Court Opinion

ID: 9418568
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:32:23.998903+00
Date Added: 2024-06-11T17:22:06.087289
License: Public Domain

Mr. Justice Brandeis
delivered the opinion of the . Court.
This is a proceeding, commenced in the federal court for Northern Alabama, under Revised Statutes of the United States, § 3450, to forfeit an automobile “said to belong to Garth Motor Company,” on the ground that it was being used with intent to defraud the United States of the tax on distilled spirits found therein by depositing and concealing the liquor.1 The libel, which was filed in September, 1923, recites that it is “a case of seizure on land under the internal revenue laws of the United States.” The company intervened as claimant and moved to quash the libel. It also filed a claim by which it asserted title to the automobile and deniéd *324knowledge or notice, prior to seizure,'that the automobile was being used or was to be used in any illegal manner. No action was ever taken on the claim. The motion to quash was allowed; and upon that motion alone the District Court entered judgment dismissing the libel. The judgment was affirmed by the Circuit Court of Appeals for the Fifth Circuit, 4 F. (2d) 528. The case is here on-writ of certiorari, 268 U. S. 687.
. The libel alleges that on August 11, 1923, the federal prohibition director for Alabama had seized the automobile in the possession of one Killian being used by him “for the purpose of depositing and. concealing certain illicit distilled spirits ” on which “ the taxes imposed by law had ■ not been paid ” with “ intent ... to defraud the United States of such taxes”; alleges that the automobile is forfeit under § 3450; and prays relief thereunder. To the libel is attached, and made part thereof, a complaint, dated August 13, 1923, by a federal prohibition agent. In that complaint, the affiant charged, with specification, only that. Killian "unlawfully had there in his possession 27 quarts of rye whisky, in violation of § 29 of Title II of the National Prohibition-Act,' October 28, 1919, c.. 85, 41 Stat. 305, 316; and he prayed that Killian “may be apprehended and further dealt with according to law.” The complaint made no reference to removal or transportation of liquor; nor to the use of a vehicle for such purpose; nor to any seizure; nor to § 26 of the Prohibition Act. It did not even mention an automobile or other vehicle. Nor did the libel state that a warrant issued on the complaint; or that Killian had been arrested or in any way prosecuted for any alleged violation of the Prohibition Act; or that his whereabouts was known.
The sole question for decision is, Whether an automobile, which was seized by a prohibition agent, may be forfeited under § 3450 if it was being used for the purpose *325of depositing or concealing tax-unpaid illicit liquors with the intent to defraud the United States of the taxes imposed thereon. Obviously, the mere fact that the seizure of the automobile had been made by the prohibition director (instead of by an internal revenue' officer) does not preclude the possibility of .a proceeding to forfeit under § 3450. It is settled that where property declared by á federal statute to be forfeited because used in violation of federal law is seized by one having no authority to do so, the United States may adopt the seizure with the same effect as if it had originally been made by one duly authorized. The Caledonian, 4 Wheat. 100, 101; Taylor v. United States, 3 How. 197, 205. See United States v. One Studebaker Seven-Passenger Sedan, 4 F. (2d) 534.
The serious question presented is whether the?;? is such a direct conflict between the National Prohibition Act, and particularly § 26 of Title II thereof, and § 3450 of the Revised Statutes, as to render the latter section inoperative and unavailable to the Government, where the vehicle was being used for the purpose of depositing and concealing illicitly distilled liquors under the circumstances set forth in the libel. On this question there has been much difference of opinion in the lower courts.2 If a forfeiture may be had under § 3450 for such use of a vehicle to evade a tax on illicitly distilled liquor, the interests of innocent persons in the vehicle are not saved. If § 26 is the only applicable provision for forfeiture of the car, the interests of those who are innocent are not forfeited. The claimant contends, on several grounds, *326that § 3460 was not applicable and that the libel was properly dismissed.
