United States v. Katz United States v. Feuerstein

• Decision Date: 24 May 1926
• Docket Number: Nos. 726,727,s. 726
• Citation: 271 U.S. 354,70 L.Ed. 986,46 S.Ct. 513
• Parties: UNITED STATES v. KATZ et al. UNITED STATES v. FEUERSTEIN et al
• Court: U.S. Supreme Court

271 U.S. 354

46 S.Ct. 513

70 L.Ed. 986

UNITED STATES

v KATZ et al.

UNITED STATES

v. FEUERSTEIN et al.

Nos. 726, 727.

Argued March 11, 1926.

Decided May 24, 1926.

Mr. William D. Mitchell, Sol. Gen., of Washington, D. C., Mrs. Mabel Walker Willebrandt, Asst. Atty. Gen., and Mr. Mahlon D. Kiefer, of Washington, D. C., for the United States.

Messrs. Wm. T. Connor, John R. K. Scott, and Benjamin M. Golder, all of Philadelphia, Pa., for defendant in error.

Mr. Justice STONE delivered the opinion of the Court.

The two defendants in error in each of these cases were indicted in the Eastern District of Pennsylvania for a conspiracy to sell intoxicating liquors without making a permanent record of the sale, in violation of section 10, title 2 of the National Prohibition Act of October 28, 1919, c. 85, 41 Stat. 305, 312 (Comp. St. Ann. Supp. 1923, § 10138 1/2 e).

The indictment in No. 726 charged that the defendant Katz conspired with the defendant Senn to sell for the Stewart Distilling Company to Senn a quantity of whisky, without making a record of the sale. A similar offense was charged against the defendants named in the indictment in No. 727.

Demurrers and motions to quash were interposed to both indictments, on the ground that they failed to charge any crime. In support of this contention it was argued that section 10, which requires a permanent record to be made of sales of intoxicating liquors, applies only to persons authorized by the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138 1/4 et seq.) to sell alcoholic liquor, and that the indictment failed to allege that either of the defendants charged with making the sales, or the Stewart Distilling Company, held a permit, or was otherwise authorized to sell. The indictments were quashed by the District Court. 5 F.(2d) 527. The cases come here on writ of error to the District Court, under the provisions of the Criminal Appeals Act of March 2, 1907, c. 2564, 34 Stat. 1246 (Comp. St. § 1704).

The overt act charged in each indictment was the sale of whisky by one defendant to the other. This is an offense under the National Prohibition Act; but as the defendants in each case were only one buyer and one seller, and as the agreement of the parties was an essential element in the sale, an indictment of the buyer and seller for a conspiracy to make the sale would have been of doubtful validity. Compare United States v. N. Y. C. & H. R. R. (C. C.) 146 F. 298; United States v. Dietrich (C. C.) 126 F. 664; Vannata v. United States (C. C. A.) 289 F. 424, 427. This embarrassment could be avoided in an indictment for a criminal conspiracy only if the buyer and seller were charged with conspiring to commit a substantive offense having an ingredient in addition to the sale, not requiring the agreement of two persons for its completion. See Chadwick v. United States, 141 F. 225, 72 C. C. A. 343.

Hence the government takes the position that the seller of intoxicating liquor is required by the statute to keep a permanent record of his sales, whether lawful or unlawful, and that failure to do so is itself a crime, from which it would follow that a conspiracy to effect a sale without such a record is an indictable offense. No question is made but that persons authorized to deal in alcoholic liquors under the Prohibition Act are required to make permanent records of their transactions. But the government, to support a charge of conspiracy applicable to buyer and seller, relies on the literal application of title 2, § 10:

'No person shall manufacture, purchase for sale, sell, or transport any liquor without making at the time a permanent record thereof showing in detail the amount and kind of liquor manufactured, purchased, sold, or transported. together with the names and addresses of the persons to whom sold, in case of sale, and the consignor and consignee in case of transportation, and the time and place of such manufacture, sale, or transportation. The Commissioner may prescribe the form of such record, which shall at all times be open to inspection as in this act provided.'

Title 2, § 34 (Comp. St. Ann. Supp. 1923, § 10138 1/2 u), provides:

'All records and reports kept or filed under the provisions of this act shall be subject to inspection at any reasonable hour by the Commissioner or any of his agents or by any public prosecutor or by any person designated by him, or by any peace officer in the state where the record is kept, and copies of such records and reports duly certified by the person with whom kept or filed may be introduced in evidence with like effect as the originals thereof, and verified copies of such records shall be furnished to the Commissioner when called for.'

