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Docket Number

Civ. A. No. 18311-3.

Attorney(S)

Charles E. French, Asst. U.S. Atty., Kansas City, Mo., for plaintiff. W. Anthony Feiock, for Morrison, Hecker, Cozad, Morrison Curtis, Kansas City, Mo., for claimant Paul Hanson Co.

Judges

William Henry Becker

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Smart Summary

United States v. Nephrite Jade — Summary of Opinion (W.D. Mo., Nov. 2, 1970)

Factual and Procedural Background

This is an in rem forfeiture action brought by the United States under 19 U.S.C. § 1592 (and invoking 19 U.S.C. § 1610 procedures) concerning quantities of nephrite jade imported through the mails from Alfred Franzmann Sohne, Idar-Oberstein, West Germany, addressed to Paul Hanson Co., Jackson Hole, Wyoming, and seized at Kansas City, Missouri, on February 2, 1968. The Government's amended complaint was filed June 29, 1970, alleging the seized articles had a total domestic value appraised at $4,492.00 and sought forfeiture on the ground that the importation was prohibited by 31 C.F.R. § 500.204(2).

The Government published notice (Daily Record, May 11, 1970) and forwarded the amended complaint and notice by certified letter to Paul Hanson Company. Paul Hanson Co. was granted leave to file a late claim on August 17, 1970 and filed an answer on August 24, 1970 asserting that the seized articles were grossularite (lawfully imported) rather than nephrite jade and that the seizure was unlawful.

On October 28, 1970 the parties filed a stipulation in which Customs would have testified to the seizure and forwarding of samples to the Customs Laboratory; the Chief Chemist would have testified chemical tests showed the samples were composed of nephrite jade; the parties stipulated the parcels' contents were nephrite jade (not grossularite), subject to 31 C.F.R. § 500.204 and that the importation of such cut but unset jade suitable for jewelry was prohibited by 31 C.F.R. § 500.204(2). The stipulation further stated neither party desired to adduce additional evidence.

Paul Hanson Company did not deny the Government's $4,492.00 valuation allegation and disclaimed any further interest in the articles; the company also abandoned its prior contention that the goods were grossularite.

Legal Issues Presented

Whether the seized articles are nephrite jade subject to the Foreign Assets Control Regulations (31 C.F.R. § 500.204) and therefore subject to forfeiture under 19 U.S.C. § 1592.
Whether false invoicing and related facts support a finding of fraudulent importation sufficient for forfeiture under 19 U.S.C. § 1592.
Whether any claim of an unlawful seizure prevents forfeiture of the property in this action.

Arguments of the Parties

Plaintiff (United States)

Plaintiff sought forfeiture under 19 U.S.C. §§ 1592 and 1610 on the ground that the imported articles were nephrite jade whose importation was prohibited by 31 C.F.R. § 500.204(2).
Plaintiff published notice and served Paul Hanson Co.; submitted stipulation providing that Customs would testify to the seizure and that the Customs Laboratory's tests indicated the samples were nephrite jade.

Claimant (Paul Hanson Company)

Initially contended the seized articles were grossularite (as invoiced), not nephrite jade, and thus lawfully imported and not subject to forfeiture under 19 U.S.C. § 1592 or the Foreign Assets Control Regulations, and asserted the seizure was unlawful.
After stipulation and testing, Paul Hanson Company disclaimed any further interest in the articles and did not deny the Government's valuation allegation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jen Dao Chen v. United States (C.A.9) 385 F.2d 939	Interpreting 19 U.S.C. § 1592 to mean that merchandise must have been fraudulently imported to be forfeitable, despite the statutory phrase "fraudulent or false invoice."	Used to support the proposition that § 1592 targets fraudulently imported merchandise and that false invoices may be considered as evidence of fraudulent intent.
230 Boxes More or Less of Fish v. United States (C.A.6) 168 F.2d 361, 365	Cited as a comparative authority regarding interpretation/applicability of forfeiture principles under § 1592.	Referenced by the court as a comparative authority ("cf.") in the discussion of the meaning of § 1592.
John Bacall Imports, Ltd. v. United States (C.A.9) 412 F.2d 586	Relevant to interpretation of forfeiture statutes and also cited regarding the effect of an illegal seizure on forfeiture proceedings.	Cited both in the context of § 1592 interpretation and as authority that an illegal seizure does not necessarily preclude forfeiture.
John Bacall Imports, Ltd. v. United States (C.D.Cal.) 287 F. Supp. 916	District-court decision modified by the Ninth Circuit in John Bacall Imports, Ltd. v. United States, 412 F.2d 586.	Noted as the district-court precursor decision that was modified by the Ninth Circuit opinion cited above.
United States v. One Bag of Crushed Wheat (S.D.N.Y.) 166 F. 562, 563	Under the predecessor to § 1592, the manner of packing and the manner in which the invoice was made up could show fraudulent purpose; false invoice may be evidence of fraudulent intent.	Relied on to show that false invoicing and related circumstances may be used as evidence of fraudulent importation.
Anno., 8 A.L.R. 3d 473, 475	Authority that an illegal seizure does not preclude forfeiture of property.	Used to support the court's observation that even assuming an illegal seizure, forfeiture may still be ordered and no evidence was offered of an illegal seizure here.

