Court Opinion

ID: 6828246
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:35:38.322362+00
Date Added: 2024-06-11T16:04:28.089258
License: Public Domain

DISSENTING OPINION.
Bland, Judge:
The appraiser found that the value of the glass-bottles was 9 marks each, and that the value of the iron covers was-8.65 marks each, and the collector classified and levied duty upon, this appraisement. The burden was upon the importer to show that, the value of the glass bottle “in its condition as found in the article” was less than the value of the iron contained “in its condition as-found in the article.” This proof, I submit, is not furnished by the-record.
The evidence shows that the manufacturer or assembler of the thermos bottles purchased the iron containers in large quantities-at the wholesale price of 8.65 marks each, and that he sold the glass-bottles manufactured by himself in Germany in large quantities at 9 marks each, and that it cost him to manufacture the glass bottles-5.80 marks each. The appraiser and collector and the Board of General Appraisers found the value of the glass bottle to be 9 marks. The actual cost of production of the iron container was not ascertained by the appraiser, nor was it disclosed by the evidence, but-its selling price was compared with the selling price of the glass bottle, which, I think, was a fair comparison. The statute relative to determining the values of component materials does not prescribe how the value shall be obtained, but it certainly would be a very illogical and dangerous rule to require that the wholesale selling price of one commodity should be regarded as its value, and that the cost of manufacturing the other article should be regarded as its value. We find ourselves in the anomalous position of being compelled to find that if the manufacturer of the iron container instead of the manufacturer of the glass bottle had assembled the thermos bottle, the glass would have been the component material of chief value instead of iron, for the reason that he would have taken his production cost as the value of his iron and the purchase price as his value of the glass. Surely Congress did not intend that our customs administrative officers should be subjected to such an unjust and uncertain rule in determining component material of chief value.
In construing this statute, according to the opinion of the majority of this court, if the question were asked, What is the value of the
*53iron? they would answer, “What the assembler of the thermos Not tie paid for it,” which includes selling cost, etc. To What is the value of the glass bottle? they would answer “What it cost the manufacturer of the thermos bottle to produce it.” It is obvious that the last answer is incorrect if the first one is correct. We ■know that the glass bottle was worth what it was selling for, if the iron container was worth what it was selling for. Surely, we must apply the same measure to both articles in determining their respective values, and I know of no good reason for refusing to take the manufacturer's selling price of the glass bottle as its value, and especially if in the same appraisement you apply the rule to the iron •container, nor do I see any statute or decision which would prevent the appraiser from finding the cost of production to the producer of Noth articles and then comparing them. While “cost of production” may not mean “value” (it is so held by the majority of the court) it is certainly a fair means of comparison if “value” is so defined and used for both competing articles. The majority of the court seem to fieél that they are bound by certain decisions, and especially by Seeberger v. Hardy (150 U. S. 420).
After examining numerous decisions on the question of component material of chief value, I find no one of them which decides the •question presented in this case, nor do I find in any of them any principle or rule laid down which would justify the statement that in determining the value of component materials of an article we must take production cost in one instance and selling price in another. ■On the contrary, the general principles laid down for determining values in all tariff matters would seem to be at variance with the •conclusions reached by a majority of the court. ' The Seeberger •case, supra, does not touch upon the question involved in this case; it merely decides that we are to take the value, or production cost, •of the competing articles, not in their raw state or their unfinished ¡state, but in the state in which they are found as they go into the •completed article.’ In the case at bar, if we apply the Seeberger case, it is my contention that the value of the glass bottle when it was finished and ready to go into the article was 9 marks, and that the value of the iron container was 8.65 marks, or that the value of the iron container is its production cost when compared with the production cost of the glass bottle. Now, in what way does the See-berger case prevent the appraiser from applying the same standard ■of measuring value to both competing articles in estimating their value at the time they are ready to go into the completed article ? It is urged that United States v. Meadows (2 Ct. Cust. Appls. 143; T. D. 31665) has a direct bearing upon this case. The same question raised in the case at bar is not even touched on nor hinted at in the Meadow's case. There the question was whether leather or cotton *54was the component material of chief value in shoes made of the two commodities. The soles and heels were leather, the tops were cloth. The chief question was as to whether the labor expended in uniting the several layers of cloth fabric should be charged to the cloth, and as to whether sewing the uppers to the soles with cotton thread should be charged to the cotton fabric. The court held, and properly so, that the layers of cotton composing the uppers were sewed together before they were united with the leather, and that the expense of putting the layers together should be charged to the uppers in determining their value. What bearing has this decision upon the perplexing question before the court in the case at bar, namely; shall we apply one rule of determining value to one commodity, and another rule of determining value to the other one ? True enough it took the production cost of the articles as their value, but no question about the value of a purchased article was involved, so the same principle is not involved. If Congress next month should pass a new tariff law making the duty on articles of which the component material of chief value was iron higher than that of which the component material of chief value was glass, we would probably find that the enterprising iron-container merchant would be the assembler of the thermos bottle, and would be submitting his production cost to this court in order to show that the value of the glass bottle which he was required to purchase was greater than the iron container which he manufactured at a low cost. I am not ready to believe that the framers of the tariff act ever intended such an uncertain and; I may be pardoned in saying, absurd method for determining the value of the competing materials.
