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Colonial Cases

United States v. Reid, 1881

United States v. Reid

United States Consular Court, Shanghai

Denny, 14 May 1881

Source: North China Herald, 20 May 1881



Shanghai, 14th May.

Before O.N. DENNY, Esq., Consul-General, Acting Judicially.


  The petition of the plaintiffs was as follows:

- That they are the Council for the Foreign Settlement of Shanghai North of the Yang-king-pang, and the defendant is a citizen of the United States, and within the jurisdiction of the Court.

-That on the 16th day of February, 1880, the Ratepayers of the Foreign Settlement of Shanghai North of the Yang-king-pang, duly assembled in annual meeting under and in pursuance and execution of the powers vested in them by the Shanghai Land regulations of 1870, which so far as it relates to the matter of this suit is as follows:

  Resolution V. - That this meeting in pursuance and execution of the powers vested un it by the Shanghai Land Regulation of 1870, imposes and authorises the Council for the Foreign Settlement of Shanghai North of the Yang-king-pang to levy collect and recover upon and from all persons liable to pay the same the following taxes rates and fees for the current year:- General Municipal Rate of 8 per  cent on the actual or assessed rentals of houses inhabited by foreigners from the occupants quarterly in advance on and after the 1st day of January, April, July and October, respectively.  All such taxes and rates being payable at the time specified and to be paid within 14 days of presentation of tax note.

-That on the 23rd day of February, 1881, the Ratepayers of the Foreign Settlement aforesaid again assembled in manner aforesaid passed a resolution for raising means fort the year 1881 in the same words as the resolution aforesaid.

- That under the said resolution passed in 1880 the sum of Tls. 4.3.2 became payable from the defendant on the 1st day of January in this year in respect of rental of part of a house No. 2, Yangtsze Road, Shanghai.

-That under the said Resolution passed in 1881 the sum of Tls. 1.6.0 became due from the defendant on the 1st day of March in that year in respect of rental of the part of the house aforesaid.  And the sum of Tls. 4.8.0 became due from the defendant ion rthe 1st day of April in the same year in respect of rental of part of a house No. 1 Yangtsze Road aforesaid.

- That after each of the said sums became due the petitioners caused a tax note in respect thereof to be presented to the defendant, and more than 14 days had expired since the presentation of each of the said tax notes, yet the defendant has not paid the said sum nor any part thereof.

- The said sums, making together Tls. 10.7.2, are now due from the defendant to the petitioners.

Therefore your petitioners pray that judgment may be given against the defendant accordingly, with interest and costs; and that they may have such other and further relief as to your honourable Court may seem meet.

(Signed) R. F. THORBURN, Secretary.


To the above petition, the defendant filed the following answer:-

 - In relation to the first clause of the petition of the plaintiffs, the defendant denies that the plaintiffs are properly and legally - "The Council for the Foreign Community of Shanghai, North of the Yang-king-opanf,": ot being a matter of common knowledge that the said "Council" represents the votes of but a small portion of the said ":community." The defendant further denies that the plaintiffs are properly or legally described in their petition in accordance with the "Regulations for the Consular Courts of China," as the nationality of the plaintiffs is not stated in said petition.

  The defendant acknowledges that he is a citizen of the State of New York, and that he is at present residing within the jurisdiction of this Court.

- In answer to the second and third clauses of the petition, the defendant states tthat he is aware from the daily newspapers, and other sources, that sixty-seven so-called Ratepayers assembled in Shanghai on the 23rd February, 1881, but he denies the right of these sixty-seven individuals "to levy collect and recover" taxes or fees for any purpose whatever, from him.

  The defendant further affirms that he has made diligent search and enquiry in the proper quarters, and has not been able to find or procure any copy of the "Shanghai Land regulations of 1870" referred to in  the petition, nor does he believe any such Land regulations of 1870 exist.

