U.S. Supreme Court
United States v. Chouteau, 102 U.S. 603 (1880)
United States v. Chouteau
102 U.S. 603
1. In an action by the United States upon a bond executed by A., a distiller, and his sureties, the breaches of the condition assigned in the declaration or complaint were first, that by omitting to make certain entries in a book which he, by sec. 3303, Rev.Stat., was required to keep, he was enabled to defraud and did defraud the United States of the tax imposed by law upon the spirits produced at his distillery, and second, that in violation of sec. 3296, he had removed spirits produced at his distillery to a place other than the distillery warehouse without the tax thereon having been first paid. To the first assignment the defendants answered by denying its allegations and averring that whatever fraud was committed was effected through other means than those charged. To the second they answered that before the suit was brought, two bills of indictment for the same removals of spirits now complained of were found against A., one containing counts upon said section and upon sections 3281 and 5440, and that upon the recommendation of the Attorney General and the advice of the Secretary of the Treasury, the Commissioner of Internal Revenue accepted from him a specified sum in a compromise, satisfaction, and settlement of the indictments, which were thereupon dismissed and abandoned by the United States. Upon a demurrer to the answer, held that the answer was a bar to the action.
2. Quaere whether the only mode for the recovery of the penalty prescribed by sec. 3296 is not by indictment.
This is an action upon a bond of a distiller, against the principal and sureties, and is founded upon sects. 3303 and 3296 of the Revised Statutes. The bond is in the penal sum of $25,000, and, after reciting that the principal, Joseph G. Chouteau, intends, after the first day of May, 1874, to be chanroblesvirtualawlibrarychanroblesvirtualawlibrary
engaged in the business of a distiller within the first collection district of Missouri, to-wit at Grand Avenue and Main Street in the City of St. Louis in that state, it is conditioned, among other things, that he
"shall in all respects faithfully comply with all the provisions of law in relation to the duties and business of distillers, and shall pay all penalties incurred or fines imposed on him for a violation of any of the said provisions."
Sect. 3303 is as follows:
"Every person who makes or distils spirits or owns any still, boiler, or other vessel used for the purpose of distilling spirits, or who has such still, boiler, or other vessel so used under his superintendence, either as agent or owner, or who uses any such still, boiler, or other vessel, shall from day to day make or cause to be made, in a book or books to be kept by him in such form as the Commissioner of Internal Revenue may prescribe, a true and exact entry of the kind of materials, and the quantity in pounds or gallons purchased by him for the production of spirits, from whom and when purchased, and by what conveyance delivered at said distillery, the amount paid therefor, the kind and quantity of fuel purchased for use in the distillery, and from whom purchased, the amount paid for ice or water for use in the distillery, the repairs placed on said distillery or distilling apparatus, the cost thereof, and by whom and when made, and of the name and residence of each person employed in or about the distillery and in what capacity employed. And in another book he shall make like entry of the quantity of grain or other material used for the production of spirits, the time of day when any yeast or other composition is put into any mash or beer for the purpose of exciting fermentation, the quantity of mash in each tub, designating the same by the number of the tub, the number of dry inches -- that is to say the number of inches between the top of each tub and the surface of the mash or beer therein at the time of yeasting -- the gravity and temperature of the beer at the time of yeasting, and on every day thereafter its quantity, gravity, and temperature at the hour of twelve meridian; also of the time when any fermenting tub is emptied of ripe mash or beer, the number of gallons of spirits distilled, the number of gallons placed in the warehouse, and the proof thereof, the number of gallons sold or removed, with the proof thereof, and the name, place of business, and residence of the person to whom sold. "
Sec. 3296 is as follows:
"Whenever any person removes or aids or abets in the removal of any distilled spirits on which the tax has not been paid to a place other than the distillery warehouse provided by law or conceals or aids in the concealment of any spirits so removed, or removes or aids or abets in the removal of any distilled spirits from any distillery warehouse or other warehouse for distilled spirits, authorized by law in any manner other than is provided by law or conceals or aids in the concealment of any spirits so removed, he shall be liable to a penalty of double the tax imposed on such distilled spirits so removed or concealed, and shall be fined not less than two hundred dollars nor more than five thousand dollars and imprisoned not less than three months nor more than three years."
The complaint in the action, or petition, as it is termed, contains eighty-four assignments of breaches of the conditions of the bond, forty-two of which, constituting the odd numbers, are founded upon sec. 3303, and forty-two, constituting the even numbers, are founded upon sec. 3296. The difference in the breaches assigned in each class is in respect to the day on which the act constituting the breach is alleged to have been done, commencing on the second day of May and ending on the fifteenth day of August, 1874. The same breach of duty is charged to have been committed on forty-two different days.
