SIX llUNDREDTONS OF IRON aBE.
HUNDRED TONS OF IRON ORE.
New Jersey. December 10, 1881.)
FORlI'EITURES-LIENB FOR FREIGHT.
Where freight is earned before the government makes election whether to declare the merchandise, of which a false and fraudulent entry has been made, forfeited, or to recover its value by suit against the parties making the entry, and the former proceeding is finally chosen and the property is sold, held, that such freight must be paid out of the proceeds of the sale, the owners of the vessel having no knowledge before it was earned of any offence, committed or premeditated. ' 2.
Manual delivery of the cargo by the ship-owners to the consignees does not, of itself, operate necessarily to discharge their lien for freight. Where the intent of the ship-owners in making such delivery is to discharge the cargo, and not to deliver it, their lien for freight remains in full force.
Jas. K. Hill and Wing £t Slwudy, for petitioners· .A. Q. Keasbey, U. S. Atty., for the Government. NIXON, D. J. The petition is filed in this case by the owners of the steam-ship Italia, of the Anchor line, to recover from the proceeds of the sale of a quantity of iron are, now in the registry of the court, the sum of $1,305.61, as freight for the transportation of said OI:e in the Italia from the port of Almeira, in Spain, to the port of New York. The ore was shipped at Almeira by one Joseph Ribiera, about the ninth of March last, and was to be carried to New York and delivered to Messrs. Schenck & Co., for the freight of nine shillings British sterling per ton of 2,000 pounds weight, and the m ual bills of lading were ex.ecuted therefor. Before its arrival there Schenck & Co. entered into a written contract to sell the cargo to Joseph K. Wells. The are was guarantied to be not less than 55.56 of iron and 3.42 of manganese, making a total metallic yield of 58.98. ' A deduction of 10 cents per unit per ton to be made for any less percentage, and 10 cents per unit per ton added for any excess; the analysis to be determined from sample to be drawn from the cargo as discharged, and to be !tualyzed as received. The price agreed upon was $5.90 per ton, duty and all from the ship ll.t charges paid, and to be delivered to the the harbor of New York, and to be paid for-one-half cash on delivery of custom-house permit, and the balance on presentation of United States weigher's certificate of weight, and certificate of sampling and analysis: On the date of the execution of the contract Wells paid $200 on account, and in advance of the approximate oue-half to be paid by;him on the delivery of the .,custom-housepermitj the said
Schenck & Co. agreeing, if the ore did not arrive, to pay back the said $200. The steam-ship reached her pier in the port of New York on the twentieth of April, 1881. Schenck & Co. paid the duties and obtained the usual custom-house permit for the landing of the ore, which they delivered to Wells on the next day, (21st,) and received from him $1,670 on account of payment on the whole shipment. Wells then procured and sent to the steam-ship three barges or canal-boats, with instructions to take the ore on board and proceed to the railroad dock of the Morris & Essex road, at Hoboken, New Jersey, and there remain until he gave further orders. The steamship company began to discharge the ore on the twenty-second and finished on the twenty-eighth. of April, the three boats crossing the river at different times and mooring in the basin of the Morris canal. On the twenty-ninth the collector of New York, discovering a fraudulent undervaluation of the goods by Schenck & Co., the importers, caused the same to be seized while yet in the basin of the Morris canal at Hoboken; repor.ted the seizure to the district attorney for this district, who filed the usual information in such cases for forfeiture, and duly condemned the cargo, no one appearing to contest the forfeiture. Pending these proceedings the marshal took possession of the ore, and, by order of the court, sold it for $3,200, and paid the proceeds of the sale into the registry of the court, where they still remain. Are the owners of the steam-ship entitled to demand and receive from these proceeds the freight money still due and unpaid on the importation, or are they obliged, under the circumstances, to look to the consignees for payment? The case presents two questions for consideration: (1) Was the lien of the ship-owners on the cargo for 'freight lost by the delivery made? (2) If not, does the forfeiture of goods, under sections 2839, 2864, Rey. St., extend to and include the interest of bona fide lienors without notice of the fraud? It is conceded that by the maritime law the ship-owner had a lien upon the goods transported for the freight, unless there be some stipulations in the contraN of affreightment inconsistent with the exercise of the lien; as, for instance, when the freight is made payable at a date subsequent to the delivery of the cargo. For, unlike the privilegium under the civil law. the lien for freight depends upon the possession, and is lost when an unconditional delivery is made, or when any agreement is entered into by the parties in regard to the payment of freight, which involves a prior surrender of the possession. In the present case, the Ship-owners, undoubtedly, intended to have
SIX HU.NDRED TONS OF IRON ORE.
