[256 U.S. 450, 451] Assistant Attorney General Adams for the United States.
[256 U.S. 450, 454] Mr. Ransom H. Gillett, of Albany, N. Y., for defendants in error.
Mr. Justice DAY delivered the opinion of the Court.
This case is here under the Criminal Appeals Act. 34 Stat. 1246 (Comp. St. 1704). The indictment is in four counts. [256 U.S. 450, 458] The first count, based on section 3257 of the U. S. Rev. Stats. (Comp. Stats. 5993), charges the defendants with unlawfully engaging in the business of distillers within the intent and meaning of the internal revenue laws of the United States, and that in fact they did distill spirits subject to the internal revenue tax imposed by the laws of the United States, and did defraud and attempt to defraud the United States of the tax on said spirits. The second count, based on section 3279 of the U. S. Rev. Stats. (Comp. Stat. 6019), charges that the defendants failed to keep on the distillery, conducted by them, any sign exhibiting the name or firm of the distiller, with the words 'Registered Distillery,' as required by statute. The third court, based on section 3281 of the U. S. Rev. Stats.( Comp. Stats. 6021), charges the defendants with carrying on the business of distilling within the intent and meaning of the revenue laws of the United States without giving the bond required by law. The fourth count, based on section 3282 of the U. S. Rev. Stats. (section 6022, Comp. Stats .), charges the defendants with unlawfully making a mash, fit for distillation, in a building not a distillery duly authorized by law.
The defendants interposed a motion to quash the indictment upon the grounds that the acts of Congress under which the same was found were repealed before the finding of the indictment, and that the acts charged to have been committed by them were after the date upon which the Eighteenth Amendment to the federal Constitution and the Volstead Act (41 Stat. 305) became effective. Defendants also filed a demurrer to the indictment on practically the same grounds. The motion to quash and the demurrer were sustained by the District Court. 266 Fed. 746.
The sections of the Revised Statutes may be summarized as follows: Section 3257 makes it an offense to defraud or attempt to defraud the United States of a tax [256 U.S. 450, 459] upon spirits distilled by one carrying on the business of a distillery, provides for forfeiting the distillery and the distilling-apparatus and all spirits found in the distillery or on the distillery premises, and subjects the offender to a fine of not less than $500 or more than $5,000, and imprisonment of not less than six months or more than three years. Section 3279 requires distillers to exhibit on the outside of their place of business a sign with the words 'Registered Distillery.' A violation of this section subjects the offender to a fine of $500. Section 3281 makes it an offense to carry on the business of a distiller without having given bond. For such offense the penalty is a fine from $1,000 to $5,000 and imprisonment not less than six months or more than three years. Section 3282 makes it penal to make or permit mash to be made in any building other than a distillery authorized by law. A violation of this section subjects the offender to a fine of not less than $500 or more than $5,000, and imprisonment of not less than six months or more than two years.
These statutes have long been part of the federal internal revenue legislation, and were passed under the authority of the taxing power conferred upon Congress by the Constitution of the United States. At the time of their enactment it was legal, so far as the federal government was concerned, to manufacture and sell ardent spirits for beverage purposes. The government derived large revenue from taxing the business, which it sought to realize and protect by the system of laws of which the sections in question were a part. This policy was radically changed by the adoption of the Eighteenth Amendment to the federal Constitution, and the enactment of legislation to make the amendment effective. The Eighteenth Amendment in comprehensive and clear language prohibits the manufacture or sale of intoxicating liquors in the United States for [256 U.S. 450, 460] beverage purposes, and confers upon Congress the power to enforce the amendment by appropriate legislation. To this end, Congress passed a national prohibition law known as the Volstead Act. 41 Stat. 305. It is a comprehensive statute intended to prevent the manufacture and sale of intoxicating liquors for beverage purposes.
