Court Opinion

ID: 6822155
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:08:52.249952+00
Date Added: 2024-06-11T08:45:32.322862
License: Public Domain

Garrett, Chief Judge,
dissenting.
I disagree with the holding of the majority reading:
* * * that the term “appraiser’s report” as used in both Article 316 of the Customs Regulations of 1937 and the Term Consumption Entry Bond filed by appellee should be construed as meaning the report of the appraiser to the collector giving the appraiser’s decision on the appraised value of the merchandise, and no other communication from the appraiser to the collector will suffice,
I prefer to state my views in an order somewhat different from that followed in the majority decision.
The legal questions involved in the two protests are identical, and my views will be summarized in connection with Protest 160662-K/ 39650, Entry No. D. E. 9653, dated June 19, 1940.
*75On that date a consumption entry of merchandise imported from China, described on the entry paper as “3 Bales contg. Cotton Lace Articles,” was made at Los Angeles, California by W. X. Huber Co., Customs Broker 1 for, or on account of Paul S. Lin & Company. On the back of the entry paper there appears a “Declaration of Nominal Consignee or Agent,” signed by an attorney-in-fact for Huber and notarized, in which it is stated that Paul S. Lin & Company “is the actual owner for customs purposes of the said merchandise.” This is stamped as being filed in the Customs House in Los Angeles, June 24, 1940, at 2:05 p. m.
There is also of record an official paper stamped as being filed July 3, 1940, at 4:22 p. m., entitled “Declaration of owner for merchandise obtained in pursuance of a purchase or agreement to purchase,” which declares Paul S. Lin & Co. to be the actual owner for customs purposes of the merchandise, etc. It is signed by a Mr. Lee, stated to be a member of the owner’s firm.
Huber testified that at the time of entry he gave bond for the production of an owner’s declaration and that he caused the document signed by Lee to be filed with the collector.
So, obviously, there was compliance with the provisions of paragraph (d) of section 485 of the 1930 Tariff Act which reads as follows:
(d) A consignee shall not be liable for any additional or increased duties if (1) he declares at the time of entry that he is not the actual owner of the merchandise, (2) he furnishes the name and address of such owner, and (3) within ninety days from the date of entry he produces a declaration of such owner conditioned that he will pay all additional and increased duties, under such regulations as the Secretary of the Treasury may prescribe. Such owner shall possess all the rights of a consignee.
It is understood that estimated customs duty (I presmne at the rate of 90 % ad valorem on the invoice price under paragraph 1529 of the 1930 Tariff Act) was paid without any appraisement of value or any finding of other requisite factors having been made — a very common practice. Whether in this instance the payment was made by the owner, Lin & Co., or by the broker, Huber, is not stated.
On July 9, 1940, fifteen days after the entry, the appraiser transmitted to the collector a statement on an official, printed customs form, No. 6523, then in use,2 which was introduced in evidence as appellee’s collective Exhibit 2. It reads:
*76notice of withheld appbaisement (Value)
United States Customs Service

Los Angeles, July 9, 1940,

Collector of Customs:

Appraisement is being withheld pending investigation as to value on the following importation of Chinese Tuscany Lace Articles De 9653, 6-19-40, China.
It is estimated that the maximum advance in dutiable value of this importation will amount to 50 %.
Remarks: Pending report of Foreign Investigation.
(Completed Jan. 28, 1942)
G. R. Gtjlicic,
Per CDG, Appraiser of Merchandise.
Since there is no question as to the notice having been transmitted to the collector on July 9, 1940, it is obvious that the notation “(completed Jan. 28, 1942)” just above the signature of the appraiser was added to the paper after the appraisement had been completed.
The completed appraisement of value was indicated by red ink notations on the entry paper and a summary of it, dated Jan. 28, 1942, is held by the majority to be the “ ‘appraiser’s report’ as used in both Article 316 of the Customs Regulations of 1937 and the Term Consumption Entry Bond filed by appellee.”
For reasons hereinafter stated, it is my opinion that the statement transmitted to the collector by the appraiser on July 9, 1940, itself constitutes an appraiser’s report that falls clearly within the purview of the statutes and regulations, and that it is the critical report here applicable.
The merchandise was released from the custody of the appraiser July 10, 1940, the day following the appraiser’s notice, upon the following statement signed by the collector:
Importer, Paul S. Lin Co. W. X. Huber, Broker.
This notice must be presented at the Entry Division, Customhouse, to secure authority for release of the packages in the Appraiser’s Stores. Appraiser:
Satisfactory security having been furnished by the importer, you may release the packages in your custody if all other requirements have been met.

