Opposition Brief — Stinson Canning Co. v. United States

INDEX

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CITATIONS

Cases :

Clark v. Barnard, 108 U. 8. 436.................. 000s 8

Fresh Grown Preserve Corp. v. United States, 143 F.

RE AR TE eae Mien Ee ee op a ee Pm See 8,10, 11

Fresh Grown Preserves Corporation v. United States, 144

EE VRE RG ane Canis DERG Rad bee ewe FE 8

Paris v. United States, 137 F. 2d 300................... 8

United States v. Dieckerhoff, 202 U. S. 302............. 8

United States v. Kent Food Corporation, 168 F. 2d 632,

certiorari denied, 335 U. S. 885...................... 10

Statute :

The Federal Food, Drug, and Cosmetie Act of June 25,

1938, ¢. 675, section 304, 52 Stat. 1040, 1044 (21 U.S.C.

ES tis aoa awed KEE ORE ERO AN See 2

18 U.S.C. 646 (1946 ed.), now 18 U.S.C. 3617.......... 8

Miscellaneous :

Se SN Seen aera eae ~

nthe Supreme Court of the Winited States

OcToBER TERM, 1948

No. 576

Stinson CANNING COMPANY AND AMERICAN SURETY

Company (399 Cases, More or Less, BEACH

CurrF Brand Marne SARDINES, ETC.), PETI-

TIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FOURTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Court of Appeals (R. 30-35),

is reported at 170 F. 2d 764.

JURISDICTION

The judgment of the Court of Appeals was en-

tered November 11, 1948 (R. 35), and a petition for

rehearing (R. 36-45) was denied January 3, 1949

(1)

2

(R. 46). The petition for a writ of certiorari was

filed February 19, 1949. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

QUESTION PRESENTED

Whether, upon a finding that the claimant had

failed over a period of eight months to comply with

decrees entered pursuant to the Federal Food,

Drug, and Cosmetic Act condemning certain lots of

canned sardines and providing for their release to

the claimant for the purpose of segregating, if pos-

sible, the diseased and undiseased sardines and de-

stroying the former, the District Court abused its

discretion in ordering the forfeiture of perform-

ance bonds without affording the claimant further

time and opportunity to show that its default was

not wilful or the result of gross neglect.

STATUTE INVOLVED

The Federal Food, Drug, and Cosmetic Act of

June 25, 1938, c. 675, section 304, 52 Stat. 1040, 1044

(21 U.S.C. 334), provides in part:

(a) Any article of food, drug, device, or cos-

metic that is adulterated or misbranded when

introduced into or while in interstate com-

merce, * * * shall be liable to be proceeded

against while in interstate commerce, or at

any time thereafter, on libel of information

and condemned in any district court of the

United States within the jurisdiction of which

the article is found. * * *

* * * * *

3

(d) Any food, drug, device, or cosmetic con-

demned under this section shall, after entry of

the decree, be disposed of by destruction or sale

as the court may, in accordance with the provi-

sions of this section, direct and the proceeds

thereof, if sold, less the legal costs and charges,

shall be paid into the Treasury of the United

States ; but such article shall not be sold under

such decree contrary to the provisions of this

Act or the laws of the jurisdiction in which

sold: Provided, That after entry of the decree

and upon the payment of the costs of such pro-

ceedings and the execution of a good and suffi-

cient bond conditioned that such article shall

not be sold or disposed of contrary to the pro-

visions of this Act or the laws of any State

or Territory in which sold, the court may by

order direct that such article be delivered to

the owner thereof to be destroyed or brought

into compliance with the provisions of this

Act under the supervision of an officer or

employee duly designated by the Administra-

tor, and the expenses of such supervision shall

be paid by the person obtaining release of the

article under bond. * * *

(e) When a decree of condemnation is en-

tered against the article, court costs and fees,

and storage and other proper expenses, shall

be awarded against the person, if any, inter-

vening as claimant of the article.

STATEMENT

In April 1947, separate libels were filed in the

District Court for the Eastern District of South

: —

4

Carolina under the Federal Food, Drug, and Cos-

metic Act, supra, for the condemnation of eight

lots of canned sardines on the ground that they

were diseased (see R. 3, 8, 25,30). Petitioner Stin-

son Canning Company intervened and claimed

ownership of the sardines (R. 19, 30). It admitted

the allegations of the libels and consented to the

entry of decrees of condemnation (R. 19, 25). Con-

sent decrees were accordingly entered on October

11, 1947, which provided, in accordance with Sec-

tion 304(d) of the Act, supra, that petitioner Stin-

son could retake possession of the condemned

sardines upon posting bonds in specified amounts,

conditioned upon the following undertakings:

Stinson would proceed to segregate the sardines so

as to effect a separation of the cases or cans con-

taining diseased fish from those containing fish not

diseased. If such a segregation were accomplished

to the satisfaction of a representative of the Food

and Drug Administration, only the cases or cans

found to contain diseased fish were to be destroyed ;

otherwise, the entire lots were to be destroyed. The

decision of the Food and Drug Administration as to

whether the salvage operation had been satisfac-

torily completed was to be final. Stinson was not to

ship or sell, or offer to ship or sell, any of the sar-

dines until they were released by the Food and

Drug Administration. A time limit of three

months from the entry of the decrees was imposed

for the segregation and destruction of the sardines.

a

5

The District Court expressly retained jurisdiction

of the proceedings, and the decrees further pro-

vided that in the event of default by Stinson in the

performance of any of the specified conditions, the

bonds should be forfeited on motion of the Govern-

ment, and judgment entered thereon. (R. 25-27.)

