Cliquot's Champagne, 70 U.S. 114 (1865)
U.S. Supreme Court
Cliquot's Champagne, 70 U.S. 3 Wall. 114 114 (1865)Cliquot's Champagne
70 U.S. (3 Wall.) 114
Syllabus
1. The provision in the Revenue Act of March 3, 1863, that when foreign goods brought or sent into the United States are obtained otherwise than by purchase, they shall be invoiced at the "actual market value thereof at the time and place when and where the same were procured or manufactured" does not mean any locality more limited than the country where the goods are bought or manufactured. The standard to be applied is the principal markets in that country. Hence, proof of the market value in Paris of wines made at Rheims, a hundred and more miles off, may be given, there being no other evidence on the subject.
2. The provisions in the 70th and 71st sections of the Revenue Act of 1799 by which, when a probable cause of forfeiture is made out to the satisfaction of the judge trying the case, the onus of proving innocence is thrown upon the claimant apply to the Act of 3 March, 1863, though not in terms adopted by it, neither of the said sections having been ever repealed, and this rule of onus probandi having been always regarded as a permanent feature of our revenue system.
3. The expression in the Act of 3 March, 1863, "If any owner, consignee, or agent shall knowingly make an entry of goods &c., by means of any false invoice, certificate, or by means of any other false or fraudulent document," &c., means if such person shall make such entry &c., of
goods knowing that the invoice &c., does not express their actual market value -- swearing falsely and knowing it -- and the expression as used in the act refers to the guilty knowledge on the part of either the owner, consignee, or agent, the act of an agent or consignee being the act of the guilty principal.
4. Prices current obtained from the agent of a manufacturer or from dealers in the manufactured articles generally, and which have been prepared and used by the parties furnishing them in the ordinary course of their business, are so far evidence of the value of the articles mentioned in them as that they may be submitted to the jury as "throwing light" on the matter, as "some guides to candid men," and for their "consideration." And this rule was held to apply so far as that the comparative value, at the town of manufacture (Rheims) and at the capital of the country (Paris) of champagne wines made by one manufacturer (Cliquot), was allowed to be shown by the prices current giving the value of that made by others (Mumm, Meet & Chandon), it not appearing -- either by evidence in the case set forth in the bill of exceptions or by an admission of the judge upon the bill that such evidence was given -- but that the articles were the same in price, kind, and quality.
5. Whether there is sufficient proof of agency to warrant the admission of the acts and declarations of the agent in evidence is a preliminary question for the court.
6. Whatever is done by an agent in reference to the business in which he is at the time employed and within the scope of his authority is said or done by the principal, and may be proved as well in a criminal as a civil case in all respects as if the principal were the actor and the speaker.
7. The proviso in the Act of 3 March, 1863, that its provisions shall not apply to invoices of goods &c., imported from any place beyond Cape Horn or Good Hope until 1 January, 1864, does not apply to cases of fraud. If the guilty means were used after the act took effect, no matter when they were prepared, the offense is complete, revenue laws not being penal laws in the sense which requires them to be construed with great strictness in favor of the defendant. They are remedial laws rather.
As is generally known, champagne wine arrives from France in large quantities into the United States. Some of it is "imported," that is to say, persons here purchase it in France and have it brought here. Large quantities, however, are sent here by the manufacturers of the wine resident in France.
The wine region itself -- the ancient province of Champagne -- is a small district in the northeast of France, of
which the ancient, decayed, and deserted cathedral city of Rheims -- lying to the side of the great thoroughfare of travel from Paris to Strasburgh -- is the capital. The region is largely owned by particular persons, Moet and his partner, Chandon; Mumm, Heidsick, Jaqueson, and the family of Cliquot, most of whom reside about here, but who with all the leading champagne manufacturers have agencies in Paris; they themselves not commonly attending to details of the "commerce," though perhaps responding -- some of them -- from the spot to communications addressed to them on the subject of their wines, referring also sometimes to their agents at Paris or abroad. [Footnote 1] Different manufacturers supply different countries, Eugene Cliquot sending large quantities to the United States, Jaqueson to Russia, different countries having different tastes.
