United States v. One Ford Coach, 307 U.S. 219 (1939)

Topics:  Ford

From the U.S. Government Printing Office via GPO Access
 
Case:   UNITED STATES V. ONE FORD COACH

Case #: 307US219


NO. 10.  REARGUED MAY 1, 1939.  - DECIDED MAY 22, 1939.  - 93 F.2D 771,
19 F.SUPP.  470, AFFIRMED.  - 99 F.2D 498, 22 F.SUPP.  507, AFFIRMED. 


1.  UPON THE FACTS, HELD THAT CLAIMANTS FOR REMISSION OF FORFEITURES
OF AUTOMOBILES SEIZED FOR UNLAWFUL TRANSPORTATION OF TAX UNPAID
LIQUORS, HAD COMPLIED WITH THE CONDITIONS IMPOSED BY SEC. 204(B) OF THE
LIQUOR LAW REPEAL AND ENFORCEMENT ACT OF AUGUST 27, 1935, AND THAT THE
COURTS BELOW PROPERLY REMITTED THE FORFEITURES.  PP. 224 ET SEQ. 

2.  A CLAIMANT (AUTOMOBILE FINANCE COMPANY) WHO IN GOOD FAITH
PURCHASED FROM A DEALER A CONDITIONAL SALE CONTRACT COVERING THE SALE
OF AN AUTOMOBILE; WHO BELIEVED THAT THE VENDEE NAMED THEREIN WAS THE
REAL PURCHASER AND OWNER OF THE AUTOMOBILE; AND WHO HAD NO KNOWLEDGE,
INFORMATION OR SUSPICION OF FACTS TO THE CONTRARY UNTIL THE CAR WAS
LATER SEIZED FOR VIOLATION OF THE REVENUE LAWS,  - HAD AN "INTEREST IN
SUCH VEHICLE  ..  ACCQUIRED IN GOOD FAITH," WITHIN SEC. 204(B)(1) OF
THE LIQUOR LAW REPEAL AND ENFORCEMENT ACT.  P. 224. 

3.  WHERE SUCH CLAIMANT, BEFORE ACQUIRING SUCH SALE CONTRACT,
INVESTIGATED THE PERSON NAMED THEREIN AS PURCHASER AND FOUND THAT HE
HAD NO RECORD OR REPUTATION FOR VIOLATION OF LIQUOR LAWS; AND BELIEVED
THAT SUCH PERSON WAS THE REAL PURCHASER; AND HAD NO KNOWLEDGE,
INFORMATION, OR SUSPICION THAT HE WAS MERELY A "STRAW" PURCHASER - THIS
WAS A SUFFICIENT SHOWING UNDER SEC. 204(B)(2) THAT THE CLAIMANT HAD NO
REASON TO BELIEVE THAT THE CAR WOULD BE USED IN VIOLATION OF LIQUOR
LAWS.  THE CONTENTION THAT, SINCE CLAIMANT KNEW THAT AUTOMOBILES WERE
FREQUENTLY USED FOR VIOLATION OF LIQUOR LAWS, HE HAD REASON TO BELIEVE
THAT THE CAR IN QUESTION WOULD BE SO USED, IS REJECTED.  P. 224. 

4.  SUBSECTION (B)(3) OF SEC. 204 OF THE LIQUOR LAW REPEAL AND
ENFORCEMENT ACT DOES NOT REQUIRE, AS A CONDITION TO REMISSION OF
FORFEITURE BY THE COURT, THAT THE CLAIMANT SHALL HAVE INVESTIGATED, AT
HIS PERIL, EVERY PERSON WITH RECORD OR REPUTATION FOR VIOLATING THE
LIQUOR LAWS WHO IN FACT, ALTHOUGH WHOLLY UNSUSPECTED, HAD ACQUIRED SOME
RIGHT TO THE VEHICLE.  THE SUBSECTION WAS INTENDED TO PREVENT REMISSION
TO A CLAIMANT WHO HAD FAILED TO MAKE INQUIRY WHEN HE SHOULD HAVE DONE
SO, TO ONE CHARGEABLE WITH WILLFUL NEGLIGENCE OR PURPOSE OF FRAUD.  P.
235. 

5.  FORFEITURES ARE NOT FAVORED; THEY SHOULD BE ENFORCED ONLY WHEN
WITHIN BOTH THE LETTER AND THE SPIRIT OF THE LAW.  P. 226. 

UNITED STATES V. ONE 1936 MODEL FORD V-8 DELUXE COACH, COMMERCIAL
CREDIT COMPANY, CLAIMANT.* 

*TOGETHER WITH NO. 627, UNITED STATES V. AUTOMOBILE FINANCING, INC.
ON WRIT OF CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH
CIRCUIT.  ARGUED MAY 1, 1939.  - DECIDED MAY 22, 1939. 

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH CIRCUIT. 

CERTIORARI, 303 U.S. 633; 306 U.S. 625, TO REVIEW THE AFFIRMANCES OF
JUDGMENTS IN TWO CASES IN WHICH THE DISTRICT COURTS ORDERED REMISSION
OF FORFEITURES UNDER THE LIQUOR LAW REPEAL AND ENFORCEMENT ACT.  IN NO.
10, THE JUDGMENT BELOW WAS PREVIOUSLY AFFIRMED HERE BY AN EQUALLY
DIVIDED COURT, 305 U.S. 564; A REHEARING WAS SUBSEQUENTLY GRANTED, 305
U.S. 666.  NO. 627 WAS ASSIGNED FOR ARGUMENT IMMEDIATELY FOLLOWING THE
REARGUMENT IN NO. 10. 

MR. JUSTICE MCREYNOLDS DELIVERED THE OPINION OF THE COURT. 

IN EACH OF THESE CAUSES THE DISTRICT COURT, PROCEEDING UNDER THE
"LIQUOR LAW REPEAL AND ENFORCEMENT ACT" OF AUGUST 27, 1935(C. 740, 49
STAT. 872, 878, TITLE 27 U.S.C. SEC. 40(A), MITIGATED THE FORFEITURE OF
AN AUTOMOBILE SEIZED FOR UNLAWFUL TRANSPORTATION OF DISTILLED SPIRITS
UPON WHICH THE FEDERAL TAX HAD NOT BEEN PAID.  (ONE WAS SEIZED DECEMBER
3, 1936; THE OTHER, MARCH 15, 1937.)  THE FORFEITURE WAS DECREED IN A
PROCEEDING BASED UPON SEC. 3450 R.S. (TITLE 26 U.S.C. SEC. 1441).  THE
CIRCUIT COURTS OF APPEALS RIGHTLY APPROVED AND THEIR JUDGMENTS MUST BE
AFFIRMED. 

THE FACTS, UNDISPUTED, ARE ESSENTIALLY ALIKE IN BOTH CAUSES.  THE
POINTS OF LAW ARE THE SAME.  A STATEMENT BASED ON RECORD NO. 10 WILL
SUFFICE. 

THE REPEAL ENFORCEMENT ACT PROVIDES - 

"SEC. 204.  (A)  WHENEVER, IN ANY PROCEEDING IN COURT FOR THE
FORFEITURE, UNDER THE INTERNAL-REVENUE LAWS, OF ANY VEHICLE OR AIRCRAFT
SEIZED FOR A VIOLATION OF THE INTERNAL-REVENUE LAWS RELATING TO LIQUORS
SUCH FORFEITURE IS DECREED, THE COURT SHALL HAVE EXCLUSIVE JURISDICTION
TO REMIT OR MITIGATE THE FORFEITURE. 

"(B)  IN ANY SUCH PROCEEDING THE COURT SHALL NOT ALLOW THE CLAIM OF
ANY CLAIMANT FOR REMISSION OR MITIGATION UNLESS AND UNTIL HE PROVES (1)
THAT HE HAS AN INTEREST IN SUCH VEHICLE OR AIRCRAFT, AS OWNER OR
OTHERWISE, WHICH HE ACQUIRED IN GOOD FAITH, (2) THAT HE HAD AT NO TIME
ANY KNOWLEDGE OR REASON TO BELIEVE THAT IT WAS BEING OR WOULD BE USED
IN THE VIOLATION OF LAWS OF THE UNITED STATES OR OF ANY STATE RELATING
TO LIQUOR, AND (3) IF IT APPEARS THAT THE INTEREST ASSERTED BY THE
CLAIMANT ARISES OUT OF OR IS IN ANY WAY SUBJECT TO ANY CONTRACT OR
AGREEMENT UNDER WHICH ANY PERSON HAVING A RECORD OR REPUTATION FOR
VIOLATING LAWS OF THE UNITED STATES OR OF ANY STATE RELATING TO LIQUOR
HAS A RIGHT WITH RESPECT TO SUCH VEHICLE OR AIRCRAFT, THAT, BEFORE SUCH
CLAIMANT ACQUIRED HIS INTEREST, OR SUCH OTHER PERSON ACQUIRED HIS RIGHT
UNDER SUCH CONTRACT OR AGREEMENT, WHICH EVER OCCURRED LATER, THE
CLAIMANT, HIS OFFICER OR AGENT, WAS INFORMED IN ANSWER TO HIS INQUIRY,
AT THE HEADQUARTERS OF THE SHERIFF, CHIEF OF POLICE, PRINCIPAL FEDERAL
INTERNAL-REVENUE OFFICER ENGAGED IN THE ENFORCEMENT OF THE LIQUOR LAWS,
OR OTHER PRINCIPAL LOCAL OR FEDERAL LAWENFORCEMENT OFFICER OF THE
LOCALITY IN WHICH SUCH OTHER PERSON ACQUIRED HIS RIGHT UNDER SUCH
CONTRACT OR AGREEMENT, OF THE LOCALITY IN WHICH SUCH OTHER PERSON THEN
RESIDED, AND OF EACH LOCALITY IN WHICH THE CLAIMANT HAS MADE ANY OTHER
INQUIRY AS TO THE CHARACTER OR FINANCIAL STANDING OF SUCH OTHER PERSON,
THAT SUCH OTHER PERSON HAD NO SUCH RECORD OR REPUTATION." 

