United States v. ONE 1958 FORD 4-DOOR SEDAN, ETC.

• Decision Date: 27 April 1959
• Docket Number: Civ. No. 1183.
• Citation: 172 F. Supp. 313
• Parties: UNITED STATES of America, Libelant, v. ONE 1958 FORD 4-DOOR SEDAN, MOTOR NO. C8PG-139239, with Accessories.
• Court: U.S. District Court — District of South Dakota

172 F. Supp. 313

UNITED STATES of America, Libelant, v. ONE 1958 FORD 4-DOOR SEDAN, MOTOR NO. C8PG-139239, with Accessories.

Civ. No. 1183.

United States District Court D. South Dakota, S. D.

April 27, 1959.

Clinton G. Richards, U. S. Atty., and Lyle E. Cheever, Asst. U. S. Atty., Sioux Falls, S. D., appeared for the United States.

Morgan & Fuller, of Mitchell, S. D., for petitioner, Rozum Motor Co.

MICKELSON, Chief Judge.

This is a forfeiture proceeding under the provisions of Sections 7302 and 7323 of Title 26 United States Code. The Rozum Motor Company of Mitchell, South Dakota, petitioned this court for remission of forfeiture under the provisions of 18 U.S.C.A. § 3617. The Government answered and alleged that the petitioner had not complied with the provisions of 18 U.S.C.A. § 3617(b) prior to acquiring its interest in and to the vehicle in question and that, therefore, the petitioner was not entitled to a remission of the forfeiture.

The case was submitted to the court on April 9, 1959, on an agreed statement of facts, supplemented by oral testimony. The pertinent facts are as follows: on June 9, 1958, a conditional sales contract covering the vehicle in question, a 1958 Ford 4-door sedan, was entered into between the petitioner, Rozum Motor Company, and Leonard Jirsa, the purchaser. Leonard Jirsa and his wife, Genevieve Fay Jirsa, pleaded guilty on December 11, 1958, to the charge of engaging in business as a retail liquor dealer without having first paid the special tax therefor, in violation of 26 U.S.C.A. § 5691. In this proceeding, it has been stipulated that Genevieve Fay Jirsa was engaged in such business from the 6th day of September, 1958, to November 14, 1958, and that the vehicle in question was in her possession and being used by her for such unlawful purpose. It is undisputed that the petitioner acquired its interest in the vehicle in good faith, and that it had at no time any knowledge or reason to believe that the vehicle was being or would be used in the violation of laws of the United States or of any state relating to liquor. It is also undisputed that the petitioner made no inquiry of any of the officers mentioned in Sec. 3617(b) (3) as to whether Leonard Jirsa had any record or reputation for violating liquor laws. The Mitchell chief of police, his assistant, the sheriff, the supervisor of the Internal Revenue Service for this Federal District, and a revenue service agent all testified that on June 9, 1958, the date of the conditional sales transaction in question, Leonard Jirsa had a reputation for violation of liquor laws; that the petitioner made no inquiry of any of them regarding such reputation; and that if such inquiry had been made, they would have informed the petitioner that Leonard Jirsa had such a reputation with them.

In Murdock Acceptance Corp. v. United States, 350 U.S. 488, 76 S.Ct. 536, 537, 100 L.Ed. 580, Sec. 3617 of Title 18 U.S.C.A. is interpreted as follows:

"That section provides that in a forfeiture proceeding the District Court `shall have exclusive jurisdiction to remit' the forfeiture, but that the court `shall not allow' remission unless the finance company (1) acquired its interest in good faith; (2) had no reason to believe that the automobile would be used in violation of the liquor laws; and (3), `was informed in answer to (its) inquiry, at the headquarters of the sheriff, chief of police, principal Federal internal-revenue officer engaged in the enforcement of the liquor laws, or other principal local or Federal law-enforcement officer of the locality * * * that (the purchaser) had no * * * record or reputation (for violating laws of the United States or of any State relating to liquor).'"

The petitioner contends, and it is not disputed by the Government, that the burden of proof lies with the Government to establish the record or reputation of the person in possession of the car for violation of the liquor laws, before the petitioner is required to prove that inquiries were made as provided in 18 U.S.C.A. § 3617(b) (3). See City National Bank & Trust Co. of Oklahoma City, Okl. v. United States, 8 Cir., 163 F.2d 820. But the petitioner contends that the reputation which the Government must establish as having existed at the time of the transaction is reputation as it is commonly used and in its general sense; i. e., "The statute is drawn so as to impose upon the seller the duty of inquiry only when there exists something which is likely to reach his ears, a public record or a general reputation." United States v. C. I. T. Corporation, 2 Cir., 93 F.2d 469, 470. The Government, on the other hand, urges that the reputation referred to in the statute does not mean the general reputation the petitioner had in the community, but rather that reputation which the person bore with any one of the law enforcement officers enumerated in the statute.

To sustain its position, petitioner has cited the case of United States v. C. I. T. Corporation, supra. It is true that in that case, Judge Learned Hand, speaking for the Court, held that the Government must establish that there was at the time of the transaction, a general reputation which would in the normal course of credit investigation be...