United States v. One Ford Coupe Automobile

Citation272 U.S. 321,47 A. L. R. 1025,71 L.Ed. 279,47 S.Ct. 154
Decision Date22 November 1926
Docket NumberNo. 115,115
CourtUnited States Supreme Court

[Syllabus from pages 321-323 intentionally omitted] The Attorney General and Mr. Wm. D. Mitchell, Sol. Gen., of Washington, D. C., for the United States.

Mr. Duane R. Dills, of New York City, for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This is a proceeding commenced in the federal court for Northern Alabama, under Revised Statutes of the United States, § 3450 (Comp. St. § 6352), to forfeit an automobile 'said to belong to Garth Motor Company,' on the ground that it was being used with intent to defraud the United States of the tax on distilled spirits found therein by depositing and concealing the liquor.1 The libel, which was filed in September, 1923, recites that it is 'a case of seizure on land under the internal revenue laws of the United States.' The company intervened as claimant and moved to quash the libel. It also filed a claim by which it asserted title to the automobile and denied knowledge or notice, prior to seizure, that the automobile was being used or was to be used in any illegal manner. No action was ever taken on the claim. The motion to quash was allowed; and upon that motion alone the District Court entered judgment dismissing the libel. The judgment was affirmed by the Circuit Court of Appeals for the Fifth Circuit. 4 F.(2d) 528. The case is here on writ of certiorari. 268 U. S. 687, 45 S. Ct. 640, 69 L. Ed. 1157.

The libel alleges that on August 11, 1923, the federal prohibition director for Alabama had seized the automobile in the possession of one Killian being used by him 'for the purpose of depositing and concealing certain illicit distilled spirits' on which 'the taxes imposed by law had not been paid' with 'intent * * * to defraud the United States of such taxes,' alleges that the automobile is forfeit under section 3450, and prays relief thereunder. To the libel is attached, and made part thereof, a complaint, dated August 13, 1923, by a federal prohibition agent. In that complaint, the affiant charged, with specification, only that Killian unlawfully had there in his possession 27 quarts of rye whisky, in violation of section 29 of title 2 of the National Prohibition Act (Act Oct. 28, 1919, c. 85, 41 Stat. 305, 316 (Comp. St. § 10138 1/2 p)), and he prayed that Killian 'may be apprehended and further dealt with according to law.' The complaint made no reference to removal or transportation of liquor; nor to the use of a vehicle for such purpose, nor to any seizure, nor to section 26 of the Prohibition Act (Comp. St. § 10138 1/2 mm). It did not even mention an automobile or other vehicle. Nor did the libel state that a warrant issued on the complaint, or that Killian had been arrested or in any way prosecuted for any alleged violation of the Prohibition Act, or that his whereabouts was known.

The sole question for decision is whether an automobile, which was seized by a prohibition agent, may be forfeited under section 3450, if it was being used for the purpose of depositing or concealing tax-unpaid illicit liquors with the intent to defraud the United States of the taxes imposed thereon. Obviously the mere fact that the seizure of the automobile had been made by the prohibition director (instead of by an internal revenue officer) does not preclude the possibility of a proceeding to forfeit under section 3450. It is settled that, where property declared by a federal statute to be forfeited, because used in violation of federal law, is seized by one having no authority to do so, the United States may adopt the seizure with the same effect as if it had originally been made by one duly authorized. The Caledonian, 4 Wheat. 99, 101, 4 L. Ed. 523; Taylor v. United States, 3 How. 197, 205, 11 L. Ed. 559. See United States v. One Studebaker Seven-Passenger Sedan (C. C. A.) 4 F.(2d) 534.

The serious question presented is whether there is such a direct conflict between the National Prohibition Act, and particularly section 26 of title 2 thereof, and section 3450 of the Revised Statutes, as to render the latter section inoperative and unavailable to the government, where the vehicle was being used for the purpose of depositing and concealing illicitly distilled liquors under the circumstances set forth in the libel. On this question there has been much difference of opinion in the lower courts.2 If a forfeiture may be had under section 3450 for such use of a vehicle to evade a tax on illicitly distilled liquor, the interests of innocent persons in the vehicle are not saved. If section 26 is the only applicable provision for forfeiture of the car, the interests of those who are innocent are not forfeited. The claimant contends, on several grounds that section 3450 was not applicable and that the libel was properly dismissed.

