# Respondents Reply Brief — Hatzlachh Supply Co. v. United States

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0056%3A6

## Record

- **Collection:** Supreme Court brief
- **Document type:** Respondents Reply Brief
- **Published:** January 1, 1980
- **Citation:** 444 U.S. 460

## Text

No. 78-1175 4 = QCT_-s«18 1979
. = i

=
>

ee

Iu the Supreme Court of the United States

OCTOBER TERM, 1979

| HATZLACHH SUPPLY COMPANY, INC., PETITIONER
Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF CLAIMS

BRIEF FOR THE UNITED STATES

WADE H. MCCREE, JR.
Solicitor General

ALICE DANIEL
Acting Assistant Attorney General

KENT L. JONES
Assistant to the Solicitor General

ELOISE E. DAVIES

FRANK A. ROSENFELD
Attorneys
Department of Justice
Washington, D.C. 205380

Opinion DObOW .....<:.....:rcssccsasncnsnscscocsossensansesyeneseens
FPO nssiiesiiesisiinscciccevinisnsinnanincababaiandllemmecnnnan
Question prewemted .............ccccecsssncsecesesnssntonavenes
Statutory provisions involved ................-.-----+-+--
ERCOUIOIE weenie cecnesianiensvenecingnssentnnninisnbraandiaaameen
Summary of argument .....................cocssssesssesss
Argument:

The Court of Claims lacks jurisdiction to
award damages on petitioner’s claim be-
cause an implied-in-fact contract of bail-
ment does not arise from the seizure of
goods for forfeiture under 19 U.S.C.
RII essen ncssisrndeibnsceada-caeumedaninaean

A. A claim founded upon an implied
contract with the United States is not
within the jurisdiction of the Court
of Claims unless there was mutual
assent to enter into the contract........

B. Neither the United States nor peti-
tioner manifested its assent to a con-
tract of bailment for the goods seized
for forfeiture under 19 U.S.C. 1592..

1. The seizure of goods for violations
of the customs laws does not cre-
ate an implied-in-fact contract
OR WIIG nicecssccctnniionsexttniniaans

13

13

16

16

II

Argument—Continued

2. Neither 28 U.S.C. 2465 nor a
discretionary remission of the for-
feiture under 19 U.S.C. 1618 cre-
ates an implied-in-fact contract of
Sa SISA RRO, 2 CY Sl

3. The exception from governmental
tort liability in 28 U.S.C. 2680
(c) for claims arising from the
detention of goods by customs
officers supports the conclusion
that an implied-in-fact contract
of bailment does not arise from
the seizure of goods for violations
of the customs laws ......................

i NLS A in TE ee ea

CITATIONS

Cases:

Agnew v. Haymes, 141 F. 631

Algonac Mfg. Co. v. United States, 428
F.2d 1241

IPPE AN I beic stcinbicbosddcasssuotnoies 8, 9, 20,

American Merchandising Co., In re, 136
a MN I iodides

epeenetaden 24,

Page

21

25, 26

34, 36
16
34
35

Ill

Cases—Continued Page
Bateson-Stolte, Inc. v. United States, 142

Sie Mie. MMI Shi tdasicaunstinbelastetvesibetalsActuagssaside 30
Beck v. Washington, 369 U.S. 541 ............ 31
Bigby v. United States, 188 U.S. 400 ........ 32
Bird & Sons, Inc. v. United States, 420

i ee Ge eehhinktetidg rgd 3
Blackorby v. Friend, Crosby & Co., 134

Bes ‘0, SD TR Wie Fe Sectein i ncieinictninns 17
Burke v. Trevitt, 4 F. Cas. 746 (No. 2,

SOI Ressnseichceseasdteipcemeleansbaibusadindleaiedaicdelas 25
Burns vy. State, 145 Wis. 373, 128 N.W.

PRINS SAMA Med TB DSIRE har Lc TOC RRS Vee Or 23
Burtt v. United States, 176 Ct. Cl. 310...... 32
Canadian Co-op. Wheat Producers, Ltd.

v. Murphy & Hoffman, Inc., 52 F.2d

pee en Te MORMON: ENA ME Us BC cea & 17
C.F. Harms Co. v. Erie R.R., 167 F.2d

IIE - cists stiiedninachoniondiniassleadbaiidebeasonateagaiigeninca 21
Cities Service Gas Co. v. United States,

a I eis ainedthisceindblensenidesadinadtdaees 14
Continental Insurance Co. v. Harrison

County, 168 F.2d 671 .......................2..:. 23
Conqueror, The, 166 U.S. 110 ................ 25, 26, 38
Department of Revenue v. Jennison-

Wright Corp., 393 Ill. 401, 66 N.E. 2d

RAIA. BOSC DOR RANT AO OED 17
Dioguardi v. Durning, 139 F.2d 274 ........ 25
Gulf Transit Co. v. United States, 43 Ct.

Sle” MID chaadhidssloncnintscinpelitecninsatiethteckitonse 21
Haskins v. Dean, 19 Utah 89, 56 P. 953... 17
H.S. Crocker Co. v. McFaddin, 148 Cal.

App. 2d 639, 307 P.2d 429 0.000... 15, 16
Jackson v. United States, 573 F.2d 1189.. 40
Keifer & Keifer v. Reconstruction Finance

COP, BOR GF, GR sic cseecscvvcescetictedantecses 32

IV
Cases—Continued Page
Kendall v. United States, 107 U.S. 1238 .... 13
Malz v. State, 36 Tex. Crim. 447, 37 S.W.
gear Son UNITE AEP CONC Oo ee 17
Maulding v. United States, 257 F.2d 56.... 17
Medbury v. United States, 173 U.S. 492... 21
Merritt v. United States, 267 U.S. 388 .... 22
Mosca v. United States, 417 F.2d 1882... 21

Naamloze Vennootschap Suikerfabriek
“Wono-Alseh” v. Chase National Bank,

cit 2 fe eee ee 18
One Lot Emerald Cut Stones and One

Ring v. United States, 409 U.S. 232... 19
Russell Corp. v. United States, 587 F.2d

474, cert. denied, 429 U.S. 1078 .......... 14, 15
S. Schonfeld Co. v. SS Akra Tenaron, 363

REST ERE aoe 34
Seaboard Sand & Gravel Corp. v. Moran

Towing Corp., 154 F.2d 399 ............ 22, 23
Somali Development. Bank v. United

States, 508 F.2d 817 oon... ececcccccee. 32
Soriano v. United States, 352 U.S. 270... 13
Spencer v. First Carolinas Joint-Stock

Land Bank, 165 S.E. 781 .................. 16, 17, 23

State v. Carr, 118 N.J.L. 233, 192 A. 36.. 22
States Marine Lines, Ine. v. Shultz, 359 F.
Supp. 512, rev’d on other grounds, 498

IR ee habia icc ctatadssrecitidbeccuasiaacy 35
States Marine Lines, Inc. v. Shultz, 498

Bi) Eas 11, 24, 25, 26, 27, 34, 38
Stencel Aero Engineering Corp. v. United

States, 481 U.S. 666 ..000...o.... ec. 39
Tree Farm Development Corp. v. United

States, 585 F.2d 498 ooo... cesses. 15
Trotter v. Union Indemnity Co., 33 F.2d

363, aff’d, 35 F.2d 104 oo. 18

Cases—Continued Page

United States v. Dickinson, 331 U.S. 745..
United States v. Hvoslef, 237 U.S. i .....-..
United States v. Lynah, 188 U.S. 446 ..........
United States v. Minnesota Mutual In-
vestment Co., 271 U.S. 212 ..............000020
United States v. One (1) 1972 Wood, 19
Ft. Custom Boat FL 8448Ay, 501 F.2d
MAMIE - siidlbcapecinshibestscinceiaekeniaaeaadasmeatoabhtdiiia
United States v. Sherwood, 312 U.S. 584..