THE FOLLOWING FINDINGS BY THE DISTRICT COURT, IT IS AGREED, CORRECTLY
SET OUT "THE FACTS IN THIS CASE" - 

THE FORD AUTOMOBILE IN QUESTION WAS SOLD BY THE GREENVILLE AUTO
SALES, INCORPORATED (THE DEALER) OCTOBER 3, 1936, THROUGH ITS AGENT,
ELROD, TO GUY WALKER, WHO IN PART PAYMENT EXCHANGED AN OLD CAR PAID FOR
BY HIM, BUT REGISTERED IN HIS WIFE'S NAME.  HE WAS GIVEN TERMS FOR
PAYMENT UNDER A CONDITIONAL SALES CONTRACT, DRAWN BY AN AGENT OF THE
DEALER, IN THE NAME OF HIS BROTHER, PAUL WALKER, WHO FORMALLY EXECUTED
THE AGREEMENT.  GUY WALKER HAD THE CONDITIONAL SALES CONTRACT DRAWN AND
EXECUTED IN THE NAME OF HIS BROTHER IN ORDER TO PLACE THE TITLE "WHERE
HIS WIFE COULD NOT REACH IT."  PAUL WALKER HAD NO INTEREST IN THE
TRANSACTION EXCEPT TO COMPLY WITH HIS BROTHER'S REQUEST.  GUY WALKER
MADE THE TRANSACTION WITH THE DEALER.  HE SELECTED THE CAR, MADE THE
AGREEMENT AND HANDLED THE TRANSACTION HIMSELF.  PAUL WALKER DROVE THE
CAR FROM THE DEALER'S PLACE OF BUSINESS.  GUY WALKER AT THE TIME, AND
FOR TWO OR THREE WEEKS AFTER THE PURCHASE, WAS LIVING AT HIS BROTHER'S
HOUSE.  ONLY ONE PAYMENT WAS MADE ON THE CONDITIONAL SALES CONTRACT
BEFORE THE SEIZURE, AND THAT BY GUY WALKER TO THE DEALER. 

IT WAS ADMITTED THAT GUY WALKER HAD A PREVIOUS RECORD AND REPUTATION
FOR VIOLATING BOTH STATE AND FEDERAL LAWS RELATING TO LIQUOR.  PAUL
WALKER WAS CONVICTED OF VIOLATING THE NATIONAL PROHIBITION ACT IN 1929,
AND WAS DULY SENTENCED THEREFOR, BUT HIS RECORD AND REPUTATION SINCE
SERVING THE SENTENCE WERE GOOD. 

ON THE DATE WHEN THE SALE WAS CONSUMMATED THE DEALER SUBMITTED THE
CONTRACT TO THE COMMERCIAL CREDIT COMPANY, THE CLAIMANT HERE, WHO
ACCEPTED BY TELEPHONE, AND SUBSEQUENTLY ON OCTOBER 5TH, IN THE USUAL
COURSE OF BUSINESS THE DEALER ASSIGNED THE CONTRACT TO THE CLAIMANT AND
RECEIVED A CHECK THEREFOR. 

THE CLAIMANT BEFORE ACCEPTING ASSIGNMENT OF THE SALES CONTRACT MADE
AN INVESTIGATION OF PAUL WALKER BY INQUIRING AT THE HEADQUARTERS OF THE
SHERIFF OF GREENVILLE COUNTY, AND AT THE HEADQUARTERS OF THE CHIEF OF
POLICE OF GREENVILLE, THE COUNTY AND CITY WHERE THE INTEREST WAS
ACQUIRED AND THE LOCALITY WHERE PAUL WALKER RESIDED, AS TO HIS RECORD
AND REPUTATION FOR VIOLATION OF THE LIQUOR LAW.  INFORMATION WAS
RECEIVED FROM THESE OFFICES THAT HE HAD NO SUCH RECORD OR REPUTATION. 
INFORMATION WAS GIVEN, HOWEVER, FROM THE SHERIFF'S OFFICE THAT GUY
WALKER HAD BOTH RECORD AND REPUTATION AS VIOLATOR OF STATE AND FEDERAL
LAWS RELATING TO LIQUOR.  NO INQUIRY OR INVESTIGATION WAS MADE AT THE
HEADQUARTERS OF THE PRINCIPAL FEDERAL INTERNAL-REVENUE OFFICER ENGAGED
IN THE ENFORCEMENT OF THE LIQUOR LAWS IN THAT LOCALITY, OR AT THE
HEADQUARTERS OF ANY OTHER PRINCIPAL LOCAL OR FEDERAL LAW ENFORCEMENT
OFFICER OF THE LOCALITY AS TO PAUL WALKER, AND NO INQUIRY OR
INVESTIGATION WHATSOEVER WAS MADE OF GUY WALKER, THE ADMITTED REAL
OWNER AND PURCHASER OF THE AUTOMOBILE. 

THE CLAIMANT HAD PAUL WALKER INVESTIGATED IN AUGUST, 1936, BY THE
BUSINESS SERVICE BUREAU OF GREENVILLE, SOUTH CAROLINA, IN CONNECTION
WITH THE PURCHASE OF A REFRIGERATOR.  NO INVESTIGATION AT THAT TIME WAS
MADE AS TO HIS REPUTATION OR RECORD FOR VIOLATING THE LIQUOR LAWS; THE
INVESTIGATION DID DISCLOSE THAT HE HAD A GOOD REPUTATION IN THE
COMMUNITY WHERE HE LIVED, AND THIS WAS THE REPUTATION GIVEN HIM BY HIS
EMPLOYER AT THAT TIME. 

THE CLAIMANT PURCHASED THE CONDITIONAL SALES CONTRACT IN GOOD FAITH,
BELIEVING THAT PAUL WALKER WAS THE PURCHASER AND OWNER OF THE
AUTOMOBILE.  IT HAD NO KNOWLEDGE, INFORMATION OR SUSPICION OF THE TRUE
FACTS UNTIL AFTER THE AUTOMOBILE HAD BEEN SEIZED BY FEDERAL OFFICERS. 

PETITIONER CHALLENGES THE JUDGMENT BELOW BECAUSE OF CLAIMANT'S
FAILURE TO ESTABLISH COMPLIANCE WITH THE CONDITIONS IMPOSED BY SUB
IT HAD NO REASON TO BELIEVE THE AUTOMOBILE WAS BEING USED OR WOULD BE
USED TO VIOLATE THE LIQUOR LAWS; ALSO BECAUSE IT MADE NO ADEQUATE
INQUIRY CONCERNING THE RECORD AND REPUTATION OF THE REAL PURCHASER -
GUY WALKER. 

RESPONDENT'S INTEREST IN THE AUTOMOBILE IS NOT QUESTIONED.  IT
"PURCHASED THE CONDITIONAL SALES CONTRACT IN GOOD FAITH, BELIEVING THAT
PAUL WALKER WAS THE PURCHASER AND OWNER OF THE AUTOMOBILE.  IT HAD NO
KNOWLEDGE, INFORMATION OR SUSPICION OF THE TRUE FACTS UNTIL AFTER THE
AUTOMOBILE HAD BEEN SEIZED."  THIS IS ENOUGH TO SHOW COMPLIANCE WITH
SUB-SECTION (B)(1).  THERE WAS AN INTEREST ACQUIRED IN GOOD FAITH. 

AFTER INVESTIGATION OF THE RECORD AND REPUTATION OF PAUL WALKER,
FOLLOWED BY FAVORABLE REPORTS, AND BELIEVING HIM TO BE PURCHASER AND
OWNER OF THE AUTOMOBILE, CLAIMANT IN GOOD FAITH ACQUIRED THE SALES
CONTRACT.  IT HAD NO KNOWLEDGE, INFORMATION OR SUSPICION THAT PAUL
WALKER WAS ONLY A "STRAW" PURCHASER.  THIS IS ENOUGH TO SHOW COMPLIANCE
WITH SUB-SECTION (B)(2).  THE SUGGESTION THAT SINCE RESPONDENT KNEW
AUTOMOBILES WERE FREQUENTLY USED FOR VIOLATION OF LIQUOR LAWS IT
THEREFORE HAD REASON TO BELIEVE THAT THE ONE IN QUESTION WOULD BE SO
USED IS NOT WELL FOUNDED.  THE FINDINGS POSITIVELY AFFIRM THAT IT
ENTERTAINED NO SUCH BELIEF OR SUSPICION. 

THE DIFFICULT PHRASING OF SUB-SECTION (B)(3) HAS PRODUCED DIVERGENT
VIEWS CONCERNING ITS MEANING. 