-In answer to the fourth and fifth clauses of the petition, the defendant denies that he is indebted to the plaintiffs in the sums stated, viz., Tls. 432, Tls 1.6.0, and Tls. 4.8.0 or that he is indebted to them in any sums of money whatever.  The defendant further denies that he has been at any time during the year 1881, in occupatio0n of any parts of the house No. 2, Yangtsze Road, Shanghai, as stated in the petition.

- In answer to the sixth and seventh clauses of the petition, the defendant denies that the sum of Tls. 10.7.2 is due by him to the plaintiffs or that any sum of money whatever is due by him to them.  He further denies that any so-called tax note for the sum of Tls. 1.6.0 has, at any time whatever, been presented to him as stated in the petition.

- The defendant affirms that he has been subjected to annoying and vexatious solicitations at the hands of the individuals purporting to be the servants of the plaintiffs., and by the present suit is subjected to further annoyance, vexation, loss of time and interference with his business, in direct violation of his constitutional rights as a citizen of the State of New York and of the United States of America.

The defendant therefore prays that in view of the said violation of his rights as a citizen, the loss of time and interference with his business, occasioned by the institution of the present suit against him by the plaintiffs, that the plaintiffs be compelled to pay him reasonable compensation, at the discretion of the Court, for damages necessarily and directly sustained by him, and further the defendant prays that the petition be dismissed, and petitioners decreed to pay the costs, and that he may have such other and further relief as the Court may deem meet.

  And the defendant will ever pray,

  (Signed) FRANK REID.

Subscribed and sworn to before me this 12th day of May, 181. (Signed) O. N. DENNY, U.S. Consul-General acting Judicially.

B. R. LEWIS, Clerk of Court.

  Mr. DOWDALL appeared for the plaintiffs.

  The Defendant conducted his own case.

  Mr. DOWDALL said the petition stated that the plaintiffs were the Municipal Council for the Foreign Settlements at Shanghai north of the Yang-king-pang.  At a meeting of Ratepayers held under the Land regulations of 1870 in February, 1880, a resolution was passed for raising means for1880 imposing a General Municipal Rate of 8% on foreign residents payable by the occupants in respect of the actual or assessed rentals quarterly in advance on the 1st days of January, April, July and October; that a similar meeting was held in February, 1881, and a resolution was passed in similar terms to the resolution passed in 1880; that the defendant was assessed in respect of rental of part of No. 2 Yangtsze Road for the first quarter of 1800 at Tls. 4.3.2 and for No. 1 Yangtsze Road for the month of March, 1881, at Tls. 1.6.0,  and for No. 1 Yantsze Road for the second quarter of the same gear at Tls. 4.8.0, and that these rates amounted together to Tls. 10.7.2, for recovery of which the suit was brought; and that the petition went on to state that debit notes were delivered for these sums, and though the 14 days allowed for payment had expired yet the defendant had not paid the sum due.  The learned Counsel went on to say that the answer submitted that a meeting of 67 Ratepayers was held on the 23rd of February, 1881, but it was denied by the defendant that these ratepayers had any right to levy taxes on him, and it seemed to him that the defendant virtually denied the existence of any Land regulations of 1870.  As regarded these Regulations, they were certainly published during September, 1869, but, as far as the learned counsel was aware, they had always been called the Land regulations of 1870.  They were signed by the Ministers in the former year, it was true, but they possibly might not have come into force till 1870.  There was a little difficulty, he admitted, as to the correct numbers of the houses occupied by the defendant, in Yangtsze Road, but he hoped it would be removed by the evidence of the Municipal tax-collector.  It was true, also, that no tax note for Tls. 1.6.0 had ever been delivered.  It was usual to consider the taxes as due on the first day of the quarter, and the note was presented for the amount for the whole of the first quarter of 1881.  But although no tax note had been presented to the defendant for this amount, application had been made to him for payment of the amount actually due, before the suit was commenced.  The Land register of 1870 had been signed by the Foreign Ministers including the Charge d'Affairs for the United States, and preceding them was a Joint Minute, in which were the following words:-

Therefore, in order to avoid longer delay, and its consequent imminent risks to the welfare and safety of those concerned, we, the undersigned, do hereby provisionally agree, on behalf of our respective Governments, both to the Code of Reglements issued April 14th, 1868, and to the Revised Land regulations for the Foreign Settlement with the Bye-Laws annexed, prepared in March, 1866, which are severally to have effect within the limits now calculated on the south and north sides of the aforesaid creek, and are both alike to have the force of law on and until the first day of November, 1869, until further pleasure of our respective Governments be made known.

