Peacock Distilling Co. v. Commonwealth

Opinion of the court by JUDGE. BURNAJM Affirming. The appellant was indicted and convicted in the Bourbon Circuit Court for failing to report on May 1, 1898. the distilled spirits withdrawn from the distillery bonded warehouse .owned by it in Bourbon county, as required' by section 4111 of the Kentucky Statutes. The particular circumstances of the offense charged in the indictment are that appellant was “on the first day of May, 1898, the-owner and proprietor of a distillery bonded warehouse;, .situated in the county of Bourbon- arid the State of Kentucky, in which said warehouse- during the four months. n.ext preceding said first day of May, 1898, distilled spirits; were stored, and upon whieh said spirits within said period the United States Government tax had been paid, -become due, and which were removed from- said warehouse, being charged by law with the duty on the 1st day of May next after said Government tax shall have been paid, become due, or the spirits removed from the warehouse, of making and transmitting to the auditor of public accounts of the-State of Kentucky and the elerk of the county court aforesaid, a -statement, sworn to- by the person whose duty it is to make the report, showing the quantity of spirits on which the Government tax had been paid or become due, and what spirits had been removed from the warehouse during the preceding four months, the years in which the said -spirits were assessed for taxation-, the .serial number600 of packages in which it was contained, and the county, city, town, or taxing district in which the warehouse was situated in which the spirits were stored at the time ■of the assessment; in the county of Bourbon and State of Kentucky, on the 1st day of May, 1898, did willfully fail to make and transmit to the auditor of public accounts ■of the State of Kentucky and the clerk of the county court in the county of Bourbon, any report showing such facts, or any of them.” Appellant complains that the lower court erred in overruling its demurrer to this indictment, it being insisted that it is fatally defective in failing to charge that any distilled spirits had been withdrawn from defendant’s bonded warehouse which had been assessed for taxation. Section 4111 of the Kentucky Statutes, under which the indictment was drawn, is as follows, viz.: “Every owner or proprietor of a bonded warehouse in which distilled spirits may be stored, as contemplated in the preceding section, shall, on .the first day of January, May and September next after said Government tax shall have been paid, become due, or removed from the warehouse, make and transmit to the auditor of public ac•eounts, and the clerk of the county court in which the spirits may have been at the time of the assessment, a statement, sworn to by the person whose duty it is to make the report, showing the quantity of spirits, on which the Government tax has been paid or has become due, and. what spirits have been removed from the warehouse during the preceding four months; the years in which such spirits were assessed for taxation; the serial numbers of packages in which it is contained, and the county, city, town or taxing district in which the warehouse is situated, in which the spirits were stored at the time of the assessment, and «ha.ll, at the same time pay all taxes and interest on such [601] spirits due to State, county, taxing district, city or town, to the officer entitled to receive same.” To understand the purpose of section 4111, it is necessary for us to consider the character of the property sought to be reached. The United States Government levies a,n enormous direct tax upon whisky, and to secure the payment of these taxes-takes charge of the whisky from the moment of its manufacture until these taxes are paid. The distiller is allowed seven years from the date of its manufacture to pay these taxes, but the whisky in the meantime is required to be kept in what are known as “bonded warehouses,” which are in the possession of the officers of the Federal Government. Until the Government tax has been paid during this period, it can not be reached by the' State officers, nor subjected to the payment of State-taxes. In order to meet these conditions, the Legislature has made its tax laws, sé far as this species of property is concerned, conform to the provisions of the United States laws, and postpones the collection of its taxes due on whisky until thé Government tax has been paid, or has become due, and -the spirits removed from the bonded warehouse. These provisions are found in sections 4105 to 4114 of the Kentucky Statutes. By section 4105, every owner or proprietor of a distillery bonded warehouse-in which distilled spirits are stored is required between thev15th day of 'September and the 1st day of October of each year to make report to the auditor of public accounts, in writing, sworn to by the person making the report, the-quantity and kinds of spirits in such warehouse on the 15th day of September in -the year the statement is required to be made, giving- the dates when made, the serial number of the packages in which it is contained,, the place where the warehouse is situated, whether the602 Government tax has Veen paid thereon; if not, the date of the expiration of the bonded period. Section 4106 provides that these reports shall be submitted to the State board of valuation, and said board shall fix values thereon for the purposes of