Bonds in the aggregate amount of $20,020, con-

ditioned upon these undertakings, were filed by

petitioner Stinson as principal and petitioner

American Surety Company as surety (R. 21, 23,

30). Stinson then shipped the sardines to its plant

in Maine, but they remained unsegregated and un-

destroyed at the end of the three-month period

(see R. 4). OnJanuary 19, 1948, a 90-day exten-

sion, to April 18, 1948, was granted by the District

Court, with the proviso ‘‘that no further extension

shall be applied for by the said Claimant”’ to per-

form the acts required by the decrees (R. 28; see

also R. 22).

On May 25, 1948, a motion was filed by the Gov-

ernment for judgment on the bonds and for an

order directing the destruction of the condemned

sardines on the ground that petitioner Stinson had

not complied with the terms of the decrees of Octo-

ber 11, 1947. The motion papers, which were

served upon petitioners (R. 22-23), recited that

Stinson had failed either to separate or destroy the

sardines, and had not indicated to the Food and

Drug Administration if and when they intended to

destroy them, despite the efforts of that agency to

scan

6

cooperate in the supervision of performance with

the provisions of the decrees (R. 3-7).

No written return was filed in opposition to the

motion, but on the day set for the hearing, June 7,

1948, counsel for petitioner Stinson appeared be-

fore the District Court and, as an oral return,

stated that it had been found impractical to segre-

gate the sardines and admitted that they had not

been destroyed. A motion was made at that time

for modification of the decrees to permit export of

the condemned articles. Counsel explained to the

court that the tolerance for diseased sardines

shipped abroad was higher than that permitted by

the Food and Drug Administration for domestic

consumption, and, in view of the food shortage in

other countries, use might be made of the con-

demned sardines. Counsel stated further that he

had made a similar motion in another proceeding

which was pending in the federal district court at

Buffalo, New York, and that action on such motion

was being held in abeyance pending a decision on

the issue in another case by the Court of Appeals

for the Second Circuit. Counsel also stated that he

had informed a Mr. Sullivan of the Boston Station

of the Food and Drug Administration that he in-

tended to use the Buffalo proceeding as a test case

to govern the disposition of several libels involving

Maine sardines which were pending in various

parts of the country. (R.8-11,17.) He admitted,

however, that he had been advised that the Food

a

and Drug Administration was opposed to the grant-

ing of permission to export food which had been

condemned (R. 10-11, 12).

The motion to amend or modify the decrees to

permit export of the sardines was denied on its

merits and for untimeliness (R. 17, 24). The Dis-

trict Court also denied a continuance to permit

petitioner Stinson to produce Mr. Sullivan to sup-

port its contention that it had not acted in bad faith

in not complying with the terms of the decrees

(R. 18-19). The court found that Stinson had been

guilty of dilatory conduct, that the return was in-

adequate, and that petitioners were in default on

the performance bonds (R. 17, 23-24). Judgments

in the amount of each of the bonds, together with

the costs of the proceedings, were awarded to the

Government (R. 24, 30).

On appeal to the Court of Appeals for the

Fourth Circuit, the judgments were affirmed (R.

30).

ARGUMENT

It is clear that the failure of petitioners to segre-

gate and destroy the condemned sardines within

the prescribed time constituted a breach of the con-

ditions of the bonds. Petitioners contend in effect

that their oral return to the Government’s motion

for judgment on the bonds raised an issue of good

faith in respect of the default and, therefore, they

were entitled to a trial of that issue. This conten-

tion is based upon the premise that the District

Court had power to remit all or part of the penalty

—y

8

upon a finding that the default did not result from

gross neglect or bad faith.

These bonds were penal and not indemnatory.

Fresh Grown Preserve Corp. v. United States, 143

F. 2d 191 (C.A. 6); Fresh Grown Preserves Cor-

poration v. United States, 144 F. 2d 136 (C.A. 4),

On the breach of the conditions, the Government

was entitled to recover the full amount without

proof that any damages had been sustained. Clark

v. Barnard, 108 U.S. 486; United States v. Diecker-

hoff, 202 U.S. 302. We do not believe that the Dis-

trict Court had power to remit any part of the

bonds after determining that the conditions had

been broken. Congressional approval of judicial

remittance of penal bonds appears to be limited to

bail bonds.’ See Rule 46(f), F. R. Crim. P.? But,

as the Court of Appeals properly observed (R. 32),

it is unnecessary to consider that question, for it is

clear in any event that the District Court was fully

1Cf. 18 U.S.C. 646 (1946 ed.), now 18 U.S.C. 3617.

