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IN THE MATTER OF THE LIABILITY OF A PARTY TO PAY INTERNAL REVENUE SPECIAL TAX AS A WHOLESALE DEALER IN SPIRITS, WINES AND MALT LIQUORS, WHO SELLS IN ONE TRANSACTION TO ONE PURCHASER TWO OR MORE SEPARATE PACKAGES OF LESS THAN FIVE PROOF GALLONS OF "DIFFERENT KINDS" OF DISTILLED SPIRITS AGGREGATING MORE THAN FIVE GALLONS, AND HIS RIGHT TO A REFUND, IF HE HAS PAID MORE THAN THE PROPER PROPORTIONATE PART OF THE TAX FOR A YEAR, WHEN MAKING A SALE AS A WHOLESALE DEALER DURING THE TAX YEAR, WITHOUT FIRST HAVING PAID THE TAX.-LIQUOR-DEALER'S CASE.

1. Courts as a general rule adopt the construction placed upon statutes by executive officers charged with the duty of executing them, especially when such construction has been acted upon for a considerable time by such officers.

2. The act of February 8, 1875 (18 Stat., 311, sec. 18), as amended by section four of the act of March 1, 1879 (20 Stat., 333), provides that "every person who sells or offers for sale (1) distilled spirits, (2) wines, or (3) malt liquors in quantities of not less than five wine gallons at the same time shall be regarded as a wholesale liquor dealer." April 2, 1882, a party, who had paid special tax only as a retail dealer, sold to a purchaser in one transaction in separate packages 4 gallons of whiskey, 2 gallons of brandy, 2 gallons of blackberry brandy, and 2 gallons of gin. December 8, 1882, he paid the proper collector, under an assessment made in consequence of said sale, $100 as the special tax of a wholesale dealer for a year and $50 penalty. The dealer applied to the Commissioner of Internal Revenue for a refund of the amount so paid, and March 17, 1884, the Commissioner allowed the whole claim.

Held:

(1.) The sale mentioned constituted the vendor a wholesale dealer.

(2.) The "special tax" year is from May 1, in one year to May 1, in the next year. As the claimant in this case made only one sale as a wholesale dealer, he was not liable to pay the special tax for a year, but only for the residue of the year in which the sale was made-that is, for April, 1882, being $8.33 with a penalty of $4.17, in all $12.50. Having paid $150, he is entitled to a refund of $137.50. (3.) The sale of a number of articles at the same time, even at separate prices for each, is generally deemed to be entire.

April 21, 1882, John C. Thomasson, who was engaged in business as a retail dealer in distilled spirits, wines and malt liquors at Henderson, Kentucky, sold to William Binley in one transaction in separate packages 4 gallons of whiskey, 2 gallons of brandy, 2 gallons of blackberry brandy, and 2 gallons of gin. For making this sale of several kinds of spirits (the aggregate being in excess of 5 gallons) to a customer at one time, Thomasson was required by the collector of his district to pay, and, December 8, 1882, he did pay, a special tax of $100 as a wholesale dealer, and 50 per cent. penalty, amounting to $150, under an assessment made by the Commissioner of Interual Revenue. The claimant applied to the Commissioner for a refund of the whole amount so paid. January 12, 1884, the Commissioner of Internal Revenue allowed the claim

for $141.67, thus holding the claimant as a wholesale dealer by virtue of the sale he had made, and allowing him a refund of all the penalty paid, and all the tax paid, except the tax for one month as a wholesale dealerthat is for April, 1882.

March 13, 1883, the Commissioner requested the First Comptroller to return the claim for re-examination "under a recent decision of the courts, published since the allowance of the claim, and accepted and acquiesced in by this [Commissioner's] office." Subsequently the Commissioner of Internal Revenue allowed the claim for $150.

The First Comptroller is required to decide whether the claim so allowed shall be paid.

DECISION BY WILLIAM LAWRENCE, First Comptroller.

