1. An importer of sugars having entered them at the custom house
by a warehouse entry, under sec. 12 of the Act of Aug. 30, 1842, c.
270, as amended by sec. 1 of the Act of Aug. 8, 1848, c. 84, gave,
with sureties, a bond, conditioned to be void if he or his
"assigns" should, within a specified time, withdraw them from the
warehouse in the mode prescribed by law, and pay to the collector a
sum specified, "or the true amount, when ascertained, of the duties
imposed." The act required the sugars to be kept subject to the
order of the importer, "upon payment of the proper duties," to be
ascertained on entry, "and to be secured by his bond," with surety.
He afterwards sold the sugars in bond, and gave to the purchaser,
who agreed to pay the duties as part of the purchase price, a
written authority, on which the sugars were withdrawn; but the full
amount of the proper duties, which was less than the sum specified
in the condition of the bond, was not paid. In a suit on the bond
to recover the unpaid duties
held that the obligors are
liable.
2. Although it is the usage of trade to sell goods in bond and
deliver them by an order for their withdrawal, the purchaser
withdrawing them and paying the duties, the obligors do not become
merely sureties, with the goods as the primary security for the
duties, nor are they released because the officers of the United
States unlawfully part with the goods without exacting payment of
the duties chargeable thereon.
3. The negligence of the officers does not affect the liability
of either the principal or the surety in a bond to the United
States.
Page 106 U. S. 438
The facts are stated in the opinion of the Court.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
On August 2, 1865, the firm of Grinnell, Minturn & Co.,
being the owners of five hundred and eighty packages of sugar,
imported from abroad, entered them at the custom house in New York
by a warehouse entry, and thereupon the members of that firm, as
principals, and one Clark, as surety, executed under their hands
and seals and delivered to the collector a warehouse bond,
conditioned that the bond should be void if the principals, "or
either of them, their or either of their heirs, executors,
administrators, or assigns," should, "on or before the expiration
of one year from the date of the importation" of the said goods,
withdraw them, "in the mode prescribed by law, from the public
store or bonded warehouse" where they might be deposited at the
port of New York, and pay to the collector for that port
$23,787.99, "or the true amount, when ascertained, of the duties
imposed," by laws then existing, or thereafter to be enacted, upon
the said goods, etc. On the giving of the bond the sugars were
placed in the public store and in the custody of the collector, as
provided by the warehousing statutes. On August 8, 1865, the owners
sold to Gibson, Early & Co. all the sugars, the same being
still in warehouse, and held by the collector for duties, under
said statutes. By the terms of the sale, the goods were sold
expressly subject to the payment of all duties thereon by Gibson,
Early & Co., who assumed the payment of the duties as part of
the agreed price of the goods on the sale, the price, less the
duties so assumed, being paid in cash on delivery. The sellers made
delivery of the goods in bond, subject to the duties, by writing
and signing, on August 9, 1865 at the foot of the warehouse entry,
the following consent: "We hereby authorize Gibson, Early & Co.
to withdraw
Page 106 U. S. 439
the sugars described in this entry. Grinnell, Minturn & Co."
It was not the custom to give any formal notice to the collector or
any other officer of the customs of such sales in bond, nor was any
such notice given in this case. The authority to withdraw, in the
form above stated, would be and was presented to the collector in
due course before the withdrawal could be made by the purchaser.
