Opinion
February Term, 1902.
Robert M. Boyd, Jr., for the appellants.
William W. Niles, for the respondent.
This is an action for damages caused by the failure of the defend ants as attorneys to appeal from a decision made by the United States board of appraisers within the time allowed by law.
In the years 1895 and 1896 the firm of which plaintiff is the surviving partner was doing business under the firm name of "Mica Roofing Company," and in connection with its business of distilling coal tar it made certain importations of "dead oil" or "coal tar product." The collector of the port of New York held that these importations were "distilled oils" within the meaning of paragraph 60 of the Tariff Act of 1894 (28 U.S. Stat. at Large, 511) and subject to a duty of twenty-five per cent ad valorem. The importers, through Kennedy Moon, a firm of custom house brokers, filed protests against the exaction of such duties, and the same were transmitted in the usual manner by the collector to the board of general appraisers for a hearing on the correctness of his decision. On the 11th of June, 1896, the defendants wrote Messrs. Kennedy Moon, asking if they might take the claim of the Mica Roofing Company in hand on the usual basis and saying that they had been asked to act on some claims of other parties concerning the same product. The brokers brought the matter to the attention of plaintiff's firm, and subsequently advised the defendants that the application was received with favor. Thereupon defendants addressed a letter to the Mica Roofing Company under date of June 12, 1896, which, so far as material, is as follows:
"DEAR SIRS. — Messrs. Kennedy Moon advise us that you are willing we should take in hand your contest as to exaction of customs duty on so-called coal tar oil or dead oil, which is now at a stage of progress represented by the fact that the protests have been lodged and are waiting the decision of the general appraisers, and should prosecute the same to a conclusion, upon the understanding that we are to take all such steps as may be requisite, both on the cases now pending and on any further importations which you may make pending the final decision of the question, that we are to receive a fee of 25% of whatever sums may be recovered as a result of the contest, and are to look to you for no compensation whatever unless the matter should result in recovery. * * * If the terms herein stated properly express your understanding of the matter, please advise us to that effect."
The Mica Roofing Company replied thereto on the 15th day of June, 1896, as follows:
"DEAR SIRS. — We have yours of the 12th regarding bringing suit against the Government for the recovery of duty which we have paid on dead oil. We have to say in regard to the matter that you are entirely right. We desire that you go ahead at once with the suits, and we will stand to our agreement of allowing you 25% of all recovered, nothing to be paid unless suit results in recovery."
This correspondence constitutes the contract between the clients and attorneys, which is the basis of the action.
On an appeal to the Circuit Court of the United States, taken by the defendants for the Warren Chemical Manufacturing Company, whose protests were similar and were heard with plaintiff's by the board of general appraisers, the decision of the appraisers sustaining the imposition of duties by the collector was reversed ( Warren Chemical Mfg. Co. v. United States, 78 Fed. Rep. 810), and this reversal was affirmed by the United States Circuit Court of Appeals. ( United States v. Warren Chemical Mfg. Co., 55 U.S. App. 402; 84 Fed. Rep. 638.) The respondent contends that if an appeal had been taken on his protests he also would have recovered the duties paid. He assigns as a breach of contract and for his cause of action the failure of defendants to take such appeal within the thirty days allowed therefor after the decision of the board of appraisers (26 U.S. Stat. at Large, 138, § 15), and he seeks to recover as damages the duties paid and interest thereon.
