Docket No. 579.
UNITED STATES OF AMERICA
on behalf of
Ward Edgerly Pearson, individually and as Executor of the Estate of Fred Stark Pearson, Deceased, and Frederick A. Pearson, Katherine L. Ward, and Grace Ward,
Claimants,
v.
GERMANY.
Docket No. 581.
UNITED STATES OF AMERICA
on behalf of
Ward Edgerly Pearson, Administrator with the Will Annexed of the Estate of Mabel Ward Pearson, Deceased, and Frederick A. Pearson, Katherine L. Ward, and Grace Ward,
Claimant,
v.
GERMANY.
PARKER, Umpire, rendered the decision of the Commission.
The two cases numbered and styled as above have been considered and will be disposed of together. They are before the Umpire for decision on a certificate of the two National Commissioners[a] certifying their disagreement.
It appears from the records that Fred Stark Pearson, and American national, and his wife, Mabel Ward Pearson, 53 and 52 years of age respectively, were lost with the Lusitania. They were survived by two sons and a daughter, Ward Edgerly, Frederick A., and Natalie, then 27, 23, and 25 years of age respectively. In February, 1915, the daughter married Reginald Nicholson and thereby became a British subject and so continues. No claim is here put forward on her behalf. Claims are made on behalf of the two sons and also on behalf of Katherine L. and Grace Ward, sisters of Mrs. Pearson. All of the claimants are American nationals and were such when the Lusitania went down and when the Treaty of Berlin became effective. No claim is made for the value of property belonging to either Mr. or Mrs. Pearson and lost with them.
Dr. Fred Stark Pearson had a remarkable career. Through his own efforts he obtained a college education and thoroughly equipped himself for constructive work on a large scale in the then comparatively unexplored field of electrical engineering. As one of the pioneers in that field he made notable contributions to the world which will long bear eloquent testimony to the usefulness of his life. His great ability, dynamic industry, his initiative and resourcefulness, and her personal and intellectual honesty, all contributed to create a great demand for his services which he was not slow to capitalize. Apart from his engineering ability, he developed great capacity as an executive and as a promoter of projects for the development of natural resources. He became interested as an engineer, and executive, and a stockholder in many enterprises in different parts of the world, principally in Mexico and Brazil. The salaries alone paid to him by the corporations with which he was connected aggregated approximately $125,000 per annum. He evidently regarded himself and was generally regarded as a man of large wealth when, in 1910, Mexico became engulfed in revolution. His situation thereafter is aptly and concisely stated in the biographical sketch of his life which appears in the record, verified by the affidavits of his son, Ward E. Pearson, and Louis J. Hirt and Howard P. Quick, engineers, in these words:
* * * The losses of these years cut into his fortune deeply. The severe financial depression which started in this country several years before the war and developed during these years, made it impossible for Pearson to raise additional capital for some of his companies. He plunged his personal fortune into the breach to carry some of these companies through. As values continued to shrink and as all security markets collapsed completely when the great war started, Pearson saw his entire fortune lost in the vortex of the great financial upheaval created by the cessation of normal economic life in finance and industry.
* * * In the last few years he derived his sole income once more from his salaries. In order to use as much of these as possible to bolster up his financial burdens, he cut his living and other expenses to the limit.
Dr. Pearson’s estate was found to be insolvent. His comparatively small life insurance, only slightly in excess of $21,000, was payable to his estate and was applied toward the payment of his creditors.
Dr. Pearson supplied his family with every creature comfort and gave his children educational and social advantages befitting his station in life. Ward E. Pearson, decedent’s eldest child, was graduated from Yale College in 1909, and married soon thereafter. He was employed in his father’s office at comparatively small salaries paid by several corporations in order to fit him for his life work. At the time of his father’s death these salaries aggregated $5,400 per annum, and cash gifts made to him by his father brought his annual income up to approximately $10,000 per annum. In addition his father gave him securities for the establishment of a fund designed eventually to yield him a substantial income. The total amount of these securities and the income which they yielded at the time of and subsequent to his father’s death are not disclosed by the record.