 And in pursuance of this agreement we will give the necessary instructions to the Consuls of our respective nationalities at Shanghai, through whom these two codes shall be published for general information and observation.

  He also read the following Articles, and portion of Articles, from the Regulations:-

Article IX.

  It being expedient and necessary for the better order and good government of the Settlement, that some provision should be made for the appointment of an Executive Committee or council, and for the construction of public works, and keeping the same in repair, and for the cleansing, lighting, watering and draining the Settlement generally; establishing a watch or Police force therein; purchasing and renting lands, houses and buildings for municipal purposes; paying the persons necessarily employed in any Municipal office or capacity, and for raising money when  necessary by way of loan or otherwise for any of the purposes aforesaid, the Foreign Treaty Consuls, or a majority of them, shall during the month of April or May in each year, and so early in the same as possible, fix the day for the election  of the Executive Committee or Council, in manner hereinafter provided, giving fourteen days' notice of the same, and shall also during the said months give notice of a public meeting to be had within twenty-one days of such notice to devise ways and means of raising the requisite funds for these purposes; and it shall be competent to such meeting duly assembled, or a majority thereof, including proxies of absent owners of land, to impose and levy rates and issue licenses for the purpose mentioned in the Bye-laws, and to declare an assessment in the form of a rate to be mad on the said land or buildings; provided always that the proportion  between the tax and land, and on houses or buildings, shall not exceed one-twentieth of one per cent on the gross value of land to one per cent on the same rental of houses,  .  .  .  

Article X,

  And whereas it is expedient that the said Land renters, and others entitled to vote, on the terms hereinafter mentioned, in public meeting duly assembled, under and in accordance with the provisions of the preceding article, should appoint in the mode hereinafter provided an Executive Committee or Council, to consist of not more than nine nor less than five persons, for the purpose of levying the rates, dues and taxes hereinbefore mentioned, and applying the funds realized from the same for the purposes aforesaid, and for carrying out the regulations now made, but it further ordered that such Committee, when appointed, shall have full power and authority to levy and apply such rates, dues and taxes for the purposes aforesaid, and shall have power and authority to sue for all arrears of such rates, dues and taxes, and recover the same from all defaulters in the Court under whose jurisdiction such defaulters may be. .  .  .  

Article XXVII:-

  And be it further ordered that the Executive Committee or Council may sue and be sued in the name of their Secretary for the time being or in their corporate capacity or character as "Council for the Foreign Community of Shanghai.  .  .  .  

  The learned Counsel proceeded to state that the validity of the Regulations had been discussed in the United States Consular Court in 1875, before Mr. Seward in the case of the Municipal Council v. W. H. Fogg; the report of the proceedings in which appeared in the North-Chinas Herald of the 25th of March of that year.  The judgment would be found in the issue of that journal for the 1st of the following month, and the Land Regulations had been upheld, an order being made that the defendant should pay the taxes sued for.  The "old" Land Regulations, which were similar to those at present in force, had been upheld in the British Court on the 15th November 1865, in the case of the Municipal Council v. Wills and another, and the Land regulations of 1870 had been recognized in the French Court here on the 17th September, 1878, in the case of the Municipal Council v. Guien.

  Mr. DOWDALL would call before the Court the Secretary of the Council, who would prove the due holding of the meetings in 1880 and 1881, and the passing of the resolutions at those meetings, and also the election of the present Municipal Council, who were the plaintiffs; and he would call Mr. Johnsford, the Inspector and Collector of Municipal taxes, who would prove that the amounts claimed were correct, the presentation of the debit notes, and that the amounts had not been paid.

