States Marine Lines, Inc., Appellant, v. George P. Shultz, Secretary of the Treasury, et al., Appellees, 498 F.2d 1146 (4th Cir. 1974)

Gordon D. Schreck, Charleston, S.C. (Buist, Moore, Smythe & McGee, Charleston, S.C., on brief), for appellant.

Ronald A. Hightower, Asst. U.S. Atty. (John K. Grisso, U.S Atty., on brief), for appellees.

Before HAYNSWORTH, Chief Judge, WINTER, Circuit Judge, and TURK,^*  District Judge.

TURK, District Judge.

This case concerns the amenability to suit of certain federal officers allegedly responsible for consequential damages resulting from the seizure of plaintiff's property. The District Court concluded that the action could not be maintained because it is in substance an action against the United States and thus barred by its sovereign immunity. We vacate the dismissal order and remand the case for further proceedings.

* The facts as set forth in plaintiff's complaint and not here disputed by defendants are as follows: The freighter SS Mani which had been chartered by the plaintiff, States Marine Lines, Inc., arrived at the Port of Charleston, South Carolina on September 7, 1971, with a cargo of general merchandise from far eastern ports destined for discharge at various ports along the East Coast of the United States. Shortly after its arrival, agents of the Bureau of Customs entered the vessel and seized a portion of her cargo without permission of the Master or States Marine. This confiscated cargo, which was subsequently appraised as having a domestic value of $39,619.45, was removed to the United States Customs House at Charleston.

Despite plaintiff's protests that the seizure was wrongful and its offer to post security to obtain release of its cargo, the District Director of Customs refused to surrender it. On September 20, 1971, government officers issued a notice to the Master of the SS Mani that certain of the seized items valued at $29,821.20 were being held subject to forfeiture for alleged violations of certain statutes of the United States and that those persons having an interest in the cargo should make application for return of the cargo and for remission or mitigation of the penalties levied. Accordingly, on November 11, 1971, after further efforts to negotiate release of the cargo had failed, a petition requesting remission or mitigation of the penalty and forfeiture was filed with the defendant Secretary of the Treasury stating that there had been no violation of the customs laws. Although the government officers knew or should have known that the seizure of the cargo was causing damage to plaintiff, no action was forthcoming on this petition despite repeated requests both verbally and in writing that action be taken.

On February 17, 1972, an additional notice was issued by the District Director of Customs that other cargo seized from the SS Mani, valued at $9,798.25, was also being held subject to forfeiture. On April 12, 1972, plaintiff filed an amended petition for remission or mitigation indicating that there was no basis for the seizure of the cargo and further indicating that the continued detention of the cargo was causing irreparable damage to those persons having an interest in it. The government officers failed to take action on this amended petition or to initiate forfeiture proceedings, despite continued requests both verbal and written that action be taken or that some arrangement be made for release of the cargo upon posting security during the pendency of the proceedings. The only explanation offered to plaintiff for the delay in acting on its petition was that of delay in the bureaucratic process or government 'red tape.'

Finally, on December 5, 1972, plaintiff forwarded a telegram to the Bureau of Customs in Washington, D.C., stating that if its petition were not acted upon by December 8th legal action would be taken. The telegram resulted in verbal assurances that some decision would be made, yet no decision was forthcoming. Meanwhile, plaintiff was forced to pay claims for nondelivery of the cargo which had been filed by the importers and ultimate purchasers of the seized merchandise. On January 19, 1973, States Marine took the legal action it had threatened by filing suit in U.S. District Court. It asked the court to order the defendants to institute forfeiture proceedings or in the alternative to restore the cargo to it. Additionally, incidental and consequential damages of $50,000 were alleged to have been suffered as a result of defendant's conduct.

