Case Name: James Dair et al. v. The United States
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1868-12
Citations: 4 Ct. Cl. 172
Docket Number: 
Parties: James Dair et al. v. The United States.
Judges: Casey, Ch. J., dissented.
Reporter: United States Court of Claims Reports
Volume: 4
Pages: 172–176

Head Matter:
James Dair et al. v. The United States.
On Demurrer.
Certain distilled spirits are placed in a bonded warehouse and lose liy leakage and evaporation before removal for sale, as in Thayer’s Case, ante; certain other spirits are transported in 1863, not under bonds, to a “ wholesale market,” and lose by leakage in transportation.
The Act 1st July, 1862, (12 Stafc. L432, §§ 46, 47,) and the Act 3d March, 1863, {ibid., 713, § 12,) contemplate the transportation of distilled spirits in no other way before the payment of duty than under permit or bond. Hence, where spirits were transported before the regulations of the Internal Bevenue Department from the distillery to a wholesale market, a return of the duties paid cannot be allowed for leakage in transitu.
Mr. Thomas JET. Talbot, (with whom was the Assista/nt Attorney General,) for the defendants:
Jír. V. B. ¿Edwards, for the claimants:
The following questions are presented, viz:
1st. Are distillers under the 55th section of the act June 30th, 1864, liable to pay an excise duty on spirits lost by leakage, while stored in a bonded warehouse, between June 30th and December 31st, 1864 ?
2d. Can an excise duty be levied and collected upon an article that does not exist at the date of assessment and collection?
3d. Under the 1st article, section 8, of the Constitution of the United States, must not all taxes be uniform?
4th. Under the proviso to section 12 of act of March 3,1863, are not distillers entitled to a deduction on account of leakage upon all distilled spirits u subject to taxation” and removed to a wholesale market ?
These spirits were assessed, by -virtue of the 55th section of the act of June 30,1864, by which an excise duty is imposed on all spirits that may be “ distilled and sold, or distilled and removedfor consumption and sale,” Soc. If Congress had intended the tax to have been paid on all “ distilled,” the word “ or” after “ distilled” would have been substituted instead of “ and.”
It will be seen that the whole act harmonizes with the taxing clause, (section 55,) that the tax was not to be assessed until “ sold or removed for consumption and sale,” and then to be collected only upon the quantity “ sold or removedfor consumption or sale? The 57th section (13 Stat. L., 243) requires the distiller to keep account, showing, 1st. The number of gallons distilled; 2d. the number of gallons placed in warehouse; 3d. the number of gallons sold or removed for consumption or sale; and render to the assessor and collector duplicate accounts, and pay the duty — on what ? On the quantity in said accounts mentioned “so distilled and sold, or removed for consumption or sale?
The question here presented is exactly parallel with the case decided by the Supreme Court in Pennington v. Gox, (2 Crunch, 33.) The 2d section of the act of June 5,1794, 1 Stat. L., 384, provides that there shall be levied, collected, and paid upon all sugar refined within the United States, a duty of two cents per pound. The 5th section of same act provides that the refiner shall render a just and true account of all sugar refined which he or she “ shall have sent ou,t, or caused or procured to he sent out,” &c., and at the time of rendering each account “pay or secure ” the duties which, by this act, ought to be paid on the refined sugar in the said account mentioned. The court decided that the duties did not accrue while it remained in the manu-factory unsold, and therefore not subject to be taxed.
Again, in the case of Marriot v. Brume, (9 Howard, 619 j) Lawrence v. Caswell, (13 Howard, 488;) the statute here had imposed a duty on the value of the liquors imported, and used terms respecting invoice value as to the basis of duties-assessable. But the court held that the quantity that actually reached the port (or was imported) was the quantity upon which the duties were to be assessed and collected. In the case before us we have no such difficulty. We are to pay not by value but by gallons. We are required to report the number of gallons we put in warehouse, and we contend we pay only on what we takeout. This is the construction of the statute as given by the Commissioner of Internal Kevenue and the Secretary of the Treasury, on the 1st of February, 1866, (Circular 40, page 6.)
Ag'ain, by the Act July 13,1866, § 32, (14 Stat. L.,157,) the tax to be levied is upon all spirits “ distilled.” This is a legislative construction, (by the same Congress,) that the duty or tax was only to be levied upon the spirits “ sold or removed for consumption or sale;” and could not be assessed and collected upon spirits that went into the bonded warehouse and never came out of it.
By the 1st article of the Constitution of the United States, § 8, “ all duties, imports and excise, shall be uniform throughout the United States.” This does not mean that excise shall be uniform so far as place is concerned, but uniform so far as individuals are concerned; that A shall pay the same duties as B upon the same quantity and same kind of property; and these results should be so secured, Congress should so frame its statutes, the Executive should so administer them, and the judiciary should so interpret and construe them.
Under the actMarch 3,1863, § 12, the Commissioner of Internal Revenue issued circular No. 108, dated May, 1863, covering the period these claimants’ spirits were removed. It was not in accordance with the law, for the reason that it excluded spirits from the benefit of a deduction on account of leakage that were removed otherwise than in bond for export or exported, and, under § 46, under permit.
The law contemplated that the deduction was to be made on all spirits. It expressly says upon all “ subject to taxation,” the rules and regulations of the Executive must be in conformity to law. (United States v. Uiclcson, 15 Peters, 191; Tracy v. Sioarthouse, 10 Peters, 95, and authorities there cited.)
The act March 3,1863, § 12, is a remedial act, and such acts are made from time to time to supply defects in existing law. (Sedgwick on Statutory Law, 48; Dwarris on Statutory Law, 478.)
It is a well-settled princqfie in this country as well as England, that where a statute declares that a public officer “is authorized,” “may,” or it “shall be lawful,” or “may have power,” which concerns public interest, or “ where the rights of third persons are concerned,” the words “is authorized,” “may,” or it “ shall be lawful,” or words of like import, means shall, and the law holds that it is obligatory -upon the officer to do. (Supervisors v. United States, 4 Wallace, 435; Mason v. Fearson, 9 Howard, 237 ; Gity of Weic Torlc v. Feme, 3 Hill, 612 and 614; Minor et al. v. Mechanics' Banlc, 1 Peters, 64; Bansemer et al. v. Mace et al., 18 Indiana, 27; citing Bex. & Begina v. Barloio, 2 Sallceld, 609; Dwarris on Statutes, 712.)
Again, tlie statute must be so construed as to extend tlie remedy. (Giollerton v. Mead, 22 California, 95; yol. 1, Bouvier Institutes, No. 107, p. 48; 2 OMo Stat., N. S., 43; 1 Obitty’sBlack-stone, 61, note 30.)
How did tlie law stand at tlie making of’-the new act 7 “What was the mischief for which the law did not provide, and what remedy the new law provides for curing the mischief1?
1st. The old law, as it stood, made no deduction for leakage while in transit, nor did it authorize any to be made. The present law (Act March 3, 1863, § 12) was the only law from the act July 1,1862, to June 30,1864.
2d. The great mischief for which the law did not provide was, that all spirits would evaporate or leak while in transit, and distillers who had to ship their spirits, for sale, a great distance to a wholesale market, did sustain a great loss; they could not compete with those nearer, or at the market.
3d. The remedy was by the act March 3,1862, § -12, to place this class of distillers in competition, and upon an equal footing with those at the market, and to make the tax uniform throughout the United States.

Opinion:
Losing-, J.,
delivered the opinion of the court:
Iu this case, which was heard on demurrer, two distinct claims are made. The first is for leakages in a bonded warehouse ; and for these a majority of the court are of opinion there can be no recovery, for the reasons stated in the case of Sylvester Thayer et al. v. The United States, recently decided, see ante.
The second claim is for leakages of spirits removed for sale to a wholesale market in 1863, but not stated to be under bond for exportation or under permit from one district to another. And the petition sets forth that the claim was rejected by the Commissioner because, in 1863, there was no regulation for allowance for leakages, except of spirits transported under bond or permit.
The act of 1862 contemplates and provides for the transportation of spirits, before the payment of duty, in no other way than under permit or bond; and the proviso of the 12th section of the act of 1863, chapter 74, did not require or authorize the Commissioner to make rides for allowance of leakages, except of spirits so transported. The petition, therefore, does not state a case which called for a rule or an allowance.
A majority of the court are of opinion the demurrer should be sustained.
Casey, Ch. J., dissented.