From an early day, the government has directed its attention to making the revenue laws in a form that the collection of duties ad valorem should operate uniformly, and by statute of March 3, 1863, [Footnote 2] it enacts that when goods brought or sent into the United States are obtained in any other manner than by purchase, they shall be invoiced at "the actual market value thereof at the time and place when and where the same were procured or manufactured." And after providing that the invoices shall be made in triplicate and that the manufacturer shall swear to one before the consul nearest to the place of shipment, the act goes on to say (§ 1), that
"If any such owner, consignee, or agent of any goods shall knowingly make an entry thereof by means of any false invoice, or false certificate, or by means of any other false or fraudulent document &c., or fraudulent practice or appliance, said goods shall be forfeited,"
provided
"that the provisions of the act shall not apply to invoices of goods, wares, or merchandise imported from any place beyond Cape Horn or the Cape of Good Hope until the 1st of January, 1864."
The operation of another part of the act prescribing
the mode of making up invoices was postponed by a part of § 1 until July 1, 1863.
The statute enacts also (§ 3) that any person guilty of knowingly doing what makes the goods subject to forfeiture shall be liable to fine and imprisonment.
With this act in force and with numerous persons sending champagne wines from France, the revenue officers of the United States, as it seemed from the general aspect of this case, were impressed by an idea that the invoices were below the usual French prices of the wine, and indeed that there existed perhaps an extensive combination abroad to defraud our revenue. They determined to inquire into it, and if existing, to expose and break it up. They supposed the wines to be invoiced at the cost of manufacture merely, with a fraction added, not at the "market value" of them anywhere.
They accordingly employed, as it seemed, a naval officer, Mr. Farwell, to investigate the matter secretly in France. Farwell was not a manufacturer of nor dealer in champagne wines, nor an expert as to the price of them. He never visited the champagne region, nor Rheims, of course, at all. His whole sojourn in Europe was three months, and most of his time in France was passed in Paris.
While in that city, he went to the store of a certain Jean Petit & Son, whose place of business was No. 7 Rue de la Mecorcher, who had champagne wine for sale, and who stated that they were the agents of Cliquot. They were generally reputed to be such agents, and had a sign to that effect outside the door. Farwell could find no other persons acting as agents for them. Cliquot, in fact, in a deposition of his taken at a later date, stated that this firm "was the agent for the sale of the champagne manufactured by him." Farwell examined the wines which Petit & Son had for sale, inquired the price per bottle and also the wholesale prices of these, and of the different qualities of Cliquot's wines for shipment to England, which prices Petit & Son stated, the same being five percent less than the prices named on a printed Price-Current which -- not anticipating, perhaps, exactly
the use to which the document might be applied -- they readily gave him. The document read thus:
PRICE-CURRENT
CHAMPAGNE WINES
Fine wines of the house of Cliquot, of Rheims,
Bouzy Mousseux, 1st quality, half dry . . . . . Fr. 5 the Bottle
Fine wines of the house of Ellicquot, of Rheims,
Bouzy Mousseux, 1st quality, very dry . . . . . Fr. 5 the Bottle
Fine wines of the house of Ellicquot, of Rheims,
Bouzy Mousseux, 1st quality, sweet. . . . . . . Fr. 5 the Bottle
Carte Blanche Ne Plus Ultra . . . . . . . . . . . Fr. 7 the Bottle
WINES MARKED JEAN PETIT & SON
Di Mosseux, half dry. . . . . . . . . . . . . . . Fr. 3.50 the Bottle
Sillery Mousseux, half dry. . . . . . . . . . . . Fr. 4 the Bottle
Sillery Mousseux, very dry. . . . . . . . . . . . Fr. 4 the Bottle
Sillery Mousseux, rose color. . . . . . . . . . . Fr. 4 the Bottle
Bouzy et Sillery, dry, not sparkling. . . . . . . Fr. 5 the Bottle
Red wines of Verzenary. . . . . . . . . . . . . . Fr. 5 the Bottle
Sparkling wines at very law prices for exportation. Return of duties
for the outside of Paris, or for foreign ports.
