US SUPREME COURT DECISIONS

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 chanrobles.com-red

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. * chanrobles.com-red

Page 208 U. S. 203