21

34
13

United States v. Stowell, 133 U.S. 1......19, 21, 25

United States v. Testan, 424 U.S. 392 ...... 13
United States v. Thomas, 82 U.S. (15

PR IF ein siccsnsiishsiassitammienirincknnaciansets 23, 25, 33
United States v. United Marketing Ass’n,

BI i WI CEI eerpctiecnidennsccncncensinnlnnonanns 18
Wilson v. Citizens Central Bank, 56 Ohio

pce: ie 8 Sh Sen eeem 23

Statutes and rules:

Customs Procedural Reform and Simplifi-
eation Act of 1978, Pub. L. No. 95-

410, Section 110(a), 92 Stat. 888 .......... 3
92 Stat. 893-896 (19 U.S.C. 1592(c)

DP) stiiisicernsalscadasansoonsnensoonvaveresbebeneaten 3

Federal Tort Claims Act:

Be Wi BUI) | hoccnriniececcocnvesseraie 32, 33, 34

Be TIED veceenececkecscedonncecencsene 34

I TE a clic sseenee 38

I I ie ils cclicle cw ucnbnmens 33

ee I or 2, 36

28 U.S.C. 2680(a)-(m) ..000000. ee. 35

BD WR BED vncvvncesceveecccccsasconsmees 36

28 U.S.C. 2680(c) ................ 9, 10, 12, 26, 33,

35, 36, 37, 38

VI

Statutes and rules—Continued Page
Tucker Act, 28 U.S.C. 1491 ........ 2
39 U.S.C. 1608 ................ 3, 5, 6, 7, 8, 9, 14, 16, 18,

19, 25, 39
I 23
oe OU ce 4, 5, 19, 28, 29
a 13, 21
| 4) eee 32
28 U.S.C. 2006 ................ 11, 26, 27, 30, 33, 38, 39
ih. 53 |: SSE nena 25
Oe I ce 26, 33
eM UNO i 30
. i 5 | ae 31
Sup. Ct. BR, 28(1)(e) .:................. 31

Miscellaneous:

8 Am. Jur. 2d Bailment 2) eee 23
8 C.J.S. Bail (1962) 23
8 C.J.S. Bailments (1962) 16

H.R. Rep. No. 1287, 79th Cong., 1st Sess.
Sa TITOSDE 1s Se Rane 37

S.. Rep. No. 1400, 79th Cong., 2d Sess.
SEA a ean 37
Story on Bailments (7th ed. 1863) ......11, 22, 23,
24, 38

eee eee 37

\

Iu the Supreme Court of the United States

OCTOBER TERM, 1979

No. 78-1175
HATZLACHH SUPPLY COMPANY, INC., PETITIONER
Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF CLAIMS

BRIEF FOR THE UNITED STATES

OPINION BELOW

The opinion of the Court of Claims (A. 25a-32a)
is reported at 579 F.2d 617.

JURISDICTION

The judgment of the Court of Claims was entered
on July 14, 1978, and a timely petition for rehearing
was denied on September 29, 1978 (Pet. App. 9a).
On December 8, 1978, the Chief Justice extended the

(1)

2

time for filing a petition for a writ of certiorari ‘o
January 27, 1979 (Pet. App. 10a). The petition was
filed on January 26, 1979, and was granted on May
14, 1979. The jurisdiction of this Court is invoked
under 28 U.S.C. 1255(1).

QUESTION PRESENTED

Whether the United States may be held liable for
breach of an implied bailment contract when goods
are lost while held by the United States Customs
Service following their seizure for customs violations.

STATUTORY PROVISIONS INVOLVED

1. The Tucker Act, 28 U.S.C. 1491 provides in
relevant part:

The Court of Claims shall have jurisdiction to
render judgment upon any claim against the
Unitec States founded either upon the Constitu-
tion, or any Act of Congress, or any regulation
of an executive department, or upon any express
or implied contract with the United States, or for

liquidated or unliquidated damages in cases not
sounding in tort.

2. The Federal Tort Claims Act, 28 U.S.C. 2680,
provides in relevant part:

The provisions of this chapter and section 1346
(b) of this title shall not apply to—

* * * * *
(c) Any claim arising in respect of the as-
sessment or collection of any tax or customs
duty, or the detention of any goods cz merchan-

3

dise by an officer of customs or excise or any
other law-enforcement officer.

8 Prior to October 3, 1978, 19 U.S.C. (1976 ed. )
1592 provided in relevant part: ’

If any consignor, seller, owner, importer, con-
signee, agent, or other person or persons enters
or introduces, or attempts to enter or introduce,
into the commerce of the United States any im-
ported merchandise by means of any fraudulent
or false invoice, declaration, affidavit, letter,
paper, or by means of any false statement, writ-
ten or verbal, or by means of any false or fraudu-
lent practice or appliance whatsoever, or makes
any false statement in any declaration under the

119 U.S.C. 1592 was amended on October 8, 1978, by Sec-
tion 110(a) of the Customs Procedural Reform and Simplifi-
cation Act of 1978, Pub. L. No. 95-410, 92 Stat. 888, 893-896.
The amended statute provides in part (to be codified at 19
U.S.C. 1592(c) (5)) that:

If the Secretary has reasonable cause to believe that a
person has violated [customs entry requirements as set
forth in] subsection (a) and that such person is insolvent
or beyond the jurisdiction of the United States or that
seizure is otherwise essential to protect the revenue of
the United States or to prevent the introduction of pro-
hibited or restricted merchandise into the customs terri-
tory of the United States, then such merchandise may be
seized and, upon assessment of a monetary penalty, for-
feited unless the monetary penalty is paid within the time
specified by law.

92 Stat. 896. This amendment was enacted eight years after
the declaration of forfeiture in this case and is not directly
relevant to this litigation. All citations to the customs laws
of the United States in this brief are to the laws as they
existed in 1970, at the time of the seizure that occurred in
this case.

4

provisions of section 1485 of this title (relating
to declaration on entry) without reasonable cause
to believe the truth of such statement, * * *
whether or not the United States shall or may
be deprived of the lawful duties, or any portion
thereof, accruing upon the merchandise, or any
portion thereof, embraced or referred to in such
invoice, declaration, affidavit, letter, paper, or
statement; * * * such merchandise, or the value
thereof, to be recovered from such person or per-
sons, shall be subject to forfeiture, which for-
feiture shall only apply to the whole of the mer-
chandise or the value thereof in the case or pack-
age containing the particular article or articles
of merchandise to which such fraud or false
paper or statement relates.

19 U.S.C. 1618 provides in relevant part:

Whenever any person interested in any vessel,
vehicle, merchandise, or baggage seized under the
provisions of this chapter, or who has incurred,
or is alleged to have incurred, any fine or penalty
thereunder, files with the Secretary of the Treas-
ury under the customs laws or under the naviga-
tion laws, before the sale of such vessel, vehicle,
merchandise, or baggage a petition for the re-
mission or mitigation of such fine, penalty, or
forfeiture, the Secretary of the Treasury, if he
finds that such fine, penalty, or forfeiture was
incurred without willful negligence or without
any intention on the part of the petitioner to
defraud the revenue or to violate the law, or
finds the existence of such mitigating circum-
stances as to justify the remission or mitigation
of such fine, penalty, or forfeiture, may remit or

5

mitigate the same upon such terms and condi-
tions as he deems reasonable and just, or order
discontinuance of any prosecution relating
thereto. * * *

STATEMENT

Petitioner imported certain camera supplies and
other miscellaneous items from Germany in April
and May of 1970. This merchandise, which had been
transported in shipping containers, was seized by the
United States Customs Service on its arrival at the
port in New Jersey. This action was taken because,
upon opening the containers, customs officials dis-
covered discrepancies between the descriptions of the
merchandise submitted on arrival and the items in
fact landed (A. 26a). The Customs Service gave
petitioner formal, written notice that the seized goods
were declared forfeited to the United States under
19 U.S.C. 1592.

On June 5, 1970, and June 26, 1970, petitioner
applied to the Secretary of Treasury under 19 U.S.C.
1618 for remission of the forfeitures and return of
the seized goods (A. 10a, 18a). In these petitions,
petitioner offered explanations for the violations of
19 U.S.C. 1592, stating that, while the description
of the goods on the customs documents was erro-
neous, petitioner “in no way contributed, either
actively or passively, in the erroneous description,
and that his only instruction to [his broker agent]
was to prepare a proper [entry] application” (A.

6

lla; see A. 20a-21a).? Petitioner also complained
that the government’s inventories indicated that a

portion of the merchandise had disappeared since the |

goods were landed (A. 15a-16a, 21a-22a).*

On October 13, 1970, the Secretary agreed to remit
the forfeiture in return for payment of a $40,000
penalty (A. 3a). Petitioner paid the penalty, and the
Customs Service thereupon returned the forfeited
materials in its possession (ibid.; see A. 26a).

On March 17, 1976, six years after the first con-
tainer was landed (A. 2a), petitioner filed this suit
in the United States Court of Claims seeking to re-
cover $165,220.50, which it alleged to be the value of
the goods that were “lost or stolen” while in the
custody of the Customs Service (A. 3a).‘ The gov-
ernment moved for summary judgment, alleging that

2 Petitioner maintained that the misstatements of its agents
did not justify forfeiture under 19 U.S.C. 1592 (A. 12a, 20a-
21a).

8In the June 5, 1970, petition for remission of the for-
feiture, petitioner claimed that “the statement of appraise-
ment released to the petitioner’s attorneys indicates that the
quantities which survived the opening of the container in a
public place accessible to strangers on the pier were smaller
than the quantities stated on the invoices” (A. 15a). In the
June 26, 1970, petition, petitioner asserted that “the importer
has sustained an irreparable loss. For the inventory fur-
nished by the Government, even taking several apparent
errors into account, shows that a substantial shortage of
goods took place after the containers were unsealed on the
pier and while in Customs custody” (A. 21a-22a).

