
    ASIATIC PETROLEUM CO. (NEW YORK), LTD., v. THE UNITED STATES
    [No. E-326.
    Decided April 2, 1928]
    
      On the, Proofs
    
    
      Import duties, Philippine Islands; purchase of oil by Navy; delivery o. i. †. Cavite; see. 15, act of August 5, 1909. — Where the printed form of a standard Navy contract provides that “ customs duties * * * are included in the price,” and the contractor will not be entitled to free entry or remission of duties, and the form is used for the purchase of fuel oil, but there is inserted therein typewritten matter specifying delivery “ c. i. f. Cavite,” the typewritten matter governs, and the contractor is not liable for any charges- except cost, insurance, and freight. The import duties, if any, are payable under section 15 of the act of August 5, 1909, by the United States, consignee.
    
      Semble, That the Philippine tariff act of August 5, 1909, did not require the United States to pay duty on oil owned by it and imported into the Philippine Islands for use in the Military or Naval Establishments.
    
      
      The Reporter’s statement of the case:
    
      Mr. Frederick H. Wood for the plaintiff. Mr. debus Keating and Crrnath, Henderson da de Gersdorf were on the briefs.
    
      Mr. George Dyson, with whom was Mr. Assistant Attoimey General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. The plaintiff herein, the Asiatic Petroleum Company (New York), Limited, is a corporation organized and existing under the laws of the State of New York, having its principal office and place of business at No. 65 Broadway, Borough of Manhattan, city and State of New York.
    II. On May 7, 1923, the plaintiff company and the United States, acting through T. W. Leutz, Acting Paymaster General of the Navy, Chief of the Bureau of Supplies and Accounts, and duly qualified and acting, entered into contract No. 57684 for fuel oil for the use of the Navy. Said contract is attached as Exhibit A to the petition herein and is by reference made a part of this finding.
    III. Under arid in fulfilment of the terms of said contract No. 57684 the United States Navy Department, Bureau of Supplies and Accounts, issued its orders from time to time for deliveries under said contract.
    IV. A statement of the deliveries of fuel oil made by plaintiff under said contract No. 57684 and the amounts paid by the defendant to plaintiff are set forth in Exhibit B to the petition herein, which is "made a part of this finding by reference thereto. Said statement also contains the following* facts:
    (a) The place or point of delivery of each shipment of oil to the carrying steamer;
    (b) The name of the ships by which the respective cargoes of oil were carried;
    (c) The consignee named in the bill of lading for each shipment;
    (d) The place at which, or the container into which, the oil was discharged by each ship upon arrival at Cavite;
    (e) The date on which each cargo of oil was discharged from the carrying steamer at Cavite;
    
