Transcript of Record — Anheuser-Busch Brewing Assn. v. United States

=——- ap

(20,299.)

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1906.

No. 334.

THE ANHEUSER-BUSCH BREWING ASSOCIATION,

APPELLANT,

Us,

THE UNITED STATES.

APPEAL FROM THE COURT OF CLAIMS.

INDEX.

Original.

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ANHEUSER-BUSCH BREWING ASSO, YS. UNITED STATES, 1

1 In the Court of Claims.

No. 23254.

Tue AnnEvusER-Buscu BREWING ASSOCIATION

v8.

| Tue UNITED STATEs.

Petition.

Filed April 25, 1903. é.

To the Honorable the Chief Justice and the Judges of the Court of

Claims:

The claimant, The Anheuser-Busch Brewing Association, respect-

fully represents:

I

That it is, and has been continuously for a period long preceding

the dates hereinafter mentioned, a corporation created, organized,

and doing business under the laws of the State of Missouri, engaged

in the business of brewing, manufacturing, bottling, and selling

fermented liquors, both for domestic consumption and for export,

having its brewery and principal place of business in the city of

St. Louis, in the State of Missouri.

2 Il.

By section 25 of the act of Congress entitled “An act to reduce

the revenue and equalize duties on imports and for other purposes,”

approved October 1, 1890, it is provided as follows:

“That where imported materials on which duties have been paid,

are used in the manufacture of articles manufactured or produced

in the United States, there shall be allowed on the exportation of

such articles, a drawback equal in amount to the duties paid on the

materials used, less one per centum of such duties: Provided, That

when the articles exported are made in part from domestic materials,

the imported materials, or the parts of the articles made from such

materials shall so appear in the completed articles that the quantity

or measure thereof may be asertained. And provided further, That

the drawback on any articles allowed under existing law shall be

continued at the rate herein provided. That the imported materials

used in the manufacture or production of articles entitled to draw-

back of customs duties when exported shall in all cases where draw-

back of duties paid on such materials is claimed, be identified, the

uantity of such materials used and the amount of duties paid

thereon shall be ascertained, the facts of the manufacture or pro-

duction of such articles in the United States and their ax-

3 portation therefrom shall be determined, and the drawback

due _ shall be paid to the manufacturer, producer, or

1—33

9 {HE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

exporter, to the agent of either or to the person to whom such manu-

facturer, producer, exporter, or agent shall in writing order such

drawback paid, under such regulations as the Secretary of the

Treasury shall prescribe.”

That by section 22 of the act entitled “An act to reduce taxation,

to provide revenue for the Government, and for other purposes,”

which took effect on the 25th day of August, in the year 1894, the

provisions of said seetion 25 of the act approved October 1, 1890,

were enacted word for word and remained in force until the 24th

day of July, in the year 1897, when, by section 30 of the act ap-

proved on that date, entitled “An act to provide revenue for the

Government and to encourage the industries of the United States,”

they were again re-enacted word for word and are still in force.

ITI.

That while said acts of October 1, 1890, and August 28, 1894,

and July 24, 1897, were in force and operation, the claimant herein,

while engaged in the regular, ordinary, and usual course of its busi-

ness aforesaid, exported from the United States a large quantity

of beer brewed and manufactured by it, which exportation thereof

was in bottles duly corked with corks so as to preserve the

4 beer, such corks so used therein being manufactured by the

claimant, in its place of business St. Louis, Missouri, prin-

ecipally according to and by a secret process, the property of the

claimant; and that such corks so used in the bottles in which such

beer was exported were made by and through the method and process

aforesaid, acting upon and using corks which had been imported

from foreign countries, and on which corks duty had been paid to

the United States, according to law, at the rate of fifteen cents per

pound, under the provisions of paragraph 416 of the act of Congress

approved July 24th 1897, they being manufactured corks over three-

fourths of an inch in diameter, measured at the larger end. In the

manufacture of the corks which claimant put in the bottles afore-

said, thus making the exportation of such bottled beer safe and se-

cure, the corks so imported from foreign countries were subjected to

treatment by the claimant’s method and process whereby the corks

underwent a change in some degree, and were given additional

qualities and capabilities to such an extent that such manufactured

corks when put in the bottles excluded the air and retained the beer

more perfectly than by any other process known to claimant, thus

making its use popular with the public and highly essential to the

preservation and development of the claimant’s export trade.

5 The changes which are inade in the imported cork while un-

dergoing the treatment or process which the claimant subjects

it to, are those which qualify or fit the cork to perform the functions

herein described when put in the mouth of a bottle containing the

claimant’s beer, as herein set forth.

That before corks can be used for the bottling of beer for the

export trade it is absolutely essential that they pass through a process

of manufacture.

That the claimant’s process of manufacture, which it has long

r Revel ae RAG ih dE NAR RON CI

THE UNITED STATES. 3

considered necessary to the perfect using of corks for the purposes

above mentioned, is as follows:

Ist. The corks come to the factory after importation from foreign

countries, are known as hand-cut cdrks, must first be assorted as

to sizes, and all imperfect corks rejected.

2d. The corks then pa into other hands and are branded by

machines operated by gas power.

3d. They are then thoroughly washed and cleansed.

4th. The corks are then thoroughly steamed for several hours.

5th. They are then passed to a machine by the operation

6 of which all the cork meal and other imperfections are ex-

tracted, which machine is the invention of S. Leo, and is used

only by the claimant.

6th. The corks then pass into another machine, where they

are again re-washed for the purpose of taking out any impurities

or traces of the cork meal.

7th. The corks are then subjecied to a bath in a chemical prepara-

tion intended to close all the pores and appertures from whence the

cork meal is extracted, thus preventing the escape of the gases

contained in the beer, which combination of chemicals or baths is

a secret known only to the said Leo, and is not used except by the

claimant.

8th. They are then placed in wire baskets in a drying-room where

they are thoroughly dried. When dried they are soft and pliable,

free from all foreign substances, perfectly air-tight, and are then

fit for use in hottling beer for export.

9th. They are then taken to the building used for bottling pur-

poses, where they are re-soaked and then placed in bottles containing

beer for the export trade.

r In this process ten hours is required to prepare the corks for such

use; and fourteen men are employed in this department alone, three

of them being men thoroughly skilled in their trade. The

7 total cost of treating said corks as above described by the

claimant is not less than from twenty to twenty-five dollars

per day,

The cork, in being made by the claimant a part of the bottle

or package to be exported, is completely destroyed so far as other

future use is concerned, there being no use for it afterwards, for

the cork not only undergoes a change before it is made fit for use

by the claimant as above described, but in being used thus it is

made an actual part of the bottle or package to be exported, and

is rendered useless thereby for any other purpose.

In the manufacture of beer for export to other countries it becomes

necessary to destroy the yeast in the beer to prevent second fermen-

tation and consequent ruin of the beer. In order to destroy the

germs of yeast the finished beer must be steamed to the degree neces-

sary to destroy the germs, and for that purpose the beer must be en-

closed securely in a vessel to prevent the escape of the carbonic acid

gas, and of all such vessels a bottle made of glass is the one best

adapted to the purpose aforesaid. And such steaming is also neces-

sary to the perfect manufacture of beer for bottling, and to the per-

4 THE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

fect corking thereof it is essential and necessary that the manufac-

tured cork should be used as herein described, and without such use

of such cork the perfect manufacture of bottled beer would not be

possible. x

8 The beer, after having been subjected to the process of

steaming, is materially different from the beer before being

subjected to that process, and in order to create such different article

of beer « closed glass bottle is indispensable, and the bottles and corks

forming portions of the complete manufactured article known as

“bottled beer’ are, as well as the hops and barley entering into the

same, a necessary component part of the article when completed and

in a condition ready for export. It was such bottles filled with such

beer that the claimant stopped or corked with the corks made as

hereinbefore described.

IV.

Under section 3019 of the Revised Statutes of the United States,

which is a provision similar but not identical in terms with the pro-

visions of the aets of 1890, 1894, and 1897 herein cited, it was ruled

by the Treasury Department, under date of March 31, 1886, that

“on the exportation of beer manufactured wholly of imported ma-

terials, bottled in imported bottles and corked with imported corks,

a drawback will be allowed for the hops, rice, and barley used in the

manufacture at the rate prescribed by the Department’s letter to you

on the 25th instant, and for the bottles and corks at the rate

9 of duty paid thereon, less the legal retention of 10 per cent.” ;

and in the official table of drawback rates prescribed by the

Secretary of the Treasury under date of August 17, 1886, bottles and

corks used in bottling beer were specifically named as entitled to the

benefit of drawback rates to the full amount of the duty paid, less 10

per cent. This remained in force until the 28th day of October, in

the year 1890, when, under the tariff act of October 1, 1890, it was

ruled that “imported bottles used in the bottling of fermented liquors

made in the United States, wholly from domestic grain and hops, are

not entitled, on the exportation of such bottled beer, to drawback

under the provisions of Section 25 of the act of October 1, 1890.”