Before taking up the sections of the Revised Statutes, some provisions of the Volstead Act may be appropriately referred to. Section 3 provides that after the Eighteenth Amendment to the Constitution of the United States goes into effect it shall be illegal to manufacture, sell, barter, transport, import, export, deliver, furnish or possess any intoxicating liquor except as authorized in the act. Liquor for nonbeverage purposes and wine for sacramental purposes may be manufactured, purchased, sold, bartered, transported, imported, exported, delivered, furnished and possessed but only as in the act provided, and the Commissioner of Internal Revenue may issue permits therefor. The act contains many provisions to make effective the purposes declared in section 3. Section 25, tit. 2, makes it unlawful to have or possess any liquor or property designed for the manufacture of liquor intended for use in violation of the act or which has been so used, and provides that no property rights shall exist in any such liquor or property. The same section provides for the issue of search warrants, and if it is found that any liquor or property be unlawfully held or possessed, or had been unlawfully used, the liquor and all property designed for the unlawful manufacture of liquor shall be destroyed, unless the court otherwise orders. Section 29 provides that any person who manufactures or sells liquor in violation of title 2 of the act shall for a first offense be fined not less than $1,000, or be imprisoned not exceeding six months, and for a second or subsequent offense shall be fined [256 U.S. 450, 461] not less than $200 or more than $2,000 and be imprisoned for not less than one month nor more than five years.
In title 3 elaborate provision is made for the production of alcohol in industrial alcohol plants. It provides for the taxation of such alcohol, and excepts industrial alcohol plants and bonded warehouses for the storage and distribution of industrial alcohol from certain sections of the Revised Statutes.
It is well settled that in cases of this character the construction or sufficiency of the indictment is not brought before us. United States v. Keitel, 211 U.S. 370 , 29 Sup. Ct. 123; United States v. Stevenson, 215 U.S. 190 , 30 Sup. Ct. 35. For the purpose of interpreting the statute we adopt the meaning placed upon the indictment by the court below. United States v. Colgate & Co., 250 U.S. 300 , 39 Sup. Ct. 465, 7 A. L. R. 443. As that court evidently construed the statutes upon the assumption that the charges had relation to intoxicating liquors intended for beverage purposes, we shall follow that view of the indictment in determining whether the former statutes are still in force.
Section 35 (in the margin)1 in its first sentence repeals [256 U.S. 450, 462] all prior acts to the extent of their inconsistency with the National Prohibition Act, to that extent and no more, and provides that no revenue stamps, or tax receipts, shall be issued in advance for the illegal manufacture or sale of intoxicating liquors, and that upon evidence of such illegal manufacture or sale the tax shall be assessed in double the amount now provided by law, with an additional penalty of $500 as to retail dealers and $1,000 as to manufacturers, and that the payment of such tax or penalty shall not give the right to engage in the manufacture or sale of such liquors, or relieve any one from criminal liability.
That Congress may under the broad authority of the taxing power tax intoxicating liquors notwithstanding their production is prohibited and punished we have no question. The fact that the statute in this aspect had a moral end in view as well as the raising of revenue, presents no valid constitutional objection to its enactment. License Tax Cases, 5 Wall. 462, 471; In re Kollock, 165 U.S. 526, 536 , 17 S. Sup. Ct. 444; United States v. Jin Fuey Moy, 241 U.S. 394 , 36 Sup. Ct. 658, Ann. Cas. 1917D, 854; United States v. Doremus, 249 U.S. 86 , 39 Sup. Ct. 283. The question remains concerning the applicability of section 3257, involving the right to punish for attempting to defraud the United States of a tax, did Congress intend to punish such violation of law by imposing the old penalty denounced [256 U.S. 450, 463] in section 3257 or as provided in the new and special provision enacted in the Volstead Act?
