author: DENISON, Circuit Judge.

text:
    COMMERCIAL CREDIT CO. v. UNITED STATES.
    (Circuit Court of Appeals, Sixth Circuit.
    April 6, 1925.)
    No. 4241.
    1. Internal revenue @=346 — Transportation of whisky held “removal” within vehicle forfeiture statute.
    The transportation of whisky, on which internal revenue tax is unpaid, though such transportation is not by the distiller, but by a later owner under no legal duty to pay the tax, is a “removal” within Rev. St. § 3450 (Comp. St. § 6352), providing for the forfeiture of the vehicle used.
    (Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Remove —Removal.]
    2. Internal revenue @=2, 46 — Statutes imposing per gallon tax on liquor repealed by Prohibition Act as to liquor illegally manufactured; transportation of moonshine held not to subject to forfeiture vehicle used.
    The provision of National Prohibition Act, tit. 2, § 35 (Comp. St.' Ann. Supp. 1923, § 10138%v), prohibiting the issuance in advance of tax-paid stamps for illegal manufacture of liquor, is in direct conflict with and repeals the provisions of prior internal revenue statutes imposing a per gallon tax on liquors, so far as relates to those illegally manufactured, and a mere transporter of moonshine whisky is. not chargeable with an intent to defraud the United States of a tax thereon, which renders the vehicle used subject to forfeiture under Rev. St. § 3450 (Comp. St. § 6352).
    3. Internal revenue <3=2 — Scope of Willis-Campbell Act, stated.
    The re-enactment by Supplemental Act Nov. 23, 1921, § 5 (Comp. St. Ann. Supp. 1923, § 10138%c), of “all laws in regard to the manufacture and taxation of and traffic in intoxicating liquor, and all penalties for violations of such laws” which may have been impliedly repealed by the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138% et seq.), does not include provisions of Rev. St. § 3450 (Comp. St. § 6352), which only incidentally affects liquor taxation where such provisions are in direct conflict with those of the Prohibition Act.
    4. Internal 'revenue (@=46 — Statutes applicable to forfeiture of vehicle used in transportation, stated.
    Where a vehicle used for the illegal transportation of liquor is subject to forfeiture under National Prohibition Act, tit. 2, § 26 (Comp. St. Ann. Supp. 1923, § 10138%mm), it is not forfeitable under Rev. St. § 3450 (Comp. St. § 6352); the two statutes being in direct conflict as to the rights of a good-faith owner or lienholder.
    In Error to the District Court of the United States for the Western Division of the Northern District of Ohio; John M. Killits, Judge.
    Libel by the United States against one automobile, with the Commercial Credit Company as intervening claimant. Order of forfeiture, and claimant brings error.
    Reversed and remanded.
    Joseph S. Graydon, of Cincinnati, Ohio, and Duane R. Dills, of New York City (Wm. B. Devlin, of Toledo, Ohio, and Lawrence Maxwell, of Cincinnati, Ohio, on the brief), for plaintiff in error.
    Miles E. Evans, Asst. U. S. Atty., of Cleveland, Ohio (A. E. Bemsteen, U. S. Atty., and Paul J. Mullen, Asst. U. S. Atty., both of Cleveland, Ohio, on the brief), for the United States.
    Before DENISON, DONAHUE, and MOORMAN, Circuit Judges.
   DENISON, Circuit Judge.

While an automobile was being used for the transportation of illicit whisky, the car and contents were seized by federal prohibition agents, acting under section 26, tit. 2, of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138%mm). Those in charge of the ear were prosecuted and convicted under that act, but not otherwise. Thereupon the United States brought a libel against the automobile, alleging the foregoing facts, and further that the whisky being transported was subject to a tax of $4.20 per gallon by the Revenue Act of 1918 (40 Stat. 1057), and was being removed by means of the automobile with intent to defraud the United States of such tax, and praying that the automobile be condemned and confiscated, pursuant to section 26 >of the National Prohibition Act, and pursuant to R. S. § 3450 (U. S. Comp. St. § 6352). Thereupon there issued to the marshal a warrant of seizure and a monition. In response thereto, the Commercial Credit Company, as intervening elaimant, answered, showing that it was the good-faith owner of a duly recorded purchase-money chattel mortgage upon the automobile, and that neither it nor its assignor, the original vendor, had any knowledge or any reason to suspect that the automobile would be used, or was being used, for any unlawful purpose. Thereupon it prayed recognition of its lien for the unpaid balance. Upon the hearing, the facts alleged in the intervening petition were admitted, but the court held that section 3450 was applicable, and entered the judgment of condemnation, review of which is here sought.

The ease presents three substantial questions, measurably but not wholly distinct. The first is whether such transportation as here occurred, if it had been before the pas-' sage of the National 'Prohibition Act, would have been that “removal” which section 3450 denounces. The second is on the assumption that the first is answered in the affirmative, and is as to the status- in which such transportation has now been put by the passage of the National Prohibition Act and the Willis-Campbell Act (42 Stat. 222). The third assumes that the right of condemnation under section 3450 would otherwise exist, and is - as to the effect of the government’s action in seizing under section 26 and prosecuting and convicting under that section the persons transporting. These questions have given rise to a great variety of opinion. These decisions, so far as we observe them, are cited and collected in the margin. Before discussing these questions, we may well notice that the government’s theory will carry condemnation very far. If the theory is correct, every automobile in which any quantity of nontax-paid liquor has been carried is absolutely forfeit, regardless of the participation, guilty knowledge, or even negligence of the title or lienholder. All titles and liens upon this kind of property become most unstable and unsafe. As to the first and second questions, our initial attention will be challenged by testing the affirmative theory on an extreme ease, but one short of which it seemingly cannot stop. If the automobile driver is carrying in his pocket for ■the purpose of sale one unstamped half-ounce package of morphine, on which the unpaid stamp tax is one cent, is the automobile to be totally condemned?

Coming to the first: It is to be noted that while section 3450 says “removed, deposited or concealed,” the libel in this ease charges only “removal” and does not charge “deposit or concealment.” Hence we are not directly called upon to consider this phrase “deposit or concealment.” The claimant’s contention is that at the time section 3450 was enaeted, as well as when it was re-enacted in the Revised Statutes, the internal revenue system contemplated a place of manufacture or of storage, and a tax which was payable as a condition of storage at or of removal from that place, and hence that a proper construction of the act reaches only a removal from, that place, leaving the tax unpaid. It is then said that by such removal (or deposit or concealment) by the person charged with the duty of paying the tax, the offense is completed, and it does not again arise upon a subsequent transportation by some one else in the way naturally incident to the sale of any commodity. The article here transported is said to have been moonshine whisky, but there is nothing to indicate that the transporters were distillers, or acting for the distillers. The natural inference, and the one which we accept for the purposes of the case, is that they had bought this whisky, mediately or immediately, from the distillers and were transporting it in connection with a resale. It must also be inferred that they knew or had reason to know that no tax had been paid.

The duty of the distillers (before 1920) was to deposit this liquor in their bonded warehouse (after temporary storage in the receiving cistern, R. S. § 3267 [Comp. St. § 6005]) and to pay the tax before removal therefrom (-Sundry Stats., e. g., U. S. Comp. St. §§ 5986 and 6028b). If in violation of law they took it elsewhere from the still, the per-gallon tax was to be assessed by the commissioner upon the distillers (R. S. § 3253 [Comp. St. § 5988]), who were made personally liable. Those who merely transport, after one removal, are seemingly under no duty to pay the tax. We find no statute imposing that duty. It does not seem to be a strong or violent inference, properly supporting a presumption of law, that one who is not in collusion with or aiding the defaulting taxpayer, and who merely transports for his own purposes the nontax-paid article, is thereby guilty of intent to defraud the government out of the tax. If there were continuing liens upon the liquor itself for the tax, the inference might be stronger; but we find no statute creating such a lien. The lien is given against the distillery. True, the tax “attaches” to the liquor when made; but this, without more, indicates rather a perfected, though unma-tured, duty by the distiller to pay, than an enforceable lien.

Further, “removed” and “transport” are not necessarily synonymous. The first more distinctly implies a taking away from an existing position and hence is particularly applicable to those cases where the paying of the tax is a condition of the right to change the article from a fixed to a transitory status.

We do not feel at liberty to follow out this first question to an independent conclusion. In the Goldsmith-Grant ease, 254 U. S. 505, 41 S. Ct. 189, 65 L. Ed. 376, the transporting in an automobile of nontax-paid liquor was under consideration. So far as the opinion shows the record did not indicate, any more than the present one does, that the persons transporting were distillers or in collusion with them. It is true that the argument, that mere transportation by a later owner is not the removal of section 3450, was not considered in the opinion, if indeed it was presented; and it is true that for this reason the Supreme Court might well regard the question as not concluded by that opinion; but we 'think we must interpret it as obligatory upon us to its full apparent extent, and as requiring us to answer in the affirmative the above stated first question.

