CRYSTAL (CCrcuU
SPRING DISirrr.LEBy' Co.
'D.
COX.
courc 0/ AppeaZll, Stl:t1l. mrcuit. January 18, 189a.)
L
I1n'BJtlUL RBVENtJII-BoNDBD WABBUOUSB-EltOBSSIVlI Loss.
..
Rev. at. U. S.S 8221. abating ,the tax on distilled spirits whne In · bonded warehouse "by accidental fire or other casualty... does not Include a loss by the warping of barrels from unusual and excessive summer heat, abnormal evaporation, caused by such heat, or the existence of UJld1scoverabie worm-holes In the barrels. ' SAME-AJ..x.oWANOB FOB Loss. When the commissioner of internal reveune regardl a losl from' such cauleBas excessive he has authority, under Act Cong. May 28, S to order the withdrawal of the spirits from the warehouse'before the three years of the bond have expired, and to require payment of the taxon tbequantltyoriglnally,entered, Without making any allowance under section 17 of said act for the 1088, even though it oocurred without the fraud or negligence of the owner. ,4.7 Fed. Rep. 6ll8/aftlrmed.
In Error to the Circuit Court of the United States for the District, of Kentucky. Petition by the Crystal Spring Distillery Company against AttiUs Cox, 8S collector of internal revenue, to recover taxes paid. A demurrer to the petiti<ln was sustained, and the cause dismWied. Plaintiff brings error. Affirmed. Walter Evans, fOf plaintiff in error. Atty., for defendant in error. Geo.W. JoUy, U. S. Before JACKSON, Circuit Judge, and SAGE and SWAN, District Judges. JACKSON, Circuit Judge. ' The writ of elTOr in this case is prosecuted to revise the judgment of the circuit court sustaining the demurrer to the petition and dismissing plaintiff's suit. The case presented by the petition is in brief this: In 1886 and 1887 the plaintiff, as a distiller in the fifth district of Kentucky, entered for deposit in its bonded warehouse, under and in accordance with the internal revenue laws of the United States, from time to time, 108 packages of whisky, containing by the original gauge made at the date of said entry 4,936 gallons, or over 40 wine gallons to each package. At the respective dates of entering said paokages for deposit in said warehouse,plaintilf, as required by law, gave bond;with surety,for the payinent of the 90 cents gallolHax thereon due the United States three years therealter; th'at being the period under the law during which the whisky could remain in bond, unless its withdrawal was sooner required by the commissioner of the internall'evenue. Iii the summer of 1888, before the expiration of thethree years bonded period, the commissioner of internal revenue instructed the defendant, Cox, who was then and during the year 1888 a collector ofinternal tevenue in nnd for the said fifth district of Kentucky, to require Ofthe plaintiff the immediate withdmwal of said packages of whisky from the wareho\lSEl, and the payment of the 90'eents tax upon each gallon. thereot, as ascertained by the original gauge made at the time of dep()Sit,'and wiihoutrlUlY'allowanee for losses occurring whileiIl said warehouse.,
Thereafter the commissioner ofinternalrevenue, on July 1,1888, made an assessment plaintiff for the full Bum of 9()cents per gallon on the 4,936 ga:Ilons'ofwhisky as originally Kauged, amounting to the .. rlJis was, in Augf!.st,1888,placed in sum of the hand Of defendaht,as collector of the district, for enforcement and collection, and was by plaintiff in November, 1888, under protest &Ild oompulsion. From. a regauge, made early in September, 1888, at ,but Without authority or direction from the commissionerof internal revenUe, it appeared that the lbss from said 108 packages up to that time, or between the date of entry for deposit in house andSeptember6, 1888, was, in the, aggregate, 635 gallons. It is petiti6'tl;ihat plaintiti';Vaa not properly chargeable with the:taxoHlOcents pergallon on this 635 gallons of lost spirits; amountingifu$57L50; whichw,!,!