This testimony was brought out on cross-examination and indicates that while the merchandise is sold in England, it is sold to selected purchasers.

On redirect the witness testified:

R. Q. Do you know whether the prices at which Meccano Co.'s customers in England sell to the trade are fixed by Meccano, Limited?— A. Those prices are fixed in all cases.

R. Q. So when they sell, do they sell at the list price?-A. They must do so, yes.

It further appeared on recross-examination that the British company only sells to agents or wholesalers in the foreign market, and in the home market "to the selected ordinary retailer; only those whom they select."

It would seem from Mr. Dobson's testimony for the plaintiff that the market in England was not a free one in which any person could purchase. This is sustained by an affidavit in evidence as Exhibit 1, made by Mr. Hewitt, secretary of Meccano, Ltd., of Liverpool, England, as follows:

In England Meccano, Limited, restricts the sale of its products to selected retailers; it does not supply to jobbers. Not every dealer in toys can sell Meccano products. In order to do so, a dealer must first be approved as a Meccano retailer for his locality; and he must invest in a stock of Meccano products to an amount determined by Meccano Limited, the quantities and variety of such stock investment being approved by Meccano Limited, who also fix uniform prices at which their products are to be sold at retail. The sale of any Meccano products at prices other than those determined by Meccano Limited, if persisted in, would result in the stoppage of supplies on trade terms to the offending retailer.

Similar conditions exist with respect to the exportation of Meccano products to other countries, excepting only the United States.

All sales of said products for exportation to the United States are made to Meccano Company of America, Inc., which company exclusively owns the Meccano trade-mark in the United States together with the exclusive right to sell Meccano products in the United States, having purchased said right and trade-mark in January, 1930.

It further appears from this affidavit that the products sold to Meccano Co. of America are without any conditions as to the resale thereof; and the determination of selling-prices and terms and conditions of sale of Meccano products in the United States is solely within the discretion of Meccano Co. of America, Inc.

After Mr. Dobson testified the case was submitted. However, application for a rehearing was made and granted, and Mr. Dobson was recalled. He testified that sales of merchandise in the United States are without any restriction whatever; that they are "free and open sales" to "anybody in the trade who has the money to pay" and at one price irrespective of quantity; that the price at which sold in the United States includes the cost of packing. Evidently,

the merchandise is not unpacked prior to its sale in the United States, but is ready for shipment to any purchaser in its packed condition as received from England.

The fact that sales are restricted in England is sustained by a special agent's report, Exhibit 3. The special agent made an investigation of these invoices, and received information from Meccano Co., Ltd., of England, the sellers thereof.

The prices at which the merchandise is sold in England are shown "in copies of the manufacturer's home market catalog and price list" attached to the report. The pricelist was effective July 1936.

The report shows that a trade discount of 33% per centum is allowed to all purchasers from the list prices, also "an additional deferred discount, credited monthly, allowed to certain selected large customers of either 5% or 7%, but the usual trade discount allowed is only the 33%%," and in addition a discount of "2%2% for cash, monthly account"; that "Delivery is free anywhere in the United Kingdom on orders of £2 in value and over."

It appears from this report that "The merchandise is sold to the Meccano Company of America (the plaintiff herein) at factory cost plus 10%"; that "Shipments are confined to this one importer"; that "no discounts are allowed from the invoiced price"; that "cases are charged extra", and "Cost of packing (labor) included in the price", and that the merchandise is "delivered f. o. b. Liverpool." It further appears that "the importer has no financial interest in the manufacturer"; that "The identical merchandise is sold to countries other than the United States."

The sum and substance of the evidence in this case establishes that there was not a free open market in England for this merchandise to all purchasers. The weight of the testimony establishes that it was a restricted market in the respect that the British company, the shipper, selected its own customers. This may or may not be for financial reasons; but I think the reason that sticks out rather positively is to prevent competition between dealers or customers. In a specified locality the British Meccano Co. may sell to one customer and refuse to sell to another in the same locality, not by reason of financial ability, nor mercantile qualifications, but to prevent competition and the lowering of prices they themselves create for the sale of the article by their purchasers.

The catalogs in evidence indicate a varied assortment of toys, some being quite expensive, and others less so. Not desiring competition in their own trade they select customers in a locality, and require them to purchase a certain quantity of their merchandise, and then exact from such customers an agreement that they sell at a certain price. It therefore seems to me that such method of doing business causes a

restricted market, and not within section 402 (c) which provides that the foreign value shall be the market value at the time of shipment to the United States "at which such or similar merchandise is freely offered for sale to all purchasers in the principal markets of the country from which exported".