But notwithstanding this ruling, drawback continued to be allowed

and paid on botties and corks used in the bottling of fermented

liquors made in the United States from foreign grain and hops, as

well as upon such grain and hops themselves, until the 24th day of

March, 1893, when, by a further ruling of the Treasury Department,

all earlier decisions authorizing the allowance of drawback on im-

ported bottles, corks, and tinfoil used in bottling beer for export were

rescinded and set aside, and from and after the date of said last-

mentioned decision the Treasury Department has refused to allow

any drawback whatever on bottles, corks, or tinfoil used in

10 the ranufacture of bottled beer for export, irrespective of the

question whether the hops and barley used in the manufac-

ture of such beer were of foreign or domestic origin.

r maraeuaee

THE UNITED STATES. 5

V.

The claimant herein, relying upon the law and upon the earlier

decisions of the Treasury Department thereunder, purchased from

time to time large quantities of corks for use in the manufacture of

bottled beer for the export trade, according to the method and secret

process hereinbefore mentioned, on all of which the duties imposed

by law were paid at the time of their importation, and the same were

used in the manner hereinbefore described in the manufacture of

bottled beer for the export trade, and such beer was thereupon ex-

ported to foreign ports in different quarters of the globe.

The claimant duly entered the same at the custom-house at the

port of St. Louis, in the State of Missouri, for exportation for the

benefit of drawback, and made proof to the satisfaction of the col-

lector of said port of the foreign origin of said corks so used as afore-

said, and of the vayment of duties thereon and the amount thereof,

and of the fact that the same had been used in the manufacture of

bottled beer as hereinbefore set forth, and it otherwise com-

11 plied with the law and the regulations as prescribed by the

Secretary of the Treasury for the establishment of the right

to drawback. But the collector of the port, acting under and in

. obedience to the decisions of the Treasury Department, refused to

allow the drawback on the corks, and when the claimant applied to

the Secretary of the Treasury for allowance of drawback under the

provisions of section 30 of the Act of July 24, 1897, the department

denied the application under date of December 9, 1898, and so noti-

fied the surveyor of customs at the port of St. Louis, before and since

which time the customs officers at that port have failed and refused

to allow claimant drawback on the corks used by the claimant in

the exportation of its bottled beer.

VI.

On the entries so made for exportation of bottled beer, which

bottles were corked exclusively with corks manufactured from the

corks of foreign importation as aforesaid, the total amount of draw-

back due the claimant from the 24th day of July, 1897, to this time

is, to-wit, twenty-seven thousand dollars, which amount the claimant

here demands, but reserves the right to amend as to dates and

amounts if so advised.

No other action than as aforesaid has been had on this claim in

any of the departments, or in the Congress or the courts of the

United States.

12 VII.

The claimant is the sole owner of this claim, and no other person

or corporation has any interest therein; and no assignment or

transfer of the claim, or of any part thereof, or interest therein, has

been made.

VIII.

The claimant is justly entitled to the amount herein claimed from

the United States after allowing all just credits and offsets, The

6 THE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

claimant is a citizen of the United States and has at all times borne

true allegiance to the Government thereof, has not in any way vol-

untarily aided, abetted, or given encouragement to rebellion against

the said Government, and it believes the facts as stated in this peti-

tion to be true.

Wherefore the claimant asks judgment for twenty-seven thousand

dollars.

THE ANHEUSER-BUSCH BREWING

ASSOCIATION,

By AUG. A. BUSCH, Its Vice-President.

DUDLEY & MICHENER,

Attorneys of Record.

FINKELNBURG, NAGEL & KIRBY,

Counsel.

13 Strate or Misscurt, City of St. Louis, ss:

August A. Busch, of lawful age, being duly sworn, deposes and

says that he is the Vice-President of the Anheuser-Busch Brewing

Association; that he has read the foregoing petition, and that the

statements therein made are true in substance and in fact, as he is in-

formed and verily believes.

AUG. A. BUSCH.

Subscribed and sworn to before me this 17th day of April, A. D.

1903.

[SEAL. ] GUSTAV F. DECKER,

Notary Public.

14 Il.—Traverse. Filed April 10, 1906.

In the Court of Claims of the United States.

Term, A. D. 1905-’6.

No. 23254.

Tue AnuHEvsER-Buscn Brewinc CoMPANY

v8.

THe UNITED STATES.

And now comes the Attorney General, on behalf of the United

States, and answering the petition of the claimant herein, denies

each and every allegation therein contained ; and asks judgment that

the petition be dismissed.

J. A. VAN ORSDEL,

Assistant Attorney General.

=

THE UNITED STATES. 7

15 III.—Argument and Submission of Case.

This cause was argued by Mr. Louis T. Michener for the claim-

ant and Mr. Assistant Attorney General J. A. Van Orsdel for the

defendants on the 10th and 11th days of April 1906 and submitted.

16 1V.—Findings of Fact and Conclusion of Law. Filed May

7, 1906.

Tue ANHEUSER-Buscn Brewina ComPANY

v.

Tue United Srares.

This case having been heard by the Court of Claims, the court,

upon the evidence, makes the following

Fie?ings of Fact.

I.

Plaintiff is, and has been continuously for a period long preceding

the dates hereinafter mentioned, a corporation created, organized,

and doing business under the laws of the State of Missouri, engaged

in the business of brewing, manufacturing, bottling, and selling fer-

mented liquors, both for domestic consumption and for export, hav-

ing its brewery and principal place of business in the city of Si.

Louis, in the State of Missouri.

Il.

By section 25 of the act of Congress entitled “An act to reduce the

revenue and equalize duties on imports, and for other purposes,”

approved October 1, 1890 (26 Stat., 617), it is provided as follows:

“That where imported materials on which duties have been paid

are used in the manufacture of articles manufactured or produced

in the United States, there shall be allowed on the exportation of

such articles a drawback equal in amount to the duties paid on the

materials used, less one per centum of such duties: Provided, That

when the articles exported arc made in part from domestic materials,

the imported materials, or the perts of the articles made from such

materials, shall so appear in ihe completed articles that the quan-

tity or measure thereof may be ascertained: And provided further,

That the drawback on any articles allowed under existing law shall

be continued at the rate herei:: provided. That the imported mate-

rials used in the manufacture or production of articles entitled to

drawback of customs duties when exported shall in all cases where

drawback of duties paid on such materials is claimed, be identified,

the quantity of such materials used and the amount of duties

17 paid thereon shall be ascertained, the facts of the manufac-

ture or production of such articles in the United States and

8 THE ANHEUSER-BUSCH BREWING ASSOCIATION V8.

their exportation therefrom shall be determined, and the drawback

due thereon shall be paid to the manufacturer, producer, or exporter,

to the agent of either or to the person to whom such manufacturer,

producer, exporter, or agent shall in writing order such drawback

paid, under such regulations as the Secretary of the Treasury shall

prescribe.”

By section 22 of the act entitled “An act to reduce taxation, to pro-

vide revenue for the Government, and for other purposes,” which

took effect on the 28th day of August, 1894 (28 Stat., 551), the pro-

visions of said section 25 of the act approved October 1, 1890, were

enacted word for word and remained in force until the 24th day of

July, 1897 (30 Stat., 211), when, by section 30 of the act approved

on that date, entitled “An act to provide revenue for the Government

and to encourage the industries of the United States,” they were

again reenacted word for word and are still in force.

III.

That while said acts of October 1, 1890, and August 28, 1894, and

July 24, 1897, were in force and operation the claimant herein, being

engaged in the regular, ordinary, and usual course of its business

aforesaid, exported from the United States a large quantity of beer

brewed and manufactured by it, which exportation thereof was in

bottles duly corked by it with corks so as to preserve the beer; that

such corks so used by it in the bottles in which such beer was ex-

ported were imported from Spain, a foreign country (and on which

corks duty had been paid to the United States, according to law, at

the rate of 15 cents per pound, under the provisions of paragraph

416 of the act of Congress approved July 24, 1897), they being corks

over three-fourths of an inch in diameter, measured at the larger

end. The corks so imported from Spain were subjected to treat-

ment by claimant.

The corks so used by the claimant in the making and shipment of

its export beer were corks imported into this country from Spain,

where they were cut by hand, without steaming. After these corks

were received by claimant in its brewery in St. Louis, and while in

the same state in which they were imported from Spain, they were

carefully examined and all that were not fit for use in the export

trade were rejected. The good ones were then selected and assorted

according to sizes, and were branded with the date, the name of the

brewer, the name of the beer, and a special private mark to show

what firm the cork came from. All this was done by unskilled labor.

The selecied corks were put into a machine, or air fan, the unpat-

ented invention of a man in the employ of the claimant, and all dust,

meal, bugs, and worms were removed therefrom. They were then

thoroughly cleansed by washing and steaming, removing the tannin

and germs and making the corks soft and elastic, and they were next

exposed to Llasts of air in a machine, the unpatented invention of

the same employee, until they were absolutely dry.

