Before MAJOR, Chief Judge, and SWAIM and SCHNACKENBERG, Circuit Judges.
This is an action by the United States to recover, with penalty and interest, taxes assessed on distilled spirits and alcohol seized at an illicit, unregistered distillery in which it is alleged the taxpayer, Allen M. Wainer, had a proprietary interest. The District Court entered judgment in favor of the United States, and from this the taxpayer appeals.
The testimony of Government witnesses and Government exhibits received in evidence disclose the following facts: On or about September 26, 1935, investigators of the Alcohol Tax Unit seized an illicit and unregistered distillery on premises known as the Riley Farm in Will County, Illinois, near Joliet. The seizure included 69,400 gallons of mash, a large quantity of alcohol in vats and 560 gallons of alcohol in cans which bore no revenue stamps, on none of which tax had been paid.
At the November, 1936, Term of the United States District Court for the Northern District of Illinois, an indictment was returned against Allen M. Wainer and others, including one Harry Braverman, setting forth certain offenses relating to the operation of this distillery. In the several counts of the indictment relevant here the defendants were charged, in summary, with having in their possession an unregistered distillery; with engaging in the business of distilling spirits without posting a sign designating registration; with carrying on the business of a distiller without having given bond; with making and fermenting 69,400 gallons of mash fit for the distillation and production of spirits in the unauthorized distillery; with carrying on the business of a distiller of spirits and defrauding the United States of tax on the distilled spirits; with removing, depositing and concealing 560 gallons of distilled spirits upon which a tax was imposed with intent to defraud the United States of such tax; and with having in their possession 560 gallons of distilled spirits, the immediate containers of which did not have the required internal revenue stamps.
Upon his arraignment in 1937, Allen M. Wainer, the taxpayer here, pleaded guilty to the charges contained in the indictment and sentence was duly imposed.
In 1938 the Commissioner of Internal Revenue assessed against the taxpayer and Harry Braverman, jointly and severally, taxes on specified proof gallons of alcohol, proof gallons of alcohol in mash, and wine gallons of miscellaneous distilled spirits produced at the unregistered distillery. The total assessment amounted to $31,911.20.
The taxpayer signed waivers extending the period within which collection could be made by a proceeding in court, first to December 31, 1947, and again to December 31, 1950. The complaint in this case was filed in December of 1948.
In the course of the Government's evidence it was revealed that a $5,000 offer in compromise submitted by Harry Braverman had been accepted in 1941. After all the testimony was completed, the taxpayer moved to amend his answer to allege that he was released from liability by the acceptance of this offer in compromise. The District Court denied this motion in a memorandum allowing the taxpayer credit for the $5,000 received by the Government from Braverman, but holding that he was not released from liability for the balance of the tax assessed and remaining unpaid.
The principal questions presented here are whether the taxpayer had such a connection with the distillery as to be liable for the taxes assessed, and whether the release of Braverman by the acceptance of his offer in compromise effected also the taxpayer's release. The applicable statutory provision states, in part:
"* * * Every proprietor or possessor of, and every person in any manner interested in the use of, any still, distillery, or distilling apparatus, shall be jointly and severally liable for the taxes imposed by law on the distilled spirits produced therefrom. * * *" Rev. Stat. § 3251 (now contained in 26 U.S.C.A. § 2800(d).
We think the record in this case leaves no doubt that the taxpayer was properly assessed for the taxes here involved. By his plea of guilty to the indictment in the criminal proceeding, he necessarily admitted engaging in the business of distilling spirits, possession of the distillery seized, and the production of distilled spirits from that distillery, upon which the taxes assessed were imposed. Consistent with these admissions is the evidence that the taxpayer caused to be hauled to a warehouse in Joliet, near which the distillery was located, large quantities of sugar and other products used in the manufacture of distilled spirits and cans similar to the containers used at the distillery, and the evidence that he hired a trucker to haul alcohol from this same warehouse. This was amply sufficient to show that the taxpayer, in the language of the statute, was a "proprietor or possessor of" or a "person in any manner interested in the use of" the distilling facilities.
There is no merit in the contention that the plea of guilty to the indictment was not admissible as evidence tending to show the taxpayer's connection with the distillery. Certainly the record of a party's conviction in a previous criminal proceeding may properly be admitted in evidence in a civil action arising out of the same factual situation. Local 167 of International Brotherhood of Teamsters, Chauffeurs, Stablemen & Helpers v. United States, 291 U.S. 293, 54 S. Ct. 396, 78 L. Ed. 804; Austin v. United States, 7 Cir., 125 F.2d 816; Stagecrafters Club, Inc., v. District of Columbia Division, D.C., 111 F.Supp. 127; United States v. Bower, D.C., 95 F.Supp. 19; V Wigmore, Evidence, Sec. 1671a (3d ed. 1940).Of course, where the judgment of conviction has resulted from a trial and a verdict of guilty, only those issues which were indispensable to the verdict may be regarded as having been determined. This is the principle adhered to in Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 71 S. Ct. 408, 95 L. Ed. 534, upon which the taxpayer here relies. However, that case involved the proper significance of a criminal judgment obtained after trial and a verdict of guilty as to membership in a conspiracy. Obviously a general verdict of guilty, or for that matter the entry of a plea of guilty, on a count for conspiracy does not determine which of the particular means charged in the indictment were used to effectuate the conspiracy.
In this case we are concerned with the admission of a judgment of conviction resulting from the taxpayer's plea of guilty, but we do not consider the charge of conspiracy to be relevant. The indictment to which the plea was entered was in ten counts. Each of those except the last contained a substantive allegation of particular facts. At least seven of those allegations, if true, tended to show the taxpayer's direct interest in the distillery and its product, a relationship sufficient to sustain the Government's claim in this case. His unqualified plea of guilty was competent evidence to be considered in the determination of the issue and was sufficient to establish his true status as a participant in ...