Earl Warren: Number 336, United States, appellant versus Henry Preston Covington. Mr. Martin.
John S. Martin, Jr.: Mr. Chief Justice and may it please the Court. I would like to move the admission for the purposes of this case to Mr. Philip Lacovara, member of the staff the Office of the Solicitor General and member of the Bar of the State of New York.
Earl Warren: You may. Motion is granted. Mr. Lacovara.
John S. Martin, Jr.: Thank you.
Philip A. Lacovara: Mr. Chief Justice and may it please the Court. Before I begin the statement of the Covington case which is now being considered, I'd like to clear up a misapprehension which maybe left with the Court. The tax imposed on the transfer of marihuana to a non-registrant is $100.00 per ounce or fraction thereof. So, while it is possible according to Bureau of Narcotics statistics to obtain between 85 and 100 cigarettes from each ounce of marihuana. The transfer of even of a cigarette which would have perhaps 100 of an ounce would still be subject to a $100.00 tax because any transfer of marihuana no matter how is like if to a non-registrant is subject to the $100.00 tax.
Earl Warren: Is there anything in the record to indicate how much the Government did obtain in taxes from this law?
Philip A. Lacovara: Yes, that is a matter of public record. In the fiscal year 1967 that would be July 1, 1966 through January -- through June 30, 1967, $177,000.00 was collected under the Marihuana Tax Act. For calendar year 1967, the figure is about $270,000.00.
Byron R. White: Is that from the $3.00 and $1.00?
Philip A. Lacovara: This is all revenue collected under the tax. It includes the special occupational tax and the transfer taxes in amounts of $1.00 and $100.00.
Byron R. White: Well, but does the Government depended to $100.00 has ever collected?
Philip A. Lacovara: No, sir. Absolutely not in our brief.
Byron R. White: Do you mean at the time of transfer of marihuana illegally under state law that is that I can pay the $100.00 tax collected?
Philip A. Lacovara: If you are not eligible to comply with state law, you cannot register with the Director of Internal Revenue under the Marihuana Tax Act. It is our contention that if you're not eligible for federal registration you cannot prepay the tax or obtain federal order points.
Byron R. White: But do you think that after conviction it governed with the civil action?
Philip A. Lacovara: Not always after conviction but --
Byron R. White: No, if and when, that's what I want to know.
Philip A. Lacovara: -- after the transfer -- the illegal transfer has taken place, the Sanchez case before this Court.
Byron R. White: And the Government will accept the $100.00?
Philip A. Lacovara: The tax is levied by an assessment. I'm not aware of any situation --
Byron R. White: But why is it this -- do you mean levied by assessment?
Philip A. Lacovara: In the civil suit, yes.
Byron R. White: So that the -- there is liability for $100.00 tax?
Philip A. Lacovara: There is absolutely, yes.
Byron R. White: And if the person wants to is there a penalty involved for not paying -- for non-payment civil type penalty?
Philip A. Lacovara: I'm not sure whether the 50% surcharge --
Byron R. White: There's interest anyway?
Philip A. Lacovara: Yes, there would be 6% interest.
Byron R. White: So the -- how do you really distinguish this from Grosso, but that the payment of the tax itself?
Philip A. Lacovara: Well, I think there's a very critical distinction in Grosso. The individual was required to come forward and pay the tax on his own initiative and he fail to do so, he was subject to criminal prosecution.
Byron R. White: Government --
Philip A. Lacovara: In this situation, --
Byron R. White: Do you mean to pay the tax yourself that we can collect the premium with it?
Philip A. Lacovara: If the Government bears the burden of proof, there is nothing even in Grosso.
Byron R. White: No pressure on the person because if he doesn't pay the tax, he doesn't break the law but if he doesn't pay the tax, the Government assesses that he done?
Philip A. Lacovara: No, there is no additional criminal violation.
Byron R. White: Like peculiar situation.
Philip A. Lacovara: Mr. Justice, there is no additional criminal violation in not paying the tax after the transaction has occurred and the way the --
Byron R. White: That isn't the point. The point is that paying tax and liabilities for the tax indicates that he has already broken the law, that he is among that category A which to get an order form and at the end of the guilty plea transfer the marihuana?
Philip A. Lacovara: Yes, and the Government is not punishing him for failing to waive his Fifth Amendment right. The Government is saying, “We have information that you illegally obtained marihuana. That is a taxable transaction for which you are liable.”
Byron R. White: And can you pay the tax and say, “I am in that category.” Both people who have illegally committed -- illegal to formulate the things?
