Court Opinion

ID: 8639228
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:50:25.019226+00
Date Added: 2024-06-11T16:55:39.577187
License: Public Domain

DYER, District Judge.
Considering the case precisely as it stood before condemnation and sale, what were and are the rights *258of the parties? The information charged violations of law by Hatzfeld, who was in possession of the property. By non-appearance and default, he confessed the allegations of the information. The property was therefore liable to forfeiture, and was forfeited to the United States, so far as he and his interests were concerned. The offenses producing the forfeiture were committed in the several months between November 1, 1S7C, and July 2, 1877. On the 10th of April, 1877, admitting the allegations of the petition to be true. Delmanzo was the owner of a portion of the property used by Hatzfeld in the business, and on the premises, and on that day made the mortgage thereon, now claimed to be a lien paramount to the interest of the United States. Neither the petitioner, nor Reynolds the mortgagee, was a party to the alleged illicit manufacture of spirits, or had any knowledge thereof, but both were innocent parties holding the mortgage in good faith to secure a bona fide indebtedness.
3 [It was contended on the argument by counsel for petitioners, that in analogy to proceedings in admiralty as authorized by the 34th rule in admiralty, petitioners should be permitted to contest the existence of the alleged causes of forfeiture; i. e. the existence of the alleged facts which rendered the property liable to seizure. The claimant, Hatzfeld, was the distiller possessing and using the property; as before remarked, he made no defense to the information. He confessed its allegations. By non-appearance and default he admitted the illicit transactions charged against him which made the property liable to seizure. And not only is this so, but no issue is made upon the merits by the present petitioners. They merely aver their own innocence of any fraud, and the innocence of the mortgagee. It is not in any manner denied that Hatz-feld committed the offense charged in the information. How, then, when no issue is made upon the question can these interven-ors be heard upon such an issue? Admitting that under the rules and practice in admiralty, a person having either a proprietary interest or a mere lien, might “according to the course of admiralty proceedings,” contest a forfeiture by seeking to show that no original causes of forfeiture existed, it could only be done upon suitable allegations propounding that issue. As the case is presented, we must then accept as facts the possession by Hatzfeld, at the time alleged, of the property in question; its use by him in the illicit distillation of spirits, as charged, and therefore that the alleged grounds of forfeiture existed. Further, that the mortgage lien set up by the intervenors was attempted to be created by Delmanzo, as the owner of an undivided interest in the property, that petitioners are the holders in good faith by assignment from Reynolds of the mortgage in question, and that both Reynolds the mortgagee, and the petitioners were ignorant of the alleged violations of law by Hatzfeld, and in their relations to the property and to the alleged mortgage lien, are innocent parties. Upon this state of facts, is the mortgage to be recognized as a lien paramount to the claim of the United States, and should the forfeiture and condemnation of the property be held subject to the mortgage interest of the intervenors? The bona fides of the mortgage being shown, it is claimed by the learned counsel for the intervenors, that the government can only forfeit and have condemned the interest of Hatzfeld in the property, and as he did not own the interest of the mortgagee, that interest is not and cannot be forfeited by reason of illegal transactions on the part of Hatzfeld.] 4
Upon this state of facts, is the mortgage to be recognized as a lien paramount to the claim of the United States, and should the forfeiture and condemnation of the property be held subject to the mortgage interest of the intervenor?
The good faith of the mortgage being shown, it is claimed by the learned counsel for the intervenor, that the government can only forfeit and condemn the interest of Hatzfeld in the property, and as he’ did not own the interest of the mortgagee, that interest is not and cannot be forfeited by reason of illegal transactions on the part of Hatzfeld.