Following this, they were put for a few seconds into a bath of

glycerine and alcohol, the proportions of which are a trade secret

|

{HE UNITED STATES. 4

which the claimant has the right to use, and then they were dried

by a special system. his bath closed up all the seams, holes

18 and crevices, and gave the corks a coating which prevented

the beer from acquiring a cork taste. The corks were then

dried by absorption of the chemicals that had covered them. If the

corks had been used without the application of this chemical bath,

the beer would have acquired a taste of cork which would have in-

jured the market for it.

The whole process took from one day to three days, the longest

part of it being the drying after the chemical bath.

The bath made it easier to put the cork into the bottle and take

it out. The pores and apertures of the cork were thoroughly closed

by the bath, and thus the escape of the gases contained in the beer

was prevented.

The steaming of the corks, or pasteurizing them, destroyed all the

germs in them that would damage or spoil the beer, if they were not

pasteurized. This pasteurizing also destroyed the yeast that might

have been in the beer.

If the corks had but little or no elasticity, and did not fit the bottles

perfectly, the gas would escape while the beer was yet in the brewery,

or in transportation, or in the place of market, and the beer would be

flat, stale, worthless, and unmarketable.

When the corks had been dried, they were soft, elastic and pliable,

free from all foreign substances and germs, perfectly air-tight, and

fitted for use in bottling beer for export. They were next taken to

the building in claimant’s brewery which was used for bottling pur-

poses, where they were again soaked or wetted by steaming them for

a short time, so they would fit snugly and easily in the bottles.

The bathing, or treatment by the bath, and the washing and steam-

} ing of the corks were all done by skilled labor.

After the beer had been put in the bottles and they had been

corked, the filled bottles were put in a large vat, where they were

pasteurized by heating to the right temperature for a sufficient

length of time and cooled again. If the corks had not been treated as

above described, the carbonic-acid gas would have escaped in the

heating or pasteurizing process, because there was a powerful gas

pressure toward the cork during all that process. If that gas had

escaped, the beer would have become flat.

The corks, so treated by this process and put in the bottles of beer,

could only be removed therefrom by means of a corkscrew or other

instrument of force, which removal would damage or destroy the

cork so it could not be used afterwards for the same purpose.

The hand-cut corks which come from Spain have all been cut out

of the wood without steaming it beforehand. The corks that are cut

in the United States are cut from the wood that has been steamed

first, thus depriving them of much of their elasticity. Because the

Spanish hand-cut corks are cut without having been steamed in the

first instance, they are far safer and better corks to be made for and

used in bottling export beer than corks cut in the United States after

being steamed.

Without the careful selection and thorough treatment of corks,

2—334 ‘

10 THE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

beer can not with safety be exported from the United States to foreign

countries.

When the corkwood reaches the United States it is steamed in order

to get an increase volume out of it. The steaming of the cork-wood

makes it open something like a sponge. The steaming swells the

cork, and those who do the steaming get more corks out of it,

19 but how much more does not appear. But the steaming takes

away its elasticity, and the cork cut after steaming is not so

good or so perfect as one cut from the dry wood in the first place.

Corks cut after steaming will shrink, and that fact makes them

inferior corks. Cork dealers in the United States also put it through

various treatments, such as polishing it and using chemicals to make

it look bright and have a good color. They do not attempt to close

up the pores in the cork, nor run it through machinery to shake or

wash the dust or impurities out of it. They put the cork on the mar-

ket as the machine cuts it after it has been steamed. Corks so cut

and treated in the United States would not be fit for use in the ex-

portation of beer, for they would damage the beer through contact,

and much stale beer would result from the escape of the carbonic-

acid gas by reason of the imperfect corking, and the beer would not

be marketable.

In the manufacture of beer for export to other countries it was

necessary to destroy the yeast in the beer to prevent second fermenta-

tion and the consequent ruin of the beer. In order to destroy the

germs of yeast the finished beer was steamed to the degree necessary

to destroy the germs, and for that purpose the beer was inclosed

securely in a vessel to prevent the escape of the carbonic acid gas, and

of all such vessels a bottle made of glass was and is the one best

adapted to the purpose aforesaid. And such steaming was also neces-

sary to the perfect manufacture of beer for bottling, and to the per-

fect corking therof it was essential and necessary that the cork as

treated should be used as herein described.

IV.

The iaimant herein, relying upon the law and upon the earlier

decisions of the Treasury Department thereunder, purchased from

time to time large quantities of Spanish corks for use in the manu-

facture of bottled beer for the export trade, according to the method

and process hereinbefore mentioned, on all of which the duties im-

poe | by law were paid at the time of their importation, and

73,299.78 pounds of the same were used in the manner hereinbefore

described, in the manufacture of bottled beer for the export trade,

and such beer, after being put in bottles so corked with the corks

before described, was thereupon exported to foreign ports in different

quarters of the globe.

The claimant duly entered the saiic at the custom-house at the

rt of St. Louis, in the State of Missouri, for exportation for the

nefit of drawback, and made proof to the satisfaction of the col-

lector of said port of the importation of said corks so used as afore

said, and of the payment of duties thereon and the amount thereof,

and of the fact that 73,299.78 pounds of the same had been used in

T

THE UNITED STATES. 1h

» manufacture of bottled beer, as hereinbefore set forth, and it

erwise complied with the law and the regulation as prescribed by

- Secretary of the Treasury for the establishment of the right to

whack. But the collector of the port, acting under and in

dience to the decision, of the Treasury Department, refused to

ow the drawback on the corks aforesaid, and when the claimant

ylied to the Secretary of the Treasury for allowance of drawback

under the provisions of section 30 of the act of July 24, 1897,

the Department denied the application under date of De-

cember 9, 1898, and so notified the surveyor of customs at the

‘t of St. Louis, before and since which time the customs officers at

i port have failed and refused to allow claimant drawback on the

ks used by the claimant in the exportation of its bottled beer.

1. e

Jn the entries so made for exportation of bottled beer, which bot-

; were corked exclusively as shown by the preceding findings, the

ul amount of drawback due the claimant from the 24th day of

ry, 1897, to April 17, 1903, is $10,995, being at the rate of 15

its per pound for 73,299.78 pounds, as before stated.

No other action than as aforesaid has been had on this claim in

y of the Departments, or in the Congress or the courts of the

ited States.

VI.

[he claimant is the sole owner of this claim, and no other person

corporation has any interest therein; and no assignment or trans-

of the claim, or of any part thereof, or interest therein, has been

de.

Conclusion of Law.

Jpon the foregoing findings of fact, the court decides, as a conclu-

n of law, that the petition be, and the same is hereby, dismissed.

V.—Opinion of the Court.

Towry, J., delivered the opinion of the court:

-laintiff company is engaged at St. Louis, Mo., in the business of

wing and bottling beer for domestic consumption and export. It

ngs this action under the general jurisdiction of the court for

wback authorized to be paid under section 30 of an act approved

y 24, 1897 (30 Stats. L., 211, re-enacting similar previous

utes), for $27,000 as amounts paid by it as duties for imported

k used in the export of its bottled beer, but claimed to be so

inged by treatment as to be manufactured cork in this country

or its importation from abroad.

[he court is indebted to the learned counsel on both sides for the

1 and able presentation of everything calculated to make clear the

ies. But since two recent cases in this court, pertaining to claims

drawback, were affirmed on appeal it is unnecessary to review

12 THE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

the many decisions to which we are referred defining manufacturing

but rather to give the results deduced from an examination of these

cases as well as an examination of the statute under which the draw-

back is claimed.

Plaintiff imports cork from Spain and then treats it as set forth

in the findings. After all the explanation the process is simple.

Selected corks, after being branded, are put into what the proof

shows to be a machine or air fan, which is an unpatented invention,

and all dust, meal, bugs, and worms removed. The corks are then

thoroughly cleaned and washed by steaming, which removes the

tannin and germs and makes them soft and elastic, and then are

again exposed to blasts of air in the unpatented machine until dry.

Following this they are put for a few seconds into a bath of glycerin

and alcohol, the proportions of which are a trade secret, and then

dried by what is generally stated to be a special system, the nature

of which is not shown. This bath closes up the seams and crevices,

when the corks receive a coating to prevent the beer from acquiring

a cork taste. The corks are then dried by absorption of

22 the chemicals covering them. The bath makes it easier to put

the cork into the bottle and take it out, and the steaming of

the corks destroys any germs that may be in them that would damage

or spoil the beer if not sterilized.

In Tide Water Oil Co. (31 C. Cls. R., 90; 33 ib’, 514; 171 U.S.,

210) the court of last resort in affirming this court has shown how

raw materials may be subjected to successive processes of manufac-

ture, each one of which is complete in itself, but several of which

may be required to make the final product. ‘Ordinarily,’ the court

said, “the article so manufactured takes a different form, or at least

subserves a different purpose from the original materials, and usually

it is given a different name.” The illustrations given of logs first

manufactured into boards, planks, joists, and scantlings, and then by

different processes fashioned into boxes, furniture, doors, windows,

sashes, and trimmings, manufactured wholly or in part of wood, and

of the steel springs of a watch made from iron ore and by a number

of processes or transformations called distinct processes of manufac-

ture receiving a different name are in point as to what constitutes

manufacturing. Underlying these specific illustrations and a gen-

eral statement relating to what is the ultimate product of successive

steps necessary to make a manufactured product, is the idea that

the process is supposed to produce some new article by the applica-

tion of skill and labor to raw materials.

