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even in the written part of the contract. Is it not apparent that in making a contract of this magnitude and character there must have been some understanding and agreement concerning this matter? The sixth clause of the written contract, "All merchandise owned by the seller, now in the warehouses at Nome, Alaska, shall be delivered to the buyer, free of storage charges," taken literally, according to its terms, would seem to prohibit the plaintiff in error from making any sale of goods whatever. In the very nature of the transaction, is it not reasonable to believe, as testified to by the defendant in error, that the plaintiff in error would have under the contract, the right to sell "from the said stock of merchandise in the ordinary and usual course of trade and business"? The written contract is certainly not clear or unambiguous upon this subject. It is incomplete and indefinite. The written contract is silent upon other matters. It does not specify the particular character, quality, or extent of the goods that were sold, to be delivered to the buyer on the opening of navigation in 1904.
Upon examination of the authorities bearing upon the legal principles applicable to this case, we find that the courts have held that where, in the application of a contract to its subject-matter, an ambiguity or uncertainty arises which cannot be removed by an examination of the agreement alone, parol evidence of the circumstances under whichit was made and of statements made in the negotiations which preceded it may be admitted to resolve the ambiguity, and to prove the real intention of the parties (Kilby Mfg. Co. v. Hinchman-Renton F. P. Co., 132 Fed. 957, 961, 66 C. C. A. 67; Davies v. Bierce [La.] 38 South. 488, 492); that it is also competent to show all the transactions at the same time between the parties, only a part of which is in writing (Chemical Company v. Moore, 61 S. C. 166, 169, 39 S. E. 346; Graffam v. Pierce, 143 Mass. 386, 9 N. E. 819; Sutton v. Griebel, 118 Iowa, 78, 91 N. W. 825, and authorities there cited; Schoen v. Sunderland, 39 Kan. 758, 761, 18 Pac. 913; Juilliard v. Chaffee, 92 N. Y. 529, 535; Harman v. Harman, 70 Fed. 894, 897, 17 C. C. A. 479; Patek v. Waples, 114 Mich. 669, 671, 72 N. W. 995); that where a written instrument, executed pursuant to a prior verbal agreement, does not express the entire agreement or understanding of the parties, it is competent to show by parol testimony what the real contract was (Barcus v. Gates (C. C.) 130 Fed. 364, 367; De St. Aubin v. Marshall Field & Co., 27 Colo. 414, 419, 62 Pac. 199; Neal v. Flint, 88 Me. 72, 82, 33 Atl. 669; Terry v. Railroad Co., 91 N. C. 236, 241; Moore v. Barber A. P. Co., 118 Ala. 563, 572, 23 South. 798; Niles v. Sire (Sup.) 94 N. Y. Supp. 586; Mt. Vernon Stone Co. v. Sheeley, 114 Iowa, 313, 316, 86 N. W. 301; Anderson v. National Surety Co. 196 Pa. St. 288, 46 Atl. 306); that, where the written memorandum of a contract of sale is incomplete, parol evidence is admissible to prove there was a verbal understanding at the time, and conditions upon which the seller would have the right to sell at retail until the completion of the sale and delivery of the property (Quick v. Glass, 128 Mo. 321, 30 S. W. 1031); that parol evidence is admissible where it tends to prove an independent, collateral fact about which the written contract is silent. (Fusting v. Sullivan, 41 Md. 162, 179; Hines v. Willcox, 96 Tenn.
148, 153, 33 S. W. 914, 34 L. R. A. 824, 832, 54 Am. St. Rep. 823; Hardwood Log Co. v. Coffin, 130 N. C. 432, 435, 41 S. E. 931; Windsor v. Railway Co. [Wash.] 79 Pac. 613).
The general rule as to the admissibility of parol evidence in connection with a written contract (covering a great variety of cases) has been stated as follows:
"Where a written instrument, executed pursuant to a prior verbal agreement or negotiation, does not express the entire agreement or understanding of the parties, the parol evidence rule does not apply to prevent the introduction of extrinsic evidence with reference to the matter not provided for in the writing." 17 Cyc. 741, 742.
In Clinch Valley Coal & Iron Co. v. Willing, 180 Pa. 165, 167, 167, 36 Atl. 737, 57 Am. Št. Rep. 626, the court said:
"The existence of a contemporaneous parol agreement between the parties under the influence of which a note or contract has been signed, which is violated as soon as it has accomplished its purpose in securing the execution of the paper, may always be shown when the enforcement of the paper is attempted. It is a plain fraud to secure the execution of an instrument by representations as to the manner in which payment shall be made, differing in important particulars from those contained in the paper, and, after the paper has been signed, attempt to compel literal compliance with its terms, regardless of the contemporaneous agreement without which it would never have been signed at all."