-s included the sum $4,442.40, which Hwas required to pay on the whole4,936 gallons originally,entered for deposit. Application to the commissioner of internal revenue to refund said sum asimproperly taxed upon said 635g'allons of lost'whisky having been refused, the plaintiff brought this suit against the defendant to t;ecpy.er8Jlid amount, with interestfroill November 24, 1888; It appears ,petition ,that,the action of the commissioner of internal revenue i.nreqpirmg the wHhdrawal from warehouse of the 108 packages of distilled spirits was based on the excessive loss therein, and was had under the provision of section 4 of the act,O'f May 28, '1880, (21 St. p. 146.) The plaintiff, in its pe.ti'tion, "states it,to be the fact that,while the said one of said packages had been excessive when said instructions [for their withdrawal] were given, yet said losses 00destruction. of all of said spirits so lost by accidental casu· alties,viz.,.from wastage and injury to the barrels containing said spirits, caused by excessive and unusual heat in the summer of 1887, from ab· from said packages, caused. by said heat, and from undiscovl3l1lble in the barrel!! containing said .spiJ:its, all with·, qut collusion,or, pegHgence of the plaintiff. was the owner of!ill of the said spirits, and because of said fact thesai4 of was without power or authority lawfully to give the said, instructions, [for witbdrawal.ofthe whisky,] or to make the said assessment of Sl,lid taxes," etc. . '. , \ oil state offacts tlPlB set forth the plaintiff sought to recover of Qefendant'saidsum'of $571.50, with interest, as having been illegally on tq,e635 gallqns of whisky, lqstwithqut its fault. The a general demwrerj which WIlS· sustained by the c,ircqit cqurt, spd. petition dismissed, with costs. It is assigned for erred in,sJ1staining said demurrer and in dismissing the ,suit.. It is claimed for the plaintiff in error tha,t the commissioner Q(internalrevenue had no lawful jurisdiction, power, or authority to cePJ.Uel the withQril.wal of the spirits and tIle pa.ymentof. the tax thereon elapsed from the; time the Were depogited still, the plaintiff, being witho*t ,entitled to an all,owance (or the 635 gallons lost under the
CRYSTAL SPRING DISTILLERt" CO.t. COX.
557
facts stated; and thl1t the 8571.50 tax collected thereon was illegal, unlawful, excessive,and unjust, and, having been paid under protest, may be recoyered in this ,action. Whether the commissioner of internal revtlnue had the authority to require the withdrawal of the whisky before the expiration of three years from date of entry in warehouse, and the payment of the tax thereon according to the original gauge when entered for deposit in the warehouse, without making any allowance for the 635 gallons lost while so deposited from the caUSes alleged in the petition, must be determined by reference to several sections of the internal reveenne law, which should be considered and construed together. By seetion 3248, Rev. St., distilled spirits are defined, "and the tax shall attach to this substance [thus defined] as soon as it is in existence as such." By section 3251, as amended by the act of March 3,1875, (18 St. p. 339,) shall be levied and collected on all distilled spirits * '" .'" a tax of ninety cents on each' proof gallon, or wine gallon when below proof, to be paid by the distiller,owner, or persons having possession thereof before the removal from the distillery bonded warehouse." By Eleotiot1 as amended by the act of May 28, 1880, (21 St. p. 145" it is required that" the said distiller or owner shall at the time of making said entry [in warehouse] give his bond '" '" conditioned that the principal named in said bond shall pay the tax on the spirits as specified in the entry, or cause the same to be paid, before removal from said distillery warehouse, and within three years from date of said entry. "The 90 cents pergallon tax being thus fixed on alLdistilled spirits as soon as the same is "in existence" and entered in bonded warehouse, it was provided by section 3221, Rev. St., that the secretary oBhe treasury should have authority to make an allowance for certain losses,ofthe spirits while in bond, as follows: "The secretary of the treasury, upon tbe production to him of satisfactory proof of the actual destruction by accidental fire or other casualty, and with<lut any,fraud. collusion, or neglij.'tence of the owner thereof, of any distilled while the same remained in the custody of any officer of internal revenue in any distillery warehouse or bonded warehouse of the United and before the tax thereon has been paid. may abate the amount of internal taxes accruing tbereon. and may cancel any warehouse boud. or enter faction thereon. in whole or in part, as the case may be."
