United States v. Schoverling

Citations: 146 U.S. 76; 13 S. Ct. 24; 36 L. Ed. 893; 1892 U.S. LEXIS 2177Docket: 690

Court: Supreme Court of the United States; November 6, 1892; Federal Supreme Court; Federal Appellate Court

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On October 20, 1890, the firm of Schoverling, Daly, Gales imported 12 finished gunstocks, including locks and mountings, into New York, for which the collector imposed a duty of $1.50 each plus a 35% ad valorem tax, based on paragraph 170 of the Tariff Act of 1890. This paragraph outlines duty rates for various firearms, notably categorizing double-barreled, sporting, breech-loading shotguns. The importers protested this assessment on November 15, asserting that the items were merely parts of guns and should be subject to a 45% ad valorem duty under paragraph 215, which applies to non-enumerated manufactured metal articles. The protest emphasized that the gunstocks were incomplete products intended for assembly with barrels that arrived separately. Subsequently, on December 16, 1890, the collector forwarded the protest and relevant documents to the general appraisers, who noted the assistant appraiser's report that the items were indeed gunstocks ready for assembly into complete shotguns. The collector maintained the original duty assessment based on the classification of the items as breech-loading shotguns.

On December 19, 1890, Mr. Daly testified before the board of general appraisers regarding the importation of gunstocks by the firm Schoverling, Daly, Gales. The board concluded that these gunstocks could not be classified as completed firearms for duty purposes without accompanying gunbarrels, affirming the collector's decision. It was revealed that Schoverling, a member of both involved firms, had a collusive agreement to import gunstocks separately while another firm would order the barrels, anticipating they would be assembled in New York. This arrangement was deemed an unacceptable means of evading duties.

On January 6, 1891, the importers sought a review from the U.S. Circuit Court for the Southern District of New York, contesting the duty assessment of $1.50 each plus 35% ad valorem, arguing it should only be 45% ad valorem under paragraph 215. The court ordered the board to submit relevant records and evidence. On January 22, the board filed its return, which included various documents and Daly's testimony.

After arguments, on March 20, 1891, Judge Lacombe reversed the decisions of the collector and board, determining that the merchandise should be assessed at 45% ad valorem under paragraph 215 as "manufactures, articles, or wares not specially enumerated or provided for in this act, composed, in part of iron or steel." The court noted the lack of evidence that the gunstocks were assembled with the barrels prior to importation and emphasized that the tariff law differentiated between complete shotguns and their parts, allowing importers to bring in components separately. Thus, it concluded that the gunstocks qualified as "manufactures composed wholly or in part of metal," warranting the lower duty rate.

On March 20, 1891, the U.S. Attorney General sought an appeal to the circuit court regarding a prior judgment. This appeal was granted, and the court affirmed the circuit court's decision. The U.S. contended that the transaction constituted a fraud on the statute, focusing particularly on the classification of imported gunstocks. The court noted that the statute does not impose duties on parts of breech-loading shotguns, except as specified in certain paragraphs. Duties on various parts, including axles and knives, are recognized, but gunstocks are treated as separate imports, irrespective of the importers' intent to assemble complete guns. Citing relevant case law, the court clarified that imported items' dutiable status is determined by their condition upon importation. The U.S. referenced an old provision concerning duties on parts, but the court deemed it obsolete and not applicable to later tariff acts, concluding that subsequent tariffs had rendered prior duties ineffective. Although the appeal was initially brought against a firm, the court allowed for amendments to correct this procedural defect. Ultimately, the court affirmed the lower judgment.

Messrs. Schoverling, Daly, Gales are protesting the importation of certain gunstocks, consisting of twelve finished gunstocks, which are parts of breech-loading shotguns. Mr. Daly, a member of the firm, confirmed the order was made via telegraph shortly before the invoice was issued. He clarified that they did not order the barrels of the shotguns and have not received them, nor have they made arrangements to receive them through another firm. However, there is an agreement with another firm, A. Schoverling, for the barrels to be ordered, with the expectation that all parts would be assembled in the U.S. Mr. Daly indicated that a significant number of these barrels might still be in bond and suggested that this importation strategy is common among trade peers. The firm has protested against a 35% duty assessment referenced in the appraiser's special report.