Coming to the second question: Assuming that the transportation here existing was “removal,” within the original meaning of section 3450, is the pertinent clause of that section now in force to the extent necessary to reach this particular transaction? It is obvious that the old revenue laws were repealed by the National Prohibition Act as to two classes of their provisions: First,

those where there was repeal in terms; and, second, those where the new provisions were so directly in conflict with the old that both could not stand together; and, although the second kind of repeal is called one by implication, it might well be called express. The term “implied repeal” covers also a third class, being those further eases where, although there is no direct conflict, the intent of the Legislature, determined according to settled canons of construction, is inferred to the effect that the new provision was intended to supersede the old. In the Yuginovitch Case, 256 U. S. 450, 41 S. Ct. 551, 65 L. Ed. 1043 — interpreting the decision in the aspect here important — it was held that where the same act was an offense, both under the old law and the new, and where the new law provided therefor another and a lesser punishment or penalty, there was an implied repeal [of the above-stated third class]. Applying this decision, we held in the Lewis Case, 280 F. 5, that in so far as section 3450 might apply to the same transportation which was the subject of section 26 of the National Prohibition Act, section 3450 was no longer in force. We pointed out other considerations that led us to suggest a “direct conflict” between the* pertinent aspect of section 3450 and the National Prohibition Act, but we did not reach any conclusion thereon.

Then came the Willis-Campbell Act of November 23, 1921. As interpreted in Staf-off Case, 260 U. S. 477, 43 S. Ct. 197, 67 L. Ed. 358, this act recognized all repeals by implication (of the third class) then existing by the effect of the National Prohibition Act and the Yuginoviteh Case, and as to these old provisions, thus impliedly repealed, re-enacted them, making express, though seemingly unnecessary, declaration that existing repeals which were the result of “direct conflict” should remain undisturbed.Thus the Lewis Case ceases to be continuing • authority, but the question whether there is direct conflict between the National Prohibition Act and this part of section 3450, or any other provision of the old law on which forfeiture by section 3450 depends, remains open.

The question of “intent to defraud” as bearing on the meaning of “removal” — that is, whose intent and when formed — has been considered. We now observe that the intent must be to defraud the United States “of such tax,” and this takes us to the opening clause referring to “goods or commodities for or in respect whereof any tax is imposed.” Within the fair meaning of this clause, and as affected by the “direct conflict” aspect of the National Prohibition Act, was there, in 1924, any “tax imposed” upon the liquor being transported, so that the carriers could be guilty of the punishable intent? The power of Congress to impose a tax upon that which it prohibits is not to be questioned. The inquiry is: Has Congress done so, by laws in force after November, 1921?

When we inquire about a tax, the' first thought is: “What tax?” In some of the cases it has been said that the tax authorized by section 35, tit. 2, of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138%v), answered this question; but, passing the difficulty of finding an intent to defraud the government of a tax which does not yet exist, and the doubt whether this section has any reference to a per-gallon tax, it has been authoritatively held (Lipke v. Lederer, 259 U. S. 557, 561, 42 S. Ct. 549, 66 L. Ed. 1061) that the assessment which may be made under this section is not one of a tax, but of a penalty for law violation. So it must be quite clear that the requirement of section 3450 that there shall be an intent to defraud “of a tax” cannot be satisfied by finding no tax but only a penalty. R. S. § 3296 (Comp. St. § 6038), is in the same situation. It does not provide a precedent tax out of which one may intend to defraud the government; it provides a penalty to be assessed' as punishment for wrongdoing.

Apparently, previous statutes, like R. S. § 3251 (Comp. St. § 5985), were superseded by section 48 of the Act of August 27,1894, (Comp. St. § 5986); whether the lien and personal liability clauses of 3251 would survive is here immaterial. The Act of 1894 adopts and makes applicable the existing provisions of law for the payment of taxes by the use qf stamps. This act levied a tax of $1.10 on each proof gallon; we do not find that it contemplated or permitted any means of collection, or payment, save through the system of selling of tax-paid stamps .by the collector. It provided for payment by the distiller before removal. This statute in turn was partially superseded by section 600(a) of the Revenue Act of 1918 (40 Stats. 1105 [Comp. St. Ann. Supp. 1919, § 5986e]). This provides that in lieu of all other internal revenue taxes “there shall be levied and collected on all distilled spirits * * * that may be hereafter produced in * * * the United States * * * a tax of $2.20 (or, if withdrawn for beverage, purposes or for use in the manufacture or production of any article used or intended for use as a beverage, a tax of $6.40) on each proof gallon * * *• to be paid by the distiller or importer when withdrawn, and collected under the provisions of existing law.”

When this act was passed, the manufacture of whisky for beverage purposes or its withdrawal from bond for such puiposes was lawful, except as temporarily suspended by the War Prohibition Act (Comp. St. Ann. Supp. 1919, §§ . The evident theory was that at the time the distilled spirits were withdrawn from the distillery or bonded warehouse, they should be classified as for beverage, or for industrial, medicinal, etc., purposes, and the tax paid accordingly. It'was at least difficult to apply this statute intelligently to “moonshine” whisky, which never reached the contemplated point of withdrawal or classification ; but then we come to section 600 of the Revenue Act of 1921 (42 Stats. 285 [Comp. St. Ann. Supp. 1923, § 5986ej).. This amended the last quoted statute by adding thereto: “Provided, that on all distilled spirits on which tax is paid at the nonbev-erage rate of $2.20 per proof gallon and which are diverted to beverage purposes or for use in the manufacture or production of any article used or intended for use as a beverage, there shall be levied and collected an additional tax of $4.20 on each proof gallon, * * * to be paid by the person responsible for such diversion.”

Since the National Prohibition Act then forbade any diversion to beverage purposes or for .use in an article intended for a beverage, here we have, perhaps for the first time, the clear imposition by Congress of a per-gallon tax on the liquor involved in any forbidden transaction; but here, again, it seems most difficult to make application of the provision to moonshine liquor. Indeed, the amendment of 1921 cannot refer to such liquor, since its effect is confined to spirits on which the nonbeverage tax has been paid; and its apparent scope was limited to spirits which had been withdrawn for industrial or other lawful purpose and then were diverted ; but even if it were otherwise applicable, we do not find in this record any charge that the persons who transported were the “persons responsible” for the diversion. In any effort to invoke this amendment of 1921, we must observe that this illicit liquor is diverted to beverage purposes the moment it is made as much as it ever is until its use as a beverage is finally accomplished; and it would hardly be thought that the ultimate consumer is the person intended to be taxed by the amendment of 1921, or that his„aet is “deposit or concealment” under R. S. § 3450.

Were it assumed that the distiller of. moonshine wished to pay the per-gallon tax thereon — -whatever the amount might be, $2.-20 or $6.40 — he would have difficulty enough in doing so, though possibly the implications of R. S. § 3253 would point the way; but if the later purchaser of the same liquor wished to make this payment, would he be able to discover any way in which it could be done? If he could have done it under the old revenue laws, it would have been by the purchase of stamps and affixing them to the package, though he was not entitled to buy stamps and practically he could not have 'done this; but the National Prohibition Act, § 35, after providing that the act shall not relieve any one from paying any taxes imposed upon the manufacture of such liquor or the traffic in it — a provision obviously intended to retain some liability on the part of the manufacturer and trafficker but reaching no one else — proceeds: “No liquor revenue stamps or tax receipts for any illegal manufacture or sale shall be issued in advance. ® * * ” So far as we find, there was in the old revenue laws no way of paying any per-gallon tax except tó pay it by revenue stamps “in advance” of the act which would make the liquor available for use; but now comes section 35 and prohibits the issue of any revenue stamps or tax receipts in advance.

Unless we have in some respect misapprehended the system, we cannot find that the mere transporter of moonshine is under a duty to pay a per-gallon tax, which duty would make the necessary basis for his intent to defraud; and we must regard the provision of section 35, abolishing and forbidding, as to illicit liquor, all advance payments 'through stamps and receipts, to be in “direct conflict” with the old system of per-gallon taxation, and hence to repeal it pro tanto.

We do not see that this liquor can be thought of as possibly produced for nonbev-erage purposes, and hence still subject to taxation on that theory. The system of producing nonbeverage spirits is surrounded by careful safeguards; the law in that respect is to be enforced by the specified punishment for disregarding these safeguards, not by inference drawn from any fiction that illicit liquor is to be considered, for convenient purposes, as if lawful.

Another consideration tends to the same result. We pointed out in the Lewis Case such a measure of inconsistency in the two statutes in their relative effect on the same act (though not direct conflict) as supported the inference of implied repeal of the third class. The “re-enactment” made by the Willis-Campbell Act is not of all laws that may have been impliedly repealed by the National Prohibition Act, but only of “all laws in regard to the manufacture and taxation of and traffic in intoxicating liquors” and “penalties for violation of such laws.” Only by the broadest construction can section 3450 be brought within this classification. It provides a penalty which within its total scope may have incidental effect upon liquor taxation; but section 3450 does not directly mention liquor taxation, and only with difficulty can it be said to be “a law in regard to” that subject.

May our conclusion that there is “direct conflict” between the old revenue per-gallon system of taxation and the National Prohibi.tion Act forbidding any advance tax stamps or receipts be said to be itself inconsistent with the Stafoff Case? We think not. That case did not involve any per-gallon system of taxation and tax payment, even by distillers. It considered only B. S. §§ 3242, 3258, 3281, and 3282 (Comp. St. §§ 5965, 5994, 6021, 6022). These sections forbade carrying on a distilling or rectifying business, except upon certain conditions precedent — paying special tax, giving bond, and registering. The eourt'found no “direct conflict” between these sections and the National Prohibition Act. Obviously not. There is no “direct conflict” between a provision prohibiting an act unless after condition performed and a provision prohibiting it entirely. There is substantial accord. • There is only that inconsistency coming from the implied permission for one to- do the act if willing to perform the condition. There is in the comparison of these sections a good illustra^tion of that mere inconsistency which was enough to work repeal under section 35 but not enough to be the “direct conflict” of the Willis-Campbell Act.