Philip A. Lacovara: The same could be said about an embezzler who fails to report the proceeds of an embezzlement on his income tax return if the Government and it brings a civil suit --
Byron R. White: The Government wants to argue that the general liability applicable to law the income tax -- is there suspect as the Grosso situation and argue its (Inaudible)?
Philip A. Lacovara: We're not willing to suggest that the income tax is fatally a suspect.
Byron R. White: Well, I don't think the argument now did.
Philip A. Lacovara: Well, --
Byron R. White: About the embezzlement.
Philip A. Lacovara: In practical effect, we suggest that there really is no Fifth Amendment difference in this situation. The penalty that's being imposed in the civil assessment is something that the Court expressly in Grosso and Marchetti and Haynes said was allowable. The Court expressly said the tax is not invalid in these situations and the Government can take steps to collect it civilly. The only thing that the Government may not do is prosecute a man criminally for not having come forward to pay the tax. This Act is different from the Firearms and the Wagering Tax Acts because as --
Byron R. White: Don't you think the Government gets some clue that I transferred narcotics illegally if I have to come forward and pay a tax?
Philip A. Lacovara: You don't.
Byron R. White: Because I'm the only -- the only reason I have to pay $100.00 is that I have transferred it illegally?
Philip A. Lacovara: You obtained it illegally.
Byron R. White: Well.
Philip A. Lacovara: But what we're saying is that --
Byron R. White: That maybe the first thing the Government heard of it that I transferred illegally is that if I come forward and pay the tax?
Philip A. Lacovara: Well, Mr. Justice, I have to reiterate that the way the statute was drafted and the way it's been interpreted under the regulations for the past 30 years and illegal acquisition the person who acquires marihuana illegally that is in most situation someone who was a non-registrant is not expected to come forward and pay the tax.
Byron R. White: But he is expected to pay it?
Philip A. Lacovara: If the Government brings suit against him and a judgment is rendered establishing his civil liability then the tax is collected as any assessment is. But, it was never contemplated by Congress in the administrative agencies have never expected.
Byron R. White: If on the face of the law is exempted for the liability for not paying the tax itself?
Philip A. Lacovara: Yes, that the statute doesn't --
Byron R. White: Incase he forget that?
Philip A. Lacovara: Statute that is involved here --
Byron R. White: Just forget that and say, well if he doesn't deny this means civil liability?
Philip A. Lacovara: No, sir. What we contend the statute says and what it means is that any transfer, any receipt of marihuana by an individual who cannot obtain federal authority for it is a criminal offense because the tax is said up in a way to make it a crime for a person in the course of taxable transaction to obtain marihuana without the authority to obtain it. There are --
Abe Fortas: There is nothing except this tax law that prohibits it. You're saying on the one hand that the tax law is sort of a joke and on the other hand, you're saying that man who violates it commits a criminal offense.
Philip A. Lacovara: Well, I don't suggest --
Abe Fortas: But I don't, is there anything else other than the violation of the tax law that is involved here? We say this tax law doesn't exist if we look at it as if it didn't exist here didn't mean what it says wasn't counsel in the preceding case correct that we -- what you're really doing is asking us to write a criminal statute?
Philip A. Lacovara: No, Congress wrote the criminal statute. We have cited in our brief both briefs the clear legislative history indicating that Congress did intend to achieve an absolute prohibition upon any transfers of marihuana except in what this Court in Sanchez called legitimate medicinal scientific and industrial channels. Because there have been four dissents in Doremus and three dissents in Nigro about the ability of Congress to enact the complete prohibition on illicit transfers without using the tax power. And I think it's important to know that there is no transfer tax under the Harrison Act and that was why the dissents in those two cases had set Congress, there's no legitimate relation between an attempt to distinguish law from unlawful transactions.
Byron R. White: Well, I certainly agree we're not talking about the Harrison law in this case. So, it is different, isn't?
Philip A. Lacovara: That's right and that's why Congress indemonstrably trying to achieve the same result making it the crime to transfer marihuana.
Byron R. White: But why didn't they just do it like the Harrison Act?
Philip A. Lacovara: Because of the -- then doubts about the constitutional power.
Byron R. White: The same doubts in here and the Harrison law?
Philip A. Lacovara: No, sir. In this situation, Congress imposed to taxes on the transfer of marihuana. There were no taxes on the transfer of narcotics and there still are not.
Thurgood Marshall: What is this? Is this really a tax or fine?
Philip A. Lacovara: I would call it a prohibitory tax as the constitutional doctrine is developed on that. But it's a tax which is designed to end a certain sort of conduct like the selling of state bank notes or the sale of yellow audio margin.