IN FEDERAL MOTOR FINANCE V. UNITED STATES, 88 F.2D 90, 93, THE
CIRCUIT COURT OF APPEALS EIGHTH CIRCUIT SAID - 

"WE THINK THE FAIR INTENDMENT OF THE LANGUAGE OF SUBSECTION (3)
CONCERNING REMISSION OF FORFEITURE IS THAT THE APPELLANT COULD NOT RELY
ENTIRELY UPON A COURSE OF BUSINESS WHEREBY IT ACQUIRED AN INTEREST IN
THE CAR SO NEARLY APPROXIMATING THE TOTAL VALUE THEREOF WITHOUT TAKING
CARE TO ASCERTAIN WHO THE REAL OWNER WAS IN POSSESSION OF AND USING THE
CAR." 

IN THE CAUSES NOW BEFORE US (93 F.2D 771, 773; 99 F.2D 498, 500), THE
CIRCUIT COURT OF APPEALS ACCEPTED THE VIEW THAT - 

"THE INVOLVED LANGUAGE OF SUBSECTION (B)(3) OF THE ACT DOES PERMIT
THE POSSIBLE INTERPRETATION THAT THE LIENOR IS CHARGED WITH THE DUTY OF
MAKING INQUIRY AS TO EVERY ONE, BEARING A BAD REPUTATION OR RECORD, WHO
MAY HAVE A RIGHT UNDER THE CONTRACT OF SALE, WHETHER OR NOT IT APPEARS
ON THE FACE OF THE INSTRUMENT.  SEE FEDERAL MOTOR FINANCE V. UNITED
STATES, 8 CIR., 88 F.2D 90.  BUT IN OUR VIEW CONGRESS DID NOT INTEND TO
IMPOSE UPON THE LIENOR THE OBLIGATION TO ASCERTAIN AT HIS PERIL THE
IDENTITY OF EVERY PERSON HAVING AN INTEREST IN THE PROPERTY AND TO MAKE
INQUIRY OF THE LAW ENFORCEMENT OFFICERS AS TO THE PREVIOUS RECORD AND
REPUTATION OF EVERY SUCH PERSON, UNLESS FROM THE DOCUMENTS THEMSELVES
OR OTHER SURROUNDING CIRCUMSTANCES THE LIENOR POSSESSES INFORMATION
WHICH WOULD LEAD A REASONABLY PRUDENT AND LAW-ABIDING PERSON TO MAKE A
FURTHER INVESTIGATION." 

SEE ALSO C.I.T. CORPORATION V. UNITED STATES, (FOURTH CIRCUIT) 86
F.2D 311, AND UNITED STATES V. C.I.T. CORPORATION, (SECOND CIRCUIT) 93
F.2D 469. 

COUNSEL FOR PETITIONER NOW MAINTAIN:  "THAT UNDER THE LANGUAGE OF THE
STATUTE ((B)(3)) THE CLAIMANT IS REQUIRED TO INVESTIGATE THE REAL
PURCHASER AT ITS PERIL AND THAT IF IT FAILS TO DO SO, AS BETWEEN IT AND
THE GOVERNMENT, THE CLAIMANT ASSUMES THE RISK OF FRAUD PERPETRATED UPON
IT BY THE DEALER AND THE BOOTLEGGER.  IN ANY EVENT, THE CLAIMANT SHOULD
HAVE BEEN REQUIRED TO SHOW THAT IT AT LEAST MADE A REASONABLE EFFORT TO
ASCERTAIN WHO THE REAL PURCHASER AND USER OF THE CAR WAS SO THAT HE
COULD BE INVESTIGATED AS REQUIRED BY THE STATUTE." 

MANIFESTLY, SEC. 204 IS A REMEDIAL MEASURE.  IT EMPOWERS THE COURTS,
EXERCISING SOUND DISCRETION, TO AFFORD RELIEF TO INNOCENT PARTIES
HAVING INTERESTS IN CONDEMNED PROPERTY WHERE THE CLAIM IS REASONABLE
AND JUST.  ITS PRIMARY PURPOSE IS NOT TO PROTECT THE REVENUES; BUT THIS
IS PROPER MATTER FOR CONSIDERATION WHENEVER REMISSION IS SOUGHT.  THE
POINT TO BE SOUGHT IS THE INTENT OF THE LAWMAKING POWERS.  FORFEITURES
ARE NOT FAVORED; THEY SHOULD BE ENFORCED ONLY WHEN WITHIN BOTH LETTER
AND SPIRIT OF THE LAW.  FARMERS' & M. NATIONAL BANK V. DEARING, 91 U.S.
29, 33-35.  IF ANY CLAIMANT HAS BEEN NEGLIGENT OR IN GOOD CONSCIENCE
OUGHT NOT BE RELIEVED, THE COURT SHOULD DENY HIS APPLICATION. 

CONSIDERATION OF THE STATUTORY PROVISIONS RELATIVE TO REMISSIONS
PRIOR TO SEC. 204 AND THE CIRCUMSTANCES OF ITS ADOPTION WILL ENLIGHTEN
THE PURPOSE ENTERTAINED BY CONGRESS. 

1620-1621) - DERIVED FROM ACTS JUNE 30, 1864 AND JULY 13, 1866 -
PROVIDE THAT WHENEVER ANY COMMODITY IN RESPECT OF WHICH A TAX IS
IMPOSED, IS REMOVED WITH INTENT TO DEFRAUD THE UNITED STATES, IT SHALL
BE FORFEITED "AND EVERY VESSEL, BOAT, CART, CARRIAGE, OR OTHER
CONVEYANCE WHATSOEVER, AND ALL HORSES OR OTHER ANIMALS, AND ALL THINGS
USED IN THE REMOVAL OR FOR THE DEPOSIT OR CONCEALMENT THEREOF,
RESPECTIVELY, SHALL BE FORFEITED."  "THE PROCEEDINGS TO ENFORCE SUCH
FORFEITURES SHALL BE IN THE NATURE OF A PROCEEDING IN REM IN THE
CIRCUIT COURT OR DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT
WHERE SUCH SEIZURE IS MADE."  FN1 

JULY 13, 1866 AND JUNE 6, 1872 - PROVIDE THAT WHEN GOODS, WARES, OR
MERCHANDISE SEIZED AS SUBJECTS OF FORFEITURE, DO NOT EXCEED $500 IN
VALUE, THEY MAY BE RESTORED TO THE CLAIMANT UPON THE EXECUTION OF A
BOND AND THIS SHALL BE DELIVERED TO THE DISTRICT ATTORNEY FOR PROPER
PROCEEDINGS; IF NO BOND, THE ARTICLES SHALL BE SOLD AND THE PROCEEDS
PAID INTO THE TREASURY.  WITHIN A YEAR ANY CLAIMANT MAY APPLY TO THE
SECRETARY FOR REMISSION WHICH MAY BE GRANTED "UPON SATISFACTORY PROOF,
TO BE FURNISHED IN SUCH MANNER AS HE SHALL PRESCRIBE:  PROVIDED, THAT
IT SHALL BE SATISFACTORILY SHOWN  ..  THHAT THE SAID FORFEITURE WAS
INCURRED WITHOUT WILLFUL NEGLIGENCE OR ANY INTENTION OF FRAUD ON THE
PART OF THE OWNER OF SAID PROPERTY."  FN2    WHERE THE VALUE EXCEEDS
$500 OR BOND IS GIVEN, FORFEITURE MUST BE SOUGHT IN COURT THROUGH A
LIBEL IN REM.  UNITED STATES V. TWO BAY MULES, ETC., 36 F. 84; UNITED
STATES V. MINCEY, 254 F. 287; LOGAN V. UNITED STATES, 260 F. 746;
UNITED STATES V. ONE BAY HORSE, 270 F. 590. 

15 STAT. 125, 166; 26 U.S.C. SEC. 1661) PROVIDES - 

"THE COMMISSIONER OF INTERNAL REVENUE, WITH THE ADVICE AND CONSENT OF
THE SECRETARY OF THE TREASURY, MAY COMPROMISE ANY CIVIL OR CRIMINAL
CASE ARISING UNDER THE INTERNAL-REVENUE LAWS INSTEAD OF COMMENCING SUIT
THEREON; AND, WITH THE ADVICE AND CONSENT OF THE SAID SECRETARY AND THE
RECOMMENDATION OF THE ATTORNEY-GENERAL, HE MAY COMPROMISE ANY SUCH CASE
AFTER A SUIT THEREON HAS BEEN COMMENCED.  WHENEVER A COMPROMISE IS MADE
IN ANY CASE THERE SHALL BE PLACED ON FILE IN THE OFFICE OF THE
COMMISSIONER THE OPINION OF THE SOLICITOR OF INTERNAL REVENUE, OR OF
THE OFFICER ACTING AS SUCH, WITH HIS REASONS THEREFOR, WITH A STATEMENT
OF THE AMOUNT OF TAX ASSESSED, THE AMOUNT OF ADDITIONAL TAX OR PENALTY
IMPOSED BY LAW IN CONSEQUENCE OF THE NEGLECT OR DELINQUENCY OF THE
PERSON AGAINST WHOM THE TAX IS ASSESSED, AND THE AMOUNT ACTUALLY PAID
IN ACCORDANCE WITH THE TERMS OF THE COMPROMISE." 

(AMENDED, ACTS FEBRUARY 26, 1926, C. 27, SEC. 1201, 44 STAT. 9, 126;
MAY 10, 1934, C. 277, SEC. 512(B), 48 STAT. 680, 759; MAY 28, 1938, C.
289, SEC. 815, 52 STAT. 447, 578.) 

