The Court of Claims made the following findings of fact in this
case. I. During the years 1889, 1890 and 1891, the claimant was a
corporation existing under the laws of New Jersey, organized in
1888 and having a factory for carrying on its business at Bayonne
in that state. II. In 1889 and 1890, the claimant imported from
Canada box shooks, and from Europe steel rods, upon which
importation duties amounting in the aggregate to $39,636.20 were
paid to the United States, of which sum $837.68 was paid on the
importation of the steel rods. III. The box shooks imported as set
forth in finding II were manufactured in Canada from boards, first
being planed and then cut into required lengths and widths,
intended to be substantially correct for making into boxes without
further labor than nailing the shooks together. They were then tied
up in bundles of sides, of ends, of bottoms, and of tops of from
fifteen to twenty-five in a bundle for convenience in handling and
shipping. IV. The shooks so manufactured in Canada and imported
into the United States as aforesaid were at the claimant's factory
in Bayonne, New Jersey, constructed into the boxes or cases set
forth in Exhibit E to the
Page 171 U. S. 211
petition herein by nailing the same together with nails
manufactured in the United States out of the steel rods imported as
aforesaid and by trimming when defective in length or width to make
the boxes or cases without projecting parts,
i.e., the
shooks were imported in bundles of ends, of sides, of tops, and of
bottoms, each part coming in bundles separated from the bundles of
other parts. From one of these bundles of ends the ends of a box
are selected, to which the sides taken indiscriminately from any
bundle of sides are nailed by nailing machines; then the sides are
trimmed off even with the ends by saws; then by bottoming machines
bottoms taken from any bundle of bottoms are nailed on; then the
bottoms are trimmed even with the sides by saws; then, after being
tilled with cans, the tops are nailed on, and then the boxes or
cases are ready for exportation. The cost of the labor expended in
the United States in the necessary handling and in the nailing and
trimming of the boxes as aforesaid was equal to about one-tenth of
the value of the boxes. The principal part of the labor performed
in trimming the boxes was occasioned by the Canadian manufacturer's
not cutting the shooks into the required lengths and widths for use
in making the boxes, and for which the claimants sometimes charged
the cost of such trimming to the Canadian manufacturer.
Held that the company, when exporting these manufactured
boxes, was not entitled to be allowed a drawback under Rev.Stat. §
3019.
This was a petition by a corporation of New Jersey for a
drawback of duties paid upon certain shooks imported from Canada,
and steel rods imported from Europe, which were manufactured into
boxes or cases by the petitioner in its factory at Bayonne, New
Jersey, and were subsequently exported to foreign countries.
The Court of Claims made the following findings of fact:
"1. During the years 1889, 1890, and 1891, the claimant was a
corporation existing under the laws of New Jersey, organized in
1888, and having a factory for carrying on its business at Bayonne
in that state."
"2. In 1889 and 1890, the claimant imported from Canada box
shooks, and from Europe steel rods, upon which importation duties
amounting in the aggregate to $39,636.20 were paid to the United
States, of which sum $837.68 was paid on the importation of the
steel rods."
"3. The box shooks imported as set forth in finding 2 were
manufactured in Canada from boards, first being planed and then cut
into required lengths and widths, intended to be substantially
Page 171 U. S. 212
correct for making into boxes without further labor than nailing
the shooks together. They were then tied up in bundles of sides, of
ends, of bottoms, and of tops of from fifteen to twenty-five in a
bundle for convenience in handling and shipping."
"4. The shooks so manufactured in Canada and imported into the
United States as aforesaid were, at the claimant's factory, in
Bayonne, New Jersey, constructed into the boxes or cases, set forth
in Exhibit E to the petition herein, by nailing the same together
with nails manufactured in the United States out of the steel rods
imported as aforesaid, and by trimming, when defective in length or
width, to make the boxes or cases without projecting parts --
i.e. the shooks were imported in bundles of ends, of
sides, of tops, and of bottoms, each part coming in bundles
separated from the bundles of other parts. From one of these
bundles of ends, the ends of a box are selected, to which the sides
taken indiscriminately from any bundle of sides are nailed by
nailing machines; then the sides are trimmed off even with the ends
by saws; then, by bottoming machines, bottoms taken from any bundle
of bottoms are nailed on; then the bottoms are trimmed even with
the sides by saws; then, after being filled with cans, the tops are
nailed on, and then the boxes or cases are ready for
exportation."
