Barr v. United States 287

• Decision Date: 05 February 1945
• Citation: 324 U.S. 83,89 L.Ed. 765,65 S.Ct. 522
• Parties: BARR v. UNITED STATES. No 287
• Court: U.S. Supreme Court

324 U.S. 83

65 S.Ct. 522

89 L.Ed. 765

BARR

v UNITED STATES.

No 287.

Argued Dec. 15, 1944.

Decided Feb. 5, 1945.

Mr. J. Bradley Colburn, of New York City, for petitioner. at Mr. Ralph F. Fuchs, of Washington, D.C., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

The question in this case is the proper rate at which the currency of the invoice of imported goods should be converted into United States dollars under § 522(c) of the Tariff Act of 1930. 46 Stat. 739, 31 U.S.C. § 372(c), 31 U.S.C.A. § 372(c).

On May 13, 1940, petitioner imported into the United States at the port of New York certain woolen fabrics which had been exported from England on May 3, 1940. Payment for the merchandise was made with pounds sterling purchased through the Guaranty Trust Co. of New York in the New York market for cable transfer. The Collector of Customs converted the pounds sterling of the invoice into dollars at the 'official' rate of exchange of $4,035. Petitioner claimed that the currency of his invoice should have been converted at the 'free' rate of exchange of $3.475138. He paid the higher rate and filed his protest against the Collector's action under § 514 of the Tariff Act of 1930, 19 U.S.C.A. § 1514. The Customs Court sustained the protest. 79 Treas. Dec., No. 7, 14. The Court of Customs and Patent Appeals reversed. 143 F.2d 132. The case is here on a petition for a writ of certiorari which we granted because of the importance of the questions presented.

The 'free' rate and the 'official' rate have the following origin.

Sec. 522(a) of the Tariff Act provides that the value of foreign coin as expressed in the money of account of the United States shall be that of the pure metal of such coin of standard value, and that it shall be estimated quarterly by the Director of the Mint and proclaimed by the Secretary of the Treasury. The value of the pound sterling at all times relevant here was proclaimed to be $8.2397. Sec. 522(b) provides that for the purpose of assessment and collection of duties upon merchandise imported into the United States foreign currency shall be converted, wherever necessary, into currency of the United States at the values proclaimed by the Secretary under § 522(a) for the quarter in which the merchandise was exported. Sec. 522(b) provides, however, for an exception. That exception is contained in § 5522(c), which reads as follows:

'If no such value has been proclaimed, or if the value so proclaimed varies by 5 per centum or more from a value measured by the buying rate in the New York market at noon on the day of exportation, conversion shall be made at a value measured by such buying rate. If the date of exportation falls upon a Sunday or holiday, then the buying rate at noon on the last preceding business day shall be used. For the purposes of this subdivision such buying rate shall be the buying rate for cable transfers payable in the foreign currency so to be converted; and shall be determined by the Federal Reserve Bank of New York and certified daily to the Secretary of the Treasury, who shall make it public at such times and to such extent as he deems necessary. In ascertaining such buying rate such Federal reserve bank may in its discretion (1) take into consideration the last ascertainable transactions and quotations, whether direct or through exchange of other currencies, and (2) if there is no market buying rate for such cable transfers, calculate such rate from actual transactions and quotations in demand or time bills of exchange.'

At all times prior to March 25, 1940, the Federal Reserve Bank of New York pursuant to its authority under § 522(c) certified daily to the Secretary of the Treasury one buying rate for the pound sterling. When the present war between Great Britain and Germany was declared, the British Government inaugurated a detailed system for controlling foreign exchange. It required among other things that all persons resident in the United Kingdom sell to the British Treasury at prices fixed by it all foreign currency which they were entitled to sell, and prohibited, with certain exceptions, exportion of foreign currency from the United Kingdom and the purchase and sale of foreign currency in the United Kingdom from or to any person other than an authorized dealer and at prices fixed by the British Treasury. On March 7, 1940, an Order in Council, effective March 25, 1940, was issued by the British Government which provided that certain classes of merchandise¹ (whiskey, furs, tin, rubber and jute) might not be exported from the United Kingdom to the United States and certain other countries except when payment had been or would be made to persons resident in the United Kingdom in specified currencies. These currencies included United States dollars or English pounds pur- chased in the United Kingdom after September 3, 1939, from an authorized dealer in foreign currency. Authorized dealers sold English pounds only at the rate of $4.035, prescribed by the British Treasury, from January 8, 1940, to September 30, 1942, when the present case was tried.