Section 3281, Rev. St., provides, that “every person who carries on the business of a distiller, without having given bond as required by law, or who engages in or carries on the business of a distiller with intent to defraud the United States of the tax on the spirits distilled by him, or of any part thereof, shall, for every such offense, be fined * * * and imprisoned. * * * And all distilled spirits or wines, and all stills or other apparatus fit or intended to be used for the distillation * * * of spirits * * » owned by such person, wherever found, and all distilled spirits or wines and personal property found in the distillery or in any building, room, yard or inclosure connected therewith, and used with or constituting a part of the premises; and all the right, title and interest of such person in the lot or tract of land on which such distillery is situated, and all right, title and interest therein of every person who knowingly has suffered or permitted the business of a distiller to be there carried on, or who has connived at the same, and all personal property owned by or in possession of any person who has permitted or suffered any building, yard or inclosure, or any part thereof, to be used for purposes of ingress or egress to or from such distillery, which shall be found in any such *259building, yard or inclosure, and all the right, title and interest of every person in any premises used for ingress or egress to or from such distillery, •who has knowingly suffered or permitted such premises to be used for such ingress or egress, shall be forfeited to the United States.”
By this section, a forfeiture is denounced, first of spirits, wines, stills and other apparatus owned by the distiller, wherever found; second, of all distilled spirits, wines and personal property, found in the distillery, or in any building, room, yard or inclosure connected therewith, and used with or constituting a part of the premises; third, of all the right, title and interest of the distiller in the lot or tract of land on which such distillery is situated; fourth, all right, title and interest therein of every person who knowingly has suffered or permitted the business of a distiller to be there carried on, or who has connived at the same; fifth, all personal property owned by or in the possession of any person who has permitted or suffered any building, yard or inclosure, or any part thereof, to be used for the purposes of ingress or egress to or from such distillery, which shall be found in any such building, yard or inclosure; and, sixth, all the right, title and interest of every person in any premises used for ingress or egress to or from such distillery, who has knowingly suffered or permitted such premises to be used for such ingress or egress.
Thus it will be seen, a distinction is made in some respects between real estate and personal property. As was said by Judge Woodruff in U. S. v. Distillery at Spring Valley [Case No. 14.963]: “In this section, congress seems to have anticipated a possible discussion, whether it was intended to forfeit property found upon the premises, or used for the purposes of distillation, not belonging to the distiller, and to have purposely been so explicit as to preclude inquiry into mere questions of title, and at the same time, in respect to the real estate, to protect one whose land, under lease or out of possession may, without his knowledge and consent, or perhaps even against his will, when he has no power to prevent, be used in or for the. purposes of a distillery.”
Further, in the same opinion it is said, that the second of the foreitures enumerated, “is declared irrespective of ownership. It plainly includes property not owned by the distiller. All spirits, wines, stills and other apparatus owned by the distiller, had already been declared forfeited, whether found on the distillery premises or not. It would have been meaningless to declare again, that the same should be forfeited when found there. Spirits, etc., owned by the distiller are «brought into distinct contrast with the other spirits, etc., named. The latter are only forfeited when found on the distillery premises; the former are forfeited wherever found.”
Such is the construction, that has been placed upon this statute, and in view of its plain provisions, no other, in my opinion, is sound. Now, applying the law, as so construed, to the present case, the following conclusions necessarily result. Taking the averments of the information as undenied, the alleged infractions of law were committed, both before and after the making of the mortgage in question. Where a statute in direct terms denounces a forfeiture of property as a penalty, the forfeiture takes place at the time the offense is committed, and operates as a statutory transfer of the right of property to the government. U. S. v. 56 Barrels of Whiskey [Case No. 15,093], And in the case just cited it was so held against persons who had in good faith purchased the property before the commencement of suit for condemnation. The property in question was therefore already forfeited to the United States when the mortgage was made. It was so forfeited as to both Hatzfeld and Delmanzo, because, as we have seen, the forfeiture of such property occurs irrespective of ownership. If Delmanzo’s ownership could not avail against the forfeiture, then he could create no lien that would be operative against it, and his mortgagee and the assignee of the mortgage occupy no better position than does the owner and mortgagor. These conclusions are only to be avoided by showing that no grounds of forfeiture existed, and upon this question no issue is made. The objections to the intervenor’s petition must be sustained.

 [From 11 Chi. Leg. News, 9.]

 [From 11 Chi. Leg. News, 9.]