Nippon Import & Trading Co. v. United States

Kincheloe, Judge:

This suit involves the dutiable classification for customs purposes of certain merchandise invoiced as 5 bales “Hit & Miss Cotton Rag Rugs” measuring 21 inches by 9 feet, on invoice covered by entry 709143, and to the item of 8 bales, ditto, measuring 27 by 90 inches, on invoice covered by entry 97997. The merchandise was shipped by Kakunaka & Co., Ltd., Kobe, Japan, and was imported by the Nippon Import & Trading Co., Inc., New York, the plaintiff herein. Duty was assessed on the merchandise at the rate of 75 per centum ad valorem under paragraph 921 of the Tariff Act of 1930, as “rag rugs, wholly or in chief value of cotton, of the type commonly known as ‘hit-and-miss/ ” and it is claimed to bo more properly dutiable under the provision of the same paragraph for “all other floor coverings * * * wholly or in chief value of cotton,” at 35 per centum ad valorem.

The contention of the plaintiff is that a cotton “hit-and-miss” floor ■covering of a length three or more times its width is not a rug in the •commercial sense, but a runner, and that it therefore does not come within the provision for cotton “hit-and-miss” rag rugs, but is relegated to said residuary provision of said paragraph 921 for dutiable classification.

*19The same issue was raised by the plaintiff herein in protest 964255-G, decided as Abstract 41571, wherein the so-called cotton “hit-and-miss” rag rugs or runners measured 21 inches by 9 feet. In that case, however, plaintiff relied solely on the common or ordinary meaning of the terms “rugs” and “runners.”

Under the common or dictionary meaning of the term “rug” this court found it sufficiently broad to embrace the merchandise there in issue, and the claim of the plaintiff was accordingly overruled. In the present case, however, the plaintiff relies on the doctrine of commercial designation to prove its claim. It has been agreed between counsel on both sides that illustrative exhibit 1, representative of the merchandise in the former case, supra, shall be accepted and received in evidence as representative of the merchandise in the present instance, and it was ordered, filed and marked exhibit 1 herein. (R. 6.)

Counsel for the defendant contends that the provision for “rag rugs, wholly or in chief value of cotton, of the type commonly known as ‘hit-and-miss,’ ” in paragraph 921 of the Tariff Act of 1930, is not subject to proof of commercial designation. His main argument for this, as we understand it, is because of the language “of the type commonly known as ‘hit-and-miss’ ” in said paragraph, and that it is therefore not subject to proof of commercial designation. In support of such contention he cites the case of United States v. Stone & Downer Co., 274 U. S. 225. In that case the merchandise consisted of wool, worsted, and worsted cloth, and was assessed for duty under paragraph 18 of the Emergency Tariff Act of 1921, providing for “Wool, commonly known as clothing wool,” etc. The importer protested the assessment and claimed that the wool there in question was combing wool, and that combing, wool was not included in said paragraph 18 of said emergency act, but fell under paragraph 650 of the Tree List of the Tariff Act of 1913.

We have carefully considered said decision, and are of opinion that it has no bearing here. The issue in the case at bar is not whether the instant merchandise is of the “type commonly known as ‘hit-and-miss,’ ” but whether such merchandise is a “rug” or a “runner,” as claimed by plaintiff. On such issue the attorneys for the plaintiff have made the following concession in their brief:

It is conceded that the merchandise herein is wholly or in chief value of cotton and of the type commonly known as hit and miss. It is further conceded for the purposes of this case that such merchandise is within the common understanding of the term ‘rugs.’ * * * Plaintiff here relies upon commercial designation and contends that the term ‘rugs’ as used in the cotton rag hit and miss floor covering trade of the United States at and prior to June, 1930, had a uniform, definite and general meaning, different from its common meaning, and that such commercial meaning excluded floor coverings such as those covered by the case at bar, whose length exceeds the width by three times or more, which articles are known in the trade as runners.