The decision of the majority of this court rests entirely upon the proposition that “value” as used in this section means “cost” to the fabricator, which definition they no doubt concede is prompted only by precedent, administrative and judicial. If precedent forbids the appraiser to determine “value” in this kind of case to be cost of production of the container and of the glass bottle, or if precedent forbids the appraiser from finding the value of the two competing component materials in any other manner, it must be by reason of administrative practice or judicial decision. Administrative practice may be proved, or courts may take judicial knowledge of it. The record furnishes no proof of administrative practice in this kind of case, and I have found no decision of any court which holds that cost to the assembler of a competing component material shall be the value of one component material if the other component material is manufactured by himself. Therefore there is no precedent either in administrative practice or in judicial decisions for holding that “value” as used in this section of the statute must be construed to mean cost to the assembler.
*55But it is urged that in the Seeberger case and the Meadows case, supra, the principle was settled that “value” meant “cost.” .In those cases the finding of the appraiser that the value of the parts, all of which were produced by the assembler, was their cost of production, was not disturbed for the reason that comparing cost of production value with cost of production value was fair, and the statute had not specified how this value should be determined. Therefore the principíelas applied to that statement of facts was not inequitable. But the courts have never held that production cost shall be comparable with selling price, and both at the same time be termed “value.” Therefore there is no precedent for the decision of .the majority of the court in principle or otherwise. The principle involved in determining value in the case at bar is entirely different from the principle involved in the Seeberger case, where both compared items stood on a comparable basis. I have sought in vain to find anything in the statute that would justify a rigid rule that the appraiser in determining value must consider only cost, and I have looked in vain in the decisions of the courts for any plausible reasoning why the appraiser in construing value must be confined to cost alone. It impeaches the judgment and good sense of the appraiser for him to be compelled to hold that the value of an article whose value he is by law required to estimate, is its cost. Where “value” is used in the statute in this instance, it has no strings to it, no qualifying phrases; it is left to the appraiser to find the value, and 1 submit that if he should find the cost of production of the iron container and the cost of production of the glass bottle and compare the two, that there is nothing in the statute itself, nor in administrative practice, nor the decisions of the courts, that could successfully question its correctness.
We will assume that it costs $3,000 to manufacture a Packard automobile and that it sells'for $4,500. Is anyone going to pretend that the value of that car at the factory or any. place else is only $3,000? No; it is worth more than that if it is worth anything. It has a greater value than $3,000, and under any rule of determining value, under any statute, it would be declared to be worth more than $3,000. If the selling price of the glass bottle in Germany at its place of manufacture and at the place where the thermos bottle was assembled was not shown in the evidence even, then I would contend that the appraiser under the law would- be required to take a value other than its factory cost if he took another value for the competing article; that he would be justified in adding to the factory cost a reasonable selling profit. This would be reviewable if unreasonable, but where the market selling price is given of both competing articles, it surely is fair to accept both of them if you accept one. And let me repeat here, that there is nothing in the law that forbids the appraiser *56from taking the market value or any other standard of value. The majority of the court say that the decisions of the courts construing the statute, and the administrative practice pursuant thereto, forbids his taking any value but the cost to the assembler. It is not urged that there was any reason for the court arbitrarily adopting the cost of production as the “value” in the cases cited, and it is not disputed but what its application to the facts at hand show its absurdity.
The decisions of the courts on “value” as used in this section of the statute, have gone only so far as to sanction the “production cost” standard of value where producing cost was used in comparing all competing articles. New conditions bring new rules of law where the statute is silent as in the present instance, and this court should never hold that the value of one competing article is its selling price, and of the other its cost of production. If the cost of production is to be accepted as the rule for the glass bottle, it was surely the duty of the importer to show the production cost of the iron container if he hoped to overcome the findings of the appraiser and collector. This he did not do, and I have no good reason yet assigned why the appraiser’s finding should be wafted arbitrarily aside without proof of its incorrectness. It was the duty of the appraiser to ascertain the component material of chief value of the merchandise and report the same to the collector. This he did in the fairest way possible, and it should stand.
The Board of General Appraisers in my judgment by their unanimous decision were correct in sustaining the appraiser and collector, and their decision should be affirmed.