Alliance Assurance Company v. United States

• Decision Date: 10 February 1958
• Docket Number: No. 110,Docket 24521.,110
• Citation: 252 F.2d 529
• Parties: ALLIANCE ASSURANCE COMPANY, Ltd., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

252 F.2d 529 (1958)

ALLIANCE ASSURANCE COMPANY, Ltd., Plaintiff-Appellant, v.UNITED STATES of America, Defendant-Appellee.

No. 110, Docket 24521.

United States Court of Appeals Second Circuit.

Argued December 5, 1957.

Decided February 10, 1958.

James H. Simonson, New York City(Bigham, Englar, Jones & Houston, New York City, on the brief), for plaintiff-appellant, Alliance Assur. Co., Limited.

Foster Bam, Asst. U. S. Atty., Southern District of New York, New York City(Paul W. Williams, U. S. Atty., for Southern District of New York, Benjamin T. Richards, Jr., Asst. U. S. Atty., Southern District of New York, New York City, on the brief), for defendant-appellee, United States of America.

Before CLARK, Chief Judge, MOORE, Circuit Judge, and SMITH, District Judge.

MOORE, Circuit Judge.

This is a suit brought against the United States by Alliance Assurance Company, Ltd., the insurer and subrogee of Carlyle Clothes, Inc., to recover the value of goods, consigned to H. W. Robinson & Co., Inc., customs broker for Carlyle and the importer of record, which, while being inspected for entry into this country, disappeared from the possession of the United States Customs.

Two causes of action were alleged: (1) under the Tucker Act, 28 U.S.C.A. § 1346 (a)(2), for breach of an implied contract of bailment; and (2) under the Federal Tort Claims Act, 28 U.S.C.A. § 1346(b), for the negligent loss of the goods.

The Facts

In the cargo discharged from the S.S. Queen Mary at Pier 90, North River, New York, N.Y., in late December 1952 was a case of English woolens weighing 309 pounds imported by the H. W. Robinson & Co., Inc., a licensed customs broker for consignment to Carlyle Clothes.The stipulated value of the goods was $2,460.59.The appropriate entry procedure was followed and $708.25 duty was paid.The Invoice Division at the Custom House prepared ten so-called "Elliott Fisher" tickets containing identifying information, five of which were forwarded to the Appraiser at Public Stores and five delivered to the importer.Pursuant to statutory requirements (19 U.S.C.A. § 1499), on January 13, 1953 the goods were removed to Public Stores, 201 Varick Street, New York, N. Y. (the official government warehouse), for inspection by the customs officials to ascertain if the goods were of the value and quantity declared in the invoice.

On that date the goods were taken to the fifth floor of Public Stores, an inspection section, where the case was opened by a verifier and checked by an examiner.The goods passed inspection and presumably were repacked by the verifier and transferred to the "passed pile" of goods on that floor.The examiner then prepared a delivery order, consisting of two of the tickets, a white and a red, which were placed in a post office type box reserved for H. W. Robinson & Co., Inc. on the first floor at Public Stores.An employee of the importer then endorsed the white ticket and turned both tickets over to its trucking company which at 4:19 p.m. on the same day, January 13, 1953, surrendered the red ticket to the customs officials to obtain delivery.Since the delivery platform closed at 4:30 p.m., the customs officials would not deliver the goods that day.The red ticket was sent back up to the fifth floor which under prescribed procedure operated as a notice to send the goods down to the delivery platform.The red ticket should have been filed on the fifth floor thus indicating that the goods had been sent to the first floor platform for delivery to the consignee.On the following day, the customs officials were unable to locate the goods to make delivery.On January 21, 1953, a full week after the disappearance, a search throughout Public Stores failed to uncover the goods.Thereafter the duty paid was refunded.

The trial court had no alternative but to find, and in fact did find, that the goods disappeared from the Public Stores and that "the manner in which they have vanished remains a mystery"(146 F. Supp. 118, 123).

Jurisdiction

The United States made a motion to dismiss both causes of action for lack of jurisdiction over the subject matter.The trial court granted the motion to dismiss the claim under the Tucker Act, but denied the motion in so far as it sought to dismiss the claim under the Federal Tort Claims Act.

The trial court dismissed the cause of action under the Tucker Act"for lack of jurisdiction because it is not based on an express or implied contract within the meaning of the Act."The court, however, held that the government was subject to suit under the Tort Claims Act and that 28 U.S.C.A. § 2680(c) excepting any claim in respect of "the detention of any goods or merchandise by any officer of customs" from that Act did not bar plaintiff's claim because customs could not detain goods which had disappeared.Judgment was entered for the government, the court concluding that "Plaintiff has failed to prove that the customs officials were negligent in the handling of the case of woolen goods, * * *."