Our conclusion is confirmed — indeed sufficiently supported — by a comparison of the rights of the parties under section 26 and under section 3450, as the latter is construed by the government to reach mere transportation and as it has been interpreted in the Goldsmith-Grant Case. With reference to the effect upon the same act of the one transporting, there is no difference to him between the two sections; under either he loses every right he has in the vehicle. It is otherwise with reference to the good-faith mortgagee, or title holder. Section 3450 says his rights shall be forfeited; section 26 says they shall not. Gould inconsistency be more clearly “conflict,” or “conflict” more surely “direct” ?

The acts cannot be differentiated by imputing in one case an intent to defraud the revenue, and considering this element absent in the other ease. It is the government’s necessary position that the intent to defraud of the tax is inherent in the mere transportation, and so is always present.

The third question is whether there was á binding election by the government to proceed under section 26. In view of our determination upon the second question, an answer to the third becomes unnecessary.

The order of condemnation must be reversed and the case remanded for the entry of the order proper under section 26.

       As to “removal With intent, etc.,” and “transportation”: U. S. v. One Ford Truck (D. G. Wash.) 286 F. 204; U. S. v. One Kissel Car (D. C. Ariz.) 289 F. 120; Id. (C. C. A. 9) 296 F. 688; U. S. v. Premier Auto (C. C. A. 9) 297 F. 1007; U. S. v. Studebaker Auto (D. C. Tex.) 298 F. 191, 193; U. S. v. One Cadillac Auto (D. C. Ill.) 292 F. 773, 775; U. S. v. Mangano (C. C. A. 8) 299 F. 492; U. S. v. One Buick Auto (D. C. Cal.) 300 F. 584; U. S. v. One Buick Auto (D. C. Cal.) 1 F.(2d) 997; U. S. v. One Cadillac Auto (D. C. Tenn.) 2 F.(2d) 886.
      As to effect of Willis-Campbell Act upon 3450; and as to the existence of a “tax thereon” and “direct conflict”: U. S. v. One Hudson Car (D. C. Mich.) 274 F. 473; One Ford Car v. U. S. (C. C. A. 8) 284 F. 823; U. S. v. American Brewing Co. (D. C. Pa.) 296 F. 772, 774; U. S. v. Deutsch (D. C. N. J.) — F.(2d) —, not yet reported; U. S. v. One Ford Coupé (C. C. A. 5) - F.(2d) -, not yet reported. U. S. v. One Haynes Auto (C. C. A. 5) 274 F. 926; The Cherokee (D. C. Tex,) 292 F. 212; U. S. v. One Bay State Roadster (D. C. Conn.) 2 F.(2d) 666; U. S. v. Milstone (C. A. D. C., March 2, 1925) 6 F.(2d) -; U. S. v. Simms (C. A. D. C., March 2, 1925) 6 F.(2d) -; U. S. v. One Ford Auto, Morris Co., Intervener (D. C. Tenn.) 1 F.(2d) 654; U. S. v. One Ford Auto (D. C. Tenn.) 2 F.(2d) 882.
      As to election between section 26 and R. S. § 3450: U. S. v. Torres (D. C. Md.) 291 F. 138; U. S. v. One Ford Auto, Commercial Cr. Co., Intervener (D. C. Tenn.) -F.(2d) -, not yet reported. U. S. v. 385 Bbls., etc. (D. C. N. Y.) 300 F. 565.

       It might be said that since the petition charges only an intent to defraud out of the $4.20 tax, and since such tax cannot attach to liquor not withdrawn for lawful purposes, there can be no condemnation under this petition.

       Section 1300 of the Revenue Act of 1021 (42 Stats., 308, Comp. St. Ann. Supp. 1923, § 637T%b), does not seem applicable. It “extends to this act * * * stamp provisions of law,” but this act imposes no possible relevant tax except the $4.20 tax of 600 (a) which refers only to $2.20 tax-paid liquor, nor do the “stamp provisions of law” seem possible of application to that tax.


source: Caselaw Access Project

author: RUDKIN, Circuit Judge.

license: Public Domain

text:
    PUCCINELLI v. UNITED STATES.
    (Circuit Court of Appeals, Ninth Circuit.
    April 27, 1925.)
    No. 4538.
    1. Criminal law ©=>1216(2) — Sentences run concurrently, in absence of provision specifying order of sequence.
    Sentences imposed on verdicts or pleas of guilty on several indictments, or on several counts of same indictment, in same court, run concurrently, in absence of specific provision that sentences shall run consecutively, specifying order of sequence.
    2. Criminal law ©=>996(2) — After expiration of term of court and of longest term of imprisonment, court could not amend judgments to make sentences run consecutively.
    After expiration of term of court and of longest term of imprisonment imposed under pleas of guilty to four indictments, court was not authorized of its own motion, without any minute, note, or record evidence of any kind, to extend term of imprisonment by amending judgments nunc pro tunc so that sentences should run consecutively.
    Appeal from the District Court of the Uqited States for the Northern Division of the Northern District of California; John S. Partridge, Judge.
    Proceeding between the United States and Joe Pueeinelli. From an order denying a writ of habeas corpus, Pueeinelli appeals.
    Eeversed and remanded, with directions.
    Clifford A. Bussell and Donald McKisick, both of Sacramento, Cal., for appellant..
    Sterling Carr, U. .S. Atty., and T. J. Riordan, Asst. U. S. Atty., both of San Francisco, Cal.
    Before GILBEBT, HUNT, and RUDKIN, Circuit Judges.
   RUDKIN, Circuit Judge.

March 11, 1924, Joe Pueeinelli entered a plea of guilty to four informations under the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 1013814 et seq.) in eases numbered 2018, 2019, 2159, and 2162. The record does not disclose the exact nature of the offenses, but the several sentences were as follows: Case No. 2018, a fine of $500, without any order of commitment; ease No. 2019, a fine of $500 and imprisonment in the county jail for three months, and, in default of payment of the fine, a further term of imprisonment in the county jail for the period of five months; case No. 2159, a fine of $1,000 and imprisonment in the county jail for one year, and, in default of payment of the fine, a further term of imprisonment in the county jail for the period of ten months; case No. 2162, a fine of $1,000 and imprisonment in the county jail for one year, and, in default of payment of the fine, a further term of imprisonment in the county jail for the period of ten months.'

January 12, 1925, the prisoner appeared before a United States commissioner and took the oath prescribed by section 1042 of the Revised Statutes (Comp. St. § 1706). February 11, 1925, he applied to the United States commissioner for a release under the above section, but his application was denied. On the following day he petitioned the court for an order directing the United States commissioner to issue an order releasing him from further imprisonment, but his petition was denied. On the next day, February 13, 1925, the following orders were entered in each of the several cases:

“Case No. 2018. — Ordered that any pauper’s oath that defendant may make in this cause shall be of no avail to him.”
“Case No. 2019. — Ordered that any pauper’s oath that defendant may make in this cause shall be of no avail to him.”
“Case No. 2159. — The court on .its own motion ordered that the order and the judgment heretofore entered on March 11, 1924, be and the same is hereby amended so that the sentence herein shall run consecutively to the sentence imposed in case No. 2019, U. S. v. Joseph Puccinelli.
“Further ordered that any pauper’s oath that defendant may make in this cause shall be of no avail to him.”

“Case No. 2162. — The court on its own motion ordered that the order and the judgment heretofore entered on March 11, 1924, be and the same is hereby amended so that the sentence herein shall run consecutively to the sentence imposed in case No. 2159, U. S. v. Joseph Puccinelli.

“Further ordered that any'pauper’s oath that defendant may make in this cause shall be of no avail to him.”

The prisoner thereafter applied to the court below for a writ of habeas corpus, but his application was denied. From the latter order this appeal is prosecuted.

Where sentences are imposed on verdicts of guilty or pleas of guilty on several indictments, or on several counts of the same indictment, in the same court, each sentence begins to run at once and all run concurrently, in the absence of some definite, specific provision that the sentences shall run consecutively, specifying the order of sequence. United States v. Patterson (C. C.) 29 F. 775; Daugherty v. United States (C. C. A.) 2 F.(2d) 691. By entering the amendatory orders of February 13, 1925, the court below’ recognized this rule, and the government, we understand, concedes it. Inasmuch as the appellant had already served the longest' term of imprisonment imposed by any of the sentences and 30 days’ additional when he made application for a writ of habeas, corpus, he was entitled to a discharge, unless the orders of February 13 justify his further detention. Wagner v. United States (C. C. A.) 3 F.(2d) 864. The validity of these orders is therefore the principal question for decision. The orders themselves show upon their face that they were entered by the court of its own motion, and it is conceded that there was no record evidence of any kind to justify or support the amendments.

“According to the generally accepted rule, the évidenee to justify the entry of a judgment nunc pro tune must be record evidence, that is, some entry, note, or memorandum from the records or quasi records of the court, which shows in itself, without the aid of parol evidence, that the alleged judgment was rendered.” 34 C. J. 79.

