Dryfoos v. Edwards

• Decision Date: 14 November 1919
• Citation: 284 F. 596
• Parties: DRYFOOS et al. v. EDWARDS, Collector of Internal Revenue. JACOB RUPPERT, Inc., v. CAFFEY, U.S. Atty., et al.
• Court: U.S. District Court — Southern District of New York

284 F. 596

DRYFOOS et al. v. EDWARDS, Collector of Internal Revenue.

JACOB RUPPERT, Inc., v. CAFFEY, U.S. Atty., et al.

United States District Court, S.D. New York.

November 14, 1919

These cases came up on motions by the plaintiffs for temporary injunctions. In the first case the motion was to enjoin the collector from interfering with the withdrawal and sale for beverage purposes in the United States of certain distilled spirits. In the second the motion was to enjoin the district attorney and the deputy collector from enforcing the penalties against the plaintiffs of title 1 of the National Prohibition Act of October 28, 1919, because of its proposed sale of nonintoxicating beer containing more than one-half of 1 per cent. and not more than 2.75 per cent. of alcohol. The defendants moved in each case to dismiss the bills.

The bills present the question of the constitutionality of the War-Time Prohibition Act (Act Nov. 21, 1918, c. 212, 40 Stat 1047) and of title 1 of the National Prohibition Act, which establishes a definition of the words, 'beer, wine or other intoxicating malt or vinous liquors,' as used in the War-Time Prohibition Act, and provides a procedure for the enforcement of the earlier act. In the first case the plaintiffs allege that they are the owners of 474 packages of distilled spirits, which had been lawfully made before the War-Time Prohibition Act went into effect or had been passed (at least it is conceded that the bill shall be so understood), and which had been entered or deposited for storage in government warehouses and transferred in bond; that the defendant had refused to permit the withdrawal of any such distilled spirits and continued to refuse it; that the armistice between the German government and the United States was accepted on November 11, 1918, and that the United States in its various departments has suspended all war-time activity and has demobilized its forces, as appears from official communications of the President; that its army and navy has been reduced to less than its peace quota, and that various other of the interruptions of normal industry and intercourse occasioned by war have terminated; that the only constitutional basis of the War-Time Prohibition Act was under the war powers of the government, and had ceased to exist, so that the act itself was no longer in force.

The second bill alleges that the plaintiff is the owner of three plots of real estate in the city of New York, to the value of nearly $2,000,000, on which is erected a brewing plant, with all its equipment, to the value of over $10,000,000; that it has been engaged in the manufacture of malt liquors since 1910 to an annual amount of more than $8,000,000; that since January 1, 1918, it has discontinued the manufacture and sale of beer of more than 2.75 per cent. alcohol, which does not intoxicate; that it had on hand on October 28, 1918, a large number of barrels of beer containing 2.75 per cent. of alcohol, on which day Congress passed title 1 of the National Prohibition Act, making its sale thereafter illegal; that for some six months before October 28, 1919, no general emergency had existed warranting such prohibition by Congress either military or otherwise; that the armistice had been accepted by Germany and Austria on November 11, 1918, and that the President had proclaimed that prohibition was no longer necessary on October 27, 1919, in a message in which he vetoed the National Prohibition Act; that in this message he had proclaimed that the army and navy had been demobilized and the other objects of the War-Time Prohibition Act had been satisfied; that this was in fact the case, and that most of the boards of governmental instrumentalities appointed to carry on the war had been disbanded; that the effect of title 1 was to destroy the valuable business and good will of the plaintiff, to dissipate its staff of employes, and to reduce its plant to a junk or salvage value only; that the act is unconstitutional, and that the defendants, in enforcing the same, will be acting without warrant of law.

The plaintiff in the second case submitted certain affidavits supporting in detail the allegations of the bill, showing that the reduction of the beer on hand from 2.75 per cent. to one-half of 1 per cent. of alcohol will involve the loss of a large sum of money, also showing that the use of 2.75 per cent. beer was not intoxicating. The whole point in issue is the constitutionality of the two acts; the first as affecting the plaintiffs in the first suit and the second as affecting the plaintiff in the second suit.

Walter C. Noyes, M. J. Stroock, and Arthur L. Strasser, all of New York City, for plaintiffs Dryfoos and others.