There is no conflict in the authorities upon the matters we have discussed. In a previous portion of this opinion we pointed out this fact by a reference to the case of Chandler v. Thompson, where the respective rules were recognized. In Seitz v. Brewers' R. M. Co., 141 U. S. 510, 517, 12 Sup. Ct. 46, 35 L. Ed. 837, which is cited and relied upon by the plaintiff in error to prove that the court below erred in giving the instruction complained of in relation to the silence of the written contract, the language of the opinion relied upon is as follows:
"Whether the written contract fully expressed the terms of the agreement was a question for the court, and since it was in this instance complete and perfect on its face, without ambiguity, and embracing the whole subjectmatter, it obviously could not be determined to be less comprehensive than it
And this conclusion is unaffected by the fact that it did not allude to the capacity of the particular machine. To hold that mere silence opened the door to parol evidence in that regard would be to beg the whole question."
We have italicized certain portions to show that the contract in that case was directly opposite in its character from the one under consideration in this case, and the change in the facts controlled the decision. In the course of the opinion, it is said:
"Undoubtedly the existence of a separate oral agreement as to any matter on which a written contract is silent, and which is not inconsistent with its terms, may be proven by parol, if under the circumstances of the particular case it may properly be inferred that the parties did not intend the written paper to be a complete and final statement of the whole of the transaction between them."
In Fire Ins. Association v. Wickham, 141 U. S. 564, 576, 12 Sup. Ct. 84, 87, 35 L. Ed. 860, the court said:
"We have no disposition to overrule or qualify in any way the general and familiar doctrine enforced by this court in repeated decisions, from the case of Hunt v. Rousmanier, 8 Wheat. 174, 5 L. Ed. 589, decided in 1823, to that of Seitz v. Brewers' Refrigerating Company, 141 U. S. 510, 12 Sup. Ct. 46, 35 L. Ed. 837, decided at the present term, that parol testimony is not admissible to vary, contradict, add to or qualify the terms of a written instrument. The rule, however, is subject to numerous qualifications, as well established as the general principle itself, among which are that such testimony is admissible to show the circumstances under which the instrument was executed."
Further comment is unnecessary.
record discloses no error.
An examination of the whole
The judgment of the District Court is affirmed, with costs.
UNITED STATES v. R. F. DOWNING & CO.
SAME V. SCHOELLKOPF, HARTFORD & HANNA CO.
Nos. 52, 126.
1. CUSTOMS DUTIES-CLASSIFICATION-PETROLEUM PRODUCTS-COUNTERVAILING DUTY.
Paragraph 626, Free List, § 2, Tariff Act July 24, 1897, c. 11, 30 Stat. 199 [U. S. Comp. St. 1901, p. 1685], providing a countervailing duty on "crude petroleum, or the products of crude petroleum, produced in any country which imposes a duty on petroleum or its products exported from the United States," is intended to provide that, when crude petroleum or any of its products is imported from a country which imposes a duty thereon when imported from the United States, it shall pay duty at the rate so imposed by such country on merchandise in the same condition. A product of petroleum is subject to the duty so imposed by the country of manufacture on such product when coming from the United States, rather than to that so imposed on crude petroleum by the country in which the petroleum was produced. If no duty is so imposed on such product by the country in which it is manufactured, it is not liable to the countervailing duty, even though produced from petroleum originating in a country which does impose such a duty thereon.
2. SAME PARAFFIN-SPECIFIC ENUMERATION.
The proviso in paragraph 626, Free List, § 2. Tariff Act July 24, 1897, c. 11, 30 Stat. 199 [U. S. Comp. St. 1901, p. 1685], providing a countervailing duty on "crude petroleum, or the products of crude petroleum," is not limited to the articles enumerated in the preceding portion of that paragraph, but should be read into every section of the tariff which enumerates a product of petroleum. The special enumeration of "paraffin” in paragraph 633, Free List, § 2, of said act (30 Stat. 200 [U. S. Comp. St. 1901, p. 1686]), does not remove that substance from the scope of the proviso.
3. SAME PRODUCTS OF PETROLEUM-ARTICLES IN CHIEF VALUE OF PETROLEUM. The provision in paragraph 626, Free List, § 2, Tariff Act July 24, 1897, c. 11, 30 Stat. 199 [U. S. Comp. St. 1901, p. 1685], for "products of crude petroleum," does not include articles not composed in chief value of petroleum, even though the petroleum predominates in quantity. 4. SAME DETERMINATION OF COMPONENT OF CHIEF VALUE.
The determination as to the component material of chief value of imported merchandise is to be in reference to the values of the components În the country where the compound is produced. Evidence as to the
value of one component material in one country and of another component in another country is not sufficient to overcome the sworn statement of the manufacturer of the goods.
STATUTORY CONSTRUCTION-SCOPE OF PROVISO-POSITION OF PROVISO.
The general rule that a proviso to a particular section does not apply to other sections, but is to be construed with reference to the immediately preceding parts of the clause to which it is attached, is not controlling, especially in such composite structures as tariff and appropriation acts. The true rule seems to be that while the position of a proviso in a statute has a great and sometimes controlling influence upon the question of its application, yet the inference from its position cannot overrule its plain general intent.
