Court Opinion

ID: 6814444
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:58:52.528386+00
Date Added: 2024-06-11T16:03:47.825276
License: Public Domain

DISSENTING OPINION
Graham, Presiding Judge:
I find myself compelled to dissent from the majority opinion in this case for reasons which I will state in as *530brief a form as is possible, contenting myself not with, an exhaustive discussion of the authorities, but with a brief statement of what I consider to be the issues involved.
This is a reappraisement matter. The local appraiser found the foreign value of the imported goods to be 0.60 lira per gram, plus sales tax and packing. This appraisement was made under section 402 (c) of the Tariff Act of 1930, and, therefore, was the local appraiser’s ascertainment of the “market value or the price at the time of exportation of such merchandise to the United States, at which such or similar merchandise is freely offered for sale to all purchasers in the principal markets of the country from which exported, in the usual wholesale quantities and in the ordinary course of trade, including the cost of all containers and coverings of whatever nature, and all other costs, charges, and expenses incident to placing the merchandise in condition, packed ready for shipment to the United States.” (Italics are mine.)
The Government attacked this appraisement, and hence it had the burden of establishing' that the appraisement made by the local appraiser was not the foreign value “in the principal markets” of the country of export. If the goods were freely offered for sale at Campo Ligure, and as to this there is positive proof by the affidavit of the witness Bongera Domenico, and if Campo Ligure was one of the principal markets of Italy, and if, further, the market value within the scope of said paragraph 402 (c) was 0.60 lira per gram, then the First Appellate Division was justified in the conclusion reached by it. There is nothing in the record to prove that there was not such a principal market. The report of the Government agent, Exhibit 1, is the only thing in the record which might be felt to contradict this finding of the local appraiser. In this statement: “The principal market for the sale of the filigree silver, both for the home market and for export, is in Genoa”, it may well be that Genoa is the principal market; however, Campo Ligure may be- one of the principal markets, and, so far as the record shows, the local appraiser has so found. The Government must prove otherwise if it is to succeed. Section 501, Tariff Act of 1930.
Therefore,-on the facts, I am of opinion that the Government has not sustained its burden of proof.
The majority opinion is written on the theory that this record establishes a foreign value for the imported goods at 0.93 lira per gram, based upon the selling price at Genoa. In so finding, the view of the majority is that the facts do not establish a controlled market, within the meaning of the former decisions of this court, at Genoa, but that the market there must be considered one “at which such or similar merchandise is freely offered for sale to all purchasers * * * in the usual wholesale quantities and in the ordinary course of trade.”
*531The facts as to such market, as shown by the record, are these: An association which has been in existence for over three years, and to which association “all dealers without exception” belong, fixes the prices on this product in the Genoa district. The term "all dealers” is not limited by the proof, and hence includes all kinds of dealers, both wholesale and retail, if there be any such. Thus the proof shows that from the time the goods leave the association until they reach the hands of the consumer, the prices are fixed and unchangeable, except by the association. From the record, it fairly appears that this silver filigree is used as material for making jewelry, and other similar articles. Therefore, the manufacturer who purchases it to make jewelry is the consumer. The market, then, at Genoa, is a controlled market to this degree, that there is no competition and can be no competition in prices, between the association and the consumer.
The majority opinion, however, arrives at the conclusion that this does not constitute a controlled market, within the spirit of our decisions in many cases. This conclusion is based largely on the view expressed that the control, while it may extend to the prices of the product at Genoa, does not follow the goods into the hands of the consumer.
In my judgment, such a conclusion is in conflict with almost everything we have said in former cases on this subject, as I shall attempt to show by a very brief summary of the cases.
Let us first look at Goodyear Tire & Rubber Co. v. United States, 11 Ct. Cust. Appls. 351, T. D. 39158. In this case, the manufacturer sold its tires through a limited number of jobbers and dealers. No other purchasers were allowed and the prices were fixed and graded by the manufacturer, for each and every class of buyers, so that the price was regulated from the manufacturer to the ultimate consumer. This court held that no foreign market value was established by proof of such controlled market. In that case, the Government made exactly the same contention that it makes here, namely, that if a manufacturer succeeds in controlling the market in such a way that the goods cannot be bought in any other manner, then the method so established becomes the usual method in which such merchandise is sold at wholesale in the ordinary course of trade. However, this court refused to adopt this theory and said it might be the ordinary course of tradé in that commodity, but that it was not the ordinary course of trade which the law had in mind.' Thereupon, this court, speaking through Smith, Judge, made this expression:
It may be that a manufacturer’s control of sales and distribution from the time they leave his factory until they reach the ultimate consumer is the “ordinary course of trade” for the marketing of his merchandise, but we are not prepared to admit that it is the ordinary course of trade for supplying consumers *532with tires or other goods. In other words, price-fixing and restriction of distributing agencies may be the ordinary course of trade in Canada for the furnishing of Goodyear tires to the public, but it can hardly be said that it is the ordinary course of trade for the marketing of automobile tires or for the marketing of merchandise in general.