First, The claimant contends that, at the time of the seizure,' the law did not impose. any tax upon liquor illicitly made. Congress has power to tax such liquor. United States v. Yuginovich, 256 U. S. 450, 462; United States v. Stafoff, 260 U. S. 477, 480. By Rev. Stats. § 3248, the tax attaches to distilled spirits “ as soon as it is in existence as such,” United States Fidelity & Guaranty Co. v. United States, 220 Fed. 592; and upon its production the tax becomes a first lien thereon. United States v. Ulrici, 111 U. S. 38, 42. The Revenue Act of 1918, February 24, 1919, c. 18, § 600, 40 Stat. 1057, 1105, lays the tax “ on all distilled spirits now in bond or that have been or that may be hereafter produced in or imported into the United States.” The provision. ip § 600b of the Act, concerning liquor which could not during the period of war-prohibition be lawfully sold or removed, did not remit the tax; it merely deferred the time for payment. It is clear that, before the enactment of the National Prohibition Act, it imposed the. basic production tax upon all distilled spirits, although illicitly made.3
The continued existence of taxes upon illicit liquor is indicated in § 35 of the National Prohibition Act (p. 317), which provides: “This Act shall not relieve anyone from paying any taxes or other charges imposed upon the manufacture or traffic in such liquor.” That Congress in enacting that law would intentionally have exempted illicit liquor- from taxation is not likely. Moreover, we are not dealing with the construction of the law as enacted in 1919. The Willis-Campbell Act, November 23, 1921, c. 134, § 5, 42 Stat. 222, 223, sup*327plemental thereto, continued in force or reenacted, by-express provision, all laws in regard to the taxation of intoxicating liquor not directly in conflict with the prohibitory legislation. Furthermore, the Revenue Act of 1921, November 23, 1921, c. 136, § 600, 42 ,Stat. 227, 285, enacted on the same day, shows that Congress had no intention then of relieving liquor from taxation merely because illegally dealt with. For it provided specifically that if distilled spirits, tax-paid for non-beverage purposes, be diverted to beverage purposes, an additional tax of $4.20 per gallon piust be paid, although under the law such diversion could not be made legally.
The claimant argues that it could not have been the intention of Congress to impose the tax, because it had become very difficult, if not impossible, to pay the tax. The claimant points t'o the fact that the payment of the tax contemplated by the revenue laws existing at the time of the passage of the National Prohibition Act was by means of tax-paid stamps to be affixed when liquor was withdrawn from the distillery or bonded warehouse, after complying with the minutely prescribed proceedings incident to its manufacture and custody, set forth in Taney v. Penn Bank, 232 U. S. 174, 181-184; that, since the National Prohibition Act, there has been no way in which the tax could be so paid on intoxicating liquor made for beverage purposes; that stamps are no longer obtainable and no officer is authorized to receive payment. These supervening obstacles to paying the tax do not, however, establish that the intention -was not to continue it in force. A law which imposes a tax on intoxicating liquor, whether legally or illegally made, is not in conflict with another law which prohibits the making of any such liquor. Compare United States v. Stafoff, 260 U. S. 477; Vigliotti v. Pennsylvania, 258 U. S. 403. There is no direct conflict between any provision of the prohibitory legislation and the .imposition of the tax here in question.
*328Second. The claimant contends that the so-called tax on' illicitly distilled spirits theretofore imposed ceased to be a tax and became in law a penalty, when the enactment of the National Prohibition Act changed the purpose of the tax from raising revenue to preventing manufacture, sale, and transportation; and that to enforce such penalty by forfeiture of the property rights- of innocent third parties would be a denial of due process of law. It is true that the use of the word “ tax ” in imposing a financial burden does not prove conclusively that the burden imposed is a tax; and tlfat when it appears from its very nature that the imposition prescribed is a penalty solely, it must be treated in law as such. But the imposition here in question is not of that character. A tax on intoxicating liquor does not cease to be such because the sovereign has declared that none shall be manufactured, and because the main purpose in retaining the tax is to make, law-breaking less profitable. What was sought to be enforced and held to be a penalty in Lipke v. Lederer, 259 U. S. 557, 561, was the so-called double tax. Here, we are dealing with the basic production tax.
