Court Opinion

ID: 8823507
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:40:06.922809+00
Date Added: 2024-06-11T17:04:42.675130
License: Public Domain

MANTON, Circuit Judge
(dissenting). The indictment here has eleven counts. Counts 2, 4, 5, 7, and 8 were dismissed by the court, and the defendants were each convicted upon the remaining counts, Nos. 1, 3, 6, 9, 10, and 11. Count 1 charges a conspiracy to sell distilled spirits for beverage purposes in violation of the War Prohibition and the Eever Acts. Count 3 is for a violation of section 15 of the act of Congress of August 10, 1917 (Lever Act), for the selling, for beverage purposes, of distilled spirits made from food products. The sixth count is for violation of section 3296 of the Revised Statutes (title 37), removal of distilled spirits on which the tax had not been paid from a place other than a distillery warehouse. The ninth count is for a similar offense, except as to another quantity of distilled spirits. The tenth count is a violation of the act of Congress of November 21, 1918 (War Prohibition Act, 40 Stat. 1045), for selling distilled spirits for beverage purposes, and not for export. And the eleventh count is for violation of section 16 of the act of February 8, 1875 (18 Slat. 307), for carrying on the business of a wholesale liquor dealer without having paid the special tax. The evidence discloses that the distilled spirits was alcohol of 190 proof. The individual plaintiffs in error were each sentenced to various terms under these convictions, and it was ordered that the sentences run concurrently. The plaintiff in error Maresca was the president and sole owner of the Herba Products Company, Rubino was the president of the Gramatan Company, Inc., and De Angelis was a stockholder of the Gramatan Company, Inc., and its treasurer. The Herba Products Company was a domestic corporation, as was the Gramatan Company, Inc., and the Promotion Sales Company. It was through the medium, of these corporations that the individual plaintiffs in error conducted a business for the manufacture and sale of flavoring extracts, hair tonic, and candy. Their factory was located at No. 138 Prince street, in the city of New York. The office of the Promotion Sales Company was at No. 1482 Broadway. On the door of the office there were names of each'of the corporate plaintiffs in error. Concededly they carried on a legitimate business of manufacturing hair tonic. It appears that alcohol was used in the manufacture of the Gramatan hair tonic; the formula calling for 5 per cent, alcohol. This was their sole requirement for alcohol. A permit was granted to the Gramatan Company, Inc., for the withdrawal of alcohol, pursuant to the acts of Congress on September 2, 1919, for use only in malting hair tonic and flavoring extracts. A bond was given in a sum inadequate in amount for the withdrawals of the barrels of alcohol which the record shows the corporate companies used during the period. On November 14, 1919, the plaintiffs in error were detected delivering two barrels of 190 proof alcohol at a saloon at No. 424 Mulberry street, Newark, N. J., with *750three additional barrels on the truck. The government officers seized the alcohol and the truck. Investigation revealed that the tax paid was at the rate of $2.20 per gallon, the nonbeverage rate, and that the beverage rate was $4.20. The identification marks on the barrels, including the serial numbers, the nonbeverage tax stamps, and the non-beverage caution label were found to have been removed by green paint. It was possible to trace these five barrels as part of the lot purchased by one of the plaintiffs in error on behalf of the Gramatan Company, Inc., from wholesale liquor dealers in New York City. There is other evidence, of a circumstantial character, which traced the ownership of the alcohol to the plaintiffs in error, and the sale, thereof by the plaintiffs in error. The government’s claim is that the permit was obtained by the plaintiffs in error for use by the Gramatan Company Inc., and used by that company, not for withdrawing alcohol for the manufacture of hair tonic and flavoring extracts, but, in point of fact, for the purpose of disposing of the alcohol for beverage purposes. The books of the Gramatan Company, Inc., show large withdrawals of harrels of alcohol between the period of August and November 17, 1919, and the claim is that the alcohol purchased and withdrawn on these permits was not necessary to the manufacture of hair tonic containing 5 per cent, alcohol, nor, indeed, could it have been used by the plaintiffs in error in their legitimate business.
