1. The 20th section of the Act of Congress of July 20, 1868, is
as follows:
"That on the receipt of the distiller's first return in each
month, the assessor shall inquire and determine whether said
distiller has accounted in his returns for the preceding month for
all the spirits produced by him; and to determine the quantity of
spirits thus to be accounted for, the whole quantity of materials
used for the production of spirits shall be ascertained, and
forty-five gallons of mash or beer brewed or fermented from grain
shall represent not less than one bushel of grain, and seven
gallons of mash or beer brewed or fermented from molasses shall
represent not less than one gallon of molasses. In case the return
of the distiller shall have been less than the quantity thus
ascertained, the distiller or other person liable shall be assessed
for such deficiency at the rate of 50 cents for every proof gallon,
together with the special tax of $1 for every cask of forty proof
gallons, and the collector shall proceed to collect the same as in
cases of other assessments for deficiencies; but in no case shall
the quantity of spirits returned by the distiller, together with
the quantity so assessed, be for a less quantity of spirits than
eighty percentum of the producing capacity of the distillery, as
estimated under the provisions of this act."
Held that the meaning of this section is that in no
case shall the distiller be assessed for a less amount of spirits
than 80 percent of the producing capacity of his distillery, and if
the spirits actually produced by him exceed this 80 percent, he
shall also be assessed upon the excess.
2. The law is constitutional. The tax imposed upon the distiller
is in the nature of tin excise, and the only limitation upon the
power of Congress in the imposition of taxes of this character is
that they shall be "uniform throughout the United States." The tax
here is uniform in its
Page 82 U. S. 112
operation -- that is, it is assessed equally upon all
manufacturers of spirits wherever they are. The law establishes one
rule for all distillers.
3. The 15th section of the Act of Congress of July 20, 1868,
required every distiller to provide a warehouse for the storage of
spirits manufactured by him and declared that such warehouse, when
approved by the Commissioner of Internal Revenue on report of the
collector, should be it bonded warehouse of the United States, and
should be under the direction and control of the collector of the
district and in charge of the internal revenue storekeeper assigned
thereto by the commissioner. The 52d section of the same act
enacted that the compensation of these storekeepers should be
determined by the commissioner and be paid by the United States.
The distillers in this case provided the warehouse directed, and
the Commissioner of Internal Revenue assigned a storekeeper to take
charge of it at a compensation of $5 a day, and he remained in
charge of the warehouse from the 4th to the 25th of March, 1869,
inclusive, for which service be was entitled to $110, and was paid
that amount by the United States. Subsequently to this, and on the
29th of March, 1869, Congress passed a certain joint resolution to
which was annexed a proviso that after the passage of that act, the
proprietors of all internal revenue bonded warehouses should
"reimburse to the United States the expenses and salary of all
storekeepers or other officers in charge of such warehouses," and
that the same should be paid into the Treasury and accounted for
like other public moneys.
Held that the official bond of
the distillers and their sureties, in this case executed in
January, 1869, does not bind them to make reimbursement of this
money expended by the United States before the joint resolution was
passed, 1st, because the joint resolution only contemplates the
reimbursement of expenses and salary paid after its passage, and
2d, because the reimbursement to the United States of moneys paid
by them to their own officers or agents, in pursuance of a law in
existence when the bond was executed is not a duty so connected
with or naturally belonging to the business of a distiller as to be
within the reasonable contemplation of the parties to the bond at
the time of its execution.
4. The official bond of parties covers not merely duties imposed
by existing law, but duties belonging to and naturally connected
with their office or business imposed by subsequent law, but the
new duties must have some relation to or connection with such
office or business, and not be disconnected from and foreign to
both.
5. This case distinguished from that of
United
States v. Powell, 14 Wall. 493, in this, that there
the moneys were expended by the United States, and one of the bonds
in suit was executed after the passage of the joint resolution.
The 20th section of the Act of July 20, 1868, entitled
Page 82 U. S. 113
"An act imposing taxes on distilled spirits and tobacco, and for
other purposes," [
Footnote 1]
enacts:
"That on the receipt of the distiller's first return in each
month, the assessor shall inquire and determine whether said
distiller has accounted in his returns for the preceding month for
all the spirits produced by him; and to determine the quantity of
spirits thus to be accounted for, the whole quantity of materials
used for the production of spirits shall be ascertained; and
forty-five gallons of mash or beer brewed or fermented from grain
shall represent not less than one bushel of grain, and seven
gallons of mash or beer brewed or fermented from molasses shall
represent not less than one gallon of molasses. In case the return
of the distiller shall have been less than the quantity thus
ascertained, the distiller or other person liable shall be assessed
for such deficiency at the rate of fifty cents for every proof
gallon, together with the special tax of four dollars for every
cask of forty proof gallons, and the collector shall proceed to
collect the same as in cases of other assessments for deficiencies;
but in no case shall the quantity of spirits returned by the
distiller, together with the quantity so assessed, be for a less
quantity of spirits than eighty percentum of the producing capacity
of the distillery as estimated under the provisions of this
act."