The total weight of the sugars, as returned by the government
weighers, was 755,621 pounds, upon which the proper duty at three
cents per pound, was liquidated at $22,668.63. On August 11, 1865,
Gibson, Early & Co. withdrew for transportation to Cincinnati,
under the said authority from Grinnell, Minturn & Co., 325,011
pounds of the sugar, and paid $9,750.33 duties thereon. On August
29, 1865, they withdrew for consumption, in like manner, 48,618
pounds, and paid $2,058.42 duties thereon. Afterwards, and before
September 4, 1865, they sold to one Camp the residue of the sugars,
the same being then in warehouse, and being, by the terms of the
sale, sold in bond, expressly subject to the payment of all duties
thereon by Camp, who assumed the payment of said duties as part of
the agreed price of the goods on the sale. A firm of custom house
brokers, Wylie & Wade, was employed by Camp to withdraw the
sugars and to pay the duties thereon, and for that purpose was
furnished by Camp with the amount of the duties, $10,859.88, in
gold. On September 4, 1865, Gibson, Early & Co. made delivery
to Camp of the residue of the sugars in bond, by writing and
signing at the foot of the withdrawal entry made thereof by his
said brokers, the following consent: "We authorize Wylie & Wade
to withdraw the goods described in this entry. Gibson, Early &
Co." No formal notice of this sale to Camp was given to the
collector or any other officer of the customs. This last authority
to withdraw was presented in due course by said brokers when they
desired to withdraw the goods. This was done on September 4, 1865,
when they made a withdrawal entry of the residue of the sugars, the
weight of which was 361,996 pounds. The duty at three cents per
pound was $10,859.88. But the collector demanded as duties only
$9,352.89, being at the rate of three cents per pound on 311,763
pounds, leaving due as duties, $1,506.99. The goods were delivered
to the brokers,
Page 106 U. S. 440
and were of greater value than the duties chargeable on them.
This was done without the knowledge or consent of Grinnell, Minturn
& Co. The first knowledge or notice they had of the withdrawal
without the payment of full duties was a notice from the collector,
December 6, 1867, as to the amount so remaining unpaid. Before that
time, the brokers had become insolvent, and Gibson, Early & Co.
became insolvent before the trial of this suit. The United States
having brought suit on the bond against the obligors in it, to
recover the $1,506.99, with interest, a jury was duly waived, and
the court, having found the foregoing facts, found the following
conclusions of law:
1. That the facts constituted no bar to a recovery.
2. That if the defendants were to be regarded as sureties, after
the transfer of the title to the property in bond, instead of
principals, they stood in no better position.
3. That the laches of the custom house officers, in delivering
the goods without collecting the whole of the duties, could not
affect the plaintiffs, as the United States were never bound by the
laches of their agents, nor could the defendants set up such laches
as a discharge of their obligation.
4. That the plaintiffs were entitled to judgment.
The defendants excepted to each of said conclusions of law, a
judgment was rendered for the plaintiffs for $3,096.11, and the
defendants brought this writ of error.
The court below also found, as facts
"That it was the established and uniform usage of trade in New
York at the times of said sales and deliveries and long before for
importers to make sales of imported goods, which were in warehouse,
in bond, the purchaser on such sales assuming the payment of the
duties thereon, and being allowed and credited by the seller with
the amount of the duties so assumed, as so much paid on account of
or deducted from what would otherwise have been the purchase price,
and for the seller to make delivery of said goods in bond, by
signing a written consent to the withdrawal of said goods by the
purchaser, and it was also in accordance with such usage and custom
for successive sales and deliveries of goods in bond to be made, on
similar terms and in the same manner, so long as any of such goods
remained in warehouse, the last purchaser withdrawing the goods
under the written consent so received by him upon and as the
delivery thereof, and paying
Page 106 U. S. 441
the duties thereon on such withdrawal; that the said custom and
usage were at the times aforesaid, well known and understood, and
the established and settled practice at the custom house in New
York was to treat the party holding such consent, for withdrawal,
and him only, as the person entitled to withdraw and receive the
goods on payment of the duties, and, upon the payment by him of the
duties remaining due thereon, and not otherwise, to issue a written
permit for the actual delivery to him of said goods out of
warehouse, and that, during the period covered by the transactions
hereinbefore set forth, the following regulations of the Treasury
Department were in force, to-wit:"
"Art. 442. The entry for withdrawal of merchandise from
warehouse for consumption at port of original importation, shall be
made by the party in whose name the merchandise was warehoused, or
by some person duly authorized for the purpose pose by him, and in
either case shall be signed by the party making the withdrawal.
