Syllabus.

considered, and the decision of the state courts of New York were called to its attention and cited in its opinion. The court held that notice is required by that statute only as a basis for declaring a forfeiture or lapse of a policy for non-payment of premium or interest, and that the law had no application, because it was a non-forfeitable policy of term insurance, which had expired by limitation before the insured died. Whether the Supreme Court of Iowa was correct in its construction of the applicability of the New York notice statute to this policy was immaterial, since it did not deny the full faith and credit due to the New York law, but construed it as not applying to the policy in this case. The case is covered by that of Banholzer v. New York Life Insurance Co., 178 U. S. 402, and in principle by Glenn v. Garth, 147 U. S. 360; Lloyd v. Matthews, 155 U. S. 222. To hold otherwise would render it possible to bring to this court every case wherein the defeated party claimed that the statute of another State had been construed to his detriment.

The validity of the New York statute was not called in question. The case turned upon its construction. This was not a Federal question. Commercial Bank v. Buckingham, 5 How. 317; Baltimore &c. R. R. Co. v. Hopkins, 130 U. S. 210. The writ of error is

Dismissed.

MR. JUSTICE WHITE and MR. JUSTICE MCKENNA dissented.

DOWNS v. UNITED STATES.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH

CIRCUIT.

No. 318. Argued October 29, 1902.-Decided January 5, 1903.

When a tax is imposed upon all sugar produced, but is remitted upon all sugar exported, then, by whatever process or in whatever manner or under whatever name it is disguised, it is a bounty upon exportation. As under the laws and regulations of Russia, the Russian exporter of

Argument for Petitioner.

sugar obtains from his government a certificate solely because of such exportation, which certificate is salable and has an actual value in the open market, the government of Russia does secure to the exporter from that country, as the inevitable result of such action, a money reward or gratuity whenever he exports sugar from Russia, and which is in effect a bounty upon the export of sugar which subjects such sugar, upon its importation into the United States, to an additional duty equal to the entire amount of such bounty under the act of Congress of July 24, 1897, 30 Stat. 205.

THIS was a writ of certiorari to review a decree of the Circuit Court of Appeals, affirming a decree of the Circuit Court for the District of Maryland, which itself affirmed the action of the board of general appraisers, holding a cargo of refined sugar imported into Baltimore from Russia subject to a countervailing duty leviable upon merchandise upon which a bounty is paid upon exportation.

The proceedings were instituted by a petition filed in the Circuit Court setting up the importation of sugar on the steamship Assyria, July 6, 1899, the imposition of a countervailing duty by the collector of customs at Baltimore, and the payment of the same under protest; and the fact that the decision of the collector had been affirmed by the board of general appraisers. The grounds stated in the petition for a review are, generally, that the country from which the sugar was exported did not pay or bestow, directly or indirectly, any bounty or grant upon the exportation of said sugar.

The return of the general appraisers contained a copy of the proceedings before them, including a copy of the Russian law and regulations, a stipulation of facts, a copy of certain reports from the United States consul at Odessa, and their opinion overruling the protest, and affirming the decision of the collector. The Circuit Court affirmed the action of the general appraisers, and upon appeal to the Circuit Court of Appeals that court in turn affirmed the decree of the Circuit Court. 113 Fed. Rep. 144.

Mr. Ernest A. Bigelow on behalf of petitioner supported the contention that no bounty or grant was paid or bestowed by the Russian government upon the exportation of the consignVOL. CLXXXVII-32

Argument for Petitioner.

ment of sugar involved in the action. The Russian sugar law is not a covert scheme to pay concealed bounties on exportation, but the genuine effort of a paternalistic government to wrest the control of the trade from a pernicious sugar ring and to regulate the industry in the interest of producer and consumer alike.

