United States v. La Franca

• Decision Date: 24 February 1931
• Docket Number: No. 74,74
• Citation: 51 S.Ct. 278,282 U.S. 568,75 L.Ed. 551
• Parties: UNITED STATES v. LA FRANCA
• Court: U.S. Supreme Court

282 U.S. 568

51 S.Ct. 278

75 L.Ed. 551

UNITED STATES

v LA FRANCA.

No. 74.

Argued Jan. 27, 1931.

Decided Feb. 24, 1931.

The Attorney General and Mr. G. A Youngquist, Asst. Atty. Gen., for the United States.

Mr. E. Howard McCaleb, Jr., of New Orleans, La., for respondent.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

Respondent was sued in a federal district court for nonpayment of taxes and penalties. The petition alleged that he had sold intoxicating liquor at various times in his restaurant, and by reason thereof had become a retail liquor dealer and incurred liabilities as follows: In the sum of $37.50, retail liquor dealer's tax under Rev. St. § 3244 (26 USCA § 205) for a period of nine months, doubled under section 35, title 2, of the National Prohibition Act (27 USCA § 52); $4.68 Penalty imposed by Rev. St. § 3176, as amended (26 USCA § 98) for failure to make and file a return as a retail liquor dealer; $1,500, special tax under section 701 of the Revenue Act of 1924 (26 USCA § 206 note) for engaging in the business of retail liquor dealer in Louisiana contrary to the law of that state, being for a period of nine months and doubled under section 35 (27 USCA § 52); $500, penalty, in addition to the retail liquor dealer's tax imposed by section 35.

Prior to the commencement of the action respondent had been convicted and fined upon an information filed by the United States under the National Prohibition Act, charging him with the same unlawful sales of intoxicating liquor set forth in the petition as the basis for the imposition of the taxes and penalties sought to be recovered. There is no dispute about the facts. They are alleged in the petition and, in detail, made the subject of a stipulation of the parties in the district court. Pleas of former jeopardy and of res judicata were overruled by the district court, 26 F.(2d) 706, a jury was waived, and judgment for the United States entered for the full amount sued for. The court of appeals reversed the judgment on the ground that the action was barred by section 5 of the Willis-Campbell Act (27 USCA § 3) 37 F.(2d) 269.

The point is made that respondent failed to enter an exception to the order of the district court overruling the pleas, but, since the facts were agreed to by stipulation entered of record, the failure to note an exception to the order will not preclude their consideration. Certainly it does not appear that an exception was necessary to direct the mind of the trial court to the precise point to afford opportunity for reconsideration, which is one of the functions of an exception. United States v. U. S. Fidelity Co., 236 U. S. 512, 529, 35 S. Ct. 298, 59 L. Ed. 696; Fillippon v. Albion Vein Slate Co., 250 U. S. 76, 82, 39 S. Ct. 435, 63 L. Ed. 853. And an exception is not necessary to open for our consideration a question of law apparent on the record, as it is here, where there is nothing in the record to indicate waiver of the respondent's rights. Denver v. Home Savings Bank, 236 U. S. 101, 103-104, 35 S. Ct. 265, 59 L. Ed. 485.

By § 35, title 2, of the National Prohibition Act, c. 85, 41 Stat. 305, 307 (U. S. C., title 27, § 52 (27 USCA § 52)), it is provided that the act 'shall not reliee a nyone from paying any taxes or other charges imposed upon the manufacture or traffic in (intoxicating) liquor. No liquor revenue stamps or tax receipts for any illegal manufacture or sale shall be issued in advance, but upon evidence of such illegal manufacture or sale a tax shall be assessed against, and collected from, the person responsible for such illegal manufacture or sale in double the amount now provided by law, with an additional penalty of $500 on retail dealers and $1,000 on manufacturers.'

