Sturges v. Clark D. Pease, Inc.

AUGUSTUS N. HAND, Circuit Judge.

This appeal raises tbe sufficiency of tbe amended bill of complaint. The amended bill alleges that the complainant purchased a secondhand Hispano-Suiza automobile in Paris, France, for 80,000 francs and'attempted to import it into the United States; that if arrived on the steamship Lafayette at New York on May 26,1930, and bore on it in various places the trade-mark “H-S,” owned and registered by the defendant Clarke D. Pease, Inc., a New York corporation; and that a copy of the registration had been filed with the Custom Authorities in New York pursuant to section 141, chapter 3, title 19, of the United States Code (19 USCA § 141)..

Complainant after the arrival of the car at New York made an appraisement entry in the office of the defendant Elting, as collector of the port, and demanded that the ear be appraised, the duty fixed, and after payment thereof possession be given to her. This demand was refused by the collector on the ground that under sections 141,142, and 143 of chapter 3, title 19, of the United States Code (19 USCA §§ 141-143), it was unlawful to import the automobile without written consent of Clarke D. Pease, Inc., because the latter .had registered and filed the trade-mark which the car bore. The complainant thereupon requested from Clarke D. Pease, Inc., its written consent to the importation of the automobile for her personal use, and not for resale, but such permission was refused.

Upon the foregoing state of facts the complainant sought a decree directing the collector to deliver the ear to her upon payment of lawful duties and enjoining Clarke D. Pease, Inc., from requiring the collector to detain the car by reason of the trade-mark or from in other ways interfering with her use of it.

Two causes of action are set up in the amended bill. The first is based upon the contention that the statute relating to the importation of merchandise of foreign manufacture bearing a trade-mark owned by a citizen of the United States is inapplicable to articles intended only for the personal use of the importer; the second upon the contention that, if the statute in terms covers such articles, it is unconstitutional. The court below dismissed the entire bill, and from its decree this appeal has been taken.

The statutory provisions which affect the ease are contained in title 4 of the Tariff Act of September 21, 1922, and are the following :

“Section 401. When used in this title— • • «
“(e) Merchandise. — The word 'merchandise’ means goods, wares, and chattels of every description and includes merchandise the importation of which is prohibited. * * * ” 19 USCA § 231.
“See. 526. (a) That it shall be unlawful to import into the United States any merchandise of foreign manufacture if such merchandise, or the label, sign, print, package, wrapper, or receptacle, bears a trade-mark owned by a citizen of, or by a corporation or association created or organized within, the United States, and registered in the Patent Office by a person domiciled in the United States, under the provisions of the Act entitled 'An Act to authorize the registration of trade-marks used in commerce with foreign nations or among the several States or with Indian tribes, and to protect the same,’ approved February 20, 1905, as amended, if a copy of the certificate of registration of such trade-mark is filled with the Secretary of the Treasury, in the manner-provided in section 27 of such Act, and unless written consent of the owner of such trade-mark is produced at the time of making entry.
“(b) Any such merchandise imported into the United States in violation of the provisions of this section shall be subject to seizure and forfeiture for violation of the customs laws.
“(e) Any person dealing in any such merchandise may be enjoined from dealing therein within the United States or may be required to export or destroy such merchandise or to remove or obliterate such trade-mark and shall be liable for the same damages and profits provided for wrongful use of a trademark, under the provisions of such Act of February 20, 1905, as amended.” 19 USCA §§ 141-143.

The main ground on which the appellant rests her contention that these statutory provisions are not applicable to her ease is that the Hispano-Suiza automobile which she seeks to import is not “merchandise” within the meaning of sections 141,142, and 143 of chapter 3, title 19, of the United States Code (19 USCA §§ 141-143). Her counsel begins his argument by saying that the statutory defini*1037tion of “merchandise” found in section 231 of chapter 3, title 19, of the Code (19 USCA § 231), is limited to subtitle 4 thereof, and does not define the word when used in sections 141, 142, and 143, which are contained in the prior subtitle 3 governing merchandise of foreign manufacture bearing a trade-mark owned by a citizen or a corporation organized within the United States. This particular argument was induced by the words in section 231 of the Code which limit the definition far the use of the word “merchandise” in that particular subtitle. But as appears from the quotation from section 401 of title 4 of the Tariff Act of September 21,1922 (19 USCA § 231), the definition of “merchandise” relates to the use of the word wherever found in that title and thus distinctly defines its meaning in section 526 (a) (b) and (e) of the Tariff Act .(19 USCA §§ 141-143).

While the act codifying the laws of the United States provides that the Code shall establish “prima facie” the laws of the United States it adds that, “in ease of any inconsistency arising through omission or otherwise between the provisions of any section of this Code and the corresponding portion of legislation heretofore enacted effect shall be given for all purposes whatsoever to such enactments.” 44 U. S. Stat. Pt. 1, p. 1.