The act of February 8, 1875 (18 Stat., 311, sec. 18), as re-enacted in the same words by section 4 of the act of March 1, 1879 (20 Stat., 333), provides:

"That retail dealers in liquors shall pay twenty-five dollars. Every person who sells, or offers for sale, foreign or domestic distilled spirits, wines, or malt liquors, otherwise than as hereinafter provided, in less quantities than five wine gallons at the same time, shall be regarded as a retail dealer in liquors. Wholesale liquor dealers shall each pay one hundred dollars. Every person who sells, or offers for sale, foreign or domestic distilled spirits, wines, or malt liquors, otherwise than as hereinafter provided, in quantities of not less than five wine-gallons at the same time, shall be regarded as a wholesale liquor dealer. But no distiller, who has given the required bond, and who sells only distilled spirits of his own production at the place of manufacture in the original packages to which the tax-stamps are affixed, shall be required to pay the special tax of a wholesale liquor-dealer on account of such sales." The Revised Statutes provide as follows:

"SEC. 3237. All special taxes shall become due on the first day of May, in each year, or on commencing any trade or business on which such tax is imposed. In the former case the tax shall be reckoned for one year; and in the latter case it shall be reckoned proportionately, from the first day of the month in which the liability to a special tax commenced to the first day of May following."

Section 3176 of the Revised Statutes authorizes the Commissioner of Internal Revenue to add fifty per centum to said tax in case of any sale by a party who has unlawfully failed to make a return for special tax.* *In this connection the prior legislation on the subject is presented. The act of July 1, 1862 (12 Stat., 455, sec. 64) provided that:

"3. Wholesale dealers in liquors of any and every description, including distilled spirits, fermented liquors, and wines of all kinds, shall pay one hundred dollars for each license. Every person, other than the distiller, or brewer, who shall sell, or offer for sale, any such liquors or wines in quantities of more than three gallons at one time, to the same purchaser, shall be regarded as a wholesale dealer in liquors within the meaning of this act.

"4. Retail dealers in liquors, including distilled spirits, fermented liquors, and wines of every description, shall pay twenty dollars for each license. Every person who shall sell or offer for sale such liquors in less quantities than three gallons at one

In the "Manual of the Direct and Excise Tax System including the forms and regulations established by the Commissioner of Internal Revenue, the decisions and rulings of the Commissioner," &c., 4th ed., 1864, page 165, under the head of "rulings," is the following:

"No. 95. Any person who shall sell liquors in quantities of more than three gallons at one time and to the same purchaser will be required to take license as a wholesale dealer in liquors, although such sales may not amount to twenty-five thousand dollars per annum. Persons selling liquors at retail, whose annual sales each shall exceed twenty-five thousand dollars will also be required to take license as wholesale dealers in liquors."

*

This decision was made under the statute declaring that every "person who shall sell in quantities of more than three gallons, at one time, to the same purchaser, shall be regarded

liquors

time, to the same purchaser, shall be regarded as a retail dealer in liquors under this act. But this shall not authorize any spirits, liquors, wines, or malt liquors to be drank on the premises."

The act of June 30, 1864 (13 Stat., 251, sec. 79) provided that:

"Wholesale dealers in liquors, whose annual sales do not exceed fifty thousand dollars, shall pay fifty dollars for each license; and if exceeding fifty thousand dollars, for every additional one thousand dollars in excess of fifty thousand dollars, one dollar. Every person who shall sell, or offer for sale, any distilled spirits, fermented liquors, or wines of any kind, in quantities of more than three gallons at one time to the same purchaser, or whose annual sales, including sales of other merchandise, shall exceed twenty-five thousand dollars, shall be regarded a wholesale dealer in liquors. "Retail dealers in liquors shall pay twenty-five dollars for each license. Every person who shall sell or offer for sale foreign or domestic spirits, wines, ale, beer, or other malt liquors in quantities of three gallons or less, or whose annual sales, including all sales of other merchandise, do not exceed twenty-five thousand dollars, shall be regarded as a retail dealer in liquors under this act. But nothing herein contained shall authorize the sale of any spirits, wines, or malt liquors to be drank on the premises."

