Source: https://openjurist.org/476/f2d/715
Timestamp: 2019-04-26 07:42:47+00:00

Document:
Hal SIMMONS, Administrator of the Estate of Melvin D.
Argued and Submitted May 18, 1972.
Kendall O. Schlenker, Albuquerque, N. M. (James M. Parker, Jay R. Payne, and Charles I. Wellborn, Albuquerque, N. M., on the brief), for appellant.
Wesley J. Filer, Atty., Dept. of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, and John P. Burke, Attys., Dept. of Justice, Washington, D. C., and Victor R. Ortega, U. S. Atty., Albuquerque, N. M., of counsel, on the brief), for appellee.
Before SETH and HOLLOWAY, Circuit Judges, and LANGLEY,a District Judge.
This appeal involves the validity of a claim by the government for excise taxes imposed on a transfer of marihuana alleged to be due under the Marihuana Tax Act provisions in 26 U.S.C.A. Sec. 4741 (1954).1 Appellant Simmons raises only one issue here-the constitutionality of the excise tax provisions. He argues that in view of the self-incrimination principles pronounced in Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57,2 the marihuana excise tax provisions are no longer valid and are not now sustained by the United States v. Sanchez, 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed. 47. We do not agree and affirm the trial court's judgment which rejected these contentions.
The principal facts are as follows. Carmen Paz sued for injunctive relief and to quiet title on property she claimed as her own against a federal tax lien based on a claim for marihuana excise tax against her husband, Melvin D. Anderson. The government answered and counterclaimed against her and also cross-claimed against Anderson. The government sought to foreclose its tax lien against funds and properties of Anderson and his wife and requested a deficiency judgment against him for any amount unsatisfied. The principal claim asserted by the government was based on an assessment of marihuana excise tax in the amount of $483,200 and interest thereon, claimed to be due from Anderson. Anderson moved to dismiss the claims against him, asserting the unconstitutionality of the marihuana excise tax.
The trial court granted summary judgment for the government on the marihuana excise tax liability. From the papers and from some evidence taken the court found that Carmen Paz and Melvin D. Anderson were married at all material times; that certain properties were their community property and that one business property had been validly assigned to Carmen Paz and that no cause was shown to set aside that assignment. The trial court found that there was no genuine issue of material fact as to the claim for marihuana excise tax against Anderson assessed in the sum of $483,200, plus interest. And the court concluded that the tax was a valid civil tax that could be collected from the interests of Carmen Paz and of Anderson in their community property.
Judgment was entered for the marihuana tax and other liabilities totaling $567,393.58 against the estate of Anderson, who had died prior to entry of judgment. The judgment also provided for foreclosure of the tax liens and for entry of a deficiency judgment of any amount of the indebtedness of Anderson remaining unsatisfied after disposition of proceeds. Anderson's Administrator Simmons appeals, raising only the constitutionality of the marihuana excise tax. We turn to his contentions on appeal.
Appellant Simmons argues primarily that since the Leary decision on self-incrimination principles, the excise tax liability of $100 per ounce imposed by 26 U.S.C.A. Sec. 4741(a)(2) may no longer be sustained as a valid civil tax as was held in United States v. Sanchez.
The Leary case involved a conviction on a third count charging that the defendant knowingly transported, concealed and facilitated concealment of marihuana without having paid the transfer tax imposed by 26 U.S.C.A. Sec. 4741, 68A Stat. 560 (1954) (repealed 1970), thereby violating 26 U.S.C.A. Sec. 4744(a)(2), 70 Stat. 567 (1956) (repealed 1970). The Court concluded that obtaining the required order form and payment of the $100 per ounce tax for a valid acquisition of the marihuana would have involved a substantial risk of selfincrimination. It was held, therefore, that Leary properly invoked the privilege against self-incrimination, which was a complete defense to this charge, and the conviction was reversed. While the Leary opinion discussed United States v. Sanchez in other contexts, it in no way vitiates the Sanchez holding or the reasoning which sustained the $100 per ounce tax as a valid tax.