WILSON MOTOR CO. V. UNITED STATES, (NINTH CIRCUIT) 84 F.2D 630, 632,
STATES - "THE GOVERNMENT'S BRIEF ADVISES THAT PRIOR TO THE ACT OF
AUGUST 27, 1935, THE PROCEDURE OF THE GOVERNMENT TO AFFORD RELIEF TO
THESE INNOCENT OWNERS WAS UNDER THE PROVISIONS OF COMPROMISE POWERS
GIVEN THE ATTORNEY GENERAL AND THE TREASURY UNDER SECTION 1661, 26
U.S.C.A." 

IN CONNECTION WITH THE SECTIONS REFERRED TO ABOVE THE U.S.C.
ANNOTATED POINTS TO THEIR ORIGIN AND HISTORY. 

THE NATIONAL PROHIBITION ACT (OCTOBER 28, 1919, C. 85, TITLE II, SEC.
26, 41 STAT. 305, 315, TITLE 27 U.S.C. SEC. 40) PROVIDED THAT "WHENEVER
INTOXICATING LIQUORS TRANSPORTED OR POSSESSED ILLEGALLY SHALL BE SEIZED
BY AN OFFICER HE SHALL TAKE POSSESSION OF THE VEHICLE AND TEAM OR
AUTOMOBILE, BOAT, AIR OR WATER CRAFT, OR ANY OTHER CONVEYANCE, AND
SHALL ARREST ANY PERSON IN CHARGE THEREOF."  THE PERSON ARRESTED SHALL
BE PROCEEDED AGAINST BUT THE VEHICLE OR CONVEYANCE SHALL BE RETURNED
UPON EXECUTION OF A BOND.  UPON HIS CONVICTION THE COURT SHALL ORDER
THE LIQUOR DESTROYED "AND UNLESS GOOD CAUSE TO THE CONTRARY IS SHOWN BY
THE OWNER, SHALL ORDER A SALE BY PUBLIC AUCTION OF THE PROPERTY
SEIZED."  FN3  SEE RICHBOURG MOTOR CO. V. UNITED STATES, 281 U.S. 528. 
THIS WAS REPEALED BY THE REPEAL AND ENFORCEMENT ACT, SUPRA. 

THE ACT OF SEPTEMBER 21, 1922, (C. 356, SEC. 618, 42 STAT. 858, 987)
PROVIDES - 

"WHENEVER ANY PERSON INTERESTED IN ANY VESSEL, VEHICLE, MERCHANDISE,
OR BAGGAGE SEIZED UNDER THE PROVISIONS OF THIS ACT, OR WHO HAS
INCURRED, OR IS ALLEGED TO HAVE INCURRED, ANY FINE OR PENALTY
THEREUNDER, FILES WITH THE SECRETARY OF THE TREASURY IF UNDER THE
CUSTOMS LAWS, AND WITH THE SECRETARY OF COMMERCE IF UNDER THE
NAVIGATION LAWS, BEFORE THE SALE OF SUCH VESSEL, VEHICLE, MERCHANDISE,
OR BAGGAGE A PETITION FOR THE REMISSION OR MITIGATION OF SUCH FINE,
PENALTY, OR FORFEITURE, THE SECRETARY OF THE TREASURY, OR THE SECRETARY
OF COMMERCE, IF HE FINDS THAT SUCH FINE, PENALTY, OR FORFEITURE WAS
INCURRED WITHOUT WILLFUL NEGLIGENCE OR WITHOUT ANY INTENTION ON THE
PART OF THE PETITIONER TO DEFRAUD THE REVENUE OR TO VIOLATE THE LAW, OR
FINDS THE EXISTENCE OF SUCH MITIGATING CIRCUMSTANCES AS TO JUSTIFY THE
REMISSION OR MITIGATION OF SUCH FINE, PENALTY, OR FORFEITURE, MAY REMIT
OR MITIGATE THE SAME UPON SUCH TERMS AND CONDITIONS AS HE DEEMS
REASONABLE AND JUST, OR ORDER DISCONTINUANCE OF ANY PROSECUTION
RELATING THERETO." 

(REENACTED BY ACT JULY 17, 1930, C. 497, SEC. 618, 46 STAT. 590, 757;
19 U.S.C. SEC. 1618.) 

THE ACT MAY 29, 1928(C. 852, SEC. 709, 45 STAT. 791, 882, 26 U.S.C.
SEC. 1626) EXTENDED "THE PROVISIONS OF LAW APPLICABLE TO THE REMISSION
OR MITIGATION BY THE SECRETARY OF THE TREASURY OF FORFEITURES UNDER THE
CUSTOMS LAWS  ..  TOO FORFEITURES INCURRED OR ALLEGED TO HAVE BEEN
INCURRED, BEFORE OR AFTER THE ENACTMENT OF THIS ACT, UNDER THE INTERNAL
REVENUE LAWS." 

IN THE SITUATION DISCLOSED BY THE FOREGOING SUMMARY, CONGRESS CAME TO
CONSIDER THE ACT OF AUGUST 27, 1935.  THE JUDICIARY COMMITTEES OF
SENATE AND HOUSE MADE REPORTS (SENATE REPORT NO. 1330, HOUSE REPORT NO.
1601, 74TH CONG., 1ST SESSION).  IN EACH THE PARAGRAPHS RELATIVE TO
SEC. 204(A) AND (B) ARE THE SAME IN SUBSTANCE.  FN4 

A REPRESENTATIVE OF THE TREASURY DEPARTMENT MADE A STATEMENT TO THE
SENATE JUDICIARY COMMITTEE.  AN EXTRACT FROM THIS APPEARS IN THE
MARGIN.  FN5 

A REARRANGEMENT OF THE WORDS OF SUB-SECTION (B)(3) WILL ENLIGHTEN ITS
MEANING - 

"THE COURT SHALL NOT ALLOW THE (REQUEST) - CLAIM - OF ANY CLAIMANT
FOR REMISSION OR MITIGATION, IF IT APPEARS THAT THE INTEREST ASSERTED
BY (HIM) - THE CLAIMANT - ARISES OUT OF OR IS IN ANY WAY SUBJECT TO ANY
CONTRACT OR AGREEMENT UNDER WHICH ANY PERSON HAVING A RECORD OR
REPUTATION FOR VIOLATING LAWS OF THE UNITED STATES OR OF ANY STATE
RELATING TO LIQUOR HAS A RIGHT WITH RESPECT TO SUCH VEHICLE OR
AIRCRAFT, UNLESS AND UNTIL HE (THE CLAIMANT) PROVES THAT BEFORE (HE) -
SUCH CLAIMANT - ACQUIRED HIS INTEREST, OR SUCH OTHER PERSON ACQUIRED
HIS RIGHT UNDER SUCH CONTRACT OR AGREEMENT, WHICHEVER OCCURRED LATER,
(HE) - THE CLAIMANT - HIS OFFICER OR AGENT, WAS INFORMED IN ANSWER TO
HIS INQUIRY, AT (CERTAIN HEADQUARTERS SPECIFIED IN THE ALTERNATIVE) AS
TO THE CHARACTER OR FINANCIAL STANDING OF SUCH OTHER PERSON, THAT SUCH
OTHER PERSON HAD NO SUCH RECORD OR REPUTATION." 

IF THE WORDS OF SEC. 204(B)(3) BE TAKEN LITERALLY, WITHOUT REGARD TO
HISTORY OR PURPOSE OF THE ENACTMENT, THEY INHIBIT REMISSION BY THE
COURT UNLESS ONE WHO CLAIMS AN INTEREST MADE ACTUAL INQUIRY CONCERNING
EVERY PERSON WITH RECORD OR REPUTATION FOR VIOLATING THE LIQUOR LAWS
WHO IN FACT (ALTHOUGH WHOLLY UNSUSPECTED) HAD ACQUIRED SOME RIGHT TO
THE VEHICLE.  THERE WOULD BE ABSOLUTE FORFEITURE ALTHOUGH THE CLAIMANT
ACQUIRED HIS INTEREST IN THE UTMOST GOOD FAITH AND WITHOUT SUSPICION OF
ANY UNDISCLOSED INTEREST; ALTHOUGH INDEED, HE HAD DILIGENTLY BUT
UNSUCCESSFULLY SOUGHT INFORMATION CONCERNING ALL THE FACTS FROM EVERY
PERSON CONNECTED WITH THE TRANSACTION.  THUS CONSTRUED THE PROVISION
WOULD REQUIRE ABSOLUTE FORFEITURE NOTWITHSTANDING THE CLAIMANT COULD
NOT BY THE UTMOST DILIGENCE ASCERTAIN THE TRUE SITUATION.  NO GREATER
REASON EXISTS FOR SAYING A CLAIMANT SHOULD BE RELIEVED IF HE MADE
UNSUCCESSFUL INQUIRY OF THE SELLER CONCERNING UNDISCLOSED MATTERS THAN
THERE IS FOR RELIEF WHEN HE HAD NO CAUSE TO SUSPECT THE EXISTENCE OF AN
UNDISCLOSED INTEREST - NO CAUSE TO QUESTION APPEARANCES.  A MEASURE
REQUIRING ABSOLUTE FORFEITURE UNDER SUCH CIRCUMSTANCES PROBABLY WOULD
BE EXPRESSED IN LANGUAGE SUFFICIENTLY PLAIN TO ADMIT NO REASONABLE
DOUBT. 

