United States v. Sisk

• Decision Date: 01 February 1910
• Docket Number: 933.
• Citation: 176 F. 885
• Parties: UNITED STATES v. SISK et al.
• Court: U.S. Court of Appeals — Fourth Circuit

176 F. 885

UNITED STATES v. SISK et al.

No. 933.

United States Court of Appeals, Fourth Circuit.

February 1, 1910

This is an action of debt on a distiller's bond. The complaint in the fourth paragraph alleges that the breach of bond consists in the fact as therein alleged that the defendant Sisk during the period from the 1st day of May 1901, to the 1st day of May, 1902, produced '138 gallons of spirits which he removed from the said distillery premises without paying the tax thereon,' which was $151.80; and the object of the action is to recover not only that amount of tax, but 5 per cent. penalty and interest at 12 per cent per annum from the 1st of September, 1901.

The answer denies the allegations of the fourth paragraph of the complaint; that is, it denies that the distiller Sisk removed from the distillery premises the spirits so alleged to have been produced without paying the tax thereon.

On the trial the plaintiff introduced the assessment list for September, 1901, showing an assessment for $151.80 upon three packages of spirits produced by the defendant's distillery during the months of June and July, 1901, and thereupon the defendant Sisk, sworn in his own behalf testified that the spirits produced in the months of June and July, 1901, were not entered in bond, and no warehousing bond was given therefor; that the taxes upon the spirits were assessed and a warrant of distraint issued therefor, and the spirits so produced were taken by the deputy collector and removed from the distillery premises to a place 10 miles distant and advertised for sale and lost and never sold without any fraud or collusion on the part of the said defendants.

The court charged the jury that if the spirits upon which the taxes were assessed under the warrant of distraint were taken by the deputy collector and removed from the distillery premises and from the possession of the distiller 10 miles distant, and placed in an old warehouse, as testified to by the defendant Sisk, and were removed therefrom and allowed to waste, and were lost without fraud or collusion on the part of the defendants and without the defendants' knowledge, the plaintiff would not be entitled to recover. The jury found the issue thus submitted in favor of the defendants, and judgment was rendered accordingly.

To this charge of the court the plaintiff in error excepted, and upon that is based the only assignment.

A. L. Coble, Asst. U.S. Atty. (A. E. Holton, U.S. Atty., on the brief).

William P. Bynum, Jr., for defendants in error.

Before GOFF and PRITCHARD, Circuit Judges, and WADDILL, District judge.

PRITCHARD, Circuit Judge (after stating the facts as above).

Treating the statement of the case as found in the record made by the court below as the bill of exceptions required by our rule 10-- the same having been signed and sealed by the judge-- and evidently intended as such bill, we find the facts to be as follows:

'The plaintiff introduced the assessment list for September, 1901, from the office of the collector of internal revenue for the Fifth collection district of North Carolina, showing an assessment of $151.80 assessed upon three packages of spirits produced by the defendant's distillery during the months of June and July, 1901.

'The defendant, Kelly W. Sisk, offered himself a witness in behalf of himself, and testified that the spirits produced for the months of June and July were not entered in bond, and no warehousing bond was given therefor; that the taxes upon the spirits were assessed and warrant of distraint issued therefor and placed in the hands of J. A. Petree, the then deputy collector in charge of the division, who seized the same spirits on which the taxes were assessed under the warrant of distraint and removed them from the distillery premises to an old warehouse at Walnut Cove and had the same advertised for sale; that by the negligence of the said deputy collector the said spirits whilst in his custody were lost and were never sold, without any fraud or collusion on the part of the said defendant.'

From the foregoing it will be seen that the distiller in this instance neglected and failed to comply with the requirements of the law, to wit, to pay the taxes on spirits distilled within the period required by law, or to place the same within a bonded warehouse after having executed a bond for the payment of the taxes thereon.

Section 3260, as amended by Act May 28, 1880, c. 108, Sec. 1, 21 Stat. 145 (U.S. Comp. St. 1901, p. 2114), provides as follows:

'Every person intending to commence or to continue the business of a distiller, shall on filing with the collector his notice of such intention, and before proceeding with such business, and on the first day of May of each succeeding year, execute a bond in the form prescribed by the commissioner of internal revenue, conditioned that he shall faithfully comply with all the provisions of law relating to the duties and business of distillers, and shall pay all penalties incurred or fines imposed on him for a violation of any of the said provisions; and that he shall not suffer the lot or tract of land on which the distillery stands, or any part thereof, or any of the distilling apparatus, to be incumbered by mortgage, judgment, or other lien, during the time in which he shall carry on said business. Said bond shall be with at least two sureties, approved by the collector of the district, and for a penal sum of not less than * * * the amount of tax on the spirits that can be distilled in his distillery during a period of fifteen days.'

Among other things, this section contemplates that the distiller shall comply with the provisions of law relating to the duties and business of distillers, and pay all penalties and fines imposed upon him for a violation of its provisions, and also that he shall pay the taxes on the spirits that may be distilled at his distillery during a period of 15 days. It appears in this instance that the spirits seized were not placed in a warehouse, but retained in the possession of the distiller, and that he failed to pay the taxes on the same. The government by proper proceedings attempted to collect the taxes due on the spirits by assessment, and in pursuance of such assessment a distraint warrant was issued, and the packages of spirits were seized and taken into custody by the deputy collector. Under these circumstances, there was a breach of the distiller's bond, and the distiller and his sureties thereby became liable for the payment of the taxes on the spirits thus produced.

It is insisted by counsel for defendants in error that inasmuch as 'it is alleged in the fourth paragraph of the complaint that the distiller, Sisk, produced 138 gallons of spirits which he removed from the distillery premises without paying the taxes thereon, and this allegation being denied in the answer, and there being no proof to sustain it, the plaintiff was not entitled to recover.'

This being a suit on a distiller's bond, wherein the sureties among other things, undertook to pay the taxes on any spirits that might be produced and not warehoused at any time during a period of 15 days, it necessarily follows that the real issue in this controversy is as to whether the...