US SUPREME COURT DECISIONS

Sections 8 and 7 of the War Revenue Act of 1898, 30 Stat. 448, c. 448, provided for certain stamp taxes on bonds, and other instruments enumerated in Schedule I of the act, but section 17 of the same act exempted

"all bonds, debentures, or certificates of indebtedness issued by the officers of the United States government, or by the officers of any state, county, town, municipal corporation, or other corporation exercising the taxing power."

The "Dramshop Act" of Illinois and the Revised Code of Chicago provided for the giving of bonds by all applicants to whom licenses were granted to sell liquor in the City of Chicago. Ambrosini gave two such bonds as required by the state statute, but failed to affix thereto United States revenue stamps, and was indicted for an offense under the War Revenue Act, tried, found guilty and sentenced to pay a fine after a motion to quash the indictment had been overruled. Held error, and that the indictment should have been quashed.

The General Assembly of Illinois, in enacting the Dramshop Act, legislated "against the evils arising from the sale of intoxicating liquors" not by prohibiting, but by regulating, the traffic, and such legislation was in exercise of the police power which is reserved to the states free from any federal restriction material in this action.

Such legislation (and ordinances of the City of Chicago) required bonds to be given by applicants as prerequisites to the issue of licenses permitting sales, and the granting of the license was a strictly governmental function, chanrobles.com-red

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and the giving of the bonds was a part of the same transaction, and to tax either would be to impair the efficiency of state and municipal action; this case therefore falls within the general principle that, as the means and instrumentalities employed by the general government to carry into operation the powers granted to it are exempt from taxation by the states, so are those of the states exempt from taxation by the general government, and viewed in the light of this principle, the bonds in question were exempted by section 17 of the War Revenue Act.

This was a writ of error brought to reverse a judgment of the district court imposing a fine on a finding of guilty of an offense under section 7 of the Act of Congress entitled "An Act to Provide Ways and Means to Meet War Expenditures, and for Other Purposes," 30 Stat. 448, c. 448, otherwise known as the war revenue act of 1898. The indictment contained two counts. The first charged that defendant, on August 30, 1898, executed a certain bond in the penal sum of $3,000 to the people of the State of Illinois without affixing to the bond a fifty-cent revenue stamp alleged to be required by said act of Congress. The second count charged that defendant, on August 30, 1898, executed a certain bond to the City of Chicago in the penal sum of $500 without affixing thereto a fifty-cent revenue stamp alleged to be required by the act. The bonds were set forth in extenso. A motion to quash the indictment was made and overruled, and, a jury being waived, the cause was submitted to the court for trial, defendant found guilty, and sentenced to pay a fine. The opinion is reported, 105 F.2d 9.

Sections 6, 7, and 17 of the act are as follows:

"SEC. 6. That on and after the first day of July, eighteen hundred and ninety-eight, there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in schedule A of this act, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, shall be written or printed by any person or persons, or party who shall make, sign, or issue the same, or for whose use or benefit the same shall be made, signed, or issued, the several taxes or sums of money set down in figures

Page 187 U. S. 3

against the same, respectively, or otherwise specified or set forth in the said schedule. . . ."

"SEC. 7. That if any person or persons shall make, sign, or issue, or cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, without the same being duly stamped for denoting the tax hereby imposed thereon, or without having thereupon an adhesive stamp to denote said tax, such person or persons shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not more than one hundred dollars at the discretion of the court, and such instrument, document, or paper, as aforesaid, shall not be competent evidence in any court."

"SEC. 17. That all bonds, debentures, or certificates of indebtedness issued by the officers of the United States government, or by the officers of any state, county, town, municipal corporation, or other corporation exercising the taxing power, shall be, and hereby are, exempt from the stamp taxes required by this act: Provided, That it is the intent hereby to exempt from the stamp taxes imposed by this act such state, county, town, or other municipal corporations in the exercise only of functions strictly belonging to them in their ordinary governmental, taxing, or municipal capacity: Provided further, That stock and bonds issued by cooperative building and loan associations whose capital stock does not exceed ten thousand dollars, and building and loan associations or companies that make loans only to their shareholders, shall be exempt from the tax herein provided."

Schedule A contained this provision:

"Bond: for indemnifying any person or persons, firm, or corporation who shall have become bound or engaged as surety for the payment of any sum of money, or for the due execution or performance of the duties of any office or position, and to account for money received by virtue thereof, and all other bonds of any description, except such as may be required in legal proceedings, not otherwise provided for in this schedule, fifty cents."