The Cause of Action Under the Tucker Act

The Tucker Act provides in relevant part:

"(a)The district courts shall have original jurisdiction, concurrent with the Court of Claims, of:

* * * * * *

"(2) Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded * * * upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort."

The "implied" contracts on which an action may be brought under the Tucker Act are limited to contracts implied in fact as opposed to contracts implied in law, more commonly termed quasi-contracts.Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784;United States v. Minnesota Mutual Investment Co., 271 U.S. 212, 46 S.Ct. 501, 70 L.Ed. 911;Merritt v. United States, 267 U.S. 338, 45 S.Ct. 278, 69 L.Ed. 643.The jurisdictional issue depends upon whether the bailment was a contract implied in fact, and if so, the terms of that contract.It, therefore, becomes necessary to analyze what, if any, contractual attributes a bailment of the type here involved possesses.

The obligation of the government was not artificially created by law but rather stemmed from an implied promise to redeliver the goods as soon as customs had checked them against the invoice.Such a promise need not be formalized in a written agreement or even made the subject of a specific conversation.It arises from the implied promise to return the goods to the lawful owner after the customs inspection has been completed.The elaborate set of ten tickets, at least two of which are designed to restore the goods to the owner, is indicative of this promise.

The government does not contend that the bailment here was "involuntary" in the sense that the goods were thrust upon it.Since it voluntarily undertook a bailment of the goods in question, a promise on its part to use due care during the term of the bailment can and should be implied.In the ordinary bailment "the mutual rights of the parties are often, if not usually, so inadequately fixed by their agreement, that rules of law not based on the agreement, although not inconsistent with it, must be called upon to supply the deficiency."Williston on Contracts, § 1032.It would be the normal and expected action on the part of the bailee to promise to use due care, and no judicial inventiveness is required to imply one.It is at least as reasonable to imply such a promise here as it is to imply a promise by the government to pay for lands it has tortiously appropriated as was done in United States v. Dickinson, 331 U.S. 745, 67 S.Ct. 1382, 91 L.Ed. 1789(alternative holding), and United States v. Lynah, 188 U.S. 445, 23 S.Ct. 349, 47 L.Ed. 539.The government's attempt to distinguish the case at bar from the Lynah case by arguing that some "unforeseeable factor such as theft was present in this case whereas in the `taking'cases the government was or could have been aware that the plaintiff's injuries would flow directly from its actions" contains its own rebuttal because in this case it can only be held for injuries which were reasonably foreseeable from its breach of its promise to use due care.

Nor does absence of any specific bailment fee weaken the promise or deprive the implied agreement of consideration.This appears to have been the rule for many years.In Wheatley v. Low, Cro. Jac. 668, 79 Eng.Reprint 578(K.B. 1623), the defendant without compensation accepted money from the plaintiff and promised to deliver it to a certain person.Upon his failure to do so, the defendant suffered an unfavorable verdict in an action of special assumpsit.A motion in arrest of judgment on the ground that there was no consideration was denied "for being that he accepted this money to deliver, and promised to deliver it, it is a good consideration to charge him."In Coggs v. Bernard, 2 Ld.Raym. 909, 92 Eng.Reprint 107(1703), a gratuitous bailee damaged some casks of brandy which he was transporting and was held liable for his negligent handling.Lord Holt in holding that there was consideration underlying the bailee's gratuitous undertaking said in the course of his opinion (2 Ld.Raym. 919, 92 Eng.Reprint 113):

"But secondly it is objected, that there is no consideration to ground this promise upon, and therefore the undertaking is but nudum pactum.But to this I answer, that the owner\'s trusting him with the goods is a sufficient consideration to oblige him to a careful management."

The doctrine that a gratuitous bailment is supported by consideration has retained its vitality down through modern times.SeeFirst Nat. Bank of Lyons v. Ocean Nat. Bank, 60 N.Y. 278, 284-285;Glanzer v. Shepard, 233 N.Y. 236, 239-240, 135 N.E. 275, 23 A.L.R. 1425;Siegel v. Spear & Co., 234 N.Y. 479, 483, 138 N.E. 414, 416, 26 A.L.R. 1205.In Siegel v. Spear & Co., supra, Judge Crane, in holding that a...