*20We do not agree with the contention of counsel for the defendant on the question of commercial designation, and are of opinion that under the issue raised in the instant case the question of whether the merchandise at bar is a “rug” or a “runner” is susceptible of proof of commercial designation.

The rule of commercial designation is well illustrated by the case of Neuman & Schwiers Co. v. United States, 24 C. C. P. A. 127, T. D. 48606, wherein the following language was used by the court:

We have pointed out, on numerous occasions, and did so again in the Wile case, supra, [T. D. 47327] what the true rule was. This conclusion was based upon a uniform line of authorities from the beginning of the consideration of su'eh cases by the courts of this country. The Supreme Court, in the very early consideration of these matters, as in the noted case of Two Hundred Chests of Tea, 9 Wheat. 428, recognized that customs laws were particularly adapted for use by merchants, and that it might well be that commodities which were well known among those who were engaged in the trade, under a certain designation might not be so known, by those who were not engaged in trade; that the Congress was to be understood as speaking in terms of the trade; and that if an article, although not commonly known as designated by the law, was uniformly, definitely, and generally known by that designation in the trade and commerce of the country, it should be included within the statutory term. This rule has been carried down through the years, continuously. * * *

On the issue thus presented plaintiff called as its first witness Isaac Davis, vice president and salesman of the importing company since 1924. His testimony is to the effect that he is in charge of the sales of the plaintiff corporation, Nippon Import & Trading Co., and has been buying and selling floor coverings since 1911; that he has personally sold “hit-and-miss” floor coverings such as exhibit 1 in different sizes all over the country to resident buyers, general stores, etc., at wholesale since 1923 (R. 8, 9, 13); and that he has come into contact with buyers and the trade generally, and is familiar with the trade usage and phraseology (R. 9). The witness further testified that at and before June, 1930, there was a trade understanding of the term “rug” in the cotton “hit-and-miss” floor covering trade which was definite, uniform, and general (R. 9), and that such meaning was different from the common or dictionary meaning, and was as follows:

The term “rug” as used in the cotton rag “hit and mip°” floor covering trade included all floor coverings of any shape or form, finished on all sides, but did not include floor coverings where the length is three or more times greater than the width, which was known and sold as runners. (R. 14.)

and that such trade understanding does not include merchandise like exhibit 1, which is always sold and offered for sale as “runners,” and is never sold or offered for sale as rugs (R. 15), and that the same thing applies to the “hit-and-miss” floor coverings measuring 27 by 90 inches (R. 16).

*21On cross-examination Mr. Davis named some of the people to whom he sold “hit-and-miss” floor coverings as including J. C. Penney, Mc-Crory Corp., J. J. Newberry, McClelland Stores, and Ely-Wallcer Dry Goods Co., all of whom, when buying merchandise like exhibit 1, specified “runners.” (R. 20.) The witness further stated that it was the practice of his company to keep its records for 7 years only, and that records prior to 1930 were therefore not available, but that he could recall the character of the bills and circulars distributed to the trade prior to 1930, and that such merchandise as exhibit 1 was described therein and offered for sale as runners and never as rugs (R. 26, 27).

On recall the same witness testified further that “rugs” and “runners” are used in different ways, the runners in narrow passages and halls, also as a floor covering over a good rug or carpet to save it from wear, also for stair covering, while rugs are used to cover the floor space inside rooms (R. 46).

Plaintiff’s second witness was Samuel Milgrim, vice president and secretary of the Providence Import Co., New York, from 1928 to date. He testified that they were importers of rugs and floor coverings, including “hit-and-miss” cotton rag floor coverings. He stated that his duties have been that of selling since 1926 (R. 30). His testimony may be said to be the same, and corroborative of that of the previous witness Davis; namely, that he has sold “hit-and-miss” cotton floor coverings at wholesale throughout the greater part of the United States, and that the term “rug” in such trade includes all floor coverings of different shape or form, finished on all sides, but does not include such floor coverings whore the length is three or more times greater than the‘width, which are then called “runners,” and that the term “rug” did not include merchandise of the size or shape of exhibit 1, which prior to June 17, 1930, was sold as runners (R. 33). The witness stated further that his company, the Providence Import Co., distributed circulars or advertising matter to the trade prior to 1930, and he introduced in evidence two circulars and a price list sent out to the trade, which were marked collective exhibits 2-A, 2-B, and 2-C (R. 37). While he was not able to give the dates of these circulars, he stated they were between 1926 and 1930, and that in such circulars merchandise like exhibit 1 is illustrated and. described as “runners” (R. 38).