To uphold the contention of the government, therefore, the language of section 10 must be taken to apply not only to those who hold government permits authorizing them to deal in intoxicating liquors under a familiar system of regulation, to whom it admittedly is applicable, but to every criminal violator of the National Prohibition Act, even though making only a single, isolated sale. It must be taken also to extend the provisions of section 34, clearly applicable to such permittees, in such a way as to present the incongruity of a system of records to be kept by criminal violators of the act who are not permittees, in a form which the Commissioner may prescribe, which may be introduced in evidence on the certification of the person 'with whom kept,' and verified copies of which are to be furnished on demand, presumably by the criminal keeping the record.

We are not now concerned with any question of legislative power to establish such a system but only with the question whether it was the intention of Congress to do so.

All laws are to be given a sensible construction; and a literal application of a statute, which would lead to absurd consequences, should be avoided whenever a reasonable application can be given to it, consistent with the legislative purpose. See Hawaii v. Mankichi, 190 U. S. 197, 212, 23 S. Ct. 787, 47 L. Ed. 1016, and cases there cited. In ascertaining that purpose, we may examine the title of the act (United States v. Fisher, 2 Cranch, 358, 386, 2 L. Ed. 304; United States v. Palmer, 3 Wheat. 610, 631, 4 L. Ed. 471; Holy Trinity Church v. United States, States v. Saunders, 22 Wall. 492, 22 L. Ed. 226), the source in previous legislation of the particular provision in question (United Seates v. Saunders, 22 Wall. 492, 22 L. Ed. 736; Viterbo v. Friedlander, 120 U. S. 707, 7 S. Ct. 962, 30 L. Ed. 776; United States v. Morrow, 266 U. S. 531, 535, 45 S. Ct. 173, 69 L. Ed. 425), and the legislative scheme or plan by which the general purpose of the act is to be carried out. See Platt v. Union Pacific R. R., 99 U. S. 48, 63-64, 25 L. Ed. 424; Bernier v. Bernier, 147 U. S. 242, 246, 13 S. Ct. 244, 37 L. Ed. 152.

One purpose of the National Prohibition Act was to suppress the entire traffic in intoxicating liquor as a bev- erage. Grogan v. Walker & Sons, 259 U. S. 80, 89, 42 S. Ct. 423, 66 L. Ed. 836, 22 A. R. L. 1116. But the Eighteenth Amendment did not prohibit the use of intoxicating liquor for other than beverage purposes, and an important purpose of the act, as its title¹ and contents show, was to regulate the manufacture, tansportation, and use of intoxicating liquor for other than beverage purposes.

Section 3, title 2 (Comp. St. Ann. Supp. 1923, § 10138 1/2 aa) which prohibits the manufacture, sale, and possession of intoxicating liquor, expressly provides that:

'Liquor for nonbeverage purposes and wine for sacramental purposes may be manufactured, purchased, sold bartered, transported, imported, exported, delivered, furnished and possessed, but only as herein provided, and the commissioner may, upon application, issue permits therefor. * * *'

To make the prohibitions of the act effective, and to provide for the production and use of liquor for nonbeverage purposes, it became necessary for the government to regulate and supervise those uses of intoxicating liquor which were not prohibited. Congress had before it the provisions of the Revenue Law (Comp. Stat. 1916, §§ 5981 to 6161) governing distillers, rectifiers, and brewers, requiring detailed records of all transactions, and laying down other regulations designed to promote the effective collection of liquor taxes; it also had before it the regulatory system devised by the Internal Revenue Bureau for carrying into effect the prohibitory legislation contained in the Food Control Act of August 10, 1917, c. 53, 40 Stat. 276 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115 1/8 e-3115 1/8 kk, 3115 1/8 l-3115 1/8 r), and subsequent war legislation. See 21 T. D. 7, No. 2788.

The business affected by this legislation was lawful business, subject to governmental regulation; records of transactions were required to be kept, as a condition of receiving government permission to operate, and such records were a convenient and necessary means for protecting the interests of the government with respect to its revenues. When Congress came to enact the National Prohibition Act, a similar method of permit or license and a similar system of records afforded a convenient means for the regulation and control of those dealing with alcoholic liquors for the nonbeverage purposes as authorized by the statute.

The reports of the committees of the Senate and House having the bill in charge, as well as the statute as adopted, indicate clearly that the purpose of Congress was to take over an established and well-known system of granting permits and requiring reports and records, for the purpose of regulating and controlling such portion of the liquor traffic as had not been prohibited by the Eighteenth Amendment and the National Prohibition Act.² The report of the Senate Committee is also persuasive that the provisions of title 2, § 34, already quoted, relating to 'all records and reports kept or filed under the...