The act of July 13, 1866 (14 Stat., 116, sec. 9) provided that:

"Wholesale dealers in liquors whose annual sales do not exceed fifty thousand dollars shall pay one hundred dollars and if exceeding fifty thousand dollars, for every additional one thousand dollars in excess of fifty thousand dollars they shall pay one dollar, and such excess shall be assessed and paid in the same manner as required of wholesale dealers. Every person who shall sell or offer for sale any distilled spirits, fermented liquors, or wines of any kind in quantities of more than three gallons at one time to the same purchaser, or whose annual sales, including sales of other merchandise, shall exceed twenty-five thousand dollars, shall be regarded as a wholesale dealer in liquors.

Retail dealers in liquors shall pay twenty-five dollars. Every person who shall sell or offer for sale foreign or domestic spirits, wines, ale, beer, or other malt liquors in quantities of three gallons or less, and whose annual sales, including all sales of other merchandise, do not exceed twenty-five thousand dollars, shall be regarded as a retail dealer in liquors."

The act of March 2, 1867 (14 Stat., 474, sec. 9), struck out of the act of 1866 the words in paragraph four,

"In quantities of more than three gallons at one and the same time to the same purchaser, or"

And in paragraph five,

"In quantities of three gallons or less,"

thus in effect proving that persons who made sales not exceeding twenty-five thousand dollars in a year should be deemed retailers, and those above wholesale dealers.

The act of July 20, 1868 (15 Stat., 150, sec. 59), continued the same distinction, by providing that:

"Wholesale liquor dealers, whose annual sales do not exceed twenty-five thousand dollars, shall pay one hundred dollars; and if exceeding twenty-five thousand dollars,

as a wholesale dealer." The inference from the decision is that a person who sells at one time more than three gallons in the aggregate of one or more different kinds of liquors was regarded as a wholesale dealer.

September 14, 1869, the Commissioner of Internal Revenue instructed a collector that "the sale of several packages of the same kind of spirits at the same time, each containing less than five proof gallons, but which contain in the aggregate more, cannot be made by a retail dealer, but he may sell several packages of different kinds of spirits, each containing less than five proof gallons, although the aggregate may be more. The sale of each different kind is considered as a separate sale." This instruction was given in answer to a question whether a retail dealer could lawfully sell to one person "four-and-a-half gallons of rum [and] four-and-a-half gallons of wine in [separate] wooden packages at one time and place" (10 Int. Rev. Rec., 98, September 25, 1869).

It will be observed that the effect of this opinion was to sanction a sale by a retail dealer to one person at one time and place of two packages each of 4 gallons, one of distilled spirits [rum] and one of fermented liquor [wine]. When it was said, therefore, that a retail dealer may sell as stated "several packages of different kinds of spirits, each containing less than five gallons, although the aggregate may be more," the "different kinds" were, one distilled, one fermented. It was not said that whiskey and brandy were different kinds of spirits, though the language employed might seem to justify this conclusion. On the con trary, when a case was submitted involving the question whether alcohol and gin, both distilled spirits, were to be regarded as different kinds of spirits within the meaning of the statute, the opinion was given that they were not. Thus in January, 1875, the Commissioner of Internal Revenue was asked this question: "Can a retail liquor dealer sell 4 gallons alcohol, 4 gallons rum, 4 gallons gin, &c., at the same

shall each pay in addition ten dollars for every one thousand dollars of sales of such spirits, wines, or liquors in excess of twenty-five thousand dollars, and on other sales shall pay as wholesale dealers; and such excess shall be assessed and paid in the same manner as required of wholesale dealers. Every person who sells or offers for sale distilled spirits, wines, or malt liquors, whose annual sales shall exceed twenty-five thousand dollars, shall be regarded as a wholesale liquor dealer. But no distiller or brewer, who has paid his special tax as such, and who sells only distilled spirits or malt liquors of his own production, at the place of mannfacture, in the original casks or packages in which they are placed for the purpose of affixing the tax stamps, shall be required to pay the special tax of a wholesale dealer."