We are therefore confronted at the outset with the provisions of title 4, § 401, of the Tariff Act (19 USCA § 231), which define “merchandise” in the most sweeping terms and state that the word “‘means goods, wares .and chattels of every description and includes merchandise the importation of which is prohibited.” It requires much subtraction from the natural meaning of words to eliminate appellant’s ear bearing the foreign trade-mark owned by a New York corporation from the term “merchandise” as defined in the Tariff Act.

But it is contended that the word “merchandise” naturally means goods imported for sale and that the statute was directed at goods intended for ssile and not at property brought in for personal use and consumption. In this connection it is argued that the drastic statutory provisions in question were only adopted to avoid our decision in A. Bourjois & Co. v. Katzel, 275 F. 539, where we held that the importation and sale in the United States of an article made in a foreign country bearing a foreign trade-mark also owned in this country did not infringe the rights of the owner of the trade-mark in this country. That decision doubtless brought about the legislation by Congress, and, if the reversal of the decision by the Supreme Court in Bourjois v. Katzel, 260 U. S. 689,43 S. Ct. 244, 67 L. Ed. 464, 26 A. L. R. 567, had occurred pri- or to the date of the Tariff Act the provisions in question would not have been enacted at all. Coty, Inc., v. Le Blume Import Co. (D. C. ) 292 F. 264, at page 269. But this fact does not settle the scope of the aet.

It is of course true that the appellant had a perfect right to buy and import the automobile in question provided the trade-mark was removed; in other words, the statute does not prevent importation of the car itself but only importation of the ear when bearing the foreign trade-mark. The object of- this drastic statute is to protect the owner of a foreign trade-mark from competition in respect to goods bearing the mark. If such goods can be imported for personal use without his consent, they will be introduced into the country with the risk of ultimate sale. By such a system an opportunity would likewise be afforded for evasive importations when the real object was sale. But, even though importation, as in this ease, be for personal use, it is likely that any automobile thus imported will finally be turned in as part payment toward the purchase price of a new car or otherwise. Sales of cars bearing the foreign trade-mark and imported without the consent of Clarke D. Pease, Inc., interfere with its right to control the use of the mark in this country which was the apparent purpose of the congressional legislation.

A mark betokening the origin of a car is an important element in its value, and the American owner of the mark is entitled to have the benefit of such sales as are affected by it. Buyers are likely to purchase Hispano-Suiza. ears from Clarke D. Pease, Inc., in order to secure the mark if they cannot otherwise obtain that advantage. If they are allowed to import for personal use without its .consent, Clarke D. Pease, Inc., may certainly lose customers who would be willing to buy from them rather than possess cars bearing no trade-mark. To obtain such advantages the local owner of the foreign mark is given control of the importation of all cars bearing it.

The term “merchandise” has'been used to cover clothing and other goods imported for personal use, United States v. Chesbrough (D. C.) 176 F. 778; likewise to include opium and intoxicating liquors the sale of which is forbidden, United States v. Sischo, 262 U. S. 165, 43 S. Ct. 511, 67 L. Ed. 925; United States v. 1,250 Cases of Intoxicating Liquors (C. C. A.) 292 F. 486. In tax cases a yacht *1038used as a pleasure boat, Tobey v. Kip, 214 Mass. 477, 101 N. E. 998, and household furniture, Sullivan v. Inhabitants of Ashfield, 227 Mass. 24, 116 N. E. 565, have been held to come within the term “merchandise” in tax statutes. But decisions construing the meaning of the word “merchandise” are hardly important where the statutory definition is so all-inclusive as the one here.

In view of the foregoing we hold that the appellant’s ear is “merchandise” within the meaning of the statute.

The contention that the statute if interpreted as above would be unconstitutional is without merit. It has been repeatedly held that Congress may regulate the type of merchandise which is brought into this country and that merchandise legally purchased and .used elsewhere may be prohibited -from entry and use here. Buttfield v. Stranahan, 192 U. S. 493, 24 S. Ct. 349, 48 L. Ed. 525; The Abby Dodge v. U. S., 223 U. S. 166, 32 S. Ct. 310, 56 L. Ed. 390; Cunard S. S. Co. v. Mellon, 262 U. S. 100, 43 S. Ct. 504, 67 L. Ed. 894, 27 A. L. R. 1306. The question is really one of legislative policy. By the Tariff Act Congress adopted the policy of protecting the American owners of foreign trade-marks by most drastic means. However much we may differ with its policy, the wisdom of the legislation is for the lawmaking body, and we cannot say that the means adopted were unadapted to the end sought to be attained.

The decree is affirmed.