*
, By the .fourth section of the act of May 28, 1880, it is provided: "If it shall appear at any time that there bas been a loss of distilledlilpirits from any cask or other package hereafter depositeq in a distillery warehouse. <lther thantne loss provided fOr in section 3221 of the Revised Statutes of the :United States. as wbich, in tbe opinion of the commissioner of the internal revenue. is 'excessive, he may instruct the collector of the district in which the loss has occurred'to require the withdrawal from tbe warebouse of 8uChdistilledspirits. and' to collect the tax accrued upon the original quantity of distillell spirits entered into the warehouse in such cask Or .package, ;not. withstandi,ng that the time specified in 'any bond given for the wlthdrawalof ,the spirits entered into warehouse insi,lch. cask or package has not expired. If the saidt1\x is not paid on demand, the COllector, shall report the amount dueupoil'bis nlflxt monthly list, and it shallbeass6ssed and collected as other taxes are assessed and collected. ThetRxoD all distilled spirits hereafter en·
558 .ndlstiller,t :wareho",,,es; sball be due before and lHld within, three years from for deposit therein. vrarehousing bonds, taken ....... ,'ilhaU bl'l'Qonditioned for the payment of thtl tax on the spirits as specified"in the, entry removal from di::ltillery warehouse, within three years frorrithe d'ate ot said bonds." The: 1;08 packages of whisky in the present Case havinlir "been manufactored and entered for deposit in a distiIlery warehollse since the act ofMlty28, 1880,went into operation and effect, it must be assumed thaqhe bond or bonds given by plaintiff upon making such entry or entries thereof were executed inconformity with the provisions of said section 4, and were conditioned" for the payment of the tax on the spirits as specified in the entry." It is, furthermore, perfectly clear from the language of said section that plaintiff had no absolute right to the period of three years from date of entry for thewithdrawaLof such spir"Hsand payment of the tax thereon. The tax was "due and payable before and at the time" the spirits are withdrawn from the warehouse, "aoo within three years frOm ,date of the entry for deposit therein. tI The malilifest meaning and purpose of said section was and is to make the tax on'the original quantity of spirits entered due and payable at the time of, the withdraw.al thereof, when Buch withdrawal is required by the commissioner ofinternal revenue under and in pursuance of the authority therein conferred,'lnotwithstanding that the time specified in any bond given for the withdrawal of the spirits entered into warehouse , in such e8.flkor package hanlot expired." In other words, the tax based or "accrued upon original quantity of distilled spirits entered into the warehouse'! is due and ,payable, without any allowance for diminution in quantity, whenever the commissioner of interrial revenue requires its ,withdrawal bpcausej inqis opinion, theloss from the cask or packages .is excessive, provided,Buch loss does)not come within the provisions of section 3221, Rev.' St. t above quoted. If I the loss has arisen from Cltlie actual destruction 'by acCidental fire or other casualty, and without, any fraud, collu!:lion, or negligence of the owner thereof of any while in any distillery or bondedjvarehouse, the commissioner of internal revenUe hl\s no authority, however great such loss may be, to instruct the collector pC ,the district in which the loss has occurred td require the withdrawal of such spirits, and the payment of the tax as specified in the entry But iNhe loss from casks or, pa:ckages while in wareho,use has not been caused '''by accidental fire or and in tne ophiion of the, is excessive, withdrawal of the spirits and payinent of the ,tax on the quantity originally entered fordepQsit ,may be directed and requ.ired under th,e 1l1Uhority:conterred upon the commissioner of internal revenue by said 's6ction4 brthe act of May '28, 1880. So that the controlling, if hot the sole,questirin presented ;\\ihether, under the allegations of tha petition, 'tIle IQss'lii' the Whisky, entered for qephsit in warehouse pytl)e plaintiff trtlated aqd 8,.Slln "actual destructionby accidentaltil'e: ,or: casualty," with.in,f,he pf tered for at the date ,of
CRYSTAL.
QQ·.
'!.