With respect to the character of the impositions called taxes there is nothing in either the Revenue Acts or the Prohibition Act which makes any distinction between the product of legal and illegal distillation. The Acts left in effect the basic tax of $2.20 per gallon, which was and is a true tax on the product, whether legally or illegally distilled, and added to it the additional amounts in case of illegal distillation or diversion to illegal uses. These additional amounts also are called taxes by Congress, and were understood by it to be such. Whether they were intrinsically penalties and should be treated as such we need not determine. The basic tax of $2.20 a gallon on liquor illegally produced is not imposed because of illegality, but despite of it. It is a tax within the meaning of § 3450; and being unpaid makes that *329section applicable, even if the .additional amounts imposed by the Acts be deemed penalties. Moreover, there is no constitutional objection to enforcing' a penalty by forfeiture of an offending article. Lipke v. Lederer holds merely that the enforcement of a penalty by an administrative official without giving notice and an opportunity to defend is a denial of due process. A proceeding under § 3450 is a judicial proceeding in which the claimant is accorded fully the right to litigate. A claim was filed in this ease; but that is not now before us. Instead of asking for a hearing thereon, the claimant chose to move to quash the libel. If the judgment dismissing the libel is set aside, a hearing on the merits of the libel and of the claim may still be had. But we may not consider now allegations in the claim.
Third. The claimant contends that a proceeding under § 3450 will not lie to forfeit a vehicle, unless it was being used to remove the tax-unpaid article from the place where the tax was required by law to be paid, •that is, the place of manufacture or of importation, or a bonded warehouse. This narrow meaning of the word “remove” is urged upon us, as contrasted with the broad term “transport” employed in • § 26. We have no occasion to determine the exact scope, in this connection, of the term “remove.” The libel makes no reference to removal. It charges only that the automobile was being used to deposit or conceal.
Under § 3450, it is not essential that the offender must have been either the manufacturer or importer of the liquor or a person directly associated with him. The Government may look for payment also to the liquor itself and to whoever has possession of it. Nor does the language of § 3450, or its history, indicate that Congress intended to limit the proceeding under that section to cases where the vehicle was used for deposit or concealment as part of the illegal act of removal, or to make it *330applicable only where the article concealed had been unlawfully removed from the place where the tax should have been paid. If the intent to defraud the United States of the tax is established by any. competent evidence, a use of the vehicle for the purpose of concealment satisfies the requirement of § 3450, even if it appears that the offender obtained it, not from a distillery, bonded warehouse or importer, but from a stranger.
It is argued that Killian's purpose cannot have been to evade the tax; that it was only to violate the Prohibition Act. The place from which the removal is made, and the special relation to the manufacturer or importer of him who used the vehicle, are of evidentiál significance only. Knowledge that' liquor was illicitly distilled may tend to prove knowledge that it was tax-unpaid. Removal or concealment of the liquor with such knowledge may tend to. prové an intention to deprive the United States of the tax due thereon. But with these questions we have no concern now. The case is here on review of a judgment of dismissal upon a motion to quash. Therefore we must accept as true the allegations of the libel.
Fourth. The claimant contends that § 3450, in so far as it applied to intoxicating liquor, was superseded by § 26 of the National Prohibition Act. There was no repeal in terms. There cannot be held to have been a repeal by implication, unless § 3450 is in direct conflict with some provision of the National Prohibition Act or of the supplemental act. For Congress has declared in § 5 of the Willis-Campbell Act that, in ascertaining its intention in this connection the standard of mere inconsistency, which h,ad been applied in United States v. Yuginovich, 256 U. S. 450, shall not prevail.
