United States v. Ehrgott

| U.S. Circuit Court for the District of Southern New York | Nov 1, 1910

HAND, District Judge.

The first question is of the indictment for the substantive offenses. The first count must be limited to a violation of section 2987, Rev. St. (U. S. Comp. St. 1901, p. 1959), and the second to section 9, Act June 10, 1890, c. 407, 26 Stat. 135 (U. S. Comp. St. 1901, p. 1895). The demurrer is to both counts.

In the first count the crime alleged consists of fraudulently removing warehoused merchandise from a public warehouse. The count alleges by way of inducement that the beans had been deposited in Brooklyn in warehouse under bond, and then alleges that on a given day the firm withdrew them under a false pretense that they were to be’ exported. They removed the goods from the warehouse, concealed them in Manhattan, and did not export them. Of the elements going to make up thé crime the warehousing of the merchandise is properly alleged, also, their removal. The only question which can arise is as to “fraudulently.” That word means that the acts must be done with an .intent to -evade the law, and that intent must, of course, be alleged in detail. The pleader says that the firm withdrew the goods “with the' false * ■ * * pretense” that they were to be exported. “False pretense” means .’at the least that the defendants did not mean to export the goods when they removed them. The only legal disposition of the beans was to export them, and to intend not to export them was to intend to evade the law.

The .verbal criticisms I need not notice. First, that there is no allegation of the person to whom the pretense was made; and, second, that Ehrgott personally is not aptly described in the word “firm.” When courts to-day interpret any document, even an indictment, with such pervérse scholastic ingenuity, they rightly eiiough bring odium upon the administration of justice in the minds of .all sensible people.

The real objection to the count lies in the fact that the removal was completed in the Eastern District of New York, and it was obviously enough' because of this that the grand jury tried to bring the case within thé concealment clause. However, if fhe offense was completed by the fraudulent removal, the subsequent concealment' is mere surplusage, relevant as “evidence, and then only to show the original intent with which the removal was made. It has no proper place in the indictment. Does the statute, then, create as a crime the concealing of merchandise after its removal from a bonded warehouse? The definition of the crime as distinct from the forfeiture does omit “in,” but there is, I think, no change in intent. The statute clearly shows that the offense consists in concealing merchandise in a bonded warehouse, or in taking it out. Of course, there could be no motive in concealing it in such a warehouse, unless you meant eventually to take it out, but yet the concealment might be a first, and at times an effective, step, which Congress might well wish to make criminal in itself, and independently of whether or not it was detected before the removal was consummated. To construe the statute to mean that it was a crime to conceal it after it was removed is less likely. The subsequent concealment would practically always be proof of the fraudulent intent in the removal, but would, as a substantive offense, add nothing to the removal which must precede it. The cases in which you could prove concealment after removal, but not removal, which is a public act, would hardly ever occur. It is most unlikely that Congress meant to cover such cases, even if the words permitted the interpretation. Mr. Wemple suggests that a truck is a warehouse within the act, but I do not think so. The goods no doubt are always in the possession of some quasi official person, and never come into the free commerce of the country, as I shall show below, but, when the statute speaks of a warehouse, it must mean what we usually include as a warehouse, and nothing more. If there be a doubt, I ought to give the benefit of it to the defendant upon a criminal statute. The offense being completed upon the removal, there is no room for section 731 of the Revised Statutes (U. S. Comp. S,t. 1901, p. 585). I think, therefore, that the first count does not set up any crime committed in the Southern District of New York, and to that count I sustain the demurrer.

The second count arises under section 9 of the act of 1890, and requires some willful act or omission by means whereof the United State is deprived of duties. The count by way of inducement alleges the original deposit of the beans in the warehouse, their withdrawal for exportation upon bond and permit, all on January 15, 1903. It then proceeds to allege that the goods were not exported' “then and there,” but were “withheld” and “concealed,” with the knowledge of the defendants.

The chief object of the defendants’ attack is the limitation of the withholding and concealment to the very day of' the removal. They say: ' .

“Non constat but that before the time to ship the goods arrived the defendants changed their minds and shipped the goods. If so, the United States was never deprived of ,the duties. What the pleader should have done is to allege that the defendants concealed and withheld the goods, not only at the time of their removal, but for all the period which was allowed to ship them. That that period was at least a reasonable one is shown by the fact that they had a whole year by the terms of the bond in which to'file their proofs of exportation.”

■ This is a substantial criticism of the indictment, and needs answer. The pleader obviously meant to allege that the beans got into the country without paying a duty due upon them. Yet no duty was due on them at all, so long as they were either in bond or in process of exportation. As soon, however, as they were introduced or “entered” into the country, duties became due on them, and that, too, whether the “entry” was surreptitious or honest. Any act which diverted them from the process of exportation and brought them free into the commerce of the country deprived the United States of duties due upon them. The question is whether the process of exportation was interrupted by their being “withheld and concealed” by the defendants. If it was, it is of no consequence that afterwards the defendants might repent and set them in train of exportation again. The crime was complete as soon as the goods were once “entered,” whether any one ever knew it or not, and whether or not the defendants at once began again to export them.

The phrase, “under the inspection of the proper officers,” is a somewhat vague one, which certainly permits of the interpretation that the goods shall be under the constant surveillance of such officers from the time they leave the warehouse until they reach the ship. This is the interpretation which the executive has placed upon it by articles 834, 838, 841, and 842 of the Treasury Department, which enact a system of licensed truckmen to whom a limited custody of the goods is intrusted for the purpose only of transfer from warehouse to hold. These regulations are controlling with me for two reasons: First, because as a construction of a statute by the executive they are entitled to much weight in a doubtful case; second, because under section 2989 (U. S. Comp. St. 1901, p. 1959) they have the force of law. I cannot very seriously regard section 2979 (U. S. Comp. St. 1901, p. 1953) as doubtful, even if it had to be interpreted for the first time, but the construction of the department would lay any doubts, if I had them. The defendant insists nevertheless that as mere regulations they cannot be the basis of a criminal prosecution (United States v. Eaton, 144 U;- S. 677, 12 Sup. Ct. 764, 36 L. Ed. 591" court="SCOTUS" date_filed="1892-04-25" href="https://app.midpage.ai/document/united-states-v-eaton-93358?utm_source=webapp" opinion_id="93358">36 L. Ed. 591), where the substantive offense was defined only in the regulations themselves. In United States v. United Verde Copper Co., 196 U.S. 207" court="SCOTUS" date_filed="1905-01-09" href="https://app.midpage.ai/document/united-states-v-united-verde-copper-co-96192?utm_source=webapp" opinion_id="96192">196 U. S. 207, 25 Sup. Ct. 222, 49 L. Ed. 449" court="SCOTUS" date_filed="1905-01-09" href="https://app.midpage.ai/document/united-states-v-united-verde-copper-co-96192?utm_source=webapp" opinion_id="96192">49 L. Ed. 449; however,, where it was enacted that it was an offense to violate the regulations of the Secretary, the court did not take the point and proceeded to the discussion of whether the regulation was itself valid. The distinction is whether Congress' in a statute makes penal the violation of the Secretary’s regulations, or whether such a provision can be only found in the' regulation itself. Caha v. U. S., 152 U.S. 211" court="SCOTUS" date_filed="1894-03-05" href="https://app.midpage.ai/document/caha-v-united-states-93825?utm_source=webapp" opinion_id="93825">152 U. S. 211, 14 Sup. Ct. 513; 38. L. Ed. 415; Re Kollock, 165 U.S. 526" court="SCOTUS" date_filed="1897-03-01" href="https://app.midpage.ai/document/in-re-kollock-94627?utm_source=webapp" opinion_id="94627">165 U. S. 526, 17 Sup. Ct. 444, 41 L. Ed. 813" court="SCOTUS" date_filed="1897-03-01" href="https://app.midpage.ai/document/in-re-kollock-94627?utm_source=webapp" opinion_id="94627">41 L. Ed. 813. The cases to the contrary in the lower co.urts. are not the law; It is: true that section 9. does not make the violation of the regülations penal, nor does any' other section. The regulations do,' however, prescribe in detail, what shall be meant by the • phrase,', “under the inspection of thé proper officers,” and in so far they haye:the force of law under section 2989 (U. S. Comp. St. 1901, p. 1959). The words of the statute have thereupon an"authoritative interpretation which is binding on a court. When the question arises whether the custody of such merchandise given to an importer is limited or free, that “question must be determined under the interpretation of these articles whether the inquiry is incidental to the determination of a criminal or a civil proceeding. The regulations require me to regard that custody as limited and even quasi official. If the owners or their truckmen to whom such custody is intrusted disregard the limitations so put upon them, thus introducing them into unrestricted commerce, they have entered the goods which up till then were, as it were, detained at the borders, and they have deprived the United States of duties. The word “concealment” is apt to describe such a diversion, even if temporarily, of the goods from the limited custody to which alone the defendants were entitled. The offense is well laid, and judgment must be respondeat ouster.

The indictment for conspiracy, to be valid, must refer to a violation of section 9, and to that alone, because the overt acts are laid in Manhattan after the removal of goods. Of course, I do not mean that Ehrgott and Newmann might not in Manhattan conspire to violate section 2987 (U. S. Comp. St. 1901, p. 1959) in Brooklyn. That would be a crime committed in Manhattan, but it could not be an overt act in pursuance of that crime to do anything in Manhattan after the beans had come there from Brooklyn. The defendants are clearly right in saying that the overt act cannot succeed the completion of the contemplated crime, and here the crime contemplated would have been completed as soon as the goods once got clear of the warehouse in Brooklyn, if I am right about the scope of section 2987.

Does the conspiracy indictment properly allege a conspiracy to violate section 9, since.that is the only crime, an agreement to commit which it does allege? The real attack upon it is the same as upon the second count of the prior indictment, which is that the conspiracy does not allege that the defendants contemplated retaining possession of the beans beyond the period when they must have been shipped for exportation. As I indicated, that would be a serious matter for the indictment, if all the statute required was that the goods should appear upon the ship within a limited time after their removal, but if it requires more than that, and that the shipment shall be under the continued inspection of the customs officers, one contemplates a crime who means to “deposit,” “con'ceal,” or “withdraw” them from exportation, and so to introduce them unconditionally in the country. Those acts similarly would effect a deprivation of the United States from its duties arising from the very act of surreptitious entry, and so by this single act the duties would become due and be evaded. An agreement contemplating such a result contemplates a crime.

The overt acts laid are proper parts of the agreement, naturally fitted to carry it into effect.

Eet judgment upon this demurrer also be entered respondeat ouster.