* * * * * * *
* * * Far from indicating approval of such a course- of trade, we think that the radical difference between the original and the present statutory definition of market value, as well as legislation permitting in certain contingencies the liquidation of duties on cost of production, or even on wholesale prices in the open market in the United States, demonstrates that Congress intended that prices fixed by a manufacturer in a market restricted and absolutely controlled by him should not be a factor in determining the dutiable value of merchandise.
Again, Judge Smith said: .
* * * Indeed, if prices fixed by the manufacturer in markets restricted and absolutely controlled by.him constitutes market value within the intention of paragraph It, Section III, then the phrase “freely offered for sale to all purchasers ” becomes utterly meaningless. More than that, if fixed prices in such a restricted market be actual market value, then the manufacturer who fixes prices and controls the market has the power to make a market value to his liking and thereby determine in some measure the duties to be paid on his product — a -power which might well he exercised not to protect jobbers, dealers, and consumers, as in this case, but to reduce duties on goods manufactured largely or wholly for foreign consumption. (Italics mine).
After these expressions, Judge Smith then used the expression quoted in the majority opinion, and a part of which holds that the goods were not “freely offered for sale to all purchasers” and in which the opinion italicizes the words “freely” and “all purchasers.”
Now, it must be obvious to the reader of this opinion that this court was discussing two propositions: Not only did it hold that the goods were not freely offered to all purchasers because of the restricted number of persons who could buy, but it was proceeding to discuss the broader aspect of the case, namely, that the control of the market price produced such a condition as to defeat ‘‘the manifest purpose of Congress that duty should not be determined by factory fixed prices in a factory controlled market.”
This double aspect of the case was so apparent that the Assistant Attorney General, in applying for a rehearing before Judge Dallinger in this case, applied for it merely because of the distinction between the Goodyear case and the case at bar in this respect, namely, that in the Goodyear case those who could buy were restricted in number, while in the case at bar, anybody could buy. On this theory, the Government claimed a distinction between the cases and obtained a rehearing. However, when the matter was reheard, it was not decided upon the stated distinction, but upon the theory that the cases were different in the- matter of the control exercised in each case. The single judge stated, “nor does the manufacturer fix the price at which jobbers must sell to dealers and dealers to consumers. In a *533word, there is no attempt by a manufacturer to control the sales, distribution, and selling prices of his merchandise from the time it leaves the factory until it reaches the ultimate consumer.”
Therein, obviously, the single justice misconstrued the record. The prices were fixed for “all dealers.” There is no distinction made in the record between wholesalers, jobbers, or retailers. All are dealers. Hence, from association to consumer, the prices were fixed and controlled.
It cannot be said that what this court said as to a controlled price in the Goodyear case was obiter. It was a discussion of an issue then in the case and an issue which is the only issue in the case before us. It was the expression of the unanimous views of this court that a factory controlled price was and is not sufficient to establish foreign market value.
In United States v. Davies, Turner & Co., 13 Ct. Cust. Appls. 547, T. D. 41430, in commenting upon the Goodyear case, supra, this court, speaking through Barber, Judge, stated that we had pointed out in the Goodyear case that a controlled price did not constitute a foreign market value “within the meaning of that term as defined by law, because merchandise, the price of which was so controlled, was not freely offered for sale in the contemplation of law.” Then he makes this suggestion: “It is true that in that case the control was probably more complete and was brought about in a different manner than in this, but the purpose, if not the effect thereof, certainly is substantially the same in the two cases.” (Italics mine.)
I think, without exception, up to the present time, this court has always taken the view which we expressed in Cottman & Co. v. United States, 20 Ct. Cust. Appls. 344, 357, T. D. 46114, where we said: “Foreign-market value, in our opinion, as defined in this statute was intended by the Congress to mean such conditions as exist in a free, open, unrestricted market, where people meet under normal competitive conditions to buy and sell their goods.”
The expression above was not obiter in that case, but was directly pertinent to whether a foreign value existed for Moroccan phosphate rock.
In Meadows, Wye & Co. v. United States, 17 C. C. P. A. (Customs) 36, T. D. 43324, this court, speaking through Hatfield, Judge, was discussing a question of foreign value. In so doing, it was said:
In view of the fact that the manufacturer restricts the market for the involved merchandise to those firms and individuals who will agree to resell at prices not less than those fixed by the manufacturer, and, as the manufacturer’s prices are the same regardless of the quantity purchased, we are of opinion that the merchandise is not freely offered for sale to all purchasers in the principal markets of Great Britain, in the usual wholesale quantities and in the ordinary course of trade,- and that the issue is controlled by our decision in the Goodyear Tire & Rubber Co., and the Richard & Co. cases, supra. We so hold.
