United States Fidelity & Guaranty Co. of Baltimore, Md., v. U.S.

• Decision Date: 28 November 1914
• Docket Number: 1308.
• Citation: 220 F. 592
• Parties: UNITED STATES FIDELITY & GUARANTY CO. OF BALTIMORE, MD., v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Fourth Circuit

220 F. 592

UNITED STATES FIDELITY & GUARANTY CO. OF BALTIMORE, MD., v. UNITED STATES et al.

No. 1308.

United States Court of Appeals, Fourth Circuit.

November 28, 1914

Edward R. Baird, Jr., of Norfolk, Va. (Baird, Swink & Moreland, of Norfolk, Va., on the brief), for plaintiff in error.

Hiram M. Smith, Asst. U.S. Atty., of Richmond, Va. (Richard H Mann, U.S. Atty., of Petersburg, Va., on the brief).

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges.

PRITCHARD Circuit Judge.

This is an action instituted in the United States District Court for the Eastern District of Virginia, at Norfolk, in February 1914, against Columbus F. Cheshire and the United States Fidelity & Guaranty Company, upon a warehousing bond in the penalty of $5,000, in which the former is principal and the latter is surety. The plaintiff in error will be referred to as defendant, and the defendant in error as plaintiff; such being the relative positions the parties occupied in the court below.

This case was heard upon a stipulation as to the facts. The court instructed the jury to return a verdict in favor of the government for $3,221.79, with interest from the 30th day of May, 1913, at the rate of 6 per cent. per annum until paid said amount being the full claim of the government as presented in such action. Judgment was accordingly entered by the court upon this verdict.

The circumstances are as follows:

Columbus F. Cheshire was a distiller, owning distillery warehouse No. 3, near Portsmouth, Va. The warehousing bond given by him, upon which this suit was brought, was conditioned.

'To pay the full amount of tax, at the rate imposed by an act of Congress of August 28, 1894, on all spirits so deposited in said distillery warehouse before removal therefrom and within eight years from the date of entry of such spirits for deposit in said warehouse.'

Because of alleged offenses against the government, proceedings were begun by it, before the institution of this suit, against Cheshire, in which was obtained a judgment forfeiting to the government the distillery, the land whereon it was located, and 64 barrels of spirits, upon which taxes amounting to $3,221.79 were then unpaid. The agreed statement of facts contains the following:

'Fourth. On May 30, 1913, subsequent to the seizure and forfeiture of the distillery in these proceedings described, and while said distillery and whisky was in the possession of the United States government, to be sold by the marshal under the order of this court in said libel proceedings, the whisky in the warehouse was stolen therefrom before said sale, and has never been recovered or sold.'

Upon the trial the court refused certain instructions asked for by the defendant, and at the request of the government charged the jury as follows:

'The jury are charged that the United States tax on spirits distilled attaches to the same as soon as it comes into existence, and continues as a first lien thereon until the tax is paid or the whisky is sold by the United States; and defendants are not relieved from the payment of the tax thereon because the same was stolen before the sale thereof, while in the possession of the government, notwithstanding it may have been declared forfeited to the government in the proceedings instituted for such forfeiture.

'The jury are accordingly directed to find a verdict for the government for the sum of $3,221.79, with interest thereon from the 30th day of May, 1913, at the rate of 6 per cent. per annum until paid.'

In accordance with such charge, the jury rendered the following verdict:

'We, the jury, upon issue joined, find for the government for the sum of ($3,221.79) thirty-two hundred and twenty-one 79/100 dollars, with interest thereon from the 30th day of May, 1913, at the rate of six per centum per annum until paid. John W. Starke, Foreman. June 12th, 1914.'

The surety excepted to the ruling of the court below, and the case comes here on writ of error.

The only question involved in this controversy is as to whether the court below erred in holding that under the facts of this case the surety was not relieved of its obligation to pay the taxes on the amount of spirits placed in the warehouse in pursuance of the execution of the bond in question. That portion of the obligation material to the issue is as follows:

'The principal shall * * * well and truly pay or cause to be paid * * * the full amount of tax on all spirits so deposited at said distillery warehouse before the removal therefrom and within eight years

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