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engine or other machinery connected therewith, and all empty barrels, and all grain or other material suitable for distillation, shall, under the direction of the court in which the forfeiture is recovered, be sold at public auction, and the proceeds thereof, after deducting the expenses of sale, shall be disposed of according to law. And all spirits or spirituous liquors which may be forfeited under the provisions of this Title, unless herein otherwise provided, shall be disposed of by the Commissioner of Internal Revenue as the Secretary of the Treasury may direct. [R. S.]
Act of July 13, 1866, ch. 184, 14 Stat. L. or consent. U. S. 1. Two Barrels Whiskey, 151.
(C. C. A. 1899) 96 Fed. Rep. 479. Offense committed by bailee. Mules and Innocent purchaser. Where the forfeiture a wagon, hired at a certain sum per day for is made absolute by statute the decree of the purpose of hauling produce to market, condemnation when entered relates back to are forfeited when employed by the bailee in the time of the commission of the wrongful the removal of a package of spirituous liquors acts, and takes date from the wrongful acts in violation of law, though the owner had no and not from the date of the sentence or deknowledge or information that his property cree, and it is not in the power of the offender so hired for a lawful purpose would be em to defeat the forfeiture by any subsequent ployed in removing the package of spirits in transfer of the property even to a bona fide violation of law. U. S. 1. Two Bay Mules, purchaser for value without notice of the (1888) 36 Fed. Rep. 84. See also U. Š. 1. Two wrongful acts done and committed by the Horses, (1878) 9 Ben. (U. S.) 529.
former owner. Henderson's Distilled Spirits, Rights of mortgagee. A horse, mule, and (1871) 14 Wall. (U. S.) 56. See also Pilcher wagon, used for hauling two barrels of un 1'. Faircloth, (1902) 135 Ala. 311; U. S. t. 372 stamped whiskey, were seized, and a libel of Pipes Distilled Spirits, (1879) 5 Sawy. _(U. information was filed praying a decree of for S.) 421. But see U. S. 17. One Hundred Barfeiture under this section. Under the law of rels Spirits, (1870) 2 Abb. (U. S.) 305. the state, mortgagee, after condition A judgment of acquittal on a criminal inbroken, is entitled to have the possession of dictment is a bar to an information brought the property, and the legal title is in him, for forfeiture of the property seized, when and as to his interest in the property it was the fraudulent acts and attempts and intents held that the action could not be maintained to defraud, alleged in the prior criminal inwhen it appeared that such mortgagee was formation, and covered by the verdict and innocent of any intention to violate the rev judgment of acquittal, embraced all of the enue law, and that the property was in the acts, attempts, and intents averred in the inpossession of another without his knowledge formation in rem. Colley r. U. S., (1886) 116
U. S. 436.
Sec. 3451. [Fraudulently crecuting documents required by internal-revenue laws — penalty.] Every person who simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the internal-revenue laws, or by any regulation made in pursuance thereof, or who procures the same to be falsely or fraudulently executed, or who advises, aids in, or connives at such execution thereof, shall be imprisoned for a term not less than one year nor more than five years; and the property to which such false or fraudulent instrument relates shall be forfeited. [R. S.]
Act of June 20, 1868, ch. 186, 15 Stat. L. must have heen made in consequence of care165.
lessness or design, and the defendants are A forfeiture includes the spirits described bound to see that the duty imposed by the in a false form of return, and is not limited statute is fully performed, and if, through to those which could be unlawfully placed the carelessness or neglect of the employee, upon the market by means of its false char it is not performed, they are responsible. If acter. U. S. l'. One Hundred and Two Pack the making of the false notices was purely ages Distilled Spirits, (1876) 27 Fed. Cas. No. accidental, the defendants should not be held 15,944.
responsible. U. S. 1. Amann, (1876) 24 Fed. Innocent purchaser. -- The right of the gov Cas. No. 14,438. ernment to a forfeiture under this section Criminal conviction bar to forfeiture. — A cannot be defeated by a transfer of the prop conviction of a stockholder of a corporation, erty to an innocent purchaser for value. on an indictment under this section, is a bar Thacher v. U. S., (1881) 103 U. S. 679. to a civil action for forfeiture, brought under
The fact that a competent bookkeeper was sections 3257, 3281, 3305, 3453, and 3456, placed in charge of the business to prepare based on the same fraudulent acts and omisnotices of rectification, does not exonerate sions that were introduced in proof in support the defendants indicted for executing false of the indictment, and such plea in bar may notices of rectification. The false notices be interposed by any one interested in the
property. The government has the right to proceed by civil action to enforce the forfeiture of the property because of the frauds, or to prosecute the parties engaged in it
criminally; but for the same acts it could not do both. l'. S. 1. One Distillery, (1890) 43 Fed. Rep. 846, affirmed on a question of pleading, (1899) 174 U. S. 149.