It is contention of the government that section 35 saves the right to prosecute as to taxes, as well as the acts charged as violative of the other sections of the Revised Statutes, because of the phrase with which the section concludes:
It is, of course, settled that repeals by implication are not favored. It is equally well settle that a later statute repeals former ones when clearly inconsistent with the earlier enactments. United States v. Tynen, 11 Wall. 88. In construing penal statutes, it is the rule that later enactments repeal former ones practically covering the same acts, but fixing a lesser penalty. The concluding phrase of section 35 by itself considered is strongly indicative of an intention to retain the old laws. But this section must be interpreted in view of the constitutional provision contained in the Eighteenth Amendment and in view of the provisions of the Volstead Act intended to make that amendment effective.
Having in mind these principles and considering now the first count of the indictment charging an attempt to defraud and actually defrauding the government of the revenue tax, we do not believe that the general language used at the close of section 35 evidences the intention of Congress to inflict for such an offense the unishment provided in section 3257 with the resulting forfeiture, fine, and imprisonment, and at the same time to authorize prosecution and punishment under section 35 enacting lesser and special penalties for failing to pay such taxes by imposing a tax in double the amount provided by law, with an additional penalty of $500 on retailers and $1,000 on manufacturers. Moreover, the concluding words of the first paragraph of section 35, as to all the offenses charged, must [256 U.S. 450, 464] be read in the light of established legal principles governing the interpretation of statutes, and in view of the provisions of the Volstead Act itself making it unlawful to possess intoxicating liquors for beverage purposes, or property designed for the manufacture of such liquor, and providing for its destruction. We agree with the court below that while Congress manifested an intention to tax liquors illegally as well as those legally produced, which was within its constitutional power, it did not intend to preserve the old penalties prescribed in section 3257 in addition to the specific provision for punishment made in the Volstead Act.
We have less difficulty with the other sections of the prior revenue legislation under which the charges, already set forth, are made. We think it was not intended to keep on foot the requirement as to displaying the words 'Registered Distillery' in a place intended for the production of liquor for beverage purposes which could no longer be lawfully conducted; nor to require a bond for the control of such production; nor to penalize the making of mash in a distillery which could not be authorized by law.
The questions before us solely concern the construction of the statutes involved, under an indictment pertaining to the production of liquor for beverage purposes, and we think they were correctly answered in the opinion. of the court below. It follows that its judgment is
[ Footnote 1 ] Section 35: 'All provisions of law that are inconsistent with this act are repealed only to the extent of such inconsistency and the regulations herein provided for the manufacture or traffic in intoxicating liquor shall be construed as in addition to existing laws. This act shall not relieve anyone from paying taxes or other charges imposed upon the manufacture or traffic in such liquor. No liquor revenue stamps or tax receipts for any illegal manufacture or sale shall be issued in advance, but upon evidence of such illegal manufacture or sale a tax shall be assessed against, and collected from, the person responsible for such illegal manufacture or sale in double the amount now provided by law, with an additional penalty of $500 on retail dealers and $1,000 on manufacturers. The payment of such tax or penalty shall give no right to engage in the manufacture or sale of such liquor, or relieve anyone from criminal liability, nor shall this act relieve any person from any liability, civil or criminal, heretofore or hereafter incurred under existing laws. The commissioner, with the approval of the Secretary of the Treasury, may compromise any civil cause arising under this title before bringing action in court; and with the approval of the Attorney General he may compromise any such cause after action thereon has been commenced.'
This section has given rise to different constructions in the federal courts, in some it has been held that the National Prohibition Act has repealed the old revenue laws. United States v. Windam (D. C.) 264 Fed. 376; United States v. Puhac (D. C. Pa.) 268 Fed. 392; United States v. Stafoff (D. C. Mo.) 268 Fed. 417; Reed v. Thurmond (C. C. A. S. C.) C. C. A. 4th Circuit, 269 Fed. 252. Contra United States v. Sohm (D. C.) 265 Fed. 910; United States v. Turner (D. C.) 266 Fed. 249; United States v. Sacein Rouhana Farhat (D. C. Ohio) 269 Fed. 33.