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UNITED STATES V. MARTIN.
(Circuit Court, D. Massachusetts. April 23, 1907.)
No. 18 (1,518).
CUSTOMS DUTIES–CLASSIFICATION-SCAMMONY RESIN-DRUG.
Scammony resin, prepared from gum scammony, or scammony root, and used principally in compounding medicines, is dutiable as a drug advanced in value or condition, under Tariff Act July 24, 1897, c. 11, § 1, Schedule A, par. 20, 30 Stat. 152 [U. S. Comp. St. 1901, p. 1628], rather than as a medicinal preparation, under paragraph 67, 30 Stat. 154 [U. S. Comp. St. 1901, p. 1631].
On Application for Review of a Decision of the Board of United States General Appraisers.
In the decision below the Board of General Appraisers sustained the protest of Gustav Martin against the assessment of duty by the collector of customs at the port of Boston. This action was taken on the authority of a former decision of the Board. In re Parke, G. A. 5,010 (T. D. 23,323). The opinion in the former case reads as follows:
SOMERVILLE, General Appraiser. The merchandise in question is known as “scammony resin.” It was assessed for duty under Tariff Act July 24, 1897, c. 11, § 1, Schedule A, par. 67, 30 Stat. 152 [U. S. Comp. St. 1901, p. 1631], as a medicinal preparation in the preparation of which alcohol is used, at the rate of 55 cents per pound. The protestants contend that the article is not a medicinal preparation, but a drug, and (1) that it is free of duty under the provision in section 2, Free List, par. 548, 30 Stat. 197 [U. S. Comp. St. 1901, p. 1683), for crude drugs "not advanced in value or condition by refining or grinding, or by other process;" or (2) that it is dutiable at the rate of one-fourth of one cent per pound and 10 per cent. ad valorem under Schedule A, par. 20, 30 Stat. 152 [U. S. Comp. St. 1901, p. 1628], as a drug "advanced in value or condition by refining, grinding, or other process.”
The evidence not only fails to sustain the claim that the merchandise is a crude drug, but, on the contrary, shows that it is a manufactured article made of scammony. A witness for the importers testified that the article is the same as that covered by T. D. 6,118, which was "manufactured by digesting scammony root or the crude gum scammony in alcohol until exhausted, removing the alcohol by distillation, and precipitating the resin by the action of water, and then drying the product at a gentle heat.” We hold therefore that the article is not free of duty under said paragraph 548 as a crude drug.
The alternative claim of the protestants that the merchandise is dutiable as a drug advanced in value, rather than as a medicinal preparation, is, in our opinion, well founded. Although there is some evidence that the article can be used as a medicine without further preparation than is required to reduce it to a powder, the weight of the evidence is that its chief use is as an ingredient in the preparation of pills and other medicines. One of the witnesses, a druggist of experience, testified that, before it can be used at all, it has to be dried in a kiln and then powdered; that, before it is fit to be used medicinally, it must be compounded with other drugs; and that it is principally employed in the production of calisaya compounds. As imported, it is in the form of flattened rolls about a foot in length, wrapped in coarse paper, and its appearance would indicate that it is not intended for use as a medic inal preparation without further manipulation. It satisfactorily appears to be an article from which medicines are to be made, rather than a medicinal preparation itself. This view is supported by the statement in the United States Dispensatory, under the head "Resina Scammonii," that:
“When rubbed with unskimmed milk, the resin of scammony forms a uniform emulsion undistinguishable from rich milk itself. This is an excellent mode of administration. The resin should always be given either rubbed up with some mild powder or in emulsion."
In U. S. v. Merck, 66 Fed. 251, 13 C. C. A. 432, it was held by the Circuit Court of Appeals for the Second Circuit that elaterium imported in little cakes, which was not used in that form as a medicine, but was an article from which medicinal preparations were made, was not dutiable as a medicinal preparation. Note, also, In re Dodge, G. A. 4,859, where guarana, an article that is not used as a medicine without being first prepared, was held not to be dutiable as a medicinal preparation.
Although both of the articles covered by the decisions cited were held to be free of duty as crude drugs, the present case is distinguishable from those, in that the drugs then in question were in a crude condition, while the article now under consideration is not crude, but, as stated above, is prepared from scammony by an elaborate process of manufacture.
We hold that the merchandise is dutiable under said paragraph 20, as a drug advanced in value or condition.
The protest is therefore sustained in so far as it makes this claim, and the decision of the collector reversed, with instructions to reliquidate the entry accordingly.
William H. Garland, Asst. U. S. Atty.
The decision of the Board of General
BROWN, District Judge. Appraisers is affirmed.
J. C. PUSHEE & SONS v. UNITED STATES.
(Circuit Court, D. Massachusetts. July 29, 1907.)
No. 37 (1,575).