Sec. 3452. [Having property in possession with intent to sell in fraud of law, or to evade taxes — penalty.] Every person who shall have in his custody or possession any goods, wares, merchandise, articles, or objects on which taxes are imposed by law, for the purpose of selling the same in fraud of the internalrevenue laws, or with design to avoid payment of the taxes imposed thereon, shall be liable to a penalty of five hundred dollars or not less than double the amount of taxes fraudulently attempted to be evaded. (R. S.]
Act of June 30, 1864, ch. 173, 13 Stat. L. The penalty is in the alternative, and when 240; Act of July 13, 1866, ch. 184, 14 Stat. the claim is for one penalty the verdict of the L. 112.
jury must be for that penalty, and nothing An intent to evade the payment of the tax more or less. U. S. 1'. Grotenkemper, (1867) must appear to the satisfaction of the jury. 2 Bond (U. S.) 140. U. S. 1. Grotenkemper, (1867) 2 Bond (U. S.) 140.
Sec. 3453. [Seizure of property found in possession in fraud of revenue laws.] All goods, wares, merchandise, articles, or objects, on which taxes are imposed, which shall be found in the possession, or custody, or within the control of any person, for the purpose of being sold or removed by him in fraud of the internal-revenue laws, or with design to avoid payment of said taxes, may be seized by the collector or deputy collector of the proper district, or by such other collector or deputy collector as may be specially authorized by the Commissioner of Internal Revenue for that purpose, and shall be forfeited to the United States. And all raw materials found in the possession of any person intending to manufacture the same into articles of a kind subject to tax for the purpose of fraudulently selling such manufactured articles, or with design to evade the payment of said tax; and all tools, implements, instruments, and personal property whatsoever, in the place or building, or within any yard or inclosure where such articles or raw materials are found, may also be seized by any collector or deputy collector, as aforesaid, and shall be forfeited as aforesaid. The proceedings to enforce such forfeitures shall be in the nature of a proceeding in rem in the circuit court or district court of the United States for the district where such seizure is made. [R. S.]
Act of June 30, 1864, ch. 173, 13 Stat. L. any overt act in respect of it. U. S. v. Quan240; Act of July 13, 1866, ch. 184, 14 Stat. tity of Tobacco, (1872) 6 Ben. (U. S.) 80. L. 1ll.
See Chaffee 1. U. S., (1873) 18 Wall. (U. S.) This statute embraces three classes of 536. property: first, all goods, articles, or ob Distilled spirits are included in this statjects on which taxes are imposed by law, ute. U. S. v. One Still, (1867) 5 Blatchf. (U. found in the possession or within the control S.) 403; Distilled Spirits, (1870) 11 Wall. of any person, for the purpose of being sold (U. S.) 364; U. S. 1. 18 Barrels High Wines, or removed in fraud of the internal revenue (1871) 8 Blatchf. (U. S.) 475. laws, or with intent to avoid payment of the Spirits, while in the distillery warehouse, taxes; second, all raw materials found in like are in the possession of the owner of the dispossession or control, intended to be manu tillery within the meaning of this statute. factured into articles of a kind subject to U. S. v. 36 Barrels High Wines, (1870) 7 tax, with the intent to sell the same in fraud Blatchf. (U. S.) 459; U. S. 1. 18 Barrels High of the revenue, or to evade the payment of Wines, (1871) 8 Blatchf. (U. S.) 475. the tax; and third, all personal property Property in the possession of an innocent whatsoever found in the place or building, or purchaser for value is not protected from forwithin the yard or enclosure, where the arti feiture if fraud of the manufacturer is cles or raw materials previously referred to proved. U. S. . Eight Hundred Caddies Towere found or seized.” U. S. v. One Still, bacco, (1869) 2 Bond (U. S.) 309. See also (1867) 5 Blatchf. (U. S.) 403.