First. The claimant contends that, at the time of the seizure, the law did not impose any tax upon liquor illicitly made. Congress has power to tax such liquor. United States v. Yuginovich, 256 U. S. 450, 462, 41 S. Ct. 551, 65 L. Ed. 1043; United States v. Stafoff, 260 U. S. 477, 480, 43 S. Ct. 197, 67 L. Ed. 358. By Rev. Stats. § 3248 (Comp. St. § 5982) the tax attaches to distilled spirits 'as soon as it is in existance as such' (United States Fidelity & Guaranty Co. v. United States, 220 F. 592, 136 C. C. A. 50), and upon its production the tax becomes a first lien thereon (United States v. Ulrici, 111 U. S. 38, 42, 4 S. Ct. 288, 28 L. Ed. 344). The Revenue Act of 1918 (Act Feb. 24, 1919, c. 18 § 600, 40 Stat. 1057, 1105 (Comp. St. § 5986e)), lays the tax 'on all distilled spirits now in bond or that have been or that may be hereafter produced in or imported into the United States.' The provision in section 600b of the act (Comp. St. § 5986f), concerning liquor which could not during the period of warprohibition be lawfully sold or removed, did not remit the tax; it merely deferred, the time for payment. It is clear that, before the enactment of the National Prohibition Act, it imposed the basic production tax upon all distilled spirits, although illicitly made. 3

The continued existence of taxes upon illicit liquor is indicated in section 35 of the National Prohibition Act (page 317 (Comp. St. § 10138 1/2 v)), which provides:

'This act shall not relieve anyone from paying any taxes or other charges imposed upon the manufacture or traffic in such liquor.'

That Congress in enacting that law would intentionally have exempted illicit liquor from taxation, is not likely. Moreover, we are not dealing with the construction of the law as enacted in 1919. The Willis-Campbell Act (Act Nov. 23, 1921, c. 134, § 5, 42 Stat, 222, 223 (Comp. St. § 10138 4/5 c)), sup- plemental thereto, continued in force or re-enacted, by express provision, all laws in regard to the taxation of intoxicating liquor not directly in conflict with the prohibitory legislation. Furthermore, the Revenue Act of 1921 (Act Nov. 23, 1921, c. 136 § 600, 42 Stat. 227, 285 (Comp. St. § 5986 e)), enacted on the same day, shows that Congress had no intention then of relieving liquor from taxation merely because illegally dealt with; for it provided specifically that if distilled spirits, tax-paid for nonbeverage purposes, be diverted to beverage purposes, an additional tax of $4.20 per gallon must be paid, although under the law such diversion could not be made legally.

The claimant argues that it could not have been the intention of Congress to impose the tax, because it had become very difficult, if not impossible, to pay the tax. The claimant points to the fact that the payment of the tax contemplated by the revenue laws existing at the time of the passage of the National Prohibition Act was by means of tax-paid stamps, to be affixed when liquor was withdrawn from the distillery or bonded warehouse, after complying with the minutely prescribed proceedings incident to its manufacture and custody set forth in Taney v. Penn Nat. Bank, 232 U. S. 174, 181-184, 34 S. Ct. 288, 58 L. Ed. 558; that since the National Prohibition Act, there has been no way in which the tax could be so paid on intoxicating liquor made for beverage purposes; that stamps are no longer obtainable and no officer is authorized to receive payment. These supervening obstacles to paying the tax do not, however, establish that the intention was not to continue it in force. A law which imposes a tax on intoxicating liquor, whether legally, or illegally made, is not in conflict with another law which prohibits the making of any such liquor. Compare United States v. Stafoff, 260 U. S. 477, 43 S. Ct. 197, 67 L. Ed. 358; Vigliotti v. Pennsylvania, 258 U. S. 403, 42 S. Ct. 330, 66 L. Ed. 686. There is no direct conflict between any provision of the prohibitory legislation and the imposition of the tax here in question.

Second. The claimant contends that the so-called tax on illicitly distilled spirits theretofore imposed ceased to be a tax, and became in law a penalty, when the enactment of the National Prohibition Act changed the purpose of the tax from raising revenue to preventing manufacture, sale, and transportation, and that to enforce such penalty by forfeiture of the property rights of innocent third partied would be a denial of due process of law. It is true that the use of the word 'tax' in imposing a financial burden does not prove conclusively that the burden imposed is a tax, and that, when it appears from its very nature that the imposition prescribed is a penalty solely, it must be treated in law as such. But the imposition here in question is not of that character. A tax on intoxicating liquor does not cease to be such because the sovereign has declared that none shall be manufactured, and because the main purpose in retaining the tax is to make law breaking less profitable. What was sought to be enforced and held to be a penalty in Lipke v....

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