Thurgood Marshall: Will have the same effect as the fine.
Philip A. Lacovara: Not a fine, it's a deterrent rather than a fine principally.
Thurgood Marshall: Well, I'm fined for the purpose of deterrent?
Philip A. Lacovara: Well, all criminal statutes we can say both deterrent and cumulative.
Thurgood Marshall: Well, as I understand you this can view this never comes up until after you violate it then they file a civil suit to collect the fine.
Philip A. Lacovara: No, to collect the tax.
Thurgood Marshall: Well, the word.
Philip A. Lacovara: It's a civil suit rather than a forfeiture proceeding in form. And when we say, “it comes up only after you violate the law,” we're talking only about a transfer set by definition or illegal. The tax is due and payable and it's paid at the time the transfer or the time of applying order forms for lawful transactions. I think that we shouldn't lose sight of the fact either that the regulations which the Court has frequently held especially when dating from the time of enactment and when promulgated by the agencies which are to give life to a statute as in this case have from within two months after the passage of the Marihuana Act clearly indicated exactly what Congress was intending. The regulations that were promulgated on this point under the Marihuana Tax Act are identical to the regulations under the Harrison Act. And they provide that only people who are lawfully registered can obtain the order forms for the lawful acquisition of marihuana. Now, under the Marihuana Act, that is the time that the tax is to be paid by those who are lawfully entitled to obtain marihuana. Where counsel in the previous case suggested that this was ingenious and noble construction that the Government invented only after Grosso and Marchetti and Haynes suggested that there are constitutional difficulties with this statute. These regulations date from 1937 longer for there was any suggestion that statutes which operate even differently as the wagering and firearms statutes did involve Fifth Amendment problems. This is by no means a noble inventive rejoinder there to recent constitutional development. The administrative agencies with ample foundation in the legislative record including statements on the floor of the Congress and in the Committee Reports that this bill is designed to stamp out illicit marihuana transfers that it's designed to prevent marihuana from coming into the hands of those who would use it for smoking or for addiction. With this type of legislative background, the Secretary of the Treasury promulgated regulations to effectuate that objective. So that the only transfers of marihuana that can be made or transfers that are lawful or to lawful registrants who are complying with state law. These are the only people who are expected to register, they're the only people who were allowed to register, they're the only people who file information returns, they're the only people whose names are listed in forms that will be made available to state and local investigating services. People who would be in violation of state law if they handle marihuana are not allowed to get federal sanction for the transfer of marihuana. They are not expected to register. This Act as to that class of people stands as an absolute prohibition; that is what Congress understood, that is what the regulations make clear. The standard for whether the privileges against self-incrimination prevents prosecution for violation of statute focuses on whether compliance with the statute would have presented real and substantial rather then imaginary hazards of self-incrimination.
Abe Fortas: Well, if that were so then you would have to defend the statute, wouldn't you on some power -- constitutional power of the Congress rather than the taxing power?
Philip A. Lacovara: No, sir.
Abe Fortas: In other words, what you're saying is that this taxing statute here is not in reality a tax statute, it's a prohibitory statute but that we should regard the taxing power as a constitutional basis for the congressional prohibition?
Philip A. Lacovara: No, sir. Let me say that this case follows a fortiori from cases that this Court has already decided in Doremus, in Nigro, in Wong Sing, and Alston. This Court upheld as a legitimate exercise of the tax power, the absolute band provided in the Harrison Act for transfers to non-registrants even though there is no tax even on the transfer of narcotics under the Harrison Act. They said, “It was enough to say that these prohibitions were designed to keep the transfers above board where the commodity tax was subject to collection.”
Abe Fortas: But a while ago, you told us that Congress didn't follow the Harrison Act model here in order to avoid the frightful prospect presented by the fact that they were in dissents in Doremus.