U. S. 1. Sixty-Four Barrels Distilled Spirits, The corpus delirti is the possession of the (1870) 3 Cliff. (U. S.) 308. specified property, with the specified fraud Raw materials. There is no apparent inulent purpose or design, without the doing of tention to make the provision in regard to
raw materials dependent upon, and connected eral words “personal property," which folwith, the provision in regard to taxable ar low, and the statute is read as forfeiting the ticles, and to make a forfeiture of the raw tools, implements, instruments, and personal materials depend upon their being seized in property connected with the illegal business, the possession of a person in whose posses and found within the building, yard, or ension forfeitable taxable articles are found. closure where that business is carried on. U. " The language manifests a plain intention S. V. Thirty-three Barrels Spirits, (1868) 1 that all raw materials found in the posses Lowell (U. S.) 239, (1868) 1 Abb. (U. S.) 311. sion of any person who intends to manufac See also U. S. 1. 36 Barrels High Wines, ture them into articles of a kind subject to (1870) 7 Blatchf. (U. S.) 459. tax, for the purpose of fraudulently selling The tools, etc., found and seized in the such manufactured articles, or with design to place and enclosure where the distilled spirits evade the payment of taxes thereon, shall be were found and seized, were, upon avermenis seized and forfeited, without reference to the in an information following the language of question whether manufactured articles of a the statute, subject to seizure and forfeiture. kind subject to tax are or are not found in U. S. 1. 17 Empty Barrels, (1875) 3 Dill. (l'. the possession of the same person." U. S. 1. S.) 285. Quantity of Tobacco, (1872) 6 Ben. (U. S.) 83. Alatch-making machinery, which could be
By this statute “ Congress intended to for removed without damage to the building, is feit taxable articles, when held, especially by included within the term tools, implements, their manufacturer, for the purpose of being instruments." U. S. 1. Friction- Match Masold or removed in fraud of the revenue laws, chinery, 1 Hask. (U. S.) 32, (1866) 25 Fed. or with design to avoid the payment of the Cas. No. 15,167. But see L. S. 1. Spring Valtaxes which would accrue thereon by reason ley Distillery, (1873) 11 Blachf. (U. S.) 255. of such sale or removal, and also to forfeit A water-cheel is not personal property, all raw materials when held by a person in subject to seizure under this statute, but a tending to manufacture them into taxable part of the realty. U. S. v. Friction-Match articles for the purpose of fraudulently sell Machinery, 1 Hask. (U. S.) 32, (1866) 25 Fed. ing such articles, or with design to evade the (as. No. 15,167. payment of the taxes which would accrue A barge fitted up for and actually engaged thereon when sold or removed, and also to in the business of illicitly manufacturing forfeit all personal property found in the spirits in violation of the internal revenue place where such articles, or any such raw laws is not an object or thing upon which materials, are found; and that possession, tax is imposed, nor is it a tool, implement, with the specified purpose, design, or intent, or instrument, within the meaning of this is all that is necessary to work the for statute. Tracey 1: Corse, (1874) 58 N. Y. 149. feiture.” U. S. 1. Quantity of Tobacco, Tiogs and pigs kept in a shed or pen which (1872) 6 Ben. (U. S.) 80. See also U. S, v. formed a part of the enclosing fence surQuantity of Tobacco, (1871) 5 Ben. (U. S.) rounding the premises might properly be 112.
found by the jury to have been within the The raw material may be seized, without place or building or within the yard or enreference to the place where, or in whose pos closure. U. S. 1. 18 Barrels High Wines, session, found, if it was intended to be fraud (1871) 8 Blatchf. (U. S.) 475. ulently used or disposed of. U. S. v. Sixteen Knowledge of ouner. Property found on Hogsheads Tobacco, (1867) 2 Bond (U. S.) the premises is forfeited if the owners knew 139.
of the existence of the illicit still. U. S. v. The words “such articles” refer to “all Quantity of Rags, (1868) 27 Fed. Cas. No. goods, wares, merchandise, articles, or ob. 16,103. jects," and not to articles which might be in Rights of mortgagee. - A horse, mule, and the future manufactured out of the raw ma wagon, used for hauling two barrels of unterials found in the place. “The construc stamped whiskey, were seized, and a libel of tion is perhaps obscured by a change in information was filed praying a decree of punctuation made in the re-enactment of the forfeiture under this section. Under the law law in the Revised Statutes, but it is evi of the state, a mortgagee, after condition dent that there was no change of meaning in broken, is entitled to have the possession of tended. In the original statute there is no the property, and the legal title is in him, full stop after the words “shall be forfeited and as to his interest in the property it was to the United States,' as there is in this sec held that the action could not be maintained tion of the Revised Statutes.” U. S. v. 16 when it appeared that such mortgagee was Barrels Distilled Spirits, (1879) 10 Ben. (U. innocent of any intention to violate the revS.) 484.
