Kessel v. Albetis

By the Court, Brady, J. This case was reserved in reference to the point taken by the respondent, that the contract for the sale of the whisky could not be enforced in consequence of a violation of the internal revenue laws. The whisky was sold for $1.45 a gallon, when the tak imposed upon it by the government was $2 per gallon. Section 180 of the act relating to internal revenue, (13 U. S. Stat. at Large, 305,) provides that if any person liable and required to pay any tax upon any article, &c., as therein provided, shall sell or cause the same to be sold before the tax to which such article is legally liable is paid, with intent to avoid such tax, or in fraud of the revenue therein provided, any debt contracted .in the sale of such article, &c., shall be entirely void, and the collection thereof shall not be suffered in any court. Section 21 of the act of [367] 1867, to amend existing laws relating to internal revenue, and for other purposes, (14 U. S. Stat. at Large, 471,) provides that whenever any distilled spirits found elsewhere than in a bonded warehouse shall be sold, or offered for sale, at a price less than the tax imposed by law thereon, such selling shall be taken and deemed prima facie evidence that the tax imposed by law on the same has not been paid; that said spirits have not been removed from a bonded warehouse according to law, and that the same shall be liable to seizure. At the time of the sale to the defendants the tax on whisky was $2 per gallon, (14 U. S. Stat. at Large, p. 480, § 14.;) but, as already stated, the price of the whisky agreed upon was only $1.45, which was less than the tax to be paid to the government. The sale at the sum mentioned was prima facie evidence that the tax was not paid under section 21, (supra,) and the intent to avoid the tax was inferred from the price at which it was sold, and the amount stated in the bill rendered for it, and by which the price was made in excess of the government duties, namely, $2.45 per gallon. "When the plaintiff rested, the defendants moved for a nonsuit, on the grounds that the plaintiff had shown no valid assignment of the claim; that it should have been in writing, and not being in writing it was within the statute of frauds; and that the plaintiff had failed to fix the value of the goods. The motion was granted, upon the ground that the assignment was within the statute of frauds, and should have been in writing; and also upon the ground that the sale was in violation of the "United States revenue laws. The latter ground, it is true, was not taken by the defendants’ counsel, either by pleading or motion. It originated with the court, and was applied to the disadvantage of the plaintiff. We held, upon the argument, ¡ that the reasons assigned by the defendants’ counsel for. the dismissal of the complaint were not sufficient for that [368] purpose; that the assignment by paroi was valid, and that there was evidence of the value of the whisky. The objection to the plaintiff’s recovery, stated by the court, was regarded as formidable, and seems to be fatal. The court was bound to take judicial notice' of the statutes relating, to internal revenue, and not to suffer the collection of any debt prohibited, (§ 180, supra;) and the plaintiff having apparently violated them in the respect named, it was incumbent on him to show either that he had paid the tax, or that it had been paid, or that he did not intend to evade its payment. Independently of the statute making it prima facie evidence thereof, no other conclusion.can be reasonably drawn, it seems to me, from the sale of an article for less than the tax imposed by law upon it, in' the absence of proof of the payment of such tax, than an intention to evade such payment. And in this case, in addition to that circumstance, there was the fact that in the bill made out for the purchaser, the price was inserted at an amount in excess of the tax, as already stated, although the actual price was less. I think, the evidence showing a violation of the internal revenue laws, the complaint was properly dismissed, and that the judgment should be affirmed. [New York General Term, April 4, 1870. Ingraham, Geo. G. Barnard and Brady, Justices.]