      (f) The outturned quantity (i. e., the quantity discharged from the carrying steamer) of each cargo in tons of 2,240 pounds each at Cavite, and the total outturned quantities for all cargoes delivered by the plaintiff under the contract;
    (g) The aggregate contract price for each cargo, and the total contract price for all cargoes, delivered by the plaintiff under the contract;
    (h) The date or dates on which payment or payments were made by the defendant to the plaintiff at San Francisco in respect of each cargo delivered by the plaintiff under the contract;
    (i) The amounts paid by the defendant to the plaintiff at San Francisco in respect of each cargo, and the total amount paid by the defendant to the plaintiff at San Francisco in respect of all cargoes, delivered by the plaintiff under the contract; and
    (j) The amounts deducted and withheld by the defendant from the total contract price in respect of certain of the cargoes, and the total amounts deducted and withheld by the defendant from the total contract price in respect of all cargoes, delivered by the plaintiff under the contract.
    V. The plaintiff has demanded payment from the defendant of the sum of $121,876.16 as the balance due on the contract and the defendant has refused to pay said amount and has disclaimed liability therefor.
    VI. The plaintiff paid all freight charges of the carrying-steamers from the point of loading to the place of discharge.
    VII. The carrying steamers were each owned by parties other than the plaintiff.
    VIII. Prepaid bills of lading signed by the master of the carrying steamer for the quantity of oil carried by his vessel were issued in the case of each cargo and delivered to and forwarded with the master of the carrying steamer for delivery to the consignee upon arrival at Cavite.
    IX. A prepaid bill of lading' for each cargo was delivered by the master of the carrying steamer or the agents of the plaintiff to the defendant’s agents, the United States naval authorities at Cavite, as soon as practicable after arrival of the carrying steamer. The bill of lading was in each case accepted by the naval authorities and the oil was delivered thereunder by the carrying steamer.
    X. Each cargo' of oil was insured by the plaintiff with Petroleum Assurantie Maatschappij of The Plague, Holland, “ for account of the supplier or whom it may concern.”
    XI. No request was made by the United States naval authorities for the delivery to them of insurance policies or insurance certificates covering any of the cargoes and none was delivered to them by the plaintiff.
    XII. On or about March 4,1924, plaintiff referred a claim to the Comptroller General for an unpaid balance of $121,-876.16 due on the contract price of oil delivered pursuant to the terms of said contract, but no decision has been rendered thereon, though by letter addressed to the Secretary of the Navy dated June 25, 1924 (3 Comp. Gen. 988) the Comptroller General made a preliminary ruling adverse to the plaintiff, and thereafter by letter addressed to the Secretary of the Navy, dated August 18, 1924, affirmed his earlier ruling.
    Except as above stated, no action has been had on said claim in Congress or by any of the departments of the United States.
    XIII. On December 18, 1922, the plaintiff company and the United States, acting through the Paymaster General of the Navy, Chief of the Bureau of Supplies and Accounts, and duly qualified and acting, entered into contract No. 56924 for fuel oil for the use of the Navy, which contract is attached to the defendant’s counterclaim as Exhibit A and made a part of this finding by reference.
    XIY. The following statement shows the deliveries of fuel oil made by plaintiff under said contract No. 56924, as well as the names of the ships carrying same, dates discharged, bills of lading, number of tons of oil, where discharged, quantity billed by customs, etc.:
    
      
      
    
    
      NV. On December 28, 1922, Smith, Bell & Co. Ltd., by O. W. Darch, agents for the Asiatic Petroleum Co. (P. I.) Ltd., wrote to the supply, officer at the United States naval station, Cavite, concerning the deliveries of fuel oil under contract No. 56924, as follows:
    G-44-N GM Maotla, December %8, 19%%.
    
    Supply Officer,
    
      ü. S. Nmal Station, Omite.
    
    LIQUID FUEL TO U. S. S. “ PECOS ”
    SiR: Further to our letter of December 14th and to your reply of December 19th regarding the shortage of 38 tons on the occasion of the loading of the above vessel at Tarakan in July, we have pleasure in forwarding you herewith copy of a further letter we have received from Belikpapan, and we shall be glad to receive your comments in due course.
    As regards deliveries against the contract recently concluded in New York for 200,000 barrels, and with reference to our telephone conversation with your department yesterday afternoon, we beg to advise you that we are in receipt of the following information regarding conditions of delivery :
    Delivery to be effected between 1st January and 30th June, 1923, and the oil to be paid for at the rate of gold $10.25 per ton, payment to be made on bill of lading quantity. The oil will be shipped to Cavite in our own tankers and both the tanker and the cargo will be consigned to you in order to obviate the possibility that we may be called upon to pay duty. The period of free discharge is laid down as 96 hours, and thereafter demurrage will be at the rate of gold $19 per hour.
    We understand that you wish the cargo of the Hermione, which is due to arrive with the first shipment against the contract early next month, to be delivered partly into the Pecos and partly into Navy tank at Cavite. We understand that you are not certain as to manner in which the cargo can be checked, but in view of the stipulation that payment be on bill of lading quantity this point would appear to be of minor importance. Your representatives will, however, be at liberty to check the tanker’s measurements prior to discharge.
    Kespectfully yours,
    For The Asiatic Peteoleum Co. (P. I.) Ltd.,
    Smith, Bell & Co. Ltd., Agents.
    
