# Muser v. Magone

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United States Supreme Court
155 U.S. 240
Muser v. Magone
This was an action brought by Frederick W. Muser, Richard Muser, and Curt Muser, composing the firm of Muser Bros., against the collector of the port of New York, to recover duties alleged to have been illegally exacted of them on certain importations of cotton embroideries, manufactured at St. Gall, Switzerland, where they had a branch house. Their course of business there was as follows: The cloth on which the embroideries were stitched was purchased in the gray state by plaintiffs at Manchester, and received in their warehouse in St. Gall. It was then sent out to various parties at St. Gall who had stitching machines, and stitched the goods according to patterns or designs furnished by plaintiffs, which designs had either been purchased by them in Paris or made in their St. Gall establishment by designers employed by them. The goods, when stitched, were returned to the warehouse, and, having been examined by plaintiffs' employees to see if they were properly done, were sent out again to a bleacher to be bleached. When bleached, they were brought back, re-examined, cut into strips of suitable size for the American market, ticketed, boxed, and shipped. To carry on this business in St. Gall, plaintiffs rented a building, employed a staff of assistants, paid insurance, and kept a certain amount of capital invested.
Finished embroideries were not kept in stock for sale at St. Gall in 1887, the date of these importations. The goods were usually ordered from samples submitted by the manufacturers or by so-called 'commissionnaires.' The commissionnaires, as a rule, submitted samples to the purchasers, bought the cloth, and turned it over to the manufacturer to make up. Their charge for their own services, according to plaintiffs, was 3 per cent., besides all expenses. According to other testimony, the commissionnaire would require an advance of the necessary capital to do the trade with, and also all the cash discounts, amounting to another 3 per cent. If he were asked to employ his own capital and make his own designs, his charge would vary. It might be less than 10 per cent., or it might be more, but 10 per cent. would not be any more than a fair profit. It was within the knowledge of one of the merchant appraisers that one of the largest manufacturers in St. Gall was coming to New York to do business for 10 per cent. profit.
Plaintiffs' goods were invoiced at their actual gross cost, omitting any cash discount, any charge for designing, any interest and risk on capital, any allowance for salaries or other office expenses at St. Gall. They added 3 per cent. to the invoice price, 'to make market value'; but they claimed upon the trial that this addition was not voluntary, but was made to avoid the advance of duty provided by statute in cases where the appraised value exceeds the entered value by 10 per cent. This 3 per cent. was not more than enough to cover the expense of designing alone, and interest and risk on capital was sometimes itself rated at 8 per cent.
It appeared that, for many years prior to 1887, St. Gall embroideries had been appraised in the same way as in that year; but, the question of undervaluation being raised, they had been advanced from 10 to 40 per cent. In the fall of 1885 the treasury department appointed a commission to investigate the matter, which met at the public stores in New York City. Merchants interested in the cotton embroidery trade also had a meeting, arrived at certain recommendations, and appointed a committee to present them to the commission and see them carried out. A member of Muser Bros. was one of this committee. The conviction was expressed in the resolutions of the meeting that the counting of the stitches was 'the only proper way for arriving at a correct valuation of cotton embroideries, Oriental and Egyptian laces'; and 'that it be recommended that the appraiser, in appraising cotton embroideries, Oriental and Egyptian laces, should appraise them by counting the stitches and valuing them at the rate at which they are quoted by the U.S. consul on the day of shipment, adding to this the cost of the cloth, and adding to this ten per cent., to be called manufacturer's profit, then the cost of bleaching, finishing, and putting up.' Subsequently, and after conference with the general appraiser and the commission, the committee agreed that the 10 per cent. should 'be added to the cost of the goods in a finished condition, including the cost of the bleaching, finishing, and putting up.' It was also recommended that 'the minimum rates for stitching adopted by the manufacturers' union at St. Gall should be the basis of the appraisement; but, if the price of the stitching should be advanced, the invoice should be in accordance therewith.' One of the plaintiffs signed the committee's communication to the commission and the subsequent agreement, but on the same day sent to the commission a written protest, stating that he doubted the authority for the exaction of the 10 per cent. on the cost of the price for cloth and stitching, but had no doubt at all as to the illegality of the exaction on the charges incurred for bleaching and finishing.
As to one of the importations in question here, an advance of 7 per cent. was made by direction of the merchant appraiser, but the reason therefor did not appear, and no reappraisement was called for or had. As to the other importations the appraiser raised the entered value about 9 per cent. The plaintiffs demanded a reappraisement, upon which the merchant appraiser in one case approved the entry. In the other cases the merchant appraisers recommended an advance of 6 per cent. The general appraiser made the advance about 10 per cent., and the collector decided in favor of the general appraiser.