This rule is supported by the overwhelming weight of authority. In United States v. Patterson, supra, the defendant was sentenced to imprisonment at hard labor for the term of five years upon each of three indictments, “said terms not to run concurrently.” After having served a term of imprisonment for the full period of five years, the prisoner made application to Mr. Justice Bradley for a writ of habeas corpus. The learned judge held that the three sentences ran concurrently, because the order of sequence was not specified, and said:

“If there were any way in which the district court could amend the judgment, the case might perhaps be different. But I see no way in which it could do so without passing a new sentence, and that it could not do now, after the term has passed, and after one term of imprisonment has been suffered. What right would the court have now to determine that the expired term was due to any particular indictment more than to either of the others?

“I have carefully read the able opinion of the Supreme Court of New Jersey in the case of Gibbs v. State, 45 N. J. Law, 379, and agree to all that the court there says as to the right of a criminal court to extend its judgment and proceedings on the record in proper form, regardless of imperfections in the minutes of its clerk. But in the present case there are no materials in existence for altering the form of the judgment under consideration — at least nothing hut what may rest in the bosom of the judge; and for him to resort to his memory at this day to alter the judgment would be to render a new judgment. It is unnecessary to say that the honorable judge of the district court would not adopt a proceeding so questionable and hazardous. The district attorney has supplied me with a certified copy, literatim, with all the erasures and interlineations of the rough minutes; but they exhibit nothing upon which the court could base any substantial alteration in the judgment as recorded.”

The sentence before the court in that case was far more favorable to the contention of the government than are the sentences before this court, because there the sentence contained an express provision that the different terms should not run concurrently; whereas, the original sentences in this case contained no such provision. The government, and the court below, rely very largely upon Wight, Petitioner, 134 U. S. 136, 10 S. Ct. 487, 33 L. Ed. 865. There a motion for a new trial, after verdict of guilty, and a motion in arrest of judgment, were transferred by the District Court to the Circuit Court. The motions were later heard in the Circuit Court and denied, as appeared from its records, but no order was entered remitting the case to the District Court. On the date on which the motions were denied in the Circuit Court, the District Court imposed sentence. An application for a writ of ha-beas corpus was thereafter made to the United States Circuit Court upon the ground that the District Court was without jurisdiction to impose sentence because at the date, of sentence the ease had not been remitted by the Circuit Court. After the application for a writ of habeas corpus was filed, the Circuit Court amended its records by entering an order nunc pro tunc, as of the date of the denial of the motion for a new trial and motion in arrest of judgment, remitting the case to the District Court. The validity of that order was under consideration in the Wight Case, and in the course of its opinion the court said:

“Our first impression was that whatever might be the powers of the courts in this regard over their records during the term in which the transactions are supposed to have occurred, the record of which, or failure to make any record of which, is the subject of amendment, yet when it was attempted to do this after an adjournment and at a subsequent term of the court, the powers of the court in making such changes in the records of the proceedings were limited to those in which there remained written memoranda of some kind in the ease, and among the files of the court, by which the record could be amended, if erroneous, or the proper entry could be supplied, if one had been omitted. And especially that in criminal' procedure this power to make such entries, at a subsequent term of the court, of what had transpired at a former term, as would establish the authority of the court to pass a sentence of fine or imprisonment, either did not exist at all, or, if it did, was limited to cases in which some written evidence of what was done remained in the papers connected with the case.”

Upon examination of the authorities, however, the court reached a different conclusion. From that conclusion the Chief Justice and Mr. Justice Harlan dissented, the Chief Justice saying:

“The record before us does not disclose the existence of any minutes of the clerk or notes of the judge that the entry of such an order had been directed, or of any other official evidence to that effect, and I do not understand it to be contended that there was any such. Granting that, as has been said, the judge during the term is a living record, and may alter and supply from memory any order, judgment or decree which has been pronounced, and this, because he is presumed to retain his own action in his recollection ; yet after the term has elapsed, the exercise of such a power to the extent of supplying an order upon which jurisdiction depends, in the absence of any entry, minute or memorandum to proceed by, or of any statutory provisions expressly allowing it, ought not to be conceded in criminal eases.”

Whether the Patterson Case and the present one can be distinguished from the Wight Case we need not inquire, but it is somewhat significant that Mr. Justice Bradley, who delivered the opinion in the Patterson' Case, concurred in the majority opinion in the Wight Case. It would seem, however, that the court went back to its first impressions in the later case of Gagnon v. United States, 193 U. S. 451, 24 S. Ct. 510, 48 L. Ed. 745. In that case the court had under consideration the validity of a nunc pro tunc order naturalizing an alien. The court distinguished between the power to create and the power to amend, and said:

“The power to recreate a record, no evidence of which exists, has been the subject of much discussion in the courts, and the weight of authority is decidedly against the existence of such power. We have examined a large number of authorities upon this point, and while they do not altogether harmonize in their conclusions, the practice in some States being much more rigid than in others, we have found none which supports the contention that a record may be created to take the place of one of which no written memorandum was made or entered at the time the original judgment was supposed to have been rendered.”

Again, the court said:

“It may be gathered from those cases that, if a memorandum be entered upon the calendar that a certain document has been filed, such document, if lost, may be supplied by a copy in-the hands of counsel; or where a judgment or order has been entered upon the calendar, which does not appear upon the journal, the court may order a new one to be entered nunc pro tune. In such cases there is often a memorandum of some kind entered upon the calendar, or found in the files, and there is no impropriety in ascertaining the fact even by parol evidence, and supplying the missing portion of the records. But the exercise of a power to recreate a record where no memorandum whatever exists of such record is evidently a dangerous one, and, although such power may have been occasionally given- by the legislature in cases of overwhelming necessity, as, for instance, by the ‘lost record act’ passed by the general assembly of Illinois after the great fire in Chicago in 1871 (Laws of Illinois, 1871-72, p. 650), such power has not been hitherto supposed to be inherent in courts of general jurisdiction. As the evidence upon which such restoration is made cannot be inquired into, if the jurisdiction to recreate the record exists, it might well happen that, upon the testimony of a single interested witness, the court would order a new record to be entered after a lapse, as in this ease, of over thirty years, and when the judge and clerk have both died, and there was no possibility of contradicting the testimony of such single witness.”

In the ease before us, after the expiration of the term, and after the expiration of the longest term of imprisonment imposed, without any minute of the clerk or any note of the judge, without any record evidence of any kind for its guidance, and without reciting any facts even tending to justify its action, the court below, of its own motion, extended the term of imprisonment from one year to two years and three months, leaving out of consideration the several terms of imprisonment imposed or attempted to be imposed for defaults in the payment of fines. Our attention has not been called to a single ease according any such power or authority to a court of criminal jurisdiction, and we have found none.

“But in no ease to which our attention has been directed or which we have been able to discover has any eojirt, by the entry of such an order, corrected a former judgment or sentence in a criminal cause by adding a fine or in any way increasing the penalty denounced against the accused.” Smith v. District Court, 132 Iowa, 603, 109 N. W. 1085, 11 Ann. Cas. 296.

See, also, Rutland v. State, 14 Ga. App. 746, 82 S. E. 293; State v. McBee, 10 Kan. App. 450, 61 P. 1093.

We are not disposed to establish the precedent, for, in our opinion, it is better far that this appellant should escape the full penalty which the court intended to impose, than that the fate of every prisoner and the duration of every sentence should depend upon the recollection of the trial judge or the uncertainty of parol testimony for months and perhaps for years after the original sentence was pronounced and entered upon the records of the court. In the language of Mr. Justice Bradley, the court should ,not adopt a proceeding so questionable and hazardous. To do so is not to amend, but to create.

The judgment of the court below is reversed, and the cause is remanded, with instructions to discharge the prisoner. Mandate forthwith.


author: HUNT, Circuit Judge

text:
    SOUZA v. UNITED STATES.
    (Circuit Court of Appeals, Ninth Circuit.
    April 27, 1925.)
    No. 4361.
    1. Criminal law <@=>693 — Objections to validity of search warrant issued by commissioner and of search held too late.
    Where accused did not question validity of search warrant issued' by commissioner, or of search, or move to suppress or object to use in evidence of articles seized until trial two years after he pleaded not guilty, objections were too late.
    2. 'Witnesses <©=3277 (2) — Cross-examining accused as to ownership of still and other property seized held not error.
    Where accused’s testimony tended to convey impression that others might own still found in dugout under his dwelling, it was not error to cross-examine him as to ownership of the still and other property found in the dugout.

