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UNITED STATES v. CROSSTOWN LIQUOR MART

January 10, 1950

UNITED STATES
v.
CROSSTOWN LIQUOR MART, INC., ET AL.



The opinion of the court was delivered by: Campbell, District Judge.

On July 11, 1949, two search warrants were executed on the premises of the Crosstown Liquor Mart in the City of Chicago. 409 cases of liquor (distilled spirits) were seized under one warrant, and a 1948 Pontiac automobile, the property of Sol M. Dunner, the president of the corporation, was seized under another warrant on a public street in front of the premises of the Crosstown Liquor Mart. On July 29, 1949, an indictment was returned charging the present defendants with violations of the Internal Revenue Laws, specifically those relating to the carrying on of the business of a wholesale liquor dealer without having paid the special tax required by law.

The defendants moved for return of the property and suppression as evidence of all property and papers seized under authority of the search warrants. A hearing was had on the motion, after which the matter was taken upon the briefs of the parties.

The defendants set forth three principal contentions in support of their position: (a) "The sales which are the subject of the applications for warrants in the case at bar and the surrounding circumstances do not constitute a violation of Section 3253, Title 26 U.S.C.A., that is, carrying on the business of a Wholesale Liquor Dealer with willful failure to pay the special tax"; (b) "The search warrants are insufficient on their faces, and the warrants were illegally executed by reason of seizure of property not described in the warrant and by seizure of property not located on the premises ordered searched"; (c) "There is no provision in law for the seizure of the tax paid property of a wholesale liquor dealer for failure to pay the special tax as such dealer".

The defendants' motion to suppress must be denied. In order to justify the issuance of the search warrants, it was not necessary that the accompanying affidavits disclose that the Investigator for the Alcohol Tax Unit was accompanied by another person when the alleged sales occurred. He stated under oath that liquor was offered for sale and that it was sold to him in quantities such as would constitute wholesale transactions within the meaning of the Internal Revenue Code. From this the Commissioner could logically conclude that defendants were carrying on the business of a wholesale liquor dealer. Nor was it necessary that Crosstown should have been described in the affidavits as a licensed retail liquor dealer. The fact that it was so licensed would not deter the Commissioner from issuing the warrants upon a charge that a wholesale liquor business was being carried on. In any event, defendants' argument on this point is specious, since the warrants do describe Crosstown as a retail liquor dealer.

Furthermore, insofar as the sufficiency of the affidavits was concerned, it made no difference that at all times, as defendants contend, any liquor and records were available for inspection and, hence, were not concealed. The essential element is that, although the liquor was being held ostensibly to replenish retail stocks, it was used for the purpose of carrying on the business of a wholesale liquor dealer without paying the special tax therefor, and without fulfilling other requirements of law.

In view of the contradictory testimony of the Revenue Agents and defendant Dunner, it cannot be determined as a matter of law that the sales in question were to two persons rather than only one, or that defendants did not willfully fail to pay the special tax. Those questions must be decided by the jury and cannot be disposed of upon the motion now before the Court.

Defendants' next contention, i.e., that the property to be seized was inadequately described, is unsupportable. The warrant contains the following language: "Affidavit having been made before me by James W. Lavely, Investigator, Alcohol Tax Unit that he has reason to believe that on the premises known as * * * in the Northern District of Illinois there is now being concealed certain property, namely taxpaid distilled spirits and containers, intended for use in violating the provisions of the internal revenue laws * * *." The command of the warrant is that the officers search the premises for the "property specified". Defendants contend, therefore, that it was left to the extra-judicial decision of the officers to determine which of the distilled spirits should be seized in view of the language "intended for use in violating the provisions of the internal revenue laws". However, this latter language is merely an averment of the grounds for the issuance of the warrant, and is included so as to conform to the dictates of Rule 41(b)(2) of the Federal Rules of Criminal Procedure, 18 U.S.C.A. The "property specified" in the command of the warrant is, therefore, the "taxpaid distilled spirits and containers". That the latter is a sufficient description of the property to be seized is confirmed by the United States Supreme Court in the case of Steele v. United States, 267 U.S. 498, 45 S.Ct. 414, 416, 69 L.Ed. 757: "Then it is said that the property seized was not sufficiently indentified in the warrant. It was described as `cases of whisky,' and while there is no evidence specifically identifying the particular cases which were seized as those which Einstein saw, the description as `cases of whisky' is quite specific enough. (Citing cases)."

Nor does it appear that defendants have any cause for complaint on the ground that the agents seized only the liquor in cases and left the liquor on the shelves undisturbed.

Insofar as the siezure of the automobile is concerned, defendants contend that the command of the warrant was to search the premises of the Crosstown Liquor Mart for the automobile, whereas, in fact, it was seized on a public highway. The place was actually described in the warrant as "on or about the premises known as Crosstown Liquor Mart, Inc." Under such a description, it was permissible to seize the automobile located in front of the liquor store.

Defendants' remaining contention, i.e., that there is no provision in law for the forfeiture of property for failure to pay the wholesaler's special tax, is untenable in view of the judicial interpretations of the forfeiture provisions of the Internal Revenue Code. The applicable sections of the Code are:

Section 3253 — "Penalties and forfeitures for nonpayment of special Tax

"Any person who shall carry on the business of a brewer, rectifier, wholesale liquor dealer, retail liquor dealer, wholesale dealer in malt liquors, retail dealer in malt liquors, or manufacturer of stills, and willfully fails to pay the special tax as required by law, shall, for every such offense, be fined not less than $100 nor more than $5,000 and be imprisoned for not less than thirty days nor more than two years. And all distilled spirits or wines, and all stills or other apparatus, fit or intended to be used for the distillation or rectification of spirits, or for the compounding of liquors, owned by such person, wherever found, and all distilled spirits or wines and personal property found in the distillery or rectifying establishment, or in any building, room, yard or enclosure connected therewith and used with or constituting a part of the premises, shall be forfeited to the United States."

Manifestly, this section authorizes three modes of punishment for failure to pay the special tax: fine, imprisonment and forfeiture of property. This conclusion is borne out in the case of Seib v. United States, 8 Cir., 150 F.2d 673, 675, where a similar contention was made: "The section is entitled `Penalties and forfeitures for nonpayment of special tax.' Apparently, the appellant interprets the section to authorize only fine and imprisonment for engaging in the business of a wholesale liquor dealer without having paid the special tax on wholesalers, and to provide for forfeitures only such distilled spirits `fit or intended to be used for the distillation or rectification of spirits' by one engaged as a rectifier without having paid the special tax required to rectifiers. We do not agree with this interpretation. We think the section expresses the intent of Congress to provide for the forfeiture of distilled spirits in the possession of one engaged as a wholesale liquor dealer without having paid the special tax required by the Revenue Laws of the United States, as well as for the forfeiture of such liquors in the hands of rectifiers who have failed to pay the special tax imposed upon them. * * *"

In any event, however, the liquor in question here is forfeitable under Section 3116 of the Internal Revenue ...


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