Thurgood Marshall: To make it clearer that this was a legitimate exercise of the tax power, they impose to transfer tax. The legislative history is clear on this. This is why they thought there would be absolutely no constitutional problem under the tax power because these transactions are subject to the taxing power. They are subject to a tax and it was thought obvious that Congress in its exercise to the tax power can legitimately distinguish between types of taxable transactions and make determinations as to how the transactions must be carried on if at all. But I would like to say that as the legislative history does relate because in the House Committee Report were, this was actually as the revenue bill originated in the House. It was expressly stated that insofar as the tax power might be argued not to support a complete prohibition such as was being enacted. The report states it is clear that the commerce power and the other powers of Congress for instance a power over the District of Columbia and the territories would also support this. I might point out that we have today even a further support for a complete prohibition such as this and I think it standard constitutional doctrine that even if Congress misapprehends the power that it's relying and a statute is not ultra vires if there is some constitutional support even if it's not the clause that Congress relied on to sustain statute. The United States is now a party to an international convention enforced with some 67 other states -- nation states which expressly obliges the United States to impose the maximum controls on heroin, opium, and marihuana. We think that the interplay of all of these constitutional clauses is more than adequate authority to sustain the absolute prohibition on illicit transfers that Congress has enacted and the administrators have implemented. There was also a claim made that this is a noble contention because it's inconsistent with what this -- with the Government has advised the Court or Congress in the past. A petitioner in the Leary case cited our Sanchez brief which was the case in which the Court sustained the constitutionality of the $100.00 per ounce transfer tax in a civil assessment proceeding. Nothing that we said in Sanchez it's in any way inconsistent with what we say here. The two sentences quoted in the reply brief upon behalf of petitioner in Leary are in the course of a discussion in which we said Congress went beyond what it had done in the Harrison Act. And the Harrison Act, it had simply enacted a direct prohibition unrelated to the tax power. In this Act, the Marihuana Act, we said in Sanchez and the Court ultimately agreed that it was constitutional to do it this way. Congress didn't fashion a direct prohibition without more. It went beyond this and as we said in the language which I believe is quoted in their brief -- reply brief, Congress did more in addition to achieve in that same effect it also provided that there would revenue raised through the course of transferring marihuana. And for that reason as I suggested before, the controls that were imposed on the transfer of marihuana we thought to be valid a fortiori from those that have been sustained albeit by divided courts in Doremus and Alston, Webb, Wong Sing, and Nigro. The same thing is true with respect to the memorandum by the treasury in relating to the Guam Organic Act all that recognize. I think that's quoted in the amicus brief filed on behalf for the American Civil Liberties Union. That memorandum reflects that the Marihuana Tax Act is not a complete prohibition on the transfer of marihuana as it is not because there are still lawful uses for marihuana at least in the United States. It is still possible to deal in marihuana lawfully. The treasury memorandum said, “There are no lawfully uses for marihuana in Guam,” there isn't any research being conducted, it's not grown for hand purposes. So, rather than preserved the possibility of some legitimate dealings in marihuana in Guam where it's unnecessary, we will substitute for it a direct categorical prohibition so that no one in Guam can lawfully deal in marihuana. In the United States, that is not true and in fact there are approximately 90 federal registrants who having complied with state requirements for handling marihuana are eligible to register under the Federal Act and can lawfully transfer marihuana upon payment of the $1.00 an ounce transfer tax. The essence of all of this is that as the Act was drafted with the clear objective of stamping out transfers to illegitimate addict and as the administrative agencies had consistently administered the Act. There is no real problem of incrimination because those whose obtaining of marihuana would violate state law are not expected to come forward to register. They're not allowed to register. They're not expected to come forward to obtain order forms or to prepay the tax. They will not be allowed to do this because Congress was not unlike the firearms case and unlike the wagering cases. Congress was not willing to provide federal sanction for this type of conduct with the intent of exposing it to prosecution under state law. The federal and state provisions in this area are in complete tandem only lawful dealers under state law can comply with the Federal Act. Anyone who can't comply with state law cannot comply with the Federal Act. So, we have federal enforcement power to reinforce as a matter of federal law the ban on the transfer of marihuana for smoking or addiction. We suggest this is radically different from the wagering and firearms cases. And that the reason that people don't comply with this statute is not there's any fear of incrimination, it is because they're not eligible to comply because there is a prohibitive tax that is imposed and a tax which Congress did not contemplate could be paid before the transaction took place. I would like to save any remaining time for rebuttal.
Earl Warren: Mr. Davis.
William J. Davis: Thank you. Mr. Chief Justice and all of the members of the Court, I have not been admitted to the Supreme Court Bar and I would request that I be admitted for the purpose of this suit since I have been appointed by the Court to represent the indigent. I hope to prefect my membership that --
Earl Warren: (Voice Overlap) You may proceed on the argument of this case Mr. Davis.
