The provision in the sixth section of the Act of July 20, 1868,
as to notice of the place at which a distiller is to carry on his
business, is not matter of form, and when the distiller's bond,
following the notice, recites that a person is about to be the
distiller at one place, as
ex. gr., "at the corner of Hudson
Street and East Avenue, situate in the town of Canton," his
sureties are not liable for taxes in respect of business carried on
by him at another, as
ex. gr., "at the corner of Hudson and
Third Streets" in the same town, even though he have had no
distillery whatever at the first-named place, about four squares
from the last-named.
The United States sued Henry Boecker, principal, and C. Schorr
and F. Altevoght, his sureties, in a distiller's bond. The bond was
in the penal sum of $6,000, and conditioned that whereas the said
Henry
"is now, or intends, on and after the 4th day of May, 1869, to
be a distiller within the Second Collection District of the State
of Maryland, to-wit,
at the corner of Hudson Street and East
Avenue, situate in the Town of Canton, County of Baltimore,
and state aforesaid, now, if the said Henry shall in all respects
faithfully comply with all the provisions of law in relation to the
duties of distillers,"
&c., "then this obligation to be void, otherwise it shall
remain in full force."
It was proved upon the trial that Boecker was largely indebted
to the United States
"for taxes assessed against him in respect to his business of
distilling, carried on by him at his distillery
at the corner
of Hudson, and Third Streets, in the Town of Canton, for the
months of May, June, July, August,
Page 88 U. S. 653
September, October, November, and December, in the year 1869,
and that the said taxes remained unpaid."
It was further proved
"that no distillery at any other place was carried on by said
Boecker, and that there was not any distillery at the corner of
Hudson Street and East Avenue,"
and that the latter place was about four squares from the
former.
The defendants Schorr and Altevoght thereupon prayed the court
to instruct the jury that if they
"shall find from that there was not any distillery at the corner
of Hudson Boecker at the corner of Hudson Street and East Avenue, .
. . they would find their verdict for the defendants, although they
may find that said Boecker carried on a distillery at some other
place at Canton, and for his operations at which place he became
indebted in this suit."
This instruction was given. The United States excepted. The jury
found for the defendants, and judgment being entered accordingly,
the case was brought here.
The bond was taken under the Act of July 20, 1868. [
Footnote 1] Its provisions bearing upon
the subject are as follows:
"SECTION 1. Every proprietor or possessor of a still,
distillery, or distilling apparatus, and every person in any manner
interested in the use of any such still, distillery, or distilling
apparatus, shall be jointly and severally liable for the taxes
imposed by law on the distilled spirits produced therefrom, and the
tax shall be a first lien on the spirits distilled, the distillery
used for distilling the same, the stills, vessels, fixtures, and
the tools therein, on the lot or tract of and whereon the said
distillery is situated, together with any building thereon, from
the time said spirits are distilled until the said tax shall be
paid."
"SECTION 6. Every person engaged or intending to be engaged in
the business of a distiller or rectifier shall give notice in
writing, subscribed by him, to the assessor of the district within
which said business is to be carrier on, stating his name and place
of residence, and, if a company or firm, the name and place of
residence of each member thereof,
and the place where such
business is to be carried on, and whether of distilling or
rectifying,
Page 88 U. S. 654
and if such business be carried on in a city, the residence and
place of business shall be indicated by the name of the street and
the number of the building."
In the case of a rectifier, the notice must state "the precise
location of the premises where such business is to be carried on,"
and that the "establishment is not within six hundred feet of the
premises of any distillery," &c. In case of change in the
location &c., of a distillery, notice in writing is required to
be given to the assessor or his assistant within twenty-four hours.
Every notice required by this section shall be
"in such form, and shall contain such additional particulars, as
the Commissioner of Internal Revenue shall from time to time
prescribe. . . . Any person failing or refusing to give such notice
shall pay a penalty of $1,000, and, on conviction, shall be fined
not less than $100 nor more than $2,000, and any person giving a
false or fraudulent notice shall, on conviction, in addition to
such penalty or fine, be imprisoned not less than six months nor
more than two years."
