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 National Prohibition Act took effect and was in force from and after the date when the Eighteenth Amendment to the Constitution took effect. 41 Stat. 307-322. The amendment was ratified January 28, 1919, and took effect January 29, 1920. It provided that:

"After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territories subject to the jurisdiction thereof for beverage purposes is hereby prohibited."

Section 3 of title 2 of the National Prohibition Act (41 Stat. 307, 308) provides:

"No person shall on or after the date when the Eighteenth Amendment to the Constitution of the United States goes into effect, manufacture, sell, barter, transport, import, export, deliver, furnish or possess any intoxicating liquor except as authorized in this act, and all the provisions of this act shall be liberally construed to the end that the use of intoxicating liquor as a beverage may be prevented."

This act was in full force and effect when the Commissioner of Internal Revenue levied the tax, the collection of which the plaintiff seeks to enjoin by this action. The appellant states the question in controversy as follows:

"Where a person has legally withdrawn intoxicating liquor from a bonded warehouse for nonbeverage purposes, and at the time of withdrawal has paid all taxes thereon, and has then sold such liquor, has the Commissioner or collector of internal revenue any power or warrant, under section 35, title 2, of the National Prohibition Act, after said liquor has been sold and said Commissioner and collector of internal revenue surmises that some of said liquor has been sold for beverage purposes in violation of law, to levy, assess, or collect from such person a further sum under the guise of a tax, as though the liquor had been withdrawn in the first instance for beverage purposes?

"Another question to be determined is: Can such Commissioner or collector proceed to levy and collect from such person a $500 penalty for selling liquor in violation of law, and a further penalty in the sum of $1,000 for manufacturing in violation of law, and a further penalty in the sum of $93.75 for rectifying in violation of law, and can they do all these things without any hearing granted to that person?"

The appellant adds:

"All of the facts involved here took place after the National Prohibition Act was enacted, which was on October 28, 1919. At that time and since, complete prohibition of the sale of intoxicating liquor for beverage purposes has been in effect."

The appellant contends that, as the Eighteenth Amendment and the statute passed for its enforcement prohibits absolutely the manufacture and sale of intoxicating liquors and wines for beverage purposes, the provisions of the prior law inconsistent with the constitutional en

(273 F.)

actment and the enforcing statute have been repealed, and there can be no tax assessed or imposed on such liquors and wines; in other words, there can be no legal tax, so it is contended, upon that which cannot be legally manufactured or sold, and that if manufactured or sold illegally, the liability of the offender is for a penalty, and not for a tax, and if it is for a penalty its collection must be enforced by proceedings in court and not by the summary proceedings of an assessment. Conceding that the tax is in the nature of a penalty, it does not follow that its collection can be restrained by a suit in equity, if there is a speedy and adequate remedy at law. That there is such a remedy at law cannot be seriously controverted.

Section 3220 of the Revised Statutes (Comp. St. § 5944) provides: "The Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, is authorized, on appeal to him made, to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected."

Section 3226 (section 5949) provides:

"No suit shall be maintained in any court for the recovery of any internal tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until appeal shall have been duly made to the Commissioner of Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of the Commissioner has been had therein: Provided that if such decision is delayed more than six months from the date of such appeal, then the said suit may be brought, without first having a decision of the Commissioner at any time within the period limited in the next section."

It does not appear from the amended bill of complaint, nor is it otherwise claimed, that the plaintiff has appealed to the Commissioner of Internal Revenue for the abatement of the tax assessed against him in this case. That this suit cannot be maintained has been conclusively determined by the Supreme Court of the United States in Cheatham v. United States, 92 U. S. 85-88, 23 L. Ed. 561, State Railroad Tax Cases, 92 U. S. 576-613, 23 L. Ed. 663, and Dodge v. Osborn, 240 U. S. 118, 36 Sup. Ct. 275, 60 L. Ed. 557. In the latter case, the Supreme Court, quoting from Snyder v. Marks, 109 U. S. 189, 193, 194, 3 Sup. Ct. 157, 160 (27 L. Ed. 901), says:

"The inhibition of Rev. Stat. § 3224, applies to all assessments of taxes, made under color of their offices, by internal revenue officers charged with general jurisdiction of the subject of assessing taxes against tobacco manufacturers. The remedy of a suit to recover back the tax after it is paid is provided by statute, and a suit to restrain its collection is forbidden. The remedy so given is exclusive, and no other remedy can be substituted for it. Cheatham v. United States, 92 U. S. 85, 88. And again in State Railroad Tax Cases, 92 U. S. 575, 613, it was said by this court, that the system prescribed by the United States in regard to both customs duties and internal revenue taxes, of stringent measures, not judicial, to collect them, with appeals to specified tribunals, and suits to recover back moneys illegally exacted was a system of corrective justice intended to be complete, and enacted under the right belonging to the government to prescribe the conditions on which it would subject itself to the judgment of the courts in the collection

of its revenues. In the exercise of that right, it declares, by section 3224, that its officers shall not be enjoined from collecting a tax claimed to have been unjustly assessed, when those officers, in the course of general jurisdic tion over the subject-matter in question, have made the assignment [assessment] and claim that it is valid."

The judgment of the District Court is affirmed.

UNITED STATES v. FREIDERICKS et al.

(District Court, D. New Jersey. May 17, 1921.)

1. Indictment and information 108-Indorsement of statute under which drawn no part of indictment.

The indorsement on an indictment of the statute under which it is drawn is no part of the indictment, which is sufficient if it charges an offense under any statute.

2. Internal revenue hibition Act.

2-Statutory provisions not repealed by National Pro

Under the settled rules that repeals by implication are not favored, and that where the provisions of an earlier and a later statute are not absolutely irreconcilable and no purpose to repeal the earlier is expressed or clearly implied in the later, effect will, if possible, be given to both, Rev. St. § 3296 (Comp. St. § 6038) and Act Aug. 27, 1894, c. 349, §§ 51, 59 (Comp. St. §§ 6058, 6065), relating to bonded warehouses, and prohibiting the removal of any liquor therefrom without payment of the tax, or in the absence of the storekeeper, held not repealed by the National Prohibition Act, and an indictment for violation of said sections sustained. 3. Internal revenue 2-Offense of unlawful removal of spirits from warehouse not same as illegal transportation.

The removal of distilled spirits from a government warehouse without payment of the tax thereon, or in the absence or without the knowledge of the storekeeper, contrary to Rev. St. § 3296, and Revenue Act Aug. 27, 1894, §§ 51, 59, though in a sense the transportation of the spirits, is not the same offense as the illegal transportation of intoxicating liquor contrary to National Prohibition Act, tit. 2 and 3, as respects the question of implied repeal.

4. Internal revenue 39, 40-Removal of spirits from warehouse without payment of tax, etc., not warranted by permit under National Prohibition Act.

A permit under the National Prohibition Act for the removal of distilled spirits from a government warehouse will not justify such removal without the payment of the tax imposed thereon, or in the absence or without the knowledge of the storekeeper, in violation of Rev. St. § 3296, and Revenue Act Aug. 27, 1894, §§ 51, 59.

Criminal prosecution by the United States against Oscar C. Freidericks and others. On demurrer to indictment. Overruled.

Isaac Gross, Asst. U. S. Atty., of Jersey City, N. J.

Samuel Kessler, of Newark, N. J., for defendant Freidericks.

RELLSTAB, District Judge. The indictment contains three counts, to which the defendant Freidericks demurs. In substance, and so far as pertinent to the present inquiry, they charge:

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(273 F.)

First Count. That on or about September 12, 1920, the defendants, with unknown others, intending to commit an offense against the United States, fraudulently, etc., conspired to unlawfully remove from the La Breque Company, Incorporated, warehouse at 600 Ogden street, in the city of Newark, New Jersey-a United States government bonded warehouse for spirits authorized by law-a quantity of distilled spirits, to wit, 400 gallons of Overholt and Glenmore whisky, on which the tax had not been paid, and that to effect the object of said conspiracy, the named defendants, on or about that date, placed the whisky into empty barrels and cans theretofore taken by them to the La Breque warehouse, and did remove the whisky on which the tax had not been paid from that warehouse to a place on Ferry street, near Wilson avenue, in said city.

Second Count. The unlawful removal of the liquor on which the tax had not been paid from the La Breque warehouse to the Ferry street location.

Third Count. The unlawful removal of the liquor from the La Breque warehouse to the Ferry street location, in the absence, and without the knowledge of the storekeeper in charge of the warehouse, and by breaking and tampering with its locks.