4 Petitioner also sought to recover $2,000,000 for loss of
“face and good will” (A. 4a). This claim was denied and is
not in issue here.

T

the complaint failed to state a claim within the court’s
jurisdiction (A. 26a).° The Court of Claims granted
the motion, holding that petitioner had not stated a
claim for breach of an implied bailment contract and
therefore had failed to state a claim on which the
court could grant relief (A. 32a).

The court first rejected petitioner’s contention that
the seizure of the merchandise by the Customs Service
was “ ‘capricious, arbitrary, unreasonable, unlawful
and not sanctioned nor colored’ by law” (A. 26a).
The court noted that petitioner’s application for re-
mission of the forfeiture “to the Regional Commis-
sion of Customs admitted that the merchandise de-
scription submitted to the [Customs Service] was
‘erroneous’ and that the discrepancy between the
merchandise description and the items actually landed
[was] ‘obvious and apparent’” (A. 26a; emphasis
in original). The court observed that, while the sanc-
tion of forfeiture in this context might appear severe,
the Customs Service had not acted unlawfully, arbi-
trarily or capriciously in declaring the forfeiture and
seizing the merchandise under 19 U.S.C. 1592 (A.
26a). The court also observed that, even if the seizure
of the goods had been unlawful, arbitrary or caprici-
ous, the Court of Claims would have had no juris-
diction over petitioner’s action because it “would
then sound in tort” (A. 26a-27a, citing Algonac

5The government also impleaded Sea-Land Services as
third-party defendant. Sea-Land operated the terminal where
the goods were first landed and where they were detained
before their removal to a government warehouse.

8

Mfg. Co. v. United States, 428 3'.2d 1241 (Ct. Cl.
1976) ).°

The court then rejected petitioner’s claim that the
government had entered into an implied contract of
bailment to return the merchandise seized for for-
feiture under 19 U.S.C. 1592. The court concluded
that, when the government seizes merchandise for
forfeiture for violations of Section 1592, it does not

assent[] to, or agree[] to be bound by, an im-
plied-in-fact contract to return the merchandise
whole. Lacking such assent by one of the parties
(and here it is doubtful whether either of the
parties actually agreed), we cannot find an im-
plied-in-fact contract. See, e.g., Somali Develop-
ment Bank v. United States, 508 F.2d 817, 205
Ct. Cl. 741 (1974).

(A. 32a; emphasis in original).

The court noted that the Second Circuit had con-
cluded in Alliance Assurance Co. v. United States,
252 F.2d 529 (1958), that an implied-in-fact contract
of bailment was created when the government de-
tained merchandise for inspection to determine com-
pliance with entry requirements. It distinguished
the decision in Alliance, however, on two principal
grounds. First, there is “the obvious factual distinc-
tion” that this case involves seizure for forfeiture
rather than inspection, and the importer in this case

6 For essentially the same reasons, the court rejected peti-
tioner’s claim that the forfeiture of merchandise entered in
violation of 19 U.S.C. 1592 constitutes a “ ‘taking’ * * * with-
out just compensation” (A. 27a). Petitioner has not sought
further review of these rulings of the Court of Claims.

9

was thus not the “unquestioned, rightful owner” of
the goods as the court had assumed in Alliance (A.
30a).7 Second, where goods are seized for forfeiture
under 19 U.S.C. 1592, any tort claim against the
United States “arising in respect of * * * the deten-
tion” is expressly precluded by 28 U.S.C. 2680(c).
Because Congress has “specifically precluded recovery
in claims arising from customs detention, even where
such claims arose from tortious actions by the Gov-
ernment” (A. 31la-32a; emphasis in original), the
court reasoned that it could not find an implied agree-
ment by the government to pay for the value of the
allegedly missing merchandise (ibid.).* The court
indicated, however, that it would not consider its
decision “as necessarily controlling a case in which
there were additional facts from which an implied
or express agreement could possibly arise, ¢.g., a

7 [In Alliance, the court of appeals had relied on the fact
that the importer was “the lawful owner” of the merchandise
held by the government for customs inspection. 252 F.2d at
582. The court emphasized that the goods there at issue had
passed customs inspection before they were lost. Id. at 531.
The court also remarked that there was an “elaborate set of
ten tickets, at least two of which [were] designed to restore
the goods to the owner,” which supported an inference of a
promise to return the goods following inspection. Jd. at 5382.

8The court noted that the Second Circuit had ruled in
Alliance that merchandise lost while in the possession of the
government for customs inspection is not being “detained”
by the government and that neither tort nor contract liability
is thus precluded by 28 U.S.C. 2680(c) for such claims. The
court suggested that the Alliance court might interpret 28
U.S.C. 2680(c) to preclude recovery on the different facts of

this case (A. 31a).

10

promise, representation or statement that the goods
would be guarded or carefully handled” (A. 32a).
In the latter circumstances, the court stated that a
claim might lie under the Tucker Act even though
28 U.S.C. 2680(c) barred recovery under the Federal
Tort Claims Act (ibid.).

SUMMARY OF ARGUMENT

The Court of Claims is a court of limited juris-
diction. A claim based upon an implied contract is
within the jurisdiction of the Court of Claims only if
the contract is one implied-in-fact, not implied-in-
law. For petitioner to prevail in this case, it must
establish that the United States and petitioner
mutually assented in fact to a contract of bailment
for merchandise seized by the United States for for-
feiture under the customs laws.

A. The elements of an implied-in-fact contractual
bailment are wholly lacking in this case. In a con-
tractual bailment, the bailor retains unquestioned
title to the property and the right to call for delivery
or reclaim his goods. The United States, however,
seized petitioner’s merchandise by operation of law
under a claim of government ownership due to forfei-
ture for violation of the customs laws, and not by
mutual assent, The United States held the merchan-
dise under its own claim of title and not pursuant
to any contractual agreement with petitioner.

B. The fact that the United States does not enter
into an implied-in-fact contract of bailment when it
seizes goods for forfeiture does not mean that the

11

government has no responsibility under any circum-
stances to return or safeguard goods seized for vio-
lations of the customs laws. At common law, cus-
toms officials are regarded as “quasi-bailees” (Story
on Bailments § 618, at 597 (7th ed. 1863) ) be-
cause the law imposes on them certain responsi-
bilities that are analogous to those created by a con-
tractual bailment. In particular, customs officers
must exercise reasonable diligence in the care of goods
seized and held by them in the performance of their
official duties. This responsibility is imposed by law,
however, and not by agreement, it is enforcable in a
private tort action and not in a suit for breach of
contract.

The statutes of the United States have long recog-
nized the tort liability of customs officers as a result
of their “quasi-bailee” status. 28 U.S.C. 2006 pro-
vides that, in an action brought against a customs
officer for negligent loss of goods, if it is established
that the seizure was made with probable cause the
judgment may not be executed against the individual
officer but “shall be paid out of the proper appropria-
tion by the Treasury.” Under this statute, the lia-
bility of customs officers remains grounded in tort,
not in contract. The statute merely protects customs
officers in limited circumstances from being held
personally liable for their tortious conduct. States
Marine Lines, Inc. v. Shultz, 498 F.2d 1146, 1149
(4th Cir. 1974).

The Court of Claims plainly lacks jurisdiction over
personal actions against government officers; it also

12

lacks original jurisdiction over claims grounded in
tort. The implied-in-law or “quasi-bailee” responsi-
bilities of customs officers are thus not the proper
subject of suit in the Court of Claims. While there
is a remedy for goods that are seized but not forfeited
and are lost by the negligence of customs officers,
that remedy is not in the Court of Claims.

C. This conclusion is supported by the fact that
in enacting the Federal Tort Claims Act, Congress
was careful not to shoulder for the United States the
potential tort liability of customs officers. 28 U.S.C.
2680(c) excludes from the general coverage of the
Act any claim arising “in respect of the * * * deten-
tion of any goods or merchandise by any officer of
customs * * *.” Claims for negligent loss of goods
during customs detention must be brought against
the customs officer as an individual; they are ex-
eluded from coverage under the Federal Tort Claims
Act. As the Court of Claims concluded in this case,
the United States cannot be assumed to have assented
in fact to a liability that it has by law disclaimed.

138

ARGUMENT

THE COURT OF CLAIMS LACKS JURISDICTION
TO AWARD DAMAGES ON PETITIONER’S CLAIM
BECAUSE AN IMPLIED-IN-FACT CONTRACT OF
BAILMENT DOES NOT ARISE FROM THE SEIZURE
OF GOODS FOR FORFEITURE UNDER 19 U.S.C. 1592

A. A Claim Founded Upon An Implied Contract With
The United States Is Not Within The Jurisdiction Of
The Court Of Claims Unless There Was Mutual
Assent To Enter Into The Contract

The Court of Claims is a court of limited jurisdic-
tion. Under the Tucker Act, it has jurisdiction to
award damages upon any claim against the United
States that is bs

founded either upon the Constitution, or any Act
of Congress, or any regulation of an executive
department, or upon any express or implied con-
tract with the United States, or for liquidated or
unliquidated damages in cases not sounding in
tort.