"The cost of the labor expended in the United States in the
necessary handling and in the nailing and trimming of the boxes as
aforesaid was equal to about one-tenth of the value of the
boxes."
"The principal part of the labor performed in trimming the boxes
was occasioned by the Canadian manufacturer's not cutting the
shooks into the required lengths and widths for use in making the
boxes, and for which the claimants sometimes charged the cost of
such trimming to the Canadian manufacturer."
"5. The boxes or cases made as aforesaid were exported from the
United States to foreign countries, in conformity with the
regulations of the Treasury Department then in force, to-wit,
Treasury regulations of 1884, sections 966, 967, and 968,
hereinafter set out, relating to drawbacks upon the exportation
Page 171 U. S. 213
of articles wholly manufactured of imported materials, and cases
so manufactured were entered for such drawback upon the exportation
thereof."
"6. For about four years prior to July 31, 1889, the Treasury
Department had allowed and paid a drawback upon the exportation of
boxes made from imported shooks fastened together with nails made
from imported steel rods as aforesaid, and the Treasury Department
was requested to pay the drawback on the exportation of the boxes
or cases set forth in Exhibit E to the petition, but refused, for
the reasons set forth in the following communication addressed to
the collector of customs at New York:"
" Treasury Department, July 31, 1889"
" Sir: Referring to department letter of March 2, 1885,
addressed to the then collector at your port, in which a rate of
drawback was established on shooks used in the manufacture of
boxes, you are informed that the department has recently given the
matter further consideration, and it appears upon investigation
that the boxes are made complete in Canada, with the exception of
nailing, and that the only manufacture which they receive in this
country consists in their thus being nailed together, which part of
the labor is omitted to be done in Canada merely for convenience in
shipping to the United States."
" The boxes appear to have been manufactured complete abroad,
and, in the condition imported, resemble the finished furniture
imported in pieces, which the department has heretofore held to be
dutiable at the rate applicable to finished furniture. (See
Synopsis, 4272.)"
" The simple act of nailing them together is not, in the opinion
of the department, a manufacture, within the meaning of section
3019, Revised Statutes, and the authority to allow drawback thereon
is hereby revoked."
" You will accordingly receive no further entries for drawback
in such cases."
" Respectfully yours George C. Tichnor"
"
Assistant Secretary"
" Collector of Customs, New York "
Page 171 U. S. 214
"7. The Treasury regulations of 1884, referred to in finding 5,
viz., articles 966, 967, and 968, are as follows:"
" Art. 966. On articles wholly manufactured of imported
materials on which duties have been paid, a drawback is to be
allowed, on exportation, equal in amount to the duty paid on such
imported materials, less 10 percent thereof, except on exportations
of refined sugars, in which case the legal retention is 1
percent"
" Art. 967. The entry in such cases will be as follows, and must
be filed with the collector at least six hours before putting or
lading any of the merchandise on board the vessel or other
conveyance for exportation."
Here follows a form of entry for exportation, with oaths of
exporter, and of the proprietor and foreman of manufactory.
Article 968 contained a form of bond for exportation.
Upon the foregoing findings, the court found the ultimate fact,
so far as it was a question of fact, that the boxes or cases so
exported were not manufactured in the United States, and, as a
conclusion of law, that the claimant was not entitled to recover,
and the petition was dismissed. Whereupon petitioner appealed to
this Court.
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the court.
The single question presented for our consideration in this case
is whether the boxes or cases exported by the petitioner were
"wholly manufactured" in the United States within the meaning of
the section hereinafter cited.
The facts were, in substance, that the claimant imported from
Canada, in 1889 and 1890, box shooks, and from Europe steel rods,
upon which duties were paid to the amount of $39,636.20, under the
Tariff Act of March 3, 1883, 22 Stat. 488, 502, which levied a duty
of thirty percent upon
"casks and
Page 171 U. S. 215
barrels, empty, sugar-box shooks, and packing boxes, and
packing-box shooks, of wood, not specially enumerated or provided
for in this act."