After the conviction the plaintiffs in error sued out this writ of error. This bill of exceptions, which was signed and filed on December 20, 1920, is attacked by the defendant in error for the reason that it was not prepared and filed within the term. The judgment of the court was entered on July 2, 1920. The term of the District Court expired September 30, 1920, 90 days after the entry of final judgment. On July 2, 1920, after sentence was imposed, the court said:
“I will extend it (tlie term) until November 1st; that is four months, and I am quite sure, if it becomes • necessary, I will have the power to grant an additional extension.”
No minute or docket entry was made of the judge’s remarks, and no order was ever signed until November 3, 1920, when, over the government’s objection, an order was signed extending the term until December 8th. This order was procured on an affidavit which was filed November 3d, in which affidavit it was stated that the term had been extended until November 3d. The order was filed. November 4th. On November 29, 1920, a further order extending the term was granted. The contention is that .the term expired September 30th pursuant to rule 5, and that all subsequent orders are void and of no effect. The claim is that the order granting time to file a bill after the term must be made during the term, and that there must be a record entry showing that fact at the time the leave is granted, and that the mere recital in the bill of exceptions of an extension granted is not sufficient. The contention is that November 2d was election day, and that, if a four months’ extension was granted, the period ended on and with November 2, 1920, and that the subsequent order extending the term, granted On November 3d,, is void.
*751The majority of the court are of the view that this bill of exceptions was not signed and filed within the time under the circumstances above disclosed. Serious questions of error are presented by this record as errors committed at the trial, which may well warrant a new trial. I do not agree with the view of the majority of the court that there is no valid bill of exceptions, but, in the view that I take of this case, it is not necessary for me to discuss the sufficiency of the bill of exceptions and whether or not the same was signed and filed within tiie time granted by the court below. I think the indictment is defective and shall proceed to state my reasons.
The first count of the indictment alleges a conspiracy to violate both the Lever Act (40 Stat. 276) and the War Prohibition Act (40 Stat. 1045). It is alleged that this violation of law occurred between the 1st of July and the 15th of November, 1919. The Lever Act became effective August 10, 1917. Titles 1 and 3, and sections 1, 27, 37, 38 of title 2 oi the National Prohibition Law (Volstead Act) became effective on October 28, 1919. The other sections of title 2 took effect and were enforced when the Eighteenth Amendment of the Constitution of the United States became effective. The first count of the indictment charges that the plaintiffs in error, both corporate and individual—
“dkl conspire and agree together and with said divers other persons to violate section 15 of the act of Congress approved August 10, 1017, and the act of November 21, 1918, and the rules and regulations made thereunder, in that at the time and place aforesaid they did conspire and agree together to use and to sell for beverage purposes a large quantity of distilled spirits manufactured from foods, fruits, food materials, and feeds after September 9, 1917, and to sell for beverage purposes, and not for export, large quantities of distilled spirits; and it was a part of the conspiracy that the individual defendants and corporate defendants should purchase such distilled spirits for the ostensible purpose of using it as an ingredient in the manufacture of hair tonic and flavoring extracts, but with ¡lie true object and purpose of using and selling such distilled spirits for beverage purposes.”
As a charge in furtherance of this conspiracy six overt acts are set forth. In substance it is charged that on November 14 and 15, 1919, the plaintiffs in error, individual and corporate, did various acts such as obtaining a permit, physically obtaining certain barrels of distilled spirits, and. delivering five barrels to persons unknown to the grand jury for other than nonbeverage purposes.
