
“the Concessionary,” of the other part; it has been agreed to modify
the contracts of March 23, 1878, and December 10, 1890, for the open-
ing of an inter-oceanic canal across Colombian Territory, in conformity
with the following stipulations: - -
ARTICLE FIRST.
The extension of ten years granted in Article First of the Contract
of 1890 to the Liquidator of the Compagnie Universelle du Canal de
Panama, remains in force, subject to the conditions then provided,
except the Second, which is modified by the extension until October
31st, 1894, of the period within which the new Company is to be
formed and work on the Canal is to be resumed in a serious and per-
manent manner.
The term of ten years shall begin to run from the date of the formal
organization of the new Company.
ART. 2.
The Concessionary or his successor acknowledges the validity of the
former contracts and of the present contract and binds himself to do,
in France, all acts necessary to insure its validity. These proceedings
are to be concluded not later than August 31st next.
174 PANAMA CANAL TITLE.
ART. 3.
As compensation for the extension which the Government grants
by Article First and to indemnify it for the advantages which it relin-
quishes accordingly, the Concessionary or his successor acknowledges
an indebtedness in favor of the Republic, amounting to the sum of
Two million francs in gold (2,000,000 francs), which added to the Ten
millions provided in Article 4 of the Contract of 1890, constitutes a
total indebtedness of Twelve million francs (12,000,000 francs), in favor
of Colombia, exclusive of Five million francs (5,000,000 francs) in
Ten thousand shares, also mentioned in the Article aforesaid.
ART, 4.
: The contracting parties further agree that from the Twelve millions
which have just been mentioned in the preceding Article shall be
deducted the sum of Four million francs which the Colombian Gov-
ernment and the Treasury of the Department of Panama owe to the
Company in liquidation for the loan of 1883 and its interest and for
services and material furnished to the administration of this Depart-
ment from 1881 to 1892. Accordingly, this debt becomes finally extin-
guished, leaving the Republic free from all obligation with regard to
this matter, and reducing to Eight million francs in gold (8,000,000
francs), the sum which the new Company is to pay to the Government.
ART. 5.
The eight million francs mentioned in the preceding Article shall be
paid by the Concessionary or his successor in the following manner:
150,000 francs August 31st, 1893;
150,000 francs October 31st, 1893;
200,000 francs December 31st, 1893.
The remainder shall be paid in four annual instalments, the first
to be paid three months after the new Company for the completion of
the Canal shall be formally organized. The first of these instalments
shall be One million five hundred thousand francs (1,500,000 francs)
and the three others, Two millions each (2,000,000 francs).
ART. 6.
The Republic shall enter into possession and ownership, without
need of previous judicial decision and without any indemnity, of the
Canal itself and the annexes dependent thereon, in conformity with
the contracts of 1878 and 1890, in each of the following cases:
If the new Company shall not be organized within the period fixed
by Article First; - .
If the work shall not be resumed within the period fixed by the
same Article; - -
If the Liquidator sells the property which is to belong to the Republic
in case of lapse or abandons its maintenance, all in conformity with
the provisions of the previous contracts, saving and excepting deterio-
ration arising from use, unavoidable causes or from accident; -
If the inventory mentioned in Article 7 of the present contract shall
not be made.
If the conditions of Article 2 of the same contract shall not be
ulfilled. - -
PANAMA CANAL TITLE. 175
ART. 7.
A general inventory of the property of the Company in liquidation,
which shall comprise as well the property which is to belong to the
Government in case of lapse, as that which is to belong to the Com-
pany in liquidation, shall be prepared upon the Isthmus. It is under-
stood that rolling stock and floating plant shall be comprised in this
inventory, which is to be made in conjunction with the Agent of the
Government at Panama, and is to be completed not later than August
31st, 1893. --
- ART. 8.
The security of Seven hundred and fifty thousand francs (750,000
francs) deposited in conformity with the contract of 1878, by the
Canal Company, and confirmed by the contract of 1890, shall be main-
tained as a guarantee for the fulfillment of the obligations arising
from the said contracts and those to which the Concessionary agrees
by the present contract. -
ART. 9.
Disputes which may arise between the contracting parties with
regard to the present contract or the former contract, shall be sub-
mitted to the Supreme Court of Justice of Colombia.
In conformity with the provisions of Article 7 of law 145 of 1888,
the Concessionary waives the right to diplomatic intervention concern-
ing the duties and rights arising from the three contracts, except in
case of denial of justice. -
ART. 10.
All rights and obligations arising from Contract of March 23rd, 1878
and contract of December 10th, 1890 for the excavation of an inter-
Oceanic canal across Colombian Territory, approved by law 28 of 1878,
and by law 107 of 1890, shall continue in full force and vigor, without
other modifications than those provided in the present contract.
ART. 11.
. The Concessionary declares that he accepts all the provisions of the
present contract which impose special obligations upon the Liquidator
as well as those which affect the Company which may be formed.
ART. 12.
The present Contract must, in order to be valid, be approved by His
Excellency, the Vice-President of the Republic. -
Done, in duplicate, at Bogota, the fourth day of April, one thousand
eight hundred and ninety-three. - * .
& MARCO F. SUAREZ.
- & FRANCOIS MANGE.
ExECUTIVE GOVERNMENT—BOGOTA, April 4, 1893. - -
Approved. -
[L. S.] M. A. CARO. -
The Minister of Foreign Affairs,
MARCO F. SUAREZ.
176 * PANAMA CANAL TITLE.
EXTENSION OF CONCESSION, APRIL 26, 1900.
[Number 11278. “Diario Oficial” Bogota, May 7, 1900. Ministry of Finance.]
Contract relative to the grantông of an entension of time to the Wew
Company of the Panama Canal.
WHEREAs, The National Executive Power has issued the fol-
lowing sº
Decree Number 721 of 1900.
(April 23.) -
by which provision is made for the granting of an extension of time
to the New Company of the Panama Canal, -
- The President of the Republic
Having seen the memorial by which the New Company of the
Panama Canal has solicited of the Government an extension of six
years for the completion of the work and putting it into public
service; and having seen the communications in which the Special
Agent, Dr. Nicolas Esquerra, expounds to the Government to
public expediency of granting the extension herein considered,
“Decrees
ART. 1. The Government may grant to the New Company of the
Panama Canal an extension for the fixed term of six years to com-
plete the work and put it into public use, Provided that it shall de-
posit at the disposition of the National Treasury, within one hundred
and twenty days, computed from the date on which this instrument
shall be notified to the said Company in such bank or establish-
ment as may be designated by the Government, five millions of francs
(frs. 5,000,000) in French gold. - ~ * .
ART. 2. The said extension will begin to run on the 31st day of
October, 1904. Consequently the canal must be completed and put
into public use on the 31st day of October, 1910, at the latest.
Let it be communicated and published. -
Given at Pena, Department of Cundinamarca, this 23d day of April,
1900. -
MANUEL A. SANCLEMENTE.
The Minister of State, . RAFAEL M. PALACIO.
The Minister for Foreign Affairs, CARLOS CUERVO MARQUEZ.
The Minister of Finance. CARLOS CALDERON.
The Minister of War, - José SANTOs.
The Minister of Public Instruction, MORCO F. SUAREZ.
The Minister of the Treasury, MARCELIANO WARGAs.
Now, therefore, we, to-wit: Carlos Calderon, Minister of Finance
of the Republic, duly authorized by the Executive Power, on the one
part, and, on the other part, Alejandro N. Mancini, in his capacity of
Agent of the New Company of the Panama Canal and as representa-
tive of the same, by virtue of the power of attorney which he has laid
before the Ministry of Finance, have executed the following contract.
ART. 1. The Government of the Republic grants to the New Com-
pany of the Panama Canal a delay of six years, from the 31st of Octo-
ber, 1904, in which to complete the work on the Canal and deliver it
to the public service, under the terms of the existing contracts. In
<}
PANAMA CAN AI. TITLE. 177
consequence the said work shall have to be completed and put into the
public service on the 31st day of October, 1910. -
ART. 2. In consideration of the extension referred to in the fore-
going article, the New Company of the Panama Canal will pay to the
Republic the sum of five millions of francs (francs 5,000,000) in French
coin, in the city of Paris, ninety days from the date on which this
contract shall have been approved by the Most Excellent President of
the Republic. Said payment shall be made by the Company to the
firm or bank in the city of Paris in whose favor the Minister of the
Treasury of the Republic may draw. -
ART. 3. This contract requires the approval of the Council of Min-
isters and that of the Most Excellent President of the Republic.
In witness whereof, we have signed three copies of even tenor at
Bogota, this twenty-fifth day of April, one thousand nine hundred.
CARLOS CALDERON.—ALEJANDRO N. MANCINI.
Presidency of the Council of Ministers, Bogota,
- April 25, 1900. -
In the session of this day the foregoing contract was examined and
unanimously approved.
The President, CARLOS CUERVO MARQUEZ,
The Secretary ad hoc, ALEJANDRO M. OLIVAREs.
National Executive Power: Pena Department of Cundinamarca,
April 26, 1900.
Approved. -
MANUEL A. SANCLEMENTE.
The Minister of Finance,
CARLOS CALDERON.
EXELIEIT ID.
EVIDENCE OF PAYMENTS TO COLOMBIA SINCE DECEMBER 31, 1893.
Sec. 1, No. 1550.] REPUBLIC OF COLOMBIA,
THE MINISTRY OF TREASURY,
- Bogotá, September 12, 1896.
THE DIRECTOR OF THE NEW PANAMA CANAL COMPANY.,
i Paris.
On the 31st day of October proximo deliver to the Messrs. Schloss
& Bros., of London, two million francs (fr. 2,000,000), being the
annual payment due January, 1897. Said delivery will be made in
accordance with the contract between the Government of this Republic
and the company you represent as administrator, respecting antici-
pated discount and formalities required in making the annual payment
due. (1896.)
Your most obedient servant,
(Signed.) MANUEL PONCE DE LEON.
Certified to be a copy of the original.
The chief of the general accounts,
MARIE.
8751–02–12
178 - PANAMA CANAL TITLE.
Sec. 1, No. 7139.] - REPUBLIC OF COLOMBIA,
- MINISTRY OF TREASURY,
Bogotá, May 28, 1900.
Mr. ALEJANDRO MANCINI: - -
For your information I beg to transmit the following communication
and the resolution pertaining to same: -
Sec. 1, No. 159.] REPUBLIC of CoIOMBIA, MINISTRY OF WAR,
Bogotá, May 26, 1900.
The MINISTER OF THE TREASURY:
In conformity with authorization received from His Excellency the President of
the Republic, communicated through the minister of state in the telegram I had the
honor to transcribe for you in my official note No. 155, dated the 22d instant, I beg
to state that this ministry notified the banking house of Fould & Co., of Paris, to
accept as a deposit the five million francs, French gold, which is to be paid by the
New Panama Canal Company for the concession of “prolongation,” as I had the
honor of informing you, for the conclusion of the business.
I am, sir, your obedient servant,
MANUEL CASABIANCA.
Sec. 1.] - MINISTRY OF TREASURY,
Bogotá, May 26, 1900.
Instruct the representative of the New Panama Canal Company in this city and
inform the banking house of Fould & Co. to receive the consignment without dis-
count or commission. . -
By the minister, the secretary:
IGNACIO R. PINEROs.
Your obedient servant.
By the minister in charge:
The subsecretary, *3
(Signed) IGNACIO R. PINEROS.
Certified to be a copy of the orginal.
The chief of the general accounts,
- MARIE.
EXEIIRIT E.
BY-LAWS OF THE OLD PANAMA CANAL COMPANY.
TITLE FIRST.-Creation and object of the company, denomination,
t 'residence, and duration. -
ARTICLE 1. There is created, between Mr. Ferdinand de Lesseps, the
conferees, and the subscribers to shares hereafter created, a company
under the denomination of the “Universal Interoceanic Panama Canal
CO.” - +
ARTICLE 2. This company has for object:
First. The construction of a maritime canal for large navigation
between the Atlantic and Pacific oceans, through the part of the
American isthmus belonging to the United States of Colombia.
Second. The exploitation of the said canal and sundry enterprises
belonging thereto.
Third. The construction or exploitation of all lines of railroad which
the company should deem for the good of the undertaking to be con-
structed or brought in the vicinity of the canal.
Fourth. The exploitation of lands conceded and mines contained
therein.
IPANAMA CAN AL TITLE. 179
The whole according to the clauses and conditions of the concession,
such as result from the law of the Congress of the United States of
Colombia dated May 18th, 1878. (Law 28 of 1878.) -
ARTICLE 3. The office of the said company is in Paris, temporarily
No. 7 Rue Saint Florentin, at the domicile of Mr. Ferdinand de
Lesseps, and hereafter in such locality as the board of directors may
select. - +. -
ARTICLE 4. The company commences to date from the day of its
final creation. Its duration shall be equal to that of the concession;
that is to say, ninety-nine (99) years, to be reckoned from the day
when the canal will be opened in whole or in part to the public service,
or when the grantee company will commence to receive tolls for transit
and navigation.
TITLE SECOND.—Contribution, social capital, share, and payments.
ARTICLE 5. In virtue of the conditions agreed upon between him
and the International Civil Company of the InterOceanic Canal, grantee
of said canal, Mr. Ferdinand de Lesseps brings to the company, with
a guarantee of right in the matter: .
First. The concession to this civil company by the Government of
the United States of Colombia of the exclusive privilege for the excava-
tion through its territory and for the exploitation of a maritime canal
between the Atlantic and Pacific Oceans, with all its advantages, as also
with all its charges stipulated by the law of Congress of the United
States of Colombia dated 18th of May, 1878. (Law 28 of 1878.)
Second. All surveys, work, and documents appertaining to the said
grantee company relative to the line and the project submitted to the
International Congress of Study of the Interoceanic Canal.
Third. The benefit of all the agreements which the said grantee com-
pany has obtained from the council of administration of the Panama
Railroad Company. .
The company will be the owner of this contribution from the date
of its final creation. It will be substituted, starting from this date, to
all the rights and obligations resulting from the law of concession of
United States of Colombia.
ARTICLE 6. In view of this contribution, in order to conform to the
obligation which Mr. Ferdinand de Lesseps has had to assume to assure
to the company hereby created the said contribution, there is allotted
to the civil company the beneficiary of the law of concession of May
18th, 1878.
First. One million (1,000,000) of francs, cash, to be paid within
fifteen (15) days from date of the final creation of the said company.
Second. Four millions (4,000,000) of francs, cash, payable without
interest in the month which will follow the date fixed by the council of
administration of the present company for the payment of the sum
which will complete the liberation of one-half of the shares subscribed,
which will be hereafter mentioned.
Third. And five millions (5,000,000) of francs, the value of ten
thousand (10,000) shares, five hundred (500) francs each, of the said
company, entirely liberated.
These ten thousand (10,000) shares entirely liberated will be the
property of the grantee civil company, starting from the final creation
of the present company, but they shall not be delivered and shall be of .
no profit to them, except under the reservations following. .
180 { PANAMA CAN AI, TITLE.
Up to their delivery, which will be regulated and determined, they
will be registered in the names of those having rights to the civil com-
pany, and will remain attached to the stub with the effect of a pledge
for the exclusive guarantee of the authenticity of the law of conces-
sion and of the claims that a third party might bring against the civil
company for services rendered. The civil company may exact the
remittance of said shares to the rightful claimant, either when the sub-
scribed shares will be liberated entirely or when the company hereby
created shall have called either upon its shares or by means of a loan .
for the payment of a total capital of five hundred millions (500,000,000)
of francs. ſº
These ten thousand (10,000) shares, though they may be entirely
liberated, or if they remain attached to the stub, or that they may be
detached in the above aforeseen case before the entire liberation of the
shares subscribed, will not have any right to interest or dividend,
except on the same conditions of other subscribed shares, so that dur-
ing the period of the construction of the canal they will have no right
to an interest of 5 per cent only upon the amount of capital called for
on the subscribed shares and as fast as installments are called.
While these ten thousand (10,000) shares remain attached to the stub
the interest or dividends which may be due will be paid to the holders
upon special certificates which will be delivered to them in conformity
to the model which may be determined by the council of administration
of the company hereby created. -
The delivery of the securities and money by the company will take
place for the benefit of the civil company in the terms agreed between
Mr. Ferdinand de Lesseps and the said civil company.
ARTICLE 7. On the other hand to organize the present company and
to prepare its creation in 1879, as well as in 1880, Mr. Ferdinand de
Lesseps has had to make an appeal for capital and the help of persons
devoted to the creation of this enterprise. - -
The accounts of expenses made or pledged for, previously to the final
creation of the company, will be presented at the first general meeting
of shareholders and submitted for the approbation of the second meet-
ing, and after approbation the amounts of these expenses will become
a company debt. -
Besides, the present by-laws will stipulate hereafter, under article
60, with such reserve as therein expressed for the benefit of sundry
persons whose capital and help have served to the creation of the
present company, 15% upon the net profits of the enterprise.
The apportionment of this 15% shall be made under the care of
Mr. Ferdinand de Lesseps in the terms agreed between him and his
auxiliaries.
ARTICLE 8. The company’s capital, made up of contributions in
nature and in cash capital, is fixed to three milliards of francs, and
divided in six hundred thousand shares of 500 francs each.
Ten thousand shares being allotted to the grantees for representa-
tion of their contribution, there shall be issued five hundred and ninety
thousand shares cash. -
ARTICLE 9. The amount of each share is payable in cash at the rate
of exchange in Paris, in the company’s office or to the representatives
of the company which will be designated for subscription by the
appearing founder and in the future by the council of administration.
Twenty-five francs shall be paid immediately upon each share at the
PANAMA CAN AI, TITLE. 18]
time of subscription and one hundred francs more shall be paid after
its close.
The three hundred and seventy-five francs in addition shall remain
in reserve, and will only be called subsequently to the time and in the
proportion which will be fixed by the council of administration.
No payments shall be made previous to a call for funds.
They will be made in conformity to calls of the council by means of
advertisement, three months in advance in one of the Paris newspa-
pers authorized to receive legal advertisements, and in foreign news-
papers which may be selected by the council of administration.
ARTICLE 10. The first payment will be acknowledged by a nomi-
native receipt which during the six months commencing from the
creation of the company will be exchanged against a certificate also
nominative.
All following payments to be made except the last will be men-
tioned upon this temporary certificate.
The last payment shall be made against the delivery of a final share,
nominative or to bearer, at the option of the holder.
However, shares half paid may be converted into shares to bearer
by resolution of a general meeting. -
ARTICLE 11. The council of administration will determine the form
and style of the share certificates.
Temporary certificates will be detached from the stub of a register;
they will be in numerical order and will be stamped with the dry seal
of the company; they will be signed by two administrators or by an
administrator and a delegate from the council of administration.
ARTICLE 12. All subscriptions on which the second payment com-
pleting the first quarter shall not have been made at the time set upon
for its call shall be considered null and void without legal notice and
with full right.
The first payment becomes the property of the company as damages.
ARTICLE 13. In default of payment of the other installments at the
time determined, interest will be due for each day of delay at the rate
5 per 100 per year. -
The company besides will have the right to have such shares sold
upon which payments are in arrear.
To this effect the numbers of such shares will be published as in
default in one of the newspapers of Paris designated to receive legal
notices. - - •
Two months after such publication the company, without any demand
in due form of law and without any subsequent formality, shall have
the right to proceed with the sale of the said shares for the account
of and at the risk and peril of the defaulter.
Such sale will be made upon duplicates one or several times at the
Paris Bourse or at London through the agency of a stock broker.
The previous certificates of shares thus sold shall become null by
full right by the fact of the sale; there shall be delivered to the
purchasers new certificates which will bear the same numbers and will
be the only ones valid.
In consequence all shares not bearing the regular mention of install-
ments to be paid cease to be negotiable.
The stipulations prescribed in the present and the preceding article
do not prevent the simultaneous use by the company of ordinary means
of right, if deemed useful, against the delinquent shareholders.
182 PANAMA CANAL TITLE.
ARTICLE 14. The money received from the sales made in virtue of
the preceding article, deducting expenses and interest, is imputed in
the terms of right upon what is due by the expropriated stockholder or
by his transferees who remain responsible for the difference, if there
is any deficit, and who are benefited by the excess if excess there be.
ARTICLE 15. The council of administration may authorize the deposit
and the preservation of the shares to bearer in the company’s hands.
In such a case it will determine the form of nominative certificates of
deposit, the conditions of their delivery, and the guarantees with which
the execution of such measure should be surrounded in the interest of
the company and the shareholders.
ARTICLE 16. The transfer of shares to bearer is made by a simple
exchange of the certificates. - -
For receipts and nominative shares the exchange will be made by a
declaration of transfer signed by the transferrer and the transferee, or
their substitutes, upon registers to be kept in the office of the com-
pany or of those of its representatives designated for that purpose by
the council of administration wherever needed.
The company may require that the signature of the parties should
be duly certified.
ARTICLE 17. Each share carries a right to a proportional part in the
property of the company’s assets.
ARTICLE 18. Every share is indivisible; the company will recognize
but one owner for each share.
ARTICLE 19. The rights and obligations attached to a share follow
the certificate held in any hand. f {
The possession of a share carries with it full right of adhesion to the
by-laws of the company and to the resolutions of the general meeting
of the stockholders. - - -
ARTICLE 20. The heirs or creditors of a stockholder under any pre-
text whatever can not cause the affixing of seals upon the real estate,
the values, or revenue of the company, nor ask for their division or
their public sale, nor to interfere in any manner in its management.
They shall for the exercise of their rights rely upon the company’s
inventories and the annual account approved by the general meeting
of the stockholders.
ARTICLE 21. The stockholders shall be responsible only to the amount
of the capital of their shares beyond which any call for funds is
prohibited.
TITLE THIRD.—Council of administražom.
ARTICLE 22. The company will be managed by a council of eighteen
members at least and twenty-four members at most, taken from among
the shareholders.
A committee selected from its midst will be specially charged with
the management of the business of the company.
ARTICLE 23. Owing to their functions the administrators shall not
contract any personal or joint obligations; they are only liable for
the execution of their duties.
ARTICLE 24. The administrators shall be appointed by the general
meeting of stockholders.
However, the first council of administration shall be composed of
twenty-four persons, of whom the names are following and who shall
PANAMA CANAL TITLE. 183
accept such functions of administrator before the final completion of
the company, viz: -
Ferdinand de Lesseps, presiding manager of the Suez Canal Com-
pany; Allavene, Charles Francois Hubert, retired general; De Cicourt,
Anne Marie Joseph Albert; Charles Cousin, principal inspector repre-
sentative of the Northern Railways; Daubree, Jean Basptiste Emman-
uel, administrator in the Suez Canal Company; Marius Fontana, general
secretary of Suez Canal Company; Delagarde, Harel, Jules Herbette,
Max Hellman, of the firm of Seligman Freres et Cie.: Baron Jules de
Lesseps, administrator of the Suez Canal Company; Charles Aime de
Lesseps, administrator of the Suez Canal Company; Victor de Lesseps,
administrator of the Suez Canal Company; De Mondesir, Paul Antoine
Theodore, administrator of the Suez Canal Company; Monet-Bey,
Theodore Antoine, administrator of the Suez Canal Company; Mou-
rette, Edme Constant Charles Vincent, administrator of the Suez Canal
Company; Theodore Motet, Adolph Peghoux, administrator of the
Suez Canal Company; Baron Poisson, administrator of the Company
of Deposits and Accounts Current; Ernest Prevost, Piat, William
Seligman, of the firm of Seligman Freres et Cie. ; General Etienne
Turr, Dauprat, Louis Jules Eugene, administrator of the Suez Canal
Company.
This first council is appointed for three years; the appointment will
not be submitted to the general meeting for organizing the company.
At the end of the three first years it will be in whole submitted to a
reelection.
ARTICLE 25. Commencing from this time the administrators shall be
appointed by the general meeting of the shareholders for six years at
the utmost.
Consequently so long as the council will be composed of eighteen or
twenty-four members it shall be renewed every year by one-sixth
until the entire renewal of the council has decided the order of rota-
tion. The outgoing members will be selected annually by drawing
Jots. -
The outgoing administrators may be reelected.
If the number of administrators selected by the general meeting
should become less than twenty-four and above eighteen, the general
meeting which would thus decide the number of administrators shall
have to determine the manner of their renewal and the duration of
their functions. .
ARTICLE 26. In case of vacancy arising from resignation or death
temporary provision shall be made for the vacancy to be filled by the
council of administration up to the time of the next general meeting
of the stockholders. - - -
The administrators thus selected shall only remain in power during
the time remaining of the period of their predecessors.
The first council appointed as above under article 24 during the time
of its function shall have the faculty to complete or to renew itself, if
need be, up to the number of twenty-four members, subject to con-
firmation by the next general meeting. -
It is weli understood that the latter members shall only remain in
power up to the expiration of the third financial year.
ARTICLE 27. Each administrator must be the owner of one hundred
shares, nominatives, unalienable, stamped with a seal showing their
unalienability, and they shall remain in the hands of the company dur-
ing the whole time of his functions.
184 PANAMA CANAL TITLE.
These shares are pledged as a guarantee for all acts during the man-
agement, even of such as would be exclusively personal to one of the
administrators.
ARTICLE 28. A share of three per cent in the net annual profits shall
be allowed to the administrators on account to their trouble and care
under the reservations mentioned in article 60 hereafter.
During the time of the work and, if need be, during the first years
following the opening of the maritime canal to large navigation, there
shall be allowed to the administrators in place of the 3 per cent stipu-
lated hereabove, an annual allowance which shall be included in the
expenses of management, the amount of which shall be fixed by
the second general meeting of the stockholders who organized the
Company. *
The council of administration shall decide the special allowance
which is to be made to the members of the committee out of this sum
or from the three per cent of profits.
ARTICLE 29. The council of administration will elect each year from
among its members one president and three vice-presidents.
The president and vice-presidents can always be reelected.
In case of absence of the president and the vice-presidents, the
council will designate at each meeting which of its members shall fill
the position. -
ARTICLE 30. The council of administration will meet at least once a
month. It shall also meet upon the call of the president as often as the
interest of the company may require. *.
The decisions shall be adopted by a majority of the members present.
In case of a tie the vote of the president will be the casting vote.
At least seven administrators shall be present to validate the reso-
lutions of the council.
When seven administrators only are present, the resolutions to be
valid shall be carried by a majority of five votes.
None can vote in the council by proxy. *~
ARTICLE 31. The general secretary of the company shall be present
at the meeting of the council of administration, with the privilege of
consultation. -
ARTICLE 32. The decisions of the council of administration shall be
recorded in minutes signed by the president and a member present at
the meeting.
The copies or extracts of the minutes to be valid at law or elsewhere
should be certified by two administrators.
ARTICLE 33. The council of administration shall have the utmost
powers to insure the construction of the canal, for the management of
the company, and for the choice and exploitation of the domainal lands
ceded by paragraphs 7 and 8 of article 1, and by article 4 of the law
of concession.
They may ask for all new concessions, make agreements with third
parties for the purchase of concerns or of concessions having relation
to any of the purposes of the company.
They will fix the rules of order of the general meetings; they shall
examine the accounts submitted to the general meeting; they shall
make a report to the general meeting upon the accounts and the state
of the business of the company. -
They shall fix the dividends temporarily, and determine, if need be,
the advances to be paid on January 1st upon the dividend of the period
closed by the inventory of June 30th preceding.
PAN AMA CAN AL TITLE. - 185
They shall decide upon the propositions of the committee concern-
ing the following, viz:
First. Call for cash from stockholders.
Second. Temporary investment of funds on hand.
Third. Surveys and schemes, plans and estimates for carrying out
the work.
Fourth. Contracts by the job.
Fifth. Purchases, sales, and exchanges of personal property and real
estate, purchase of ships or machinery necessary for the execution
of the work and the management of the enterprise.
Sixth. Annual budgets.
Seventh. Fixing and modifying rights of all nature to be received
in virtue of the concession, the conditions, and mode of collecting tolls.
Eighth. Disposal of the reserve funds. -
Ninth. Disposal of the funds for pensions, help, and encouragement
of the employes.
Tenth. Regulations for deposits of the shares and bonds of the com-
pany.
And generally shall do for the best interest of the company all that
they may deem useful or necessary.
ARTICLE 34. The council shall appoint from its members those who
are to be a part of the committee.
They may delegate to one or several administrators, to officers,
employes of the company, or to others, part or all of their power by
special authority for one or more transactions or determined purposes.
TITLE FOURTH...-Committee.
ARTICLE 35. The committee shall be composed of the president of
the council of administration and six members at the most of the council
of administration.
The powers of members of the committee will last for the same
period as those they possess as members of the council of administration.
ARTICLE 36. The committee will meet as often as necessary for the
good management of the business and at least once a week.
In order to make its work valid there shall be at least three members
present. -
All resolutions shall be adopted by a majority of the members
present. . -
In case of a tie, the vote of the president of the council, if present,
shall be the casting vote.
ARTICLE 37. Minutes of the meeting of the committee shall be
kept. These minutes shall be signed by two members present at the
meeting. :
The extracts from such minutes to be valid in courts or elsewhere
shall be certified to by two members of the committee. :
ARTICLE 38. The committee shall have full power for the manage-
ment of the business of the company.
They shall provide for the execution of the obligations imposed by
the law of concession and the by-laws, as also for the resolutions
adopted by the general meeting and the decisions of the council of
administration. . -
They shall submit to the council of administration propositions
relating to the purposes defined in article 33. -
186 - PANAMA CANA L TITLE,
They shall represent the company and shall act in its name by one
or more of its members in all cases where a special decision does not
require the intervention of the general meeting of the stockholders or
of the council of administration. They especially shall dismissemployes,
determine their functions and attributes, fix their compensation and
gratuities.
They shall regulate the work of the offices, prescribe the regulations
and order of business, and will order and regulate expenses. They
shall sign all correspondence, all notes, endorsements, contracts, drafts,
transfer of “rentes,” public securities, and values belonging to the
COmpany.
They shall decide upon all bargains, agreements, except contracts by
the job for the whole of the work; they will authorize awards; make
all purchases of furniture; authorize all rentals and leases.
They will attend to the collection of tolls, the recovery of all moneys
due, will sign all receipts and discharges; they will decide all with-
drawals of mortgages, seizure, injunctions, and other hindrances, with
all abandonments of privilege, of mortgages or action for cancellation,
the whole before or after payment.
They may agree, compound, compromise, plead as prosecutor or
defendant, but judiciary proceedings are to be directed by or against
the president of the council of administration.
In consequence the legal notices shall be served and received by the
president of the council at the company’s office.
The decisions of the committee, the acts and agreements approved
by them, shall be signed by the president or by one of the members
of the committee designated for that purpose. -
ARTICLE 39. The committee by authenticated power of attorney
can delegate to one or more administrators, to officers of the company,
employees, or others the power to sign all acts and agreements men-
tioned hereabove. -
TITLE FIFTH.—Commissa?res.
ARTICLE 40. The general meeting of the stockholders shall appoint
one or more commissaires, together or separately, invested with the
functions which devolve upon them by law.
In case of absence of one of the commissaires the one or those who
remain will proceed by themselves. .
TITLE SIXTH.—General meetings of stockholders.
ARTICLE 41. A general meeting regularly organized shall represent
the universality of all the shareholders. - -
ARTICLE 42. The general meeting shall be composed of all stock-
molders, owners of at least twenty shares.
It will be regularly organized when the stockholders present will
represent one-quarter of the capital.
ARTICLE 43. If upon a first call the stockholders do not fill the con-
ditions specified hereabove to validate the resolutions of the general
meeting, the meeting by right shall be adjourned and the adjournment
shall not be less than a month. r
A second call shall be made in the manner prescribed by article 4
hereafter. -
PANAMA CAN AI. TITLE. 187
The resolutions of the general meeting of this second call shall only
bear upon questions of the proceedings of the first meeting; such reso-
lutions will be valid whatever the proportion of capital represented by
the stockholders may be.
ARTICLE 44. The general meeting shall be held each year and day and
at the place designated by the council of administration before June 30.
There will be an extraordinary meeting besides as often as the council
of administration shall deem it advisable. • *
ARTICLE 45. The ordinary and extraordinary calls are made by means
of a notice inserted at least one month in advance in one of the Paris
newspapers designated for receiving legal notices, and also in all other
foreign papers designated by the council of administration.
ARTICLE 46. Stockholders in order to have the right to attend or to
be represented at the general meeting shall have to show proof at the
office of the company at least five days before the meeting that they
have deposited their certificates at the company’s office, or at the office
of a representative of the company designated for that purpose by the
council of administration. - -
Deposits made under such conditions shall give the right for nomi-
native card of admission.
Stockholders of nominative certificates or certificates of deposit have
also the privilege to be represented at general meetings by proxies
having regular power, the form of which shall be determined by the
council of administration.
The proxies shall deposit their power of attorney at the office of the
company within a time to be fixed by the council of administration for
each meeting.
No one can act as proxy for a stockholder unless he is himself a
member of the meeting.
ARTICLE 47. The general meeting shall be presided by the president
or one of the vice-presidents of the council of administration, and in
their absence, by an administrator selected by the council.
The two largest stockholders present at the time of the opening of
the meeting, and who will accept, shall be appointed as scrutators.
The president shall appoint the secretary.
ARTICLE 48. The resolutions at general meetings shall be adopted by
a majority of votes of the members present or regularly represented.
In case of a tie the vote of the president shall be the casting vote.
ARTICLE 49. Twenty shares give the right to one vote, but the same
stockholder can not possess more than ten votes, either as shareholder
Or as proxy. -
ARTICLE 50. Secret ballots may be requested by ten members.
ARTICLE 51. The resolutions of the general meetings shall be
recorded in minutes signed by the president, by the scrutators, and by
the secretary. - -
The copies or extracts of these minutes in order to be valid before
courts of justice or elsewhere shall be certified by two administrators.
ARTICLE 52. In each general meeting a tally sheet of those present
shall be kept. It shall contain the names and residences of the share-
holders and the number of shares held by each. This sheet shall be
certified by the officers of the meeting and shall remain at the Office of
the company.
ARTICLE 53. The order of business of the meeting shall be decided
by the council of administration.
188 PANAMA CAN AI, TITLE.
No other question than that mentioned in the order of business shall
be discussed. w t
ARTICLE 54. The general meeting will receive the report of the coun-
cil of administration upon the company’s business. *
The report of the commissaires shall also be read upon the situation
of the company and upon the condition and of the accounts presented
by the council of administration.
The accounts shall be discussed and if need be shall be approved.
The dividends to declare shall be decided.
Vacancies of administrators and commissaires shall be filled.
A vote shall be taken, if need be, for the increase of the company’s
capital up to the amount of 300 millions, and for carrying it, if need be,
to the amount of 600 millions.
| Such increase of capital shall not be made unless the first stockholders
are given the right of preference.
All loans by means of issues of bonds or by means of mortgages or
by any other means shall be voted for.
Accounts for first installation shall be settled after the execution of
the work. Meetings shall decide upon propositions made by the council
of administration.
They shall consider and decide sovereignly upon all the interest of
the company, and shall confer all supplementary useful powers needed
upon the council of administration.
ARTICLE 55. The resolutions of a general meeting adopted accord-
ing to the by-laws bind all stockholders, even such as are absent or
disagreeing. .
TITLE SEVENTH.-Statement of finances—Inventory.
ARTICLE 56. The financial year will commence July 1st and end
June 30th. *
The first statement of receipts and expenditures will include the
time between the final organization of the company and the following
June 30th.
ARTICLE 57. The council of administration shall make every quarter
a summary statement of the resources and liabilities of the company.
This statement to be accessible to the commissaires.
There shall be made up, moreover, at the end of each financial year
an inventory showing the value of assets and liabilities and all the
active and passive debts of the company.
Such inventory to be reported to the general meeting.
TITLE EIGHTH.—Annual accounts — ſeedemption—Interest— Reserve
fund–D/vidends.
ARTICLE 58. During the execution of the work there shall be paid
to the stockholders annually interest at 5 per cent upon the amount
paid by them in conformity with article 9 here above.
Payment for such interest shall be provided for by temporary
investments of funds and other accessories and, if need be, by the
company’s capital.
ARTICLE 59. The annual revenues of the company shall first be used
for cancelling the part stipulated for its benefit to the United States
of Colombia according to terms of the law of concession; the expenses
PANAMA CANAL TITLE. 189
of exploitation and care taking; the expenses for office management
and generally for all charges; the interest and redemption of loans
which may have been contracted; four-hundredths per cent of the
capital applicable to the redemption fund as created by article 63
hereafter; the allotment of one-twentieth upon the profits, after the
satisfaction of all the charges here above enumerated, for the creation
of a reserve fund; the excess of the annual revenues, the net revenues
or profits of the company to be divided. -
ARTICLE 60. The net revenues or profits of the company are to be
divided in the following manner: -
To the shares up to amount of 5 per 100 of their capital by allot-
ment, excepting, however, what will be stated hereafter concerning
redeemed shares.
The remainder after this allotment will be divided at the rate of:
80 per 100 to shares. -
15 per 100 to founders or beneficiaries mentioned under article 7
hereabove. *
3 per 100 to administrators.
And 2 per 100 for the creation of a fund to provide for pensions,
help, indemnity, or gratuities granted by the council of administration
to employés. .
The redeemed shares shall only have a right to the part of the divi-
dend exceeding 5 per 100 of the capital reimbursed on them; all that
will represent interest at 5 per 100 of the capital reimbursed shall be
paid to the redemption fund, which will be mentioned in article 63
hereafter. -
ARTICLE 61. The payment of interest and dividend shall be made to
the company’s treasurer or to the representatives designated by the
council of administration.
The payment of interest is to be made in two periods—the 1st of
January and the 1st of July of each year.
The dividend shall be paid on the 1st of July which will follow the
vote of the annual general meeting. - *
However, the administrators when they may judge it deemable may
authorize a payment on account of the dividend on the 1st of January
preceding. -
ARTICLE 62. The dividends and interest unclaimed at the expiration
of five years after the time for payment shall be forfeited to the
COmpany.
ARTICLE 63. The redemption of the shares shall be accomplished in
ninety-nine years, to begin from the starting point of the concession.
Provision is made for this redemption as mentioned in articles 59
and 60 hereabove by means of an annuity of four hundredths per cent
of the company’s capital and by the sums retained from the dividends
of redeemed shares. t .
The shares to be reimbursed shall be designated by means of draw-
ing lots in public each year at the office of the company at the time
and according to the regulations made by the council.
ARTICLE 64. The numbers of shares drawn to be reimbursed shall
be posted at the office of the company. .
ARTICLE 65. The reimbursement of the shares drawn to be redeemed
shall be made at the place selected for the payment of interest and
dividends.
The holders of redeemed shares shall possess all the same rights as
190 PANAMA CANAL TITLE.
the holders of shares unredeemed, with the exception of the portion of
the dividend representing interest at 5 per 100 of the capital which
has been reimbursed to them.
ARTICLE 66. The part allotted to the founders or beneficiaries, desig-
nated in article 7 hereabove, from the annual profits of the company
shall be represented by special certificates, the nature and style of
which shall be determined by the council of administration.
In all cases the provisions of articles 18 and 19 hereabove concerning
shares are equally applicable to the certificates of founders or benefi-
CI2, I’ll 6*S.
ARTICLE 67. The reserve fund shall consist of accumulations of
money withdrawn from the annual profits in conformity to article 59
hereabove, and is set aside to meet extraordinary and unforeseen
expenses. -
When this reserve fund shall attain one-tenth of the capital the allot-
ment intended for its creation shall cease to be applied and shall be
added to the dividends to be divided. -
In case of insufficiency of the results in one year to allow 5 per 100
per share the difference may be drawn from the reserve fund.
TITLE NINTH.
Changes in by-laws—///uſdation.
ARTICLE 68. If experience should show the usefulness of making
modifications or additions to the present by-laws the general meeting
shall proceed to make them in the manner determined by articles 69
and 70 hereafter.
The meeting can especially decide upon–
The reduction of the company’s capital or its increase beyond 600
millions. - - -
The extension or the dissolution of the company.
Consolidation with other companies. : º
All modifications bearing upon the company’s object can be made
without, however, altering it in its essence.
ARTICLE 69. The general meetings called to deliberate upon the sun-
dry purposes named in the preceding article shall not be regularly
organized and their resolutions shall only be valid when they are com-
posed of a number of stockholders representing at least one-half of the
capital. But then the council of administration shall have the right,
in its calls, to decrease as much as it may deem useful the number of
shares held, which shall be sufficient for taking part in the general
meetings; and in such a case the holder of a minimum number of shares
sufficient to be admitted to the meeting shall have the right to one
vote, the holder of ten shares shall have a right to two votes, and the
number of votes will increase at the rate of one vote for each ten shares,
whilst the total number of votes for each holder can not be above ten.
ARTICLE 70. It is hereby explained that it is to conform to the
French law now in force that the present by-laws require the repre-
sentation of one-half the company’s capital in the general meetings
relating to purposes specified in article 68 hereabove and the represen-
tation one one-quarter of the capital in the other general meetings.
But it is positively understood that the company would enjoy all
benefits derived from all new laws which should decrease the amount
of capital necessary to be represented in the general meetings and that
all new legislative provisions touching upon this question will become
applicable to the company created by these present upon a conform
BANAMA CANAL TITLE. 191
resolution of a general meeting called according to the regulations
prescribed by articles 42 and 43 hereabove.
ARTICLE 71. In case of dissolution of the company upon a proposi-
tion of the council of administration, the general meeting will deter-
mine the mode to be adopted either for dissolution or for the organiza-
tion of a new company. One or more liquidators shall be appointed,
and the most extensive power may be granted to them.
ARTICLE 72. During the liquidation the power of the general meet-
ings will continue as during the existence of the company. -
They have especially the right to approve the accounts of the liqui-
dator and give receipt therefor. i g
The appointment of liquidators will terminate the powers of the
administrators and of all proxies.
TITLE TENTH.-Competency of jurisdiction—Controversies.
ARTICLE 73. In conformity with article 20 of the law of concession,
the differences which may arise between the Government of the United
States of Colombia and the company shall be submitted to the federal
supreme court.
But for all other controversies the company has its domicile in Paris.
ARTICLE 74. Controversies bearing upon the general and collective
interest of the company can not be brought either against the council
of administration or against one of its members, except in the names
of stockholders representing at least one-twentieth of the capital of
the company. The social initiative can not belong to a stockholder or
to a group of stockholders representing less than one-twentieth of the
capital.
And no action at law brought by one or more stockholders against the
company, its council of administration, or one of its members can be
referred to any tribunal until after it has been examined by the general
meeting of the stockholders, the opinion of which will be submitted
to the magistrates at the same time as the request itself.
ARTICLE 75. In cases of controversies all stockholders shall select a
domicile in Paris and all notices and summons will be validly served
to the domicile by him so selected without regard to his real domicile.
Failing to select a domicile such an election shall take place with full
right for judicial or extra judicial notices to the office of the procurator
of the Republic at the civil tribunal of first instance of the Seine.
Domicile being selected formally or implicitly, as has been mentioned,
will carry with it the competency of jurisdiction of the tribunals of
the Department of the Seine. t
ARTICLE 76. In all controversies which may arise between the com-
pany and third parties all judicial or extra judicial actions must of
necessity be served legally upon the company by a single copy in the
person of the president of the council of administration and at the
office of the company.
TITLE ELEVENTH...-7pansitory provisions.
ARTICLE 77. The subscription of the company’s entire capital and
the payment of at least one-quarter of the capital in specie shall be
announced by a declaration of Mr. Ferdinand de Lesseps, made by a
notarial act. -
To this declaration is to be annexed the list of subscribers and the
statement of the instalments paid.
192 PANAMA CANAL TITLE.
ARTICLE 78. Such a declaration with its vouchers shall be submitted
at the first regular meeting, when its correctness shall be certified to.
At the same meeting the value of the acquisitions stated above shall
be verified and also the cause of the stipulated advantages.
ARTICLE 79. A second meeting shall take place to approve, if need
be, the acquisitions and advantages alluded to.
This same meeting for the first period of receipts and expenditures
shall appoint commissaires as created by article 40.
The minutes of the meeting will state the acceptance of the adminis-
trators and commissaires if they are present at the meeting.
The company shall be organized from the time of their acceptance.
ARTICLE 80. The general meetings held for the creation of the com-
pany shall be composed of all the subscribers voting ºva wooe, except
that the bearers of several shares are to have a vote for each ten shares,
but not to have more than ten votes.
The organizing meeting shall be composed of a number of stock-
holders representing at least one-half of the capital. The company’s
capital, one-half of which must be represented for a verification of the
acquisitions, shall be composed only of the acquisitions not submitted
to verification.
If the general meeting is not composed of a number of stockholders
representing one-half of the company’s capital, none but temporary
resolutions can be adopted. In such a case a new general meeting
shall be called. Two notices, published at an interval of eight days, at
least one month in advance, in one of the Paris newspapers for legal
notices, shall acquaint the stockholders of the temporary resolutions
adopted by the first meeting, and such resolutions shall become final
if they are approved by the new meeting composed of a number of
stockholders representing one-fifth at least of the capital. -
ARTICLE 81. All the stipulations of Title VI relative to general meet-
ings and conciliable with those contained under the present title are
applicable to Organizing general meetings.
ARTICLE 82. The sum of 300 millions proposed by the proponent
under article 8 of the present scheme for a company to be the amount
of the company’s funds is thus fixed temporarily and as a basis for the
subscription to be opened. t
Consequently if this amount is not subscribed in whole, the sub-
scribers shall be notified for a preparatory meeting to determine if the
purpose of the company can or can not be attained with the capital
obtained by the subscription, and, in case of the affirmative, to fixin a defi-
nite and irrevocable manner the amount of the capital of the company.
To be valid such a decision should be adopted in accord with Mr.
Ferdinand de Lesseps.
The subscribers present must then represent one-half of the capital
subscribed and voting shall take place by the majority of subscribers
present voting ºva voce.
The capital being thus fixed the formalities for organization enumer-
ated in the preceding articles shall then be gone into.
TITLE TWELFTH.— Publication.
ARTICLE 83. During the month of the organization of the company
the administrators will deposit at the office of the tribunal of com-
merce of the Seine and of justice of the peace of the first district of
Paris: - *
PANAMA CAN AIL TITLE. 193
First. A copy of the organization of the company.
Second. A copy of the act stating the subscription of the capital and
the payment of one-fourth.
Third. A certified copy of the resolutions adopted at the general
meeting in virtue of the articles 78 and 79 hereabove.
Fourth. A certified copy of the nominative list of the subscribers,
containing their names, surnames, their business, residences, and the
number of shares to each. -
The same documents shall be posted up in a conspicuous manner in
the offices of the company.
ARTICLE 84. During the same time an extract of the acts and reso-
lutions mentioned in the preceding article shall be inserted in one of
the Paris journals for legal notices, in conformity with law.
ARTICLE 85. All powers shall be granted to the bearer of the papers
for the deposit and publication in question.
ARTICLE 86. Finally Mr. Ferdinand de Lesseps calls attention that
all the stipulations contained in the two last preceding titles relative
to the organization and to the publications of the present company
have only been dictated owing to the exigencies of the French law for
stock companies now in force.
He especially reserves the benefits of all new enactments that may
be introduced by legislation in the law for the purpose of facilitating
the organization of such large enterprises.
IEXEIIBIT F.
LAW OF JUNE 8, 1888 (FRANCE), AUTHORIZING THE OLD PANAMA
CANAL COMPANY TO ISSUE LOTTERY BONDS. -
PARIs, June 8, 1888.
LAW AUTHORIZING THE COMPAGNIE DU CANAL INTEROCEANIQUE DE
PANAMA TO ISSUE SECURITIES F.E.PAYABLE WITH PRIZES.
The Senate and Chamber of Deputies have adopted, and
The President of the Republic promulgates a law of the following .
tenor: .
ARTICLE 1. The Compagnie Universelle du Canal Interocéanique de
Panama is authorized to create, up to six hundred million francs
(600 000,000 fr.), an issue of bonds, payable with prizes, by lot, upo
the following conditions:
First. The bonds issued shall bear annual interest, the rate of
which can not be less than 3 per cent on their par value. f
Second. The total annual sum distributed in the form of prizes can
not in any case exceed 1 per cent of the par value.
Third. The par value of the bonds issued can not be less than
300 fr. ; subsequent division of the bonds issued is forbidden.
Fourth. The payment of this loan in a period of 99 years, at farthest,
shall be secured by a sufficient deposit, for this especial purpose, of
French Government bonds, or of securities guaranteed by the French
Government. The Compagnie Universelle du Canal Interocéanique
de Panama, to meet the obligation imposed upon it, is authorized to
increase, under the same conditions, the said loan of 600 millions by
the sum necessary for the formation of this guaranty fund, this increase
8751–02 13
194 PANAMA CANAL TITLE.
of loan not to exceed twenty per cent (20 per cent) of the par of the
ISSUL62. .
ART. 2. If the Compagnie Universelle du Canal Interocéanique de
Panama should hereafter convert all or any part of its former obliga-
tions, the provisions of article 1 shall be applicable to the new securities
created by means of this conversion.
ART. 3. All material necessary for the completion of the works
shall be manufactured in France. +
The raw material must be of French origin.
ART. 4. All prospectuses, posters, publications, and other documents
intended for advertising must bear, in type of the same size as that
used for announcing the loan, and below the amount of the loan, the
notice:
“Loan authorized in conformity with the provisions of the law of
May 21st, 1836, by the law of June 8th, 1888, but without any guaranty
or responsibility of the State.” -
The same notice shall be put at the top of the temporary or perma-
ment certificates issued to subscribers. -
Any violation of the above provision will entail the withdrawal of
authorization by simple order of the Minister of Finance.
The present law, considered and adopted by the Senate and by the
Chamber of Deputies shall be executed as a law of the State.
Done at Paris, June 8th, 1888. *
. CARNOT.
The Minister of Finance,
P. PEYTRAL.
By the President of the Republic:
EXEHIBIT G.
JUDGMENT OF DECEMBER 15, 1888 (CIVIL TRIBUNAL OF THE SEINE),
APPOINTING PROVISIONAL AIDMINISTRATORS OF THE OLD PANAMA.
CANAL COMPANY.
[Taken from the minutes of the clerk's office of the civil tribunal of the first instance, department
of the Seine, sitting at the palace of justice at Paris.]
The civil tribunal of the first instance, department of the Seine, sit-
ting at the palace of justice at Paris, has rendered, at the session of
the chamber of the council of said tribunal, the following judgment:
Session of the 15th of December, 1888.
The tribunal, met in the chamber of the council; upon, first, the
request presented by Denormandie, Baudelot, and Hue, signed Denor-
mandie, solicitor, the tenor of which is as follows:
To the president and judges composing the chamber of council of the
first instance of the Seine.
GENTLEMEN: MM. Denormandie, Baudelot, and Hue, acting in the
character of provisional administrators of the company of the Inter-
oceanic Canal of Panama, the character of which they have been invested
by order of the president of the tribunal, dated the 14th of December
of the present month recorded, having domicile at the headquarters of
the company, 46 Rue Comartin, at Paris, having for solicitor Me. Denor-
mandie, have the honor to show to you the following:
The 14th of December, present month, an order was made by the
president of the tribunal in the following terms, upon the request pre-
sented by the Interoceanic Canal Company: We, the president, having
PANAMA CANAL TITLE. - 195
seen the above request, appoint MM. Denormandie, Baudelot, and
Hue provisional administrators of the company of the interoceanic
Canal, with powers the most extensive to carry on and administer pro-
visionally the company, and especially to assure the continuation of
the works, and to do these things they are authorized to contract all
loans, constitute all pledges, make all payments, enter into all agree-
ments, sign all papers, institute all judicial proceedings, or defend them,
and generally to do all acts necessary to the objects of their mission,
with the obligation to proceed within fifteen days before the chamber
of the council. We order the provisional execution of the present
ordinance, even before its being recorded, in case of the existence of
any urgency. Done at Paris, in the palace of justice, the 14th of
December, 1888.
(Signed) AUBEPIN.
There is great urgency for the provisional administrators to demand,
in conformity with the ordinance above stated, the confirmation of
their powers by the president and judges composing the chamber of
the council, asking of the tribunal, in confirming their powers, to
authorize them to sign all documents, either collectively or individu-
ally; to authorize them, besides, to delegate, so far as necessary, all
agents and engineers and, generally, all persons, in order to give in
the name of the provisional administrators all signatures or fulfill all
or part of the mission that you have been pleased to confer upon the
appearers. For these reasons, to pass upon the powers conferred
upon the provisional administrators by the ordinance of the 14th of
December confirming them, and adding the power to sign all docu-
ments whatsoever, either collectively or individually, and to authorize
them to delegate for the accomplishment of their mission, and to sign
in their name all documents necessary of persons as may be deemed
advisable. And this will be right.
(Signed) DENORMANDIE.
Secondly. The ordinance of the president of the tribunal providing:
Let this be communicated to the attorney of the Republic in order
that, after his conclusions are received, and upon the report which
will be made by M. Bourgoin, judge, whom we commission, it may
be determined as may be proper.
Done at the palace of justice the 15th of December, 1888.
(Signed) - MASSON.
Thirdly. The conclusions of the public ministry, which are as follows:
The attorney of the Republic does not oppose. Submitted the 15th
of December, 1888. *
(Signed) s FOURNIER.
Fourthly. The divers documents produced. Having heard M. Bour-
goin, judge, in his report, and after having deliberated conformably
with the law judging in first resort:
Considering that by Ordinance dated yesterday, the 14th of Decem-
ber, the president appointed provisional administrators for the Uni-
versal Company of the InterOceanic Canal of Panama, Denormandie,
Baudelot, and Hue, with the charge of proceeding within fifteen days
before the chamber of the council; -
Considering that it is necessary to attend to the provisional admin-
istration of the said company:
That this measure is required in the interest of the company and of
196 PANAMA CANAL TITLE.
third persons who have dealt with it, and that it is proper to confirm
the appointment of the administrators made by the ordinance above
referred to, and the powers which are given to them by that ordinance.
Considering that it is proper, besides, to authorize them to sign,
collectively and individually, all documents and to give all delegations
to all persons either to sign in the name of the provisional administra-
tors or to fulfill the whole or part of their mission;
For these reasons: Confirms the powers conferred on Denormandie,
Baudelot, and Hue in their character of provisional administrators of
the Universal Company of the Interoceanic Canal of Panama by the
ordinance aforesaid and in the terms thereof, and by extension gives
all powers to the said administrators to sign collectively or individually
all documents, and give all delegations to all persons either to sign in
the name of the provisional administrators or to fulfill the whole or
part of their mission;
Declares that in case of the administrators aforesaid being prevented
from acting, they shall be replaced by ordinance of the president of
the tribunal, rendered upon simple request. -
The present judgment is signed on the minutes by the president, by
the reporting judge, and by the clerk.
(Signed) AUBEPIN, BOURGOIN and FLOQUET.
Done and adjudged in the session of the chamber of the council of
the said civil tribunal of first instance, department of the Seine, sitting
at the palace of justice, Paris, Saturday, December 15, 1888, by M.
Aubepin, president; M. Vanier, vice-president; and M. Bourgoin,
judge. In the presence of M. Sollantin, substitute judge, and M. Four-
nier, substitute of the Republic, assisted by Floquet, clerk.
Saturday, December 15, 1888. -
The minute of the present judgment has been signed by the presi-
dent, the reporting judge, and the clerk. 3.
On the margin of the minutes of the present judgment is found
mention of its being recorded as follows: -
“Recorded at Paris the 16th of December, 1888; folio 31, case 3.
Received the sum of 9 francs 38 c.”
Signed as a copy: -
FLOQUET.
EXHIBIT. H.
JUDGMENT OF FEBRUARY 4, 1889 (CIVIL TRIBUNAL OF THE SEINE),
DISSOLVING THE OLD PANAMA CANAL COMPANY AND APPOINTING
A LIQUIDATOR.
[Copy of the judgment of the civil tribunal of the Seine, rendered February 4, 1889, pronouncing
the dissolution of the Compagnie Universelle du Canal Interocéanique de Panama and appointing
a liquidator.] r
The COURT:
In consideration that the civil or commercial character of a com-
pany is recognized, not by the particular form which it takes, but by
the nature of the enterprise which constitutes its principal object;
that it therefore matters little that the Compagnie du Canal Inter-
océanique de Panama is a Société anonyme, this circumstance not
being enough to impress upon it a commercial character:
Considering that as to its object, according to article 2 of its arti-
cles, it comprises the construction of a maritime canal for deep-water
PAN AMA CAN AI, TITLE. 197
navigation between the Atlantic Ocean and the Pacific Ocean, across
the part of the American Isthmus which belongs to the United States
of Colombia, as well as the operation of said canal and of the various
enterprises which are connected there with; that in reality the company
is formed for the operation of the canal and in view of the profits which
it may obtain, and that the construction itself is not the principal aim
of the enterprise but only a necessary means for carrying it out;
That the operation can not be assimilated to a transportation busi-
ness, the company limiting itself to the opening of a new way for nav-
igation upon payment of fixed tolls;
Considering that therefore the company has for its principal object
the development of real estate under conditions under which the State
of Colombia might have developed it itself if it had not granted the
concession to third parties; that it is therefore purely civil, and that
on this account, its duration being moreover limited, any one of the
associates may apply for its dissolution, in conformity with article
1871 of the civil code; -
Considering that the objection would be unavailing that the present
application has been made in violation of article 74 of the by-laws,
according to which no proceeding at law can be taken by one or more
shareholders against the company, its council of administration, or One
of the members of the board, until it has been submitted to the exam-
ination of the shareholders’ meeting, whose opinion is to be submitted
to the court at the same time with the action; that on the one hand this
provision, which implies a simple opinion to be stated by the share-
holders' meeting and not at all a preliminary consent to be given by it,
is not of such a character as to be binding upon the court when it is
not set up by the defendant; that it could not moreover prevail against
the right which every member acquires by article 1871 of the civil code,
the protection of which concerns considerations of public policy; that,
on the other hand, it appears from the papers in the case that if the
special shareholders’ meeting of January 26 last could not be legally
organized, in spite of the reiterated notices sent to the shareholders,
there is no reason to hope that a new call would have a more efficacious
result; that thus the plaintiffs would be deprived by the mere force of
circumstances, and without possible recourse, of a right which article
1871 of the civil code intended to assure them: that finally the calling
of a new meeting would involve, according to the articles, such delays
that the corporate interests which are now at stake might suffer irrep-
arable injury;
Considering that the further objection can not prevail that, in
accordance with article 68 of the by-laws, the dissolution of the com-
pany before its expiration must be voted by a meeting of shareholders,
held under special conditions fixed in article 69; that none of the terms
of these articles implies the idea that the right in question belongs
exclusively to the shareholders’ meeting and that the courts are deprived
of it; that such a provision would be in contradiction with the principle
laid down in article 1871 of the civil code, and would obviously nullify
its objects;
That, furthermore, what was said above relative to the shareholders’
meeting of January 26 last and the impossibility of calling to any useful
purpose a new meeting within the period fixed by the articles is perti-
ment here again, and that from every point of view the application
should be received: .
198 PAN AMA CANAL TITLE.
Considering that, on the merits, article 1871 of the civil code con-
fers upon the court the power of deciding finally whether the com-
pany, under the circumstances contemplated, can still continue its
normal course, or whether its dissolution is rendered necessary by the
very situation in which it is placed; that it is now established that the
Compagnie du Canal de Panama has ceased to act in a regular way;
that it has suspended payment upon its securities and that the contin-
uation of work on the canal is insured only for a very limited time;
that since December 14 last it has been necessary to confide its man-
agement provisionally to appointees of the court, who have taken the
necessary measures to protect temporarily the important interests con-
nected with its existence; that these wholly provisional measures are
now insufficient, or will shortly become so, and that it is important to
take action to ward off dangers, the consequences of which would be
irreparable; . -
Considering, therefore, that there is occasion for pronouncing the
dissolution of the company and providing for its winding up; that
there is occasion also for ordering a provisional execution of the pres-
ent judgment, notwithstanding appeal, and without security, applying
article 135 of the code of civil procedure; *
For these reasons,
Pronounces the dissolution of the Compagnie Universelle du Canal
Interocéanique de Panama and orders that it be wound up;
Appoints Mr. Joseph Brunet, liquidator of said company with the
broadest powers, especially to grant or contribute to any new com-
pany all or a part of the corporate assets, to enter into or ratify with
the contractors for the Panama Canal all agreements having for their
purpose the insurance of the continuance of the works and to this end
to contract all loans and form all sinking funds;
Declares that in case the liquidator appointed can not act provision
will be made for replacing him in the ordinary way; -
Authorizes him henceforth to apply in the same way for all special
powers which may be necessary for the performance of his duties,
and, if he thinks fit, for the addition of one or more liquidators:
Orders provisional execution of the present judgment, notwithstand-
ing appeal and without security;
Condemns the defendant company to the expenses.
EXEIIIBIT I.
BY-LAWS () F THE NEW PANAMA CANAL COMPANY.
Nºr
NEW PANAMA CANAL COMPANY. CHARTER.
TITLE I.- ForMATION AND OBJECT OF THE COMPANY: NAME: PRIN-
CIPAL OFFICE; DURATION.
ARTICLE 1. There is formed between the present founder and the
subscribers to the shares hereinafter created a commercial joint-stock
company under the name of the Compagnie Nouvelle du Canal de
PANAMA CAN AI. TITLE. 199
Panama, in conformity with the acts of July 24, 1867, and August 1,
1893. -
ART. 2. This company has for its objects (1) the completion of the
maritime ship canal between the Atlantic and Pacific Oceans; (2) the
exploitation of the said canal and of the various enterprises connected
there with; (3) the construction and exploitation of all lines of railway
within the vicinity of the canal and the management of all interests
which the company may possess and acquire in lines already con-
structed; (4) the exploitation of lands granted and of mines therein
contained. -
All under the clauses and conditions of the concession as fixed by
the act of the Congress of the United States of Colombia, dated May
18, 1878 (law 28 of 1878), and of the extensions of the concession dated
December 26, 1890 (law 107 of 1890), and April 4, 1893.
ART. 3. The principal office of the company is at Paris, provisionally
fixed at No. 63 bºs, Rue de la Victoire, and hereafter at such place as
the council of administration shall designate. |
ART. 4. The company shall begin from the date of its formal organi-
zation. Its duration shall be the same as that of its concession—that
is to say, ninety-nine years from the date when the canal shall be open
in whole or in part for public service or when the company shall begin
the collection of dues for transit and navigation. *
TITLE. II.-CONTRIBUTIONs; CAPITAL; SHARES; PAYMENTs.
ART. 5. A party to these presents is M. Jean Pierre Gautron, judi-
cial administrator of the civil tribunal of the Seine, residing at No. 13
Rue Tronchet, Paris, - -
“Acting as and in the capacity of sole liquidator of the Compagnie
Universelle du Canal Interocéanique de Panama, by virtue of the
powers conferred by judgment of the civil tribunal of the Seine, dated
February 4, 1889,”
M. Gautron, appointed to said office of liquidator by a judgment of
the Chambre du Conseil of the civil tribunal of the Seine, dated July
21, 1893, in his said capacity contributes to the company:
First. All rights accruing to the company in liquidation from the
laws of the Governments of the United States of Colombia, dated
May 18, 1878, and December 26, 1890, as well as from any decrees,
acts, or things whatever which have occurred in the execution of
these laws, with all the advantages provided by these laws, together
with all lands and real estate granted to the company in liquidation, or
acquired by it,
All subject to the fulfillment of the conditions of the laws and
extensions of the concessions, and to the payment of all sums remain-
ing due from the liquidator to the Colombian Government;
Second. The works executed and under execution, workshops,
buildings, hospitals, plant, erected and not erected, materials and sup-
plies, etc., belonging to the Compagnie Universelle du Canal Inter-
Océanique in liquidation, as well as all deposits as security made by
said company in liquidation;
Third. The plants, estimates, studies, documents of every nature,
collected by the Compagnie Universelle du Canal Interocéanique,
relating in any manner to the study, execution, or exploitation of the
200 BANAMA CAN AI, TITLE
canal or its dependencies, as well as the benefit of all agreements
with all third persons;
Fourth. The rights of every nature, part interests, and generally
any others whatsoever, which may belong to the Compagnie Univer-
selle du Canal Interocéanique in liquidation, in the railroad from Pan-
ama to Colon, operated by an American company called the Panama
Railroad Company, whose principal office is at New York, as said
rights are enjoyed and exist; M. Gautron, as liquidator, binding him-
self to transfer the same to the present company in the form required
by the laws of the United States of America;
In such manner moreover as the said rights and properties are
enjoyed and exist and in the condition in which they are.
The present company shall be the owner of the property and rights
granted and contributed from the date of its formal organization,
except as hereinafter provided with respect to the Panama Railroad.
This grant and contribution are made by M. Gautron with the res-
ervations and subject to the conditions hereinafter expressed, to wit:
First. There shall be appropriated to the liquidator 60 per cent of the
net profits of the enterprise, as these profits shall be determined under
articles 51 and 52 hereof. - -
Second. There shall be appropriated 50,000 shares, full paid, on
account of those now issued to the Government of the United States
of Colombia, in accordance with the extension law of December 26,
1890.
Third. The rights of every nature in the Panama Railroad, belong-
ing to the estate in liquidation and contributed by M. Gautron under
section 4 of this article shall become the property of the present com-
pany from and after the stockholders’ meeting provided for by article
75 hereof, without any pecuniary compensation, but upon the express
condition that the canal be constructed within the time fixed by the
agreement of concession. Upon default in completion within such
time, said rights shall revert to the estate in liquidation.
If, contrary to all expectation, the meeting in question should not
take the necessary action for the completion of the canal, or if the
course of action adopted by the meeting can not be carried out, the
said rights in the railroad shall remain the property of the present
company, but it shall pay into the estate in liquidation the sum of
20,000,000 francs by way of indemnity, and the share of profits set
apart or the estate in liquidation shall be half the profits of the present
company, without other deductions than those provided in sections 2
and 3 of article 51 hereof. * -
Accordingly said rights shall remain inalienable in the hands of the
new company until either the payment of said sum of 20,000,000 or
the entire completion of the canal. • *
Fourth. Until the entire completion of the canal, M. Gautron, in his
official capacity, shall have the right to appoint a commission of control
composed of three members taken, as far as possible, from among the
engineers of the department of bridges and roads and the inspectors
of finances, to inspect the progress of the works, the condition and
maintenance of the plant and buildings, as well as the accounts relating
to these different objects. .
The expense of this commission shall be borne by the new company.
ART. 6. The capital of the company is fixed at 65,000,000 francs,
divided into 650,000 shares of 100 francs each.
PANAMA CANAL TITLE. 201
Of these 650,000 shares, 50,000 full paid are set apart for the Gov-
ernment of the United States of Colombia, in accordance with the
extension law of December 27, 1890, as provided in the preceding
article. -
As for the balance of the 600,000 shares, they are to be issued for
cash subscriptions.
Capital may be increased once or several times by vote of the regu-
lar stockholders’ meeting, and upon the proposition of the council of
administration, by the issue of new shares. .
ART. 7. The 50,000 shares set apart for the Government of the
United States of Colombia, though full paid, shall be entitled to inter-
est or dividends only on the same terms as the shares issued on
subscription. -
These 50,000 shares shall remain attached to their respective stubs
and shall be negotiable under the conditions provided by article 2 of
the French law of August 1, 1893, and by the concession laws.
ART. 8. A preference is reserved to the stockholders and bond-
holders of the Compagnie Universelle du Canal Interocéanique in
liquidation, in subscribing for stock of the present company, to the
extent of one-half the present capital and the total amount of all
future issues.
ART. 9. The amount of each share is payable in cash into the com-
pany’s treasury or to the representatives who shall be appointed for
subscriptions by the new company.
It shall be payable as follows: 25 francs immediately on subscription;
25 francs on October 15, 1894; and the balance as calls shall be made
by the council of administration.
Payments shall become due, in accordance with calls made by the
council, upon notice published one month in advance in one of the Paris
newspapers designated for the publication of legal notices. -
Any shareholder may, however, pay up his shares in advance and at
any time. - -
ART. 10. The first payment is represented by a receipt in the name
of the subscriber, which, within two months from the organization of
the company, shall be exchanged for a provisional certificate, also in
his name.
All further payments, except the last, shall be indorsed upon this
provisional certificate. -
Upon the last payment being made a permanent certificate shall be
issued to the shareholder, which shall be either to bearer or in his name,
at his option. - - e
ART. 11. The council of administration shall fix the form and style
of the certificates of stock. -
Provisional and temporary certificates shall be taken from a book
with stubs; they shall be numbered in order and stamped with the seal
of the company; they shall be signed by two administrators, or by one
administrator and a person appointed by the council of administration.
ART. 12. All payments in arrear upon calls shall bear interest at the
rate of 6 per cent per annum from the day when they shall be payable,
for the benefit of the company.
In default of payment within the month wherein the same shall
become payable the council of administration may, at its option, bring
action at law, or sell the certificates on which payment shall not have
been made.
202 - PANAMA CANAL TITLE.
Such sale may take place fifteen days after notice published in the
“Journal Officiel” or one of the other papers in the department of the
Seine designated for the publication of legal notices. It shall take
place at the risk of the person in default through an agent de change
of the Paris Bourse or through a notary, at the option of the council
of administration.
The certificates for the shares sold will become void and will be
replaced by new certificates in the name of the purchasers, of the
same numbers.
The price of the sale will be deducted from the sums due the com-
pany from the subscriber for the share, and his assigns, who will all
remain jointly and severally liable for the difference, and entitled to
any surplus.
ART. 13. Shares shall stand in the names of subscribers until fully
paid, in accordance with the law of August 1, 1893.
Moreover, no share can be sold, and the council of administration
can not authorize its transfer, until it shall have been fully paid.
This prohibition, however, will not apply to shares belonging to
future issues. &
Every owner of shares to bearer shall always have the right to
require the conversion of shares to bearer into shares registered in his
Iłża, Ille.
ART. 14. The shares confer a right to a proportional part in the
corporate assets, in profits to be distributed as interest or dividends
and in reserve funds.
Interest and dividends are paid to bearer either upon presentation
of the certificate to be stamped, for registered certificates, or upon pre-
sentation of the coupon, for certificates to bearer, at the company’s
office at the times which shall be fixed by the council of administration.
ART. 15. The transfer of shares to bearer is effected by simple
delivery. g -
That of registered certificates shall take place by a declaration of
transfer entered on the books of the company and signed by the
transferor and transferee or their attorneys. -
The expenses of transfers, changes, and conversions shall be borne
by the new assignees.
ART. 16. The council of administration may authorize the keeping
and deposit of certificates to bearer in the company’s treasury. In that
case it shall determine the form of the registered certificates of deposit,
the conditions of their delivery, and the precautions with which the
execution of this measure should be surrounded in the interest of the
company and of the shareholders. -
ART. 17. Shareholders shall not be liable upon the contracts of the
company beyond the amount of the shares which they own.
In no event can any call be made for funds beyond the amount of
the shares. -
ART. 18. The shares are indivisible, as regards the company, which
recognizes only a single Owner for each share.
All owners of undivided parts of a share must be represented in
dealing with the company by One and the same person.
ART. 19. The rights and obligations attached to the share follow
the certificate into whatever hands it comes.
The possession of a share imports full consent to the statutes of the
company as well as to all acts of a stockholders’ meeting.
PAN AMA CAN AL TITLE. - 203
The heirs, creditors, or assigns of a shareholder can not, on any
pretext, require a partition, or sale of the corporate property, obtain
an attachment, require the sealing of the company’s books, registers,
papers, and securities, nor interfere with its administration.
They must, for the exercise of their rights, rely exclusively upon
the corporate statements, the action of the stockholders’ meetings, and
the decision of the council of administration.
TITLE III.-COUNCIL OF ADMINISTRATION.
ART. 20. The company is administered by a council composed of not
less than 9 nor more than 15 members chosen from among the share-
holders.
ART. 21. The administrators do not, in consequence of their duties,
contract any personal or joint and several obligations. They are
responsible only for the performance of their duties.
ART. 22. Administrators are appointed by the stockholders’ meeting
for not more than six years. -
If the council is composed of 9, 12, or 15 members, one-third shall
be elected every two years, the outgoing members to be determined
during the first period of six years by lot, and thereafter by seniority.
If the number of administrators be any other than those above speci-
fied, the stockholders’ meeting shall determine the mode of choosing
new members and the duration of their terms.
Outgoing administrators may always be reelected.
The second meeting of stockholders for organization shall fix the
number of members of the first council and shall proceed to choose
them.
This first council may, if it think fit, add to itself new members within
the limits hereinbefore fixed, and must cause appointments so made
to be ratified by the first regular stockholders’ meeting.
ART. 23. In case of vacancy arising from resignation or death,
the council of administration may fill the same until the next meeting
of stockholders. - *
Administrators thus appointed continue in office only until the
expiration of the terms of their predecessors. -
ART. 24. Every administrator must be the owner of 250 shares, which
are registered in his name and inalienable. They shall be stamped to
indicate this inalienability and remain deposited in the company’s
treasury during the whole term of office of the owner.
These shares constitute a guaranty for all acts of management.
ART. 25. The council of administration shall appoint each year from
among its members a president and, if there be occasion, one or more
vice-presidents. -
The president and vice-president may always be reelected. In case
of the absence of the president and of the vice-president or vice-
presidents, the council may appoint, at each session, one of its mem-
bers to fulfill the duties of the office. -
ART. 26. The council of administration shall meet at least once a
month. It shall meet also at the call of the president as often as the
interests of the company require. t
Questions shall be decided by a majority of the members present.
In case of equal division the vote of the president shall preponderate.
Five administrators at least must be present to form a quorum.
204 3. PANAMA CAN AI, TITLE.
When only five or six administrators are present all action, to be
valid, must be taken by a majority of four votes.
No member of the council can vote by proxy.
ART. 27. The proceedings of the council of administration shall be
recorded by minutes signed by the president and one of the members
present at the meeting. -
Copies or extracts from these minutes must, to be produced in evi-
dence elsewhere, be certified by the president or by two administrators.
ART, 28. The council of administration is vested with the broadest
powers for the management and administration of the affairs of the
company, for the selection and exploitation of the public lands granted
by paragraphs 7 and 8 of article 1, and by article 4 of the concession
law. - - -
The council of administration may ask any new concessions, consent
to all agreements with third parties for the purchase of enterprises or
of concessions connected with any of the objects of the company.
It shall appoint and dismiss employees, determine their functions
and powers, fix their salaries and pay. -
It shall order and regulate expenditures.
It shall sign correspondence as well as all notes, indorsements, drafts,
cheques, transfers, and conversions of assets and securities belonging
to the company, and it shall contract and consent to all advances.
It shall take all financial measures necessary to the progress of the
company, and make all loans other than those which must be authorized
by the stockholders’ meeting.
It shall lay before the stockholders’ meeting all propositions con-
cerning loans on mortgage and the issue of obligations.
It shall administer the rights in the Panama Railroad Company con-
tributed to the company under the terms of article 5.
It shall arrange the order of business for stockholders’ meetings and
the accounts which are to be submitted to them. It shall make a report
to each stockholders’ meeting upon the accounts and the condition of
the corporate affairs.
It shall fix' provisionally the dividend and determine, if occasion
arises, the installment to be paid on July 1 on the receipts and dis-
bursements closed by the inventory June 30 preceding.
It shall decide upon the following subjects, to wit: 1, calls for money
upon the shares; 2, temporary investment of funds in hand; 3, studies
and projects, plans and estimates for the execution of the works; 4,
agreements and bargains for Works of various characters, bargains
with penalty, and contracts not concerning the works; 5, hiring, sell-
ing, letting, and exchanging real and personal property, purchasing
and hiring vessels or machines necessary for the execution of the
works and the exploitation of the enterprise; 6, annual budgets; 7,
fixing and modifying dues of every nature to be collected by virtue of
the concession, conditions and manner of collecting tolls; S, disposi-
tion of reserve funds; 9, regulation of deposit of stock and obligations
of the company. -
It shall sue for the collection of dues, the recovery of all debts, give
all accuittances and discharges, consents to all replevies of mortgaged
property, distresses, attachments, and other impediments, with all
releases of preference, mortgage, and suit for cancellation, all before
or after payment. It may create all preferences.
It shall authorize all judicial actions, whether as plaintiff or as
PANAMA CAN AL TITLE. 205
defendant, treat, adjust, and compromise the said actions, as well as all
affairs of the company.
In general it shall do, in the corporate interest, all acts which it
thinks necessary and useful, the powers above recited being purely
declaratory and not in limitation of the rights of the council of
administration.
ART. 29. The council of administration may, for the general admin-
istration of the company, delegate all or a part of its power either to
one or more of its members, with the title of administrator-delegate
Or to one or more managers or submanagers taken from outside the
council.
It may, moreover, delegate either to one or more administrators, or
to one of the employees of the company, or to one or more third per-
sons, all or a part of its powers by special authorization and for one
or more definite affairs or objects.
ART. 30. The administrators shall be compensated, over and above
the share of profits fixed in article 52, by tokens of attendance, the
amount of which shall be determined by the stockholders’ meeting and
which it shall be the duty of the council of administration to distribute
to its members.
TITLE IV.-TECHNICAL COMMISSION.
ART. 81. The council of administration is authorized to associate
with itself a technical commission chosen from among persons com-
petent in matters of public works, and especially from the retired
inspectors-general of the departments of bridges and roads and finance.
This commission, upon communications made to it by the council of
administration, shall give its opinion on questions relative to the
execution of the works. '. -
The number of members of the technical commission, as well as
their remuneration, shall be fixed by the council of administration.
TITLE V.—COMMISSAIRES.
ART. 32. The stockholders’ meeting shall appoint one or more com-
missaires, members or not, invested with the functions committed to
them by law.
If any of the commissaires can not act, the one or more who remain
shall act without them.
A compensation is allowed them, to be fixed by the stockholders’
meeting. .
TITLE VI.-STOCKHOLDERS’ MEETING.
ART. 33. A regularly constituted stockholders’ meeting shall repre-
sent all the stockholders.
ART. 34. The stockholders’ meeting shall be composed of all holders
of at least 10 shares.
All holders of less than 10 shares may unite to form the necessary
number and cause themselves to be represented by one of their num-
ber as provided by the law of August 1, 1893.
The meeting shall be regularly constituted when the shareholders
who compose it represent a quarter of the capital of the company.
ART. 35. When, upon first assembling, the stockholders present do
not comply with the conditions above specified, in order to make the
:
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206 F’AN AM A CAN AIL TITLE.
proceedings of the meeting valid it may be adjourned for not less than
twenty days. - -
A second call shall be made in the form prescribed by article 37
hereof.
The deliberations of this second meeting can only relate to the order
of business provided for the first meeting. Its acts shall be valid,
whatever may be the amount of capital represented by the stock-
holders. . -
ART. 36. A stockholders’ meeting shall be held every year at a day
and place fixed by the council of administration before December 31.
Extraordinary meetings also shall be held whenever the council of
administration may consider it useful.
ART. 37. Ordinary and extraordinary meetings may be called by
means of a notice inserted at least twenty days previously and in one
of the Paris papers designated for the publication of legal notices.
ART. 38. Shareholders, in order to have the right to take part in or
to have themselves represented at stockholders’ meetings, must qualify,
at the domicile of the company, at least five days before the meeting,
by the deposit of their certificates in the company’s treasury or in that
of one of the establishments designated for this purpose by the council
of administration. .
Deposits made under these conditions give a right to the issue of
cards of admission in the name of the depositor.
Registered holders of registered shares or of certificates of deposit
have also the right to be represented at meetings by proxies furnished
with regular powers, the form of which shall be determined by the
council of administration. -
Holders of powers must deposit their proxies at the domicile of the
company within the time fixed by the council of administration for
each meeting. & -
No one can represent a shareholder at the meeting unless he is
himself a member of the meeting. -
Married women, however, may be represented by their husbands if
he has the management of their rights and shares, and in like manner
minors or incompetents may be represented by their guardian.
Usufructuaries and naked owners must be represented by one of
them, furnished with a power from the other, or by a common proxy
who is a member of the meeting. -
Companies which are stockholders, as well as the Government. Of
Colombia, may each be represented by a delegate who is not himself
a shareholder.
ART. 39. The stockholders’ meeting shall be presided over by the
president or one of the vice-presidents, and, in default of these, by an
administrator appointed by the council.
The two largest shareholders present at the opening of the meeting,
who accept, shall be appointed tellers.
The officers of the meeting shall appoint the secretary.
ART. 40. Action by the stockholders’ meeting shall be determined by
a majority of votes of the members present or regularly represented.
In case of equal division the vote of the president shall preponderate.
ART. 41. Ten shares shall give the right to one vote. The same
shareholder can not cast in all more than 200 votes, whether as share-
holder or as proxy. &
ART. 42. A secret vote may be required by 10 members represent-
ing:tógether at least 200 votes. .
§:
& e
* * * *
* * * * *
~ * * * *
*
PAN AMA CAN AL TITLE. 207
ART. 43. The action of the stockholders’ meeting is recorded in
minutes signed by the president the tellers, and the secretary.
Copies of extracts from these minutes to be used in proceedings at
law or otherwise must be certified by the president or by two adminis-
trators. -
ART. 44. At each stockholders’ meeting a list shall be kept of mem-
bers present. It shall contain the names and residences of the share-
holders and the number of shares held by each. This list shall be
certified by the officers of the meeting and deposited with the com-
pany’s records. -
ART. 45. The Order of business for the stockholders’ meeting shall
be fixed by the council of administration.
No other questions than those contained in this order of business
can be brought before the meeting. -
ART. 46. The stockholders’ meeting shall hear the report of the
council of administration on the corporate affairs.
It shall also hear the report of the commissioner or commissioners
upon the condition of the company, on the balance sheet, and on the
accounts presented by the council of administration.
It shall discuss and, if need be, approve the accounts.
It shall authorize, on proposal of the council, the creation of special
supplemental reserve and sinking funds which may be found useful.
It shall fix the dividend to be paid.
It shall elect administrators in place of those retiring and the com-
missioners.
It shall vote all loans by means of the issue of obligations or by
mortgage. t
It shall audit the first accounts after the execution of the works.
It shall pass upon the propositions of the council of administration.
It shall vote upon the increases of capital proposed by the council
of administration.
It shall consider and finally decide upon all the interests of the com-
pany, and confer upon the council of administration all the supple-
mentary powers which shall appear useful.
It shall have extraordinary power of decision upon the course to be
taken in accordance with article 75 hereof. .'
ART. 47. The action of the stockholders’ meeting, taken in conformity
with the statutes, shall bind all shareholders, even although absent or
dissenting.
TITLE VII.-STATEMENTS OF CONDITION; INVENTORIES.
ART. 48. The corporate year shall begin July 1 and end June 30.
The first period shall comprise the time between the formal organ-
ization of the company and June 30, 1895. :
ART. 49. The council of administration shall prepare every six
months a summary statement of the condition of the company as to
assets and liabilities. - - -
This statement shall be submitted to the commissioner or commis-
SIOIO € I’S. -
ART. 50. There also shall be made up at the end of each corporate
year an inventory showing the real and personal property of the com-
pany and all indebtedness due to or by it. -
This inventory shall be presented to the stockholders’ meeting.
208 PANAM A CAN AI. TITLE.
TITLE VIII. — ANNUAL Accounts; SINKING FUNDs; INTEREST :
RESERVE FUNDs; DIVIDENDs.
ART. 51. The annual income from the enterprise shall be first applied
to the payment of: 1. The share for which the United States of Colom-
bia has stipulated for its own benefit, according to the terms of the
concession law. 2. The expenses of maintenance and exploitation;
the cost of administration, and all corporate charges in general; interest
and sinking funds on loans which may have been contracted. 3. The
previous deduction of one-twentieth of the net profits, after payment
of all the charges hereinbefore mentioned, for the formation of a legal
reserve fund. 4. Five per cent upon the corporate capital, the income
of which shall be applied by the stockholders’ meeting, in accordance
with the propositions of the council of administration, not only to form
the sinking fund to be established in accordance with article 55 hereof,
but also to provide dividend on the shares not extinguished.
ART. 52. The excess of annual income after the various deductions
provided in the preceding article constitutes the net income or profits
of the enterprise. From these profits shall be deducted 5 per cent for
the benefit of the council of administration.
The surplus shall belong: To the amount of 40 per cent to the shares
issued and to the amount of 60 per cent to the Compagnie Universelle
du Canal Interocéanique in liquidation.
* &
ART. 53. The payment of interest and dividends shall be made at the
company’s office or at the offices of the representatives designated by
the council of administration.
The payment of interest shall be made at two periods: January 1
and July 1 in each year.
Dividends shall be payable on January 1 next after the vote of the
annual stockholders’ meeting.
The council may, nevertheless, if it thinks fit, authorize a payment
on account of dividends on the preceding 1st of July.
ART. 54. Interest and dividends remaining unclaimed at the expira-
tion of five years from the time when payable shall become the
property of the company. -
ART. 55. The extinguishment of the shares shall be accomplished in
ninety-nine years from the putting of the canal in operation.
Provision shall be made for this extinguishment by means of the
deduction hereinbefore provided for in article 51, the amount of which
shall be fixed by the stockholders’ meeting, on recommendation of the
council of administration.
The shares to be paid off shall be designated by drawing lots, which
shall be publicly done at the times and in the manner fixed by the
council of administration.
ART. 56. The numbers of the shares drawn for payment shall be
posted in the company’s principal office.
ART. 57. Shares drawn for payment shall be paid at the places desig-
nated for the payment of dividends and interest.
Holders of extinguished shares have the same rights as holders of
shares not extinguished, except as to the dividend which may be paid
in accordance with article 51 hereof.
ART. 58. The share of 60 per cent set apart for the Compagnie Uni-
verselle du Canal Interocéanique in liquidation, may, if the liquidator
so requests, be represented by certificates, to such number as he shall
PANAMA CANAL TITLE. 209
fix, leaving it to him to make a proper distribution thereof among the
parties in interest. - • -
This right to a share in the profits shall not give to any of those who
enjoy it any right to take part in any way in the acts or administra-
tion of the company. - z
In all cases the provisions of articles 18 and 19 hereof, concerning
shares, are equally applicable to the certificates of interest. -
All expenses and formalities connected with these certificates must
be borne by the holders. * - -
Before distributing these certificates the liquidator must make
arrangements for their being represented in dealings with the new
company; these arrangements must be satisfactory to the council of
administration of the present company. - •"
ART, 59. The reserve fund is composed of the accumulation of the
º: deducted from the annual profits, in accordance with article 51
ereof. . - g
When this reserve fund reaches one-tenth of the capital of the com-
pany, its creation may be suspended. It must be resumed when the
amount of the reserve has sunk below one-tenth of the capital of the
company.
TITLE IX. —MoDIFICATION OF THE BY-LAws; DISSOLUTION.
ART. 60. If experience shall show the desirability of making modifi-
cations in or additions to the present statutes, the stockholders’ meeting
shall proceed to make them in accordance with articles 61 and 62 hereof.
It may especially determine upon a reduction of the capital of the
company, a reduction in the duration, the prolongation or the earlier
dissolution of the company, its consolidation with other companies.
It may even introduce modifications as to the object of the company
without, however, changing its essential character. -
ART. 61. Meetings which are to consider the different subjects men-
tioned in the preceding article will not be regularly constituted nor will
their action be valid unless they are composed of a number of share-
holders representing at least one-half of the capital of the company;
but in such case the council of administration shall have the right, in
its calls, to reduce, as far as it shall think desirable, the number of
shares which must be held in order to take part in the meeting; and in
such case the holder of the minimum number of shares necessary to
take part in the meeting shall have 1 vote, the holder of 10 shares shall
have 2 votes, the number of votes increasing at the rate of 2 votes for
10 shares; provided, that the total number of votes of any member
shall not exceed 200. - -
Moreover all owners of a number of shares less than that fixed for
admission to the meeting may unite to form the requisite number of
shares and may cause themselves to be represented by one of their num-
ber in accordance with the law of August 1, 1893.
ART. 62. It is here explained that it is in order to conform to the
French law now in force that the present statutes require the repre-
sentation of one-half the capital of the company at the stockholders’
meetings called to consider the subjects specified in article 61 hereof,
and a representation of one-quarter of the capital in the other meetings;
but it is expressly understood that the company may take the benefit
of any new laws which may decrease the amount of capital necessarily
87 51–02–14
210 PANAMA CANAL TITLE'
represented in stockholders’ meetings, and that new legislative provi-
sions concerning this question will become applicable to the company
, hereby created upon a resolution to that effect of a meeting of stock-
holders called in accordance with the rules laid down in articles 34 and
35 hereof. -
ART. 63. In case of dissolution of the company the meeting of stock-
holders on recommendation of the council of administration shall
determine the method to be adopted either for the liquidation or reor-
ganization of the company as a new company; it may appoint one or
more liquidators, and may confer upon them the broadest powers.
ART. 64. During liquidation the powers of the meetings of stock-
holders shall continue as during the existence of the company.
It shall have, especially, the right to approve the accounts of the
liquidation and to give acquittance therefor. -
The appointment of liquidators shall terminate the powers of the
administrators and of all mandatories.
TITLE X.—CONFERRING OF JURISDICTION; SUITs.
ART. 65. In accordance with article 20 of the concession law of
May 18, 1878, differences which may arise between the Government
of the United States of Colombia and the company shall be submitted
to the Federal supreme court (Colombia). - –
But for all other litigations the company shall have its domicile at
Paris. t - .
ART. 66. The company shall be considered commercial in its essence
as in its form, and shall, accordingly, be within the jurisdiction of the
tribunal of commerce of the Seine.
ART. 67, Suits concerning the general and collective interests of the
company can not be brought either against the council of administra-
tion or against one of its members, except in the names of share-
holders representing one-twentieth of the capital of the company.
Actions concerning the rights of members can not be brought by a
shareholder, or group of shareholders, representing less than a twen-
tieth of the company’s capital. .
And no action at law, brought by one or more shareholders against
the company, its council of administration, or one of its members can
be brought into court until after having been submitted to the examina-
tion of a meeting of shareholders, whose opinion shall be submitted to
the magistrates at the same time with the complaint itself.
ART. 68. Every shareholder in case of litigation must make election
of a domicile at Paris, and all notices and summonses to him may be
lawfully served at the domicile by him elected, without regard to the
distance of the real domicile. - -
In default of election of a domicile, he shall be deemed to have
elected, for notices judicial and extrajudicial, the office of the attorney
of the Republic at the civil tribunal of first instance of the Seine.
The domicile elected, actually or impliedly, as has just been stated,
shall carry with it the conferring of jurisdiction on the competent
tribunals of the Seine. -
ART. 69. In all litigations which may arise between the company
and third persons, notice of all judicial or extrajudicial documents
must necessarily be given by service of a copy personally upon the
president of the council of administration at the principal office of the
company. -
IPAN AMA CAN AI, TITLE. 211
TITLE XI.-TEMPORARY PROVISIONS.
ART. 70. The subscription of the entire capital of the company, and
the payment of at least one-fourth the capital in cash, shall be evi-
denced by a declaration of the founder acknowledged before a notary.
To this declaration shall be annexed a list of the subscribers and the
state of the payments made. -
ART. 71. This declaration, with vouchers, shall be submitted to the
first stockholders’ meeting, which shall verify its accuracy.
The same meeting shall cause the value of the contributions herein-
before mentioned, and the consideration for the advantages agreed to
be given, to be appraised. -
ART. 72. A second meeting shall be called to approve, if proper,
the contribution and advantages in question.
The same meeting shall elect the administrators and the commis-
sioners created by article 32. ...” -
The minutes of the meeting shall show the acceptance of the
administrators and of the commissioners.
The company shall be organized upon their acceptance. -
ART. 73. Stockholders’ meetings called for the organization of the
company shall be composed of all the shareholders, who have each a
vote, provided that the holders of several shares shall have one vote.
for every ten shares; but no person shall have more than ten votes.
The meetings for organization must be composed of a number of
shareholders representing half the capital of the company. The
capital, one-half of which must be represented for verification of the
contribution, shall be composed only of the payments not subject to
verification. - * -
If the meeting does not include a number of shareholders repre-
senting half the capital, it can act only provisionally; in such case a
new meeting shall be called. -
Two notices published eight days apart, at least one month in
advance, in one of the papers in which legal notices are published in
Paris, shall give notice to the shareholders of the provisional action
taken by the first meeting, and this action shall become final if
approved by a new meeting composed of a number of shareholders
representing at least one-fifth of the capital of the company.
ART. 74. All general provisions of Title VI, relative to stockholders’
meetings, not inconsistent with those contained in this title, shall be
applicable to meetings of stockholders for organization, except that
meetings for organization may be called by a notice inserted in a news-
paper in which legal notices are published in Paris, as follows: For
the first meeting, two days beforehand, and for the second meeting at
least ten days beforehand.
ART. 75. When the amounts expended, as well for the work done
upon the canal as for the discharge of the burdens resulting from the
contribution of M. Gautron, shall reach about one-half of the cash
capital of the company at the minimum, a special technical commission,
theretofore appointed at a proper time shall pronounce upon the
results obtained from the work already done and upon the conclusions
to be drawn therefrom as to the remainder of the enterprise.
The commission shall be composed of 2 members, appointed by the
council of administration of the present company, and of 2 persons
appointed by the liquidation of the old Compagnie Universelle du Canal
Interocéanique. These 4 members shall appoint a fifth, who shall be
212 PANAMA CANAL TITLE.
president of the commission, and if they can not agree, this president
shall be appointed by the president of the tribunal of commerce of the
department of the Seine.
The council of administration shall be required to make public the
opinion of this commission, and to call a special meeting of stockholders
in the manner provided in articles 61 and 62 hereof.
This meeting shall consider the ways and means tending to insure
the completion of the work and the stipulations contained in article 5,
section 4, No. 3 hereof. t
TITLE XII.-PUBLICATIONS.
ART. 76. Within the month of the organization of the company the
administrators shall file in the registry of the tribunal of commerce of
the Seine and of the justice of the peace of the ninth arrondissement of
Paris, 1, a copy of the articles of association; 2, a copy of the docu-
ment showing the subscription of the capital and the payment of one-
fourth; 3, a copy, or a certified copy, of the action of the stockholders’
meeting, in accordance with articles 71 and 72 hereof; 4, a copy, or a
certified copy, of the list of the names of the subscribers.
ART. 77. Within the same time an extract from the documents and
proceedings specified in the preceding article shall be inserted in one
of the newspapers publishing legal notices in Paris, in pursuance of
law. - º -
ART. 78. Full powers are granted the holders of the documents for
the filing and publication in question. *
ART. 79. Finally, it is noted that all the provisions contained in the
two last preceding titles, relative to the organization and publications
of the present company, have been dictated only by the requirements
of the French law as to joint stock companies now in force.
Express reservation is made of the benefit of all new provisions
which the legislature may introduce into the law.
EXEIIIBIT. J.
MINUTES OF THE ORGANIZATION MEETINGS OF THE NEW PANAMA
CANAL COMPANY.
On the 22nd of October, one thousand eight hundred and ninety-four,
Before Me. Felix Edouard Lefebvre and Me. Louis Antoine Maurice
Champetier de Ribes, both notaries at Paris, undersigned, has appeared
M. François Gustave Ramet, former President of the Tribunal of
Commerce, of Rennes, residing at Paris, Rue Demours, No. 83, acting
in the capacity of founder of the Compagnie Nouvelle du Canal de
Panama, with a capital of 65,000,000 francs, whose principal office has
been provisionally fixed at Rue de la Victorie, No. 63 bis, and whose by-
laws have been settled in accordance with a document executed before
Me. Lefebvre and Maurice Champetier de Ribes, notaries undersigned,
the 26th day of June, 1894, and followed by a declaration of subscrip-
tion and payment before the same notaries, the 29th of September last,
the particulars of which appear above, who, by these presents deposits
with Lefebvre, notary undersigned, and has requested him to enter
PANAMA CANAL TITLE. - 213
upon his minutes, under date of this day, in order that all extracts and
copies which may be needed may be issued, to-wit:
1. The original, certified by the officers, of the minutes under date
of the fourth of October instant, of the first organization meeting of
the shareholders of the anonymous company, Compagnie Nouvelle du
Canal de Panama -
It appears from these minutes:
That the meeting of shareholders after having heard read the by-laws
and the declaration of subscription and payment, has declared that it
accepts the declaration of subscription and payment, as made in good
faith, and has declared that the sum of the payments made by the
shareholders had been made in cash, and deposited in caisse des
consignations; - -
And that, after having considered the matter, the meeting had
appointed as commissaires: - .
M. Pierre Edouard Fougeu, former notary, and Vice President of
the Committee of Bondholders, of Orleans, residing at Orleans, Boule-
vard Alexandre Martin, No. 65, -
M. Charles Florian Goudchaux, Chief of Division in the Depart-
ment of Posts and Telegraphs, retired, residing at Paris, Rue Lafayette,
No. 119, -
And M. Jean Baptiste Georges Focké, manager of the newspaper
“L’Avenir Industriel et Commercial”, residing at Paris, rue Cau-
martin No. 26, - ( .
Who were directed to appraise the value of the contributions made
by M. Gautron, liquidator of the Compagnie Universelle du Canal
Interoceanique de Panama, and the benefits provided, as well in con-
sideration of these contributions as for the benefit of the administra-
tors, and generally to fulfill the duties fixed by law and the by-laws;
To these minutes are annexed: - . -
A copy of the newspaper “Les Petites Affiches”, issue of Sunday,
September 30th last, containing the notice of calling of the first organ-
ization meeting of stockholders, said copy recorded and certified;
The attendance sheet, signed by each member upon his arrival, and
certified by the officers, with one hundred and eleven proxies, given
by different shareholders, and two copies made by Messrs. Lefebvre
and Portefin, notaries at Paris, of powers of attorney given by the
Credit Lyonnais to M. Rabeau and by the societé Générale to M.
de Fredaignes; i - - - -
II. And the original, certified by the officers, of the minutes, under
date of the 20th of October instant, of the second organization meeting
of shareholders of the said Company. - -
It appears from these minutes:
That the shareholders’ meeting approved, by the unanimous vote of
the members present, except only M. Gautron and the Commissioners,
who did not vote, the report printed and deposited at the main office
on the 13th inst. by Messrs. Fougeu, Goudchaux and Focké, Commis-
sioners appointed by the first organization meeting of shareholders of
the fourth of October, instant, adopts the conclusion of this report,
and accordingly says that it approves the provisions made and benefits
provided in consideration of the contribution of M. Gautron, and for
the benefit of the administrators by the by-laws;
That said meeting decided, by unanimous vote of the members pres-
ent, that the attendance pay of the council of administration should
214 - PANAMA CAN AI, TITLE.
be fixed at the sum of three thousand frames for each acting adminis-
trator per annum, leaving to the council to divide the total between its
members in conformity with the business to each of them; and at two
thousand francs for each period, the compensation to be allotted to
each of the commissaires of accounts;
That the meeting, after due consideration, decided unanimously,
with the exception of two persons, one having ten votes, and the other
eighteen, - - - +
That the council of administration should be fixed for the present at
ten, and appoints to fill these offices for the first period of six years;
M. Theophile Auguste Baillet, merchant, former Judge of Tribu-
nal of Commerce of Orleans, residing at Orleans, rue Dauphine No. 13;
M. Jean Bonnardel, administrator of the Compagnie des chemins
de fer de l'Ouest, residing at Lyons, quai d'Occident, No. 3; -
M. Georges Brolemann administrator of the Crédit Lyonnais, resid-
ing at Paris, Boulevard Malesherbes, No. 52:
M. Calixte Carraby, administrator of the Comptoir National d’Es-
compte, residing at Paris, Rue Pigalle, No. 14; -
M. Gabriel François Chanove, administrator delegate of the Société
des Forges et Aciéries de Huta Bankowa, residing at Paris, rue de
Prony, No. 95; * . -
M. Gabriel Jules Jonquiere, former Inspector of public lands,
residing at Paris, rue Spontini No. 1;
M. Augustin Aime Le Begue, administrator of the Société Gén-
érale, residing at Paris, Boulevard Malesherbes No. 81;
M. François Gustave Ramet, former President of the Tribunal of
Commerce of Rennes, residing at Paris, rue Demours No. 83;
M. de Saint Quentin Marcel Pierre Acheman, administrator of the
Crédit Industriel et Commercial, residing at Paris, Boulevard des
Batignolles, No. 82: - - -
M. Lucien Souchon, administrator of the Société des Houillères de
Saint Etienne residing at Lyon Place de la Charité: -
And that in case M. Saugnier, previously proposed, should not
change his decision, it invited the council to consider at the next share-
holders’ meeting, the desire, expressed by it, to see added to the list
of the council an authorized representative of the bondholders of the
old company; -
That said meeting recognized the acceptance of said duties of
directors; -
That said meeting, after due consideration, appointed unanimously,
with the exception of one shareholder, having ten votes, commissaires
to report to the shareholders’ meeting on the accounts of the first cor-
porate fiscal period, and on the situation of the company:
M. Auguste Louis Joseph Barbier, Auditor of the Tribunal of
Commerce of the Seine, residing at Paris, Avenue de la République,
No. 12;
M. Auguste Etienne Lemoine, Associate Agent de change, residing
at Paris, rue de la Pompe, No. 10;
And M. Pierre Edouard Fougeu, former notary, and Vice Presi-
dent of the Committee of Bondholders of Orleans, residing at Orleans,
Boulevard Alexandre Martin, No. 65; - .
That it recognized the acceptance of said duties by the commissioners
PANAMA CANAL TITLE. 215
And that the company was declared formally organized, in con-
formity with the law and the by-laws.
To these minutes are annexed;
A copy of the newspaper “Les Petites Affiches”, issue of Tuesday,
the 9th of October last, containing the notice of the calling of the
Second organization meeting of stockholders, said copy recorded and
certified: - -
The attendance sheet, signed by each member on his arrival, and
certified by the officers, with two hundred and sixteen stamped mem-
oranda, signed by the proxies of the absent shareholders, and three
thousand and ninety-one powers of attorney. in support of said
memoranda; * - - ~
A copy of the report of the commissaires, certified by them as
true; - • ,
A power of attorney, given by the administrators and the commis-
sioners to M. Ramet, to accept the duties of administrators and of
commissaires. -
Which minutes have been hereto annexed, after having been certified
as true by the party appearing, and that mention above of this annex-
ing was made and signed by the undersigned notaries.
Reference to these presents are allowed wherever necessary.
And for the making of the filing and publication prescribed by law,
full power is given to the holder of a copy of this document. -
Done and passed at Paris, Rue Tronchet, No. 34, in the office of M.
Lefebvre, one of the notaries undersigned. - -
The day, month and year above mentioned.
And the same having been read, the party appearing has signed with
the notaries. -
The signatures follow.
On the margin is written:
Recorded at Paris, Fourth Bureau, the 29th of October, one thousand
eight hundred and ninety-four, Fol. 82, case 7, 3 francs seventy-five
centimes, decimes included. & a.
(Signed) COPIN.
APPENDIX.
NEW PANAMA CANAL COMPANY.
Anonymous company with capital of 65,000,000 francs.
Principal office at Paris, rue de la Victoire No. 63 bis.
JFºrst meeting of shareholders, for the organization of the company.
In the year one thousand eight hundred and ninety-four, Thursday
the fourth of October, at half-past ten o’clock in the forenoon,
The shareholders of the Compagnie Nouvelle du Canal de Panama,
an anonymous company, with a capital of sixty-five million francs,
whose principal office is at Paris, rue de la Victoire, No. 63 bis,
The said company, formed by M. François Gustave Ramet, former
President of the Tribunal of Commerce at Rennes, residing at Paris,
216 PANAMA CANAL TITLE.
rue Demours, No. 83, according to a document executed before Messrs.
Lefebvre and Maurice Champetier, notaries at Paris, the twenty-sixth
of June, one thousand eight hundred and ninety-four, .
Met in first organization meeting of shareholders at Paris, rue d
Lanery, No. 10, at the building of the Union Nationale des Chambres
Syndicales, on the call, addressed to them by the insertion in the gen-
eral paper for advertisements, issue of Sunday, the thirtieth of Sep-
tember, one thousand eight hundred and ninety-four, called the
“Petites Affiches”.
This meeting is for this purpose:
1st. Of verifying the correctness of the declaration of subscription
and payment made in accordance with document executed before
Messrs. Lefebvre and Maurice Champetier de Ribes, notaries at Paris,
the twenty-ninth of September, one thousand eight hundred and
ninety-four, -
2d. And of appointing one or more commissaires for the purpose
of appraising the value of the contributions made by M. Gautron, as
liquidator of the Compagnie Universelle du Canal Interocéanique de
Panama, and the provisions made and benefits provided, in considera-
tion of said contributions, and for the benefit of the administrators;
and of making a report to the second organization meeting of share-
holders. - &
M. Gautron is requested to fill the office of president, which he
states that he accepts.
He asks to assist him as scrutators, in default of the acceptance of
larger subscribers: - -
M. Gabriel Chanove, Civil Engineer, residing at Paris, rue de
Prony No. 95, -
And M. François Gustave Ramet, founder of the company,
Both subscribers for two hundred and fifty shares.
In consequence Messrs. Chanove and Ramet are appointed scrutators,
and accept these offices. .
The President and scrutators appoint to the office of secretary M.
Théophile Auguste Baillet, merchant, former Judge of the Tribunal
of Commerce of Orleans, residing at Orleans, rue Dauphine No. 13,
who accepts and takes his place at the desk in this capacity. *
The officers thus appointed certified the attendance sheet, signed by
each member on his arrival. - - -
This sheet shows the presence, personally or by proxy, of share-
holders representing three hundred and seventy-two thousand, nine
hundred and sixty shares, viz, more than one-half the corporate capital,
and giving a right to one thousand and thirty-two votes.
Comsequently, the president announces the regularity of the meet-
ing, and declares it open.
The president lays before the meeting:
1st. A copy of the paper for judicial and legal notices, “Les Petites
Affiches,” issue of twenty-ninth of September one thousand eight
hundred and ninety-four, bearing the number two hundred and seventy-
three, said copy recorded, containing the notice of the calling together
of the subscribers to the shares of the Compagnie Nouvelle du Cana
de Panama, in first organization meeting of shareholders. -
The president requests M. Lefebvre, Notary of Paris, present at
the meeting, to read: - -
1st: The by-laws of the company, according to document executed
PANAMA CANAL TITLE. 217
before him and M. Maurice Champetier de Ribes, the twenty-sixth of
June, one thousand eight hundred and ninety-four; -
2d. And the declaration of subscription and payment of the corpo-
rate capital in cash, executed before Messrs. Lefebvre and Maurice.
Champetier de Ribes, notaries at Paris, twenty-ninth September, one.
thousand eight hundred and ninety-four.
These two documents are read to the meeting.
This reading being finished, the president states that the meeting
is called upon to consider and vote on the following resolutions, which,
he reads: -
FIRST RESOLUTION.
The meeting, after having read the by-laws, prepared by Messrs.
Lefebvre and Maurice Champetier de Ribes, notaries of Paris, the
twenty-sixth day of June, one thousand eight hundred and ninety-
four, and the declaration of subscription and payment, executed
before the same notaries the twenty-ninth of September, one thousand.
eight hundred and ninety-four, declares that it recognizes the correct-
ness of this declaration of subscription and payment, and that it finds.
that the amount of payments made by the shareholders has been paid
in cash, and deposited with the caisse des depôts et consignations. .
This resolution is passed unanimously by show of hands.
Thereupon, the president requests the assembly to appoint three.
commissaires, whose duty will be to appraise the value of the con-
tributions made to the company by the liquidation of the Compagnie.
Universelle du Canal Interocéanique de Panama, as well as the provi-
sions made for the benefit of the liquidation, in consideration of the said.
contributions, as well as the benefits provided by the by-laws, for the
benefit of the administrators, and to make to the second organization
meeting of shareholders, the report prescribed by law and the by-laws.
And he explains that these contributions and benefits result from
Articles five, six, eight and fifty-one and fifty-two of the by-laws, pre-
viously read. &
The president observes, furthermore, that he cannot personally take
part in the voting.
After an exchange of explanations, and the proposal of various names.
successively put to vote, the president puts to vote the following resolu-
tion, which he reads: -
SECOND RESOLUTION.
The meeting, after due deliberation, appoints as commissaires:
M. Pierre Edouard Fougeu, former notary, and Vice President of
the Committee of Bondholders, of Orleans, residing at Orleans, Boule-
vard Alexandre Martin, No. 65; -
| M. Charles Florian Goudchaux, Chief of Division in the Depart-
ment of Posts and Telegraphs, retired, residing at Paris, Rue Lafayette,
No. 119: •
And M. Jean Baptiste Georges Focké, manager of the newspaper
“L’Avenir Industriel et Commercial,” residing at Paris, Rue Caumar-
tin No. 26: - -
Who are directed to appraise the value of the contributions made
by M. Gautron, liquidator of the Compagnie Universelle du Canal.
218 . . PANAMA CANAL TITLE.
Interocéanique de Panama, and the benefits provided, as well in con-
sideration of these contributions as for the benefit of the adminis-
trators, and generally to fulfill the duties fixed by the law and the by-
laws. - -
This resolution, put to vote, is passed by show of hands.
Messrs. Fougeu, Goudchaux and Focké, being present, state that
they accept the said offices. -
The president requests the commissioners to prepare their report in
the shortest possible time, and reminds them that it must be kept for
the inspection of the shareholders at the company’s office, five days
before the second meeting of shareholders.
After which the president declares the meeting adjourned.
There have been annexed to the present minutes:
A copy of the newspaper “Les Petites Affiches,” issue of Sunday,
the thirtieth of September last, containing notice of the calling of the
present meeting, said copy recorded and certified;
The attendance sheet, signed by each member on his arrival, certified
by the officers, with one hundred and eleven proxies, given by different
shareholders, and two copies, delivered by Messrs. Lefebvre and
Portefin, notaries at Paris, of powers of attorney, given by the Crédit
Lyonnais, to M. Rabeau, and by the Société Générale to M. de
Fredaignes. -
Of all the matters set forth above, these present minutes have been
prepared, which have been signed by the officers of the company.
The President (signed) GAUTRON,
A scrutator (signed) CHANOVE,
A scrutator (signed) RAMET,
The Secretary (signed) AUG. BAILLET.
Thereafter is written.
- * * Recorded at Paris,
Fourth Bureau, twenty-ninth October one thousand eight hundred
and ninety-four, folio eighty-three, case three, received three francs
seventy-five centimes, decimes included.
(Signed) - - COPIN.
New PANAMA casal company.
Anonymous company with capital of 65,000,000 francs.
Principal office at Paris, rue de la Victoire No. 68 bis.
Second meeting ayf shareholders, for the organization of the company.
In the year one thousand eight hundred and ninety-four, Saturday
the twentieth of October at half-past two o'clock, in the afternoon,
The shareholders of the Compagnie Nouvelle du Canal de Panama,
an anonymous company, with a capital of sixty-five million francs,
whose principal office is at Paris, rue de la Victoire, No. 63 bis,
The said company, formed by M. François Gustave Ramet, former
president of the Tribunal of Commerce at Rennes, residing at Paris,
PANAMA CANAL TITLE. . 2.19
rue Demours, No. 83, in accordance with document executed before
Messrs. Lefebvre and Maurice Champetier, notaries at Paris, the
twenty-sixth of June, one thousand eight hundred and ninety-four,
Met in second organization meeting of shareholders at Paris, in the
room of the Société d’Horticulture de France, rue Grenelle, No. 84,
on a call which was addressed to them, by insertion in the general
paper for advertisements, issue of Tuesday, ninth of October, one
thousand eight hundred and ninety-four, called “Petites Affiches.”
The purpose of this meeting is: . -
To hear read the report of the commissioners appointed by the first
organization meeting of shareholders as to the value of the contribu-
tions made to the company by M. Gautron, in his capacity of liqui-
dator of the Compagnie Universelle du Canal Interocéanique de
Panama, and the provisions and benefits stipulated, as well in consid-
eration of the said contributions, as for the benefit of the administra-
tors, and to take action upon the conclusions of said report;
To appoint administrators of the Company, and to ascertain their
acceptance;
To fix the amount of the attendance fee allotted to the administra-
tors, and the remuneration awarded to the commissaires;
And to declare, if such be the case, that the company is formally
organized. - - - r
M. Georges. Lemarquis, mandataire of the Panama bondholders,
and member of the meeting, is requested to take the office of presi-
dent, which he states that he accepts. -
He requests to assist him, as tellers, in default of the acceptance of
larger subscribers: .
M. Simon Edouard Joyant, rentier, residing at Paris, Boulevard
Malesherbes No. 97, -
And M. Abel Adrien Alexis Couvreux, contractor for public works,
residing at Paris, rue d’Anjou No. 78, --
Subscribers, the first to eight hundred and twenty-six shares, and the
second to six hundred and twenty-five shares. 3
Accordingly, Messrs. Joyant and Couvreux are appointed tellers, and
accept these offices. - -
The president and the tellers appoint to the office of Secretary M.
Theophile Auguste Baillet, merchant, former Judge of Tribunal of
Commerce of Orleans, residing at Orleans, rue Dauphine No. 13, who
accepts, and takes his place at the desk in this capacity.
The officers thus constituted, certify the attendance sheet signed by
each member on arrival. 3
This sheet shows the presence in person, or by proxy, of shareholders
representing five hundred and twenty-three thousand six hundred and
forty-eight shares, say more than one-half of the corporate capital, and
giving a right to four thousand eight hundred and seventy-six votes.
Accordingly, the president declares the meeting regular, and states
the meeting is open. *
The commissioners appointed by the first meeting of shareholders,
take the floor and read their report. - .
This report concludes by approving the provisions made in the by-laws
in favor of M. Gautron, in consideration of the contributions made by
him, as liquidator of the Compagnie Universelle du Canal Interocéan-
ique de Panama, and for the benefit of the administrators.
220 - PANAMA CAN AI. TITLE.
. The president, after having furnished the assembly various addi-
tional explanations, and having ascertained that no shareholder asks
the floor, puts to vote the following resolutions:
FIRST RESOLUTION.
The meeting, after having informed itself concerning the report
printed and filed in the office of the company the thirteenth of October
instant, by Messrs. Fougeu, Goudchaux and Focké, commissioners
appointed by the first organization meeting of commissioners of Octo-
ber fourth instant, adopts the conclusions of its report, and conse-
quently declares that it approves the provisions and benefits stipulated
in consideration of the contribution of M. Gautron, and for the
benefit of administrators, by the by-laws. -
This resolution is passed unanimously by the members present, with
the exception of only M. Gautron and the commissioners, who state
that they do not vote.
The president next asks the meeting to fix the value of the attend-
ance tickets to be issued to the administrators and the compensation
of the commissioners. -
After exchange of explanations, the president puts to vote the
following resolution:
SECON ID RESOLUTION. •
The meeting decides that the attendance fees of the council of admin-
istrators shall be fixed at the sum of three thousand francs for each
acting administrator per annum, leaving to the council to distribute the
total among its members, according to the employment to each of
, them, and at two thousand francs for each fiscal period the compen-
sation to be allotted to each of the commissioners of accounts.
This resolution is passed unanimously by the members present.
The president next requests the meeting to appoint the administra-
tors of the company for the first period of six years, in comformity
with the by-laws, and informs the meeting that a list of eleven persons
had been presented to him, which he reads to the meeting. -
Mr. Saugnier, former treasurer paymaster general of the Depart-
of the Loire, mentioned in this list, states that he declines the duties
which are offered him, and refuses to be a candidate.
The president expresses a desire that Mr. Saugnier should re-con-
sider his decision. -
He then opens the debate as to the choice of administrators.
Mr. Georges Thiébaud, member of the meeting, offers several obser-
Vations as to the character of the list presented, and the incompatibility
which may exist between the duties of administrators of the financial
companies, borne by several of the candidates proposed, and the duties
of the administrators of the company. -
Mr. Focké proposes to the meeting several names which he would
desire to see added to the list.
The President explains to the meeting that the list was made up by
agreement between the persons who compose it, and forms a homo-
geneous whole, which it is difficult to change without the consent of its
members. . -
He reserves, however, to the council, the power of completing itself
in conformity with the wishes of the meeting, and with the by-laws.
EANAMA CANAL TITLE. - 221
After further exchange of explanations, in which Mr. Georges
Thiébaud takes part, the president puts to vote the following resolu-
tion.
THIRD RESOLUTION.
The meeting, after due consideration, in conformity with article
twenty-two of the by-laws, decides that the council of administration
be fixed for the present at ten, and appoints to fill these offices during
the first period of six years,
Mr. Théophile Auguste Baillet, merchant, former Judge of the
Tribunal of Commerce of Orleans, residing at Orleans, rue Dauphine
No. 13.
Mr. Jean Bonnardel, administrator of the Compagnie des chemins
de fer de l'Ouest, residing at Lyons, quai d'Occident, No. 3.
Mr. Georges Brolemann, administrator of the Crédit Lyonnais, resid-
ing at Paris, Boulevard Malesherbes, No. 52.
Mr. Calixte Carraby, administrator of the Comptoir National d’Es-
compte, residing at Paris Rue Pigalle, No. 14.
Mr. Gabriel François Chanove, administrator delegate of the Sociéte
des Forges et Aciéries de Huta Bankowa, residing at Paris, rue de
Prony, No. 95. -
Mr. Gabriel Jules Jonquiére, former Inspector of public lands,
residing at Paris, rue Spontini No. 1. • .
Mr. Augustin Aimé Le Bégue, administrator of the Societe Gen-
erale, residing at Paris, Boulevard Malesherbes No. 81. r
Mr. François Gustave Ramet, former President of the Tribunal of
Commerce of Rennes, residing at Paris, rue Demours No. 83.
Mr. Marcel Pierre Acheman de Saint Quentin, administrator of the
Crédit Industriel et Commercial, residing at Paris, Boulevard des
Batignolles, No. 82. - -
, Mr. Lucien Souchon, administrator of the Societe des Houilleres de
Saint Etinne, residing at Lyon, Place de la Charité. -
And in case Mr. Saugnier, heretofore suggested, should not recon-
sider his decision, the meeting requests the Council to consider at the
time of the next shareholders’ meeting the desire expressed by it, of
seeing added to the list of the Council an authorized representative of
the security holders of the old company. - -
This resolution is passed, unanimously with the exception of two
persons, who, upon being questioned, state that one possesses ten
votes and the other eighteen. -
Mr. Ramet, as well in his own name personally as in the name of
the administrators elected, states that they accept the offices which are
conferred upon them.
The president requests the meeting to appoint the commissioners to
verify the accounts for the first fiscal period, and suggests to the meet-
ing a list of three names, which is proposed. -
He puts to vote the following resolution.
\
FOURTH RESOLUTION,
The meeting, after due consideration, appoints Mr. Auguste Louis
Joseph Barbier, auditor of the Tribunal of Commerce of the Seine,
residing at Paris, Avenue de la République, No. 12. . -
222 - PANAMA CAN AL TITLE.
Mr. Auguste Etienne Lemoine, associate agent de change, residing
at Paris, rue de la Pompe, No. 10. .#
And Mr. Pierre Edouard Fougeu, former notary, Vice President of
the Committee of Bondholders of Orleans, residing at Orleans, Boule-
vard Alexandre Martin, No. 65,
Commissioners to make the report to the shareholders’ meeting, on
the accounts of the first corporate fiscal period, and upon the situation
of the company, in conformity with the law and article thirty-two of
the by-laws. *
This resolution is passed unanimously, with the exception of a share-
holder having ten votes.
Mr. Ramet states that he accepts in the names of Messrs. Barbier
and Lemoine, the offices which have just been conferred upon them.
Mr. Fougeu, present at the meeting, states that he accepts also.
In the course of this voting, Mr. Georges Thiébaud filed with the
officers a protest, as follows, which is inserted in the present minutes,
at the express request of Mr. Georges Thiébaud, and subject to all
reservations on the part of the officers:
Mr. Georges Thiébaud, shareholder, 33 quai Voltaire, Paris, protests
in the most formal way against the method of voting which has been
employed for the election of the council of administration, which was
elected by count of the show of hands of the shareholders, who did
not desire it. Furthermore, the list of the council, contrary to the
by-laws, was not composed of nine, twelve or fifteen members, but of
ten and eleven.
Furthermore, the council, instead of being elected name by name,
were elected in a body, and decisions upon other matters were annexed.
(Signed) GEORGES THIEBAUD.
The President announces, as a result of the resolutions above adopted,
that the Compagnie Nouvelle du Canal de Panama, is formally organ-
ized in conformity with the law and the by-laws. -
He adds a few words as to the formalities which are to be imme-
diately complied with to inform the Government of Colombia of the
Organization of the company, and announces the immediate resump-
tion of work on the Isthmus of Panama. -
DECLARATION FOR RECORDING.
For the collection of the dues for recording, only, it is here declared,
That the sum of seven million five hundred thousand francs to be
paid to the Government of Colombia, under the provisions of the
concession laws, applies to the rights in real property included in the
concession of the Colombian Government, especially to the lands in
which the canal will be dug, to the strip of land granted on each of
its sides, and to the five hundred thousand hectares of public lands
granted, with the mines which they may contain.
The meeting was adjourned at six o'clock.
There have been annexed to the present minutes, +
A copy of the paper “Les Petites Affiches,” issue of Tuesday, ninth
October last, containing the notice of the calling of the present meet-
ing, said copy recorded and certified.
The attendance sheet, signed by each member on arrival, and certi-
fied by the officers, with two hundred and sixteen stamped memoranda,
PANAMA CANAL TITLE. -- - 223
containing the details of the proxies given by the shareholders not
present, signed by the said proxies, and three thousand and ninety-one
powers in support of the said memoranda. - -
A copy of the report of the commissioners, certified by them as
true. -
A power of attorney, given by the administrators and commissioners
to Mr. Ramet, to accept their offices.
PUBLICATIONS.
For making the filing and publication prescribed by law, full powers
are given to the bearer of a copy of the documents and minutes of
Organization of the company. -
Of all which is above set forth, the present minutes have been pre-
pared, which have been signed by the officers, the administrators and
the commissioners, or their proxies. -
The President (signed) LEMARQUIs,
A Scrutator (Signed), JOYANT,
A Scrutator (Signed), CouvrBUx,
The Secretary (Signed), AUG. BAILLET.
Good as an acceptance of the offices of administrators, both in my
name personally, and as attorney in fact. , ,
Signed Ramet. .
Good as an acceptance of the office of commissioners for Messrs.
Barbier and Lemoine.
Signed Ramet.
Thereafter is written, -
“Recorded, Paris Fourth Bureau, twenty-ninth October, one thou-
sand eight hundred and ninety-four, folio thirty-three, case five, one
hundred and seventy-two thousand five hundred francs, decimes
included. - -
Signed Copin.
The undersigned,
Mr. Theophile Auguste Baillet, merchant, former Judge of the
Tribunal of Commerce of Orleans, residing at Orleans, rue Dauphine
No. 13.
Mr. Jean Bonnardel, administrator of the Compagnie des chemins
de fer de l'Ouest, residing at Lyons, quai d'Occident, No. 3.
Mr. George Brolemann, administrator of the Crédit Lyonnais, resid-
ing at Paris, Boulevard Malesherbes, No. 52. . -
Mr. Calixte Carraby, administrator of the Comptoir National d’Es-
compte, residing at Paris, Rue Pigalle, No. 14.
Mr. Gabriel François Chanove, administrator delegate of the Société
des Forges et Aciéries de Huta Bankowa, residing at Paris, rue de
Prony, No. 95. -
Mr. Gabriel Jules Jonquière, former Inspector of public lands,
residing at Paris, rue Spontini No. 1. * - -
Mr. Augustin Aimé Le Begue, administrator of the Société Géné-
rale, residing at Paris, Boulevard Malesherbes, No. 81.
And Mr. Marcel Pierre Acheman de Saint Quentin, administrator of
224 PANAMA CANAL TITLE.
the Crédit Industriel et Commercial, residing at Paris, Boulevard des
Batignolles, No. 82. *4 - -
In case they should be appointed as administrators of the Compagnie
Nouvelle du Canal de Panama by the second organization meeting of
shareholders, .
Give by these presents full power to Mr. François Gustave Ramet,
former President of the Tribunal of Commerce of Rennes, residing at
Paris, rue Demours, No. 83.
For the purpose of: -
Accepting the said offices of administrators, or declining them, for
each of them individually.
Paris, twentieth October one thousand eight hundred and ninety-
four. - &
Good as power, (signed) BAILLET,
Good as power, (signed) BONNARDEL,
Good as power, (signed) BROLEMANN,
Good as power, (signed) CARRABY,
Good as power, (signed) CHANOVE,
Good as power, (signed) JONQUIERE,
Good as power, (signed) LE BEGUE,
Good as power, (signed) DE SAINT QUENTIN.
Thereafter is written: .
Recorded at Paris, fourth bureau, twenty-ninth October, one
thousand eight hundred and ninety-four, folio 83, case 10, received
thirty francs, decimes included. .
- (Signed) CHOPIN.
The undersigned, Lucien Souchon, administrator of the Société des
Houilleres de Saint Etienne, residing at Lyon, Place de la Charité.
Gives by these presents power to Mr. François Gustave Ramet,
former President of the Tribunal of Commerce of Rennes, residing
at Paris, rue Demours No. 83. --
For the purpose of accepting, in my name, the office of administra-
tor of the Compagnie Nouvelle du Canal de Panama, in case it should
be conferred upon me by the Second organization meeting of share-
holders.
For the said purpose, to sign all minutes. -
Lyon, the nineteen of October, one thousand eight hundred and
ninety-four. t - -
Good as a power, (Signed) SOUCHON.
Thereafter is written: -
Recorded at Paris, fourth Bureau, twenty-ninth of October, one
thousand eight hundred and ninety-four, folio 83, case 10, received
three francs, ninteteen centimes, decimes included.
- (Signed) CHOPIN.
The undersigned,
Mr. Auguste Louis Joseph Barbier, auditor of the Tribunal of
ºrce of the Seine, residing at Paris, Avenue de la République,
O. 12. . -
And Mr. Auguste Etienne Lemoine, associate agent de change,
residing at Paris, rue de la Pompe, No. 10, .
Give by these presents, power
To Mr. François Gustave Ramet, former President of the Tribunal
of Commerce of Rennes, residing at Paris, rue Demours No. 83.
PANAMA CANAL TITLE 225
For the purpose of accepting for each of the undersigned the offices
of auditing commissioners of the Compagnie Nouvelle du Canal de
Panama, in case these offices should be conferred upon us by the sec-
Ond Organization meeting of shareholders of the Company.
For the said purpose, to sign all the minutes.
Paris, the eighteenth October one thousand eight hundred and
ninety-four. - - -
Given as a power (signed) BARBIER,
Given as a power (signed) LEMOINE.
-- Thereafter is written,
Copied on nineteen pages Recorded at Paris, fourth Bureau,
and one-half, containing twenty-ninth October one thousand
three interlineations, ap- eight hundred and ninety-four, folio
proved, and three words 83, case 10. Received seven francs,
erased. . fifty centimes, decimes included.
LEFEBVRE (Signed) LEFEBVRE.
EXEIIRIT K.
JUDGMENT OF JUNE 29, 1894 (CIVIL TRIBUNAL OF THE SEINE), APPROV-
ING CONTRIBUTION BY THE LIQUIDATOR TO THE NEW PANAMIA
CANAL COMPANY.
{Taken from the minutes of the civil tribunal, lower court, for the department of the Seine, sitting
in the palace of justice, Paris.]
The civil tribunal, lower court, for the department of the Seine,
sitting in the palace of justice, Paris, has rendered, in open and public
session of its first division, the following judgment:
Done at the sitting of the 29th day of June, 1894.
The tribunal having examined and considered the petition presented
by Gautron, as liquidator of the court for the Universal Company of
the Panama Interoceanic Canal, which petition is signed by de Biéville,
his solicitor; and the tribunal having also examined and considered
the documents produced, and the petition aforesaid being conceived as
follows: - -
To the honorable the president and justices of the first division of
the civil tribunal of the Seine, the petitioner, M. Jean Pierre Gautron,
liquidator of the court, residing in Paris, No. 13 Tronchet street,
represents as follows: - - -
That he is acting in his capacity as liquidator for the Universal
Company of the Panama Interoceanic Canal, whose legal residence is in
Paris, No. 63 bºs, rue de la Victoire; that he was named liquidator as
aforesaid by a decree rendered in chambers by the civil tribunal of
the Seine on the 21st day of July, 1893. -
That he, through his solicitor, M. de Biéville, respectfully states
that on the 4th day of February, 1889, M. Joseph Brunet was named,
by recorded decree of the first division of this tribunal, liquidator for
the Universal Company of the Panama Interoceanic Canal, and was
given most extensive powers, notably that of granting, or making a
contribution of, either the whole or a part of the assets of the company
to a new company or association. . -
That by a recorded decree of this tribunal, rendered in chambers
on the 13th day of February, 1890, M. Achille Monchicourt was
8751—02—15
226 PANAMA CANAL TITLE.
named coliquidator for the said company, with M. Joseph Brunet,
and was given the same powers, to use individually or in conjunction
with the latter. ... • -
That owing to the resignation of M. Brunet, M. Achille Monchi-
court has been confirmed, by a chambers decree dated the 8th day of
March, 1890, as sole liquidator for the said company, with the broadest
powers, notably “that of giving or making a contribution, to a new
company or association, of either the whole or a part of the assets of
the company aforesaid; of entering into and rectifying with contract-
ors all contracts and agreements aiming to the continuation or preserv-
ing of the work, and of prolonging and renewing all agreements, of
giving all guarantees, necessary for this purpose.”
Finally, that by a decree rendered in chambers on the 21st day of
July, 1893, M. Jean Pierre Gautron was appointed coliquidator with
M. Achille Monchicourt, with the same and equal powers, to use
individually or jointly with the said M. Monchicourt.
That owing to the decease of M. Achille Monchicourt, which occurred
on the 14th day of March, 1894, M. Gautron remains sole liquidator
of the Panama Innteroceanic Canal Company. *.
That a new company is in process of formation at the present time
for the purpose of resuming the work and completing the canal. -
That the by-laws of this company, called the New Panama Canal
Company, have been drawn up and deposited for record by M. Gustave
Ramet, formerly president of the tribunal of commerce at Rennes,
and have been filed also in the records and minutes of M. Lefebvre,
notary, in Paris. -
That your petitioner, by virtue of the powers conferred by the
orders and decrees aforesaid on the liquidator for the Panama Inter-
oceanic Canal Company, is preparing to make contribution to the new
company now being constituted: First, of all rights whatsoever accru-
ing to the old company from the laws of the Government of the United
States of Colombia, dated May 18, 1878, and December 26, 1890, as
well as from all decrees, acts, or facts whatever having followed upon
these laws in the course of their execution, and all advantages and
benefits accruing therefrom and stipulated by these laws and decrees,
together with all territory and real estate having been granted and
ceded to the interOceanic company now in process of liquidation, or
acquired by the same, all this provided the new company fulfill the
conditions prescribed and imposed by the laws and acts passed in
granting or extending the concession, and provided it pay and dis-
charge all sums and indebtedness remaining due to the Colombian
Government by the old company. -
Secondly. Of the work already done and accomplished, of the yards,
workshops, buildings, hospitals, plant mounted and unmounted, and
of the stores, etc., belonging to the liquidation as well as of all deposits.
Thirdly. Of the plans, estimates, surveys, and specifications, and of
all documents whatsoever gathered and collected by the Universal
Company of the InterOceanic Canal, bearing in any manner on the
study, construction, or improvement and operation of the canal or of
its appurtenants, as well as the privileges attached to the same, and all
contracts or agreements with third parties. -
Fourthly. Of all rights of any nature and description, part owner-
ship, or any other rights whatsoever, which may belong or accrue to
the InterOceanic Canal Universal Company, now being liquidated, in
PANAMA CANAL TITLE. 227
the Panama Railroad at Colon, now worked and operated by an Amer-
ican company, known as the Panama Railroad Company, whose legal
residence is in New York. The said rights shall be transferred such
as they are, carrying with them all privileges entailed by them; and
M. Gautron binds himself, in his official capacity, to invest with them
the present company in the form and in compliance with all formali-
ties required for such transfer by the laws of the United States of
America.
The said rights shall be transferred, as well as the said property in
full, such as they exist and with all that they entail.
Your petitioner further respectfully shows as follows:
That the said grant and contribution are made, or are to be made,
by him, with the following reservations and under the following con-
ditions, to wit: t
First. The liquidation shall have and receive a part in the net
profits and gains of the enterprise, amounting to 60 per cent of the said
profits and gains, such as the same shall be determined and computed
under articles 51 and 52 of the by-laws. - -
Secondly. Fifty thousand shares of entirely paid-up stock shall be
given to the Government of the United States of Colombia, as pre-
scribed by the extension act of December 26, 1890.
Thirdly. The rights of every nature and description belonging to
the receivership in the Panama Railroad, and ceded by M. Gautron,
as set forth in paragraph 4 above, shall become the property of the
new company from the date of the meeting provided for by article 75
of the constitution and by-laws. No pecuniary compensation is required
of the new company for the cession of said rights, but they are trans-
ferred on the condition and with the full understanding that said trans-
fer shall be void if the canal be not completed within the time appointed
by the grant. Should the work not be completed within the said
period of time, the said rights shall revert to the liquidation.
If, contrary to all expectations, the meeting in question should fail
to take the necessary measures to complete the canal, or if the meas-
ures thus taken by said meeting should fail of execution, by reason of
impossibility to carry them out, the present company would still retain
the said rights accruing from the railroad aforesaid; but it would
have to pay to the liquidation a sum of 20,000,000 francs as an
indemnity, while the liquidation’s share, in the gains and profits of
the new company would then be equal to one-half of said gains and
profits, without further previous deduction than such as is provided
for by paragraphs 2 and 3 of article 51.
Fourthly. Until the full completion of the canal M. Gautron shall
have power, in his capacity as liquidator, to appoint a controlling or
supervising committee, composed of three members selected, as much
as possible, from among the engineers of bridges and roads and finance
inspectors, in order to inspect the progress of the work, the condi-
tion and maintenance of the plant and of the real property, as well as
the accounts kept in relation to these various objects.
The compensating of this committee shall be at the expense of the
new company.
Your petitioner further shows that it is proper for him to submit to
the civil tribunal of the Seine, for ratification and approval, the con-
ditions of the said grants and contributions, and the constitution and
by-laws of the company formed for the completion of the canal.
228 PANAMA CANAL TITLE.
Wherefore your said petitioner, acting in his official capacity, respect-
fully requests and prays the honorable president and associate justices
of this court purely and simply to ratify and approve the purport and
conditions of the grants or contributions intended to be made by the
liquidator for the Universal Company of the Panama Interoceanic Canal
to the New Panama Canal Company now in process of formation, as
well as the constitution and by-laws of the last-mentioned company.
All proper reservations being made, justice will be done.
(Signed) A. DE BIſàvil LE.
Having considered the order issued by the president of the court,
dated the 27th day of June, 1894, appended to the said petition and
directing: - - *
That this be communicated to the commonwealth attorney, and that
Mr. De Boislisle, vice-president, is hereby appointed to make a report.
HDone at the palace of justice, Paris, on the 27th day of June, 1894,
and signed BAUDOUIN. -
Having considered the written opinion of the commonwealth attor-
ney, likewise appended to the said petition, which opinion is thus con-
ceived: The attorney for the commonwealth refers the matter to the
tribunal of justice; signed CABAT. s
Having considered articles 10 and 11 of the act of July 1, 1893,
which articles are thus framed:
ART. 10. All acts tending to alienate any assets of the company,
all contracts entailing a transfer or contribution of the whole or of
part of the assets of the concern, emanating from the liquidator of the
Universal Company of the Panama Interoceanic Canal, shall be subject
to the approval or ratification of the civil tribunal of the Seine, who
shall, on the report of one of the justices, pass on the question in
Open court. -
ART. 11. All decrees of approval and ratification rendered in accord-
ance with the preceding article shall be published within a term of
ten days in the “Journal Officiel” and in the “Journal Officiel (com-
mune edition).”
This decree may be attacked by the shareholders, by the manda-
taire of the holders, and by other creditors of the company within a
delay not exceeding one month from the date of the publication afore-
said. The civil tribunal shall adjudicate the question within the space
of one month, as in the case of matters demanding immediate and
summary adjudication. The appeal from such decision must be
entered within ten days from the time of notification of said judgment
to the party in person or at his domicile.
Having heard at the sitting of the court M. de Boislisle, vice-
president, in his report, and M. Cabat, assistant attorney for the com-
monwealth, in his opinion, and having deliberated upon the same in
accordance with law; J
Whereas it appears from the terms of article 5 of the constitution
and by-laws of the New Panama Canal Company, which constitution
and by-laws have been duly acknowledged before Lefebvre and his
colleague, notaries in Paris, under an act of June 26, 1894, that Gau-
tron, acting in his official capacity as liquidator for the Universal Com-
pany of the Panama Interoceanic Canal, has declared himself as ceding
or contributing to the said company newly formed: --
First. All rights whatsoever accruing to the old company by virtue
PANAMA. CAN AI, TITLE. 229
of the laws of the Government of the United States of Colombia,
dated May 18, 1878, and December 26, 1890, as well as those accruing
from all decrees, acts, or facts having followed upon these laws in
the course of their execution, and all advantages accruing there-
from and stipulated by these laws and decrees; together with all
territory and real estate granted and ceded unto the interoceanic com-
pany now in process of liquidation, or acquired by the same; all this
provided the new company fulfill the conditions prescribed and
imposed by the laws and acts passed in prolongation or extension of
the grant, and provided it discharge and pay all sums and indebtedness
remaining due to the Colombian Government by the old company.
Secondly. The work already done and accomplished, the plants,
workshops, buildings, hospitals, plant mounted and unmounted, and
the stores, etc., belonging to the liquidation of the Universal Com-
pany of the Panama Interoceanic Canal, as well as all deposits which
may have been made by the said company now in process of liquidation.
Thirdly. The plans, estimates, surveys, and specifications, and all
documents whatsoever gathered and collected by the Universal Com-
pany of the Panama Interoceanic Canal, bearing in any manner on the
study, construction, or improvement and operation of the canal and its
appurtenants, as well as the privileges attached to the same, and all
contracts or agreements with third parties.
Fourthly. All rights of any nature and description, part ownership,
or any other rights whatsoever which may belong or accrue to the
InterOceanic Canal Universal Company now being liquidated, in the
Panama Railroad at Colon, now worked and operated by an American
company known as the Panama Railroad Company, whose legal resi-
dence is in New York. The said rights being transferred, such as they
are and exist, carrying with them all the privileges which they entail;
and M. Gautron binding himself, in his official capacity, to invest
with them the present company in the form and in compliance with
all the formalities required for such due and valid transfer by the laws
of the United States of America.
Whereas, moreover, the said rights are to be transferred, as well
as the said property, such as they exist and with all that they entail,
and whereas these cession or grant and contribution have been made
by Gautron in his official capacity, with the following reservations
and under the following conditions, to wit:
First. The liquidation shall have and receive a share in the net
profits and gains of the enterprise, amounting to 60 per cent of the
said profits and gains, such as the same shall be determined and com-
puted under articles 51 and 52 of the constitution and by-laws.
Secondly. Fifty thousand shares of entirely paid-up stock shall be
given to the Government of the United States of Colombia, as pre-
scribed by the extension act of December 26, 1890.
Thirdly. The rights of every nature and description belonging to
the liquidation in the Panama Railroad, and ceded by M. Gautron,
as set forth in paragraph 4 above, shall become the property of the
new company from the date of the meeting provided for by article 75
of the constitution and by-laws. No pecuniary compensation is required
of the new company for the cession of these rights, but they are trans-
ferred on the condition and with the full understanding that said
transfer shall be void if the canal be not completed within the time
appointed by the grant. Should the work not be completed within
230 PANAMA CAN AI. TITLE.
the said period of time, the said rights shall revert to the liquidation.
If, contrary to all expectations, the meeting in question should fail to
take the necessary measures to complete the canal, Or if the measures
thus taken by the said meeting should prove impossible of execution,
the present company would still retain the said rights accruing from the
railroad aforesaid; but it would be bound to pay to the liquidation a
sum of 20,000,000 francs as indemnity, while the liquidation’s share
in the gains and profits of the new company would then be equal to one-
half of the said gains and profits, without further previous reduction
than such as is provided for by paragraphs 2 and 3 of article 51.
Consequently the said rights shall remain inalienable in the hands of
the new company aforesaid either until the payment of the said
20,000,000 francs or until the full completion of the canal.
Fourthly. Until the full completion of the canal, M. Gautron shall
have power, in his official capacity, to appoint an inspecting or super-
vising committee composed of three members, to be selected as far as
possible from among civil engineers and finance inspectors, in order to
inspect the progress of the work, the condition and maintenance of the
plant and real property, as well as the accounts kept in relation to these
various subjects. The compensation of this committee shall be at the
expense of the new company.
Whereas, according to the terms of article 51 of the constitution and
by-laws of the said new company the annual proceeds of the enterprise
shall be used to pay and discharge:
First. The share in the gains and profits stipulated and reserved to
itself by the Government of the United States of Colombia, according
to the terms of the grant.
Secondly. The costs of maintenance and the operating expenses, the
expenditures entailed in the management of the concern, and, generally
speaking, all charges incurred by the company, as well as the payment
of interest and the redemption of all loans which may have been con-
tracted. -
Thirdly. The deduction of one-twentieth levied on the net profits
after the settlement and cancellation of all items of indebtedness above
enumerated, the said deduction to be applied to the formation of the
legal reserve fund. +
Fourthly. Five per cent of the capital stock, the same to be applied
by the general meeting as the council of administration may advise,
both to the formation of the redemption fund which is to be established
under article 55 and to the payment of interest on unredeemed shares.
Whereas, according to the terms of article 52, the net gains and
profits of the enterprise will consist in whatever will be left of the
annual proceeds after deduction of the various items enumerated in the
preceding article hereof, while 5 per cent of these net profits will be
set apart for the benefit of the council of administration, and the surplus
shall go, 40 per cent to the shares created and 60 per cent to the Inter-
oceanic Canal Universal Company now in process of liquidation;
Whereas, finally, by the terms of article 75, when the expenses
incurred for the work done on the canal and for the settlement of obli-
gations resulting from the contribution made Gautron in his official
capacity as liquidator shall have reached a sum equal to at least one-half
of the capital stock (excluding nonspecies portions of the same), the
PANAMA CANAL TITLE. 231
results then achieved from the work already done and the consequent
decisions to be taken for the future of the enterprise shall be passed
upon by a special technical commission brought together at some
previous and opportune time, the said commission to consist of two
members designated by the council of administration of the present
company and of two persons named by the liquidation of the former
Universal Company for an Interoceanic Canal, together with a fifth
member whom the other four shall designate, and who shall be presi-
dent of the said commission, but who, in case the other four members
should fail to agree, shall be appointed by the president of the tri-
bunal of commerce for the department of the Seine; - - -
Whereas the council of administration shall be bound to make public
the report made by this commission, and to summon an extraordinary
or special general meeting; *
Whereas this meeting shall have to deliberate on ways and means to
insure the completion of the work and on the stipulations hereinabove
set forth, article 5, paragraph 4, number 3; whereas the constitution
and by-laws in question must be submitted, by the terms of article 10
above mentioned of the law dated July 1, 1893, to the tribunal for
ratification, touching the contributions intended to be made to the New
Panama Canal Company by Gautron in his official capacity, and whereas
this ratification is prayed for by Gautron;
Whereas the said contributions are within the competency of the
liquidator, according to decrees which appointed him with the broadest
powers, notably with that of ceding or contributing to a new company
all or part of the company’s assets; whereas the conditions stipulated
for the benefit of the Universal Company of the Panama Interoceanic
Canal seem to be in accord with its own interests, and therefore it is
proper to ratify and approve the agreement declaring these contribu-
tions and conditions; .
For these reasons the court, leaving unimpaired the right of share-
holders, of the attorney or mandataire of obligation holders, and of
other creditors of the company to intervene and make objection under
article 11 of the law dated July 1, 1893,
Does hereby approve and ratify, purely and simply, the constitu-
tion and by-laws of the New Panama Canal Company, as received by
Lefebvre and his colleague, notaries, in Paris, on the 26th day of June,
1894, touching the contributions made by Gautron in his capacity as
liquidator of the Universal Company of the Panama Interoceanic Canal,
and the court hereby orders that the present decree be published within
the space of ten days in the “Journal Officiel” and in the “Journal
Officiel (Commune edition),” according to article 11 of the law of July
1, 1893. -
Signed: Baudouin, de Boislisle, and Lasnier. Done and adjudged
by Messrs. Baudouin, president; de Boislisle, vice-president; Laporte,
judge; Tassart, supernumerary judge; Le Berquier, supernumerary
judge, in the presence of Monsieur Cabat, assistant attorney for the
Commonwealth, attended by Lasnier, clerk, June 29, 1894.
The order was signed by the honorable president of the court, by the
reporting judge, and by the clerk. d -
Recorded in Paris July 11, 1894, folio 50, third subdivision. Re-
ceived 9 francs and 38 centimes, decimes included.
232 PANAMA CANAL TITLE.
EXEIIIBIT L.
JUDGMENT OF AUGUST 8, 1894, DECIDING AGAINST TIERCE OPPOSI-
TIONS TO JUDGMENTS OF JUNE 29, WHICH APPROVED CONTRIBUTION
BY THE LIQUIDATOR TO THE NEW COMPANY, ETC.
[Taken from the minutes of the clerk's office of the civil tribunal of first instance of
the Department of the Seine sitting at the Palace of Justice at Paris.]
The civil tribunal of first instance of the Department of the Seine,
sitting at the Palace of Justice at Paris, has rendered in public session
of the first chamber the following judgment:
SESSION OF WEDNESDAY, AUGUST 8, 1894.
Between M. Gautron, judicial administrator, residing at Paris, rue
Tronchet, No. 13, acting as administrator liquidator of the Universal
Company of the Interoceanic Canal of Panama, the headquarters of
which are at Paris, rue de la Victoire, No. 63 bis.
Appointed to the said functions by judgment of the chamber of the
council of the civil tribunal of the Seine, dated July 21, 1893, recorded;
Defendant against tierce opposition, defendant against intervention,
appearing, submitting brief, and arguing through Maître Lourtaunau,
advocate, assisted by Maître de Biéville, solicitor,
On the one part,
And: As
First, M. Georges Emile Lemarquis, judicial administrator of the
civil tribunal of the Seine, residing at Paris, rue Louis le Grand,
No. 3:
Acting in the character of judicial mandataire of the bondholders of
the Panama Company; r -
Appointed to the said functions by judgment of the chamber of the
council of the civil tribunal of the Seine, dated July 4, 1893, recorded;
Plaintiff in tierce opposition, appearing, briefing, and arguing by
Maître —, advocate, assisted by Maître Dubourg, solicitor.
Of the other part. -
Second. M. Pierre Couaillier, janitor, residing at Paris, rue de Lille,
No. 65,
Plaintiff in tierce opposition, appearing, concluding, and arguing by
Me. X., advocate, assisted by Maître Legrand, solicitor.
Third. M. Muracciole, residing at Muracciole (Corsica), intervenor,
appearing briefly and arguing by Maître X., advocate, assisted by
Maître Dumesnil, solicitor.
Fourth. M. Duhamel, residing at Paris, rue de l’Aqueduc.
Fifth. M. Leprince, residing at Paris, rue Aubry de Boucher.
Sixth. M. Pollike, residing at Paris, etc.
[Here follow names and addresses of thirty-eight persons,]
Plaintiffs by intervention, defendants by tierce opposition, appear-
ing briefly, and arguing by Maître X., advocate, assisted by Maître
Ernest Jacob, solicitor.
Of the last part. M
Without their present characters being able to prejudice in any way
the rights and interests of the respective parties.
PANAMA CANAL TITLE. 233.
POINTS OF FACT.
Paragraph 1. Tierce opposition of M. Lemarquis, in his character
aforesaid, to the judgment of June 29, 1893, which approves the con-
tribution made by M. Gautron, in his character aforesaid, to the New
Panama Canal Company.
According to the document of Fabre, bailiff at Paris, dated July 7,
1894, M. Lemarquis, in his said character, has caused to be given to
M. Gautron, in his said character, notification to appear before the
first chamber of the civil tribunal of the Seine in order that:
Whereas, by judgment of the first chamber of the civil tribunal of
the Seine, dated June 29 last, recorded, the tribunal approved the con-
tribution made by M. Gautron, in his said character, to the New
Panama Canal Company, an anonymous association now being formed,
but reserving expressly, under the terms of article 11 of the law of
July 1, the right for M. Lemarquis, in his said character, to proceed
against said judgment by tierce opposition; -
Whereas, it is not, at least up to the present time, demonstrated to
the appearer, in his said character, that the bondholders he represents
consider the agreement aforesaid advantageous for them;
Whereas, in view of the importance of the interests involved by that
agreement, it is not possible for the appearer, in his said character, to
take a definitive part without being previously, by all the means in
his power, informed of the views of his principals;
That it is important to him, therefore, to reserve provisionally all
their rights, and especially to furnish them, by instituting tierce oppo-
sition, the opportunity to intervene in the discussions, if they see fit,
under the terms of article 2, paragraph 3, of the law of July 1, 1893.
For these reasons, ſhe asks] to be admitted in his said character as
a tiers opposant to the execution of the judgment aforesaid of June
29 last; on the merits ſhe asks] to have a determination as may be
proper after the tribunal shall receive information as to the merits of
the tierce opposition;
[Asks to have M. Gautron, in his said character, condemned in all
the costs.
|Gautron answers, claiming that the purely formal tierce opposition
should not be allowed, as it is very urgent for him to arrive at the
constitution of the new company and to avoid forfeiture of the conces-
sion. He asks accordingly to have Lemarquis declared inadmissible.]
Paragraph 2. Defense by the tierce opposition, of M. Lemarquis,
in his said character, to the judgment of June 29, 1894, which approves
the contract containing the eventual cession to the General Company,
the Crédit Lyonnais, and to the Crédit Industriel and Commercial of
545 lottery bonds of the Universal Panama Canal Company.
According to document of Fabre, bailiff at Paris, dated July 7, 1894,
M. Lemarquis, in his said character, gave notification to M. Gautron,
in his said character, to appear within eight full days before the first
chamber of the tribunal, in order thaf:
Whereas, on the 29th of June, 1894, there was entered a judgment
of the first chamber of the civil tribunal of the Seine, which pro-
nounced approval of the contract containing an eventual cession by M.
Gautron, as liquidator of the Panama Company, to the General Com-
pany, the Crédit Lyonnais, and to the Crédit Industriel and Commer-
cial, of 545 lottery bonds of the said company.
234 . ' PANAMA CANAL TITLE.
And moreover, for the reasons already stated in the tierce opposi-
tion to the judgment which approves the contribution of M. Gautron
to the New Panama Company, as mentioned above;
In due form, [asks] to have M. Lemarquis, in his said character,
received as a tiers opposant to the judgment aforesaid of the 29th of
June, 1894; -
On the merits, to have a decision as may be right on the merits of
º tierce opposition after information shall be furnished to the tribu-
nal; -
To have M. Gautron condemned in the costs in any event.
[To this Gautron responded, asking (after again speaking of the
urgency of arriving at the constitution of the new company before the
expiration of the prorogued concession) for the rejection of Lemar-
quis’s tierce opposition, and a decision that the judgment of approval
should be executed.] .
Paragraph 3. Defense by tierce opposition of M. Couaillier to the
three judgments of June 29, 1894.
According to document of Gillet, bailiff at Paris, dated July 26,
1894, M. Couaillier caused notification to be served upon M. Gautrou,
in his aforesaid character;
To appear on Thursday, the 2d of August, 1894, before the first
chamber of the civil tribunal of the Seine in order that:
Whereas, he is owner of three bonds of 500 francs, 5 per cent of the
Universal Company of the Interoceanic. Canal of Panama, numbers
41,746 to 41,748, and of a share of stock of the said company, number
335,973; t -
That in those characters he has the right to enter tierce opposition to
the judgments rendered by the first chamber the 29th of June, which
have approved: *
First. The by-laws of the New Panama Company constituted by
M. Gautron, liquidator of the old company, and by other persons.
Second. The settlement made between it and M. Eiffel.
Third. The agreement entered into between him and three establish-
ments of credit. . -
Paragraph first. As to the document constituting the company:
That this document establishes the by-laws of a new company called
the Universal Company of the Canal of Panama; that according to the
terms of that document M. Gautron contributes in his aforesaid char-
acter to the new company, especially the rights of all kinds, shares of
ownership whatsoever of the company of which he is liquidator as to
the railroad from Panama to Colon, operated by an American company
called the Panama Railroad Company, with the condition of forfeiture
that the canal shall be terminated in the time fixed by the act of con-
cession;
That moreover the by-laws provide that if a meeting, which is pro-
vided for by article 75, does not take the necessary measures for the
accomplishment of the canal, or if the measures so taken by it do not
succeed, the said rights as to the railroad shall remain acquired by the
new company, on paying a sum of 20,000,000 by way of indemnity,
and in that case the part of the profits to go to the liquidation will be
the one-half of the profits of the new company; -
That it is impossible to admit that the Panama Railroad, which con-
stitutes the most considerable element of the assets of the liquidation,
can be abandoned, even conditionally, for a sum of 20,000,000, since
|PANAMA CANAL TITLE. 235
it has cost more than 93,000,000 to the company in liquidation, and
that its normal traffic has reached, from 1874 to 1880, that is in six
years, for the 70,000 shares of 50 francs each, 99 per cent dividend, in
addition to an annual interest of 5 per cent;
That it is to be remarked that these 20,000,000 will be taken from the
resources of the new company, which have been furnished them in
great part by the liquidation of the old company;
That such an abandonment ought to result from the single fact of a
recognition at some time that the canal is not susceptible of construc-
tion;
That the new company will ever have an interest in sacrificing the
canal to continue the profitable operation of the railroad; that all
the projects of reconstitution of the Panama affair have had up to the
present for their basis the ownership of the Panama Railroad in the
patrimony of the liquidation. If these companies do not arrive at
the accomplishment of the canal, this cession of the railroad will be
disadvantageous. -
Paragraph 2. Eiffel agreement: That by another judgment of the
same day, of the first chamber, the civil tribunal of the Seine approved
a transaction had between M. Gautron, in his character aforesaid, and
M. Eiffel, by the terms of which the latter agreed to subscribe shares
to the value of 10,000,000 in any new company having for its object
the reconstitution of the work of Panama, and in which it has been
further agreed that for the bills of exchange, of which he is the holder,
M. Eiffel shall receive in payment lottery bonds of the company in
liquidation, entirely paid up, calculated at 125 francs;
That by means of the making of those agreements all litigation
pending between M. Eiffel and the Panama Company was to be ended;
That this transaction is contrary to the interests of the liquidation;
that not only the credits of M. Eiffel are illusory, but that he ought
to restore, without any compensation, considerable sums;
That in any event it is inadmissible that M. Eiffel can free himself by
a transaction from restitutions which are at his charge, by means of a
subscription to shares, which, the day after the constitution of the
company, he can resell to the public, perhaps even at a premium;
That the spirit of the law of July 1, 1893, indicates that the resti-
tutions to be made by the debtors of the company ought to be made
in money deposited at the Bureau of Deposits and Consignments and
distributed among the company creditors;
That consequently the transaction had with M. Eiffel is prejudicial
to the interests of the company in liquidation.
Paragraph 3. Agreements with the three credit companies.
That, by a third judgment, the civil tribunal of the Seine approved
an agreement made between M. Gautron, in his character aforesaid,
and the three credit establishments, the Crédit Lyonnais, the general
company to advance the development of industry and commerce, and
the general company of the Crédit Industriel and Commercial;
That, by the terms of this agreement, M. Gautron sells conditionally
to those establishments of credit lottery bonds of the company in
liquidation, and this up to a maximum number of 545,000 bonds, at 90
francs each; -
That it is inadmissible that the liquidator should abandon at the
price of 90 francs these lottery bonds, which are quoted on the Bourse
236 - PANAMA CANAL TITLE.
at 125 francs, and which he himself transfers to M. Eiffel at the price
of 125 francs;
That, besides, these lottery bonds are susceptible of returning to
their value of issue, viz., 360 francs; - -
That, on the other hand, the law of July 15, 1889, which authorized
the liquidator to negotiate the lottery bonds not yet placed, without
limitation of price or of interest, has given that authorization only
upon the following conditions:
In case the liquidator shall make contribution or cession of all or part of the liqui-
dation [sic] to a company created for the accomplishment of the canal (an hypothesis
which is realized), the new company will not be able to issue the bonds at that time
not placed on the terms, except on the conditions determined by the law of 1888, as
regards the minimum of the price of issue and as to interest.
That by the terms of this law the cost at issue can not be less than
360 francs, comprising the 60 francs reserved for the payment of
prizes and sinking and the annual interest, to descend [sic] below 3
per cent of the nominal capital; -
That thus the cession at a low price of those bonds made by the
liquidation is contrary to law;
That moreover the appearer, far from disapproving the project of
the reconstitution of the work of Panama, is Tuite ready to give his
adhesion as concerns that to any combination which will assure respect
for the law, safeguard the patrimony of the liquidation, and favor the
accomplishment of the canal;
That this end can be attained without more than the resources of the
liquidation;
For these reasons [he asks] to be received as tiers opposant to the
three judgments aforesaid;
To have the three judgments in question declared void and of no
effect; -
Consequently, to have refused the approval of the by-laws of the
New Panama Canal Company made before Lefebvre and his colleague,
notaries at Paris, June 26, 1894, of the transaction with M. Eiffel, and
of the agreement entered into with the Crédit Lyonnais, the General
Company, and the Crédit Industriel and Commercial; d
To have the costs allowed; -
By a document of the Palace, dated July 31, 1894, recorded, M. de
Biéville, advocate of M. Gautron, in his character aforesaid, served
upon Me. Legrand, solicitor of M. Couaillier, his conclusions or brief,
asking that it may please the tribunal:
That, after having thus given his adhesion to the principle of recon-
stitution of the Panama Company, the tiers opposant may abstain
from indicating the means of attaining the threefold end which he
proposes;
That he may limit himself to criticising the combination offered by
the liquidator for the acceptance of the bondholders;
As for what concerns the contribution to the New Panama Canal
Company: . *
Whereas these observations of M. Couaillier have not escaped the
attention of the liquidator of the Panama Company; and that all the
efforts as well of the predecessors as of himself have been given to
defending the patrimony of the liquidation, and especially its rights
in the Panama Railroad; that the tiers opposant himself recognizes in
PANAMA CANAL TITLE. 237
leferring to them that the preceding projects of reconstitution reserved
to the liquidation the ownership of its rights in the Panama Railroad,
if the canal should not be finished;
But, whereas, those projects have not resulted in anything;
That the date for the expiration of the period allowed in the pro-
Iogation of the concession is imminent; -
Whereas, to attract large capital to attempt anew the piercing of the
isthmus, it has been indispensable to give it confidence in the enter-
prise;
Whereas, while doing what that necessity requires, M. Gautron, in
his character aforesaid, has reserved to the liquidation one-half of the
profits to be received in carrying on the railroad;
That, under the circumstances, it is for the bondholders either to
accept the combination proposed, or to renounce all hope of reviving
the matter, and to proceed purely and simply to realization and to the
distribution of the assets realized;
Whereas it is not serious to pretend that the accomplishment of the
canal can be attained with the mere resources of the liquidation;
As to what concerns the Eiffel transaction: -
Whereas the credits of M. Eiffel, on account of the works which
he has executed during the liquidation, can not be denied;
Whereas in his estimates M. Couaillier takes no account either of
the difficulties of litigation or of the chances of recovery;
Whereas the Eiffel transaction has already been approved by judg-
ment of May 11, 1894, notwithstanding the intervention of the bond-
holder, M. Pichot, an intervention soon abandoned by him; .
Considering, finally, that article 313 provides: “The shares shall
be in the names of the holders [not to bearer] until they are entirely
paid up, in conformity with the law of August 1, 1893.”
Besides, no share can be negotiated and the council of administra-
tion can not authorize the transfer until it is fully paid up;
That it is necessary, then, for M. Eiffel to risk a capital of 10,000,000
to pay up his shares before he can negotiate them; s
Whereas there is nothing in the law of July 1, 1893, that forbids
the liquidator or the mandataire of the bondholders to enter into trans-
actions, provided they comply with the provisions of that law.
As for what concerns the sale of lottery bonds:
Whereas the first complaint of the tiers opposant falls before this
observation; that the price of 90 francs has been fixed on account of
the number of the lottery bonds to be sold; -
That this sale is purely within the rights of M. Gautron in his said
character, and that the liquidator is interested in offering the bonds
at the same price and under the same conditions, and in preference to
shareholders and bondholders of the Panama company in liquidation.
Whereas it is not correct to say that this sale is contrary to the
special laws regulating the Panama company;
Whereas the law of July 15, 1889, authorized the liquidator to
negotiate, without limitation of price and without interest, the lottery
bonds, the issue of which was authorized by the law of June 8, 1888,
and which were not yet issued on the 4th of February, 1889; -
That it is only in case the liquidator should make contribution or
cession of the whole or part of the assets of the liquidation that the
new company would not be able to issue the bonds at that time not
238 PANAMA CAN AL 'TITLE.
issued otherwise than under the conditions determined by the law of
June 8, 1888, so far as concerns the minimum price and the interest;
Whereas this last event has not taken place; that it is the liquidator
who realizes on the lottery bonds and not the new company, which is
not yet definitively constituted: -
That, consequently, this realization is free from the conditions of
limitation of price and of the fixing of interest, under the terms of the
first paragraph of the first article of the law of July 16, 1889;
For these reasons [he asks] to have M. Couaillier declared inadmis-
sible, and in any event unfounded in his tierce opposition to the three
judgments of approval rendered by this chamber on June 29, 1894,
recorded;
In doing that, to declare that the said judgments shall have their
full and entire effect, and to condemn M. Couaillier in all the costs,
allowance being made for the fees of Me. de Biéville, solicitor.
Paragraph 4. Defense by intervention of M. Muracciole. Accord-
ing to document of the Palace, dated February 28, 1894, Me. Dumesnil,
solicitor, constituted on behalf of M. Muracciole, submitted conclusions
showing his constitution as solicitor and asking that it might please
the tribunal; -
Whereas the assets of the Panama Company, which the execution
of these agreements exposes to new risks, constitutes the gage of the
creditors of the old company, and it can not belong to the liquidator,
who represents the shareholders but not the creditors, to dispose of that
gage so long as he has not paid the creditors interested in it;
Whereas the appearer is a creditor of the Universal Company of the
Panama Canal by virtue of judgments dated April 11, 1893, which have
passed into the condition of res judicata,
That he is master of his rights, and that he intends to exercise them
upon the assets, such as they are to-day, without submitting to the risks
of new combinations;
That, if it suits the interests of the shareholders, who have nothing to
claim, that, after the extinction of the rights of the creditors, some bond-
holders may constitute themselves as a company to expose the gage of the
creditors in a new adventure, in which they have everything to gain
and nothing to lose, the interest of the creditors is altogether different,
and that it can not belong to the shareholders to put a check to their
right, respect for which is obligatory upon all, and more especially
when the creditor has an ordinary credit verified by judgment, the
beneficiary of which in the last analysis has placed confidence in the
company capital and in the associates; -
Whereas the right of tierce opposition, reserved by article 11 of
the law of July 1, 1893, is moreover reserved by the judgments them-
selves, so that the present pleading is as admissible in law as it is just
in its foundation: -
That M. Couaillier, having introduced a principal demand of tierce
opposition to these three judgments, the appearer intends to intervene
in the said proceeding; -
For these reasons [he asks] that the appearer may be received as an
intervenor in the pending proceeding of tierce opposition between the
arties; - .
p In doing this to have himself declared a tierce opposant to the three
judgments of June 29, 1894;
To have it declared that those judgments are without effect and void;
To have prohibited the execution of the agreements approved by
PANAMA CANAL TITLE. 239
the said judgments, and this on pain of being personally responsible
for the credit of M. Muracciole, both principal and interest;
To have it ordered that the assets realized and to be realized shall
remain unchanged, subject to the credit of the appearer, and that they
may not be exposed to the risks of any enterprises;
And to have the costs adjudged, with allowance of fees of Me.
Dumesnil, solicitor;
By document of the Palace, dated July 31, 1894, Me. de Biéville,
solicitor of M. Gautron, in his character aforesaid, served upon the
solicitors in the case conclusions asking that it might please the tribunal
that the law has organized a special regulation of the liquidation of
the Panama Company; .
That following the spirit of judicial liquidation and bankruptcy in
commercial matters, it has subordinated the exercise of individual
rights to the general interests;
That, consequently, it has suspended, from the promulgation of the
said law, all suits in course, begun either by holders of bonds or
by any creditors, as well as all proceedings for taking possession of
property or execution, even those actually in course, against the prop-
erties, movable or immovable, belonging to the said company;
That whereas article 10 provides expressly for the cession or contri-
bution of the whole or the part of the company assets by the liquidation
of the Universal Company of the Interoceanic Canal of Panama;
That the said article only requires the liquidator to submit all acts
of realization of the assets and all contracts carrying cession or con-
tribution to the civil tribunal of the Seine, which is to decide in public
session upon the report of a judge; -
That, finally, every judgment of approval is to be published, and can
be attacked by tierce opposition;
Whereas it results from these provisions that if M. Muracciole has
the right to come and produce before the tribunal the reasons which
make him consider as disadvantageous the combination for the recon-
stitution of the Panama Canal Company, he can not oppose the transac-
º approved with an objection of principle drawn from the ordinary
aw; - -
For these reasons ſhe asks] to have it declared that the intervention
of M. Muracciole is inadmissible in law, and to declare him unfounded
on the merits in his tierce opposition to the three judgments of approval
rendered by this chamber on June 29, 1894, recorded;
In doing this, to declare that the said judgments shall have their full
and entire effect;
And to condemn M. Muracciole in the costs, with the allowance of
the fee of M. de Biéville.
Paragraph 5. Defense by intervention of M. Duhamel and consorts.
According to the document of the Palace dated August 1, 1894, Me.
Ernest Jacob, solicitor of M. Duhamel and consorts, served upon Me.
de Biéville, solicitor of M. Gautron, in his character aforesaid, con-
clusions in which he constitutes himself for M. Duhamel and consorts,
and asking that it may please the tribunal: -
Whereas the appearers, holders of 4,000 bonds of the Panama Com-
pany, have the right to intervene in the case in order to resist the
demand of the said M. Couaillier; .
Whereas the different agreements made by the liquidator are in
conformity with the interests of the Panama bondholders;
240 $, PANAMA CANAL TITLE.
That, on the other hand, the demand of Couaillier would result in a
liquidation disastrous and injurious to the bondholders;
That, under these circumstances, the appearers unite with Gautron,
in his said character, to ask the rejection of the tierce opposition insti-
tuted by M. Couaillier;
For these reasons [they ask] that they may be received as inter-
venors in the cause pending between MM. Couaillier and Gautron;
On the merits, to have it declared that the tierce opposition should
be rejected;
Declared, consequently, that M. Couaillier is inadmissible, or, at all
events, unfounded in his demands to dismiss them, and to have him
condemned in the costs, Including those of the intervention, with
allowances of the fee of M. Ernest Jacob, solicitor.
By document of the Palace, dated August 1, 1894, Me. Ernest Jacob
gave notice to Me. de Biéville for the session of August 2, 1894. By a
last document of the Palace of August 2, 1894, Me. de Biéville, solici-
tor of M. Gautron, in his said character, submitted conclusions asking
that it might please the tribunal: - -
To sustain M. Gautron, in his said character, in declaring proper the
intervention of M. Duhamel and consorts, and to condemn M. Couail-
lier in the costs, with allowance of fees to M. de Biéville.
Paragraph 6. Joining of the proceedings. In this condition of the
case, the different demands in tierce opposition and interventions have
been joined and put in order for the session of this day, at which the
advocates of the parties, assisted by their solicitors, have presented
themselves at the bar, and explained orally the conclusions previously
submitted by them, and have asked judgment for their respective
clients.
The public minister has been heard in his conclusions and observations.
In this condition, the affair presents for judgment the following
questions:
BOINTS OF UAW.
Should the tribunal, as a matter of law, receive M. Lemarquis in his
said character as tiers opposant to the judgment of June 29, 1894%
[The other questions are then formally stated, and the tribunal
names over the advocates who argued the matter, and proceeds:
The causes being joined on account of their relations with each other
and determining upon the whole by one and the same judgment, in an
ordinary matter and in first resort;
Considering that by the terms of article 5 of the by-laws of the com-
pany formed for the accomplishment of the Panama Canal, according
to a document made July 26, 1894, before Lefebvre and his colleague,
notaries at Paris, Gautron in his character of liquidator of the Uni-
versal Company of the Interoceanic Canal of Panama, declares that he
contributes to the new company on the conditions indicated in the said
by-laws, to wit:
First ſquoting article 5]. That with a view to obtaining the concur-
rence necessary in the subscription of the capital of the company for
the accomplishment of the canal, and to assure the acquisition of the
necessary funds which will have to be paid out in that case, Gautron
has requested the financial aid of the General Company, the Crédit
Lyonnais, and the Crédit Company Industriel and Commercial;
That by nonnotarial documents, dated June 26, 1894, recorded, these
three establishments promised to buy from him in the case provided
|PANAMA CAN A. L TITLE. 241
for, and each one in a proportion agreed upon, for the price of 90 francs
per bond, lottery bonds of the InterOceanic Canal Company entirely
paid up or freed with regard to the civil company, and these to the
extent of a maximum quantity of 545,000 bonds; -
That, finally, by the terms of the transaction, had the 26th of Janu-
ary, 1894, between the liquidator of the Panama Canal Company and
the mandataire of the bondholders and Gustave Eiffel, by which the
latter agreed to subscribe shares up to the amount of 10,000,000 in
any new company having for its object the reconstitution of the work
of Panama, it was agreed that in case that subscription should be real-
ized Eiffel should receive in payment of the bills of exchange he held
on account of the work which he had done for the benefit of the liqui-
dation, a corresponding quantity of lottery bonds entirely paid up and
freed, and calculated at 125 francs per bond;
That for the case on the contrary in which a new company shall not
be constituted, Eiffel engages himself to pay to the liquidator the net
sum of 5,000,000 francs and abandon the bills, the liquidation on its
side, abandoning 5,755 tons of iron, etc., deposited in his warehouses;
Considering that, according to the judgment of this chamber dated
June 29, 1894, recorded, the tribunal has, on the demand of Gautron
as liquidator, approved the acts above analyzed so far as they carry:
The first, a contribution made by the liquidator to the company of
construction and the two others realizations of the assets;
That these judgments have been published in the Official Journal
and in the Official Journal (edition of the Commune) of the 1st of
July, 1894;
That tierce opposition has been introduced by Lemarquis, manda-
taire of the bondholders, and Couaillier, stockholder of the Universal
Company, and bondholder of that company; -
That Muracciole, creditor of the liquidation, has intervened in the
tierce opposition of Couaillier in which he has joined;
That Duhamel and others, as bondholders, have intervened in the
said tierce oppositions, and concluded in favor of their rejection;
Considering that the said tierce opposition and intervention are
admissible under the terms of Article 11 of the law of July 1, 1893;
On the merits: -
As for the tierce opposition of Lemarquis as mandataire;
Considering that it has no object except to reserve the rights of the
bondholders and enable them to intervene if they see fit;
That except Couaillier, holder of three bonds only, none of them
have made use of that opportunity;
That it results from the documents submitted by Lemarquis, and
especially from the correspondence of the bondholders, that they are
by a very large majority favorable to the proposed combination;
That a very small number of these bondholders have pronounced in
favor of the distribution of the assets, which distribution could give
to each of those interested but a very small dividend and would neces-
sarily carry with it the forfeiture of the concession, the definitive
abandonment of the enterprise, and the loss without compensation of
the works already made, of the immovable property, and of the greater
part of the matériel; -
That, under these circumstances, M. Lemarquis has justly believed
himself authorized to join in the demand for approval made by Gau-
tron, which he has done at the session.
8751—02 16
242 PANAMA CANAL TITLE.
As for the tierce opposition of Couaillier:
Considering that, far from claiming distribution of the assets and
opposing the continuation of the canal enterprise, Couaillier declares
himself ready to give his own adhesion to any combination for its
accomplishment;
That he contends only that this end will be attained with no more
than the resources of the liquidation, without its being necessary to get
rid of part of the assets for the benefit of the new company, a getting
rid the legality of which and the advantages of which he disputes,
especially as regards the rights of the liquidation in the railroad from
Panama to Colon, and whereof he criticises the stipulations;
Considering that none of the combinations attempted since 1889
under divers forms for the reconstitution of the work of Panama has
resulted in anything;
That it would be idle to inquire whether one or another of them would
have been more advantageous if it had been possible to realize them;
That by the very force of things, and in view of the imminence of
the date fixed for the forfeiture of the concession, the approval of the
contract submitted to the tribunal can alone prevent that forfeiture;
That if the liquidafor recommences the work at the risk and peril
of the liquidation, as the tiers opposant seems to think proper, he
will manifestly exceed the powers conferred by the judgments
appointing him and by the law of July 1, 1893; -
That he would fatally absorb all the resources of the liquidation, and
expose himself to a certain check, since the canal can not be constructed
without a new appeal for funds which a dissolved company can not
make with any chance of success; *
That, on the contrary, the acts of contribution and of realization of
assets, the approval of which is asked, are within the powers of the
liquidator; that their legality can not be seriously disputed; that
their opportuneness is not less evident:
That the preceding attempts have all failed by reason of obstacles
which their authors have met with when they attempted to get the
capital necessary to recommence the work;
That it would be chimerical, before recommencing that work, and
without waiting for the practical demonstration by serious experiments
of the possibilities of accomplishing the work, to count upon outside
aid which would continue to keep away or oppose to the liquidation
unacceptable requirements: but it is legitimate to hope that such an
experiment will revive confidence, and will dispose the national savings
to new sacrifices; -
That the liquidator should not be complained of, then, for having
consecrated to the work undertaken by the new company a part of the
resources of the liquidation, and still less for having interested in its
success financial establishments whose concurrence will be necessary
for new appeals to capital;
Considering as to what concerns especially the contribution of the
rights as to the railroad from Panama to Colon, that it is the essential
basis and condition of the new combination, not only on account of the
necessary correlation of the two enterprises, but because it permits
the assurance of a legitimate remuneration to the capital of the new
company in case the accomplishment of the canal shall be finally
abandoned;
That it is proper to remark that the cession of these rights is not
(but) conditional; . -
PANAMA CANAL TITLE. 243
That they will return to the liquidation if, the accomplishment of the
canal having been decided upon by the general meeting, it can not be
terminated within the time fixed by the act of concession;
That this rescissionary clause guarantees completely in that event
the interests of the liquidation, and that no criticism can be or is
indeed directed against the by-laws under that heading;
That it is the same as to what concerns the giving to the new com-
pany of the said rights in the event of the accomplishment of the
canal; . - -
That the revenues of the railroad will be added, in that event, to the
profits of the canal and benefit, consequently, the liquidation, which is
to get three-fifths of the benefits of the enterprise;
That if these rights are to remain the property of the new company
in case the general meeting does not take the necessary steps for the
accomplishment of the canal, the liquidation will not receive, in that
event, as the tiers opposant seems to believe, merely an indemnity of
twenty millions of francs, but the half part of the profits;
That the only deductions authorized in that case, being the expenses
of maintenance and operation and of administration, and the taking
out of a twentieth for the reserve fund, the part of the new company
in the revenues of the railroad will not exceed that paid to the
liquidation: +. - -
That it is the less to be feared that the company will renounce for
such a small remuneration the accomplishment of the canal, with the
object of confining itself to the operation of the Panama Railroad
because the works and the annuities paid to the Colombian Government
will have at that time absorbed the whole or the major part of its
capital in such a way that the company will find that it has bought
for nearly 80,000,000 the half of the revenue of the railroad;
That the apprehensions manifested by Couaillier are, therefore,
without foundation; - -
That the rights as to the railroad were, it is true, bought by the
Panama Company at 93,000,000, but it is shown that the price was con-
siderably increased by the regulation and also that the revenues of the
railroad were artificially raised; -
That if it is legitimate to count in the future upon a remunerative
revenue, it is not less demonstrated that the sale en bloc for 20,000,000
francs of the half of that revenue constitutes an operation altogether
to the advantage of the liquidation:
That it is proper to recall, on the other hand, that the liquidator,
besides the influence and the part of the profits which will, in the
contingeney arising, belong to him in his character of subscriber, is
assured by a set of provisions of the most precise kind of the means
of effectively examining all the operations of the new company:
That without speaking of the commission of inspection, provided by
article 5, paragraph 4, he has reserved the naming of the half of the
members of the technical commission;
That, finally, the prohibition to sell shares before they are com-
pletely paid up and the limitation of the number of votes allowed to
each shareholder in the general meeting appears to sufficiently protect
those meetings against all speculation; -
That the mandataire of the bondholders has thought, nevertheless,
that it is proper to fortify further the guarantees offered by the
by-laws to the liquidation, and has obtained from the principal sub-
scribers, notably the Eiffel credit companies, an agreement not to cede
244 PANAMA CANAL TITLE.
or negotiate their shares, until the commission provided for by article
75 of the by-laws shall have made its report, and the general meeting
shall have pronounced upon the continuation or stopping of the works;
That it is proper to sanction this act of Lemarquis;
As for what concerns the promised purchase of lottery bonds by the
credit companies;
Considering that if the price of 90 francs is lower than the present
quotation, it is sufficient to refute the objection which the tierce oppo-
sition undertakes to draw from that circumstance to remark that the
course of the Bourse, subject to the fluctuations of speculation, can not
serve as a basis for the sale en bloc of a considerable lot of values not
yet issued; $
That the price imposed on Eiffel in the document of January 26, 1894,
can no more be taken as a means of comparison, the difference
between the price of 125 francs stipulated in that document and the
quotation at that time, constituting exactly one of the advantages
conceded to the liquidation;
That, on the other hand, it is not necessary to dwell upon the objec-
tion of principle drawn from the law of July 15, 1889, the restriction
invoked not applying to the liquidator, who is expressly authorized,
on the contrary, to issue the bonds without limitation of price and
without interest;
That it is proper to observe finally that the liquidator remains free
not to profit by the unilateral engagement contracted by the credit com-
panies, if the capital of the new company can be constituted without
their aid; and, on the other hand, that the interests of the bondholders
are safeguarded by the right of preference which is reserved to them;
That the annexed agreement of June 26, 1894, is then altogether to
their advantage; -
As to the transaction with Eiffel;
Considering that it has been approved upon the advice of three
jurisconsults designated by the attorney of the Republic;
That after a profound examination of the claim upon which it has
been entered into, they have considered that that transaction was
advantageous to the liquidation; §
That this opinion has been shared by the chamber of the council,
whose decision on that point is not susceptible of any attack;
That articles 10 and 11 of the law of July 1, 1893, do not authorize
tierce oppositions except as to the stipulations carrying the realiza-
tion of assets, to wit, the giving in payment of lottery bonds and the
abandonment of the matériel; -
That these stipulations have not been criticised by the tiers opposants;
That the latter is manifestly confused when he characterizes as
illusory a debt contracted not by the Panama Company but by the
liquidation, on the faith and for the profit of which Eiffel continued
the works after the dissolution of the company; -
That if the law of July 1, 1893, has prescribed the deposit at the
caisse des consignations of the amount of the transactions, it has not
forbidden the liquidator to receive other things than payments in
money, and especially to stipulate for his benefit the right to be released
from his debts in consideration for the turning over of values;
That in fact the method of settlement adopted is, as has been said
above, advantageous for the liquidation;
That there is no occasion, therefore, even on this point to revise the
approval pronounced by the judgment of June 29;
PANAMA CAN AT TITLE. 245
As for what concerns the intervention of Muracciole;
Considering that the intervenor, creditor of the Universal Panama
Company, by virtue of a judgment of April 11, 1893, claims that the
assets as they are shall be and should remain the gage of the creditors
without its being permitted to the liquidator representing only the
shareholders to dispose of them and least of all to subject them to the
chances of any new enterprise; - -
That he opposes himself on this ground to the execution of the con-
tracts made by Gautron; -
Considering that this pretension is contrary as well to the text as to
the spirit of the law of July 1, 1893;
That this law has authorized, in principle, the liquidator to make,
under the conditions which it has determined, all contributions and
realizations of assets; that it intended that the creditors could not
oppose these acts after they shall have been approved, as in conformity
with the general interest; -
That it is precisely to prevent them that it has suspended their suits
and execution proceedings; that there is no occasion then, to dwell
upon the tierce opposition of Muracciole;
As for what concerns the intervention of Duhamel and consorts,
that it is proper for the above reasons to sustain their conclusions
which ask for the rejection of the tierce opposition;
For these reasons;
The tribunal admits Lemarquis and Couaillier as tiers-opposants to
the judgments of June 29, 1894;
Admits the interventions of Muracciole and Dubamel and others;
On the merits: declares Lemarquis, Couaillier and Muracciole
unfounded in their tierce oppositions; -
Orders the said judgments to be given their full and entire effect;
Approves, nevertheless, Lemarquis’ engagement with the Eiffel
credit companies and other companies concerning the time when the
shares subscribed by them may be negotiated: -
Applies to Lemarquis, Couaillier and Muracciole article 479 of the
Code of Civil Procedure;
Consequently condemns them each to a fine of 50 francs, combines
the costs, which include the expenses of Duhamel and consorts;
Condemns Couaillier and Muracciole in the said costs to the amount
of a third for each; - -
Declares that the other third shall be borne by Lemarquis as man-
dataire; 4.
Makes allowance to de Bie ville and Jacob, solicitors, of their fees.
(Signed) BOUDOUIN and LARNIER.
Done and adjudged in public session, etc.
EXHIBIT IM,
REPORT OF OCTOBER 8, 1894, OF COMMISSAIRES APPOINTED BY THE
NEW PANAMA CANAL COMPANY TO VALUE THE CONTRIBUTIONS
MADE TO IT BY THE LIQUIDATOR.
[Does not seem to have been published.]
GENTLEMEN: In our constitutive meeting you selected us to make
the report required by law and the by-laws upon the value of the con-
tributions made to your company and upon the legitimacy of the advan-
tages stipulated by articles 5, 6, 7, 8, 51, and 58 of the by-laws.
246 PANAMA CANAL TITLE.
We here render you an account of the mission which you were pleased
to confide to us. - -
t I.
The by-laws of the New Panama Canal Company, according to the
document received by MM. Lefebvre and Champetier de Ribes, nota-
ries at Paris, on the 26th of June, 1894, were the subject of profound
preliminary examination on the part of M. Gautron, liquidator of the old
company, and of M. Lemarquis, official mandataire of the bondholders.
In conformity with the special law of the 1st of July, 1893, they were
afterwards submitted to the approval of the civil tribunal of first
instance of the Seine, which approved them by judgment dated 29th
of June. Some tierce oppositions having been put in to this judgment,
a new judgment of the same tribunal, dated the 8th of August, decided
against the opposants and maintained the provisions of the preceding
judgment. -
The authority of these decisions, which are to-day final, supported,
besides, by reasonings of remarkable precision, suffice assuredly to
demonstrate that the by-laws are of the most perfect regularity and
that they embrace the best possible solution of the difficulties which
the business of reconstituting the work of Panama has encountered.
It is always to be remembered that the tribunal of the Seine had the
charge of specially looking after the safeguarding of the interests of
the stockholders or bondholders of the Company of the Interoceanic
Canal of Panama. - - .
If, then, the judicial control is of such a nature as to facilitate the
accomplishment of the mission which you have confided to us, we are
not the less obliged to examine and discuss, in conformity with the law
of the 24th of July, 1867, the stipulations of the by-laws, the value of
the contributions, and the equity of those stipulations from the point
of view of the interests of the new company, with regard to the sub-
scribers of money capital. Your commissaires had to deliver them-
selves to this work without regard to the particular circumstances
passed upon by the judicial decisions.
II.
The contribution made to your company by the liquidator of the
old company of the Interoceanic Canal, and the advantages stipulated
in behalf of that liquidation in return for that contribution, are settled
by divers provisions of the by-laws which it is important to place
before you. - -
These articles are thus worded: [Quoting the articles 5, 6, 7, 8, 51,
52, and 58; see by-laws, printed in full elsewhere.]
The articles which we recall to you, and the stipulations which they
contain, have two different aspects, the one principal and concerning
the accomplishment of the company’s object, the other subsidiary and
which may be ultimately carried out in consequence of a decision to
be taken by a special general meeting convoked under the terms of
article 75. - -
We have, then, to take account of this double aspect, and we shall
examine successively the situation which is produced at the same time
for the liquidation and for the new capital in both of the two cases
referred to. *
PANAMA CANAL TITLE. 247
III.
There is to be examined what belongs to the construction and oper-
ation of the canal, which are the very objects of the new company as
defined by its first article, as well as the contribution of the liquidator,
which embraces the constitutive elements of that enterprise. -
These different elements should be successively passed in review.
1. CONCESSION.
“All rights,” say the by-laws, “resulting in behalf of the company in
liquidation from the laws of the Government of the United States of
Colombia, dated the 18th of May, 1878, and 26th of December, 1890,
as well as from the decrees, acts, and facts whatsoever following in
execution of those laws, and all the advantages stipulated by those
laws and decrees, together with all lands and immovable properties
granted to the Interoceanic Company in liquidation or acquired by it.
“The whole with the charge of fulfilling the conditions of the laws
and prorogations of the concession, and of paying all sums remaining
due from the liquidation to the Colombian Government.”
The concession of the Panama Canal, described in these terms by
the by-laws, results from three documents emanating from the Colom-
bian Government and sanctioned by the laws of that Republic.
The first determines the clauses and provisions of the concession
made for ninety-nine years, beginning from the day on which the
canal shall be opened in whole or in part to the service of the public,
Or on which the concessionaires or their representatives shall com-
mence to receive payments for transit and for navigation.
The canal was to be finished and delivered to the service of the pub-
lic within twelve years from the constitution of the company organized
by M. Ferdinand de Lesseps—that is to say, before March 3, 1893,
allowing, however, a supplemental period of six years.
Independently of the general clauses and provisions, there were
given to the concessionaires the necessary public lands for the con-
struction of the canal, as well as a strip of land 200 meters wide on
each side of the canal, and besides 500,000 hectares of land to be
chosen by the concessionaire company. -
Finally, the Colombian Government reserved to itself a participa-
tion in the gross product of all that should be received from the enter-
prise, fixed, to wit: - .
At 5 per cent, during the first twenty-five years from the opening
of the canal; at 6 per cent, during the following twenty-five years; at
7 per cent, from the fiftieth to the seventy-fifth year, and at 8 per cent,
from the seventy-fifth year to the end of the concession.
Following the suspension of the works of the old company, the
Colombian law of December 26, 1890, was passed on the petition of
M. Monchicourt, then liquidator of the old company, .
A prorogation of ten years was granted, on condition that a new
company of construction should be formed and should recommence the
work of excavation in a serious and permanent manner, at the latest,
by February 28, 1893. -
Finally, the terms of the prorogation were definitively arranged in
the following manner on the 4th of April, 1893: r
The prorogation of ten years, given in article first of the law of 1890,
248 PANAMA CAN AI, TITLE.
to the liquidator of the Universal Panama Canal Company to remain in
force under the conditions then stipulated, except as to the second, which
was modified by the prorogation, until 31st of October, 1894, of the
period within which the new company was to be constituted, and the
works of the canal to be recommenced in a serious and permanent
IłłąIn El (21°. -
The term of ten years to commence to run from the date of the
definitive constitution of the new company.
It is, then, the definitive constitution of the present company which
determines the point of beginning of the ten years. -
Besides, these different laws contained, for the benefit of the Colom-
blan Government, the following advantages:
1. The receipt of 5,000,000 francs in paid-up shares of the new
company. -
This was effected by articles 5 and 6 of the by-laws.
2. The obligation of the liquidator and the new company to pay to
the Government of Colombia without deduction, the sum of 8,000,000
in gold, payable as follows: - -
Five hundred thousand francs before the 31st of December last
(1893). This sum was paid punctually by the liquidator.
And 7,500,000 francs surplus which remains at the charge of your
company, in four payments, year after year, the first to be made three
months after the definitive constitution of the new company. The first
of these installments will be of 1,500,000 francs and the three others
of 2,000,000 francs each.
3. The maintenance at the cost of the company of the armed force
necessary for the preservation of order and the security of the canal.
4. Participation by the Colombian Government in the gross pro-
ceeds of the enterprise according to the terms above mentioned.
5. The right of the Government of Colombia to name, whenever it
shall judge useful, a special delegate to the council of administration
of the company, who shall enjoy the same rights as those given to the
other administrators by the by-laws of the company.
6. The maintenance in the hands of the Colombian Government of
the guarantee of 750,000 francs paid by the company in liquidation.
This guarantee is comprised in the contribution which is made to you
by the company in liquidation. -
Such is the general scheme of agreements of concession, which car-
ries for the company serious charges, but which includes at the same
time—with the long period of concession, with the granting of the soil
of the canal and of its banks, and the right to 500,000 hectares of pub-
lic land, with the monopoly of the transit, and of the conditions on
which such transit is practicable—all the elements of a great enter-
prise.
2. WORKS, CONSTRUCTIONS, MATÉRIEL.
“The works executed, the plants, workshops, buildings, hospitals,
matériel mounted and not mounted, materials and supplies, etc.,
belonging to the Universal Company of the Interoceanic Canal in
liquidation, as well as all guaranties which may have been deposited
by the said company in liquidation.”
As for the guaranties, this concerns the 750,000 francs paid over to
the Colombian Government by the old company, and which that Gov-
ernment keeps in its hands, as we have above stated.
PANAMA CAN AL TITLE. 249.
As to the remainder of this part of the contribution, it embraces in
this enumeration all the work accomplished by the old company of the
InterOceanic Canal during the eight years of its existence, from 1880
to 1888.
It would be rash, gentlemen, to undertake to appraise in an abso-
lute manner the real worth of this asset. -
We do not need for the accomplishment of our mission to enter upon
the examination of the carrying on of the old company and we scrupu-
lously abstain from expressing any opinions on that subject. It suffices
to state, leaving out the question of expense, that the work accom-
plished by the old company represents a considerable part of the task
in hand and that the matériel and the supplies can be made use of, at
least for the greater part.
On this subject we find all the assurances necessary, in the reports
of the commission of examination appointed by the first liquidator, M.
Brunet, presided over by M. Guillemain, inspector-general of roads,
bridges, and canals, of the 5th of March, 1890.
We place two extracts before you.
Division //.-Technical Report on the Canal with Locks, page 66:
The execution of the works is entirely subject to the utilization of the matériel and
the installations existing. It is with regard to these that the calculation of expenses
has been made. Without departing from the exclusively technical character of this
report, it is proper to give some information on this subject.
The matériel on the Isthmus has an importance which the commission can not
ignore. It embraces objects, the acquisition, the transporting, the mounting in place.
of which have cost 150,000,000.
The delegation sent to the Isthmus has stated that the classification, putting in con-
dition, the preservation of the divers implements neglected by the contractors on the
embankments or at the bottom of ditches have been methodically pursued since the
suspension of the works. The workshops are in good condition, a perfect order
reigns in the storehouses, and the matériel seen upon the plants has been cleaned
with care and put into condition to resist the atmospheric influences.
In the course of its movements the delegation had occasion to see, besides, the
operation of several locomotives, steam launches, and divers apparatus, which oper-
ated well.
On the other hand, it caused to be operated in its presence, upon only forty-eight.
hours' notice, two excavators and a dredge at Culebra, a marine dredge at La Boca,
and several loading derricks. The experiments were satisfactory. .
There is, then, on the Isthmus a matériel of real value. However, the commission
has not been able to reduce this value to figures, for it is purely conditional, almost.
nothing, if the works are not continued; on the contrary, it becomes very valuable
for a new company, which will find in employing it the possibility of immediately
starting the work. -
That which the commission believes that it can affirm is that, except perhaps
some special machines, this matériel answers all requirements. Whatever methods
may be adopted, the dredges of all kinds, the excavators, the loading derricks, the
rails, locomotives, and earth cars are amply sufficient.
The commission has not, accordingly, estimated in its calculation any new acqui-
sition. The amount which it has given includes only the care and, upon occasion,
the renewing of the implements by future constructors.
The installations of the workshops are also ample. The three principal ones are
at Colon, at Matachin, and La Boca. Some installations of less importance are scat-
tered along the line. These establishments and the divers implements pertaining
to them are more than sufficient to make all repairs of matériel necessary for active
work.
As to the dwellings for the personnel and the workmen, their number is enormous
and seems even too great, since they permit to be lodged 26,000 to 27,000 workmen.
Under this head there is no expense to be provided for.
Thanks to the matériel and the installations which are found in place, the new
company will be able, then, immediately to attack the hill at Culebra and to under-
take the rest of the works without any other delay than that rendered necessary for
the new studies and examinations upon the points which we have specially mentioned.
250 PANAMA CANAL TITLE.
Division /.-General Report, page 51: -
In that report the commission even examined the hypothesis of a
contribution to a new company. It expressed itself in these terms:
If one considers the contributions of the two parties in the contract to be made, he
will find himself in the presence of a very complex situation. The new company
Contributes the capital for the first requirements, without which the work can not
be accomplished. The loss will, then, be permanent, and its intervention, absolutely
indispensable, creates for it preponderating rights. But, on the other hand, it can
not dispose of the matériel or the establishments of the old company. This latter, a
fact not to be lost from sight, is stillat present the sole concessionnaire. It has, as such,
rights which are precisely those of the old subscribers, and it is not prudent for the
latter to diminish their value, as some in these latter times seem to have undertaken
the task of doing.
These rights are very clearly established by the law of May 18, 1878. They will not
be extinguished before 1899, if at that time the canal shall not be navigable, and
therefore they constitute a privilege with which it is necessary to reckon.
Moreover, in that new country, where everything is to be created, a new company
Will find it very difficult to get along without the concurrence of the old, without
exposing itself in its turn to grave mistakes.
The old company contributes its matériel, numerous establishments, its supplies,
its lands which it has acquired with its money, those which are granted to it by the
act of concession, and the works already executed.
The matériel, the acquisition of which with its transportation and mounting have
cost 150,000,000, is in good condition, although to some extent worn. In the
Opinion of the commission it will suffice, such as it is, for the construction of the
Canal if the method of carrying on the work is not changed, and will thus dispense
with creating a new matériel. - -
The fixed establishments, hospitals, lodgings, workshops, etc., are indispensable
to a new company, as they were to the old. They cost 52,000,000.
But, on the one hand, they no longer have their original intrinsic value. On the
Other hand, the old company has not free and complete possession of them, since in
Case of failure they remain, without having to be paid for, the property of Colombia.
That is a condition which leaves them but a value for use—in some sort conditional—
in the absence of a new arrangement between the interested parties, including the
Government of Colombia.
The lands received, or to be ultimately received, are likewise to return to Colombia
if the canal is not completed within the time fixed. They are not, then, an assured
property, but a conditional resource, which may become considerable, since the
amount of land which will be granted to the canal in case of its accomplishment will
be 500,000 hectares; but it is impossible to give figures as to this at a time when a
crisis puts everything in doubt.
As to the volume of excavations to be made use of, in view of the total excava-
tions, the commission has not been able to give figures even approximately. The
Sea channels of the canal are in an advanced state, outlet ditches have been dug, the
trenches have been attacked throughout to a greater or less depth, and, in fine,
according to the statements furnished, the number of cubic meters removed has been
nearly 56,000,000, which, taking account of the special expenses incurred by the
company, have caused an expense of 489,000,000. But there have been false
steps taken, it is said. An important part of the excavations undertaken with a
view to the construction of the canal at sea level are no longer of the same use to a
Canal with locks. Numerous accidents have taken place, as to which it is impossible
to determine after the fact, the part to be attributed to improvidence and that which
resulted from the natural condition of the country. Time finally has performed its
work, and the soil, such as it is to-day, does not permit examination, which, in any
case, would be very difficult even at the time when the events occurred.
If we add here the uncertainties which proceed from the execution, due partly to
great constructors, partly to employees, partly to the management, the complica-
tions produced by the rescissions of contract agreed upon, and which were carried
out by the parties, it can be understood that the commission should restrict itself in
the task, already very burdensome, and which it was to accomplish within the least
possible time, of making an estimate as to what remains to be done. *
Finally, and to furnish data which should be considered simply as an intuitive
estimate, the commission thinks that, taking account of the immense matériel in
place and ready to be used, the numerous establishments created, the lands received
and to be received, the work done, the experience acquired, the supplies and the
plans prepared, as well as the concession itself, the contribution of the old company
PANAMA CANAL TITLE. 251
may be looked upon as the equivalent of one-half, at least, of the expense of
900,000,000 remaining to be laid ouſt. -
It is true that this contribution has no real value except for a new company reor-
ganized to profit by it, as the old one profited by it. It is reduced, on the contrary,
to an insignificant value if the works are stopped, and this it is that renders the
situation so difficult and so confused for the old subscribers.
This way of looking at things is similar to that of the Colombian
Government, since in its dispatch of October 26, 1888, the minister of
finance expressed himself thus: .
Considering from the facts shown in the aforesaid mémoire, it results that the
work performed for the construction of the interOceanic canal represents, at the
present, more than the half of the work which the total construction of the canal
implies, and that, consequently, the Universal Company of the said Interoceanic
Canal has acquired the perfect right to have adjudged to it the one-half of the free
lands mentioned in article 4 of the law of 1878.
And in this estimate the Colombian Government included, as did
the commission, and even more than it, the false cost of the work, as
is shown by the following passage of the dispatch of the 3d of Jan-
uary, 1884: -
That the representative of the canal company and its special delegate be informed
that the executive power is agreed that this question, as all questions arising from
the interpretation of the contract for the great work of the excavation of the canal,
should be treated with the greatest elevation of views, looking rather to the spirit
than the letter of the contract; that, consequently, the Government admits and con-
siders as work done for the accomplishment of the canal, not only the quantity of
earth removed, or the cubic meters cut for the opening of the said canal (which
conforms to the letter of the contract, but not to the good faith with which it ought
to be carried out), but also the capital brought together to accomplish the undertak-
ing, the technical and scientific studies for the laying out of the route and the execu-
tion of the work, the formation of the company, and the organization of the works,
the transportation to the Isthmus of a great part of the machines and matériel of
excavation, and the part already in fact constructed, and, after having taken all these
into consideration, the executive power declares that the Panama Canal Company
has the right to have adjudged to it, according to the terms of said article, 150,000
hectares as the equivalent of a little more than one-third of the execution of the work.
If the Colombian Government upon the report of its agents consid-
ered as one-third accomplished in 1884 the execution of the canal at
sea level, the proportion which the commission adopts in 1890 for a
canal with locks is not unreasonable. . * ,
There is less excavation to be done for a canal at sea level, but much
more of masonry work. -
Since 1886 great movements of earth have been effected, but on the
One hand some of these were useless; on the other hand, the total
cubic excavation is, by reason of the nature of the land, very much
greater than was foreseen in the beginning, and it is not surprising
that, all compensations made, the situation is a little less advanced, and
is made worse, moreover, by the grave fact that time has passed and
that the date of forfeiture is threateningly near.
As far as we are concerned we can not give our adhesion to the esti-
mate of 450,000,000 which the committee of examination considers
itself able to present, although under great reservations. We think
it is not possible to advance a precise figure, which would necessarily
be arbitrary. But we do not hesitate to think, and you will doubtless
think with us, that the statements of the commission suffice to estab-
lish the conviction that this part of the contribution has, in any case,
a value of such a nature as to justify the part of the profits which the
liquidator of the old company has stipulated for.
252 PANAMA CAN AI. TITLE.
As to the present state of the matériel and the works, we think we
can accept with confidence the last report of the liquidator, dated the
21st of April, 1894. While it is true that that document emanates
from the contributor himself, to whom we are the opposite parties, it
is considered that he has presented it to the tribunal under his respon-
sibility as judicial mandataire, rendering an account of his proceedings.
We read in that report: -
If it is observed that the works have been suspended for more than four years and
a half, if is considered, besides, the inevitable action of a climate such as that of the
Isthmus, it is not astonishing that the plants and matériel have undergone some loss
and deterioration. The effects of time and of the climate having been foreseen, the
liquidator sought with great care to prevent them. He can affirm that, thanks to
the measures which he caused to be taken, these effects have been relatively of little
importance and can be easily remedied.
The report contains afterwards circumstantial details as to each sec-
tion of the works, and as to the different kinds of the matériel, which
confirm these assertions. -
As to what concerns the matériel properly so-called, a statement was
drawn up in the course of the liquidation (Exhibit C to the report of
the 12th of November, 1891), and has been communicated to your
commissaires.
3. STUDIES AND DOCUMENTS.
“The plans, drawings,studies of all kinds in the hands of the Inter-
oceanic Company and concerning in any way whatever the study, the
execution, or the operation of the canal, or its accessories, as well as
the benefits of all agreements with third persons.”
It is useless to dwell upon this paragraph, which explains itself.
Your company having the same end and object as the old company, all
studies and documents brought together by your predecessors will
contain useful information and facilitate your task, and throw light
on your course in the future.
4. PANAMA RAILROAD.
“The rights of all kinds, shares of ownership or others whatsoever
which may belong to the Universal Company of the Interoceanic
Canal in liquidation as to the railroad from Panama to Colon.”
The rights in question were comprised in the contribution of the
liquidator in the same way as the other elements of that contribution,
and should be examined in the same manner.
The special agreements on this subject which have been inserted in
the by-laws, with the view to a particular event, will be discussed
separately in the last paragraph of our work. This refervation made,
let us examine their direct value.
The railroad belongs to a special anonymous company whose head-
quarters are at New York. -
The rights of the liquidator represent #####" of the capital of that
company. This capital is of $7,000,000, which at the rate of exchange
fixed of 5.20 per dollar is worth 36,400,000 francs; that is to say, for
the ##### a sum at par of 35,637,680 francs. The 1,466 shares
belonging to third persons, other than the liquidator, appear to give
rise to very infrequent transactions and are not officially quoted on the
stock exchange of New York. We do not definitely know what has
been their market value. The sole information which we are able to
PANAMA CAN AIL TITI, E. 253
give is the value of 175 francs or thereabouts during the month of
August last. Finally, we give the table of dividends since the origin
of the company in hundreds of dollars:
| s
Year. })ollars. Year, Dollars. Year. Dollars.
1876-------------------- 12 sº… 12. 50 | 1888. . . . . . . . . . . . . . . . . . . 26
1877-------------------- 12 ſil&. . . . . . . . . . . . . . . . . . . i 13. 50 | 1889. . . . . . . . . . . . . . . . . . . 9
1878-------------------- 12 || 1884------------------- #" || 3................... 5
1879. ----------------- -- 13 1885------------------. 10 1891------------------- 5
1880. . . . . . . . . . . . . . . . . . . . 16 " 1836------------------. | Nothing. || 1892- . . . . . . . . . . . . . . . . . . 2
1881 - - - - - - - - - - - - - - - - - - - - 34. 26 | 1887- - - - - - - - ----------- 6 1898------------------- Nothing.
Leaving out the period from 1881 to 1888, which was that of the
activity of the old company, and which is consequently abnormal in
all respects, the preceding table indicates clearly that the Panama Rail-
road gave from 1876 to 1880 a high revenue, varying from 12 to 16
per cent, whereas from 1889 to 1893 the revenue fell gradually from
9 per cent to zero. -
The present situation of the railroad is not, therefore, favorable.
We should go beyond the object of our mission if we should enter
upon details as to the causes of this condition of things and the means
of remedying it. We shall have to limit ourselves to a few summary
observations. -
It appears that the present revenues of the railroad can be raised to
a higher plane by the conclusion of new agreements with steamship
companies. The liquidation has rightly made use of its influences to
prevent the renewing of old agreements in order to leave complete
liberty of action for the future. The development of the traffic can,
besides, be favored by the improvement of the terminal facilities of
the railroad at the two oceans. Finally, it is certain that the recom-
mencing of the works on the Isthmus will give rise to considerable
transportation, by which the railroad will profit. Your company itself
will pay for a great part of that transportation.
But however that may be, and whatever the present money value of
the railroad, and of whatever improvement the railroad and its future
revenues are susceptible, the contribution which is made to you of the
rights of the liquidation has advantages which we do not hesitate to
call fundamental. Every enterprise for the cutting of the canal must
necessarily reckon with the railroad company and has need of its aid.
It is important, then, in the highest degree, to have a serious influence
in it, and therefore it was necessary that the liquidation should transfer
to you its rights. -
You will find, by way of exhibit to this report, the last balance
sheet to the Panama Railroad of December 31, 1893. -
IV.
In return for this various contribution, of which we have undertaken
to show you the outlines, the extent, and the different elements, what
are the charges which the by-laws impose upon your company? And
what are the advantages stipulated in favor of the liquidation of the
old company ? r .
In the first place, the liquidation imposes on the new company the
executing of the divers financial obligations in favor of Colombia
254 PANAMA CAN AL TITLE,
which result from the original contract of concession and the two laws
of prorogation. We specified these above and do not need to return
to them. These are the charges inherent in the very object of the
enterprise and which ought to fall to you without any possible discus-
sion, in our opinion, as a natural consequence of the substitution of
your company to the old company.
Let us pass to those stipulated for the liquidator.
1. He has reserved the power to establish, up to the time of comi-
pleted construction of the canal, a commission of examination and
inspection whose remuneration shall be at the charge of your company.
This commission of examination appears to us to be absolutely justi-
fied by the considerable interest which the liquidator preserves in the
new company, and can be for your company, and for the stockholders,
only a guaranty and a safeguard which they should be the first to
welcome. - -
2. The preferential right to subscribe to half of the present money
capital of 60,000,000 and the totality of future issues in case of
increase of the capital has been reserved for the benefit of the stock-
holders and bondholders of the old company.
The right to subscribe to half of the present capital of this company
has been exercised in part, and those who have made use of that privi-
lege appear to-day among you. The other subscribers have given their
adhesion with perfect knowledge of the right of preference as to the
future increase of the capital. This agreement seems to us perfectly
lawful; we do not think it requires any observation from us.
It is but another proof of the ties which will bind the new company
to those interested in the old company, and the facilities which are
accorded to them can not be other than favorably received.
3. Finally, and this, properly speaking, is the only advantage which
results from the by-laws, the liquidator as such, has had accorded to
him 60 per cent of the net profits of the enterprise.
The liquidation does not ask of the new capital any present sacrifice
by way of immediate payment in money, by Way of paid-up shares,
coming into equal consideration with the shares subscribed in money,
in addition to the charges imposed by the Government of Colombia.
It is only upon the development of the work and upon the profits to
arise when once the canal is constructed and open to public use that
the liquidation asks a participation, becoming thus your associate and
accepting the risks of the enterprise in order to receive with you the
hoped-for profits. - - -
As to that proportion of 60 per cent, it is to be noted in the begin-
ning that it is to be calculated on the net profits only, according to
the terms of article 51; that is to say, after the payment of the fol-
lowing charges: -
1. The participation stipulated in favor of the Colombian Govern-
lment:
2. The general expenses of all kinds and the expenses growing out
of bond issues; -
3. The legal reserve fixed by the law; -
4. The payment of 5 per cent of the company capital, in order to:
constitute a sinking fund, as also to serve as an interest on the shares.
of the capital stock; and - -
5. The remuneration at 5 per cent of the council of administration.
This concession of 60 per cent, with the deductions aforesaid, and,
PANAMA CANAL TITLE. . . 255
which include, it is important to insist, the taking out of 5 per cent of
the company capital, present or future, in the way of interest or sink-
ing fund, appears to us to correspond very exactly with the respective
rights of the old and the new company. We consider it perfectly
equitable. -
We conclude, then, with recommending that you accept the contri-
bution of the liquidator and approve the clauses and provisions con-
cerning it.
W.
It remains, however, to treat of a special and important question.
Up to the present we have discussed and commented upon the
clauses and conditions of the contribution applicable from the constitu-
tion of your company, and which will be maintained if it succeeds in
accomplishing the object of its constitution, and pursues the construc-
tion of the canal. w -
But on the side of that principal situation, which we hope, as you do,
will be the only one to be dealt with, the by-laws have provided for a
subsidiary hypothesis, that of your not being able to construct the
canal, and for the event of that hypothesis being realized in spite of
all efforts, there have been provided special agreements so far as con-
cerns the rights of the liquidation as to the railroad from Panama to
Colon.
We think we should, for greater clearness, reproduce here in bold
type article 5, paragraph 4, and article 75 of the by-laws:
3: * * X- * * *
These provisions are very clear. * .
Your company will have, from the day of its constitution, the owner-
ship of the rights of the liquidator as to the Panama Railroad; it alone
will have the enjoyment and exercise of them, and there is not imposed
upon it at present any charge except those of which we have already
given you an account. -
Only, according to future events, the conditions under which the
transmission of these rights is made to you may vary.
If, after the experimental period and the serious recommencing of
the works, which will constitute the first phase of your company’s
existence, you find yourselves in a position to pursue the accomplish-
ment of the canal, the contribution by M. Gautron as to the Panama
Railroad will remain pure and simple. Your company will have
nothing to pay to the liquidation and it will remain proprietor of the
rights in question, except for the forfeiture, in case it should not carry
out its engagements. If, on the contrary, when this phase shall reach
its end, the necessary provision for the accomplishment of the canal
shall not be made, we will still preserve the rights as to the Panama
Railroad, but your company will have— - -
1. To pay to the liquidation an indemnity of 20,000,000 francs;
2. To give it one-half of its profits without subtraction other than
those provided for in paragraphs 2 and 3 of article 51 of the by-laws.
We remark, in the beginning, that the part of the profits reserved to
the liquidation in this subsidiary hypothesis differs considerably from
that which is assured to it in case the enterprise shall pursue its
normal development. -
In the latter case the part of the benefits is the 60 per cent of that
which remains after the stockholders of your company have taken out,
256 IPANAMA CANAL TITLE.
by way of interest or sinking fund, a sum equal to 5 per cent of the
amount of the company’s capital. In the subsidiary hypothesis the
part of the liquidation is 50 per cent of the gross receipts, with
the sole deduction of expenses of all kinds and the legal reserve, with-
out any subtraction for interest and sinking fund. These special
conditions are, then, much more Onerous. * -
Are they equitable? That is what we have to determine.
We cannot pass over in silence the reasonings concerning the Pan-
ama Railroad contained in the judgment dated the 8th of August,
1894, by which the tribunal of the Seine has rejected the tierce oppo-
sitions directed against the approval of your by-laws.
Considering, so far as concerns more especially the contribution of the rights as
to the railroad from Panama to Colon, that it is an essential condition and basis of
the new combination, not only on account of the necessary correlation of the two
enterprises, but because it permits to be assured a legitimate remuneration to the
capital of the new company, in case the accomplishment of the canal should be
definitively abandoned; that it is important to note that the cession of these rights is
only conditional; that they will return to the liquidation if the accomplishment of
the canal, having been decided by the general meeting, it can not be terminated by
the time fixed in the act of concession; that this forfeiture guarantees completely, on
that hypothesis, the interest of the liquidation, and that no criticism can be, or is,
directed against the by-laws under that head; that it is the same so far as concerns
the contribution to the new company of the said rights in case of the completion of
the canal; that the revenues of the railroad will add in that case to the products of
the canal, and will benefit consequently the liquidation to which is conceded three-
fifths of the profits of the undertaking; that if these rights are to remain the property
of the new company, in case the general meeting should not take the steps necessary
for the accomplishment of the canal, the liquidation will, on that hypothesis, not
receive merely, as the tierce opposant seems to believe, an indemnity of 20,000,000
francs, but a half share of the profits; that the only deductions authorized in that
case being those of the expense of maintenance and operation, expenses of admin-
istration and the taking out of a twentieth for a reserve, the share of the new com-
pany in the revenues of the railroad will not exceed what will be paid to the
liquidation; that it will be the less to be feared that the company will renounce for
such a small remuneration the accomplishment of the canal, with the purpose of Con-
fining itself to the operation of the Panama Railroad; because the works and annui-
ties paid to the Colombian Government, added to the indemnity of 20,000,000 will
have, at that moment, absorbed the totality of its cash capital in such a fashion that
the company will have found that it has bought at nearly 80,000,000 the one-half
of the revenues of the railroad; that the apprehensions manifested by Couaillier are
then without foundation; that the rights as to the Panama Railroad have, it is true,
been bought by the Panama company for 93,000,000 francs, but it is shown that the
price was very considerably raised by speculation, as also that the revenues of the
railroad were artificially increased;
That, if it is legitimate to expect in the future a remunerative revenue, it has none
the less been demonstrated that the sale en bloc for 20,000,000 francs of the half
of that revenue constitutes a transaction altogether to the advantage of the liquida-
tion.
As you see, the tribunal has done justice both to the argument drawn
from the purchase price of 93,000,000 francs by the old company, and
all the other pretexts invoked by the opposants to make out that the
liquidator has not required enough. -
But your commissaires and your general meeting stand at a point of
view absolutely opposite, and it is our business to-day to examine, on
the other hand, whether the requirements of the liquidator have re-
mained within reasonable limits. -
It would not be so if, as the tribunal states, your company was ex-
posed to the purchase, at nearly 80,000,000, of the half of the reve-
nues of the railroad.
That sum can not be reached in any case, since your cash capital is
60,000,000.
PANAMA CAN AI, TITLE. - 257
On the other hand, one should not consider, as making part of the
price of purchase of the rights to the railroad, the sums which your
company proposes to expend to accomplish the construction of the
canal. That is an enterprise the extent of which you should not de-
ceive yourselves about.
The loss which you may incur should not enter into account after
to-day in calculating the compensation representing a special part of
the contribution of the liquidator. -
What is true is that your company, in paying to the liquidator an
indemnity of 20,000,000, while it will receive the one-half of the profits,
is proceeding in reality on the footing of 40,000,000 for the railroad.
This should be the basis of our reasonings. After what we have
stated above on the subject of the money value and the present con-
dition of the railroad, the facts can not be dissembled that the ulti-
mate conditions here are a little severe.
But the matter Ought not to be looked upon as a cession pure and
simple at a price debated and agreed upon. It is diminished by other
considerations which we have already briefly indicated and shall develop.
Properly speaking, there is not a question of a price, but of an
indemnity. The by-laws say that expressly.
This indemnity was stipulated by the liquidator for the case in which
your company will not construct the canal. It has altogether the char-
acter of a penal clause, and it appears legitimate that the figure should
be very high. Indeed, the stopping of your enterprise would expose
the greater part of the assets which the liquidator has contributed to
you to grave consequences.
The rights as to the Panama Railroad preserving on every hypothe-
sis their value, it is proper that the liquidator has consented to trans-
fer them to you only upon assuring an indemnity equal to the maximum
value which they may have.
On the other hand, it is to your interest to consent to pay ulti-
mately this indemnity, for the purpose of obtaining the certainty of
preserving by definitive and irrevocable ownership the rights of the
railroad, in case you may have difficulty as to the construction of the
canal. We shall speak here only with a certain reserve of the state
of affairs to which we have already made allusion, and which is very
well known to all persons familiar with the matter of Panama. The
railroad is an important factor of every great enterprise to be carried
on upon the Isthmus. The ultimate destinies of every way of com-
munication between the two oceans are bound up, at least in part,
with those of the railroad. You will assure the future, whatever may
happen, in obtaining as to the Panama Railroad a great influence.
You will thus respond to the original idea which caused the formation
of your company, and which consists in making all possible efforts in
order that an enterprise which has already cost so much of French
savings should not attain its conclusion except with their concurrence.
If these reasons seem to you well founded you will approve the
special conditions of this paragraph, as well as the general conditions
of the contribution of M. Gautron. -
VI.
Article 52 attributes to the benefit of the council of administration
5 per cent of the net profits of the company before the division among
8751–02—17
258 PANAMA CAN AL TITLE.
the shareholders and the liquidator of the oid company. It is equit-
able that the persons who will carry on the company shall have an
interest in the results which it is to produce.
This provision is customary, and the amount adopted and inserted
in your by-laws should be ratified by you.
VII.
In conclusion, gentlemen, we have exhibited to you, a little tedi-
ously, perhaps, all the points to which the commission which you have
given us makes it our duty to call to your attention. We should
depart from our rôle if we should discuss in this report the future of
the enterprise to which you have given your support.
The past imposes upon us the greatest reserve. But we can say,
what our profound examination has confirmed for us, that is, that
your company is created under conditions of prudence, that it is sur-
rounded by measures of inspection and control which we think will
attract confidence and will permit it to pursue and accomplish the
work of reconstruction in view of which it has been established.
We are unanimously of opinion that the provisions contained in
the by-laws, and which establish on behalf of the Colombian Gov-
ernment, of the liquidation, and of the future administrators particular
advantages, ought to be approved by you. -
Paris, October 8, 1894.
The three verifying commissioners:
ED. FOUGEU.
CH. GOUDCHAUX.
G. FOCKł.
Panama Railroad Company. Balance sheet December 31, 1893.