On March 19, 1940, the Federal Reserve Bank of New York notified the Secretary that because of the order of the British Government of March 7, 1940, it would certify, beginning March 25, 1940, two rates for the pound sterling—one to be designated as the 'free' rate, the other as the 'official' rate. The latter was the rate fixed by the British Treasury. On April 15, 1940, the Secretary of the Treasury notified the collectors of customs that until further notice he would publish only the 'official' rate; and he directed them to use that rate for assessing and collecting duties on imported merchandise whenever it varied by more than 50 per cent from the value of the pound proclaimed by the Secretary under § 522(a) of the Act.² T.D. 50134, 75 Treas.Dec. 370, 371, 5 Fed.Reg. 1447.

On the date petitioner exported his merchandise from England, the Federal Reserve Bank of New York certified to the Secretary of the Treasury that at noon on that day the 'free' rate for the English pound was $3.475138 and the 'official' rate was $4.035. The Secretary, in accordance with his notification of April 15, 1940, to the collectors of customs published only the 'official' rate. T.D. 50146, 75 Treas.Dec. 388. Since the 'official' rate varied by more than 5 per cent from the proclaimed value of the pound for that quarter, the collector used the 'official' rate in converting pounds into dollars for the purpose of assessing and collecting duties upon the value of the woolen fabrics. The pounds sterling which petitioner used in the purchase of the woolens were not obtained from an authorized dealer as defined in the British order of March 7, 1940, but, as we have noted, through the Guaranty Trust Co. of New York in the New York market for cable transfer. Petitioner claims that the invoice currency should have been converted at the 'free' rate of $3.475138 as determined and certified by the Federal Reserve Bank of New York for the date of this exportation.

It was noted in United States v. Whitridge, 197 U.S. 135, 142, 25 S.Ct. 406, 407, 49 L.Ed. 696, that the assessment of an ad valorem tax on imports involved an ascertainment of the true value of the article taxed as of the date of the tax and that the invoice price was an approximate measurement of that value. As pointed out in that case, the history of the statute shows a closer approximation to that value as the legislation has evolved. And the enactments made subsequent to the decision in the Whitridge case are consistent with that trend. In the beginning Congress prescribed specific dollar volues of specified coins. Act of July 31, 1789, § 18, 1 Stat. 29, 41. Not long after, the President was given authority to prescribe regulations for computing duties on imports where the original cost was exhibited in a depreciated currency of a foreign government. Act of March 2, 1799, § 61, 1 Stat. 627, 673. In 1873 Congress provided for an annual estimate by the Director of the Mint of the full metal value of standard coins of the various nations and a proclamation of the value by the Secretary of the Treasury. Act of March 3, 1873, 17 Stat. 602. That estimate was required to be made quarterly rather than annually by the Act of October 1, 1890, § 52, 26 Stat. 567, 624. Then came the Act of August 27, 1894, § 25, 28 Stat. 508, 552, which retained the provision for the estimate and proclamation of metallic values and gave the Secretary of the Treasury power to order a reliquidation at a different value on a showing that the value of the invoice currency in United States currency was 10 per cent more or less than the proclaimed value. United States v. Whitridge, supra. The procedure under the latter provision depended on a consular certificate to establish the percentage of depreciation of the currency. T.D. No. 23725, 5 Treas.Dec. 396. There was thus no single source (and none at all in the United States) to which customs officials could look to determine the extent to which foreign currency had depreciated. Moreover, violent fluctuations in foreign exchange rates had occurred after the first World War. It was for those reasons that § 403(c) was added to the Emergency Tariff Act of 1921, 42 Stat. 9, 17. See S. Rep. No. 16, 67th Cong., 1st Sess., p. 16; H. Rep. No. 79, 67th Cong., 1st Sess., p. 12; Fry & Friedsam v. United States, 12 Cust.App. 486, 489. And § 403(c) of the 1921 Act now appears as § 522(c) of the 1930 Act on whose meaning the present decision turns.

This history makes clear the search which has been made for a measure of the true dollar values of imported merchandise for customs purposes which was accurate (see Cramer v. Arthur, 102 U.S. 612, 617, 26 L.Ed. 259) and at the same time administratively feasible and efficient. The formula finally selected is dependent on the actual value of the foreign currency in our own money. The rate for the foreign...