298 U.S.C. 1491. The limitations in this grant of
jurisdiction are strictly observed. Soriano v. United
States, 352 U.S. 270, 273 (1957) ; Kendall v. United
States, 107 U.S. 123, 125 (1882). As this Court
stated in United States v. Testan, 424 U.S. 392, 399
(1976), quoting United States v. Sherwood, 312 US.
584, 587-588 (1941), “Te}xcept as Congress has con-
sented [to a cause of action against the United
States], there is no jurisdiction in the Court of Claims
more than in any other court to entertain suits
against the United States.”

err

14

In this case, petitioner argues that the United
States entered into, and subsequently breached, an
implied contract of bailment for merchandise seized
by the United States for violations of customs entry
requirements under 19 U.S.C. 1592. But a claim
based upon an implied contract is within the juris-
diction of the Court of Claims only if the contract is
“one implied in fact and not one based merely on
equitable considerations and implied in law.” United
States v. Minnesota Mutual Investmert Co., 271 U.S.
212, 217 (1926). See Cities Service Gas Co. v.

*. United States, 500 F.2d 448 (Ct. Cl. 1974).

A contract “implied in law’ (or quasi-contract)
arises ‘‘where, by fiction of law, a promise is imputed
to perform a legal duty, as to repay money obtained
by fraud or duress * * *.” Baltimore & Ohio R.R. v.
United States, 261 U.S. 592, 597 (1923). The duty
“is imposed by operation of law without regard to the
intent of the parties. Such arrangements are treated
as contracts for the purposes of remedy only.” Rus-
sell Corp. v. United States, 5387 F.2d 474, 482 (Ct.
Cl. 1976), cert. denied, 429 U.S. 1073 (1977). See
Algonac Mfg. Co. v. United States, 428 F.2d 1241
(Ct. Cl. 1970).

By contrast, a contract implied-in-fact is a true
contract, “founded upon a meeting of [the] minds,
which, although not embodied in an express contract,
is inferred, as a fact, from conduct of the parties
showing, in the light of the surrounding circum-
stances, their tacit understanding.” Baltimore & Ohio
R.R. v. United States, supra, 261 U.S. at 597. An

15

implied-in-fact contract differs from: an express con-
tract only in that the agreement is not expressed in
wurds, either written or spoken, but is instead “indi-
cated by some intelligible conduct, act or sign.” Jd.
at 598. In all other respects, all the elements of an
express contract must be shown:

For there to be an express contract, the parties
must have intended to be bound and must have
expressed their intention in a manner capable of
understanding. * * *

* * * * *

A contract implied in fact requires a showing
of the same mutual intent to contract as that
required for an express contract. The fact that
an instrument was not executed is not essential
to consummation of the agreement. It is essen-
tiai, however, that the acceptance of the offer be
manifested by conduct that indicates assent to
the proposed bargain.

Russell Corp. v. United States, supra, 537 F.2d at
481-482. Accord, Tree Farm Development Corp. v.
United States, 585 F.2d 493 (Ct. Cl. 1978).

For petitioner to prevail on its claim, it must there-
fore establish that the United States and petitioner
mutually assented to a contract of bailment for mer-
chandise seized by the United States for forfeiture
under the customs laws.°

® “The general rule that the assent of both parties is neces-
sary before a contract, either express or implied in fact, can
come into existence, is applicable to the ordinary case of a
contract of bailment.” H. S. Crocker Co. v. McFaddin, 148
Cal. App. 2d 639, 644, 307 P.2d 429, 432-433 (1957). See
also pages 22-23, infra.

16

B. Neither The United States Nor Petitioner Manifested
Its Assent To A Contract Of Bailment For The Goods
Seized For Forfeiture Under 19 U.S.C. 1592

The Court of Claims correctly concluded (A. 32a)
that the United States and petitioner did not mutually
assent to a contract of bailment for merchandise
seized by the United States under 19 U.S.C. 1952 for
violations of the customs laws.

1. The Seizure Of Goods For Violations Of The Cus-
toms Laws Does Not Create An Implied-In-Fact
Contract Of Bailment

A contractual bailment cannot be implied in fact
“where it appears it was the intention of the parties,
as derived from their relationship to each other and
from the circumstances of the case, that the property
was to be held by the party in possession in some
capacity other than as bailee.” H. S. Crocker Co. v.
McFaddin, 148 Cal. App. 2d 639, 644, 307 P.2d 429,
433 (1957). When the United States seized petition-
er’s goods for forfeiture for violations of the customs
laws, it did not assent to the elements of a contrac-
tual bailment.

A contractual bailment “is premised upon the un-
interrupted retention of title in the * * * bailor.”
In re American Merchandising Co., 136 F. Supp. 952,
954 (D.N.J. 1955); 8 C.J.S. Bailments §1, at 314
(1962). It is created by the delivery of property by

10 Constructive bailments, which are not contractual in
nature but are implied-in-law duties imposed when there is
“lawful possession, however created, and the duty to account
for the thing as the property of another” (Spencer v. First

17

the owner to another for a specific purpose, with an
“express or implied contract to redeliver the goods
when the purpose has been fulfilled, or to otherwise
deal with the goods according to the bailor’s direc-
tions.” Maulding v. United States, 257 F.2d 56, 60
(9th Cir. 1953). See 9 Williston on Contracts § 1030,
at 876 (3d ed. 1967). In a contractual bailment,
title does not change with delivery of the property,
and the owner retains the right to call for delivery or
reclaim his goods. Department of Revenue v. Jenni-
son-Wright Corp., 393 Ill. 401, 407, 66 N.E.2d 395,
398 (1946); Haskins v. Dern, 19 Utah 89, 98, 56
P. 953, 955 (1899) ; Malz v. State, 36 Tex. Crim. 447,
37 S.W. 748 (1896) ; 9 Williston on Contracts, supra,
§ 1035, at 890-891. While the property remains in
the possession of the bailee, the bailee “may not dis-
pute the title of his bailor.” Canadian Co-op. Wheat
Producers, Ltd. v. Murphy & Hoffman, Inc., 52 F.2d
496, 497 (W.D.N.Y. 1931). Because of the trust
nature of a contractual bailment, the bailee “cannot
set up title in himself unless it has been acquired
* * * from a transfer made by the bailor subsequent
to the bailment.” 9 Williston on Contracts, supra,
§ 1036, at 895. Blackorby v. Friend, Crosby & Co.,
134 Minn. 1, 3, 158 N.W. 708, 709 (1916):

It is a well-settled rule in the law of bailments
that the bailee must return the property or its
proceeds to the possession of the bailor before he
can assert a title thereto adverse to the bailor.

Carolinas Joint-Stock Land Bank, 165 S.E. 731, 732 (S.C.
1932) ), are discussed at pages 22-23, infra.

18

If the bailee transfers or disclaims the title of the
bailor, the “bailment terminates and the right to im-
mediate possession is restored to the bailor.””’ Naam-
loze Vennootschap Suikerfabriek “Wono-Aseh’ v.
Chase National Bank, 111 F. Supp. 838, 844 (S.D.
N.Y. 1953). See also Trotter v. Union Indemnity
Co., 33 F.2d 363 (W.D. Wash.), aff’d, 35 F.2d 104
(9th Cir. 1929); United States v. United Marketing
Ass’n, 220 F. Supp. 299, 306 (N.D. Iowa 1963).
These attributes of a contractual bailment relation-
ship bear no resemblance to the situation in this case.
When the United States seized petitioner’s goods for
customs violations under 19 U.S.C. 1952, it did not
recognize petitioner as the “unquestioned, rightful
owner” (A. 30a) of the goods and undertake to re-
turn them at petitioner’s direction. The United States
seized the merchandise by operation of law under a
claim of government ownership due to forfeiture,
and not by mutual assent. The United States claimed
(and petitioner has not disputed) that the merchan-
dise was brought into this country under a customs
declaration that contained material false statements
concerning the contents of the shipment (see page
7, supra). Because of these false statements, the
goods were subject to forfeiture and properly seized
by customs officers under 19 U.S.C. 1592. The United
States then held the goods under a claim of owner-
ship, not as bailee. Indeed, in view of petitioner’s
admission “that the merchandise description submit-
ted to [Customs’]} officials was ‘erroneous’ and that
the discrepancy between the merchandise description
and the items actually landed [was] ‘obvious and

19

apparent’ ” (A. 26a), it would appear that the gov-
ernment’s claim that the goods were forfeited was
correct. See One Lot Emerald Cut Stones and One
Ring v. United States, 409 U.S. 232, 234 (1972).”

