Court Opinion

ID: 6821570
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:07:52.700893+00
Date Added: 2024-06-11T08:45:22.405745
License: Public Domain

O’CoNNell, Judge,
concurring in part and dissenting in part.
The Supreme Court of the United States, which has a broad supervisory power over the judgments of the lower federal courts,1 has squarely held that those courts, including the Tax Court 2 and the Court of Customs Appeals,3 shall embrace in their procedure the broad social principle of res judicata, which seeks to bring litigation to an end and promote certainty in legal relations.
Failure to enforce the doctrine by the two courts last named was described by the Supreme Court as “a fertile basis for litigious confusion.”2 However, there is no procedure available in those courts, such as a declaratory judgment, 28 U. S. C. 2201, designed to expedite and simplify the ascertainment of uncertain rights or duties with respect to federal assessments.4
There is no dispute in the- case at bar that the prior suit between the parties involved the sole question, on an appeal to reappraisement, of the proper dutiable value of the entries in issue, and that the appeal was dismissed because of appellant's failure of proof; that the issue raised by the protest in the instant case nowise involves the dutiable *152value of those entries, but involves the question of whether then-liquidation by the collector was null and void.
The majority correctly holds that had the question here presented been raised in the prior suit, there is no doubt that appellant’s contention would have been upheld.
Appellant at the trial of the instant case properly objected and took exception to the action of the Customs Court in permitting the Government to introduce into evidence the record in the prior reap-praisement proceedings. Since the issue in the case at bar is not precisely the same as the issue in the prior proceeding, the Customs Court committed reversible error in receiving and considering the irrelevant evidence of the prior case. United States v. Bosca, Reed, MacKinnon Co., 1937, 24 C. C. P. A. (Customs) 364, T. D. 48829; id. 25 C. C. P. A. (Customs) 42, T. D. 49040; Wilbur-Ellis Co. v. United States, 26 C. C. P. A. (Customs) 403, C. A. D. 47.
In the Boone cases which were recently before this court, the issues, the parties, and the merchandise were precisely the same in both the first and second cases. The doctrine of res judicata should have accordingly controlled the decision in the second case before this court. United States v. Ralph Boone, 38 C. C. P. A. (Customs) 89, C. A. D. 445, rendered February 6, 1951. No one familiar with customs law could brand the opinion of the late Chief Justice Taft as responsible for the decision of this court in the case last cited.
The regular rules of evidence were relaxed by Congress in the enactment of section 501 of the Tariff Act of 1930 so as to enable importers to establish a value upon which merchandise may be appraised or reappraised: “In finding such value affidavits and depositions of persons whose attendance cannot reasonably be had, price fists and catalogues, reports or depositions of consuls, customs agents, collectors, appraisers, assistant appraisers, examiners, and other officers of the Government may be admitted in evidence.”
Assuming for the sake of argument that, as stated in the decision of the majority, every ground of appeal to reappraisement was available to appellant in the prior adjudication, there is no basis for the conclusion of the majority, that having failed in the original action to present the question here in issue, the importer is now barred by the rule of res judicata from raising that issue.
Tariff acts down through the years have been drawn to meet the needs of many major occupations and conditions, national and international. There are often various complex grounds in customs cases upon which neither the Government nor the importer can really determine the proper ground of recovery or assessment, except through the method of trial and error. The rules of practice which for years have governed the procedure in the Customs Court provide *153for a bearing in advance of tbe trial of a case, so as to formulate, simplify, or add to tbe issues to be considered and determined at tbe trial.
It would bave been a simple matter, for tbe court below in tbe prior case to bave there required tbe trial of the issue here presented. No such requirement was made either in tbe present litigation, or in any other litigation, so far as tbe record and briefs here disclose. However, irrespective of past administrative practice, customs laws, like tbe patent laws, should be so construed as to avoid multiplying litigation or producing unnecessary delay and expense to tbe parties concerned. Allen v. Lowry, 26 App. D. C. 8, affirmed, Lowry v. Allen, 203 U. S. 476.
In tbe original decision in tbe case of United States v. Bosca, Reed, MacKinnon Co., supra, tbe late Judge Hatfield, speaking for a unanimous court, properly stated:
“Commerce, industry, agriculture, finance, and tbe revenue of tbe Government depend to a considerable extent upon tbe proper adjudication of customs cases, and it should be remembered that tbe rules of practice, procedure, and evidence applicable in such cases may, from necessity, differ in many respects from those prevailing in courts of general jurisdiction. See United States v. Stone & Downer Co., 274 U. S. 225, 235.”.
Judge Hatfield, on reargument of the same case, again pointed out for a second time, that where the subject matter, tbe parties, and tbe issues in both tbe original and subsequent cases were precisely the same, tbe doctrine of res judicata applied. Tbe United States Court of Appeals for tbe District of Columbia, 1947, subsequently held in Boston Wool Trade Assn. et al. v. Snyder, 161 F. (2d) 648, 649, that:
Only if a reexamination of the initial decision were determined upon, due to new considerations developed in a later case, would the first importer become involved in another proceeding relating to the import. (Italics supplied.)
Res judicata involves the question of tbe jurisdiction of tbe court, which question is always before the court and may be acted upon by it, even though tbe question is not raised by either of tbe parties. United States v. Bush & Co., Inc., 25 C. C. P. A. (Customs) 38, T. D. 49039; Macleay Duff (Distillers) v. Frankfort Distillers, Inc., 29 C. C. P. A. (Patents) 1160, 129 F. (2d) 695, 54 USPQ 253. See also United States v. Kraft Phenix Cheese Corp. et al., 26 C. C. P. A. (Customs) 224, C. A. D. 21. Tbe final test of the existence of res judicata, as hereinafter disclosed, involves consideration of whether tbe second action is merely redundant litigation of the identical question presented in tbe prior action.
Tbe classic definition of res judicata was thus stated in Southern Pacific R. Co. v. United States, 168 U. S. 1, 48-49:
*154The general principle announced in numerous cases is that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies; and even if the second suit is for a different cause of action, the right, question or fact once so determined must, as between the same parties or their privies, be taken as conclusively established, so long as the judgment in the first suit remains unmodified. * * *
Because of the public interest, and because of the application of their decisions to like situations in other .cases, use of the principle of res judicata by the Tax Court and by the Court of Customs Appeals must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules in both cases remain unchanged. Commissioner v. Sunnen, 333 U. S. 597, 598. In that case the court also made the following explanation as to the recognized meaning and scope of res judicata, a doctrine judicial in origin:
That in the absence of fraud or some other factor invalidating the judgment, the rule of res judicata applies to the effect that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound “not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for the purpose/' citing Cromwell v. County of Sac, 94 U. S. 351, 352; Von Moschzisker, “Res Judicata,” 38 Yale L. J. 299; Restatement of the Law of Judgments, §§ 47, 48.
The Supreme Court laid special emphasis, however, on the exception to the doctrine hereinbefore enunciated (333 U. S. 597, 598):
