Commercial Credit Co v. United States

• Decision Date: 20 February 1928
• Docket Number: No. 258,258
• Citation: 72 L.Ed. 541,48 S.Ct. 232,276 U.S. 226
• Parties: COMMERCIAL CREDIT CO. v. UNITED STATES
• Court: U.S. Supreme Court

276 U.S. 226

48 S.Ct. 232

72 L.Ed. 541

COMMERCIAL CREDIT CO.

v UNITED STATES.

No. 258.

Argued Nov. 21 and 22, 1927.

Decided Feb. 20, 1928.

Mr. Duane R. Dills, of New York City, for petitioner.

Mr. Wm. D. Mitchell, Sol. Gen., of Washington, D. C., for the United States.

[Argument of Counsel from page 227 intentionally omitted] Mr. Justice SANFORD delivered the opinion of the Court.

This is a libel brought by the United States in November, 1925, in the federal court for the Western District of Washington, under section 3450 of the Revised Statutes¹, to forfeit a Ford coupe upon the ground that it had been used in the removal, deposit, and concealment of intoxicating liquor, with intent to defraud the United States of the tax thereon. The Commercial Credit Company intervened as claimant, asserting title to the car and alleging that it had no knowledge that the car was used or intended to be used in violation of law.

By stipulation of the parties the case was heard by the District Judge without the intervention of a jury. The evidence showed that in October a customs inspector who, in consequence of reports that this car was being used to distribute Canadian liquor about the city of Seattle, had watched its movements for some days, discovered one Campbell-who had purchased the car under a conditional sale-in the act of backing the car out of an alley in the rear of his house, stopped the car, searched it, found that it contained thirteen quarts of whisky and gin, arrested Campbell, and seized the car. The liquor bore labels indicating that it was of foreign manufacture, and there were no stamps on the bottles showing the payment of duty or internal revenue taxes. It was also stipulated at the hearing that Campbell was prosecuted in the District Court under the National Prohibition Act² on the charges of 'unlawful possession and transportation of liquor and plead guilty to unlawful possession, whereupon the government dismissed as to the transportation, and that covers the identical transaction here involved.' Thereafter the government brought the libel to forfeit the car.³ At the close of the evidence the claimant moved to dismiss the libel, on the ground, among others, that the United States had elected to proceed under the National Prohibition Act and was barred from proceeding under section 3450. The District Judge denied this motion, and entered a decree condemning and forfeiting the car to the United States. This was affirmed by the Circuit Court of Appeals, which held that, as Campbell's conviction of unlawfully possessing intoxicating liquor was under section 3 of title 2 of the Prohibition Act (27 USCA § 12), and did not entail a disposition of the car under section 26 of that title (27 USCA § 40), the government was at liberty to proceed under section 3450 for the forfeiture of the car. 17 F.(2d) 902.

The petition for the writ of certiorari was based solely on the ground that under section 26 of the Prohibition Act the government was barred from proceeding to forfeit the car under section 3450; and no other question will be considered. Alice State Bank v. Houston Pasture Co., 247 U. S. 240, 242, 38 S. Ct. 496, 62 L. Ed. 1096; Webster Co. v. Splitdorf Co., 264 U. S. 463, 464, 44 S. Ct. 342, 68 L. Ed. 792; Steele, Executor, v. Drummond, No. 60, 275 U. S. 199, 48 S. Ct. 53, 72 L. Ed. 238, Nov. 21, 1927.

Section 26 provides that:

'When the Commissioner, his assistants, inspectors, or any officer of the law shall discover any person in the act of transporting in violation of the law, intoxicating liquors in any wagon, buggy, automobile, water or air craft, or other vehicle, it shall be his duty to seize any and all intoxicating liquors found therein being transported contrary to law. Whenever intoxicating liquors transported or possessed illegally shall be seized by an officer he shall take possession of the vehicle * * * and shall arrest any person in charge thereof. Such officer shall at once proceed against the person arrested under the provisions of this title in any court having competent jurisdiction; but the said vehicle or conveyance shall be returned to the owner upon execution by him of a good and valid bond * * * approved by said officer and * * * conditioned to return said property to the custody of said officer on the day of trial to abide the judgment of the court. The court upon conviction of the person so arrested * * * unless good cause to the contrary is shown by the owner, shall order a sale by public auction of the property seized, and the officer making the sale, after deducting the expenses of keeping the property, the fee for the seizure, and the cost of the sale, shall pay all liens, according to their priorities, which are established, by intervention or otherwise at said hearing or in other proceeding brought for said purpose, as being bona fide and as having been created without the lienor having any notice that the carrying vehicle was being used or was to be used for illegal transportation of liquor, and shall pay the balance of the proceeds into the Treasury of the United States as miscellaneous receipts.'

The essential distinction between section 26 and section 3450, in so far as relates to the forfeiture of a vehicle, is that, where section 26 is the only applicable provision for its forfeiture, the interests of innocent owners and lienors are not forfeited, but, where it may be forfeited under section 3450 by reason of its use to evade the payment of a tax, the interests of those who are innocent are not saved. United States v. One Ford Coupe , 272 U. S. 321, 325, 47 S. Ct. 154, 71 L. Ed. 279, 47 A. L. R. 1025.

In Port Gardner Co. v. United States, 272 U. S. 564, 566, 47 S. Ct. 165, 71 L. Ed. 412, which came to this court on a certificate of the Circuit Court of Appeals, the driver of an automobile seized by prohibition agents had been charged with possession and...