    (Sgd.) O. W. Daech.
    GM/lp
    Enel, as above.
    
      XVI. On March 19, 1924, Smith, Bell & Co. Ltd., agents for the Asiatic Petroleum Co. (P. I.) Ltd., wrote to the supply officer United States naval station, Cavite, concerning the deliveries of fuel oil under contract No. 57684 as follows:
    The Asiatic Peteoleum Co. (P. I.), Limited,
    Smith, Bell & Co. Ltd., AgeNts, P. O. Box 441,
    
      Manila, March 19th, 19^J¡..
    
    In reply please quote: G-46-X-SC.
    Supply Oeeicee,
    
      TJ. 8. Na/val Station, Cavite.
    
    Attention of Com. Gudger.
    Deae Sie : We are in receipt of a telegram from our Hong-kong office in which they ask us to make clear the following points re duty on liquid fuel delivered to the U. S. Navy:
    1. The cargo which you received per S. S. Anstina toward the end of January, 1924, and which was discharged into the Pecos — was this cargo reexported? If so, we presume it will be free of duty.
    2. The Ebtvma cargo of November, 1923. This was delivered to the Pecos. Could you kindly inform us what actually happened to this oil, so that we can understand whether it is dutiable or not?
    8. The Cowrie November shipment. We understand that this cargo was first delivered to the Pecos but later transferred to the shore tanks, but we have some idea that you think it possible that we may not have to pay duty on this cargo. Will you kindly advise us regarding this point?
    4. The Gold Shell December cargo. As this was delivered into the shore tanks, we presume this cargo is definitely dutiable.
    We should be very much obliged if you would kindly give us a reply as soon as possible, as our Hongkong office are asking us to telegraph them promptly regarding this matter. Thanking you in anticipation, we are, dear sir,
    Yours faithfully,
    For The Asiatic PetRoleum Co. (P. I.), Ltd.,
    Smith, Bell & Co. Ltd., Agents.
    
    SC/EC
    XVII. Contract No. 56924 terminated on June 30, 1923, and contract No. 57684 terminated on June 30,1924.
    XVIII. The plaintiff did not pay any customs duties to the Philippine Government on fuel oil delivered under contracts numbers 56924 and 5X684, and the plaintiff at all times refused to permit any such customs duties to be paid by the defendant for the plaintiff’s account.
    XIX. No claim was made by the Philippine customs authorities for customs duties on fuel oil delivered under the contracts against the plaintiff at any time and no claim by the Philippine customs authorities for such duties was made against the Navy until complete deliveries under contract 56924 had been made and paid for, and two cargoes had been delivered under contract 57684.
    XX. The plaintiff was not advised that any claim had been made against the Navy by the Philippine customs authorities for customs duties on fuel oil delivered under contract 56924 until July 29, 1924.
    XXI. The amount of duty assessed against the Navy in respect of the various cargoes of fuel oil delivered under the two contracts was as follows:
    
      Contract No. 5692.'/
    
    Name of sMp : Amount of duty
    Semiramis___$19, 852. 64
    Argonauta_ 8,161.04
    Hermione_ 18, 056. 34
    Semiramis_ 20,122. 53
    , 192. 55
    
      Contract No. 57684
    
    Gold Shell_ 20,320.00
    Semiramis_ 20, 226.33
    Plaeuna _ 15,137. 28
    55, 683. 61
    121, 876.16
    XXII.In May, 1924, the collector of insular customs of the Philippine Islands refused to issue permits to the Navy to receive future cargoes of freight until customs duties on past deliveries had been paid, and also refused to issue permits on outgoing shipments for the Navy.
    XXIII. After negotiations by officers of the Navy with the collector of insular customs of the Philippine Islands he agreed to issue permits for incoming and outgoing cargoes for sixty days from June 2, 1924, with the understanding all bills would be settled within sixty days from that day.
    
