United States v. A. Graf Distilling Co.

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 sub nomine United States v. Three Packages of Distilled Spirits, in 125 Fed. Rep. 52 , and 129 Fed. Rep. 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

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 whiskey), 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 whiskey 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 t.ba.n 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

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 in itself improper.

.We concur, of course, in the rule which has been uphfeld in this- court,' that a statute like this one, for the raising of a revenue, even when accompanied by provisions of a very

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 cbntents 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 non-tax-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 this1 case, and -we cannot construe the section- on the mistaken theory that though the act was

■ 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 casé 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 de- j fraud the revenue or any person.

It has been held under other sections of this act, somewhat similar, that the addition, óf 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. Thirty-two Barrels of Distilled Spirits, 5 Fed. Rep. 188 ; Three Packages of Distilled Spirits, 14 Fed. Rep. 569 ; United States v. Bardenheier, 49 Fed. Rep. 846 , 948: United States v. Nine Casks &c., 51 Fed. Rep. 191 . Reference is made to them in the opinion in this case in 125 Fed. Rep. 52 , supra.

So certified.