In the claim of Walter Fletcher Smith vs.

The Compaia Urbanizadora Del Parque Y Plaza De Mariano (Playa Company)

May 2, 1929

FACTS:

Captain Walter Fletcher Smith is an American citizen residing at Habana, Cuba, and owner of all the stocks
of Mariano Beach Company which in turn owned certain properties at Mariano Beach near Habana. Prior
to 1919, Captain Smith sold to Playa Company all the stocks of his company except for two parcel of lands,
whose titles are registered personally to his name, duly executed under a Contract of Sale. His dwelling
house is located in this subject land.

In May 1919, the municipality of Mariano granted to Playa Company, a concession for the purpose of
urbanizing the district at and around Mariano Beach, which includes the two parcels of land of Smith. The
Court of First Instance of Mariano gave preliminary possession of Captain Smith land in favor of the
respondent. Eight hours after the order was issued, the buildings had been completely razed and partially
demolished by approximately 150 men, all working under the respondent. Smith contested the
expropriation proceeding in the Cuban courts and later ruled by the Audiencia that the proceeding was
illegal. After obtaining judgment, Smith filed for a petition for restoration of possession but was denied in
the second expropriation proceeding. Smith appealed from this second decision of the lower court.

To resolve the dispute and effect a settlement, the matter was taken up by the American government
with the Government of Cuba, through diplomatic channel. While such efforts were unsuccessful, an
agreement to arbitrate the question before a sole arbitrator has been reached.

The counsel of the defendant contended that the expropriation proceedings were conducted in strict
compliance with the Constitution and laws of Cuba; that these proceedings were for the urbanization of
the property and solely for purposes of public utility.

ISSUE:
Whether or not the expropriation proceedings conducted by the court of Mariano were for purposes of
urbanization and for public utility.

HELD:

No. The expropriation proceedings were not in good faith and for purposes of public utility.

Article 32 of Constitution of Cuba requires that:

No one shall be deprived of his property except by competent authority upon the justified proof
that the condemnation is required by public utility and previous indemnification. If the indemnification
is not previously paid, the judges and the courts shall protect the owners and, if needed, restore them the
property.
The Arbitrator believes that the expropriation was not in good faith since the destruction of the claimants
property was riotous and oppressive. The deployment of about one hundred fifty men were unreasonable
and unjust.

While the proceedings were municipal in form, the properties seized were turned over immediately to
the defendants company, ostensibly for public purpose, but in fact, to be used by the defendant for
purposes of amusement and for profit. The Arbitrator then, is of the opinion that all acts of expropriation
and proceedings were not of such character as to give an indefeasible title to the defendant.

Hence, the Arbitrator recommends that the property be restored to the claimant, under item c of the
Agreement of Arbitration: That if the land is not to be restored, the Arbitrator should consider what Smith
is entitled to receive in complete settlement.

Smith received the sum of $190, 000.00 as compensation for the value of land and building, and also for
the deprivation of the use of his property, including the expense of litigation.