The mere cleaning of Spanish cork by washing and steaming, so

as to remove the tannin and germs and to make the corks soft and

elastic, certainly does not produce a new article. The few seconds’

bath of glycerin and alcohol to which the corks are subjected, as

shown here, may give a coating so as to prevent beer from acquiring

a cork taste, and this application may close up the crevices in the

corks, but anybody can be called a cork manufacturer, if that is all

to be done, as there is no skill applied to make the thing over. Cer-

tainly there is nothing in washing and steaming imported cork and

in soaking the imported material in glycerin and alcohol (no matter

-

at Fo THE UNITED STATES. 13

in what proportion) that changes the imported cork into manufac-

tured cork. The chemical change that should be wrought in the im-

ported article to make the article manufactured by the washing and

steaming and then applying glycerin and alcohol certainly does not

take the imported stuff very far away from its natural form. It is,

apparently, not new. Like imported shells (Hartranft v. Wieg-

mann, 121 U. S., 609), where the outer layer of the shell is cleaned

by acid and the second layer is ground by an emery wheel, the corks

so treated do not seem to be any more manufactured than shells

treated with acid and rubbed. They are still corks, having a dis-

tinctive name and character and use as cork. If the application of

glycerin and alcohol be in such proportions as to make this applica-

tion a trade secret, equally can it not be controverted that cork has

been as effectually treated everywhere by means employed to prevent

the escape of bottled carbonic acid gas? This does not constitute

manufacture nor make persons steaming and washing cork and ap-

plying glycerin and alcohol (in any kind of proportion) manufac-

turers.

But it is shown that the corks are put into a machine or air fan

to remove dust, meal, bugs, and worms. How effectually this is done

or can be done, or how different from the means taken by others who

bottle beer or other effervescing liquid, does not appear. It

23 does appear that the company puts the corks it uses to bottle

export beer into what it proves and the finding shows to be an

air fan. But this air fan, called a machine, is an unpatented some-

thing not shown to the court, nor is there any description given

either of the machine or how it can remove any substance contained

in the imported cork. Without a description of the unpatented fan

and without some means of knowing what is accomplished by its

use, we can not assume that the cork is treated by this company ma-

terially different from cork treated by any other company or person

along the same lines or different lines. In neither case is it clear

that the cork undergoes any material change, so that it can not be

said to be an article manufactured in this country.

If the process described by plaintiff in the use of what they

say is a machine accomplishes results so valuable, we do not think

there would be much delay in applying for and obtaining a patent

upon it. We do not mean to say that it may not have some effect

upon the cork, because we have accepted its statement that it has.

At the same time we are unable to see that, after all the treatment

given to the imported article, it is converted into an article manu-

factured in this country.

The difficulty with plaintiff’s case is that when through treating

the cork the finished character of the product is not apparent. The

line of demarkation in an unfinished article and an article so finished

as to make the thing treated a manufactured article is not always

easy of distinction. We are not, however, able to say that this com-

pany manufactures cork any more than we can say that shooks

imported to be used in the manufacture of boxes are materials within

the intent of the statute (171 U. S., supra) ; or that the cork treated

by plaintiff is in any better position as the basis of a claim for draw-

Tt THE ANHEUSER-BUSCH BREWING ASSOCIATION VS.

back than bituminous coal imported but consumed as fuel in this

country (163 U. S., 499). Neither possesses the right to a draw-

Foregoing considerations are sufficient to disallow the claim, be-

cause in case of doubt as to the interpretation of the statute the

construction must be resolved in favor of the Government. (Swan

& Finch Co., 190 U. S., 143.)

The other defense that the corks in question were not a part or in-

gredient of the beer exported and consequently not, in contemplation

of law, exported at all need not be more than briefly considered.

In Schlitz Brewing Company (35 C. Cls. R., 110; 36 ibid., 580;

181 U. S., 584) it is held that bottles and cork in which beer is bot-

tled and exported for sale though brought from abroad are not im-

ported materials used in the manufacture of such beer within the

meaning of the drawback provisions of the customs-revenue laws.

Plaintiff contends that the case at bar is dissimilar to that case be-

cause here manufacture is shown while there manufacture did not

appear. But that case did include the claim for drawback of

duties upon imported bottles and corks, and while it is true that the

particular treatment of the corks imported shown here does not ap-

pear there, the court did say that bottles and corks were not imported

materials at all but finished products and usable for any liquor

which the importer might choose to put in bottles. Such materials

were “simply packages which the manufacturer (of beer) for pur-

poses of export, sees fit and perhaps is required to make use of for

the proper preservation of his product.” It is the beer manu-

24 factured that is exported for foreign competition. Certainly

the manufacture of the beer for export is alone the object

of the plaintiff’s business.

The use of corks to bottle the beer iz a necessary part of the busi-

ness, it is true, just as the use of the bottles is an essential part. But

cork manufacturing in such case, if it be manufacturing is but the

incident of the trade. The corks are washed, steamed, cleaned,

fanned, and then dried; not to sell but to put in bottles of beer for

exportation. The beer is manufactured, bottled, and corked for

export and use. The object of the drawback law was to build up an

export trade and encourage manufactures in this country where such

manufactures are intended for exportation by granting a rebate of

duties upon the raw or prepared materials imported, and thus ena-

bling the manufacturer to compete in foreign markets with the same

articles manufactured in other countries. Tide Water Oil Company

case (supra), so declares, and further that “in determining whether

the articles in question were wholly manufactured in the United

States, this object should be borne steadily in mind.” So far as

this record discloses, and so far as we have any knowledge of the

subject, plaintiff is not competing in foreign markets in exporting

the corks which hold its beer, because the corks are not sold as corks

abroad. So, if this company has otherwise made out its case as to

the claim of cork manufacture in this country, the method shown of

treating and incidentally using the imported cork would hardly be

—— -

THE UNITED STATES. 15

said to encourage manufacture in this country within the meaning

of the customs-revenue laws.

Petition dismissed.

25 VI.—Judgment of the Court.

Tue ANuEUsER-BuscH Brewina AssociATION

Vv.

UNITED STATES.

At a Court of Claims held in the City of Washington on the 7th

day of May 1906, judgment was ordered to be entered as follows:

The Court on due consideration of the premises find for the de-

fendants, and do order, adjudge and decree that the petition of the

claimant, The Anheuser-Busch Brewing Association, be and the

same is hereby dismissed.

By tHe COURT.

26 VII.—A pplication for and Allowance of Appeal.

No, 23254.

Tue AnuEvuseR-Buscn Brewina AssociaTION

v8.

Tue Unitrep Strares.

Comes now the claimant and makes application for the allowance

of an appeal to the Supreme Court of the United States from the

judgment heretofore rendered by this Court in the above entitled

case,

DUDLEY & MICHENER,

Attorneys for Claimant.

Filed May 28, 1906.

Ordered :

; That the appeal in the above-entitled cause be allowed as prayed

or.

By tHe COURT.

May 28, 1906.

27 Court of Claims.

No. 23254.

Tue ANHEUSER-BuscH BREWING ASSOCIATION

v8.

Unirep States.

[, John Randolph, Assistant Clerk Court of Claims, certify that

the foregoing are true transcripts of the pleadings in the above-enti-

16 ANHBUSER-BUSCH BREWING ASSO. VS. UNITED STATES,

tled cause; of the findings of fact and conclusion of law; of the

opinion of the Court; of the judgment of the Court; of the appli-

cation for, and allowance of, appeal to the Supreme Court of the

United States.

In testimony whereof I have hereunto set my hand and affixed the

seal of said Court of Claims this 25th day of June 1906.

[Seal Court of Claims. |

JOHN RANDOLPH,

Ass’t Clerk, Court of Claims.

Endorsed on cover: File No. 20,299. Court of claims. Term No.

334. The Anheuser-Busch Brewing Association, appellant, vs. The

United States, Filed July 2d, 1906. File No. 20,299.

jr the Supreme {= of the Goite States

OcToBER TERM, 1907.

— -s> ——

THE ANHEUSER-BUSCH BREWING

ASSOCIATION, Appellant,

v.

THE UNITED STATES. |

ASSIGNMENT OF ERRORS.

The Court of Claims erred:

1. In dismissing the petition.

2. In not rendering judgment in favor of the appellant

in the sum of $10,995.00.

I}.

THE ‘PLEADINGS.

Appellant filed its action against the United Statesin

the Court below for $27,000, as the amount of ‘ drawback "’

due it on payment of duties to the United States on im-

ported cork used thereafter in the export of its manufac-

tured and bottled beer. The cork was so changed as to be

cork manufactured in this country after its importation

from Spain and before its exportation. Sec. 30, Act of

July 24, 1897 (30 Stat. e”1).

