Caldwell v. United States, 49 U.S. 366 (1850)

U.S. Supreme Court

Caldwell v. United States, 49 U.S. 8 How. 366 366 (1850) Caldwell v. United States

49 U.S. (8 How.) 366

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Syllabus

In this case, the court below instructed the jury that if the goods were fraudulently entered, it was no matter in whose possession they were when seized or whether the United States had made an election between the penalties, and that the forfeiture took place when the fraud, if any, was committed, and the seller of the goods could convey no title to the purchaser.

This instruction was right in respect to the sixty-eighth section of the Act of 1799, 1 Stat. 677, as the penalty is the forfeiture of the goods without an alternative of their value, but wrong as the instruction applies to the sixty-sixth section of the same act, as the forfeiture under it is either the goods or their value.

Under the sixty-eighth section, the forfeiture is the statutory transfer of right to the goods at the time the offense is committed. The title of the United States to the goods forfeited is not consummated until after judicial condemnation, but the might to them relates backwards to the time the offense was committed, so as to avoid all intermediate sales of them between the commission of the offense and condemnation.

But under the sixty-sixth section of the act, in which the forfeiture is the goals or their value, the United States have no title in the goods, until an election has been

Page 49 U. S. 367

made either to recover the goods or their value.

Therefore, under that section, any rights in the goods acquired bond file by third persons in the meantime are protected.

The claimants prayed the court to instruct the jury that the United States were not entitled to recover under the first and second counts of the information founded on the fiftieth section unless the goods were unladen and delivered without permits. The jury was told, in reply,

"If the permits were obtained by fraud and improper means, they were of no effect, and a mere nullity. The United States are entitled to recover, if the goods were imported with the view to defraud the revenues."

Whether or not the permits were obtained by fraud or improper means was a point in the cause for the jury to decide, and what the court said upon the prayer was virtually saying to the jury, that a verdict might be returned upon the first and second counts against the claimants, and that they were liable to the penalties of the act for unlading goods without a permit, without saying if they thought that there was evidence enough to prove the fact against them.

The case was this.

In August, 1839, the attorney of the United States filed an information in the District Court of the United States for the Eastern District of Pennsylvania against thirty-five remnants of pieces of cloths and cassimere, that had been seized at the store of James Lynd, Jr. & Co.

The information contained thirteen counts.

"1. Charged that the goods were brought from a foreign port into some port or place in the United States, to the attorney of the United States yet unknown, and were unladen and delivered from the vessel in which they had been brought, without any permit or special license from the collector or naval officer or any other competent officer of the customs. Act of 1799, § 50, 1 Stat. 665."

"2. Charged that the goods were brought into the port of New York, and there unladen and delivered without a permit. Act of 1799, § 50 (ibid)."

"3. That the said goods were found concealed in a certain store in the occupation of William Blackburne & Co., at the port of Philadelphia, the duties on said goods not having been paid or secured to be paid. Act of 1799, § 68, 1 Stat. 677."

"4. That the said goods were, on their importation, entered at the office of the collector of New York, and that on each and every of the entries, an invoice of the goods included in the entry was produced and left with the collector. That the said goods were not invoiced according to the actual cost thereof at the place of exportation, but were invoiced at a less sum than the actual cost with design to evade the duties thereupon, or some part thereof. Act of 1799, § 66, 1 Stat. 677. "

Page 49 U. S. 368

"5. That entries of the said goods, at the time of their importation, were made at the office of the collector of New York, and that on each of the entries an invoice of the goods &c., was produced and left with the said collector. That all and each of the said invoices so produced, and all each of the several packages, in each and every of the said invoices in which the said goods were imported, were made up with intent, by a false valuation, to evade and defraud the revenue of the United States. Act of 1830, 4 Stat. 410."

"6. That entries of the said goods, at the time of their importation, were made at the office of the collector of New York; that on each of the entries an invoice of the goods was produced and left with the collector; that all and each of the said invoices were made up with intent, by a false valuation, to evade and defraud the revenue of the United States. Act of 1830, § 4, 4 Stat. 410."

