United Cigar Whelan Stores Corp. v. United States

• Decision Date: 17 July 1940
• Docket Number: No. 9397.,9397.
• Citation: 113 F.2d 340
• Parties: UNITED CIGAR WHELAN STORES CORPORATION et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

113 F.2d 340 (1940)

UNITED CIGAR WHELAN STORES CORPORATION et al. v. UNITED STATES.

No. 9397.

Circuit Court of Appeals, Ninth Circuit.

July 17, 1940.

Jesse H. Steinhart and John J. Goldberg, both of San Francisco, Cal. (Corette & Corette, Robert D. Corette, and William A. Davenport, all of Butte, Mont., of Counsel), for appellants.

John B. Tansil, U. S. Atty., of Billings, Mont., and W. D. Murray and R. Lewis Brown, Asst. U. S. Attys., both of Butte, Mont., for appellee.

Before GARRECHT, HANEY, and HEALY, Circuit Judges.

GARRECHT, Circuit Judge.

The appellant United Cigar Whelan Stores Corporation, operates a retail store at the corner of Broadway and Main Street in the city of Butte, Montana. This store, which covers a rather small floor space and is tended by but one clerk at a time, stocks and sells cigars, cigarettes, tobacco, candies, shaving supplies, etc. Prior to June 16, 1939, the defendant offered for sale in this retail establishment rubbing alcohol, known by the trade name of Weko or Wecol, or both. Appellant Edgar Dehne was manager and chief clerk of this store operated by United and had been for several years; there was also employed at this store another regular clerk and a relief clerk.

January 12, 1939, representatives of the Alcohol Tax Unit for the United States Bureau of Internal Revenue called upon appellant Dehne at the United store in Butte and, after ascertaining that rubbing alcohol was offered for sale at the store, advised Dehne of the contents of Treasury Decision 4750, hereafter set forth, and that it placed a restriction on the sale of rubbing alcohol. They reminded him that he had been warned twice before against selling this alcohol for beverage purposes.

On March 9, 1939, Julius Johnson, an investigator in the Alcohol Tax Unit of the Bureau of Internal Revenue, dressed in old overalls, lumber jacket shirt, sweater, mackinaw, and slouch hat, entered the United store in Butte and purchased of Dehne a package of cigarettes and a pint of rubbing alcohol. An hour later, dressed in the same costume, Johnson returned to the store and purchased another pint of rubbing alcohol from Dehne. Two hours later Johnson made another purchase of a pint of rubbing alcohol, this time the clerk was one Cyril Varcoe; and again, on the same evening, one hour later, he made another purchase of rubbing alcohol from the same clerk. Four times the following day Johnson reappeared at the United store and said, "Give me another bottle of alcohol." The visits were made at the hours of 10:20 a.m., 12:20 p.m., 5:00 p.m., and 7:00 p.m., respectively. He paid for each bottle. Dehne was on duty at the time of the first and last visits on that day, and Varcoe was present on the other two occasions. Johnson wore the identical costume at the time of each purchase; neither clerk inquired into the reason for any of the purchases.

April 15, 1939, at 9:15 a.m., Johnson again visited the United store; relief clerk Walfred Maenpa was on duty. Johnson said, "Give me a pint of alcohol," and, as the clerk was about to wrap it, added, "Haven't you got the other brand. I like that better to drink than I do this," to which the clerk replied, "No, that is all I got." "Well," answered Johnson, "that is all right, I can drink it. Either one will put hair on your chest." Maenpa wrapped the alcohol, handed it to Johnson, who paid him for it and left the store. At 10:45 a.m. of the same day, Johnson returned to the United store where Maenpa was still on duty, and said, "Give me four pints of alcohol, will you? That other pint didn't last long with four or five of us drinking out of it." The investigator paid for the four bottles of alcohol and took them with him. Johnson wore the same costume, described above, on each visit to the store.

Immediately following each purchase of the alcohol, Johnson went to the office of the Alcohol Tax Unit in the Federal Building in Butte, where he or Mr. Cosgriff, an investigator for the Alcohol Tax Unit stationed in Butte, labeled each bottle, took a sample from each, labeled the sample bottle, and sealed all the bottles with sealing wax. Chemical analysis revealed the samples to be common rubbing alcohol with apparent proof varying from 146.6 to 148.8, that is, an apparent percentage of alcohol by volume of approximately 73½ per cent.

