1. Where the owner of a distillery and other property connected
therewith leased them for the purpose of distilling, the acts or
omissions of the lessee in carrying on the business of distilling
while he was in possession, and with intent to defraud the revenue,
although they are unknown to the owner, subject the distillery and
such other property to forfeiture to the United Status.
2. The declarations of the lessee, voluntarily made subsequent
to his arrest, are competent evidence against the owner to show the
fraudulent intent of the lessee, as are also books, letters,
memoranda, and bills of lading found on the premises in a room
occupied by the latter.
The facts are stated in the opinion of the Court.
Page 96 U. S. 396
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Judicial proceedings
in rem to enforce a forfeiture
cannot in general be properly instituted until the property
inculpated is previously seized by the executive authority, as it
is the preliminary seizure of the property that brings the same
within the reach of such legal process.
The
Schooner Anne, 9 Cranch 289.
Due executive seizure was made in this case of the distillery,
and of the real and personal property used in connection with the
same, and the information in due form was subsequently filed
praying for process, and that the property seized should be
condemned by the definitive sentence of the court. Pursuant to the
prayer of the information, the record shows that process of
monition was issued in due form and that it was duly served by the
marshal. Sixteen causes of forfeiture were alleged in the
information, all of which, except the first three, were abandoned
at the trial.
Sufficient appears to show that the claimant was the owner of
the distillery and all the other property seized, and that he,
prior to the alleged causes of seizure and forfeiture, leased the
property to the party in possession of the same at the time the
alleged acts of forfeiture were perpetrated by the lessee and
occupant. Three of the alleged causes of forfeiture only need be
noticed, and they are in substance and effect as follows:
1. That the lessee, occupant, and operator of the distillery
neglected and refused to keep the books required by law, and make
the required entries in the same; that he made false entries in the
books kept in the distillery, and that he omitted to enter in the
same the facts required by law, with intent to defraud the revenue,
and to conceal from the revenue officers facts and particulars
required to be stated and entered in such books, with like intent
to defraud the revenue; and that he refused to produce the books
kept in the distillery when thereto requested by the revenue
officers, contrary to the statute in such case made and provided.
15 Stat. 132.
Page 96 U. S. 397
2. That the distillery, the distilled spirits, and distilling
apparatus seized were owned by the lessee, occupant, and operator,
and some other person unknown, and were intended to be used by the
owners in the business of a distiller, in a manner to defraud the
United States, contrary to the act of Congress.
Id.,
142.
3. That the property seized was used by its owners to defraud
the United States of the tax to which the spirits distilled were by
law subject, and that the United States had been thereby defrauded
of a part of such tax in violation of law.
Id., 59.
Service was made and the owner and lessor of the distillery and
other property seized appeared and was permitted by leave of court
to make defense. His defense consists of an averment that he has no
knowledge or information upon the subject of the information, and
of a denial of each and every one of the charges made against the
property seized. Issue being joined, the parties went to trial, and
the verdict and decree of condemnation were in favor of the
plaintiffs. Exceptions were duly filed by the claimant, and he sued
out a writ of error and removed the cause into this Court.
Matters set forth in the bill of exceptions which are not
assigned for error will not be reexamined.
Four errors are assigned, in substance and effect as
follows:
1. That the court erred in admitting in evidence the statements
of the lessee of the property, as contained in the first paragraph
of the bill of exceptions.
2. That the court erred in admitting the evidence set forth in
that part of the bill of exceptions denominated paragraphs 2 and
3.
3. That the court erred in charging the jury that it was
unnecessary for them to find that the claimant was implicated in
the frauds of the lessee and operator of the distillery or that he
had any knowledge of his fraudulent acts or omissions. That if the
jury find that the claimant leased the property to the occupant and
operator for the purposes of a distillery, and that the lessee
committed the alleged frauds, the government is entitled to a
verdict, even though the jury should be of opinion that the
claimant was ignorant of the lessee's fraudulent acts and
omissions.
4. That the court erred in including the real estate in the
decree of condemnation or forfeiture.