The 15th section of the same act required every distiller to
provide a warehouse for the storage of spirits manufactured by him,
and declared that such warehouse, when approved by the Commissioner
of Internal Revenue, on report of the collector, should be a bonded
warehouse of the United States, and should be under the direction
and control of the collector of the district and in charge of the
internal revenue storekeeper assigned thereto by the commissioner.
The 52d section of the same act enacted that the compensation of
these storekeepers should be determined by the commissioner and
be paid by the United States. On the 29th of March, 1869,
Congress passed a joint resolution, [
Footnote 2] supplying omissions in the enrolment of
certain appropriation acts, to which was annexed a proviso that
after the
Page 82 U. S. 114
passage of the resolution, the proprietors of all internal
revenue bonded warehouses should "
reimburse to the United
States the expenses and salary of all storekeepers or other
officers in charge of such warehouses," and that the same should be
paid into the Treasury and accounted for like other public
moneys.
In this state of the statutory law, the United States brought
suit against Singer and Bickerdike as principals and certain other
persons as sureties on a distiller's bond which all the said
parties had signed, and whereby they covenanted that the principals
should
"in all respects, faithfully comply with the provisions of the
law in relation to the duties and business of distillers, and pay
all penalties incurred or fines imposed upon them for violation of
any of the said provisions."
The government assigned as a breach that the said Singer and
Bickerdike,
"during the month of November, 1868, manufactured spirits at
their distillery, and made return for that month to the assessor of
the First Collection District of the State of Illinois of spirits
so manufactured, and the quantity of spirits so returned was less
than 80 percent of the producing capacity of said distillery, as
estimated under the provisions of the internal revenue law, and,
that thereupon, the said assessor, to-wit, on the 10th day of
February, A.D. 1869, proceeded to make an assessment against the
said Singer and Bickerdike, for the deficiency in said return,
which assessment, amounting to $26,089.60, the said Singer and
Bickerdike had refused to pay."
Plea, that the said Singer and Bickerdike,
"before the commencement of this suit, fully paid and satisfied
all assessments lawfully made against them
for spirits produced
at their said distillery since the date of the said bond."
The plaintiffs demurred, and thus raised the first point in the
case.
By a second count the plaintiffs assigned as another breach of
the bond that
"one C. W. Davis, an internal revenue storekeeper, appointed by
the Secretary of the Treasury of the United States, and assigned by
the Commissioner of Internal
Page 82 U. S. 115
Revenue to the distillery warehouse of which said Singer and
Bickerdike were proprietors, established by law, in connection with
the said distillery, at a salary of $5 per day, had charge, as such
storekeeper, of the said warehouse from the 4th to the 25th days,
inclusive, of March, A.D. 1869, and became thereby entitled to the
sum of $110 for the said services, which said last-named sum had
been paid by the United States to the said Davis for his said
services, and that it thereupon became the duty of Singer and
Bickerdike, as such distillers and proprietors, to reimburse to the
United States said sum; yet that though often requested, they had
never paid it or any part of it."
To this count also the defendants demurred.
Judgment was given by the Circuit Court of the United States for
the defendants, and this writ of error was brought, the United
States assigning as error:
1st. That by the already-quoted 20th section of the Act of July
20, 1868, the defendants, Singer and Bickerdike, were liable to be
taxed for a quantity of spirits equal to 80 percent of the
producing capacity of their distillery, whether the amount actually
manufactured equaled that quantity or not.
2d. That by the resolution of March 29, 1869, the defendants
were bound to repay to the United States what the latter had paid
to Davis as storekeeper.
Page 82 U. S. 118
MR. JUSTICE FIELD delivered the opinion of the Court.
Two questions are presented by the counsel of the government for
our consideration in this case. One relates to the construction
which should be given to the twentieth section of the Act of July
20, 1868, imposing taxes on distilled spirits, and the other
relates to the liability of the defendants on the bond in suit to
reimburse the United States the amount paid by them to the
storekeeper placed in charge of the warehouse of the
distillers.