He was informed, however, that he could obtain the wines for exportation upon better terms from the manufacturer at Rheims. The highest prices wines shown him were put up and labeled precisely like the best of the Eugene Cliquot wines imported into San Francisco. Farwell inquired of several agencies for champagne at wholesale for exportation, and the agents uniformly stated their prices. Among the places at which he called was the house No. 6 Provence Street, on the outside of which was a sign,
DELENGE RAGOT, OF THE FIRM OF MINET & CO., RHEIMS
The proprietor here showed him samples of different wines, stated their wholesale price, and gave him, as Monsieur Petit & Son had done, a Price Current. The document, varying from the last only in the new sorts of its principal subject, read thus:
PRICE-CURRENT
Delenge Ragot, of the firm of Minet, Jr. & Co., Rheims -- Paris,
No. 6 Provence Street. From 2 to 6 o'clock
FINE CHAMPAGNE WINES
Carte d'Or . . . . . . . . . . . . Fr. 6.00
Carte Blanche. . . . . . . . . . . Fr. 5.00
Choice Bouzy . . . . . . . . . . . Fr. 4.50
Excellent Verzenay . . . . . . . . Fr. 4.25
Exquisite Sillery. . . . . . . . . Fr. 4.00
Partridge's Eye. . . . . . . . . . Fr. 3.75
Foaming. . . . . . . . . . . . . . Fr. 3.50
Superior Ay. . . . . . . . . . . . Fr. 3.00
Extra fine Tisane. . . . . . . . . Fr. 2.50
GOLD-SPANGLED CHAMPAGNE, PATENTED
Imperial . . . . . . . . . . . . . Fr. 6.00
Excellent Boizy. . . . . . . . . . Fr. 5.00
Sillery. . . . . . . . . . . . . . Fr. 4.00
Verzenay . . . . . . . . . . . . . Fr. 4.00
Ay . . . . . . . . . . . . . . . . Fr. 3.00
Price at Rheims, package included
Fortified with the results of his tour, Mr. Farwell came back to the United States, and custom house officers having compared the prices at which great quantities of champagne wines sent here by foreign manufacturers were invoiced with the prices which his two "Price-Currents" showed as prices at the places he asked at in Paris, and with other evidences of actual market value abroad, resolved to invite judicial inquiry. They accordingly made extensive seizures of champagne, in New York, San Francisco, and other ports.
The present suit concerned the wines of Eugene Cliquot alone. These had been made at Rheims. The invoice was dated 5 September, 1863. The wine itself was shipped in that same season, and arrived at San Francisco in February, 1864, where it was seized and libeled in the district court for the Northern District of California. The libel set forth that the owner of the champagne had consigned it to one Borel, and that Borel, by his attorney in fact, De Rutle, had entered it. The charge was that in making this entry, the consignee had
"produced and used an invoice which did
not contain a true and full statement of the actual market value of said goods and merchandise at the time and place when and where the same were procured or manufactured; but that, on the contrary, as the said owner well knew, the said invoice was false, and that the market value of said goods and merchandise was much greater than the sums and prices stated in said invoice."
The prosecution was founded upon the already mentioned [Footnote 3] Act of March 3, 1863.
It is here requisite to state that, by a statute of 1799, [Footnote 4] it was enacted (§ 70) that it should be the duty of the several officers of customs to make seizure of any goods liable to seizure, "by virtue of this or any other act of the United States which is now or may hereafter be enacted, as well without as within their respective districts." And, by § 71, that where any seizure should be made, pursuant to this act,
"the onus probandi should be upon the claimant, provided probable cause was shown for the prosecution, to be judged of by the court before whom the prosecution is had."
