United States v. ONE 1936 STUDEBAKER SEDAN, ETC., 13894.
| Decision Date | 06 December 1937 |
| Docket Number | No. 13894.,13894. |
| Parties | UNITED STATES v. ONE 1936 STUDEBAKER SEDAN, ENGINE NO. D-74084, SERIAL NO. 5850480, et al. |
| Court | U.S. District Court — Western District of Washington |
J. Charles Dennis, U. S. Atty., and G. D. Hile, Asst. U. S. Atty., both of Seattle, Wash., for the United States.
Eggerman & Rosling, of Seattle, Wash., for claimants.
The libelant upon information seeks to forfeit 1936 Studebaker sedan, it having been seized while being used as a depository for 25 gallons of distilled spirits upon which there was due certain imposed taxes by section 600(a) (3, 4) of the Revenue Act 1918, section 2 of the Liquor Taxing Act of 1934 (26 U.S.C.A. § 1150(a) (1); that the distilled spirits were removed, concealed, and deposited in said automobile with intent to defraud the United States of said taxes.
Claim is made by the Bee Hive Auto Service Company, Inc., claiming purchase from George B. Wallace Company, an Oregon corporation, as grantors of said auto to the Bee Hive Auto Service Company, Inc. Claim also is made by the C. I. T. corporation, as holder of the chattel mortgage upon said auto to secure the purchase price and payment thereof, which chattel mortgage was executed by the Bee Hive Auto Service Company, Inc., to George B. Wallace Company in the sum of $2,441.24 and assigned together with a promissory note of the Bee Hive Auto Service Company, Inc., to the C. I. T. corporation. That the said C. I. T. corporation is the holder of said note and mortgage and a balance of $1,616.24 is unpaid. The said claimant at no time had actual knowledge or reason to believe that said auto was being or would be used in violation of the laws of the United States; that use of said auto in violation of law was in violation of the terms and conditions of the said mortgage; that the appraised value of said auto is $550. The mortgage covers two automobiles; the value of other is not shown.
The C. I. T. corporation at the time of the execution of the chattel mortgage and assignments thereof and all times subsequent knew that the Bee Hive Auto Service Company, Inc., was engaged in renting the automobiles to various persons under a "Drive-Yourself" business. It is also stipulated that the allegations of the libel are true and forfeiture may be decreed subject to the right of the C. I. T. corporation and other claimants to secure remission of forfeiture in accordance with 27 U.S.C.A. § 40a should the facts warrant.
It is further stipulated that libelant should not be foreclosed from contending that C. I. T. corporation was charged with constructive notice. The mortgage further stipulated that:
"Should said chattel be used for the bartering, storage and transportation of intoxicating liquor contrary to the provisions of the so-called Volstead Act or any provision or amendment thereof (if the automobile covered by this contract is seized for alleged violation of the National Prohibition Act or any like Federal or State Act you shall be deemed the "owner" thereof for the purpose of obtaining possession of the car under bond and you shall have the sole right so to do) or contrary to any other statute or ordinance respecting intoxicating liquors."
The record shows that the mortgage was executed May 15, 1936, and the last payment was due May 15, 1937. Arrest was made March 11, 1937. The chattel mortgage attached to the petition for remission, among other things, provides:
"Payments to be made at the rate of three (3¢) cents per mile (operating miles) per car * * *"
The C. I. T. corporation is made a party to the chattel mortgage by acceptance of the mortgage by express stipulation in the mortgage of the intention to assign the same to it, and admission thereby that the convenants of the mortgage inure to it; it is named in the chattel mortgage as assignee, and is the acceptor of the express assignment moving from the mortgagor to it, and bears the relation of a principal to the chattel mortgage and is therefore a third party to it, etc.
It is also stipulated that George B. Wallace Company made an investigation of the moral character and general reputation and financial responsibility of the Bee Hive Auto Service Company, Inc., at the time of the execution of the mortgage, and from said investigation there was no indication that said auto would be used in violation of any of the laws of the United States or the State of Washington; that the C. I. T. corporation acquired its interest in said auto in good faith; that it has at no time had knowledge or reason to believe that the auto seized would be used in violation of the laws of the United States or the State of Washington; that it did not know said car was in the possession of Anderson at the time of its unlawful employment and seizure.
All claimants knew the auto in issue was to be employed in a "Drive-Yourself" service and continuous multiplicity of bailments with a system or plan appearing to have been devised to ascertain information of the character and responsibility of the bailee-person hiring the auto. The following is a copy:
Upon application for an auto the party...
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