This entry shall exhibit the marks and numbers of the packages, the
description and quality of the goods, and the dutiable value of the
same. On presentation to the proper officer in the collector's
office, it shall be compared with the record, on the warehouse
books, of the original warehouse entry, and, if found correct, be
properly entered therein, the warehouse bond number endorsed
thereon, and the amount of duties payable estimated. From the
collector's office it shall then be taken by the importer to the
naval office, where a similar comparison shall be made with the
warehouse records of that office, and the estimate of duties
verified and endorsed upon the duplicate entry. The amount of
duties thus ascertained having been paid, a permit will be issued
for the delivery of the goods. Article 443. Merchandise in bulk,
liquors, sugars, molasses, cocoa, pepper, and other articles bought
and sold by weight, when withdrawn for export or transportation,
must be entered for such destination at the actual quantities on
which duties were estimated at the time of arrival in the United
States, and, to secure this, weighers, measurers, and gaugers will
be required to mark on each package its contents, as determined by
them on its entry for warehouse. On these quantities the duties on
export and transportation entries will be estimated. Goods
withdrawn for
Page 106 U. S. 442
consumption may be taken at average valuations, care being had
that on the last withdrawal the entire balance of duty be
collected. Art. 444. Should the final withdrawal entry be for
export or transportation, and there be any difference between the
actual duty and the amount to close the sum due on the warehouse
entry, the excess, if any, shall be refunded on the last withdrawal
for consumption, and the deficiency, if any, collected on amendment
to said entry."
The contention for the plaintiffs in error is that by the
substitution for a credit system, in the payment of duties, of a
deposit of the goods in warehouse, subject to a withdrawal for
consumption only on the payment of duties, involving the holding by
the United States of possession of the goods in the meantime, such
possession became the primary security for the duties, and the
obligors in the bond were thereafter merely sureties, and were
wholly released because the officers of the United States parted
with the possession of the goods without exacting payment of the
duties.
Section 1 of the Act. of Aug. 6, 1846, c. 84, amendatory of ยง 12
of the Act of August 30, 1842, c. 270, provides that on an entry of
goods for warehousing, the goods shall be taken possession of by
the collector, and deposited in the public stores, there to be kept
subject at all times to the order of the owner, importer,
consignee, or agent,
"upon payment of the proper duties and expenses, to be
ascertained on due entry thereof for warehousing, and to be secured
by a bond of the owner, importer, or consignee, with surety or
sureties to the satisfaction of the collector, in double the amount
of said duties, and in such form as the Secretary of the Treasury
shall prescribe."
It is contended by the plaintiffs in error that a private
creditor, standing in the same relation to them and to the goods
which the United States occupied under the warehousing system as
provided for by the statute and as practically administered, could
not have voluntarily surrendered the goods which had been placed in
his hands as security for the payment of the debt, and which were
available for that purpose, without requiring payment of the debt,
otherwise than with the consent of the plaintiffs in error, without
discharging them from their liability; that the United States are
entitled to no other or
Page 106 U. S. 443
higher right than a private creditor would be entitled to in the
same case, and that the consent of the importers to the withdrawal
of the goods by Gibson, Early & Co. was not a consent
unconditionally to their delivery, or to their delivery without the
payment of duties, but only to their withdrawal from warehouse in
the manner and upon the terms and conditions prescribed by law and
by the Treasury regulations and by usage -- namely after all duties
thereon had been first paid, and not otherwise.
The warehousing statute, above cited, provides that warehoused
goods shall be subject to the order of their owner on payment of
the duties. Therefore, no order of the plaintiffs in error could
become operative to affect any rights of the United States unless
the duties on the goods to be affected by the order were paid.
Moreover, the provision as to the deposit of the goods, and their
retention till the duties on them are paid is coupled with the
provision for the securing of the duties by the bond. Evidently the
intention of the statute was to superadd to the security of the
holding of the goods the security of the bond, so that, in case of
a delivery of the goods by fraud, or mistake, or negligence in the
officers of the government, the security of the bond should remain.
