I accept, that the entry must be liquidated within three years from date of entry.
When Section 557 of the Tariff Act of 1930, as amended,
is read in conjunction with Section 559,
these provisions in effect provide that within three years from the date of original importation the importer must either pay the duties and taxes on the goods or suffer them to be abandoned to the government.
Prior statutes had similar sections. See Act of September 21, 1922, c. 356, Title IV, Secs. 557, 559, 42 Stat. 977; Act of October 3, 1913, c. 16 Sec. III, S, 38 Stat. 189; Act of August 5, 1909, c. 6, Sec. 19, 36 Stat. 101; Act of June 10, 1890, c. 407, Sec. 20, 26 Stat. 140; R.S. Secs. 2970-2972.
It has been said that these statutes express the intent of Congress to secure prompt payment of duties and taxes on imported goods by limiting the time within which an importer must exercise his right to withdraw these goods from the bonded warehouse and by penalizing his failure to do so. E.g., Anglo-California Bank, Limited v. Secretary of Treasury, 9 Cir., 76 F. 742, 749, certiorari denied 166 U.S. 722, 17 S. Ct. 991, 41 L. Ed. 1188, appeal dismissed 175 U.S. 37, 20 S. Ct. 19, 44 L. Ed. 64. An inherent part of this intent is the requirement that the collector of customs liquidate the entry and determine the duties and taxes within the time allowed for withdrawal. The obviousness of this requirement and compliance therewith is probably the reason for the dearth of litigation on the precise point involved in this case. Cf. United States v. Campbell, supra, 10 F.at pages 817-821; United States v. DeVisser, Ex'x. etc., D.C., 10 F. 642.
Therefore, I find from the words 'shall pay' an implied condition precedent in the surety's bond that the government will liquidate the entry within three years from the date of the original importation.
The failure of the government to cooperate or to comply with this condition precedent, which is necessarily implied for the performance of the contract, releases the surety from liability. Stearns, Law of Suretyship, 163 (4th ed. 1934); Restatement, Contracts Sec. 395; 3 Williston, Contracts Sec. 887A (rev. ed. 1936); 50 Am.Jur. 1018.
If the entry had been liquidated within the three year period, the bond would have remained in full force and effect until the duties and taxes were paid. But the surety is under no obligation to compel liquidation. When the collector of customs delays making the liquidation until after the expiration of the three year period, regardless whether this delay is for seven months or seven years, the surety's right to pay the amount due and to proceed against its principal for indemnity is also postponed for that length of time.
Thus, the effect of the government's failure to comply with the implied condition precedent in the bond is to prolong the surety's risk without its consent.
It is fundamental that an extension of time to pay is a material alteration of the contract that discharges the surety if the extension was granted without the surety's consent. Stearns, Law of Suretyship Sec. 81; Restatement, Security Sec. 129(1), Comment a; 50 Am.Jur. 944-945.
Accordingly, the defendant surety is entitled to judgment as a matter of law.
The plaintiff's motion for summary judgment is hereby denied. The defendant's motion for summary judgment is hereby granted.