2 Paris v. United States, 137 F. 2d 300 (C.A. 4), upon which

petitioners rely (Pet. 7) as establishing a principle in conflict

with that of the decision below (the same court decided both

cases), holds merely that since a district court has discretion to

remit the penalty on a bail bond, a proper exercise of discre-

tion required the court to give consideration to the defend-

ant’s explanation that his default was induced by representa-

tions of the district attorney and thus was not wilful. In the

ease at bar, on the other hand, apart from the distinction that

remission is probably not available in any event, it is clear that

even if full acceptance were accorded to Stinson’s excuse for

noncompliance with the decrees, the District Court properly

exercised its discretion in holding the excuse insufficient and

in ordering a forfeiture of the bonds.

_—

9

justified in decreeing forfeiture in full. The trial

judge found that ‘‘the whole course of this case has

been one of complete dilatory action on behalf of

the claimant’’ (R. 17). In its opinion, the Court of

Appeals reviewed at length the factual basis for

this finding and agreed that petitioners’ conduct

was ‘‘extremely dilatory’’ (R. 33) and that ‘‘They

have offered an utterly insufficient excuse for such

grossly neglectful behavior’’ (R. 34).

Petitioners were admonished on January 19,

1948, after the original three months’ period for

compliance had expired, that an extension of 90

days was granted with the express understanding

that no application would be made for any further

extension (R. 28). Petitioners had almost eight

months, from the entry of the decrees (October 11,

1947) until the return date of the Government’s

motion for judgment on the bonds (June 7, 1948),

to perform their undertakings. They were noti-

fied by the court in advance that judgment would

be granted against them unless the matter was dis-

posed of within the time limit (R. 11). Despite

these explicit directions, petitioners disregarded

the efforts of the Food and Drug Administration to

cooperate in the segregation and destruction of the

diseased food and made no attempt to comply with

the provisions of the decrees (R. 3-7). Noncom-

pliance persisted right up to the hearing on the

motion for forfeiture (see R. 13).

The return of petitioners did not raise any mate-

rial issue of fact. The decrees required them either

—

10

to segregate the comdemned sardines and destroy

that part which was diseased or to destroy the en-

tire lots. If, as pettitioners contend, Stinson con-

templated resort to a third alternative, i.e., the

exportation of the sardines without segregation (a

procedure, incidenttally, which has not received

either administrative or judicial approval, United

States v. Kent Food Corporation, 168 F. 2d 632

(C.A. 2), certiorari denied, 335 U. S. 885), it was

incumbent upon them at least to ask the District

Court to modify its decrees, instead of ignoring

them completely until the hearing on the motion

for forfeiture of the bonds.

Petitioners urge (Pet. 7) that the decision in this

case is in conflict with Fresh Grown Preserve Corp.

v. United States, 143 F. 2d 191 (C.A. 6). To the

contrary, the two decisions are entirely consistent.

In the case cited, the claimant filed an affidavit in

opposition to the motion for forfeiture in which it

stated that its failure fully to comply with the pro-

visions of the decree ‘‘was not occasioned through

any fault of the claimant”’’ but was due to the fail-

ure of the Food and Drug Administration to co-

operate in the supervision of its performance. The

court held that this attempted justification did not

raise any material issue of fact, since the only issue

was whether the claimant had actually complied

with the decree. ‘‘The course pursued by the

agency appears to have been either arbitrary or

neglectful, but this afforded appellant no right to

11

violate the law. The appellant’s appropriate course

would have been to move the district court for an

order directing the Federal Agency to perform

forthwith its function under the decree. The aid

of the court was not thus invoked. To the contrary,

appellant deliberately violated the court’s order by

its own admission.’’ 143 F. 2d at 196.

Likewise, in the case at bar, if petitioners’ return

to the motion for forfeiture had raised an issue

whether or not they had complied with the provi-

sions of the decrees, they would have been entitled

to a hearing on that issue. But no such issue was

presented and the trial judge properly exercised

his discretion in refusing to grant any further ex-

tensions of time for compliance with the decrees.

CONCLUSION

The judgment below is clearly correct and no

conflict of decisions is involved. Accordingly, we

respectfully submit that the petition for a writ of

certiorari should be denied.

Puitie B. PERLMAN,

| Solicitor General.

ALEXANDER M. CAMPBELL,

Assistant Attorney General.

Rosert S. ErDad#1,

| Harotp D. CoHEN,

Attorneys.

v

Marcu 1949.

wo. S. GOVERNMENT PRINTING OFFICE: i948 e2ete¢ soe