Section seven prescribes the bond to be given. It is to have two
sureties, and one of the conditions required is that the
distiller
"will not suffer the lot or tract of land on which the
distillery stands, or any part thereof, or any of the distilling
apparatus, to be encumbered by mortgage, judgment, or other lien
during the time in which he shall carry on said business."
Section eight enacts that the bond is not to be approved unless
the distiller is the owner in fee, unencumbered, of the lot or
tract of land on which the distillery is situated or unless he
files with the assessor the written consent of the owner of the fee
and of any encumbrance, that the premises may be used for the
purpose of distilling spirits, subject to the provisions of law,
and stipulating that the lien of the United States for taxes and
penalties shall have priority over such encumbrance, and that in
case of forfeiture of the premises, the title shall vest in the
United States, discharged from such encumbrance, whatever it may
be.
Page 88 U. S. 655
Section twelve forbids the use of any still, boiler, or other
vessel for the purpose of distilling "within six hundred feet of
any premises authorized to be used for rectifying," and declares
that the offender against this, or either of the other prohibitions
contained in this section, "shall, or conviction, be fined $1,000,
and imprisoned for not less than six months nor more than two
years, in the discretion of the court."
MR. JUSTICE SWAYNE, having stated the case, delivered the
opinion of the Court, as follows:
The several provisions bearing on the subject, in the Act of
July 20, 1868, under which the bond sued on in this case was taken,
show the importance attached by the statute to the place as
designated in the notice required to be given by the distiller
before commencing business. Here the bond, it is to be presumed,
followed the notice. The designation of the place is made important
to the distiller, to his sureties, and to the government, in
several respects. If the place be not as designated in the notice
the distiller is outside of the law and liable to the penalties
denounced by the sixth section. If it be within six hundred feet of
premises authorized to be used for rectifying, he is liable to
suffer as prescribed in the eighth section. The premises having
been specified in the notice, the surety, before executing the
bond,
Page 88 U. S. 656
and the assessor, before taking it, may examine and determine
how far, in the event of liability on the part of the principal,
the property would be available as security for the government and
indemnity for the surety.
If the proposition of the counsel for the United States were
sustained, the designation of the place, as in this bond, instead
of affording a limitation and a safeguard to the surety, might
prove but a delusion and a snare, and subject him to liabilities
which he could not have foreseen, and to the hazard of which he
would not knowingly have exposed himself. In such cases, the United
States having a lien, the surety is entitled to the benefit of it.
He might be willing to bind himself where the lien was upon one
piece or parcel of property, and unwilling where it was upon
another. His ultimate immunity or liability might depend wholly
upon the value of the premises. He had the option to assume the
risk or not. This element may have controlled the exercise of his
election.
Viewing the subject in the light of these considerations, we
cannot assent to the view expressed by the counsel for the
government. On the contrary, we think this term of the bond is of
the essence of the contract. It is hardly less so than the amount
of the penalty. One defines the place where the liability must
arise, the other the maximum of that liability for which the
sureties stipulated to be bound. The former can no more be held
immaterial than the latter. No distillery having been carried on at
the place named, the contract never took effect. The event to which
it referred did not occur. There could consequently be no liability
within the letter or meaning of the contract. It was as if the
agreement had been for the good conduct of a clerk while in the
service of B., and the clerk never entered his service, but entered
into the service of another. Distilling begun and carried on
elsewhere was no more within the obligation of the sureties than if
it had been begun and carried on there or elsewhere by a person
other than Boecker. No other place than that named is, under the
circumstances of this case, within the letter, spirit, or meaning
of the bond.
Page 88 U. S. 657
The specification has no elasticity. It cannot be made to extend
to the locality where the distillery here in question was placed.
In
Miller v. Stewart, [
Footnote 2] this Court said:
"Nothing can be clearer, both upon principle and authority, than
the doctrine that the liability of a surety is not to be extended
by implication beyond the terms of his contract. To the extent, and
in the manner, and under the circumstances pointed out in his
obligation he is bound, and no further. . . . It is not sufficient
that he may sustain no injury by a change in the contract, or that
it may even be for his benefit. He has a right to stand upon the
very terms of his contract, and if he does not assent to any
variation of it and a variation is made, it is fatal."
To the same effect is
Ludlow v. Simond. [
Footnote 3] There is no more learned and
elaborate case upon the subject.