CUSTOMS DUTIES–CLASSIFICATION-BRISTLES IN BUNCHES.
In Tariff Act July 24, 1897, c. 11, § 1, Schedule N, par. 411, 30 Stat. 190 [U. S. Comp. St. 1901, p. 1673], relating to "bristles, sorted, bunched, or prepared," and in section 2, Free List, par. 509, 30 Stat. 196 [U. S. Comp. St. 1901, p. 1682], relating to "bristles, crude, not sorted, bunched, or prepared," the distinction made is between absolute crudeness and advancement one or more steps in preparation for the arts; and bristles that have been tied in separate bundles, with their butt ends together, in preparation for brushmakers, are subject to duty under the former provision.
On Application for Review of a Decision of the Board of United States General Appraisers.
For decision below see G. A. 5,483 (T. D. 24,797), affirming the assessment of duty by the collector of customs at the port of Boston.
Searle & Pillsbury, for importers.
Asa P. French, U. S. Atty., and William H. Garland, Asst. U. S. Atty.
COLT, Circuit Judge. In the tariff act of July 24, 1897, crude bristles, which are not sorted, bunched, or prepared, are admitted free of duty under paragraph 509 of the free list (Act July 24, 1897, c. 11, § 2, 30 Stat. 196 [U. S. Comp. St. 1901, p. 1682]); while bristles which are sorted, bunched, or prepared are subject to a duty of 77/2 cents per pound under paragraph 411, § 1, Schedule N, 30 Stat. 190 [U. S. Comp. St. 1901, p. 1673). These paragraphs are as follows:
"509. Bristles, crude, not sorted, bunched, or prepared.”
“411. Bristles, sorted, bunched or prepared, seven and one-half cents per pound.”
When we consider the various conditions in which crude bristles are imported into this country, it seems clear that the distinction which Congress intended to make in these paragraphs is between crude bristles consisting of a mass of different sizes, with their butt ends and flag ends mixed together indiscriminately, and crude bristles which have been in any way sorted, bunched, or prepared-in other words, between absolutely crude bristles and those which have been passed through one or more steps in the process of preparation for use in the arts; the former being admitted free of duty, while the latter are subject to a duty of 71/2 cents per pound.
In the present case the imported bristles are in the form of small bunches, with a string tied around each bunch to hold the bristles together. In these bunches the butt ends and the flag ends are not mixed indiscriminately, but substantially all the butt ends lie together, and all the flag ends. There is evidence that each bunch is the product of one hog, and that the bristles are in the condition in which they were taken from the back of the hog. The important fact, however, is that the bristles are tied up in separate bunches, with their butt ends lying together, and therefore in a partial state of preparation for the brushmaker.
In holding these bristles dutiable at 77/2 cents a pound, the Board of General Appraisers said:
"The merchandise as shown by the sample consists of bunches of bristles carefully put up with the roots all placed together at one end. The evidence discloses the fact that each bunch represents the crop gathered from one hog and that it is tied up in the manner above described at the time that the bristles are taken from the hog's back, so as to keep each lot separately and distinctly by itself. The sample shows that as a result of this operation the bunch consists of one class of bristles of fairly uniform size, and while it is true that they have not been sorted into exact sizes, yet they are undoubtedly bunched so as to make them marketable for brushmakers' use. From these facts we are of opinion that they fall within the express language of both provisions making them dutiable."
This reasoning of the Board of General Appraisers seems to me conclusive.
There is no evidence in support of the contention of the importers that the word “bunched” in the foregoing paragraphs means "bundled, and hence that it signifies bristles which have been subjected to the entire process of dressing as known to brushmakers. On the contrary, the evidence shows that the term "bunched” is used in its ordinary meaning, and therefore as signifying “a collection, cluster, or tuft, properly of things of the same kind, growing or fastened together." It follows that these bristles, by the clear and express language of the statute, are subject to a duty of 71/2 cents a pound.
The decision of the Board of General Appraisers is affirmed.
In re BURT et al.
(District Court, E. D. Pennsylvania. July 24, 1907.)
BANKRUPTCY-PROPERTY PASSING TO TRUSTEE-PROPERTY HELD UNDER CON
Bankrupts at the time of the filing of the petition against them had been for more than 30 days in possession of machinery which had been shipped to them under contracts by which they agreed to pay for the same within one year from shipment, and which provided that a retention of the property after 30 days from date of shipment should constitute a trial and acceptance. Held, th
Held, that such contracts constituted conditional sales, and not ailments under the law of Pennsylvania, and the property, being subject to transfer by the purchasers or to seizure and sale by their creditors under such law, passed to their trustee in bankruptcy under Bankruptcy Act July 1, 1898, § 70a (5), c. 541, 30 Stat. 566 [U. S. Comp. St. 1901, p. 3451].
[Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy, $ 199.)
In Bankruptcy. On report of referee.
HOLLAND, District Judge. At the time the petition in bankruptcy was filed in this case the alleged bankrupts were in possession of machinery received by them from Fay & Eagan Company upon three different contracts, all of similar tenor. A copy of the first is as follows:
"Subject to strikes, accidents or other delays beyond your control, please ship in good order the following machinery, delivered f. 0. b. Philadelphia, Pa., about
190 "One No. 156 new cabinet smoothing planer with set of knives, wrenches, countershaft and all complete to dress material 24" wide and 7" thick divided feed roll. One No. 146 bank rip and re-saw with two three inch blades and brazing tools. For which we agree to pay within one year after date of shipment, eleven hundred and sixty ($1,160.00) dollars. In case payment is divided, to be made as follows, the deferred payment to be evidenced by notes bearing date of shipment and interest: (1) Payment, two hundred dollars ($200.00) to be 30 days after receipt of tools (without interest). (2) Payment three months from receipt of goods evidenced by note $240.00. (3) Payment six months from receipt of goods evidenced by note $240.00. (4) Payment nine months from receipt of goods evidenced by note $240.00. (5) Payment twelve months from receipt of goods evidenced by note $240.00.
"It is agreed that title to the property mentioned above shall remain in the J. A. Fay & Eagan Co. until fully paid for in cash, and that this contract is not modified or added to by any agreement not expressly stated herein, that a retention of the property forwarded after thirty days from date of shipment, shall constitute a trial and acceptance, be a conclusive admission of the truth of all representations made by or for the consignor, and void all its contracts of warranty express or implied. It is further agreed that the purchaser shall keep the property fully insured for the benefit of J. A. Fay & Eagan Company, and that the said machinery shall not become a fixture to any realty on account of being annexed thereto."
It will be noticed that the bankrupts in this form of order and agreement requested the Fay & Eagan Company to ship to them the machinery, for which they agreed to pay in one year after date of shipment the amount specified, and it is further stipulated:
"That a retention of the property forwarded after thirty days from the date of shipment shall constitute a trial and acceptance, be a conclusive admission of the truth of all representations made by or for the consignor.”
The order, the mode of payment, the 30 days' trial to consummate the sale, and make it binding after that date, and the whole tenor of the contract are such as to indicate this to be a conditional sale of the property, and not a bailment, under the Pennsylvania law. The fact that there was a stipulation by the purchaser that the title might remain in the vendors until paid for does not entitle them to prevail, because under section 70a, par. 5, of the act of 1898 (Bankr. Act July 1, 1898, c. 541, 30 Stat. 566 [U. S. Comp. St. 1901, p. 3451]), property which prior to the filing of the petition he (the bankrupt) could by any means have transferred or which might have been levied upon and sold under judicial proceedings against him will pass to the trustee in bankruptcy. In Pennsylvania, property in the possession of a creditor on conditional sale can be levied upon and sold under judicial proceedings, and comes clearly within the definition of property which passes to the trustee.
In the case of Louis Fabian, Bankrupt (D. C.) 151 Fed. 949; the agreement was a consignment of goods to be sold for the account of Schleestein, Cohn & Co., and was clearly not a conditional sale, as was held by Judge McPherson, and, as the property was that of the claimant, it was in that case properly held that no title passed to the bankrupt; and the case of York Co. v. Cassel, 201 U. S. 344, 26 Sup. Ct. 481, 50 L. Ed. 782, s. c. 15 Am. Bankr. Rep. 633, was entirely in point, and ruled the case, but has no application in case of a bailment in Pennsylvania. The agreement is clearly a conditional sale. Title passed to the bankrupts upon the delivery of the machinery, and a trial and retention for 30 days bound the bankrupts to retain and pay for the property. At any time this machinery could have been levied upon by creditors and sold under judicial proceedings and upon the institution of proceedings in bankruptcy passed to the trustee.
The report of the referee is affirmed.
JOHNSTON V. FORSYTH MERCANTILE CO.
(District Court, S. D. Georgia, W. D. June 29, 1907.)
BANKRUPTCY-FRAUDULENT TRANSFER OF PROPERTY-SUIT BY TRUSTEE TO SET
A sale by an insolvent company in bulk of its stock of merchandise, which constituted practically all of its property, the transfer having been made secretly, at night, to a purchaser which knew of the insolvency, and the proceeds in part used to pay certain creditors, held to have been made with intent to binder, delay, and defraud its creditors, and to be voidable at suit of its trustee in bankruptcy.
[Ed. Note. For cases in point, see Cent. Dig. vol. 6, Bankruptcy, § 248.]
In Equity. Suit by trustee in bankruptcy to set aside an alleged fraudulent transfer.
For former opinion, see 127 Fed. 816.