The hearing before the board of general appraisers was on the 26th day of June, 1896. The defendants, in behalf of the importers, contended that "dead oil," although produced from coal tar by a process of distillation, was entitled to free entry, under paragraph 443 of the Tariff Act of 1894 (28 U.S. Stat. at Large, 539), and was not subject to a twenty-five per cent ad valorem duty as "distilled oil" under paragraph 60 thereof. On the 23d day of July, 1896, the board of general appraisers rendered a decision in writing sustaining the collector on many of the protests, concerning which they had taken evidence in this matter, a schedule of which was annexed thereto. It included the plaintiff's protests and those of the Warren Chemical Manufacturing Company and others. This decision was, according to the usual custom, transmitted to and filed with the collector. It was the custom of the board on making a decision to send out notices to those interested. Where the protest is filed by an attorney or broker the notice is ordinarily sent to him and in other cases to the importer. These notices are not required by law and they merely announce the date of the decision on the protests, a schedule of which is annexed, but give no information as to how the matter has been decided, and on that point say, "The details can be ascertained upon application to the collector of customs at New York." It was shown to be the custom of importers and brokers on receiving such notices to send them to the attorneys, but it does not appear that plaintiff's firm was familiar with such custom. On receiving such a notice, either direct or through their client or his broker, it is the custom of attorneys practicing that branch of the law to send a clerk to the collector's office to copy the decision and the schedules of protests so far as they relate to the importer, on account of whose protest the notice is sent, and file the same in their office as a ground for appeal proceedings if the protest has been overruled. Under date of July 23, 1896, such a notice was received by the Mica Roofing Company, and their clerk was sent to the collector's office to ascertain how the matter was decided, and then the notice was filed away and not delivered to defendants until an inquiry arose concerning it about the 14th of September, 1896. Appellants also represented the Warren Chemical Manufacturing Company, on its protests heard on the same evidence and at the same time. That company received a notice from the board of general appraisers announcing a decision on its protests and transmitted it to defendants. Upon receiving this notice defendants pursued the usual course and sent their clerk to the collector's office to ascertain what the decision was. It does not appear that they obtained a copy of the decision and they claim to have learned its contents only so far as it related to the Warren Chemical Manufacturing Company. The defendants selected the Warren Chemical Manufacturing Company protests for a test case, and duly took an appeal in time. That company's imports were also products of coal tar known as "dead oil" and were of the same general character as plaintiff's and considered the same for dutiable purposes.
The defendants were experts in that line of business, and aside from these protests they represented a very large percentage of all protests filed against the imposition of tariff duties that were heard before the board of general appraisers. They were familiar with the practice of the government officials and aware of the risk in relying on the irregular practice in the transmission of notices of their decisions by the board of general appraisers. Appeals in such cases are taken by attorneys, and it does not appear that the execution by the client of any papers or documents is essential thereto. The appellants expressly concede in their points that "The plain and obvious meaning of the contract was that, should the decision of the board of general appraisers be adverse to the plaintiff, the defendants should appeal from such decision." Their contention is that they had no means of obtaining knowledge of the decision other than by the notice which in this case was sent to their client, and they base this contention upon a rule of the Treasury Department which provides that "Subordinate officers of customs are not permitted on their own authority to give other than necessary information relative to the public business, except to persons entitled to demand it; nor to grant inspection or copies of public records or documents, or information obtained therefrom to others than official persons entitled to the privilege." The collector of customs of the port of New York is not, we think, a subordinate officer of customs within this rule, and nothing in the rule could be construed as prohibiting him from giving information asked by importers or their attorney as to the contents of the decision of the board of general appraisers filed with him. Further than this the rule expressly permits the subordinate officers to give necessary information relative to the public business, and to give any information to persons entitled to demand the same. It is manifest that the attorneys who conduct the proceeding for a client before the board of general appraisers are authorized to receive information as to the nature of the decision or as to whether a decision had been made on the protests filed by their clients.
When the defendants received notice that a decision had been made on the protests filed by the Warren Chemical Manufacturing Company they sent their clerk to inspect the decision. A careful inspection of the decision at that time would have shown that the board had decided on all of the protests filed in behalf of the plaintiff as well. While it appears that the board did not universally decide all protests heard at the same time and concerning the same matter, it is evident that they ordinarily would. The protests having been based upon the same grounds and with respect to a similar product, when the attorneys had notice of a decision in one case they were put upon their inquiry as to whether a decision had not been made in the other. Their liability depends upon their contract. They expressly agree "to take all such steps as may be requisite both on the cases now pending and on any further importations" and to "prosecute the same to a conclusion." They did not limit their liability to receiving notice from their clients, and we think the court was justified in saying to the jury that it was their duty to inspect the decision, and that they were chargeable with the knowledge that would have been obtained by such inspection.