  R. F. THORBURN, deposed, - I am the Secretary of the Municipal Council for the Settlement North of the Yang-king-pang.  A meeting of Ratepayers took place on the 16th of February 1880.  It was called in the usual manner by the Council, and a resolution was passed about the general municipal rate, levying a tax of 8 per cent, on assessed rentals, and 4 tenths of 1 per cent on the assessed rental of houses is payable quarterly in advance, within fourteen days from the presentation of the tax note.  The annual Ratepayers' meeting for 1881 was called in the same way, and a similar resolution was passed to that which I have just read.  The Consuls appointed a day some time in January for the election of the members of the present Municipal Council, and they were duly elected.

  By Defendant. - The highest number of votes for any candidate for Municipal Councillor was 58.  I have no personal knowledge with regard to the amounts specified on those tax notes.  My signature is printed on them, but the tax notes are not all brought to me before they are sent out.  The year 1870 is not referred to in that copy of the Land regulations.  The Regulations were passed in 1869, but did not come into force till 1870.

  ALFRED JOHNSFORD, deposed - I am Collector and Overseer of Rates to the Municipal Council.  In the first quarter of 1880, defendant occupied part of a house in the Settlement, No. 2 Yangtsze Road, No. 21.  I am not quite certain as to the date defendant left Shanghai, but I think it was soon after the end of the quarter.  I think he returned about the beginning of April.  He subsequently went to another house, No. 1 Yangtsze Road.

  By His HONOUR. - The sum of Tls. 4.3.2 would be the tax for the first quarter of 1880.  Defendant went back to No. 1 Yangtsze Road in the latter part of the first quarter of 1880.

Mr. DOWDALL explained that the amount of Tls. 4.8.0 was for the month of March and those of April, May and June.

  Witness resumed - The "No 2" on the debit note is a mistake.  I am sure that I delivered it at No. 1; that is where defendant's office is.  Tls. 1.6.0 is what was due for the latter third of the first quarter of 1881 for the rooms occupied in No. 1, though "No. 2" has been written on the tax note in error.  Tls. 4.8.0 are due for No. 2 for 1880.  I delivered the first debit note on the 43rd of March, 1880, the second on threw 23rd of February last, and the third on the 9th of April.  I delivered them in person to the defendant.  I calculated the amount of the taxes from information received from the agents of the landlord of the house as to the rent paid by defendant. Defendant has paid Municipal taxes before.  He occupied the same house in 1877, and paid taxes for three quarters, and he also paid taxes for two quarters in 1879.  He promised to pay the sum Tls. 4.3.2, now sued for, when I saw him in his bedroom at the Club.  He was sick at the time, and said he would pay the amount by-and-by; but he subsequently refused to do so.  When he was absent from Shanghai, I applied to Mr. Brown, but he said he had no authority to pay taxes for Mr. Reid.

  By His HONOUR - When I see premises newly occupied, I always present a debit note for the period of that quarter, whatever the time may be that the tenant has gone in.  I expect him to apply to me for a reduction should he require it, and I then report the matter to the Council.

  By Defendant - I have never applied for the sum of Tls. 1.6.0.  The sums on those tax notes are all that are due to the Council from you.

  Defendant now mounted the stand, and being sworn, said - I never promised to pay the Tls. 4.8.09 that has been referred to.  I had made up my mind not to do so before any application was made to me by Mr. Johnsford.

  By Mr. DOWDALL - I have paid Municipal taxes before.

  Defendant now left the stand, and in addressing the Court, asserted that the so-called Municipal Council represented only a small portion of the community. He took exception to the plaintiff's petition because their nationality was not stated therein.  By American law the power of taxation was never at any time delegated to the Executive by the people.  He contended that the National legislature and that of the State of New York were the only bodies that could levy taxes on him.  He referred to Story's Commentary on the Constitution of the United States published in Boston, 1833, chapter XIV, pp. 366-503. 'Powers of Congress - Taxes.'  On this and on the Constitution itself he based his refusal to pay the money for which he was sued'; he also referred to sections 1 and 8 of Article I of the Constitution and to United States Statutes 2nd edition, 1878, p. 411, and said that no authority was vested in the President or any diplomatic officer to tax the people, and this remark bore on the Joint Minute which was attached to the so-called Land regulations of 1870, signed by the American representative among others.

  His HONOUR said that the Minister on that occasion exercised authority under a section of the United States Statutes that referred to Foreign Relations, and which gave the United States Ministers the right to make regulations for the government of their nationals in foreign countries, though of course a question might arise as to whether legislative powers were bestowed.

  Defendant contended that the President of the United States could not delegate to any one the power to tax him.  There had been cases in which the Minister had issued Regulations with respect to Consular fees, but with that exception he denied the right of any official, or of any nondescript body such as the so-called Municipal Council to make any claim on him for taxes.  He pointed out that the "sanction" given by the Joint Minute before referred to was "provisional' and thought that that meant the regulations were to have the force of law if he (Defendant) chose to endorse them. He also mentioned that according to the memorandum attached to the Joint Minute he would be allowed to sue the so-called Municipal Council as a matter of expensive experiment if he wished, provided he could get a Court of Consuls together, while the Council could sue him for Tls.10 before his own Consul, and he ended his protest against this.  He held that the "provisional sanction" accorded by the American Minister to the Land regulations did not compel the payment of taxes, especially if they were levied by people not under the jurisdiction of the Court and not approachable by him (defendant.) It would be very difficult, he thought, for him to recover Tls. 10.7.2 from the plaintiffs.  He concluded his address by asking for compensation in the form of damages for the vexation and annoyance caused him by the demands that has been made for the taxes in dispute, and also that the plaintiffs be ordered to pay all costs.

  In reply to His HONOUR, defendant said that he had nothing to say in reply to Mr. Dowdall if the alleged Land Regulations of 1870 were declared to be so by the Court.  He considered that he ought not to be taxed by what was recognized by the 67 men who met and formed it, as the Municipality of Shanghai.

Mr. DOWDALL thought that the evidence had so fully borne out his opening statement that he need not refer to it further than by calling attention to the fact that the Secretary of the Council had given a god reason for the Regulations sued under being called the Land Regulations of 1870.  He had not found anything in the Rules of the Court that made a statement of the nationality of the plaintiffs in their petition an absolute necessity.  As regarded the Joint Minute he thought that if the whole of the last two paragraphs were read, it would be seen that the Land Regulations of 1870 were binding on citizens of the United States, and did not depend on the pleasure of the defendant in any Court.   A reference to R. S. 1874, sections 4083 and subsequent sections, and to the United States Treaty of Tientsin, would show that the minister had been justified in according his sanction to the regulations and giving the force of law binding upon United States citizens.

20th May.

  Judgment was given this morning for the plaintiffs, with costs.   


Source: North China Herald, 27 May 1881


Shanghai, 29th May.

Before     O. N. DENNY, Esq., Consul-General Acting Judicially.


  In this case, His Honour this morning delivered the following


The Municipal Council for the Foreign Community of Shanghai North of the Yang-king-pang, by their Secretary, bring this suit against Frank Reid, a citizen of the United States, to recover Tls. 10and cents 72 as taxes alleged to be due from the defendant as a householder within the said Municipality, for the last quarter for 1880, for the month of March 1881, and for all of the second quarter of this year.  While the defendant denies the material allegations of the complaint, yet from the evidence adduced upon the trial, it appears that these taxes were charged against him in the usual way, and in accordance with the Land Regulations which have hitherto governed in such cases, and that payment has been requested by plaintiffs and refused.  The defendant denies that the plaintiffs are a legally constituted body, and that for this reason he should [not] be taxed in any way upon their order for Municipal purposes or otherwise. That as he is a citizen of the United States, only the Congress of his Government can constitutionally impose such obligations upon him.  Answering the first objection raised, the plaintiffs, by their Counsel, rely for the legality of their action upon the Land Regulations of the Settlement, submitted to the Foreign Ministers at Peking and by them approved 24th September, 1869, and which went into effect the beginning of the following year.

