Court Opinion

ID: 8861757
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:50:26.54053+00
Date Added: 2024-06-11T17:05:50.983507
License: Public Domain

WOODS, Circuit Judge,
after stating the case as above, delivered the opinion of the court.
The intention of congress that all “distilled spirits, spirits, alcohol and alcoholic spirit,” whether produced by fermentation or otherwise, .should be subject to the tax prescribed, is evident; and it is not perceived that there is in the supposed lack of a specific, regulation provided by the commissioner of internal revenue any obstacle to the full enforcement of that intention. What is subject to the tax is to be determined by the statute, and not by any rule which the commissioner is to adopt in order “to secure a uniform and -correct system of inspection, weighing, marking, and gauging of spirits.” “The true intent and meaning” of the act is to impose the prescribed tax on that substance known as “ethyl alcohol or spirit of wine.” That the arti-*915de produced by the defendant in error was of that character is not disputed, but it is said that Corning & Co. was not a distiller or producer, within the meaning of the law; that,.when the spirits in the package have been gauged, the packages duly stamped and branded, and the tax paid, the government releases all claim upon it, and the purchaser who buys it. has a right to use it as he pleases; that the soakage allowance is made because the spirits are deemed to be lost to the distiller, and are lost to him as he does not receive anything for-the staves; that in law there is no restriction upon the use of a still by a rectifier, either to redistill his spirits, or to recover spirits fi-om the charcoal used in his rectifiers; that there is no provision of law applicable to the case; that no fraud was attempted; and that no mistake was made. All this is a statement of the question, rather than a solution of it. The chief proposition is that, there is no provision of the statute which authorizes the collection of this tax; but the statute-is to be fairly and liberally construed, for the purpose of effecting its evident, purpose, as manifested in the express declaration which it contains of its true intent and meaning (Smythe v. Fiske, 23 Wall. 374; U. S. v. Stowell, 133 U. S. 1, 10 Sup. Ct. 244); and it needs no strained construction to include the spirits in question. It is true that the allowance for soakage was made to the distiller on the theory that it was lost. As an article of spirits capable of use as such it was lost, and in its exact identity in all of its parts as it went into the staves it has never been reproduced. If it was proximately a “proof-spirit,” as defined in section 3249 of the ltevised Statutes, when it went into the staves, it consisted of alcohol and water in about equal’ parts; but the result of the process employed by Corning & Co. was a product which in bulk exceeded many times the quantity allowed for soakage. It is perhaps to be presumed that: the absolute or pure alcohol contained in the product was in all its particles the same which had soaked into the staves of the barrels, but that is by no means certain, since methylic alcohol may be obtained by the destructive distillation of wood itself; and it is not impossible that in this instance, by the process employed, which was a form of distillation, alcohol was extracted which had not been absorbed from the distilled contents of the barrels. But, while it is evident that the spirits produced by Corning & Co. were not in their constituent elements the identical spirits which had been soaked into the staves of the packages, it is not to be understood that the decision of the court is placed on that ground. Concede the identity, and it remains true that while in the wood the absorbed liquor was not a merchantable article. As-such, it had ceased to exist. Allowance was made for it on the theory that it never would exist in its original identity and form again, and it was, of course, the privilege of the purchaser to use the barrel or staves for any conceivable lawful purpose; but it was not his privilege to extract the soaked alcohol, alone or in combination with that contained originally in the wood, and make of it a merchantable spirit to be put uiitaxed on the market, to compete with that on which the lawful duty had been paid.
A rectifier by reason of the fractional quantity which is disregarded in ganging, it is asserted, can obtain untaxed one-half to 1 per cent, of *916the spirits which he purchases, and why, it is asked, is he not as much entitled to the soakage as to this untaxed quantity? The distinction is clear. It is the difference between inclusion and exclusion. Except the soakage, no part of the spirits in a package is in fact untaxed. The fractional quantity which is disregarded in the computation of the amount to be charged on the package bears its proportionate share of the entire tax, and goes into the market without violation of either the letter or the spirit of the law. The soakage, on the other hand, besides not being included in the basis of computation, is not a part of the quantity upon which the tax is levied; and, consequently, when extracted from the empty barrels in the manner stated, it is spirits on which the lawful tax has not been paid, and is subject to taxation no less than if produced, by the same or any other process, from imported barrels or staves, or from any other source or in any other mode which might be suggested. It is not inconceivable, nor necessarily improbable, that a process might be invented whereby the alcohol in fermented liquors, on which the tax is only a dollar for a barrel of 31 gallons, could be withdrawn, in whole or perhaps in such part as to leave the minimum quantity essential to the integrity of the liquor from which it should be taken, and, if the spirits produced from the staves of whisky barrels is not taxable because the free contents of the barrels had been taxed, still more ought the spirits to be exempt which, as constituent parts of beer or ale, had borne the tax imposed on those liquors. Again, under the regulations of the internal revenue department, whiskies, spirits, or high wines which have been held in bond are regauged when about to be put on the market, and allowance made for actual evaporation during the period of storage; and let it be supposed that means should bfe discovered by the use of which in the warehouses the evaporated spirits, after escape from the barrels, could.be recondensed and saved: Would it be necessary to amend the law or to add to the rules of the department of internal revenue in order to bring under taxation the spirits so produced or recovered?
Little credit is due to the lawmaker who is driven to special enactments to supply the defects of a general law on a subject to which general provisions are applicable; and when a comprehensive statute has been so framed that, without distortion of its terms, it may be reasonably applied to extraordinary and unexpected conditions, it is no duty of the courts to impose upon it a narrow construction, which will include only anticipated transactions and conduct, leaving evasive schemes and devices, which, though unforeseen, are clearly within the aim of the law, to the awkward and inefficient remedies of special legislation.
•The judgment below is reversed, with direction to enter judgment for the defendant.
JENKINS, Circuit Judge, dissents.