Elihu Root and William D. Guthrie, both of New York City, and William L. Marbury, of Baltimore, Md., for plaintiff Jacob Ruppert, Inc.

William I. Frierson, of Chattanooga, Tenn., and Francis G. Caffey and Earl B. Barnes, both of New York City, for defendants.

LEARNED HAND, District Judge (after stating the facts as above).

The War-Time Prohibition Act was passed on November 21, 1918, 10 days after the acceptance of the terms imposed by the Allies upon the German government and when the Empire had fallen. The circumstances were then such as made patent to every one that successful hostilities could not be resumed, and, as the President declared to Congress a few weeks later, the war had come to an end. If, therefore, the war powers of Congress were dependent upon the prosecution of further hostilities in the field, they had ceased. However, no one urges that this was the case. Every one agrees that to some extent, at least Congress had the power to take steps necessary to insure the observance of the terms of the armistice and to demobilize the forces which had been called to the colors. The second admission is, however, significant to this extent, that it concedes that the powers of Congress do not terminate at once with the cessation of hostilities, but that they include the power to restore, in certain respects anyway, the status quo ante bellum. It therefore becomes necessary to inquire how far the powers of Congress go to that end.

It seems to me rather a barren question whether the so-called war powers are to be drawn from the express power 'to declare war,' though that has been said at times (Miller v. United States, 11 Wall. 268, 305, 20 L.Ed. 135; Ex parte Milligan, 4 Wall. 2, 139, 18 L.Ed. 281, per Chase, C.J.), or whether it is to be found in the added power 'to raise and support armies,' or whether it is to be inferred from the fact that the United States is the only sovereign recognized among the world of nations, within the territory of the United States, at once responsible and vested with any of the powers which are customarily exercised by such a sovereign so charged (Julliard v. Greenman, 110 U.S. 421, 447, 449, 450, 4 Sup.Ct. 122, 28 L.Ed. 204). The real question is of the limits, after the cessation of hostilities, of the powers of Congress to unravel the results which war has caused. That it has some such powers, as I have said, cannot be denied. The forces must be demobilized, the unnecessary accumulation of supplies must be sold, the railroads must be returned, or some other valid status given them, the ships, built and building, must be disposed of, contracts must be canceled, and the immense organization of workmen and of factories and machinery must be restored to the general industrial life of the nation. So much, at least, is within the powers of Congress, and in the execution of its powers it is not limited narrowly. Veazie Bank v. Fenno, 8 Wall. 533, 19 L.Ed. 482; The Legal Tender Cases, 12 Wall. 457, 20 L.Ed. 287.

Now, I cannot see why it should be thought a legitimate concern of Congress to deliver its soldiers and workmen to the places whence they came, and yet be held totally beyond its ken to inquire into the conditions which they must meet upon their arrival. The nation is to-day the employer of thousands of men upon the railways, which it holds, not by virtue of the interstate commerce clause, but under its war powers. It has discharged some 4,000,000 soldiers and immense numbers of workmen from industries suddenly discontinued by the war. The inevitable industrial adjustments, which so enormous and sudden an influx into the industries of the country involve, are a direct and immediate result of the war. They are one of the consequences of a return to a peace footing, quite as inextricably involved in the prosecution of war as the disposal of its accumulated supplies and munitions. As to the last, Congress might prescribe rules as to how they should be marketed, perhaps, indeed, might even regulate their prices till the effect of the new supply was absorbed. Is not the same rule to apply to its men? The responsibility for some adequate provision against the immediate results of military and industrial demobilization is national, because it was the nation for its own purposes that chose to produce them. No doubt the states might in a measure deal with them, but the nation has neither the duty nor the right to abandon the problems that it alone has raised. It was for war that these men were taken from their work; it was for war that unaccustomed duties were imposed upon them; and it may prove of vital importance in another war whether the nation disregards all further duty to them as soon as they are discharged.

Now a policy of prohibition rests, or at any rate may rest, upon the belief that the use of intoxicating drink will provoke discontent, disorder, economic waste, and industrial friction and maladjustment among this class and during this period. With the correctness of that belief, of course, I have nothing to do; it is enough that it...