DURING MANY YEARS INNOCENT CLAIMANTS HAD A CLEAR REMEDY EITHER BY
APPEAL TO THE DISCRETION OF THE SECRETARY OF THE TREASURY OR BY
APPLICATION FOR COMPROMISE ADDRESSED TO THE ATTORNEY GENERAL AND
TREASURY OFFICIALS (WILSON MOTOR CO. V. UNITED STATES, SUPRA); OR UNDER
THE PROHIBITION ACT, TO THE COURT (RICHBOURG MOTOR CO. V. UNITED
STATES, SUPRA).  THIS SITUATION WAS CALLED TO THE ATTENTION OF THE
SENATE COMMITTEE BY THE REPRESENTATIVE OF THE TREASURY.  HE ALSO
POINTED OUT THAT BEFORE RESTORING A CAR THE SECRETARY REQUIRED THAT THE
CLAIMANT "MUST PROVE THAT HE MADE AN INVESTIGATION AS TO WHETHER OR NOT
THE PURCHASER HAD A BOOTLEGGER RECORD AND FOUND THAT HE HAD NONE."  THE
SECRETARY "CONSIDERS THAT THE BOOTLEG HAZARD IS AN ELEMENT INVOLVED IN
THE CREDIT RISK, AND IS JUST AS MUCH A PART OF THE INVESTIGATION BY THE
FINANCE COMPANY OF A PERSON AS A CREDIT RISK AS IS HIS FINANCIAL
STANDING IN THE COMMUNITY."  THE COMMITTEE REPORTED IN RESPECT OF
204(B)(3) - "THIS LAST REQUIREMENT IS PREDICATED UPON THE RECOGNITION
OF THE 'BOOTLEG HAZARD' AS AN ELEMENT TO BE CONSIDERED IN INVESTIGATING
A PERSON AS A CREDIT RISK." 

THESE FACTS INDICATE THAT CONGRESS INTENDED A REASONABLE INQUIRY
CONCERNING THE BOOTLEG RISK SHOULD BE MADE IN CONNECTION WITH THE
INVESTIGATION OF FINANCIAL RESPONSIBILITY.  THEY NEGATIVE THE NOTION
THAT A WHOLLY INNOCENT CLAIMANT AT HIS PERIL MUST SHOW INQUIRY
CONCERNING SOMETHING UNKNOWN AND OF WHICH HE HAD NO SUSPICION.  DEALERS
DO NOT INVESTIGATE WHAT THEY HAVE NO CAUSE TO SUSPECT. 

THE FORFEITURE ACTS ARE EXCEEDINGLY DRASTIC.  THEY WERE INTENDED FOR
PROTECTION OF THE REVENUES, NOT TO PUNISH WITHOUT FAULT.  IT WOULD
REQUIRE UNCLOUDED LANGUAGE TO COMPEL THE CONCLUSION THAT CONGRESS
ABANDONED THE EQUITABLE POLICY, OBSERVED FOR A VERY LONG TIME, OF
RELIEVING THOSE WHO ACT IN GOOD FAITH AND WITHOUT NEGLIGENCE, AND
ADOPTED AN OPPRESSIVE AMENDMENT NOT DEMANDED BY THE TAX OFFICIALS OR
POINTED OUT IN THE REPORTS OF ITS COMMITTEES. 

SUB-SECTION (B)(3) WAS INTENDED TO PREVENT REMISSION TO A CLAIMANT
WHO HAD FAILED TO INQUIRE WHEN HE SHOULD HAVE DONE SO, TO ONE
CHARGEABLE WITH WILLFUL NEGLIGENCE OR PURPOSE OF FRAUD.  IT WOULD BE
EXCESSIVELY HARSH, UNREASONABLE INDEED, TO SAY THAT ONE DEALING IN
ENTIRE GOOD FAITH MUST, AT HIS PERIL, FIRST DISCOVER AND THEN MAKE
INQUIRY CONCERNING SOMEBODY OF WHOSE EXISTENCE HE HAS NO KNOWLEDGE OR
SUSPICION.  WE CANNOT THINK CONGRESS INTENDED THUS TO BURDEN DEALING IN
ALL VEHICLES CAPABLE OF TRANSPORTING LIQUOR. 

IT SHOULD BE OBSERVED THAT THE FOLLOWING THINGS ARE POSSIBLE SUBJECTS
OF SEIZURE AND FORFEITURE BECAUSE OF LIQUOR LAW VIOLATIONS:  "EVERY
VESSEL, BOAT, CART, CARRIAGE, OR OTHER CONVEYANCE WHATSOEVER, AND ALL
HORSES OR OTHER ANIMALS, AND ALL THINGS USED IN THE REMOVAL OR FOR THE
DEPOSIT OR CONCEALMENT, ETC."  "VEHICLE" IS THUS DEFINED - "THAT IN OR
ON WHICH A PERSON OR THING IS OR MAY BE CARRIED FROM ONE PLACE TO
ANOTHER."  A WHEELBARROW, A COVERED WAGON, A "ROLLS-ROYCE," THE PATIENT
MULE, A "MAN OF WAR," AND POSSIBLY A PULLMAN CAR OR OCEAN LINER IS A
VEHICLE.  GOLDSMITH-GRANT CO. V. UNITED STATES, 254 U.S. 505; UNITED
STATES V. TWO BAY MULES, SUPRA; UNITED STATES V. ONE BAY HORSE, SUPRA. 

SUB-SECTION (B)(3) APPLIES NOT ONLY TO TRANSACTIONS BY FINANCIAL
CONCERNS LIKE RESPONDENT BUT TO THOSE OF INDIVIDUALS AND CORPORATIONS
GREAT OR SMALL.  IT CONTEMPLATES AN INVESTIGATION AND THIS PRESUPPOSES
SOME REASON AT LEAST TO SUSPECT THE EXISTENCE OF THE SUBJECT OF
INVESTIGATION.  CONGRESS TOOK AWAY FROM EXECUTIVE OFFICERS THE POWER TO
MITIGATE FORFEITURES WHERE THE PROPERTY EXCEEDS $500 IN VALUE, AND GAVE
THIS TO THE COURT FAMILIAR WITH THE CIRCUMSTANCES; BUT IT LEFT WITH THE
SECRETARY OF THE TREASURY DISCRETION TO REMIT WHEN THE VALUE WAS BELOW
$500.  THE INTENT WAS TO REQUIRE THE COURTS TO EXACT PROOF OF INQUIRIES
LIKE THOSE DEMANDED BY THE TREASURY DEPARTMENT PRACTICE, AND DISCLOSED
BY ITS REPRESENTATIVE BEFORE THE SENATE COMMITTEE.  THE PETITIONER'S
VIEW, IF ADOPTED, WOULD SANCTION ONE STANDARD OF REMISSION FOR A
VEHICLE WORTH $500, ANOTHER WHEN APPRAISED AT A DOLLAR MORE. 

THE CHALLENGED DECREES MUST BE AFFIRMED. 

FN1  R.S. SEC. 3450(ACT JULY 13, 1866, C. 184, SEC. 14, 14 STAT. 98,
151; 26 U.S.C. SEC. 1441) - 

"(A)  EVERY PERSON WHO REMOVES, DEPOSITS, OR CONCEALS, OR IS
CONCERNED IN REMOVING, DEPOSITING, OR CONCEALING ANY GOODS OR
COMMODITIES FOR OR IN RESPECT WHEREOF ANY TAX IS IMPOSED, WITH INTENT
TO DEFRAUD THE UNITED STATES OF SUCH TAX ON ANY PART THEREOF, SHALL BE
LIABLE TO A FINE OR PENALTY OF NOT MORE THAN $500. 

     .         .         .         .  . 

"(3)  EVERY VESSEL, BOAT, CART, CARRIAGE, OR OTHER CONVEYANCE
WHATSOEVER, AND ALL HORSES OR OTHER ANIMALS, AND ALL THINGS USED IN THE
REMOVAL OR FOR THE DEPOSIT OR CONCEALMENT THEREOF, RESPECTIVELY, SHALL
BE FORFEITED." 

(THIS SECTION WAS AMENDED BY ACT JUNE 26, 1936(C. 830, TITLE III,
SEC. 325, 49 STAT. 1939, 1955) WHICH CHANGED THE PROVISION FOR $500
PENALTY TO A "FINE OF NOT MORE THAN $5,500 OR BE IMPRISONED FOR NOT
MORE THAN THREE YEARS, OR BOTH.") 