"7. That all and each of the several packages contained in each and every of the entries, and each and every of the invoices so produced, were made up with intent, by a false valuation, to evade and defraud the revenue. Act of 1830, § 4, 4 Stat. 410."

"8. Charges that the invoices were made up by a false extension, to evade and defraud the revenue of the United States. Act of 1830, 4 Stat. 410."

"9. That the goods &c., being composed wholly or in part of wool or cotton, were entered, at the times of their importation, at the office of the Collector of New York; that invoices were produced and left with the collector; that all and each of the packages in each and every of the invoices, and each and every of the entries, were made up with intent to evade and defraud the revenue of the United States. Act of 1832, 4 Stat. 593."

"10. As amended, the same with the 4th."

"11. As amended, the same with the 6th."

"12. As amended, the same with the 7th."

"13. As amended, the same with the 9th."

To this information the claimants put in three pleas:

1st. Traversing the several causes of forfeiture alleged.

2d. The second plea, which was to all the counts save the two first, alleged that claimants, prior to goods being seized, had bona fide purchased the goods for full value, without any notice or knowledge of their being liable to seizure or forfeiture, under or by an act of Congress, entitled "An act to regulate the collection of duties on imports and tonnage," from persons having the ostensible ownership of them, and that at the

Page 49 U. S. 369

time of seizure the goods were in no way whatever concealed within the meaning of any act of Congress.

3d. The third plea alleged that the goods, prior to their seizure, had been duly entered, passed through the custom house &c., the duties imposed paid, and the goods thereupon delivered to the importers; that afterwards the several packages of which these goods formed part were broken up and divided; that subsequently these goods were at sundry times purchased bona fide and for full value from persons having the ostensible ownership of same, and without notice or knowledge that they were liable to seizure or forfeiture under any act of Congress for any cause; that no part of the goods had been imported or entered by the claimants; that at the time of seizure they were not in original packages nor concealed, but openly exposed for sale on the shelves of claimants' store.

To the first of these the United States joined issue.

To the second and third demurred generally, and claimants joined in demurrer.

These two pleas denying every cause of forfeiture except the single one of the goods having been falsely invoiced, it is believed that all the material questions afterwards arising on the trial of the cause are raised by these demurrers, but for greater caution the same points were again raised on the trial in the shape of exceptions to the judge's charge and otherwise.

On the trial it appeared that James Lynd, Jr. & Co. kept a wholesale and retail dry goods store in Philadelphia, and were in the habit of purchasing goods from W. Blackburne & Co. and John Taylor, Jr.; that at the time of the seizure, the officer inquired for and took from them at their store all the goods which had been purchased from Blackburne & Co. or from John Taylor, Jr., and that the goods seized were at the time distributed among other goods in single pieces and parts of pieces, on the shelves of claimants' store, for sale, without any appearance of concealment whatever. Evidence was, under objections, offered to show that part of the goods seized corresponded in numbers with pieces forming parts of various invoices that had been in 1838 and 1839 fraudulently entered by Blackburne and Taylor, at prices below their value in England, whence they had been exported.

There was no evidence of any other cause of forfeiture whatever.

For the purpose of fixing the fraud, evidence was likewise given, under similar objections, of other fraudulent invoices made about the same time by Blackburne and Taylor, and likewise of conversations with Blackburne some days before the

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seizure, about other invoices and other goods, and the concealment of said other goods from the officers.

There was no attempt to show that the claimants had any part in this concealment, nor in the making of the false entries, but, on the contrary, it appeared that the goods had been fairly and bona fide purchased and settled for before the seizure.

The claimants contended that where goods are imported, entered at the custom house, duties imposed and paid according to such entry, and a permit and license thereupon granted under which the goods are delivered to the importer, the original packages subsequently broken, and part of them sold to a bona fide purchaser without notice, and before the United States had made any election, the goods so sold are not liable to seizure in the hands of such bona fide holder, though they may have been fraudulently entered by being invoiced below their actual cost &c.