For petition see Rec. 1-6. The government filed the

usual general denial (Rec. 6). 7

Ill.

JURISDICTION.

This action is for “drawback'’ and the court below

had jurisdiction.

Campbell's case, 107 U.S. 407.

Schlitz case, 181 U.S. 584.

IV.

Tue Facts.

The court below found the facts at length and sub-

stantially as alleged in the petition (Rec. 7-11). In

finding V, Rec. 11, it is found that the amount due appel-

lant on payments made from July 24, 1897, to April 17,

1903, was $10,995.00. The facts are so clearly and

concisely stated in findings III and IV, that we shall

not try to summarize them here further than to say that

the entire process of manufacture is elaborately set forth

in the third finding. The cork was cut in Spain while

in its crude state, and then imported to the United States,

where it was first assorted into sizes, the imperfect corks

rejected and the perfect ones put through mechanical

and chemical operations and treatments which washed,

cleansed and purified them, and in every way fitted them

for use in bottles containing beer to be exported to foreign

3

countries. In doing all this, labor, care, skill, mechanical

implements, secret processes and chemical treatments

were necessarily used. The result was a product of corks

fitted in every way for use in the exportation of beer.

Without the use of corks duly selected and treated by

the process described in that finding, or by a process

equivalent to it, appellant's beer could not have been

exported to foreign countries.

V.

THE JUDGMENT.

The court adjudged that the petition be dismissed

(Rec. 15). That judgment is preceded in the record by

the opinion of the court (Rec. 11-15).

VI.

THE STATUTES.

By section 25 of the act of Congress entitled “An act

to reduce the revenue and equalize duties on imports and

for other purposes,"’ approved October 1, 1890 (26 Stat.

617), it is provided as follows:

“That where imported materials on which duties

have been paid, are used in the manufacture of

articles manufactured or produced in the United

States, there shall be allowed on the exportation of

such articles, a drawback equal in amount to the

duties paid on the materials used, less one per centum

of such duties: Provided, That when the articles

exported are made in part from domestic materials,

the imported materials, or the parts cf the articles

made from such materials, shall so appear in the com-

pleted articles that the quantity or measure thereof

may be ascertained. And provided further, That the

drawback on any articles allowed under existing law

4

shall be continued at the rate herein provided. That

the imported materials used in the manufacture or

production of articles entitled to drawback of cus-

toms duties when exported shall in all cases where

drawback of duties paid on such materials is claimed,

be identified, the quantity of such materials used and

the amount of duties paid thereon shall be ascer-

tained, the facts of the manufacture or production of

such articles in the United States and their exporta-

tion therefrom shall be determined,and the draw-

back due thereon shall be paid to the manufacturer,

producer, or exporter, to the agent of either or to the

person to whom such manufacturer, producer, ex-

porter, or agent shall in writing order such drawback

paid, under such regulations as the Secretary of the

Treasury shall prescribe.”

By section 22 of the act entitled ‘‘An act to reduce

taxation, to provide revenue for the Government, and for

other purposes,’”’ which took effect on the 28th day of

August, 1894 (28 Stat. 551), the provisions of said secticn

25 of the act approved October 1, 1890, were enacted word

for word and remained in force until the 24th day of July,

1897 (30 Stat. 211), when, by section 30 of the act approved

on that date, entitled “An act to provide revenue for the

Government and to encourage the industries of the United

States,”” they were again re-enacted word for word and

are still in force. Finding II, Rec. 7, 8.

VII. e-

DEPARTMENTAL INTERPRETATION.

Under section 3019, Revised Statutes, which is a pro-

vision similar to but not identical in terms with the pre-

visions of the acts of 1890, 1894, and 1897, it was ruled

by the Treasury Department, under date of March 31,

1886, that “ on the exportation of beer manufactured

5

wholly of imported materials, bottled in imported bottles

and corked with imported corks, a drawback will be

allowed for the hops, rice, and barley used in the manu-

facture at the rate prescribed by the Department’s letter

to you on the 25th instant, and for the bottles and corks

at the rate of duty paid thereon, less the legal retention

of 10 per cent.

And in the official table of drawback rates prescribed

by the Secretary of the Treasury under date of August 17,

1886, bottles and corks used in bottling beer were speci-

fically named as entitled to the benefit of drawback rates

to the full amount of the duty paid less 10 per cent. This

remained in force until the 28th day of October, 1890,

when, under the tariff act of October 1, 1890, it was ruled

that “imported bottles used in the bottling cf ferrrented

liquors made in the United States, wholly from domestic

grain and hops, are not entitled, on the exportation of

such bottled beer, to drawback under the provisions of

Section 25 of the act of October 1, 1890.”

Notwithstanding that ruling drawback continued to

be allowed and paid on bottles and corks used 2 the

bottling of fermented liquors made in the United tates

from foreign grain and hops, as well as upon such grain

and hops themselves, until the 24th day of March, 1893.

when, by a further ruling of the Treasury Department, all

earlier decisions authorizing the allowance of drawback

on imported bottles, corks, and tinfoil used in bottling

beer for export were rescinded and set aside , and from and

after the date of said last-mentioned decision the Treasury

Department has refused to allow any drawback whatever

on bottles, corks, or tinfoil used in the manufacture of

bottled beer for export, irrespective of the question

whether the hops and barley used in the manufacture of

such beer were of foreign or domestic origin.

See Schlitz Brewing Co. case, 35 C. Cls. 110-113,

and Treasury Decisions and 181 U. S., 584, 587.

6

The departmental action has been first one way and

then another. Drawback was allowed on corks from

March 31, 1886, to March 24, 1893, and since then it has

been denied.

VIII.

IAW OF THE CASE.

Section 25 of the act of October 1, 1890 (26 Stat. 617), is

quoted in full in the second request. That section was re-

enacted, word for word, in section 22 of the act of August

28, 1894( 28 Stat. 551). The latter act still remains in

force, for it was re-enacted as section 30 of the act of

July 24, 1897 (30 Stat. 211).

The statute uses the words “imported materials,”

“manufactured or produced,’’ “manufacture or produc-

tion,” and ‘‘manufacturer, producer or exporter.’’ We

submit that the case turns on the meaning of the words

“‘manufacture’’ and “manufactured.” The other words

of the statute, so far as this case is concerned, depend

upon the meaning of the words “manufacture’’ and

“manufactured.”’

This court has sanctioned the use of dictionary defini-

tions in determining the meaning of words in tariff laws.

Marvel v. Merritt, 116 U. S. 11, 12.

Nix v. Hedden, 149 U. S. 304.

Therefore we shall make use of such definitions in this

argument.

1. Mr. Brande defines “‘manufacture’’ as a term em-

ployed to designate the changes or modifications made by

art or industry in the form or substance of material

articles with a view of rendering them capable of satis-

7

fying some want or desire of man, and “ manufacturing

industry’’ to consist in the application of art, science, or

labor to bring about certain changes or modifications of

already existing materials. He includes under the term

‘“‘manufacture’’ all branches of industry, with the excep-

tions of fishing, hunting, mining, and such industries as

have for their object to obtain possession of material

products in the state in which they are fashioned by

nature. He says that the term is generally applied only

to those departments of industry in which the raw ma-

terials are fashioned into desirable articles by art or

labor without the aid of the soil, but that there is no real

good reason for such limitation, and that it is obvious

from the slightest consideration that agriculture is nothing

but a manufacture, for the business of the agriculturalist

is to dispose of the soil, seed, manure, or other materials,

that they may supply him with other and more desirable

products.

Brande’s Enc., tit. ‘‘ Manufacture.”

Evening Journal Ass'n v. State Board of Assessors,

47 N. J. Law (18 Vroom), 36, 38.

“Manufacture”’ is defined by Worcester to be “the

process of making anything by art, or of reducing materi-

als into forms fit for use by hand or by machinery, as an

establishment for the manufacture of cloth; anything

made or manufactured by hand, or manual dexterity, or

by machinery.” As a verb it is defined to mean, te

form by manufacture or workmanship by hand or by

machinery; to make by art or labor.

Approved and applied in—

Attorney-General v. Lorman, 59 Mich. 157.

Louisville & N.R. Co. v. Fulghan, 91 Ala. 555.

Beggs v. Edison Elec. Ill. Co., 96 Ala. 295.

Lamborn v. Bell, 18 Colo. 346.

8

Bouvier says the word ‘manufacture’ “includes any

new combination of old materials constituting a new

result or production, in the form of a vendible article, not

being machinery.”