The case was tried before Mr. Justice Ogden Hoffman and a jury -- the claimant setting up in reply to proof that the wines were invoiced at cost of production (which sort of valuation the government alleged to be in violation of the statute, and ground of forfeiture), that it was proper so to value them, since Rheims was not in the least degree a commercial place, and the wines had no actual market value there -- a fact denied, on the other hand, by the government, which sought to infer a contrary conclusion by proofs that the manufacturers did sometimes deal in them from Rheims itself.
However, among the facts relied on by the government, in support of their libel, were the prices in Paris, and with a view of getting before the jury the results of Mr. Farwell's tour, various questions were asked of him and answers made, exceptions being taken on the bill (which, however, did not set out all the evidence) to these particular inquiries, and the matters given in response. They were thus:
"What did you ascertain, if anything, concerning the price or value of Eugene Cliquot champagne? Did you ascertain what was the jobbing or wholesale price at Paris? What means did you take to ascertain the price or value, and what was the result of your investigation?"
The witness answered:
"I went to the agents of Eugene Cliquot, Jean Petit & Son, whose place of business was No. 7 Rue de la Mecorcher. They had wines for sale, and stated that they were the agents of Eugene Cliquot, of Rheims, for the sale of his wines. They were generally reputed to be such agents, and there was a sign to that effect outside the door. I examined the wines there which they had for sale and inquired the prices per bottle, and also inquired the wholesale prices for shipment to England and elsewhere. The agent stated to me the different prices."
The defendant's counsel objected to the witness' testifying what Petit & Son stated to him in regard to the prices of champagne as inadmissible and incompetent on the ground that it was hearsay and that there was no evidence that Petit & Son were the agents of Cliquot, the claimant.
The court overruled the objection.
II. The witness having produced and identified the Price-Current given him by Petit & Son, the government offered it in evidence. The claimant objected on the grounds,
"That the evidence was hearsay, irrelevant, and immaterial; that the paper did not purport to state the wholesale price at Paris of the wines mentioned in it, but merely the price of a single bottle; that no actual transaction on the part of Farwell or anyone else had been proved or was proposed to be proved to have been based on such paper or on the prices stated in it; that the paper had not in any manner been connected with the claimant, and that the wines mentioned and stated in the paper did not appear to be and had not been proved to be of the same quality as those proceeded against in this action."
The court, however, admitted the Price-Current.
III. The witness further testified:
"That almost all the leading champagne manufacturers have agencies in Paris; that he inquired of several agencies for champagne at wholesale for exportation, and the agents uniformly stated to him their prices; that he could find no agents for Eugene Cliquot at Paris other than said house of Jean Petit & Son. That among other wine dealers in Paris was the house No. 6 Provence Street, on the outside of which was a sign, 'Delenge Ragot, of the firm of Minet, Jr. & Co., Rheims.' That he called at said establishment and was shown by the proprietor samples of various wines, who stated their wholesale prices; that he was also at the same time handed a printed Price-Current, which he now produced."
To this testimony the same objection was made that was made to the last, but it was received, the Price-Current being the second of those already mentioned.
IV. Farwell was also asked:
"Did you, upon inquiry at Paris, ascertain the difference in price between Rheims and Paris, as to Mumm champagne and Moet & Chandon champagne?"
To which question the claimant objected, as calling for irrelevant and immaterial testimony; also because it referred to champagne wines, different in kind, price and quality from those wines the subject of this suit.
But the court allowed the question.
The testimony being closed, the counsel for the claimant asked the court to give the jury the following instructions:
"1st. That any valuation set by the claimant on his wine, or any offer by him to sell his wines at a price fixed by him, is not evidence of the fair market value or of the usual buying and selling price of his wines unless he was in the habit, at the place of manufacture, of selling his wines at such valuation or price."
Which instruction the judge refused to give, but charged that such offer was evidence, but not conclusive; that an isolated offer to sell had no great weight, but if corroborated
by other testimony, and in the absence of any evidence of sales or offers to sell at a lower figure, it was worthy of consideration by the jury.