Roy Cleeland, president of Robert Cleeland & Co., Philadelphia, was called as a witness by the defendant. He testified that his firm are manufacturers of all types of cotton rugs, including rag rugs, and that they have been in business since 1847; that he has charge of the operation of the plant and is directly in charge of the sales force; that *22be bas sold, rag rugs commonly known as “hit-and-miss” all over the United States, and prior to 1930, including merchandise similar to exbibit 1, in all widths and lengths, and where the length was three times or more the width, namely, of the dimensions 27 by 90 inches, 27 by 108 inches, and 36 by 144 inches, and that the sales were at wholesale (R. 51-53); that he has heard the term “runners,” and that his firm have made runners; that some people call a runner a rug and some call a rug a runner; that he has not manufactured articles that he calls runners (R. 57); that he sold merchandise commonly known as “hit-and-miss” type, manufactured of cotton, to Sears, Roebuck & Co. prior to 1930, including such merchandise where the length was three or more times the width (R. 58, 59). The witness' attention was called to the dictionary definition of the term “rug” reading: “A heavy textile covering for a floor, differing from a carpet in that it is properly made in one piece, commonly with a shaggy pile, and of a size to cover only a portion of a floor,” and he stated that the trade understanding of the term was the same on or about June 17, 1930, and that it was definite, uniform, and general (R. 60), and that it included merchandise like exhibit 1. The witness testified further that he personally has been selling rugs since 1921; that he directs the manufacture and sale of all rugs and carpets made at their plant; that he comes into contact with the purchasers that come into the office; that they have salesmen that go all over the country, and that he personally has contacted buyers from Sears, Roebuck & Co., Montgomery Ward & Co., and has called on J. C. Penney, W. T. Grant, and others (R. 61, 62).

Under cross-examination the witness stated that he had charge of the manufacturing plant in 1921, when he was 20 years old, and ba.s been conducting the manufacturing end all the time; that in 1921 he “sat-in” on all matters of selling that came to the office, and that he worked in the plant every summer from the time he was 16 years old (R. 66); that his firm issues invoices when they sell goods, but was unable to produce any prior to 1930, as their office records from 1921 to 1930 are no longer in existence (R. 67). He stated further that there is a class of “hit-and-miss” merchandise referred to in the trade as runners. His description of a runner is a long narrow rug, and that it cóuld be a wide runner or a narrow runner (R. 68, 69).

This witness on the stand showed a very biased attitude. He was evasive, his evidence was contradictory, and in the main was an expression of his individual opinions instead of the trade’s understanding of the terms “rugs” and “runners.” For instance, on cross-examination he testified in part as follows:

X Q. You know a long rug as a runner? — -A. A long rug, yes.
X Q. In other words, a long rug, say 40 x 40,. would be a runner? — A. No.
X Q. Well, what do you mean? — A. A long, narrow rug.
*23X Q. So it is a question of dimensions, isn’t it? — A. But they are all rugs.
Mr. Richabdson. I move to strike that out.
Judge Hínchelos. Strike it out.
X Q. If you would just listen to my question and answer it and not try to 'prove a case, we would get along much better. A runner is a narrow floor covering; is that right? — A. Not necessarily, no. It could be a wide runner or a narrow runner.
X Q. What dimensions would you say were the outside limit in width of a runner? — A. I would not know.
X Q. Why not? — A. It is something to cover an amount of square feet of floor, according to the floor space.
X Q. It would be a runner? — A. Not necessarily.
X Q. I am asking you about a runner. You say there is a class of merchandise referred to in the trade as runners. — A. In my trade I refer to all things as rugs.
X Q. You say other people refer to them as runners? — A. Some other types of business possibly may.
X Q. Then they are talking about a long rug?' — A. Then they are rugs.
X Q. Well, what are the physical dimensions of merchandise that was referred to as runners in regard to both length and width?- — A. A long piece of carpeting.
X Q. Do you know what “dimensions” means? — A. There is no specific dimensions that anybody can state. I cannot state that to you.
X Q. It wouldn’t make any difference whether it was 100 feet long and one inch wide, or ten feet long and a hundred wide; dimensions have nothing to do with it, in other words? — A. It is probable-
X Q. Will you answer my question. You have said there is a type of merchandise referred to in your trade-. A. By the trade. I don’t say by my trade; by the trade.
X Q. That’s right; I prefer that. Referred to in the trade as runners; that is what you said, isn’t that right? — A. May I clarify that?
X Q. That is what you said, isn’t it? — A. I presume so.
X Q. But you can’t give the dimensions of those runners? — A. No, I can’t give any dimensions. . .
X Q. You don’t know whether that meaning for the word “runners” was universal in the trade or not, do you?— A. I presume they used that word.
X Q. Universally? — A. I presume so.

The witness was then again referred to the dictionary definition of “rugs” reading: “A heavy textile covering for a floor, differing from a. carpet in that it is properly made in one piece, commonly with a shaggy pile,” etc., and was questioned further as follows:

X Q. Well, now have “hit-and-miss” rugs a shaggy pile? — A. They are fuzzy»'
X Q. Would you say that vas a shaggy pile? — A. They are a fuzzy type; that is shaggy.
X Q. You say, showing you Exhibit 1, that the pile of that rug is fuzzy or shaggy? — A. There is a fuzz; here is a fuzz.
X Q. You call that fuzz? — A. There is a difference between a “hit-and-miss” rug and a Wilton rug or some other type. There are different types of rugs. That dictionary definition spoke of a high pile floor covering, such as that covers the floor here, or in a Wilton or some other type of merchandise.
X Q. Do y.ou deal in Wilton rugs?- — -A. I do not.
X Q. Stick to something you know something about. Has Exhibit 1 either a shaggy or a woolly pile? Look at it. — -A. No. (R. 69-71)

*24Upon questioning by Judge Kincbeloe the witness further stated that he would call merchandise identical in character with exhibit 1, that is as long as the courtroom and'only 2 inches wide, a runner, but that they are all rugs in his estimation, although it might be termed in the trade as a runner (R. 72, 73).

The second witness for the Government was Samuel Allenson, manager of the New York office of the Topton Rug Manufacturing Co., for 10 years, and who prior thereto was in the floor covering business for 17 years (R. 73); he testified that from. 1906 up to the present he has handled merchandise known as “hit-and-miss” floor coverings; that he handled such merchandise prior to 1930, where the length was throe or more times its length at wholesale all over the country; that he sold merchandise like exhibit 1 prior to 1930, and that in his opinion it is a “hit-and-miss” rug (R. 77); that he has heard the term.“runner” used and referred to by purchasers, and has used the term himself; that a runner “is the shape of a rug”; that all rugs are not runners, and all runners are not rugs; that a strip of carpet that is not finished at the end is not a rug, but is called a runner, and that a finished article like exhibit 1 is also referred to as a runner in the trade at times (R. 78).

This witness’ evidence was conflicting, and on cross-examination was largely corroborative of the testimony of the plaintiff’s witnesses a part of which is as follows:

X Q. Give me the dimensions of a floor covering known as a runner. — A. There are so many different sizes that it is pretty hard to name them; for instance, 24 inches by 9 feet; that would be 108 inches by 24 inches. (R. 83)
% * % * # *
X Q. Would you say a floor covering, “hit-and-miss” type, whose length was three times or more its width would come within your idea of what the trade knows as a runner, so far as yourself is concerned? — A. Yes. (R. 84)
* * * * sk * *
X Q. The definition was read to you by government counsel and you were asked whether you agreed with that definition as to the common meaning of the word “rug.” That definition was as follows: “A textile covering for a floor, differing from a carpet in that it is properly made in one piece, commonly with a shaggy pile, and of a size to cover only a portion of a floor.” Now, will you look at exhibit 1? Has that any pile? — A. No; that has no pile.
* * * * * * *
X Q. Now, if you take a rug or a floor covering rather, which covers an entire room, would the trade consider as a rug, or floor covering, a “hit-and-miss” floor covering, which covers an entire room? — A. That question is rather vague.
X Q. What is vague about it? — A. Because we can take a rug that is larger than a room and thoroughly cover the entire room.
X Q. But you Wouldn’t? — A. I certainly would. I would turn the ends under, and so it is a rug.
X Q. So a floor covering of the “hit-and-miss” character, which covers the entire surface of the floor of a room, you would call that a rug? — A. Yes, I would call that a rug. (R. 85, 86.)

*25On redirect examination the witness stated that he has .never seen any cotton rag rug of the “hit-and-miss” type which has a pile (R. 86).

David J. Thompson was called as another witness by the Government, but was not permitted to testify, as he was shown' to have had no personal experience in the purchase or sale of cotton rag “hit-and-miss” floor coverings (R. 87). ■

A case that is very analogous to and in which the facts closely parallel the one under consideration is that of United States v. Telfeyan & Co., 14 C. C. P. A. 128, T. D. 41648, involving the classification of so-called “Anatolian mats.” The merchandise was assessed for duty under paragraph 1116 of the Tariff Act of 1922, as oriental rugs. The contention of the plaintiff was that commercially the articles were not known as rugs, but as mats, and that they were therefore dutiable under paragraph 1117 of said act, as wool mats. The appellate court, in affirming the decision of this court holding the merchandise dutiable as claimed, quoted from said décision, with approval, as follows:

Two members of the importing firm, who have been in the business for upward of 20 years and who sell the merchandise in question throughout the country, testified. Their evidence establishes, under all the rules of commercial definition or trade custom, that the merchandise in question is universally sold as “Anatolia mats” and never as rugs in the wholesale trade of the United States, and, further, that commercially anything less than feet by 2)4 feet is a mat, irrespective of the material of which it is composed, and there is nothing in the record to contradict this testimony.
The Government claims, on the other hand, that by all the definitions in the principal dictionaries “rug” is a generic term which includes a mat, the various qualities being graded under that term in paragraph 1116.
Giving this fact its full weight it only tends to establish that under the common meaning of the term a mat is included under the word “rug” and consequently if there was no proof of the commercial meaning these goods would be properly classified as mats, commonly known as a class of rugs under paragraph 1116 at the oriental rate.
But the difficulty is that, in establishing a commercial definition (as we hold it does) of the merchandise in question as mats less than 4% feet, by 2% feet in size irrespective of material and as distinguished from rugs which are larger, the importer’s evidence limits the term rugs in paragraph 1116 as not commercially including these mats.
As the commercial meaning when different from the common meaning must always govern in customs we are constrained to hold that the merchandise in question should be classified as mats at 30 per cent under the third clause of paragraph 1117. * * *

So we are of the opinion, and so hold, that the testimony of plaintiff’s witnesses herein clearly establishes that the term “rugs” as used in the cotton rag “hit-and-miss” floor covering trade at and prior to June, 1930, had a commercial meaning different from its common meaning; that such commercial meaning was definite, uniform, and *26general throughout the trade and commerce of the United States; that such commercial meaning excluded cotton “hit-and-miss” 'floor coverings whose length exceeds the width by three times or more, and that the testimony of plaintiff's witnesses is largely corroborated by the testimony of both of defendant’s witnesses on cross-examination.

The protest is therefore hereby sustained, and all the merchandise covered thereby whose length exceeds the width by three times or more is held properly dutiable at 35 per centum ad valorem under paragraph 921 of said act of 1930, as “all other floor coverings” of cotton. Judgment will be rendered accordingly.