taxation. Section 4108 provides that immediately after the fixing of such values- the board ■shall certify to the county clerk of the respective counities in which the bonded warehouse is situated the amount of such valuation, and that this report shall he by the «county clerk filed in his office, and by him certified to the proper collecting officer of the county, city, town, or taxing district for collection.' Section 4110 provides: Taxes on distilled spirits which may be assessed while in bonded • warehouses, and on which the United States Government tax has not been paid, or will not become due on the 1st day of March .after the assessment, shall be due on the 1st days of January, May, and September next after said Government tax becomes due or paid, or when the spirits ■are removed from the warehouse, and the tax on each .yearns «assessment shall bear interest, as other taxes-. These sections of the statutes provide for the ascertainment of the existence and location of all distilled spirits, that they may be properly assessed for taxation by the officers of the State, and would seem to furnish all information necessary for this purpose; but under the United States laws the owner of whisky in a bonded warehouse is not required to leave it in bond for the full bonded period of seven years, but may, at his option, remove it from bond by the payment of tax due to the Federal Government at any time he may elect to do so; and to enable the revenue officers of the State to keep tab or track of each package which had been deposited in these bonded warehouses, and as an additional security for the pay [603] ment of the taxes due thereon to the State, county, city, town, or other taxing district, section 4111 was enacted, which provides that the owner or proprietor of these ■bonded warehouses shall report on the 1st days of January, Miay, and September all spirits which may have been removed from the warehouses during the preceding four-months by -their serial numbers. It .seems to us that this is not a,n unreasonable requirement, when we recollect that in many of these vast bonded warehouses thousands of these packages are stored, and that the only way to distinguish them is by their .serial numbers and the dates when they were manufactured. It is a well-known fact that these spirits differ in kind. Some are kept in the bonded warehouse for many years, and grow more valuable by age; while there are other kinds of spirits, known to the commercial world as “high wines,” on which the fax is usually paid by their owners within a very short time after they are deposited in the warehouses. To hold that this requirement of the statutes only relates to whisky which had been previously assessed for taxation would undoubtedly remove one check and safeguard which hais been provided by the Legislature to secure the payment of the tax due by this character of property. We do not think that this is a fair construction of the language of the section, or that it would meet the purposes of its enactment. We think that it is clearly the duty, under this section of the statute, of every proprietor of a bonded warehouse in which distilled spirits are stored, as contemplated in the preceding sections of the chapter, to report what spirits have been removed from the warehouse during the preceding four months, without regard to the fact whether they had been .actually assessed for taxation or not. In the case of Com. v. Bond [604] (Ky.) 53 S. W., 642, (21 Ky. L. R., 973) the indictment was so drawn that it did not appear from its averments that any distilled spirits were in fact stored in appellee’s warehouse, and the contention was made that the report under section 4111 must be made whether there were spirits stored in the warehouse or not, and it was held that there was no violation of the statutes unless there were such spirits stored in the warehouse. In this case the indictment charged not only that distilled spirits were actually stored .in appellant’s warehouse, but that the tax due thereon to the Government had been paid, and the spirits withdrawn therefrom. These averments were sufficient, and the demurrer was properly overruled. It is also complained that the indictment fails to charge that the defendant was the owner or proprietor of the bonded warehouse at the time the distilled spirits stored therein were removed prior to the 1st day of May, 1898. We are of the opinion that this fact is sufficiently alleged in the indictment. The secretary' and treasurer of the .appellant corporation frankly admit that the company did not make or transmit either to the county clerk of Bour. bon county or to the auditor of public accounts the report required by the statute, and that there had been actually withdrawn 185 packages of whisky from the b'ond■ed warehouse on which the Government tax had been paid, and on which the tax due the State of Kentucky and the county of Bourbon had accrued. While it is perfectly1 cleiar that there was no intentional violation of the law, or fraudulent purpose to evade the payment of the tax •due to the State or county, yet appellant clearly failed to conform to the requirements of the statute, and in■■ourred the penalties therein denounced. After a, careful [605] examination of the record, we are of the opinion that there was no error in the admission or rejection of testimony, ”or in the instruction given to the jury. For the reasons indicated, the judgment must be affirmed. Whole court sitting.