William J. Davis: Thank you. First, I want to apologize to the clerk's office and the Court for any problems arising in the -- my presentation of this case. Probable cause was noted in October of 1968 and I was at that time notified that because of the Leary case was coming up at the same time it was desirable that this case be argued at the same time and I was asked if I could meet the deadline. I was reluctant to try to meet the deadline because I am somewhat of anachronism I run a one-man law office and I -- however, felt the importance of this case and I took, almost took on more than like two. I – we manage -- did manage to get in a brief and it is a brief, brief. I do not apologize for the brevity of the brief but I do apologize for the small print because like my Texas colleague yesterday I'd like to say that the brief only cost about $1.10 a copy. So, we did save some money but it might have to be use with microscope in order to read, the print it is so small. It is my hope that I can amend for this in my oral presentation of this case. Now, the Covington case which is before you delineates the very shocking the question of the tax because as the Government admits and I was of course counsel below as the Government admits, we interpose our objection to the statute in the time of the matter. My client was indicted on or about August well in September of 1967 or sometime thereafter and the indictment read as follows, “United States of America versus Henry Preston Covington that on or about August 11, 1967 within the Eastern District of the Southern District of Ohio, Henry Preston Covington being a transferee of marihuana required to pay the tax imposed by Title 26, United States Code Section 4741 (a) did acquire and obtain approximately 737.1 grams of marihuana without having paid such tax period in violation of 26 United States Code 4744 (a) (1).” To this indictment, we interpose a motion to dismiss the indictment on the grounds that the statute compel -- would compel the defendant to incriminate himself. We had -- this was not accidental that we raise this. We have been following the Costello case as in the gambling cases in the Advance Sheets and we were waiting for the decisions to be reached. Unfortunately for us, the decisions were reached before the indict -- before we had to answer the indictment and when the, not only because when the cases came out, Haynes, Marchetti, and Grosso and the same volume of the law editions we relied on these cases to meet this. So, to answer to Mr. Justice Stewart's question of yesterday as to the time of the case, our case did come after Haynes, Marchetti and Grosso so that would be no problem of retroactivity if the Court desire to follow its decisions in those cases. Of course, one of the things that impelled us to make the objection to the statute and I think one of the things that influenced the federal judge, Judge Joseph P. Kinneary in sustaining our motion was the dissent of the Chief Justice in the Grosso case in which he said that, “I apprehended the Court by a necessarily sweeping within its constitutional requirements, the registration requirements within its constitutional holding the registration requirements of 4412 is opening a door to a new waive of a tax on a number of federal registration statutes wherever the registration requirement touches upon allegedly illegal activities. And of course the 4722, those engaged in dealing in narcotic drugs 4753, those who deal in marihuana were included in the Chief Justice's enumeration of the statutes which might be affected by this decision. We realize of course that Chief Justice which this time was concerned about the effect that these decisions had on the power to tax and we of course would share that concern. However, it's no question about that these decisions did open the door. And we're trying to get in it. Might I say that insofar as civil liability is concerned and I might say this reference to the questions that have been asked by Mr. Justice Fortas and Mr. Justice Stewart, the -- I'm sorry, White. This law is no joke to my client. My client was served a notice by a narcotic agent and the notice was directed to him to Henry Preston Covington and it says this is from a narcotic agent Jack Elloy in Ohio in case in Ohio 782M which is either his narcotic case file number or the Internal Revenue file number. “It has been reported to the undersigned officially that on or about 11 day of August 1967 at Columbus Ohio and Eastern Division, Southern District of Ohio you were found with a quantity of marihuana in your possession and under your control. Accordingly, and in pursuant to the provisions of Section 4744, the Internal Revenue Code of 1954, I hereby demand that within eight days from the service hereof upon you, you produce at my office in room 1045 in the Federal Office building Cleveland, Ohio a copy of the official order form” that's in caps “required by Section 4742 of the Internal Revenue Code of 1954 to be retained by you under and by virtue of which said marihuana was transferred to and applied by you. You are further notified that your failure to comply herewith within the period specified will render you liable for the transfer of taxes imposed by Section 4741 of the Internal Revenue Code of 1954 and will establish presumptively that you acquired and obtained said marihuana unlawfully without having paid such taxes.” So, contrary to the Government's argument that this is a lot of more lucky, these people are following this statute. It is a tax statute and they are observing it as such.
Abe Fortas: Mr. Davis, is what you just read to us in the record before us?
William J. Davis: No, sir. I refer to it in my brief, in my brief, brief but I don't believe I attest a copy of this. I might have attest a copy in the record.
Abe Fortas: There's a copy of the -- you're reading from an official notice?
William J. Davis: Yes, sir.
Abe Fortas: Is copy of that available?