Page 96 U. S. 398
Instructions not included in the assignment of errors were given
by the court to the jury, which deserve to be briefly noticed
before proceeding to examine the rulings and instruction of the
court, which, it is insisted, present a sufficient cause to reverse
the judgment.
Requests for instructions having been presented by the claimant,
and the same having been refused, the court, of its own motion,
instructed the jury to the effect that if the evidence satisfied
the jury that the lessee and occupant of the distillery made sales
of spirits produced by him which he omitted or neglected to enter
in his books, with intent to defraud the government or with intent
to conceal from the officers the fact of such sales, then he would
be guilty, and it would be their duty to find for the plaintiffs
under the first article of the information; that the mere absence
of that party from the state or the country was not of itself
evidence upon which they could base a verdict, but if they found
that he absconded and fled from justice when detected and charged
with the frauds alleged against him in the case, that that fact
might be considered by the jury, with other evidence, as tending to
prove his fraudulent intents and guilt; that the information is a
proceeding to condemn and forfeit to the United States certain
property, both real and personal, for alleged offenses against the
revenue law; that the property in question consists of a
distillery, with its fixtures and apparatus, and the ground within
the enclosure on which the distillery stands, together with the
various articles of personal property enumerated in the
information, and that the present defendant is the claimant of the
property contesting the grounds of forfeiture assigned by the
government; that the gist of the proceeding consists in the alleged
fraudulent acts and omissions of the lessee and occupant of the
distillery, or his agent and employees, and whether the charges
against him be positive acts done by him or omissions to do what
the law requires of him as a distiller, fraud is a necessary
element in the case, without which there can be no forfeiture.
Evidence of the statements and declarations of the lessee and
occupant of the distillery, voluntarily made while under arrest and
afterwards, were offered by the district attorney as tending to
show his fraudulent intent in the doing and omitting to do
Page 96 U. S. 399
certain acts assigned in the information as causes of
forfeiture, and the ruling of the court in admitting the same,
subject to objection by the claimant, constitutes the first
assignment of error.
Throughout the trial, the claimant appears to have assumed as
the theory of the defense to the information that he was the
accused party, and that he was on trial for a criminal offense
created and defined by an act of Congress. Instead of that, the
forfeiture claimed in the information is aimed against the
distillery, and the real and personal property used in connection
with the same, including the real estate used to facilitate the
operation of distilling, and which is conductive to that end as the
means of ingress or egress, and all personal property of the kind
found there, together with the distilled spirits and stills
wherever found.
Nor is it necessary that the owner of the property should have
knowledge that the lessee and distiller was committing fraud on the
public revenue in order that the information of forfeiture should
be maintained. If he knowingly suffers and permits his land to be
used as a site for a distillery, the law places him on the same
footing as if he were the distiller and the owner of the lot where
the distillery is located, and, if fraud is shown in such a case,
the land is forfeited just as if the distiller were the owner.
Burroughs, Taxation, 67.
Cases arise, undoubtedly, where the judgment of forfeiture
necessarily carries with it, and as part of the sentence, a
conviction and judgment against the person for the crime committed,
and in that state of the pleadings it is clear that the proceeding
is one of a criminal character; but where the information, as in
this case, does not involve the personal conviction of the
wrongdoer for the offense charged, the remedy of forfeiture claimed
is plainly one of a civil nature, as the conviction of the
wrongdoer must be obtained, if at all, in another and wholly
independent proceeding. 1 Bish.Crim.Law (6th ed.), sec. 835, note
1;
United States v. Three Tons of Coal, 6 Biss. 371.
Forfeitures, in many cases of felony, did not attach at common
law where the proceeding was
in rem until the offender was
convicted, as the crown, Judge Story says, had no right to
Page 96 U. S. 400
the goods and chattels of the felon without producing the record
of his conviction; but that rule, as the same learned magistrate
says, was never applied to seizures and forfeitures created by
statute
in rem, cognizable on the revenue side of the
Exchequer Court, for the reason that the thing in such a case is
primarily considered as the offender, or rather that the offense is
attached primarily to the thing, whether the offense be
malum
prohibitum or
malum in se, and he adds that the same
principles apply to proceeding
in rem in the admiralty.