      •3. Criminal law <©=>374 — Witnesses <©=>345 (I) — Better rule is that unproved charge does not tend to prove person’s guilt or affect his credibility.
    Better rule is that unproved charge against ' person does ’ not logically tend to prove his guilt, or affect his credibility.
    4. Criminal law <©=>11701/2(5) — Cross-examination of accused as to previous arrest, though improper, held not prejudicial.
    Where one accused of violating liquor law admitted ownership of still, use of mash in making liquor, and possession of liquor, he was not prejudiced by improper cross-examination as to his previous arrest.
    In Error to the District Court of the United States for the Southern Division of the Northern District of California; John S. Partridge, Judge.
    Criminal prosecution by the United States against John R. Souza. Judgment of conviction, and defendant brings error.
    Affirmed in part and reversed and remanded in part.
    Souza was convicted of possession of property designed to manufacture liquor, a 50-gallon still, a pump, fan, and electric motors; also, of possession of 50 gallons of jackass brandy; and also of having manufactured 50 gallons of jackass brandy. The information was filed and plea of not guilty entered in 1922. The trial was in 1924.
    A prohibition officer testified that the defendant lived in a house on the premises described; that at times prior to his entry of the cellar, witness noticed the odor of distillation and fermenting mash coming from the premises; that acting upon the information he had and the use of his own senses, he obtained a search warrant from a United States commissioner, and pursuant thereto entered and searched a dugout under the house; that defendant was not there; that he read the warrant to defendant’s wife; that he and other prohibition agents went through a small door underneath the side of the house, crawled along under the house, dug away some dirt, and entered a dugout where they found a 50-gallon still, 50 gallons of jackass brandy, and the other property described in the information. Defendant moved to exclude the articles seized, for the reason, that the search warrant was issued without probable cause; that there was no evidence of sale on the premises; that the premises were defendant’s private dwelling; and that defendant’s constitutional rights were invaded. The court overruled the motion, and exception was saved.
    Defendant in his own behalf testified that he and his family lived on the premises; that two other families lived downstairs in two apartments; that there was a basement with an entrance on the side of the house, and also through a little trapdoor in one of the rooms on the second floor; that he had not sold any intoxicating liquor on the premises. On cross-examination counsel for the government asked defendant if he did not own the still. Defendant objected on the ground that the question was not proper cross-examination. Defendant answered that it was part of a still and that he owned it, and that he owned the brandy that was seized. Counsel for the government then asked the witness if he had not been arrested in 1921. Witness said he had been. , The court then asked the witness if he had made the jackass brandy. Defendant answered no, that it had been given to him “to finish up”; that he had mash there; and that he was trying to get rid of it and run that little to make some liquor for his own use. Exceptions were preserved to questions propounded by the court.
    Gilman & Harnden, of Oakland, Cal., for plaintiff in error.
    Sterling Carr, U. S. Atty., and T. J. Sheridan, Asst. U. S. Atty., both of San Francisco, Cal.
    Before GILBERT, HUNT, and RUDKIN, Circuit Judges.
   HUNT, Circuit Judge

(after stating the facts as above). [1] Nearly two years elapsed between the time defendant entered his plea of not guilty and the date of the trial; yet not until the trial was progressing did defendant question the validity of the warrant, or search, or move to suppress, or object to, the use in evidence of the things that had been seized. In view of the fact that the search was made under the authority of a warrant issued by a commissioner, defendant’s objections to the validity of the search came too late to avail him.

There was no error in cross-examination of the defendant as to his ownership of the still and other property that was found in the dugout. His testimony on direct examination lacked frankness and reads as though he meant to convey the impression that others might have owned the still. It •was proper to rebut any such inference by asking him the direct questions propounded by the court.

It was improper for counsel for the government to ask defendant if he had not been arrested in 1921. Coyne v. United States, 246 F. 120, 158 C. C. A. 346; Glover v. United States, 147 F. 426, 77 C. C. A. 450, 8 Ann. Cas. 1184; Forni v. United States (C. C. A.) 3 F.(2d) 354; Jones on Evidence, § 838. The better rule is that the fact that an unproven charge has been made against one does not tend logically to prove guilt of an offense or to affect the credibility of his testimony. But, as the defendant took the stand in his own behalf and admitted ownership of the still, and the use of the mash in making liquor, and possession of the brandy, he is not in a position to argue that he was prejudiced by the incompetent testimony.

The court sentenced the defendant to pay a fine on the first and second counts and to be imprisoned for one year under the third count. Counsel for the government concede that the sentence under the third count, which was for manufacturing, was in excess of the maximum imprisonment authorized by section 29, title 2, of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138%p), which provides that any person who manufactures in, violation of title 2 shall, for a first offense, be fined not more than $1,000 or imprisoned not exceeding six months.

For this error the judgment under the third count must be reversed, and the cause is remanded to the District Court, with directions to enter judgment as authorized by the acts of Congress. As to counts 1 and 2 the judgment is affirmed.


author: SYMES, District Judge.

text:
    NORTHERN FINANCE CORPORATION v. BYRNES.
    (Circuit Court of Appeals, Eighth Circuit.
    March 30, 1925.)
    No. 6774.
    1. Receivers @=>153 — Duty of federal court in receivership proceedings to recognize priority of state taxes.
    It is duty of federal court in receivership proceedings to recognize priority of state taxes on land, including penalties, made prior lien by state statutes.
    2. Taxation @=576 — Property in possession of federal court cannot be levied on, sold, or distrained by state officer for state taxes.
    Property in actual possession of federal court through its receiver cannot be levied on, sold, or distrained by state officer for state taxes.
    3. Subrogation @=l — Does not arise from contractual relation, but is equitable doctrine to accomplish substantial justice.
    Doctrine of subrogation does not arise from any contractual relation, but is equitable doctrine designed to accomplish substantial justice.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Subro-gation.]
    4. Receivers @=l 10 — Receivers are officers of court with very limited powers, and in doubtful or important matters should apply to court.
    Beceivers for purely private business concerns are officers of court, who, in absence of special authority given by court, have very limited powers, and it is their duty in doubtful or important matters to apply to court for instructions and advice.
    5. Subrogation @=23 (I) — Mortgagee held not entitled to be subrogated for money loaned to receiver to pay taxes.
    Where mortgage debt was far in excess of value of land, court could have directed receiver not to pay taxes, since there was no equity above mortgage to be saved for benefit of general creditors of estate, and mortgagee was not entitled to be subrogated to state’s rights for money loaned to receiver to pay taxes without direction of court.
    6. Receivers @=115 — Court may allow unauthorized expenditure by receiver beneficial to estate only in clear cases.
    Court may allow unauthorized expenditure by receiver beneficial to estate, notwithstanding lack of previous authority; but this is exception to general rule and should only be made in clear cases.
    7. Receivers @=97 — Receiver’s promise to repay money advanced by mortgagee for taxes held not binding on court; mortgagee bound to take notice of receiver’s powers.
    Mortgagee of property in possession of receiver appointed by federal court was bound at his peril to take notice of receiver’s powers, and in advancing money to receiver to pay state taxes acted as volunteer, and receiver’s promise to repay advance was not binding on court.
    8. Morgages @=209(3) — Subrogation @=23(l) —Under Missouri law, mortgagee paying taxes cannot sue- mortgagor for debt, or on tax lien under law of subrogation.
    Under law of Missouri, mortgagee has right to pay taxes and have payment included in mortgage debt, but payment outside of that relation is voluntary and will not support an independent action for debt against mortgagor, or action on tax lien under law of subrogation.
    Appeal from the District Court of the United States for the Eastern District of Missouri; Charles B. Fans, Judge.

    Action by the Northern Finance Corporation against James W. Byrnes, receiver of the Forked Leaf White Oak Lumber Com-party. Judgment for defendant, and plaintiff appeals.
    Affirmed.
    ■ William S. Bedal, of St. Louis, Mo. (Eliot, Blayney, Bedal & Eliot, of St. Louis, Mo., and Rodney M. Fairfield, of Carthage, Mo.,' on the brief), for appellant.
    Paul Bakewell, Jr., of St. Louis, Mo., for appellee.
    Before SANBORN, Circuit Judge, and POLLOCK and SYMES, District Judges.
   SYMES, District Judge.

Butler as receiver in January, 1922, borrowed from the appellant, the mortgagee, moneys to pay the 1920 taxes, including penalties, part of which he later paid back, leaving a balance due of $4,033.77.

The foreclosure suit in the state court went forward, and on June 18, 1923, the sale took place, and the mortgagee, appellant here, became the purchaser for $300,000; $200,000 less than the amount due on the deed of trust. Later, and on July 2, 1923, appellant petitioned the federal court to have the receiver repay it the balance of this money loaned to the receiver for the purpose of paying the taxes as aforesaid. The court refused to allow the claim, or to allow the appellant to be subrogated to the rights of the state of Missouri for the amount so advanced for taxes.

The case is here on appeal from that order.

It may be conceded at the outset that it was the duty of the federal court to recognize the priority of any claim of the state for taxes which, being a prior lien under the laws of Missouri, became such in the receivership proceedings, and that upon proper application it would have been the duty of the court to make the taxes, including penalties, a prior lien. We might also add that the property being in the actual possession of the federal court, no state officer could have levied upon or sold the real property without permission of the court, or exercise the right of distraint given by the statutes of Missouri. Marshall v. N. Y., 254 U. S. 380, 41 S. Ct. 143, 65 L. Ed. 315; Greeley v. Provident Sav. Bank, 98 Mo. 458, 11 S. W. 980. Many cases are cited by the appellant from Missouri and the federal courts, holding that it is the duty of a receiver to fully recognize and pay taxes as a prior lien to other claims against the estate. But in all these cases application was made to the court, and authority granted the receiver before any payment was made.

Appellant relies upon the doctrine of subrogation; that is, having paid the taxes, it was subrogated to the rights of the state of Missouri. But the authorities cited do not bear out this contention. They are mostly eases where a mortgagor failed to protect the mortgaged property against superior liens, as required by the covenant of the mortgage, and'the junior lienor, under the well-established rule, stepped in and paid off the prior claim to protect his own lien, and was allowed to include it in the amount of his debt. This doctrine, as stated in Memphis R. R. Co. v. Dow, 120 U. S. at page 301, 7 S. Ct. 482, 30 L. Ed. 595, does not arise from any contractual relation between the parties, but is an equitable doctrine designed to accomplish substantial justice.