William J. Davis: I'll -- I'll leave the original. It appears to be a copy of an original. I can leave it with the Court and I think perhaps since the Government's argument is taking the turn that it is that this should be by the record, if it's not all ready I referred to it in my brief. I did not realize we will get in to the argument of civil liability. And in addition, I have --
Earl Warren: Can you may -- you may leave it with the Court if you please and if counsel has response to it they may make it.
William J. Davis: Yes, thank you sir. In addition, my client has been served with a Form 17 from the Internal Revenue office dated at Cincinnati Ohio the District dated October 11, 1967 notifying him that he has been taxed a reference and date Number 4 Marihuana that the assessment is $2,900.00 and that is -- it's a $2.75 special tax and there is 28 cents interest and the total tax due is $2,903.03. So, this is no joke to my client because in addition he had a --
Hugo L. Black: Is that in the record?
William J. Davis: No, sir. That is not in the record at all. I didn't mention it in the record.
Hugo L. Black: What's in the record?
William J. Davis: Sir?
Hugo L. Black: It's rather difficult to take things if not in the record. What is in the record?
William J. Davis: Just the fact that this order was -- that this order was served on him, the order from the Internal Revenue or from the narcotic agent notifying him that he should comply with the statute.
Hugo L. Black: Official notice of him, I don't --
William J. Davis: Sir?
Hugo L. Black: It might be possible to take the judicial knowledge of them?
William J. Davis: Yes, this is an official notice and --
Hugo L. Black: Did the government argue below the same point of civil liability that it argued in this Court?
William J. Davis: I -- we, -- the case below was decided on memorandum solely and I do not recall a civil liability being raised in the memorandum. It was the memorandum below of the government was primarily on this question of the administrative construction of this Act to the effect that no person who was illegally engaged in the transfer of marihuana could obtain an order form but there was no question of civil liability. Of course, these are things outside the record, In addition, my client's car was impounded 66, 65 Buick. So, it's very real, this man is very real that him and because the impounding of the car was not under the statute. So, it's a very real to him. Now, we feel therefore that we are strictly following judicial precedent and we feel the Court -- the lower court, District Court took a forthright stand and we feel that Haynes, Grosso, and Marchetti required that the striking down of the statutory scheme such as this which constructs a federal crime upon failure to make a compelled disclosure of activity clearly criminal and even though it's in a tax or in a statute. We -- we note that the Haynes, Grosso, Marchetti decisions merely extended the Albertson decision which struck down a registration oriented criminal statute which the two purpose was to direct it to a selective group inherently suspect of criminal activities. Again, we emphasize the fact that our case came after the Haynes, Grosso and Marchetti case. I might also indicate one of the statements that was made by a federal judge below. After the judge had struck down the statute and construed the statute to be unconstitutional as applied to this defendant, Covington, the Government again asked for reconsideration. And on reconsideration, it emphasizes argument that this man could've obtained the narcotic and therefore the tax doesn't apply to him. The court below rule made an alternative ruling in addition to ruling that that the statute compelled self-incrimination. The court answered the Government's argument in the following manner and he said, “The memorandum filed in support of this motion submits that a person who is a transferee of marihuana in violation of state laws will not be issued an order form for marihuana. It is asserted this reads the statute of any trace of unconstitutionality.” This Court did not decide that the marihuana taxing provision are in themselves unconstitutionally. It merely determined that as applied to this defendant, they would be unconstitutional. If the defendant had no obligation to pay the tax and obtain an order form, the United States had no basis on which to seek an indictment. The Court does not agree that Section 4744, the statute under which this defendant was indicted is now an absolute prohibition. Section 4744 is based explicitly on Section 4741 (a). If 4741 (a) is not applicable to the defendant, then there is no basis for the indictment. Therefore, in any event the indictment should be dismissed. We feel that this is a commendable construction of the answer to the Government's argument. And we feel that it is too late now for laws to be change by administrative fiat. Normally, the administrator is trying to read more things into the law. Here, in this case, the Government is trying to read something out of the law. This law says, “all persons” and we feel therefore that this law compels incrimination insofar as Covington was concerned and that as to him it was an unconstitutional attempt to compel him to incriminate himself. Thank you. I would defer I think they have some time left to my colleague Mr. Haft.
Earl Warren: Yes. Mr. Haft.