"2d. That the market value at Paris of wines manufactured by the claimant is not to be taken by the jury as the fair market value of the wines in controversy in this case unless these wines were manufactured in Paris."
Which instruction the judge also refused to give, but charged that though the value required to be stated in the invoice was the market value at Rheims, yet the market value at Paris, if established by the evidence, was a fact which might be considered as tending to show the market value at Rheims.
"3d. That the law only punishes by forfeiture the attempt to defraud the revenue or evade the duties, and therefore if the jury shall believe that the claimant in this case has made up his invoice of the wines in controversy through a doubt of the requirements of the law or of its meaning, and not with a fraudulent design, their verdict must be for the claimant."
Which instruction the judge refused to give, but charged as is hereinafter set forth.
"4th. That the invoice in this case having been made out on the 5th day of September, 1863, and the wine mentioned therein having been shipped from Bordeaux in the year 1863, therefore the Act of Congress passed on the 3d day of March, 1863, is not applicable to such invoice or to the goods mentioned therein, even though the goods arrived at the port of San Francisco in February, 1864."
Which instruction was refused on the ground that it would be an incorrect instruction.
"5th. That if there was not an actual market value -- that is, wholesale market value -- for manufactured champagne at Rheims at the time the invoice of the goods in question was made out, then the claimant was justified in expressing in said invoice the value of these goods at their actual cost to the manufacturer. "
Which instruction the judge also refused, but charged as is hereinafter set forth.
"6th. That the jury cannot find these wines should be forfeited as undervalued in the invoice unless they are satisfied that the claimant, in valuing the wines in the invoice, fraudulently undervalued them."
Which instruction also the judge refused, but charged as is hereinafter set forth.
"7th. That if Borel was the consignee or agent of the wine, and entered the same at the San Francisco custom house upon the invoice presented here, then it cannot be forfeited unless the said Borel made or caused to be made the said entry knowing or believing the invoice to be false."
Which instruction also the judge refused, but charged as is hereinafter set forth.
"8th. That if De Rutle acted as agent of Borel in entering the wine upon the invoice presented here by the plaintiffs, then the wine cannot be forfeited unless the said De Rutle made the said entry knowing or believing the invoice to be false."
Which instruction the judge refused, but charged as is hereinafter set forth.
"9th. That that section of the Act of Congress of March 2, 1799, which provides that where probable cause is shown for the prosecution, the onus probandi shall lie on the claimant has no application to this cause."
Which instruction the judge refused, but charged as is hereinafter set forth.
"10th. That the word 'knowingly' in the first section of the Act of March 3, 1863, means, in connection with the language which accompanies and surrounds it, fraudulently."
Which instruction the judge refused, but charged as is hereinafter set forth.
The judge thereupon charged the jury at large, extracts from the charge being in substance as follows:
"GENTLEMEN OF THE JURY: This case involves the inquiry as to the basis on which ad valorem duties are to be estimated, in all cases, upon Champagne wines."
"The law of 1863, under which you are proceeding, in effect punishes the entry of goods at the custom house, or the attempt to enter them, by means of an invoice which shall not contain a true statement of the actual market value of the goods. It is alleged here on the part of the plaintiff that this invoice did not contain a true statement of the market value of the goods, and on the side of the claimants it is alleged that it did. The inquiry, therefore, presents itself what is the 'actual market value,' in the sense of that statute?"
"The market value of goods is the price at which the owner of the goods, or the producer, holds them for sale; the price at which they are freely offered in the market to all the world; such prices as dealers in the goods are willing to receive, and purchasers are made to pay, when the goods are bought and sold in the ordinary course of trade. You will perceive, therefore, that the actual cost of the goods is not the standard. On the contrary, that having been the standard, the law has been changed, and for the standard of the cost has been substituted another standard, to-wit, the actual market value."