The Palmyra, 12
Wheat. 1.
Corresponding views were expressed by the same learned judge in
a case decided at a much later period, in which he remarked that
the act of Congress in question made no exception whatsoever,
whether the alleged aggression was with or without the cooperation
of the owners. Nor, said the judge in that case, is there anything
new in a provision of that sort. It is not an uncommon course in
the admiralty, acting under the law of nations, to treat the vessel
in which or by which, or by the master or crew thereof, a wrong or
offense has been committed, as the offender, without any regard
whatsoever to the personal misconduct or responsibility of the
owner thereof, the necessity of the case requiring it as the only
adequate means of suppressing the offense or wrong, or of insuring
an indemnity to the injured party.
United
States v. Brig Malek Adhel, 2 How. 210.
Beyond all doubt, the act of Congress in question attaches the
offense to the distillery, and the real and personal property
connected with the same, the words of the act defining the offense
being that if any such false entry shall be made in said books or
any entry shall be omitted therefrom with intent to defraud or to
conceal from the revenue officers any fact or particular required
to be stated and entered in either of said books or to mislead the
revenue officers with reference thereto, or if any distiller shall
omit or refuse to produce either of said books or shall cancel,
obliterate, or destroy any part of either of said books or any
entry therein with intent to defraud, or shall permit the same to
be done, or such books or either of them be not produced when
required by any revenue officer -- the distillery, distilling
apparatus, and the lot or tract of land
Page 96 U. S. 401
on which it stands, and all personal property used in the
business, shall be forfeited to the United States. 15 Stat.
133.
Nothing can be plainer in legal decision than the proposition
that the offense therein defined is attached primarily to the
distillery and the real and personal property used in connection
with the same, without any regard whatsoever to the personal
misconduct or responsibility of the owner beyond what necessarily
arises from the fact that he leased the property to the distiller
and suffered it to be occupied and used by the lessee as a
distillery.
Cases often arise where the property of the owner is forfeited
on account of the fraud, neglect, or misconduct of those entrusted
with its possession, care, and custody, even when the owner is
otherwise without fault, and Judge Story remarked, in the case last
cited, that the doctrine is familiarly applied to cases of
smuggling and other misconduct under the revenue laws, as well as
to other cases arising under the embargo and nonintercourse acts of
Congress.
Controversies of the kind have arisen in our judicial history,
and it has always been held in such cases that the acts of the
master and crew bind the interest of the owner of the ship, whether
he be innocent or guilty, and that in sending the ship to sea under
their charge, he impliedly submits to whatever the law denounces as
a forfeiture attached to the ship by means of their unlawful or
wanton misconduct.
Analogous views were expressed by Marshall, C.J., at a much
earlier period.
United States v. The Little Charles, 1
Brock. 347. Objection was there taken to the admissibility of the
report and manifest made by the master of the schooner when she
arrived at her port of destination, the schooner having been
subsequently seized for an alleged violation of the embargo laws.
Two grounds were assigned in support of the objection: 1. that the
paper offered was not accompanied by the entry; 2. that the
declaration of the master, if admitted in evidence, would affect
the owner in a criminal case. Both were overruled. Reference will
only be made to the reasons given for the second ruling.
Neither confessions nor admissions of the master, it was
contended, were admissible to prove the guilt of the owner, and
Page 96 U. S. 402
the Chief Justice added that if the case was such as was
supposed in argument, the objection would be entitled to great
weight. But he remarked that the proceeding was one against the
vessel for an offense committed by the vessel, which is not less an
offense and does not the less subject her to forfeiture because it
was committed without the authority and against the will of the
owner. It is held, said the Chief Justice, that inanimate matter
can commit no offense. But the ship, as a body, is animated and put
in action by the crew, who are guided by the master. The vessel
acts and speaks by the master; she reports herself by the master.
It is therefore not unreasonable that the vessel should be affected
by this report.
