187 U.S. 281
MILTENBERGER LAWDER et al., Petitioners,
WILLIAM F. STONE, Collector.
Submitted November 11, 1902.
Decided December 1, 1902.
In the months of May, June, and July, 1897, the petitioners, copartners trading as S. M. Lawder & Sons, imported into the port of Baltimore from the British West Indies several cargoes of pineapples, invoiced as a specified number of dozens.
Upon the discharge of the cargo at Baltimore, after the pine- [187 U.S. 281, 282] apples had been taken out of the vessels and their number estimated by the inspectors, there remained in the holds a quantity of what was described as 'slush,' consisting of decomposed vegetable matter, mixed with bilge water and other d ebris of the cargo, some of it in a semi-liquid condition. This slush was brought up from the holds in baskets and included by the inspectors in their appraisement of the cargoes. The pineapples alleged to be contained in the slush were uncountable, and their number was roughly estimated by the inspectors by counting the pineapple tops and butts contained in a number of baskets of the slush, striking an average of those baskets, and then calculating the number contained in the whole quantity of slush according to that average. The material thus removed from the vessels was commercially valueless, and under the sanitary regulations of the city of Baltimore was taken down the river on a scow and dumped overboard. The number of pineapples so estimated by the inspectors to be contained in the slush was less than 10 per cent of the total invoice, and the collector treated the loss as a case of damage to the cargo within the meaning of 23 of the customs administrative act of June 10, 1890, and assessed duty on the whole number of pineapples estimated by the inspectors to be contained in the cargoes, including this quantity of slush.
The board of general appraisers sustained a protest of the importers against the assessment of duties on the worthless and indistinguishable mass referred to, and this decision was affirmed, on appeal of the collector, by the circuit court of the United States for the district of Maryland. On a further appeal by the collector the circuit court of appeals for the fourth circuit reversed the decisions which had been made in favor of the importers and sustained the action of the collector. 41 C. C. A. 621, 101 Fed. 710. The case was then brought to this court by writ of certiorari.
Mr. Edward S. Hatch for petitioners.
Assistant Attorney General Hoyt and Messrs. James A. Finch, John C. Rose, and Solicitor General Richards for respondent. [187 U.S. 281, 283]
Mr. Justic White, after making the foregoing statement, delivered the opinion of the court:
As mentioned in the preceding statement, the collector of customs for the district of Baltimore treated the loss arising from the worthless condition of the portion of the cargo in question as a case of damage to the entire cargoes, within the meaning of 23 of the customs administrative act of June 10, 1890. That section reads as follows:
Do pineapples, which, on the voyage to this country, become so decayed as to be utterly worthless, constitute, upon arrival within the limits of a port of entry of the United States, goods, wares, and merchandise imported into the United States, within the meaning of this expression as employed in the section above quoted? is the question for decision.
In Marriott v. Brune (1850) 9 How. 619, 13 L. ed. 282, it was held that, under the 11th section of the tariff act of July 30, 1846, where a portion of a cargo of sugar and molasses was lost by leakage on the voyage to this country, duty should be exacted only upon the quantity of sugar and molasses which arrived here, and not upon the quantity which appeared to have been shipped. In the course of the opinion the court said (p. 632, L. ed. p. 288):
After instancing certain cases provided for in a statute where [187 U.S. 281, 285] a fixed percentage was directed to be deducted for leakage and breakage and a reduction in weight for tare and draff, the court further said (p. 633, L. ed. p. 288):
The doctrine of this decision clearly supports the proposition that it would be inequitable and presumably not within the intention of Congress to assess duty upon an article which on a voyage to this country and before arrival within the limits of a port of entry had become utterly worthless by reason of casualty, decay, or other natural causes, and which the importer might rightfully abandon and refuse to receive or enter for consumption. In other words, that articles thus circumstanced were not in truth within the category of goods, wares, and merchandise imported into the United States, within the meaning of the tariff laws. The ruling in Marriott v. Brune was approved and applied in United States v. Southmayd, 9 How. 637, 13 L. ed. 290, and Lawrence v. Caswell, 13 How. 488, 14 L. ed. 235, and it has been consistently recognized by this court that as a general rule duties are intended to be levied only upon the value of goods which possess some intrinsic or other value at the time when ordinarily the duty would attach on an article.
