United States v. Falk Brother

• Decision Date: 07 January 1907
• Docket Number: No. 259,259
• Parties: UNITED STATES, Petitioner, v. G. FALK & BROTHER
• Court: U.S. Supreme Court

204 U.S. 143

27 S.Ct. 191

51 L.Ed. 411

UNITED STATES, Petitioner,

v G. FALK & BROTHER.

No. 259.

Argued December 4, 1906.

Decided January 7, 1907.

Assistant Attorney General McReynolds and Solicitor General Hoyt for petitioner.

[Argument of Counsel from page 143 intentionally omitted] Messrs. John G. Carlisle, Edward S. Hatch, J. Stuart Tompkins, and Hatch, Keener, & Clute for respondents.

[Argument of Counsel from Page 144 intentionally omitted] Mr. Justice McKenna delivered the opinion of the court:

This case involves the question whether, upon withdrawal of imports from a bonded warehouse, duties should be collected according to their weight then or upon their greater weight when entered and imported into the country, the loss having been occasioned by evaporation of moisture.

The merchandise in question was leaf tobacco imported into the port of New York, a part before and a part after July 24, 1897. It was entered under bond for warehousing without the payment of duty, and withdrawn from warehouse after the present tariff act went into effect, and was assessed by the collector for duty on the basis of weight at the time of its entry. The importers, Falk & Brother, protested and appealed from the decision of the collector to the board of general appraisers. The board affirmed the ruling of the collector on its opinion in Re Schmidt (G. A. 4214, T. D 19715). Falk & Brother then instituted proceedings for review before the circuit court for the southern district of New York, and that court sustained the decision of the board of appraisers. 145 Fed. 574. The circuit court of appeals reversed the circuit court. 146 Fed. 484.

The contention of the importers is that the merchandise is subject to duty under the provisions of Schedule F of the act of July 24, 1897, based upon weight at the time of withdrawal from bond for consumption, under the provisions of § 50 of the act of October 1, 1890. It is contended that the proviso of the latter act has not been repealed but is in full force and effect, and is applicable to merchandise entered in bond subsequent to the passage of the act of July 24, 1897. The board of appraisers held that the proviso of § 50 of the act of 1890 was repealed by § 33 of the act of 1897.

Those sections are, respectively, as follows:

'Sec. 50. That on and after the day when this act shall go into effect all goods, wares, and merchandise previously imported, for which no entry has been made, and all goods, wares, and merchandise previously entered without payment of duty and under bond for warehousing, transportation, or any other purpose, for which no permit of delivery to the importer or his agent has been issued, shall be subjected to no other duty upon the entry or the withdrawal thereof than if the same were imported, respectively, after that day: Provided, that any imported merchandise deposited in bond in any public or private bonded warehouse, having been so deposited prior to the first day of October, eighteen hundred and ninety, may be withdrawn for consumption at any time prior to February first, eighteen hundred and ninety-one, upon the payment of duties at the rates in force prior to the passage of this act: Provided, further, That, when duties are based upon the weight of merchandise deposited in any public or private bonded warehouse, said duties shall be levied and collected upon the weight of such merchandise at the time of its withdrawal.' 26 Stat. at L. 624, chap. 1244.

'Sec. 33. That on and after the day when this act shall go into effect all goods, wares, and merchandise previously imported, for which no entry has been made, and all goods, wares, and merchandise previously entered without payment of duty, and under bond for warehousing, transportation, or any other purpose, for which no permit of delivery to the importer or his agent has been issued, shall be subjected to the duties imposed by this act, and to no other duty, upon the entry or the withdrawal thereof: Provided, That, when duties are based upon the weight of merchandise deposited in any public or private bonded warehouse, said duties shall be levied and collected upon the weight of such merchandise at the time of its entry.' 30 Stat. at L. 213, chap. 11, U. S. Comp. Stat. 1901, p. 1701.

The circuit court held that those sections were not repugnant. The court said: 'Neither is general in its application, but is restricted to merchandise previously imported for which no entry has been made.' The court, however, sustained the decision of the board on the ground that § 2983 of the Revised Statutes (U. S. Comp. Stat. 1901, p. 1958) was applicable. That section is as follows: 'In no case shall there be any abatement of the duties or allowance for any injury, damage, deterioration, loss, or leakage sustained by any merchandise while deposited in any public or private bonded warehouse.'

The importers denied the application of that section, and contended that under the law, and particularly under § 20 of the customs administrative act of June 10, as amended December 15, 1902 (presently to be stated), they were authorized to withdraw the merchandise from warehouse upon the payment of duties and charges based upon its weight at the time of withdrawal. The court ruled against the contention, and said: 'It seems too plain for discussion that the word 'loss' [referring to § 2983], coupled as it is in the disjunctive with 'leakage,' applies precisely to such a case as the one before us. I cannot find any sound reason for believing that the Congress did not have § 2983 in mind when it enacted said §20, as amended. It is obvious that § 20, especially as amended, refers exclusively to rate rather than weight.' The circuit court of appeals differed from the circuit court in the application of § 2983. It held that the loss there provided for related solely to the loss of merchandise subject to duty, and such loss had not occurred. The court further held that the other terms of the section referred to actual reduction in the value or quantity of the merchandise itself. 'It is clear,' it was said, 'that evaporation of moisture is not 'loss' . . . sustained by . . . merchandise.' The case of Seeberger v. Wright & L. Oil & Lead Mfg. Co. 157 U. S. 183, 39 L. ed. 665, 15 Sup. Ct. Rep. 583, was referred to as analogous. The court also disagreed with the construction of the circuit court of § 20 of the customs administrative act, and held that by virtue of the proviso added to that section December 15, 1902 (stated later), duties should have been assessed according to the weight of the tobacco at the time of its withdrawal.

This history of the case exhibits the contentions of the parties and the elements of the contentions, and, it will be seen, the case is one of statutory construction.

First, as to Seeberger v. Wright & L. Oil & Lead Mfg. Co. supra, which is urged as controlling. The importation there was flaxseed. The proof showed that the seed contained dust composed of clay, sand, and gravel to an average of 4 per cent. The case turned upon the meaning of the word 'draught' in § 2898 of the Revised Statutes (U. S. Comp. Stat. 1901, p. 1919). It was assumed that the word did not apply to impurities, and it was said that the lower court was correct in assuming that the flaxseed in question which was made dutiable, under the act of 1883 [22 Stat at L. 513, chap. 121], at 20 cents per bushel of 56 pounds, less tare, meant 56 pounds of clean seed, or, at least, seed free from any impurities, such as the clay, sand, and gravel in question.

The moisture which the tobacco in the case at bar absorbed cannot be said to be an impurity within the meaning of that decision, even though moisture in tobacco is a variable quantity and its amount can be estimated by weighing the tobacco at different times. Nor can it be considered as an independent, nontaxable substance, even though, as conceded in this case, it was absorbed on the ocean voyage. The statutes contemplate and apply to merchandise which may change in weight, and if the moisture in the tobacco in this case can be regarded as an independent substance,—so much 'sea water,' to use counsel's graphic phrase,—a question of the application of §§ 50 or 33 could not arise. One or other of those sections was considered applicable from the beginning, and the importations regarded as controlled by it, as merchandise subject to duty by...