ASSEts. DOllars. Debts DOllars.
Cost of the road. -- - - - - - - - - - - - - - - - - - 10, 215,320. 73 || Capital stock . . . . . . . . . . . . . . . . . . . . . . 7,000,000.00
Property On the Isthmus. . . . . . . . . . . 263,616. 74 || Bonds, 7 per cent general mort-
Matériel --------------------------- 169,322.99 gage debt------------------------ 4,000,000.00
Profits not yet received (estimate BOnds Of indebtedness to Colom-
in part) - - - - - - - - - - - - - - - - - - - - - - - - - - 80,967.67 bia, 6 per cent. ------------------ 2, 152,000.00
Accounts to be received . . . . . . . . . . . 18, 648. 14 || Funds to buy bonds. . . . . . . . . . . . . . . 57,430.00
Sinking fund ---------------------- 1,436, 189. 22 || Interest accumulated on those
Cash on hand in New York. . . . . . . . 177,051. 32 bonds . . . . . . . . . . . ---------------- 74,768.69
Cash on hand in London . . . . . . . . . . 22,888. 24 || Debts on the Isthmus not pre-
Cash on hand at the agency. On the Sented. . . . . . . . . . * * * * * * * * * * * * * * * * * 40, 549. 13
Isthmus. ------------------------- 30, 204. 73 || Coupons due . . . . . . . . . . . . . . . . . . . . . . 1, 710.00
Due by agency on the Isthmus. . . . . 4,855.81 || Dividends not claimed . . . . . . . . . . . . 149. 00
General European agents. . . . . . . . . . 2,094.35 || Due for employees who have died
Interest upon funds On deposit . . . . 1, 306.94 or left . . . . . . . . . . . . . . . . . . . . . . . . . . . 894, 70
Advance of indebtedness to the Due to the GO Vernment Of Panama. 18,750.00
Republic of Colombia. . . . . . . . . . . . 2, 152,000.00 || Due to the annexed companies . . . 32, 513.86
Bonds Sterling, 7 per cent on the ACCOunts to be paid . . . . . . . . . . . . . . . 2, 441, 24
treasury Of the general mortgage Divers unpaid accounts . . . . . . . . . . . 3, 325. 34
indebtedness- - - - - - - - - - - - - - - - - - - - - 471,000.00 || Surplus December 31, 1892 - . . . . . . . 1, 717, 554.65
Due by sinking fund. . . . . . . . . . . . . . . 17, 284. 12 || Addition to surplus for the year
Advances to the company of the 1898------------------------------ 75,795.77
Steamers Of the Panama Railroad- 115, 131.38 - ------
- . 15, 177,882. 38
15, 177,882. 38
Surplus ---------------------- 1,793, 350. 42
PANAM A CANAL TITLE. 259
ExHIBIT N.
FIRST AND LAST REPORTS (1895, 1901) OF THE COUNCIL OF ADMINIS-
TRATION OF THE NEW PANAMA CANAL COMPANY.
REPORT OF THE COUNCIL OF ADMINISTRATION TO THE ORDINARY
GENERAL ASSEMBLY OF DECEMBER. 21, 1895.
GENTLEMEN: You are met in ordinary general assembly to receive
an explanation of the operations of the company during its first activ-
ity, the duration of which has been eight months and ten days, since
the 21st of October, 1894, the date of its definitive constitution, and up
to the 30th of June, 1895. You will have to pass upon the accounts
involved in such operations and upon the proposition which we shall
have the honor to submit to you. -
I.
It is proper to go over, in the beginning, the particular circum-
stances in which our company was formed. -
By the terms of article 1 of the contract of prorogation of April 5,
1893, the termination of the Panama Canal concession was to ensue if
a new company for its construction should not be formed before Octo-
ber 31, 1894, and “if the work of excavation was not undertaken in
a serious and permanent manner before that date.”
It is not without difficulty that the promoters of the new company
have been able to attain their object within the necessary time. The
subscription of the greater part of the capital resulted from proceed-
ings whose validity was submitted to judicial sanction and legal delay.
Thanks to the care and activity of the judicial officers, no unfavorable
incident has occurred, and your company was able to validly constitute
itself on the 21st of October, 1894, ten days before the expiration of
the period referred to. -
The uncertainty which existed up to the last moment, gentlemen,
forbade either the contracting of any engagement in the name of the
company in process of formation, or to take the steps which are ordi-
marily taken to assure from its commencement the operations of the
future company. It was therefore necessary the day after its consti
tution to improvise all the elements of an organization, which it was
impossible to prepare in advance, even as to matters the most indis-
pensable. - -
But, thanks to the foresight of the promoters and the concurrence
of the liquidator of the Universal Company, we have been able rapidly
and with success to safeguard your interests in Colombia.
From the 22d of October the council of administration, by cable-
gram, accredited as its representative near the Colombian Government
M. Mancini, formerly chargé d'affaires of the French Republic, who
already exercised the same function for the liquidation of the old com:
pany. It charged him to officially notify the Government of Bogotá
of the formation of the new company and to present the documents
previously sent to our agent. At the same time the minister of for-
eign affairs of the French Republic was good enough, upon our appli-
cation, to instruct the minister of France at Bogotá to make the same
communication. - -
260 PANAMA CANAL TITLE. {
The 23d and 31st of October M. Marco F. Suarez, minister of for-
eign affairs for the Republic of Colombia, answered these notifications
by dispatches, recognizing without reservation the constitution in due
time of our company. These dispatches were inserted in the “Oficial
Journal’’ of Bogotá, together with the complete text of our by-laws.
On his part, M. Mallarino, minister of Colombia at Paris, gave us the
most satisfactory assurances of the disposition of his Government.
The second condition imposed by the contract of prorogation—that
is to say, the “taking up of the work of excavation in a serious and
permanent manner”—has likewise been fulfilled in due time. A cable-
gram, announced in advance by instructions of the liquidator to the
director of his business on the Isthmus, has permitted to be prepared
the reopening of the workshops and their being put into activity at
the desired moment with a sufficient number of workmen.
The new company thus found itself in perfect conformity with the
clauses of the documents of prorogation, and a new period of ten
years for the execution of the canal commenced to run on the 22d of
October, 1894.
We think well to add that we have had but to acquiesce under all
circumstances as to our relations with the Colombian Government.
The questions which the installation and carrying on of our operations
on the Isthmus have given rise to, have been settled in a spirit of lofty
equity, and to our satisfaction. We confidently expect to find always
the same justice and the same good will from the Colombian Govern-
ment which marks the close of the difficulties of the task we have
undertaken, and will certainly aid us to surmount them in the interest
of the future of Colombia, and to develop the commerce of the world.
II.
One of the constitutive elements of the contribution made by the
liquidator of the old company of the interoceanic canal to our com-
any was represented by 68,534 shares of “Panama Railroad,” which
ave been transmitted to us with the reservations and conditions
embodied on that subject in our by-laws.
The situation of this matter, generally little understood, was far
from being satisfactory when our company was formed. We think that
to give you the data to understand it properly it will not be useless to
go over here the general points of its constitution and the principal
phases of its development. g
We do not need to return to the principal considerations which have
been the motive for the contribution of these shares to our company.
They have been communicated in the report of the commissaires to
your second general constitutive meeting, which explains the natural
corelations existing between the two enterprises.
Created in 1849, under the form of an anonymous company, by virtue
of a charter delivered by the State of New York for the purpose of
favoring and facilitating the commerce of the United States at a time
when there existed no railroad connecting the coasts of the Atlantic
and Pacific, “the Panama Railroad Company” had for its object the
operation of a railroad of 76 kilometers, which has opened to inter-
national commerce the Panama route. -
The concession granted to the company in the beginning by the
Republic of New Granada was confirmed later by the Colombian Gov-
PAN AMA CAN AL TITLE. 261
ernment. By the terms of its by-laws it is administered by a council
which sits in New York. It finds itself, by virtue of its constitution
and treaties, placed, as does the way across the Isthmus, under the
rule and protection of the laws of the United States. - -
Outside of its stock capital, which is $7,000,000 divided into 70,000
shares of $100 each, “the Panama Railroad Company” has issued two
sets of bonds, the interest on which has required for the last year the
sum of $369,000, the bonds in circulation, representing on the 31st of
December, 1894, a capital of $4,569,000, after deducting bonds paid,
bought in, or remaining in the hands of the company.
One of these bond issues, which is at 7 per cent interest, and which
has not been paid, is protected by a general mortgage on the immova-
ble property of the company. Sufficient provision has not been made
to assure the reimbursement which falls due for the whole on the 10th
of October, 1897.
The other issue is at 6 per cent, redeemable in twenty-eight years,
from 1881 to 1908, by annual payments which the operation of the road
provides for with regularity. The carrying on of the railroad from
Colon to Panama, commenced in 1855, has produced, from the begin-
ning, brilliant results, and the period elapsing up to 1869 was very
prosperous. - -
The opening of the first transcontinental lines modified these gen-
eral conditions of traffic by the Isthmus. It has resulted in greatly
reducing the rate of transport by the Panama Railroad, and to impel
that company to seek the alliance and concurrence of companies oper-
ating vessels on the Atlantic as well as on the Pacific. .
It was thus that in 1872, 1875, and 1878 arrangements took place
between the Panama Railroad and the Pacific Mail Steamship Com-
pany, with the effect of regulating the conditions of traffic by the
Isthmus. To understand from the point of view of transportation, the
results of the régime inaugurated in 1872 in the operation of that rail-
road, it is proper to omit the period from 1881 to 1889, which was
favored by the exceptional amount of travelers and merchandises dur-
ing the works of the old company of the Interoceanic Canal. It
appears that, omitting that abnormal element, the traffic of the rail-
road doubled during the period of twenty years which followed 1872,
without the annual amount of receipts of transportation having been
perceptibly increased. . -
We shall give to the carrying on of the railroad its true character
by relating here that during that period of twenty years the expenses
of operation following the development of traffic, increased dispropor-
tionately. The consequence was the obvious diminution of the profits
of carrying on the road from the commencement to the end of that
period. , - -
In the first months of 1893 the last agreement concluded with the
Pacific Mail ended without its having been possible to renew it before
its expiration, upon acceptable conditions. The Pacific Mail then
ceased carrying on the maritime part of the business upon a common
tariff of rates. More than that, it claimed that the agreement of 1872
allowed it certain privileges without reciprocity as to traffic between
Panama and Acapulco, and it introduced upon that subject a proceed-
ing before the tribunal of New York. The rupture of relations with
the ship company, which had assured up to that time the regular
service of the route by the Isthmus between the coasts of the United
262 * * PANAMA CANAL TITLE.
States on the Atlantic and the Pacific, imposed upon the Panama Rail-
road Company the obligation to maintain a line of vessels on each of
the two oceans from New York to Colon and from Panama to San
Francisco. &
The carrying on of the two lines by sea in connection with the rail-
road has been maintained with a loss. However, the organization of
these maritime services has permitted the company to preserve prac-
tically the amount of traffic of the railroad before the reductions of
rates which it has been compelled to make, produced an important
diminution in its receipts. .
In conclusion, the last two periods of operation of 1893 and 1894
have been much the most unfavorable since the beginning. The car-
rying on of the railroad during those two periods has left, according
to the accounts of the company, an excess of receipts of $298,885,
after payment of all its expenses, including interest on the bonds.
But this excess of receipts has been employed wholly to cover the
losses arising from the two lines of vessels, the amount of which has
risen to a total practically equal to that. 3.
The negotiations undertaken and broken off at different times during
three years with the Pacific Mail Company have continued during 1895.
They have been conducted by the council of administration of the
Panama Railroad with a persevering ability to which we are glad to
render homage. A telegram, dated the 16th of the present month,
has informed us that these laborious negotiations are about to result in
the signing of an agreement. This happy solution, which will carry
with it the suppression of the maritime service which the company has
Organized on the Pacific, will improve the general results of its opera-
tion. X.
In the course of those negotiations the operations of 1895 have pro-
ceeded under always difficult conditions. However, thanks to an abun-
dant crop of coffee in Central America and to other favorable circum-
stances, the movement of the receipts of the traffic of the railroad for
the three first quarters of the current year is sensibly increased, com-
pared with the corresponding figures of the preceding year. On the
other hand, the measures taken by the council of administration of the
Panama Railroad with a view to diminishing expenses have already
produced salutary results. .
It is not permitted to us to state the ultimate result of the operations
of the current year, the accounts of which can not be communicated to
us before next March. There is, however, reason to think that, not-
withstanding the sacrifices required by the maintenance of the two
lines of vessels, the results of the operation of the railroad in 1895 will
be more satisfactory than those of the operations of the two previous
years.
But in the meantime the Panama Railroad Company is required to
reserve all its financial ability and put itself in a condition to meet the
falling due of bonds in 1897. It can not think then of executing with
its own resources, nor by an appeal for a loan, the work required on
the Pacific for an improved port. As has been said to you by the
commissaire having to do with the contributions, the enterprise of the
Construction of the canal can not be indifferent to the proper carrying
on of the railroad company. More than that, our constant care is to
attract the commercial currents to the Panama route in order to assure
for the canal, from its opening to navigation, an immediate traffic.
PANAMA CANAL TITLE. 263
We consider it then indispensable to lend our aid to the Panama Rail-
road to remedy the grave defects of the railroad, even if for that it is
necessary to make an advance of funds to a limited extent.
In the present state of affairs the lack of constructions renders the
port of Panama altogether insufficient. The shallowness of the water
prevents reaching the wharves of the Panama Railroad. Ships are
obliged to cast anchor several kilometers from shore, under the pro-
tection of the Naos Islands, and the cargoes, on arriving or departing,
are laden, unladen, and transported on lighter. These operations are
tedious, costly, and seldom sure. There result losses of time to the
vessels, risks of loss of the merchandise, and finally a double handling,
which adds to the charge of transportation by way of the Isthmus.
The council of administration of the Panama Railroad Company is
probably occupied in trying to remedy these conditions, so unfavor-
able from the point of view of the development of traffic. To that
end it has proceeded to examinations having in view the creation of a
port at La Boca, at the point where the canal opens on the Pacific and
which is already connected with Parama by a branch railroad estab-
lished by the Old Panama Canal Company. The execution of this
project will permit ships to discharge themselves directly opposite the
railroad. -
The expenses for this purpose is calculated at about 5,000,000 francs.
The examination of the ways and means to be employed for assur-
ing the execution of that project has led the Panama Railroad to ask
us to lend it, in some manner to be determined, the sum of 5,000,000
francs, representing the amount of the aforesaid expenses. We con-
sider that it is in conformity with your interest to make the advance
in question on certain conditions, and if possible with special guaran-
tees. Consequently we shall ask you to give by particular resolution
the authorization necessary for that purpose.
III.
We take up now, gentlemen, the principal object of your company,
which is the construction of the Panama Canal.
We are going to set before you as completely as is possible to us
the progress of our examinations, and of our operations on the Isth-
mus, the results obtained up to June 30, and the hopes they permit us
to conceive of the future of the enterprise. -
We have taken possession of a domain of 14,000 to 15,000 hectares,
that is:
(1) A strip of 200 meters wide on each side of the canal, granted
from the public lands by the law of concession of the 18th of May,
1878; - - -
(2) Lands of Christopher Columbus, conquered from the sea by
different private owners, acquired by the old company, and of which a
large part has the character of private ownership and can be disposed of.
Since the cessation of the works numerous occupants have estab-
lished themselves on these lands and have cleared a part. By the
terms of article 3 of the contract of prorogation of December 26, 1890,
the Colombian Government has obliged itself to lend its active aid to
put an end to these usurpations. Our agents have given all their
energy to the accomplishment of this difficult task, endeavoring to
avoid, as far as possible, litigation. -
264 PANAMA CAN AI. TITLE,
On the 30th of June 800 affairs of this kind were already settled.
This work proceeds in a satisfactory manner.
IV.
The immovable constructed properties existing on the Isthmus are
very numerous. They consist of buildings for bureaus, workshops
and storehouses, hospitals, dwelling houses for the agents, barracks
and camps for the workmen, together with quite a large number of con-
structions not devoted to the business of the enterprise, susceptible of
being rented and constituting, as does a portion of the lands, a private
and dispensable property.
The condition of preservation of these different constructions varies.
It nevertheless can be considered as certain that at nearly all points
along the canal the construction is in a good state of preservation, sus-
ceptible of being repaired at little expense, and sufficiently ample to
accommodate the personnel, administrative and technical, as well as
the workmen, even in the periods of most activity of the works. The
making of new constructions will be necessary only at a small number
of places where the works not provided for by the old company may
require them. - -
The distribution of drinkable water, of the greatest importance from
a hygienic point of view, proceeds wherever it is necessary. It will
be easy to provide, when necessary, for any new requirements in that
respect. - -
The houses not used in connection with the works, especially at
Colon, are rented, and produce a revenue which diminishes our expenses
of caring for our property, and are, besides, moderate.
V.
We have also taken possession of the matériel accumulated on the
Isthmus at great expense, which constitutes an inseparable accessory
of the concession. The liquidation perfectly understood the necessity
of preserving this portion of its assets, which, while without realizable
commercial value, must facilitate greatly the recommencement of the
works. It took care to collect the scattered objects at the workshops
and to classify them. - .
Without speaking of the workshops for repair, well made and on
an extensive plan, the following table will give you an idea of the
matériel of the working apparatus: -
Marine and river dredges -------------------------------------------- ---- 35
Lighters and steam launches - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 26
Boats with valve appliances----------------------------------------------- 40
Excavators of different kinds---------------------------------------------- 88
Locomotives of gauge of 1.52 meters - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 253
Railway cars of gauge of 1.52 meters------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6,006
Kilometers of track of gauge 1.52 meters - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500
Locomotives, narrow gauge ----------------------------------------------- 14
Small cars (Decauville).--------------------------------------------------- 7,449
Kilometers of road (Decauville) -- - - - - - - - - - - - - - - - - - - - - - - - - - - r - - - - - - - - - - - - - - 110
Pocomobiles ------------------------------------------------------------- 169
Steam and hand windlasses - - - - - - - - - - - - - - --------------------------------- 254
Skiffs-------------------------------------------------------------------- 44
Perricks----------------------------------------------------------------- 278
PANAMA CANAL TITLE. 265
With some exceptions, the number of these machines appears to be
sufficient for the construction of the canal. There will be, then, to buy
only a certain number of machines and tools which the old company
did not have and the employment of which will produce an economy
in the execution of the works. The matériel in general has been and
continues to be well cared for.
VI.
You will understand, gentlemen, that we would not have undertaken
the difficult task which has been confided to us if we had not been pre-
viously assured by the opinion of a very honorable engineer, and one
of unquestionable ability, that the accomplishment of the canal was
not beyond the strength and devotion of men firmly resolved to under-
take that great work.
From the month of August, 1894, the promoters of the new under-
taking had applied to M. de la Tournerie, inspector-general, who had
acquired, as president of the general council of roads and bridges, an
exceptional experience of large works. -
He made his reply after a profound examination of the business.
After a complete study of all the documents of which he could possess
himself, he is convinced that the accomplishment of the canal can be
effected in the first days of October, 1894, and he accepted in princi-
ple the presidency of the technical committee provided by article 31
of the by-laws.
Immediately after the constitution of your company, M. de la Tour-
merie entered upon his duties, and we have occupied ourselves in form-
ing a personnel of engineers and constructors to send to the Isthmus.
The memories of the past have rendered this recruiting difficult, and
time was necessary to prepare instructions and establish a perfect
understanding with the engineers. They embarked at St. Nazaire on the
9th of December, 1894, and arrived at Colon the 30th of the same month.
Up to that date the continuation of the works on behalf of the new
company had been assured by the personnel of the liquidation of the
old company. -
The transfer of the business took place on the 7th of January, 1895,
without any difficulty, and conformably to instructions arranged
between the liquidator and our company.
The president of the technical committee went to the Isthmus,
accompanied by the administrator of the company, in order to settle by
personal inspection their own views and to complete the instructions
given to the local personnel. - $3.
After having left the Isthmus, and in order to make use of all means
of information, these gentlemen made a visit to examine the canal in
course of construction from Chicago to the Mississippi, some maritime
canals from Amsterdam to the sea, from the Baltic to the North Sea,
and from Liverpool to Manchester. . -
The preliminary studies and experiments which we have mentioned
have permitted the president of the technical committee to map out
the outlines of the enterprise. -
VII.
We do not need to remind you, gentlemen, that the construction of
a canal at sea level seems to be out of the question. The experience,
so dearly purchased, has demonstrated that such a work would entail
266 PANAMA CAN AI, TITLE.
an excessive expense and require a considerable lapse of time. Every-
One appears to be in accord at present in this respect.
There is no question, then, as to a canal with locks. * *
This being so, there have been numerous projects. The first was
prepared by the old company at the time when it was compelled to
renounce its original conception of a sea-level canal.
Another project was elaborated by the commission instituted by M.
Brunet, liquidator, under the presidency of M. Guillemain, inspector-
general of roads and bridges. The question was taken up again by a
great number of engineers, who have submitted useful ideas and pro-
posed ingenious solutions of such and such particular problems. We
shall owe much to the works of our predecessors. But investigations
were necessary to determine the details, and have required long and
minute studies upon the site. The commission presided over by
M. Guillemain recognized this formally so far as it concerned it, and
we can, without temerity, we think, extend this declaration to the
other projects whose authors have not been able to consecrate to such
difficult studies the time and money necessary. .
The two principal difficulties that the execution of the canal pre-
sents are the cut of Culebra and the management of the waters of the
Chagres. To-day the majority of technical men consider that these
difficulties should be overcome in the following manner:
The valley of the river will be dammed at suitable points selected,
in order to restrain the waters in such a manner as to form one or sev-
eral lakes. As a result, the diggings to be made will be much dimin-
ished, since on a great part of the course, in place of being obliged to
cut a trench, navigable lakes will be created. These lakes will consti-
tute at the same time immense reservoirs, so that the floods of the Cha-
gres will be received without danger to navigation and for the canal.
The Chagres will cease in this way to be a menace, but will, on the
contrary, be a valuable auxiliary. Finally, the cuttings will be nearly
reduced to the cut of Emperador and that of Culebra, the length of
which will be again diminished as a result of the rising of the plain
of water in the basin.
Thence will result the necessity of changing the present line of the
Panama Railroad according to a new line to be determined according
to the exigencies of the inundations.
On the other hand, the examination of the great maritime canals
constructed in these latter times and the conditions of carrying them
on demonstrates that for the security and facility of navigation it is
indispensable— . .
To open, from the beginning, the basin at the locks into two water
courses;
To construct locks with two basins, one of them having dimensions
sufficient to receive the great ships, the types of which have singularly
increased in these latter times.
As to supplying the higher water course, several plans have been
proposed. The question has not yet been definitively settled, but we
think we should say to you that it seems to us very desirable to supply
it by means of mechanical appliances. -
VIII.
As you see, our company finds itself in the presence of new prob-
lems, important to be settled. In perfect accord with M. de la Tour-
PANAMA CAN AI, TITLE. 267
nerie, we have thought it was not necessary to live in uncertainty or
in obscurity as to the different solutions possible. It is for this reason
that the Isthmus has been covered by a vast number of operations on
the land destined to furnish all the information necessary to examine
with full knowledge the numerous questions which have to be settled.
Under these conditions only can take place the deliberations of the
technical committee, to which will belong, according to article 31 of
our by-laws, the elaboration of a definitive project.
We should have seriously neglected our duty if, giving way to
natural impatience, we had shortened the period of preparation and
of study. -
The want of success of the efforts of our predecessors has cast upon
the works doubts which can not be dissipated except on condition of
presenting to the public a project deliberately conceived, studied with
scrupulous care, kept within the limits of moderate expense, and
answering, nevertheless, the requirements of traffic.
It would be an error to believe that one could find in a hasty and
precipitate development of the works a means of immediately restor-
ing confidence. -
The period of execution will be all the more short, the progress of
the works all the more exempt from hesitations, and all false steps or
expenses, including the interest, will be the less, the more the studies
shall have been made profound and complete.
Outside of this line of conduct, rigorous and methodical, it would
not be possible to assign a limit to the expense. -
These studies have been conducted with diligence and with the
greatest care by the personnel charged with them on the Isthmus; the
data and the results which they have brought to us have been succes-
sively put into practice. They are at present very much advanced,
and this essential part of the task approaches its termination.
IX.
At the same time that the studies were pursued without intermission,
we have taken up and developed with all the activity possible the works
commenced in the great cut of the passage of the Cordillera, which
must be made, whatever project may be definitively adopted.
But before attacking vigorously the excavations it was necessary to
make solid the unsafe masses on the left crest of the cut; otherwise
grave accidents would be feared. .
In the second place, it was not possible to develºimmediately upon
the whole length of the cut the works of Empéſador and Culebra,
because there is encountered in both cases special difficulties which a
study of the whole and of the special establishments for excavation
can alone settle surely and economically.
To-day, thanks to the protective works, we consider the danger of
landslides avoided, and a tentative study, taking into account the expe-
rience acquired and the matters to be provided for, has permitted to
be arranged a mode of work which warrants us in counting upon the
rapid and sure excavation of a large cubic quantity.
Finally, it was essential, under pain of proceeding infallibly to an
irremediable check of the enterprise on account of the great cost, to
regulate from the beginning the conduct of the works in a mannel
to maintain salaries at a reasonable rate. " .