I feel that this case is governed by the rule enunciated in Goodyear Tire & Rubber Co. v. United States, 11 Ct. Cust. Appls. 351, T. D. 39158, wherein the court stated (p. 353):

In brief, the selected dealer and the selected jobber buy and sell the Goodyear product at a fixed price and if either sells for a price other than that fixed he loses his agency.

That is the combination which appears in the case at bar. The selected dealer must purchase at a certain price and sell at a certain price. The Goodyear case holds such to be a restricted market.

This rule was again enunciated in United States v. Philipp Wirth, 20 C. C. P. A. 94, T. D. 45705, wherein the court states (p. 96):

Furthermore, the jobbers and dealers are required to resell at prices dictated and controlled by the manufacturer. They are prohibited from exporting. [Parenthetically that is not true in the case at bar.] It is upon these conditions only that the goods are sold to them. Obviously, then, the evidence discloses a controlled, not a free and open, market, and such restricted sales are not indicative of foreign value. [Words in brackets mine.]

This rule has not been changed by United States v. Michele Diagonale, 22 C. C. P. A. 517, T. D. 47497.

That case in my judgment is not applicable to the case at bar. The lower court there held it was a restricted market, but the holding was reversed on appeal for the reason that every dealer had to purchase at the restricted price; therefore, there was not any competition, but the court concluded that was not a restricted market.

While this rule has not been satisfactory, and has received some criticisms in later decisions, of course it is still the law, although there was a vigorous dissenting opinion by the late presiding Judge Graham. I feel it is not applicable to the facts in the case at bar for the very well-grounded reason that in this case the Meccano Co., Ltd., did not sell to every and all purchasers. It selected its purchasers; sold to them at a specific price; prohibited them from reselling at a price other than that given to them by the manufacturer at which to sell; and thus this case falls within the Goodyear Tire & Rubber case, supra.

I therefore find there was not a foreign market for this merchandise in England and that there was not an export market, as the plaintiff herein was the sole agent in the United States of the shipper, and, of course, could not create an export market. It therefore follows that this merchandise is dutiable according to its United

States value, as found in section 402 (e) of the Tariff Act of 1930, which provides as follows:

The United States value of imported merchandise shall be the price at which such or similar imported merchandise is freely offered for sale, packed ready for delivery, in the principal market of the United States to all purchasers, at the time of exportation of the imported merchandise *

The testimony is not contradicted that the price at which the plaintiff sold in the United States was a free one to any and all purchasers in the condition as packed on the date of exportation.

It is not disputed that the allowances that should be made are in accordance with the rule enunciated in United States v. Beer, 15 Ct. Cust. Appls. 140, T. D. 42215. That decision holds, referring to section 402 (d) of the act of 1922:

An analysis of section 402 (d) discloses that the United States value is the price at which such or similar imported merchandise is sold in the market. From this price are to be deducted the following allowances:

First. Duty.

Second. Cost of transportation and insurance.

Third. Other necessary expenses.

Fourth. Profits not to exceed 8 per centum.

Fifth. General expenses not to exceed 8 per centum.

Each of these items has been deducted, probably not in the order enumerated, but at the close of the testimony they have all been deducted, and the profit of 8 per centum and general expenses of 8 per centum are as testified by the witness, there not being any dispute in regard thereto.

Now, the question arises whether the plaintiff has established a United States value.

There was offered in evidence Exhibit 2 as an aid to the court, in which is disclosed the character of the merchandise, the sales price, and the United States value.

Attached to the special agent's report are invoices of merchandise sold in England and in foreign countries with the exception of the United States. It is disclosed in such report that as to the sales made to restricted retailers in a particular locality of Great Britain, the following statement of conditions of sale is contained in the right-hand corner of each of the invoices:

Conditions of sale

All goods are supplied on the understanding that they are to be re-sold by retail only and at the prices in our current price list without deduction. Your acceptance of them will be treated as an acknowledgment of these terms: otherwise they should be returned immediately.

Terms

Statements rendered monthly. All items are subject (unless otherwise stated) to a cash discount of 22% if paid on or before the 15th of the month following the date of this invoice, afterwards they are strictly nett.

This very fully indicates that sales are restricted and are not open and freely offered as required by section 402 (c).

I therefore find from the facts in this case that the appraiser was in error in his appraisement of this merchandise on its foreign value. I find it should be appraised according to its United States value as set forth in section 402 (e) of said Tariff Act of 1930. Such value is ascertainable by taking the sales price in the United States, and making the deductions therefrom as provided in said statute.

On the hearing Exhibit 2 was received in evidence by consent. That exhibit sets forth the United States value of each item involved. Calculations by the court disclose such values to be correct, and I therefore find the United States value of each item to be as set forth in said Exhibit 2. A list of the items covered by this case, with the United States value of each is attached to my judgment herein, and marked schedule A.

Judgment will be entered for the plaintiff accordingly.