      XXIV.In making payments for the fuel oil delivered under contract No. 57684 certain amounts were withheld by the Navy to cover the estimated customs duties on fuel oil delivered under that contract and contract No. 56924, as follows:
    Name of ship: Amount withheld
    Cowrie_ 1— $16,951.43
    Eibuma_ 18, 560. 57
    Gold Shell 20, 321. 35
    Anatina_ _ 17, 321.07
    Placuna— _ 49, 111. 35
    Buccinum-18,087. 88
    Total_$140,353.05
    XXV. All fuel oil delivered under contracts numbers 56924 and 57684 was either reexported from the Philippine Islands by the Navy or used in the propulsion of naval vessels.
    XXVI. Under date of January 5, 1925, the Navy purchasing officer at San Francisco was authorized to make payment to the plaintiff of the $18,477.49 withheld from payments to it in excess of the customs duties levied, and this amount was paid to plaintiff on January 14, 1925.
    XXVII. No payment has been made by the defendant to the government of the Philippine Islands of the sum of $121,876.16, or any other sum on account of customs duties on cargoes of fuel oil delivered by the plaintiff under contracts 56924 and 57684 and assessed against the Navy as set forth in Finding XXI.
    The court dismissed the counterclaim, and gave judgment for plaintiff in the sum of $121,876.16.
   Moss, Judge,

delivered the opinion of the court:

Plaintiff, Asiatic Petroleum Co., is suing for the recovery of a balance of $121,876.16 due on purchase price of fuel oil sold by plaintiff for the use of the Navy under a certain contract dated May 7, 1923. The amount claimed is admitted, but defendant has interposed a counterclaim for the same amount alleged to be due and owing to the Philippine government as customs duties on oil delivered under this contract and also under a prior contract dated December 18, 1922. No duties have been paid by either the Government or plaintiff, the Government contending, however, that it will be required to pay same to the Philippine customs officials.

It is stipulated that the oil under both contracts was consigned to the United States. Section 15 of the Philippine tariff act, 36 Stat. 174, provides that all property imported into the Islands shall for the purpose of that act be deemed to be “ the property of the person to whom the same may be consigned.” The United States would therefore, as between the parties, be liable for customs duties, if any should be collectable, unless expressly assumed by plaintiff under the contract. It is contended by defendant that under the terms of the contract plaintiff obligated itself to pay such duties, and in support of that contention cites paragraph 3 of said contract, which reads as follows: The customs duties on imported articles used in the fulfillment of this contract are included in the price herein set opposite each item, and therefore the contractor will not be entitled to free entry or remission of any customs duties.” Each contract in this case consisted of a standard printed form of Navy contract, used in connection with the purchase of all manner of supplies, within which was inserted a mimeographed schedule relating to the proposed purchase of fuel oil. The mimeographed portion of the printed form invited proposals for fuel oil to be delivered at a number of places, including Cavite, Philippine Islands. Plaintiff bid only on the oil to be delivered at Cavite, and there was inserted in appropriate places, in typewriting, plaintiff’s proposal, which in part is as follows: “ * * * but maximum annual quantity not to exceed 750,000 bbls. to be delivered c. i. f. Cavite, in cargo lots * * By this provision plaintiff limited its obligation to a quantity not to exceed 750,000 barrels “ to be delivered g. i. f. Oavite,” at $11.48 per ton. Plaintiff’s proposal was accepted and became the contract between the parties. The term “ c. i. f.” has a well-understood legal meaning in commercial transactions. In simple terms it means that the price quoted included cost of goods at point of shipment, insurance, and freight to point of delivery. All other charges, if any, including import duties being assumed by the buyer. Thames & Mersey Insurance Co. v. United States, 237 U. S. 19, 26, and numerous other decisions cited in plaintiff’s brief. The paragraph in the printed portion of the contract upon which defendant relies is clearly inapplicable to the contract under consideration, and obviously refers to customs duties accruing to the United States and concerning which the United States could contract. It will be readily seen that the Government would have no authority either to relieve the contractor from the payment of customs duties imposed by the Philippine government or to remit such duties. Manifestly this printed paragraph was left in the contract by inadvertence. At any rate, it is inconsistent with the typewritten matter mentioned, and the latter must be regarded as the true agreement between the parties. Harper v. Hochstim, 278 Fed. 102. It is claimed by defendant that the contract in this case is only a modified c. i. f. contract by reason of the fact that insurance policies and certain freight credit memoranda were not delivered to the defendant as contemplated under a c. i. f. contract. However, prepaid bills of lading were in each shipment delivered to the master of the ship, an independent carrier, for delivery to the proper naval authorities and same were so delivered. No better evidence that the freight had been paid could have been supplied. Insurance was secured, payable to the account of plaintiff, or “whom it may concern.” Failure to deliver same to the naval authorities constituted, at most, a breach of contract, without damage to defendant. If there had been a loss, unquestionably defendant’s rights would have been protected under the clause “ whom it may concern,” but there was no 'loss, and the mere failure to deliver the policies to the naval authorities is immaterial. The contract is a c. i. †. contract in all essential characteristics, and under such a contract plaintiff is not liable for any charges, except cost, insurance, and freight.