268 PANAMA CANAL TITLE.
We have embarked successfully during some weeks ali the workmen
who had presented themselves. While we took the precaution not to
create needs in addition to those of the employment of the labor obtain-
able on the Isthmus, we had, however, in the month of April, a first
embarrassment in that respect. We recognized that our price paid
was a little low. We kept it very low in the beginning for the pur-
pose of destroying the illusion of those who looked for a return of the
extravagance of the past. We have, accordingly, consented to raise
slightly the price for our work. In the month of August a new mis-
hap occurred. The company, convinced that the salaries were sufficient,
resisted, and the workmen returned to the plants on the same condi-
tions as before. These facts demonstrated that it would have been
dangerous to give to the workmen at the start a too active impulse.
The price of day labor would have been too much raised and the total
expense seriously increased.
We believe, then, that we acted wisely in proceeding at the begin-
ning with circumspection and not in developing our plans except a lit-
tle at a time and in a methodical way, without endeavoring to make
immediately and regardless of price a large cubic excavation.
We have thus reached the point gradually of employing 2,000
Workers. To augment this number we have undertaken to get work-
men from certain of the Antilles, but the local authorities have thrown
obstacles in the way of emigration. This incident has a little retarded
Our recruiting in requiring us to seek elsewhere. Four hundred new
Workmen have arrived at Colon. Six hundred others are expected,
and the effective force is thus raised to 3,000 men. -
With this personnel of workmen we intend to vigorously continue
the works at the cut of Emperador and that at Culebra. A first trench
or ditch, the lower part of which will be 15 meters wide, will be car-
ried down to 4 meters below the plane of water in the water course at
those places. It belongs to the technical committee to determine upon
this plane, which does not permit us as yet to estimate exactly the
time for the digging of the ditch. -
This ditch will differ from the final trench only by its less width and
by a very slight difference in its depth. When it is terminated, the
possibility of completing the canal, one of the difficulties of which con-
sisted in crossing the Culebra, will no longer be doubtful to anyone.
X.
The sanitary administration has been the object of our constant solici-
tude. We have considered that nothing should cause a neglect in assur-
ing to the personnel the best hygienic conditions possible and the care
necessary in case of accident or sickness. {
The sanitary condition has this year been very satisfactory; the
number of sick has remained below all expectations. Of the two hos-
pitals possessed by the company we have been able to close that at
Colon, and we have kept that of Panama, which is more than sufficient
at present for the needs of the service.
During the month of June, which is, from a sanitary point of view,
one of the worst of the year, the number of sick in the hospital did
not reach 2 per cent of our effective force. $
It seems, besides, that the salubrity of the country has considerably
increased during some years. It is possible that this improvement is
/
PANAMA CANAL TITLE. 269
due to the clearing and cultivation which have taken place since the
cessation of the works of the old company.
XI.
In the course of the explanation which we have given you as to the
plants and the works we have sufficiently manifested our opinion as
to the important rôle which belongs to the technical committee. Such
is, we think, the true interpretation of article 31 of the by-laws.
Also, we have not ceased to occupy ourselves in the formation of that
committee.
We have thought that, to facilitate, when the time should come, the
appeal which we will have to address to French and foreign capital,
this committee ought to have an international character, and the
French members should be selected in a broad-minded way; that is to
say, at the same time among the engineers of state and among the
civil engineers.
The deference due to the Government has induced us to solicit,
before everything else, authorization to apply to the engineers of roads
and bridges in active service.
Our request was made in July last. We have since then repeated
it several times, but by dispatch dated the 29th of November last the
minister of public works informs us that he regrets not being able to
give us that authorization.
We have since commenced to take steps, from which we thought it
Our duty to abstain up to this time, in connection with some eminent
personages, French and foreign, and we expect that the technical
committee will be shortly constituted. -
XII.
We have now, gentlemen, to state summarily recent incidents to
which the project of the Nicaragua Canal has given rise.
As you know, an interoceanic communication by Nicaragua has
been under examination for a long time, and even during the period
in which the work of the old Universal Company was in the greatest
activity, divers attempts were made without success, to recommend
that enterprise to the public authorities of the United States.
A new effort is being made with the same end in view.
In the month of January, 1895, the Senate of the United States voted
a bill tending to constitute a company which would enjoy a guaranty
or interest given by the Federal Government and would be placed
under its control.
This bill was not accepted by the Chamber of Representatives, which,
however, voted at the end of its session a credit of $20,000 for an
examination of the project by an official commission.
The report of the commission has been made. We do not possess
its text, but, according to analyses published in American papers, it
will recommend the postponement of the matter. The opinion of the
commissioners will be that the probable expense would rise to about
double the figure contemplated by the promoters of the affair, and in
view of the gravity of the difficulties to be overcome it will be neces-
sary to proceed to new investigations, which would require at least
270 PANAMA CAN AI, TITLE.
eighteen months and entail an expense of $350,000, or nearly 1,800,000
francs.
It is not for us to predetermine the decision which will be taken on
the subject of this affair by the United States. We have confidence
that that great nation will understand that the universal character of
the work of Panama can not fail to give all security to the commer-
cial and political interests of the American people, the sympathies of
whom we make it our business to cultivate, as we do those of all the
maritime nations. -
XIII.
We have nothing to add to the detailed explanations given you by
the commissaires of accounts on the balance sheet of June 30, 1895,
printed at the end of the present report.
We may mention that the commission of examination, instituted by
the liquidator of the Universal Company, in accordance with the pro-
visions of article 5 of the by-laws, has proceeded to have its creden-
tials verified. We have gladly placed ourselves at its disposition to
facilitate the accomplishment of its mission.
XIV.
By the terms of article 22 of the by-laws, the council of administra-
tion renews itself to the extent of one-third every two years, when its
members are of the number of 9, 12, or 15; and in case the number
of administrators in activity is not exactly divisible by 3, it belongs
to the general assembly to arrange the matter.
Your council is at present composed of ten administrators. We
propose to you to decide that four of them instead of three shall be
selected by lot before your next annual meeting, which will have to
vote as to their being replaced or their reelection.
XV.
It has appeared to us natural and desirable that the bondholders of
the old company, interested like you in the accomplishment of the
canal, should be represented in your council of administration, and
the constitutive meeting of the 20th of October, 1894, has taken action
inviting us to submit a proposition to that end. -
We have particularly considered that point, but we have speedily
recognized the difficulty of proposing to your choice such and such an
individual selected among the old company bondholders, without raising
delicate personal questions.
It is for the bondholders themselves to agree upon the designation
of their candidates; but the number of persons interested in the old
company is too great for that to be possible, and the candidates pre-
sented by a group would never be more than those of a minority.
We have accordingly thought best to address ourselves to M. Lemar-
quis, who is, by virtue of his legal commission, the representative of
all the bondholders without exception.
This honorable mandataire of justice, approached on this subject,
has responded that he was ready to join his efforts with ours for the
accomplishment of the canal. But he has observed to us that, if the
accomplishment of that great work created numerous interests com-
PANAMA CANAL TITLE. 271
mon to the stockholders of the new company and his principals, the
bondholders, he considered that, in order to represent the latter in
your council with independence, he could not accept the post of man-
dataire of the stockholders. -
We have recognized those obligations as well founded, and in order
to respond to the desire expressed by the general assembly of October
20, 1894, we propose to you to authorize your council by special res-
olution to join with itself M. Lemarquis, judicial mandataire of the
bondholders, to have the right to take part in all the sessions of the
council of administration with a consultative voice, and to propose
there any measures which he may judge proper.
We can also delegate to him, by application of article 29 of our by-
laws, and when we think it for the interest of our company, the whole
or part of our powers, with the object of utilizing in an effective
manner the concurrence which he has consented to give us.
XVI.
We have endeavored, gentlemen, to present to you an explanation
as clear and complete as possible of the progress of your affairs.
You know under what specially difficult circumstances your com-
pany was created, and how we were called upon to undertake the work
of reconstituting the business of the Panama Canal. We had at the
beginning everything to do to assure its being carried on, and every-
thing to learn to discover the truth in the midst of the contradictory
and sometimes impassioned views to which it has in the past given
rise. - -
We have not thought proper to act at all after forming an opinion
conscientious and reasonable concerning facts, a great number of
which were little understood or badly interpreted.
We find the Panama Railroad in a delicate situation. The agree-
ment to be signed will improve the circumstances of its operation,
and the establishment of maritime installations at Panama, which
depend only upon your vote, will contribute to the development of
the traffic. -
During the short duration of an administration of eight months we
have assured the rights resulting from the acts of concession on the
point of escaping from the liquidation of the old company. We have
taken possession of the lands, immovable properties, the matériel, and
the works existing on the Isthmus, as well as the other parts of the
contribution. We have looked after the recruiting of the personnel,
and organized the activities of the new company. We have taken up
again the works of the canal, and have given to them a methodical
impulse which belongs to the conducting of a great enterprise. By
examinations, pursued with care, we have disengaged the general lines
of the solution to be adopted, and prepared the elements to be sub-
mitted to the deliberations of the technical committee in conformity
with article 31 of our by-laws, to arrange the definitive project of a
navigable way susceptible of great traffic. If we do not encounter
one of those difficulties which defies human foresight, the great trench
of Culebra will be greatly lowered, and will furnish the demonstration
that the confident hopes of the promoters and the stockholders of your
company may become a reality. - -
We are reaching the end of a period of examination and organization
272 T’ANAMA CAN AL TITLE.
of plants which appeared to us to be the indispensable condition of
success. We are now at the point of vigorously attacking the works.
Strong in your support and your confidence, we are resolved to pursue
the construction of the canal with all the energy of which we are
capable. -
REPORT OF THE COUNCIL OF ADMINISTRATION OF THE NEW PANAMA
CANAL COMPANY OF DECEMBER. 21, 1901. f
GENTLEMEN: You have met in ordinary general meeting, in con-
formity with article 36 of the by-laws.
Since your last meeting we have pursued regularly the continuation
of the works, notwithstanding the trouble caused on the Isthmus by
the political situation and the revolutionary crisis. As in the past.
our efforts have been concentrated upon the excavation of the great
central trench, and especially upon that part of it at Culebra.
The cubic quantity taken out during the year is 1,080,000 meters,
which carries the total cube excavated since the recommencement of
the work by the new company to 5,850,000 meters for the entire
trench. The depth of the trench is lowered by this to an altitude of
about 45 meters above sea level in the culminating part of the trench.
We are excavating now on a large scale according to a methodical
working organization, with a view to the final section. The Panama
Railroad Company has reported definitely upon its proceedings as to
the partial deviation of its road between the stations of Culebra and
Pedro-Miguel, a deviation which we have effected to permit us to get
rid of the part of the railroad that crossed the trench at the exit from
the Culebra hill, and which constituted an obstacle to the work of
excavation. - -
As we made known last year, we are continuing in a regular manner
our hydrological observations, which are of serious interest for the
solution of problems concerning the discharges of the Chagres and its
affluents, both at low water and during floods.
The sanitary condition of our personnel is as satisfactory as possible.
In a personnel of agents and workmen of about 2,000 men, we have to
deplore only 50 deaths, of which 44 were from causes existing in all
countries, or from accidents incident to the work; 6 only were due to
maladies of the climate.
The business of 1900–1901 has been particularly marked by our rela-
tions with the Government of the United States. We come now to
the part of our report which has to do with those relations. We limit
ourselves to presenting to you an account of them necessarily con-
densed, but clear and precise. -
You know already that we have accepted the principle of a cession
to the Government of the United States of our concession and of all
our properties on the Isthmus. - -
In execution of a law voted by the Congress on March 3, 1899, the
President of the United States has appointed a special Commission
charged with examining, in all its aspects, the question of the construc-
tion of an interOceanic canal by one or another of divers routes which
may present themselves. - -
You are not ignorant that by reason of the formal prohibition stipu-
lated in article 21 of our law of concession we can not take any effect-
ive action in the way of a sale to the Government of the United
PANAMA CANAL TITLE. 273
States without the authorization of the Colombian Government.
Through its minister plenipotentiary and envoy extraordinary at
Washington, M. Martinez Silva, the Colombian Government acquainted
us, on the 28th of March, 1901, with its intention to give to “the canal
company authority to transfer its concession to the Government of
the United States, upon certain conditions concerning the two Gov-
ernments.” - .
This intervention took away the prohibition decreed by the law of
concession and gave us the power to enter upon negotiations with the
Government of the United States without compromising ourselves.
With a view to the carrying on of those negotiations and to furnish
for them a rational basis, we have made with the greatest care an esti-
mate of our properties of all kinds on the Isthmus—concession, maté-
riel, constructions, works, rights as to the railroad, etc. This impor-
tant work divides itself into articles which, all together, represent a
considerable sum. - -
In transmitting to the president of the Isthmian Canal Commission
(that is the name of the Commission above mentioned), M. Hutin,
president of the company, undertook to specify the nature of this
work. He said especially in his letter dated October 4, 1901:
I desire to add, Mr. President, that these are simply sums to which we are led by
a personal valuing which we are making of the different elements, to be discussed
pro and con in the negotiations, and which, from the very fact of those negotiations
between independent parties, can be modified to an extent more or less important.
This is, then, properly speaking, that first expression of the views of the company to
which you allude in your letter of May 16 last as intended to serve as a basis for dis-
cussion, as concerns us, in the proposed negotiations—negotiations which we shall
undertake, believe me, with the greatest desire to reach a reasonable agreement. We
are prepared to carry to them, with that end, a sincere spirit of conciliation and of
concession, hoping that we will find on the other side the same spirit and the same
desire to reconcile, in an equitable manner, the serious interests before us.
These statements seemed of a sort to prevent all misconceptions.
There has occurred, nevertheless, an incident of which we shall give
an account. -
The final report of the Isthmian Canal Commission was made to the
President of the United States at the end of last month. According
to the findings of that report the Commission declares itself in favor
of the Nicaragua route, after having, however, set forth faithfully the
numerous advantages of the Panama route. That decision is based
principally upon this consideration, that the price fixed by the Panama
Canal, Company is so high that the Commission can not recommend its
acceptance. .
We believe that there is here only a misconception, for the company
has never intended to fix a price, but only to offer a basis for discus-
ision. The communications previously received permitted it, besides,
to count upon the Commission’s lending itself to that discussion. But
the Commission has considered that its authorization did not extend to
negotiating, and it has made its report, stating therein as the price
demanded by the company the total of the valuations. .
However this may be, it is important to correct without delay that
error. It seemed to us that the report of the Commission furnished a
means of arriving at that end in a manner such as to leave no room
for doubt. .
Among other advantages of the Panama route over that of Nicaragua
the report of the Commission makes prominent a decided economy in
8751–02—18 -
274 PANAMA CANAL TITLE.
the cost of construction and an annual economy in the expenses of
operation. Here, then, is, outside of the technical advantages, a
motive of preference in favor of the Panama Canal.
We shall ask you at once to give us all powers to treat with the
Government of the United States under the reservation of submitting
to your vote of approval the sum settled upon by the Government of
the United States and the agent charged by us to carry on the negotia-
tions. But, from the present, we desire to inform you that our nego-
tiator will receive instructions to declare to the American Government
that we are ready to make omissions from the valuations which have
been considered as a fixed and determined price from that point of
view inadmissible, and that we shall offer to take for the basis and
point of starting for the debate which we ask for and which it will not
decline, as we believe, the figures and statements contained in the
findings of the final report of the Isthmian Canal Commission. We
shall give, besides, to our agent the power to close the discussion upon
proposing a fixed price. -
Under these circumstances it seems to us that nothing equivocal can
exist as to our attitude and our intentions.
We hope that this simple and categorical offer will have a favorable
influence upon the future negotiations. On one hand it will raise for
us a weapon of which we shall not fail to make use, in letting it be
known that our conciliatory intentions are not accompanied by incon-
sistent acts. On the other hand, it will bear witness to our confidence
in the result of a serious valuation of our properties, whatever method
therefor may be adopted. -
We have to regret to see separate from us, upon this question, Our
honorable colleagues, M. Hutin, president and director-general, and
M. Choron, administrator and director of the works. Their resigna-
tions, which have been accepted, leave a great void in the council, which
will preserve the memory of their wisdom and devotion.
Death has taken from us in the course of the year our colleague,
M. Rouget, former inspector-general of finance. You will join us in
rendering to the memory of M. Rouget a sincere testimonial of pro-
found respect. -
Making use of the right conferred upon us by article 23 of the
by-laws, we have replaced MM. Hutin and Choron by MM. Forot,
former comptroller-general of the army, and Bourgeois, former
receiver of the finances at Paris. We ask you to ratify these nomina-
tions, as well as that of M. Richmann, whom we have called to the
council upon the death of M. Rouget. M. Richmann is recommended
to your election by long services rendered in the administration of the
finances, where he recently occupied the high post of central receiver
of the department of the Seine.
We ask of you also, by way of completing the council, to be good
enough to select for the office of administrator M. Gueydan, former
negotiator with the United States.
Gentlemen, it appears to us superfluous to call your attention to the
resolution which is submitted to you on the subject of the attitude
to be taken with regard to the Government of the United States.
After a conscientious examination of the situation we have arrived at
this conviction, that no other method of negotiations is adapted to the
circumstances.
It is true, and we should call your attention to it, that the solution we
propose does not depend exclusively upon the agreement to be reached
PANAMA CANAL TITLE. 275
between our company and the great American Republic. This solu-
tion is subjected, besides, to the arrangements to be concluded between
the Government at Washington and the United States of Colombia.
But, at least, in the sphere which belongs to us, we have done what
is demanded, not only by your interests but by those that take their
origin in the old Panama Canal Company.
[Here follow four resolutions, one approving the accounts as
reported, two concerning current business, including the election of
the officers above referred to, and the other as below:]
The general meeting, after having heard the report of the council
of administration, approves the conclusions of that report and gives
all powers to its council of administration to negotiate the cession of
the properties, concessions, privileges, etc., of the company and to
contract, under the reservation of ratification by the stockholders.
ExHIBIT o.
JUDGMENT OF AUGUST 2, 1901 (CIVIL TRIBUNAL OF THE SEINE),
AUTHORIZING THE LIQUIDATOR TO CONSENT TO ARBITRATION.
AUGUST 2, 1901.
REQUEST FOR THE INCREASE OF THE Powers OF THE LIQUIDATOR.
[12th Chamber, No. 33.]
[Taken from the minutes of the clerk of the civil tribunal of first instance of the department of the
Seine, sitting at the palace of justice, Paris.]"
The civil tribunal of first instance of the department of the Seine,
in session in the palace of justice in Paris, rendered in the chamber of
the council the decision, the tenor of which is as follows:
The tribunal assembled in the chamber of the council in view: First,
of the request presented by Gautron in his official capacity, signed by
Biéville, attorney, and the tenor of which is as follows:
To M.M. the President and Judges composing the chamber of the
council of the civil tribunal of the Seine: .
M. P. Gautron, liquidator of the Compagnie Universelle du Canal.
Interocéanique de Panama, residing at the seat of the liquidation,
Rue de la Chaussée d’Antin No. 42, M. Biéville acting as his attorney,
has the honor to state to you: *
That the judgment of the civil tribunal of the Seine dated February
4, 1889, which declared the dissolution and the placing in liquidation of
the Société du Canal Interocéanique de Panama, has appointed M.
Joseph Brunet as liquidator of the said company with the most extended
powers, especially to cede or contribute to any new company all or part
of the corporate assets, to make or ratify with the contractors of the
Panama Canal all agreements for the purpose of insuring the continu-
ation of the works, and of contracting loans and furnishing all guar-
antees thereto; -
That the tribunal said that, in case of the disability of the appointed
liquidator, his place should be filled by the usual methods;
That it thereupon authorized him to solicit in the same way all
special powers which should be necessary for the fulfillment of his
mission, and if he judged it useful, the addition of one or more
liquidators; . . -
That M. Achille Monchicourt was named assistant liquidator of the
\
276 PANAMA CANAL TITLE.
Compagnie Universelle du Canal Interocéanique de Panama by the
judgment of the chamber of the council dated February 13, 1890;
That after the resignation of M. Brunet, M. Achille Monchicourt
solicited and obtained the addition of M. Gautron joint liquidator by
the terms of a judgment of the chamber of the council of July 21, 1893;
That in consequence of the death of M. Achille Monchicourt, M.
Gautron remained the sole liquidator; - -
That the liquidation of the Compagnie Universelle du Canal Inter-
océanique de Panama is at this moment confronted with negotiations
entered into by the Compagnie Nouvelle du Canal de Panama with the
Government of the United States of North America and with the
eventuality of the transfer of the concession and canal works either to
the Government of the United States or to a foreign company;
That this transfer could not be validly made by the new company
except with the concurrence and assent of the liquidation of the Com-
pagnie Universelle du Canal Interocéanique de Panama and of the
representative of the bondholders and creditors of the liquidation;
That the liquidation may find itself in disaccord with the Compagnie
Nouvelle as to the price to be asked or the conditions to be proposed to
the eventual purchaser;
That there exists a difference of interests between the liquidation
and the new company upon the subject of a division of the proceeds of
the said transfer; w -
That an immediate discussion might bring about no result and would
be of a nature to injure the result of negotiations pending with an
eventual purchaser; -
That it is essential to submit the questions in dispute which may
arise to the decree of amicable arbitrators charged with deciding all
questions relating to— - - . .
Firstly. The determination of the price and the conditions to be
proposed to the eventual purchaser; - a
Secondly. The division of the proceeds of the sale should such sale
be effected; . - -
That the right of liquidators of companies to compromise is con-
tested by certain legal authorities as exceeding acts of their adminis-
tration; -
That it is therefore necessary to solicit from the tribunal the author-
ity for M. Gautron to consent to an arrangement under the circum-
stances above stated, and in the case of a sale of the concession and
the canal works as well as all of the assets of the Compagnie Nouvelle.
Wherefore the petitioner prays that it may please the president and
judges to authorize him in his capacity of liquidator of the Compagnie
Universelle du Canal Interocéanique de Panama to pass an agreement
with the Compagnie Nouvelle du Canal de Panama upon all matters of
dispute which may arise in connection with—
Firstly. The determination of the price and the conditions to be pro-
posed to the eventual purchaser of the concession and canal works and
all the assets of the new company; .
Secondly. The division of the proceeds of the sale between the new
company and the liquidation of the Panama Canal Company should
such sale be effected. -
Under all reserves. - - - -
And this will be justice. DE BIſàviLLE.
PANAMA CANAL TITLE. 277
In view, secondly, of the decree of the president of the tribunal
being as follows, the -above request shall be communicated to the
attorney for the Republic in his office, and we appoint Vice-President
Laporte to make his report. * - .
Paris, the 31st day of July, 1901.
BAUDOIN.
In view, thirdly, of the conclusions of the attorney for the Republic,
which are as follows, the attorney for the Republic does not object.
Rendered in the attorney’s office August 2, 1901.
- . - . PEZOUS.
In view, fourthly, of the various documents submitted,
Having heard Vice-President Laporte in his report, the attorney for
the Republic in his conclusions, and after having deliberated in con-
formity with law, judging in first instance: -
Whereas by a judgment of this chamber, dated July 21, 1893,
Achille Monchicourt petitioned for and obtained the addition of Gau-
tron as coliquidator of the Compagnie Interocéanique de Panama;
Whereas, in consequence of the death of Achille Monchicourt, Gau-
tron remained the only liquidator; . . )
Whereas, from the documents submitted it appears that it is neces-
sary to authorize Gautron to consent to a compromise in compliance
with his request; -
For these reasons: * * -
Authorizes Gautron, in his official capacity, to consent to a compro-
mise with the Nouvelle Compagnie du Canal de Panama upon all liti-
gious questions which might arise relating—
Firstly. To the determination of the price and conditions to be pro-
posed to the eventual purchaser of the concession and the canal works
and all the assets of the new company; * : * - - •.
Secondly. To the division of the proceeds of the sale, if that sale
should be effected, between the new company and the liquidation of
the Panama Canal. . - - - -
. LA PORTE,
LE BERQUIER,
FLOQUET.
Ordered and decreed in the chamber of the council of the civil tri-
bunal of the first instance of the department of the Seine, sitting in
the palace of justice in the city of Paris, by Laporte, president; Ber-
quier, judge: Planchenault, special judge: in the presence of M.
Pezous, substitute for the attorney for the Republic, assisted by Flo-
quet, clerk. - - . -
August 2, 1901.
(In consequence, etc., * * *) * - . . .
The minute was signed by the president, the reporting judge, and
the clerk. - - -
Recorded at Paris the 19th of August, 1901, folio 94, division first.
Received 9 francs, 38 centimes, decimes included. -
- * VARINOT.
A true copy: . -
FLOQUET,
278 PANAMA CAN AT TITLE.
ExHIBIT P.
RESOLUTION OF DECEMBER 23, 1901, OF THE COUNCIL OF THE
ADMINISTRATION OF THE NEW PANAMA CANAL COMPANY, TO
AGREE TO ARBITRATE WITH THE LIQUIDATOR.
ExTRACT
of the minutes of the meeting of December 23, 1901.
Were present : MM. Bó,
Bourgeois,
Couvreux,
Forot,
Gueydan, -
Le Baron de Lassus St. Genies,
Georges Martin, -
Monvoisin,
Rischmann,
Terrier,
Samper, representing the Colombian Gov-
ernment. .
The board, after discussion, resolves, unanimously, to enter into the
proposed agreement with M. Gautron, liquidator of the Compagnie
Universelle, and gives all powers to MM. Bo and Monvoisin to sign
same agreement. - * - -
The president of the Council of Administration,
(Signed) BÖ.
EXIIII»IT Q.
AGREEMENT OF DECEMBER 24, 1901, REGARDING ARBITRATION.
BETWEEN THE UNDERSIGNED:
1st. — M. Jean Pierre Gautron, acting in his capacity of Liquidator
of the Compagnie Universelle du Canal Interocéanique de Panama.
2nd.—The Compagnie Nouvelle de Panama represented by MM.
Marius Bó and Monvoisin, Administrators, by virtue of a resolution of
the Council of Administration dated December 23, 1901.
It has been stated and agreed as follows—
STATEMENT:
By the terms of article 52 of the by-laws of the New Panama Canal
Company, the profits of the enterprise, such as had been determined
by article 51, were to be divided between the stockholders of the New
Panama Canal Company and the Liquidation of the Compagnie Uni-
verselle de Panama in the proportion of 40% to the former and 60%
to the latter. - -
As negotiations may be opened for the sale of the Panama Canal
enterprise to the Government of the United States of North America,
a sale which would modify profoundly the conditions of its contribu-
tion to the enterprise, the Liquidation of the Compagnie Universelle
PANAMA CANAL TITLE. 279
has held: 1st.—That these negotiations could not be carried on without
its intervention; 2nd.—That the price of the sale could not be fixed
except in agreement with the Liquidation; 3rd. —That the share to
go to the Liquidation in the said proceeds should be larger than the
proportion fixed by article 52, on account of the damage suffered by
the Liquidation from the fact of the sale and the consequent abandon-
ment of its rights to the eventual future profits of the enterprise.
While maintaining a contrary opinion upon these three points, the
New Company has admitted that, as a matter of fact, in default of a
previous agreement with the Liquidation, there might be difficulty in
bringing the negotiations to a successful conclusion. It therefore
proposed that the direction of the negotiations and the power to treat
should be accorded to the New Company, remarking, on the one hand,
that they could with difficulty be conducted by two persons, and on
the other hand, that the pecuniary interests of the Company which,
moreover, appears as alone invested with ownership, so far as third
parties are concerned, gave all necessary guaranty to the Liquidation
for the conduct of the negotiations and their eventual conclusion; and
it offered to submit to the decision of a Tribunal of Arbitration the
third claim of the Liquidation of the Compagnie Universelle.
Coinciding with these views, M. Gautron, Liquidator of the Com-
pagnie Universelle, in accord with M. Lemarquis, the judicial rep-
resentative of the bondholders, on the one hand, and the New Panama
Canal Company, on the other hand, have, under the advice of their
counsel, entered into the following agreement:
A GREEMENT:
ARTICLE FIRST:
The New Panama Canal Company alone remains charged with
carrying on the negotiations. . It shall have full powers to conclude
eventually with the Government of the United States and to fix,
after discussion with it, the price and conditions of the sale.
ARTICLE SECOND:
A Tribunal of Arbitration is hereby appointed, charged, from now
on, with the determining the proportions in which the proceeds of the
sale shall be assigned to the New Panama Canal Company and to the
Liquidation of the Compagnie Universelle. - -
This Tribunal of Arbitration shall be composed of five members.
ARTICLE THIRD:
The New Company designates:
MM. Du Buit and Léon Devin.
M. Gautron, in his official capacity, designates on his side:
MM. Limbourg and Henri Thiéblin.
The two parties have agreed to designate as fifth arbitrator M.
Bétolaud, late chairman of the Bar Association.
ARTICLE FOURTH:
The arbitrators shall render their decision within the month which
will follow the convening of the Tribunal of Arbitration.
280 PANAMA CAN AL TITLE.
They are freed from the rules and forms of procedure; they shall
decide as amicable arbitrators, without appeal or recourse to the
Supreme Court. -
ARTICLE FIFTH:
The present agreement is made: -
1st. So far as concerns the Liquidator of the old Company, by
virtue of the authority to compromise which was conferred upon
him by the judgment of the Chamber of the Council of the Civil
Tribunal of the Seine dated August 2nd, 1901.
2nd. So far as concerns the New Company, by virtue of the powers
which article 28 of the by-laws confers upon the Council of Administra-
tion, but subject to final approval by the general meeting of shareholders
of the conditions of the transfer to the United States Government.
Done in duplicate at Paris, the 24th of December, 1901.
Read and approved, Read and approved,
Signed: M. Bo. Signed: GAUTRON.
Read and approved.
Signed: M. MonvoisiN.
NEW PANAMA CANAL COMPANY - i
Joint Stock—Capital: 65 millions of francs.
Corporate office: 7 rue Louis le Grand, Paris.
EXIIIIBIT R.
AWARD OF ARBITRATORS, FEBRUARY 11, 1902.
In the year one thousand nine hundred and two and on the twenty-
first of January at nine o’clock in the evening, in the study of M. Béto-
laud, former President of the Bar, 25 Avenue Marceau, at Paris, and in
his presence, met MM. du Buit, former President of the Bar, Léon
Devin, former President of the Bar, Limbourg and Henri Thiéblin, bar-
risters of the Court of Appeal of Paris, all five appointed arbitrators by
the agreement of compromise hereinafter mentioned. And thereupon
appeared before them MM. Marius Bó and Monvoisin, administrators
of the New Panama Canal Company, in the name of which they act,
attended by Me. Dubourg, attorney of the Court, and counsel of the New
Panama Canal Company. A letter was read from M. Gautron, Liquida-
tor of the Compagnie Universelle du Canal Interocéanique de Panama,
who excused himself, on account of the state of his health, for not being
able to attend the hearing. In his absence Me. de Biéville, counsel
of the Liuidation, represented his interests. Finally appeared M.
Lemarquis, acting as legal representative of the bondholders of the
Compagnie Universelle du Canal Interocéanique de Panama.
After the reading of the agreement of compromise of December 24th,
1901, which will be annexed to these presents and recorded at the same
time with them, MM. Bó and Monvoisin called upon the five arbi-
trators appointed to state whether they accept the office conferred
upon them. MM. de Biéville and Lemarquis state that they have no
objection to make to this request and that they unite in it, so far as
may be necessary.
PANAMA CAN AI. TITLE. 281
Whereupon the five arbitrators appointed stated that they accepted
the duties confided to them and they immediately organized as a tribunal
of arbitration under the presidency of M. Bétolaud.
And they signed, after reading, with the parties present and their
counsel. - -
Signed: M. B6, Monvoisin, A de Biéville, Dubourg, Léon Devin,
Du Buit, Henri Thiéblin, Limbourg, A. Bétolaud, Lemarquis.
And, without adjournment, we, the arbitrators, declared, in agree-
ment with the parties present, the hearing opened.
Thereupon Me. de Biéville spoke in the name and on behalf of the
Liquidation of the Compagnie Universelle du Canal Interocéanique de
Panama, to state the matter in dispute and to support the claims of the
Liquidation, reserving the right to file a brief later. -
After which, at half-past eleven o’clock, we, the Arbitrators sus-
pended the hearing, and adjourned, in agreement with the parties
present, to Monday the 27th of the current month, at half-past eight
o'clock in the evening, at the same place as above, to hear the explana-
tions which will be presented by the New Company, it being agreed
by both sides that upon that day the parties shall file written briefs.
And we signed with the parties after reading.
Signed: M. Bó, Monvoisin, A. de Biéville, Dubourg, Léon Devin,
H. du Buit, Henri Thiéblin, Limbourg, A. Bétolaud, Lemarquis.
sº-º-º-º:
On the fourth of February in the year one thousand nine hundred
and two, at half-past eight o’clock in the evening, we, the five arbi-
trators named in the preceding minutes, met in the study of M. Béto-
laud, one of us. And before us appeared: M. Jean Pierre Gautron,
judicial Liquidator of the Compagnie Universelle du Canal Interocé-
anique de Panama, M. Henri Boudet, Secretary General of the said
Company, M. Lemarquis, Representative of the bondholders of the
Panama Company, M. Marius Bó and M. Monvoisin, representing the
New Panama Company. It was thereupon explained that the hearing
which was to have taken place on the date of Monday, January 27th,
was adjourned at the request of both parties, and postponed, by agree-
ment, to to-day at the same place and time. M. de Biéville filed a
brief in the name of the Compagnie du Canal Interocéanique de Pan-
ama in liquidation, and undertook to furnish, in 48 hours, a copy on
stamped paper to be annexed to these presents. The floor was given
to M. Chaumat, advocate of the Court of Appeal, present and assist-
ing the representatives of the New Panama Canal Company.
And at this moment M. Gautron, prevented by his health from
being present at the first meeting, stated that, having examined the
foregoing minutes, he gave his full consent thereto. And foreseeing
that, for the same reasons of health, it would not be possible for him
to remain until the end of the hearing, he reserved the right to with-
draw when he should find it necessary, delegating henceforth all his
powers to M. Boudet, Secretary General of the Company in liquida-
tion. And he signed, in this place, the present statement.
- Signed: GAUTRON.
M. Chaumat set forth the arguments which the New Company under-
took to file on stamped paper on the evening of the day after to-mor-
282 TAN AMA CANAL TITLE.
row, Thursday, to be annexed to these presents. After the argument
of M. Chaumat, remarks were made by Me. de Biéville in reply, and
after him by MM. Lemarquis and Monvoisin, in the presence of Me.
Dubourg, attorney, who came in during the course of the hearing.
None of the parties nor their counsel desiring to be heard further, the
case was closed, the arbitrators reserving the matter for consideration
among them later. . - -
The hearing was closed at midnight and we, the arbitrators, signed
with the parties and their counsel, after reading.
Signed: Henri Thiéblin, A. Bétolaud, Limbourg, Léon Devin,
Dubourg, Henri Boudet, Bó, H. du Buit, Monvoisin, J. Chaumat,
A. de Biéville, Lemarquis. -
And just as they were about to withdraw, MM. B6 and Monvoisin,
in the name of the New Company, M. Boudet, as substitute for M.
Gautron and for M. Lemarquis, representative of the bondholders, all
acting by virtue of powers conferred upon them, stated that they
waived the filing of the decision by the arbitrators in the clerk’s office.
The original of the decision with the minutes of the arbitration and
the documents annexed, shall be placed in the hands of Me. de Biéville,
the attorney of longest standing, appointed by agreement of the par-
ties, who shall send to each of them a copy of the decision, certified
by him, as well as of the minutes. And the parties signed, after
reading. - .
Signed: M. B6, Henry Boudet, Monvoisin.
}
*-*
On the 11th of February, in the year one thousand nine hundred
and two, at half-past eight o’clock in the morning, we, the five arbitra-
tors, mentioned in the foregoing minutes, met in the study of M.
Bétolaud, one of us, where, after having continued our consultations
and examined anew the briefs of the parties, of which two originals
on stamped paper have been heretofore filed, one by the liquidator,
the other by the New Company, and will be annexed to these presents,
to be recorded at the same time with it, have rendered our decision as
follows:
THE TRIBUNAL OF ARBITRATION:
Considering, as matter of fact, that on the occasion of the negotiations
entered into by the New Panama Canal Company, with the consent of
the Liquidator of the Compagnie Universelle du Canal Interocéanique
de Panama, with a view to a sale of the enterprise to the Government
of the United States, the New Company and the Liquidator, having to
consider in what way, if the sale should take place, the division of the
price of sale should be made between them, could not agree upon the
bases of this division; -
That the New Company maintained that the division of the price
should be made in conformity with the provisions of Articles 51 and
52 of its articles of incorporation, in this sense, that the New Company
would have the right to take out, before any division, the total amount
of its corporate capital, and that the remainder of the price should be
allotted, 60 per cent. to the Liquidator and 40 per cent. to the New
Company; that it desired it to be noted, however, that it did not
PANAMA CANAL TITLE. 283.
Oppose the Liquidator's being authorized, after it had taken out its
capital, to take out the sum of twenty million francs, for the Panama
Railroad shares; - l
That the Liquidator, on his side, maintained that the articles of incor-
poration had not settled the effect which a sale of the enterprise should
have upon his relations with the New Company; that the division of
the price of this sale should be made between the New Company and
the Liquidation, after taking out for the benefit of the latter a sum
of twenty million francs for the Panama Railroad shares, in the pro-
portion of the value of their respective contributions, and that, in any
case, the Liquidation should receive at least a sum equal to that which
a sale of the assets of the old company would have produced, if the
New Company had not been formed;
That it was in view of this disagreement that the parties agreed to
refer to amicable arbitrators the settlement of the dispute;
Considering that the first question to be settled by the arbitrators is
to ascertain whether the provisions of the articles of incorporation
considered literally or in their spirit, are applicable to a division of
the price of a sale between the two parties in interest;
That it is proper, for this purpose, to seek in the articles the pro-
visions by which the contracting parties have regulated between them-
selves the different situations which, they foresaw, might arise in the
future;
Considering that article 2 shows that the object of the Company is,
1st, the completion of the canal; 2d, its operation; 3d, the construction
and operation of all lines of railroad in the vicinity of the canal; 4th,
the exploitation of the lands granted and the mines therein contained;
all subject to the clauses and conditions of the concession granted by
the United States of Colombia; * -
That article 5 enumerates the contributions made by the Liquidator
of the Compagnie Universelle du Canal Interocéanique de Panama,
consisting of 1st, the concession itself with all its benefits and all its
burdens; 2d, the work executed, yards, shops, buildings, hospitals,
machinery, materials and supplies, deposits as security, etc.; 3d, the
plans, estimates, studies, documents of every nature relating to the
canal, as well as all agreements with third persons; 4th, the shares in
the railroad from Panama to Colon, operated by the American Com-
pany called the Panama Railroad Company, of which the Liquidation
is the owner; - - -
That these contributions carried the entire title to the property;
That no remuneration was provided for the benefit of the Liqui-
dator who made them, either in cash or in shares;
But that they were made under certain reservations and conditions;
That it was provided, in the first place, that the Liquidator should
have 60 per cent. of the net profits of the enterprise as fixed by articles
51 and 52; that is to say, after deduction of the share promised to the
Colombian government, of the expenses of maintenance, operation and
administration, of the sums necessary on account of loans, for the legal
reserve of 5 per cent. of the corporate capital, intended to insure
the amortization of the shares, and to pay interest upon the shares
not amortized, and of 5 per cent. for the benefit of the council of
administration; • - : : {
That 50,000 full paid shares were set apart for the Government of
Colombia; - -
284 PANAMA CAN AL TITLE.
That, as to the Panama Railroad shares, their final disposition was
regulated in a different way according to three possible events;
That it was said in Article 75 that, when the New Company should
have expended at least half of its corporate cash capital for the work
to be done upon the Canal and for the discharge of the incumbrances
resulting from the contribution, a special technical commission should
pronounce upon the results gained and the conclusions to be drawn for
the remainder of the enterprise, that the opinion of the Commission
should be made public and that a special stockholders’ meeting should
be called for the purpose of considering ways and means tending to the
completion of the work, and the stipulations contained in Article 5,
Sec. 4, No. 3; - :
That article 5 provided that the Panama Railroad shares should
remain the property of the New Company from this meeting, with-
out any pecuniary compensation, but upon the condition subsequent
of the construction of the canal within the period fixed by the conces-
sion, and that, in default of completion within this period, the shares
shall revert to the Liquidation; - -
That it provided furthermore that if, contrary to all expectation,
the meeting should not take the necessary action for the completion
of the Canal, or if the course of action adopted by the meeting could
not be carried out, the shares should remain the property of the New
Company, but it should pay to the Liquidation the sum of twenty
million francs by Way of indemnity and the share of profits set apart
for the Liquidation should be half the profits of the company with-
out other deduction than that of the expenses of administration and of
the legal reserve: s . .
That, consequently, the shares should remain inalienable until
either the payment of the sum of twenty millions or the completion
of the canal; -
Considering that it results from these provisions, taken together,
that the object aimed at by the two contracting parties was the com-
pletion of the Canal and its operation, the profits of this operation,
divided annually between the two participants in the proportion of
sixty and forty per cent., being intended alone to furnish a remunera-
tion for their respective contributions;
That they had, nevertheless, considered the hypothesis of non-
completion of the Canal, and that, in this case, the Liquidator was to
take back part of his contributions, to wit, the Panama Railroad
shares, and that he was to take them back either as they were, or in
money and with a share in the profits of the operation of the railroad,
according to the possible events above taken into account;
That, in short, the contracting parties had considered three distinct
hypotheses, upon the accomplishment of which were to depend, in
different proportions, the rights of the shareholders, contributors of
cash capital, and those of the Liquidator, contributor without pecuniary
compensation of almost all the assets of the Liquidation of the
Compagnie Universelle du Canal Interocéanique de Panama, to wit:
1st, the completion of the Canal and its operation; 2d, the non-com-
pletion of the Canal after the voting by the meeting of means to
complete it and the carrying out of the provisions adopted; 3d, the
non-completion of the canal on account of failure of the meeting
to adopt the necessary provisions, or failure to carry out these
provisions; -
PANAMA CANAL TITLE. 285
Considering that the proposed sale to the Government of the United
States of the entire assets of the New Company, including the Panama
Railroad shares, does not come exactly under any of these hypotheses;
That it is, in fact, neither the completion of the canal, nor its aban-
donment under the special circumstances mentioned in the articles of
incorporation; - . - -
That it is not a mere abandonment of the enterprise as contemplated
in article 5 of the articles of incorporation, since the New Company,
intending to convey to the Government of the United States all its
assets, including the Panama Railroad shares, could neither restore
them to the Liquidator as they are, nor, keeping them by the payment
of an indemnity of twenty million francs, afford the Liquidation the
share of 50 % which it had undertaken to give in the annual profits
from the operation of the railroad; -
That neither is it the completion of the canal under the circumstances
contemplated by articles 5, 51 and 52 of the articles of incorporation.
That in these articles was contemplated the completion of the canal,
its operation by the New Company and a division between it and the
Liquidator of the annual profits of Operation; -
That in that event the repayment of the capital of the New Company
was assured only by means of a ..". long duration, extend-
ing to the end of the concession; - -
That the annual deduction intended for the sinking-fund was only
5 % of the corporate capital;
That the New Company was preferred only to this limited extent;
That, beyond this, the remuneration of the contributions in property
made by the Liquidator and of the contributions in cash made by the
shareholders went on concurrently and proportionally; -
That the claim of the New Company to take out, immediately and
by way of preference, from the price of sale, the whole of its cash
contribution and not allow the Liquidator to participate, except in the
balance of the price, is not, therefore, justified by the provisions of
articles 51 and 52 of the articles of incorporation; -
Considering that, on his side, the Liquidator maintains that the divi-
sion of the price of sale should be made in proportion to the compara-
tive value of the shares of the two contracting parties in the property
to be transferred; that he contends that, this property having a value
of 565,500,000 francs according to a valuation made by the New Com-
pany itself, the share of the New Company would represent a value of
57,500,000 francs and that of the Liquidation 508,000,000 francs, so
that the price should be divided in the proportion of 58/565 for the
Liquidation and of 571565 for the New Company, and that, in any
case, the Liquidator should receive at least a sum corresponding to that
which he would have got from a sale of his assets, if the New Com-
pany had not been formed; that he estimates this sum at one hundred
and twenty million francs; -
That he points out, in support of his position, that the articles of
incorporation did not regulate, as between the two contracting parties,
the consequences of a sale of the enterprise and, furthermore, that the
New Company, in not completing the canal, has not accomplished the
work for which it was formed, and for which the Liquidation con-
sented to the great sacrifices which enabled it to be formed; -
But considering that, if the sale to the Government of the United
States cannot be assimilated to the completion of the canal and its
286 PANAMA CANAL TITLE.
operation, and if it is true that the New Company has not carried out
the projected enterprise, we cannot, nevertheless, fail to recognize the
importance of the part which it played in the common interest, and
wholly deny it the benefit of the initial agreements; -
That it is the more necessary to take these initial agreements into
account, so far as possible; that the New Company accomplished, in the
most useful way, the task which was assigned to it, at least as a pros-
pecting company; that, especially by its negotiations and at its expense,
it obtained the extension of the concession, an extension without which
the enterprise would have been lost, and that it has, by its work, pru-
dently and economically carried on, demonstrated the possibility of
completing the Canal with locks, and made it possible to fix, with more
precision, the cost and duration of the work to be done for this com-
pletion; that it has not only preserved, but also greatly improved and
increased the property of the old company and has made possible either
the completion of the enterprise by the means of new capital to be pro-
cured, or a sale, such as that which is now proposed;
That it has therefore attained, in part, at least, the object aimed at.
Considering that the same reasons which led to a rejection of the
extreme claims of both parties, leads us to seek for a solution which
approaches as nearly as possible to the common intention of the
contracting parties as it can be made out from the articles of incor-
poration; •
Considering that, so far as concerns the Panama Railroad shares the
articles of incorporation may be applied; -
That, in fact, the Canal not being completed, and the New Company
being unable to restore the shares as they are, since they are to be
included in the sale, it should be decided that the Liquidator has a right
to the indemnity of twenty millions, provided by article 5 in case of
non-completion of the canal; {
That, moreover, the claim of the Liquidator to this preference is not
opposed by the New Company; - -
Considering, for the rest, that in default of an exact rule to be
applied, a case has arisen for the arbitrators to use their powers of
amicable adjusters which have been expressly conferred upon them,
departing as little as possible from the spirit of the articles of incor-
poration;
Considering that there should be set aside the sum of five million
francs which was devoted by the New Company to obtaining on April
25th, 1900, a new extension of the concession;
Considering that this sum served directly, in the common interest,
to preserve its most essential possession;
That it is therefore proper, in accordance with the general principles
of law, that the New Company should first take out said sum of five
millions, after the twenty millions mentioned above;
Considering, so far as concerns the balance of the price of sale, after
satisfaction of these preferences, that, by fixing in articles 51 and 52
of the articles of incorporation the division between them of the annual
revenue from Operation, the contracting parties have given an indica-
tion of the value of their respective contributions, as they then con-
sidered them, and that it is impossible not to take this into account in
the division of the proceeds of sale; - . -
That, under the present circumstances, it is just and equitable to
make this the basis for the division of the price;
PANAMA CANAL TITLE. 287
Considering, so far as concerns the expenses, that in view of the
peculiar character of the case, and each of the parties, moreover,
failing in part of its claims, they should be combined, and it should
be decided that they be borne half by the New Company and half by
the Liquidator;
- - FOR THESE REASONS DECIDEs:
1st. That the consequences of a sale of the enterprise are not
regulated by the wording of the articles of incorporation; -
2d. That the Liquidator of the Compagnie Universelle du Canal
Interocéanique de Panama shall, before any division, take out of
the price of the sale of the enterprise to the Government of the
United States the sum of twenty million francs; -
3d. That after this sum has been taken out the New Panama Canal
Company shall take out, on its side, the sum of five million francs;
4th. That the balance of the price of sale shall be divided between
the parties entitled in the proportion of sixty per cent. for the
Liquidator of the Compagnie Universelle du Canal Interocéanique de
Panama and of forty per cent. for the New Panama Canal Company;
5th. That the remainder of the demands, propositions and requests
of the parties are dismissed;
6th. That the expenses, including the fees of the arbitrators, shall
be combined, to be borne half by each of the parties; t
7th. That the costs which the filing of the judgment would entail,
including registration fees, shall be borne by that one of the parties
who shall have made it necessary. - . -
And we, the arbitrators, have signed after reading.
Signed: HENRI THIñBLIN,
A. BáTOLAUD,
LIMBOURG,
LÉON DEVIN,
-- - H. DU BUIT.
Certified a true copy.
Signed: DE BIEVILLE.
EXHIBIT S.
LAST REPORT (1901) OF THE BOARD OF DIRECTORS OF THE PANAMA
RAILROAD COMPANY. -
J3oard of directors, 1907.-J. Edward Simmons, Edward A. Drake,
Xavier Boyard, Samuel M. Felton, William B. Franklin, J. H. Par-
ker, William Nelson Cromwell, Vernon H. Brown, Charles Einsiedler,
Robert M. Gallaway. A. Lawrence Hopkins, C. B. Comstock, Mau-
J 2 •
rice Hutin. -
Beecutive committee.—J. Edward Simmons, Edward A. Drake,
William Nelson Cromwell, Xavier Boyard, Vernon H. Brown.
9 *...” 2
Officers. —J. Edward Simmons, president, New York; Edward A.
Drake, second vice-president and secretary, New York; Sylvester
Deming, treasurer, New York; Charles Paine, general manager, New
- S 9 - º * $5 $º 2
York; Sullivan & Cromwell, general counsel, New York; R. L.
5 5 §s & 2
Walker, traffic manager, New York; John Adams, auditor, New
5 8-> 2 • - 2 .
York; T. H. Rossbottom, assistant to secretary, New York; J. R.
288 PANAMA CANAL TITLE.
Shaler, general superintendent, Colon; H. G. Prescott, assistant super-
intendent, Colon; P. G. Baker, master mechanic, Colon; F. S. Higbid,
road master, Colon. -
General offices, No. 24 State street, New York.
PANAMA RAILROAD COMPANY.,
Mew York, March 27, 1902.
To the stockholders of the Panama Railroad Company:
The past year was one of marked activity in the company’s affairs.
The report of the general manager, with the accompanying statement
of earnings and expenses for the calendar year 1901 and the treas-
urer's balance sheet and transcript of profit and loss account, will
furnish you detailed information upon the physical and financial aspects
of the company’s properties and business.
The capital stock issue of $7,000,000 is unchanged.
The present outstanding bond issues are: -
Sinking fund 6 per cent subsidy bonds:
Original issue of.--------------------------------------------- $3,000,000.00
(Being payment in advance until 1910 of the annual subsidy of
$225,000 to the Republic of Colombia.) -
Redeemed by annual sinking fund drawings, including $144,000
drawn in 1901---------------------------------------------- 1, 798,000.00
Outstanding at this date ------ ---------------------- • * * * * * * 1, 202,000.00
Of those outstanding $206,000 are owned by the company and -
held in its treasury----------------------------------------- 206,000.00
Leaving in the hands of the public - - - - - - - - - - - - - - - - * - - - - - - º 996,000.00
By the operation of the sinking fund provision of this issue all of
the bonds outstanding will be redeemed in 1908.
First mortgage 43 per cent twenty-year gold bonds:
Authorized issue of ----------------------------------- - - - - - - - - $4,000,000.00
Issued to the public ------------------------------------------ 2, 504,000.00
Redeemed by annual sinking fund drawings, including $141,000
drawn in 1901. - - - - - - - - - - - - - - - - - .* * * * * * * * = * * * * * * * * * * * * * * * * * * * 561,000.00
Held in the company's treasury - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 935,000.00
$4,000,000.00
Through the operation of the sinking fund this indebtedness will be
reduced by 1917, the date of the maturity of the mortgage, to $1,199,000,
and constitute the only mortgage lien upon the company’s property.
Since the declaration of the previous dividend in January, 1893, in
addition to the payment of $250,000 annually to the Colombian Gov-
ernment and the redemption of $561,000 of the company’s 4% per
cent first-mortgage bonds out of gross earnings, the net earnings of
the company amounted to $2,072,359.42, or 29% per cent upon the
capital stock.
Of this sum your directors have applied to the development and
permanent improvement of the company’s property, in excess of the
amount of the 2 per cent dividend paid in March last, $1,755,509.01,
in the purchase and betterment of its steamships and floating equip-
ment, the construction of the La Boca Pier, port, and terminal, the
acquisition and restoration of dredging outfit, the installation of electric
light and ice plants, etc., and in general so improving the company’s
PANAMA CANAL TITLE. . . . . 289
property that it is to-day in better physical condition than at any time
in its history. .
The port and terminal at La Boca having been completed and opened
to commerce on January 1, 1901, its construction account was closed,
showing a total cost of $2,148,303.69, and that outlay capitalized into
the company’s 4% per cent first-mortgage twenty-year gold bonds author-
ized for that purpose. -
As contemplated by contracts between the companies, a lease has
been effected from the canal company of the La Boca Branch Rail-
road and adjoining lands necessary for the operation of the terminal
during the life of the railroad company’s concession, or until 1966,
upon mutually satisfactory terms. The use of dredges, clapets, and
materials necessary for the operation of the La Boca terminal, belong-
ing to the canal company, have also been secured under lease, upon
reasonable terms.
Owing to the severance of relations with the Pacific Mail Steamship
Company, the company put on a line of chartered vessels between
Panama and San Francisco direct, to maintain its coastwise traffic.
Charters at the outset were difficult to obtain and very expensive, but
later better conditions prevailed. The volume of coastwise traffic was
materially increased during the year, but the very large outlay required
to charter ships on both oceans to transport it was burdensome and
represented interest on a capital sum which, had it been applied by the
company to the construction of new vessels, would have made the bus-
iness highly remunerative. - - -
The company’s business was adversely affected by political disturb-
ances on the Isthmus of so grave a character as to have occasioned the
landing there by the United States Government, under its treaty obli-
gations, of its armed forces to maintain free transit and to protect this
company’s property. To the discreet and energetic performance of
this delicate duty by the naval officers to whom it was intrusted, in con-
cert with the Colombian authorities, is to be attributed the fact that
the company’s property was not materially impaired. These facts,
together with a prolonged labor strike in San Francisco and a mate-
rially reduced coffee output in Central America and Mexico during
the season of 1900–1901, considerably affected net earnings, but these
are extraordinary conditions not generally encountered.
During the year an important deviation of the railroad at Culebra,
necessitated by canal construction, was completed and put in operation;
but its entire cost was borne and paid by the canal company. r
The condition of the company’s property has been fully maintained
and many improvements added, for the interesting particulars of which
I refer you to the general manager’s report. -
There is now under consideration a further increase of the facilities
of the La Boca pier, in order to more expeditiously handle the increasing
tonnage. - -
The result of the company’s operations during the last year, under
what was referred to as the “open-door” policy, has not been as remu-
nerative as desired, and the board of directors are considering changes
in existing traffic arrangements and connections at Panama.
I refer you to the accompanying reports for more detailed particu-
lars. -
Respectfully submitted.
. J. EDWARD SIMMONs, President.
8751—02—19 -
290
PANAMA CAN AL TITLE.
.*
PANAMA RAILROAD COMPANY.,
New York, March 18, 1902.
To the PRESIDENT OF THE PANAMA RAILROAD COMPANY.
SIR: I respectfully submit the following report of the business and
operations of the Panama Railroad Company for the year ending
December 31, 1901, and of the condition of the company’s property
and finances at the close of the year.
The operations of the year show the following results:
Statement of earnings and expenditures.