But where the second action between the same parties is upon a different cause or demand, the principle of res judicata is applied much more narrowly. In this situation, the judgment in the prior action operates as an estoppel, not as to matters which might have been litigated and determined, but “only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.” Cromwell v. County of Sac, supra, 353. And see Russell v. Place, 94 U. S. 606; Southern Pacific R. Co. v. United States, 168 U. S. 1, 48; Mercoid Corp. v. Mid-Continent Co., 320 U. S. 661, 671. Since the cause of action involved in the second proceeding is not swallowed by the judgment in the prior suit, the parties are free to litigate points which were not at issue in the first proceeding, even though such points might have been tendered and decided at that time. But matters which were actually litigated and determined in the first proceeding cannot later be relitigated. Once a party has fought out a matter in litigation with the other party, he cannot later renew that duel. In this sense, res judicata is usually and more accurately referred to as estoppel by judgment, or collateral estoppel. See Restatement of the Law of Judgments, §§ 68, 69, 70; Scott, “Collateral Estoppel by Judgement,” 56 Harv. L. Rev. 1.
The further principle applies in all such cases that so long as the judgment in the first suit remains unmodified, the judgment is effective *155as an estoppel on the points decided there, whether the judgment was right or wrong.5
The first suit involved in this proceeding was an action for reap-praisement and the suit here in issue is an action to recover duties paid under protest. The subject matter in the former suit, as in all reappraisement cases, was the proper dutiable value of the merchandise, while in the present case, the subject matter in issue is the validity of the liquidation of the entries by the Collector of Customs. One called for a revision of the action of the appraiser; the other of the collector.
There is a basic distinction under the statute between the protest filed by the importer with the collector against his decision as to the rate and amount of duty assessed by him on an illegal appraisement in the classification of merchandise, and the notice of dissatisfaction with the appraisement filed' by the importer leading to an appeal from the appraisement. That distinction was succinctly and effectively pointed out by the Circuit Court of Appeals, Second Circuit, in the following excerpt from the decision rendered on December 7, 1925, under the provisions of the Tariff Act of 1913 in the case of United States v. Lian et al., 10 F. (2d) 41, 42:
Ever since the enactment and to the present time, an importer, in connection with his importations, could ask for reappraisement of his merchandise, if dissatisfied with the valuations and assessments thereon. He could appeal from the appraisement. If dissatisfied with the decision of the collector as to the rate and amount, he could file a protest to that decision. The two are quite distinct. In other words, the decision of the appraisers as to the value of merchandise is the subject of an appeal to reappraisement, and the decision of the collector as to the rate and the amount of duties chargeable is the subject of protest. * * *
The matter raised in the first suit admittedly is essentially different from the controlling facts and legal rules applicable in the second proceeding, which have never been passed upon. Therefore, the judgment of the United States Customs Court in the instant case, under the authorities hereinbefore cited, is erroneous and should be reversed. See also United States v. William Prym of America, (Inc.), 17 C. C. P. A. (Customs) 180, T. D. 43475.
I wholly concur in the finding of the majority that the principle of res judicata is applicable, in the discretion of the United States Customs Court, and under its rules of practice, to matters relating to the application of the tariff act with respect to the classification and assessment of merchandise with duty. I wholly dissent, however, with the conclusion of the majority that res judicata is applicable to the situation presented by the record in the instant case.
Failure to understand the true significance and scope of the doctrine of res judicata led the majority in the recent case of United *156States v. Ralph Boone 6 to promulgate and apply the following erroneous doctrine:
It is generally known by all familiar with customs litigation that the doctrine does not apply in cases involving classifications of imported merchandise. It has never been applied by this or any other court and we cannot see how it ever will be. That it should not be applied and the cogent reasons why it has no place in such customs litigation is set forth at length in the opinion of the late Chief Justice Taft in the case of United States v. Stone & Downer Company, 274 U. S. 225. What was set out there is still the law.
What was set out in the decision of the late Chief Justice Taft in the cited case nowise authorized or validated the heresy contained in the quoted statement. That fallacy is now necessarily and properly overruled by the decision of the majority in the instant case.
The conclusion that the customs court in the second trial of the instant case was not bound by the decision of the courts in the first suit is fortified by the fact that under the administrative practice in a number of custom cases, after appeals to reappraisement were decided adversely to the importer, protests were subsequently filed and sustained against the liquidation of the identical entries upon the ground of insufficient designation or examination of packages.7
The doctrine of res judicata has likewise been before this court recently on the patent side of our jurisdiction.8 Krasnow et al. v. Bender, our latest holding on the question, was based on the decision in Jeffrey Mfg. Co. v. Kingsland, 77 USPQ 500, 77 F. Supp. 617, affirmed, 179 F. (2d) 35. Judge Holtzoff in bis well written decision in the District Court there pointed out that under the usual application of the rule of res judicata, the prior judgment bars subsequent consideration not only of issues actually decided by the court but also of matters which could have been raised and decided.
Kes judicata is not merely a rule of law, however, but also a rule which involves a doctrine of public policy, as the District Court held, and an exception to the general doctrine of res judicata exists under the patent laws to the effect that the allowance of the claims for a patent over the cited references in the prior action does not prevent the rejection of the same claims in a second action on the basis of additional references subsequently cited by the examiner after the court’s decision in the first case, citing Hoover Co. v. Coe, 325 U. S. 79, 88.
Appellant in the instant case has further established by the citation *157of competent authority that the court below erred in failing to hold' and decide that the appraisements in each and every one of the entries involved herein were null and void ab initio, upon the ground that the mandatory requirements of section 499, Tariff Act of 1930,' as to designation of merchandise by the collector for examination by the appraiser were not complied with; in holding and deciding that the appraisements involved herein were made after the effective date of the Customs Administrative Act of 1938; and in holding and deciding as to 19 of the protests that the appellant is estopped from asserting that the appraisements were made prior to the effective date of the Customs Administrative Act of 1938.
The application of the doctrine of res judicata has been a source of confusion in the exercise of our jurisdiction and the jurisdiction of the Customs Court. This is the first time, according to the brief of counsel for the Government, that the question here in issue has been presented. It is evident that the disposition which has been made of the case by the majority,- if allowed to become final, will retard the orderly procedure in the trial and disposition of customs cases in the court below.
For the reasons hereinbefore stated, the judgment of the United States Customs Court should be reversed.

