Evening journal., 1898-09-23
TO TEST CLUB TAX Jaw.

That which may develop into a long
drawn out and highly interesting test
case on technicality Of United States
law was commenced Wedne sday before
Bel, when Deputy Inter
nal Revenue Collector Milligan began
the prosecution OF the Alexis Club, Of
Philadelphia, for non-payment of the
special tax as a retail liquor dealer.
The Internal Revenue Department
acts under section {, 244, Chapter 3, Re
vised Statutes, which provides:
Fourth. Retail liquor dealers shall
pay SIS. Every person who sells or
offers for sale foreign or domestic dis
titled spirits or wines in less quantities
than five wine gallons at the same
time shall be regarded as a retail
dealer in liquors"
This act was passed in 1866. For a
long time there was q question
whether social clubs could be classed
as retail liquor dealers under this sec
ton; but Judge Lowell, in a decision
handed down in the United States
Court for the Eastern district of Mas
sachUss It's, ruled in 1875 that such
clubs were liable 20 the tax. In Phila-
delphia there has been little effort onthe
part of the Internal Revenue Depart
ment to collect any money from clubs,
but Commissioner Scott at Washing
ton recently ordered that all organiza-
lions carrying on liquor trade should
be made to pay, no only for the pres
eDt year. but for non-payment Of tax
in former years, in order to raise as
large a revenue for war purposes as
possible.
by tins ruling, and the effort Of Col
lector Mccain to enforce it, social
clubs are placed in a peculiar position.
The Alexis Club, of Philade.phia,which
is determined to test the law, dis
tributes liquors among it $50 members
by a system Of elevators. Persons not
members cannot obtain drinks. The
United States is seeking to obtain from
the club for taxes and penalties $418.75
representing a period Of fifteen years
for retail liquor dealers tax. Should
the cub pay this tax it is compelled
to swear that it intends to engage in
the business Of occupation ~ a retail
liquor dealer, and as such would, un'
der the state law, be liable to prose
cution for not having a license.
AT the hearing on Wednesday befor
Commissioner Bell, in Philadelphia, th'
defendant cub was Represented b!
, Anton Fontyn, secretary, and Harve,
Bailey. steward, with Matthew Dit
man as counsel Assistant District AT
torney McCullen conducted the prose
cution Special Agent Van Horn. O
the internal revenue office, teetlfia
that on August / last he entered tn
prs misses Of the cub, seventh an
:. Vine streets, Philadelphia, saw the ba
and equipments, and was told by Stew
ard Bailey that liquor was sold
members Chief Deputy Collectc
= Milligan stated that the club had neve
p, paid any tax to the government o
these sales. Notwithstanding the state
ment Of Attorney Dittmann that tn
decision of Judge Lowell, above refer
red to, has not ben followed in SINH
lar cases in state and Federal distriC
courts. Commissioner Bell held that, 1
view OF the fact that it had never bee
: repealed or set aside by higher cour
he was bound to- abide by it and cor
sidsr the defendants as retail l.quc
dealers, Liable to the special tax. Fol-
tyn and Bailey were according
70 placed under $500 bail each for appea
,r ance in the United States Distri
in Court. and Otto NJ. schaettlc was a
is cepted as bondsman.
n Attorney Dttmann said it Is pr
v posed 20 make this a test case, an
many OF the clubs in Philadelphia wi
N have paid the tax under protest, as We
IN as others who have declined to pa
he have organized and intsnd to empl'
Az additional counsel. 1t is said that e
Judge Elcock and A. S. w. Shields "
n assist in the United States Distri
he Court.