enue law, and that the property was in the The words “all tools, implements, instru possession of another without his knowledge ments, and personal property” exclude any or consent. U. S. v. Two Barrels Whiskey, inquiry into the ownership or title, or (C. C. A. 1899) 96 Fed. Rep. 479. whether they constituted part of the manu The word "place" refers to a place less facturing apparatus used in the business or than a building or to a part of a building, as were there for some other purpose. U. S. v. well as to a place other than a building or Spring Valley Distillery, (1873) 11 Blatchf. part of a building, that is, to the place where (U. S.) 255.
the person who has in his possession the The tools, implements, and instruments guilty articles has also other personal prophere forfeited are those with which the un erty. " Therefore, the statute may be read lawful business is carried on, and this con as providing that all other personal property struction restricts the operation of the gen in the same building or the same place other
than a building, occupied by the person or persons having the possession in such building or other place of the prohibited articles, shall be forfeited." U. S. C. 16 Barrels Distilled Spirits, (1879) 10 Ben. (U. S.) 481.
Forfeiture. – An information following the language of the statute is sufficient. U. S. 1. 17 Empty Barrels, (1875) 3 Dill. (U. S.) 285.
An information in relation to tools, implements, etc., must allege that they were found in the place or building, or within the yard or inclosure where they were intended to be fraudulently used. U. S. 1'. Sixteen Hogsheads Tobacco, (1867) 2 Bond (U. S.) 139.
A proceeding in rem is necessary to declare and perfect the forfeiture, though the legal effect of a conviction under an indictment may estop the convicted person from recovering the specified things. U. S. V. Three Copper Stills, (1890) 47 Fed. Rep. 495.
An indictment is sufficient though it does not aver that the whiskey was found in the possession of the defendant. U. S. 1. Mattingly, (1867) 26 Fed. Cas. No. 15,743.
An indictment will lie to recover the penalty pronounced by this statute. U. S. 1'. Mattingly, (1867) 26 Fed. Cas. No. 15,743.
Fraudulent intent. — “The reason for the seizure of the articles enumerated in the first and second class is obvious enough; it is for the fraudulent intent of the person in the possession or control of them, that is, an intent to defraud the public revenue by evading the tax. The seizure of the articles in the third class stands different grounds, namely, association with the guilty classes or articles. The fraudulent intent or purpose of the person in the possession, or having the control, of the articles does not constitute an element of the offense or ground of forfeiture.” U. S. 1'. One Still, (1867) 5 Blatchf. (U. S.) 403. See Quantity Distilled Spirits, (1868) 3 Ben. (U. S.) 70; U. S. 6. Sixteen Hogsheads Tobacco, (1867) 2 Bond (U. S.) 139; U. S. v. Two Hundred and Fifty Six Barrels of Beer, (1870) 2 Bond (U. S.) 395.
The fraudulent purpose or design may be
proved by proving manifestations at prior times of like fraudulent intent in respect of kindred matters. U. S. 1. Quantity of Tobacco, (1872) 6 Ben. (U. S.) 80.
“The expression 'in fraud of the internal revenue laws,' in this connection, means, in violation of the internal revenue la ws." Quantity Tobacco, etc., (1871) 5 Ben. (U. S.) 407.
The burden is on the claimant of property of the third class to show that the situation of the property was consistent with his entire innocence. U. S. 1'. One Still, (1867) 5 Blatchf. (l'. S.) 403.
Criminal proceedings bar forfeiture. The government has the right to proceed by civil action to enforce the forfeiture of the property because of the frauds, or to prosecute the parties engaged therein criminally; but for the same acts it could not do both. The conviction of a stockholder of a corporation, on an indictment under section 3451, R. S., is a bar to a civil action for forfeiture based on the same fraudulent acts and omissions that were introduced in proof in support of the indictment, and such plea in bar may be interposed by any one interested in the property. U. S. 1. One Distillery, (1890) 43 Fed. Rep. 846, affirmed on a question of pleading, (1899) 174 U. S. 149.
A judgment of acquittal on a criminal indictment is a bar to an information brought for forfeiture of the property seized, when the fraudulent acts and attempts and intents to defraud, alleged in the prior criminal information, and covered by the verdict and judgment of acquittal, embraced all of the acts, attempts, and intents averred in the information in rem. Coffey 1. U. S., (1886) 116 ('. S. 436.
