United States v. Goldfell Enterprises, Inc., 17845.
| Decision Date | 18 October 1971 |
| Docket Number | No. 17845.,17845. |
| Citation | 450 F.2d 106 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. GOLDFELL ENTERPRISES, INC., d/b/a 606 Club, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Edward J. Calihan, Jr., Chicago, Ill., for defendant-appellant.
William J. Bauer, U. S. Atty., Chicago, Ill., Martin R. Nathan, Atty., Regional Counsel I. R. S., Chicago, Ill., for plaintiff-appellee; John Peter Lulinski, Jeffrey Cole, Robert J. Breakstone, Asst. U. S. Attys., of counsel; assisted by Arnold Kanter, Legal Intern.
Before KILEY and KERNER, Circuit Judges, and REYNOLDS, District Judge.*
This is an appeal from a misdemeanor conviction for a violation of Subtitle E, Chapter 51, of the Internal Revenue Code — Alcohol, Tobacco, and Certain Other Excise Taxes (Title 26 U.S.C. § 5117). Specifically, the defendant below and appellant here, Goldfell Enterprises, Inc., a retail liquor dealer, was charged with having made three purchases of liquor from another retail liquor dealer for purposes of resale, all in violation of Title 26 U.S.C. § 5117 which provides:
After hearing evidence, a jury rendered a guilty verdict, and the defendant-appellant, after motions, was adjudged guilty by the district court judge and fined $500 for each violation for a total fine of $1,500 in accordance with Title 26 U.S.C. § 5687. Appellant argues five principal contentions: (1) that § 5117 does not prohibit the liquor purchases at issue; (2) that § 5117 is vague and uncertain; (3) that § 5117 requires a specific intent to violate the law; (4) that the jury was improperly instructed; and (5) that the evidence is insufficient to sustain the conviction. For the reasons set out below, we conclude that the contentions of appellant are without merit and that the conviction should stand.
The undisputed evidence brought out at trial is as follows: Goldfell Enterprises, Inc., is a corporation engaged in the retail liquor business and operates a tavern named the 606 Club. During the years 1966 and 1967, it purchased almost all its liquors from wholesale dealers. However, on three occasions an employee of the 606 Club was sent out to purchase liquor from a retail liquor store. On each of these three occasions (September 19, 1966 — April 6, 1967 — September 13, 1967) less than three gallons of liquor was purchased, and the total purchase price was $218.15. The employee who purchased the liquor was reimbursed out of the till when he brought the liquor back to the tavern.
Appellant contends that a fair reading of § 5117 does not forbid the purchase of liquor by one retail dealer from another in that that statute permits a dealer to purchase liquor from "(3) a person who is not required to pay special tax as a wholesale dealer in liquors." Taken as an isolated sentence, such a reading might indeed seem plausible, but read in the context of Subparts D and E (Wholesale and Retail Dealers) of Part II (Occupation Tax) of Subchapter A (Gallonage and Occupational Taxes) of Chapter 51 (Distilled Spirits, Wines and Beer) of Subtitle E (Alcohol, Tobacco and Certain Other Excise Taxes) of the Internal Revenue Code, it is clear that the opposite is true. As the structure of the code described in the prior sentence indicates, § 5117 is an integral part of a large interrelated body of law and is not simply a casual addition to the United States Code. The principal purpose of Subparts D (Title 26, U.S.C. §§ 5111-5117) and E (Title 26 U.S.C. §§ 5121-5125) is to exact an occupation tax from those who engage in the sale of liquor. United States v. Reeves, 425 F.2d 1063 (10th Cir. 1970). However, rather than tax all who may deal in liquor equally without differentiating between those "in the business" and those who make an "out of the ordinary" or "isolated" sale or without differentiating between the different types of liquor businesses, Congress decided to distinguish by exempting some from any taxation and by taxing others at a lower rate. Title 26 U.S.C. §§ 5111, 5113, 5121, and 5123.
Under Subparts D and E of Chapter 51, "any person who sells, or offers for sale, any distilled spirits, wines, or beer" is considered a dealer. Title 26 U.S.C. § 5112(a). A dealer "who sells, or offers for sale, distilled spirits, wines, or beer, to another dealer" is considered a wholesale dealer, Title 26 U.S.C. § 5112(b), and unless exempt by statute must pay a wholesale dealer tax. Title 26 U.S.C. § 5111. A dealer "who sells, or offers for sale, any distilled spirits, wines, or beer, to any person other than a dealer" is considered a retail dealer, Title 26 U.S.C. § 5122(a), and unless exempt by statute must pay a retail dealer tax. Title 26 U.S.C. § 5121. The wholesale dealer taxes are roughly five times greater than the retail dealer taxes.
In order to insure the integrity of this functional division among dealers and the integrity of its specific exemptions for tax collection purposes, Congress also enacted a number of regulatory measures. Thus both retail and wholesale dealers must keep records of their transactions, and retail dealers must specifically record from whom they purchase their alcoholic stock. Title 26 U.S.C. §§ 5124 and 5114. Similarly, wholesale dealers not exempt from taxation must post a sign on their premises to the effect that they are such dealers. Title 26 U.S.C. § 5115. Finally, the statute at issue in this case affirmatively limits the persons from whom dealers may purchase their liquor stock intended for resale. Title 26 U.S.C. § 5117.
Under § 5117 a dealer may only purchase from:
Under Title 26 U.S.C. § 5112(b), a retail dealer who in the course of his business sold liquor to a dealer, such as appellant, would also be considered a wholesale dealer "* * * the term `wholesale dealer in liquors' means any dealer * * * who sells * * * to another dealer." (Emphasis added.) Title 26 U.S.C. § 5112(b). As a sale to another dealer, such as is presented in the facts of the case before us, is not exempt from the wholesale dealer's tax by...
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