361 Mass. 464

Pistorino & Company, Inc. vs. Style Leather Co., Inc.

Suffolk.

February 8, 1972.

March 23, 1972.

Present: Cutter, Spiegel; Reardon, Quirico, & Hennessey, JJ.

George Karelitz for the defendant.

Phillip R. Shea for the plaintiff.

Cutter, J.

The plaintiff (Pistorino), a licensed cus*465tomhouse broker in Bostón, seeks declaratory relief concerning its right to reimbursement by the defendant (Style), a leather importer in Haverhill, for about $35,000 of additional import duties owed on Style’s account (and liquidated by Pistorino after the initiation of this suit) on goods brought into the United States by Style.1 A Superior Court judge overruled Style’s demurrer and, after hearing, caused a final decree to be entered, declaring that Style must pay to Pistorino $35,169.86 with interest. Style appealed. The facts are stated largely on the basis of the judge’s voluntary findings. The evidence is reported.

Louis Shafmaster was treasurer of Style and “in operational control” of that company. Prior to July 8, 1968, he purchased in West Germany three sample rolls of a synthetic fabric (loosely referred to as imitation leather) for use for lining shoes. These were exported to the United States. T. D. Downing Company was employed as customhouse broker. The duty stated on the “Informal Entry” papers 2 was nine per cent.

On July 26, 1968, Shafmaster bought for Style a bulk *466quantity of the same merchandise for an invoice cost of $58,169.94. This material arrived in New York about August 17. On August 19, Style sent the shipping documents to Pistorino. A sample of the material was sent by Pistorino to the Boston Customs House by messenger with a note requesting that the rate of duty be determined. A handwritten reply was received (initialed by a Customs import specialist, Albert Van Bibber) referring to tariff schedule § 355.81 and a rate of eleven per cent.

On August 27, Pistorino sent to Style an invoice covering “estimated duty only” containing two items: a duty deposit of $6,398.59 for “2587 rolls [of] leather” and “Oceanfreight $2208.75,” representing a “cash outlay” by Pistorino. On August 29 or 30, Pistorino made entry of the goods and was reimbursed by Style for the duty. On August 31, Pistorino sent a final invoice to Style, in which, next to the item “Duty,” appeared in red print, “(Subject to correction by customs).”

On January 21, 1969, the Boston District Director of Customs notified Pistorino and Style of an increase in duty of about $35,000 because of a reclassification from tariff schedule § 355.81 at eleven per cent to § 359.50 at twenty-five cents a pound plus thirty per cent ad valorem. On May 9, 1969, the additional duty was liquidated by customs at $35,169.96. Pistorino had notified Style of its right to “protest” the increase. Style failed to file any protest or to avail itself of Pistorino’s offer to be of assistance.

Frederick Koerner, Pistorino’s executive vice-president, testified that Pistorino obtains a binding declaration “in case a client wants to determine how much the duty . . . [will] be on merchandise which he intends to buy and import.” This, he said, would be done “in case *467the merchandise has not arrived yet” by sending “a sample to Washington and ask[ing] for a decision. . prior to buying the merchandise.” He also testified that Pistorino first “received the documents” from Style on August 20, 1968, which was the first word Pistorino had of this transaction. No binding declaration was sought, he said (in an answer to an interrogatory) because there “was not sufficient time to obtain . . . [one] and . . . [Style] did not request one.”3

The trial judge made also the following findings and reached the conclusions mentioned below. The merchandise was bought on July 26, 1968, and shipped about August 6. Style first communicated with Pistorino on August 19. Shafmaster and Koerner had no conversations before January 22, 1969. If Style “relied on anyone before it made the . . . purchase on July 26 ... it relied on the duty stated on the papers when it employed T. D. Downing Company as its customs broker” in connection with entry of the samples. Pistorino “acted with due diligence and reasonableness as a customs broker in full conformity with applicable” customs regulations. “Shafmaster was a man of considerable experience as an importer of leather and allied products.” From this the judge concluded that he was “familiar with the opportunity available to an importer to obtain ... a binding determination of duty.”

The judge ruled that Pistorino, on the facts found, had no duty (as Koerner in fact testified, in effect as an expert on customs practice) to advise Style about the binding determination procedure. He also ruled that Pistorino was entitled to be exonerated for the additional customs duty ($35,169.86) for which it became liable (see fn. 1, supra).

*4681. The demurrer was correctly overruled. There was clearly a controversy about Style’s obligation to reimburse Pistorino for the additional duty. Pistorino, as the customhouse broker and importer of record, became liable for the additional duty in the first instance. It is immaterial that the duty was not liquidated by the customs authorities until May 9, 1969, after this suit was commenced (on May 6, 1969). General Laws c. 231A has long been construed broadly as to the existence of a controversy. See School Comm. of Cambridge v. Superintendent of Schs. of Cambridge, 320 Mass. 516, 518; Billings v. Fowler, ante, 230, 233-234. See also Nissenberg v. Felleman, 339 Mass. 717, 720-722.

