Opinion
No. 379.
May 9, 1932.
Appeal from the District Court of the United States for the Southern District of New York.
At Law. Action by Helene M. Lafontan against Philip Elting, Collector of the Port of New York, who filed a cross-complaint against the American Import Export Company and another. From a judgment against cross-defendants [ 54 F.2d 664], they appeal.
Reversed.
The American Import Export Company, a domestic corporation having its principal place of business in New York City, purchased eighteen bales of lambskins of J.B. Arbouet in France. Arbouet was informed that a credit would be established in Paris to pay 90 per cent. of the purchase price and on the strength of this shipped the lambskins by the S.S. Zeeland from Bordeaux consigned to the American Import Export Company in New York. This shipment was under a straight bill of lading which the ship delivered to Arbouet and was made out to "American Export Import Corp., 640 Broadway, New York, * * * or their assigns." Arbouet then sent to the consignee an invoice for the purchase price of the skins which it is now claimed did show on its face that 90 per cent. was to be paid on delivery of the bill of lading. When the consignee used it to make entry of the goods through the customs, only a large ink blot appeared where this notation is said to have been. Arbouet kept the bill of lading. When he attempted to collect the 90 per cent. of the purchase price, he discovered that no credit had been set up as previously promised. He later assigned the bill of lading to the plaintiff.
The lambskins arrived at New York in due course. The American Import Export Company applied to the defendant Elting, who was collector of the Port of New York, for consumption entry of the skins through the customs. This application was granted without the production of the bill of lading upon the execution and delivery of a bond to Elting on which the American Import Export Company was the principal and the defendant United States Fidelity Guaranty Company was surety, and the skins were delivered to the American Company. The plaintiff later demanded the skins of the defendant Elting and upon the demand being refused brought suit against him for conversion. He filed a cross-complaint against the two corporate defendants setting up their liability on the bond. They answered separately denying all liability. The action was tried with a jury of one. The court directed a verdict in favor of Elting and rendered judgment thereon from which no appeal was taken. A verdict for the plaintiff against the other two defendants was directed and they have appealed from the judgment entered against them.
The condition of the bond was as follows: "Now, therefore, the condition of this obligation is such, that if the above bounden parties, in consideration of delivery of said goods, without a bill of lading therefor, shall defend, save and hold harmless the said Collector of Customs against all and every claim and demand which may arise or be brought against him by any person or persons, firm, corporation or association by reason of the delivery of the goods described above to or for the account of the said Principal, and will produce and deliver to the said Collector of Customs a valid bill of lading for the said goods, properly endorsed by the shipper or consignee, as the case may be, within thirty days from date hereof, or within any extension of said time as may be approved by the Collector in writing, and failing so to do shall thereafter on demand in writing forthwith pay to the said Collector of Customs the full amount of any and every unsatisfied, just and proper claim or demand that may have arisen or been brought against him by any person or persons, firm, corporation or association holding such bill of lading, then this obligation shall be void; otherwise it shall remain in full force and effect."
William J. McArthur, of New York City, for appellants.
Guerra Everett, of Washington, D.C. (Phillip Burnett Thurston, of New York City, of counsel), for respondent.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
If for the purposes of this appeal we should assume that the plaintiff could have sued the defendants who signed the bond directly upon that obligation and that this action may be treated as such a suit under section 193 of the New York Civil Practice Act, the only obligation which could be enforced is that which the obligors assumed. Since the defendant Elting has had judgment that has become final because no appeal was taken, his liability cannot now be relied upon to establish that of the obligors on the bond.
The statute in force provided for the delivery of goods in the custody of the collector of the port without the production of a bill of lading upon the execution and delivery of a bond of the kind therein required. The section of the statute is 19 USCA § 347(2), and reads: "The collector is authorized to permit entry and to release merchandise from customs custody without the production of the bill of lading if the person making such entry gives a bond satisfactory to the collector, in a sum equal to not less than one and one-half times the invoice value of the merchandise, to produce such bill of lading, to relieve the collector of all liability, to indemnify the collector against loss, to defend every action brought upon a claim for loss or damage, by reason of such release from customs custody or a failure to produce such bill of lading and to entitle any person injured by reason of such release from customs custody to sue on such bond in his own name, without making the collector a party thereto. Any person so injured by such release may sue on such bond to recover any damages so sustained by him."
The statute required a bond on which the principal and surety would be liable in an action brought directly against them and that liability is not limited to indemnifying the collector since the required bond must be one "to entitle any person injured by reason of such release from customs custody to sue on such bond in his own name, without making the collector a party thereto." And "any person so injured by such release may sue on such bond to recover any damages sustained by him." This bond, however, did not comply with the statute, since it provided only for indemnity to the collector and not for a suit on the bond by anyone else. Its failure to comply with the provisions required by the statute may have made it less than enough to give the collector the protection of the statute as a justification for releasing the skins without the production of the bill of lading. That question is not before us. We are now dealing only with the obligation of these defendants upon this bond. As the collector has had a final judgment in his favor, it follows that the other defendants, who agreed only to indemnify the collector, are entitled to judgment also. The terms of the statute have apparently been confused with those of the bond and the matter treated as though the bond did provide what the statute required in regard to suits on it by persons injured by delivery without the production of the bill of lading. In what has been said we have assumed without deciding that the plaintiff once had a cause of action because of injury by delivery of these skins to the American Import Export Company, but it should not be amiss to remark that if that question could be considered on the merits the result might be contrary to this assumption. See Derobert v. Stranahan (C.C.) 126 F. 582. However that may be, it must be remembered that the nonliability of the collector to this plaintiff has become res adjudicata.
It has been suggested that we can treat the judgment as defective in form only, amend it by ordering judgment entered against the collector, and then enforce the bond. That course would include a reversal and the entry of an entirely new judgment contrary to that which has become absolute by failure to appeal and goes beyond our power.
Judgment reversed.