Robert J. Haft: Thank you Mr. Chief Justice, may it please the Court. Counsel for the Government has relied upon the regulation as something it has -- is in support of the consistent administrative of construction since 1937 that the Government does not accept the $100.00 tax. Now, the regulations are part of the Government's brief in the Leary matter and I believe in Covington as well starting on page 58. These regulations states starting with the first one, the tax applies to every transfer and that's put in the regulation since 1937. Amount of tax where they transfers to a taxable person who was duly registered and paid the special tax, the transfer tax is at the rate of a dollar per ounce of fraction thereof. If the transfers to be to a person was not registered and paid the special tax under this Act, tax at the rate of $100.00 per ounce of fraction thereof is due. That's in the 19 -- regulation since 1937. On page 59 of the Government's appendix, this is 59 of their brief, again in the regulations it states that on the order form the application shall show that transferee's name, address, and if registered, the registration number so that the order form regulation since 1937 has contemplated a non-registrant applying for an order form. Now, what is there in the regulations of the Government does rely on? They rely on the signature and comparison regulations, the only thing and either the statute, the legislative history or any place that says anything about a registration is tied in with the order form. Now, in the signature and comparison regulations, it does state that the Internal Revenue District is to take an application for an order form and compare the signature on that application with the list of registrant's signatures which are on file. That is those that paid their occupational tax. Now, that's all the Government can hang their head on and I think that that is easily explained. That is if you want to commend with an application for an order form and pay a dollar an ounce tax, the way that you prove that all you have to pay is a dollar an ounce is by signing and showing that you are a registrant to what comparing it to your signature on file and that is consistent. Those regulations with the dollar an ounce tax claim and if the comparison does not show up in the Internal Revenue District, you got to pay the $100.00 an ounce tax. That's all and is in this so-called 1937 to date consistent construction by the Government and plenty against it. In connection with this rather subtle point that you can't prepay the tax and that all and unlawful possess it can do is post pay the tax and go to jail. I mean that's really what the Government is saying. The statutes themselves expressly provide to the contrary. The 4741 which imposes the tax in subdivision (b) and (a) imposes the rate a dollar and $100.00 and in (b) by whom pay such tax and now without any distinction between the dollar and a hundred search tax shall be paid by the transferee at that time of securing each order form and shall be in addition to the price of the form. It's very clear that tax payment both the dollar and a hundred is contemplated at the time you go to the Secretary of that Treasury and get you order form. The order form again, it sometime pays to look at the plain statute in what it says in light of the sophisticated argument. The order form requirement 4742 says, “It shall be unlawful for any person whether or not required to pay a special tax and to register to transfer marihuana. And the tax is -- the $100.00 tax is upon each transfer to any person who has not paid the special tax and register.” It's all embracing, the statute says, it is to be paid at the time you get your order form. The order form speaks prospectively in subsection (c) of the order form requirement 4742. It talks about the name and address of the proposed vendor and proposed vendee. So that you are suppose to legitimatize your transaction beforehand by paying your tax and securing your order form. This is on the face of the statute. The regulation's reiterate this position. The crime, it is interesting is in 4744 and it says, “It's unlawful for any person who is a transferee required to pay the transfer tax imposed by 4741 to acquire marihuana without having paid such tax.” Again, very clear that the tax is to be paid prior to the transaction and it's expressly contemplated by the statute. I thank the Court.
Earl Warren: Mr. Lacovara.
Philip A. Lacovara: Mr. Chief Justice, in answer to the question that you asked Mr. Davis, the Government did argue that and cert that transfers of -- illicit transfers of marihuana are taxable civilly. On page 17, of the buff colored appendix where in pertinent part are motion for reconsideration in the District Court is set forth footnote 3 says after saying that it's impossible to prepay the tax and to obtain an order form if the perspective transferee is a non-registrant. Of course, the Government is not foreclosed in collecting the $100.00 tax after it has been established that a transfer was made to an unregistered person.
Potter Stewart: How did the figure get up to the rather dizzy heights that were and that was given to us by counsel some like $2,900.00 or --
Philip A. Lacovara: Well, there are 737 grams which is approximately 29 ounces of marihuana.
Potter Stewart: 29 ounces, $2900.00 I see.
Philip A. Lacovara: I‘m not sure what the $2.75
Potter Stewart: But then there was only 8 cents interest or 28 cents interest?
Philip A. Lacovara: Well, that's because the demand apparently --
Potter Stewart: Was just a matter of days?
Philip A. Lacovara: Just a matter of days. I think the indictment says the transaction took place on August 11 and the indictment was returned in November, so it's a matter of few days.
Earl Warren: Mr. Lacovara, do you have any objection to the two documents that that counsel pointed out to us?
Philip A. Lacovara: As far as I know Your Honor, I do not. I believe the demand form that is referring to is a standard demand for production which triggers the penal provisions of Section 4744. It is provided for in the statute like this.
Earl Warren: But then you may provide both of them to the Court Mr. Davis.