The order appointing the receiver is not exhibited in the record. It is conceded, however, that it merely directed him to continue the business, and that no application was made to the court by the receiver or the appellant at the time for permission to borrow money to pay taxes as aforesaid. Receivers appointed by the federal courts are officers thereof, and in the absence of any special authority given by the court, their powers are very limited. As a rule they can do nothing without express authority. They are at liberty, and are in fact encouraged to apply at all times to the court for instructions and advice, and such is their duty in any doubtful or important matter arising in the course of their duties. Davis v. Gray, 16 Wall. 203, at page 218, 21 L. Ed. 447; Smith v. McCullough, 104 U. S. 25, 26 L. Ed. 637; Union Trust Co. v. Illinois Midland Ry. Co., 117 U. S. 434, at pages 476, 477, 6 S. Ct. 809, 29 L. Ed. 963; Thompson v. Phenix Insurance Co., 136 U. S. 287, 10 S. Ct. 1019, 34 L. Ed. 408; Chable v. Nicaragua Canal Construction Co. (C. C.) 59 F. 846. In Thompson v. Phenix Insurance Co., supra, the court said, quoting from Brown v. Hazlehurst, 54 Md. 26, 28:

“There is no doubt of the general rule, and it is a wholesome one, that a receiver will not be permitted to lay out more than a small sum at his own discretion, in the preservation or improvement of the property under his charge; but he should, in all cases where it is practicable, or the circumstances of the ease will permit, before involving the estate in expenses, apply to the court for authority for so doing.”

What we have said applies to receivers of purely private business concerns as distinguished from those of a quasi public character, such as railroads, etc. There is a broad distinction between the two, as pointed out in Wood v. Guarantee Trust Co., 128 U. S. 416, 9 S. Ct. 131, 32 L. Ed. 472.

It is urged here that the court on application of the receiver would have ordered these taxes paid as a matter of course, and that the estate in the receiver’s hands was necessarily benefited to the extent of the moneys advanced by the appellant for that purpose. That does not necessarily follow. This record discloses that the mortgage debt was far in excess of the value of the land, which brought at the sale barely more than half thereof; so that if an application had been made to the court at the proper time for instructions in respect to these taxes, the court might well have concluded not to pay them, as there was no equity above the mortgage to be saved for the benefit of the general creditors of the estate.

There are, of course, exceptions to this rule. Where a court finds an unauthorized expenditure to have been beneficial to the estate, it may adopt and allow the same, notwithstanding previous lack of authority; but exceptions should not be allowed to become the rule, and should be made only in the most clear cases.

Counsel for appellant rest their case on the promise of the receiver to repay the advance, and urges that the court is in equity bound to carry out the promise it in effect made, acting through its receiver. Such is not the law. Appellant was bound at his peril to take notice of the powers of the receiver. When he advanced this money, he noted as a volunteer, and it cannot be stated too strongly that unauthorized agreements of receivers are their individual acts, and do •not bind the court in any way.

Further, the appellant has pursued (the wrong remedy. It is the íaw of Missouri (Horrigan v. Wellmuth, 77 Mo. 542) that a right to pay the taxes inured to the appellant here as mortgagee, and that if he pays them outside of that relation, it would be a voluntary payment, which would not support an action. It will be noted from the chronological statement of fact that this money was loaned by appellant, while the foreclosure proceedings were pending, but before sale. Under the law of Missouri, he could have had the amount of the taxes, under the doctrine of the above and other Missouri cases, included in his mortgage debt, for the payment of which the property was sold before he ever applied to the federal court. In Carter v. Phillips, 49 Mo. App. at page 324, it is held that a mortgagee’s claim for such taxes must be enforced as part of the mortgage debt, and not otherwise, and if, as here, the mortgagee permits the property to go to sale without adjustment of his claim for taxes, he would not be permitted to maintain an independent action for debt against the mortgagor, or an action in equity for the enforcement of the tax lien by virtue of the law of subrogation.

The judgment of the lower court is affirmed.


author: FARIS, District Judge.

text:
    DREXLER v. COMMERCIAL SAVINGS BANK.
    (Circuit Court of Appeals, Eighth Circuit.
    March 27, 1925.)
    No. 6825.
    1. Courts <§=>370 — Federal Court will not construe state statute in advance of construction by state court, if it can be avoided.
    Construction of state statute is initially for state Supreme Court, and in advance of such construction federal courts will not construe state statute unless necessary to determination of ease.
    2. Appeal and error <§=>931(1), 1009(3) — Finding of chancellor on contradictory evidence not disturbed, except for error of law or serious mistake of fact.
    Finding of a chancellor on contradictory evidence is presumptively correct, and will not he disturbed, except for obvious error of law or serious mistake of fact.
    3. Mortgages <§=>290 — Sale in inverse order of ¿lienation decreed only where not in contravention of equity and justice.
    Sale of mortgaged property in inverse order of alienation will be decreed only where not contravening natural equity and justice.
    4. Mortgages <§=>290 — Sale in inverse order of alienation not decreed where not all lands and persons affected were before the court.
    In mortgage foreclosure suit, one to whom a mortgagor had alienated portion of mortgaged property held not entitled to decree for sale in inverse order of alienation, where not aE of lands affected nor aE parties whose rights were involved were before the court.
    5. Appeal and error <@=>l054(E) — Admission of improper evidence in case tried without jury, not reversible where judgment sustained by competent evidence.
    In an equity case, and ordinarily in any case tried without jury, admission of irrelevant, incompetent, and immaterial evidence is not reversible error, where in the case there, is enough competent evidence to sustain the judgment.
    Appeal from the District Court of the United States for the District of South Dakota; James D. Elliott, Judge.
    Bill in equity hy the Commercial Savings Bank against C. A. Drexler for foreclosure of mortgage. Decree for plaintiff,, and defendant appeals.
    Affirmed.
    J. G. Bradford, of Sioux Palls, S. D. (James A. Lyons, of Howard, S. D., and Davis, Lyon & Bradford, of Sioux Palls, S. D., on the brief), for appellant.
    John Brown McCrary, of Carroll, Iowa (John E. Haltigan, of Carroll, Iowa, and Kirby, Kirby & Kirby, of Sioux Palls, S. D., on the brief), for appellee.
    Before LEWIS, Circuit Judge, and YAH YALKENBURGH and PARIS, District Judges.
   FARIS, District Judge.

' This action was begun below by appellee, to foreclose a mortgage upon certain land situate in Miner county,' S. D. Defendant Drexler, sole; defendant below and appellant here, set up by his answer that he was an innocent, subsequent purchaser for value of the lands in dispute, without actual notice of the morti gage herein sought to be foreclosed, and that no constructive notice was comported by the recording of this mortgage; because such mortgage did not contain therein the post office address of the mortgagee, as required by a local statute.

Defendant further set up by his answer that the mortgage included, in addition to the lands in controversy, certain other lands of the mortgagor situate, respectively, in Carroll county, Iowa, and in Mellette county, S. D.; that these latter lands were in value more than sufficient to pay the mortgage debt due to the bank; and thereupon prayed, by way of alternative and affirmative relief, that the court order that the sale of these lands be made on foreclosure, if fore-1 closure should be decreed, in the inverse order of alienation, under the equitable doctrine cognate to that of the marshalling of assets.- The court found for the bank, and decreed a foreclosure and ordered a sale; but made no express ruling on the matter of marshalling securities, thus, by inference, denying this relief. Defendant Drexler thereupon appealed in conventional manner and form.

'Drexler, so called hereinafter, sets up 46 assignments of error. These may be reduced to three: (a) Did the evidence under the law show that Drexler had either actual or constructive notice of the mortgage to the bank?

(b) Did the court err in failing to order the bank to sell the three several tracts of land in the inverse order of alienation? And (c) did the court err in the admission of incompetent evidence? The mortgagor, since executing the mortgage, has sold and conveyed all lands embraced in the mortgage; first the tract here in dispute to appellant, and subsequently, the two remaining tracts to his father, who reeonveyed them to the wife of the mortgagor.

The mortgage sought to be foreclosed was executed by one Lemker to-appellee, Commercial Savings Bank, of Carroll County, Iowa, on the 14th day of June, 1921, to secure the payment of a note for $14,000 bearing even date. This mortgage, as correctly pleaded by Drexler, conveyed to the bank, in addition to the land here in controversy, a parcel of land in Carroll county, Iowa, and another parcel in Mellette county, S. D. It was filed for record in the office of the register of .deeds for Miner county, S. D., on the 1st day of October, 1921, and copied in full, on such records, some eight months before the date of the conveyance from Lemker to Drex-ler. But since a local statute of South Dakota provides that “the mortgagee of every real estate mortgage shall state therein his post office address before recording the same” (section 1570, Rev. Code S. D. 19190, and since another statute of South Dakota provides that “no mortgage shall be received for record by any register of deeds which does not contain the post office address of the mortgagee” (section 5916, Rev. Code S. D. 1919), it is contended by Drexler that, although this mortgage was spread upon the proper records of Miner county, eight months before he bought the land, such record, in view of the above statutes, did not comport constructive notice to him.