Upon the construction which should be given to the twentieth
section of the act of July, 1868, there appears to have been some
conflict of opinion among different circuit judges. The real or
supposed hardship in particular cases of imposing a tax upon an
amount of spirits equal to eighty percent of the producing capacity
of the distillery, where a less quantity has been in fact
manufactured by the distiller, has undoubtedly had much to do in
inducing a construction leading to a different result. But the
hardship of the operation of particular provisions of a statute has
properly no place for consideration where the language is
unambiguous and the legislative intent is clear. And reading the
section in question by itself, there does not appear to us to be
any ambiguity in its language or any doubt as to its meaning. Its
meaning is that in no case shall the distiller be assessed for a
less amount of spirits than eighty percent of the producing
capacity of his distillery, and if the spirits actually produced by
him exceed this eighty percent, he shall also be assessed upon the
excess.
The other sections of the act, instead of conflicting, agree
with this construction. There are running through the act two
classes of provisions, one of which looks to the ascertainment of
the quantity of spirits distilled and the other to
Page 82 U. S. 119
the ascertainment of the producing capacity of the distillery.
Thus, the first section has reference to the spirits actually
produced, and provides for the tax thereon. The fifteenth section
compels every distiller to provide a warehouse, to be situated on
and constitute part of his distillery premises, to be used only for
the storage of distilled spirits of his own manufacture. The
nineteenth section requires the distiller to make daily entries in
books, kept for that purpose, of the grain and other materials used
in the manufacture of spirits, and to render a sworn account three
times each month of the number of gallons produced by him and place
in his warehouse. And the twentieth section makes it the duty of
the assessor to inquire into and determine whether the distiller
has accounted in his returns for all the spirits produced by him.
These provisions are intended to secure the ascertainment of the
quantity actually manufactured by the distiller. On the other hand,
the ninth section provides
"That every distiller, or person intending to engage in the
business of distilling, shall previous to the approval of his bond
cause to be made, under the direction of the assessor of the
district, an accurate plan and description, in triplicate, of the
distillery and distilling apparatus, distinctly showing the
location of every still, boiler, doubler, worm-tub, and receiving
cistern, the course and construction of all fixed pipes used, or to
be used in the distillery, and of every branch thereof, and of
every cock or joint thereof, and of every valve therein, together
with every place, vessel, tub, or utensil, from and to which any
such pipe shall lead, or with which it communicates,"
and also showing
"the number and location, and cubic contents of every still,
mash tub, and fermenting tub, together with the cubic contents of
every receiving cistern, and the color of each fixed pipe."
One copy of the plan and description is required to be kept
displayed in some conspicuous place in the distillery, one is to be
kept by the assessor, and one to be transmitted to the Commissioner
of Internal Revenue. Their accuracy is to be verified by the
assessor, the draughtsman, and distiller, and no alteration in the
distillery can afterwards be made without
Page 82 U. S. 120
the consent of the assessor, and any alteration made must be
shown on the original, or by a supplemental plan and description,
which is to be preserved in the same manner as the original. The
tenth section requires a survey to be made by the assessor, with
the aid of a skillful and competent person to be designated by the
Commissioner of Internal Revenue, of every distillery used, and its
true producing capacity estimated and determined, and reports of
the same to be made in triplicate, one to be furnished to the
distiller, one of be retained by the assessor, and one to be
transmitted to the Commissioner of Internal Revenue. These several
provisions are intended to secure information as to the producing
capacity of the distillery, and then we have the concluding clause
of the section under consideration, that in no case shall the
quantity returned by the distiller, with the quantity assessed as
deficit, be less than eighty percent of such capacity.
The system thus adopted was designed to prevent the secret
production of spirits and consequent evasion of the government tax.
And it seems well suited to accomplish this purpose; it at least
reduces the limits within which fraud can be practiced to twenty
percent of the capacity of the distillery. In view of the enormous
frauds previously practiced upon the government in rendering
accounts, this system cannot be justly charged with unnecessary
harshness. Everyone is advised in advance of the amount he will be
required to pay if he enters into the business of distilling
spirits, and every distiller must know the producing capacity of
his distillery. If he fail under these circumstances to produce the
amount for which by the law he will in any event be taxed if he
undertake to distil at all, he is not entitled to much
consideration.
