A revenue statute containing provisions of a highly penal nature
should be construed in a fair and reasonable manner and,
notwithstanding plain and unambiguous language, provisions for the
prevention of evasion of taxation, which naturally are applicable
to taxable articles only, will not be held applicable to articles
not taxable, wholly harmless, and not used for an illegal purpose,
in an improper manner, or in any way affording opportunities to
defraud the revenue.
The sale of a barrel of whiskey, stamped, branded and marked so
as to show that the contents have been duly inspected, and the tax
thereon paid, into which a nontaxable substance has been introduced
after such stamping, branding and marking by an officer of the
revenue, does not
Page 208 U. S. 199
authorize a seizure and forfeiture thereof to the United States
under the provisions of § 3455, Rev.Stat.
The phrase "anything else," as employed in § 3455,
Rev.Stat., does not include substances that are not in themselves
taxable under the law of the United States.
This case comes here on a certificate from the United States
Circuit Court of Appeals for the Eighth Circuit. The proceeding was
commenced in the District Court of the United States for the
Eastern District of Missouri, January 4, 1905, by the United States
district attorney for that district, who filed therein an amended
information praying for a decree of forfeiture, condemnation, and
sale of three barrels of whisky which had theretofore bees seized
by the collector of internal revenue and were still in his
possession and custody.
The sole ground for the seizure and forfeiture averred in the
information is contained in the following paragraph thereof, as
certified by the circuit court of appeals:
"That, prior to the times of said seizure of said barrels and
packages, they, and each of them, had been purchased and received
by A. Graf & Company, they then being stamped, branded, and
marked so as to show that the contents thereof were distilled
spirits of a certain proof, which had before then been duly
inspected by an officer of the revenue, to-wit, a United States
gauger. That afterwards, and before said seizure, said barrels and
packages, and each of them, and the contents therein then
contained, were sold to divers persons, each of the barrels and
packages at the time of the sales last aforesaid containing things
else than the contents which were therein when said barrels and
packages were so lawfully stamped, branded, and marked by said
officer of the revenue, as aforesaid, to-wit, burnt sugar, commonly
called caramel, which had been added to and placed in said spirits
before said last-mentioned sales thereof, in violation of §
3455 of the Revised Statutes of the United States, whereby and by
force of said statute said barrels and packages and all the
contents thereof became and are forfeited to the United States.
"
Page 208 U. S. 200
The claimant, A. Graf Distilling Company, demurred to the
information on the ground that it was insufficient in law to
authorize a decree of forfeiture.
The demurrer was sustained by the district court, and, the
United States declining to plead further, it was adjudged that the
barrels of whisky be restored to the claimant.
The ground of the decision of the district court was that the
purpose of § 3455 of the Revised Statutes is to prevent the
disposition of packages stamped, branded, or marked, when empty, or
when containing a taxable substance other than the contents which
were therein when they were so lawfully stamped, branded, or marked
by an officer of the revenue, and that burnt sugar, or caramel, not
being taxable, is not within the meaning of the phrase "anything
else," as contained in the section referred to.
The circuit court of appeals, in order to a correct
determination of the cause, desired the instruction of this Court
upon the following questions:
"1. Does the sale of a barrel of whisky, stamped, branded, and
marked so as to show that the contents have been duly inspected,
and that the tax thereon has been paid, into which burnt sugar, or
caramel, has been introduced after such stamping, branding, and
marking by an officer of the revenue, authorize a seizure and
forfeiture thereof to the United States under the provisions of
§ 3455 of the Revised Statutes of the United States?"
"2. Does the phrase 'anything else,' as employed in § 3455
of the Revised Statutes, include substances that are not in
themselves taxable under the laws of the United States?"
Section 3455 of the Revised Statutes, under which the seizure of
the whisky was made, is set forth in the margin.
*
Page 208 U. S. 203
MR. JUSTICE PECKHAM, after making the foregoing statement,
delivered the opinion of the Court.
Other phases of this controversy have appeared in the courts
below and are reported in 125 F. 52, and 129 F. 329. After the
reversal of the judgment of forfeiture and the granting of a new
trial by the circuit court of appeals, as disclosed by those
reports, the information was amended by making the allegations
contained in the foregoing statement, and the original averment as
to placing other
Page 208 U. S. 204
distilled spirits of a different quality in the barrels after
being stamped is not before us.