They seek to relieve themselves of this liability by a conversation in the presence of the senior member of plaintiff's firm, since deceased, between the defendant Comstock and one Comer, an importer, whom the defendants also represented. This conversation took place immediately after the hearing before the general appraisers and outside the room where seven or eight parties interested in the appraisal were waiting for the elevator. Mr. Comer testified that he asked Mr. Comstock how he would know about the decision when rendered, and that Comstock replied that he was liable to receive the notice direct himself or that it might be sent to "us; if it came to us to send it to him." In answer to the question, "Was anything said regarding the importance of letting him know?" the witness answered, "Certainly, as there was only a limited time allowed for appealing." The witness further testified, "I told Mr. Comstock if I got the notice I would send it to him." It did not appear that the deceased member of plaintiff's firm took part in the conversation; nor does it appear that his attention was drawn thereto otherwise than that he stood close to Mr. Comstock and within hearing distance. The court charged the jury, in substance, that if that conversation took place, and if there was an understanding or agreement between the decedent and Mr. Comstock by which the former was to send the notice to the latter, then the defendants were excused from ascertaining that a decision had been made adverse to the protests of their clients, but otherwise not. This, we think, is the correct rule of law and the finding of the jury on the facts to which it related is adverse to the defendants. It thus appears that, without any understanding or agreement with their clients that a notice which might be sent to their clients should be forwarded to them, the defendants took no steps to ascertain whether a decision had been rendered in their clients' cases. They did nothing until after the time to appeal had elapsed. This, we think, rendered them liable on the contract for the damages sustained by their clients. The court, we think, properly refused to charge the jury that if in their opinion the plaintiff's firm was guilty of contributory negligence in not forwarding to the defendants the notice received, the plaintiff could not recover. This request eliminated from the consideration of the jury the question as to whether plaintiff's firm had been requested to forward such notice or had agreed so to do. The court, however, immediately thereafter did instruct the jury that if the defendant Comstock notified the plaintiff's firm to forward all notices and papers received regarding the case before the board of general appraisers, it was negligence on their part not to do so. If this request as made did not fully instruct the jury as to the effect of that negligence the fault lies with the defendants and not with the court; but it is evident that the jury would understand that in such event the plaintiff could not recover.
It quite clearly appears that the decision of the Circuit Court and of the Circuit Court of Appeals on the appeal taken by the Warren Chemical Manufacturing Company was stare decisis on the proposition that the products imported by plaintiff's firm and concerning which protests were filed were not dutiable, and, as the court said to the jury in this case, it is reasonably certain that if an appeal had been taken and prosecuted the decision of the board of general appraisers would have been reversed.
These decisions were to the effect that "dead oil," although produced from coal tar by a process of distillation, was neither known commercially nor scientifically as "distilled oil," and it was, therefore, entitled to be entered free of duty. It is strenuously insisted that the government would not necessarily conform to the decision of the court as to importations falling within the principle upon which the adjudication was had, and evidence was offered that, after the decision of the appeal, other importers were obliged to pay duties on similar products. This evidence was excluded, and defendants excepted. The fact that the customs officials were over zealous in exacting duties or failed to properly interpret the decision of the court was of no consequence. The material point is that the rights of the plaintiff's firm could have been secured and enforced by an appeal. The various exceptions, therefore, taken to the admission of evidence and to the charge and to the refusal of the court to charge upon this subject present no prejudicial or reversible error. The amount of duties paid which the plaintiff has been allowed to recover is $2,003.75. Interest was computed on this amount from the 20th day of January, 1898, that being the date of the mandate of the Circuit Court of Appeals. In the Warren Chemical Manufacturing Company case, after the decision of the Circuit Court or Circuit Court of Appeals, the duties paid by it were repaid, but the date of such repayment was not shown.
The defendants' counsel excepted to so much of the charge as allowed the jury to add any interest. This exception is urged upon the ground that the government does not allow interest on duties which it repays. Doubtless, interest could not be recovered except from the date upon which it might be found that the duties would have been repaid had the appeal been taken and prosecuted to a successful termination with due diligence; but the exception is not sufficient to properly present the question. The case was submitted to the jury on the 26th day of April, 1900. It might, we think, be fairly assumed that the duties would have been repaid before that time, and, therefore, the plaintiff was entitled to recover some interest. It might have been a question for the jury to say what would have been a reasonable time in which the duties would have been repaid, but no such question was presented.
The plaintiff has been allowed to recover the full amount of the duties paid. The action, as has been seen, is for damages for a breach of the contract, which, if performed, would only have resulted in the recovery of seventy-five per cent of the duties for the benefit of the plaintiff. We think the damages should be limited according to the contract, which is the basis of the action. We have examined the other questions presented, but we find none which requires extended consideration.
It follows that, if the plaintiff will stipulate to reduce the judgment, including interest, costs and extra allowance, to the sum of $1,950.23, the judgment as so reduced and the order appealed from should be affirmed, without costs; otherwise, the judgment and order should be reversed and a new trial had, with costs to appellants to abide event.
VAN BRUNT, P.J., PATTERSON, INGRAHAM and HATCH, JJ., concurred.
If plaintiff will stipulate to reduce judgment, including interest, costs and extra allowance, to the sum of $1,950.23, the judgment as so reduced and order affirmed, without costs; otherwise, judgment and order reversed and new trial ordered, with costs to appellants to abide event.