Harris v. United States

• Decision Date: 04 August 1954
• Docket Number: No. 6800.,6800.
• Citation: 215 F.2d 69
• Parties: HARRIS v. UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

215 F.2d 69 (1954)

HARRIS v. UNITED STATES.

No. 6800.

United States Court of Appeals, Fourth Circuit.

Argued June 3, 1954.

Decided August 4, 1954.

John B. Browder, Richmond, Va. (Leaman & Browder, Richmond, Va., on brief), for appellant.

Richard R. Ryder, Asst. U. S. Atty., Richmond, Va. (L. S. Parsons, Jr., U. S. Atty., Norfolk, Va., on brief), for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

Charles Harris, claimant herein, was the owner of a Chevrolet truck. This truck was forfeited to the Government, when the truck was discovered in the transportation of illegal liquor, while in the possession of Raymond Davis. Harris sought relief from the forfeiture in the United States District Court for the Eastern District of Virginia. As the basis for this relief, Harris asserted that he parted with the possession of the truck to Davis, in the course of his U-Drive-It business, in good faith and utterly ignorant both of the illegal use to which the truck was to be put, and also of the bad reputation and past record of Davis in the field of trafficking in illegal liquor.

The District Court, after hearing the evidence and arguments, concluded that Section 3617(b)(3), Title 18 U.S.C.A. was applicable to Harris and that his admitted failure to make the statutory inquiries as to the reputation and record of Davis as a violator of the liquor laws disqualified him for the relief he sought. Harris has appealed to us.

There is little or no conflict in the facts. Davis, unbeknown to Harris, had been convicted of violating, and had the reputation of being a violator of, the liquor laws. Harris, "an honest, industrious, law-abiding Negro * * * operates a service station and rents trucks to those who wish to hire a truck" (District Court's Opinion). Davis had been purchasing gas and oil for his automobile from Harris for a while when, on the night prior to the episode in question, he asked Harris to rent him a truck for the following day. Harris asked and received $25 from Davis for the use of the truck but Harris made no inquiries of Davis. This is the first libel ever filed against one of appellant's trucks. According to the District Court, "It may be conceded that the claimant acted in good faith."

Title 18 U.S.C.A. § 3617(a) gives to the Court decreeing forfeiture of a vehicle the power to remit or mitigate the forfeiture. Subsection (b) thereof then provides as follows:

"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 of each locality in which the claimant has made any other inquiry as to the character or financial standing of such other person, that such other person had no such record or reputation."

Harris admittedly fulfilled requirements (1) and (2) of Subsection (b) and contends that (3) is not applicable to those engaged in the U-Drive-It business, the specified inquiries being required only of those doing a banking, financing or other type business in which it is customary to make credit inquiries about those who are to have possession of the vehicle.

The sole question here involved is whether the provisions of Section 3617 (b)(3) of Title 18 U.S.C.A., requiring certain inquiries of designated law enforcement officials by one delivering possession of a motor vehicle to another is applicable to one renting a vehicle in the usual course of his U-Drive-It business. Or, to be specific, whether, in the instant case, the admitted non-compliance with Section 3617(b)(3) by Harris, deprived the District Court of power to remit the forfeiture.

A brief outline of legislation antecedent to the statute before us seems in order. From at least the Acts of July 13, 1866, and June 6, 1872, 26 U.S.C.A. § 1624,¹ all vehicles and conveyances used with intent to defraud the Government in tax matters were forfeit; but the Secretary of the Treasury in matters involving $500.00 or less had authority "upon satisfactory proof, to be furnished in such manner as he shall prescribe * * *" to remit such forfeiture if "incurred without willful negligence or any intention of fraud on the part of the owner of said property." In matters involving over $500 this authority was given to the Secretary of Treasury and the Attorney General. After the enactment of the National Prohibition Act, the power of remission in alcoholic matters was given to the Secretary of the Treasury or, if under the Customs Laws, to the Secretary of Commerce in the absence of "willful negligence or without any intention on the part of the petitioner to defraud the revenue or to violate the law * * *," 19 U.S.C.A. § 1618. This was the state of the law when Congress came to consider the enactment of the statute now under discussion. There is nothing to indicate that under the former statutes it was customary for these cabinet officers to require that specified inquiries under the present Act be made as to U-Drive-It Companies. The Secretaries of the Treasury and Commerce and the Attorney General were unrestricted in matters of remission save as to a finding that there had been no willful negligence or intent to defraud or violate the law on the part of the petitioner.

This brings us to the decided cases. In United States v. Drive New Cars, Inc., 10 Cir., 208 F.2d 774, Circuit Judge Phillips denied remission. The owner of the cars rented them on a semi-permanent basis to a taxi-cab company, to be used as taxis. A bank held a chattel mortgage on the cars also. Both the owner and the bank sought remission from the forfeiture. Although it was found that both the bank and the owner acted in good faith and without any knowledge that the vehicles would be used in violation of the laws of the United States, both parties were held not to be entitled to remission because of failure to comply with 18 U.S.C.A. § 3617(b)(3). It is noteworthy, however, that the opinion was not concerned with the question of whether the Statute applied to a car rental agency, but dealt exclusively with an interpretation of what constituted compliance with the above-enumerated section of the Statute.

Likewise, the case of Pittsburgh Parking Garages, Inc., v. United States, 3 Cir., 108 F.2d 35, involved a vehicle owned by the named corporation, leased to an individual and seized in the possession of the lessee while violating the alcohol tax laws. Again, the applicability of the remission Statute to a lessor of the truck was not discussed in the opinion. The opinion of Judge Biddle was directed to a holding that, when compliance with 18 U.S.C.A. § 3617 (then Act Aug. 27, 1935, § 204, 27 U.S.C.A. § 40a) (b)(1) and (2) has been shown, then compliance with (b)(3) is only required after a showing by the Government that inquiry would have revealed the reputation for liquor law violation. Thus, while these two cases, in total effect, held that a lessor of a vehicle was subject to all the conditions of the Statute, that exact question was not really before the courts and was not discussed in the opinions.

United States v. One 1936 Studebaker Sedan, D.C.W.D.Wash.N.D., 21 F.Supp. 499, is another such case. Here the vehicle was owned by a car rental agency and a chattel mortgage on the car was held by C. I. T. Corporation. An arrangement was made between C. I. T. Corporation and the rental agency whereby regular and thorough investigations would be made of each lessee, but this system was not followed, and had not been followed for nearly two years. Here again it was apparently assumed that the lessor was bound by all conditions of the Statute and the primary question was whether C. I. T. was likewise bound by all the requirements of the Statute. In denying remission or mitigation, District Judge Neterer said:

"To be entitled to remission and/or mitigation under section 40a (b)(3), the C. I. T. corporation must show that at the time it acquired its interest, and at the time the bailee under the `Drive-Yourself\' contract `obtained the auto, it by its officers or agents made inquiry at * * * the headquarters of the * * * principal Federal Internal Revenue officer * * *.\'" 21 F.Supp. 501.

That was the principal holding of this case and, again, it cannot be said that the Court came directly to grips with the question involved in the instant appeal.

In United States v. One Chevrolet Sedan, D.C.E.D.Pa., 18 F.Supp. 799, District Judge Maris held that he could not remit the forfeiture of an automobile used in the transportation of illegal liquor in favor of the innocent assignee of the lessor of the automobile, since the assignee failed to show that it had made the proper inquiry of the law enforcement officers and, at the time the lease was made, the...