We are here called upon to determine what is the proper
construction of the language of the statute when it speaks of
selling a barrel and its contents after it has been properly
stamped, and which at the time of sale, contained anything else
than the contents which were therein when the barrel was stamped by
the revenue officer. Does the addition, after such stamping, of
burnt sugar, or caramel, placed in the barrel for the sole purpose
of coloring the contents (in this case whisky), and without intent
to defraud the revenue or any person, render the seller liable to
the penalty provided by the statute, and the barrel and its
contents liable to forfeiture? This coloring matter was not itself
taxable. There is no charge that it is unhealthy, and it is plain
that its use defrauds no one, within the legal meaning of that
term. The statute is not a health law, nor is its purpose to
prevent the coloring of whisky before its sale to the consumer. The
matter which was added to the contents of the barrel, after it was
stamped and branded, did not increase or decrease the amount of the
tax otherwise payable on the spirits so colored.
The government, however, contends that it is wholly immaterial
whether the coloring matter added is not itself taxable; it is,
within the terms of the statute, something "else than the contents
which were" in the barrel when it was lawfully stamped by the
officer of the revenue; and, if the person who adds the coloring
matter subsequently sells the barrel and contents, such act
subjects them to forfeiture, and renders the person making the sale
subject to the penalty named in the first part of the section. The
counsel for the government insists that there is no room for
construction other than such as the plain language of the statute
calls for, and it is contended that to hold otherwise destroys the
statute and opens the door to fraud which is not easy to detect,
and which the statute was intended to prevent. In a very careful
review of the various provisions of the internal revenue statute,
counsel
Page 208 U. S. 205
for the government has called attention to many acts which are
forbidden and which would seem to be innocent, but which were,
nevertheless, thought to be of such a character as to open the door
for fraud upon the revenue, and hence it is argued that this
addition of coloring matter was an act which, although it might
seem to be innocent in itself, yet nevertheless comes within the
plain prohibition of this section, and effect must be given to that
prohibition, because it may tend to prevent some subsequent fraud,
however harsh or unreasonable the provision might otherwise seem to
be. We must first, however, be satisfied that this alleged total,
absolute, and unconditional prohibition was the real intention of
Congress, to be gathered from the language of the section when read
in connection with the language of the whole statute. There is no
doubt that many of its provisions are harsh beyond anything known
heretofore in our history (
United States v. Ulrici, 3
Dill. 532, 539), and yet we cannot persuade ourselves that the act
proved in this case comes within the law.
The section is one of many dealing with the subject of
collecting a revenue from the taxation of the articles therein
mentioned and in the manner therein provided. The aim of the whole
statute is to make all of the taxable articles actually pay the
tax, and to that end it prohibits those acts which might possibly
lead to an evasion of the payment of the tax due upon any taxable
article. When, therefore, in the course of the many provisions for
collecting the tax and for preventing any evasion of its due
payment the statute prohibits the putting of anything else in the
barrel or package, etc., after it has been branded or stamped, it
seems to us the natural meaning of the language limits the addition
to anything of a taxable nature, and does not include an article
which is not taxable, is wholly harmless, and added for a purpose
not illegal or is itself improper.
We concur, of course, in the rule which has been upheld in this
Court, that a statute like this one, for the raising of a revenue,
even when accompanied by provisions of a very
Page 208 U. S. 206
highly penal nature, is still to be construed as a whole and in
a fair and reasonable manner, and not strictly in favor of a
defendant.
United States v. Stowell, 133 U. S.
1. Construed under this rule, we are unable to conclude
that the section applies to this case. The language used, when
considered in connection with the whole statute, is not so plain as
to preclude the application of those general rules of construction
of statutes which frequently interpret language in accordance with
what seems to be the real meaning of the legislature, although not
in exact and literal obedience to the wording of the law.