REVISED STATUTES SEC. 3453(ACT JUNE 30, 1864, C. 173, SEC. 48, 13
STAT. 223, 240; ACT JULY 13, 1866, C. 184, SEC. 9, 14 STAT. 98, 111; 26
U.S.C. SECS. 1620-1621) - 

"ALL GOODS, WARES, MERCHANDISE, ARTICLES, OR OBJECTS, ON WHICH TAXES
ARE IMPOSED, WHICH SHALL BE FOUND IN THE POSSESSION, OR CUSTODY, OR
WITHIN THE CONTROL OF ANY PERSON, FOR THE PURPOSE OF BEING SOLD OR
REMOVED BY HIM IN FRAUD OF THE INTERNAL-REVENUE LAWS, OR WITH DESIGN TO
AVOID PAYMENT OF SAID TAXES, MAY BE SEIZED BY THE COLLECTOR OR DEPUTY
COLLECTOR OF THE PROPER DISTRICT, OR BY SUCH OTHER COLLECTOR OR DEPUTY
COLLECTOR AS MAY BE SPECIALLY AUTHORIZED BY THE COMMISSIONER OF
INTERNAL REVENUE FOR THAT PURPOSE, AND SHALL BE FORFEITED TO THE UNITED
STATES.  AND ALL RAW MATERIALS FOUND IN THE POSSESSION OF ANY PERSON
INTENDING TO MANUFACTURE THE SAME INTO ARTICLES OF A KIND SUBJECT TO
TAX FOR THE PURPOSE OF FRAUDULENTLY SELLING SUCH MANUFACTURED ARTICLES,
OR WITH DESIGN TO EVADE THE PAYMENT OF SAID TAX; AND ALL TOOLS,
IMPLEMENTS, INSTRUMENTS, AND PERSONAL PROPERTY WHATSOEVER, IN THE PLACE
OR BUILDING, OR WITHIN ANY YARD OR INCLOSURE WHERE SUCH ARTICLES OR RAW
MATERIALS ARE FOUND, MAY ALSO BE SEIZED BY ANY COLLECTOR OR DEPUTY
COLLECTOR, AS AFORESAID, AND SHALL BE FORFEITED AS AFORESAID.  THE
PROCEEDINGS TO ENFORCE SUCH FORFEITURES SHALL BE IN THE NATURE OF A
PROCEEDING IN REM IN THE CIRCUIT COURT OR DISTRICT COURT OF THE UNITED
STATES FOR THE DISTRICT WHERE SUCH SEIZURE IS MADE."    FN2  REVISED
STATUTES SECS. 3460 AND 3461(ACT JULY 13, 1866, C. 184, SEC. 63, 14
STAT. 98, 169; ACT JUNE 6, 1872, C. 315, SEC. 40, 17 STAT. 230, 257; 26
U.S.C. SEC. 1624) - 

"SEC. 3460.  IN ALL CASES OF SEIZURE OF ANY GOODS, WARES, OR
MERCHANDISE, AS BEING SUBJECT TO FORFEITURE UNDER ANY PROVISION OF THE
INTERNAL-REVENUE LAWS, WHICH, IN THE OPINION OF THE COLLECTOR OR DEPUTY
COLLECTOR MAKING THE SEIZURE, ARE OF THE APPRAISED VALUE OF FIVE
HUNDRED DOLLARS OR LESS, THE SAID COLLECTOR OR DEPUTY COLLECTOR SHALL,
EXCEPT IN CASES OTHERWISE PROVIDED, PROCEED AS FOLLOWS: 

     .         .         .         .         .   "SECOND.  IF THE
SAID GOODS ARE FOUND BY THE SAID APPRAISERS TO BE OF THE VALUE OF FIVE
HUNDRED DOLLARS OR LESS, THE SAID COLLECTOR OR DEPUTY COLLECTOR SHALL
PUBLISH A NOTICE, FOR THREE WEEKS, IN SOME NEWSPAPER OF THE DISTRICT
WHERE THE SEIZURE WAS MADE, DESCRIBING THE ARTICLES, AND STATING THE
TIME, PLACE, AND CAUSE OF THEIR SEIZURE, AND REQUIRING ANY PERSON
CLAIMING THEM TO APPEAR AND MAKE SUCH CLAIM WITHIN THIRTY DAYS FROM THE
DATE OF THE FIRST PUBLICATION OF SUCH NOTICE. 

"THIRD.  ANY PERSON CLAIMING THE GOODS, WARES, OR MERCHANDISE SO
SEIZED, WITHIN THE TIME SPECIFIED IN THE NOTICE, MAY FILE WITH THE SAID
COLLECTOR OR DEPUTY COLLECTOR A CLAIM, STATING HIS INTEREST IN THE
ARTICLES SEIZED, AND MAY EXECUTE A BOND TO THE UNITED STATES IN THE
PENAL SUM OF TWO HUNDRED AND FIFTY DOLLARS, WITH SURETIES TO BE
APPROVED BY THE SAID COLLECTOR OR DEPUTY COLLECTOR, CONDITIONED THAT,
IN CASE OF CONDEMNATION OF THE ARTICLES SO SEIZED, THE OBLIGORS SHALL
PAY ALL THE COSTS AND EXPENSES OF THE PROCEEDINGS TO OBTAIN SUCH
CONDEMNATION; AND UPON DELIVERY OF SUCH BOND TO THE COLLECTOR OR DEPUTY
COLLECTOR, HE SHALL TRANSMIT THE SAME, WITH THE DUPLICATE LIST OR
DESCRIPTION OF THE GOODS SEIZED, TO THE UNITED STATES DISTRICT ATTORNEY
FOR THE DISTRICT, AND SAID ATTORNEY SHALL PROCEED THEREON IN THE
ORDINARY MANNER PRESCRIBED BY LAW. 

"FOURTH.  IF NO CLAIM IS INTERPOSED AND NO BOND IS GIVEN WITHIN THE
TIME ABOVE SPECIFIED, THE COLLECTOR OR DEPUTY COLLECTOR, AS THE CASE
MAY BE, SHALL GIVE TEN DAYS' NOTICE OF THE SALE OF THE GOODS, WARES, OR
MERCHANDISE BY PUBLICATION, AND, AT THE TIME AND PLACE SPECIFIED IN THE
NOTICE, SHALL SELL THE ARTICLES SO SEIZED AT PUBLIC AUCTION, AND, AFTER
DEDUCTING THE EXPENSE OF APPRAISEMENT AND SALE, HE SHALL DEPOSIT THE
PROCEEDS TO THE CREDIT OF THE SECRETARY OF THE TREASURY. 

"SEC. 3461.  WITHIN ONE YEAR AFTER THE SALE OF ANY GOODS, WARES, OR
MERCHANDISE, AS PROVIDED IN THE PRECEDING SECTION, ANY PERSON CLAIMING
TO BE INTERESTED IN THE PROPERTY SOLD MAY APPLY TO THE SECRETARY OF THE
TREASURY FOR A REMISSION OF THE FORFEITURE THEREOF, OR ANY PART
THEREOF, AND A RESTORATION OF THE PROCEEDS OF THE SALE; AND THE SAID
SECRETARY MAY GRANT THE SAME UPON SATISFACTORY PROOF, TO BE FURNISHED
IN SUCH MANNER AS HE SHALL PRESCRIBE:  PROVIDED, THAT IT SHALL BE
SATISFACTORILY SHOWN THAT THE APPLICANT, AT THE TIME OF THE SEIZURE AND
SALE OF THE SAID PROPERTY, AND DURING THE INTERVENING TIME, WAS ABSENT,
OUT OF THE UNITED STATES, OR IN SUCH CIRCUMSTANCES AS PREVENTED HIM
FROM KNOWING OF THE SEIZURE, AND THAT HE DID NOT KNOW OF THE SAME; AND
ALSO THAT THE SAID FORFEITURE WAS INCURRED WITHOUT WILLFUL NEGLIGENCE
OR ANY INTENTION OF FRAUD ON THE PART OF THE OWNER OF SAID PROPERTY. 
IF NO APPLICATION FOR SUCH RESTORATION IS MADE WITHIN ONE YEAR, AS
HEREINBEFORE PRESCRIBED, THE SECRETARY OF THE TREASURY SHALL, AT THE
EXPIRATION OF THE SAID TIME, CAUSE THE PROCEEDS OF THE SALE OF THE SAID
PROPERTY TO BE DISTRIBUTED ACCORDING TO LAW, AS IN THE CASE OF GOODS,
WARES, OR MERCHANDISE CONDEMNED AND SOLD PURSUANT TO THE DECREE OF A
COMPETENT COURT." 

FN3  "WHEN THE COMMISSIONER, HIS ASSISTANTS, INSPECTORS, OR ANY
OFFICER OF THE LAW SHALL DISCOVER ANY PERSON IN THE ACT OF TRANSPORTING
IN VIOLATION OF THE LAW, INTOXICATING LIQUORS IN ANY WAGON, BUGGY,
AUTOMOBILE, WATER OR AIR CRAFT, OR OTHER VEHICLE, IT SHALL BE HIS DUTY
TO SEIZE ANY AND ALL INTOXICATING LIQUORS FOUND THEREIN BEING
TRANSPORTED CONTRARY TO LAW.  WHENEVER INTOXICATING LIQUORS TRANSPORTED
OR POSSESSED ILLEGALLY SHALL BE SEIZED BY AN OFFICER HE SHALL TAKE
POSSESSION OF THE VEHICLE AND TEAM OR AUTOMOBILE, BOAT, AIR OR WATER
CRAFT, OR ANY OTHER CONVEYANCE, AND SHALL ARREST ANY PERSON IN CHARGE
THEREOF.  SUCH OFFICER SHALL AT ONCE PROCEED AGAINST THE PERSON
ARRESTED UNDER THE PROVISIONS OF THIS TITLE IN ANY COURT HAVING
COMPETENT JURISDICTION; BUT THE SAID VEHICLE OR CONVEYANCE SHALL BE
RETURNED TO THE OWNER UPON EXECUTION BY HIM OF A GOOD AND VALID BOND,
WITH SUFFICIENT SURETIES, IN A SUM DOUBLE THE VALUE OF THE PROPERTY,
WHICH SAID BOND SHALL BE APPROVED BY SAID OFFICER AND SHALL BE
CONDITIONED TO RETURN SAID PROPERTY TO THE CUSTODY OF SAID OFFICER ON
THE DAY OF TRIAL TO ABIDE THE JUDGMENT OF THE COURT.  THE COURT UPON
CONVICTION OF THE PERSON SO ARRESTED SHALL ORDER THE LIQUOR DESTROYED,
AND UNLESS GOOD CAUSE TO THE CONTRARY IS SHOWN BY THE OWNER, SHALL
ORDER A SALE BY PUBLIC AUCTION OF THE PROPERTY SEIZED, AND THE OFFICER
MAKING THE SALE, AFTER DEDUCTING THE EXPENSES OF KEEPING THE PROPERTY,
THE FEE FOR THE SEIZURE, AND THE COST OF THE SALE, SHALL PAY ALL LIENS,
ACCORDING TO THEIR PRIORITIES, WHICH ARE ESTABLISHED, BY INTERVENTION
OR OTHERWISE AT SAID HEARING OR IN OTHER PROCEEDING BROUGHT FOR SAID
PURPOSE, AS BEING BONA FIDE AND AS HAVING BEEN CREATED WITHOUT THE
LIENOR HAVING ANY NOTICE THAT THE CARRYING VEHICLE WAS BEING USED OR
WAS TO BE USED FOR ILLEGAL TRANSPORTATION OF LIQUOR, AND SHALL PAY THE
BALANCE OF THE PROCEEDS INTO THE TREASURY OF THE UNITED STATES AS
MISCELLANEOUS RECEIPTS.  ALL LIENS AGAINST PROPERTY SOLD UNDER THE
PROVISIONS OF THIS SECTION SHALL BE TRANSFERRED FROM THE PROPERTY TO
THE PROCEEDS OF THE SALE OF THE PROPERTY." 