The breach stated in each of the assignments designated by odd numbers is that the distiller omitted to make, in a book he was required by law to keep, a true and exact entry of the kind and quantity of materials used by him in the production of distilled spirits; that he produced from the grain used a large quantity of spirits, and "that by means of the said omission to make said entry in said book as aforesaid," he
"was enabled to defraud and did defraud the plaintiff out of the internal revenue tax then and there imposed by law on spirits, whereby the plaintiff is damaged in the sum of $2,100."
To this breach in the various assignments the defendants answer, and deny that, by reason of the alleged omission of the distiller to make proper entries in the distiller's book mentioned, chanroblesvirtualawlibrarychanroblesvirtualawlibrary
he was enabled to defraud and did defraud the United States of the tax on distilled spirits produced at his distillery, or any part of the tax, and state that prior to any of the acts complained of, the distiller combined, confederated, and conspired with certain designated revenue officers and agents and other distillers and rectifiers to defraud the United States of the tax on distilled spirits produced at various distilleries within the first collection district of Misctifiers to defraud the United States of the tax on distilled spirits produced at various distilleries within the first collection district of Misctifiers to defraud the United States of the tax on distilled spirits produced at various distilleries within the first collection district of Missouri; that in furtherance of this conspiracy and to accomplish its purpose, the parties concerned in it committed various violations of the revenue laws, and among other things they removed and aided in the removal of distilled spirits from the distilleries without having first paid the tax on them; they reused upon packages paid and warehouse stamps which had been previously used; they gave and received bribes, and made and connived at making false and fraudulent reports to the collector of internal revenue within the district of the quantities of spirits produced upon which taxes had become due; that the distiller, by reason of his participation in this conspiracy, was enabled, if at all, to defraud the United States of the tax on distilled spirits produced at his distillery within the period covered by his bond; that the internal revenue officers charged with the execution and enforcement of the internal revenue laws had no occasion to have recourse to the distiller's book and the storekeeper's record kept at the distillery, and did not have recourse to them, or examine them to obtain information touching the quantities of grain used and the number of gallons produced at the distillery; and that it was by reason of the organization and execution of this conspiracy, irrespective of the omission to make the entries mentioned, that the conspirators were enabled to defraud the United States of the tax on spirits produced at the distillery.
The breach stated in each of the assignments designated by even numbers is that the distiller removed spirits produced at his distillery to a place other than the distillery warehouse without the internal revenue tax imposed thereon being first paid, thereby incurring a penalty of $2,800, which sum he has not paid.
To this breach in the various assignments the defendants chanroblesvirtualawlibrarychanroblesvirtualawlibrary
answer that the United States ought not to maintain its action for the penalty denounced in sec. 3296, for, at the November Term, 1875, in the District Court of the United States for the Eastern District of Missouri, two bills of indictment were found against said Chouteau, the distiller, one of which contained counts founded upon that section, alleging the removal by him, and his aiding and conniving at the removal, of distilled spirits from his distillery to a place unknown, upon which spirits the revenue tax was imposed and had not been paid, the other counts being founded upon secs. 3281 and 5440 of the Revised Statutes; that afterwards, with the advice and consent of the Secretary of the Treasury and upon the recommendation of the Attorney General, the Commissioner of Internal Revenue accepted from the distiller $1,000 in full satisfaction, compromise, and settlement of the indictment and prosecutions, which were thereupon dismissed and abandoned.
And the defendants, further answering, state
"That the alleged removals of distilled spirits set forth in the various assignments of breaches now answered are the same removals recited in the said indictment; that all of the said removals of spirits complained of in plaintiff's petition might have been established, if said allegations be true, under the said indictments either upon those counts based upon sec. 3296 or that count based upon sec. 3281; that all of the evidence which would be necessary to establish, and competent under the various assignments of breaches in plaintiff's petition, would also be competent under and would tend to establish the allegations of said indictments; that the various assignments of breaches in plaintiff's petition relate to the same subject matter and are based upon the same transaction as the various allegations in said indictments contained, so far as they relate to alleged offenses under sects. 3296 and 3281 and 5440, and that at the time when the said indictments were presented to said grand jury, and at the time when the said indictments were considered by said grand jury, all of the facts which would be competent to sustain the allegations of plaintiff's petition were known to, and within the possession of the representative of the United States. "
The United States demurred to the answer. The demurrer was overruled and judgment entered thereon in favor of the defendants. The case was then removed here by writ of error.