The point is an interesting one, especially in view of the fact that this mortgage bore upon the back thereof an indorsement which did give the post office address of the mortgagee. But in view of the fact that the construction of sections 1570 and 5916, Rev. Code of South Dakota, is’ initially for the Supreme Court of that state, and since that court has never construed these sections, we ought not to trespass upon the prerogative of that court if it can be avoided, as it can in this ease. This is so, for the reason that another statute of South Dakota provides that “an unrecorded instrument is valid as between the parties thereto and those who have notice thereof.” Section 990, p. 183, Comp. Laws S. D. 1913. Upon the question of whether Drexler had actual notice of this mortgage when he bought the land, the trial court found for the bank and against Drexler. Confessedly, the evidence upon the point was contradictory; but the finding of the trial court seems to be fully warranted by the weight of the evidence even, and so recourse, in any event, may be had to the rule that when a chancellor has considered contradictory evidence and has bottomed his findings thereon, such findings are to be deemed by this court- presumptively correct, and they will not be disturbed or the ease reversed, save in the presence of an obvious error of law, or a serious mistake of fact. Roswell Drainage Dist. v. Dickey (C. C. A.) 292 F. loc. cit. 31.

The second point reserved for discussion is a more involved and difficult one, Drexler contends, upon the facts and in view of his plea for affirmative relief, set up in the alternative in his answer, that the decree of the court should have provided that the bank, as a condition precedent to the granting of the equity it asked, ought to have been compelled by the terms of the decree to resort for payment of its mortgage debt to the three several tracts of lands embraced in the mortgage in the inverse order of alienation thereof by Lemker, the mortgagor.

Of course, it is almost, if not quite, a maxim of the law that courts will not do vain and futile things. Concretely, that if prior foreclosures and sales of the two other tracts will not afford some measure of relief to Drexler, he may not ask for foreclosures in the inverse order of alienation. But here Drexler’s plea for affirmative relief avers that the two tracts last, in point of time, conveyed by Lemker by mesne conveyances to his wife, are in value more than sufficient to pay the mortgage debt to the bank in full. The cashier of the bank, than whom no one should be better informed, or be in better position to bind the bank by his statements, says upon this question: “The Carroll county land ought to bring enough to protect us, and then we would have the half section of land out in Mellette county that is clear.” Germane to this point this witness also said: “We have commenced no foreclosure proceedings against the Carroll county, or Mel-lette county land; thought we would take one at a time.” Obviously, if the Carroll county, Iowa, land should on forelcosure and sale prove sufficient to pay the bank’s debt, and thus leave'the other tract of South Dakota land clear, no occasion would ever arise to call on the Miner county land, here in controversy, to respond for any sum. But all this conceded, is Drexler entitled to have the relief prayed for ?

The existence of the general equitable doctrine here invoked by Drexler is well-settled. 27 Cyc. 1367; 2 Jones on Mortgages (5th Ed.) 1630; Orvis v. Powell, 98 U. S. 176, 25 L. Ed. 238; Bank v. Creswell, 100 U. S. 630, 25 L. Ed. 713; 18 R. C. L. 468; Burpee v. Parker, 24 Vt. 567; Newby v. Fox, 90 Kan. 317, 133 P. 890, 47 L. R. A. (N. S.) 302; Gilliam v. McCormack, 85 Tenn. 597, 4 S. W. 521; Lewis v. United States, 92 U. S. 618, 23 L. Ed. 513; Neely v. Williams, 149 F. 60, 79 C. C. A. 82, and eases cited. Certainly, this is the case inter sese as regards subsequent purchasers with notice, of separate parcel of the lands embraced in the mortgage, -and within limits and subject to exceptions, it is the case as to the first mortgagee. 18 R. C. L. 468. In such first mentioned ease, since the mortgag-or is liable for the whole debt secured by the mortgage, a sale by him of a part of the lands has the effect to shift the initial burden of liability from the part thus sold to that portion, or parcel still remaining in his hands; if, and in the event, that such remaining parcels shall be sufficient to pay the mortgage debt. Likewise, upon a sale of a second parcel of the mortgaged land, the primary burden to pay the mortgage debt shifts conditionally to those lands yet remaining in the hands of the mortgagor. So that, if all of the mortgaged lands are sold by the mortgagor, the vendees of the several tracts are, inter sese liable to pay the mortgage debt in the inverse order of alienation. He who is, as to his grant, first in point of time, becomes last in point of liability to have his lands subjected to sale to pay the mortgage debt.

But this is not a ease between a grantee of a part of the mortgaged premises and the mortgagor. The suit here is between the mortgagee of three separate parcels of land and the vendee of one of those parcels, who bought by warranty deed, and as we have already ruled, with notice of the mortgage. Neither the mortgagor nor his vendees of subsequent parcels are parties to the action. In such ease, is the mortgagee compellable to undergo the cost and put itself to the delay, labor, and expense of bringing a separate action in another state as the price of getting only that to which it is entitled, to wit, payment -of the money justly due to it?

There are eases which hold that where all of the parties are before the court, and where all of the lands are involved in a single suit, of course in the same jurisdiction, and where justice and equity require it, a decree may be entered, requiring the mortgagee, who seeks foreclosure, to resort first to the parcels last aliened by the mortgagor. A few cases, beyond the pale of the weight of authority, however, seem to hold that the mortgagee may be compelled to go into other states and jurisdictions and there exhaust his remedy against the lands last aliened by the mortgagor before he is entitled to proceed against those first aliened. Blight’s Heirs v. Bank’s Ex’rs, 6 T. B. Mon. (Ky.) 192, 17 Am. Dec. 136; York, etc., Co. v. Associates etc., Hopk., Ch. (N. Y.) 460. But, as forecast, the weight of the authorities is against this latter view, not only in the federal courts, but in the several states, Lewis v. United States, 92 U. S. loc. cit. 623, 23 L. Ed. 513; Sternburger v. Sussman, 69 N. J. Eq. 199, 60 Atl. 195; Aldrich v. Cooper, 2 Lead. Cas. Eq. 276; Shedd v. Bank, 32 Vt. 709; Farwell v. Biglow, 112 Mich. 285, 70 N. W. 579; Denham v. Williams, 39 Ga. 312; Dodds v. Snyder, 44 Ill. 53; Herriman v. Skillman, 33 Barb. (N. Y.) 378; Kyner v. Kyner, 6 Watts. (Pa.) 221; Walker v. Covar, 2 S. C. 16; Gilliam v. McCormack, 85 Tenn. 597, 4 S. W. 521.

In the case of Lewis v. United States, supra, at page 623, the Supreme Court of the United States said, upon the germane question of marshalling assets this:

“A court of equity will not entertain the question of marshalling assets, unless both funds are within the jurisdiction and control of the court.”

Likewise, in a similar ea,se and on a point therein wholly analogous to that here involved Judge Lurton (afterwards Mr. Justice Lurton), speaking for the Supreme Court of Tennessee, in the case of Gilliam v. McCormack, supra, 85 Tenn. at page 611, 4 S. W. at page 525, said:

“These cases, and the sound equity upon which they are * * * founded, sustain the proposition that marshalling is a pure equity, and does not at all rest upon contract, and will not be enforced to the prejudice of either the dominant creditor, or third persons, or even so as to do an injustice to the debtor. We are not disposed to .extend the doctrine so as to affect the equities or legal rights of third persons.”

The cases and the above excerpts foreshadow the true limits of this doctrine, the existence of which, as said, is well settled. These limits of application in a ease of the mortgage of lands are that (a) where a mortgagee holds a mortgage on more than one parcel of land, or a single tract capable of division, and (b) parts or parcels thereof are thereafter conveyed by the mortgagor to third persons with notice and (semble) with warranty of title, and (e) an action to foreclose is brought by the mortgagee, wherein all persons interested in the several tracts, or parts, are parties, and (d) all the lands to be affected ax*e involved, the court will decree a sale of the parcels in the inverse order of alienation, (e) if such a decree will not do injustice to the mortgagee, to the debtor, to the several alienees, or to third persons. In short, as to the last-named condition, equitable reasons must be present in such wise that the application and enforcement of the doctrine will not contravene natural equity and justice. Guion v. Knapp, 6 Paige (N. Y.) 35, 29 Am. Dec. 741; Aderholt v. Henry, 87 Ala. 415, 6 So. 625, 6 L. R. A. 451; Chancellor of New Jersey v. Towell, 80 N. J. Eq. 223, 82 Atl. 861, 39 L. R. A. (N. S.) 359, Ann. Cas. 1914A, 710; Patty v. Pease, 8 Paige (N. Y.) 277, 35 Am. Dec. 683; Howser v. Cruikshank, 122 Ala. 256, 25 So. 206, 82 Am. St. Rep. 76; 18 R. C. L. 474. This all seems true, because, as said by Judge Lurton, the doctrine is a pure equity, wholly apart from contract, and therefore one which ought not to be applied in any case, wherein inequitable results will follow its application. Indeed, there is quite respectable authority for the view that the doctrine of inverse order of alienation does not at all affect the mortgagee, who may proceed to collect his debt in any way, which is most to his interest. Palmer v. Snell, 111 Ill. 161; Waters v. Hubbard, 44 Conn. 340; Rugg v. Brainerd, 57 Vt. 364; Hawhe v. Snydaker, 86 Ill. 197. But the trend of the later eases is to the effect that even the- first mortgagee is bound in a proper ease by this doctrine. 18 R. C. L. 468, and cases cited. Some few of the eases hold that the conveyance by the mortgagor need not be by warranty deed. Gray v. Lumber Co., 128 Mich. 427, 87 N. W. 376, 54 L. R. A. 731; Howser v. Cruikshank, 122 Ala. 256, 25 So. 206, 82 Am. St. Rep. 76. But since the conveyance to Drexler was by such deed, we need not rule the point, and so pass it as not necessary for decision here.

