Baker v. . Johnson

Grover, J. If the counsel for the appellant is right in his position, that the contract for the sale and delivery of the alcohol by the defendant included such alcohol only as was subject to the tax imposed by the act of congress, passed July 1st, 1862, he is also right in his further position that the defendant was discharged from the contract by his performance having been made impossible by act of law. The time fixed for the delivery of the alcohol was in August, 1862. The contract for the sale was made in July, 1862. The act imposing the tax provided that it should go into operation August 1st, 1862. Congress passed a joint resolution July 17,1862, conferring power upon the secretary of the treasury to postpone the time of the act going into operation to a period subsequent to that fixed by the. act. The secretary, pursuant to the power thus conferred, postponed the opera *130 tion of the act until September 1st, 1862. ÜSTo tax was imposed upon alcohol or spirits manufactured prior to the act going into operation. It is clear, therefore, that no alcohol was subject to the tax before September 1st, 1862, and that none subject to such tax could have been delivered in August, 1862. In order fully to arrive at the intention of the parties, ■ in making the contract, it must be kept in mind that the tax imposed by the act was designed to include only such spirits and alcohol as were consumed in the country, and that provision was made for refunding the tax paid upon such as were exported therefrom. The contract was made July 19, 1862, and provided for the delivery of the alcohol on board of a vessel under the tax law from the the 20th to the 31st August, 1862, duty paid. This shows that at the making of the contract the parties believed that the act imposing the tax would go into effect as therein provided August 1st, 1862. That the alcohol to be delivered would thereafter be manufactured, and consequently subject to the tax which would be prepaid by the defendant before delivery. I think the agreement fairly inferred from the writing, construed in the light of the extrinsic facts proved, was that the plaintiff should export the alcohol, and that thereupon the defendants should be entitled to have the taxes paid thereon by them refunded. The inquiry is as to what, if any, part of this contract became impossible of performance by the postponement of the operation of the act by the secretary. It will be seen that the only effect of the postponement was to relieve all alcohol manufactured in August, and the material from which it was manufactured, from the payment of any tax. The defendants could have performed their contract by its delivery without any such payment, and having paid no tax, would not be entitled to any refunding. This was the only direct effect of the postponement upon the •contract. This in no way rendered performance by the •defendants impossible. On the contrary, performance in this view was thereby facilitated. But the counsel for the appel- ' lants insists that there were two kinds of alcohol, the one 'described as the long and the other as the short priced, the *131 former being the article subject to the tax which had been paid, and the other from which the duty was deducted, and claims to have established this by the proof given upon the trial. This distinction, as applied to all alcohol manufactured before September 1st, 1862, has no foundation, as no tax was paid upon any part of it. The price of all of like quality was the same. But it could readily be seen at the time this contract was made that all alcohol manufactured before the law went into operation would gradually rise, until it reached the price of that manufactured in the country thereafter with the tax paid, as the former could enter into the consumption of the country equally with the latter, and that this rise would commence at once upon the enactment of the law, although not to take effect until some time thereafter. Alcohol manufactured after the act took effect could be sold for exportation at a lower price than either, because upon this the tax paid to government would be refunded. The case comes to this, not that there were two kinds of alcohol bearing different prices at the time the contract was made, for at that time none had been subjected to the payment of a tax, but that the contract was made in the expectation by the parties that the alcohol to be delivered by the appellants to the respondents would be manufactured after the law' took effect, and having been sold for export, and therefore not taxable, could be afforded at a price less than that which could be used in the country without payment of a tax thereon. The effect of the postponement made by the secretary was not, therefore, to make performance of the contract any more beneficial to the plaintiff, nor to render it impossible for the defendant, but to make performance more expensive and burdensome. This has never been held to exonerate such party from the obligation of his contract. Should it be so held, every increase of a duty or tax upop goods, enacted after the making and before the performance of a contract for the sale thereof, would discharge the seller, and upon the like reasoning a reduction would discharge the purchaser. There can be no question but that the respondents would have been bound to accept alcohol of the pre *132 scribed quality manufactured at any time upon the contract: The defendant, although at a greater cost to himself, wav, bound to procure and deliver it. The judgment must, therefore, be affirmed with costs. Foster, J., read an opinion for reversal on the ground that it was plainly the intention of both parties to contract for an article to be manufactured after the law of July 1st should go into operation, and for no other alcohol whatever; and the ■ delivery of such an article having become" impossible in consequence of the change in the law, the defendants were absolved from the agreement. Hunt, J., was also for reversal. Sutherland, Ingalls, Lott and Smith, JJ.‘, concurred with Grover for affirmance. Earl, Ch. J., not voting. Judgment affirmed.