A. Guckenheimer & Bros. Co. v. United States

• Decision Date: 03 February 1925
• Docket Number: No. 3222.,3222.
• Parties: A. GUCKENHEIMER & BROS. CO. et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Third Circuit

3 F.2d 786 (1925)

A. GUCKENHEIMER & BROS. CO. et al. v. UNITED STATES.^*

No. 3222.

Circuit Court of Appeals, Third Circuit.

February 3, 1925.

Charles B. Prichard, B. B. McGinnis, and Oliver K. Eaton, all of Pittsburgh, Pa. (Frank Davis, Jr., of Washington, D. C., of counsel), for plaintiffs in error A. Guckenheimer & Bros. Co., Brown, and Farkas.

John M. Henry and Jos. H. Reich, both of Pittsburgh, Pa., for plaintiffs in error Little and Beck.

Louis Little, of Pittsburgh, Pa., for plaintiff in error Dickerman.

Walter Lyon, U. S. Atty., and George V. Moore and Arthur W. Henderson, Sp. Asst. U. S. Attys., all of Pittsburgh, Pa.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

WOOLLEY, Circuit Judge.

This case was prosecuted against a corporation and 13 persons under an indictment which charged them with conspiring to obtain the release of a large quantity of whiskey from bond and to sell and deliver it unlawfully. Section 37 of the Criminal Code (Comp. St. § 10201).

The trial court directed the acquittal of Frank Tito; the United States attorney entered a nolle prosequi as to Sherer; the jury acquitted Shapiro, Mazer, Weiners and Morrison and rendered a verdict of guilty against A. Guckenheimer & Brothers Company, a corporation, and against Brown, Farkas, Joseph Tito, Little, Beck, Dickerman and Ferris. To the sentences imposed the convicted defendants, except Joseph Tito, sued out these writs of error.

In order to discuss the principal matters presented by the many assignments of error, it becomes necessary to state the case. However, in view of the great volume of testimony and the intricacies of the facts, involving the Federal liquor permit system, we shall give the story only in outline.

A. Guckenheimer & Brothers Company owned one of the oldest whiskey distilleries in Western Pennsylvania, located at Freeport. It owned another with which the case has little to do. In 1921, Farkas, Shapiro, Mazer and Brown purchased the entire capital stock of the corporation. In the reorganization which followed, Farkas became President; Shapiro, Vice President; Mazer, Treasurer; and Brown, a Director.

This deal carried with it the ownership of approximately 5,000 cases of whiskey which were tax paid and in the free warehouse of the distillery. There were, at the time, between 9,000 and 10,000 barrels of whiskey, or about 400,000 gallons, in the bonded warehouses of the corporation against which warehouse receipts, or "certificates," had been issued. These certificates evidenced the ownership of the liquor and could be lawfully bought and sold. They were held by many persons then in no way connected with the transaction. So far everything was lawful. The problem to one who, in such a situation, contemplates making money by illicit traffic in whiskey which is on his premises yet is owned by others lies first in acquiring ownership of the whiskey and next in getting it out of bond and into the hands of bootleggers. This involves the difficulty of getting it past Government agents in charge of the bonded warehouse and procuring its delivery, which can lawfully be done only on permits to purchase issued by the Government to those who have qualified to buy liquor for lawful use. How these difficulties were overcome in the instant case may be illustrated by one transaction.

Deitrick, formerly a wholesale liquor dealer at McKeesport, Pennsylvania, held certificates showing that he owned thirty-five barrels of Guckenheimer whiskey in the bonded warehouses of the corporation. Being in bond, this whiskey was not available for illicit sale and was therefore worth relatively little money. Being of small value compared with its value if it were in his possession, Deitrick sold his certificates to J. A. Farkas, a brother of one of the defendants, for about $4,100. At the same time he purchased from Farkas 150 cases of Guckenheimer whiskey at about $90 a case, to be delivered at his place of business. Later, he made other purchases, amounting to 350 cases in all. The immense profits of such a transaction, when carried through, represent the difference between the value of whiskey in bond and its value out of bond; or the difference between whiskey certificates lawfully held and actual whiskey unlawfully possessed. For instance, a barrel of whiskey will make approximately 15 cases. Deitrick was paid $4,100 for certificates for 35 barrels, enough to make 525 cases. In return, he purchased 350 cases for $34,000; that is, he sold his whiskey for $4,100 and in effect re-purchased a portion of his own whiskey for $34,000.