Plaintiffs protested 'against the standard of value adopted by the appraising officers, and of their appraised value as returned by them and approved by' the collector, upon various grounds, in substance: Because the standard dutiable value of the merchandise established by the collector included, 'besides the actual market value or wholesale price, commissions and charges nondutiable under section 7, Act March 3, 1883'; because the goods should have been appraised at their actual market value or wholesale price in the gray, adding to such value the cost for laundrying and finishing them, and no more, as provided by section 2906 of the Revised Statutes and section 7 of the act of March 3, 1883, whereas there had been illegally included 'a further amount to cover the incidental charges incurred in the purchase and preparation of said goods for shipment, such charges or incidental expenses being for designs furnished the manufacturer, salary of the buyer, and clerk hire, rent of buyer's office, and rooms for putting up and packing for shipment, interest on money credits for the purchase of the goods and for a profit or commission in excess of such aggregate cost, or one or more of such charges,' which charges or items of costs were nondutiable under section 7; because the goods were dutiable 'at no more than the cost or value of the materials composing such merchandise, together with the expense of manufacturing, preparing, and putting up such merchandise for shipment, as provided in section 9, Act March 3, 1883'; 'that the standard marketable condition of embroideries is in the gray; that the wholesale current market prices for regular goods bought in the regular manner is usually quoted in the gray, according to the number of stitches contained in a given pattern; such price, plus the market value of the muslin upon which the stitching is done, constitutes their marketable value in their wholesale marketable condition; to this value is to be added the expenses for laundrying and finishing, to make dutiable value under existing laws, and no more.'
By section 2902 of the Revised Statutes, it was made 'the duty of the appraisers of the United States, * * * by all reasonable ways and means, * * * to ascertain, estimate, and appraise the true and actual market value and wholesale price * * * of merchandise, at the time of exportation, and in the principal markets of the country whence the same has been imported into the United States'; and, by section 2904, the day of actual shipment is made the day as of which the duty is to be estimated.
Section 2906 provided:
'When an ad valorem rate of duty is imposed on any imported merchandise, or when the duty imposed shall be regulated by, or directed to be estimated or based upon, the value of the square yard, or of any specified quantity or parcel of such merchandise, the collector * * * shall cause the actual market value, or wholesale price thereof, at the period of the exportation to the United States, in the principal markets of the country from which the same has been imported, to be appraised, and such appraised value shall be considered the value upon which duty shall be assessed.'
By section 2907, in determining the dutiable value, there was to be added to the market value 'the cost of transportation, shipment, and trans-shipment, with all the expenses included, from the place of * * * manufacture * * * to the vessel in which shipment is made to the United States; the value of the sack, box, or covering of any kind in which such merchandise is contained; commission at the usual rates, but in no case less than two and a half per centum; and brokerage export duty, and all other actual or usual charges for putting up, preparing, and packing for transportation or shipment. All charges of a general character incurred in the purchase of a general invoice shall be distributed pro rata among all parts of such invoice.'
Section 2908 provided that all additions made to the entered value of merchandise for charges should be regarded as part of the actual value of such merchandise, and, if such addition exceeded by 10 per cent. the value declared, in addition to the duties, 20 per cent. duty should be collected.
Section 2930 read thus:
'If the importer, owner, agent, or consignee, of any merchandise shall be dissatisfied with the appraisement, and shall have complied with the foregoing requisitions, he may forth with give notice to the collector, in writing, of such dissatisfaction; on the receipt of which the collector shall select one discreet and experienced merchant to be associated with one of the general appraisers wherever practicable, or two discreet and experienced merchants, citizens of the United States, familiar with the character and value of the goods in question, to examine and appraise the same, agreeably to the foregoing provisions; and if they shall disagree, the collector shall decide between them; and the appraisement thus determined shall be final and be deemed to be the true value, and the duties shall be levied thereon accordingly.' Sections 2907 and 2908 were repealed by the seventh section of the act of March 3, 18803, which further declared:
'And hereafter none of the charges imposed by said section or any other provisions of existing law shall be estimated in ascertaining the value of goods to be imported, nor shall the value of the usual and necessary sacks, crates, boxes, or covering, of any kind be estimated as part of their value in determining the amount of duties for which they are liable.' 22 Stat. 523, c. 121, § 7.
The ninth section of this act was as follows:
'Sec. 9. If upon the appraisal of imported goods, wares, and merchandise, it shall appear that the true and actual market value and wholesale price thereof, as provided by law, cannot be ascertained to the satisfaction of the appraiser, whether because such goods, wares, and merchandise be consigned for sale by the manufacturer abroad to his agent in the United States, or for any other reason, it shall then be lawful to appraise the same by ascertaining the cost or value of the materials composing such merchandise, at the time and place of manufacture, together with the expense of manufacturing, preparing, and putting up such merchandise for shipment, and in no case shall the value of such goods, wares, and merchandise be appraised at less than the total cost or value thus ascertained.' 22 Stat. 525.
The action was tried before Judge Lacombe and a jury, and a verdict directed in favor of the collector. Judgment having been entered upon the verdict given in accordance with such direction, this writ of error was sued out. The opinion of the circuit judge is reported in 41 Fed. 879.
Edwin B. Smith and Charles Curie, for plaintiffs in error.
Asst. Atty. Gen. Whitney, for defendant in error.
Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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