The bonds to which it was alleged the stamps should have been affixed were bonds required by the laws of Illinois to be given as a condition of the issue of licenses to keep dramshops chanrobles.com-red

Page 187 U. S. 4

or sell intoxicating liquors in the State of Illinois and in the City of Chicago.

Sections one, two and five of an Act of the General Assembly of the State of Illinois entitled "An Act to Provide for the Licensing of and against the Evils Arising from the Sale of Intoxicating Liquors" read:

"§ 1. That a dramshop is a place where spirituous or vinous or malt liquors are retailed by less quantity than one gallon, and intoxicating liquors shall be deemed to include all such liquors within the meaning of this act."

"§ 2. Whoever, not having a license to keep a dramshop, shall, by himself or another, either as principal, clerk, or servant, directly or indirectly, sell any intoxicating liquor in any less quantity than one gallon, or in any quantity to be drank upon the premises, or in or upon any adjacent room, building, yard, premises, or place of public resort shall be fined not less than twenty dollars ($20) nor more than one hundred dollars ($100), or imprisoned in the county jail not less than ten nor more than thirty days, or both, in the discretion of the court."

"§ 5. No person shall be licensed to keep a dramshop, or to sell intoxicating liquors, by any county board, or the authorities of any city, town, or village, unless he shall first give bond in the penal sum of $3,000, payable to the people of the State of Illinois, with at least two good and sufficient sureties, freeholders of the county in which the license is to be granted, to be approved by the officer who may be authorized to issue the license, conditioned that he will pay to all persons all damages that they may sustain, either in person of property, or means of support, by reason of the person so obtaining a license selling or giving away intoxicating liquors. The officer taking such bond may examine any person offered as security upon any such bond, under oath, and require him to subscribe and swear to his statement in regard to his pecuniary ability to become such security. Any bond taken pursuant to this section may be sued upon for the use of any person, or his legal representatives, who may be injured by reason of the selling or giving away any intoxicating liquor by the person so licensed, or by his agent or servant."

2 Starr & Curtis, Anno.Stat.Ill. (2d ed. 1586), c. 43. chanrobles.com-red

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By article five, chapter 24, of the statutes of Illinois concerning cities, it was provided:

"§ 1. The city council in cities, and president and the board of trustees in villages, shall have the following powers: . . ."

"Fourth. To fix the amount, terms, and manner of issuing and revoking licenses."

"* * * *"

"Forty-sixth. To license, regulate, and prohibit the selling or giving away of any intoxicating, malt, vinous, mixed, or fermented liquor, the license not to extend beyond the municipal year in which it shall be granted, and to determine the amount to be paid for such license: . . . Provided, further, That in granting licenses, such corporate authorities shall comply with whatever general law of the state may be in force relative to the granting of licenses."

"* * * *"

"Ninety-sixth. To pass all ordinances, rules, and make all regulations proper or necessary to carry into effect the powers granted to cities or villages, with such fines or penalties as the city council or board of trustees shall deem proper. . . ."

1 Starr & Curtis (2d ed.) 689, c. 24.

The Revised Code of Chicago of 1897 provided:

"The mayor of the City of Chicago shall, from time to time, grant licenses for the keeping of dramshops within the City of Chicago to persons who shall apply to him in writing therefor, and shall furnish evidence satisfying him of their good character. Each applicant shall execute to the City of Chicago a bond, with at least two sureties, to be approved by the city clerk or city collector, in the sum of five hundred dollars, conditioned that the applicant shall faithfully observe and keep all ordinances in force at the time of the application or thereafter to be passed during the period of the license applied for, and will keep closed, on Sundays, all doors opening out upon any street from the bar or room where such dramshop is to be kept, and that all windows opening upon any street from such bar or room shall, on Sundays, be provided with blinds, shutters, or curtains, so as to obstruct the view from such street into such room. No application for a license shall be considered until such bond shall have been filed."

1 Rev.Code 1897, p. 253, c. XXXIX, Art. 1. chanrobles.com-red

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The ordinance contained many other specific regulations of the traffic, and provided that licenses might be revoked by the mayor for violation of "any provision of any ordinance of the city council relating to intoxicating liquors, or any condition of the bond aforesaid."

The conditions of the bond in the sum of $3,000 to the people of the State of Illinois were substantially in the words of the statute. The conditions of the bond in the sum of $500 to the City of Chicago were somewhat more stringent than the language of the municipal Code.