It was therefore obvious that before such profits could be realized the whiskey in the bonded warehouses of the corporation had to be delivered to purchasers, who, as in Deitrick's case, not holding permits to purchase, had no right to receive it. The only way to make such deliveries was by violating the law. Certain of the defendants proceeded to do this in the following manner: First, they lawfully acquired lawful certificates, thus obtaining lawful title to the whiskey which upon its release gave them the right to pay the government tax. They then procured forged permits, not in the names of the actual purchasers, whose identity for obvious reasons had to be concealed, but in the names of other persons, real or fictitious. On these the first step in the release of the whiskey was effected. Here another difficulty was encountered, and this had to do with the physical delivery of whiskey to the undisclosed purchasers — persons other than the persons named in the forged permits. This involved complicity of truckmen in the unlawful transaction. So, in 1921, such deliveries were made by the "Interstate Trucking Company" of which Little was proprietor and Beck manager. In 1922 deliveries were made by Joseph Tito, a trucker, and in two instances by "Breet Trucking Company," a fictitious concern. There was still another difficulty to be surmounted in delivering whiskey to purchasers for illicit use. This grew out of a practice of the department requiring that before whiskey can be released and delivery made on valid permits the Government storekeepers and gaugers must have the permits confirmed by the Federal Prohibition Director's Office. False confirmations were procured through counterfeit post office records; through impersonation of Government officers; and through corruption of Federal employees. Confirmation can also be lawfully made by telephone. In one instance, a storekeeper at the Freeport bonded warehouse, when proceeding to obtain confirmation of what was a bogus permit, was directed by one involved in the conspiracy to call up the office of the Federal Prohibition Director at Philadelphia by one of two telephone numbers given him. On making the call the permit was confirmed by the party at the other end of the line. But the numbers given the storekeeper were those of the Hotel Walton and not of the Office of the Federal Prohibition Director and, of course, the confirmation was made by one without authority.

In order to make deliveries of this very large quantity of whiskey it was found necessary to have caches where liquor could be stored after its removal from the distillery, and also necessary, in addition to truckers, to employ individuals to effect distribution to a large body of ultimate purchasers. One of such places was maintained by Dickerman, who had in the cellar of his garage a secret room in which the whiskey was stored and from which, through a small hole, it was passed on being loaded upon outbound tracks for transportation. One of these trucks conveying Guckenheimer whiskey was stopped by Government officers and the driver on being arrested disclosed the situation.

Ferris, a Federal Prohibition Agent, was engaged in making small deliveries.

The transactions, of which we have given an example, involved 310 forged permits, made in some instances in the names of fictitious persons but more generally in the names of entirely reputable druggists, business houses, and individuals without their knowledge, to no one of whom were deliveries made. Through these permits approximately 100,000 gallons of whiskey were released and delivered to unknown persons for unlawful use. For lawful use, as for medicine, the whiskey thus delivered would have been worth about $1,000,000, but when diverted to unlawful use it was worth several times as much.

At the trial the 310 permits were offered in evidence and the signature on each was proven a forgery. Much of the evidence offered by the Government on the issue of forged permits consisted of letters confirming permits, envelopes, return registry receipts or post cards, telegrams, telephone records, memoranda and correspondence obtained from the corporation in a manner which all the defendants maintained at the trial, and now urge here, was violative of their rights under the Fourth Amendment to the Constitution.

The alleged unlawful search and seizure occurred in a transaction long before the indictment in this case was found. The corporation had been doing business as a wholesale liquor dealer under a...