By the settled doctrine of this court, whenever
a statute enacts that upon the commission of a
certain act specific property * * * connected with
that act shall be forfeited, the forfeiture takes
effect immediately upon the commission of the
act; the right to the property then vests in the
United States, although their title is not per-
fected until judicial condemnation; the forfeiture
constitutes a statutory transfer of the right to
the United States at the time the offence is
committed * * *.

United States v. Stowell, 1383 U.S. 1, 16-17 (1890).”

11In One Lot Emerald Cut Stones and One Ring, supra, the
Court noted that, in a proceeding to adjudicate goods forfeited
for importation in violation of customs entry requirements,
the government need not prove intent to defraud. 409 U.S.
at 234. See also 19 U.S.C. 1592 (goods may be seized for
forfeiture for “any false statement in any [customs entry]
declaration * * * without reasonable cause to believe the
truth of the statement, whether or not the United States shall
or may be deprived of the lawful duties * * *.’’).

12 The government’s claim of title in this case, though valid,
was not adjudicated in formal court proceedings and thus
remained unperfected. United States v. Stowell, supra, 133
U.S. at 17. Adjudication became unnecessary because the
Secretary exercised his discretion to remit the forfeiture pur-
suant to 19 U.S.C. 1618. (See pages 28, 31, infra.) Dur-
ing the period that the United States held the goods pursuant
to 19 U.S.C. 1592, however, it did so under a claim of rightful
ownership and not by the assent of the parties that the goods
would be returned at petitioner’s direction.

20

Because the United States seized petitioner’s
merchandise under a claim or rightful ownership, in
derogation of petitioner’s title and without assenting
to return the merchandise at petitioner’s direction,
the elements of an implied-in-fact contract of bail-
ment were wholly lacking.“* The United States held
the merchandise under its own claim of title, not
pursuant to any contractual agreement with peti-
tioner.**

13 The decision of the court of appeals in Alliance Assurance
Co. v. United States, supra, is distinguishable on this basis
(A. 30a; see note 7, supra). In Alliance, the court held
that the government breached an implied contract of bail-
ment when it failed to return goods that had been lost follow-
ing their clearance through customs inspection. The court
relied on the fact that the importer was “the lawful owner”
of the merchandise and noted that the goods had passed cus-
toms inspection before they were lost. 252 F.2d at 531, 532.
The court also noted that there was an “elaborate set of ten
tickets, at least two of which [were] designed to restore the
goods to the owner,” which supported an inference of a
promise to return cleared items following inspection. Jd. at
532.

Here, by contrast, petitioner’s goods did not pass customs
inspection. The United States seized the goods for customs
violations under claim of right and in derogation of petition-
er’s claim of title. Moreover, here, unlike in Alliance, there
were no “additional facts from which an implied or express
agreement could possibly arise, ¢.g., a promise, representation,
or statement” that the goods would be returned at petitioner’s
request (A. 32a). The Court need not decide in this case
whether the decision in Alliance, on its different facts, was
correct in finding an implied-in-fact contract. The Court of
Claims properly refused to decide that hypothetical question
(A. 30a, 32a).

14 Petitioner cites (Br. 14-15) several cases in which courts
have determined that, under the particular facts presented,
the United States did assent to an implied-in-fact contract

21

2. Neither 28 U.S.C. 2465 Nor A Discretionary Remis-
sion Of The Forfeiture Under 19 U.S.C. 1618 Cre-
ates An Implied-In-Fact Contract Of Bailment

a. The fact that the United States did not enter
into an implied-in-fact contract of bailment does not

of bailment. These cases are inapposite, however, because we
do not contend that the United States cannot assent to an
implied-in-fact contract of bailment—as when it charters a
barge (C. F. Harms Co. Vv. Erie R.R., 167 F.2d 562 (2d Cir.
1948) or allows members of the public to use a Navy dock
(Gulf Transit Co. v. United States, 43 Ct. Cl. 183 (1908) ).
Rather, it is our position that, on the totally different facts
of this case, the United States did not assent to an implied-in-
fact contract of bailment.

Petitioner’s reliance (Br. 16 n.11) on United States v.
Dickinson, 331 U.S. 745 (1947), and United States v. Lynah,
188 U.S. 445 (1903), is similarly misplaced. In those cases,
the Court suggested, without concluding, that a taking of
land for public use may create an implied promise to pay just
compensation. The Court held that such a claim is, in any
event, within the jurisdiction of the Court of Claims over
claims “founded * * * upon the Constitution” (28 U.S.C.
1491) because the claim “traces back to the prohibition of the
Fifth Amendment” * * *,” 331 U.S. at 748. There is plainly
no implied-in-fact promise of compensation when goods are
seized for forfeiture for violations of the customs laws. The
goods are not appropriated for public use; they are forfeited
for unlawful conduct. United States v. Stowell, supra.

Finally, petitioner’s reliance (Br. 15) on cases in which
a statute creates a duty in an officer to pay certain sums to a
claimant is unavailing. Where a statute “leave[s] no ques-
tion” that a sum of money is to be paid, the claim is properly
founded on the statute, not on an implied-in-fact contract to
which the officer has not assented. See, e.g., United States v.
Hvoslef, 237 U.S. 1, 10 (1915) ; Medbury v. United States, 173
U.S. 492, 497 (1899) ; Mosca v. United States, 417 F.2d 1382,
1385 (Ct. Cl. 1969). Petitioner has never claimed that it has
a right in money damages against the United States based on
statute. Moreover, there is no statutory duty to return goods
that are forfeited to the United States.

22

mean that government officers have no responsibility
under any circumstances to return goods seized for
violations of the customs laws. It has been said that
customs officials are “quasi bailees” (Story on Bail-
ments § 613, at 597 (7th ed. 1863) ) because the law
imposes on them certain responsibilities that are
analogous to those created by a contractual bailment.
But these responsibilities are imposed by law, not by
contractual agreement. There is no jurisdiction in
the Court of Claims to award damages for the breach
of these non-contractual responsibilities. Merritt v.
United States, 267 U.S. 338, 341 (1925).

While many cases “refer to a bailment as a con-
tractual relation, the statement is not entirely ac-
curate. The relation may be created by operation of
law.” Seaboard Sand & Gravel Corp. v. Moran Tow-
ing Corp., 154 F.2d 399, 402 (2d Cir. 1946) (footnote
omitted). Courts have long recognized the distinction
between contractual bailments, which “spring[] from
the mutual assent of the parties” (State v. Carr,
118 N. J. L. 233, 234, 192 A. 36, 87 (19387)), and
quasi-bailments or constructive bailments that arise
by operation of law rather than agreement.

While it is a relationship that ordinarily rests
in contract, express or implied in fact, there is
also a class of bailments, quasi-contractual in
nature, which arises by operation of law “where,
otherwise than by a mutual contract of bailment,
one person has lawfully acquired the possession
of personal property of another and holds it
under circumstances whereby he ought, under
principles of justice, to keep it safely and restore
it or deliver it to the owner * * *; * * * guch

23 .

quasi contracts of bailment include what are

known as constructive and involuntary bail-

ments.”
Ibid. Accord, Seaboard Sand & Gravel Corp. v. Moran
Towing Corp., supra, 154 F.2d at 402; Wilson v. Citi-
zens Central Bank, 56 Ohio App. 478, 480, 11 N.E.2d
118, 119 (1936); Spencer v. First Carolinas Joint-
Stock Land Bank, supra, 165 S.E. at 732; Armstrong
v. Sisti, 242 N.Y. 440, 444, 152 N.E. 254, 256 (1926) ;
8 Am. Jur. 2d Bailment § 52 (1963).”

At common law, collectors of customs were re-
garded as “quasi-bailees” of merchandise seized for
customs violations.’® See Story on Bailments, supra,
§§ 613, 618, at 597, 599. The responsibilities of the
collector were imposed by law, not by agreement. If

15In Continental Insurance Co. v. Harrison County, 153
F.2d 671 (5th Cir. 1946), Judge Walker noted that a construc-
tive or quasi-bailment may be implied by law even when no
mutual assent exists and that it ordinarily results from “ ‘law-
ful possession, however created, and [the] duty to account for
the thing as the property of another.’” Jd. at 676, quoting
Burns V. State, 145 Wis. 373, 380, 128 N.W. 987, 990 (1911).

See also 8 C.J.S. Bail § 15, at 362 (1962) (“* * * an actual
contract or one implied in fact is not always necessary to
create a bailment. There is also a class of bailments which
arise by operation of law.”).

16 Collectors, as agents of the government, are true bailees
for the government of goods seized or held under a claim of
government title. The government, being the owner, has the
right to demand that the collector relinquish possession of the
goods at the government’s direction. United States v. Thomas,
82 U.S. (15 Wall.) 337 (1872), on which petitioner relies (Br.
8), established no more than this. In Thomas the Court held
that the collector, “as custodian of the money [collected,]
* * * ig bailee of the government.” Jd. at 352. See also 19
U.S.C. 1605, which directs the collector to retain forfeited

goods in his possession.