Court's Reasoning and Analysis

The court's analysis relied primarily on the parties' stipulation and the undisputed facts established by that stipulation. The stipulation established that Customs seized the listed parcels on February 2, 1968; that samples were forwarded to the Chief Chemist of the United States Customs Laboratory; and that chemical tests indicated each sample was composed of nephrite jade. The parties further stipulated that the parcels' contents were nephrite jade (not grossularite), that they were jade stones cut but not set and suitable for jewelry, and that their importation was prohibited by 31 C.F.R. § 500.204(2).

The court noted Paul Hanson Company's failure to deny the Government's valuation allegation ($4,492.00) and the company's disclaimer of any further interest in the articles. The court concluded that the items had been falsely invoiced as grossularite and that false invoicing may be considered evidence of fraudulent intent. Citing authorities interpreting 19 U.S.C. § 1592, the court accepted that forfeiture under § 1592 requires fraudulent importation, and found the stipulated facts sufficient to support forfeiture.

The court also addressed Paul Hanson Company's contention regarding the legality of the seizure, observing that, even assuming without deciding the seizure was unlawful, precedent indicates that an illegal seizure does not necessarily preclude forfeiture; moreover, no evidence was offered to establish an illegal search or seizure in this case.

Finally, the court noted that, with respect to any other potential claimant, judgment of forfeiture may be entered because no timely claim and answer were filed as required by Supplemental Rule C(6) of the Federal Rules of Civil Procedure.

Holding and Implications

Holding: The court ordered that the seized articles described in paragraph 4 of the plaintiff's amended complaint and in paragraph 1 of the stipulation filed October 28, 1970, be forfeited to the United States of America.

Consequence: The articles are to be delivered by their present custodian to the District Director of Customs, St. Louis, Missouri, for disposition according to law. The opinion does not announce or discuss any novel or broad legal rule beyond applying existing authorities to the stipulated facts; its direct effect is the forfeiture and transfer of custody of the described articles to the Government.

Case specifics drawn exclusively from the provided opinion: United States v. Nephrite Jade, Civ. A. No. 18311-3, United States District Court, W.D. Missouri, Chief Judge William H. Becker, November 2, 1970.

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UNITED STATES of America, Plaintiff, v. NEPHRITE JADE, imported through the mails from Alfred Franzmann Sohne, Idar-Oberstein, West Germany, to Paul Hanson Co., Jackson Hole, Wyoming, seized at Kansas City, Missouri, on February 2, 1968, Defendant.

FINAL JUDGMENT FORFEITING SEIZED ARTICLES TO UNITED STATES OF AMERICA

WILLIAM H. BECKER, Chief Judge.

This is an action under Section 1592 of Title 19, United States Code, for the forfeiture of certain quantities of nephrite jade, the importation of which is prohibited by 31 C.F.R. § 500.204(2). In its amended complaint filed herein on June 29, 1970, plaintiff sought forfeiture of the quantities of nephrite jade seized by it on February 2, 1968, under the provisions of Sections 1592 and 1610, Title 19, United States Code, stating that "the total domestic value of the seized articles has been appraised at $4,492.00." Section 1592 of Title 19, U.S.C. provides for the forfeiture of items fraudulently imported into the United States. Section 1610 of the same title provides that if the value of the items is in excess of $2,500, "the collector shall transmit a report of the case, with the names of available witnesses, to the United States attorney for the district in which the seizure was made for the institution of the proper proceedings for the condemnation of such property."

On August 4, 1970, plaintiff filed herein its proof of publication of notice of this action on May 11, 1970, in the Daily Record, and stated that a copy of the amended complaint filed herein on June 29, 1970, together with a copy of the public notice published in the Daily Record, was forwarded by certified letter to Paul Hanson Company ("Paul Hanson Co." sometimes.) Thereafter, on August 17, 1970, Paul Hanson Company was granted leave to file its claim out of time and did so on the same date, stating that "it was at the time of the filing of the complaint herein and still is the importer and consignee of and owner of a contract to purchase said articles and is entitled to the possession thereof." In its answer subsequently filed on August 24, 1970, Paul Hanson Company alleged "that the defendant articles are grossularite and are not nephrite jade, and, therefore, that their importation was legal and not in violation of § 1592, Title 19, U.S. Code or the Foreign Assets Control Regulations, 31 C.F.R. § 500.204 and that their seizure was unlawful."

Subsequently, by a "stipulation" filed herein on October 28, 1970, signed by counsel for the United States and Paul Hanson Company, the following stipulations and agreements were made:

"1. That if John W. Cary, an Import Specialist, Bureau of Customs, were called as a witness in this matter and duly sworn, he would testify that, on February 2, 1968, at Kansas City, Missouri, he seized the following parcels imported through the mails from Alfred Franzmann Sohne, Idar-Oberstein, West Germany, and addressed to Paul Hanson Co., P.O. Box 9, Jackson Hole, Wyoming, invoiced as follows:

Parcel R-226f: 380 pcs spheres Wyoming greenstones

F-2 7¼ — 7½ mm. undr.

v.6.12

3249 474 pces spheres hematites 6 mm. undr.