While not necessary to a decision of the case, it is not inappropriate to state that the court is in extreme doubt as to whether or not the oil in question was dutiable. Whatever may be said as to when the title to the oil passed, as between the parties, such oil for the purposes of the tariff act was the property of the United States at the time of its importation into the Philippine Islands. Is the United States liable for customs duty on property imported by it and for its own use? The act itself is silent on that question. It should be remembered that no duties were demanded until after the full completion of the first contract under which 50,167.6058 tons of oil were delivered and paid for, and until after 14,460.7 tons under the second contract had been delivered. It can therefore be said that the customs officials themselves did not at first regard this property as dutiable. It should also be noted that when duties were subsequently assessed it was sought to impose same only on that portion of the oil which was delivered into naval tanks at Cavite, and not on the oil discharged directly into the U. S. S. Peco». Both deliveries were within the jurisdiction of the Philippine Islands. The first section of the act, 36 Stat. 130, provides that the duties therein imposed shall be levied upon “ all articles * * * entering the jurisdiction of the Philippine Islands from any place or places, including the United States and its possessions, and in any manner whatsoever, either with intent to unlade therein, or which, after such entering, are consumed therein or become incorporated into the general mass of property within said Islands * * It is stipulated that all the oil discharged into shore tanks was either reexported or consumed in the propulsion of Navy vessels. The delivery into said tanks was a temporary matter of convenience. Section 21 of said tar,iff act provides “ that on all fuel imported into the Philippine Islands, which is afterwards used for the propulsion of vessels engaged in trade with foreign countries, or between ports of the United States and the Philippine Islands, or in the Philippine coastwise trade, a refund shall be allowed equal to the duty imposed by law upon such fuel, less one per centum thereof, which shall be paid under such rules and regulations as may be prescribed by the insular collector of customs.” It is true that this provision applies only to merchant ships. However, the startling incongruity presented by this situation in connection with the attitude of the Philippine government concerning the liability of the United States for the payment of tariff duties is worthy of consideration. Under section 21 this oil which was used for supplying naval vessels would have been subject to a refund of duties if, instead of having been imported by the United States for such purposes, it had been imported and stored in tanks by a steamship company and subsequently used for the same purpose. It will scarcely be believed that Congress intended to produce a situation which would result in such an unjust discrimination.

The purpose of the statute providing for customs duties on importations into the Philippine Islands was to provide revenue for the use of the Philippine government, for the protection, and partial support of which the United States held itself responsible. It is inconceivable that Congress in the enactment of the said statute should have intended that the United States would be required to pay duty on its own oil imported into the Philippine Islands, for its own use, in supplying its Navy vessels used in the protection of the Philippine government, as well as for the maintenance of ,its own Military and Naval Establishments in the national defense. It is not necessary to decide any other questions at issue in the case. Plaintiff is entitled to recover herein, and defendant’s counterclaim should be dismissed, and it is so ordered and adjudged.

GRAham, Judge; Booth, Judge; and Campbell, Chief Justice, concur.  