Cottman Co. v. Dailey

• Citation: 20 F. Supp. 142
• Decision Date: 19 July 1937
• Docket Number: No. 2476.,2476.
• Parties: COTTMAN CO. et al. v. DAILEY.
• Court: U.S. District Court — District of Maryland

20 F. Supp. 142

COTTMAN CO. et al. v. DAILEY.

No. 2476.

District Court, D. Maryland.

July 19, 1937.

Marbury, Gosnell & Williams, Wm. L. Marbury, Jr., and Roszel C. Thomsen, all of Baltimore, Md., and J. Stuart Tompkins, of New York City, for complainants.

Joseph R. Jackson, Asst. Atty. Gen., Daniel I. Auster, Sp. Atty., of New York City, and Bernard J. Flynn, U. S. Atty., and C. Ross McKenrick, Asst. U. S. Atty., both of Baltimore, Md., for defendant.

CHESNUT, District Judge.

The subject-matter of this suit relates to the administration of the customs laws of the United States, and arises particularly under the Act of May 27, 1921, c. 14, § 201-212, 406, 407, 42 Stat. 11, known as the "Antidumping Statute." (U.S.C.A. title 19, §§ 160 to 173.) The principal object of the suit is to enjoin the defendant Collector of Customs from liquidating an entry at the Port of Baltimore of certain merchandise, and assessing thereon a special customs duty under that statute. A motion has been made to dismiss the bill of complaint which sets out the following situation, in substance.

The plaintiffs in 1927 and 1928 imported at the Port of Baltimore several cargoes of phosphate rock from Morocco. That merchandise was under the then applicable Tariff Act of 1922 generally free of duty but, acting under the authority of the Antidumping Act, the Secretary of the Treasury made the finding and announcement that "dumping" was likely to occur with respect to this commodity (U.S.C.A. title 19, § 160); and thereupon the local appraiser attached to the Collector's office appraised the goods on the basis of their "foreign market value," at a sum substantially higher than the purchase price paid by the importers. It is provided by the statute that in such an event a special duty must be paid "in an amount equal to such difference" (U.S.C.A. title 19, § 161). The total amount here involved on that basis is said to be approximately $60,000. The plaintiffs took exception to the determination of the foreign market value as so fixed by the appraiser (ex parte and without hearing), and exercised their right of an "appeal for reappraisement," authorized by the statute. (U.S.C.A. title 19, § 169). Such an appeal by the customary procedure goes to the United States Customs Court which, before 1926 (Act May 28, 1926, § 1, 44 Stat. 669), was known as the Board of General Appraisers, where there is a trial de novo, and by the statute then in force it was made the duty of that court to "ascertain and return the value of the merchandise." (U.S.C.A. title 19, § 381).

Thereupon there began a very long litigation in the Customs Court and the Court of Customs and Patent Appeals, which included three separate consecutive appeals from the trial judge in the Customs Court to the 3rd Appellate Division, consisting of three judges of said court, with three further appeals to the Court of Customs and Patent Appeals. The opinions of the latter court are reported in U. S. v. Cottmann & Co., 18 C.C.P.A. (Customs) 132, Cottman & Co. v. U. S., 20 C.C.P.A. (Customs) 344, and U. S. v. Cottman & Co., 23 C.C.P.A. (Customs) 378; Id. (1936) 69 Treas. Dec. p. 779, No. 48292. During the course of the litigation the Supreme Court has twice refused certiorari as to judgments of the Court of Customs and Patent Appeals. Cottman & Co. v. United States, 289 U.S. 750, 53 S.Ct. 695, 77 L.Ed. 1495, and Id., 299 U.S. 566, 57 S.Ct. 27, 81 L.Ed. 416. The final result was that the appeals for reappraisement were dismissed without determination of value by the Customs Court, with the effect (as contended by defendant's counsel) of reinstating the figure for foreign market value fixed by the appraiser.