and retain a lien on the merchandise for the freight j for, in addition to their right under the law-merchant, they inserted a clause in the bill of lading that "the captain or owner should have a lien on the goods for the payment of freight and all expenses j" and on the day after the arrival of the steamer.in New York, they caused a notice to be served upon the superintendent of the dook, as appears to be their custom when the consignee is unknown, or they are not willing to trust to his personal responsibility, to hold the ore until the freight was paid. These faots are important, in 80 far as they rebut any presumption drawn from the acts of the parties of the waiver of the lien. The Kimball, 3 Wall. 44. With the above notice in their possession, the agents of the owners began to unload the ore into, the oanal-boats on the twenty-seoond of April, and continued until it was all discharged, on the 28th. One of the boats, in the mean time, being loaded, left the pier and crossed the river to the Morris canal basin. The remaining two, having received the residue of the followed her there. The superintendent says that he did not know of the departure of the' first boat j but he acknowledges he was informed of it before the others left, and offered no objections, and took no steps to have it brought back. His testimony in the matter is quite significant. Being asked, "Did you make any remonstrances to the men that were in the other two boats about the first one going away?" he answered: "No, sirj! thought everything was all right, because the same man had been taking ore from us previous to that, and I supposed there would be no trouble about it." Nor did he make any efforts to ascertain its destination, and did :not know where it had gone until some days afterwards, when, at the request of the captain, he visited the boat in the Morris canal basin, to examine into some alleged damage which it bad received from the steamer while loading the ore. Libellant's Testimony, pp. 27. 28. It is often a difficult question to determine what acts on the part of the shipowner amount to a waiver of the lien for freight. It is not divested by a delivery to the consignee or his agen'ts if conditions are annexed to the delivery, or if there be an understanding, express or implied, that the lien shall oontinue. Bags of Linseed, 1 Black, 108. In 151 Tons of Goal, 4 Blatch£. 468, Judge Nelson went still further and said that "the mere manllal delivery of the ooal by the carrier to the consignea did not, of itself, operate necessarily to discharge the lien. The delivery must he made with the intent of parting with his interest in it, or under circumstances from which the law will infer such an intent." Applying these principles to the
598 facts, it is a close question whether the lien ha.s been waived or not. I confess to a serious doubt on the subject. But, remembering that a court of admiralty is the "chancery of the seas," and that the libellants have a strong equitable claim upon the forleited goods for freight, in view of the fact that the transportation added considerably to their value here, I incline to the opinion that the intent of the owners was to discharge the cargo, and not to deliver it, and that the lien for the costs of transportation has. not been waived. I am strengthened in this opinion by the additional facts that the bills of lading ha.ve never been surrendered, and no receipt given to the steam-ship for the ore, as is customary in such cases, after delivery. 2. The ore has been forfeited under sections 2839, 2864, of the Revised Statutes. Does such forfeiture carry with it the lienor's interest in. the condemned merchandise? Some discussion took place between the respective counsel, at the hearing, in regard to the effect which the recent legislation of congress had upon this question. By the third section of the act of March 2, 1867, (section 2981, Rev. St.,) the col· lector, or other chief officer of the cust.oms, is authorized, on being notified in writing, by the owner or consignee of any vessel, of a lien for freight on any merchandise imported in such vessel, to refuse the delivery of the same from. any public. or bonded warehouse, or other pl/tce, in which the same shall be dep9sited, until proof to his satisfaction shall be produced that the freight has been paid or secured. The provisions of this section were modified by a substitute passed June 10, 1880, (Snpp. to Rev. St. vol. 1, p. 547,) in which the proper officer of the customs, on receiving the said notice of lien for freight, is required, before delivering the merchandise to the importer, owner, or consignee, to give seasonable notice to the parties claiming a lien, and containing the further provision that the possession of the goods by the officers of the customs shall not affect the discharge of such lien. Both the. original section and the substitute contain the "If merchandise so subject to a lien, regarding which notice has been filed, shall be forfeited to the United States, and sold, the freight due thereon shall be paid from the proceeds of such sale in the same manner as other charges and expenses, authorized by law to be paid therefrom, are paid." The district attorney insists that as no notice was given to the proper officer of the customs the case does not come within the provisions of the act, and no statutory authority can be invoked to pay the freight out of the proceeds of the sale. The counsel for the petitioners, on the other hand, contends that no notice was required, as none of the iron O1;e went into a public or bonded warehouse,
SIX HUiliD&I!IDTONS OF IRON ORE.
and that the merchandise, withoutnotice, falls within the intention and legisspirit of the law. lie regards the act as the lative intent to preserve and ship.owner!s:lien in all cases of forfeiture to the governmellt,'8J;1d qu.otes Potter's Dwarris on Statutes, etc.! p. 144, in support of his position : "The intention of the legislature may be found from the act itself, from other aetain pari materia, and sometimes from the necessity of the statute; and wherever the intentqan be discovered. it should be followed with reason and discretion, thouRh such construction seems contrary to the letter of the statute." But these are rules of interpretation; when the words .of .the law are obscure, and there is no obscurity in the act under consideration. I am not prepared to affirm that when popgress elplicitly gives to parties certain rights, upon their. performanceof certain. antecedentacts.alld conditions, they are entitled to claim the rights, without showipgthat they hllNtl performedtbe acts 8iUd conditions. ',But this question turn!;!, in my other considerations, to which I shall now advert. There. are a large number of statut,es in ;both the customs and internal-revenue acts which. subject property, used in violation of, the law, to forfeiture. It is sufficient, for my present purpose, to divide these statutes into two' classes,-one cla'ss forfeiting the offending res absoh1tely,withol.1t reference to Jiens()f :innocent holders, or the claims of bona fide purchasers without and the other the interest oft,he guilty oWller;a.qd ·preserving the rights of honest lienors or purchasers. Most of.the sections for forfeiture, under the internal-revenue laws, belong to the former classs,and many of those under the 'Customs .laws to the latter. Whether the statute fll.lls within one class or the other depends upon the phraseology used by congress in its enactment. Where it makes the forfeiture absolute, it is within the former class, and the forfeiture is incurred at the time of the. commission of .the, Mt which works the condemnation, and the title ,is vested in.the United States frop} that date. No matter how long afterwards are taken to enforce the right of the government runs back, by relation, to the, time of the commission of the wrongful acts, and cuts oP,t all intervening claimants, however innocent. l3u,t ia stittute. gives an alternative to the United States, either to f()l'(eit the offeuding thing or its value by suit against the offending per!iOp., it comes within the latter class; the government .acqnires no title to the :property until its proper officers make an electi<>n they wilL proceed against the res Ql'.aga,inst the offender foritsy-alu.e,.
