Eagle v. Nowlin

• Decision Date: 29 May 1899
• Docket Number: 5,873.
• Parties: EAGLE v. NOWLIN, Collector.
• Court: U.S. District Court — District of Indiana

94 F. 646

EAGLE v. NOWLIN, Collector.

No. 5,873.

United States District Court, D. Indiana.

May 29, 1899

Under 1 Supp.Rev.St.p. 505, 3, providing that 'retail dealers in oleomargarine shall pay' a certain tax, and that 'every person who sells oleomargarine' in specified quantities is a retail dealer, such a dealer is liable to the tax, though he honestly believed that what he bought and sold was butter.

This is an action brought by the plaintiff against the defendant, as collector of internal revenue, to recover the amount of a tax assessed against, and collected from, the plaintiff, as a retail dealer in oleomargarine, by the defendant. The plaintiff insisted that he was not liable to the tax, and paid the same to the collector under protest. The case was by agreement, submitted to the court for trial on the following agreed statement of facts:

'The plaintiff, John H. Eagle, is a grocer in the city of Indianapolis, Ind., doing business at No. 624 North Delaware street. That said John H. Eagle bought of the Three Friends Creamery what was sold by said company as creamery butter, and sold the same to the trade generally believing at the time that it was creamery butter. That he handled these goods for a period of 11 months, beginning with August, 1897. That it was discovered by the revenue officers that the said Three Friends Creamery was manufacturing oleomargarine in violation of law, and that the goods bought by said John H. Eagle, and sold as creamery butter, were in fact oleomargarine. That the commissioner of internal revenue thereupon assessed a tax of $44 and a penalty of $22 against him as a retail dealer in oleomargarine, and the revenue collector notified him the said Eagle, that such assessment had been made, and must be paid within 10 days. Mr. Eagle asked for time to present application for abatement of tax and penalty to the commissioner of internal revenue, which time was granted. On this application and proof offered, the commissioner abated the penalty, but ordered the collection of the tax, $44, which was paid by Mr. Eagle under protest; he having filed the usual return for special tax on Form 11, a copy of which is hereto attached, marked in red ink 'Copy.' This was also filed under protest by Mr. Eagle. He also appealed to the commissioner of internal revenue from said assessment and payment thereof, which appeal was overruled. It is agreed that he did sell, at retail oleomargarine, but it is also agreed that he did not know at the time it was oleomargarine. It is also agreed that he made no special effort to inform himself as to whether it was oleomargarine or creamery butter. It is also agreed that he had no special tax stamp at the time, nor had he paid any special tax, as a retail dealer in oleomargarine. That the defendant collected the amount, $44, as the revenue collector of the Sixth district, and not otherwise. That it was paid by the plaintiff after time had been given to him to present the matter to the commissioner of internal revenue, and after the hearing of his complaint, and the abatement of the penalty of 50 per cent., and that he appealed from said assessment of tax against him, which was also heard and overruled, after which this suit was brought, and is now pending, to recover the said sum of $44 so paid.'

The statute under which the tax was assessed and collected reads:

'Retail dealers in oleomargarine shall pay forty-eight dollars. Every person who sells oleomargarine in less quantities than ten pounds at one time shall be regarded as a retail dealer in oleomargarine.' 1 Supp.Rev.St.U.S.P. 505, § 3.

Frank B. Burke, for plaintiff.

A. W. Wishard and J. J. M. La Follette, for defendant.

BAKER District Judge (after stating the facts as above).

The contention of the plaintiff is that having in good faith, and without fault or negligence, purchased the oleomargarine as creamery butter, and having sold the same in like good faith, without fault or negligence, he is not liable to the tax. The statute is a revenue regulation, operating incidentally for the protection of the public health, and the congress regarded the dealing in oleomargarine as suitable subject for the imposition of a tax. In the absence of the statute, dealing in oleomargarine would be as legitimate as dealing in any other harmless commodity. The statute is not aimed at dealing in oleomargarine as an act which is immoral or malum in se, but as one which is made malum prohibitum, in aid of the revenue, except upon payment of the prescribed tax. It does not make knowledge on the part of the dealer an ingredient in his liability to pay the tax; nor ought the court to import, by construction, such an ingredient into it. If a person deals in oleomargarine, without regard to the question of motive or knowledge, he becomes liable to the tax. The principle on which this doctrine is grounded is well stated in 3 Greenl.Ev. § 21, where it is said:

'Ignorance or mistake of fact may, in some cases, be admitted as an excuse. But where the statute commands that an act be done or omitted, which, in the absence of such statute, might have been done or omitted without culpability, ignorance of the fact or state of things contemplated by the statute, it seems, will not excuse its violation. Thus, for example, where the law enacts the forfeiture of a ship having smuggled goods on board, and such goods are secreted on board by some of the crew, the owner and officers being alike innocently ignorant of the fact, yet the forfeiture is incurred notwithstanding their ignorance. Such is also the case in regard to many other fiscal, police, and other laws and regulations, for the mere violation of which, irrespective of the motives or knowledge of the party, certain penalties are enacted; for the law in these cases seems to bind the party to know the facts and to obey the law at his peril.'

A brief review of some of the cases will show that where the statute commands that an act be done or omitted which, in the absence of such statute, might have been lawfully done or omitted, ignorance of the fact or state of things contemplated by the statute will not excuse its violation.

The case of Reg. v. Woodrow, 15 Mees.& W. 404, was an information for the recovery of a penalty brought by William Hedges, an officer of the excise, against Woodrow, a licensed dealer in tobacco by retail, for having in his possession adulterated tobacco, contrary to an act of parliament. The action was brought under the third section of 5 & 6 Vict.c. 93, § 3, which provided as follows:

'That every manufacturer of, dealer in, or retailer of tobacco, who shall receive or take into or have in his possession, or who shall sell, send out, or

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