Costs. In a proceeding in rem under this statute, upon a judgment condemning goods as forfeited to the United States, there must be judgment against the claimant for the amount of the costs. The word “ defendant," as used in section 974, R. S., includes a claimant in an action in rem for a forfeiture. U. S. v. Seven Barrels Distilled Oil, (1868) 27 Fed. Cas. No. 16,253a.
Sec. 3454. [Sales to evade tax — forfeiture.] Whenever any person who is liable to pay any tax upon any goods, wares, or merchandise, sells or causes or allows the same to be sold before the tax is paid to which said property is liable, with intent to avoid such tax, or in fraud of the internal-revenue laws, any debt contracted in such sale, and any security given therefor, unless the same shall have been bona fide transferred to an innocent holder, shall be void, and the collection thereof shall not be enforced in any court. And if such goods, wares, or merchandise have been paid for, in whole or in part, the sum so paid shall be deemed forfeited, and any person who shall sue for the same in an action of debt shall recover from the seller the amount so paid, one half to his own use and the other half to the use of the United States. [R. S.]
Act of June 30, 1864, ch. 173, 13 Stat. L. 305, 306.
Sec. 3455. [Disposing of or receiving empty stamped packages, etc. penalties.] 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). [R. S.]
Act of July 13, 1866, ch. 184, 13 Stat. L. 152. quired by said regulation. A subsequent sur
"By the first paragraph a penalty is im reptitious addition to the liquors of burnt posed, first, for selling, giving away, pur sugar or caramel, and sale of the same, conchasing, or receiving an empty package, bar stituta a violation of this section. U. S. v. rel, etc., bearing a government brand or Three Packages Distilled Spirits, (1903) 125 stamp, indicating that the contents have been Fed. Rep. 52. inspected, or that the revenue laws have been The addition of water, or a reduction of complied with; and, second, for giving away, proof by natural causes, would not work a selling, purchasing, or receiving packages forfeiture under this section. U. S. v. 9 thus branded or stamped, which contain dif Casks, etc., Distilled Spirits, (1892) 51 Fed. ferent contents than they had in them when Rep. 191. branded or inspected. By the second para But in U. S. v. Three Packages Distilled graph of the same section the penalty is Spirits, (1903) 125 Fed. Rep. 52, the court imposed on one who makes, manufactures, said the above opinion was purely obiter, and or produces any box, barrel, etc., and stamps that it is exceedingly doubtful whether the or brands the same with a government stamp, addition of water would not constitute a vioor whọ so stamps or brands a box or package lation of section 3455, but that after having which some one else has made." U. S. v. 9 promulgated a regulation authorizing the reCasks, etc., Distilled Spirits, (1892) 51 Fed. duction of proof by the addition of water, the Rep. 191.
government could not claim a forfeiture upon Putting in tax-paid spirits. — A person
that ground. cannot buy a package that contains distilled “ It seems to me that the mere addition of spirits, already stamped and branded, and re water to spirits which had been properly move the contents and put in other distilled stamped and marked, and upon which the full spirits, although the other spirits may have tax had been paid, could not be regarded as paid the tax, without rendering the property such a change in the package of the spirits subject to forfeiture. U. S. v. 9 Casks, etc., which were in the possession of the wholeDistilled Spirits, (1892) 51 Fed. Rep. 191. sale liquor dealer as would bring him within
Addition of burnt sugar or caramel.- the inhibition of the statute. I fail to see After spirits, properly stamped, had been what reason would induce the courts to bring withdrawn from the warehouse, under a
act within the inhibition. It regulation of the commissioner of internal would take nothing from the government in revenue permitting such reduction, a quantity any way whatever, and it would in no sense of water was added whereby their proof was take from these spirits any element which reduced from about 100 to 90. This was done would be necessary and essential for the on the premises of a duly qualified wholesale government in tracing them from one point liquor dealer, in the presence of a government to another.” U. S. v. Thirty-Two Barrels gauger, who affixed to the cask the stamp re Distilled Spirits, (1880) 5 Fed. Rep. 190.
Sec. 3456. [Penalty and forfeiture by distillers, rectifiers, wholesale liquordealers, and manufacturers of tobacco or cigars, for omitting things required, and for doing things forbidden.] If any distiller, rectifier, wholesale liquor