Pistorino & Co. v. Style Leather Co.

Citation361 Mass. 464,280 N.E.2d 676
CourtUnited States State Supreme Judicial Court of Massachusetts
Decision Date23 March 1972
PartiesPISTORINO & COMPANY, Inc. v. STYLE LEATHER CO., Inc.

George Karelitz, Haverhill, for defendant.

Philip R. Shea, Boston, for plaintiff.

Before CUTTER, SPIEGEL, REARDON, QUIRICO and HENNESSEY, JJ.

CUTTER, Justice.

The plaintiff (Pistorino), a licensed customhouse broker in Boston, seeks declaratory relief concerning its right to reimbursement by the defendant (Style), a leather importer in Haverhill, for about $35,000 of additional import duties owed on Style's account (and liquidated by Pistorino after the initiation of this suit) on goods brought into the United States by Style. 1 A Superior Court judge overruled Style's demurrer and, after hearing, caused a final decree to be entered, declaring that Style must pay to Pistorino $35,169.86 with interest. Style appealed. The facts are stated largely on the basis of the judge's voluntary findings. The evidence is reported.

Louis Shafmaster was treasurer of Style and 'in operational control' of that company. Prior to July 8, 1968, he purchased in West Germany three sample rolls of a synthetic fabric (loosely referred to as imitation leather) for use for lining shoes. These were exported to the United States. T. D. Downing Company was employed as customhouse broker. The duty stated on the 'Informal Entry' papers 2 was nine per cent.

On July 26, 1968, Shafmaster bought for Style a bulk quantity of the same merchandise for an invoice cost of $58,169.94. This material arrived in New York about August 17. On August 19, Style sent the shipping documents to Pistorino. A sample of the material was sent by Pistorino to the Boston Customs House by messenger with a note requesting that the rate of duty be determined. A handwritten reply was received (initialed by a Customs import specialist, Albert Van Bibber) referring to tariff schedule § 355.81 and a rate of eleven per cent.

On August 27, Pistorino sent to Style an invoice covering 'estimated duty only' containing two items: a duty deposit of $6,398.59 for '2587 rolls (of) leather' and 'Oceanfreight $2208.75,' representing a 'cash outlay' by Pistorino. On August 29 or 30, Pistorino made entry of the goods and was reimbursed by Style for the duty. On August 31, Pistorino sent a final invoice to Style, in which, next to the item 'Duty,' appeared in red print, '(Subject to correction by customs).'

On January 21, 1969, the Boston District Director of Customs notified Pistorino and Style of an increase in duty of about $35,000 because of a reclassification from tariff schedule § 355.81 at eleven per cent to § 359.50 at twenty-five cents a pound puls thirty per cent ad valorem. On May 9, 1969, the additional duty was liquidated by customs at $35,169.86. Pistorino had notified Style of its right to 'protest' the increase. Style failed to file any protest or to avail itself of Pistorino's offer to be of assistance.

Frederick Koerner, Pistorino's executive vice-president, testified that Pistorino obtains a binding declaration 'in case a client wants to determine how much the duty . . . (will) be on merchandise which he intends to buy and import.' This, he said, would be done 'in case the merchandise has not arrived yet' by sending 'a sample to Washington and ask(ing) for a decision . . . prior to buying the merchandise.' He also testified that Pistorino first 'received the documents' from Style on August 20, 1968, which was the first word Pistorino had of this transaction. No binding declaration was sought, he said (in an answer to an interrogatory) because there 'was not sufficient time to obtain . . . (one) and . . . (Style) did not request one.' 3

The trial judge made also the following findings and reached the conclusions mentioned below. The merchandise was bought on July 26, 1968, and shipped about August 6. Style first communicated with Pistorino on August 19. Shafmaster and Koerner had no conversations before January 22, 1969. If Style 'relied on anyone before it made the . . . purchase on July 26 . . . it relied on the duty stated on the papers when it employed T. D. Downing Company as its customs broker' in connection with entry of the samples. Pistorino 'acted with due diligence and reasonableness as a customs broker in full conformity with applicable' customs regulations. 'Shafmaster was a man of considerable experience as an importer of leather and allied products.' From this the judge concluded that he was 'familiar with the opportunity available to an importer to obtain . . . a binding determination of duty.'

The judge ruled that Pistorino, on the facts found, had no duty (as Koerner in fact testified, in effect as an expert on customs practice) to advise Style about the binding determination procedure. He also ruled that Pistorino was entitled to be exonerated for the additional customs duty ($35,169.86) for which it became liable (see fn. 1, supra).

1. The demurrer was correctly overruled. There was clearly a controversy about Style's obligation to reimburse Pistorino for the additional duty. Pistorino, as the customhouse broker and importer of record, became liable for the additional duty in the first instance. It is immaterial that the duty was not liquidated by the customs authorities until May 9, 1969, after this suit was commenced (on May 6, 1969). General Laws c. 231A has long been construed broadly as to the existence of a controversy. See School Comm. of Cambridge v. Superintendent of Schs. of Cambridge, 320 Mass. 516, 518, 70 N.E.2d 298; BILLINGS V. FOWLER, MASS., 279 N.E.2D 906.A See also Nissenberg v. Felleman, 339 Mass. 717, 720--722, 162 N.E.2d 304.

