Court Opinion

ID: 6850738
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:35:35.993336+00
Date Added: 2024-06-11T16:05:04.034291
License: Public Domain

On Rehearing.
KENNAMER, District Judge.
The petition for rehearing does not present any new questions. Additional facts are submitted upon which an argument is predicated, which were not presented to nor considered by the trial court. It is stated that gaugers and inspectors are kept at places of manufacture under the internal *69revenue practice resulting in greater efficiency of governmental inspection and collection of taxes where bonded warehouses are located only in connection with sueh manufacturing plant, and that persons operating manufacturing plants are likely to be more responsible persons by reason of their large investment than those maintaining bonded warehouses apart from manufacturing plants. These facts are not found in the record of the evidence.
The statement was made in the argument to the court that the application for the permit was not denied for the reason the applicant was an unfit person to operate a bonded warehouse. The refusal to grant the permit was not upon the ground of difficulty of supervision and the impairment of the efficiency of governmental inspection and collection of taxes. The record in the ease disclosed that the applicant had been engaged in distributing alcohol for other than beverage purposes, and that it never diverted any alcohol or otherwise violated any of the provisions of the National Prohibition Act. The denial of the permit was upon the ground that under the provisions of the National Prohibition Act and the regulations the establishment of warehouses was restricted to a manufacturer or the proprietor of such plant. Counsel for the appellants in their brief state: “Thus narrowed, the real question is whether'none but a manufacturer of alcohol or a proprietor of an industrial aleobol plant, may operate a bonded warehouse for alcohol.”
It appears now the appellants in the petition for rehearing have abandoned tbe contention that under section 3' of title 3 of tbe National Prohibition Act (27 USCA § 73) tbe granting of a permit was restricted to a manufacturer of aleobol or tbe proprietor of an industrial plant,- but insist tbe validity of article 36 of tbe regulations of 1927 so restricting the granting of permits was within the power of the Prohibition Commissioner to provide such. regulations and are valid. This contention was thoroughly considered in the opinion of the court filed herein, and decided adversely to the contention of the appellants. Seetdon 3 of title 3 of the National Prohibition Act plainly provides that upon filing application and bond the issuance of the permit may be in connection with a manufacturing plant or elsewhere, as the commissioner may determine and does not restrict the granting of a permit only to manufacturing plants. •While it authorizes the commissioner to determine such other places where such bonded warehouses may be located, it would be an arbitrary exercise of the power granted to simply determine that sueh bonded warehouses may be only located at such places as would restrict the granting of a permit only to a manufacturer. It must be assumed that it was intended in the authorization of the distribution of alcohol for other than beverage purposes, that is for legitimate and useful purposes, that it was intended such warehouse should be conveniently located in order to properly serve the purposes • for which the use of such alcohol was authorized. Being within the power of the commissioner to determine the location of sueh bonded warehouse, it will he assumed that sueh power must be exercised in a reasonable manner to effectuate the authorized withdrawal and use of alcohol from sueh bonded warehouse for other1' than beverage purposes, and that such power may not he exercised in such an arbitrary manner as to militate against a prudent distribution of alcohol for sueh lawful purposes. Although the Prohibition Act grants to tbe commissioner authority to determine where bonded warehouses may be located, it also contemplated the possibility of the commissioner committing error, both in law and fact, or arbitrarily exercising such power, and granted the applicant for a permit a review on the decision of the commissioner before a court of equity, and as determined in the opinion filed herein the commissioner committed error of law in denying the permit in this ease. ,¡
Petition for rehearing should be denied. It is so ordered.
COTTERAL, Circuit Judge, contra.