and in the mean time, pending the election, ;/,11 jona Jlde meum· brances are protected. The question as to the time when the transfer of right in the thing forfeited takes place, was first fully discussed and settled in the caseof U. S. v. Grundy, 3 Cranch, 338. Under the act of December 31, 1792, for registering and recording ships or vessels, (section 4143, Rev. St;,) it was provided that taking a false oath as to ownership forfeited· the vessel or the value thereof. The suit was brought to recover the vessel in the hands of a bona fide purchaser, without notice of the fraud in the registry, on the gronnd that title had vested in the United States at the instant of the commission of the offence for which the forfeiture was claimed. Chief Justice Marshall, in delivering the opinion of the court, stated the question to be whether, by virtue of the act, the absolute property in the ship or vessel vested in the United States, either in fact or in contemplation of law, on the taking of the false oath, or remained in the owners until the United States should perform some act manifesting their election to take the ship,aud not the value. He held to the latter view, and in his luminous way said: "It seems to be of the very nature of a right to elect one of two things:
that actual ownership is not acquired in either until it be elected, and if the penalty of an offence be not the positive forfeiture of a particular thing, but one of two things, at the choice of the person claiming the forfeiture, it would seem to be altering materially the situation in which that person is placed to say that either is vested in him before he makes that choice. If both are vested in him it is not an election which to take, but which to reject. It is not a forfeiture of one of two things, but a forfeiture of two things of which one only can be retained."
This construction of the class of statutes which forfeit the property with an alternative of its value, was acquiesced in by the attorney general of the United States in the discusion of the case of 1,9fJO Bags of Coffee, 8 Cranch, 398, and was afterwards deliberately reaffirmed in Caldwell v. U. S. 8 How. 366, where the supreme court reached the necessary conclusion of such a construction, by holding that any rights in the forfeited property, acquired in good faith by third persons, after the offence and before the date of the election, were not divested by the decree of condemnation. It will not be suggested, after the case of The Siren, 7 Wall. 152, that the government stands in any different relation to the money in the registry than do private suitors, except that it is exempt from the payment of costs. It will be seen, by reference to the sections (2839, 28tH) under which the are was condemned, that they are both in the alternative. The United States had an election, in either case, whether to forfeit the merchandise, or
SA WYER V. KELLOGG.
to recover its value by suit against the persons making the false and fraudulent entry. They chose the former proceeding; but, in the mean time, the owners of the steamer, without knowledge of any offence; committed' or premeditated, earned the freight which was agreed to be paid for its transportation, and ought not now to be refused its payment from the proceeds of the sale of the forfeited property. Let an order be entered directing the clerk to pay to the petitioners the Bum of $1,305.61 out of the proceeds in the registry.
(Circuit Court, D. New Jer8ey. November 19,1881.)
K., who was engaged largely in the business of packing blues, on his own account and for others in the trade, put up the blues covered by the infringing trade-mark for the firm of B. & Co., who sold them, paying K. for the work and labor of packing them. K. was adjudged an infringer, an injunction issued against him, and the decree directed an accounting. On motion to strike from the decree the clauses directing an accounting, held, that the complainant was entitled to an accounting to enable him to ascertain what profits were made by K. by his work and labor, and what damages resulted therefrom.
In trade-mark cases the ordinary rule is that a decree for an infringement and an injunction carries costs; and this rule applies, though no demand was made before suit that the defendant should cease to use the infringing trademark.
On Motion to Amend Decree. George Putnam Smith, for the motion. Rowland Cox, contra. NIXON, D. J. This is a motion to strike from the decree entered in the above case the clauses which direct an accounting and the payment of costs. 1. As to the accounting. The counsel for the defendant rests his application to strike out on two grounds: First, becanse the proofs show that the defendant is not the person liable to account to the complainant. The evidence is that the defendant was largely engaged in packing blues on his own account and for others in the trade; that all the blues covered by the infringing trade-mark were put up by him for the firm of James S. Barron & Co., dealers in wooden ware, rope, and cordage in New York, who placed the same upon the market; that he made no sales to anyone of the articles thus packed,