Apply that rule to the case before the Court and it follows that
the distillery and the real and personal property used in
connection with the same must be considered as affected by the
unlawful doings and omissions of the lessee and occupant of the
property as a distillery, subject to the rules and regulations
prescribed by Congress.
United States v. Distillery, 2
Abb. (U.S.) 192.
Suppose that is so, still it is insisted by the claimant that
the declaration of the lessee and occupant of the distillery made
subsequent to his arrest were not competent evidence in the case;
but the Court is entirely of a different opinion, as the arrest of
the lessee did not to any extent affect or change his relations to
the property or to his lessor. If his lease was a subsisting one at
the time of his arrest, his relations to the property and the owner
of the same continued unaffected by that occurrence, nor is there
anything in the authority cited by the claimant which, when
properly understood, asserts any different doctrine.
Statements made by the master of a ship as to what occurred
during the voyage, tending to inculpate the owner in the guilty
enterprise of the ship, are not admissible in evidence against the
owner where he is charged with a crime if the statements were made
subsequent to the time when he ceased to be master and the common
enterprise had come to an end; but the rule has no application
here, as the arrest of the lessee did not abrogate the lease, and
if the prosecution had failed, he might have
Page 96 U. S. 403
continued to operate the distillery in spite of the accusation
contained in the information.
2. Certain private books, letters, and memoranda found in an
open box in a room occupied by the lessee and operator of the
distillery as a private office were also offered in evidence, to
the admissibility of which the claimant objected; but inasmuch as
it appears that they were the books, letters, and papers of the
person in whose office they were found, and that they related in
part to the business of the distillery, it requires no argument to
show that the objection of the claimant was without merit.
Other letters and bills of lading found by the marshal in an
open box in the room occupied by the same party as a private office
were also introduced in evidence subject to the claimant's
objection, which, it appears, were addressed to the operator of the
distillery, and that they tended to prove the shipment by the
distiller to the firm from which they came of large quantities of
high wines, and that the firm rendered accounts to the shipper of
the sales as commission merchants.
Found as the papers were in the office of the distiller, it is
too clear for argument that they were properly admitted unless it
be assumed that it was the claimant, and not the distillery and the
property connected with the same, who was on trial.
3. Much discussion of the remaining error assigned will not be
required, as it presents the same question in principle as that
involved in the first assignment of error, which has already been
sufficiently considered.
None of the material facts are in dispute, nor were they to any
considerable extent at the trial. Beyond controversy, the title of
the premises and property was in the claimant, and it is equally
certain that he leased the same to the lessee for the purposes of a
distillery, and with the knowledge that the lessee intended to use
the premises to carry on that business, and that he did use the
same for that purpose.
Fraud is not imputed to the owner of the premises, but the
evidence and the verdict of the jury warrant the conclusion that
the frauds charged in the information were satisfactorily proved,
from which it follows that the decree of condemnation
Page 96 U. S. 404
is correct, if it be true, as heretofore explained, that it was
the property and not the claimant that was put to trial under the
pleadings; and we are also of the opinion that the theory adopted
by the court below, that if the lessee of the premises and the
operator of the distillery committed the alleged frauds, the
government was entitled to a verdict even though the jury were of
the opinion that the claimant was ignorant of the fraudulent acts
or omissions of the distiller.
Viewed in that light, the legal conclusion must be that the
unlawful acts of the distiller bind the owner of the property in
respect to the management of the same as much as if they were
committed by the owner himself. Power to that effect the law vests
in him by virtue of his lease, and if he abuses his trust, it is a
matter to be settled between him and his lessor; but the acts of
violation as to the penal consequences to the property are to be
considered just the same as if they were the acts of the owner.
The Vrouw Judith, 1 C.Rob. 150;
United States v. The
Distillery at Spring Valley, 11 Blatchf. 255;
Same v. The
Reindeer, 2 Cliff. 57;
Same v. Nineteen Hundred and
Sixty Bags of Coffee, 8 Cranch 398;
Mitchell v.
Torup, Parker 227.
Examined in the light of these suggestions, as the case should
be, it is clear that there is no error in the record.
Judgment affirmed.