The attorney of the United States contended, on the contrary, that from the moment the fraudulent entry was made, the goods became forfeited and the title of the United States accrued so as to defeat the right of a subsequent bona fide purchaser without notice, and that when the goods are delivered under a permit obtained under such fraudulent entry, it is as though no permit had been given and the goods had been delivered without permit.

The counsel for the claimants a asked the court to instruct the jury:

"First. That there cannot be a forfeiture of the goods under the fourth section of the act of 1830, nor under the fourteenth section of the act of 1832, unless the information alleges, and the United States has proved all the special circumstances of the examination and detection of the fraud under the authority of the collector in the manner pointed out in said acts of Congress."

On which the court instructed the jury "This is correct, but there may be a forfeiture under the act of 1799."

"Second. That the probable cause mentioned in the seventy-first section of the Act of Congress of 1799, chapter 22, refers to the right of seizure under said act, and the right of seizure depends on the fact whether, at the time of their being seized, the goods were concealed within the meaning of the sixty-eighth section of said act."

On which the court instructed the jury:

"This is not law as applied to this case. The probable cause applies to all cases of seizure for any fraud under any of the revenue laws and any section of any such law. Whether there was probable

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cause for the prosecution does not depend upon whether there was originally ground for the seizure or not, but upon the proof at the trial in support of the prosecution."

"Third. That the term 'concealed' in said sixty-eighth section applies only to articles intended to be secreted and withdrawn from public view on account of the duties' not having been paid or secured to be paid or from some other fraudulent motive,"

which the court answered affirmatively.

"Fourth. T hat if the goods were not so concealed, nor any probable cause to suspect their concealment at the time of their seizure, the burden of proof is upon the United States; that neither the existence of probable cause to suspect that goods upon which the duties had not been paid or secured to be paid were in possession of the claimants nor the fact that goods were found in their possession which had been fraudulently invoiced or entered is sufficient to justify a seizure under said sixty-eighth section unless the goods were concealed by them or they were parties or privies to the false invoices or entries."

On which the court instructed the jury:

"This is not the law. The burden of proof is not upon the United States, though the goods may not have been concealed nor any probable cause to suspect their concealment at the time of their seizure, if there was probable cause to believe the duties upon them had not been paid or secured."

"Fifth. That if the goods seized had been fairly and bona fide purchased by the claimants without any knowledge by them of their being liable to seizure on the part of the United States, and were at the time of the seizure openly exposed by them for sale in their store, the United States cannot recover under the sixty-sixth or sixty-eighth section of said act of 1799 even though the goods had been fraudulently or falsely invoiced or entered, provided the claimants were in no way parties thereto."

On which the court instructed the jury:

"This is not the law. If the goods were fraudulently entered, it is no matter in whose possession they were when seized; the forfeiture took place when the fraud, if any, was committed, and the seller could convey no title to the purchaser."

"Sixth. That even though the goods in question had been invoiced at less than actual cost thereof at the place of exportation with design to evade the duties thereupon, the United States had no title in the goods until they made their election either to recover the goods themselves or the value thereof, and that any rights in said goods acquired bona fide by third

Page 49 U. S. 372

persons in the meantime are protected against the right of forfeiture under this section."

On which the court instructed the jury:

"This is not the law. The title of the United States vested at the time the fraud, if any, was committed, and the law authorized them to seize the goods wherever they might be found."

"Seventh. That the United States is not entitled to recover under the first and second counts of the information unless the goods were unladen and delivered without permits."

On which the court charged:

"If the permits were obtained by fraud and improper means, they are of no effect, and a mere nullity. The United States is entitled to recover if the goods were imported with the view to defraud the revenue."

"Eighth. That the burden of proof in this case, under the seventy-first section of the act of 1799, is upon the United States."

On which the court charged "This is not so; the burden of proof is on the claimants."

The counsel for claimants also asked the court to charge:

"Ninth. That the claimants are not bound to prove the innocence of intent of the importers in making the invoices."