"Second. The tax levied by Sec. 2590(a)(2) is not conditioned upon the commission of a crime. The tax is on the transfer of marihuana to a person who has not paid the special tax and registered. Such a transfer is not made an unlawful act under the statute. Liability for the payment of the tax rests primarily with the transferee; but if he fails to pay, then the transferor, as here, becomes liable. It is thus the failure of the transferee to pay the tax that gives rise to the liability of the transferor. Since his tax liability does not in effect rest on criminal conduct, the tax can be properly called a civil rather than a criminal sanction. The fact Congress provided civil procedure for collection indicates its intention that the tax be treated as such. Helvering v. Mitchell, 1938, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917. Moreover, the Government is seeking to collect the levy by a judicial proceeding with its attendant safeguards. Compare Lipke v. Lederer, 1928, 259 U.S. 557, 42 S.Ct. 549, 66 L.Ed. 1061; Tovar v. Jarecki, 7 Cir., 1949, 173 F.2d 449."
We recognize that Sanchez did not involve self-incrimination principles and that Leary and the three self-incrimination cases3 foreshadowing it significantly extended the application of those principles. However we cannot agree with appellant that the collection of the tax amounts to a punishment or penalty for exercise of the privilege against self-incrimination and feel that the privilege is not involved in this suit. Therefore we conclude that the rationale of Sanchez is unimpaired and still sustains the tax as a valid civil liability.
In Anderson's situation the $100 tax was the only rate involved if he acquired the marihuana, regardless of his actions. We must assume that he was not a lawful dealer or possessor of marihuana under federal and state law, for otherwise the self-incrimination claim would have no substance as a good faith defense.4 As an unlawful possessor of marihuana, Anderson was not entitled under the statute and the Treasury Regulations to register and thereby qualify to pay the tax at the $1. rate. He could either pay the $100 per ounce transfer tax and give incriminating information, see Leary v. United States, supra 395 U.S. at 26, 89 S.Ct. 1532, or he could refuse to do so and remain liable for the tax at the $100 rate. The liability was the same whether Anderson voluntarily paid the tax or whether he failed to do so and was subjected to the liability by a collection suit as occurred here.
See also United States v. Alvero, 470 F.2d 981 (5th Cir., filed Jan. 19, 1973).
We feel that this conclusion is also supported by similar decisions reached under the wagering tax statutes. While Marchetti and Grosso sustained the self-incrimination defense against prosecutions under those statutes for failure to furnish incriminating information, the attendant civil tax liability has been upheld. Cole v. Cardoza, 441 F.2d 1337, 1340-1341 (6th Cir.); Washington v. United States, 402 F.2d 3, 5-6 (4th Cir.), cert. denied, 402 U.S. 978, 91 S.Ct. 1641, 29 L.Ed.2d 145, and see United States v. United States Coin & Currency, 401 U.S. 715, 717-718, 91 S.Ct. 1041, 28 L.Ed.2d 434.
We have examined the carefully reasoned opinion in Jensen v. United States, No. C-2938 (D.Colo., unpublished, filed Mar. 27, 1972). The court there concluded that under present law protecting assertion of the privilege against self-incrimination, the $100 tax rate constituted an impermissible burden on assertion of the privilege. However, for the reasons stated we respectfully disagree.
Accordingly we conclude that the trial court properly decided this case and affirm.
The answer, counterclaim and crossclaim of the government, including its claim for the foreclosure of its tax lien against the interests of Melvin D. Anderson in certain properties, and for a deficiency judgment for any amount unsatisfied, was filed October 31, 1969. Anderson moved to dismiss the government's cross-claim on December 9, 1969, and asserted the constitutional challenge to the marihuana excise tax by that motion. Anderson died prior to entry of judgment and appellant Simmons, his administrator asserts that same contention.
On the other hand, if Anderson had been a dealer within Sec. 4751(5), entitled to register as legally qualified, there would have been no self-incrimination problem.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.