*534Here, this court expressed the view that if prices were fixed by the manufacturer, and if the goods were sold only to persons who would agree to resell them at the manufacturer’s prices, the market was controlled and no foreign value existed. Compare that with the case at bar. The proof is that all dealers belong to the association, and are fined if they vary from the prices fixed by the association. Certainly, therefore, it follows that there is an agreement among these dealers, and that only such dealers as belong to the association can handle the product. It will not be contended, I dare say, that the fining of a member is done by the State. It must be the result of joint agreement or understanding, a membership in the association. Therefore, following the dictum of Judge Hatfield in the Meadows, Wye case, supra, the price is controlled and the market is limited to the members of the association.
Again Judge Hatfield, in expressing the views of this court in United States v. Wirth, 20 C. C. P. A. (Customs) 94, T. D. 45705, stated this:
* * * Furthermore, the jobbers and dealers are required to resell at prices dictated and controlled by the manufacturer. They are prohibited from exporting. It is upon these conditions only that the goods are sold to them. Obviously, then, the evidence discloses a controlled, not a free and open, market, and such restricted sales are not indicative of foreign value.
Without going further into the judicial construction of the term “foreign value” by this court, it is sufficient to say that the decisions have not been based upon the fact that the use and sale of the product is controlled in the hands of the consumer, but if the control from the manufacturer to the consumer was restricted and controlled, that was sufficient to result in a finding that such market would not come within the statutory definition necessary to constitute foreign value. In fact, in many cases, the product was not controlled in the hands of the consumer; as, for instance, in the Goodyear case, where the tires purchased might be used or resold by the consumer in any way he might desire. In the Oottman case, there was such control in Morocco of the use or resale of the rock phosphate, but that is not true in the majority of the adjudged cases.
As a matter of fact, this court has always proceeded upon the theory that the value that was intended to constitute a foreign value, was, as stated in the Oottman case, a free, open market where buyer and seller might meet under ordinary competitive, and not extraordinary, conditions.
It has been suggested that to hold that the facts here involved constitute a closed and controller market, would do away with the possibility of one who had a patented article, to control the market in such article. As a matter of fact, that very thought was in the *535mind of this court when Judge Smith, in the Goodyear case, supra, said:
As pointed out by the Government, there is a tendency, especially among manufacturers of ‘patented, articles, to “thwart the normal effects of competition” by retaining complete control of the sales and distribution of their product until it reaches the hands of the consumer. But it can not be safely contended that that is “the ordinary course'of trade” and much less that Congress recognized such marketing as a standard for determining values for tariff purposes. * * * (Italics mine.)
These are, briefly, my views, and it is unnecessary to further prolong the expression of the same.
It may be that to come to this conclusion would, under present world existing conditions, destroy foreign value in many foreign countries. However, this is no reason for a change in our construction of these statutes, in order to care for changing foreign political and trade conditions. The legislative body is at hand, and can, at any time, make any necessary changes in the method of ascertainment of value on dutiable goods which enter the country. If such changes are necessary, it is the legislative duty, not ours. We have adhered, for years, to judicial views which are well known to the Congress. To depart from these views now, because of differing world conditions, is ill-advised.
One other suggestion and I have said all that I care to say. One of the titles of the Emergency Tariff Act of May 27, 1921, which has been retained and is now a part of our law, is Title II, Antidumping Act, 1921. This act provides, in part, (section 202 (a)), that if merchandise be sold in this country at less than its foreign market value or cost of production, that to compensate for the same there shall be levied an antidumping duty equal to the difference between the actual sales price and the foreign market value or cost of production.
Let us assume that a foreign monopoly, not governmental, but a bund, kartel, syndicate, or other like association, desires to invade the commerce of this country, and for that purpose lowers its price to less than the cost of production; and let us assume that the goods, chiefly intended for sale abroad, are thus offered for sale to all purchasers in the country of production. Thereupon, according to the opinion of the majority in this case, such controlled price in the country of exportation constitutes a foreign market value, and no anti-dumping duty may be levied, because the goods are not being sold abroad at less than the foreign market value. Thus, the purpose of the antidumping act is defeated, and it is within the power of such an association in a foreign country to not only dictate the amount of duties which shall be collected in this country, but to destroy industries here without any remedy, so far as the antidumping act is concerned. I do not believe that the law-makers intended any such *536Jesuits, nor do I believe it can be accomplished if we adhere to what I think to have been our uniform holdings on the question of controlled markets.
My conclusion is that there was no foreign value established for the goods manufactured at Genoa, and that the First Appellate Division correctly concluded that the prices at Campo Ligure were properly accepted by the local appraiser, as proof of foreign value.