Pistorino was not obliged to postpone its request for declaratory relief until termination of administrative and review proceedings before the customs authorities and the United States Customs Court to protest the increased duty. Style refused or failed to initiate such proceedings. It also did not request Pistorino to initiate a protest in its behalf. See 19 C.F.R. (1968) § 31.10(d) forbidding a customhouse broker to represent any person in an appeal or protest 'unless he shall previously have been . . . authorized to do so.' See also Altieri v. United States, 55 C.C.P.A. 104, 106.

The present proceeding does not involve the correctness of the customs duty in fact imposed and thus there is no question of invasion of any exclusive jurisdiction of the United States Customs Court or of the Court of Customs and Patent Appeals. See 28 U.S.C. §§ 1541, 1582, 1583 (1970). Cf. Batista v. Nicolls, 213 F.2d 20, 21--22 (1st Cir.), where declaratory relief was prematurely sought concerning the precise subject matter about which further administrative relief was available. The jurisdiction of this court and of the Suprior Court to afford declaratory relief is not affected by the circumstance that it may be necessary incidentally to consider questions affecting the duties of customhouse brokers under the Federal customs laws. See Union Brokerage Co. v. Jensen, 322 U.S. 202, 204--206, 64 S.Ct. 967, 88 L.Ed. 1227; F. W. Myers & Co. v. Piche, 109 N.H. 357, 359, 252 A.2d 427.

2. The judge's subsidiary findings are justified by the reported evidence, much of it oral, including the testimony of Shafmaster and Koerner. The findings cannot be said to be plainly wrong. See Hurley v. Hobbs, Mass., 277 N.E.2d 125. b

The finding, most dependent on inference, is that Shafmaster was 'familiar with the opportunity available to an importer to obtain . . . a binding determination of duty.' This was supported by evidence that Shafmaster had been dealing with the German shipper of the merchandise for eighteen to twenty years, that he had been engaged in importing leather and spent much time in Europe on the importing business; that the samples were imported through T. D. Downing Company 'for the purpose of determining the customs duty that would be employed in merchandise of this type in the future'; and that he had seen the United States Customs 'informal' entry form, used by T. D. Downing Company, at least as early as a pre-trial deposition taken eight months before trial in October, 1970. This 'informal' entry form (see fn. 2, supra) contained a reference to the 'binding determination' procedure. The judge was not required to believe, and obviously did not believe, Shafmaster's denial of knowledge of the opportunity of obtaining a binding declaration. Although we think this inferential finding permissible we deal with the case without relying on it.

3. On the merits, Style's principal contention is that Pistorino 'had a duty to advise . . . (Style) of the availability of a procedure for obtaining a binding determination of duty from the . . . Bureau of Customs.' Style, however, points to no regulation specifically imposing such a duty. There was general evidence about the duties and function of a licensed customhouse broker. See 19 C.F.R. (1968) §§ 31.1--31.14. 4 The obligations imposed on brokers by the regulations 5 do not appear rto be more onerous than the duty to use due diligence and good faith. 6

Wholly apart from the judge's finding (discussed in part 2 of this opinion) that Shafmaster knew about the 'binding determination' procedure, the judge was not required by the evidence to conclude that there was any lack of due diligence or good faith in Pistorino's failure to advise Shafmaster about the procedure. The evidence does not suggest that Style informed Pistorino of any special uncertainty concerning the merchandise or its composition. Pistorino also is not shown to have had knowledge of the earlier sample shipment (which carried a nine per cent rate rather than the eleven per cent rate originally estimated on the bulk shipment)....

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3 cases
  • Langton v. Secretary of Public Safety
    • United States
    • Appeals Court of Massachusetts
    • July 11, 1994
    ...the fact that G.L. c. 231A "has long been construed broadly as to the existence of a controversy," Pistorino & Co. v. Style Leather Co., 361 Mass. 464, 468, 280 N.E.2d 676 (1972), "controversy in the abstract is not sufficient to allow a plaintiff to invoke the declaratory judgment remedy."......
  • Lagasse v. Lagasse
    • United States
    • Appeals Court of Massachusetts
    • June 26, 1985
    ...(1960). In event of doubt, G.L. c. 231A is to be construed broadly as to the existence of a controversy. Pistorino & Co. v. Style Leather Co., 361 Mass. 464, 468, 280 N.E.2d 676 (1972). 2. The license to sell. As a postscript to his allowance of the license to sell, the judge, a month after......
  • Command Communications v. Fritz Cos., No. 00CA1209.
    • United States
    • Colorado Court of Appeals
    • September 27, 2001
    ...533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). We find additional support for our determination in Pistorino & Co. v. Style Leather Co., 361 Mass. 464, 280 N.E.2d 676 (1972). There, an importer contended that its customs broker had a fiduciary duty to seek or to advise the importer t......

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