FN4  HOUSE REPORTS, VOL. 4, 74TH CONGRESS, 1ST SESSION, 1935, REPORT
NO. 1601, P. 6 - 

"SECTION 204(A) OF SECTION 204 PROVIDES THAT IN ANY COURT PROCEEDING
FOR THE FORFEITURE UNDER THE INTERNAL-REVENUE LAWS OF ANY VEHICLE OR
AIRCRAFT SEIZED FOR A VIOLATION OF THE INTERNAL-REVENUE LAWS RELATING
TO LIQUOR, THE COURT SHALL, UPON DECREE OF FORFEITURE, HAVE EXCLUSIVE
JURISDICTION TO REMIT OR MITIGATE THE FORFEITURE.  AT THE PRESENT TIME,
THE COURT HAS AUTHORITY ONLY TO DECREE THE FORFEITURE, AND REMISSION OR
MITIGATION IS DEPENDENT UPON ADMINISTRATIVE ACTION.  SECTION 204
EXTENDS TO THE COURT WHICH DETERMINES WHETHER THE VEHICLE OR AIRCRAFT
SHALL BE FORFEITED BY REASON OF HAVING BEEN USED IN THE VIOLATION OF
INTERNAL-REVENUE LAWS RELATING TO LIQUOR, THE POWER TO DETERMINE
WHETHER THE CLAIM OF ANY PERSON HAVING AN INTEREST IN THE VEHICLE OR
AIRCRAFT SHOULD BE ALLOWED AFTER FORFEITURE.  THUS, IN ALL CASES WHERE
THE VALUE OF THE SEIZED PROPERTY EXCEEDS $500, AND IN ALL CASES WHERE
THE VALUE IS $500 OR LESS, BUT A BOND IS POSTED IN ORDER TO BRING THE
FORFEITURE PROCEEDING INTO COURT, THE COURT WILL HAVE EXCLUSIVE
JURISDICTION TO REMIT OR MITIGATE THE FORFEITURE.  IN THE EVENT THAT A
BOND IS NOT FILED IN CASES WHERE THE PROPERTY IS OF THE VALUE OF $500
OR LESS, THE POWER TO REMIT OR MITIGATE WILL REMAIN IN THE SECRETARY OF
THE TREASURY. 

"CERTAIN STANDARDS ARE GIVEN TO THE COURT TO GUIDE IT IN THIS
DETERMINATION.  THUS, UNDER SUBSECTION (B), THE CLAIMANT MUST PROVE
THAT HE ACQUIRED HIS INTEREST IN GOOD FAITH, THAT HE HAD NO KNOWLEDGE
OR REASON TO BELIEVE THAT THE VEHICLE OR AIRCRAFT WAS BEING OR WOULD BE
USED IN VIOLATING FEDERAL OR STATE LIQUOR LAWS, AND THAT, IF HIS
INTEREST ARISES OUT OF, OR IS SUBJECT TO, ANY AGREEMENT UNDER WHICH ANY
PERSON HAVING A RECORD OR REPUTATION FOR VIOLATING FEDERAL OR STATE
LIQUOR LAWS HAS A RIGHT WITH RESPECT TO THE VEHICLE OR AIRCRAFT, THE
CLAIMANT, BEFORE HE ACQUIRED HIS INTEREST, OR BEFORE THE OTHER PERSON
ACQUIRED HIS RIGHT, WHICH EVER OF THESE EVENTS OCCURRED LATER, INQUIRED
OF THE LAW ENFORCEMENT OFFICERS IN THE LOCALITY WHERE SUCH OTHER PERSON
ACQUIRED HIS RIGHT, OF THE LOCALITY IN WHICH SUCH OTHER PERSON THEN
RESIDED, AND OF EACH LOCALITY WHERE THE CLAIMANT MADE INQUIRY AS TO THE
CHARACTER OR CREDIT STANDING OF SUCH OTHER PERSON, WHETHER THE OTHER
PERSON HAD SUCH A RECORD OR REPUTATION, AND WAS INFORMED HE HAD NOT. 
THIS LAST REQUIREMENT IS PREDICATED UPON THE RECOGNITION OF THE
'BOOTLEG HAZARD' AS AN ELEMENT TO BE CONSIDERED IN INVESTIGATING A
PERSON AS A CREDIT RISK.  AS A MATTER OF SOUND BUSINESS PRACTICE,
AUTOMOBILE DEALERS, FINANCE COMPANIES, AND PROSPECTIVE LIENHOLDERS ON
AUTOMOBILES EXAMINE RECORDS, AND MAKE INQUIRY OF REFERENCES AND CREDIT
RATING AGENCIES AS TO THE OWNER'S OR PROSPECTIVE PURCHASER'S REPUTATION
FOR PAYING HIS DEBTS AND HIS ABILITY TO DO SO.  THIS SUBSECTION MERELY
REQUIRES THAT IN THE MAKING OF SUCH INQUIRY, THE 'BOOTLEG HAZARD' ALSO
BE EXAMINED AS ONE ASPECT OF THE CREDIT RISK." 

FN5  SENATE COMMITTEE HEARINGS, 1935, VOL. 495, NO. 4, P. 13 - 

"SECTION 204  ..  REELATES TO PROCEEDINGS IN COURT FOR THE FORFEITURE
OF VEHICLES OR AIRCRAFT SEIZED FOR VIOLATIONS OF INTERNAL-REVENUE
LAWS.  AT THE PRESENT TIME, CLAIMANTS OF INTERESTS IN VEHICLES OR
AIRCRAFT THAT HAVE BEEN SEIZED AND FORFEITED FOR VIOLATION OF INTERNAL
REVENUE LAWS, PETITION THE SECRETARY OF THE TREASURY FOR THE REMISSION
OR MITIGATION OF THE FORFEITURE, AND THE SECRETARY, UNDER THE LAW,
REQUIRES THE PERSON CLAIMING TO HAVE AN INNOCENT INTEREST TO SHOW THAT
HE HAD NO KNOWLEDGE OF THE UNLAWFUL USE OF THE VEHICLE OR AIRCRAFT. 
WHAT THIS SECTION WILL DO, IN THE CASE OF ANY COURT PROCEEDING FOR THE
FORFEITURE OF VEHICLES OR AIRCRAFT, IS TO GIVE THE COURT JURISDICTION
TO DETERMINE WHETHER OR NOT THE PERSON CLAIMING TO HAVE AN INNOCENT
INTEREST ACTUALLY HAD SUCH AN INTEREST.  UNDER THE PRESENT PRACTICE THE
SECRETARY OF THE TREASURY REQUIRES SUCH A SHOWING.  ..  THHIS SECTION
IS OF PARTICULAR IMPORTANCE IN CONNECTION WITH THE DISCOUNTING BY A
FINANCE COMPANY OF AN AUTOMOBILE DEALER'S PAPER. 

"AT THE PRESENT TIME, THE SECRETARY OF THE TREASURY CONSIDERS THAT
THE BOOTLEG HAZARD IS AN ELEMENT INVOLVED IN THE CREDIT RISK, AND IS
JUST AS MUCH A PART OF THE INVESTIGATION BY THE FINANCE COMPANY OF A
PERSON AS A CREDIT RISK AS IS HIS FINANCIAL STANDING IN THE COMMUNITY. 
HE REQUIRES THAT BEFORE A CAR BE RETURNED TO THE PERSON CLAIMING AN
INNOCENT INTEREST, THE LATTER MUST PROVE THAT HE MADE AN INVESTIGATION
AS TO WHETHER OR NOT THE PURCHASER HAD A BOOTLEGGER RECORD, AND FOUND
THAT HE HAD NONE." 

MR. JUSTICE BUTLER AND MR. JUSTICE STONE TOOK NO PART IN THE
CONSIDERATION OR DECISION OF THESE CAUSES. 

MR. JUSTICE DOUGLAS, DISSENTING: 

MR. JUSTICE BLACK, MR. JUSTICE FRANKFURTER AND I THINK THAT THE
JUDGMENTS BELOW SHOULD BE REVERSED. 

