Mr. FULTON. In each of those letters did you approve this general policy of legislation?

Mr. SWEENEY. We approved the general policy of legislation. We pointed out that in litigating these claims we had made representations to the Court with the concurrence of the Department of State, that the purpose was to collect this fund for distribution among American claimants in whole or in part depending on the disposition Congress ultimately decided to make.

Mr. FULTON Did you make any recommendation as to the disposition of this amount by marshaling first the claims of claimants or did you take any position on the claims of the United States Government against these various Russian Governments?

Mr. SWEENEY. We took the position that it was equitable to distribute the entire fund collected to private claimants.

Mr. FULTON. So your recommendation was then that the United States Government withhold its own claims against the various Russian Governments and not participate in this fund?

Mr. SWEENEY. We made no affirmative recommendation of that

type.

Mr. FULTON. But in effect you were inferring that?

Mr. SWEENEY. Yes. That was implicit in the recommendations that were made.

Mr. FULTON. Did you make any recommendation as to the priority of claims or liens as to who should first share?

Mr. SWEENEY. We, I think, approved the priority established by the bill in general, and our comments were technical comments to insure the priority which we thought the bill sought to provide.

Mr. FULTON. When you made your recommendations did you make the recommendation that the Commissioner should act under United States domestic law or did you act on the recommendation as it is in House Joint Resolution 130, that he should likewise proceed under international law? Did you as counsel for the Government give any attention to that question of international law entering the picture in making the Commissioner's decisions?

Mr. SWEENEY. I do not recollect that we made any recommendation on international law. I would assume that it was in the first resolution that was presented.

Mr. FULTON. It was not in the resolution that was passed in 1939. That being a new facet, I wondered how it had gotten into the discussion. Of course, I wanted to know whether you people as the counsel for the Government would recommend such an expansion of the law base, upon which the decisions are made?

Mr. SWEENEY. If it had been called to our attention, and it would have been my function, I would have recommended that the term "international law" be included.

Mr. FULTON. Why did you extend it to international law, because as you know from the time of Grotius it has been a very indefinite subject? When you say "international law" to me it brings up the question just what international law you mean. Is it a law that we must adhere to, for example, on the Hague tribunal and be bound by any precedents that might have been set as if they were our own United States precedents, or does this Commissioner have the power in his own discretion to come up with what he believes to be what is a sort of common law international law?

Mr. SWEENEY. Maybe the latter is what we would have had in mind. There has been a body of law developed by various claims commissions, by writers, and these are normally accepted when a commission meets. For example, there is the thought that there must be continuous nationality to the claim. In other words, if it is an assigned claim of an alien, it may not be espoused by a government. The claim must be based upon a denial of justice or some wrongful act of the other government. In other words, the mere fact that a court perhaps entered an erroneous decision against you in another country would not be necessarily a basis on which you could base an international claim.

Mr. FULTON. That brings up my point of precedents. When you talk of international law, you talk of international precedents. So it brought out the question to me whether the Commissioner did have judgment on a basic common law idea of justice, which would be our method of common law applied to international law decisions. Is that the approach?

Mr. SWEENEY. I think the language is that usually employed and includes a number of elements. He shall give his decision in accordance with his best judgment and with justice and equity and such principles of law as may be applicable, including international law. He is not limited to decide it exclusively on international law principles, but it is one of the parts of his arsenal into which he can reach in determining the type of judgment he would render.

Mr. FULTON. So that actually the method of interpretation of that language that you read is that the "and" in each case may be "or"? Mr. SWEENEY. That is right.

Mr. FULTON. For example, if there have been decisions made on assignments, he might even look into the question of assignment of these claims, is that right?

Mr. SWEENEY. I would think so.

Mr. FULTON. Is that in any way to cover what consideration there might have been paid for the assignments? These are claims that have been a very discouraging lot of claims. So, suppose somebody had bought the claims at one-thousandth of the value of them, just as a rabid speculation, under what law would the Commissioner decide to find out who would get the right to the proceeds from this fund? Should this man that might be speculating get them who might be dealing in claims, or should he be limited to the amount of his consideration?

