Reid v. United States

• Decision Date: 08 November 1921
• Docket Number: 3538.
• Citation: 276 F. 253
• Parties: REID et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Sixth Circuit

276 F. 253

REID et al. v. UNITED STATES.

No. 3538.

United States Court of Appeals, Sixth Circuit.

November 8, 1921

H. W Fraser, of Toledo, Ohio (Marshall & Fraser, of Toledo, Ohio on the brief), for plaintiffs in error.

Gerard J. Pilliod, Asst. U.S. Atty., of Toledo, Ohio (Edwin S Wertz, U.S. Atty., and Gerard J. Pilliod, Asst. U.S. Atty both of Toledo, Ohio, on the brief), for the United States.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

KNAPPEN Circuit Judge.

Plaintiffs in error, together with four others, were indicted for an alleged conspiracy unlawfully to procure, and unlawfully to transport to Toledo, Ohio, 'certain intoxicating liquors, to wit, whisky, contrary to section 6, title II, of the Act of October 28, 1919, entitled the 'National Prohibition Act" (41 Stat. 310). The overt act charged was the unlawful procuring from the Hayner Distilling Company, at Troy, Ohio, of 30 barrels of Hayner whisky, and its unlawful transportation from that distilling company to the Banner Chemical Company, at Toledo, Ohio, 'all without having the permit therefor, as required by law. ' The indictment was dismissed as to each of the four other defendants, apparently for lack of sufficient evidence. Plaintiffs in error, under their plea of not guilty, were tried and convicted; their motion for directed verdict having been overruled. This writ is to review the judgment of conviction.

According to the undisputed evidence, the three plaintiffs in error, each acting under a fictitious name, employed an attorney to organize a corporation styled the Banner Chemical & Perfumery Company, under the general incorporation laws of Ohio, ostensibly for the manufacture and sale, among other things, of medicinal remedies and toilet articles, two of the plaintiffs in error becoming incorporators (with three other individuals), each of these two plaintiffs in error signing and verifying the articles under fictitious names. Two of the other incorporators seem to have been called in for the purpose of completing the statutory number, the third being one of the defendants dismissed on the hearing. Formulas were prepared for the ostensible manufacture of each of three articles, viz., a toilet water, a hair tonic, and a blood purifier, the first calling for 'cologne spirits,' the remaining two for 'alcohol.' Neither called for whisky. There was also issued to the Banner Company by the proper authorities (likewise under application by plaintiff in error Reid as president, and under his fictitious name) a permit to manufacture and sell the three articles before referred to as 'proprietary and nonbeverage medicines, perfumes and toilet waters,' according to the formulas before mentioned. There were also issued to the Banner Company, likewise under application by plaintiff in error Reid, as such president and in his fictitious name, permits under the National Prohibition Act, respectively to purchase or procure from the Hayner Distilling Company, and to transport from that company to the Banner Company, at Toledo, Ohio, 30 barrels of what in each permit was termed 'rectified spirits.' Two days before the transportation permit would expire, plaintiff in error Hay presented to the distilling company its warehouse receipts for 30 barrels of 'whisky.' The distilling company's clerk, after informing Hay that the whisky could not go out as 'rectified spirits,' and that there were no rectified spirits in a bonded warehouse, sent the permit to purchase to Cincinnati, by messenger, with check for the revenue stamps, and with instructions to ask, if she could change 'rectified spirits' to 'Hayner whisky.' On the return of the messenger two days later, and on his suggestion, the clerk, in the presence of Hay and with his knowledge, substituted for 'rectified spirits' the words 'Hayner whisky' in the permit to purchase, and 'Hayner spirits' in the permit to transport. The 30 barrels of whisky were thereupon delivered to plaintiffs in error, and were transported by them from Troy, Ohio, to Toledo, Ohio, in two trucks hired by them for the purpose, and were at Toledo put in a building controlled by plaintiffs in error at the address given in the permits as the place of business of the Banner Company. The whisky was seized by the officers soon after its arrival.