section 3221, Rev, St." ,'l'here is no controverl\¥,. aEl to the fact that the loss from the package warehouse was excessive when thf:! immediate withdrawal of .the, ,spirits was ordered and ,directed by the com. missioner of internal revenue. 'It exceeded the the allowan'ce permitted by , said' act of May 28, 1880, when the loss was without the. fault or negligence of the distiller or owner of. the spirits; and the petition admitted, the fact that "said .fJ:!)m each and every one of said. packages had :been excessive when said ip'structions [for their withdrawal] were given," but claimed that 8uchloS$Els were "occasioned by the .ofall of said spirits so lost bY;Rccident;U casualties,viz., from warpage. injury to the contaillingsaid spirits, caused b1 excessive and unusual heat iJ;lthe .summer.Qf 1887, ft'om abnormal from said cauliled by said penh undiscoverable worm-holes in the. barrels containing said, spVits, all without auy fraud, collusion, or of tq.e plaintiff, the owner of Are loss, as tb9JI stated" ,co\"ered by saId sectIon 3221, Rev. St.? We ,thInk not; for It cannot. be properly said that eit/:1er .excessive anq uJiusual sl1miner heat or undiscovera.b,le worm-holes in barrels constitutq by .Il:ccidentai nreor other casualty," .within. tb,e tiue of said terms as employed in section 3221, Rev. St. We arecleady QUhe opinion that the court below waa correct in its holding that, "other cas,u.w,ty," M uaed in said section, meant an aQQidental destruction by some, cause. of like character and operation as fire; such as .lightning, floods. qyclones, storms, or other,.pncontrollable force, which ordtnary t\ud prudeI?-ce could D,ot. guard against or vent, . TheJ()ss from or the warping onarrels frQmtlxc!lssive sumtqe;r h.eat, evaporation of spirits, is not the destruption by, "other cllsualty" said section 3221; Rev. St. In Wellesv. ChBtle8, 3 Gray, 325, Justice, BIGElpW, speaking for the c(:>Urt" says that" I unavoidable casualty' signifies or acciClents which human prudence, foresight,alld sagacity cannot pre. vent.", III Mi118 v. Baehr, 24 Wend. 254, there, was a provision in a lease that the rent. should , cease if the premises became untenantable, by, "fire .or 9tbercasualty," .The building became untenantable in quenceQfthe greater portion of it being taken down to conform·to an order of the city corpora-tion for the widening of the street on which. it was situated. Chief NELSON, in delivering the opinion of the court, said: . . . "The term 'other casuallty' refers tO,some fortUitous interruption of the use. This Is <11ear, not only upon the import of the words, but from the connection in which they are found. No ea,sualty has intervened. On the contrary, whatever has taken place has been in pursuance of established law, and might have been and probably was anticipated." The poli9Y Qf ,the government, .declared in the provisions of section 3248, being to have its excise. ;taxattach to distilled spirits al!,.soon. same are in existence, and according to the origina,l quaJ;ltity foX' deppait in warebouse,. the excePtion to the general
060
:i'EDltRAL
REPORTER.
voL 49.
rule provided for by section 3221, Id., as amended by section 6 of the act of ¥arch 1, 1879, (20 St. p. 327,) cannot, under the principle of the foregoing decisions, or py any proper construction, be extended so as itt> COver excessive losses: arising from such causes' as those alleged in plab:itiff's p e t i t i o n . . . It is urged on behalf of plaintiff in error that, inasmuch as the loss of the 635 gallons while thet08 packages were in warehouse occurred without fault on its part,an allowance should have been made therefor under section. 17 of thea<::t of May 28, 1880, which provides that, "whenever the ?l'ner Of an,y'distilled spirits shall desire to withdraw the same from the or from a special bonded warehouse, he'JX!,a.yfile with the collector a notice 'giving a description of the package to be withdrawn, andreqnest that the distilled spirits be regauged; and :thereupon the collectofshall direct the gauger to regauge the same, an<J. mark upon each so regauged thenumber of gauge or wine $.'fill0:Osand contained. Ifupon such regauging it shall appear that there hn.s been a loss spirits from any cask or package without the fllulfor negligence .of the distiller 01' owner thereof, blfoollected only 'on the quantity of distilled spirits conor package at the time of the withdrawal thereof from. distillery warehouse or special bonded warehouse: and provided, powever, that the allowance which shall be made for such loss of spirits as aforesaid shall not' exceed" a certain number of proof gallons in eaohcask or package Qf400r more wine gallons capacity for designatThe loss in question exceeded the ed periods of two or allowance cOveted by the. proviso of said section 17. While we,Q'oDot mean to decide that it wasthe intention of congress by the Qfthe act, otMay28, 1880, to limit and restrict the authoHty ofthe commisslonars of internal revenue, in reqUiring the with.,. draw-al of spirits to cases in which the loss.is greater than that allowed by the seventeenth section of Said act, we are of the opinion that, even uponthat construction of the t\yo sectiops, as applied to the present case, the lorder directing the withdrawal of plaintiff's 108 packages because of excessive loss therein was. clearIy within the power and jurisdiction conferred upon the' commissioners by and under said fourth section of the.' {Jet, and' that'the plaintiff cannot properly claim the benefit of th& to the extent in and by the seventeenth section. '1'hefnanifestobject and purpose of the fourth section of the act was to' enable the commissioner of internal revenue to protect the government's lien,on the spiritS for the' tax due thereon in cases where there was an excessivegiminutionof fraud or negligence on the part of the ownetftom causes. other than tp,ose excepted by, section 3221, Rev. St. ' . ' . Under rules.of construction the courts must give such interpretationto the te\1entie act of May 28, 1880, as wi1l-allow both seetions 4lmd' 17 to·· stand. 'There is in fitet no conflict between them. by the' petition oomesdirectlywitbin the provisions of sectioii'4;Of'8aidact;'aIid theconcllisiO'n is ine\1itable that, the 1088 being i
LOUISVILLE PUBLICWAREHOUS])
co.