The leading English case is
Lord Arlington v. Merricke.
[
Footnote 4]
These authorities are conclusive of the case before us. It is
needless to analyze and discuss them. Others, without number,
maintaining the same principle, might be referred to. Many of those
most apposite to this case are cited in the argument of the counsel
for the defendants in error. The rules of the common law upon the
subject are as old as the Year Books. Those rules were doubtless
borrowed from the earlier Roman jurisprudence, known as the civil
law. They obtain throughout the states of our Union. The
adjudications everywhere are in substantial harmony.
The question here was not as to the law in the abstract, but as
to its application to the facts of the case.
A careful examination has satisfied us that the learned judge
upon the trial below instructed the jury correctly.
Judgment affirmed.
MR. JUSTICE BRADLEY (with whom concurred JUSTICES CLIFFORD,
DAVIS, and STRONG), dissenting:
I dissent from the opinion of the court in this case. It seems
to me that it has a tendency to cast every burden on
Page 88 U. S. 658
the government and to unduly relieve the sureties of the
distiller from responsibility for his acts. By the sixth section of
the Act of July 20, 1868, every person intending to be engaged in
the business of a distiller is to give notice in writing to the
assessor of the district within which such business is to be
carried on, stating his name and place of residence, and the place
where said business is to be carried on; and if in a city, the
residence and place of business is to be indicated by the name and
number of the street. He is then, by the seventh section, to
execute a bond with at least two sureties, to be approved by the
assessor. Such a notice and such a bond were given in this case.
The bond recited, in the preamble to the condition, the fact that
the distiller intended to be engaged in the business of a distiller
within the second collection district of the State of Maryland,
to-wit, at the corner of Hudson Street and East Avenue, situate in
the town of Canton, County of Baltimore. Then followed the terms of
the condition, namely, that the distiller should in all respects
faithfully comply with all the provisions of law &c., and not
suffer the lot on which the distillery stood to be encumbered
&c. Now the sureties contend that if the distillery is actually
established on a different lot from that suggested in the recital,
though only across the street, or even the adjoining lot on the
same side, they are not bound. It seems to me that it is for them,
and not for the government, to see that the distiller pursues his
business on the lot which he gives notice to the assessor that he
will use for that purpose. They are the guarantors of his conduct
to the government, and not the government to them. If, after
starting his distillery, he changes its location, or after giving
notice of the location he changes his mind and commences business
on another lot, the sureties ought to be bound for the regularity
of his conduct. If he should not carry on business in the
designated district, but in a different one, subject to the
jurisdiction of another assessor, to whom the bond was not given,
the result might be different. But if he establishes it in the same
district, the sureties ought to be liable. The condition is not
that
Page 88 U. S. 659
he shall comply with the law only on that particular lot. That
can only be claimed as an inference of law. But does such an
inference arise in this case? The fact that the distiller intended
to pursue his business on that lot is mentioned, it is true, in
accordance with his notice. But this is no part of the substance of
the condition; the substance is that he was going to engage in the
business of a distiller in that district, and the sureties
guaranteed his compliance with the law. Where a sheriff or marshal
is elected or appointed for a particular term, a bond given for the
faithful discharge of his duties relates by implication of law to
that term alone; and the sureties are not bound for a subsequent
term in case of his re-election or reappointment. This is so,
whether the condition recites the term of office for which the
appointment was made or not. This is the reasonable inference from
the whole transaction. But, in the case under consideration, the
implication of law and the reasonable inference is that the
sureties are bound for the conduct of their principal, though he
should change the location of his distillery to any other place
within the district. Otherwise the government is liable to be
subjected to great frauds. It is the duty of the sureties, rather
than that of the government officials, to see that no change is
made without the distiller's pursuing the formalities required by
the law. If it is made without those formalities, there would be
stronger reason for holding that fact of itself as constituting a
violation of the bond, than for holding that it discharges the
sureties from all obligation whatever.
[
Footnote 1]
Ch. 186, 15 Stat. at Large 125.
[
Footnote 2]
22 U. S. 9
Wheat. 703.
[
Footnote 3]
2 Caine's Cases 1.
[
Footnote 4]
2 Saunders 402.