Section 5 of the Willis-Campbell Act, c. 134, 42 Stat. 222, 223 (U. S. C., title 27, § 3 (27 USCA § 3)), so far as pertinent here provides:

'That all laws in regard to the manufacture and taxation of and traffic in intoxicating liquor, and all penalties for violations of such laws that were in force when the National Prohibition Act was enacted, shall be and continue in force, as to both beverage and nonbeverage liquor, except such provisions of such laws as are directly in conflict with any provision of the National Prohibition Act or of this Act; but if any act is a violation of any of such laws and also of the National Prohibition Act or of this Act, a conviction for such act or offense under one shall be a bar to prosecution therefor under the other.'

By section 701, par. 9, of the Revenue Act of 1924, c. 234, 43 Stat. 253, 327 (U. S. C., title 26, § 206 (26 USCA § 206 note)), it is provided that every person carrying on the business of retail liquor dealer, etc., in any state, etc., contrary to the laws of such state, etc., or in any place where the carrying on of such business is prohibited by local or municipal law, shall pay in addition to all other taxes, $1,000. This section was passed in lieu of a similar provision in the Revenue Act of 1918 (section 1001, 40 Stat. 1128), repeated in the Revenue Act of 1921 (§ 1001, 42 Stat. 296). The government, accordingly, treats the item sought to be recovered under section 701 as having been imposed by an act in force prior to the National Prohibition Act. With that view we agree.

Of the four items involved, two unmistakably are penalties, and are so denominated. The other two, notwithstanding they are called taxes, are in their nature also penalties. Putting aside for later consideration the item of $4,68, we consider, for the present, only the other three items.

By section 35, supra, it is provided that upon evidence of an illegal sale under the National Prohibition Act, tax shall be assessed and collected in double the amount now provided by law. This, in reality, is but to say that a person who makes an illegal sale shall be liable to pay a 'tax' in double the amount of the tax imposed by preexisting law for making a legal sale, which existing law renders it impossible to make. A 'tax' is an enforced contribution to provide for the support of government; a 'penalty,' as the word is here used, is an exaction imposed by statute as punishment for an unlawful act. The two words are not interchangeable one for the other. No mere exercise of the art of lexicography can alter the essential nature of an act or a thing; and if an exaction be clearly a penalty it cannot be converted into a tax by the simple expedient of calling it such. That the exaction here in question is not a true tax, but a penalty involving the idea of punishment for infraction of the law is settled by Lipke v. Lederer, 259 U. S. 557, 561-562, 42 S. Ct. 549, 66 L. Ed. 1061. See also Regal Drug Corp. v. Wardell, 260 U. S. 386, 43 S. Ct. 152, 67 L. Ed. 318. There is nothing in United States v. One Ford Coupe , 272 U. S. 321, 47 S. Ct. 154, 71 L. Ed. 279, 47 A. L. R. 1025, or Murphy v. United States, 272 U. S. 630, 47 S. Ct. 218, 71 L. Ed. 446, to the contrary. The first of these cases was a proceeding to forfeit an automobile because used in violation of law; the other was a suit in equity to enjoin the occupation and use of premises for a year because use in the commission of offenses under the National Prohibition Act, and to abate the maintenance as a nuisance.The distinction made by these four cases is that in the first two, the purpose of the proceedings was punishment; while, as to the other two, the purpose in the first case was to enforce a simple tax, not one which had been, as here, converted, by a change of its nature, into a penalty, and in the second case the purpose was prevention. Murphy v. United States, supra, page 632 of 272 U. S., 47 S. Ct. 218. Respondent already had been convicted and punished in a criminal prosecution for the identical transactions set forth as a basis for recovery in the present action. He could not again, of course, have been prosecuted criminally for the same acts. Does the fact that the second case is a civil action, under the circumstances here disclosed, alter the rule?

In United States v. Chouteau, 102 U. S. 603, 26 L. Ed. 246, a distiller and his sureties were sued upon a bond, one of the breaches of which was that the distiller had removed spirits from his distillery, without first paying the tax thereon. To this it was pleaded that before the suit was brought two indictments had been found against the distiller for the same removals, and that upon the recommendation of the Attorney General the government and accepted a specified sum in compromise and satisfaction of...