"The United States insist that they have shown that the actual market value of these goods is much greater then the prices at which they are invoiced."
"The defendant asserts that there is no actual market value at Rheims, the place where the goods are produced, as determined by sales, and that the only way to arrive at the market value is to take the cost of production, to compute how much the manufacturer has actually disbursed in producing the goods, and that thus you have the actual market value. The United States, however, maintain that though the manufacturer of these goods may not ordinarily sell them for consumption at Rheims, and though there may be no persons at that place who buy the goods for the purpose of disposing of them at that place, yet they are freely offered to all the world, and held at known and established rates; that they are sold by the manufacturers to anyone who may apply by letters addressed to them or their agents throughout
Europe, and can be obtained, and only be obtained, at certain fixed rates, at which they are held by the producers of the goods, and at which they are ready to furnish them to all the world. If this latter state of facts be true, then it is evident that the prices at which the producers so hold them are the market prices, within the meaning of the statute, under any rational interpretation which can be given to it."
"The United States have also offered in evidence various Prices-Current. These were obtained, I understand, from dealers in wines in Paris. Of course, if you believe that these merely indicate the retail prices of some grocer, or of some cabaret, or drinking shop, where someone sells wine by the bottle, or the half bottle, or the drink, or even two or three bottles, they will be but slight guides to you in estimating the market value of wines at wholesale. On the other hand, if they appear to be statements of the prices at which wines are held by dealers in Paris, a city which is within a few hours of Rheims, the place of production, and in some instances, if it be so, by the agents of these manufacturers themselves, then they do throw light on the market value of wines. If the place of manufacture were at San Jose, the prices offered or demanded here at San Francisco for wines, as indicated by the Prices-Current, would be some guide to a candid man as to the market value of the goods at San Jose. I am unable to see why the testimony should be rejected. It is before you for your consideration. The 'price current' is, as nearly as one can get at it, the price which the manufacturer himself demands, if it is the price which his agent asks, and offers to deliver the wine for, at Rheims or at Paris."
"With regard to the question of intent, I am asked to charge you that you should be convinced that these goods, if invoiced below their market value, were invoiced fraudulently below their market value. The previous statutes passed by Congress had introduced in many instances the word 'fraudulently,' had defined the offense to be making a false invoice 'with intent to defraud' the revenue or evade the payment of duties. This statute, apparently ex industria, omits these expressions and substitutes the words 'if the owner,' &c., 'shall knowingly make an entry by means of any false invoice,' &c. I do not feel at liberty, when the legislature has left out the word 'fraudulent' and inserted the word 'knowingly,' to reinstate the word 'fraudulent.' At the same time, I am bound to say that I cannot
conceive any case where an entry could be knowingly made by means of a false invoice unless it were fraudulently made. I do not tell you in terms that you are obliged to find that the entry was made fraudulently, but you are obliged to find that it was made knowingly by means of a false invoice, and for myself I cannot imagine any case where it could be knowingly done without being fraudulently done. What, then, shall we understand by this word 'knowingly' as here employed? It is that in making out this invoice, and in swearing before the consul that such was the actual market value of the goods, the claimant knew better, and that he was swearing falsely. He forfeits these goods if you believe that he knew this invoice did not express their market value -- their actual market value."
"By the legislation of the United States it is established that in revenue cases, where the government has shown probable cause, the onus probandi, or burden of proof, is on the part of the claimants to prove the facts necessary to be shown in their defense. Under that rule of law, or rather provision of the statute, I am bound, at the request of the district attorney, to say that in my opinion the United States has proved probable cause, and it is for you to say whether the claimants themselves have made out their defense; whether they have shown that the goods were invoiced at their real market value at Rheims."
To that part of the charge instructing the jury that the plaintiffs having shown a probable cause, the burden of proof was on the claimant the claimant's counsel excepted.
The jury found for the government, and the case, after judgment, came here by writ of error, it being understood that other cases, to very large amounts, and claims for back duties, would be regulated by the decision here.