JEarnings. 1901. 1900. Increase. DeCrea.Se.
EARNINGS.
JRailroad.
Colon to Panama.:
From freight.--------------------------------- $606, 185.65 $505, 898.92 |$100,286.73 |. . . . . . . . . . . .
From treasure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,182.77 9, 376.45 |. . . . . . . . . . . . $5,193.68
From mails ----------------------------------- 52,254.08 45,653. 70 6,600. 38 |... . . . . . . . . .
From extra baggage - - - - - - - - - - - - - - - - - - - - - - - - - - 9,695.40 8, 546. 59 1, 148.81 | . . . . . . . . . . . .
From passengers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,236.81 38,614.86 621.95 ! . . . . . . . . . . . .
711, 554.71 608,099. 52 | 103,464. 19 |. . . . . . . . . . . .
Panama to Colon:
From freight---------------------------------- 590, 624. 07 599, 178. 19 |- - - - - - - - - - - - 8,554. 12
From treasure -------------------------------. 14,334. 07 12,868. 20 1,465.87 - - - - - - - - - - - -
From mails ----------------------------------- 4,780.47 5, 116.47 |- - - - - - - - - - - - 336.00
From extra baggage ... ----------------------. | 7,460.37 7,890. 79 |- - - - - - - - - - - - 430.42
From passengers ----------- - - - - - - - - - - - - - - - - - - - 36,417.87 37,852.07 |. . . . . . . . . . . . 1,434.20
653,616.85 | 662,905.72 |............ 9,288.87
Total earnings of railroad. . . . . . . . . . . . . . . . . . . | 1,365,171.56 1,270,996.24 94,175.32 |............
Panama Railroad steamship line.
Atlantic Service:
From freight--------------------------------- 718,607.88 769, 225.62 |. . . . . . . . . . . . 50,617. 74
From treasure -------------------------------- 4,951.65 8,044.02 |. . . . . . . . . . . . 3,092.37
From mails ----------------------------------- 79,015.83 || 60, 618.30 | 18,397.53 . . . . . . . . . . . .
From extra baggage . . . . . . . . . . . . . . . . . . . . . . . . . . i 2, 186.69 2,047.63 139.06 |- - - - - - - - - - - -
From passengers. . . . . . . . . . -- - - - - - - - - - - - - - - - - - - 154,571.58 128, 234.78 26,336.80 . . . . . . . . . . . .
From miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 7,517.21 7, 814, 88 - - - - - - - - - - - - 297. 67
- 966,850.84 975,985.23 ||........... 9, 134.39
Pacific Service: * -
From freight---------------------------------. | 349,277.33 3,922.06 || 343, 355. 27 | . . . . . . . . . . . .
From passengers - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - : 16,425.25 155.00 16, 270.25 |- - - - - - - - - - - -
From extra baggage . . . . . . . . . . . . . . . . . . . . . . . . . . 120, 18 -------------- 120, 18 |- - - - - - - - - - - -
| 365,822.76 6,077.06 || 359,745.70 |. . . . . . . . . . . .
Joint railroad and Steamship receipts . . . . . . . . . . . . 498,863.81 402, 136. 18 96,727. 63 |- - - - - - - - - - - -
Total earnings -----------------------------. 3,196,708.97 2,655,194.71 || 541,514.26 |............
ExPENDITUREs.
Operating expenses of railroad.
General expenses on Isthmus. . . . . . . . . . . . . . . . . . . . . 40, 378. 20 40,216.25 161.95 . . . . . . . . . . . .
Conducting transportation. . . . . . . . . . . . . . . . . . . . . . . . 373,022.88 309,516.83 || 63,506.05 |. . . . . . . . . . . .
Maintenance of equipment . . . . . . . . . . . . . . . . . . . . . . . 116. 519.83 116,518.87 t 2 : - - - - - - - - - - - -
Maintenance of way and structures ........... * * * 95,341.62 95,810. 60 |. . . . . . . . . . . . 468.98
625,262.53 562,062.55 | 63, 199.98 |. . . . . . . . . . . .
Panama Railroad steamship line.
Atlantic Service:
Steamer expenses--- - - - - - - - - - - - - - - - - - - - - - - - - - - 585,877.45 576,391.96 9, 485. 49 |... . . . . . . . . .
Agency expenses - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 117,202.81 116,689.67 513. 14 ... ---------
Charter of Steamers. . . . . . . . . . . . . . . . . . . . . . . . . . . 164,929, 38 140,634. 79 24, 294.59 |. . . . . . . . . . . .
868,009. 64 833, 716.42 || 34,293. 22 . . . . . . . . . . . .
PANAMA CAN AL TITLE.
291
Statement of earnings and eaſpenditures—Continued.