Mr. SWEENEY. The bill has two methods of dealing with that. First it defines an American national as an individual who had a claim against Russia at the time of the Litvinov assignment.

Mr. FULTON. That is corporation or person?

Mr. SWEENEY. That had a claim at that time. Only American nationals can recover. Anyone who acquired a claim subsequent to 1933 under the terms of this act would not be entitled to recover under this particular resolution.

Mr. FULTON. Can I just comment there? Then, if there were an assignment prior to 1933 of a claim arising between 1917 and 1933, there could be recovery here?

Mr. SWEENEY. There could be recovery under this language, especially if it were from one American national to another.

Mr. FULTON. Then would the question of how much the other person paid for it, the assignee paid for it, enter into the question of recovery? Suppose a fellow bought a million-dollar claim for $10. Would he have a right to participate for $1 million?

Mr. SWEENEY. I think if I were the Commissioner I would hold he could not.

Mr. FULTON. Then the position of the Department is that the consideration of any assignment should be taken into account when the Commissioner makes up his judgment as to who shall participate in this fund?

Mr. SWEENEY. Yes.

Mr. MORANO. Will the gentleman yield right there? I just want to follow that up. Suppose the man paid $750,000 for a million-dollar claim. How would you rule if you were the Commissioner?

Mr. SWEENEY. I would probably give him the million dollars.

Mr. MORANO. The decision you would make would be based on the relative amount that he paid?

Mr. SWEENEY. That is right. I would think in a situation of this character a great deal would depend upon the Commissioner for carrying these wide powers into effect.

Mr. FULTON. That statement certainly brings up a problem, if you have a rule of law applicable to the amount paid for an assignment of a claim. It would seem to me that if in one case you say he should only get the amount he paid for the claim, when he is an assignee, that regardless of the amount involved the principle is the same. Mr. MORANO. That is right.

Mr. FULTON. So I would respectfully ask for the Department's judgment in a letter on that particular question. I think we should move to the next point.

Mr. MULTER. May I suggest that at the suggestion of the Department of Justice subdivision (c) of section 11 was inserted in the resolution on page 5. That has a much more limited application. It applies only to bonds. This committee might well consider whether you want to go beyond that and have it apply to all claims. There you provide

any claims based on bonds of the Soviet Government or prior governments of Russia or the nationals thereof acquired by claimants for less than their face value shall be allowed by the Commissioner only to the extent of the actual consideration paid therefor.

That has in mind the point you have raised. It applies only to bonds. Mr. FULTON. What we are into here is that on a specific instance by the witness, and there was a possible interpretation of the Justice Department's position, that more than the consideration that the assignee paid should be given to the man as participation in this fund for his claim. The rule that I am trying to get is a broad generic rule which will be a rule of law upon which the Justice Department stands as a recommendation.

I think Mr. Morano is entirely correct in bringing out the other extreme when I pointed one out.

Mr. SWEENEY. We would have no objection, obviously, to the bill being amended in that respect. As far as we were aware, the only speculation in the claims that took place was in bonds, which had a

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very active market and passed from 5 to 10 percent of their face value.

Mr. FULTON. Suppose there was a case where an individual had claims under contract with one of the Russian governments, for example, an American engineer, as we had many people going into Russia in the period from 1917 to 1933. In some instances their contracts were arbitrarily canceled, their full assets they had with them were expropriated, and they were deposited on the Polish or Hungarian or Czech border with nothing in their pockets and nothing to show for their claims. Under what kind of claim does the Justice Department recommend consideration of the hearing by the Commissioner of that type claim? We have the type claim that shows an action through the representation of a paper, but on these other indefinite claims do you and the Justice Department recommend that the Commissioner should have jurisdiction of that type claim?

Mr. SWEENEY. I think he has it under the resolution as drawn here. Mr. FULTON. On that type of claim that has appeared between 1917 and 1933 there is no such thing as a limitation either in amount or period of time, such as the statute of limitations?

Mr. SWEENEY. No.