24

the goods were properly seized by the collector and
forfeited to the government, there was of course no
duty to return the goods to the claimant. If, however,
the goods were determined not to be forfeited, the
customs officers could be “liable in their individual
capacities for tortious conduct committed in the per-
formance of their duties.” States Marine Lines, Ine.
v. Shultz, 498 F.2d 1146, 1149 (4th Cir. 1974).
The tort liability of the officers as constructive or
quasi-bailees only “bears some analogy” (Story on
Bailments, supra, § 613, at 597 )"* to the responsibili-
ties that would be imposed if a contractual bailment
had been created. If the seizure was “tortious, and
without any reasonable cause” (ibid.), the customs
officer could be sued in tort for conversion or trespass
and would be strictly liable for goods lost while in his
possession. Jd. at 599. If, on the other hand, the
seizure was justifiable (although eventually proven
to be in error), the officer was liable only on a theory
of negligence for breach of his “official obligation, as
imposed by law” to exercise “reasonable diligence”
in the performance of the duties of his office. United
States v. Thomas, 82 U.S. (15 Wall.) 337, 342-343
(1872). The officer would then be liable in tort “only
for losses and damages occasioned by the want of
ordinary diligence.” Story on Bailments, supra,
§ 613, at 597. See Agnew v. Haymes, 141 F. 631,
641 (4th Cir. 1905).

17 See also 9 Williston on Contracts, supra, § 1088A, at 905:

“While not directly presenting a question of contracts, there
is a close analogy.”

25

The legal duty imposed on the collector under the
common law is plainly not created by agreement or
mutual assent; the duty attaches even if the collector
attempts to disclaim it at seizure. Failure to act with
due diligence establishes a personal liability in tort;
the duty is not assumed by contract or mutual assent.
See States Marine Lines, Inc. v. Shultz, supra, 498
F.2d at 1149." ae

The quasi-bailee status of the collector, which is
implied by law “to supply the place of a special agree-
ment where there is none” (United States v. Thomas,
supra, 82 U.S. (15 Wall.) at 349)), has long been
recognized in the statutes of the United States. Goods
seized by customs officers for violations of entry
requirements under 19 U.S.C. 1592 may be made the
subject of forfeiture proceedings in the United States
district courts. See 28 U.S.C. 2461. If the goods are
adjudicated to be forfeited to the United States, the
government’s title is “perfected” (United States V.
Stowell, supra, 183 U.S. at 17) and the claimant
obviously has no further right or claim in the goods.
If, however, judgment is entered for the claimant in

18 The cases on which petitioner relies (Br. 8-10) wine g
only that the collector may be held personally liable 7 et re
negligence in the conduct of his office. See, a ety hs
Smith, 84 U.S. (17 Wall.) 82 (1872); Burke v. ar ‘ i
Cas. (No. 2,168) 746 (C.C. Mass. 1816) ; Agnew V. on
141 F. 631 (4th Cir. 1905). See also The Conqueror, jot * 4
110 (1897); Dioguardi v. Durning, 139 F.2d 274 (2
1944). By referring to the law of bailments as a —
a standard of due care, these decisions do not hold t _ -
collector has in fact agreed or assented to a contractual bail-

ment.

26

the forfeiture proceeding, 28 U.S.C. 2465 provides
that the goods held subject to forfeiture “shall be
returned forthwith to the claimant or his agent
* * *” The customs officer must then return the
goods, and if he fails to do so, the claimant may
bring suit against the collector for personal liability
in tort to recover his loss. States Marine Lines, Ine.
v. Shultz, supra, 498 F.2d at 1148-1151.” In the
action against the collector, if it is determined that
the seizure was made without probable cause, the
officer will be strictly liable for the loss of goods in
his possession, and the United States will not in-
demnify the officer. Agnew v. Haymes, supra, 141
F. at 637-641.” If, however, there was probable
cause for the seizure, the officer will be liable only in

The United States has not consented to suits for money
damages for the loss of goods that are not returned by the
collector following an adjudication of non-forfeiture. The
duty to return the goods resides in the collector, who may be
sued individually and may be indemnified, in some circum-
stances, by the United States (see 28 U.S.C. 2006). The Con-
queror, 166 U.S. 110 (1897); States Marine Lines, Inc. Vv.
Shultz, supra, 498 F.2d at 1148-1151; Agnew v. Haymes,
supra, 141 F. at 636-641. Congress has preserved the com-
mon law defenses that are available to the collector in the
individual tort action. Indeed, as we discuss at pages 33-40,
below, it was the adequacy of the common-law remedy
against the collector that led Congress to enact 28 U.S.C.
2680(c) to exclude claims based on customs detentions from
the general waiver of sovereign immunity for tort claims
under the Federal Tort Claims Act.

*0 Indeed, if the seizure was without probable cause, the
collector may be personally liable for consequential damages
that otherwise are forbidden by 28 U.S.C. 2465. See Agnew
v. Haymes, supra, 141 F. at 641.

27

negligence for the value of goods lost or damaged
while in his possession; moreover, the judgment
entered against the collector in such a case may not
be executed against the collector, but “shall be —
out of the proper appropriation by the Treasury.
28 U.S.C. 2006.2 See States Marine Lines, Inc. v.
Shultz, supra, 498 F.2d at 1149-1150.

Under these statutes, the liability of the officer
remains grounded in tort, not in contract. The stat-
utes merely “protect[] * * * such officers” in some
circumstances from their tort liability. States Marine
Lines, Inc. v. Shultz, supra, 498 F.2d at 1149. The
tort liability of the officer must be established, and
the claim reduced to judgment, before the United
States will act as surety for the collector’s negligence.
28 U.S.C. 2006. And even then the United States
has not consented to pay the judgment if the seizure
was made without probable cause. Ibid. The Court
of Claims plainly lacks jurisdiction over personal
actions against government officers and individuals;

21 28 U.S.C. 2006 provides:

Execution shall not issue against a collector or other
revenue officer on a final judgment in any Semen
against him for any of his acts, or for the recovery :
any money exacted by or paid to him and subsequen y
paid into the Treasury, in performing his official duties,
if the court certifies that:

ble cause existed; or

i -ogpe acted under the directions of the Secre-
tary of the Treasury or other proper Government —

When such certificate has been issued, the amount °
the judgment shall be paid out of the proper appropria-

tion by the Treasury.

28

it also lacks original jurisdiction over claims
grounded in tort. The implied-in-law or “quasi-
bailee” responsibilities of the collector are thus not
the proper subject of suit in the Court of Claims.

Petitioner, in any event, has not sought to invoke
the traditional tort remedy against the collector for
negligent loss of goods. Whether such a remedy
would have been available to petitioner had it been
sought in the circumstances of this case is far from
clear.” But, whatever the tort liability of the collec-
tor might have been as “quasi-bailee” of the goods
seized for forfeiture, the defect with petitioner’s ac-
tion in the Court of Claims is that it seeks recovery
against the United States on a bailment that is im-
plied in law, not in fact.

b. Petitioner argues (Br. 12) that, when the
Secretary of the Treasury exercised his discretion
under 19 U.S.C. 1618 to remit the forfeiture upon
petitioner’s payment of a $40,000 penalty, the gov-
ernment thereby assented to an implied-in-fact con-
tract of bailment for the merchandise that had been
seized. But the discretionary action taken by the
Secretary to remit the forfeiture was taken approxi-

2 If, as we believe (see pages 18-19, supra), the goods were
seized under a valid claim of forfeiture, petitioner would not
be entitled to return of the goods in a proceeding to adjudi-
cate the forfeiture. The Secretary of the Treasury could,
however, remit the forfeiture “upon such terms and condi-
tions as he deems reasonable and just.” 19 U.S.C. 1618.
Petitioner’s right to the goods would then be no greater than
that granted by the Secretary in remission of the forfeiture.
See pages 28-31, infra.

—

29

mately six months after the goods had been seized for
customs violations.”* During the preceeding six month
period, the merchandise had been held by the United
States under a claim of right and not as an implied-
in-fact bailee. The Secretary’s action in remitting the
forfeiture did not disclaim the government’s prior
declaration that the goods were forfeited. To the con-
trary, by remitting the forfeiture “upon such terms
and conditions as he deems reasonable and just” (19
U.S.C. 1618), the Secretary reaffirmed that the goods
were forfeited but concluded that a lesser sanction was
appropriate due to the absence of “willful negligence,”
an intent “to defraud the revenue,” or the presence of
other “mitigating circumstances” (ibid.). This action
did not retroactively create a contractual bailment at
the time the goods were seized. See pages 16-18 supra.