We do not think that the opportunities for perpetrating a fraud
upon the revenue are in any way extended by reason of the addition
in question. A liquor dealer having a properly stamped barrel in
his possession might violate the law and empty the contents of the
barrel without destroying the stamps, and might then dispose of the
barrel, so stamped, to an illicit distiller, who might then
endeavor to perpetrate a fraud upon the revenue by filling the
barrel with nontax paid spirits, but we do not see that the prior
addition, as mentioned, of coloring matter to the contents of the
barrel, would aid him in his attempt, nor would the absence of such
matter tend in any degree to its prevention or detection. It is not
the coloring matter which was added to the contents of the barrel
before they were emptied that would, in such case, aid the
attempted fraud, for such coloring matter would probably have been
emptied with the other contents of the barrel. The opportunities
for fraud commenced at the time the liquor dealer emptied the
contents of the barrel without destroying the stamp, and that
opportunity was not in the slightest degree affected by the
addition, and the attempted fraud of the distiller is not made more
easy of accomplishment because of such addition. We cannot see,
therefore, that any reasonable purpose could be attributed to
Congress in prohibiting an addition, such as is charged in this
case, and we cannot construe the section on the mistaken theory
that, though the act was
Page 208 U. S. 207
really innocent, yet it might aid in the evasion of payment of
some portion of a tax, and hence must be regarded as
prohibited.
The statute in question, although there has been no intent to
defraud, makes a person violating it liable to the lighter penalty,
while, if the intent to defraud be alleged, the article is still
liable to forfeiture and the person may be fined a much larger sum
and also imprisoned. On this ground, it is contended the statute is
intended to meet just such a case as the one before us, where there
was no intent to defraud and where there was no addition of
anything which was itself taxable, but where, nevertheless,
something else had been added after the stamping and branding which
was not a part of the contents of the barrel when it was so
stamped. It is therefore urged that, as the section provides for a
forfeiture of the article and a fine upon the person guilty of the
addition, even when no intent to defraud is alleged or proved, it
emasculates the section to hold that the addition must be something
which is itself taxable. We do not think so. When there has been an
addition of anything that was taxable, the statute applies,
although there was no intention to defraud, while, if there were
such intention, a much heavier penalty is imposed. The two portions
of the section are distinct, and each may be enforced, however
harsh the first may appear to be, when imposed in a case where the
action was really without any intention to defraud the revenue or
any person.
It has been held under other sections of this act, somewhat
similar, that the addition of water to the contents of a barrel or
package is no ground of forfeiture. We do not say that the language
is exactly the same, but only that it is somewhat similar.
United States v. 32 Barrels of Distilled Spirits, 5 F.
188;
Three Packages of Distilled Spirits, 14 F. 569;
United States v. Bardenheier, 49 F. 846, 848;
United
States ex Rel. United States Attorney v. Nine Casks & Packages
of Distilled Spirits, 51 F. 191. Reference is made to them in
the opinion in this case in 125 F.,
supra.
Page 208 U. S. 208
We think the reasonable construction of this statute requires
that the questions submitted should be answered in the negative. It
will be so certified.
*
"SEC. 3455. Whenever any person sells, gives, purchases, or
receives any box, barrel, bag, vessel, package, wrapper, cover, or
envelope of any kind, stamped, branded, or marked in any way so as
to show that the contents or intended contents thereof have been
duly inspected, or that the tax thereon has been paid, or that any
provision of the internal revenue laws has been complied with,
whether such stamping, branding, or marking may have been a duly
authorized act or may be false and counterfeit, or otherwise
without authority of law, said box, barrel, bag, vessel, package,
wrapper, cover, or envelope being empty, or containing anything
else than the contents which were therein when said articles had
been so lawfully stamped, branded, or marked by an officer of the
revenue, he shall be liable to a penalty of not less than fifty nor
more than five hundred dollars. And every person who makes,
manufactures, or produces any box, barrel, bag, vessel, package,
wrapper, cover, or envelope, stamped, branded, or marked, as above
described, or stamps, brands, or marks the same, as hereinbefore
recited, shall be liable to penalty as before provided in this
section. And every person who violates the foregoing provisions of
this section, with intent to defraud the revenue, or to defraud any
person, shall be liable to a fine of not less than one thousand nor
more than five thousand dollars, or to imprisonment for not less
than six months nor more than five years, or to both at the
discretion of the court. And all articles sold, given, purchased,
received, made, manufactured, produced, branded, stamped, or marked
in violation of the provisions of this section, and all their
contents, shall be forfeited to the United States."
