United States v. Seventy-Five Bales of Tobacco

COXE, Circuit Judge. On writ of error to review a decision of the District Court for the Southern District of New York, which directed a verdict for the defendants in an action brought by the United States for the forfeiture of 49 bales of tobacco imported at Tampa, Fla. The information charges that the invoice and entry were false and fraudulent in that the tobacco was described therein as “leaf tobacco fillers,” whereas it was in truth and in fact “wrapper tobacco.” The information was laid under section 9 of the customs administration act of June 10, 1890, c. 407, 26 Stat. 135 [U. S. Comp. St. 1901, p. 1895]. That section is as follows: “Sec. 9. That if any owner, importer, consignee, agent, or other person shall make or attempt to make any entry of imported merchandise by means of any fraudulent or false invoice, affidavit, letter, paper, or by means of any false statement, written or verbal, or by means of apy false or fraudulent practice or appliance whatsoever, or shall be guilty of any willful act or omission by means whereof the United States shall be deprived of the lawful duties, or any portion thereof, accruing- upon the merchandise, or apportion thereof, embraced or referred to in such invoice, affidavit, letter, paper, or statement, or affected by such act or omission, such merchandise, or the value thereof, to be recovered from the person making the entry, shall be forfeited, which forfeiture shall only apply to the whole of the merchandise or the value thereof in the case or package containing the particular article or articles of merchandise to which such fraud or false paper or statement relates; and such person shall, upon conviction, be fined for each offense a sum not exceeding five thousand dollars, 'or be imprisoned for a time not exceeding two years, or both, in the discretion of the court.” The statute under which the property of the defendants was seized is penal in character. Proof which is sufficient to uphold a forfeiture of the importers’ property is also sufficient to justify a conviction, fine and imprisonment. • Such a statute must be strictly construed. Manifestly it was not intended to apply to fnistalces or errors in judgment but to acts of commission and omission, which plainly indicate a willful and culpable intent to defraud the government of its lawful revenues. Fraud, whether the action be criminal or -civil, must be proved; it cannot be inferred; this is elementary. A mere mistake in the description of imported merchandise unaccompanied by acts from which an intent to defraud may be presumed is, in our judgment, insufficient to justify a forfeiture under this section. U. S. v. Ninety-Nine Diamonds (C. C. A.) 139 Fed. 961. An examination of the record convinces us that there was no error in directing a verdict for the defendants. Our reasons for this conclusion, are briefly as follows: First. The contention of the plaintiff that the importation was fraudulent rests wholly upon the statements of the invoice and entry [131] that the merchandise consisted of “108 hales of leaf tobacco fillers” and “tobacco fillers,” respectively. There is nothing to show that at the time of the entry the importers knew that these statements were incorrect. The testimony upon which the plaintiff relies to establish their falsity resulted from an examination of the tobacco after it had been delivered to the importers and had reached New York. Second. The entire importation of 308 bales was delivered to the customs officers at Tampa for examination. The usual practice of sending one package in ten to the public stores, when merchandise is entered for consumption, does not obtain at Tampa where there arc no public stores. The entire importation goes to the warehouse where it is examined. It is not delivered to the importers until such examination is made and the duty paid. In the present case entry was made July 25, and the tobacco was withdrawn August 2, after an examination and payment in full of the duties levied by the collector. The tobacco remained in the custody of the customs officers for a period of eight days. It must be presumed that the importers knew of the absence of public stores at Tampa and the custom there to warehouse the entire importation. It seems incredible that men of ordinary prudence and intelligence would attempt so clumsy a fraud as the one. contended for by the plaintiff — a fraud that would be detected the moment the bales were examined. In such circumstances as these a finding that the description of the tobacco as “fillers” in the invoice and entry is sufficient evidence of a fraudulent purpose must rest on the assumption that the collector was either hopelessly incompetent or was in conspiracy with the importers. There is not a shadow of suspicion resting upon the collector or any of his subordinates. Third. Every one of the bales was carefully examined at Tampa by (he acting deputy collector who had been in the tobacco business before entering the customs service and was an experienced examiner. His honesty and competency have not been questioned. The result of this examination was that he returned 6 bales as wrapper tobacco, 2!) bales as having a percentage of wrapper and the balance as filler. As the 2!