Ryan v. United States - 86 U.S. 514 (1873)
U.S. Supreme Court
Ryan v. United States, 86 U.S. 19 Wall. 514 514 (1873)
Ryan v. United States
86 U.S. (19 Wall.) 514
1. Sureties on a bond for the transportation of tobacco from one district to another, in the condition of which the number of boxes and pounds of tobacco are given and the kind of tobacco described, are responsible for
the delivery at the proper place of the tobacco, and not the boxes in which it was supposed to be but never was.
2. The fraud of the principal in filling the boxes with other substances than tobacco before they left his warehouse does not release the sureties from this obligation.
3. Nor does the carelessness of the inspecting officer, though it made the fraud of the principal in the bond easier of accomplishment, release the sureties on his transportation bond.
John May, a manufacturer of tobacco at Indianapolis, in the Sixth Collection District of Indiana, had a quantity of plug tobacco in his store on which he had not paid the government taxes. Representing to the assessor and collector of his district that he wished to "transport" it from his factory to a bonded warehouse, Class B, in New York, he got permission to do so on executing the usual transportation bond with surety. * He did accordingly execute such bond, in the penalty of $10,000, with one Ryan and another as his sureties. The condition of the bond was:
"That if the above-bounden John May shall transport or cause to be transported, and within twenty days from the date hereof shall complete the transportation of the following described merchandise, viz.,"
"from the manufactory owned by John May at Indianapolis directly to the Thirty-Second District of the State of New York and shall deliver the same to the collector of said district and store or cause the same to be stored in a bonded warehouse, Class B, in said district according to law, then this obligation is to be void; otherwise to abide and remain in full force and virtue."
Before executing and delivering the bond, May exhibited 110 boxes to the inspector of tobacco and represented to him that they contained plug tobacco of a quality subject to a duty of 40 cents a pound. The inspector did not examine the contents of the boxes, the same being closed and nailed up so as to exclude a view of the contents. The boxes were
duly branded by the inspector as containing plug tobacco. After the execution of the bond and after its delivery to the officers of the United States, May shipped to the Thirty-second Collection District of New York the identical 110 boxes exhibited as aforesaid to the inspector, the same being the boxes branded by him, and the boxes were delivered in a bonded warehouse, Class B, in said Thirty-second District of New York. The collector of that district certified to the collector of the Sixth Collection District of Indiana that the boxes had been so received, and the usual bond executed therefor by the consignee, and thereupon the collector of the collection district of Indiana entered the transportation bond given by May and his sureties "cancelled." The certificate of the collector of the collection district of New York, and the entry of cancellation by the collector of the district of Indiana were made without knowing what the boxes contained.
The boxes, after their delivery in the bonded warehouse, New York, were discovered to contain nothing but ashes, brickdust, brickbats, tobacco remnants &c. They contained no tobacco in plug. The sureties had no knowledge of the contents of the boxes at any time before their arrival and inspection in the bonded warehouse at New York; they executed the bond in good faith. The thing, in short, was a fraud practiced by May, who, by means of this pretense of transporting the plug tobacco to New York, was enabled to withdraw it from the manufactory at Indianapolis and cheat the government out of its revenue. For after the bond was given and the 110 boxes sent off, May could, without observation, smuggle away as much plug tobacco still in his factory as the 110 boxes would hold (about 12,000 lbs.) the tax upon which was still unpaid. By pretending to remove to New York what the 110 boxes would hold, he could obtain credit for it on the assessor's lists, and then its disappearance would be a matter of course. The bond enabled him to remove not only the boxes, but the tobacco as well, and the latter need not go to New York.
Being indicted for this fraud, May fled the country, and
being wholly insolvent, the United States sued Ryan and the other surety upon the transportation bond already mentioned. The court below, on the case as above stated, gave judgment against them and they took this writ of error.