THE PROBLEM HERE INVOLVED RAISES THE QUESTION OF THE DUTY OF
AUTOMOBILE FINANCE COMPANIES TO INVESTIGATE THOSE WHO PURCHASE CARS
FROM DEALERS, FINANCED BY THOSE COMPANIES, IN ORDER TO DETERMINE
WHETHER THE OSTENSIBLE PURCHASERS ARE IN REALITY STRAW MEN FOR
BOOTLEGGERS.  HERE THE DEALERS KNEW THAT THE NAMED PURCHASERS WERE ONLY
NOMINAL PURCHASERS; AND THEY ALSO KNEW THE IDENTITY OF THE REAL
PURCHASERS.  BUT THE FINANCE COMPANIES MADE NO INQUIRY WHATSOEVER OF
THE DEALERS TO ASCERTAIN IF THOSE PURCHASERS WERE STRAW MEN.  THEY MADE
NO INQUIRY IN SPITE OF THE FACT THAT THE USE OF STRAW MEN BY
BOOTLEGGERS WAS NOT NOVEL.  THEY MADE NO INQUIRY IN SPITE OF THE
INTIMATE BUSINESS RELATIONS WHICH EXIST BETWEEN THEM AND THE DEALERS
AND THE PRESUMPTION OF AVAILABILITY OF SUCH INFORMATION WHICH THAT
RELATIONSHIP CREATES.  AND THEY NOW SEEK THE BENEFIT OF AN ACT WHICH
THE CONGRESS PASSED TO AMELIORATE SOME OF THE RISKS OF CONFISCATION AND
FORFEITURE.  WE DO NOT THINK THEY HAVE SATISFIED THE BURDEN WHICH THE
CONGRESS HAS PLACED UPON THEM. 

SEC. 204(A) GIVES THE DISTRICT COURT "EXCLUSIVE JURISDICTION TO REMIT
OR MITIGATE" FORFEITURES.  SEC. 204(B) SETS FORTH THREE CONDITIONS
PRECEDENT WHICH THE CLAIMANT MUST SATISFY BEFORE THE COURT MAY REMIT OR
MITIGATE A FORFEITURE.  TO SATISFY THE THIRD OF THESE CONDITIONS
CLAIMANT MUST PROVE UNDER CERTAIN CIRCUMSTANCES THAT HE MADE INQUIRY OF
DESIGNATED LAW ENFORCEMENT AGENCIES CONCERNING ANY PERSON FOR WHOM A
STRAW MAN PURCHASER WAS ACTING AND THAT HE WAS INFORMED ON SUCH INQUIRY
THAT SUCH PERSON HAD NO RECORD OR REPUTATION FOR VIOLATING THE LIQUOR
LAWS.  THE CIRCUMSTANCES UNDER WHICH CLAIMANT MUST MAKE THAT INQUIRY
EXIST "IF IT APPEARS THAT THE INTEREST ASSERTED BY THE CLAIMANT ARISES
OUT OF OR IS IN ANY WAY SUBJECT TO ANY CONTRACT OR AGREEMENT UNDER
WHICH ANY PERSON HAVING A RECORD OR REPUTATION FOR VIOLATING LAWS OF
THE UNITED STATES OR OF ANY STATE RELATING TO LIQUOR HAS A RIGHT WITH
RESPECT TO SUCH VEHICLE OR AIRCRAFT,  .." 


TO BE SURE, THE PHRASING OF SEC. 204(B)(3) IS DIFFICULT.  BUT IT
MEANS TO US THAT A CLAIMANT MUST PROVE, IN ORDER TO SATISFY THAT
CONDITION, THAT HE MADE A REASONABLE INVESTIGATION TO ASCERTAIN IF THE
PURCHASER WAS A MERE STRAW MAN ACTING FOR ANOTHER OR WAS A LEGITIMATE
PURCHASER IN HIS OWN RIGHT.  THE WORDS "IF IT APPEARS" CARRY THAT
CONNOTATION.  A CONTRARY CONSTRUCTION DEFEATS THE PURPOSE OF THE
CONGRESS BY PLACING AN ENORMOUS PREMIUM ON LACK OF DILIGENCE.  THAT
CONSTRUCTION OPENS WIDE THE DOORS TO DEFRAUD THE REVENUE, FOR FINANCE
COMPANIES NEED LIFT NO FINGER NOR MAKE ANY EFFORT TO ASCERTAIN THE
EXISTENCE OF A STRAW MAN PURCHASER.  IGNORANCE NOW IS SURELY BLISS.  BY
FAILURE TO MAKE INQUIRY THEY CAN EFFECTIVELY INSULATE THEMSELVES EVEN
FROM THE KNOWLEDGE WHICH THEIR BUSINESS INTIMATES - THE DEALERS -
HAVE.  UNLESS INFORMED BY DISCLOSURES, IN THE WRITTEN CONTRACT OR
OTHERWISE, THEY CAN CONTENTEDLY ASSUME THAT THE PURCHASER IS NOT A
STRAW MAN FOR A BOOTLEGGER.  THAT THEY WILL THUS BE VOLUNTARILY
INFORMED BY THE PARTIES OR BY OTHERS SEEMS UNLIKELY.  SINCE THE
FUNCTION OF THE STRAW MAN IS TO CONCEAL THE BOOTLEGGER, NEITHER THE
STRAW MAN NOR THE BOOTLEGGER CAN BE EXPECTED TO STEP FORWARD WITH THE
INFORMATION.  AND THE AUTOMOBILE SALESMAN IS NOT LIKELY TO VOLUNTEER
THE INFORMATION FOR HIS DESIRE IS TO SELL AUTOMOBILES NOT TO DEFEAT
SALES.  ON THE OTHER HAND, THE INTERPRETATION WHICH WE URGE WOULD GIVE
THE STATUTE REAL MEANING AND SIGNIFICANCE IN TERMS OF THIS SPECIFIC
BOOTLEG HAZARD WHICH CONCERNED THE CONGRESS ON ITS ENACTMENT.  FN1 
FURTHERMORE, THE REQUIREMENT FOR REASONABLE INVESTIGATION CANNOT
POSSIBLY PLACE SUCH A BURDEN ON FINANCE COMPANIES AS TO FORCE US TO
RESOLVE AN AMBIGUITY IN STATUTORY LANGUAGE AGAINST FORFEITURE.  IN THE
CASES BEFORE US A SINGLE QUESTION PUT THE DEALER OR THE PURCHASER MIGHT
ALONE HAVE DISCLOSED THE EXISTENCE OF A STRAW MAN.  BUT NO SUCH SIMPLE
INQUIRY WAS MADE.  AN INVESTIGATION IN EACH CASE WAS MADE TO ASCERTAIN
WHETHER THE NAMED PURCHASER HAD A REPUTATION OR RECORD FOR LIQUOR
VIOLATIONS.  BUT THE EXISTENCE OF A STRAW MAN WAS NEVER PROBED. 
CERTAINLY ON SUCH A MATTER INVESTIGATIONAL TECHNIQUES ARE NOT NOVEL,
INVOLVED OR UNIQUE.  THE RESPONSIBILITY FOR A REASONABLE INVESTIGATION
WOULD ADD BUT IMPERCEPTIBLY IF AT ALL TO THE COST OF DOING BUSINESS. 
IN THIS FIELD SUCH INVESTIGATION ENTAILS A BURDEN WHICH ANY LEGITIMATE
ENTERPRISE SHOULD BE PREPARED TO CARRY.  WE NEED NOT CONJURE UP
HYPOTHETICAL CASES OF EXTENDED INQUIRY WHICH DISCLOSED NO STRAW MAN,
FOR THEY WOULD MEET THE TEST OF REASONABLE INVESTIGATION HERE
PROPOSED. 

FOR THESE REASONS, THE JUDGMENTS SHOULD BE REVERSED. 

FN1  PRECISELY THE INVESTIGATION HERE URGED SEEMS TO HAVE BEEN
INTENDED, FOR THE REPORT OF THE SENATE COMMITTEE ON THE JUDICIARY SAID
AS RESPECTS SEC. 204(B)(3):  "THIS LAST REQUIREMENTS IS PREDICATED UPON
THE RECOGNITION OF THE 'BOOTLEG HAZARD' AS AN ELEMENT TO BE CONSIDERED
IN INVESTIGATING A PERSON AS A CREDIT RISK.  AS A MATTER OF SOUND
BUSINESS PRACTICE, AUTOMOBILE DEALERS, FINANCE COMPANIES, AND
PROSPECTIVE LIENHOLDERS ON AUTOMOBILES EXAMINE RECORDS, AND MAKE
INQUIRY OF REFERENCES AND CREDIT RATING AGENCIES AS TO THE OWNER'S OR
PROSPECTIVE PURCHASER'S REPUTATION FOR PAYING HIS DEBTS AND HIS ABILITY
TO DO SO.  THIS SUBSECTION MERELY REQUIRES THAT IN THE MAKING OF SUCH
INQUIRY, THE 'BOOTLEG HAZARD' ALSO BE EXAMINED AS ONE ASPECT OF THE
CREDIT RISK."  SEN. REP. NO. 1330, 74TH CONG., 1ST SESS., P. 6.  TO
INVESTIGATE THE "BOOTLEG HAZARD" AS "ONE ASPECT OF THE CREDIT RISK"
WHEN INQUIRY IS MADE OF THE "PROSPECTIVE PURCHASER'S REPUTATION FOR
PAYING HIS DEBTS" SEEMS CLEARLY TO ENTAIL INQUIRY AS TO WHETHER OR NOT
THE PROSPECTIVE PURCHASER IS A STRAW MAN FOR A BOOTLEGGER.