The Lever Act was intended to conserve the food supply of the country, while the War Prohibition Act was intended to conserve, in addition, the man power of the country. Under the Lever Act, provision was made for the Commissioner of Internal Revenue to inaugurate and enforce regulations. It was provided by regulation of February 6, 1919, that the manufacture of distilled spirits from foods, fruits, food materials, or feeds for beverage purposes is prohibited after September 8, 1917. The charges of the third count of the indictment are that the plaintiffs in error withdrew alcohol on permits duly issued for alcohol already manufactured ostensibly for nonbeverage purposes, and used and sold such alcohol for beverage purposes. And count 1 charges that the plaintiffs in error conspired to "use and to sell for beverage purposes a large quantity of di.stilled spirits,” claiming a violation of the Lever Act. This is not a charge that the plaintiffs *752in error manufactured or prepared beverages and used alcohol for that purpose, or that they thereafter sold the beverages thus manufactured or.prepared by them or conspired to do so. This charge is not a violation of the regulations of the manufacture and use of food materials. The Rever Act prohibits only the use of food materials therein specified in the production of distilled spirits for beverage purposes.. It in no way prohibits the sale of intoxicating liquors. But the government, to bring the case within the Rever Act, relies upon certain regulations promulgated on February 7, 1917, by the Commissioner of Internal Revenue as such regulations were approved by the Secretary of the Treasury. They are as follows:
“All persons are forbidden to use any distilled spirits manufactured after September 8, 1917, from foods, fruits, food materials or feeds, in manufacturing or preparing beverages or feed, and provided they were made from such materials after September 8, 1917. All persons are forbidden, to use any distilled spirits manufactured after September 8, 1917, from foods, fruits, food materials or feeds, in manufacturing or preparing beverages, or to sell any such spirits for beverage purposes.”
While the President was authorized to make regulations to enforce by the Rever Act, it was not permissible for the 'Department of the .Treasury, acting for the President, to make or proclaim regulations which were beyond the powers delegated by the Congress to the President in the Lever Act. United States v. Wiltberger, 18 U. S. (5 Wheat.) 76, 5 L. Ed. 37; U. S. v. Bathgate, 246 U. S. 220, 38 Sup. Ct. 269, 62 L. Ed. 676. Regulation must not transgress the statute. Waite v. Macy, 246 U. S. 606, 38 Sup. Ct. 395, 62 L. Ed. 892; U. S. v. Antikamnia Chemical Co., 231 U. S. 654, 34 Sup. Ct. 222, 58 L. Ed. 419, Ann. Cas. 1915A, 49.
By comparing section 1 of the War-Time Prohibition Act (effective November 21, 1918) with section 15 of the Rever Act, it will be observed that in the former act the use of food products for the manufacture of beverages was forbidden, and the act went further and prohibited altogether the sale of any and all intoxicating liquors for beverages purposes. It is clear that this impliedly repealed the Lever Act. U. S. v. Yuginovich, 256 U. S.-, 41 Sup. Ct. 551, 65 L. Ed. -, decided June 1, 1921. Therefore count 3 does not charge a crime. Nor does count 1 state a criminal offense in charging a conspiracy to violate the Rever Act.
Title 1 of the National Prohibition Act of October 28, 1919, was effective during the period the conspiracy is charged to have existed and during which the overt acts in furtherance of the conspiracy were committed. It provides for the enforcement of the war prohibition, aná. it will be noted that the period when it is alleged in the indictment this conspiracy existed in part was after the effective date of the National Prohibition Act (Volstead Act), to wit, from October 28 to November 15, 1919. The acts which are charged to be the overt acts in the furtherance of this conspiracy are alleged to have occurred on the 14th and 15th of November. The National Prohibition Act repealed by implication all preceding revenue provisions because it prohibited the manufacture or sale or removal from warehouses, except for export, of distilled spirits so that laws' providing taxes in connec*753tion with such sale or removal are necessarily repealed. U. S. v. Yuginovich, supra, decided June 1, 1921.
In the Yuginovich Case the charge was a violation of section 3257 of the Revised Statutes, unlawfully engaging in the business of distillers within the intent and meaning of the internal revenue laws of the United States, and in defrauding and attempting to defraud the United States of the tax on spirits. It was charged that the plaintiffs in error failed to provide with the requirements of section 3279 of the United States Revised Statutes (Comp. St. § 6019) in exhibiting a sign, as the statute requires, and with section 3281 of the United States Revised Statutes, in carrying on the business of distilling within the intent and meaning of the Revised Statutes of the United States without-giving the bond required by law; further, a violation of section 3282 of the Revised Statutes (section 6022) in unlawfully making a mash fit for distillation in a building not a distillery duly authorized by law. The Supreme Court sustained the ruling of the lower court which held that the National Prohibition Act repealed by implication the provisions of the internal revenue laws relating to operation of dislilleries. The court said:
“The question remains concerning the applicability of section 3257, involving the right to punish for attempting to defraud the United States of a tax. I>id Congress intend to punish such violation of law by imposing the old penalty denounced in section 3257 or as provided in the new and special provision enacted in the Volstead Act?