> bales contained less than 15 per cent, wrapper, duty was assessed and paid on six^bales of wrappers, and on 306 bales of fillers at the lesser rate. At 'the trial, the examiner testified that he never made a more careful examination than the one in question. lie was confident his classification was correct and lie has seen no reason since to change it. He further testified that there was nothing unusual about the present entry; that the usual practice was to enter the merchandise as described in the invoice, classify it afterwards as wrapper or filler and levy duty accordingly. It was not the custom to seize merchandise so entered. In effect the importers came to the collector and said: “We desire to pay duty on this tobacco: It is called ‘filler’ in the invoice. Imt here it is. the entire 108 bales: examine it for yourself and let us know the amount of the duty.” Where duty is paid after such an examination we fail to see how the parties paying can be charged with a fraudulent purpose to cheat the United States. If the tobacco had been entered iu the precise language [132] of examiner McFarlane’s report, namely “6 bales wrapper, 29 bales having a percentage of wrapper, less than 15 per cent, and 73' bales of filler” it would still be open to the plaintiff, upon its present theory, to seize the tobacco because it was fraudulently invoiced and entered. The testimony shows qonclusively that there is a wide diversity" of opinion among expert tobacconists as to the proper classification of tobacco into the two groups of wrappers' and fillers, a carrot which is accepted as wrapper by one may be rejected by another. It is largely a matter of opinion and, within certain limits, it is so recognized both by the trade and the officers of the government. No two of the witnesses in the present controversy are in perfect accoru. Fourth. .The tobacco was shipped to New York August 2d and was not seized until the 22d of August, during which time it remained in warehouse. Nothing was done to it during the interval; no attempt was made to hide it or dispose of it or mix it with other tobacco, and no objection was made when the customs officials asked permission to examine it. In short, from the beginning to the end of the transaction the conduct of the defendants — unless the statement in the invoice is an exception — has been the conduct of honest men, free from deception, quibbling and prevarication. Fifth. Paragraphs 213 and 214 of the tariff act of July 24, 1897, c. 11, § 1, Schedule F, 30 Stat. 169 [U. S. Comp. St. 1901, p. 1648] impose duties upon tobacco and define the meaning of the terms “wrapper tobacco” and “filler tobacco.” Under these provisions and the regulations prescribed by the Secretary of the Treasury, as required by paragraph 214, it is, at least, doubtful whether the entry in question was not absolutely correct in any view which may be taken of the proceeding. Paragraph 214 provides that: “The term ‘wrapper tobacco’ as used in this act means that quality of leaf tobacco which is suitable for cigar wrappers, and the term ‘filler tobacco’ means all other leaf tobacco. Collectors of customs shall not permit entry to be made, except under regulations to be prescribed by the Secretary of the Treasury, of any leaf tobacco, unless the invoices of the same shall specify in detail the character of such tobacco, whether wrapper or filler, its origin and quality.” On April 1, 1903, the Treasury Department issued instructions to collectors as follows: “Importations of leaf tobacco will be denied entry unless the invoices specify in detail the character of such tobacco whether ‘wrapper’ or ‘filler,’ its origin or quality. When an invoice fails to state whether the tobacco is ‘filler’ or ‘wrapper’ and the bona fides are beyond question, opportunity will be given to secure a corrected invoice. Where good faith is not shown, summary action will be taken.” It would seem, therefore, that under the law as interpreted by the department, the importer was limited to a choice between the terms “wrapper tobacco” and “filler tobacco,” and was not permitted to describe his importation as “mixed tobacco.” If, in a case like the present, he used the term “wrapper tobacco” he would be compelled to pay the high rate of duty upon an invoice over half of which was subject to the lower rate; whereas if he used the term “filler tobacco” an [133] examination by the examiner would enable him to classify it properly, charging to each variety its proper share of the duties. Upon this question the district judge aptly observes: “Now, it seems to me that if an importer looked at this act and looked at these instructions, the natural inference for him to draw from this statute would be that in describing the tobacco in the invoice he should put it in either wrapper or filler. If it was all wrapper, he would put it in wrapper. If it was only partly wrapper, he would put it in filler, I suppose, unless he also filled in in detail the language of the act, when he might say in the invoice, ‘filler tobacco mixed or packed with more than 15 per centum of wrapper tobacco. * * * ’ It seems to me, under these circumstances, that if a man shipping a quantity of tobacco, a portion of which is filler tobacco, mixed or packed with more than 15 per centum of wrapper tobacco, and a portion of which is filler tobacco which is not mixed with an amount equal to 15 per centum of wrapper, it is natural that he should describe it as filler, and that there is no legitimate inference to be drawn from the fact that he does describe it as filler, that he is attempting to smuggle the goods into the country.” We are clearly of the opinion that no case of forfeiture, has been shown. It may be that duty on wrapper tobacco should have been paid on a larger number of bales. If so the plaintiff is still in a positron to recover the correct amount. Such controversies as this frequently arise and they should be determined by the Board of General Appraisers where justice can be done to all concerned. To forfeit the defendants’ property upon the proof shown by this record would, we think, be doing them a marked injustice. The judgment is affirmed.