Collector of customs,

By F. W. Schoeppe.

JullO, 1940.

The collector on that date had notice from the “Declaration of Owner” filed July 3, 1940, that Paul S. Lin & Co. was the owner of the merchandise and the actual party in interest, and that the broker, who was a nominal consignee, upon filing the owner’s declaration (which, so far as the record shows, was in the usual and proper form and was approved) was released from liability for any additional or increased duties that might be found to be due by reason of section 489 of the Tariff Act of 1930.
*77Seemingly, however, no bond was required of Paul S. Lin & Co., and the collector, apparently treating the broker as the importer, relied .upon a “Term Consumption Entry Bond” executed by the broker with United States Fidelity and Guaranty Company, as security.
The bond so relied upon (omitting signatures) read:
No. 282
UNITED STATES CUSTOM SERVICE
Term Consumption Entry Bond
(To redeliver merchandise, to produce documents, and to perform conditions of release, such as to label, hold for inspection, set-up, etc. To be taken in all cases when release is requested prior to inspection, examination, or liquidation).
Know all men by these presents, That W. X. Huber Company (a fictitious name owned by W. X. Huber) of 124 W. 4th St., Los Angeles, Calif., as principal, and United States Fidelity and Guaranty Co., Ill W. 7th St., Los Angeles, and (a Maryland corporation), of Calif, as sureties, are held and firmly bound unto the United States of America in the sum of Ten Thousand dollars ($10,000.00), for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents.
Witness our hands and seals this 12th day of July, 1939.
Whereas, the said principal expects to enter certain imported articles at the port of Los Angeles within a period of one year from July 12, 1939 to and including July 11, 1940 and desires release of all or part of the articles prior to ascertainment by customs officers of the quantity and value thereof, and of the full amount of duties and charges due thereon, and prior to the decision by the proper officer as to the right of said articles to admission into the United States:
Now, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, That —
(1) If the above-bounden principal shall redeliver or cause to be redelivered to the order of the Collector of Customs, when demanded by such collector (the said demand to be made not later than twenty (20) days after the appraiser’s report), such of the merchandise as was not sent to the public stores, and also shall redeliver to the collector, on demand by him, in accordance with law and regulations in effect on the date of the release of said articles, any and all merchandise found not to comply with the law and regulations governing its admission into the commerce of the United States, and if the said principal shall mark, label, clean, fumigate, destroy, export, and do any and all other things in relation to said articles that may be lawfully required, and shall hold the same for inspection and examination; or if, in the event of failure to comply with any or all of the conditions hereinabove referred to, he shall pay the said collector an amount equal to the value of said articles as set forth in said entry, [sic] plus the duty thereon;
(2) And if the above-bounden principal shall deliver to the said collector such consular invoices, declarations of owners or consignees, certificates of origin, certificates of exportation, and other declarations, certificates, and documents as may be required by law or regulations in connection with the entry of said articles, and in the form and within the time required by law or regulations, or any lawful extension thereof, or in the event of failure to comply with any or all of the conditions of this section, shall pay to said collector such amounts as liquidated damages as may be demanded by him in accordance with the law and regulations, not exceeding the penal sum of this obligation for any breach or breaches thereof;
Then this obligation to be void; otherwise to remain in full force and effect.
*78It will be noted, tbat the bond which was numbered 282, was general in its terms and made no reference to any particular importation. It was broad enough to cover any and all entries of any and all kinds of imported merchandise, no matter where it came from, made by W. X. Huber Company “within a period of one year from July 12, 1939, to and including July 11, 1940.” Hence, it covered the entry of June 19, 1940, which I am particularly discussing but was not specifically directed to such entry.
(It may be said that another bond, No. 6, executed July 12, 1940, covered all entries made “within a period of one year from July 11, 1940, to and including July 10, 1941; so, it covered the second entry involved in this proceeding made August 13, 1940.)
The following provisions of the Customs Regulations of 1937, under which the transactions here in question took place, are deemed pertinent:
Art. 314. Bond — Deposit of estimated duties — Permit.—(a) When the importer desires the release from customs custody of any part of the merchandise before (1) the full amount of duties * * * has been ascertained by liquidation of the entry * * * he shall file a bond on customs Form 7551 or 7553 or other appropriate form, at the time of entry or prior to such release. * * * (Italics quoted.)
Art. 315 [as amended by T. D. 49658, following the Customs Administrative Act of 1938]: Release of examined packages. — * * *
(6) Merchandise which has not been designated for examination for the purpose of appraisement or otherwise may be released from customs custody in accordance with the provisions of article 314.
Art. 316. Recall of merchandise released from customs custody. — * * * (Italics quoted.)