1900.
|Earnings. 1901. Increase. Decrease,
EXPENDITURES-continued.
Panama Railroad Steamship lime—Continued.
Pacific Service: -
Steamer expenses. . . . . . . ---------------------- $216,580.21 $212,779, 10 |... . . . . . . . . .
Agency expenses 4- - - - - - - - - - - - - - - - - - - - - - - - - - -
Charter of Steamers - - - - - - - - - - - - - - - - - - - - - - - - - - -
$3,801. 11
8.9
Joint railroad and steamship expenses
Total operating expenses
& sº tº * * * º ºs º ºs º ºs & gº is ºs º ºr nº
111,798.89 .92 || 111,789.97 |- . . . . . . . . . . .
279, 659. 33 6, 650.00 273,009. 33 |. . . . . . . . . . . .
608,038.43 10, 460.03 || 597, 578.40 |- - - - - - - - - - - -
333,896.64 || 321,164.78 | 12,731.86 |............
2,435,207. 24 1,727,403.78 || 707, 803.46 |. . . . . . . . . . . .
Earnings Over Operating expenses. . . . . . . . . .
761, 501.73
927, 790.93
m e º 'º - sº ºn as ºn s = s.
Appropriations for depreciation and special repairs
Of tugs.
Depreciation of tugs -------------.- : - - - - - -.- - -
Replacement of boilers and special repairs
of tugs
e = * * * * * * * * m as ºn as s as as s m = * * * s as at a m = ± = * * * * s
JFived charges.
Subsidy to Republic of Colombia
Redemption of subsidy bonds
Interest on subsidy bonds
Interest on first-mortgage bonds
Redemption of first-mortgage bonds. . . . . . . .
Interest on balance due La BOCa, Wharf
COI) tractOrS
* * * * * = & tº gº & ºt
m * * * = * * * * * * *
a s a e = a a e s as a s m e º sº sº is sº * * * * * * * * * * * *
Total appropriations andfixed charges.
Net income
* = * * * * sº ºn me s sº * * * * * * * * * * * * * * * *
2, 100.00 2, 100.00 ------------|------------
3,000.00 3,000.00 |..…..….
5, 100.00 5, 100.00 ------------|------------
25,000.00 25,000.00 - - - - - - - - - - - - - - - - - - - - - - - -
144, 240.00 || 136,080.00 || 8, 160.00 |. . . . . . . . . . . .
80, 760.00 88,920.00 |. . . . . . . . . . . . 8, 160.00
70,200.00 75,926. 25 |. . . . . . . . . . . . 5,726.25
150,000.00 | 150,000.00 - - - - - - - - - - - - - - - - - - - - - - - -
26,611, 61 -------------- 26,611. 61 |- - - - - - - - - - - -
496,811. 61 475,926. 25 20,885, 36 |. . . . . . . . . . . .
501, 911. 61 || 481,026. 25 | 20,885. 36 . . . . . . . . . . . .
259, 590. 12 446, 764. 68 . . . . . . . . . . . . 187, 174.56
a Includes wharfage at La Boca.
Gross revenue receipts, expenditures, and net earnings for 1901 com-
pared, as under, with those of 1900:

t Earnings Aº *
{- Operating ex- Over Oper- | tions for Net earn-
Earnings. 9P penses. ating ex- deprecia- ings.
penses. | tions, etc.
1901----------------------------------- $3,196,708.97 $2,435,207.24 $761, 501.73 || $5,100.00 $756,401.73
1900----------------------------------- 2,655,194.71 | 1,727,403.78 927,790.93 5,100.00 | 922,690.93
Increase in 1901 - - - - - - - - - - - - - - - - 541, 514, 26 707, 803.46 ------------|------------|------------
Decrease in 1901 . . . . . . . . . . ------|--------. - - - - - - - - - - - - - - - - - - -. 166,289.20 - - - - - - - - - - - - 166,289.20
Increase in fixed charges, 1901 ... ----|--------------|--------------|------------|-----------. 20,885.36
Decrease in profit,1901
* * * * * * * * * * sº m
187, 174.56
292 PANAMA CANAL TITLE.
EARNINGS.
FAILROAD. .
The total earnings of the railroad proper show an increase of
$94,175.32, or 7.41 per cent, in 1901 as compared with previous year,
the principal increase being in freight traffic west bound.
The largest increase in west-bound freight was on business to San
Francisco, amounting to over 10,000 tons; freight to South Pacific
ports increased 7,000 tons. East-bound freight shows a decrease of
14,000 tons, although there was an increase of 12,000 tons in San
Francisco freight.
There was an increase of 17.01 per cent in earnings on all west-
bound traffic, and a decrease of 1.40 per cent on all east-bound traffic.
The following table shows the freight tonnage carried over the
railroad in 1901 as compared with 1900:

Year ending Dec. 31–
Increase. Decrease.
1901. 1900.
- Tons. TOms. Peº Cent. Per C677t.
Carried West bound a ... -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 195,743 153,758 27.31 - - - - - - - - - - - -
Carried east bound d ---------------------------------- 189,841 203,619 |. . . . . . . . . . . . 6, 77
Total east and west bound a.................... 385, 584 357, 377 7, 89 ------------
a Ton of 2,000 pounds, or 40 cubic feet.
The gross earnings per ton moved on the road compare as follows:
Year ending Dec. 31—
Increase, Decrease.
1901. 1900. *
Per C677t. Per Cemi.
West bound ------------------------------------------- $3.10 $3.29 |- - - - - - - - - - - - 5, 78
East bound -------------------- - - - - - - - - - - - - - - - - - - - - - - - 3.11 2.94 5.78 |------------
Average east and West bound . . . . . . . . . . . . . . . . . . 3. 10 3.09 32 ------------

Table No. 4, attached to this report, shows the origin and destination
of the freight carried over the railroad. -- - - - - - - - - - - - - - -
Compared with 1900 the total tonnage carried over the road in 1901
shows an increase of 28,207 tons, or 7.89 per cent, and the earnings an
increase of $91,732.61, or 8.30 per cent. A comparison of 1900 with
1899 shows an increase in tonnage of 24.35 per cent, and in earnings of
15.83 per cent.
Of the total tonnage carried, 50.77 per cent was west bound and 49.23
per cent east bound. In 1900 these percentages were 43.02 per cent
and 56.98 per cent, respectively.
The proportion of through traffic to the total tonnage handled was
81.70 per cent; in 1900 through freight amounted to 87.11 per cent.
Of the through freight, 55.12 per cent was New York business.
Earnings from mails amounted to $57,034.55, an increase of $6,264.38,
or 12.34 per cent.
PANAMA CANAL TITLE, 293
The following statements show the number of passengers carried and
the passenger earnings: - . -
Number of passengers carried.


Classification. 1901, 1900. Increase. Decrease.
P6)” Cent, JPe)” Cemi.
17.94
First-class passengers..........................------. 4, 587 5, 590 - - - - - - - - - - - -
Second-class passengers.-----------------------------. 84, 574 77,642 8.98 ||-----------.
Total.-------------------------------------------- 89, 161 83,232 7. 12 ------------
Passenger earnings.

Classification. 1901. 1900. Increase. Decrease.
Per Cent, Per Cent,
9. 14
First-class passengers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,507.47 || $31,375. 56 |- - - - - - - - - - - -
Second-class passengers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47, 147.21 || 45,091.37 4.56 ------------
Total.------------------------------------------- 75, 654, 68 || 76, 466.93 - - - - - - - - - - - - 1. 06
Average receipt per passenger.

Classification. - 1901. 1900. Increase. Decrease.
Rirst-class passengers: Pe?' Cemi. Pe)” Cent:
Through ------------------------------------------ $8.98 $8.97 0.11 ------------
Local --------------------------------------------- 3. 73 3.44. 8.43 |- - - - - - - - - - - -
Second-class passengers:
Through ------------------------------------------ 3. 77 1. 92 96.35 ------------
Local --------------------------------------------- . 47 51 ------------ 7.84
First-class passengers decreased 1,003, or 17.94 per cent, in number,
and $2,868.09, or 9.14 per cent, in earnings. Second-class passengers
increased 6,932 in number, or 8.93 per cent, and $2,055.84, or 4.56 per
cent, in earnings. The increase of 96.35 per cent in the average receipt
per second-glass through passenger was due to the falling off in the
movement of laborers from the West Indies to Guayaquil, carried at
a low contract rate.
STEAMSHIP LINES.
The total earnings of the Atlantic Line from all sources was
$966,850.84, a decrease of $9,134.39, or 0.94 per cent. Freight traffic
shows a loss of $50,617.74 in earnings, Ör 6.58 per cent, due to the
large falling off in business from South Pacific ports. The decrease
in freight receipts was nearly offset by an increase of $18,397.53, or
3 .35 per cent, in mail earnings, and an increase of $26,336.80, or
20.54 per cent, in passenger earnings. -
Of the total tonnage transported, 119,413 tons were carried by the
company’s steamers and 62,772 tons by chartered steamers.
The Pacific Line, inaugurated in December, 1900, was maintained
during the year with the result as shown in the statement on page 8."
& Paging refers to Fifty-second Annual Report of the Board of Directors of the
Panama Railroad Company for 1901.
2.94 PANAMA CAN AL TITLE.
JOINT RAILROAD AND STEAMSHIP RECEIPTS.
The net result of the earnings of all the accounts grouped under
this heading increased $96,727.63 over 1900, or 24.05 per cent.
The following table will show the number of tons lightered in
Panama Bay and handled on La Boca wharf during the year 1901, as
compared with cargo lightered in 1900:


1901. 1900. Increase.
TOT.S. Toms. Pe)” Cent.
Merchandise -----------------------------------------------------. 216, 144 188,936 14. 40
Lumber ----------------------------------------------------------- 409 255 60. 39
Coal --------------------------------------------------------------- 22,286 5,682 292.22
Total -------------------------------------------------------- 238,839 194,873 22, 56
EXPENDITURES.
The revenue expenditures of 1901 and 1900 compare as under:
1901. 1900. In Crease.
Railroad------------------------------------------------------. $625, 262.53 $562,062.55 $63,199.98
Steamship line:
Atlantic Service ------------------------------------------. 868. 009. 64 833, 716.42 34,293. 22
Pacific Service. ----------------------------------- '* * * * * * * * * 608,038.43 10,460.03 597, 578.40
Joint railroad and steamship expenses. . . . . . . . . . . . . . . . . . . . . . . . 333,896. 64 321, 164.78 12,731.86
Appropriations for depreciation and special repairs to tugs. . . 5, 100.00 5, 100.00 - - - - - - - - - - - -
Total ---------------------------------------------------- 2,440, 307. 24 | 1,732,503.78 707,803. 46
This table shows an increase of $707,803.46 in total revenue expend-
itures, while there was an increase of $541,514.26 in total earnings.
(See pp. 8, 10.)” - .
RAII, ROAD.
Conducting transportation.—The expenses of this department show
an increase of $63,506.05, or 20.52 per cent, as compared with 1900.
The tonnage moved increased 28,207 tons, or 7.89 per cent.
The accounts show a considerable increase in the cost of labor, of
fuel, and of supplies when compared with last year. There has been
no increase in the rate for labor, but owing to the troubles on the
Isthmus labor was less efficient, and it was necessary to maintain a
a larger force of Fortune Islanders than before. Coal and other sup-
plies have commanded higher prices everywhere.
Mažntenance of equipment.--The total charges to this department in
1901 were $116,519.83 as against $116,518.87 in 1900, although more
tonnage was handled than in the latter year.
In addition to ordinary running repairs, three of the older loco-
motives, which had been laid by some years ago, have been com-
pletely repaired and restored to service. The repairs of cars have
been extensive; 38 flat cars have been converted into coal cars by the
& Paging refers to Fifty-second Annual Report of the Board of Directors of the
Panama Railroad Company for 1901.
PANAMA CAN AI, TITLE. 295
addition of sides, and 102 coal cars have had their sides raised to
increase their capacity: 4 flat cars were fitted with 20-ton trucks. -
The car shop has received new tools, as follows: A patent band saw-
ing machine, with a machine for filing it; an Acme bolt cutter, and a
self-feeding ripsaw.
Maintenance of way and structures.—The track, bridges, and build-
ings have been maintained at a high standard, the expenditures being
$95,341.62, a decrease of $468.98, or 0.49 per cent, as compared with
1900.
There have been laid in main track 100 tons of new rails of 70
pounds per yard; the rails thus released have been used for the con-
struction of much-needed sidings at Colon and Panama.
The repairs of masonry have been continued, the abutments and
aprons of 10 bridges having had complete repairs, and 4 culverts were
rebuilt. -
At Frijoles a battery of hydraulic rams has been installed, dispens-
ing with the steam engine and pumper, effecting a saving of $500 or
more per annum.
A new 6-inch water main from the reservoir at Mount Hope to the
railroad, 1,500 feet in length, has been laid, nearly, doubling the daily
supply available at Colon.
The car shed in rear of the old passenger station at Colon has been
converted into a storage warehouse for freight. &
STEAMSEIIP LINES.
The operating expenses of the line between New York and Colon
were $868,009.64, an increase of $34,293.22, or 4.11 per cent.
On December 16, 1900, the company was compelled to assume the
operating of a steamship line between Panama and San Francisco at
an unfavorable time, owing to the scarcity of vessels and the extremely
high cost of charters. This was later complicated with a long-continued
strike at San Francisco. During the latter part of the year, after the
defeat of the strikers and a reduction in the cost of charters, the line
became self-sustaining, as would appear in the accounts, if allowed
the proportions previously allotted to that traffic. The importance of
this line is indicated by the amount of tonnage carried, which was
85,541 tons, an increase 21,362 tons over the same route during the
previous year. The total amounted to 49.26 per cent of the tonnage of
the Atlantic Steamship line, and formed 22.18 per cent of the total
carried across the Isthmus.
JOINT RAILROAID AND STEAMSHIP EXPENSES.
The combined expenditures under this head amounted to $333,896.64,
an increase of $12,731.86, or 3.96 per cent. g
The steamship /30//wap has been completely overhauled, receiving
new boilers, pumps, etc., from New York. * -
Three steel launches, built at Chester, Pa., are now on the ways
and nearly completed. -
296 PANAMA CANAL TITLE.
GENERAL REMARKS.
During the period from 1894 to 1901, inclusive, the percentage of
total expenses to gross earnings was as follows:
Per Cent.
1894--------------------------------------------------------------------- 69. 93
1895 ---------------------------------------------- - - - - - - - - - - - - - - - - - - - - - - - 61. 63
1896------------------------------- ... • = - - - - - - - - - - - * = • * * * * * = = - - - - - - - - - - - - * * = 53.94
1897, including taxes and appropriations for depreciation, etc. - - - - - - - - - - - - - - - 61. 12
1898, including taxes and appropriations for depreciation, etc.- - - - - - - - - - - - - - - - 64, 91
1899, including taxes and appropriations for depreciation, etc - - - - - - - - - - - - - - - - 64. 66
1900, including taxes and appropriations for depreciation, etc.- - - - - - - - - - - - - - - - 65. 25
1901: -
Including taxes and appropriations for depreciation, etc - - - - - - - - - - - - - - - - 64. 72
(Or including Pacific Line, not operated in 1900) - - - - - - - - - - - - - - - - - - - - - - - 76, 34
It is gratifying to find that the volume of traffic has been more than
maintained, showing an increase over last year of 28,207 tons, in spite
of the embarrassments under which all operations were conducted, by
reason of the political disturbances, which occasionally interrupted
traffic, caused alarm among laborers, added to the cost of insurance of
freight, and deterred timid passengers from taking the Isthmus route
for fear of delay or injury. - -
The improvement in the condition of the company’s plant upon the
Isthmus, which was begun several years ago, has been continued during
the year 1901.
It became necessary to supply an electric-light plant at Colon to
supplement the deficient supply afforded by the Colon Illuminating
Company, which was put into use very successfully at the beginning
of the year; in connection with this is an ice machine, made necessary
by the frequent failures of the supply heretofore received from Panama,
which promises to be self-supporting. -
The improved condition of the track seemed to warrant an increase
in the loads carried in the freight cars; therefore the maximum load
has been increased from 10 tons to 12. This was equivalent to the
addition of 184 cars in the capacity of the rolling stock, and has been
of much benefit to the service.
The steamships owned by the company have been maintained in
complete repair; it is believed that none of its property has depreciated.
The ship ways for the repair and construction of the floating equip-
ment at Panama having completely decayed, they were renewed at La
Boca under a shed available there, in connection with a convenient
shop and tools, leased from the New Panama Canal Company, and the
tools and shop force formerly at Panama have been consolidated with
those at La Boca. At this establishment a large amount of work has
been done.
The dredges, clapets, etc., leased from the canal company for the
maintenance of deep water at La Boca have been very extensively
repaired; the general overhauling of the steamer Bolivar has been
completed; the three new launches, mentioned elsewhere, are now
being set up. In addition, the repairs of the transporters on the piers
and repairs of foreign steamships were made at the new La Boca
shops.
In Colon the ship berths at Pier No. 1 required dredging, to accom-
modate deeper laden coal ships. To effect this the plant was increased
PANAMA CANAL TITLE. 297
by the purchase of a new “Hayward orange-peel bucket,” which will
also be useful in the future.
Important improvements have been undertaken and partly com-
pleted upon Pier No. 2, at Colon, whereby an additional berth for the
convenient handling of coal ships has been gained, and the long-dis-
tance trucking heretofore necessary there will be avoided, three tracks
connecting with the main line having been laid down the whole length
of the Wharf.
An annex for the reception of any case of contagious disease has
been added to the hospital at Colon.
The officers and employees have been devoted to the interests of the
company. Upon the Isthmus they have had to encounter the dangers
incident to a state of war, and have exhibited courage as well as good
judgment in their dealings with the contending factions.
Respectfully,
CHARLES PAINE, General Manager.
298 PANAMA CANAL TITLE.
TABLE A.—Balance sheet,

COst of road, real estate, and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
New terminal at La Boca. . . . . . . . . . . . . . . . . . . . .\- - - - - - - - - - - - - - - - - - - - - - - - - - } * * * * * * * * * * * * * $11,941, 186.66
Floating equipment:
Steamers Alliança, Finance, and Advance, reduced value Dec. 31,
1900---------------------------------------------------------------- $267,419.27
Tugs and lighters, reduced value Dec. 31, 1900. . . . . . . . . . $345,995. 13
Deduct depreciation fund for tugs . . . . . . . . . . . . . . . . . . . . . 2,100.00
— 343,895. 13 |
611,314.40
Total ---------------------------------------------------------------------------- 12,552, 501.06
Bonds in Treasury: -
206 six per cent Panama Railroad Company sinking-fund subsidy
bonds--------------------------------------------------------------| 206,000.00
897 four and a half per cent 20-year gold sinking-fund bonds - - - - - - - 898,037.50 1, 104,037. 50
, 104,037.50 |
On deposit with financial agents for redemption of bonds (6 per cent -
subsidy bonds) --------------------------------------------------------|-------------- 31,000.00
Advance of Subsidy to Republic of Colombia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202,000.00
Improvement and COnstruction accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,598 14
Current a SSetS:
Cash in banks and With agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434,420, 22
Coal and Supplies on hand ------------------------------------------ 158,548. 55
Due from connecting companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,229.01
Due from United States Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,671. 87
Due from Companies and individuals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,716.36
Accrued interest. On deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,771.04
ACCrued interest On Securities Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,307.50
Unadjusted accounts, including purchase of leasehold Pier 57, N.
R., until 1911 ------------------------------------------------------ 67,829.42
Prepaid insurance and Charter of Steamers . . . . . . . . . . . . . . . . . . . . . . . . . 20, 864. 28 -
-º-mº-º-º-º-º-º-º-º-º- 944, 358.25
15,963, 494.95
TABLE 13.−Profit and loss account,
TO One hundred and thirteenth dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000.00
Operating expenses---------------------------------------------------------------- 2,435,207. 24
Appropriations for depreciation and Special repairs of tugs. . . . . . . . . . . . . . . . . . . . . . . 5, 100.00
Fixed charges --------------------------------------------------------------------- 496,811. 61
Supplies of no Value Written off - ... -----------------------------...--------------- 775.45
Uncollectible accounts Written off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --. 18,438.78
Balance, assets Over liabilities, Dec. 31, 1901 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 110,345.00.
7,206,678.08

IPANAMA CAN AI, TITLE.
299
December 31, 1901.

Capital stock
4% per cent 20-year sinking-fund gold bonds (authorized issue,
$4,000,000):
Issued to date (2,962 bonds, less 420 bonds previously redeemed). -
Less drawn for redemption in 1901
s = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * s - sº * * * * * * * * * * * *
tº tº tº º me º 'º fº = - º ſº º sº º º sº º º ſº tº ºi º ºs º ºſ º gº me ºn tº º sº
Current liabilities:
Balance to Credit of profit and loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* * * * * * * * * * * * * *
$2,542,000.00
141,000.00
Isthmus drafts not presented.-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 26,987.43
Coupons not presented --------------------------------------------- 5,642. 50
Audited Vouchers -------------------------------------------------- 52, 157.99
Unclaimed dividends. -------------------------------. . . . . . . . . . . . . . . 111. 00
Due deceased Or missing employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,213. 27
* * * * * * * * * * * * * *
$7,000,000.00
2,401,000.00.
Total Capital Stock and mortgage liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 401,000.00
6 per cent gold sinking-fund subsidy bonds a . . . . . . . . . . . . . . . . . . . . . . . ---|- . . . . . . . . . . . . . 1, 202,000.00.
Due COntractors, new terminal at La BOCa, b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929,812. 15.
Bonds drawn for redemption not presented for payment, 6 per cent
Subsidy bonds . . . . . . . . . . . . . . . . . . . . . . * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * - - - - - - - - - - - - - - - - 32,000.00
Accrued interest on bonds:
4% per cent 20-year gold bonds (1,526 bonds) . . . . . . . . . . . . . . . . . . . . . . . 17, 167.50
6 per cent Subsidy bonds ------------------------------------------. 12,020.00
- 29, 187.50.
Funds for redemption of bonds: -
4% per Cent 20-year gold bonds. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 62,248. 11
6 per cent Subsidy bonds ---------------------------------. . . . . . . . . . 72, 915.00 |
--- 135, 163.11
Due Republic of Colombia, department of Panama. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,875.00
Fund for replacement of boilers and special repairs to tugs. . . . . . . . . . . . . . . . . . . . . . . . . . 15,000.00
87, 112.19
4, 110,345.00.
15,963,494.95.
December 31, 1907.
Gross earnings
|By balance, Dec. 31, 1900.…
* * * * * * * * * * * * * * * * * * * * * * * * * * m me es e s tº sº me = * * * * * * * * * : * ~ as a s m sº me a s
* * * * * * * * * * * * * *
$3,867,831.69
3, 196, 708. 97
4; per Cent 20-year sinking-fund gold bonds, redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . 141,000.00
Accounts of previous years Settled... -----------------------------------. ---------. 1,137.42
7, 206, 678.08
a 1,202 six per cent gold sinking fund subsidy bonds of $1,000 each, amounting to $1,202,000, issued
November 1, 1880, fall due November 1, 1910.
To meet this bonded indebtedness, $225,000 annually of the Colombian Government subsidy was
pledged till March 27, 1908, the same to be applied by the company, first, to the payment of the
interest, and second, as accumulative sinking fund for the redemption of the principal; the bonds to
be drawn yearly in September to an amount equal to the then surplus of the subsidy sinking fund,
the ºponds to be paid on November 1, after each drawing, and thereby redeeming the Whole
ISSUl62 IIl tº -
b Of this amount $871,000 will become due in 1905, and is secured by an equivalent amount of the
Company’s new 43 per cent bonds as collateral. The total may be reduced in the meantime at the
Option of the company by payments on account. .
S. DEMING, Treasurer.
300 PANAMA CANAL TITLE.
TABLE No. 1.-Comparative statement of operating eaſpenses of railroad for the years
ending December 31, 1900 and 1901.