Quoted with approval in Murphy v. Arnson, 96

U. S. 131, 134.

The primary meaning of the word ‘‘manufacture’’ is

something made by hand, as distinguished from a natural

growth; but as machinery has largely supplanted this

primitive method, the word is now ordinarily used to

denote an article upon the material of which labor has

been expended to make the finished product. Ordinarily

the article so manufactured takes a different form, or at

least subserves a different purpose, from the original

materials, and usually it is given a different name. Raw

materials may be, and often are, subjected to successive

processes of manufacture, each one of which is complete

in itself, but several of which may be required to make

the final product. Thus, logs are first manufactured into

boards, planks, joists, scantlings, etc., and they by entirely

different processes are fashioned into boxes, furniture,

doors, windows, sashes, trimmings, and the thousand and

one articles manufactured wholly or in part of wood. The

steel spring of a watch is made ultimately from iron ore,

but by a large number of processes or transformations,

each successive step in which is a distinct process of manu-

facture, and for which the aticle so manufactured receives

a dierent name.

Tidewater Oil Co. v. United States, 171 U. S. 210.

While, from its derivation, the primary meaning of the

word ‘“‘manufacture’’ is making with the hand, this defi-

nition is too narrow for its present use. Its meaning has

extended as workmanship and art have advanced, so that

9

now nearly all artificial products of human industry,

nearly all such materials as have acquired changed con-

ditions or new and specific combinations, whether from the

direct action of the human hand, from chemical processes

devised and directed by human skill, or by the employ-

ment of machinery, which, after all, is but a higher form

of the small implements with which the human hand fash-

ioned its creations in ruder ages, are now commonly desig-

nated as manufactures. Thus a flour mill driven by steam

and furnished with the necessary machinery is a manu-

facturing establishment.

Carlin v. Western Assur. Co., of Toronto, 57 Md. 515,

526; 40 Am. Rep. 440.

2. ‘Manufacturing’ is the making of a thing, and to

make,in the mechanical sense, does not signify to create

out of nothing, for that surpasses all human power. It

does not often mean the production of a new article out

of materials entirely raw. It generally consists in giving ©

new shapes, new qualities, or new combinations to the

matter which has already gone through some other arti-

ficial process. Thus a cunning worker in metals is the

maker of the ware he fashions, though he did not dig the

ore from the earth, or carry it through every subsequent

stage of refinement. A shoemaker is none the less a

manufacturer of shoes because he does not also tan the

leather.

Norris v. Commonwealth, 27 Pa. (3 Casey), 494, 496.

“Manufacturing,” as used in the Act of June 29, 1885,

providing that all buildings more than two stories in height,

used for ‘manufacturing’’ purposes, should have at least

one fire escape for every fifty persons for which working

accommodations were provided above the second story

of such buildings should be construed to include the mak-

10

ing of articles of wearing apparel by using machines driven

by electric power. ‘‘Manufacture’’ has been defined as

the process of making anything by art, or of reducing

materials into form fit for use by hand or by machinery.

While the original meaning of the word ‘‘manufacture’”’

is to make with the hand, the definition of the term is not

confined to this original signification. Manufacturing

generally consists in giving new combinations to matter

which has already gone through artificial process. Norris

v. Commonwealth, 27 Pa. (3 Casey) 494. Bouvier, in his

Law Dictionary, in defining the word ‘‘ manufacture,”

says ‘‘it includes any new combination in the form of a

vendible article, not being machinery.”

Landgrajf v. Kuh, 188 Il. 484.

3. ‘‘A ‘manufacturer’ is defined to be one who is

engaged in the business of working raw materials into

wares suitable for use; who gives new shapes, new

qualities, new combinations,to matter which has already

gone through some .artificial process. A manufacturer

prepares the original substance for use in different forms.

He makes to sell, and stands between the original

producer and the dealer and first consumer, depending

for his profit on the labor which he bestows on the

raw materials.”

State v. Dupre, 42 Ia. Ann. 561.

City of New Orleans v. La Blanc, 34 La. Ann. 596,

597.

City of New Orleans v. Ernst, 35 La. Ann. 746, 747.

State v. American Sugar Refining Co., 108 La. 603.

““Whoever creates a useful thing by mechanical labor

is entitled usually to be called a ‘manufacturer.’ The

fact that he purchases, rather than makes, some of the

parts, does not destroy that character. A boiler-maker

11

is a manufacturer, although he purchases the boiler

plates rolled into form, and purchases also the tubes

and rivets. So with a cabinet-maker, who buys the

wood he uses in polished form or carved, and buys the

cloth, hair, and leather he uses. No manufacturer of

the finished product in this age works up the raw material.

The practical manufacturer assembles the material

he needs from all quarters in its most finished condition,

and does the rest himself.’’

People v. Morgan, 63 N. Y. Supp. 76, 79.

We will now submit some illustrations.

(a) ‘‘Manufacture”’ is sufficiently broad to include the

manufacture of bone dust and bone black, produced by

exposing the burning bone to the action of fire, or by

grinding the pieces of bone. Among the definitions given

by Webster are the operation of reducing raw material

of any kind into a form suitable for use, by hand, by art,

or by machinery; to work raw materials of any kind into

suitable forms for use. Worcester has the same defini-

tions in substance. Bone dust and bone black, with the

proper definitions, are found in both Webster and Wor-

cester, and in other medern dictionaries. Whether we

look to the popular use of the term ‘‘ manufacture,”’ or to

its definition given by our best lexicographers, as the

proper guide to the intention of the act of Congress in

levying an internal revenue tax on manufacturers, per-

sons making bone dust and bone black were properly

taxed as engaged in manufacture.

Schriefer v. Wood, 21 Fed. Cas. 737.

(b) The reduction of coke from coal is a process of

manufacture.

Commonwealth v. Juniata Coke Co. 157 Pa. 507.

12

(c) The genetating of electricity is ‘‘manufacturing,”’

within the manufacturing and mining companies’ act.

- Burke v. Mead, 64 N. E. 880, 883; 159 Ind. 252.

People v. Wemple, 129 N. Y. 543.

(dq) A corporation making fountain pens is a manu-

facturing corporation, and exempt from taxation on its

capital stock, under a statute exempting manufacturing

corporations, though it purchases from different sources

the rubber holders and gold pens which it manufactures

into fountain pens.

People v. Morgan, 63 N. Y. Supp. 76, 79.

(e) The making of gas is a manufacture.

Nassau Gas Co. v. Brooklyn, 89 N. Y. 409.

({) The term ‘‘manufactured article’’ includes any-

thing which is changed by process of manufacture from

its natural form. It is not necessary, in order to consti-

tute a manufactured article, that a chemical change should

be wrought in it. Hence the term includes iron manu-

factured from iron ore; timber and lumber manufactured

from logs; bone dust produced by the grinding of bones;

staves, etc., manufactured from logs; and ice formed by

natural process, but changed by manual labor or machin-

ery to a form adapted for sale and use.

Attorney-General v. Lorman, 59 Mich. 157; 60 Am.

Rep. 287.

(g) ‘‘Manufacturing,’’ as used in the Constitution, ex-

empting from taxation property used in manufactures,

includes a process by which, through the use of suitable

machinery in vaporizing moisture, disposing of gases, and

separating grease or oilsof garbage fromthe other materi-

als, so as to produce oleaginous products and fertilizers,

13

though the process might technically be defined to be a

work of conversion or reduction.

Southern Chemical and Fertilizing Co. v. Board of

Assessors, 48 La. Ann. 1475.

(h)‘‘To manufacture’? means to make anything by

hand or artificial device, so that the making of corn into”

meal is manufacturing.

Louisville & N. R. Co. v. Fulgham, 91 Ala. 555.

(i) A pork packer is a manufacturer, because he buys

and slaughters hogs, subjects their carcasses to certain

processes and combinations with other materials, requir-

ing the application of skill, labor and capital, and converts

them into lard and cured meats, for the purpose of adding

to the value thereof, with the view of making gain or

profit. He uses other raw materials,as well as chemicals,

tools, implements and mechanical devices, smokes the

meat, wraps it in canvas and then dips it in a mixture to

render it airtight and proof against atmospheric influences

and insects.

Engle v. Sohn, 41 Ohio St. 691.

(j) Within the term “‘ manufacturing,” there is no ques-

tion but that chewing and smoking tobacco and snuff are

manufactured products. The manufacturer of raw ma-

terials converts the raw material—leaf tobacco—into a

manufactured article, by removing stems and dirt, improv-

ing the color, drying or moistening, perhaps sweetening

some kinds, and compressing, granulating, fine-cutting, or

pulverizing, according to the use for which it is intended.

The parallel with sugar refining is complete. The process

of manufacturing tobacco accomplishes the same result

as the refining of sugar, though it is more simple and

requires less machinery, and the raw material never loses

14

its original identity. Hence the refining of suger is a

manufacture.

State v. American Sugar Refining Co., 108 La. 603.

(zk) The business of refining sugar is a manufacture, and

not ar operation of commerce, and therefore not within

the commerce clause of the Federai Constitution.

United States v. E. C. Knight Co., 156 U.S. 1.

(1) The making of linseed cake is a manufacture, Camp-

bell v. United States, 107 U. S. 407, although it is made

only by pressure on the meal after the oil has been ex-

pressed from the seed. Ency. Brit.