Philip A. Lacovara: I think it's important to turn to the contention that the regulations and the statute themselves belie the Government's contention. Counsel for Mr. Leary has just said that the only thing we have is a statement in the regulations at the signatures on the application for registration. And the signature on the application for order forms will be compared but that that's only designed to make sure that people aren't evading the $100.00 tax in trying to bring themselves under the $1.00 per ounce tax. I think if the Court looks at the regulation, it will see that it is much more expressed. Regulation 26 CFR 152.68 which is set forth on page 60 of the Leary brief, after saying that upon receipt of the application for an order form the district director will compare it with the signature appearing on the application for registration. It then says unless the district director is satisfied that the application is authentic, it will not be honored. Now, we can see no other reasonable construction of this regulation and that the signature is the authentic signature of the registrant. The order form will -- the application for an order form will not be honored unless it has been submitted by someone who is duly registered. Counselor also points to the provision dealing with application for order forms, he, I think misspoke inadvertently when he said that the order form is to contain the name of the transferee if registered. It's the application for the order form, its 26 CFR 152.66.
Abe Fortas: Can somebody apply for him and obtain the $100.00 -- go in and pay the $100.00 tax in applying for him and obtain the permit with assurance that the information listed will not be used either to institute a criminal investigation or as evidence in a criminal prosecution?
Philip A. Lacovara: No, he cannot come in and pay the $100.00 transfer tax at all. The district director would be behaving in contravention of the treasury regulations if he accept the tax and issue the order forms. The regulations expressly forbid him to issue an --
Abe Fortas: Well, apart from that suppose where the -- somebody could take a -- could issue a permit to $100.00 upon payment of a $100.00 tax in a proper case?
Philip A. Lacovara: No, sir. It's our contention that order forms are not available to any non-registrants. Only non-registrants are subject to the $100.00 tax. So, that in operation since 1937, no one has and no one can pay prepay the $100.00.
Abe Fortas: So, the money that's been collected -- has been collected and on the $100.00 tax has been collected in the absence of the insurance of an order form?
Philip A. Lacovara: That's right. After the transfer, the illicit transfer has taken place.
Abe Fortas: And what you're asking us to do is to go along with this -- what shall I call it? Well, I won't --
Philip A. Lacovara: I would call it consistent administration --
Abe Fortas: (Voice Overlap) We'll go along with this straight statutory scheme that you say should be read as saying, “Thou shalt not?”
Philip A. Lacovara: That's essentially our argument that we say it's been interpreted that way for 30 years. It also has the incidental virtue which is by no means a post talk rationalization in light for the third year history of avoiding not insubstantial constitutional doubts and normally, the Court will interpret statutes if fairly possible as we think the administrative construction and the reports make more than fairly possible. To avoid constitutional doubts, it's a noble doctrine that the contention --
Abe Fortas: It's a little difficult to think of something where the Court has -- the party is quite as far as you're suggesting from the language of the statute?
Philip A. Lacovara: Well, we're dealing in a noble area Mr. Justice. In Marchetti and Grosso, we talked about substantial hazards of incrimination. We say that under this statute there are no substantial hazards of incrimination whether the regulations are ultra vires, we contend they're not. But even if they are, for 30 years, there has been no substantial hazard of incrimination because no one has been expected to come forward and make a disclosure which could be incriminatory.
Potter Stewart: What if they -- what if the defendant sued the Government who has refused in order form sued this Government for an injunction?
Philip A. Lacovara: I think that would raise the question whether the regulations are ultra vires. But no one has ever done that.
Potter Stewart: Well, how would the question be answer though?
Philip A. Lacovara: We would be prepared to --
Potter Stewart: How could you possibly refuse somebody to order form who came in and said, “I want the money. I want the order form and I want to transfer some narcotics” and the Act says, “I can get”?
Philip A. Lacovara: Our contention is that the Act does not say that that Congress didn't mean that and the --
Byron R. White: You mean a fellow may not waive his privilege against self-incrimination?
Philip A. Lacovara: That's right. Congress has provided a direct -- Congress has provided a direct prohibition upon his acquisition of marihuana for a man can't commit murder by coming in to the Government saying, “I'm going to tell you about it, but I want to commit murder.” Well, Congress outlawed the acquisition of marihuana and even if the individual wanted to come forward and waive his privilege, Congress has said that he is just not eligible to engage in marihuana transactions without more.
Byron R. White: But you have -- you do have to go just exactly that far.
Philip A. Lacovara: Yes, sir.
Earl Warren: Very well.