The greater number of the grounds of demurrer filed are too general and vague for consideration, and were not argued, either orally or in the brief. Those argued are to the effect that section 3296, R. S. (Comp. Stat. § 6038), and section 51 of the Act of August 27, 1894, 28 Stat. 565 (Comp. Stat. § 6058), indorsed on the indictment as the sections violated, as well as sections 600 and 604 of the Act of February 24, 1919, 40 Stat. 1105 (Comp. St. Ann. Supp. 1919, §§ 5986e and 5986j), were repealed by the National Prohibition Act (41 Stat. 305), hereinafter called the Enforcement Act.

The reported federal court decisions dealing with like contentions differ greatly as to the effect of the Enforcement Act upon such earlier laws. Except that later decisions take the opposite view from that reached in United States v. Turner (D. C. W. D. Va.) 266 Fed. 248, which held on reasons which to my mind are convincing that R. S. § 3296, was not repealed by the Enforcement Act, I should have been content to overrule this demurrer on a mere citation of that case. However, in view of such differing opinions, and particularly of that in Reed v. Thurmond (C. C. A. 4) 269 Fed. 252, said by the demurrant to overrule the Turner Case, I am constrained to give the matter a more extended consideration.

[1] The indorsements constitute no part of the indictment, and it will be upheld if there is any act in force which can sustain it, whether any act is specifically mentioned therein, or if a different one is indorsed thereon. Williams v. United States, 168 U. S. 382, 389, 18 Sup. Ct. 92, 42 L. Ed. 509; United States v. Nixon, 235 U. S. 231, 35 Sup. Ct. 49, 59 L. Ed. 207; United States v. Wood (D. C. N. J.) 168 Fed. 438. However, in my judgment, the sections so indorsed furnish a legal basis for the challenged indictment.

[2] The Enforcement Act does not expressly repeal these sections.

The contention is that it does so by necessary implication. The question to be considered, therefore, is simply one of statutory interpretation.

"Where two statutes cover, in whole or in part, the same matter, and are not absolutely irreconcilable, and no purpose to repeal the earlier act is expressed or clearly indicated, the court will, if possible, give effect to both." Frost v. Wenie, 157 U. S. 46, 15 Sup. Ct. 532, 39 L. Ed. 614; United States v. Lee Yen Tai, 185 U. S. 213, 22 Sup. Ct. 629, 46 L. Ed. 878; Franke v. Murray (C. C. A. 8) 248 Fed. 865, 160 C. C. A. 623, L. R. A. 1918E, 1015, Ann. Cas. 1918D, 98; United States v. Sacein Rouhana Farhat (D. C. S. D. Ohio, E. D.) 269 Fed. 33.

Manifestly this act was not intended to prescribe the only rules which should govern the manufacture of and traffic in intoxicating liquor. Neither in title nor provision is there warrant for the contention that this act was to supplant in toto the earlier laws dealing with the general subject of manufacture of and traffic in intoxicating liquor. True, it was a prohibitory enactment; but the prohibitions did not go beyond those ordained by the Eighteenth Amendment, which were limited to the manufacture of and traffic in intoxicating liquor for beverage purposes. On the contrary, the act (sections 3, 6, and 12, title 2) contemplates the manufacture of and traffic in alcoholic liquors for nonbeverage purposes. In section 3 it is declared that all the provisions of the act were to "be liberally construed to the end that the use of intoxicating liquor as a beverage may be prevented." And section 35 of the same title declares:

"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 any one from paying any 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 any one from criminal liability, nor shall this Act relieve any person from any liability, civil or criminal, heretofore, or hereafter incurred under existing laws."

This section gives legislative emphasis and sanction to the wellsupported canon of interpretation of statutes, viz. repeals by implication are not favored, and may be inferred only if the later statute is so repugnant to or inconsistent with the earlier one that it is clear that the legislative body must have so intended. Wood v. United States, 41 U. S. (16 Pet.) 342, 10 L. Ed. 987; Arthur v. Homer, 96 U. S. 137, 24 L. Ed. 811; Witte v. Shelton (C. C. A. 8) 240 Fed. 265, 153 C. C. A. 191. The word "traffic," as used in section 35, must be given its larger significance. It is a generalization of the more specific terms used in the other parts of the act, such as "sell," "purchase," "barter," "storage," "transport," "import," "export," "prescribe," "deliver," and "furnish" (see sections 3, 6, 7, 10, 13, 14, 26, 33, and 37), and includes every step taken in the commerce in liquor from the man