Petitioner further contends that “the Customs Serv-
ice explicitly agreed to return the goods upon pay-
ment of a $40,000 penalty” (Br. 12). But what the
Secretary necessarily undertook was to return the
goods then in his possession, not the additional mer-
chandise that petitioner long previously had claimed
was missing.** It is obvious that the Secretary could

28 The forfeiture was remitted in October 1970. The goods
were seized in April and May 1970. See pages 5-6, supra.

24 Petitioner informed the Secretary in June 1970—two
months after the seizure and four months before the Secre-
tary remitted the forfeiture—that merchandise allegedly in
the shipment was not reflected in the Customs Service inven-
tory. See page 6, note 3, supra.

30

not implicitly have undertaken to return goods that
had long been alleged to be missing and were not then
in his possession. And petitioner has not alleged that
the Secretary entered into an express contract to
make petitioner whole for the claimed losses of over
$165,000 (A. 24a) in return for petitioner’s payment
of the $40,000 penalty.” Obviously, the Secretary
undertook to deliver something to petitioner in re-
mitting the forfeiture. But, in the absence of any
express agreement to the contrary, it cannot be im-
plied that he undertook to perform a physical impos-
sibility by returning goods petitioner repeatedly had
asserted to be missing from the government’s inven-
tory (A. 15a-16a, 21a-22a).

Moreover, petitioner has never contended that the
Secretary breached a contract to return the mer-

25 Indeed, it is questionable whether the Secretary would
have authority to enter into such a contract. 28 U.S.C. 2006
contemplates that the Unived States will not be liable for
goods lost or damaged by customs collectors unless (i) the
seizure was with probable cause but the goods are adjudicated
not forfeited and (ii) the goods were lost through the tortious
misconduct of the collector. See p: ves 25-27, supra. The
Secretary’s authority to remit a foriciture upon such terms
as he finds just and reasonable (19 U.S.C. 1618) would seem
subjected to the express limitations on governmental liability
for the collector’s actions in 28 U.S.C. 2006.

But this issue is not presented here in any event. Respond-
ent did not plead the existence of an express agreement to
that effect or attach a copy of any such agreement to its
petition in the Court of Claims. This is fatal to its present
claim (Br. 12) that an express contract existed and imposed
a duty on the Secretary to return goods that were not in his
possession. See Rule 35(d) of the Rules of the Court of
Claims; Batcson-Stolte, Inc. v. United States, 142 Ct. Cl. 304
(1958).

31

chandise the government held at the time that the
forfeiture was remitted.** Instead, in the Court of
Claims and in his statement of the question presented
in this Court, petitioner has asserted that the United
States breached “an implied-in-fact-contract of bail-
ment” (Pet. Br. 12) that arose at the time that the
goods were seized for customs violations. In any event,
any claim raised here that the Secretary breached a
contract to return goods in his possession at the time
that the forfeiture was remitted would not be within
the scope of the question on which certiorari was
granted and should not be considered by this Court.
Rule 23(1)(c) of the Rules of this Court; Beck v.
Washington, 369 U.S. 541, 554 (1962). See also note
a.
ae question faced by this Court, whether peti-
tioner’s claims are based on an implied-in-fact contract
or in tort, is a problem not often confronted in mod-
ern litigation. With the abandonment of the strict
rules of common law pleading, such distinctions have
lost most of their importance. See Fed. R. Civ. P. 2.
When a suit is brought against the United States in
the Court of Claims, however, these distinctions re-
main critical: the Court of Claims has jurisdiction
over contract claims against the United States only
if the “contract” arises from the mutual assent of

26 Thus, petitioner has not contended that goods seit on
the customs inventory were not returned when the forfei ure
was remitted. See notes 3, 25, supra. Instead, omgaaaed
argued in the Court of Claims (A. 34a) and logge oe
(Br. 12) that the remittance retroactively implied a bai ~—
from the time of seizure. This contention is in error for the
reasons previously discussed (pages 28-30, supra).

32

the parties, and it does not have jurisdiction over
tort claims against either the United States or gov-
ernment officers.” While there is a remedy available
for owners of goods that are seized but not forfeited
and are lost while in the custody of customs officials,
that remedy is not in the Court of Claims.

3. The Exception From Governmental Tort Liability
in 28 U.S.C. 2680(c) For Claims Arising From The
Detention Of Goods By Customs Officers Supports
The Conclusion That An Implied-In-Fact Contract
Of Bailment Does Not Arise From The Seizure Of
Goods For Violations Of The Customs Laws

a. As we have shown, the common law has long
recognized a tort action against the collectur for the

*7In Keifer & Keifer v. Reconstruction Finance Corp., 306
U.S. 381, 395 (1939), the Court reiterated that a tort claim
may not be the subject of relief in the Court of Claims. See
also Bigby v. United States, 188 U.S. 400 (1903). There must
be a contractual undertaking, either express (as in Keifer &
Keifer and Burtt v. United States, 176 Ct. Cl. 310 (1966) ) or
implied-in-fact (as in Somali Development Bank v. United
States, 508 F.2d 817 (1974) ) to sustain the action in the Court
of Claims.

28 U.S.C. 1504 gives the Court of Claims appellate jurisdic-
tion over final judgments in the district courts in civil actions
based on tort claims against the United States under 28 U.S.C.
1346 (b), but only with the consent of all parties. See Bird
& Sons, Inc. v. United States, 420 F.2d 1051, 1053 & n.8 (Ct.
Cl. 1970). Petitioner sought to invoke the original jurisdic-
tion of the Court of Claims, so Section 1504 is inapplicable
here.

*8 Petitioner is plainly mistaken in contending that a con-
tract should be implied else “there would be little or no in-
centive for government officials to maintain seized goods in
proper storage facilities” (Br. 36). The collector’s common
law tort responsibility ensures that he acts under a duty of
due diligence.

33

negligent loss of goods held in his possession.” In
enacting the Federal Tort Claims Act to authorize
claims against the United States for injury caused
by “the negligent or wrongful act or omission of any
employee of the Government while acting within the
scope of his office or employment, under circumstances
where the United States, if a private person, would
be liable to the claimant” (28 U.S.C. 1346(b); see
28 U.S.C. 2674), Congress did not choose to shift to
the United States the potential tort liability of the
collector. Instead, Congress determined to continue
the arrangement developed at common law and under
28 U.S.C. 2006 and 2465, by which the United States
will pay the judgment entered against the collector in
a private tort action for negligence only when the
seizure was supported by probable cause. See pages
25-27, supra. Because of the adequacy of the rem-
edy afforded by the private tort action and 28 U.S.C.
2006, and because of Congress’ unwillingness to as-
sume any broader liability, 28 U.S.C. 2680(c) ex-
cludes from the general coverage of the Federal Tort

Claims Act

[a]ny claim arising in respect of the assessment
or collection of any tax or customs duty, or the
detention of any goods or merchandise by any
officer of customs or excise or any other law
enforcement officer.

2° The action may be brought by the claimant if the goods
are determined to be his property. The action may be brought
by the United States if the goods are forfeited to the United
States. See United States v. Thomas, supra; note 15, supra.

34

Petitioner’s claim of negligent loss of goods is one
“arising in respect of the assessment or collection of
any * * * customs duty, or the detention of * * *
goods or merchandise by [an] officer of customs.” It
is therefore not within the limited waiver of sovereign
immunity for tort claims against the United States
in the Tort Claims Act. Assuming, for purposes of
argument, that a tort claim may exist in the factual
context of this case, it must be filed against the col-
lector individually, not against the United States.
States Marine Lines, Inc. v. Shultz, supra, 498 F.2d
at 1148-1151.

b. Petitioner argues, however, that the exception
from direct government tort liability in 28 U.S.C.
2680(c) applies only to claims based on the fact of
detention itself and that the statute does not exclude
tort claims for the negligent loss of goods “after they
have been detained” (Br. 18). The language of

80 Of course, even if we were wrong in this submission,
petitioner could not prevail in this case. The Tort Claims
Act confers no original jurisdiction on the Court of Claims. 28
U.S.C. 1846(b). Moreover, even if this case had arisen in a
federal district court, petitioner could not succeed in any action
under the Federal Tort Claims Act because the two-year stat-
ute of limitations on tort claims against the United States (28
U.S.C. 2401(b)) expired long before petitioner initiated this
litigation. See page 6, supra.

81 Petitioner’s assertion is supported by A-Mark, Ince. Vv.
United States Secret Service, 593 F.2d 849 (9th Cir. 1978),
and Alliance Assurance Co. v. United States, supra. It has
been rejected by several courts, including the Court of Claims
in this case (A. 3la). See, e.g., United States v. One (1) 1972
Wood, 19 Ft. Custom Boat FL 8443AY, 501 F.2d 1327 (5th
Cir. 1974) ; S. Schonfeld Co. v. SS Akra Tenaron, 363 F. Supp.