“It is the contention of the government that section 35 saves the light to prosecute as to taxes, as well as the acts charged as violative of the other sections of the Revised Statutes, because of the phrase with which the section concludes: * * * ‘Nor shall this act relieve any person from any liability, civil or criminal, heretofore or hereafter incurred under existing laws.’
“It is, of course, settled that repeals by implication are not favored. It is equally well settled that a later statute repeals former ones when clearly inconsistent with the earlier enactments. United States v. Tynen, 11 Wall. 88, 20 L. Ed. 153. In construing penal statutes, it is the rule that later enactments repeal former ones practically covering the same acts, but fixing a lesser penalty. The concluding phrase of section 35 by itself considered is strongly indicative of an intention to retain the old laws. But this section must be interpreted in view of the constitutional provision contained in tho Eighteenth Amendment and in view of the provisions of the Volstead Act intended to make that amendment effective.
“Having in mind those principles and considering now the first count of the indictment charging an attempt to defraud and actually defrauding tho government of the revenue tax, we do not believe that the general language used at the close of section 35 evidences the intention of Congress to Iifflict for such an offense the punishment provided in section 3257 with the resulting forfeiture, fine, and imprisonment, and at the same timo to authorize prosecution and punishment under section 35, enacting lesser and special penalties for failing to pay such taxes by imposing a tax in double tho amount provided by law, with an additional penalty of $500 on retailers and $1,000 on manufacturers. Moreover, the concluding u ords of the first paragraph of section 35, as to all the offenses charged, must bo read in the light of established legal principles governing tho interpretation of statutes, and In view of the provisions of tho Volstead Act Itself making it unlawful to possess intoxicating liquors for beverage purposes, or property designed for the manufacture of such liquor, and providing for its destruction. Wo agree with tho court below that, while Congress manifested an intention to tax liquors illegally as well as those legally produced, which was within its con*754stitutional power, it did not intend to preserve the old penalties prescribed in section 3257 in addition to the specific provision for punishment made in the Volstead Act.”
Where the later act covers the whole subject of the earlier act and embraces new provisions and indicates an attempt to substitute for an earlier act the later—as well as a lesser term of punishment—it prescribes the only rule in respect thereto. It operates as a repeal of all former statutes relating to the subject-matter even if the former acts are not in all respects repugnant to the new statute. U. S. v. Yuginovich, 256 U. S.-, 41 Sup. Ct. 551, 65 L. Ed.-, decided June 1, 1921; U. S. v. Tynen, 78 U. S. 88, 20 L. Ed. 153; Tracy v. Tuffly, 134 U. S. 206, 10 Sup. Ct. 527, 33 L. Ed. 879; Reed v. Thurmond (C. C. A.) 269 Fed. 252.
A single act of a conspiracy may charge a violation of two or more laws of the United States, and not be duplicitous. Dealy v. U. S., 152 U. S. 539, 14 Sup. Ct. 680, 38 L. Ed. 545; U. S. v. McKinley (C. C.) 127 Fed. 170; U. S. v. Howard (D. C.) 132 Fed. 325. Still, to constitute a good indictment under section 37, it must be charged that the conspiracy was to do some acts made a crime by the laws of the United States, and it must state with reasonable certainty the acts intended to be effected or carried out by the agreement of the parties, so that it can be seen the object of the conspiracy was a crime against the United States. The conspiracy or agreement and the doing of some act in furtherance of it make- up the offense. The indictment must state with reasonable certainty the acts intended to be effected and carried out by the agreement of the parties, so that it can be seen that the object of the conspiracy was a crime, well defined, against the United States.