"Tenth. The claimants are not bound to prove the actual cost or value of the goods at the place of exportation."

"Eleventh. The claimants are not bound to prove innocence of intent of the importers in making their invoices, nor the actual cost at the place of exportation when they were appraised at the custom house."

"Twelfth. That the permits, and the delivery of these goods from the custom house, is a bar in all cases against any forfeitures except where the claimants are parties or privies to the fraud in obtaining them, or had knowledge of the same."

"Thirteenth. If the vendor is liable to the claimants of the goods seized for indemnity for the forfeiture of them, the seizure does not invalidate the sale, or impair the title of claimants thereto."

But the court refused so to charge the jury, and further charged:

"That the United States have shown probable cause for this prosecution, and the claimants are bound to prove the innocence of intent of the importers in making the invoices. That they are bound to prove the actual cost or value of the goods at the place of exportation, even though they were appraised at the custom house. That the granting permits and delivery of these goods from the custom house is not a legal bar against forfeiture in all cases, except where the claimants are parties or

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privies to the fraud in obtaining them, or had knowledge of the same. And as to the thirteenth point that if the goods were fraudulently entered, no title passed to the claimants."

And thereupon the counsel for the said claimants did then and there except to the aforesaid charge and opinion of the court.

Under these instructions of the court, the jury found a verdict for the United States under the act of 1799, ch. 22, §§ 50 and 66, as to all the goods contained in the libel except two pieces of cloths, as to which they found for the claimants. The judgment of the district court followed the finding of the jury.

Upon the exceptions above stated, the case went up to the circuit court, which, on 9 November, 1846, affirmed the judgment of the district court, and a writ of error brought the case up to this Court.

Page 49 U. S. 378

MR. JUSTICE WAYNE delivered the opinion of the Court.

We shall direct the reversal of the judgment of the circuit court in this case on account of three erroneous instructions which were given to the jury. The prayers upon which those instructions were given are the fifth, sixth, and seventh.

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They involve the question as to the time when the right of forfeiture attaches upon the entry of goods invoiced at less than their value at the place of exportation under a statute which declares in such a case that either the goods or the value of them shall be forfeited.

The instructions were given by the learned judge in the court below upon the supposition that they were required by the decision which this Court made in Wood's Case, 16 Pet. 342, particularly upon account of a sentence in the opinion at the three hundred and sixty-fifth page of the volume.

It was supposed to be a repetition in that case of what had been adjudged by the Court, in the cases of United States v. 1960 Bags of Coffee, and in The Brigantine Mars, 8 Cranch 398, 417. Or that those cases did not permit instructions to be given to the jury as they were asked by the counsel for the claimants and did permit the court to give the following:

"That the title of the United States vested in the goods entered upon an undervalued invoice at the time the fraud was committed, and the law authorized the United States to seize the goods wherever they might be found."

Neither of the cases mentioned authorizes such a conclusion. There is a sentence in Wood's Case from which it may be made unless it is carefully considered in connection with the last of the paragraph and with the first part of the next. That sentence is:

"But under the sixty-sixth section, no such allegations would be necessary or proper, as the forfeiture immediately attaches to every entry of goods falsely and fraudulently invoiced, without any reference whatever to the mode or the circumstances under or by which it was ascertained."

The sixty-sixth section of the act to regulate the collection of duties upon imports and tonnage, 1 Stat. 677, is

"That if any goods, wares, or merchandise of which entry shall have been made in the office of a collector shall not be invoiced according to the actual cost thereof at the place of exportation, with design to evade the duties thereupon or any part thereof, all such goods, wares, and merchandise, or the value thereof, to be recovered from the person making the entry, shall be forfeited."

It cannot be correctly said, when the declaration of forfeiture is disjunctively one or the other, of either the goods or their value, that the forfeiture upon the fraudulent entry necessarily and compulsively comprehends the first, to the exclusion of the value of the goods, which is also said may be a forfeiture -- that is that the goods are forfeited with a right in the government to assert a forfeiture of the value too, where the penalty

Page 49 U. S. 380

for the fraud committed can only be one of them, and not both, or that when this Court said in Wood's Case, speaking of the sixty-sixth section, that "forfeiture immediately attaches to every entry of goods falsely and fraudulently invoiced," it was not intended to embrace either or both penalties, between which the United States might make its election for the punishment of the fraud.