The box shooks so imported were manufactured in Canada from
boards, which were planed and cut into the required lengths and
widths for making into boxes without further labor than nailing
them together. They were then tied up into bundles of sides, ends,
bottoms, and tops, of from 15 to 25 in a bundle, for convenience in
handling and shipping. After importation, they were made up into
boxes or cases by nailing the proper parts together with nails
manufactured in the United States out of the imported steel rods,
and by trimming, when defective in length or width, to make the
boxes or cases without projecting parts.
The ends and sides of the boxes were nailed together by nailing
machines, and the sides trimmed off even with the ends by saws.
Then bottoms were nailed on and trimmed in the same manner. After
being filled, the tops were nailed on and the boxes made ready for
exportation. The cost of the labor expended in the United States in
the nailing, handling, and trimming of the boxes was about
one-tenth of the value of the boxes. The principal part of the
labor in trimming the boxes was occasioned by the Canadian
manufacturer's not cutting the shooks into the required lengths and
widths for making the boxes, the cost of which trimming the
claimant sometimes charged to the Canadian manufacturer.
Upon this state of facts, petitioner made claim for duties paid
as above upon the shooks under Rev.Stat. § 3019, which reads as
follows:
"There shall be allowed on all articles wholly manufactured of
materials imported, on which duties have been paid when exported, a
drawback equal in amount to the duty paid on such materials, and no
more, to be ascertained under such regulations as shall be
prescribed by the Secretary of the Treasury. Ten percentum on the
amount of all drawbacks so allowed shall, however, be retained for
the use of the United States by the collectors paying such
drawbacks, respectively."
The question arises whether the boxes in question were
Page 171 U. S. 216
"wholly manufactured" within the United States of "materials
imported" from abroad. The section above quoted uses the words
"wholly manufactured of materials imported," but we understand it
to be conceded that the words "in the United States" should be
considered as being incorporated into the section after the word
"manufactured." The provision would be senseless without this
interpolation. The objects of the section were evidently not only
to build up an export trade, but to encourage manufactures in this
country, where such manufactures are intended for exportation, by
granting a rebate of duties upon the raw or prepared materials
imported, and thus enabling the manufacturer to compete in foreign
markets with the same articles manufactured in other countries. In
determining whether the articles in question were wholly
manufactured in the United States, this object should be borne
steadily in mind.
The primary meaning of the word "manufacture" is something made
by hand, as distinguished from a natural growth, but, as machinery
has largely supplanted this primitive method, the word is now
ordinarily used to denote an article upon the material of which
labor has been expended to make the finished product. Ordinarily
the article so manufactured takes a different form, or at least
subserves a different purpose, from the original materials, and
usually it is given a different name. Raw materials may be, and
often are, subjected to successive processes of manufacture, each
one of which is complete in itself, but several of which may be
required to make the final product. Thus, logs are first
manufactured into boards, planks, joists, scantlings, etc., and
then by entirely different processes are fashioned into boxes,
furniture, doors, window sashes, trimmings, and a thousand and one
articles manufactured wholly or in part of wood. The steel spring
of a watch is made ultimately from iron ore, but, by a large number
of processes or transformations, each successive step in which is a
distinct process of manufacture and for which the articles so
manufactured receives a different name.
The material of which each manufacture is formed, and to which
reference is made in section 3019, is not necessarily the
Page 171 U. S. 217
original raw material -- in this case, the tree or log -- but
the product of a prior manufacture, the finished product of one
manufacture thus becoming the material of the next in rank. This
case then resolves itself into the question whether the materials
out of which these boxes were constructed were the boards which
were manufactured in Canada or the shooks which were imported into
the United States.