In February, 1973, after the District Court Judge had issued an order to show cause why the defendants should not be ordered immediately to institute forfeiture proceedings or restore the cargo to States Marine, the Bureau of Customs rendered its decision that there had been no violation of law which would justify forfeiture and that the forfeiture of the cargo and associated penalties should be remitted and the cargo released. Thereafter, the District Court Judge granted the defendants' motion to dismiss on the ground that the suit was in substance against the United States and as such was barred by the doctrine of sovereign immunity.

II

There is no doubt that if this suit is in essence against the United States, then it is specifically prohibited as an exception to the waiver of sovereign immunity in the Federal Tort Claims Act. Title 28 U.S.C. 2680 lists the exceptions to the waiver of sovereign immunity contained in Title 28 U.S.C. 1346(b) including the following:

'(a) Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.

. . . .ise

'(c) Any claim arising in respect of the assessment or collection of any tax or customs duty, or the detention of any goods or merchandise by any officer of customs or excise or any other law enforcement officer.'Thus the initial question is whether this suit is, in fact, agsinst the sovereign and as such barred by the above exceptions. Of relevance to this question are two statutes bearing on the liability of customs officers. Title 28 U.S.C. 2006 provides:

'Execution shall not issue against a collector or other revenue officer on a final judgment in any proceeding against him for any of his acts, or for the recovery of any money exacted by or paid to him and subsequently paid into the Treasury, in performing his official duties, if the court certifies that: (1) probable cause existed; or (2) the officer acted under the directions of the Secretary of the Treasury or other proper government officer. When such certificate has been issued, the amount of the judgment shall be paid out of the appropriations of the Treasury.'

Title 28 U.S.C. 2465 provides:

'Upon the entry of judgment for the claimant in any proceeding to condemn or forfeit property seized under any Act of Congress, such property shall be returned forthwith to the claimant or his agent; but if it appears that there was reasonable cause for the seizure, the court shall cause a proper certificate thereof to be entered and the claimant shall not, in such case, be entitled to costs, nor shall the person who made the seizure, nor the prosecutor, be liable to suit or judgment on account of such suit or prosecution.'

If, as the District Court found, suits against customs officers were actually against the sovereign and barred by the exceptions in 28 U.S.C. 2680(a) and (c) then the above statutes would be unnecessary. Yet these statutes have remained in effect and have been frequently construed and applied.¹  E.g., Agnew v. Haymes, 141 F. 631 (4th Cir. 1905); United States v. Tito Campanella Societa Di Navigazione, 217 F.2d 751 (4th Cir. 1954) and cases cited therein. Traditionally, customs officers have been held liable in their individual capacities for tortious conduct committed in the performance of their duties, Truth Seeker Co. v. Durning, 147 F.2d construed and applied.¹ E.g., Agnew v. Haymes, 141 F. 631 (4th Cir. 1944), and the statutes quoted above were obviously for the protection of such officers. See, e.g., Gelston v. Hoyt, 16 U.S. (3 Wheat.) 246, 4 L. Ed. 381 (1818); Averill v. Smith, 84 U.S. (17 Wall.) 82, 21 L. Ed. 613 (1872); The Conqueror, 166 U.S. 110, 17 S. Ct. 510, 41 L. Ed. 937 (1897).

There is no indication that the exceptions in 28 U.S.C. 2680(a) and (c) were meant to alter the established practice of holding customs officers personally liable for the improper performance of their duties, but it rather seems probable that these exceptions merely recognized the established procedure and the long-standing protections afforded by 28 U.S.C. 2006 and 2465.²  To construe 28 U.S.C. 2680(a) and (c) as to afford the protection of sovereign immunity to customs officers would drain 28 U.S.C. 2006 and 2465 of any purpose. This, in turn, would violate the proposition that apparently inconsistent statute should be construed to give effect to each. Baines v. City of Danville, 337 F.2d 579, 590 (4th Cir.), cert. denied, 381 U.S. 939, 85 S. Ct. 1772, 14 L. Ed. 2d 702 (1964); Fanning v. United Fruit Co., 355 F.2d 147, 149 (4th Cir. 1966); Ely v. Veelde, 451 F.2d 1130, 1134 (4th Cir. 1971).