That such is the meaning of the sentence already cited from Wood's Case is shown by the Court's recognition, in the next, of the alternative forfeiture of the value of the goods, to be recovered of the person making the false entry; and also by the use it makes of it to show that the sixty-sixth section had not been repealed, because no such provision exists in the acts of 1830 or 1832, and no subsequent act covers all the cases provided for by it. The point in discussion in that part of the opinion was whether the sixty-sixth section of the Act of 1799, ch. 22, had been repealed or whether it was in full force. The Court, arguing against the repeal, used the alternative forfeiture in it of the value of the goods, and the want of the same in other acts, to show that it was still in full force, in that way satisfactorily establishing that the words "the forfeiture immediately attaches to every entry of goods falsely and fraudulently invoiced" apply to the entry, not to make the goods a vested forfeiture in the United States, but to show that the right in the United States to either forfeiture is coexistent with the commission of the fraud.

But if the explanation given of that part of Wood's Case shall not be as satisfactory to others as it is to ourselves, though we think it will be so to all persons, we then say that the point there in discussion concerning the sixty-sixth section is altogether different from that which we are here considering under the same section, and that any declaration concerning it used argumentatively, only to show a difference between it and other statutes in a point of pleading, as is the fact in that part of the opinion, cannot be an applicable authority, much less controlling, when the inquiry under the same statute is its meaning in respect to the attachment of penalties in it for its violation.

In Wood's Case, the point in discussion is that the United States is not entitled to recover under the third count in that information, because the sixty-sixth section of the Act of Congress passed 2 March, 1799, entitled "an act to regulate the collection of duties on imports &c.," was not in force when the goods mentioned in the count were imported.

The point we are now considering, arising under the same

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section, is are goods entered upon an invoice not according to the value thereof at the place of exportation, with design to evade the duties thereon or any part thereof, eo instanti upon the false entry a forfeiture to the United States, so as to avoid an intermediate sale of them to a bona fide purchaser, or one altogether ignorant of the fraud and in no way connected with the perpetrator of it except in buying the goods from him for a fair price? The claimants in this case contended in the trial in the circuit court that neither under the sixty-sixth nor the sixty-eighth section were the goods, eo instanti upon the commission of the fraud, forfeited to the United States,

"if the goods seized had been fairly and bona fide purchased by them, without any knowledge by them of their being liable to seizure, and were, at the time of the seizure, openly exposed by them for sale in their stores, though the goods had been fraudulently or falsely invoiced or entered, provided the claimants were in no way parties thereto."

And

"that though the goods in question had been invoiced at less than actual cost of them at the place of exportation, with design to evade the duties thereon, the United States had no title in the goods until they made their election, either to recover the goods themselves, or the value thereof. And that any rights in said goods acquired bona fide by third persons in the meantime are protected against the right of forfeiture under the sixty-sixth section."

The claimants asked that such instructions should be given by the court to the jury. The Court refused, but did instruct the jury

"That if the goods were fraudulently entered, it is no matter in whose possession they were when seized or whether the United States had made in election between the penalties, and that the forfeiture took place when the fraud, if any, was committed, and the seller of the goods could convey no title to the purchaser."

This instruction is partly right and partly wrong -- right in respect to the sixty-eighth section, as the penalty is the forfeiture of the goods without an alternative of their value; wrong as the instruction applies to the sixty-sixth section, the forfeiture under it being either the goods or their value.

In the first, the forfeiture is the statutory transfer of right to the goods at the time the offense is committed. If this was not so, the transgressor, against whom, of course, the penalty is directed, would often escape punishment and triumph in the cleverness of his contrivance by which he has violated the law. The title of the United States to the goods forfeited is not consummated until after judicial condemnation, but the right to them relates backwards to the time the offense was committed,

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so as to avoid all intermediate sales of them between the commission of the offense and condemnation.