It is suggested that as the distiller is required to make a
return of the spirits actually manufactured by him under oath, the
provision for a return of an amount equal to eighty percent of the
producing capacity of the distillery cannot be complied with where
a less amount has been produced. But we do not perceive any
difficulty in this respect, or any
Page 82 U. S. 121
difficulty in giving effect to both provisions. The distiller
should, as required, return under oath the true amount produced by
him, and where this is less than the eighty percent he should add
the difference, so as to obtain the amount for which the assessment
is to be made. He can state in his return both the actual product
of his distillery and the deficiency between that and the
assessable amount.
The law is not, in our judgment, subject to any constitutional
objection. The tax imposed upon the distiller is in the nature of
an excise, and the only limitation upon the power of Congress in
the imposition of taxes of this character is that they shall be
"uniform throughout the United States." The tax here is uniform in
its operation -- that is, it is assessed equally upon all
manufacturers of spirits, wherever they are. The law does not
establish one rule for one distiller and a different rule for
another, but the same rule for all alike.
It follows from these views that the court below erred in
overruling the demurrer of the plaintiffs to the third amended plea
of the defendants, which raised the question we have considered as
to the proper construction of the twentieth section of the act of
July, 1868.
Upon the second question presented, which relates to the
liability of the defendants on the bond in suit to reimburse the
United States the amount paid by them to the storekeeper placed in
charge of the warehouse of the distillers, our judgment is with the
defendants. The bond in suit was executed in January, 1869. The
fifteenth section of the Act of Congress of July 20, 1868, then in
force, required every distiller to provide a warehouse for the
storage of spirits manufactured by him, and declared that such
warehouse, when approved by the Commissioner of Internal Revenue,
on report of the collector, should be a bonded warehouse of the
United States and should be under the direction and control of the
collector of the district and in charge of the internal revenue
storekeeper assigned thereto by the commissioner. The fifty-second
section of the same act enacted
Page 82 U. S. 122
that the compensation of these storekeepers should be determined
by the commissioner and be paid by the United States. The
distillers in this case provided the warehouse directed, and the
Commissioner of Internal Revenue assigned a storekeeper to take
charge of it at a compensation of five dollars a day, and he
remained in charge of the warehouse from the 4th to the 25th of
March, 1869, inclusive, for which service he was entitled to one
hundred and ten dollars, and was paid that amount by the United
States. Subsequently to this, and on the 29th of March, 1869,
Congress passed a joint resolution supplying omissions in the
enrolment of certain appropriation acts, to which was annexed a
proviso that, after the passage of the resolution, the proprietors
of all internal revenue bonded warehouses should "reimburse to the
United States the expenses and salary of all storekeepers or other
officers in charge of such warehouses," and that the same should be
paid into the Treasury and accounted for like other public moneys.
The question is whether the official bond of the distillers and
their sureties in this case binds them to make reimbursement of
this money expended by the United States before the joint
resolution was passed. We are clear that this question must be
answered in the negative and on two grounds: 1st, because the joint
resolution only contemplates, in our judgment, the reimbursement of
expenses and salary paid after its passage, and 2d because if that
be not the true construction of the resolution, the reimbursement
to the United States of moneys paid by them to their own officers
or agents, in pursuance of a law in existence when the bond was
executed, is not a duty so connected with or naturally belonging to
the business of a distiller as to be within the reasonable
contemplation of the parties to the bond at the time of its
execution. The official bond of parties undoubtedly covers not
merely duties imposed by existing law, but duties belonging to, and
naturally connected with their office or business imposed by
subsequent law. But the new duties should have some relation to or
connection with such office or business, and not be disconnected
from and foreign to
Page 82 U. S. 123
both. It would be extending the liabilities of obligors on such
bonds beyond principle and precedent to hold them responsible for
the reimbursement of moneys paid by government to its own officers
or agents because, subsequent to their payment, government declares
that such reimbursement shall be made.
This case is distinguished from that of
United States v.
Powell, decided at the last term. [
Footnote 3] There, the moneys were expended by the United
States, and one of the bonds in suit was executed, after the
passage of the joint resolution.
It follows from these views that the ruling of the court below
in sustaining the demurrer of the defendants to the second count of
the declaration was correct.
Judgment reversed and the cause remanded for further
proceedings with leave to the defendants to plead anew to the first
count of the declaration.
NOTE. -- At the same time and in a similar way with the
preceding case was adjudged the case of
United States v. Van
Buskirk, in which the same points arose as in
United
States v. Singer.
[
Footnote 1]
15 Stat. at Large 133, 134.
[
Footnote 2]
16
ib. 52.
[
Footnote 3]
81 U. S. 14 Wall.
493.