The act of April 10, 1869 (16 Stat., 42, sec. 1), provided:

"Retail dealers in liquors shall pay twenty-five dollars. Every person who sells or offers for sale foreign or domestic distilled spirits, wines, or malt liquors, in less quantities than five gallons at the same time, shall be regarded as a retail dealer in liquors.

Wholesale liquor dealers shall each pay one hundred dollars. Every person who sells or offers for sale foreign or domestic distilled spirits, wines, or malt liquors, in quantities of not less than five gallons at the same time, shall be regarded as a wholesale liquor dealer.

"Dealers in liquors whose sales, including sales of all other merchandise, shall exceed twenty-five thousand dollars, shall each pay an additional tax at the rate of one dollar for every one hundred dollars of sales of liquors in excess of such twenty-five thousand dollars; and on every thousand dollars of sales or other merchandise shall pay at the same rate as a wholesale dealer; and such excess shall be returned, assessed, and paid in the same manner as required of wholesale dealers."

time, without becoming liable to the tax as a wholesale liquor dealer?" January 20, 1875, the Commissioner answered, "that if the retail dealer could show that he made a separate bargain and sale with respect to each kind of liquor, he would not be held liable as a wholesale liquor dealer" (21 Int. Rev. Rec., 25, January 25, 1875).

It is understood that the usage in the Treasury Department, at least since the act of February 8, 1875, has been to regard as a wholesale dealer any person who sells five gallons or more of distilled spirits to one person at the same time and place in one transaction, although such aggregate amount may consist in part of brandy and in part of whiskey or other distilled spirits, and so of a person selling in the same mode an aggregate of five gallons or more of wine of whatever kinds, and so as to malt liquors of whatever kinds. A learned judge has ruled differently in a recent case, but for several reasons his views cannot be adopted.*

The long usage of the Treasury Department should be regarded as having settled the question. It is well known that in such cases courts, as a general rule adopt the construction given to statutes by executive officers charged with the duty of carrying them into effect when not

* The case is as follows:

United States District Court, Eastern District Michigan, January 14, 1884.

The United States v. William V. James.

A retail dealer in liquors may lawfully sell to the same person at the same time different packages of different liquors, although the aggregate may exceed five gallons, provided no single package equals that amount: otherwise of different packages of the same liquor.

BROWN, J.-Defendant is charged with carrying on the business of a wholesale dealer in liquors without payment of the special tax required by law. His alleged offence consists in selling to the same person at the same time different packages of different liquors each package containing less than five gallons; but the aggregate purchase considerably exceeding that amount. For instance, a buyer orders of him four gallons each of wine, gin, whiskey, and brandy. He fills the order, putting each kind of liquor into a separate receptacle. The total amount of the purchase is, therefore, sixteen gallons. Does he, by such transactions, become "a person who sells, or offers for sale, foreign or domestic distilled spirits, wines, or malt liquors in quantities of not less than five wine gallons at the same time," as a wholesale liquor dealer is defined by the act of March 1, 1879, chap. 125, sec. 4? In my opinion he does not. I concede that it would be otherwise if he sold like quantities of the same liquor at the same time, though such liquor were put up in different packages. This appears to have been the point decided in U. S. v. Clare, 26 Int. Rev. Rec., 101; S. C., 2 Federal Rep., 55, although the facts are not fully stated in the report. In such case it would be almost impossible to escape the inference that the seller intended to evade the law.

*

But, I think, a sale of different kinds of liquor should be, for the purpose of this act, treated as a separate sale of each kind. The circular of Acting Commissioner Douglass, of September 14, 1869, 10 Int. Rev. Rec., 98, lays down, as it seems to me, the correct principle. It was not within the contemplation of the law to require a fam

13 DEC, VOL 5

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