In concluding that this suit was in essence against the United States and thus barred by the doctrine of sovereign immunity, the court below relied upon the test of sovereign immunity set forth by the Supreme Court in Hawaii v. Gordon, 373 U.S. 57, 83 S. Ct. 1052, 10 L. Ed. 2d 191 (1963); Dugan v. Rank, 372 U.S. 609, 83 S. Ct. 999, 10 L. Ed. 2d 15 (1963); Malone v. Bowdoin, 369 U.S. 643, 82 S. Ct. 980, 8 L. Ed. 2d 168 (1962); and Larson v. Domestic and Foreign Corporation, 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949). As stated in Dugan v. Rank, supra,

'The general rule is that a suit is against the sovereign if 'the judgment would expend itself on the public treasury or domain, or interfere with public administration,' Land v. Dollar, 330 U.S. 731, 738 (67 S. Ct. 1009, 91 L. Ed. 1202 (1947), or if the effect of the judgment would be 'to restrain the Government from acting, or to compel it to act.' Larson v. Domestic & Foreign Corp., supra, at 704 (, 69 S. Ct. at 1468, 93 L. Ed. 1628); Ex parte New York, 256 U.S. 490, 502 (41 S. Ct. 588, 591, 65 L. Ed. 1057) (1921).' 372 U.S. at 620.

The District Court Judge was of the opinion that if this suit were successful it would in all probability be paid by the United States.³  He thus concluded that it came within the above rule and was in reality against the sovereign. It is of course possible, although it is by no means a foregone conclusion,⁴  that some of the defendants could avail themselves of the provisions in 28 U.S.C. 2006 in the event judgment were rendered against them. But even assuming that a judgment for plaintiff in this case would be paid by the soverign, this fact does not necessarily bring the case within the above stated rule of sovereign immunity. It is clear that by its terms 28 U.S.C. 2465, quoted supra, prevents judgments against a government officer in cases in which property is seized pursuant to an act of Congress and judgment in a subsequent forfeiture proceeding is entered for the claimant if the court certified there was reasonable cause for the seizure. In contrast, 28 U.S.C. 2006 would apply to cases such as the instant case in which no forfeiture proceedings were instituted. See The Conqueror, 166 U.S. 110, 17 S. Ct. 510, 41 L. Ed. 937 (1897). To say that because the sovereign may have to pay a judgment rendered against certain of its officers by virtue of 28 U.S.C. 2006, such a judgment is barred by the doctrine of sovereign immunity, is in effect to say that by agreeing to pay, the sovereign need not do so. Thus, even assuming that a judgment against one or more of the named defendants would be paid by the sovereign, in order for 28 U.S.C. 2006 and 2465 to be harmonized with 28 U.S.C. 2680(a) and (c) the latter must be construed as not affecting the long-established practice of permitting suits against customs officers in their individual capacities.⁵ 

III

But aside from the effect of 28 U.S.C. 2006, it also appears that this case comes within an exception to the doctrine of sovereign immunity. In Dugan v. Rank, supra, after stating the test of sovereign immunity quoted above, the court restated the two well-established exceptions to this test:

'Those exceptions are (1) actions by officers beyond their statutory powers and (2) even though within the scope of their authority, the powers themselves or the manner in which they are exercised are constitutionally void.' 372 U.S. at 621-622.

For the reasons that follow this court is of the opinion that the manner in which the defendants have exercised their statutory powers may have violated the Fifth Amendment to the Constitution.

The statutory basis for the seizure of plaintiff's cargo is found in Title 19 U.S.C. 482 and 1581.⁶  Plaintiff does not contend that there was no statutory basis for the initial seizure but does contend that the subsequent detention of the cargo for some seventeen months was an unconstitutional deprivation of property without due process of law. The relevant statutory provisions governing the action to be taken following a seizure of merchandise as occurred in this case are set forth in Title 19 of the United States Code.

