Court Opinion

ID: 8636492
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:46:07.127455+00
Date Added: 2024-06-11T16:55:56.524153
License: Public Domain

BLATCHFORD, District Judge.
The petition in this case, a voluntary one, was filed on the 14th of August, 1871. The adjudication was made on the same day. The as-signee was chosen on the 18th of September, 1871, and an assignment was executed to him on the 23d of September, 1871. On the 4th of October, 1871, the United States brought a suit against the bankrupt, in the circuit court for this district, to recover from him sundry penalties for violations of the provisions of sections 165 and 169 of the internal revenue act of June 30, 1864 (13 Stat. 296, 297, 302), as amended by the 8th section of the act of July 13, 1866 (14 Stat. 144, 145). The assignee was not a party to such suit. The bankrupt appeared in it, but filed no plea, and a judgment by default was entered against him, on the 2d of February. 1S72, for $5,081 68. After the recovery of such judgment, the United States filed in this matter a proof of debt against the estate of the bankrupt, founded on and for the amount of said judgment. On presenting this proof of debt, the United States claimed not only that the amount of it was a provable debt, but that it was entitled to a preference or priority in dividend, under the 28th section of the act, after the payment of the ides, costs and expenses mentioned in that section. The assignee controverted both ot these propositions. Thereupon, the assignee, under the 34th general order, applied to the register for a re-examination of the claim, and testimony was taken thereon. The tes-tiihony is addressed to the question, whether the bankrupt incurred the penalties in question in April, 1871, to an amount equal to the amount of such judgment. The register has certified to the court, for determination, the issue as to whether the claim of the United States is a valid and provable claim, and, if it is, whether it is entitled to preference or priority.
The question involved turns on the point, *1216whether the claim was a debt provable against the bankrupt at the time of the adjudication.
The 163th section of the act referred to provides, that, if any person shall make, prepare and sell, or remove for consumption or sale, lucifer or friction matches, cigar lights, or wax tapers, upon which a duty or tax is imposed by law, as enumerated and mentioned in Schedule C, of the act, without affixing thereto an adhesive stamp or label denoting the tax, he shall “incur a penalty of fifty dollars for every omission to affix such stamp.” Section 169 provides, that any person who shall offer or expose for sale any of the articles named in Schedule C, or in any amendments thereto, shall be deemed the manufacturer thereof, and subject to all the duties, liabilities and penalties imposed by law, in regard to the sale of domestic articles without the use of the proper stamp or stamps denoting the tax paid thereon. Schedule C imposes a duty or tax of one cent, for each parcel or package, on friction matches or lucifer matches, or other articles made in part of wood, and used for like purposes, in parcels or packages containing one hundred matches or less. It also, as amended, imposes on wax tapers a tax of double the rates imposed on friction or lucifer matches; and on cigar lights, made in part of wood, wax, glass, paper, or other materials, in parcels or packages containing twenty-five lights or less in each parcel or package, one cent, and when in parcels or packages containing more than twenty-five and not more than fifty lights, two cents, and for every additional twenty-five lights, or fractional part of that number, one cent additional. The testimony shows that the bankrupt, in April, 1S71, in the city of New York, sold 123 grosses of packages or boxes of matches, which were wax tapers or cigar lights, and had not upon them any tax stamps. Bach box contained about 25 matches. There were 18,000 boxes. The penalty of $30 for each box unstamped would make an aggregate of $900,000 of penalty.
It is a well settled principle, that, in all cases where a forfeiture of property to the United States, as a penalty for a violation of law, is made absolute by statute, without giving any alternative remedy, such as a forfeiture of property or its value, and without prescribing any substitute for the forfeiture, or allowing any exception to its enforcement, or employing any language showing a different intent, the forfeiture becomes absolute at the commission of the prohibited act, and the title to the property vests from that moment in the United States, and a subsequent decree condemning the property as forfeited, relates back to the time of the commission of the prohibited act, and takes date from such time, and not from the date of the decree. Gelston v. Hoyt, 3 Wheat. [16 U. S.] 246, 311; Caldwell v. U. S.; 8 How. [49 U. S.] 366, 381; Henderson's Spirits, 14 Wall. [81 U. S.] 44, 56, 57.
The 179th section of the act of 1864, as amended by the 8th section of the act of 1866 (14 Stat. 145), provides, that the penalties incurred under the act may be sued for and recovered in the name of the United States, in any proper form of action, or by any appropriate form of proceeding, before any circuit or district court of the United States, for the district within which said penalty may have been incurred, or before any court of competent jurisdiction. It is well settled, that, where a statute gives a penalty, and no particular remedy is prescribed for enforcing it, an action of debt may be brought to recover it. U. S. v. Colt [Case No. 14,839]; U. S. v. Lyman [Id. 15,647]; U. S. v. Bougher [Id. 14,627]; Stockwell v. U. S., 14 Wall. [81 U. S.] 531, 541, 542. When the penalty is incurred, by the commission of the act prohibited by the statute, the penalty accrues to the government thereby, and a debt to the government arises. In the present case, the amount of the debt was fixed and made certain by the statute. Where a statute creates a charge or duty on an importer of goods.to pay the duties upon them immediately on the. importation, a debt is created to the government, for which an action of debt lies. U. S. v. Lyman [supra]; Meredith v. U. S., 13 Pet. [38 U. S.] 486, 493. So, in the present case, the sale of the matches without stamps created a charge or duty on the bankrupt immediately to pay the penalty, and it became a debt, within the sense of the bankruptcy act.
Under the 5th section of the act of March 3d, 1797 (1 Stat. 515), which provides, that, when any person becoming indebted to the United States becomes insolvent, the debt due to the United States shall be first satisfied, it has been held that such priority of the United States attaches to all debts, equitable as well as legal (Howe v. Sheppard [Case No. 6,772]); and to debts created and owing, although payable only in fu-turo (U. S. v. State Bank of North Carolina, 6 Pet. [31 U. S.] 29, 36, 37).
I am of opinion that the United States is entitled to prove a debt in respect to so much of the amount of its claim set forth in its proof of debt as does not consist of any costs of the suit, and to a priority or preference therefor. I adhere to the view taken by me in Re Brown [Case No. 1,975], that the claim is provable as a debt existing at the time of the adjudication, although a judgment on it was recovered after the adjudication.