In November, 1934, an information was filed in the District Court for Northern Alabama charging that on October 8, 1934, at Birmingham, Ala., the respondent conducted the business of a retail dealer in malt liquor contrary to the laws of the state, without having paid the special excise tax of $1,000 imposed by section 701 of the Revenue Act of 1926. A demurrer and a motion to quash were overruled, a plea of not guilty was entered, and a jury trial was waived. Pursuant to a stipulation of facts, the court found that for the fiscal year July 1, 1934, to June 30, 1935, the respondent registered with the collector of internal revenue as a retail liquor dealer and paid the tax of $25.00 imposed upon such dealers by Rev. St. § 3244, as amended; on the date named in the information the respondent had a restaurant in Birmingham, where he conducted the business of a retail dealer in malt liquors containing more than one-half of one percent alcohol, which business was contrary to the laws of the state and of the city; and had not paid the $1,000 tax. Respondent's motion for judgment was denied, that of the United States was granted, and the respondent was sentenced. The Circuit Court of Appeals reversed the judgment on the ground that the section became inoperative upon the repeal of the Eighteenth Amendment.
In its petition for certiorari the United States, though admitting the absence of a conflicting decision by the Circuit Court of Appeals of any other circuit, called attention to diverse decisions in the District Courts, to the many other cases pending in which action is awaiting authoritative settlement of the question presented herein, to the large amount of money involved, and to the number of persons whose liability will remain uncertain until the dispute is finally settled. The question thus assumes the importance required by Rule 38 and the writ issued accordingly.
In concluding that the law imposed a penalty in aid of the enforcement of the Eighteenth Amendment, and therefore fell with its repeal, the court relied upon the legislative history and administrative interpretation of section 701, and also thought such a construction necessary to avoid a serious question under article 1, § 8, of the Constitution as to the uniformity of operation of the act throughout the United States. The government insists that the section was not a part of the machinery for enforcing the prohibition amendment, but a revenue measure levying an excise conformably to the Constitution.
First. The government attacks, and the respondent supports, the conclusion of the court below that the section was adopted pursuant to the Eighteenth Amendment. We think little aid is to be had from the legislative history. On the one hand, it is said that the substance of the section was originally embodied in the Revenue Act of 1918 which became a law February 28, 1919 (40 Stat. 1057); that while under consideration by Congress in the autumn of 1918 the bill contained the section in question; and that, when enacted, it was made effective as of January 1, 1919. As the Eighteenth Amendment was not proclaimed until January 9, 1919, effective January 9, 1920, the argument is that the Act of 1918 was independent revenue legislation and no section of it could have been intended to enforce fundamental law which was to become operative long after the passage of the act. From the fact that the provision for the additional tax of $1,000 was carried forward from the Act of 1918 through those of 1921 and 1924 into that of 1926 the conclusion is drawn that the tax remained, as it was in the beginning, a means of raising revenue, and that its purpose was not altered by the existence of national prohibition when it was readopted as section 701 of the Revenue Act of 1926. Reference is also made to the fact that the section was specifically repealed by the Revenue Act of 1935 and the deduction is drawn that Congress thought it had no relation to the prohibition amendment.
On the other hand, the respondent urges that the proclamation of the Amendment prior to the passage of the Act of 1918 made prohibition a certainty; that the tax of $1,000 laid upon violators of state liquor laws, in addition to the graded excises on various forms of the liquor business prescribed by Rev. St. § 3244, as amended, and the retention of the $1,000 tax in the 1926 act, which discarded the many existing excises on other business, evince a purpose to prohibit rather than to tax liquor traffic violative of state laws.
For reasons presently to be stated we find it unnecessary to decide whether the policy exhibited by the act at its inception was independent of the Eighteenth Amendment or in subvention of it.