In accordance with the usual customs procedure the next administrative step to be taken will be the so-called liquidation of the entry by the Collector of the Port. This is said to be a merely mathematical computation of the amount of the duty based on the difference between the purchase price and the foreign market value as found by the appraiser; and in effect is an assessment of duties on that basis. The object of the plaintiffs' bill in equity in this case is to obtain an injunction against the act of liquidation (or assessment) by the Collector. It is to be further noted however, that the act of liquidation by the Collector is not final because the customs administrative law further provides that the importer, after liquidation, may pay the assessed duites under protest and further litigate the legality of the assessment by proceedings before the Customs Court, with further appeal if necessary or desired to the Court of Customs and Patent Appeals (U.C.S.A. title 19, §§ 398, 399). But the plaintiffs say that after the act of liquidation in this case they will be seriously embarrassed and prejudiced in their further opposition to the threatened assessment because payment of the duty by the Cottman estate would render it insolvent, and in addition thereto, they fear that the liquidation of itself will have such characteristics of finality with respect to the most important feature of the whole controversy, that their defenses thereafter will be seriously impaired.

The principal complaint alleged in the bill in this case is that the litigation in the Customs Courts has erroneously resulted in the dismissal of the appeal for reappraisement, when the result should have been the setting aside of the appraiser's valuation and the determination by the Customs Court that the Antidumping Act was not applicable to the importation, because the proof showed that there was no foreign market value, and no possibility of showing the "cost of production" as an alternative, within the provisions of the statute. How the result of the litigation was reached will appear from the reported opinions of the several judges of the Court of Customs and Patent Appeals, and is also recited in the bill of complaint. The plaintiffs contend that it appears from the opinions of the Court that the proof in the Customs Court showed there was and could be no foreign market value because the exporter was a government monopoly and there were no free sales, and also that it was impossible to show the necessary elements under the Antidumping statute of cost of production as an alternative to market value. And it is said that as the appeal was from the appraiser's finding of a market value, which could not have existed, and as the appraiser did not base his valuation on cost of production, and as the statute required the Customs Court to determine the value de novo, it was erroneous to dismiss the appeal with the effect of validating an appraisal of foreign market value which the court had found to be without justification. The legal proposition that the plaintiffs deduce from this contention is that they have exhausted their administrative remedies without avail, and have no other or further adequate remedy at law, and therefore invoke the aid of this court of equity in defense of a threatened invalid customs assessment, and in protection of their legal property rights, as a case arising under the Constitution and laws of the United States, jurisdiction of which they say is given by the United States Code, title 28 § 41(1), 28 U.S.C.A. § 41(1). Some color is given to the alleged hardship of the plaintiffs' case, as outlined in the bill of complaint, by the admission made by counsel for the defendant that the appraisal as determined by the appraiser was erroneous, though it is claimed that it was not void. See Rosenthal Co. v. United States, 24 F.(2d) 351 (C.C.A.2).

The prayers of the bill, in addition to (1) the request for an injunction against liquidation of the entry by the Collector, are also for rulings that (2) the Antidumping statute is unconstitutional; (3) that the Secretary of the Treasury was not warranted by the statute in his proclamation or finding that "dumping" of phosphate rock was likely to occur; (4) that the appraisal herein referred to was not justifiable, and is void, and no dumping duties can lawfully be assessed on the basis thereof; or in the alternative, (5) that the Collector be directed to liquidate the entries upon the basis of the original entered values, without levying or assessing any dumping duties.

Upon filing of the suit and after notice to the United States Attorney as counsel for the defendant Collector, a restraining order was issued without contest at the time because the subject-matter being of an unusual nature, the parties desired time to study the case before a hearing. Thereafter, as soon as requested, the court assigned the case for argument upon the defendant's subsequently interposed motion to dissolve the restraining order and to dismiss the bill for lack of jurisdiction and for want of equity on the facts stated. The case having been fully orally argued and extended briefs filed by both parties, it has now been studied, and I have reached the conclusion that the bill must be dismissed for want of jurisdiction in this court. As the motion to dismiss admits the facts stated in the bill, they must be taken as the finding of facts required by general Equity Rule 70½, 28 U.S.C.A. following section 723, and it seems unnecessary to fully repeat them here. But as the case must be dismissed for want of jurisdiction, I have briefly outlined such of the facts stated in the bill as have special relation to the question of jurisdiction, sufficiently to explain by the subsequent discussion the grounds for the conclusion reached.

Assuming that the plaintiffs' case, as stated in the bill of complaint, presents a case of seeming hardship, it is nevertheless obvious that this court cannot interfere in the existing situation if it does not have jurisdiction of the subject matter. And a reference to the applicable federal statutes will show that the jurisdiction does not exist in this case. It would probably be too broad a statement that the district court has no jurisdiction at...