None of the bottles purchased by Johnson from the United store bore a tax stamp which is required to be affixed to the bottle over the cork and indicates the tax and the quantity of the liquor contents. Nor was there on display in the store a United States Government Twenty-five Dollar Tax Stamp, which is required of retail liquor dealers. If the products were not sold for beverage purposes such stamps were not necessary.

An indictment, drawn in twenty-two counts, was filed in the court below June 17, 1939, naming the appellants here as defendants. The first count charged the defendants with carrying on the business of liquor dealer without payment of the tax imposed on such business. Counts two to eleven, inclusive, each directed to a specific sale, charged sales of denatured alcohol for beverage purposes. Counts twelve to twenty-one, inclusive, each directed to a specific sale, charged sales of denatured alcohol in unstamped containers. Count twenty-two charged possession of denatured alcohol with intent to violate the law. The case came on for trial, at the conclusion of which the jury found the defendants guilty on all counts of the indictment; defendant United Cigar Whelan Stores Corporation was fined; defendant Dehne was sentenced to serve 30 days in jail and fined. Both defendants appeal.

In addition to the evidence heretofore recited, the following evidence was adduced at the trial:

The prosecution introduced a statement of Edgar Dehne, taken April 23, 1939, by Cosgriff, wherein Dehne states that on an average the sales of rubbing alcohol, prior to the date thereof, in the United store in Butte reached 144 bottles a week; that he ordered the alcohol as needed; that since he had been advised of the restrictions placed on the sale of that product he refused to sell to persons whom he knew to be repeaters or "dehorners" Slang: persons who drink denatured or rubbing alcohol or bay rum.; that he had been advised by Mr. Cosgriff in June, 1938, it would be a violation of law to sell rubbing alcohol or bay rum to persons whom he had cause to believe were buying these products for drinking purposes; that since that last date he had been careful not to sell to such persons; that, in January, 1939, Mr. Cosgriff advised him of receiving complaints that rubbing alcohol was being purchased at the store by persons who were drinking the alcohol; that he told Cosgriff to warn the company of this fact because they were sending it to him to sell. A somewhat similar statement had been obtained by Cosgriff from clerk Varcoe and was offered in evidence following Dehne's statement.

Four druggists from the neighborhood of appellants' store were called as witnesses for the Government and testified as to their average weekly sales of rubbing alcohol, which ranged from 18 to 36 pints a week.

Roy H. Beadle, a police officer of the city of Butte, whose beat or post was located at the corner of Broadway and Main Street in that city appeared as a witness for the Government. He testified that he noticed "dehorns" and drunkards entering the United store at different times, and emerging with rubbing alcohol, sometimes wrapped, sometimes unwrapped. He further testified that he had seen such persons drinking the alcohol and had made arrests therefor.

It was also brought out by the Government that no other drug store in Butte sold Weko or Wecol brand of rubbing alcohol.

At the conclusion of the case for the prosecution, counsel for defendants moved for a directed verdict of acquittal, which motion was denied, and the defendants excepted.

For the defense, Edgar Dehne explained the operation of the United store and the division of shifts between the clerks. He said he did not remember making any sales to the witness Johnson on the dates in question; that there were 442 customers in the store on March 9, 1939, and 488 on March 10th; that about 200 persons entered the store each day who did not purchase, but merely inquired; that there were 569 customers April 15, 1939; that the store carried and sold two brands of alcohol, Weko and Wecol; that many times he had sold more than one bottle of alcohol to a person. He further testified that he remembered being called upon by agents of the Alcohol Tax Unit, one of whom was Cosgriff, early in 1939, and that they reminded him of a warning given him several months earlier relative to the sale of rubbing alcohol, and Cosgriff said, "Well, I continue to find that you are still selling rubbing alcohol," to which Dehne replied, "Yes, and I am going to continue on selling as long as it is sent in by the company, but I have cut down as best we know how in selling it to drunkards or dehorns." He also testified that from January 1, 1939, to the date of the indictment, the alcohol sales in the store were cut seventy-five per cent over the previous time. On cross-examination, however, it was brought out that, on January 5, 1939, the corporate defendant shipped 480 pint bottles of rubbing alcohol to the store and twelve days later shipped another 480 bottles. On or about June 16, 1939, the defendants ceased selling alcohol at the store. Dehne said that he never paid a tax or purchased a license which would enable him to conduct a retail or wholesale liquor business and that no stamp or license therefor was displayed at the store, nor, so far as he knew, had his codefendant paid a tax or procured a license for said business for said store. It was further brought out that he had been warned in June, 1938, and, at the time, given a copy of the treasury regulation controlling this problem, and that he was again advised, on January 2, 1939, of...