That the policy we have stated was regarded by Congress as the true doctrine to be applied, is shown by the legislation with respect to the remission of duties upon goods, wares, and merchandise in general, to the extent that the same were damaged. Thus, as stated in United States v. Bache, 8 C. C. A. 258, 20 U. S. App. 286, 59 Fed. 762, 763, the statutory system, from 1799 to the adoption of the tariff act of October 6, 1890, in regard to rebates of duties on account of damage to imported merchandise in transit, was embodied in 2927 of the Revised Statutes, being a substantial reproduction of a section of the act of 1799. The section of the Revised Statutes reads as follows: [187 U.S. 281, 287] 'Sec. 2927. In respect to articles that have been damaged during the voyage, whether subject to a duty ad valorem, or chargeable with a specific duty either by number, weight, or measure, the appraisers shall ascertain and certify to what rate or percentage the merchandise is damaged, and the rate of percentage of damage, so ascertained and certified, shall be deducted from the original amount subject to a duty ad valorem, or from the actual or original number, weight, or measure, on which specific duties would have been computed. No allowance, however, for the damage on any merchandise that has been entered, and on which the duties have been paid or secured to be paid, and for which a permit has been granted to the owner or consignee thereof, and which may on examining the same prove to be damaged, shall be made, unless proof to ascertain such damage shall be lodged in the custom house of the port where such merchandise has been landed within ten days after the landing of such merchandise.'
So, also, by 2921 of the Revised Statutes [U. S. Comp. Stat. 1901, p. 1929], it was provided as follows:
By the act of July 14, 1870 (16 Stat. at L. 265, chap. 255), however, an exception was ingrafted upon the general provision as to allowances for damage which might have resulted to goods, wares, and merchandise on the voyage, by the enactment that no allowance should be made with respect to certain fruits, for loss by decay on a voyage, unless the same should exceed 25 per centum of the whole quantity, and the allowance then made should be only for the amount of loss in excess of 25 per centum of the whole quantity. As said in Scattergood v. Tutton, 2 Fed. 28, the limitation was applied 'manifestly to avoid allowance for trifling losses.' While, however, certain fruits were made dutiable by the tariff act of March 3, 1883 (22 Stat. at L. 504, chap. 121), and certain other fruits ( including pineapples) were placed on the free list (ld. 519, chap. 121), the discrimination referred to against damage allowances upon importations of fruit [187 U.S. 281, 288] was not continued, and in 23 of the customs administrative act of 1890 fruits are not discriminated against.
In its decisions upon applications of importers to be exempted from payment of duties because of the practical destruction of an article while in transit to this country, or for an allowance because of damage occasioned to imported goods before arrival here, the Treasury Department has frequently applied the doctrine enunciated by this court in Marriott v. Brune, viz., that the purpose of Congress in enacting tariff laws was to exact the payment of duty only upon imported articles which were in truth and in fact, entitled to the appellation of goods, wares, and merchandise, articles which were not absolutely worthless, but may possess some value for use or consumption. Thus, in treasury decision No. 424, of date July 15, 1869, duties were ordered to be remitted on four cases of needles which had become worthless by reason of being submerged in salt water on the voyage of importation. It was held that the case did not come within the prohibition of the 33d paragraph of the 3d section of the act of July 14, 1862 [12 Stat. at L. 546, chap. 153], which prescribed that no allowance for partial loss or decay should be made in consequence of rust of iron or steel, etc. Again, in treasury decision No. 1,167, of date July 8, 1872, fruit which had become worthless on the voyage of importation was held not dutiable, and the provision of the act of July 14, 1870, limiting the damage allowance on fruit, was held not to apply, and it was ordered that the case should be treated as if no importation had been made. In the course of the decision, known as treasury decision No. 3,236, of date May 14, 1877, after ruling that the 'quantity' specified in the act of July 14, 1870 [16 Stat. at L. 265, chap. 255, 21], limiting allowances for damage to green fruit, referred to the quantity specified in the damage application and landed in the United States, it was observed (italics not in the original):
In treasury decision No. 3,272, dated July 21, 1877, passing upon a case where an importer, in his application for damage [187 U.S. 281, 289] allowance upon 41 barrels of oranges, included as part of the 41 barrels, 20 1/2 barrels of entirely worthless oranges, it was declared that, if the goods had been landed in the United States as any other merchandise, and no damage application had been filed, duty would have accrued thereon; whereas if they had been thrown overboard at sea, no duty would accrue, as there would have been no importation of that quantity. In treasury decision No. 4,126, of date August 1, 1879, upon application being made for a damage allowance upon an invoice of certain oranges and lemons, the goods were reported damaged 'to the extent of 100 per cent,-in other words, entirely worthless.' The ruling in treasury decision No. 1,167 was applied, and it was held that, where fruit was so damaged on the voyage of importation as to be entirely worthless, the clause in the statute limiting the damage allowance to the excess over 25 per cent did not apply, and that the case should be treated the same as if no importation had been made. Treasury Decision No. 9,719, dated November 19, 1889, reads as follows:
After the passage of the customs administrative act of June 10, 1890, the board of general appraisers, on June 6, 1891, announced its decision upon a protest against the exaction of [187 U.S. 281, 290] duty on an alleged shortage of 35,700 oranges, part of an invoice of 280, 000 oranges, on which entry had been made and the duty paid. The shortage was not ascertained until after the payment of the duties, and such shortage was presumably represented by a quantity of 'rots and slush,' which had been removed from the vessel in obedience to the health ordinance of the city of Baltimore. The collector and naval officer reported that they were satisfied by proof that the 35,700 oranges became rotten and worthless on the voyage and never went into consumption. It was held that the collector was authorized to make allowance for the shortage in the liquidation of the duty on the entries. In the course of the decision it was said:
Treasury Decision No. 16,138, dated June 8, 1895, related to a claim of allowance for shortage on an importation of cocoanuts, the shortage being occasioned by the rotting and breaking of certain cocoanuts on the voyage of importation. In consequence of the ruling in United States v. Bache, 8 C. C. A. 258, 20 U. S. App. 286, 59 Fed. 762, wherein it was held that glass broken on the voyage of importation, but which possessed some value for manufacture, should be allowed for as a damage within the meaning of 23 of the customs administrative act of 1890, the Treasury Department refused to accept the doctrine laid down by the board of general appraisers, viz., that merchandise the value of which is totally destroyed ceases to be damage, and may [187 U.S. 281, 291] properly be treated as a shortage. This last was but another form of stating the proposition that that which has been rendered worthless on the voyage to this country, by casualty, decay, or other natural causes, is not embraced within the category of goods, wares, and merchandise, even though existent on the vessel on its arrival within the limits of a port of entry. On the controversy, however, being brought into the courts, the decision of the board of general appraisers was upheld. Shaw v. Dix, 72 Fed. 166. In distinguiohing the case before it from the Bache Case the court said (p. 167):
Article 1236 of the customs regulations of 1899 was referred to in the argument at bar as supporting the contention on behalf of the government that Congress intended by 23 of the customs administrative act of June 10, 1890, to classify everything reaching this country, invoiced from a foreign port, as imported goods, wares, and merchandise, however worthless specific articles might have become during the voyage. But the regulation lends no support to this contention. It was based upon 2984 of the Revised Statutes [U. S. Comp. Stat. 1901, p. 1958], which conferred authority upon the Secretary of the Treasury to remit impost [187 U.S. 281, 293] duties paid or accruing upon imported merchandise which had been injured by accidental fire or other casualty after arriving in this country and while in the actual or constructive possession of the officers of the government. In effect, by the terms of the regulation, 2984 of the Revised Statutes [U. S. Comp. Stat. 1901, p. 1958], is construed as not conferring authority upon the Secretary of the Treasury to make allowances for any deterioration or damage to such merchandise from natural or avoidable causes, arising after the arrival of merchandise and the attaching of duties thereon, a ruling which throws no light upon the proper decision of the question we are considering.
When Congress enacted the customs administrative act of 1890 it must be presumed to have possessed knowledge of the decisions of this court to which we have referred and the consistent application made of the doctrine of those decisions by the officials charged with the execution of the tariff laws, as evidenced by the cited treasury decisions. In the light of this fact, it would require a clear expression by Congress of its intention to adopt a contrary policy, before a court would be justified in holding that such was the purpose of the legislative branch of the government. Section 23 of the customs administrative act contains no such clear expression of an intention to alter the prior practice, but the contrary. The reference in 23 to an allowance for 'damage,' and the provision that the abandoned portion of cargo should 'be sold by public auction or otherwise disposed of for the account or credit of the United States,' manifestly imports that it related to an article which, when the duty attached, was possessed of some value, and therefore negatives the idea that Congress was concerning itself with that which was destitute of all value. When, therefore, it was enacted that in a certain contingency no allowance should be made for 'damage to goods, wares, and merchandise imported into the United States,' it is reasonable to construe this language as not referring to an article, case, or package, which, though in the semblance of merchandise, had become absolutely valueless by reason of natural causes or casualty occurring thereto while the article, case, or package was in transit to the United States. The section then not embracing [187 U.S. 281, 294] articles which upon arrival in this country were outside of the category of imported goods, wares, and merchandise, such articles must be held, in accordance with the prior rulings on the subject, not to be susceptible to assessment for duty. If, as is conceded by the government, the rotten and worthless pineapples in question had been thrown overboard before the vessel reached this country, and no duty could have been assessed upon the fruit thus disposed of, the circumstance that the mass of rotten fruit in question could not, perhaps, have been gotten at upon the voyage by reason of the extent and character of the cargo of which it formed a part, so as to permit of the worthless stuff being dumped overboard before the arrival of the vessel in the United States, ought not, in justice, to debar the importer from successfully contending that the worthless material when it reached this country was not goods, wares, or merchandise within the intent of the tariff acts.
Judgment of the Circuit Court of Appeals is reversed; judgment of the Circuit Court affirmed; and the cause remanded to that court, with a direction to carry its judgment into effect.
[ Footnote 1 ] U. S. Comp. St. 1901, p. 1930.