It is apparent to me that the pleader on the first count had in mind principally the violation of the Lever Act (and the regulations made thereunder), and not the War Prohibition Act. The gravamen of the offense is that the plaintiffs in error used and sold the alcohol manufactured after September 9, 1917, the date fixed by the regulations referred to. Count 1 does not describe the kind of liquor the plaintiffs in error conspired to use and sell. It is referred to, however, as' distilled spirits. What is prohibited by the War Prohibition Act is defined. By it Congress intended to prohibit the manufacture, sale, and transportation for beverage purposes of *any and every kind of intoxicating liquor within the United States. The liquor must be fit for use for beverage purposes. It cannot be that alcohol which is not converted into beverage form and then offered for sale or sold is forbidden by the War Prohibition Act. There is no charge in the indictment, nor does the evidence show, that any or either of the plaintiffs in error had converted the alcohol into form or shape fit for beverage purposes, and that they intended to offer or did offer the same for sale for beverage purposes, and thus come within the prohibition of section 1 of the War Prohibition Act. As was said in Commonwealth v. Morgan, 149 Mass. 314, 21 N. E. 369:
“It is a matter of common knowledge that alcohol is the intoxicating element in intoxicating liquor, that pure alcohol is not used as a beverage, and *755that all intoxicating liquors that are so used contain alcohol mingled with other things, particularly with water. Whisky is alcohol mixed with water and other elements, of which the alcohol alone is intoxicating.”
And by the Circuit Court of Appeals in the Eighth Circuit in Allen v. Liquid Carbonic Co., 170 Fed. 315, 95 C. C. A. 11:
“The court below found that the extracts were never manufactured, used, or sold by the company as a beverage, and that they could not be drunk as a beverage in their original and full strength becuse of the strength of the flavoring principle, but were susceptible of use only in imparting flavor to drink or food intended for human consumption. We think the testimony supports this finding of the court and that these extracts are not spurious imitations or compound liquor, within the meaning of section 3244 of the Revised Statutes (U. S. Comp. St. 1901, p. 2096). * * *
“As already indicated, we think this finding is supported by the testimony, and that these extracts are not beverages or liquor, within the meaning of the section of the statute above referred to.”
See Commonwealth v. Mandeville, 142 Mass. 469, 8 N. E. 327; Arkansas v. Witt, 39 Ark. 216.
In the court's charge the jury was advised that the offense of count 1 was a conspiracy to violate the Lever Act as well as the Prohibition Act-
Alcohol is a principle in fermenting and distilling liquors. The Century Dictionary defines it as “the chief constituent o f fusel oil, a product of fermentation in distilleries, which is contained in crude spirit”; and it is further defined as “a liquid, ethyl hydroxid, C* Hr. OH, formed by the fermentation of aqueous sugar solutions, usually prepared from starch by the action of malt.” Webster defines it as “in the class of analogous hydroxides of organic radicals, including common or ethyl alcohol, methyl or wood alcohol.”
Congress in the National Prohibition Act (title 3), which was effective on October 28, 1919, specifically legislated as to the manufacture, warehousing, sale and use of alcohol. Therefore the sale of alcohol as charged in count 10, and in so far as it may be charged in count 1, did not violate the War Prohibition Act. It was not a beverage. Title 3, § 1, provides:
“When used in this title—the term ‘alcohol’ means that substance known as ethyl alcohol, hydrated oxido or ethyl, or spirit of wine, from whatever source or whatever processes produced.”
Section 19 provides that all prior statutes relating to alcohol as defined in this title, are hereby repealed in so far as they are inconsistent with the provisions of this title.
Its use and sale is regulated by title 3. The conditions and scheme of its use and sale are comprehensive. I think this repealed the War Prohibition Act in so far as it affected the use and sale of alcohol, whether considered in the popular sense of distilled spirits or in the more accurate terms of the various known kinds of alcohol. U. S. v. Yuginovich, supra.
Counts 6, 9 and 11 are charges of violation of the revenue statutes. These alleged offenses were committed on November 14 and 15, 1919. They are bad because of the implied repeal of the revenue statutes by the National Prohibition Law.
*756For these reasons the allegations of the indictment are insufficient to charge a violation of the criminal statutes, and the judgment should be reversed.