Higgins v. Foster, 376.

• Decision Date: 01 June 1926
• Docket Number: No. 376.,376.
• Parties: HIGGINS v. FOSTER, Prohibition Administrator, et al.
• Court: U.S. Court of Appeals — Second Circuit

12 F.2d 646 (1926)

HIGGINS v. FOSTER, Prohibition Administrator, et al.

No. 376.

Circuit Court of Appeals, Second Circuit.

April 5, 1926.

On Rehearing June 1, 1926.

Lewis Landes, of New York City, for appellant.

Emory R. Buckner, U. S. Atty., of New York City (C. D. Williams, of New York City, Asst. U. S. Atty., of counsel), for appellee.

Falk & Orleans, of New York City (Samuel Falk, of New York City, of counsel), for Olivett Distributing Co., amici curiæ.

Before ROGERS, HAND, and MACK, Circuit Judges.

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

That the evidence disclosed upon the trial was amply sufficient to justify a revocation of the permit under section 9, title 2, we have no doubt; but, if Higgins was entitled to a hearing as prescribed by that section, the action of the defendants was irregular, and cannot stand. In what we say we therefore do not wish to be understood as in any sense indicating that the result, except for this irregularity, was not in accordance with law.

We think that section 6 of title 2 has no relation to denatured alcohol, and that there is therefore no statutory provision which sets a term to such permits, whether they be assumed to be authorized by section 4 of title 2 or section 13 of title 3, under which article 21 of Regulation 61 was promulgated by the Commissioner. Section 6 uses the word "liquor," which is defined by section 1 of title 2, and which seems to us clearly to be confined to beverages. It is true that it uses the word "alcohol," but that, especially in its context, precludes denatured alcohol, which is not potable. Hence we think that the permit in its original form was not unlawful, and that the regulation of November 14, 1925, did more than confine permits for denatured alcohol to the terms prescribed by statute. Again, we do not think that by originally making the permit terminable by cancellation the Commissioner could evade, or meant to evade, section 9 of title 2, assuming for the moment that that section applied to them. In effect it had an indefinite duration, and was subject only to such revocation as the law allowed. It did not lie within the power of the Commissioner, by phrasing the permit in the language chosen, to escape any requirements of cancellation which the statute imposed.

Moreover, if section 9 of title 2 applies to permits for denatured alcohol, we cannot see that the Commissioner, under the guise of legislation, may do in gross what he had no power to do in detail. If each holder of a permit was entitled to insist upon a hearing before revocation, it would as much take away his right so created to cancel, along with his own, the permits of all others similarly situated, as though the action had been directed towards him alone. No reason is suggested why it should be possible, by so multiplying the wrong, to give it a character of legality.

Therefore the question comes to whether section 9 of title 2 applies to denatured alcohol. We think that it does. It is clear that, in spite of its heading, title 2 covers more than potable intoxicants. Section 4 describes nonpotable liquids exclusively, with the exception of cider, and especially mentions denatured alcohol. Subdivision (a). It provides for a permit to manufacture, and in other ways regulates dealing in them. Section 5 concerns the products mentioned in section 4, and prescribes the procedure to revoke permits granted under it; but it is limited to defects in the quality of the products themselves. But it is not to be supposed that section 5 was the measure of the Commissioner's power to proceed against holders of permits under section 4. Other abuses were possible than defects in quality, and might be equally intolerable, or more so. On the other hand, we should expect that the procedural protection given holders of permits by virtue of section 5 would not be taken from them, when charged with other abuses in the conduct of their business. In short, we should look for a provision beyond section 5 under which such permits might be revoked, but without opening the door for arbitrary and unreviewable action.

The language of section 9 of title 2 seems to us to bear out this expectation. It is not, like section 6, confined to "liquor," but speaks generally of permits, covering all cases where "any person who has a permit is not in good faith conforming to the provisions of this act." It is quite true that a defect in the product, covered by section 5, would fall within the compass of this general language; but the procedure of that section was special, and that fact accounts, we think, for its presence alongside of section 9, and relieves us from the embarrassment of assuming that it was redundant. In short, section 9 protected all holders of permits, whether for potable or nonpotable intoxicants, while section 5 prescribed a particular procedure in the case of nonpotable permits when the fault lay in the quality of the product.

As section 9 of title 2 prescribed that the delinquent must have 15 days' notice and be served with a statement of the facts on which he was to suffer revocation, it applied to the plaintiff, if we are right, and the regulation of November 14, 1925, denied him a right which the statute gave him. We need hardly add that this conclusion...