Pistorino was not obliged to postpone its request for declaratory relief until termination of administrative and review proceedings before the customs authorities and the United States Customs Court to protest the increased duty. Style refused or failed to initiate such proceedings. It also did not request Pistorino to initiate a protest in its behalf. See 19 C. P. R. (1968) § 31.10(d) forbidding a customhouse broker to represent any person in an appeal or protest “unless he shall previously have been . . . authorized to do so.” See also Altieri v. United States, 55, C. C. P. A. 104, 106.

The present proceeding does not involve the correctness of the customs duty in fact imposed and thus there is no question of invasion of any exclusive jurisdiction of the United States Customs Court or of the Court of Customs and Patent Appeals. See 28 U. S. C. § § 1541, 1582, 1583 (1970). Cf. Batista v. Nicolls, 213 F. 2d 20, 21-22 (1st Cir.), where declaratory relief was prematurely sought concerning the precise subject matter about which further administrative relief was available. The jurisdiction of this court and of the Superior Court to afford declaratory relief is not affected by the circumstance that it may be necessary incidentally to consider questions affecting the duties of customhouse brokers under the Federal customs laws. See Union Brokerage Co. v. Jensen, 322 U. S. 202, 204-206; F. W. Myers & Co. v. Piche, 109 N. H. 357, 359.

*4692. The judge’s subsidiary findings are justified by the reported evidence, much of it oral, including the testimony of Shafmaster and Koerner. The findings cannot be said to be plainly wrong. See Hurley v. Hobbs, 360 Mass. 618, 621-622.

The finding, most dependent on inference, is that Shafmaster was “familiar with the opportunity available to an importer to obtain ... a binding determination of duty.” This was supported by evidence that Shafmaster had been dealing with the German shipper of the merchandise for eighteen to twenty years, that he had been engaged in importing leather and spent much time in Europe on the importing business; that the samples were imported through T. D. Downing Company “for the purpose of determining the customs duty that would be employed in merchandise of this type in the future”; and that he had seen the United States Customs “informal” entry form, used by T. D. Downing Company, at least as early as a pre-trial deposition taken eight months before trial in October, 1970. This “informal” entry form (see fn. 2, supra) contained a reference to the “binding determination” procedure. The judge was not required to believe, and obviously did not believe, Shafmaster’s denial of knowledge of the opportunity of obtaining a binding declaration. Although we think this inferential finding permissible we deal with the case without relying on it.

3. On the merits, Style’s principal contention is that Pistorino “had a duty to advise . . . [Style] of the availability of a procedure for obtaining a binding determination of duty from the . . . Bureau of Customs.” Style, however, points to no regulation specifically imposing such a duty. There was general evidence about the duties and function of a licensed customhouse broker. See 19 C. F. R. (1968) §§ 31.1-31.14.4 The obligations im*470posed on brokers by the regulations 5 do not appear to be more onerous than the duty to use due diligence and good faith.6

Wholly apart from the judge’s finding (discussed in part 2 of this opinion) that Shafmaster knew about the “binding determination” procedure, the judge was not required by the evidence to conclude that there was any lack of due diligence or good faith in Pistorino’s failure to advise Shafmaster about the procedure. The evidence does not suggest that Style informed Pistorino of any special uncertainty concerning the merchandise or its composition. Pistorino also is not shown to have had *471knowledge of the earlier sample shipment (which carried a nine per cent rate rather than the eleven per cent rate originally estimated on the bulk shipment).

Such uncertainty as Pistorino may have had was confined to the fact that it was “unable to determine the nature of the material from the documents.” In these circumstances, Pistorino acted with reasonable diligence in obtaining a sample from Style and in submitting it to the Boston customs office for its classification.

Pistorino thus had in August, 1968, no indication of any uncertainty on the part of either Style or the customs service which might have led to some consideration of using the “binding determination.” Indeed, the basis of the final assessment in 1969 seems to have been a post-entry test of the merchandise by the United States Customs Laboratory, and a “determination that the . . . merchandise was a textile fabric of man-made fibers, not specifically provided for under any other tariff provision” than that (§ 359.50) used in the final assessment. The judge reasonably could have decided that Pistorino was not bound to anticipate such a nonapparent and latent difficulty.

The judge was justified in placing reliance on Koerner’s testimony about the occasions when a “binding determination” would ordinarily be requested. He could also reasonably conclude (a) that such a determination would not be usual where merchandise had already arrived in the United States following a purchase, (b) that such a procedure (fn. 2) was not generally employed except where some special circumstance suggested its use,7 *472and (c) that any reliance by Style or Shafmaster was on the T. D. Downing Company “informal” entry rather than on anything Pistorino did or reported or failed to report.

Decree-affirmed with costs of appeal.

Pistorino & Co. v. Style Leather Co.
361 Mass. 464

Case Details

Name
Pistorino & Co. v. Style Leather Co.
Decision Date
Mar 23, 1972
Citations

361 Mass. 464

Jurisdiction
Massachusetts

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