JOPiCL *
(HZ) 8787/250
2.O0.CC0 4'U JCASLid
Cp 64*229
(RBOIMINT)
MINUTE SHEET.
Reference.
Black Tom
t*   We are supporting claims of various British insurance
companies (non-marine) who paid claims made by American
Nationals In respect of property damaged by the Black
Tcfm explosion in July 1916*
2*   An American German commission was set up to adjudicate
on claims by Americans against Germany for compensation
for damages caused by Germany while America was still
neutral.
3*   Before a claim can be presented to the commission It
must be espoused by the American agent who acts on
* >
the orders of the State Department*
4.   In this case the S. D. by their letter of June 8th,
1927 (951/-/36) approved the refusal of the American
Agent to espouse these claims on the ground that they
would not 4nure to the benefit of American nationals*
Rumsey and Morgan attorneys for the English companies
had argued (letter May 31st 1927) that the companies
were subrogated to the assured, i.e. the original
sufferes of the loss.   Subpogation is the principle
of law by which an insurer stands in the shoes of
the person he has insured*   This Is a universally
established principle which is obviously equitable
so that the wrongdoer who may have caused the damage
to the assured should not escape by pleading that the
insurer has made good the damage caused by his wrong-
doing and therefore he, the wrongdoer, need not pay
anything or else so that the assured should not be
paid twice overjoy the Insurer and once by the wrong-
doer for his loss*
.In their decision of 1927 the S* D* very cynically
say, "The Department realizes that under municipal
law the doctrine of subrogation may properly be
involved/
[OVER.
lnvo4**4 regardless of the nationality of the corpora-
tion claiming its benefit, and as a matter of policy
It Invokes the same doctrine In International arbi- '
tratlons where the result Is to benefit American
nationals.   A different situation is presented, however
where a claim specifically predicated upon the doctrine
of subrogation does not   inure to the benefit of
American nationals, and the Department consistently
refuses in such cases to recognize the applicability
of the doctrine."
5*     This decision of the S. D* is not only manifestly urijusf;
but also contrary to the U* S* practice which has
often espoused claims In the past not ftnurlng to the
benefit of American nationals* ' Besides as the passage
above admits the U* S. have pressed claims on behalf of
Americans subrogated to foreigners*   In consequence of ;he
niquity of this decision E. Howard in a note
(17(4))of March 1st 1929 asked the S. D. to reconsider
their decision on the ground of "severe and unmerited
hardship" caused to' the English insurance companies*
On April 11th 1929 Stimson in answer (17 (141) promised
that if the commission should find Germany liable for
the damage the Department "will again examine the cases
of the British Insurance companies In the light of your
note and accompanying memorandum"*   This Is the promise
we are now asking the S. D* to implement (see letter
October 14th 1959 U a-ithengh technically the Commission
has not found Germany liable though It Is quite clear
that this finding will soon take place*
6.     The history of the American companies clalm^also based
on subrogation^is as follows:
October 16th 1950*   Hague decision:case heard on Its
merits.   Held case against Germany had not been proved*
December 3rd 1932»   Washington decision,petition to re-
open case for new evidence rejected*
June/
/f
MINUTE SHEET.
June 3rd 1956>   Petition toaet aside Washington
decision allowed which meant that case was reopened
for further hearing as to whether case should be
reheard because of new evidence.
June 16th 1939,   Petition to reopen case for new
evidence allowed.   Decision In such terms that It was
clear that In absence of German commissioner who
had retired In a huff the hearing on the merits
would be formal and the American companies would
obtain a decision In their favour.
In reliance on the S. D.'s promise of 1929 to
reconsider the claims the British Insurance companies
have very largely helped the American companies to
win the case by producing the evidence to show that
the original decision In Germany's favour was
obtained by fraud.
In the discussion tomorrow, October 20th, It Is
suggested:
1) That the promise of 1929 £t recalled and that
our assumption be confirmed that the S. D»
will Implement It*
2) That the procedure for reconsideration be
settled*   As the only chance Is to shame the
S, D. by showing them how monstrously they
are behaving I would suggest that the British
companies point of view should be advanced
In a memorandum (either the 1929 one or a
newer one) to be followed by a meeting at
which the Embassy representatives should be
accompanied by the English Insurance companies I
lawyers and If possible by the American
companies'/
companies1 lawyers- who are sympathetic* At
this meeting the broad considerations of
justice should be stressed*   We are not asking
the S* D. to allow the claims but only to
permit them to be presented to the Commission*
3) If opportunity arises some of the more glaring
iniquities of the 5. D**s attitude might be
brought in*
- ' is-5?2 # t'
19th October 1939