3118 53 pcs spheres hematites 7¼ — 7½ mm. halfdr.

Parcel R-326f: 570 pcs spheres afr. Grossularite

Cable 20.8 7¼ — 7½ mm. halfdr.

Parcel R-426f: 571 pcs spheres afr. Grossularite

2834 7¼ — 7½ mm.

Parcel R-133f: 85 pcs cabochons afr. Grossularite

15 mm. × 7 mm.

82 pcs cabochons afr. Grossularite 7 mm. ½ rd.

83 pcs cabochons afr. Grossularite 16 mm. × 12 mm.

Parcel R-136f: 56 diverse Wyoming greenst. cabs

BC I II

Parcel R-567f: 375 pces spheres afr. Grossularite

2834 7¼ — 7½ mm. halfdr.

Parcel R-906f:

10.8 11 pcs fac. hematites 18 × 13 mm. ov

20.8 306 pces spheres afr. Grossularite 7 mm. undr.

"Further, he would testify that he submitted samples of each of the articles contained in the afore-mentioned parcels to the Chief Chemist of the United States Customs Laboratory, Chicago, Illinois, in order that such samples analyzed to determine whether such samples were composed of nephrite jade.

"2. That if F.K. Ballard, Chief Chemist of the United States Customs Laboratory, Chicago, Illinois, were called as a witness in this matter and duly sworn, he would testify that he received from Customs authorities in Kansas City, Missouri the samples referred to in Paragraph 1 above. He would further testify that chemical tests made on such samples indicated that each of the samples were composed of nephrite jade.

"3. That the contents of the parcels referred to in Paragraph 1 are nephrite jade and subject to the Foreign Assets Control Regulations 31 C.F.R. § 500.204 and are not grossularite, as invoiced. Further, the contents of the parcels referred to in Paragraph 1 hereof are jade stones, cut but not set, suitable for jewelry, the importation of which was prohibited by 31 C.F.R. § 500.204(2).

"4. That neither party to the present stipulation desires to adduce additional evidence for consideration by the court."

Additionally, the Court notes that Paul Hanson Company did not deny in its answer the Government's allegation of the value of the articles at $4,492.00. Further, Paul Hanson Company has disclaimed any further interest in the articles, which are now admitted to be nephrite jade rather than grossularite, as formerly contended.

It therefore appears that forfeiture of the seized articles listed in paragraph 1 of the stipulation filed on October 28, 1970, (which is the same as that in plaintiff's amended complaint) to the United States of America under § 1592, supra, is proper. It has been stipulated, and plaintiff has stated in its amended complaint, that the articles are not grossularite, but nephrite jade. It further appears that the items were therefore falsely invoiced as grossularite.

It has been held that, although Section 1592, supra, states that merchandise imported by means of "fraudulent or false invoice" shall be subject to forfeiture, the clear meaning is that only fraudulently imported merchandise is so subject. Jen Dao Chen v. United States (C.A.9) 385 F.2d 939; cf. 230 Boxes More or Less of Fish v. United States (C.A.6) 168 F.2d 361, 365; John Bacall Imports, Ltd. v. United States (C.A.9) 412 F.2d 586, modifying (C.D.Cal.) 287 F. Supp. 916. The false invoice, however, may be considered as evidence of fraudulent intent. See United States v. One Bag of Crushed Wheat (S.D.N.Y.) 166 F. 562, 563, wherein it was held under the predecessor to § 1592, that the manner in which the goods were packed and the manner in which the invoice was made up could show a fraudulent purpose. Paul Hanson Company has stipulated facts pointing to the false making of the invoice and has expressly abandoned its position that it has any interest in the goods seized at all. Further, with respect to any other possible claimant, judgment of forfeiture may be entered because of failure to file a claim in writing with the Clerk of this Court within 10 days of the service by publication (or within such additional time as may be allowed by the Court) or to file or serve an answer within 20 days after the filing of the claim, as required by Rule C(6) of the Supplemental Rules of Civil Procedure.

As noted above, the claim filed by Paul Hanson Company raised the issue of legality of the search. Even assuming without holding the truth of the contention, however, it has been held that an illegal seizure does not preclude the forfeiture of property. See Anno., 8 A.L.R. 3d 473, 475; John Bacall Imports, Ltd. v. United States (C.A. 9) 412 F.2d 586. Further, no evidence is offered to prove that there was in fact an illegal search or illegal seizure.

For the foregoing reasons, it is Adjudged and decreed that the articles listed in paragraph 4 of plaintiff's amended complaint and in paragraph 1 of the stipulation filed herein on October 28, 1970, be, and they are hereby, forfeited to the United States of America, and that the articles be delivered by their present custodian to the District Director of Customs, St. Louis, Missouri, for disposition according to law.

UNITED STATES v. NEPHRITE JADE, (W.D.Mo. 1970)