 United States v. Munsingwear, 340 U. S. 36, 39-41.

 Commissioner v. Sunnen, 333 U. S. 591.

 United States v. Stone & Downer Company, 274 U. S. 225.

 The United States v. D. Lisner & Co., Inc., 38 C. C. P. A. (Customs) 79, reversing, Abstract 63840.

 Reed v. Allen, 286 U. S. 191; United States v. Munsingwear, 340 U. S. 36.

 The United States v. Ralph Boone, 38 C. C. P. A. (Customs) 89, C. A. D. 445, decision rendered February 6, 1951.

 United States v. Jacob P. Steffan Sons, 18 C. C. P. A. (Customs) 455, T. D. 44702; C. J. Tower & Sons v. United States, 21 C. C. P. A. (Customs) 417, T. D. 46943; International Clearance Co. v United States, 70 Treas. Dec. 353, T. D. 48544. See also United States v. Beer, 150 Fed. 566.

 Winkelman v. Calvert, 33 C. C. P. A. (Patents) 1206, 154 F. (2d) 1012, 69 USPQ 406; Krasnow et al. v. Bendert 36 C. C. P. A. (Patents) 723, 170 F. (2d) 560, 79 USPQ 78; Alumatone Corporation v. Vita-Var Corporation, 37 C. C. P. A. (Patents) 1151, 183 F. (2d) 612, 86 USPQ 359.