CIT Corporation v. United States, 4079.

• Decision Date: 09 November 1936
• Docket Number: No. 4079.,4079.
• Citation: 86 F.2d 311
• Parties: C. I. T. CORPORATION v. UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

86 F.2d 311 (1936)

C. I. T. CORPORATION v. UNITED STATES.

No. 4079.

Circuit Court of Appeals, Fourth Circuit.

November 9, 1936.

John D. Carr, of Roanoke, Va., and Joseph G. Myerson, of New York City (Geo. S. Shackelford, Jr., of Roanoke, Va., on the brief), for appellant.

Howard C. Gilmer, Jr., Asst. U. S. Atty., of Pulaski, Va. (Joseph H. Chitwood, U. S. Atty., of Roanoke, Va., and William W. Barron, Atty., Department of Justice, of Washington, D. C., on the brief), for the United States.

Before NORTHCOTT and SOPER, Circuit Judges, and GLENN, District Judge.

SOPER, Circuit Judge.

The District Court in this case denied the claim of the C. I. T. Corporation for the remission of the forfeiture of an automobile which had been seized by federal officers and libeled for forfeiture under Rev. St. § 3450, 26 U.S.C.A. § 1441, by the United States attorney on April 25, 1935, on the ground that it had been used on February 27, 1935, for the unlawful transportation of distilled spirits upon which the tax had not been paid. The claim for remission was filed after the seizure and before the decree of forfeiture.

The car was sold on May 8, 1934, by the Mercer Garage of Bluefield, W. Va., to Joe Houston for $773, of which the purchaser paid $227, and for the balance executed a conditional sales contract for the payment of eighteen monthly installments beginning June 25, 1934, providing that the failure to pay any installment when due would mature the remaining installments. The agreed payments were made until February 25, 1935, at which time the balance due was $300. On the day that the contract was executed, it was assigned for a valuable consideration to the C. I. T. Corporation so that it became entitled to possession of the car when the purchaser subsequently made default.

The evidence tended to show the following additional facts: The C. I. T. Corporation at no time had any actual knowledge that the automobile was being used or would be used in violation of any law, state or federal. Joe Houston, the purchaser, had no criminal record and no reputation as a violator of the laws relating to intoxicating liquor. He was in fact an assistant foreman for the Pocohontas Fuel Company and had been a steady worker in this capacity for a number of years. He resided, however, in the same house as one Fred Trump, who was driving the car in violation of the law when it was seized. Trump had a criminal record and a reputation as a violator of the liquor laws. He frequently drove the car, and had made certain of the payments thereon. At the time of the purchase of the contract, the manager of the branch office of the C. I. T. Corporation made an investigation of Joe Houston through a savings institution which had made similar investigations during the preceding five years and received a good report, but no inquiry was made of the law enforcement officers.

The court found that Houston did not have a reputation as a law violator; but that if any inquiry had been made as to Houston after the purchase, it would have shown the relationship between him and Trump and the use of the car by the latter, and would have led to the belief that the car was being used for illegal purposes.

The documents used in the conditional sales agreement were executed upon forms furnished by the C. I. T. Corporation, which included a statement to be made by the purchaser wherein the following question appeared: "Have you ever used a car or do you intend to use above car to transport alcoholic beverages, or have you had any difficulty respecting prohibition or enforcement laws?" The answer to this question was left blank. In the same paper the purchaser expressly authorized the seller, or his assigns, to make any investigation concerning him and concerning the inquiries propounded in the statement.

The claimant's case is based upon section 204 of the Liquor Law Repeal and Enforcement Act of August 27, 1935, 49 Stat. 878, 27 U.S.C.A. § 40a which is in part as follows:

"§ 40a. Remission or mitigation of forfeiture of vehicle or aircraft; possession pending trial.

"(a) Jurisdiction of court. Whenever, in any proceeding in court for the forfeiture, under the internal-revenue laws, of any vehicle or aircraft seized for a violation of the internal-revenue laws relating to liquors, such forfeiture is decreed, the court shall have exclusive jurisdiction to remit or mitigate the forfeiture.

"(b) Conditions precedent to remission or mitigation. In any such proceeding the court shall not allow the claim of any claimant for remission or mitigation unless and until he proves (1) that he has an interest in such vehicle or aircraft, as owner or otherwise, which he acquired in good faith, (2) that he had at no time any knowledge or reason to believe that it was being or would be used in the violation of laws of the United States or of any State relating to liquor, and (3) if it appears that the interest asserted by the claimant arises out of or is in any way subject to any contract or agreement under which any person having a record or reputation for violating laws of the United States or of any State relating to liquor has a right with respect to such vehicle or aircraft, that, before such claimant acquired his interest, or such other person acquired his right under such contract or agreement, whichever occurred later, the claimant, his officer or agent, was informed in answer to his inquiry, at the headquarters of the sheriff, chief of police, principal Federal internal-revenue officer engaged in the enforcement of the liquor laws, or other principal local or federal law-enforcement officer of the locality in which such other person acquired his right under such contract or agreement, of the locality in which such other person then resided, and...