File No. 20930/1.
You are requested to furnish a copy of the inclosed instruction to the
various consulates in China, including Hongkong and Tsingtau, as well as
to the United States court for China.
[Inclosure.]
The Secretary of
State to Consul Arnold.
Department of State,
Washington, April 25,
1910.
No. 80.]
Sir: The department acknowledges the
receipt of your No. 96, of June 22, 1909, and your No. 120, of
October 2, 1909, regarding the status of the firm of Siuliong &
Co., and the nature and measure of protection to be accorded by you
to this firm.
In the question of the status which should be given in China to
American corporations whose stockholders are mainly foreigners there
appears to be two distinct elements:
- (a)
- The right which such corporations might have to the
diplomatic protection or intervention of this
Government.
- (b)
- The right which such corporations might have to the status
of an American citizen in matters of litigation before the
United States consular courts of China and before the United
States court for China.
As to the first point, it would appear that inasmuch as no natural
citizen of the United States has an absolute and inlierent right
(that is, a right that is enforceable in the courts) either to the
protection or the” intervention of this Government the Secretary of
State may make such rules and regulations regarding the status of
these artificial persons—these corporations—as may seem to him meet
and desirable.
In framing such rules and regulations, however, it may be found to be
to the commercial and other advantage of the United States fully to
recognize and protect in China all corporations organized under the
laws of the United States, or of any of its territorial possessions,
irrespective of the question as to whether the stockholders or a
majority thereof are or are not citizens of the United States.
As to the second point, it appears to the department that, as a legal
proposition, our consular courts and the United States court for
China will, under the present state of the law, have no option but
to recognize as American citizens all American
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corporations irrespective of the
nationality of the stockholders; and to consider all American
corporations as entitled to invoke the jurisdiction of the
respective courts. This would appear to follow from the fact that
our general statutes conferring extraterritorial jurisdiction, as
well as the statute organizing and conferring jurisdiction upon the
United States court for China, all speak of a. jurisdiction over
citizens of the United States, or, as the act for the United States
court for China specifies, any citizen of any territory belonging to
the United States. It is assumed that for purposes of jurisdiction a
corporation organized under the laws of the Philippine Islands would
be a citizen of the United States within the meaning of those
sections of the Revised Statutes which confer jurisdiction upon our
cousular courts. It seems to be the established law of this country
that so far as the question of the taking of jurisdiction by our
Federal courts is concerned a corporation is to be regarded as a
citizen within the meaning of the constitutional provision governing
these matters. It would appear not unreasonable to assume that the
same rule would and should be applied by our courts in China.
Therefore, as a judicial question affecting the jurisdiction of our
various courts in China, it would seem that all American
corporations must be regarded as American citizens.
Briefly, then, it would appear from the above—first, that the
department may or may not extend to such corporations diplomatic
protection, as it may deem advisable; and, second, that in all
probability an application by our courts in China of the law now
obtaining in this country will require them to recognize as American
“citizens” for purposes of jurisdiction all American corporations,
irrespective of the nationality of the stockholders.
Since the firm of Siuliong & Co. appears to be organized under
the code of commerce of the Philippine Islands, and is practically a
joint-stock company which, under said code, has an entity separate
from its shareholders, there appears to be on the facts presented no
objection to the registration of this firm at your consulate. A
corporation which, like this firm, has a separate entity from its
stockholders, duly organized under American laws, is technically
regarded, irrespective of the citizenship of its stockholders, as an
American corporation subject to American jurisdiction and entitled
to American protection in the discretion of this department. It is
understood, however, that registration of such companies indicates
nothing except that the corporation is a duly organized American
compan, and does not necessarily imply that such corporation is
entitled to the diplomatic protection or intervention of this
Government.
You will, of course, understand that the above expressions regarding
the status, before the consular courts and the United States court
for China, of those American corporations whose stock is owned
wholly or in large part by foreigners, as well as the question of
the status before the same courts of American corporations organized
under me laws of the Philippine Islands, are but statements of the
department’s opinion upon this matter, which can not be and are not
intended to be conclusive or controlling upon either the consular
courts or the United States court for China in the exercise of their
sound judicial discretion regarding this matter.
There appears to be no law granting this department control over the
unofficial display of American flags in foreign countries. The
department understands that it is customary for American firms in
China to fly the American flag on all American national
holidays.
I am, etc.,