Section five of the tariff act of 1897 (in full in opinion, p. 501 post), applies only to bounties on exportation and is distinguished from bounties on production. Allen v. Smith, 173 U. S. 402. By specifying only bounties upon exportation, Congress must have intended to exclude bounties on production from the operation of section five, and unless the bounty alleged to be paid by the Russian government be conditioned solely on exportation, and in such fashion that the exporter gets it and the non-exporter does not, unless, in other words, the exporter is placed in a better position than if he had not exported, then the bounty is not a true bounty on exportation, and section five can have no application thereto. The purchase price of the "free sugar” export certificate is not a bounty on exportation; and merely liquidating the value of the right cannot convert that into a bounty on exportation which was not one before. The enhanced prices secured to manufacturers by the operation of a high protective tariff constitute a virtual bounty on production. Alexander Hamilton's Report on Manufactures; United States v. Realty Co., 136 U. S. 427, 434; Colder v. Henderson, 54 Fed. Rep. 802, 803; Lord Pirbright, P. C., Prest. of Sugar Conference of 1888, in Empire Review for April, 1902, p. 264. The question is not whether protective duties are indirect bounties, but whether Congress intended to include them within the scope of section five, and it is plain that Congress could not have had any such intention. The action of the Russian government in further limiting the market to a portion only of the product distinguishes the system in degree, but not in principle, from the American system. The wording of the section excludes the theory that Congress intended to include therein the "virtual bounties" resulting from the operation of protective tariffs or other artificial limitations of the home market.

The Russian law does not, either directly or indirectly, re

Argument for Respondent.

quire the manufacturer to export any portion of his sugar as a condition precedent to selling the balance in the home market, but on the contrary invites him not to do so but to carry over his surplus into the next campaign. This disposes of all arguments based on a supposed obligation to export in order to obtain the benefit of the artificially high prices in the home market. The Brussels Sugar Conference decided, not that Russia paid a bounty on exportation, but that the artificially high prices ensured on the home market by the high protective tariff acted as virtual bounties on production, enabling the manufacturer to endure losses abroad. If such conclusions are to be adopted the United States is the greatest bounty paying country in the world. Congress never intended the words "bounty or grant" as used in section five to have any such extreme application. The remission of excise taxes on the exportation of sugar is not a bounty or grant on exportation as the terms are used in section five. If the question is one in doubt, the doubt must be resolved in favor of the importer "as duties are never imposed on citizens upon vague or doubtful interpretation.” Hartranft v. Wiegmann, 121 U. S. 609, 616; Adams v. Bancroft, 3 Sumner, 38.

Mr. Assistant Attorney General Hoyt, for the United States, respondent.

The single question involved is whether a bounty was bestowed by Russia on the exportation of the sugar. The point of jurisdiction which might be urged in favor of exclusive executive authority to determine the question appears to have been waived by the Secretary of the Treasury having voluntarily submitted the matter to the judicial determination of the Board of General Appraisers and the courts. The only other case under this law is Hills v. United States, 99 Fed. Rep. 425; on appeal, 107 Fed. Rep. 107, which decided that the practical effect of the Dutch law is to make the remission of the Excise Tax from the standpoint of other countries a bounty on exportation.

The Russian government desires to maintain prices, and therefore limits the output on the domestic market. It also

Opinion of the Court.

desires to stimulate production, and for this purpose puts a premium on exportation. It is neither necessary nor proper to suggest a covert purpose to bestow a bounty by seeking a covert method; but the Russian attitude offers some excuse for such a suggestion. It is enough to establish that the premium on exportation, the indirect bounty, is the necessary effect and result of the scheme. The grant as a governmental allowance is shown by the complete control of the government over it. The government reserves the right to suspend the remission of excise in order to guard against the effect of such a rise of prices in the rest of Europe as might cause an abnormal domestic over-production. One highly significant feature in the arrangement is the cession or transfer of free sugar from one mill to another in order to facilitate exportation, which transfer carries a consideration to the producer who cedes his home market right, and constitutes the concrete evidence of the premium or indirect bounty on exportation. Hartranft v. Wiegmann, 121 U. S. 609, distinguished, but see Henderson v. The Mayor, 92 U. S. 259, 268, as to the doctrine of reasonable interpretation. This court does not accept a foreign remission of internal tax as conclusive upon its effect with respect to our own laws. United States v. Passavant, 169 U. S. 16. The Russian scheme carried out under their sugar law and regulations clearly amounts to the paying or bestowing indirectly of a bounty or grant upon the exportation of sugar which properly subjects the merchandise upon importation into this country to the countervailing duty presented by section five of the tariff act of 1897.

MR. JUSTICE BROWN, after making the foregoing statement, delivered the opinion of the court.

This case involves the single question whether, under the laws and regulations of Russia, a bounty is allowed upon the export of sugar which subjects such sugar, upon its importation into the United States, to an additional duty equal to the entire amount of such bounty, under the act of Congress of July 24, 1897, 30 Stat. 205, which reads as follows: