Argosy Limited v. Hennigan

• Decision Date: 05 November 1968
• Docket Number: No. 25122.,25122.
• Citation: 404 F.2d 14
• Parties: ARGOSY LIMITED, Appellant, v. Franklin HENNIGAN, individually and as Acting District Director of Customs, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

404 F.2d 14 (1968)

ARGOSY LIMITED, Appellant, v. Franklin HENNIGAN, individually and as Acting District Director of Customs, Appellee.

No. 25122.

United States Court of Appeals Fifth Circuit.

November 5, 1968.

Marshall J. Langer, Miami, Fla., for appellant.

Alfred E. Sapp, Asst. U. S. Atty., Miami, Fla., Alan S. Rosenthal, Howard J. Kashner, Attys., Dept. of Justice, Washington, D. C., for appellee.

Before GOLDBERG, GODBOLD and SIMPSON, Circuit Judges.

GOLDBERG, Circuit Judge:

The controversy here under review turns on the parametrics of federal jurisdiction within the federal system itself. We are asked to determine whether or not this action was properly dismissed by the district court below for want of subject-matter jurisdiction, and whether or not such dismissal was correctly grounded on a determination that the complaint alleged matters within the exclusive domain of the Customs Court.

On May 4, 1967, Argosy Limited (Argosy), a corporation duly incorporated under the laws of the Bahama Islands, received a notice from the District Director of Customs demanding that Argosy file a dutiable consumption entry on its yacht, the Fountainbleau II, then located in the Port of Miami. The notice informed Argosy that unless such an entry were promptly filed, seizure of the yacht under authority of the customs laws would follow shortly. In order to enjoin the proposed seizure, Argosy filed this suit. It named Frank Hennigan as defendant both individually and in his official capacity as District Director of Customs.

In its complaint, Argosy alleged that the Fountainbleau II was exempt from assessment as a dutiable import under the Tariff Act of 1930, 19 U.S.C.A. § 1202 et seq. Argosy claimed that the yacht was neither an import within the true intent and meaning of the customs laws¹ nor an article covered by an appropriate tariff schedule. Item 696.10² of the Tariff Schedules of the United States was claimed by Argosy to be inapplicable because the Fountainbleau II was available neither for sale or charter, nor for purposes of being used as a pleasure boat in United States territorial waters, nor for use in trade or commerce. The yacht had been brought to Miami, according to Argosy, for the sole purpose of undergoing major structural modifications, and was not even owned by a resident of the United States. For the Customs Director to seize such a yacht, claimed Argosy, when it was not an import, or if an import was not covered by Item 696.10, would be to commit a demonstrably tortious act. Argosy requested an injunction on the grounds that such an act would inflict irreparable injury.

On May 10, 1967, one day after Argosy filed its complaint, Hennigan took physical custody of plaintiff's yacht. On May 12, 1967, the parties stipulated that Argosy could without prejudice to the continuation of its district court action file under protest a dutiable consumption entry supported by a normal consumption entry bond for the purpose of securing the yacht's release. On his part, the District Director agreed to suspend appraisement and liquidation of the consumption entry until the district court determined its jurisdiction of the subject matter, or until November 30, 1967, whichever occurred first. On June 26, 1967, the district court dismissed plaintiff's action for want of subject-matter jurisdiction. We are in accord and affirm.

The district court's dismissal of Argosy's action rested upon the mandate of 28 U.S.C.A. § 1340:

"The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Customs Court." (Emphasis added.)

The Customs Court is given exclusive jurisdiction over customs matters by 28 U.S.C.A. § 1583:

"The Customs Court shall have exclusive jurisdiction to review on protest the decisions of any collector of customs, including all orders and findings entering into the same, as to the rate and amount of duties chargeable and as to all exactions of whatever character within the jurisdiction of the Secretary of the Treasury; decisions excluding any merchandise from entry or delivery, under any provision of the customs laws; and the liquidation or reliquidation of any entry, or the refusal to pay any claim for drawback or to reliquidate an entry for a clerical error as provided by the customs laws."

