United States v. One Steel Safe

RITCHIE, District Judge. In the steel safe case the issue arises upon the government’s claim that the defendants concealed the bottle of moonshine whisky in. the safe to evade the internal revenue tax. Several cases have come into the federal courts under sectioon 3450 as an adjunct to the ."prohibition law and the anti-narcotic law. None of these cases arose upon facts closely approximating the facts in this case, and the decisions are not wholly consistent. For that reason, this steel safe case has not been an easy one to decide, and I have made extensive search through all the federal decisions to find a precedent. The only case which seems to me to be closely applicable is United States v. One Kissel Automobile (C. C. A.) 296 F. 688. As that is a Ninth Circuit case, it appears to me it lays down the law in this jurisdiction. The facts were that one .Means had a small quantity of cocaine in his pocket while riding in the car the government sought to forfeit. Judge Dooling, sitting in the district, of Arizona, held Jhat “the intent to defraud the United States of a tax had not been proved,” and dismissed the action. 289 F. 120. The United States sued out a writ of error, and the Circuit Court of Appeals affirmed the judgment. Circuit Judge Rudkin said: “The question of intent is usually a question of fact, and is very generally proved by circumstantial evidence. The agreed statement in this ease is silent upon that issue, and it cannot be said that the intent to defraud the United States of the tax followed from the stipulated facts, as a conclusion of law. * * * The court was of opinion that the mere fact that a party carries or conceals a small quantity of narcotics in his pocket while riding in an automobile does not warrant or justify the conclusion that he is concealing the same with intent to defraud the United States of a nominal tax, estimated by the court at one cent.” A similar decision was made in the Sixth Circuit. Cadillac Automobile Motor v. United States (C. C. A.) 7 F.(2d) 102. The only difference between the Arizona case and the pending one is that the Arizona case charged removal of narcotic and the case at bar charges concealment of liquor. Section 3450 makes offenses of both acts. It provides that, whenever any goods or commodities upon which any tax is imposed are “removed or are deposited or concealed in any place, with intent to defraud the United States of such tax,” all such goods shall be forfeited. It further provides that all containers of such goods and commodities and every conveyance of any kind used in the [429] removal or for the deposit or concealment thereof shall be forfeited. It will be seen that the principle is the same, regardless of the kind of goods or commodities, or whether the offense is removing them or concealing them. It seems to me, therefore, that the opinion of the Circuit Court of Appeals in the Arizona case fits the facts of the case at bar and states the law governing it. In this case the government charges that Malehorn and Peterson placed a bottle of moonshine in the safe with intent to defraud the government of a tax. I think this court can safely paraphrase the statement of Judge Dooling and Judge Rudkin in the Arizona narcotic case, and say that the mere fact that a party concealed a small quantity of liquor in a steel safe does not warrant or justify the conclusion that he is concealing it with the intent to defraud the United States of a nominal tax. In the Arizona case it was stated to be one cent. In this case I estimate that it would be about 35 cents. A more reasonable inference is that the liquor was placed in the safe to have it convenient for use when opportunity arose for sale, and at the same time kept out of sight of any officer looking for liquor. There was no evidence that Malehorn made the whisky, and it is highly probable that he did not. The man who owed the tax was the man who distilled the whisky, and that man was liable under section 3450 for removal without paying the tax. In the steel safe case I am obliged to find that there is a total lack of proof that either defendant or anybody else concealed the liquor in the safe with intent to evade the tax, and for that reason alone the forfeiture must fail. If intent had been proven against Malehorn, lack of connivance or knowledge of the law violation on the part of Peterson would not avoid the forfeiture. This is a proceeding in rem, and under section 3450 it is the thing that is considered the offender. Goldsmith-Grant Co. v. United States, 254 U. S. 505, 41 S. Ct. 189, 65 L. Ed. 376; Dobbins’ Distillery v. United States, 96 U. S. 395, 24 L. Ed. 637. But under the ruling of the Circuit Court of Appeals there is no offense, unless intent is proven. Even the drastic requirements of the Revenue Act yield to this rule. In the abatement case, which under the provisions of the Volstead Act is a case in equity, I am necessarily impelled to the same conclusion as in the steel safe case. The evidence shows [430] that Malehorn was in possession of the premises as a lessee, but Peterson had been in Valdez since July 13, 1924, and the’ discovery of the liquor on the premises was made November 25, 1924. No evidence was offered by the government which showed that Peterson had actual knowledge of what was going on in the Chickaloon pool room at Anchorage while he was in Valdez, and no circumstantial evidence connected with the case indicates that Peterson necessarily ought to have known what was going on upon the premises. The government is entitled to a decree restraining Malehorn from using the premisés for one year, because it was shown that Malehorn pleaded guilty to a violation of the liquor laws. This decree is of no value to the government, since it is admitted that Malehorn left Anchorage soon after the raid and that Peterson has canceled his lease. Nevertheless the government is entitled to a decree, with the further provision restraining Malehorn from violating the law for one year in the territory of Alaska. As to Peterson, this was only a proceeding in rem against his property. No personal decree could be rendered against him under the pleadings and evidence, and I cannot find a sufficient showing in the evidence to entitle the government to close the Chickaloon building for one year. The government is entitled to an order restraining both defendants and all persons from keeping or selling liquor on the premises for one year.