Title 19 U.S.C. 1602 provides:

'It shall be the duty of any officer, agent or other person authorized by law to make seizures of merchandise or baggage subject to seizure for violation of the customs laws, to report every such seizure immediately to the appropriate customs officer for the district in which such violation occurred, and to turn over and deliver to such customs officer any vessel, vehicle, merchandise or baggage seized by him, and to report immediately to such customs officer every violation of the customs laws.'

Title 19 U.S.C. 1603 provides:

'Whenever a seizure of merchandise for violation of the customs laws is made, or a violation of the customs laws is discovered, and legal proceedings by the United States attorney in connection with such seizure or discovery are required, it shall be the duty of the appropriate customs officer to report such seizure or violation to the United States attorney for the district in which such violation has occurred, or in which such seizure was made, and to include in such report a statement of all the facts and circumstances of the case within his knowledge, with the names of the witnesses and a citation to the statute or statutes believed to have been violated, and on which reliance may be had for forfeiture or conviction.'

Title 19 U.S.C. 1604 provides:

'It shall be the duty of every United States attorney immediately to inquire into the facts of cases reported to him by customs officers and the laws applicable thereto, and if it appears probable that any fine, penalty or forfeiture has been incurred by reason of such violation, for the recovery of which the institution of proceedings in the United States District Court is necessary, forthwith to cause the proper proceedings to be commenced and prosecuted, without delay, for the recovery of such fine, penalty, or forfeiture in such case provided, unless, upon inquiry and examination, such United States attorney decides that such proceedings cannot probably be sustained or that the ends of public justice do not require that they be instituted or prosecuted, in which case he shall report the facts to the Secretary of the Treasury for his direction in the premises.'

Title 19 U.S.C. 1610 provides:

'If the value of any vessel, vehicle, merchandise, or baggage so seized is greater than $2,500, the appropriate customs officer 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 proper proceedings for the condemnation of such property.'

It is apparent from the above statutes that following the seizure of merchandise the government officers involved are not given unfettered discretion in proceeding with the disposition of the seized merchandise. The defendants have not stated what actions were taken following the seizure in this case nor have they offered any explanation other than 'red tape' for the delay incurred. On the other hand, plaintiff asserts that the following events transpired: On September 20, 1971, thirteen days after the seizure, plaintiff received notice that approximately $30,000 of the seized cargo was being held subject to forfeiture and that persons having an interest in the cargo should make application for its return or remission or mitigation of penalties; after failing in its attempt to negotiate release of the cargo, plaintiff filed a petition contending that there has been no violation of the customs laws; no action was taken on this petition despite plaintiff's requests, and on February 17, 1972, a second notice was issued stating that cargo in addition to that specified in the initial notice was also being held subject to forfeiture; plaintiff filed an amended petition for remission or mitigation on April 12, 1972, and despite repeated requests that action be taken, nothing was done until February, 1973, after the plaintiff had begun legal proceedings and the District Court Judge had issued an order for defendants to show cause why they should not be ordered to institute forfeiture proceedings or return the seized goods.

Although 19 U.S.C. 1602 requires 'immediate' action from a seizing officer in reporting such seizure to the appropriate 1604 requires the United States attorney to 'immediately inquire into the facts' and 'forthwith' and 'without delay' cause the proper proceedings to be instituted, 19 U.S.C. 1603 and 1610 do not specifically direct that expeditious action be taken by customs officers in reporting seizures to the United States attorney. Thus the inordinate delay by defendants in this case was seemingly not in violation of the statutes, but plaintiff contends that the statutes, as applied to it in this case by the defendants amounted to a violation of its constitutional right secured by the Fifth Amendment not to be deprived of property without due process of law.