The two statutes cover different ground. Different purposes underlay their enactment. Section 3450, extending to every taxed article, seeks to enforce the obli*331gation to pay the tax by subjecting to forfeiture also articles used in the attempt to evade such payment. The purpose of § 26 is to prevent the manufacture, sale or transportation of intoxicating liquor. Carroll v. United, States, 267 U. S. 132, 154-155, 167. It is true that many acts punishable under § 3450 are punishable also under § 26. But many are not. Thus § 3450 applies to a vehicle, whether used for removal, depositor concealment, and even although the vehicle is not in motion and movement was never contemplated; § 26 applies only to a vehicle used in transporting contrary to law. Section 3450 may apply although a permit was obtained to transport the liquor; § 26 cannot. On the other hand § 3450, as applied to liquor, relates only to that on which taxes have not been paid; § 26 applies whether taxes have been paid or not. It is clear that the mere existence of two provisions penalizing acts which are part of the same transaction does not prove direct conflict between them. Nor does the difference in purpose which underlay their enactment.
In the absence of conflict resulting from differences in the scope and purposes of the statutes, the claim of implied repeal must rest upon essential conflict incident to the prescribed methods of their operation. None such has been shown. Direct conflict is not established by showing merely differences in details of procedure. That some other mode 'of disposition must now take the place of the requirement in § 3450 for the sale of the seized liquor is not sufficient to establish a conflict of the provisions as applied to a seized vehicle. To establish an implied repeal there must, under the legislative mandate, be shown some necessary contradiction so extreme as to justify this Court in finding it impossible to permit the Government the choice between the two remedies where the facts bring the offense within the provisions of both ■statutes. Such a contradiction is said to exist, because *332under § 3450 the vehicle is the offender and must be forfeited if there is a guilty intent on the part of him who used it, whereas under § 26 a person is the offender and the forfeiture of the vehicle extends only to the interests of those who share in his guilt by having notice that it was to be used for the illegal purpose; that under § 3450 the vehicle may be forfeited although no person is convicted of the offense involved or is even prosecuted, whereas under § 26 there can be no forfeiture unless there has been- a conviction of one discovered in • the act of transportation in violation of law. But it is not true that these differences show direct conflict. The provisions- for forfeiture of the vehicle and for arrest of the-transporter are both incidental to the main purpose of § 26 of reaching and destroying the forbidden liquor in process of transportation. Carroll v. United States, 267 U. S. 132, 155. The contradiction urged relates only to the nature of the incidental penalty and the effect of its imposition. It is clearly possible to apply to a particular state of facts either one or the other remedy, and to give to the Government the choice. To hold that wheré the tax-unpaid spirits were illegally distilled, there could be forfeiture of the vehicle only under § 26 while in case of tax-unpaid legally distilled liquor the vehicle could be forfeited under § 3450, would involve holding that where the crime of tax-evasion is preceded by the offense of illegal distillation, a less severe forfeiture is inflicted than if tax evasion alone were involved.
Fifth. The claimant contends that § 26 has modified § 3450, as applied to intoxicating liquors, so as to deny a forfeiture of the interest in the vehicle of one who had no guilty knowledge that it was to be used for an illegal purpose. That there was no such protection of the innocent interest prior to the National Prohibition Act is conceded. Goldsmith, Jr.-Grant Co. v. United State, 254 U. S. 505. That since the Willis-Campbell Act, Congress *333has not intended to restrict any remedy theretofore given in aid of the revenue laws is clear.- The argument that by § 26 Congress manifested the intention to protect generally innocent interests is unfounded. The section is narrow in scope.. The protection accorded is stated explicitly. It does not apply generally to violations of the Prohibition Act, nor to the violation of any provision of the revenue laws. It applies solely to cases of forfeiture incident to the prosecution, as therein provided, of a person transporting liquor by a vehicle in violation of the Prohibition Act.