 The Ministers of the Treaty Powers approving the Regulations referred to, were those of the United States of America, Great Britain, France, Russia, and the North German Confederation. But the defendant disputes the authority of the United States Minister, by that act, to make him in any way liable to the demands of such a body as the Municipal Council of Shanghai.

 The United States Minister to China is the superior officer of the Consul-General, judicially as well as  diplomatically, and whatever the result might be if the law bearing upon a suit of this nature were strictly construed, it is a fact, of which the Court must take judicial notice, that the Regulations alluded to were approved by the Minister for the United States, acting as he believed within the scope of his Ministerial authority, and which action has been approved by the Executive Department of the Government.  Not only this, but for eleven years the validity of these Regulations has been maintained and enforced by this Court.  This, if there were no other reason, would cause me to at least hesitate before reversing its decisions in this behalf in any ordinary case now.  

 In the next place the defendant claims too much for his citizenship, when he says that only the State of New York, of which he is a resident, and the United States Congress have a right to levy taxes on him; for an interpretation so broad would exempt him  from all taxation wherever he may choose to go outside of the United States.  Neither does the defendant make that distinction which must be made when considering the rights and duties of a citizen at home, and those rights and duties as a permanent or temporary resident of China.  Within the United States he is governed by the laws of the State wherein he resides, and by the general laws of Congress. This is not the case, however, in China; for the laws of a State can have no bearing in protecting his rights here, or redressing his wrongs; while those of Congress are only special in their application. The right to live in and pursue the various business callings in the Empire is secured to citizens of the United States by treaty stipulations, and for the purpose of giving force and effect to those stipulations Congress, by Special Act, has established Ministerial and Consular Courts, with both diplomatic and judicial powers, the latter being in  some respects extraordinary.  Within the United States a citizen cannot be tried for the commission of a felony unless he has first been indicted by a grand jury regularly drawn.  And then he can only be tried upon such indictment by a Jury of his peers, while in China he is denied both.  So, in cases at law, in the United    States he is entitled to have his civil rights passed upon by a jury.  This privilege he is denied here. There he has the right of appeal.  Here this right can only be obtained in certain cases.  This distinction is not referred to with the view of questioning the wisdom of it, but simply to show that it does exist.

 Again, United States vessels visiting the different ports of China are entitle to have the services of pilots to take them safely in and out of port, but there is nothing said in the treaty as to the manner of choosing them, or of what nationality they shall be.  This, however, has been provided for by the Chinese authorities, acting in conjunction with the representatives of the treaty Powers; neither is there any thing said in the treaty of the United States about a tax as a license fee for being protected in this privilege, yet such a tax is demanded by the Chinese authorities and properly collected from American citizens who are engaged in that business here.  It is but a legitimate outgrowth of treaty stipulations with this Government. The same may be claimed with greater force for the establishment and maintenance of the Municipal Government for the foreign Settlement of Shanghai.  The object sought by foreign Governments in concluding treaties with China was to obtain commercial advantages, and the importance and value of the advantages resulting therefrom, which have for their centre the port of Shanghai, already attest the wisdom of such agreements.  So important have these interests become that at least 2,500 foreigners of different nationalities have been drawn here to stimulate and protect them.  The magnitude and nature of these interests and the number of foreigners residing here, would render it almost impossible for the residents to enjoy all the privileges conceded to them by the treaties without the aid of a recognised Municipality.  For on account of the defects in the natural advantages of the  port, residents occupying houses anywhere within the business portion of the Settlement would continually suffer loss and great inconvenience, if these defects were not cured by local legislation; and so long as persons choose to reside within these improved boundaries and continue to enjoy the advantages resulting from a local government which seems to be so well administered as this, it is but just that they should pay an equitable proportion of the taxes necessary for such purposes.

  Judgment is given for the plaintiffs, as prayed for, with costs.

(Signed) O. N. DENNY, Consul-General, Acting Judicially.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School