Chicago Heights Distributing Company v. United States
| Decision Date | 03 November 1965 |
| Docket Number | C. D. 2586. |
| Parties | CHICAGO HEIGHTS DISTRIBUTING COMPANY <I>v.</I> UNITED STATES. |
| Court | U.S. Court of Customs and Patent Appeals (CCPA) |
Wallace & Schwartz (Joseph Schwartz of counsel) for the plaintiff.
John W. Douglas, Assistant Attorney General (Herbert L. Warren and Andrew P. Vance, trial attorneys), for the defendant.
Before DONLON and RICHARDSON, Judges; DONLON, J., concurring
The merchandise of this protest consists of three lots of Scotch whiskey which were imported at Chicago, Ill., from Scotland. The merchandise was stolen while in the custody of a bonded cartman who was acting as the importer's agent in transferring the merchandise from the place of unlading to the importer's bonded warehouse. The question before this court is whether plaintiff is entitled to a refund of customs duties and internal revenue taxes assessed upon this merchandise in liquidation.
Some of the pertinent facts involved in this controversy have been stipulated by the parties, as follows:
The merchandise covered by warehouse entry 7060 consisted of 295 cartons of Scotch whisky in bottles and flasks which arrived in Chicago on or about November 4, 1960, and which was the subject of warehouse entry bond executed on November 4, 1960, by Chicago Heights Distributing Company as principal and St. Paul Mercury Insurance Company as surety. The merchandise covered by entry No. 6876 consisted of 496 cases of Scotch whisky in bottles and flasks which arrived in Chicago on or about October 24, 1960, and which was the subject of warehouse entry bond executed on October 21, 1960, by Chicago Heights Distributing Company as principal and St. Paul Mercury Insurance Company as surety. The merchandise covered by warehouse entry 6857 consisted of 100 cartons of Scotch whisky in bottles which arrived in Chicago on or about October 24, 1960, and which was the subject of warehouse entry bond executed on October 20, 1960, by Chicago Heights Distributing Company as principal and St. Paul Mercury Insurance Company as surety.
While still under bond and in customs custody the merchandise was loaded on a bonded truck of a bonded cartman (an agent of the importer) on or about November 4, 1960, for delivery to the bonded warehouse of Chicago Heights Distributing Company, Chicago Heights, Ill.
On route to the bonded warehouse of Chicago Heights Distributing Company the merchandise was stolen from the truck while still in bond and in customs custody.
The merchandise was never delivered to the bonded warehouse and was never withdrawn from bond and was never delivered to the importer.
The bonded cartman paid the sum of $5,000 to the United States Government for failure to deliver the merchandise to the importer, said amount being the full penalty of the bond filed by said cartman.
The collector found that the theft occurred without connivance, collusion, or fraud on the part of the distiller, warehouseman, owner, consignor, consignee, bailee, or carrier, or the employees of any of them [collector of customs].
No duties or taxes have been collected except the sum of $5,000 paid by the cartman, which sum has been applied as follows:
Warehouse entry 7060, $916.91 in duties
Warehouse entry 6876, $1,576.44 in duties
Warehouse entry 6857, $306.10 in duties. And
warehouse entry 6857, the same one, $2,200.55 in taxes
No claim for relief from the tax has been filed with the collector of customs except two protests filed with the collector of customs, namely the instant protest and Protest 61/2070-12086 which has been abandoned.
On the question of negligence, testimony was adduced from two witnesses, namely, Bernard A. Meiners, assistant collector of customs at Chicago, and David Holden, president of Pick Up and Deliver, Inc., the bonded cartman in this case. Regarding an investigation conducted by the collector in the matter, Mr. Meiners stated:
A. There was an investigation in this case to determine the cartman's responsibility. And we determined that he was negligent. And we informed him so in a meeting we held in our office. And subsequently we made demand on his bond, and the customs agency service made a report which indicated negligence. We required no further proof. [R. 12.]
The witness also testified, among other things, that the collector required no claim for relief from the tax or submission of proof of loss to be filed because relief was sought under section 514 of the tariff act (protest), and that since the investigation clearly showed negligence on the part of the cartman and no one else, further inquiry would have been fruitless.
Mr. Holden testified that the goods were loaded on Veterans Day, a Friday, in November 1960, but were not delivered "because there was no customs inspector to refer it in the bonded warehouse"; that it "had to be left at the other dock over there until the following day to be delivered" to Chicago Heights Distributing Co.; that one of his drivers picked up the load which came into his premises some time between 4 and 6 o'clock in the afternoon; and that the trailer was locked and sealed.
The witness also testified that it and "I went back at one o'clock and it was gone"; that between a quarter to twelve and 1 o'clock he was at the Navy Pier where he went, as he recalled it, to pick up some papers for another bonded shipment. Mr. Holden stated that he did not leave the trailer unattended, but there was a guard there at all times, as he recalled it; that the guard was his father, who is no longer alive; that when he came back, the trailer was gone, it had been pulled away, even though this was in the middle of the day in broad daylight; and that the guard, his father, said he was not there at the time this was done, "He was getting himself a sandwich, he said."
It was brought out on further examination of the witness that the restaurant where the guard had gone to was about a block and a half away from the place where the trailer was parked; that customs, the F.B.I., and the Chicago police were notified of the theft; that a spray can was found near where the trailer had been; and that the trailer was not attached to a cart just prior to the theft, leading the witness to surmise that somebody or bodies had removed the numbers from the trailer with paint and removed the trailer with another tractor which could very quickly be attached to the trailer.
Concerning the witness' customary practices, it was brought out that he normally would not have such a valuable cargo as the involved merchandise on his premises, that, with respect to the involved merchandise, he took extra precautions by engaging a guard to watch it, and that he did not usually do this with general cargo which remained on the premises, generally leaving it to the railroad police who patroled the area, to watch it. According to the witness, the condition of the trailer was such that it was locked and sealed; that there was nothing about it to indicate that it was loaded with liquor; and that he knew of no thefts occurring in the area at that time.
Mr. Holden also testified that the merchandise was not delivered on Armistice Day because customs men do not work at the warehouse on holidays or weekends; that if Armistice Day was a Friday, he had to leave the truck on his premises Thursday night, Friday, Saturday, and Sunday; that he had to load the truck when customs told him to do so, which was late in the day; and that he was not aware that he could have requested the services of a customs man, but did not believe it was up to him to make such a request.
Mr. Meiners was recalled and testified that "If there had been a request we would have provided an officer on an overtime basis to receive the merchandise at Chicago Heights."
Plaintiff contends that on the evidence of record it is entitled to an abatement of duties and taxes assessed against the stolen merchandise, because the theft occurred without negligence on the part of the cartman, relying upon 19 U.S.C.A., section 1001, paragraph 813 (paragraph 813, Tariff Act of 1930), as amended, and 26 U.S.C.A., section 5011 (section 5011, Internal Revenue Code of 1954), in support of its contention. Defendant contends that there are no provisions of the customs or internal revenue laws authorizing abatement of duties and taxes as claimed by plaintiff, and that even if there were such laws, the negligence of the cartman, as disclosed in the evidence, precludes abatement as a matter of law.
We have examined the statutes cited by counsel in support of their respective contentions. It appears that no statutory provisions have been made for the abatement of duties for a theft of imported merchandise not occurring while the merchandise is in the appraiser's stores (see 19 U.S.C.A., section 1563). "Congress has not provided that the Government shall be an insurer of imported goods while in customs custody . . .," Mills &...
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