The suggestion is made that in this view of § 3460 there may be a forfeiture where a stranger has. surreptitiously deposited or concealed the liquor in the vehicle while in the possession, and use of the owner, or has obtained possession of the vehicle by theft and then made such use of it. But we are not here concerned with such a state of facts and therefore may dismiss the suggestion by repeating what was said of like possibilities pressed on our attention in the Goldsmith, Jr.-Grant Company case (p. 612): “ Whether the indicated possibilities under the law are justified we are not called upon to consider. It has been in existence since 1866, and has not yet received such amplitude of application. When such application shall be made it will be time enough to pronounce upon it. And we also reserve opinion as to whether the section can be extended to property stolen from the owner or otherwise taken from him without his privity or consent.”
Sixth. The claimant contends that, as applied to intoxicating liquors, § 3450 and § 26 are alternative remedies; and may not be employed cumulatively. Section 26 commands that, when a person is discovered in the act of transporting,'by means of a vehicle, intoxicating liquors in violation of the law, the officer shall take possession of the vehicle, and shall arrest the person ■ in charge thereof; that the person shall be proceeded against for *334the violation; that, pending the proceeding against him, the vehicle shall be surrendered to the owner upon giving bond to return it to the custody of the officer on the day of the trial to abide the judgment of the court; that, in-case of. conviction of the person, the vehicle shall be sold under conditions and in a manner prescribed;' that the proceeds remaining after paying the expenses shall be paid over to the lienors innocent of wrong-doing; and that, unless and except so far as there are such lienors or others entitled thereto, the net proceeds shall be paid into the Treasury of the United States. The claimant, insists not only that the Government must elect between § 26 and § 3450, but that the commencement of proceedings under § 26 bars a resort to § 3450.
The case at bar does not present any conceivable question of cumulative remedies or of election. While the second sentence in § 26 uses the words “ transported or possessed,” the context makes it very plain that the possession intended is possession in transportation.4 Hence that section is applicable only if a person is discovered in the act of transporting intoxicating liquor in violation of law. There is no allegation in the libel that the automobile had been so discovered or was being so used. ■ There is no allegation that Killian, who had possession of the automobile, has ever been prosecuted. It appears that a complaint was made but not that a warrant was issued; or that he was arrested; or even that he was found. The *335motion .to quash must be determined on the showing in the libel.

Reversed.

 “ Whenever any goods ... in respect whereof any tax is or shall be imposed . . . are removed, or are deposited or concealed in any place, with intent to defraud the United States of . such tax . . ; [every] . . . conveyance whatsoever, . . . used in the removal or for the deposit or concealment thereof, respectively, shall be forfeited. . .

 See Commercial Credit Co. v. United States, 5 F. (2d) 1, and cases there cited. Also United States v. Milestone, 6 F. (2d) 481; United States v. One Reo Truck Automobile, 9 F. (2d) 529; National Bond & Investment Co. v. United States, 8 F. (2d) 942; United States v. One Marmon Automobile, 5 F. (2d) 113; United States v. One Ford Automobile, (U. S. D. C., E. & W. D., Tenn.) Feb. 27, 1925.

 See also Rev. Stat. § 3251; Acts of March 3, 1875, c. 127 § 1, 18 Stat. 339; August 27, 1894, c. 348, § 48, 28 Stat. 509,- 563; October °, 1917, c. 63, § 300, 40 Stat. 300, 308.

 The words of the section are: “ Sec. 26. When the commissioner, his assistants, inspectors, or any officer of the law shall discover -any person in the act of transporting in violation of the law, intoxicating liquors in any wagon, buggy, automobile, water or air craft, or other vehicle, it shall be ‘his duty to seize any and all intoxicating liquors found therein being transported contrary to law. Whenever intoxicating liquors transported or possessed illegally shall be seized by an officer he shall take possession of the vehicle and team or automobile, boat, air or water craft, or any other conveyance, and shall arrest any person in charge thereof. . . .” (Italics ours.)