[Ed. Note.-For cases in point, see vol. 44, Cent. Dig. Statutes, § 310.] Coxe, Circuit Judge, dissenting.
Appeal from the Circuit Court of the United States for the Southern District of New York.
These causes come here upon appeals from decisions affirming in the first cause and reversing in the second cause the decision of the Board of General Appraisers touching the rates of duty on certain importations under the tariff act of July 24, 1897. The facts are fully set forth in the opinion. The relevant paragraphs are Nos. 626 and 633, both on the free list, which read as follows:
"(626) Oils: Almond, amber * ; petroleum crude or refined: Provided, That if there be imported into the United States crude petroleum, or the products of crude petroleum produced in any country which imposes a duty on petroleum or its products exported from the United States, there shall in such cases be levied, paid, and collected a duty upon said crude petroleum or its products so imported equal to the duty imposed by such country." 30 Stat. 199, c. 11, § 2, Free List [U. S. Comp. St. 1901, p. 1685]. "(633) Paraffin." 30 Stat. 200 [U. S. Comp. St. 1901, p. 1686].
For decisions below, see (1) 135 Fed. 250, affirming a decision of the Board of United States General Appraisers (G. A. 5,470, T. D. 24,778), which had reversed the assessment of duty by the collector of customs at the port of New York, and (2) 139 Fed. 58, reversing decisions of the Board, which had affirmed the assessment of duty by said collector. Note G. A. 5,658, T. D. 25,237.
Charles Duane Baker, Asst. U. S. Atty.
Comstock & Washburn (Albert H. Washburn, of counsel), for appellees.
Before WALLACE, LACOMBE, and COXE, Circuit Judges.
LACOMBE, Circuit Judge. In the Downing Case there was imported paraffin, which it is not disputed was "manufactured in Hamburg from crude petroleum produced in Russia." The collector charged a countervailing duty equal to the duty imposed by Germany. on paraffin imported into Germany from the United States. The importer protested, claiming, first, that it was free under paragraph 633, and, secondly, that in view of the place of the production of the crude petroleum therein contained it should pay a less duty than that assessed.
The Board of General Appraisers overruled so much of the protest as claimed free entry, the court affirmed the Board, and the importers have not appealed. That question, therefore, is not before us in this case.
The second ground of protest was sustained, and the Board reversed the collector, holding that the duty to be assessed upon paraffin which the importers in the Downing Case concede to be a product of petroleum, should be equal to the duty imposed by Russia upon the crude petroleum out of which it was made. Their decision is based on a construction of paragraph 626, which finds that "Congress did not speak of the origin of the products made from petroleum, but only of the origin of the crude petroleum from which the products were made." We think this construction is too narrow. Evidently Congress wished to protect our own products by providing a countervailing duty against the country which assessed them, and that body recognized that the discrimination to be provided against was not only one which laid a duty upon crude petroleum, but also one which laid a duty upon the products of crude petroleum. It is to be inferred from the use of the four words, "petroleum, crude or refined," which immediately precede the proviso, that Congress intended to include refined petroleum among the products of crude petroleum. If the construction which the Board has approved is to be given to this paragraph, it would result that, where crude petroleum, produced in a country which laid no duty on our petroleum or petroleum products, was refined in a country which did impose a heavy duty upon our petroleum, etc., it should nevertheless come in free. We are of the opinion that Congress intended no such result, and that it intended to provide that when crude petroleum is imported it shall pay whatever duty is laid upon it in the country where it is produced, and that when any product of crude petroleum is imported it shall pay a duty equal to that imposed upon such product, when coming from the United States, in the country where it is produced. We think the collector correctly assessed duty on these products of crude petroleum at the rate imposed in the country where they were produced (Germany), and not at the rate imposed in the country where the crude petroleum from which they were produced originated. The decision of the
Board in the Downing Case is therefore reversed.
In the Schoellkopf Case two varieties of commercial paraffin were imported, viz., Paraffin Liquid and Paraffin Molle. Two of the importations (ex. "Finland" and "Vaterland") were from Belgium. The paraffin in these two lots was manufactured of Russian crude oil at Antwerp, Belgium, and the deputy collector reports that:
"As Belgium is a country which does not impose a duty upon petroleum or its products exported from the United States [the collector], in the liquidation of the entries, charged a countervailing duty equal to the duty imposed by Russia on crude petroleum exported from the United States."
The Board sustained this assessment.
Under the construction of paragraph 626 already set forth, these products of crude petroleum were not liable to duty since the country which produced them did not impose duties on petroleum or petroleum products exported from the United States. As to these two importations, however, the protest claimed free entry only under paragraphs 633 and 695, so that this construction of paragraph 626 cannot be availed of by the importers, who indeed in the proceedings