The youngest child, Frederick A. Pearson, after graduating from Yale in 1914, was employed in Spain by a corporation in which his father was interested at a salary of $100 a month, which was supplemented by gifts from his father similar to those made to the eldest son, but the aggregate amount of these gifts and the income yielded by the fund so created at the time of and subsequent to the father’s death are no disclosed. This son married soon after his father’s death; he has a wife and two children, and is now engaged in managing and selling real estate belonging to his mother’s estate.
The record indicates that Dr. Pearson in providing for his daughter was even more generous than with his sons.
Katherine L. Ward and Grace Ward, spinster sisters of Mrs. Pearson, were, at the time of the latter’s death, 47 and 45 years of age respectively. Dr. Pearson gave them securities which yielded them a joint income of approximately $3,000 per annum during the years 1909, 1910, and 1911. These securities declined rapidly in value and in 1912 did not yield any income. Thereafter Dr. Pearson contributed to the support of each of them $50 per month. The record indicates that had he lived he would probably have continued to make these contributions to them or such contributions as his impaired fortunes would have warranted. Mrs. Pearson made numerous gifts to each sister, exceeding $200 a year each, from 1902 to 1915, and beginning in January, 1915, contributed $50 monthly to them jointly.
Mrs. Pearson’s estate was solvent. The personal property belonging to the estate was appraised at approximately $149,000 and the realty at approximately $251,000. The record indicates that the market value of this realty is probably not in excess of $75,000. The debts and the expenses of administration amounted to less than $12,000. Each of the two sons, claimants herein, is entitled to one-third and the daughter, Natalie Pearson Nicholson, is entitled to one-third of the net proceeds of their mother’s estate.
It is contended that had Dr. Pearson lived he would have recovered at least a portion of the fortune he had lost, estimated at $10,000,000, and that during the balance of his life he would have continued his liberal contributions to members of his family and that on his death their inheritances from him would have been very large. Manifestly the numerous factors by which this contention is sought to be supported are of a highly speculative nature. The loss of Dr. Pearson’s fortune did not result from his death. It was lost prior to his death due to revolution in Mexico followed by the highly abnormal conditions throughout the world in finance, industry, and commerce resulting from the World War. These conditions continued for at least three and one-half years after his death. Had he lived he would have been more than 57 years of age on the signing of the Armistice. The salaries he had been receiving from corporations which had become involved in financial difficulties would probably, long prior to that time, have been lost to him or substantially reduced. His sons, who had been educated and trained by him, would naturally, through experience, have become increasingly self-supporting and independent of their father. Under changed conditions it is hardly probably that he would have continued to contribute so generously to them as he had done in the days of his affluence. The demands made upon his sources of income in his efforts to rehabilitate his lost fortunes and to support himself and wife, with such contributions as he might see fit to make to his daughter, a British subject, would necessarily have limited the funds available for contributions to his sons. But Dr. Pearson was a most unusual man, of great energy, resourcefulness, initiative, courage, and optimism. With these qualities and the confidence of men of large affairs and powerful financial interest, his advice and services would probably have been much in demand and his income would doubtless have been substantial for a number of years, but probably not for the full period of his life expectancy of 18 years.
Applying the rules announced in the Lusitania Opinion and in the other decisions of this Commission to the facts as disclosed by these records, the Commission decrees that under the Treaty of Berlin of August 25, 1921, and in accordance with its terms the Government of Germany is obligated to pay to the Government of the United States on behalf of (1) Ward Edgerly Pearson the sum of fifty thousand dollars ($50,000.00), (2) Frederick A. Pearson the sum of fifty thousand dollars ($50,000.00),(3) Katherine L. Ward the sum of three thousand dollars ($3,000.00), and (4) Grace Ward the sum of three thousand dollars ($3,000.00), with interest on each of said sums at the rate of five per cent per annum from November 1, 1923; and further decrees that the Government of Germany is not obligated to pay to the Government of the United States on behalf of Ward Edgerly Pearson as Executor of the Estate of Fred Stark Pearson, Deceased, or Ward Edgerly Pearson as Administrator with the Will Annexed of the Estate of Mabel Ward Pearson, Deceased.
Done at Washington March 5, 1925.
EDWIN B. PARKER,
Umpire.
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[a] Dated January 5, 1925.
53281°–25—-37