There was undisputed evidence that no application was ever made, or permit obtained, to purchase or procure 'Hayner whisky' or to transport 'Hayner spirits'; that 'rectified spirits' does not include commercial whisky; that whisky in order to its conversion into alcohol requires a redistillation by an elaborate and expensive apparatus known as a rectifying still; that such rectification could under the law be carried on only by one who qualifies as a rectifier, pays the special tax, and acts under government supervision.

We consider the prominent grounds of attack upon the conviction, although not in the precise order in which they are discussed in the brief of plaintiffs in error.

1. It is urged that verdict should have been directed in favor of plaintiffs in error for lack of evidence beyond reasonable doubt that they willfully and knowingly conspired to unlawfully procure and unlawfully transport the whisky in question from Troy to Toledo, contrary to section 6 of the act; and the argument is made that not only is there no evidence that plaintiffs in error had any intention of violating the law in connection with the permits to purchase and transport the liquor, but that, on the contrary, they did everything they could to comply with the law, citing the employment of a skillful and reputable attorney for advice, the use by the attorney of the words 'rectified spirits' upon the suggestion of a chemist, that the applications for the permits showed the serial and certificate numbers of the warehouse receipts; that plaintiffs in error did nothing but to sign what their attorney prepared and directed them to sign, and in the belief that the permits were in every way regular; and that plaintiffs in error merely submitted passively to the changes made in the permits at the distilling company's office. But the jury was not bound to draw these inferences.

There was substantial evidence tending to show that the entire scheme entered upon and carried out by plaintiffs in error (including the incorporation, the formulas, the obtaining of permits to manufacture, to purchase, and to transport, the purchasing and transporting, as well as the renting of the building) was conceived for the fraudulent purpose of obtaining whisky for illicit purposes. Plaintiffs in error were provided with a copy of the Volstead Act and of the departmental regulations thereunder. They presumably knew they could not obtain permits for the purchase and transportation of intoxicating liquors for other than nonbeverage purposes. It was open to inference that they knew that the formulas were prepared as basis for obtaining permits to manufacture; also, that commercial whisky could not be used for manufacturing the articles they claimed they intended to make; and that permits calling in terms for whisky could not be permitted. The testimony strongly tends to negative the theory of blind following of attorney's instructions and passive acquiescence in the changes made in the permits. In addition to what has already been stated, there was testimony that when Hay presented his (ware house) certificates to the distilling company, he called for whisky, although that word appeared in neither permit; that on the objection that the certificates did not call for rectified spirits, Hay asserted that he thought that would make no difference, and the question was argued 'pro and con' between Hay and the distilling company's clerk; that plaintiffs in error told the attorney, in connection with the making out of the applications for the permits, that they 'had the paraphernalia ordered and when the whisky got to Toledo the other would be here'; that Hay told the distilling company's clerk when the permits and certificates were first presented that he 'had to have the whisky and would pay any price to get it'; that when the messenger suggested going to Cincinnati Hay said he would 'pay any price to send a messenger down,' and that he 'would have to have it by Saturday as he had three chemists waiting for the whisky.' There is an entire absence of competent testimony that plaintiffs in error had ordered any paraphernalia or engaged any chemists to manufacture the preparations in question. ^[1] There was also testimony tending to show that Hay registered at the Troy hotel on Thursday under the fictitious name of Marshall, Kriss on Friday under the name of Myers, and Reid on Saturday under the name of Howard; that the trucks left Troy at about 9:30 Saturday morning, arriving at Toledo apparently late Sunday night or early Monday morning, the three plaintiffs in error, together with one of the discharged defendants, accompanying the trucks to Toledo, two of them all the way through, the other two joining them at a later point; that the whisky was unloaded from the trucks at about 4 o'clock in the morning; that the building before referred to, in which the whisky was placed, was of one story, containing two vacant rooms, having in it no vats or manufacturing apparatus of any kind, its only contents when raided by the officers being the 30 barrels of whisky, a couple of...