Mr. FULTON. Then on priority might I ask you this: You would recommend, speaking for the Justice Department, that there be no variation in time in giving priority to various classes of claimants? Suppose somebody has proceeded quickly and somebody else has not proceeded. Would you penalize the one who has not proceeded quickly to getting a lien or a final judgment, say, in the United States

courts?

Mr. SWEENEY. It has been impossible to obtain a lien against these funds since 1933 because the title to them passed to the United States at that time. I think undertaking to determine relative priorities in the liens before that time might cause considerable difficulty to the Commission.

But as a practical matter in determining which lien has the greater validity, he should give priority in time because that would be the priority which would be accorded by domestic law, to which he would look for their validity. Most of these claims would arise in New York. As I understand, the liens there are marshaled according to priority and order of time. So if you had a situation where you had all of those funds being eaten up by priority claims, it would have to be marshaled in the order which New York would give priority to them. That would be a matter in which in applying a doctrine of law you would look to the New York law to determine priority.

Mr. FULTON. And not international law?

Mr. SWEENEY. No.

Mr. FULTON. What is your position on that, Mr. Multer?

Mr. MULTER. I think Mr. Sweeney has correctly stated the rule of law that would be applicable and should be applicable.

Mr. FULTON. Do you think any portion of this fund should be set aside on a percentage basis for unsecured claims regardless of the time of their presentation as long as they are presented in time to the Commissioner? The point of that is this: Do you think there should be participation by people who felt it was useless to spend the money to prove their claims or get the liens or didn't know where the assets were?

Mr. SWEENEY. I think the act takes care of that because the priority they get is only with respect to the funds on which they would have a lien. These funds are collected from different sources. Some were funds of one bank, some were funds of another bank, and of this corporation and that corporation. It is inconceivable to me that a situation would arise whereby any priority claimants who could have liens could exhaust the entire fund by their right of priority. Their priority might exhaust the funds of the Russo-Asiatic Bank, but those only make up a fraction of the amount collected. No one could assert priority to one of the funds here, which was $1,500,000 which was gotten through the Post Office Department for unpaid money orders. So there will always be a substantial amount remaining for distribution among general claimants.

Mr. MULTER. You couldn't deprive the claimants of liens and say that they must come in with unsecured creditors who simply sat back and waited and who thought it was not worthwhile. You run into the constitutional question: Can you deprive anyone who has a lien. Take the bankruptcy statute, if you got your lien within 4 months of bankruptcy, they can't take that lien away from you.

Mr. FULTON. It goes a little beyond that, Mr. Multer. This is money in the hands of the United States Government. The Government is going to decide what to do with it. So that if the liens were specifically enforceable in courts of law, these people would have already enforced them and had their recovery. It takes an act of Congress and the distribution that we feel in our judgment as a body is equitable. Even the law applicable to the disposition of these proceeds is put very much in the judgment of a Commissioner. Part of the discussion here this morning has been what kind of discretion should the Commissioner have, what law should he apply, to what degree should these claims be covered by this legislation, what are the various classes of coverage, and also these questions of the position of the Department of Justice in its consideration.

Those are rather technical things. We will ask the staff to take these up further with the Department of Justice to get their position. I know you have only 15 minutes from this point to get to another equal branch of Government. Do you have any other comments?

Mr. SWEENEY. No. It is our position that our letters have stated the position of the Department of Justice. We express no view on the policy matter, because we are, in effect, or have been, the attorney who has been collecting these claims. It was only such matters that came to our knowledge in the course of that that we expressed views, plus the fact that in order to accomplish what we thought was the intended purpose of the bill we made certain technical suggestions.

Mr. FULTON. You think these funds that have been collected by your agency should be promptly dispersed and the claims acted upon by a Commissioner?

Mr. SWEENEY. We see no reason why it should not be done promptly. Mr. FULTON. You feel the bill referring only to the money that has been collected is sufficient so there need be no provision as to any future collection?

Mr. SWEENEY. I think that is correct. We have spent long periods of time trying to trace all possible sources of money. We have been aided by people who hope to participate. We closed down our New