1901. 1900.
- GENERAL EXPENSES ON THE ISTHMUS.
Advertising---------------------------------------------------------------- $8.21 $15.12
Cablegrams----------------------------------------------... * * * * * * * - - - - - - - - - e. e. 415. 33 174.45
Hospital Service ----------------------------------------------------------- 7, 576.73 7,997. 57
Legal expenses ------------------------------------------------------------ 2,485. 74 2,574. 93
Salaries of Officers--------------- ------------------------------------------ 11,442. 40 11,673. 07
Salaries of Clerks and attendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 516.09 12,725.58
Office expenses, stationery, and printing . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - 2,408. 12 2, 370.98
Other expenses ------------------------------------------------------------ 3,525, 58 2,684. 55
Total.----------------------------------------------------------------- 40, 378. 20 40,216.25
CONDUCTING TRANSPORTATION.
Advertising-------------------------------------------------------"--------- 1,288.04 1,256.72
Clearing Wrecks ----------------------------------------------------------- 138.00 72.46
Engineers and firemen ---------------------------------------------------- 29, 176.58 23,446.97
Fuel for locomotives------------------------------------------------------- 44, 345.99 32,382. 58
Injuries to persons--------------------------------------------------------- 749. 08 5, 512. 70
Labor—Colon and Panama Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,354. 26 101, 502. 33
Oil, tallow, Waste, and Other supplies for locomotives . . . . . . . . . . , * * * * * * * * * * 2,779.02 1,637.78
Roundhouse men---------------------------------------------------------- 8,211. 39 6,385. 52
Superintendence and Clerks. . . . . . . . . . . . . . . . . . . . . . ------------------------- 4, 352. 13 3,872.24
SWitchmen, yardmen, and yard Watchmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,257.21 27,883. 17
Station agents and clerks. . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65,695.42 | 60,696.99
Station Supplies and expenses------------------. . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 146.25 12,402. 50
Stationery and printing --------------------------------------------------- 3,706. 24 2,564. 53
Train conductors, baggagemen, flagmen, and brakemen . . . . . . . . . . . . . . , sº a s 18,295. 34 14, 371.82
Train Supplies and expenses --------... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 310.25 2,717. 57
Telegraph expenses-------------------------------------------------------- 8,726.72 8, 228.96
Water Supply for locomotives----------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 529.13 3,230.02
Other expenses . . . . . . . . . . . . . . . . . . . . . . -------------------------------------- 1,961.83 1, 351.97
Total.---------------------------------------------------------------- 378,022.88 309,516.83
MAINTENANCE OF EQUIPMENT.
Repairs of freight cars ----------------------------------------------------- 60,266.15 51, 307.00
Repairs of locomotives----------------------------------------------------. 24, 216. 16 30,986. 38
Repairs of passenger cars.... ---------------------------------------------- 9, 496, 36 7,459.23
Repairs and renewals of Shop machinery and tools . . . . . . . . . . . . . . . . . . . . . . . 10,097.15 15,648.60
Superintendence and Clerks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 230.32 10,882.82
Stationery and printing . . . . . . . . . . . . . . . . . . . . . . . . '* * * * * * * * * * * * * * * * * * * * * * * * = = = 213. 69 234.84
Total.------------------ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 116, 519.83 116,518.87
MAINTENANCE OF WAY AND STRUCTURES.
Repairs of bridges and Culverts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,493. 24 23,852.66
Repairs and renewal of general Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300.36 2, 124.76
Repairs of road machinery and tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,317.79 2,208.68
Repairs of roadway and track ---------------------------------------...--- 19,920. 74 23,607.76
Renewals of SWitches and frogs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1, 140. 31 987. 41
Renewals Of Spikes and rail fastenings - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,078.69 4,608.06
Repairs and renewal of Station buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 139.03 3, 178.54
Repairs of shop buildings, Water and fuel stations . . . . . . . . . . . . . . . . . . . . . . . . 14,028. 64 5, 200. 99
Repairs of Section houses, tool houses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656. 22 231. 11
Renewal of ties. ---------------------------------. - - - - - - - - - - - - - - - - - - - - - - - - - 2,971. 13 13,758. 36
Repairs of telegraph------------------------------------------------------- 2,423.26 1,691.23
Removal of Weeds, brush, grass, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,934.01 6, 732. 29
Superintendence and clerks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 307.27 7, 394. 20
Stationery and printing --------------------------------------------------- 261.13 204.86
Other expenses -----------------------------------------------------------. 369. 80 29. 69
Total ---------------------------------------------------------------. 95, 341.62 95,810. 60
PANAMA CAN AI. TITLE.
30I.
TABLE No. 2. —Comparative statement of expenses of steamship line, Atlantic Service, for
years ending December 31, 1900 and 1901.

Expenses. 1901. 1900.
STEAMER. EXPENSES.
Port charges: - -
Custom-house entrance, clearance and consular fees, etc. . . . . . . . . . . . . . $15,279. 23 $12,753.83
Pilotage --------------------------------------------------------------- 7,351.88 6,620.89
Quarantine . . . . . . . . . . . , as tº me a s sº se e º ºr sº as as tº * * * * * * * * * * * * * * * * * * * * * * * * = s. sº as sº ºn tº * * * * * 938, 00 979. 00
Total ---------------------------------------------------------------- 23, 569. 11 20, 353.72
Docking ----------------. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1, 163.68 3,426.29
Equipment, deck, engine, and commmissary departments. . . . . . . . . . . . . . . . 10, 628. 16 10,889. 11
* * * * * * * * * * * * * * * * * * * * * * -------------------------------------------------| 111,460. 11 89,512.67
Feeding passengers and Crew.----------------------------. . . . . . . . . . . . . . . . . . 62,894.06 55,279.69
Insurance-----------------.... - * * * * * * * * * * * * * * * * * * * me as º ºr a mº m = m = e º ºs e º ºr & as a s is sº a m = * 22, 760. 53 22,728.10
Labor on Cargo ------------------------------------------------------------ 121,278. 24 121,072. 3
Labor on coal.------------------------------------------------------------- 14, 336.98 12, 196.91
Labor on ashes ------------------------------------------------------------ 1,435.00 1,291.00
LOSS and damage . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6,038. 14 3, 184.06
Oil and Waste--------------------------------------------------- ----------- 2, 167.42 1, 523.80
Painting Ships' bottoms --------------------------------------------------- 1,403.00 2,815.04
Repairs, deck, engine, and Commissary departments . . . . . . . . . . . . . . . . . . . . . 44, 708. 34 84,431.85
Stores, deck, engine, commissary, and surgeon’s departments. . . . . . . . . . . . 12, 462.84 12,752. 55
Stationery and printing --------------------------------------------------- 875, 98 430.46
Telegrams and Cables-----------------------------------------------------. 1, 205.78 1,463, 54
Towage -------------------------------------------------------------------- 1,484.80 1,535.30
Wages --------------------------------------------------------------------- 130,331.36 116,968. 22
Water-------------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 12, 578.43 11,453. 53
Washing ------------------------------------------------------------------- 1,772. 11 1,227.37
Other expenses ------------------------------------------------------------ 1, 333.38 1,856. 37
Total.---------------------------------------------------------------- 585,877.45 576,391.96
A GENCY EXPENSES.
Advertising------------------------------------------ .# * * * * * * * * * * * * * * * * * * * * = 2, 669. 30 2,885. 15
Insurance----------------------. ** = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * = 1,759. 21 1,307.86
Labor---------------------------------------------------------------------- 16,645.71 17,374, 27
Office expenses . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5, 962.49 7, 126.75
Repairs and rent of Offices and Wharves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57, 388.51 55,315. 73
Salaries of agents and Clerks ---------------------------------------------. 29, 298.42 29,546.51
Stationery and printing --------------------------------------- - - - - - - - - - - - - 1,443.80 1,486.61
Taxes---------------------------------------------------------------------- 1,000.03 960. 00
Other expenses------------------------------------------------------------ 1,035. 34 686. 79
Total ---------------------------------------------------------------- 117,202.81 116,689.67
TABLE No. 3.-Comparative statement of general ea penses, New York, for years ending
December 31, 1900 and 1901.

Expenses. 1901. 1900,
GENERAL EXPENSES, NEW YORK.
Advertising---------------------------------------------------------------- $1,728.59 $1,659.64
General office expenses---------------------------------------------------- 6, 615. 74 9,765.18
Legal Services and expenses----------------------------------------------- 9, 149.82 8,246. 30
Salaries Of general Officers and clerks and directors' and COmmittees’ fees. 70,271.60 73,784.66
Stationery and printing ------------------------------------------ = • * * * * * * = 1, 181.23 1,381. 20
Telegrams and Cablegrams. ----------------------------------------------- 1,620. 07 2, 199.83
Other expenses ----------------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - 1,074. 93 3, 141.81
Total ---------------------------------------------------------------- 100, 178.62
91,641.98
302 E’AN AM A CAN AL TITLE.
TABLE No. 4.—Comparative Statement of expenses of steamship line, Pacific Service, for
years ending December 31, 1900 and 1901.

Expenses. 1901. 1900.
STEAMER EXPENSES.
Port charges:
Custom-house, entrance, clearance, consular fees, etc . . . . . . . . . . . . . . . . $1,167.21 $28.00
Pilotage --------------------------------------------------------------. 5,645.68 169. 64
Total.----------------------------------... • * * * * * * * - - - - - - - - - - - - - - - - - - - - - - 6,812. 89 197.64
Equipment, deck, engine, and commissary departments. . . . . . . . . . . . . . . . . . 3.00 3.00
Fuel ----------------------------------------------------------------------- 99,486.83 2,728.99
Feeding passengers and Crew. -------...... -------------------------------. - 9, 576.78 |... . . . . . . . . . . .
Labor on Cargo ...--------------------------------------------------------- 68,673.95 564. 75
Labor on coal-------------------------------------------------------------- 5,953.26 153.05
Labor on ashes ------------------------------------------------------------ 27. 50 3.00
LOSS and damage ---------------------------------------------------------- 4,853.98 |- - - - - - - - - - - - - -
Repairs, deck, engine, and commissary departments. . . . . . . . . . . . . . . . . . . . . . 16.98 ||--------------
Stores, deck, engine, Commissary, and Surgeon’s departments. . . . . . . . . . . . . 2,211.27 122.78
Stationery and printing --------------------------------------------------- 229.30 --------------
Telegrams and cables ----------------------------------------------------. 385. 58 - - - - - - - - - - - - - -
Towage-------------------------------------------------------------------- 472. 50 |... -----------
Wages --------------------------------------------------------------------- 2,981.85 |. . . . . . . . . . . . . .
Water---------------------------------------------------------------------- 10,034.95 27. 90
Other expenses------------------------------------------------------------ 175. 77 --------------
Total . . . ------------------------------------------------------------- 211,896.34 3,801. 11
AGIENCY EXPENSES.
Advertising--------------------------------------------------------------- - 1,207. 15 8. 92
Labor ---------------------------------------------------------------------- 9, 413.85 - - - - - - - - - - - - - -
Office expenses ------------------------------------------------------------ 1, 865.03 |. . . . . . . . . . . . . .
Repairs and rent of Offices and wharves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,596, 57 |. . . . . . . . . . . . . .
Salaries of agents and clerks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 332.88 |.... - - - - - - - - - -
Stationery and printing --------------------------------------------------. 713.74 |--------------
Taxes. --------------------------------------------------------------------- 3.25 --------------
‘Other expenses ------------------------------------------------------------ 666.42 - - - - - - - - - - - - - -
Total ---------------------------------------------------------------. 111,798.89 8. 92
TABLE No. 5.—Number of tons of freight moved on the railroad.
(1) FROM ALL POINTS TO ALL POINTS.
1901. 1900. Increase. DeCrea.Se.
COLON TO PANAMA,
Tom S. TO77S. | Per Cemi. | Per Cent,
From New York to San Francisco . . . . . . . . . . . . . . ., - - - - - - - - - - - - 43, 455 33, 555 29. 50 - - - - - - - - - - -
From New York to Panama, South Pacific, Central America,
and Mexico ------------------------------------------------ 28,455 26,963 5.53 -----------
From Europe to Panama, South Pacific, Central America,
Mexico, and San Francisco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,972 54,905 12.87 -----------
From Colon to Panama (local):
Commercial freight -------------------------------------- 27,699 16,217 70.80 - - - - - - - - - - -
Company's freight --------------------------------------. 34, 162 22, 118 54.46 -----------
Total.--------------------------------------------------- 195,743 | 153,758 27.31 - - - - - - - - - - -
PANAMA TO COLON.
From San Francisco to New York . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,086 30,624 37.48 ||-----------
From South Pacific, Central America, Mexico, and Panama,
to New York ----------------------------------------------- 59, 651 88,046 |. . . . . . . . . . 32.25
From South Pacific, Central America, Mexico, San Francis-
CO, and Panama to Europe ... ---------------........ . . . . . . 79,388 77,219 2.81 -----------
From Panama to Colon (local): -
Commercial freight-------------------------------------- 2,883 3, 198 |- - - - - - - - - - 9.85
Company's freight. . . . . . . - - - - - - - - - - - - - - - * * * * * * * * * * * * * * - - - 5,833 4, 532 28, 71 ||-----------
Total.--------------------------------------------------- 189, 841 203,619 - - - - - - - - - - 6.77
Total east bound and West bound. . . . . . . . . . . . . . . . . . . . . . 385,584 || 357, 377 7.89 -----------

PANAMA CANAL TITLE.
303
TABLE No. 5.-Number of tons of freight moved on the railroad—Continued.
(2) CountRIES OF ORIGIN AND DESTINATION.

1901. 1900. Increase. Decrease.
COLON TO PANAMA. Tom S. Tom S. | Pen Cemt. Pe)” Cemt.
For Panama-------------------------------------------------- 71, 151 47,381 50.17 |-----------
For Central America.----------------------------------------- 28,252 27,409 3.08 ||-----------
For South Pacific -------------------------------- - - - - - - - - - - - 48,085 40, 936 |- 17.46 . . . . . . . . . . .
For San Francisco --------------------------------- * * * * * * * * * * 45, 434 35,374 28.44 |- - - - - - - - - - -
Por Mexico -------------------------------------------------- 2,821 2,658 6.13 ----------.
Total.--------------------------------------------------- 195,743 | 153, 758 27.31 -----------
PANAMA TO COLON.
From Panama ----------------------------------------------. 25,814 30,009 . . . . . . . . . . 13. 98
From Central America.--------------------------------------- 40, 128 48, 283 |- - - - - - - - - - 16. 89
From South Pacific ------------------------------------------ 80, 318 93,511 - - - - - - - - - - 14. 11
From San Francisco ----------------------------------------- 42, 552 30,628 38.93 - - - - - - - - - - -
From Mexico ------------------------------------------------ 1,029 1, 188 |---------- 13. 38
Total.--------------------------------------------------- 189,841 203,619 |.......... 6. 77
Total eastbound and west bound...................... 385,584 || 357, 377 || 7.89 |...........
TABLE No. 6.—Statement showing number of tons of freight transported during the years
1897, 1898, 1899, 1900, and 1901.

MOnth. 1897. 1898. 1899. 1900. 1901.
TO77S. Toms. Toms, TO7).S. Tom S.
January -------------------------------------------- 26,886 23, 708 29, 204 29, 115 38,264
February ------------------------------------------- 31, 587 29,993 20,883 30, 947 32, 909
March ---------------------------------------------- 32, 539 32,234 32,838 33, 177 34,271
April ----------------------------------------------- 33,978 25,899 32, 575 33,381 41, 159
May ------------------------------------------------ 30,420 18,007 27,654 29,670 36, 715
June------------------------------------------------ 20,962 17, 108 21,098 25, 236 26,889
July ------------------------------------------------ 20, 368 16,906 18,827 25,982 29,919
August --------------------------------------------- 17,004 18, 373 17, 645 22,415 20, 554
September ------------------------------------------ 16,929 15,816 19,357 27,894 35, 984
October--------------------------------------------- 21,073 22, 146 19,871 29, 320 23,814
November ------------------------------------------ 19, 435 22,581 23,305 36,754 34, 406
December------------------------------------------- 19,470 25, 385 24, 143 33,486 30, 700
Total ----------------------------------------- 290,651 268, 156 287,400 || 357, 377 385,584.
304
E’AN AMA CAN AI. TITLE.
TABLE No. 7.-Statement showing number of passengers transported during the years
1900 and 1901.
1901.
TO Panama. TO Colon.
MOnth. - º º
First Second First SeCOnd
class. class. Total. Class. Class. TOtal
January------------------------------------ 232 3,867 4,099 172 3,633 || 3,805
February ---------------------------------- 194 3,535 3, 729 169 3, 510 3, 679
March ------------------------------------- 175 3,836 4,011 180 3,922 4, 102
April--------------------------------------- 222 4, 514 4,736 227 4, 175 4, 402
May---------------------------------------- 203 4, 313 4, 516 275 3,852 4, 127
June --------------------------------------- 229 3,963 4, 192 287 4,387 4, 674
July---------------------------------------- 228 3,710 3,938 204 3,605 3,809
August------------------------------------- 155 3,089 3, 244 155 3,075 3,230
September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 2,943 3, 146 167 2,845 3,012
October ------------------------------------ 212 2,731 2,943 111 2,771 2,882
November --------------------------------- 215 2,976 3, 191 109 2,948 3,057
December. . . . . . . . . . . . . . . . . . . . . . . ----------- 154 3,090 3,244 109 3,284 3,393
Total.--------------------------------- 2,422 42, 567 - 44,989 2, 165 42,007 || 44, 172
89, 161
190ſ),
January------------------------------------ 178 2,284 2,462 152 2,794 || 2,946
February ---------------------------------- 260 2,226 2,486 264 2,736 3,000
March ------------------------------------- 211 3,025 3,236 263 3,354 3, 617
April--------------------------------------- 269 3,224 3,493 447 3, 538 3,985
May---------------------------------------- 205 2,846 3,051 420 3,091 3, 511
June --------------------------------------- 174 3, 169 3,343 247 3, 183 || 3,430
July---------------------------------------- 186 3,058. 3, 244 257 3,236 || 3,493
August------------------------------------- 185 3, 148 3,333 153 3, 525 3,678
September --------------------------------- 200 3, 250 3, 450 182 3,060 3,242
October ------------------------------------ 256 4, 885 5, 141 241 3, 167 || 3,408
November . . . . . . . . . . . . . . . . ----------------- 272 3, 670 3,942 154 3, 126 3,280
December---------------------------------- 279 |’ 4, 196 4,475 135 3,851 3,986
Total.--------------------------------- 2,675 || 38,981 || 41,656 2,915 38,661 41,576
83, 232




TABLE No. 8.—Comparative statement of local and through freight transported from Colon
to Panama during the years 1900 and 1901.


LOCal from Colon | Through from Through from
to Panama, and Furope to all New York to TOtal.
MOnth, way stations. destinations. all destinations.
1901. 1900. 1901. 1900. 1901. 1900. 1901. 1900.
TOT.S. Tons. TO70s. Toms. TO778. Tom S. Tom S. Tom S.
January . . . . . . . . . . . . 4,918 2, 221 6,304 6, 178 8,032 5, 252 19,254 13,651
February ........... 3,837 4,420 4, 245 3,623 5,709 2,788 13,971 10,831
March -------------. 4,803 3,689 6, 181 3,272 6,685 5,362 17,669 12,323
April---------------- 8, 285 7,422 5,352 4, 357 8,577 4, 585 22, 214 16,364
May----------------- 4, 108 2,256 5, 148 3,409 6, 274 6, 210 15, 530 11,875
June ---------------- 3,033 2,292 4, 190 4, 184 5,547 3,835 12,770 10, 311
July ---------------- 2,237 1,766 5, 574 4,230 6, 516 4,928 14, 327 10,924
August.------------- 1,979 2,035 3,896 3, 511 4, 575 3,890 10,450 9,436
September . . . . . . . . . . 11,441. 2, 319 4,404 4,428 4, 695 4, 642 20, 540 11,389
October. -- - - - - - - - - - - 3,796 1, 296 6, 132 5,600 5,310 5, 601 15,238 12,497
NOWember . . . . . . . . . . 6,653 6, 521 4,894 5,432 5,281 7,398 16,828 19,351
December. . . . . . . . . . . 6,771 2,098 5,652 6,681 4,709 6,027 17, 132 14,806
Total. . . . . . . . . . 61,861 38,335 61,972 54,905 71,910 60,518 195,743 153,758

BAN AMA CAN AL TITLE.
305
TABLE No. 9.-Comparative statement of local and through freight transported from.
Panama to Colon during the years 1900 and 1901.


Local from Pana- § { * *- riº . -
- Through from all Through from all *T* -- 4.
ma to Colon and 3 ** + r. * i r + c, T X zº, vºl - TOtal.
MOnth. way stations. points to Europe. points to New York.
1901. 1900. 1901. 1900. 1901, 1900. 1901. 1900.
* TO77S. TOT.S. TO70s. TO70s, To??.S. To??.S. TO7].S. TO70s.
January . . . . . . . . . . . . 859 459 11,081 9, 157 7,070 5,848 19,010 15, 464
February . . . . . . . . . . . 685 847 9,504 10, 207 8,929 9,062 19, 118 20, 116
March -------------- 889 921 10,303 11,001 5,410 8,932 16,602 20,854
April. --------------- 1,169 1, 100 9,974 9,433 7, 802 6,484 18,945 17,017
May----------------- 567 605 10, 242 6,784 10, 376 10, 406 21, 185 17, 795
June ---------------- 489 681 6,307 4,761 7, 323 9, 483 14, 119 14,925
July----------------- 545 601 3,489 4,040 11, 558 10, 417 15, 592 15,058
August. ------------. 571. 591 3,381. 3,484 6, 152 8,904 10, 104 12,979
September . . . . . . . . . . 601 509 2, 652 3, 460 12, 191 12, 536 15,444 16,505
October . . . . . . . . . . --. 733 486 4,322 3, 676 3, 521 12,661 8,576 16, 823
NOvermber . . . . . . . . . . 667 486 3,733 3, 257 13, 178 13,660 17,578 17,403
December. . . . . . . . . . . 941 444 4,400 7, 959 8, 227 10,277 13, 568 18, 680
Total - - - - - - - - - - 8,716 7, 730 79, 388 77,219 || 101,737 118, 670 189,841 203,619
TABLE No. 10,–Statement of interest and earchange.
Debits. 1901. 1900, Credits. 1901. 1900.
Miscellaneous interest Interest on deposits with .
and exchange items. . . . $88.50 $95. 80 trust companies and
Loss on exchange—New London bankers - - - - - - - $11,259. 83 $24,557.74
York, London, and Isth- Interest On bonds in -
mus drafts. . . . . . . . . ----- 2,450.32 |. . . . . . . . . . . . treasury - - - - - - - - - - - - - - - 14, 350.00 15,876.25
Balance, net receipts. . . . . 86, 215. 28 47, 738.93 || Discount on prepayment
of Sundry accounts. - - - - 2,982. 52 2, 242. 64
Miscellaneous interest - - - 412. 37 2, 111.09
Profit on exchange, New
York, London and Isth-
mus drafts -------------|------------ 3,047.01
Interest. On advances for
Construction La BOCa,
terminal - - - - - - --------- 59, 749. 38 . . . . . . . . . . . .
88,754. 10 ! 47,834.73 88, 754. 10 47,834, 73
TABLE No. 11.-Statement of operating expenses of railroad (by months) for the year 1907.


January. Fº March. April. May. June. July.
General expenses on Isthmus -|$2,954. 98 |{3,210. 11 $3,344. 16 $3,108.98 s 180, 62 $8, 554.98 || $3,660. 25
Conducting transportation. . . .31, 557. 33 31,017.90 |31,554.11 (31,941.68 35,163.51 |30,829.76 || 30, 106.80
Maintenance of equipment ... 9,377.05 || 9, 380. 90 13,500. 34 || 9, 150.87 10. 358.46 11, 254. 50 || 14,059.43
Maintenance of way and struc- - -
tures -------------- * - - - - - - * * * 5, 546.78 5,035.03 || 8,308.77 | 6, 119.86 |11,428. 28 9,023.49 || 7,397.09
Total :------------------- 49, 436. 14 |48, 643.94 56,707. 38 |50, 321. 39 º 87 |54,662. 73 55,223, 57
August. September. October. |November. Pºmer Total.
-
General expenses on Isthmus. $3,888.91| $3,087. 20 $3,205.73 $3,687.86 - $3,544. # $40,378. 20
Conducting transportation .... 29,246.87 30, 509.00, 30, 669.86 30, 580.49| 29,445. 57 373,022.88
Maintenance of equipment - - - 11,458. 15 11, 742. 52 9, 590.26; a 4,863. 69 11, 511.04] 116, 519.83
Maintenance Of way and -
Structures-------------------- 10, 524.99 5, 547.89 12,325.43 7,478,45 6,605. 56 95,341.62
Total.-------------------- 55, 118,92 50,886.61 sºlº 37,283. 11 51, 106. 59 625, 262.53
\ |
(t Credit.
8751—02—20
306
PANAMA CAN AI. TITLE.
TABLE No. 12.—Statement of operating eacpenses of the Panama Railroad Steamship Line,
Atlantic service (by months), for the year 1901.

January. February. March. April. May. Julle. July.
Steamer expenses . . . . . . $51,868.23 #43, 765.84 $43,080.89 $57,600. 41 ($51,738.88 ($43,541, 58 || $49,078. 04
Agency expenses. . . . . . . 9,633.83 9,422.73 9, 268.39 || 9,807. 28 11,542.86 10,956.15 9,079. 15
Charter of Steamers . . . . 27, 509. 38 12,600.00 | 13,950.00 || 13,500.00 13,950.00 | 11, 150.00 7,300.00
Total. . . . . . . . . . . . . 89, 011. 44 65, 788.57 66,299. 28 80,907. 69 77,231. 74 || 65,647. 73 65, 457. 19
August. September. October. November. December. Total.
y
Steamer expenses. . . . . . . . $44,193.24 $51, 640. 12 $43,216. 64 || $46,507. 18 $54,646.40 $585,877.45
Agency expenses - - - - - - - - 9,753.81 8,838, 30 9, 585. 10 9,402.19 9,913.02 117, 202.81
Charter of steamers . . . . . 17,160.00 8, 100.00 7,800.00 || 17, 200.00 14, 710.00 164,929.38
Total.--------------- 71, 107.05 68,578.42 65,601. 74 | 73,109.37 79,269.42 868,009. 64
|
TABLE No. 13.—Statement of operating expenses of the Panama Railroad Steamship Line,
Pacific service (by months), for the year 1901.
January. | February. | March. April. May. June. July.
Steamer expenses . . . . . . $20,159. 13 $19,415.45 §20,878. 37 ºz0, 560.88 515, 153. 33 $16,996.63 $13,172.48
Agency expenses. . . . . . . 6,985. 12 11, 136. 39 8,926.81 | 11,062. 14 6, 710. 84 12, 158.41 7, 557.91
Charter of steamers . . . . 19,600.00 28,000.00 || 31,000.00 || 31, 251.00 21,033.33 17,250.00 17,825.00
Total ------------- 46, 744, 25 58,551.84 60,805. 18 62,874.02 | 42,897. 50 46,405.04 || 38,555. 39
August. September. October. November. December. Total.
Steamer expellses. . . . . . . . $18,954.66 $14,437.17 | $24,636.37 $17,406.42 || $14,809, 32 || $216,580.21
Agency expenses . . . . . . . . 6, 734.90 14, 170.35 6,828.88 16,529. 24 2,997. 90 111,798. 89
Charter Of steamers . . . . . 23,450.00 18,375.00 || 31, 100.00 22,950.00 17,825.00 | 279, 659. 33
Total.-------------- 49, 139. 56 46,982. 52 62, 565. 25 35,632. 22 608, 038.43


56,885. 66
TABLE No. 14.—Statement of earnings of railroad (by months) for the year 1901.

January. Fº March. April. May. June. July.
|
| |
Freight, Colon to Panama. . . . . $58,742, 64;41,907. 31:51, 109.80 $60,382.97.546,728. 24541,066. 38||50, 939. 19
Freight, Panama to Colon. . . . . 65, 965. 77. 63,792.77 60,819.67, 60,893. 13 67, 587. 31' 42, 111.34 42, 522.62
Passengers, Colon to Panama...] 3,659.75 2,920, 29 2,978.49, 3,533.29 4,959.05 3, 209.63. 3,360. 57
Passengers, Panama to Colon. . 2,720.77| 2,629.22, 2,869. 16' 3,481.59 3,825.18| 4,371.16|| 3,448.23
Mails, Colon to Panama- - - - - - - 4,404.48 3,800.05. 4,577. 59; 4,298.32 4, 193. 35 4, 191.55 5,210.85
Mails, Panama, to Colon - - - - - - - 517. 14 391. 12 333.01. 415.41 340. 53 418.09 362. 72
Treasure, COlon to Panama,. - - - 628. 89 424.05 338.72 350. 16 358. 22 167. 18 314, 13
Treasure, Panama to Colon. ... 1, 257.28. 1, 150, 72 .1, 580. 15, 1,122.48; 1,266. 34 1, 199.78 869.98
Extra baggage, Colon to Pan-
8. In 8 - - - - - - - - - - - - - - - - - - - - - - - - - 796. 44 537. 34 525.81| 1,055.46 830. 50| 1,054.60 872.49
Extra baggage, Panama to
Colon. ----------------------- 506. 40 604. 17 345.36. 557, 85 910.40 751. 11 799. 08
Total -------------------- 139, 199.56||118, 157.04|125,677. 76,136,090. 66,130,999. 12 98,540.82|108,699.86
*
August. September. October. |November.|December. Total.
Freight, Colon to Panama - - - - - $36,491.97 $58,673.49 $51,265. 39 $54,176.09 $54,702. 18.3606, 185.65
Freight, Panama to Colon . . . . . 29,237.92 39,287.97 27, 582.42 50,969.84 39,853. 31|| 590,624. 07
Passengers, Colon to Panama. - 2,613. 21 2,832.05 2,936.68 3, 608.09| 2,625.71 39,236.81
Passengers, Panama to Colon. . 2,504.78 2,741.51 2, 362.49 2,630.66 2,833. 12 36,417.87
Mails, Colon to Pariama. . . . . . . . 3,918. 79 3,776. 64 4,676.47 4,463. 85 4,742. 14 52,254.08
Mails, Panama, to Colon - - - - - - - 322. 29 514. 22 430. 13 335. 64 400. 17| 4,780.47
Treasure, Colon to Panama. . . . 205. 45 217.81 349. 63 321. 83 506.70 4, 182,77
Treasure, Panama, to Colon. . . . 1,473.45 1, 611.28 1,047. 23 964. 36 791.02 14,334. 07
Extra baggage, Colon to Pan- -
&m.8 - - - - - - - - - - - - - - - - - - - - - - - - - 407. 60 1,119.90 817. 14 1,060. 27 617. 85 9,695.40
Extra baggage, Panama to
O10D - - - - - - - - - - - - - - - - - - - - - - - - 584. 02 598. 65 538. 63 474.94 589.76; 7,460. 37
Total--------------------- 77,759.48. 111,373. * 92,006. 21 119,005. 57 107,661.961,365,171.56
PAN AMA CANAL TITLE,
307
TABLE No. 15.—Statement of earnings of the Panama Railroad Steamship Line, Atlantic
service (by months), for the year 1901.

January. Fº March. April. May. Julne. July.
Freight-----------------------. $62,091. 18:49,633.01|$56,857. 32;74, 414, 20360,946. 37.562,306.88561,898.59
Treasure. . . . . . . . . . . . . . . . . . . . . . . 602. 6; 433, 55 430. 38 873. 28 209. 42 358, 48 340. 28
Mails-------------------------- 7,381. 14, 5,769.87 6,340, 50, 7,405.45, 5,916.67 6,088.39 7,717.35
Extra baggage . . . . . . . . . . . . . . . . . 113.48 161.15 144. 17 159. 35 192. 75 179. 11, 220. 79
Passengers - - - - - - - - - - - - - - - - - - - - 12,609. 10, 9,297.65, 8,601. 59 15,433.34. 14,063.89 15, 181.82 18, 222.72
Miscellaneous . . . . . . . . . . . . . . . . . 530.83 409, 69 490. 67 802.54 785. 21 639. 50 913. 28
Total -------------------- 83, 328.35 65,704.92 72,864.63 99,088. 16 82,114.31 84,754. 18 89, 313.01
August. September. October. |November.|December. Total.
Freight ------------------------ $63,596.22 $40,827.94 $60,042.80 $58,234.10 $67,759.27$718, 607. 88
Treasure ----------------------- 278. 19 : 9 590. 79 197. 06 266.41| 4,951.65
Mails -------------------------- 5, 898.86 5,441.73 7, 322, 61 6,046. 36|| 7,686.90 79,015.83
Extra baggage---------. . . . . . . . 137. 23 220. (35 171. 07 276.21 210. 73| 2, 186.69
Passengers. . . . . . . . . . . . . . . . . . . . . 12, 178. 35 10,984. 76 14, 202.25 13,694. 18, 10, 101.93| 154,571.58
Miscellaneous . . . . . . . . . . . . . . . . . 497.80 516.45 532. W8 608. 20 790.26 7, 517.21
Total.--------------------- 82,586.65 58, 362. 72 82,862. 30 79,056. 11| 86,815. 50 966,850. 84
TABLE No. 16. —Statement of earnings of the Panama Railroad Steamship Line, Pacific
service (by months), for the year 1901.

Febru-
January. ary March. April. May. June. July.
Freight. ~~~~ $18,476.00;21,293.39||45,452.00:18, 771.00%, 610. 28'537,557.80;13,857.42
Extra baggage . . . . . . . . . . . . . . . . 2.45 31. 24 5. 55 9. 55 13. 75 1. 35 2.25
Passengers -------------------- 1,527. 50, 1,400.00 1,615.00. 2, 152.75. 1,070.00 1,837.50 1,080.00
Total -------------------- 20,005.95 22,724.63 47,072.55 20,933. 30, 29,694.03 39,396, 65. 14,939.67
August. September. October. November.|December. Total.
Freight * * * * * * * * * * * = & tº º ºs º e º sº sº m º º $41,427.72 $20,562.72 $53,575..12| $11,513. 55 §38,180.335349,277.33
Extra baggage----------------- 9.25 7.35 25. 29 12. 15) ----------- 120.18
Passengers--------------------. 875.00 1,250.00 1,495.00 602.50 1,520.00 16,425.25
Total.--------------------- 42,311.97 21,820. 07 55,095.41 12, 128.20 39,700. 33 365,822.76
TABLE No. 17.-Comparative statement of vessel entries during the years 1900 and 1901,
Colom Harbor.
Sailing vessels. SteamerS. Total.
MOnth. 1901. 1900. 1901. 1900. 1901. 1900.
No. Tons. No. Tons. NO TOnS. | NO TOIns. | NO TOnS. NO TOnS.
January. . . . . 27 | 1,014 56 1, 113 || 38 97, 545 31 88, 137 65 98,559 || 87 89,250
February . . . 28 948 || 42 965 25 50,755 29 89, 692 53 51,703 || 71 90,657
March - - - - - - 36 402 || 43 689 || 33 100,658 || 33 95,693 69 || 101,060 | 76 96,382
April. ------- 42 | 1, 117 | 50 696 || 33 || 104,964 || 31 90,940 || 75 106,081 | 81 91,636
May. . . . . . . . . 34 570 54 (352 33 93, 403 || 31 89,849 || 67 93,973 || 85 90, 501
June -------- 42 618 50 | 1,422 27 76,705 || 28 73, 144 || 69 77, 323 78 74,566
July--------- 34 484 || 34 615 32 93,314 || 31 95,466 | 66 93,798 || 65 96,081
August. . . . . . 33 313 || 36 721 27 71,759 28 72,035 | 60 72,072 64 72,756
September . , 33 647 39 1,119 29 77,814 27 74,618 62 78,461 | 66 75,737
October - - - - - 34 726 || 46 630 || 31 95,757 29 80,462 65 96,483 75 81,092
November . . . 28 971 54 | 1,461 35 87,276 28 78,715 63 88,247 | 82 80, 176
JDecember - - - 27 700 || 39 532 || 30 | 100, 680 29 84, 384 57 | 101,380 | 68 84,916
Total...] 398 || 8,510 || 543 || 10,615 373 |1,050,630 || 355 1,013,135 | 771 1,059, 140 | 898 || 1,023,750

308
PANAMA CANAL TITLE.
TABLE No. 18.—Comparative State
ment of vessel entries during the years 1900 and 1901,
port of Panama.
SteamerS. Total.
MOInth. 1901. 1900. 1901. 1900.
NO. TOnS NO. TOIS NO. TOnS. NO TOnS.
January----------------------------. 17 26,588 20 28,486 17 26,588 20 28,486
February --------------------------- 18 27,683 22 31, 544 18 27,683 22 31, 544
March ------------------------------ 20 28, 223 21. 33,633 20 28,223 21 33,633
April-------------------------------. 17 26, 157 19 26, 179 17 26, 157 19 26, 179
May--------------------------------- 20 27,481 17 26,476 20 27,481 17 26,476
June -------------------------------- 16 20,391 19 23, 738 16 20,391 19 23, 738
July--------------------------------. 17 23,687 15 23, 594 17 23,687 15 23, 59
August------------------------------ 18 22,215 14 18, 378 18 22,215 14 18,378
September -------------------------. 21 27, 673 18 26,673 21 27,673 18 26,673
October ----------------------------- 17 23,475 21 30, 840 17 23,475 21 30, 840
NOWember -------------------------. 19 27,038 19 29, 103 19 27,038 I9 29, 103
December--------------------------. 16 21,899 21 29, 198 16 21,899 21 29, 198
Total.-------------------------- 216 302,510 || 226 327,842 216 || 302,510 || 226 327,842
TABLE No. 19.-Rolling Stock equipment.
tºo. Passenger cars. | Freight Cars. Miscellaneous.
rº, d5
ſt: º:
* 2: = | #| #
3 # ‘F,3| 2: % 5 || 3 º
C '85 . . . Sº 3 $2 | . 3 | } | .
'ab ſº ź |&g|3 P4 b0 3, º 3
º: Cl) : | 3 |: 3 | * | * * | E g; 3 | dº | E,
GD r: ||. 5 # 3|E | } * || || 3 || 3 || 3 || 3 | | | E F.
rc; 3 || 3 |# |##| 5 || 3 || 3 | = | is 3 || 3 || 3 || 3 || 3 || 3 | E | 3:
# g | #|É|ä”| 3 || || 3 || 3 || 3 || 3 || 3 ||3| #|3|3| 3 || 3 ||3
3 || 7 |}|# 3 |}|3| 3 || 3 | E | 3 ||= |3 iş E |}| 3 || 3 |#
Stock On Dec. 31,1901. 24 11 || 5 || 8 || 2 || 9 || 7 || 582 | 136 186 27 || 1 || 5 || 2 || 9 || 9 || 2 | . . . . . ].
Stock on Dec. 31, 1900. 24 11 || 5 || 8 || 2 || 9 || 7 || 582 | 136 186 27 | 1 || 5 || 2 || 9 || 9 || 2 || 1 || 1
Decrease during
the year --------|------|-----. * | * = <s as sº s = | * * * : * = * I as as ºn an as i s m sº * * * * s as sº e i is s a º sº tº a --- 1 *
TABLE No. 20.—Floating equipment.
Paºlºom-
* f \{* - IllOClà,UlOIl.
Name. Gººn Length. Breadth. Depth. Hull. ll O
'S SL -
Cabin. Steerage.
Feet. J't, I'm. | Ft. In,
Steamship Alliança. . . . . . 2,985 303 42 0 23 9 IrOn . . . . . . . . . . 82 66
Steamship Advance . . . . . 2,605 295 38 4 23 4 |- - - - - do -------- 64 66
Steamship Finance. - - - - - 2,603 300 38 4 23 6 - - - - - do -------- 64 62
Tug Ancon - - - - - - - - - - - - - - 105 98 18 () 6 0 |..... do --------|--------|----------
Tug Bolivar . . . . . . . . . . . . . 234 127 28 0 9 6 || - - - - - do --------|--------|----------
4 freight lighters . . . . . . . . 340 110 24, 2 7 2 | Steel. ---------|------------------
14 freight lighters - - - - - - - 230 to 300 110 24 () 6 6 Iron ----------|--------|----------
2 Coal lighters - - - - - - - - - - - 5 100 24 0 6 0 | . . . . . do ----------------|----------
1 floating pile driver . . . . . . . . . . . . . . . . 60 30 0 5 0 | Wood---------|--------|----------