In United States v. Thirty-Seven Photographs, 402 U.S. 363, 91 S. Ct. 1400, 28 L. Ed. 2d 822 (1971) the Supreme Court considered the constitutionality of 19 U.S.C. 1305(a) pursuant to which customs agents had seized thirty-seven allegedly obscene photographs from the claimant upon his return to the United States from Europe. Thirteen days after the seizure the United States Attorney instituted forfeiture proceedings in the District Court, and the claimant challenged the constitutionality of the forfeiture statute on the ground that 19 U.S.C. 1305(a) did not contain time limits insuring a prompt judicial determination as to whether or not the seized materials were obscene. The court construed the statute in order to save it from constitutional attack by requiring 'no more than 14 days from seizure of the goods to the institution of judicial proceedings for their forfeiture and no longer than 60 days from the filing of the action to final decision in the district court.' Id. at 373-374. Although the issue before the court was the constitutionality of 19 U.S.C. 1305(a), the court commented by way of a footnote with respect to 19 U.S.C. 1602 and 1604:

'The United States urges that we find time limits in 19 U.S.C. 1602 and 1604. Section 1602 provides that customs agents who seize goods must 'report every such seizure immediately' to the collector of the district, while 1604 provides that, once a case has been turned over to a United States Attorney, it shall be his duty to 'immediately inquire into the facts' and 'forthwith to cause the proper proceedings to be commenced and prosecuted, without delay', if he concludes judicial proceedings are appropriate. We need not decide, however, whether 1602 and 1604 can properly be applied to cure the invalidity of 1305(a), for even if they were applicable, they would not provide adequate time limits and would not cure its invalidity. The two sections contain no specific time limits, nor do they require the collector to act promptly in referring a matter to the United States Attorney for prosecution. Another other flaw is that 1604 requires that, if the United States Attorney declines to prosecute, he must report the facts to the Secretary of the Treasury for his direction, but the Secretary is under no duty to act with speed. The final flaw is that neither section require the District Court in which a case is commenced to come promptly to a final decision.' 402 U.S. at 368 n. 2.

It is clear that the decision in United States v. Thirty-Seven Photographs may be distinguishable from the case at bar if it is read narrowly as involving primarily the court's concern with the government's use of forfeiture statutes to impose prior restraints on First Amendment rights. Such a distinction is of doubtful validity, for although it is true that the Supreme Court has expressed a particular aversion to the prior restraint of First Amendment rights, it has in recent years been equally solicitous in ensuring that persons not be deprived of property without due process of law. See Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972); Bell v. Burson, 402 U.S. 535, 91 S. Ct. 1586, 29 L. Ed. 2d 90 (1971); Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970); Wheeler v. Montgomery, 397 U.S. 280, 90 S. Ct. 1026, 25 L. Ed. 2d 307 (1970); Sniadach v. Family Finance Corporation, 395 U.S. 337, 89 S. Ct. 1820, 23 L. Ed. 2d 349 (1969). See also, Lynch v. Household Finance Corporation, 405 U.S. 538, 92 S. Ct. 113, 31 L. Ed. 2d 424 (1972) in which the court stated:

'Property does not have rights. People have rights. The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth a 'personal' right, whether the 'property' in question be a welfare check, a home or a savings account. In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized.' 405 U.S. at 552.

When this court considers that the Supreme Court has interpreted the due process clause of the Fourteenth Amendment to require an evidentiary hearing by a State prior to the suspension of a driver's license, Bell v. Burson, supra; or the termination of welfare benefits, Goldberg v. Kelly, supra; or garnishment of wages, Sniadach v. Family Finance Corporation, supra; or the repossession of goods sold under a constitutional sales contract, Fuentes v. Shevin, supra, it would be incongruous indeed if the federal government were left completely unrestrained under the identical wording of the Fifth Amendment following the seizure of goods by customs officers. Plaintiff does not contend that it was entitled to an evidentiary hearing before the cargo was seized, but merely that the defendants' actions, or lack thereof, following the seizure amounted to a violation of its Fifth Amendment rights. In Fuentes v. Shevin, supra, Mr. Justice Stewart described certain 'extra-ordinary situations' in which the court had allowed 'outright seizure' without a prior hearing: