Case Name: UNITED STATES of America, Plaintiff-Appellee, v. Roy WHITEHEAD, Defendant-Appellant
Court: United States Court of Appeals for the Sixth Circuit
Jurisdiction: United States
Decision Date: 1970-03-03
Citations: 424 F.2d 446
Docket Number: No. 18607
Parties: UNITED STATES of America, Plaintiff-Appellee, v. Roy WHITEHEAD, Defendant-Appellant.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 424
Pages: 446–457

Head Matter:
UNITED STATES of America, Plaintiff-Appellee, v. Roy WHITEHEAD, Defendant-Appellant.
No. 18607.
United States Court of Appeals, Sixth Circuit.
March 3, 1970.
McCree and Combs, Circuit Judges, and O’Sullivan, Senior Circuit Judge, dissented in part.
Joel M. Shere, Detroit, Mich., on brief for defendant-appellant.
Ralph B. Guy, Jr., Chief Asst. U. S. Atty., Detroit, Mich., for plaintiff-appel-lee; James H. Brickley, U. S. Atty., Detroit, Mich., on the brief.
Before PHILLIPS, Chief Judge, WEICK, EDWARDS, CELEBREZZE, PECK, McCREE, COMBS and BROOKS, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge.
. 26 U.S.C. §§ 5173(a), 5601(a) (4), 5205 (a) (2), 5179(a), 5601(a) (1), 5222(a) (1), 5601(a) (7), 5178(a) (1) (B), 5601 (a) (6), 5180(a), 5681(c) (1964).

Opinion:
EDWARDS, Circuit Judge.
This appeal presents constitutional issues upon which panels of this court have been divided. It was selected by the court sua sponte for en banc consideration. It was reargued before the entire bench in the December 1969 term of the court. The fundamental question presented is whether the Fifth Amendment bars appellant's conviction on an indictment charging violations of the federal alcohol tax laws. We hold that it does not.
Appellant was convicted on seven counts of an eight-count indictment and sentenced to concurrent terms totaling four years. The counts charged appellant with possession, custody and control of a still, the making of mash, the transportation of raw materials to an unlawful distillery, and the possession of distilled spirits, all in violation of the federal tax laws.
The record discloses extensive surveillance of the house in Detroit, Michigan, where ultimately the still and 800 gallons of mash were found. Appellant was seen going into the house carrying 60-pound sacks of sugar and coming out with paper bags containing something heavy and loading same in cars. Two such ears were stopped by Internal Revenue agents. Appellant, who was driving one of them, was arrested. Both cars were found to be loaded with non-tax-paid whiskey. Thereupon a search warrant was procured for the house, the still was found, and appellant was indicted.
Appellant contends that the evidence was insufficient to sustain conviction on several counts, including Count 6 pertaining to the making of mash. He also contends that various provisions of the federal tax laws violated his Fifth Amendment rights under Supreme Court decisions in the Marchetti, Grosso, and Haynes cases.
We believe that the evidence of appellant's activity inland about the premises were acts which represented much more than presence at the site of a still (see United States v. Romano, 382 U.S. 136, 86 S.Ct. 279, 15 L.Ed.2d 210 (1965)) or assistance in only one phase of an illegal liquor business (see Bozza v. United States, 330 U.S. 160, 67 S.Ct. 645, 91 L.Ed. 818 (1947)). Appellant was seen engaged in activities from which the jury could have inferred that he was carrying supplies for illegal manufacture of liquor into a house and carrying the illegal liquor out. He was arrested while driving an automobile which contained illicit whiskey which the jury had every right to infer was a product of an illegal still operated by appellant.
As to the count which alleged illegal manufacture of mash, appellant was seen carrying heavy bags of sugar into the house where subsequently the still and some distilled liquor were found. The sugar bags were found empty in a closet in the house. Eight hundred gallons of mash were also found there.
All in all, there was both direct and circumstantial evidence from which the jury could have inferred appellant's guilt on all counts beyond a reasonable doubt. Ramsey v. United States, 248 F.2d 740 (6th Cir. 1957); Chadwell v. United States, 260 F.2d 257 (6th Cir. 1958).
Turning to the constitutional issue, we note that appellant herein did not seek to raise the Fifth Amendment privilege at trial. Nonetheless, we do not consider the privilege to have been waived in this case and we elect to decide this issue on its merits. See Grosso v. United States, 390 U.S. 62, 63, 70, 71, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968); Drennon v. United States, 393 F.2d 342 (8th Cir. 1968); Greenwood v. United States, 392 F.2d 558 (4th Cir. 1968); United States v. Manfredonia, 391 F.2d 229 (2d Cir. 1968); Harris v. United States, 390 F.2d 616 (8th Cir. 1968); but see Howard v. United States, 397 F.2d 72 (9th Cir. 1968).
We are urged to hold these tax measures unconstitutional in that they require the performance of certain affirmative acts; here, the posting of a sign at the site of a lawful distillery, the furnishing of bond, the purchase and affixing of tax stamps and the filing of registration information. Appellant asserts that these affirmative acts might create for some prospective taxpayers in some possible situations "hazards of incrimination [which] are not trifling or imaginary." Marchetti v. United States, 390 U.S. 39, 54, 88 S.Ct. 697, 706, 19 L.Ed.2d 889 (1968).
At the outset we emphasize that we do not read these words as having been written as a litmus paper test of constitutionality. It is "compelled" self-incrimination against which the Fifth Amendment has been held to offer protection. Every criminal act, no matter how voluntary, creates some real hazard of incrimination. And where regulatory legislation provides penalties for failure to perform certain acts normally the Fifth Amendment does not apply because the omission is not deemed "compelled."
We do not think • that the Supreme Court has as yet provided a wholly clear rationale for distinguishing constitutional exercise of taxing and regulatory powers from those situations wherein fatal Fifth Amendment conflicts are to be found. In such a situation we would proceed with some caution and with strict construction of the case holdings if the issue involved appeared to be in doubt. In our instant case, however, we believe there is no reason for doubt.
There are clear and important distinctions between the currently disputed provisions of alcohol tax statutes and those statutory provisions which were held vulnerable to attack on Fifth Amendment grounds in the Marchetti, Grosso and Haynes cases. See also Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57 (1969).
Underlying the series of cases to which we have referred is the Supreme Court's holding in Albertson v. SACB, 382 U.S. 70, 86 S.Ct. 194, 15 L.Ed.2d 165 (1965). The Supreme Court there distinguished between the Sullivan case (United States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927) ) which upheld as constitutional the requirement of filing an income tax return, and an order requiring a Communist to register as such and thus furnish evidence of his violation of two federal criminal statutes.
In Albertson the Supreme Court said:
"In Sullivan the questions in the income tax return were neutral on their face and directed at the public at large, but here they are directed at a highly selective group inherently suspect of criminal activities. Petitioners' claims are not asserted in an essentially noncriminal and regulatory area of inquiry, but against an inquiry in an area permeated with criminal statutes, where response to any of the form's questions in context might involve the petitioners in the admission of a crucial element of a crime." Albertson v. SACB, 382 U.S. supra at 79, 86 S.Ct. at 199.
THE PUBLIC PURPOSE
The alcohol tax laws are "essentially noncriminal" revenue measures. Until the Sixteenth Amendment to the United States Constitution (income tax), taxes on alcoholic beverages provided the fundamental financing of the United States government.
Even after enactment of the federal income tax, the alcohol tax laws constitute substantial revenue producing measures.
As the Fourth Circuit has noted:
"In 1966, the taxes on distilled spirits produced $3.7 billion in internal revenue. The wagering tax scrutinized in Marchetti produced 'in the past several years' only $115 million. 390 U.S. at 82, 88 S.Ct. at 721.
"We think the failure of these defendants to designate place of manufacture and to post a distillery bond is due to their wish to avoid the federal tax of $10.50 per gallon on distilled spirits. The evasion of tax alone provides the enormous margin of profit in the white whiskey business and accounts for the delinquency here. It lies well within the power of Congress to exercise a regulatory function to enforce the collection of such lawfully due taxes." United States v. Walden, 411 F.2d 1109, 1112 (4th Cir. 1969). (Footnote omitted.)
In a preprohibition case, the United States Supreme Court provided this description of the alcohol tax laws of that day — a description which we feel entirely appropriate to describe the statute currently under attack:
"It is clear, even upon a cursory reading, that the well-considered and minute provisions of the Revised Statutes found in chapter 4, entitled 'Dis tilled Spirits,' of Title XXXV., entitled 'Internal Revenue,' were adopted with one purpose only, namely, to secure the payment of the tax imposed by law upon distilled spirits.
"All the regulations for the manufacture and storage the marking, branding, numbering, and stamping with tax stamps, of distilled spirits, and all the penalties, forfeitures, fines, and imprisonments prescribed by the chapter mentioned, have that end only in view. If the tax on distilled spirits were repealed, all the ingenious and complicated provisions of the chapter would become useless and insensible." United States v. Ulrici, 111 U.S. 38, 40, 4 S.Ct. 288, 289, 28 L.Ed. 344 (1884).
Returning to the language of Albertson, the statutory provisions here attacked are "neutral on their face and directed at the public at large." The manufacture of alcoholic beverages is lawful under some circumstances in all 50 states and the District of Columbia and the taxes are collected from thousands of persons engaged in lawful sale and distribution of these products.
The Fifth Circuit has expressed this view in a case'upon which the Supreme Court has already denied certiorari:
"Perhaps if this prosecution had occurred under an appropriate statute that existed during the short life of the Eighteenth Amendment to the United States Constitution, appellants could properly equate their situation to the appellants in Marchetti. As it is, however, we are informed by the government's brief, and it is not disputed, (a matter of which we can take judicial notice) that possession of distilled spirits is legal to some extent in every one of the fifty states of the union. Therefore, we find ourselves in agreement with those district courts in addition to the trial court here, which have held that there is no danger of self incrimination resulting from the requirement of- Sections 5205(a) (2) and 5604(a) (1) relating to the placing of stamps and taxing of distilled spirits." Brown v. United States, 401 F.2d 769, 770 (5th Cir. 1968), cert. denied, 394 U.S. 962, 89 S.Ct. 1314, 22 L.Ed.2d 564 (1969).
THE EFFECT ON THE INDIVIDUAL
Regardless, however, of what we have written thus far pertaining to the purpose of the alcohol tax laws, appellant would argue that the Fifth Amendment privilege depends upon no such balancing of rights and is absolute as to him. We cannot perceive, however, how the affirmative acts here objected to can be held to represent compelling this appellant "in any criminal case to be a witness against himself." U.S.Const. Amend. V. Contrary to the facts in the Albertson case, these statutory provisions are not aimed at exposing "a highly selective group inherently suspect of criminal activities" to prosecution under other criminal statutes. Nor do we find here a compelled response which might involve "the admission of a crucial element of a crime."
These statutes do apply generally to all who manufacture liquor, including many persons or organizations who do so entirely lawfully within the State of Michigan. We find here no purpose to aid state officialdom in suppressing activities generally rendered illegal by state law. Cf. Marchetti v. United States, supra; Grosso v. United States, supra.
We certainly do not find here that "Congress intended information obtained as a consequence of [the requirements of these statutes] to be provided to interested prosecuting authorities." Marchetti v. United States, supra, 390 U. S. at 58, 59, 88 S.Ct. at 708.
Nor do we find that these statutes have "an obvious purpose to coerce evidence from persons engaged in illegal activities for use in their prosecution." Grosso v. United States, supra 390 U.S. at 74, 88 S.Ct. at 717 (concurring opinion).
Indeed, the alcohol tax statutes were drafted with the purpose of keeping per sons of ill-repute out of the alcohol beverage manufacturing business. Seaway Beverages, Inc. v. Dillon, 115 U.S.App.D.C. 321, 319 F.2d 722, cert. denied, 375 U.S. 923, 84 S.Ct. 265, 11 L.Ed.2d 166 (1963). And these federal statutes — in place of seeking to expose a limited class of law violators to state prosecution (Cf. Marchetti, Grosso and Haynes)— prohibit issuance of a basic permit upon a finding "that the operations proposed to be conducted by such person are in violation of the law of the State in which they are to be conducted." 27 U.S.C. § 204(a) (2) (C) (1964).
Absent the prior securing of the basic permit on a showing of compliance with state law, it is greatly to be doubted that any other of the affirmative acts required as a prerequisite to legal manufacture of alcoholic beverages under federal law (i.e., posting of bond, securing and posting of a distillery sign, securing and affixing of tax stamps) could actually be performed.
For example, Title 27 § 203 makes it unlawful to manufacture, ship or sell any distilled spirits, except pursuant to the basic permit referred to above. And appellant in this case (if we hypothesize his ability to show compliance with state law) could not have received such a basic permit to manufacture distilled spirits on the premises involved in this ease because 26 U.S.C. § 5178 flatly prohibits such a plant "in any dwelling house."
The possibility of appellant's self-incrimination by dint of actual compliance with the statutory provisions attacked herein is considerably less than "purely hypothetical." Cf. Minor v. United States, 396 U.S. 87, 90 S.Ct. 284, 24 L.Ed.2d 283 (1969).
In summary, the statutory provisions attacked in this appeal are a far cry from the statutory provisions invalidated in Marchetti, Grosso and Haynes which the Supreme Court held deliberately sought to expose federal registrants to state prosecution. Here federal registration is prohibited unless the registrant is in compliance with state law. This appellant could not, if he had tried, have gotten his name on any list of federal registrants because that list was a list of lawful distillers under both state and federal laws and not as in Marchetti and Grosso a list of gamblers whose activities were illegal under state law. Judge McCree's dissent suggests that appellant might have "attempted" registration and in effect told the federal authorities of his intention to make white whiskey in residential premises. Since there would have been no conceivable federal statutory benefit from such a disclosure, we cannot perceive how it could be deemed "compelled" in any Fifth Amendment sense.
We find no abuse of appellant's Fifth Amendment rights.
While this is a case of first impression in this court, we are by no means plowing new ground in the federal law. Three circuits and many District Courts have already reached the same conclusion. United States v. Fricano, 416 F.2d 434 (2d Cir. 1969); United States v. Walden, 411 F.2d 1109 (4th Cir. 1969); Wilson v. United States, 409 F.2d 604 (5th Cir.), cert. denied, 395 U.S. 923, 89 S.Ct. 1772, 23 L.Ed.2d 240 (1969); Thornburg v. United States, 406 F.2d 1060 (5th Cir. 1969); Grant v. United States, 407 F.2d 56 (5th Cir. 1969); Hall v. United States, 407 F.2d 1320 (5th Cir. 1969); United States v. Ellington, 406 F.2d 348 (5th Cir. 1969); Shoffeitt v. United States, 403 F.2d 991 (5th Cir. 1968), cert. denied, 393 U.S. 1084, 89 S.Ct. 868, 21 L.Ed.2d 777 (1969); Anderson v. United States, 403 F.2d 206 (5th Cir. 1968); Brown v. United States, 401 F.2d 769 (5th Cir. 1968), cert. denied, 394 U.S. 962, 89 S.Ct. 1314, 22 L.Ed.2d 564 (1969); United States v. Young, 284 F.Supp. 1008 (E.D. Tenn. 1968); United States v. Richardson, 284 F.Supp. 419 (M.D. Ala. 1968); United States v. McGee, 282 F.Supp. 550 (M.D. Tenn. 1968). Contra, United States v. Fine, 293 F.Supp. 189 (E.D. Tenn. 1968).
The judgment of the District Court is affirmed.
. Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968).
. Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968).
. Haynes v. United States, 390 U.S. 85, 88 S.Ct. 722, 19 L.Ed.2d 923 (1968).