(6) The collector may demand the return to customs custody of any merchandise which has been released therefrom, provided such demand is made within 20 days after the appraiser’s report.
(c) A demand for the redelivery of the merchandise shall be made when the appraiser’s report indicates that increased or additional duties will accrue, unless the increased and additional duties are promptly deposited, provided that such demand must be made within SO days after the appraiser’s report. (Italics mine.)
Referring first to Article 316 (c), it is noted that the word “report” is used twice therein, and that certain crucial phraseology is “when the appraiser’s report indicates that increased or additional duties will accrue.” “Will,” as used in the regulation, obviously refers to future action or findings.
The actual advancement by the.appraiser on January 28, 1942, of the customs duties in this case, which, incidentally, is not specifically named as a “report” in the assessment itself, was not indicative of something which might be found necessary in the future. It was itself fait accompli — a completed finding which could be changed thereafter only as a result of a successful appeal to reappraisement.
The provision in paragraph (c) of Article 316, supra, requiring that the demand for redelivery of merchandise must be made within twenty *79days after the appraiser’s.report was certainly a reasonable one and, by its very nature, it seems to me that it strongly implied applying the word report in the regulation to the notice given the collector by the appraiser that accrual of increased or additional duties was indicated. In this case, the appraiser stated the reason for withholding appraisement, viz., a foreign investigation.
The interest of the Government here was primarily — probably it is not going too far to say wholly- — in obtaining the proper customs duties. A report made while the merchandise was still in the custody of the appraiser that an advance in dutiable value was indicated (meaning, of course, that it was indicated by information within the appraiser’s possession) naturally tended to be of aid to the collector in "protecting the revenue.” The merchandise might then have been retained in customs custody, or perhaps the additional duties might have been paid by the actual owner (the broker himself having been relieved of liability for such duties, as hereinbefore recited) or unquestionable security might have been obtained.
The only action taken by the collector, however, was to release the merchandise from customs custody. Thereafter, nothing was done until February 3, 1942, when a demand was made upon the broker — not upon the owner of the merchandise — that either (a) the merchandise itself be returned, or (b) the broker pay what was called liquidated damages, the damages being alleged to result from the failure to return the merchandise.
The return of the merchandise which the collector himself had directed released from customs custody at a time when it was so situated and might have been retained, had become impossible with the lapse of time. The broker, of course, had no control over it nor any responsibility for it after its release by the collector.
The report of the appraiser to the collector was made as a matter of official duty.
The majority decision sets out the statutory duties of the appraiser. It is required, among other things, that he appraise the merchandise under such rules and regulations as the Secretary of the Treasury may prescribe.
The appraiser’s action in sending the notice to' the collector was an essential part of his duty in connection with the appraisement which eventually he had to make.
In the brief for the Government it is said:
* * * If the construction which- the Customs Court has placed on the words “appraiser’s report” were to prevail, the collector would be required to make demands for the redelivery of merchandise based on such tentative preliminary notices which after investigation might be required to be ignored. The Court should not strain to place such a construction on the words “appraiser’s report” as would lead to such a harsh imposition on the importers unless it was clearly Congress’s intention to do so.
*80As to this, I am unable to conceive of a construction more harsh than that for which counsel for the Government contend, it being one whereby a customs broker — not the actual importer or owner — will be refused refund of monies exacted from him under the state of facts hereinabove related.
It is important to “protect the revenues” of the Government by collecting all customs duties, but collection from one not liable should not be insisted upon.
I feel no strain in so holding.
I shall not attempt a discussion of the “liquidated damages” feature of the case because I think the trial court arrived at the correct conclusion in sustaining appellee’s contention respecting the report made by the appraiser to the collector on July 9, 1940, and its judgment should be affirmed.
O’Connell, J., joins in this dissent.

 It is noted that in the majority opinion it is said that W. X. Huber “was the owner of an importing firm.” I do not understand that he was an importer in any sense other than as customs broker. He testified that he became engaged in the customs brokerage .business in 1925 or 1926 and that he was active in the business “up until 1942.” It seems that although he was the sole owner of the business, he conducted it under the name of “W. X. Huber Company.”

 Use of Custom Form 6523 seems to have been discontinued following the promulgation on June 21,1950 of T. D. 62508 (85 Treas. Dec. 188) in furtherance of T. D. 52403 (85 Treas. Dec. 33) approved February 8» 1950, but it (6523) was in force during the transactions here involved.