Finding III clearly falls within the definitions an-

nounced by the lexicographers and approved by the

courts, and within the rules of law laid down in the

cases above cited. The corks were changed or modified,

in substance, if not in form, by the art and industry of the

petitioner, with the view of rendering them capable of fur-

nishing perfect means, when inserted in bottles, of carry-

ing beer securely, safely and .properly from appellant's

brewery to foreign countries. Appellant applied to them

art, science, and labor for the purpose of bringing about

changes or modifications in the cork, as it was cut in Spain

and brought from that country to this. Appellant used

hand labor, both skilled and unskilled, machinery, and a

chemical bath, made and applied according to a secret

formula, after having pasteurized the corks and otherwise

freed them of impurities.

In due course, and after further pasteurizing, the corks

were inserted in beer bottles already filled with beer made

for the export trade. The bottles so filled and corked

were then inserted in a huge vat and heated to such degree

as would destroy the yeast yet remaining in the beer, as

15

well as noxious germs. The use of the corks so prepared

by appellant in the bottles prevented the carbonic acid

gas and the beer from escaping and preserved the beer,

so that it would be palatable and marketable in for-

eign countries.

All this involved labor, machinery, chemical processes

and intelligent effort and management of a high degree.

Here was a perfect combination of the raw material of the

corks, labor, skilled and unskilled, machinery, chemicals

and chemical action, and the result was the product of art,

labor and skill. The corks yet retained the form of cork,

but they had taken on other materials and qualities, and

had acquired a fitness for uses to which, in their usual

state, they were not fitted or adapted. The corks went

through successive stages or processes of manufacture, each

complete in itself, but the several stages or processes were

required to make the final product. The original corks

were thus given new qualities, by the possession of which

the beer made by appellant when corked by them could

be sent to foreign countries without loss, without injury

to it or to the consumer, and therefore without detriment

to its market.

By means of the process described in the third finding,

new combinations were given to the cork, the alcohol, the

glycerine and the steam, and the result was corks perfect

for use in the necks of bottles, and so free of germs, impuri-

ties and tannin that the beer enclosed in the bottles could

come in contact with the corks without injury to them or

to it. Among other things, the tannin was removed

from the corks, an important consideration, for the reason

that tannin is injurious to beer.

Tannin is a term applied to various forms of the astrin-

gent principle used in tanning. Most of those forms have

an acid reaction and resemble each other in properties,

16

though they differ in chemical composition. (Webster;

Ency. Brit.)

Tannic acid, which is evidently the form of tannin

spoken of in the request, is a solid, crystalline, colorless,

inodorous acid, of a very astringent taste, soluble in water,

and forming, with peroxide of iron, a compound which is

the basis of common ink. bid.

Tanning is the act or process of converting hides into

leather, by cleansing them of hair, flesh, etc., and saturat-

ing them with tannin, or some form of the astringent prin-

ciple contained in the bark of certain trees and plants. /b.

As the cork contains this tannic principle, or acid,

which is soluble in water, it is evident, even to one not

particularly familiar with the making and storing of beer,

that it is of importance that it shou!d be either removed

from the cork, or so thoroughly covered as to prevent the

beer from reaching and dissolving it, as it would completely

do in the course of the six or eight months which must

elapse between the corking of the beer in the brewery

and its consumption in foreign countries.

Of the pasteurizing of the corks and the beer, and the

destruction of noxious germs, it is needless to speak at

length in this enlightened time, when it is known in even

the humblest family that many forms of disease and death

may be avoided by the use of the discovery which has

made Pasteur immortal and has wrought great good for

mankind.

Bone dust is a manufacture, and yet it is produced only

by exposing the bone to the chemical action of fire and

then grinding.

Coke is a manufacture from coal by burning it for a

time in vessels or ovens, to which air is admitted partially,

followed by steam to prevent complete combustion.

This result is obtained by labor, skill, and by chemical

action. '

17

It is a manufacture also, through the use of suitable

machinery, in vaporizing moisture, disposing of gases,

separating grease or oils from garbage or other materials,

to produce oily products and fertilizers. In that form we

have the use of machinery, chemical action, steam, labor,

and skill.

In the packing of pork there is the use of raw material,

labor, skilled and unskilled, tools and mechanical devices,

smoke and the mixture ‘and application of chemicals, to

render the product air-tight and proof against atmo-

spheric influences.

In the manufacture of chewing and smoking tobacco

and snuff,the stems and dirt are removed from the leaf,

the color is made by drying or moistening, to which is

added compressing, granulating, fine-cutting or pulveriz-

ing and sweetening or flavoring sometimes. All this in-

volves labor, skilled and unskilled, and the use of machin-

ery and chemicals.

In the refining of sugar the raw material is taken and

put through machinery and certain chemical agencies by

the aid of labor, skilled and unskilled. .

These instances of art and manufacture are taken from

the cases already cited, and we apply to them, and to the

general rules heretofore stated, the unchallenged facts

set forth in the findings, and then we submit that the

things done to, by and with the corks were a manufacture

of corks within the acts of Congress; that the corks were

imported materials used in the manufacture of articles

in the United States,on which duties had been paid, and

then were exported to foreign coun‘ries; and that the

appellant is a manufacturer and exporter within those

acts of Congress and is entitled to a refund of the duties so

paid.

18

IX.

OPINION CouRT OF CLAIMS.

The opinion of the court helow, Rec. 11-15,relies upon

certain cases which we will consider briefly.

The Tidewater Oil case, 171 U.S., 210. There the sides,

tops and bottoms of boxes were made abroad, imported

here in hales and then assembled into boxes. This court

held that the boxes were substantially manufactured abroad

and that nothing was done in the United States but

assemble the parts together.

In Hartranft v. Weigmann, 121 U. S., 609, the shells

were cleaned by acid and then ground on an emery wheel,

some of them being etched by acid afterwards, and all

were intended to be sold for ornaments as shells. The

characteristics of the shells were not changed nor did they

take on other materials or qualities. The Supreme Court

held—and very properly,as we think—that such cleaning

grinding and etching were not “manufactures of shells’’

und :r the statute.

We are not seeking recovery here on the theory that

these corks were cleaned, ground or polished so as to

make them shine and were then etched so as to represent

a beer stein, or anything else, or to make them ornaments

as corks. They were for plebian uses only, and were

so made over in this country as to fit them for the uses

described in the findings.

United States v. Allen, 163 U.S. 499, does no more

than hold that the right of drawback under one act was

taken away by another act. There is no such question

here.

In the Swan & Finch Co. case, 190 U.S. 143, it was held

that, in case of doubt as to the time interpretation of the

19

statute, it must be resolved in favor of the government.

We are not rash enough to gainsay that proposition but

we do not see that it applies to the case at bar.

The case of the Schlitz Brewing Co., 181 U.S. 584, does

not present the questions of fact and law involved in the

case at bar. In that case the corks were not manufac-

tured, but the claimant exported bottled beer, using hops,

barley, bottles and corks on which duties had been paid.

The Treasury Department refused a drawback on the

bottles and corks. There the bottles were sent to the

corking machines and corked, a thin metal cap was placed

over the cork for its protection, and a wire was attached

to the neck of the bottle and wound over the cork. Then

the bottles were put through the pasteurizing process,

“for the purpose of destroying living yeast cells,” that

process being necessary for beer bottled for export. 35

C. Cls. 115, finding IX. The corks were not put through any

process of manufacture whatever.

This court held that the bottles and corks were not

imported materials, but were finished products and usable

for any liquor which the importer might choose to put

in them.

The two cases are as dissimilar on the facts as cases can

be; in one there was no manufacture but in the other

there was manufacture.

We submit that the cases cited in the opinion of the

Court of Claims do not sustain the conclusion reached

by the court.

X.

OTHER CasEs CONSIDERED.

In the court below, counsel for the government cited

some other cases that we shall consider now on the assump-

tion that they will be relied on here.

20

In the Wheeler case, 75 Fed. Rep., 654, it was held

that imported bottles and corks, re-exported filled with

beer made in this country, are not materials, etc. An

examination of that case will show that there was no

manufacture of corks at all by the exporter. Nothing at

all was done to the corks but putting them in the bottles.

In Frazee v. Moffit, 20 Blatch., 267, it was held that

hay pressed in bales rea’ y for market was not a manu-

factured article, though labor had been expended in cut-

ting and drying the grass and baling the hay. We are

not asking the drawback here on the theory that our client

had anything to do with taking the bark from the tree,

or cutting it into such shapes as would fit it for subse-

quent manufacture, or baling or boxing those pieces so

they could be shipped to this country.

In United States v. Potts, 5 Cranch, 284, it was held

that round copper plates, turned up and raised at the

edges from four to five inches by the application of labor

to fit them for subsequent use in the manufacture of

copper vessels, etc., were not manufactured copper, and

Mr. Chief Justice Marshall, speaking for the Court, said:

“From the facts stated,the copper in question cannot be

deemed manufactured copper within the intention of the

legislature.’” We think no one would challenge that

proposition.