So this Court said in the case of United States v. 1960 Bags of Coffee, 8 Cranch 398. It was said again in the case of United States v. Brigantine Mars, 8 Cranch 417. Declared again four years afterwards in Gelston v. Hoyt, 3 Wheat. 311, in these words: "The forfeiture must be deemed to attach at the moment the offense is committed," so as to avoid all sales afterwards.

The differences in time when the transfer of right in forfeited goods takes place, under such provisions for forfeiture as are found in the sixty-sixth and sixty-eighth sections of the act of 1799, were fully considered and ruled by this Court in United States v. Grundy and Thornburg, 3 Cranch 337. It was afterwards noticed and assented to by the Attorney General of the United States, in his argument in the case of 12 U. S. 1960 Bags of Coffee, 8 Cranch 398, and has always been considered, from the time it was made, as the proper interpretation of a statute providing for a forfeiture for an offense either of goods or their value. No case can be found in our own or the English courts in conflict with it.

We must therefore say that the instructions given upon the fifth and sixth prayers of the claimants were erroneous.

Our conclusion also is that there was error in the instruction given by the court upon the seventh prayer of the claimants. The prayer is,

"That the United States is not entitled to recover under the first and second counts of the information unless the goods were unladen and delivered without permits."

The difference between the first and second counts is that the allegation in the first is that the goods were brought into some port or place in the United States unknown, unladen and delivered; and in the second, that they were brought into the port of New York, and unladen and delivered there; and in both, without any permit or special license from the collector or any other competent officer of the customs.

The response of the court to the prayer is

"If the permits were obtained by fraud and improper means, they were of no effect, and a mere nullity. The United States is entitled to recover if the goods were imported with the view to defraud the revenue."

The direct and proper response to that prayer ought to have been that, as the first and second counts were framed upon the fiftieth section of the act of 1799, by which a fine is imposed upon persons unlading and delivering goods without a permit, if the jury should find that the goods in question had been

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so unladen by the claimants, then they were liable to the penalty provided in that section; or if the goods were unladen by them with a permit, the jury could not find a verdict against the claimants upon the first and second counts.

The prayer does not involve, either in terms or inferentially from them, the legal effect or sufficiency of a permit obtained by improper means, or fraud upon the unlading of goods under it, or that the permit under which the goods in question may have been landed had been fraudulently obtained, and the goods landed under it by the claimants. When, then, the jury were told that a permit obtained by fraud or improper means was of no effect and a nullity, it was virtually saying to them that a verdict might be returned upon the first and second counts against the claimants and that they were liable to the penalties of the act for unlading goods without a permit, without saying, if they thought that there was evidence enough to prove the fact against them. And the court, by adding that "the United States is entitled to recover if the goods were imported with the view to defraud the revenue," stated a proposition out of the case, for there was no such count in the information or any statute of the United States, for the punishment of frauds in the importation of goods, upon which a count could have been framed in the words of the instruction. The instruction was calculated to mislead the jury into a conclusion that the suit was against the claimants for a meditated fraud in the importation of the goods in question, which had rendered them liable to be forfeited.

It is not necessary to notice the other prayers asked, refused, and given in this case. It was argued before this Court only upon the three already stated, the answers to which we have said are erroneous.

We shall therefore

Remand the cause with an order for the reversal of the judgment and for a venire de novo, that further proceedings may be had thereon in conformity with this opinion.

Order

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Eastern District of Pennsylvania and was argued by counsel. On consideration whereof it is now here ordered and adjudged by this Court that the judgment of the said circuit court affirming the judgment of the district court in this cause be and the same is hereby reversed, and that this cause be and the same is hereby remanded to the said circuit court with directions to enter a disaffirmance of the judgment of the district

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court, and to remand this cause to the said district court with directions to that court to award a venire facias de novo, and for further proceedings to be had therein in conformity to the opinion of this Court.