Court Opinion

ID: 5450821
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:38:00.099294+00
Date Added: 2024-06-11T08:32:22.530331
License: Public Domain

TRAYNOR, J.
I concur in the result reached in the majority opinion but do not agree that the federal excise tax *408on distilled spirits is a property tax, that the tax follows the property “as a necessarily included part of the value thereof,” or that it “becomes an obligation of the owner, as an incident of ownership.” To employ property law concepts in the solution of problems like the present one can lead only to confusion.
The issue turns not upon who had title to the liquor that was destroyed, but upon whose tax liability was discharged by plaintiff when it paid the tax after the destruction of the liquor. Defendant contends that plaintiff paid its own debt, on the ground that the liquor was being transported under the plaintiff’s bond at the time it was lost. Plaintiff contends that it paid defendant’s debt, and that the provisions requiring it to post a bond guaranteeing the payment of the tax in the event the liquor was withdrawn from bond are designed, not to impose a new or substituted tax, but merely to insure collection of a tax already imposed. The determination of this issue rests upon the proper interpretation of the federal statutes and regulations with respect to the federal excise tax on distilled spirits.
Section 2800 (a) (1) of the Internal Revenue Code provided, at the time here pertinent: “There shall be levied and collected on all distilled spirits (except brandy) in bond or produced in or imported into the United States an internal revenue tax at the rate of $2.25 (and on brandy at the rate of $2.00) on each proof gallon or wine gallon when below proof and a proportionate tax at a like rate on all fractional parts of such proof or wine gallon, to be paid by the distiller or importer when withdrawn from bond.” Section 2800 (e) provided: “The tax shall attach to distilled spirits ... as soon as this substance is in existence as such. ...” Section 2800 (d) provided: “Every proprietor or possessor of, and every person in any manner interested in the use of, any still, distillery, or distilling apparatus, shall be jointly and severally liable for the taxes imposed by law on the distilled spirits produced therefrom.”
These provisions impose an excise tax on distilled spirits measured by the quantity distilled. (United States v. Singer, 82 U.S. (11 Wall.) 111, 121 [21 L.Ed. 49]; see Patton v. Brady, 184 U.S. 608 [22 S.Ct. 493, 46 L.Ed. 713].) Liability for the tax rests upon the distiller as soon as the liquor is in existence and until the tax is paid. If the tax were a property tax it would have to be apportioned among the states according to population. (U. S. Const., art. 1, sec. 2; see Bromley v. *409McCaughn, 280 U.S. 124 [50 S.Ct. 46, 74 L.Ed. 226]; Pollock v. Farmer’s Loan & Trust Co., 157 U.S. 429 [15 S.Ct. 673, 39 L.Ed. 759].)
Recognizing that liquor is frequently held several years before sale or resale, Congress provided for the postponement of the payment of the tax, not to exceed eight years, under conditions insuring payment. Thus section 2879 (b) of the Internal Revenue Code provides: “The tax on all distilled spirits hereafter entered for deposit in internal revenue bonded warehouses shall be due and payable before and at the time the same are withdrawn therefrom and within eight years from the date of the original entry for deposit therein; and warehousing bonds hereafter taken under the provisions of the internal revenue laws shall be conditioned for the payment of the tax on the spirits as specified in the entry before withdrawal from the internal revenue bonded warehouse, and within eight years from the date of said entry.” Subdivision (c) of section 2879 provides: “The Commissioner shall prescribe the form and penal sums of bonds covering distilled spirits in internal revenue bonded warehouses and in transit to and between such warehouses; Provided, That the penal sums of such bonds covering distilled spirits shall not exceed in the aggregate $200,000 for each such warehouse.” Pursuant to this provision the commissioner required each receiving warehouse to post a bond to insure payment of the tax when liquor was in transit to or in possession of the receiving warehouse. The bond posted by plaintiff expressly guaranteed payment of the tax by plaintiff in the event the liquor was destroyed while in transit to plaintiff.
While plaintiff’s obligation was ancillary to and by way of security for the payment of the distiller’s obligation, it did not supersede that obligation. Plaintiff discharged the tax liability that rested upon defendant until the tax was paid, and may recover from defendant under the established principle that “A person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity from the other, unless the payor is barred by the wrongful nature of his conduct.” (Restatement: Restitution, sec. 76, p. 331; see cases cited in 17 Cal. Jur. 587 et seq.; see, also, Brooks Wharf and Bull’s Wharf Co., Ltd. v. Goodman Bros., (1937) 1 K.B. 534.)
Gibson, C. J., and Edmonds, J., concurred.