PANAMA CANAL TITLE. 309
EXHIBIT T.
OFFICIAL PROPOSAL OF SALE TO THE UNITED STATES.
NEW PANAMA CANAL COMPANY., ANONYMoUs Association, CAPITAL 65 MILLIONs;
CoMPANY HEADQUARTERs 7 RUE LOUIS-LE-GRAND.
Taken from the record of the deliberations of the council of admin-
istration.
Session of January 9, 1902. . *
Present: MM. Bo, president,
Monvoisin, vice-president,
Terrier, vice-president,
Bourgeois, administrator,
Couvreux, administrator,
Forot, administrator,
Gueydan, administrator,
Le Baron de Lassus St. Genies, administrator,
Georges Martin, administrator.
The council decides unanimously to make an offer at a fixed price
for the cession to the Government of the United States of all the prop-
erties and rights which the New Company possesses on the Isthmus,
without any exception, for $40,000,000, and it delegates to its presi-
dent, M. Bo, all powers to transmit that offer, and effect and sign the
said cession.
Copy conforming with the original.
- M. Bo,
President of the Council of Administration.
TELEGRAM ADDRESSED TO ADMIRAL WALKER, JANUARY 9, 1902.
The New Panama Canal Company declares that it is ready to accept
for the whole of its properties and rights on the isthmus, without
exception, the sum of $40,000,000. This offer good up to March 4, 1903.
BO
President of the Council of Administration.
Certified to be in conformity with the original.
- i Bo,
ſºresident of the Council of Administration.
TELEGRAM ADDRESSED TO ADMIRAL WALKER, JANUARY 11, 1902.
The Offer of cession of all our properties comprises also all plans and
archives at Paris.
- - Bo,
J’resident of the Council of Administration.
Certified to be in conformity with the original.
- BO,
President of the Council of Administration.
NEw PANAMA CANAL COMPANY, ANONYMoUs Association, CAPITAL 65 MILLIONs;
COMPANY HEADQUARTERs 7, RUE LOUIS-LE-GRAND.
Taken from the report of the ordinary general meeting of stock-
holders of the New Panama Canal Company, held December 21, 1901,
in the hall of the Association of Agriculturists of France, 8 rue
d'Athènes, Paris.
310 PANAMA CANAL TITLE.
Saturday, December 21, 1901, at 2.30 p, m. *
The stockholders of the New Panama Canal Company, an anonymous
association, with a capital of 65,000,000 francs, having its headquarters
at Paris, 7 rue Louis-le-Grand,
Having met in ordinary general assembly at Paris, in the hall of the
Association of Agriculturists of France, 8 rue d'Athènes, in conse-
quence of a call inserted in the general journal of announcements, issue
of Friday, November 29, 1901, called “Little Announcements” (Petites
Affiches), M. Bo, vice-president of the company, presiding, -
The president announces that the roll of those present, signed by
each stockholder upon entering, shows the presence of 227 stockhold-
ers, representing either for themselves or as proxies 592,304 shares,
giving a right to 7,523 votes, to wit, more than half of the company
capital; that in consequence the meeting, being legally constituted, can
validly deliberate. . -
He places upon the table the stamped copy, recorded and authenti-
cated, of the number of the Petites Affiches of November 29 aforesaid.
Afterwards the president invites to assist him two of the principal
stockholders present: tº
M. Jean Pierre Ganfron, judicial administrator, in the name of and
as liquidator of the Universal Company of the Interoceanic Canal of
Panama, having headquarters at Paris, 42 Rue de la Chaussee d’Antin;
and M. Uribe, residing at Paris, 12 Rue de Bassano, consul-general of
the Republic of Colombia, specially accredited to represent his Gov-
ernment at the meeting,
The liquidation of the Universal Company of the Interoceanic Canal
of Panama, being owner of 158,655 shares, and the Government of the
Republic of Colombia of 50,000 shares. .
M.M. Gautron and Uribe accept the functions of examiners and take
their places at the table.
The president and examiners designate as secretary of the meeting,
M. Edouard Lampre, residing at Paris, 39 Boulevard Berthier, who
accepts.
The bureau being thus constituted, certifies the list of those present.
* * * * * * *
SECONI) RESOTUTION.
, The general meeting, after having heard the report of its council of
administration, approves the conclusions of that report and gives all
powers to its council of administration to negotiate the cession of the
properties, concessions, privileges, etc., of the company, and to con-
tract, with the reservation of ratification by the stockholders.
This resolution is adopted almost unanimously.
(Signed) Bo,
The president.
GAUTRON, JOSE PABLO URIBE,
An AEcd/mºner. An AEpaminer.
ED, LAMPRE,
The Secretary.
- Bo,
President of the Council of Administration.
Certified to be in conformity with the original.
PANAMA CAN AL TITLE. - 3.11
NEW PANAMA CANAL COMPANY., ANONYMoUs Association; CAPITAL, 65 MILLIONs;
COMPANY HEADQUARTERs, 7 RUE LOUIS-LE-GRAND.
Taken from the report of the ordinary general meeting of stock-
holders of the New Panama Canal Company, held December 21,
1901, in the hall of the Association of Agriculturists of France, 8 Rue
d'Athènes, Paris.
Saturday, December 21, 1901, at 2.30 p. m.
*
x-º $º &. **** .*. &p
* & º ** ** * tº 7.
THIRD RESOLUTION.
The general meeting ratifies the nominations of administrators made
by the council of administration in pursuance of article 23 of the
by-laws, of M. Rischmann to replace M. Rouget, of M. Forot to replace
M. Hutin, and of M. Bourgois to replace M. Choron. It appoints,
besides, M. Gueydan as administrator, who will make the tenth admin-
istrator, and decides, in conformity with article 22 of the by-laws, that
four administrators instead of three shall be designated before the next
general annual meeting, which will vote to replace or reelect them.
This resolution is adopted almost unanimously.
* * * * * * *
The order of the day being accomplished, the session adjourns at
4 o'clock.
The faith of which there has been drawn up the present report,
which is signed by the members of the bureau to serve and value as it
lawfully may.
M. Bo,
- The President.
P. GAUTRON, JOSE PABLO URIBE,
An Adam/ner. An Aca/nºver.
ED. LAMPRE,
The Secretary.
M. Bo,
President of the Council of Admºnºstration.
Certified to be in conformity with the original.
EXEHIBIT U.
- OBINION BY MAITRE DU BUIT AS TO JUDGMENT CREDITORS OF THE
COMIPAGNIE UNIVERSELLE.
According to French law judgments, even for liquidated sums'
obtained against a debtor, do not in themselves confer upon the cred-
. any right of preference or right to follow the property of the
Ciebtor. -
These judgments carry with them a judicial lien upon all real estate
(art. 2123 of the Civil Code); that is to say, they confer upon the
creditor who obtained them the right to obtain a lien by an entry on
the registers of liens of the place where the property is situated (art.
2134), but the lien affects the property only by virtue of the entry.
Unless the claim sanctioned by the judgment is in its nature a claim
preferred as to certain property or as to all property, the creditor can
312 - PANAMA CANAL TITLE.
not obtain from the judgment or from the date of its entry any prior-
ity over claims, whether supported by executory instruments (judg-
ments or notarial deeds) or not, whatever may be their earlier or later
date. (Arts. 2093 and 2094.) -
The existence of these judgments does not affect in any way the
right of disposition, which continues to belong to the debtor; all aliena-
tions not made in fraud of creditors, are, therefore, valid, and transfer
title to the purchasers (art. 1167), subject to the right of redemption
in the case of conveyances of real estate.
The only effect of judgments is to allow the creditor who had no
executory instrument, but only a private right, to levy upon and have
sold, the property, personal and real, belonging to his debtor (art. 545,
Code of Procedure, 583, 673); but this right, even when exercised,
does not confer upon him any right of preference in the proceeds of
the sale of the personal or real property upon which he has levied, and
which he has had sold (arts. 2093, 2094, Civil Code). All other credit-
ors of the same debtor, whether they hold executory instruments or
not (art. 609, Code of Procedure), have the right to come in to share
in the proceeds of sales made at the instance of the most diligent. It
may even happen that in the distributions (art. 656 et seq. of the Code
of Procedure) or in the orders (these latter are open, as to the price of
real estate) (art. 749 et seq. of the Code of Procedure) which the court
may make for the distribution of the price, the creditor making the
levy may find himself confronted by creditors having a right to pri-
ority, and that he may be reduced, after the deductions made for them,
to receiving only an insignificant share.
It will be seen, therefore, that the act of 1893 might, without vio-
lating any rule, and without disregarding any wested right, provide
that the creditors (not mortgage creditors, moreover) of the Com-
pagnie Universelle de Panama, which owned no real estate in France,
should not have the right to enforce, themselves, judgments which they
might have obtained before the promulgation of the act. In fact,
these judgments would not have given, even in case they had enforced
them by levy and judicial sale of certain property, any exclusive or
preferential right to the proceeds of these sales. These partial execu-
tions could only cause the most serious inconvenience, in that they
would have paralyzed the liquidator, who alone could have made any-
thing out of the principal asset, the canal concession; a levy upon
and sale of this concession in the ordinary way would, moreover—it
might be feared, at least—destroy the value of the concession. Such
is the purpose of the act of 1893 on this point. It deprives none of
the creditors of the only right which French law recognizes in him,
that of receiving his proportionate share of the assets of his debtor,
the Compagnie Universelle. (Art. 2123 of the Civil Code.)
The Government of the United States, therefore, in case it should
become the purchaser of the concession, would in no way have to con-
cern itself with the creditors of the Compagnie Universelle, who had
obtained judgments against it before the promulgation of the act.
It has, moreover, been explained in the opinion that all rights of cred-
itors of the Compagnie Universelle as to the concession and the rest of
the assets of that company have been cleared away, so far as concerns
the New Company and third parties who may become purchasers from
it in future. (See art. 609, Code of Procedure: “Creditors can not
intervene except upon the price of sale.”) The rights of creditors,
PANAMA CAN AL TITLE. 313
whatever they may be, have been transferred to the price of the
sale made by the liquidator, in the form of a contribution to the
company, so that third parties have nothing to do with any diffi-
culties and competitions which may arise between creditors and the
liquidator. If, contrary to the fact, it were even supposed that
the holders of judgments against the Compagnie Universelle have
thereby gained a better situation than that of the other bondholders
or creditors, and would have a right to payment in full, this would
still be only a right of preference in the price, and not a right to fo/-
low, affecting any part of the assets of the old Compagnie Universelle,
as against outside purchasers. The question, which is wholly internal,
would have no importance to third parties, especially to the Govern-
ment of the United States, which would never have anything to fear
from them.
Given at Paris, September 15, 1902. -
(Signed) H. DU BUIT.
EXELIBIT V.
OPINION OF ME. WALDECK-ROUSSEAU, ADVOCATE OF THE COURT OF
APPEALS OF PARIS, ON THE TITLE OF THE NEW PANAMA CANAL
COMPANY TO ITS CONCESSIONS AND OTHER PROPERTY AND ITS
POWER TO CONVEY A. CLEAR TITLE TO THE UNITED STATES.
The questions submitted to the counsel undersigned are contained in
a letter dated September 6, 1902, and are formulated as follows:
I. Has the New Panama Canal Company a certain and absolute title to the prop-
erty which it has offered for sale to the Government of the United States?
II. Is this property in any measure legally encumbered by the debts and liabili-
ties of the old company? In the event of the United States purchasing this property,
would they, by so doing, become responsible for such debts and liabilities and would.
they thereby assume any kind of obligation to the shareholders, bondholders, or
other creditors of the old company? #
III. Is the act of July 1, 1893, unimpeachable and absolute, according to the
Constitution and according to French law? Have the French judicial authorities
power to discuss the validity of said act? -
IV. Is the New Panama Canal Company in any measure a govern-
ment corporation in France, and is the cooperation of the French
Government necessary for the transfer which the New Panama Canal
Company proposes making to the Government of the United States?
V. Will the proposed transfer, duly carried out by deed of the New
Panama Canal Company, and by deed of the liquidators of said com-
any, the dissolution of which would be declared, place in the hands
of the United States an absolute and unconditional title to the trans-
ferred property, without the United States assuming any of the obli-
gations of the old company to the shareholders, bondholders, and
other creditors of said company ?
Of course, the New Panama Canal Company, having made the transfer, will, with-
out delay, fulfill all its obligations towards the liquidator of the old company, as they
appear by the decision of the arbitrators dated February 11, 1902, made in execution
of the contract dated December 24, 1901.
To answer these questions, it is necessary to refer to the private or
judicial documents, the chain of which shows at once the nature of the
Panama Canal concession and the various transfers of ownership of
314 PANAMA CAN AL TITLE.
which it has been the subject. This historical review has been already
presented with the greatest clearness and the most scrupulous accu-
racy in different opinions given either by Mes. Limbourg, Devin, Du
Buit, Thiéblin et Gontard, counsel at the bar of Paris, or by Messrs.
Sullivan & Cromwell, general counsel of the new company in America.
As we shall have, in stating our opinion, to quote the exact text of the
documents mentioned in these statements, it is enough, for brevity, to
review generally the series of facts and instruments.
I.
The concession for the Interoceanic Panama Canal was obtained by
M. Wyse. (Agreement of March 23, 1878–law 28 of 1878, of
Colombia.) .
Not only by its nature was it transferable, but its transfer to a com-
pany by the concessionary and by this company to other companies or
capitalists was expressly contemplated by article 21.
II.
It was, in the first place, to the Compagnie Universelle du Canal
Interocéanique that the concession was transferred. This transfer is
the subject of no criticism. It was made in consideration of certain
advantages granted to the transferrer. It is to be observed that every-
body admits that, by the contribution made to the Compagnie Univer-
selle, the latter became owner of the concession with all its advantages
without anyone's ever thinking of maintaining that the transferrer
7'eserved any other rights than that of requiring the performance of the
correlative advantages stºpulated ºn the transfer.
III.
There is no need of reviewing the difficulties encountered by the
Compagnie Universelle, or its financial vicissitudes. In 1889 it was
driven to dissolution. Application was made to two jurisdictions—the
one recognized in the company a commercial character, the other a
civil character. It was the latter opinion which prevailed before the
court of appeal, and it is the decree of the civil tribunal of the Seine
of February 4, 1889, which having become res judicata governs the
liquidation of the company.
IV.
The same decree appointed the liquidator (M. Brunet), and in the
enumeration of the powers of this liquidator mentions that of trans-
ferring or contributing to any new company all or part of the corporate
assets. We shall say, further on, that this express statement was
supererogatory, such an act, under French legislation and jurispru-
dence, being by law within the powers of the liquidator, since it is of
the essence of his duties to realize upon the corporate assets. It should
be added that, in this particular case, transfer by contribution to
another company of assets of this sort was, in truth, the only possible
way of realizing upon them, the property involved being not real
PANAMA CANAL TITLE. . 315
estate or personal property of little importance, and already producing
a return, but a colossal enterprise, to be carried out, and which could
produce a return only after its completion.
V.
It is unnecessary to review the modifications in the liquidation in
consequence of death or other causes, and it is enough to observe that,
if the person of the liquidator has changed, the powers of liquidation
have remained the same.
VI.
Nor do we think it necessary to enter into the details of the laws for
extension of the concession in 1890, 1893, or 1900. They have, for
the present opinion, no other importance—though this is consider-
able—than to show the approval given by Colombia to the transfer
made by the Compagnie Universelle for the benefit of the new company.
VII.
The new company was formed on October 20, 1894. In form, as in
substance, it is a private company, formed under the general act of
July 24, 1867, and that of August 1, 1893, like all commercial com-
panies, and without connection with the Government. All the formali.
ties prescribed acknowledgment of the articles of incorporation
before a notary, subscription to the shares, payment of one-fourth of
the shares, declaration of subscription and of the payment of one-
fourth, meeting of the shareholders for organization, approval by a
second meeting of the contributions, etc. A// legal forma/???es were
fulfilled, and the regularity as well as the validity of this company
must be considered as beyond doubt.
VIII.
The articles of incorporation show the purpose of the company—the
construction and operation of the canal; that is to say, the utilization
of the concession of 1878 held by the liquidation of the Compagnie
Universelle.
The purpose of the company could not be attained unless it became
owner of the concession. The liquidator, authorized so to do by the
decree of February 4, 1889, became a party to the articles in order to
contribute to the company: First, this concession (all rights whatever
resulting for the benefit of the company in liquidation from the laws
of the Government of Colombia of May 18, 1878, and December 26,
1890, etc.); second, the works executed, yards, plant, etc.; third, the
plans and estimates; fourth, the rights of every nature of the Com-
pagnie Universelle relating to the Panama Railroad.
In a word, the liquidator contributes to the new company the Orig-
inal concession, without exception, and the increment resulting from
its works of acquisitions. .
316 g PANAMA CAN AI, TITLE.
IX.
In our law it is correct to say that contribution to a company is
nothing else than a sale." It is in essence a transfer of ownership. It
may be stated that the numerous precautions taken by our legislation
concerning commercial companies have for their principal purpose to
inform the public of the assets, and so of the solvency, of the company
formed, whence the publicity which must be given the articles of
incorporation, and to guarantee the substantial character of the con-
tribution and the correctness of its valuation, whence the appointment
of commissioners to report upon the value of the contributions and
the verification by a shareholders’ meeting, the majority of which is
fixed by law. - * ---
Therefore to say contribution to a company is, by the same words,
to say transfer of the ownership of the contribution for the benefit of
the company. º -
X.
Certainly, the ownership contributed may be subject to incum-
brances, but only those which are enumerated ºn the document and made
public are valid and may form the subject of any action at law. Any
reticence, any dissimulation, of a sort to modify the value of the con-
tribution, and, consequently, the security of third parties, would be
fraudulent, as tending to give a false idea of the credit of the com-
pany. In any case, it would be wholly inoperative, void, and non-
existent, and could not furnish a foundation for any action susceptible
of being brought to their prejudice before the courts.
XI.
The only encumbrances which there can be upon the contribution
made by the liquidator are, then, those enumerated in these articles:
First. The obligation of the new company to conform, with regard
to the grantor, the Colombian Government, to the terms of the law of
1878 and that of 1890, and to pay all sums due by the Compagnie
Universelle to that Government. - -
Second. The obligation to provide the Compagnie Universelle and
the Government of Colombia certain limited advantages. Thus, the
new company must pay over to the liquidator of the Compagnie Uni-
verselle 60 per cent of the net profits and issue to the Colombian
Government, in conformity with the extension law of December 26,
1890, 50,000 full paid shares out of those issued to form the capital of
the new company.
& V. Lyon Caen and Renault, Traité de Droit Commercial, t. II, No. 16:
“Ownership is transmitted, by the member who makes the contribution, to the
association, when the latter constitutes a legal person, or becomes common to him
and his fellow-members, when the association has no personality. In the former
case ownership is entirely transferred; in the second transfer is made for the benefit
of the other members only to the extent of the excess beyond the share assigned to
the member who makes the contribution. The relation of the member by whom
the contribution is made, to the company, or to his fellow-members (according
to the distinction just stated), is analogous to the relation of a vendor to his
purchaser.’’
PANAMA CANAI, TITLE. 317
There is nothing in this part of the articles but a very ordinary and
very normal method of compensation for the contribution. The con-
tributor, in exchange for the property which he transfers to the
company, may receive either a price in money, paid once for all, or
an eventual interest, a share in the profits for example, resulting from
the business, or full-paid shares; these are methods between which he
may choose and which may be either modified or combined. He may
then receive both an eventual interest and shares. -
But in any case, and whatever may be the form of remuneration, this
remuneration is the equivalent of the abandonment to the company of
the contribution, and it falls within the rule that the contributor can
not both receive the price stipulated for the thing transferred and
retain all or any part of his ownership. The company acquires the
ownership of the things contributed and the contributor loses it.
XII.
Among the assets of the liquidation were shares of the Panama Rail-
road. They were also transferred to the new company, but not abso-
lutely, like the other property. The transfer is conditional. If the
canal is completed within the period by the new company, the latter
becomes absolute owner of the shares. In the contrary case it must
either restore the shares or pay for them by an indemnity of 20,000,000,
the share of profits assigned to the liquidation being then fixed at 50
per cent.
XIII.
It has been said that to contribute all the assets of the dissolved
company to a new company was within the Ordinary powers of the
liquidator. This right had been expressly conferred upon the liquida-
tor by the decree of 1889. The use which he made of it for the benefit
of the new company has received the sanction of the act of July 1, 1893.
By recognizing a civil character in the Compagnie Universelle an
almost inextricable situation had been created. In a civil liquidation
there is not, as in a bankruptcy or a commercial liquidation, a body of
creditors represented by a common representative; each of the cred-
itors remains empowered to bring individually any suit, any claim;
what is adjudged against or for him can neither bind nor benefit the
rest. It was in order to apply to a civil liquidation, by virtue of
a special provision, the methods of a commercial liquidation that
the act of July 1 was passed. But it had to consider, at the same
time that it ousted the creditors for the benefit of a representative,
the protection of their interests in the liquidation. It devoted a title,
title 2, to the liquidator. In articles 10 and 12 it expressly sanctions
the right of transfer of the assets in the liquidator, and, while sanc-
tioning it, surrounds it with new safeguards. This transfer must be
confirmed by the tribunal. It, as well as the decree, shall be published
in official form; intervention may be made upon the decree during the
period of a month. When this period has passed, and when the decree
has become final, having the authority of res judicata, the transfer can
no longer be attacked by anyone.
Thus, and subject to judicial confirmation, the right which M. Gau-
tron used in the formation of the new company is sanctioned at once
by general law, the decree of February 4, 1884, the act of July 1, 1893.
3.18 PANAMA CANAL TITLE.
XIV.
The formalities prescribed by the act of July 1, 1893, were observed.
The contribution made to the new company was the subject of a decree
of confirmation of June 29, 1894. It was regularly published. There
were interventions; they were overruled by a new decree of August
8, 1894. The right of the liquidator to make the transfer, as it appears
Žn the articles of Żncorporation of the new company, without any other
obligation than those expressed in the articles, is, therefore, erga
onnes, sanctioned by the authority of res judicata, and can not be the
subject of controversy in the courts.
XV.
Article 75 of the articles of incorporation provides for the appoint-
ment of a technical commission, after the expenditure of about half of
the capital, for the purpose of making a report upon the possibility
of completing the canal and the most suitable means for reaching that
end. It was appointed on February 26, 1898, and made a report on
February 23, 1899, in favor of the possibility of constructing the canal.
By agreement between the liquidator and the company it was arranged
that the meeting of the shareholders should not pass upon its conclu-
sions until 1903.
We may therefore suppose that at that time the liquidator and the
company were considering the advantage which would result for all
from a new arrangement.
XVI.
It was, in fact, at the commencement of 1901 that negotiations began
with a view to the transfer of the canal to the United States. In case
of transfer to the United States the nature of the assets of the liquida-
tion would undergo a change. It possessed, before this transfer, an
interest of 60 per cent; after the transfer it could claim in the proceeds
of the property of the new company a share corresponding to the
benefit which it would receive as a shareholder and from its interest in
the company.
The liquidator, being of the opinion that this transaction might con-
stitute, within the meaning of article 10 of the act of July 1, 1893, a
realizing upon assets, complied with the provisions of that act. He
presented an application on July 30, 1901, to be authorized to enter
into an agreement with the new company on all questions which the
United States might raise, the fixing of the price, and the setting off
to the liquidation of its share in the proceeds of this sale.
A favorable decree was made on August 2, 1901. It has become
final.
On December 24 an agreement, submitting possible controversies to
arbitration, was signed by the liquidator and the new company, and
gave the new company power to deal with the United States and to fix
the price and terms of the transfer. On February 11 the arbitrators
proceeded to make the adjustment which had devolved upon them.
This agreement of arbitration was confirmed by decree of March 19,
1902. The same decree authorized the transfer for $40,000,000. There
was an intervention. A decree of July 13, 1902, overruled this inter-
PANAMA CANAL TITLE. 3.19
vention. It was confirmed by a decision of August 5, 1902. Here,
again, by virtue of the authority of res judicata, the authorization
given by the liquidation to the new company to transfer to the United
States, the mode of adjustment to be reached between these two par-
ties, are so many res judicatae which can no longer be the subject of a
new action. .
XVII.
In truth, this procedure, the authority of which is of great value in
the present difficulties, might have been omitted. The tribunal had,
by virtue of the act of July 1, 1893, authorized the liquidator to con-
tribute to the new company the assets of the Compagnie Universelle.
The consideration for this contribution consisted of 50,000 shares
issued to the Colombian Government and 60 per cent of the profits of
the new company. It is enough to say that it was subject to the work-
ing, to the fortunes of the company, to all acts which it might regu-
larly and lawfully do, either by virtue of general law or by virtue of
its articles of incorporation. If this company might lawfully and regu-
larly transfer its concession, the liquidator must submit to this as to all
proper acts possible by the articles of incorporation. But it may easily
be understood that he was anxious to protect his responsibility, and
that, in the presence of a possible controversy, he settled the question
in the direction of an overscrupulous application of the act of 1893.
Finally, it is to be noted that the agreement of arbitration had for its
purpose to fix the method of settlement between those interested in the
proceeds of the transfer of the assets of the new company, and that it
was not unnecessary for a liquidator to obtain authority to make a
compromise, an act which, in French law, is considered as particularly
serious and subject to special authorization. -
XVIII.
In any case, whether the approval of the tribunal was necessary or
was only advisable and constituted a measure of prudent precaution,
it is beyond doubt that the liquidator consented and was authorized
by the court to consent to the proposed transfer by the new company
to the Government of the United States."
XIX.
Finally, besides the liquidator of the Compagnie Universelle and the
new company, there was a third party interested in maintaining the
rights which it had under the concession of 1878—the Government of
Colombia. Without referring to other documents exchanged between
this Government and that of the United States of America, it is enough
to say that on April 18, 1902, the envoy extraordinary of the Republic
of Colombia to the United States agreed with the Secretary of State
of the United States upon a treaty, article 1 of which contains an
authorization by the Government of Colombia, given to the new com-
pany, to sell and transfer to the United States its rights, privileges,
property, and concessions, as well as the Panama Railroad, and all
shares and parts of shares of this company. . We shall omit, therefore,
from the present opinion, all objections based upon the prohibition of
transfer to a foreign government contained in the law of 1878.
320 PANAMA CANAL TITLE.
XX.
A first fact appears from these occurrences, namely, the regular
consent given by Colombia, the liquidator, and the new company to the
plan of transfer to the United States.
FIRST QUESTION.
Has the New Panama Canal Company a certain and absolute title to the property
it has offered for sale to the Government of the United States?
The title of ownership—certain and absolute ownership—which is to
be invoked for the benefit of the new company, comes from the con-
tribution which was made to it by the liquidator of the Compagnie
Universelle. -
Article 5 of the articles of incorporation of October 20, 1894, is as
follows:
A party to these presents is M. Jean Pierre Gautron, judicial administrator of the
civil tribunal of the Seine, residing at No. 13, Rue Tronchet, Paris.
“Acting as and in the capacity of sole liquidator of the Compagnie Universelle du
Canal Interocéanique de Panama, by virtue of the powers conferred by judgment of
the civil tribunal of the Seine, dated February 4, 1889.”
M. Gautron, appointed to said office of liquidator by a judgment of the Chambre
du Conseil of the civil tribunal of the Seine dated July 21, 1893, in said capacity
contributes to the company: -
First. All rights accruing to the company in liquidation from the laws of the Gov-
ernment of the United States of Colombia, dated May 18, 1878, and December 26,
1890, as well as from any decrees, acts, or things whatever which have occurred in
the execution of these laws with all the advantages provided by these laws, together
with all lands and real estate granted to the company in liquidation or acquired by it.
All subject to the fulfillment of the conditions of the laws and extensions of the
concessions, and to the payment of all sums remaining due from the liquidator to the
Colombian Government. -
Second. The works executed and under execution, workshops, buildings, hos-
pitals, plant, erected and not erected, materials and supplies, etc., belonging to the
Compagnie Universelle du Canal Interocéanique in liquidation, as well as all depos-
its as security made by said company in liquidation.
Third. The plans, estimates, studies, documents of every nature collected by the
Compagnie Universelle du Canal Interocéanique, relating in any manner to the
study, execution, or exploitation of the canal or its dependencies, as well as the
benefit of all agreements with all third persons.
Fourth. The rights of every nature, part interests, and, generally, any others what-
soever, which may belong to the Compagnie Universelle du Canal InterOcéanique in
liquidation, in the railroad from Panama to Colon, operated by an American com-
pany, called the Panama Railroad Company, whose principal office is at New York,
as said rights are enjoyed and exist; M. Gautron, as liquidator, binding himself to
transfer the same to the present company in the form required by the laws of the
United States of America in such manner, moreover, as the said rights and prop-
erties are enjoyed and exist and in the condition in which they are.
The present company shall be the owner of the property and rights granted and
contributed from the date of its formal organization, except as hereinafter provided,
with regard to the Panama Railroad. -
This grant and contribution are made by M. Gautron, with the reservations and
subject to the conditions hereinafter expressed, to wit:
First. There shall be appropriated to the liquidator 60 per cent of the net profits
of the enterprise, as these profits shall be determined under articles 51 and 52 hereof.
Second. There shall be appropriated 50,000 shares, full paid, on account of those
now issued to the Government of the United States of Colombia, in accordance with
the extension law of December 26, 1890. g
Third. The rights of every nature in the Panama Railroad, belonging to the estate
in liquidation and contributed by M. Gautron, under section 4 of this article, shall
become the property of the present company from and after the stockholders’ meet-
ing provided for by article 75 hereof, without any pecuniary compensation, but upon
F2AN AMA CAN AI, TITLE. . 321
the express condition that the canal be constructed within the time fixed by the
agreement of concession. Upon default in completion within such time, said rights
shall revert to the estate in liquidation. -
If, contrary to all expectation, the meeting in question should not take the neces-
Sary action for the completion of the canal, or if the course of action adopted by the
meeting can not be carried out, the said rights in the railroad shall remain the
property of the present company, but it shall pay into the estate in liquidation the sum
of 20,000,000 francs by way of indemnity, and the share of profits set apart for the
estate in liquidation shall be half the profits of the present company without other
deductions than those provided in sections 2 and 3 of article 51 hereof.
Accordingly, said rights shall remain inalienable in the hands of the new com-
pany until either the payment of the said sum of twenty millions, or the entire com-
pletion of the canal.
Fourth. Until the entire completion of the canal, M. Gautron, in his official
capacity, shall have the right to appoint a commission of control, composed of three
members, taken, as far as possible, from among the engineers of the department of
bridges and roads and the inspectors of finances, to inspect the progress of the works,
the condition and maintenance of the plant and buildings, as well as the accounts
relating to these different objects. - - -
The expense of this commission shall be borne by the new company.
I.
It is indisputable that everything which forms the subject of the
present plan of transfer to the United States is comprised in the con-
tribution enumerated in article 5.
There is no dispute as to the validity of the title of the Compagnie
Universelle to the property which was the subject of this contribution.
If the Compagnie Universelle was indeed the owner of the conces-
sion and of what we have called its increment, had it the right to
transfer them? Did it transfer them regularly . Such are the first
two questions to be examined.
II.
The Compagnie Universelle had the right to transfer the concession,
because it was the owner of it, the right to alienate being one of the
elements of ownership.
To make it otherwise it must be shown that the instrument by which
it acquired them contained a restriction of this elementary right. Now,
not only does this restriction not exist in the contract of 1878, but it
contemplates a transfer, and even successive transfers, and authorizes
them. Furthermore, the transfer made was known to the original
grantor (the Government of Colombia); it ratified it both beforehand
and afterwards. (See especially the agreement of extension of Decem-
ber 26, 1890, stipulating that the liquidator shall transfer all the assets
to a new company—article 1 of the agreement of April 5, 1893, giving
the liquidator time to form a new company—the agreement of May 7,
1900, in which the newly formed company is expressly mentioned and
recognized.) 4.
The right of transfer by the Compagnie Universelle belonging to
it, from the very fact that it was owner, this right not having been
restricted by the agreement of concession, but, on the contrary,
expressly recognized both by the agreements of concession and by the
subsequent agreements above mentioned, we are of the opinion that
the right of the Compagnie Universelle to transfer to the new com-
pany the whole of its rights is absolutely certain. -
8751—02—21
322 - PANAMA CANAL TITLE.
III.
Did the Compagnie Universelle do regularly what it had the right
to do? We say the company. It is it which made the contribution.
Here we must avoid an ambiguity.
It is only in common language that we may say that a company dis-
appears from the fact of its dissolution and liquidation. The truth in
legislation, at least in France, is that it survives the liquidation. No
doubt its purpose is profoundly changed; that is, in fact, no longer to
undertake or continue the operations mentioned in the articles of
incorporation, but to settle them, to realize upon its assets, to pay off
its creditors, to divide the net cash assets among its shareholders. But
for all these operations, the legal entity of the company, the collective
entity designated by the corporate name, remains and has not disap-
peared. It is the company which realizes; it is the company which
pays the creditors, reimburses its shareholders, answers any actions,
carries on suits. It is this state of the law which in jurisprudence is
expressed by this axiom: The company survives for liquidation."
So, the liquidator is not, with regard to the company, a third party,
but a representative of the company. The law directs, the agreement
usually provides, that, after dissolution, the company should be repre-
sented by a mandatory, suº generºs, the liquidator. Though invested
with a mandate different from and more restricted than that of the
board of directors, for example, he is none the less a representative of
the company; if he alienates, it is the company which sells; if he
receives, it is the company which receives. Moreover, anyone may
be chosen for this new mandate, a third party, a member of the com-
pany, a member of the board of directors, the board of directors itself,
but, in this case, it will act, not with the general mandate resulting
from the articles of incorporation, and with a view to the working of
the company, but with the new and different mandate of representing
the company for its liquidation. This maxim, that the company sur-
wives for all acts of liquidation, upon voluntary or judicial dissolution,
is uncontested in French law. s
It is, then, the company, represented by its liquidator, which made
the contribution. - -
It made it validly for the following reasons: .
First. The sale of the assets is fully within the powers of liquidation,
because, usually, if the assets are not composed of cash, it would be
impossible without a sale to make payment and division. Contribu-
tion to a company is in reality a sale; contribution of the assets to a
new company is one of the most usual forms of liquidation; it is
a V. Lyon Caen and Renault, Traité de Droit Commercial, t. II, No. 366:
“When a company is dissolved, there is, strictly speaking, between the former
members, only a community of interest. They are owners in common. Hence it
might be said that there is no longer an artificial person, no longer a corporate fund
distinct from the private property of the members. .
“But with such an idea there will be danger of impairing rights acquired, to the
great detriment of the credit of the company, or of hampering the working of the
liquidation. * * * In order to avoid these results, jurisprudence has agreed that,
in spite of the dissolution, the dissolved company still exists as an artificial person
for its liquidation, so far as it may be used to protect the rights acquired, and not to
hinder the proceedings of liquidation.”
PANAMA CANAL TITLE. 323
also fully within the powers of liquidation. (See especially Cass.,
May 12, 1896.)” |
Second. The liquidator, in this case, received this power, as far as
necessary, and in the most express way, from the decree of February
4, 1889– -
appoints M. Joseph Brunet liquidator of the said company, with the broadest powers,
especially to transfer or contribute to any new company, all or a part of the corporate
aSSetS. -
Third. The act of July 1, 1893, adds to so many authorizations
a new sanction; in regulating the exercise of the right of contribution,
it makes it subject to formalities dictated by the interest of third
parties, by the very fact that it regulates it, it sanctions it. We shall
show, under the third question, that this act, like every French law,
is sovereign, and exempt from the review of any judicial authority,
even the highest.
It produces this noteworthy result: That a procedure having been
prescribed, making the validity of the contribution subject to for-
malities of procedure and publication, if these formalities were com-
plied with—and we know that they were "—the contribution can no
longer be contested nor attacked by anyone.
It follows, hence, no less clearly: First, that the transfer made to the
new company by contribution was regular, second, that it can no longer
be attacked.
IV.
The Compagnie Universelle had the right to contribute its assets to
another company.
This right it exercised in the person of its liquidator in the most
regular way.
This question of regularity is absolutely settled.
Thence, we arrive inevitably at the conclusion that the title of the
new company to the ownership of the property which composes the
assets of the Compagnie Universelle is certain, and we add that any
contest of its validity would be in France defeated, without examina-
tion of the merits, by the plea of res judicata.
SECOND QUESTION.
Is this property in any measure legally encumbered by the debts and liabilities of
the old company? In the event of the United States purchasing this property, would
they by so doing become responsible for such debts and liabilities, and would they
assume any kind of obligation toward the shareholders, bondholders, or other cred-
itors of the old company?
By reference to what was said above (Secs. IX and X) it will be
seen that this second question is entirely governed by the first. The
contribution, we have said, can be subject only to liabilities openly
-- *-xx---,
tº Adjudged by this decision that in case of changes which do not impair the pur-
pose or the essential bases of a company, the judges decide absolutely that the liqui-
dators had sufficient power to enter into an agreement for the purpose of contributing
the corporate assets to a new company in exchange for full paid shares. (Comp.
Trib. Civ. de la Seine, July 27, 1892. Rev. des Sociétés, 1892, p. 514.2.)
b See decree of June 29, 1894, publication in the Officiel of July 1, 1894. Decree of
intervention of August 8, 1894.
324 PANAMA CANAL TITLE.
specified in the agreement of contribution, subject to the examination
of the commissioners appointed by the first meeting, accepted upon
their report, by the second, and without an estimate of which the value
of the contribution can not be estimated. It all comes down, there-
fore, to considering whether the contributions were made subject to
the payment of the debts and liabilities of the old company to any
extent. - - .
II.
The slightest examination of the articles of incorporation, and
especially of article 5, excludes any idea of a general transfer of assets
and liabilities. Such an arrangement was excluded beforehand by the
most Ordinary prudence, for it would have put the new company in
the same situation as the old, to which the latter succumbed. -
A transfer of the indebtedness, then, does not appear in the agree-
ment.
The deed being silent, it is excluded by general law.
A debtor may dispose of his property, but his creditors have no
right to follow it, unless it is subject to an incumbrance upon the
thing, hypothecation, pledge, mortgage, or lien. This is the distinc-
tion, fundamental in French law, taken from the Roman law, between
a general creditor and a lienor who has a right in the thing. M.
Troplong explains this in these terms:
If the debtor alienates, the bond which united the property to the person is broken,
and the thing having become part of the estate of another owner, the creditor will have no
right to follow it there. Whence it follows that, if the general creditor has a legal
claim upon the property of his debtor, this claim continues only so long as his debtor
Temains owner of the property. (Priv. et hyp., Sec. 6. ()
It must, then, be considered certain, in this whole affair, that a trans-
feror remains alone subject to his general indebtedness, and that the
transferee can only be bound to the creditors of the transferor by the
obligations of a contract, and only to the extent of the debts which he
has expressly promised to pay. French law reserves to the general
creditor a single right, that of having the instrument of transfer itself
annulled, in order to have the property sold restored to the estate of
a V. Paul Pont Des privilèges et. hypothèques, t. I, No. 12 et seq.;
“Creditors have, as security, the general property of their debtor, personal and
real property, present and future.
“This right of security embraces all the property. It embraces all property
present and future. -
“But there can not be taken into account property which the debtor may have
had at the time of the obligation and which has ceased to be his when the perform-
ance of the obligation comes to be enforced, whether because he has sold it or
even because he has given it away. The right of general security given by article
2092 continues, in fact, only so long as the debtor remains in possession; this is very
evident, since any property which the debtor had in the past, but which he has no
longer, can not be put in the category of property present and future, the only prop-
erty which the right of security includes. If, then, the debtor has disposed of the
thing belonging to him, if he has put it out of his estate by any act of alienation, he
transferred it free and clear of this right of security by which it was affected in his
hands; and it is in this respect, among others, that this right differs from a mortgage,
which follows the real estate which is subject to it into whatever hands it passes.
Creditors can, no doubt, have the thing restored to the estate of their debtor, if it
was alienated in fraud of their rights (article 1167). But if the thing remains out-
side of the estate of their debtor, the security of the creditors will be so much less,
though at the time when the obligation arose the thing was part of the estate of
their debtor, from which it has since been separated.”
PANAMA CAN AL TITLE. 325
the vendor. If it is not restored it forms part of the estate of the pur-
chaser, absolutely protected from his pursuit. But to procure this
annulment, contemplated by article 1167 of the Civil Code,” the cred-
itor must prove two things: First. That the sale was prejudicial to him.
Second. That it was made to defeat the creditors and with fraudulent
Žntent. -
Now—and here appears the second fundamental consideration which
governs all this argument—a deed consented to by the creditor, or
declared regular in litigation with him, can not be subject of the action
mentioned in article 1167, consequently neither the transfer by the
liquidation to the new company nor the transfer by the new company
to the United States can any longer be attacked; first, because the
transfer from the Compagnie Universelle to the new company was
approved by the creditors of the Compagnie Universelle, authorized
by the court, ratified by the act of 1893, declared good and valid by the
decrees of June 29 and August 8, 1894; second, because the transfer
to the United States was approved by the liquidator of the Compagnie
Universelle, authorized to enter into the agreement of December 24,
1901, because this agreement was itself approved by the decrees of
March 19 and July 3, 1902, and by the decision of August 5, 1902;
third, because the Panama bondholders and all the creditors of the old
company were represented in the proceeding which ended in the
decree of August 5, and there is, as against them, an admission that
the agreement is advantageous, a judicial decision holding that it is
lawful. -
So that it may be said that from these two facts, the rights of gen-
eral creditors do not survive a transfer, no action by them founded
upon article 1167 can be hereafter brought, it would follow sufficiently
and evidently that the transfer to the United States would involve
for the purchaser no other Zabºlities than those eaſpressed ºn the deed;
that henceforth no action can be brought by former creditors for the
purpose of invalidating this transfer.
XII.
Without dwelling longer upon these conclusions, we draw, from
What has been said, the necessary consequence that the new company
can only be bound by the obligations which it accepted and which
are expressed in writing in the agreement of contribution and in the
articles of incorporation. *
These obligations are the following:
First. To conform to the clauses and conditions of the concession
(see last paragraph of article 1), and consequently, the concession being
contributed by the Compagnie Universelle to the new company, it
binds itself to the former “to fulfill all the conditions of the laws and
extensions of the concession and to pay all sums remaining due from
the liquidation to the Colombian Government.” (Art. 5, par. 6.)
Second. To pay to the Compagnie Universelle in liquidation 60 per
cent of the net proceeds of the enterprise.
Third. To allot to the Government of the United States of Colombia
a Art. 1167, Civil Code.
Creditors may also in their personal name attack acts done by their debtor in fraud
of their rights. - f
326 PANAMA CANAL TITLE
50,000 shares entirely full paid, out of those created, in conformity
with the law of extension of December 26, 1890:4 -
Nothing can be clearer, more precise, and more exactly limited.
Finally, concerning the Panama Railroad shares, we have said (see
Sec. XII) upon what conditions subsequent they were transferred to
the new company.
Such are the only obligations accepted by the new company as the
equivalent of the transfer. They are the price of the transfer. They
have nothing to do with the indebtedness of the Compagnie Univer-
selle. Creditors of the latter do not become creditors of the former.
Still further, the fact of estimating the price of the transfer excludes
any hypothesis of a general transfer of assets and liabilities, for a fixed
price is not given for assets transferred, if the purchaser must bear
the unascertained burden of unknown liabilities. -
In short, the regular transfer of the concession does not entail for
the new company any obligation to pay to any extent whatever the
liabilities of the Compagnie Universelle, but only an obligation to bear
the charges above mentioned, which are enumerated to the exclusion
of all others.
We repeat again, as an indisputable thing, that any other obligation,
not written, not expressed—and it has never been alleged by the Com-
pagnie Universelle, nor by anyone, that there was a secret stipulation—
would be null, even if it were not unlawful with regard to the con-
tracting parties. In corporate matters there can be neither secret
compact, nor trust, nor defeasance. .
XIV.
Answering the second section of the second question, it is by this
very fact demonstrated that in accepting a transfer from the new com-
pany of the rights inherent in the concession of which it has become
the owner the United States do not expose themselves to answering for
any debt whatever of the Compagnie Universelle to third parties.
For this there are two conclusive reasons: First. What has been said
of the effects of the transfer by the Compagnie Universelle to the new
company would be true of a transfer by the new company to the
United States. The latter will owe the new company only the price
stipulated, and in regard to its creditors they will contract no other
obligation than that of paying their debtor the price agreed upon.
If, as is plain, the purchaser becomes a debtor only for the purchase
price, he does not become the debtor of all the creditors of the trans-
feror. This is not the case with general successors, such as natural
or testamentary heirs of the purchaser. -
If the purchaser—the United States in this case—does not become
the debtor of the creditors of the new company, still less would he
become the debtor of the creditors of the old company. To raise the
Question, they must first have become creditors of the new company.
Now we have shown that they are nothing of the sort; but, were the
a First. There shall be appropriated to the liquidation a share of 60 per cent in the
profits of the enterprise, as these profits shall be determined under articles 51 and 52
hereof.
Second. There shall be appropriated 50,000 shares, full paid out of those now Cre-
ated for the Government of the United States of Colombia, in conformity with the
extension law of December 26, 1890.
PANAMA CAN AI. TITLE. 327
terms of the contribution of 1894 different, it would be enough to
destroy their claim to consider that the act of transfer to the United
States, in the form proposed, will not confer upon the creditors of the
new company any right either to follow its property into the hands of
the purchaser or against the purchaser personally. -
XV.
What we have said with regard to the creditors, either of the new
company or the old, is absolutely true in regard to their shareholders.
The same deeds can be set up against them. The transfers made have,
with regard to them, the same bearing, the same regularity. No more
than the bondholders can they impose upon the transferee an obliga-
tion which has not been stipulated. Against them may be set up an
additional plea, drawn from the fact that to these deeds they are not
third parties; they are parties to the deeds. It is enough to say that
if these deeds may be successfully set up against third parties, it is
not reasonable that they should be attacked by those who signed them.
XVI.
The objection has been made, it appears, that the Compagnie Uni-
verselle had not completely divested itself of the property transferred.
As a proof is cited the fact that it stipulated for a share of 60 per
cent in the profits. From this it is argued that, this share being
taken away from it by the transfer to the United States, it may recover
al or a part of its former assets.
We oppose to this erroneous argument two decisive answers: -
First. The Compagnie Universelle might have required as the price
of the transfer a sum of money fixed, immutable, and which could
neither be increased nor diminished. It did not do so for the simple
reason that it never could have got a fixed price which was at the same
time a high price for a concession, the carrying out of which remained
subject to so many hazards that the parties considered that the possi-
bility of carrying it out could be determined only later. (See article
75 of the articles of incorporation.) It preferred to stipulate for an
indeterminate price, consisting of 60 per cent of the profits to be made by
a company. By a company, that is to say, by an artificial person,
subject to the causes for involuntary legal dissolutions and which
reserved to itself expressly (see article 60) the right, if it thought
advisable, to dissolve itself voluntarily. -
Whence it follows that it is as if the provision had been that it gave
up its assets in consideration of 60 per cent of the profits so long as the
company should not be under the legal necessity of dissolution or should
7\of thºnſ, it necessary to dissolve. And let it not be said that this
second hopy thesis allowed the new company to defeat the liquidation
by dissolving itself arbitrarily. In fact, without mentioning the guar-
anties furnished by the conditions which, in that case, must be com-
plied with, on the one hand, dissolution gave to the Campagnie Uni-
verselle the right to appear upon the liquidation of the new company
and to receive a part of its assets corresponding to the value of its
ultimate 60 per cent; on the other hand, if the dissolution were intended
to defeat it or fraudulent, the liquidator of the Compagnie Univer-
selle could have it annulled. And here we reach the second answer.
328 PANAMA CANAL TITLE.
Second. Not only did the liquidation not consider the alienation of
the concession harmful to it, but it desired it, preferring a certain and
speedy price to remote and uncertain profits. It prepared the way
for it. It had itself authorized to discuss the terms and fix the bene-
fit which would come to it therefrom. This consent was sanctioned
both by the decree of March 19, 1902, by the decree upon intervention
of July 3, and by the decision of August 5. Let us add that the rep-
resentative of the bondholders has stated that he himself did not inter-
vene, because his clients approved the transfer."
So, if the liquidation had—and it certainly had not—the right, in
case of transfer by the new company, to maintain that, by the effect
of the failure to carry out the clause relative to the 60 per cent, it
should be restored to the property which it had alienated, it expressly
decided not to do so, and its acquiescence in the alienation sanctioned
by the court has become irrevocable by the effect of judicial decisions
which have become res judicatae. We may, therefore, think it strange
that to disturb the resolutions to be passed there is argued the possi-
ble exercise by the liquidation of a right which it did not have, and
which, in any case, it has renounced by having it adjudged that it was
for its interest that the transfer should be carried out. The same
argument might be used against the bondholders or creditors of the
Compagnie Universelle. -
XVII.
We give no more force to the arguments drawn from the considera-
tion that, the liquidation having stipulated for the right to appoint a
commission for the purpose of inspecting the progress of the works,
it may be inferred that it had not divested itself of the ownership of
the concession and of its increment.
There is no correlation between these two ideas.
Nothing prevents a contributor who has received shares in pay-
ment—whence it follows that he will be paid or not according as the
enterprise shall be well or ill managed—from requiring guaranties of
good management. If he obtains them he is none the less a share-
holder, and if he is a shareholder he is no longer the owner of prop-
erty contributed, but of what represents it in capital stock.
It will never be possible, at least under our legislation, to reconcile
these two facts—a contribution in consideration of a price, of whatever
nature it may be; retention of ownership of the contribution by him
& Măitre Charneau, attorney, gave notice in the name of the sieur Lemarquis in his
official capacity, for whom he appeared, to Māitre Caillet and de Biéville, of requests
to find upon intervention by which alleging:
That the sieur Lemarquis in his capacity of representative of the holders of Panama.
bonds had the right of intervention in the proceeding pending between the sieur-Gau-
tron in his official capacity and the sieur Donadieu.
That the transfer proposed, to the Government of the United States of America, to
which the sieur Gautron has consented, is favorable to the interests of the bondholders.
He asked that it might please the tribunal. -
To recognize Măitre Charneau in his appearance for the sieur Lemarquis in his offi-
cial capacity. -
To recognize the intervention of the sieur Lemarquis, that he joined in the requests
for judgment of the liquidator, and that he approved wholly the understanding
reached between the liquidator and the New Panama Company for the purpose of
a transfer of the enterprise to the Government of the United States of North America
for the sum of $40,000,000.
And to decree according to law as to the costs.
PANAMA CAN AL TITLE - 329
who has made the transfer and has received the equivalent for it. But
there is more. It is precisely because the liquidation transferred the
ownership of the concession and of the works begun, and divested
itself of it, that it was important for it to stipulate for a guaranty of
good management in the future; for if it had retained the ownership,
so that the new company was only a sort of mandatory, interested in
the proper completion of the enterprise, this stipulation would then
have been wholly needless.
THIRD QUESTION.
- Is the law of July 1, 1893, unimpeachable and absolute according to the constitu-
tion and according to French law? Have the French judicial authorities power to
discuss the validity of said law? -
The act of July 1, 1893, is, according to the French constitution, not
open to attack and of absolute authority. The French constitution in
this point differs wholly from that of the United States, which has con-
ferred upon the supreme judicial authority a right of review over legis-
lative acts. More than one writer, more than one politician in France,
has emphasized the dangers of the sovereignty of the legislative power
and has praised the precautions accepted in the United States against
the possible excesses or errors of legislators. We have not here to
take sides in this controversy, but to state what is the fact. We
declare that there is no superior power which can either modify or
annul a law passed by the two chambers. Still further, the highest of
our judicial jurisdictions, the court of cassation, or supreme court, is
in its essence created to insure execution by the inferior tribunals of
all laws as they are promulgated. Far from its being able to modify
them or suspend their execution, its duty is to reverse any decision
which has either misinterpreted or wrongly applied a law, though it
appear detestable to the high court. It is enough to say that the act
of 1893 can not now be the subject of revision or criticism on the part
either of the executive power or of the judicial power.
A law passed in France by the Parliament (the two chambers) can
only be repealed or modified by another law passed by Parliament.
But were this done, the new law is applicable only for the future, and
all acts done before it goes into force remain subject to the former
legislation. Whence it follows that were the act of July 1, 1893,
abrogated or amended, all acts done previous to this event will be
valid or not, according as they are or are not in conformity with its
provisions. -
FOURTH QUESTION.
Is the New Panama Canal Company in any measure a government corporation in
France, and is the cooperation of the French Government necessary for the transfer
which the New Panama Canal Company proposes making to the Government of the
|United States?
In the period prior to 1867 the formation of certain commercial
companies was subject to the authorization of the Government (a cer-
tain number of joint-stock companies organized before that date remain
subject to the old legislation). In 1867 the general law applicable to
commercial companies was radically changed, and thenceforth, by
observing the procedure and the rules for publicity prescribed by the
act of July 24, companies are made freely, like any other contract.
330 PANAMA CAN AI, TITLE.
Even before 1867 an authorized company was in no way a govern-
mental company; having obtained authorization, it remained private,
and preserved this private character for everything concerning dis-
posal of its property, liquidation, realization upon, or sale of its assets.
A forđorđ, a company like the new company, organized under the
act of July 24, 1867, is absolutely independent of the Government.
The latter did not have to intervene for its formation, and does not
have to intervene in its management or its liquidation. This the Gov-
ernment has declared several times, on March 22, 1882, in diplomatic
correspondence, and later in 1893 on the floor of the Chamber of
Deputies. -
That the Government and Parliament intervened to authorize the
issue of lottery bonds is explained in the simplest way by a circum-
stance which has nothing to do with the nature of the company. The
issue of lottery bonds is considered in our legislation as a lottery, no
lottery can be established by private persons, any more than by a
company, without the authorization of the minister of the interior, if
it does not exceed a certain figure, without a law, if it exceeds this
figure; therefore a bill was necessary to authorize the issue of Panama
lottery bonds, and the company no more lost its private character
than a private person who should have asked and obtained authority
to establish any other lottery. º -
The new company, then, is certainly not a governmental company,
and the French Government has not to intervene and can not inter-
vene in the transfer which it makes to the United States.
FIFTH QUESTION.
Will the proposed transfer, duly carried out by deed of the New Panama Canal
Company and by deed of the liquidators of said company, the dissolution of which
would be declared, place in the hands of the United States an absolute and uncondi-
tional title to the transferred property, without the United States assuming thereby
any of the obligations of the old company to the shareholders, bondholders, and
other creditors of said company? - -
Of course the New Panama Canal Company, having made the transfer, will,
without delay, fulfill all its obligations toward the liquidator of the old company as
they appear by the decision of the arbitrators dated February 11, 1902, made in
execution of the contract dated December 24, 1901.
Thus stated, the question is, perhaps, not presented with sufficient
clearness. It appears from the verbal explanations which have been
given us that it would be more exactly formulated in these terms:
Has the new company power to transfer the concession, and its assets
connected there with, to a third party, for example, the United States?
In what form and by whom should this transfer be carried out, to place
in the hands of the purchaser a title of absolute and unconditional
ownership to the property transferred, without the United States
assuming any of the obligations of the old company to the bondholders,
shareholders, or creditors of the said company ?
I.
We have said that a transfer by a company, as by a simple private
person, entails no obligation for the transferee to pay the debts of the
transferor; the obligations of the transferee are limited by the agree-
ment itself. The only obligations, besides those stipulated, which fol-
low the subject of the transfer into the hands of the new owner are the
obligations annexed to the thing—those which constitute debts of the
PANAMA CANAL TITLE. 331
thing sold and not of the vender. But this supposes, of course, that
the sale is made by a person capable of making it, or authorized to
make it, if that is necessary—in a word, a valid sale. The whole ques-
tion, then, lies in considering whether the new company has power to
alienate its concession and the property appurtenant to it.
II.
^ .
It may be said that if the company has the right to sell a part of its
assets, it can not alienate the very object of the company without the
company’s disappearing, that by so doing it goes contrary to its pur-
pose, which is to accomplish the enterprise in view of which it was
formed, and that its duty is to procure for the parties in interest its
accomplishment. i -
This idea, correct as a general statement, could not be made an
invariable and absolute rule of law without the most serious incon-
veniences. By it a company would be bound to pursue the accom-
plishment of its purpose until the complete exhaustion of its resources,
and to consume then progressively, even though it was certain, either
that the purpose can not be accomplished by it or that it, as well as
all parties interested, should find it clearly to their advantage to transfer
its enterprise instead of pursuing it. -
This pernicious rule does not exist in our legislation concerning
companies. On the contrary, article 37 of the act of 1867 requires
that in case three-fourths of the capital is lost the shareholders’ meet-
ing should be consulted as to the propriety of continuing the enter-
prise or abandoning it, and it is enough in this case that one-fourth of
the capital be represented. - - -
If the legislator requires the company to decide under the circum-
stances above mentioned he allows it, even without these circum-
stances, to decide to stop the enterprise under the single condition that
the meeting of stockholders should comprise half the shares of the
capital. This is a settled point in doctrine and in law, even though
the articles of incorporation are silent. (See opinion of Mes. Lim-
bourg, Devin, Du Buit, Henri Thiéblin et Gontard, p. 49.)
If they have expressly reserved to the shareholders’ meeting the
right, in any state of the case, of passing upon the propriety of con-
tinuing or discontinuing the corporate business, no doubt can remain.
III.
This is precisely the situation of the new company, whose articles
(article 60)" gave the shareholders’ meetings regularly constituted—
that is to say, in conformity with the provisions of articles 61 and 62–
the right to shorten the duration of the company, to extend it, or
immediately to dissolve the company.
a If experience shows the desirability of making modifications in or additions to the
present statutes, the stockholders' meeting shall provide for the same in the manner
fixed in articles 61 and 62 hereof.
It may especially determine upon–
A reduction of the capital of the company;
A reduction in the duration, the prolongation, or the earlier dissolution of the
Company;
Its consolidation with other companies;
It may even introduce modifications in the objects of the company, without, how-
ever, changing their essential character.
332 PANAMA CANAL TITLE.
Now, this is a provision left by the act of 1867 to the general rule of
freedom of agreement, and no one in France will contest its lawful-
ness. Let us add that it was made necessary for the new company by
the circumstances under which it was formed; a company to attempt,
created to protect the concession, to prevent its lapse, uncertain (the
articles show) whether it could itself complete the enterprise, uncer-
tain (the articles again show) whether the enterprise could be carried
out, at least as it had been planned. -
IV.
We say, consequently, that the new company may certainly put an
end to its operations and transfer the concession. It remains to
examine the second part of the question: In what form and by whom
should the transfer be made to place in the hands of the purchaser a
title of ownership not open to attack.
Several solutions may be adopted with perfect safety.
The new company may, by virtue of article 60, a meeting of share-
holders having been called in conformity with articles 61 and 62, put
itself in liquidation.
Supposing that it limited itself to appointing a liquidator with ordź-
nary powers of liquidation, no more will be needed to enable him to
transfer the corporate assets, in whole or in part, to a third party with
the most absolute regularity.
We refer here to Section III of the first question, and we repeat, to
sum up, that the receiver has full power to carry out a sale of the
assets; that he then binds the company itself; that it is it which alien-
ates, by its mandatory; that it survives, as an artificial person, until
final distribution, and that to deal with the liquidator for the purchase
of the assets is to deal with the company itself.
But the articles allow the company to do something still more cer-
tain and less open to attack, if possible. The shareholders’ meeting
may (article 63) fix the manner of liquidation and decide, for example,
either that it shall take place by contribution of the assets to a new
company or by sale in parcels or by transfer as a whole. The liquida-
tor, conforming to this specific mandate, will bind the company to
third parties in the same way as if they had dealt with the company
itself. -
V.
A second solution is furnished by the following consideration:
To show that a company can not alienate its corporate capital, it is
observed that this act of alienation puts an end to its operation, which
is strictly correct. But this demonstrates only that the company which
alienates its assets by the same act brings about its dissolution, and,
as it has been demonstrated that the company has full power to dis-
solve itself, it remains proved that it has the same right to do any act
involving its dissolution. -
The new company may, then, by a decision of a meeting of share-
holders, approve the proposed transfer, give its board power to carry
it out and decide at the same time that, by the fact of carrying it out,
the company shall be altogether dissolved. Then dissolution will be
the consequence of the transfer itself. This is the solution suggested
PANAMA CANAL TITLE. 333
by my eminent colleagues of Paris. It is, in my opinion, absolutely
legal. A meeting of shareholders which may vote dissolution may vote
an act involving dissolution. It will be necessary, however, for this
decision, to comply with the same conditions as if it operated immedi-
ate dissolution; that is to say, that a meeting of shareholders should
be made up in conformity with articles 61 and 62 of the articles, and
that the decision should be published in the form prescribed in the act
of July 24, 1867.
VI.
There is a third solution, no less legal. Against the preceding, an
objection might be raised which is, no doubt, only specious, but which
it would be preferable to avoid. It may be said that a meeting of
shareholders which votes for an act involving dissolution and which
thus, and by that very fact, votes for dissolution, can not at its will
postpone consequences of that decision; that by the effect of this vote
dissolution takes place immediately, and that from that moment the
powers of the board of directors, as defined in the articles of incorpo-
ration, limited to the management of affairs while the company is in
operation, disappear, and they are without power to perform an act of
genuine liquidation. We do not think the objection well founded, and
we do not see how it could be demonstrated that, the shareholders’
meeting having power to vote dissolution or not, at its option, it would
not have the right to vote its subject to a condition or at a fixed time,
and we think that it would only be incapable of doing so if a case
arose of legal and hence obligatory dissolution. -
But in such a matter the best arrangement will be that which offers
the most security to the purchaser and the least opening for contro-
versy. *
It results, both from the corporation law and the articles of incor-
poration, that the new company is in full control of its liquidation,
and that it can consequently, by law and by its articles, in the plenti-
tude of its power, decide that its liquidation shall take place in a given
form and by a given determinate act. It may, in a word, carry out
Žts liquidation at the same time that ºf decides upon it.
A meeting of shareholders should be called in conformity with arti-
cles 61 and 62 to adopt the following resolutions:
First resolution: The special shareholders’ meeting approves the
plan of transfer to the United States as the President of the United
States is himself authorized to accept it.
By this first resolution it is the company itself which binds itself in
the plenitude of its power and in a form which binds all shareholders
and which may be set up against all parties in interest.
Second resolution: It decides that, to conclude this transfer, the com-
pany should be declared to be in liquidation and consequently appoints
M. X., with express authority, for it and in its name, to fulfill all for-
malities and sign all papers necessary to carry out the transfer.
By this second resolution the meeting creates the legal representa-
tive contemplated by the law in case of liquidation, and no contest can
be made hereafter as to the authority of its mandatory. -
Third resolution: In case modifications in the plan of transfer should
be proposed, the liquidator shall submit them to a meeting of share-
holders organized in conformity with articles 33 and 34. ;"
It is prudent to provide for this possibility.
334 - PANAMA CAN AI. TITLE.
This third resolution is justified by the right, conferred upon the
meeting of shareholders by article 63, to regulate the procedure of
liquidation, the powers of the liquidator and the terms of their
exercise, .
By this method in dealing with the United States the liquidator does
not merely perform an act within his general powers, but carries out
a decision made by the company itself and which can be set up against
it, not only as an act which the liquidator had the right to do, but as
an act emanating from itself. -
He does not merely make a decision which he would have the right
to make by virtue of his powers, but fulfills a precise and formal man-
date, which consists in carrying out an agreement accepted by the com-
pany itself.
A contract made under these conditions by the new company with a
company, or with any person whatever, would not be open to attack
in France.
VII:
It may become still less so by making parties to the deed, parties not
necessary but supererogatory, the only persons who have a right, not
real but apparent, to object to the alienation made by the company.
We have proved that it has become the owner of the assets which are
the subject of the transfer; that as owner it can dispose of them; that
by following one of the three forms above mentioned it will dispose of
them validly.
It lawfully binds its shareholders, who are bound by a decision of
the shareholders’ meeting; as to its creditors, it has no other obliga-
tion than to divide the price among them; as concerns the Compagnie
Universelle, it has the right to dispose of its assets upon condition
only of giving over to it the full share of the price to which it may be
entitled; its right to transfer was recognized by the agreement of
December 24, 1901; the decision of the arbitrators of February 11,
1902, settled the amount of its claim. The whole has been confirmed
by decrees and decisions. -
Concerning the creditors of the old company it has no obligation and
no legal connection; the transfer which the latter made to the new
company was approved and has become final by compliance with the
formalities of the act of July 1, 1893. Further still, in the procedure
leading to the decree upon intervention confirmed by the decision of
August 5, 1902, the representative of the bondholders, who alone had
power to oppose the sale, declared that he approved the agreement
reached with a view to the transfer. Whence it follows that the pres-
ence of and signature of the final act of transfer to the United States
by either the liquidator of the Compagnie Universelle or the repre-
sentative of the bondholders is in no way necessary.
Nevertheless, and if it be desired to push the spirit of precaution
beyond the limits of ordinary and sufficient prudence, it seems easy
to make the liquidator of the Compagnie Universelle a party to the
Contract.
The agreement of December 24, 1901, provides (article 1st), “the
new company remains charged with carrying on the negotiations. It
shall have full powers to conclude eventually with the United States,
and to fa', after discussion with it, the price and conditions of the sale.”
PANAMA CAN AL TITLE. - 335
This agreement, the plan of transfer made in consequence by the
new company for the price of $40,000,000, were confirmed by decrees
of March 19 and July 3, 1902. The liquidator certainly finds in these
decisions the power necessary to sign the final deed of transfer, and if
he thought that he should solicit a new confirmation from the court, we
may be assured that the tribunal would not reverse itself.
In the same way, the decree of August 5, 1902, being made in a pro-
ceeding to which the representative of the bondholders was a party, he
has also full power to ratify a transfer which he could not oppose by
reason of the decision made. -
But the presence, at the making of the deed between the United
States of Colombia and the new company, of the liquidator and of the
representative of the bondholders, would have no other merit than to
sanction a state of things which is settled, since, to repeat it for the last
time, the plan of transfer is henceforth, by the effect of judicial deci-
s?ons which have become res.judicatae, not open to attack either by the
liquidator or by the representative of the bondholders.
VIII.
To sum up, the undersigned counsel expresses his formal opinion
that by the transfer which the new company might make to the United
States in one of the three forms set forth in Sections IV, V, and VI of
the fifth question the United States will acquire the firmest and most
impregnable title of ownership to the property transferred and will
assume no other obligations than those stipulated for in the contract
of transfer itself, without any other claim being possible to be made,
either by the old company, or by its shareholders, or by its liquidator,
or by its creditors and bondholders, or by their representative.
Paris, September 21, 1902. t
- WALDECK-ROUSSEAU,
Advocate of the Court of Appeal.
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