In 23 Opinions, 625, it was held that an importer was

not entitled to a refund of duties paid on an automobile

imported for use in the construction of an express wagon,

upon the re-exportation of the completed wagon, such

wagon not being a manufacture within the meaning of the

statute. We may assent to the soundness of that view

without in the least impinging upon the doctrine con-

tended for by the appellant in this case. There is not the

21

slightest analogy between that case and the case at bar,

either in fact or in principle.

These authorities are not in point, as we think.

We submit that the judgment of the court below

should be reversed, and that court should be directed

to enter judgment in behalf of appellant for $10,995.00.

W. W. DUDLEY,

L. T. MICHENER,

Attorneys for Appellant.

Inthe Supreme Court of the United States.

OctrosperR TERM, 1907.

THE ANHEUSER-BuUscH BREWING Asso- |

ciation, Appellant,

A No. 60.

Tue UNITED STrares.

APPEAL FROM THE COURT OF CLAIMS,

BRIEF FOR THE UNITED STATES.

STATEMENT.

The appellant association imported from Spain

large quantities of corks for use in bottling export

beer. The corks were used for this purpose and the

bottled beer was exported by the appellant associa-

tion. This suit was brought in the Court of Claims

under the provisions of section 25 of the act of Con-

gress entitled “An act to reduce the revenue and

equalize duties on imports, and for other purposes,”

approved October 1, 1900 (26 Stat., 617), to secure a

drawback equal in amount to the duties paid on the

corks so imported, less one per centum of such duties.

The facts are fully set forth in Findings III and IV

13238—07

2

of the Court of Claims (R., pp. 8 to 11). The case

was tried in the Court of Claims, and on May 7, 1906,

the court entered judgment dismissing the petition of

claimant. From that judgment the claimant asso-

ciation prosecutes this appeal.

ARGUMENT

It is contended on behalf of the United States that

the judgment of the Court of Claims should be sus-

tained for two reasons:

First. The corks in question were not a part or in-

gredient of the beer exported, and were not, there-

fore, in contemplation of law, exported at all.

Second. The process of cleansing and preparation

adopted and applied by the appellant to the corks in

question did not constitute a manufacture of corks

within the purview of the statute providing for a re-

bate or drawback on exported manufactured articles.

z

In the case of the Schlitz Brewing Company (181

U. S., 584) the claimant relied upon the proposition

that the imported corks and bottles which contained

the beer exported by it form, together with the beer,

one product, which was an exported article. This

court, holding against this proposition, said:

The bottles and corks are not imported ma-

terials at all, but finished products, and usable

for any liquor which the importer may choose

to put in them. Neither are they ingredients

used in the manufacture of exported or any

other kind of beer, in any proper sense of the

3

term, but simply the packages which the man-

ufacturer, for the purposes of export, sees fit,

and perhaps is required, to make use of for the

proper preservation of his product. Bottled

beer is still beer, made of the same ingredients

as ordinary beer, though miade with greater

care, and to speak of the bottles and corks as

ingredients of the beer is simply an abuse of

language.

The opinion then goes on to say that the process of

steaming the beer does not convert a bottle from an

encasement into an ingredient, and gives uses or illus-

trations of similar instances—bottled champagne and

effervescent waters and certain canned fruits and

vegetables. The force of this decision is to establish

not only that the corks in exported bottled beer are

not an ingredient in any sense of the beer, but also

that the article which is exported is the beer. It

follows, then, that the corks are not exported at all,

for if not exported as a part of the beer, how can it be

contended that they form a separate exportation.

There can be no exportation, within the meaning

of the statute providing for a rebate or drawback,

without a sale of the article exported in a foreign

country. The corks used by the appellant to cork its

bottles of exported beer were not sold. It was the

beer that was sold, and the corks have no relation to

the transaction, except as above stated in the Schlitz

case, to form a part of the encasement of the beer.

(Wheeler v. The United States, 75 Fed. Rep., 654.)

This contention receives special emphasis from the

fact that the appellant alleges in its petition that

4

the corks, after being treated and used as therein

described in the export of bottled beer, are rendered

useless for any other purpose. (R., p.3.) The

Treasury Department in its rulings on this question

has held that section 25, in giving a drawback does

not apply to corks, bottles, or tin foil, imported and

used for bottling purposes in this country and subse-

quently exported, but that it has reference exclu-

sively to the ingredients out of which an exported

article is manufactured or produced.

See the following decisions of the Treasury Depart-

ment:

No. 10301, October 28, 1890, synopsis of decisions

for 1890, p. 447;

No. 13851, March 24, 1893, synopsis of decisions

for 1893, p. 257;

No. 13921, April 15, 1893, synopsie of decisions

for 1895, p. 328.

In the case of The United States v. Allen (163

U. S., 499), Mr. Justice White, touching upon the

meaning of the word “materials,” as used in section

25, said:

An added circumstance weighing against the

construction that the proviso was intended to

continue the drawback in question is the fact

that the rule laid down in the proviso for de-

termining the amount of drawback evidently

had relation to articles manufactured from

“materials,” and not to a raw material like

coal, in the production of which no materials

are used which enter into and form a part of

the product.

5

This language clearly holds that the section relates

to the materials from which the articles of exportation

are manufactured or produced, and not to the cover-

ings or packages. In other words, in the case at

bar the material exported was beer and not corks

and bottles. The encasement of the material ex-

ported does not, within the meaning of the statute,

form any part of the export.

Il.

It appears from the findings of fact that the corks

in question were imported from Spain, cut in proper

sizes for the use to which appellant intended to

apply them, and that all that claimant did was to

wash and cleanse the corks and by the use of certain

chemical applications render them impervious. This

we contend does not constitute a manufacture of

the corks. If the article remains in the same form,

bearing the same commercial name and applied to

the same use for which it was originally designed,

it can not be said to have undergone a process of

manufacture. The cases cited by appellant in its

brief are not in point, for the reason that in each

case the article was entirely changed and came

out designed for a different use than the original

material from which the manufactured product

was made. But here the corks were manufactured

in Spain from the raw material into the shape

and form of the completed article. All that

was done by the cleansing process was to apply

the finishing touches. While these finishing touches

6

may have been necessary to properly prepare the

corks for the use of the appellant, it was merely

the taking of a manufactured product intended

for geaeral use and by a special treatment pre-

paring it for that same use in a manner to suit the

convenience and purpose of the claimant. It might,

with the same propriety, be contended that if A

import a buggy and it is not painted in a style to

suit his taste, by painting the buggy a different color

with paint of a particular quality prepared specially

for his own use, he has thereby manufactured a

buggy.

I need not burden the court with illustrations.

This matter has been so conclusively settled by ad-

judicated cases that it is unnecessary to more than

call the attention of the court to a few decisions.

The privilege granted importers of securing a rebate

upon exported manufactured articles that have been

manufactured from the imported material is a gov-

ernmental grant of a privilege or benefit which is to

be construed in favor of the Government and against

the party claiming the grant. (Swan and Finch

Company v. The United States, 190 U. S., 143.)

In Hartranft v. Weigmann (121 U. 8., 609) it was

sought to recover the duty paid on imported shells,

and the question to be determined was whether

“cleaning off the outer layer of the shell by acid and

then grinding off the second layer by an emery

wheel, so as to expose the brilliant inner layer, is a

manufacture of the shell.” Though it appeared that

some of the shells were afterwards etched by acids

7

so as to produce inscriptions upon them and that

the shells were to be sold for ornaments, yet the

court held that they were not manufactured. We

quote from the opinion as follows:

They were still shells. They had not been

manufactured into a new and different article,

having a distinctive name, character, or use

from thet of « shell. The application of labor

to an articlo, either by hand or by mechanism,

does not make the article necessarily a manu-

factured article, within the meaning of that

term as used in the tariff laws. Washing and

scouring wool does not make the resulting

wool a manufacture of wool. Cleaning and

ginning cotton does not make the resulting

cotton a manufacture of cotton.

In Frazee v. Moffitt (20 Blatchford, 267) it was held

“that hay pressed in bales ready for market was not a

manufactured article, though labor had been bestowed

in cutting and drying the grass and baling the hay.”

In United States v. Potts (5th Cranch, 284) it was

held that “round copper plates turned up and raised

at the edges from four to five inches by the applica-

tion of labor to fit them for subsequent use in the

manufacture of copper vessels, but which were still

bought by the pound as copper for use in making

copper vessels, were held not to be manufectured

copper.”

In the Twenty-third Opinions of Attorneys-General,

625, it was held that where an importer imported an

automobile for the purpose of reconstructing it into

an express wagon, and exported the completed ex-

8

press wagon, he is not entitled to a refund of the

duties paid on the automobile.

In Tidewater Oil Company v. The United States (171

U. S., 210), where the sides, tops, and bottoms of

boxes were imported in bales and constructed into

boxes in this country it was held that the boxes were

substantially manufactured abroad, but the parts

were assembled together in this country.

It is unnecessary to further tax the patience of

this court by citation of authorities or by prolong-

ing the argument. It is respectfully submitted that

the judgment of the Court of Claims should be

affirmed, with directions to dismiss the petition.

J. A. VAN ORSDEL,

Assistant Attorney-General. ; ;

O