Court Opinion

ID: 9419034
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:45:08.357478+00
Date Added: 2024-06-11T17:22:14.636263
License: Public Domain

.Mr. Justice Douglas,
dissenting:
Mr. Justice Black, Mr. Justice Frankfurter and I think that the judgments below should be reversed.
The problem here involved raises the question of the duty of automobile finance companies to investigate those who purchase cars from dealers, financed by those companies, in.order to determine whether the ostensible purchasers are in reality straw men for bootleggers. Here the dealers knew that the named purchasers were only riomi-nal purchasers; and they also knew the identity of the real purchasers. But the finance companies made no inquiry whatsoever of the dealers to ascertain if those purchasers were straw men. They made no inquiry in spite of the fact that the use of straw men by bootleggers was not novel. They made no inquiry in spite of the intimate business relations which exist between them and the dealers and the presumption of availability of such information which that relationship creates; And they now seek the benefit of an Act which the Congress passed to ameliorate some of the risks of confiscation and forfeiture. We do not think they have satisfied the burden which the Congress has placed upon them.
Sec. 204 (a) gives the District Court “exclusive jurisdiction to remit or mitigate” forfeitures. Sec. 204 (b) *239sets forth three conditions precedent which the claimant must satisfy before the court may remit or mitigate a forfeiture. To satisfy the third of these conditions claim-' ant must prove under certain circumstances that he made inquiry of designated law enforcement agencies concerning any person for whom a straw man purchaser was acting and that he was informed on such inquiry that . such person had no record or reputation for violating the liquor laws. The circumstances under which claimant must .make that inquiry exist “if it appears that the interest asserted by the claimant arises out of or is in any way subject to any contract or agreement under which any person having a record or reputation for violating laws of the United States or of any State relating to liquor has a right with respect to such vehicle or aircraft, . . .” '
To be sure, the phrasing of § 204 (b) (3) is difficult. But it means to us that a claimant must prove, in order to satisfy that condition, that he made a reasonable investigation to ascertain if the purchaser was a mere straw man acting for another or was a legitimate purchaser in his own right. The words “if it appears” carry that connotation. A contrary construction defeats the purpose of the Congress by placing an enormous premium on lack of diligence. That construction opens wide the doors to defraud the revenue, for finance companies need lift no finger nor make any effort to ascertain the existence of a straw man purchaser. Ignorance now is surely bliss. By failure to make inquiry they can effectively insulate themselves even from the knowledge which their'business intimates — the dealers — have. Unless informed by disclosures, in the written contract or otherwise, they can contentedly assume that the purchaser is not a straw man for a bootlegger. That they will thus be voluntarily informed-by ■ the parties or by others seems unlikely. Since the function of the straw *240man is to conceal the bootlegger, neither the straw man nor the bootlegger can be expected to step forward with the information. And the automobile salesman is not likely to volunteer the information for his desire is to sell automobiles not to defeat sales. On the other hand, the interpretation which we urge would give the statute real meaning and. significance in terms of this specific bootleg hazard which concerned the Congress on its enactment.1
Furthermore, the requirement for reasonable investigation cannot possibly place such a burden on finance companies as to force us to resolve, an ambiguity in statutory language against forfeiture. In the cases before us a single question put the dealer or the purchaser might alone have disclosed the existence of a straw man. But no such simple inquiry was made. An investigation in each case was made to ascertain whether the named purchaser had a reputation or record for liquor violations. But the existence of a straw man was never.probed. Certainly on such a matter investigational techniques are not novel, involved or unique. The responsibility for a *241reasonable investigation would add but imperceptibly if at all to the cost of doing business. In this field such investigation entails a burden which any legitimate enterprise should be prepared to 'carry. We need not conjure up hypothetical cases of extended inquiry which disclosed no straw man, for they would meet the test of reasonable investigation here proposed.
For these reasons, the judgments should be reversed.

 Precisely the investigation here urged seems • to have been intended, for the -Report of the Senate Committee on the Judiciary .said as respects § 204 (b) (3): “This last requirement is predicated upon the recognition of the 'bootleg hazard’ as an element to be considered in invéstigating a person as a credit risk. As a matter of sound business practice, automobile dealers, finance companies, and prospective lienholders on automobiles examine records, and make inquiry of references and credit rating agencies as to the owner’s or prospective purchaser’s reputation for paying his debts and his ability to do so. This subsection merely requires that in the making of such inquiry, the ‘bootleg hazard’ also be examined as one aspect of the credit risk.” Sen. Rep. No. 1330, 74th Cong., 1st Sess., p. 6. To investigate the “bootleg hazard” as “one aspect of the credit risk” when inquiry is made of the “prospective purchaser’s reputation for paying his debts”- seems clearly to entail inquiry as to whether or not the prospective purchaser is a straw man for a bootlegger.