V. COLLECTOR OF CUSTOMS.
561
excessive, the commissioner of internal revenue had full authority to require the withdrawal of the whisky, and the payment of the tax on the original quantity entered for deposit in the distillery warehouse. In the case of Thompson v.U. S., 12 Slip. Ct. Rep. 299, (decided January 11, 1892,) the supreme court say of section 3293, Rev. St., as amended by the fourth section of the act of May 28, 1880, already referred to, that "the evident intention of congress, to be gathered from those provisions, is that the tax shall attach as soon as the spirits are produced, and that such tax shall not be evaded except upon satisfactory proof, under section 3221, 'of destruction by fire or other casualty." We concur fully with the lower court in the view that the loss in the present case,as:describedin the petition, is not covered by section 3221, Rev. St., and .that plaintiff was not entitled to any allowance as claimed on th;e635gall.ons lost while iIi warehouse, but was properly taxed thereon. We do not deem it necessary to consider or decide the question whether, under the. principle laid down in the cases of Er8ki'M v. Hohnbach, 14 Wall. 613; Haffin v. MaBon, 15 Wall. 674; and Harding v. Woodcock; 137 U. 8;46,' 11 Sup. Ct. Rep. 6, -the plaintiff could maintain its said suit against the defendant under the facts alleged. The judgment of the ' circuit court is affirmed, with costs.
<'
LoUISVILLE, PUBLIC
W AR])HOUSE Co. v.
OF CUSTOMS.
(O£rcu:l.t CO'Il.'rt of Appeals, 81a:th Circuit. January 16, 1892.)
CmOUIT COURT, 011'
Tbe 4fth section of the act creating the circuit court of appeals enumerates the. cases in which appeals shall still be taken direct to the supreme court, and the s.xth section declares, that the circuit court of appeals shall have appellate jurisdiction of all other cases, "unless otherwise provided by law." Held, that this gives the latter court jurisdiction of an appeal from a judgment rendered by the circuit court in reviewing a decision of the board of general appraisers under the act of June 10, 1890.
ApPEALS.
lL SAME. The fact that sectidn 15 of the latter act authorizes the circuit court, when it deems the question of special importance, to allow an appeal to the supreme court, cannot be considered as having" otherwise prOVided by law," as such a construction would extend tl1e .direct appellate jurisdiction of the supreme court beyond the classes of cases specifically enumerated in section 5 of the act creating the circuit court of appeals, and would in fact deprive the latter court of all appellate jurisdiction; for prior to. that act there was "provision by" law in respect to appealll or writs of error in all cases. 8. .CUSTOM DUTIES-REIMPORTED WHISKy-WITIIDRAWAL lI'ROM BOND. The tariff. act of October 1,1890, (26 U.S.St. p. 624,) provides in section that on the reimportation of an article manufactured in the United States, and once exported without paying an internal' revenue tax, it shall pay a duty equal to the internal revenue tax:, ion ·sueh article.' Section 50 declares that any merchandise Qn bond before t,he date of the act may be withdrawn for cousumptionon of the duties in force before the act; when such duties are based upon the weight of the goods, the weight shall be taken at the time of the withdrawal. Bela,.thatwhHe,. under the internal revenue laws, the proof of spirits is determined weight, yet the tall: is always assessed. upon the gallon' measurement, whether the spirits are above or below proof,; and hence reimported whisky, when .withof lIndra,wij iron. bQnd, must pay according to the number of ,gallons at the plll'tlition. and not at time of withdraWaL"· '.;." '.' .' .. .
v.49F.no.7-36