The recited facts in the instant case clearly disclose that neither all of the lands to be affected nor all parties whose rights are involved were before the court below, and that delay, and expense, inevitably and possibly, loss, will accrue to the mortgagee bank if the doctrine contended for should be applied here. It is, moreover, suggested by learned counsel for the mortgagee that various remedies — some in law and some in equity — were and are open to Drexler, the use of which by him will save or would have saved him from loss. Touching this point it is not necessary to rule, and as to these things Drexler may proceed as he is advised. We content ourselves in saying that under the facts and situation disclosed, this was not a proper ease in which to apply the doctrine of marshalling securities.

Complaint is also made th'at the trial court erred in admitting in evidence, overDrexlePs objection, the ultimate fact that a letter addressed to the bank at the county only of its location, and without naming any post office, had been received by the addressee. This point went to a question which we have already said should be left for decision to the Supreme Court of South Dakota, and on which, since it was not necessary to a decision, we declined to rule. Besides, this case was on the equity side, and the law is settled that in such a ease, as also ordinarily in any case tried by the court without a jury, the admission of irrelevant, incompetent, and immaterial evidence is not reversible error, where there is in the case enough competent evidence to sustain the judgment rendered. Bodkin v. Edwards (C. C. A.) 265 F. 621; Coles v. Denslow (C. C. A.) 270 P. 23; Shearer v. Farmers’, etc., Co. (C. C. A.) 262 P. 861; Hall v. United States (C. C. A.) 267 F. 795.

It is, however, conceded by the bank that the amount, found to be due it, exceeded by the sum of $1,120 the amount actually due.

So, credit should be given for the above sum, as of the date of the rendition of the judgment and the decree thus modified is affirmed.


author: SANBORN, Circuit Judge.

text:
    EDWARDS v. UNITED STATES.
    (Circuit Court of Appeals, Eighth Circuit.
    March 23, 1925.)
    No. 5824.
    I. Indians ©=^35 — Statute prohibiting manufacture, sale, gift, etc., of intoxicating liquor in Indian territory, held not repealed by admission of Oklahoma info Union.
    Act March 1, 1895, § 8, prohibiting manufacture, sale, gift, etc., of intoxicating liquor in Indian Territory, was not repealed, expressly or impliedly, by admission of state of Oklahoma into Union, or by Oklahoma Enabling Act June 16, 1906.
    2. Indians <®=»35 — Fine of $1 for possessing intoxicating liquor in Indian country required reversal.
    Under Act June 30, 1919 (Comp. St. Ann. Supp. 1923, § 4137aa), and Act July 23, 1892, as amended by Act Jan. 30, 1897 (Comp. St. § 4137), minimum penalty for possessing intoxi-' eating liquor in Indian country is imprisonment for 60 days, and fine of $100, and fine of $1 was erroneous and required reversal.
    3. Criminal law <®=31,086 (14) — In absence of evidence by accused, demurrer to evidence, motion for instructed verdict, or exception to ruling on instruction, issue of insufficiency of evidence was not reviewable.
    Where only evidence was produced by government, and no demurrer to evidence, no motion for instructed verdict, and no exception to ruling of court, or to its charge, appeared in record, question Whether there was substantial evidence to support verdict was not presented for appellate review.
    In Error to the District Court of the United States for the Eastern District of Oklahoma; David P. Dyer, Judge.
    W. M. Edwards was convicted of violating the revenue laws, of unlawfully possessing whisky in Indian country, and of violating the National Prohibition Act, and he brings error.
    Affirmed in part, and reversed in part.
    Crump, White & Seawel, of Muskogee, Okl., for plaintiff in error.
    W. P. Rampendahl, Asst. U. S. Atty., of Muskogee, Okl.
    Before SANBORN, STONE, and LEWIS, Circuit Judges.
   SANBORN, Circuit Judge.

In this case the plaintiff in error, W. M. Edwards, called hereafter the defendant in this opinion, was indicted, tried, and convicted of offenses committed on or about July 24, 1920, and described in eight counts of his indictment. The first five counts were for violations of the revenue laws of the United States which had been superseded and repealed by the Volstead Act, which was in force at the time of the offenses charged to have been committed. 41 Stat. 305, 307, 318, title 2, § 35 (Comp. St. Ann. Supp. 1923, § 10138½v); United States v. Yuginovich, 256 U. S. 450, 463, 41 S. Ct. 551, 65 L. Ed. 1043; United States v. Stafoff (D. C.) 268 F. 417. Counsel for the United States accordingly concede that the judgments and sentences upon these counts were erroneous and must be reversed.

The sixth count charged the defendant with the unlawful possession about July-24, 1920, of 34 gallons of whisky in Coal county in the Eastern district of Oklahoma where such whisky had been had and kept within the limits of the Indian Territory pri- or to the admission of the state of Oklahoma into the Union — a place where the introduction of spirituous and intoxicating liquors is and was prohibited by federal statutes. The Act of March 1,1895, 28 Stat. 693, see. 8, p. 697, prohibited under penalty of a fine not exceeding $500 and by imprisonment for not less than one month or more than five years the manufacture, sale, gift, furnishing to any one for himself or another, and the carrying or having carried into the Indian Territory of any intoxicating drinks of any kind. These provisions of this act were not repealed either expressly or by implication by the admission of the state of Oklahoma into the Union or by the Oklahoma Enabling Act June 16, 1906 (34 Stat. 267), but remained in force. Ex parte Webb, 225 U. S. 663, 683, 686, 690, 691, 32 S. Ct. 769, 56 L. Ed. 1248; United States v. Wright, 229 U. S. 226, 227, 233, 238, 33 S. Ct. 630, 57 L. Ed. 1160.

The Act of June 30,1919, making appropriations for the expenses of the Bureau of Indian Affairs provided: “That on and after July 1, 1919, possession by a person of intoxicating liquors in the Indian country or where the introduction is or was prohibited by treaty or federal statute shall be .an offense and punished in 'accordance with the provisions of the Acts of July 23, 1892 (27 Statutes at Large, page 260), and January 30, 1897 (29 Statutes at Large, page 506).” 41 Stat. chap. 4, p. 4 (Comp. St. Ann. Supp. 1923, § 4137aa). The defendant was convicted under the sixth count for violation of this act and was sentenced to pay a fine of one dollar. Counsel for the United States contend that this sentence was unauthorized and that the judgment on this count should be reversed, and the court below should be advised to impose a sentence in accordance with the provisions of this act.

The maximum penalty prescribed by. the Act of July 23, 1892 (Comp. St. § 4136a), for the violation of that act, was imprisonment for not more than two years and a fine of not more than $300, and it fixed no minimum penalty whatever; so that a fine of $1 was permissible and valid under that statute as it was originally enacted. But that act was amended by the Act of January 30, 1897 (Comp. St. § 4137; Morgan v. Ward et al., 224 F. 698, 699, 701, 140 C. C. A. 238; United States v. Wright, 229 U. S. 226, 230, 231 ; Salazar v. United States, 236 F. 541, 149 C. C. A. 593), and the later act expressly provided that a violator of the act as amended should be punished by imprisonment for not less than 60 days and by a fine of not less than $100 for the first offense and not less than $200 for the second offense, and that “so much of the Act of the 23d day of July, 1892, as is inconsistent with the provisions of this act is hereby repealed.” This was the condition of these statutes when the offense charged in the sixth count of this indictment was committed, and there is no rational or logical way of escape from the conclusion that the minimum punishment prescribed for the offense under the Act of July 23, 1892, as amended by the Act of January 30, 1897, was imprisonment for 60 days and a fine of $100, and this has been the repeated holding of this court. United States Express Co. v. Friedman, 191 F. 673, 677, 112 C. C. A. 219; Ammerman v. United States, 216 F. 326, 327, 132 C. C. A. 470; Salazar v. United States, 236 F. 541, 542, 149 C. C. A. 593. The sentence under the sixth count must therefore be reversed and the court below must be advised to impose a sentence on this count not heavier than the maximum nor lighter than the minimum prescribed by the Act of July 23, 1892, as amended by the Act of January 30, 1897 (27 Stat. 260; 29 Stat. 506).'

The offense charged in the seventh count was the manufacture of whisky in violation of the National Prohibition Act, and the offense- charged in the eighth count was the possession of materials and apparatus, to wit, boiler and 360 gallons of mash designed for the manufacture and intended for use in making intoxicating liquors in violation of the same act. The sentence upon each of these counts was a fine of $100. Counsel for the defendant contend that these two sentences should be reversed because the evidence before the jury was insufficient to sustain their verdict against him. But the only, evidence in the case was produced by the United States; none was introduced or offered by the defendant; no demurrer to the evidence, no motion for an instruction to the jury to return a verdict for the defendant, no exception to any ruling of the court or to its charge appears in the record before us. So that the question whether or not there was substantial evidence in support of the verdict is not presented by the record for our consideration. Moreover, out of an abundance of caution we have read the testimony in this case and have concluded that it sustains the verdict.

The sentences upon the first five counts must be reversed; the sentences upon the seventh and eighth counts must be affirmed, and the sentence upon the sixth count must be reversed, with directions to the court below to impose, a sentence under this count in accordance with the statutes and the views herein expressed. And it is so ordered.

       33 S. Ct. 630, 57 L. Ed. 1160.