The form of the bond taken was such that while in connection with
the regulations and the usage, commerce was favored by the
privilege of dealing in warehoused goods, it was clearly intended
to hold the obligors responsible if any purchaser from the
importers should obtain the goods on their order without paying
full duties. The condition is that the bond shall be void if they
or their "assigns" shall withdraw the goods and pay the "true
amount" of duties. The bond is not to become void on any other
condition, and it is not to become void unless, in addition to the
withdrawal of the goods, the true amount of duties is paid. This
view shows that the parties have contracted to be and remain
principal debtors to the United States until the true amount of
duties is paid, whatever fraud or negligence there may be in
parting with the possession of the goods without the payment of the
true amount of duties. There was no power in any officer of the
government to alter the terms or effect of this contract, and
destroy the obligation of the bond,
Page 106 U. S. 444
by giving up the goods without the payment of the duties. The
same statute required the holding of the goods and the taking of
the bond. The cases in which it has been held that the United
States had parted with rights, by reason of acts done to the
prejudice of persons who had contracted with them, have all been
cases where there was authority of law to do such acts. In
United States v. Adm'rs of Hillegas, 3 Wash.C.C. 70, it
was held, by Mr. Justice Washington that acts of the United States
acting within their proper spheres, and to be imputed to the United
States and considered as the acts of the United States, in
extending the time for the payment of the debt due from a principal
in a bond, discharged the sureties in the same bond, they not
having known of or consented to the extension. The same principle
was applied by Mr. Justice Thompson in
United States v.
Tillotson, 1 Paine 305, to the case of the alteration of a
contract by the United States without the consent of the sureties
for its performance. But in the present case, the giving up of the
goods without the payment of the duties was an act not only not
unauthorized, but forbidden by the statute.
The question presented by this case is not a new one in the
court. In
Hart v. United States, 95 U. S.
316, in a suit brought by the United States against the
principal and sureties on a distiller's bond to recover taxes on
spirits distilled by the principal, the sureties pleaded that the
taxes were a lien on the spirits and that the collector, without
the knowledge or assent of the sureties and without first requiring
the payment of the taxes thereon, permitted the principal to remove
from the distillery warehouse distilled spirits more than
sufficient in value to pay the demand. This Court held that, as
under the statute, no distilled spirits could be removed from the
warehouse before payment of the tax, and no officer of the United
States had authority to dispense with the requirement of the law,
the United States were not bound by the acts of the collector, and
the prior cases of
United States v.
Kirkpatrick, 9 Wheat. 720;
United
States v. Van Zandt, 11 Wheat. 184;
United States v.
Nicholl, 12 Wheat. 505;
Gibbons v.
United States, 8 Wall. 269, and
Jones v.
United States, 18 Wall. 662, were cited as
establishing that the government is not responsible for
Page 106 U. S. 445
the laches or the wrongful acts of its officers, and it was said
by the Chief Justice delivering the opinion of the Court:
"Here, the surety was aware of the lien which the law gave as
security for the payment of the tax. He also knew that in order to
retain this lien, the government must rely upon the diligence and
honesty of its agents. If they performed their duties and preserved
the security, it inured to his benefit as well as that of the
government; but if, by neglect or misconduct, they lost it, the
government did not come under obligations to make good the loss to
him, or, what is the same thing, release him
pro tanto
from the obligation of his bond. As between himself and the
government, he took the risk of the effect of official negligence
upon the security which the law provided for his protection against
loss by reason of the liability he assumed."
These views are conclusive to show that the importers as well as
their surety are liable on the bond in this case. If the importers
could be regarded as having always been or as having at any time
become sureties only in respect of the duties, with the goods as
the primary security (a position shown to be wholly untenable), it
is well settled by the decisions of this Court that the negligence
of the officers of the government does not affect the liability of
a surety in a bond any more than it does that of his principal.
United States v.
Kirkpatrick, 9 Wheat. 720;
United
States v. Van Zandt, 11 Wheat. 184;
Dox v. Postmaster
General, 1 Pet. 318.
Judgment affirmed.