CASES

ARGUED AND DETERMINED

IN THE

Circuit Courts of the United States

WITHIN THE SECOND CIRCUIT.

THE UNITED STATES vs. JOHN HALLORAN AND OTHERS.

Under the 20th section of the Act of July 20th, 1868, (15 U. S. Stat. at Large, 133,) the producing capacity of a distillery, and not the amount of spirits produced, is made the measure of taxation.

An assessment by an officer is not a condition precedent to the collection of taxes, when the statute prescribes the amount to be paid; and such amount can be recovered in an action of debt.

In an action upon a distiller's bond, an erroneous assessment, which did not include the amount actually due, as prescribed by the statute, is not conclusive against the Government.

(Before SHIPMAN, J., Southern District of New York, October 3d, 1876.)

SHIPMAN, J. This action was tried by the Court upon an agreed statement of facts which is made a part of the record. It is only necessary to give briefly the conclusions of law which I think are applicable to the case.

The producing capacity of the distillery of Halloran was duly and truly fixed, by a survey, made in accordance with the provisions of the 10th section of the Act imposing taxes on distilled spirits, approved July 20th, 1868, (15 U. S. Stat. at Large, 129,) at 1,530 gallons of spirits per diem, eighty per centum thereof being 1,224 gallons. The Government

VOL. XIV.-1

The United States v. Halloran,

claims to recover of the defendants as follows: a tax of fifty cents per gallon upon 12,240 gallons, the same being 80 per cent. of the admitted producing capacity of said distillery for the ten days during which the distillery was operated in March, 1869, amounting to....

Also upon the barrel tax on said quantity of spirits, at 40 gallons per barrel, being 306 barrels, at $4, amounting to.....

The per

to.....

diem tax, which it is admitted amounts

The per diem tax upon the days during which the distillery was admitted to have been suspended..

Total ...

100

$6,120

1,225

780

28

$8,153

Said Halloran actually manufactured, during said period, 11,134 50 gallons of spirits, and no more, which was ascertained and determined by the assessor to be the entire amount which the distiller manufactured, and upon this amount he paid, at the rate of fifty cents per gallon....... 5,567 20 The amount of barrel tax and per diem tax collected by distraint was..

The amount paid upon barrel tax by Halloran,

was

Amount paid

Balance of taxes claimed to be due.....

1,496

100

$7,163 20

$989 80

(1.) The 20th section of the Act of July 20th, 1868, (15 U. S. Stat. at Large, 133,) made the producing capacity, under the above recited facts, and not the amount produced, the measure of taxation. "At all events, the distiller was made taxable for a production of spirits not less then 80 per cent. of the producing capacity of his distillery, as determined by the survey, whether that quantity was actually produced by

The United States v. Halloran,

him or not, or whether he used a bushel of grain or not. Eighty per cent. of the estimated, (not the actual,) capacity of the distillery was the smallest amount for which he was made taxable. If he actually produced more, or if the quantity of grain or other materials used for distillation, as ascertained by the assessor, showed a larger production, he was made taxable to the full extent of that production thus shown." (The Collector v. Beggs, 17 Wall., 182; Pahlman v. The Collector, 20 Wall., 189.)

(2.) An assessment by an officer is not a condition precedent to the collection of taxes, when the statute prescribes the amount to be paid, and this amount can be recovered in an action of debt. "An assessment is only determining the value of the thing taxed, and the amount of the tax required of each individual. It may be made by designated officers or by the law itself." (Dollar Savings Bank v. United States, 19 Wall., 227.) The 20th section of the Act of July 20th, 1868, indeed, requires that the assessor shall determine whether the distiller has accounted, in his return, for the product of the materials which he used, and a rule is prescribed by which such ascertainment shall be made. No question is raised, in this case, that the true amount of spirits which was actually made, or which should have been made, was not returned and correctly ascertained by the assessor. It is admitted, that the spirits actually made did not equal eighty per cent. of the producing capacity. Under these facts, the law itself, and the assessor, determined that the measure of the taxation to be imposed upon the distiller was eighty per cent. of the producing capacity. He had become liable to pay upon the eighty per cent., and might have been liable to pay more, in case he had produced beyond the minimum rate, or if the quantity of grain used for distillation, as ascertained by the assessor, showed a larger production.

(3.) In an action upon the distiller's bond, an erroneous assessment, which did not include the amount actually due, as prescribed by the statute, is not conclusive against the Government. It is claimed by the defendant that the assessor had

The United States v. Halloran.

assessed upon the distiller's return, and had found that $1,496 only was due for barrel tax and per diem tax, which amount was collected by distraint, and that the assessment so inade and paid is final and conclusive, and the Government can have no action for the recovery of any tax for the month of March, even though the tax which was collected was for a less sum than might have been assessed under the law. The principles which have been declared in Dollar Savings Bank v. United States, (19 Wall., 227,) and in Clinkenbeard v. United States, (21 Wall., 65,) seem to be decisive upon this point. In the former case, it was held that an action of debt would lie to recover an amount due for taxes which had not been assessed. The latter case decided, that, in an action against a distiller, upon his bond, to recover the amount of an assessed tax, the assessment, though not appealed from, was not res adjudicata, and was not conclusive, and that the defendant was not precluded from showing its erroneous character. The Government is not suing upon the assessment of the officer, but has resorted to an action of debt, to recover a tax which has never been assessed in accordance with the statute. The assessment which was made is not such a judgment or decree as to bind the Government in this collateral proceeding.

Let judgment be entered in favor of the plaintiffs, for $98980, and interest from the date of the amendment of the declaration.

Roger M. Sherman, (Assistant District Attorney,) for the United States.

Robertson & Close, for the defendant Devlin.

The United States v. Tuska.

THE UNITED STATES vs. PHILIP H. TUSKA.

A plea in abatement to an indictment, averred that 48 persons were summoned as grand jurors; that the names of such persons were not drawn by the clerks, as required by the Rules; that one of the grand jurors was a nonresident; and that several of them were not possessed of the proper property qualification. It did not aver any prejudice to the accused. On demurrer to the plea: Held, that the plea was bad.

(Before BENEDICT, J., Southern District of New York, October 6th, 1876.)

BENEDICT, J. This case comes before the Court upon a demurrer to a plea in abatement. All the averments of the plea relate to the constitution of the grand jury that found the indictment. The material averments are, that 48 persons were summoned by the marshal to attend as grand jurors; that the names of such persons were not drawn by the clerks, as required by the Rules; that one of the grand jurors was a non-resident; and that several of them were not possessed of

the

proper property qualification. These are all the averments of the plea deserving of any particular notice, and they are simple averments of irregularities, unaccompanied by any averment of any prejudice to the accused. The law applicable and authoritative here upon such questions is to be found in the case of United States v. Reed, (2 Blatchf. C. C. R., 435,) subsequently considered and approved in United States v. Tallman, (10 Id., 21.) The determination of the Court in Reed's case was, that the statute of the State, adopted by the statute of the United States, having taken away the right of challenging the array of grand jurors, has, by implication,

taken

away the right to raise the objection in any form. The same case also determines, that an objection founded upon the want of qualification of grand jurors, either as individuals or as a panel, is within the scope of the statute and

unavailing.

It has been contended here, that, as, in the cases above re