35

the statute does not support such a distinction: it
excludes “[a]ny claim arising in respect of * * * the
detention of any goods or merchandise by any officer
of customs * * *.” 28 U.S.C. 2680(c). A claim al-
leging that goods were lost while being detained is
literally a claim that “‘aris[es] in respect * * * of the
detention.” Jbid. Petitioner cannot maintain, on the
one hand, that goods were lost while being detained
by the Customs Service, and argue, on the other hand,
that the goods were lost ‘“‘after” the detention so as
to be beyond the scope of 28 U.S.C. 2680(c).

The legislative history of the Federal Tort Claims
Act refutes petitioner’s effort “to fracture the clear
language of [the] statute.” Andrus v. Sierra Club,
No. 78-625 (June 11, 1979), slip op. 8. Since its
initial enactment, the Federal Tort Claims Act has in-
cluded a series of exceptions from tort liability for
various federal activities. The exception for claims
arising in respect of the detention of goods by customs
officers is one of the 13 exceptions now contained in 28
U.S.C. 2680(a)-(m). When these exceptions were first
considered by Congress in 1940, Judge Alexander
Holtzoff, who was then an officer of the Justice Depart-
ment, testified before a congressional subcommittee
that the exception for claims “arising in respect of
the assessment or collection of any tax or customs

1220 (D. S.C. 1973); States Marine Lines, Inc. v. United
States, 359 F. Supp. 512 (D. S.C. 1973), rev’d on other
grounds, 498 F.2d 1146 (4th Cir. 1974). The conflict is not,
however, presented in this case for, as we have noted above
(note 30, supra), the Court of Claims has no original juris-
diction over claims arising under the Federal Tort Claims Act.

36

duty or the detention of any goods or merchandise by
any officer of customs” should be enacted because
various statutory remedies already existed and
“Tt]here was no purpose in interfering with that
machinery.” Tort Claims Against the United States:
Hearings on S. 2690 Before a Subcomm. on the Ju-
diciary of the Senate Judiciary Committee, 76th Cong.,
3d Sess. 38 (1940). Two years later, the bill was again
submitted to Congress, and the list of exceptions con-
tained in 28 U.S.C. 2680 was supported by the Justice
Department generally—without reference to particu-
lar exceptions—on the grounds that the exceptions
either were necessary to protect certain government
activities from the threat of suit or because other
adequate remedies already were in existence.” Tort

32 Petitioner, relying on Alliance Assurance Co. v. United
States, supra, 252 F.2d at 534, argues (Br. 27) that the ex-
clusion in 28 U.S.C. 2680(c) for Customs Service activities
is narrower than the exception for Postal Service activities,
which applies to claims of “loss, miscarriage, or negligent
transmission” of mail. 28 U.S.C. 2680(b). To the contrary,
the Postal Service exception in 28 U.S.C. 2680(b) applies to
only a small subset of the broader activities excepted from
tort liability for customs officers in 28 U.S.C. 2680(c). While
the Postal Service exception applies only to claims arising
from the loss or negligent transmission of mail, the Customs
Service exception applies broadly to “[a]ny claim” whatso-
ever “arising in respect” to the detention of goods by customs
officers. While the specific language of the Postal Service
exception supports an inference that claims not based on loss
or negligent transmission of mail are not excluded from Tort
Claims Act coverage, the specificity of 28 U.S.C. 2680(b)
provides no basis for limiting the broader exemption con-
tained in 28 U.S.C. 2680(c).

Petitioner also cites (Br. 24-26) numerous law review
articles that discuss the legislative history of the Federal Tort

37

Claims: Hearings on H.R. 5373 and H.R. 6463 Be-
fore the Comm. on the Judiciary of the House Comm.,
77th Cong., 2d Sess. 28, 44 (1942). When the Federal
Tort Claims Act was eventually enacted in 1946, Con-
gress adopted the exceptions the Justice Department
had proposed, explaining that the exceptions exclude
from the coverage of the Act “claims which relate to
certain governmental activities which should be free
from the threat of damage suit, or for which adequate
remedies are already available.” S. Rep. No. 1400,
79th Cong., 2d Sess. 33 (1946). See H.R. Rep. No.
1287, 79th Cong., lst Sess. 6 (1945).

Petitioner argues that this legislative history indi-
cates that claims based on negligent loss of goods
during customs detention were not contained within
the exception in 28 U.S.C. 2680(c) because no “‘ade-
quate remedies [were] already available” for such
claims. But petitioner is simply mistaken in its
premise that there were no pre-existing “statutory
procedures for the-xecovery of damages for loss or
damage to goods while in the custody of Customs
officers” (Pet. Br. 23). As we have explained in
detail (pages 25-27, supra), the claimant’s tradi-
tional remedy—long recognized by the statutes of the
United States—is to sue the collector individually in
tort for the loss or damage and then to execute on
the judgment by obtaining payment from the Treas-

Claims Act. These articles support our position that the ex-
ception contained in 28 U.S.C. 2680(c) was enacted because
other adequate remedies existed for the loss of goods during
customs detention.

38

ury. 28 U.S.C. 2006. See States Marine Lines, Inc.
v. Shultz, supra, 498 F.2d at 1149. To be sure, the
United States will not shoulder a judgment against
the collector if the seizure was without probable
cause; and, if the seizure was with probable cause,
the collector (and, thereafter, the government) will
be liable only for negligent loss of the goods and not
for consequential damages.* 28 U.S.C. 2006. It was,
no doubt, as Judge Holtzoff testified, the need to avoid
interference with the traditional strictures of this
adequate pre-existing remedy that led Congress to ex-
clude from general governmental tort liability all
claims arising from the detention of goods by the col-
lector.“ By enacting 28 U.S.C. 2680(c), Congress
was careful not to assume a liability greater than that
the United States had assumed under pre-existing
legislation.

The legislative history of the Federal Tort Claims
Act thus supports the conclusion that 28 U.S.C.
2680(c) is as broad as the words Congress employed.
Claims for negligent loss of goods during customs de-

33 See 28 U.S.C. 2465; The Conqueror, supra, 166 U.S. at
121-125; Story on Bailments, supra, at 598-599.

** If 28 U.S.C. 2680(c) means only what petitioner urges,
the traditional limitations on the liability assumed by the
United States under 28 U.S.C. 2006 would be rendered mean-
ingless. As the court concluded in States Marine Lines, Inc.
v. Shultz, supra, 498 F.2d at 1149, the exception from Federal
Tort Claims Act liability in 28 U.S.C. 2680(c) “merely recog-
nized the established procedure and the long-standing protec-
tions afforded by 28 U.S.C. §§ 2006 and 2465.” 28 U.S.C.
2680(c) should not be read to “drain 28 U.S.C. §§ 2006 and
2465 of any purpose.” 498 F.2d at 1150.

39

tention must be brought against the collector as an
individual. They are excluded from coverage under
the Federal Tort Claims Act.

c. Congress’ careful efforts to preserve the tradi-
tional restrictions on the common law tort remedy
against the Collector in enacting the Federal Tort
Claims Act supports our submission that an implied-
in-fact contract of bailment does not arise when goods
are seized for forfeiture under 19 U.S.C. 1592. The
exclusion in the Federal Tort Claims Act for claims
arising in respect of customs detention is not an acci-
dental result of drafting. Rather, it reflects a consid-
ered judgment by Congress that the sovereign immun-
ity of the United States with respect to such claims
should not be waived beyond the limited, adequate
remedy available under the common law and 28
U.S.C. 2006. As the Court of Claims stated, allowing
recovery against the United States on an implied-
in-fact contract theory for breach of the “quasi-
bailee” tort responsibility of the collector would
“ ‘admit at the back door that which has been legis-
latively turned away at the front door” (A. 31a,
quoting Stencel Aero Engineering Corp. v. United
States, 431 U.S. 666, 673 (1977) ).* The United States
cannot be assumed to have assented in fact to a lia-

35 Petitioner mischaracterizes Stencel by arguing that it
involved an attempt to “bypass the procedures” for relief
provided by statute. In Stencel, the Court refused to infer a
contractual undertaking by the government to indemnify a
party for losses that the government had, by statute, other-
wise limited or disclaimed. See 431 U.S. at 672-674. The
Court’s reasoning in Stencel applies here as well.

40

bility that it has in fact disclaimed by statute. See
Jackson v. United States, 573 F.2d 1189 (Ct. Cl.
1978). The “quasi-bailee” status of the collector is
a responsibility imposed by law, not a contract
implied-in-fact. The Court of Claims therefore lacked
jurisdiction in this case.

CONCLUSION

The judgment of the Court of Claims should be
affirmed.

Respectfully submitted.

WADE H. MCCREE, JR.
Solicitor General

ALICE DANIEL
Acting Assistant Attorney General

KENT L. JONES
Assistant to the Solicitor General

ELOISE E. DAVIES
FRANK A. ROSENFELD
Attorneys

OCTOBER 1979

WX ou. 8. GOVERNMENT PRINTING orrics; 1979 302917 103

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0056%3A6. Public record. Not legal advice.