While the planing and cutting of the boards in Canada into the
requisite lengths and shapes for the sides, ends, tops, and bottoms
of the boxes was doubtless a partial manufacture, it was not a
complete one, since the boards so cut are not adaptable as material
for other and different objects of manufacture, but were designed
and appropriate only for a particular purpose (
i.e. for
the manufacture of boxes of a prescribed size), and were useless
for any other purpose. It is not always easy to determine the
difference between a complete and a partial manufacture, but we may
say generally that an article which can only be used for a
particular purpose, in which the process of manufacture stops short
of the completed article, can only be said to be partially
manufactured within the meaning of this section; nor can we regard
the mere assembling and nailing together of parts complete in
themselves, and destined for a particular purpose, as a complete
and separate manufacture. Thus, chairs are made of bottoms, backs,
legs, and rounds, each one of these parts being made separately and
in large quantities. If imported in this condition from abroad and
the parts were assembled and glued or screwed together here, we
think it entirely clear that such chairs would not be wholly
manufactured in the United States, and the same may be said of the
staves, heads, and hoops which constitute a barrel. Upon the theory
of the claimant, if all the parts which constitute a wooden house
were made separately, as they sometimes are, and imported from
abroad and put together in this country in the form of a house, it
would follow that the house must be said to have been wholly
constructed in this country.
It may be said generally, although not universally, that a
complete manufacture is either the ultimate product of prior
Page 171 U. S. 218
successive manufactures, such as a watchspring or a penknife, or
an intermediate product which may be used for different purposes --
such, for instance, as pig iron, iron bars, lumber, or cloth, while
a partial manufacture is a mere stage in the development of the
material towards an ultimate and predestined product, such, for
instance, as the different parts of a watch, which need only to be
put together to make the finished article. If, for instance, the
wheels, chain, springs, dial, hands, and case of a watch were all
imported from abroad and merely put together in this country, we do
not think it could be said that the watch was wholly manufactured
within the United States. The same remark, we think, may be made
with reference to the shooks in this case, which were practically
worthless except for being put together for a box of a definite
size.
The distinction here made was alluded to in the opinion of this
Court in
Worthington v. Robbins, 139 U.
S. 337, in which the question arose whether "white, hard
enamel," used for various purposes, including watch dials, was
dutiable as "watch materials," or as a simple manufacture. In
delivering the opinion of the Court, Mr. Justice Blatchford
said:
"The article in question was, to all intents and purposes, raw
material. If it were to be classed as 'watch materials,' it would
follow that any metal which could ultimately be used, and was
ultimately used, in the manufacture of a watch, but could be used
for other purposes also, would be dutiable as 'watch materials.' In
order to be 'watch materials,' the article must, in itself, bear
marks of its special adaptation for use in making watches. The fact
that the article in question was used in the manufacture of watches
has no relation to the condition of the article as imported, but to
what afterwards the importer did with it."
It does not necessarily follow that the shooks in question were
not a manufacture, and dutiable as such, or that they were dutiable
as boxes, though destined to be put together as such, since, in
United States v. Schoverling, 146 U. S.
76, finished gunstocks, with locks and mountings,
unaccompanied by barrels, were held to be dutiable as manufactures
of iron, and not as "guns."
Page 171 U. S. 219
Bearing in mind that the object of the drawback was partly, at
least, to encourage domestic manufactures, and that all the
substantial work done in this country was in nailing together the
tops, bottoms, and sides of these boxes, we think it clear that it
cannot be said that the boxes so constructed were wholly
manufactured in the United States. The work done in trimming or
sawing off the ends of the boards was a mere incident to the
nailing together, and was caused by the inadvertence, negligence,
or insufficient instructions given to the Canadian manufacturer,
and was no proper part of the manufacture. While the amount of work
done to constitute a new manufacture may not be great,
Saltonstall v. Wiebusch, 156 U. S. 601, yet
we think the fact that, in the transfer of those boards to the
completed boxes, the cost of the labor expended in the United
States represented only one-tenth in value of the boxes is
important, especially when taken in connection with the fact that
the shooks, when imported, were usable only for a single purpose.
It is quite improbable that Congress intended to allow a drawback
upon the nine-tenths represented by the Canadian material for the
benefit of the one-tenth represented by the labor put upon the
boxes in this country. What was doubtless meant was to allow this
drawback upon articles manufactured wholly and
bona fide
within the United States, either from the raw material or from
material which was the result of the last complete manufacture.
While the nails which were used in fastening the shooks
together, and were made from steel rods imported from abroad, may
be said to have been wholly manufactured in the United States
within the principles here announced, they lost their identity as
such when used in nailing the shooks together, and became so far a
part of the boxes that no separate drawback could be claimed for
them.
There was no error in dismissing the petition, and the judgment
of the Court of Claims is therefore
Affirmed.