The district court was of the opinion that these statutes committed the subject matter of Argosy's complaint to the exclusive jurisdiction of the Customs Court. Argosy argues, however, on the authority of vintage cases,³ that these statutes place within the jurisdiction of the Customs Court only questions relating to the rates and amounts of duties chargeable on articles which are conceded to be imported, and do not commit the question of importation itself to Customs Court scrutiny. Quite simply, the issue on this appeal is whether or not a district court is the proper forum in which to determine if an article is "imported" within the meaning of 19 U.S.C.A. § 1202.⁴ In view of our conclusion set forth below that the issue of importation is exclusively within the jurisdiction of the Customs Court, we do not consider whether the Fountainbleau II is in fact an import, or whether it is owned by a resident of the United States or brought into the United States for charter or sale within the meaning of Item 696.10. Such determinations involve facts to be ferreted out by the tribunal vested by Congress with the appropriate decisional authority.

The jurisdictional question here in dispute is not one of first impression. Rather it has an important, though somewhat aged judicial antecedent in the Supreme Court case of Ex Parte Fassett, 1892, 142 U.S. 479, 12 S.Ct. 295, 35 L.Ed. 1087. Fassett supports Argosy's position that the district court and not the Customs Court has jurisdiction to determine whether or not an item is an import. Were Fassett, therefore, the only authority on the subject, we would have to decide in Argosy's favor. It is our view, however, that Fassett is no longer controlling on the import issue. Fassett was decided under authority of the Customs Administrative Act of 1890. Since that time the Act has been superseded by the Tariff Laws of 1909, 1913, 1922, and 1930. These revisions have subjected the tariff laws to such substantial statutory permutations that Fassett can be considered good law today only to the extent that the terms of the Customs Administrative Act discussed therein have been carried forward into the Tariff Act of 1930.

As we read Fassett, the decision in that case was predicated largely upon two characteristics of the Customs Administrative Act. The first had primarily equitable dimensions. It rested on the belief that the district court was the only forum open to plaintiff because of the particular protest mechanism then in use. The Supreme Court found that the means necessary to bring plaintiff's claim before the Customs Court would simultaneously interdict his chances of having the import issue reviewed:

"Under the customs administrative act, the libelant, in order to have the benefit of proceedings thereunder, must concede that the vessel is imported merchandise, which is the very question put in contention under the libel, and must make entry of her as imported merchandise, with an invoice and a consular certificate to that effect, and thus estop himself from maintaining the fact which he alleges in his libel, — that she is not imported merchandise." Ex parte Fassett, 1892, 142 U.S. 479, 12 S.Ct. 295, 299, 35 L.Ed. 1087, 1090-1091.

Argosy on this appeal is in no position to plead this dilemma. The Customs Director concedes that Argosy may have review of the dutiability of its yacht "by the simple expedient of paying the assessment of duty * * * under protest and seeking to recover it in the Customs Court" 19 U.S.C.A. §§ 1514, 1515; 28 U.S.C.A. § 1583. More importantly, the Court of Customs and Patent Appeals has held in United States v. Porto Rico Coal Co., 1929, 17 C.C.P.A. 288, T.D. 43716, that the filing of a consumption entry does not estop a claimant from challenging the assessment of a customs duty. The Porto Rico case also involved the question of whether a vessel was imported into the United States. The government contended that:

"* * * under authority of In re Fassett, 142 U.S. 479, 12 S.Ct. 295, 35 L.Ed 1087 the appellee in this case is estopped by his entry of the Berwind from now claiming that she is not a dutiable article." United States v. Porto Rico Coal Co., 1929, 17 C.C.P.A. 288, 292 T.D. 43716.

After exploring the legislative modifications in the customs laws that had occurred since Fassett, the Court said:

"We are of opinion the Fassett case was decided in view of the particular statute in force at that time, and can not be held to be applicable now. To hold that an importer is bound and estopped by each statement he makes in his entry, under present laws, would not only greatly interfere with and cripple the commerce of the country, but, in our judgment, is far from the intent of Congress as expressed in the various acts which have been cited and referred to." United States v. Porto Rico Coal Co., 1929, 17 C.C.P.A. 288, 294, T.D. 43716.

We also find that Fassett was "decided in view of the particular statute then in force." Today's statutory framework, as indicated by the Porto Rico case, no longer debars the presentation of a claim contrary to the assertions in a consumption entry. Unlike the plaintiff in Fassett, Argosy will not be bound or estopped from raising its claim in the Customs Court.

The passing of the estoppel principle does not, however, altogether dispose of Fassett. As already noted, estoppel was only one of the characteristics of the Customs Administrative Act which Fassett considered. The other, and perhaps more important characteristic, related to the authority conferred...