Twenty-Five Thousand Gallons of Distilled Spirits

S.D. New York

Twenty-Five Thousand Gallons of Distilled Spirits

24 F. Cas. 416, 1 Ben. 367

DecidedAugust 15, 1867

StatusPublished

This text of 24 F. Cas. 416 (Twenty-Five Thousand Gallons of Distilled Spirits) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Twenty-Five Thousand Gallons of Distilled Spirits, 24 F. Cas. 416, 1 Ben. 367 (S.D.N.Y. 1867).

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Opinion

BLATCHFORD, District Judge.

The first exception is allowed, and the second -exception is disallowed.

The main question arising on the facts in this case is as to the share of the proceeds to which McDonald is entitled. This depends on the question as to when his right to a share in such proceeds became vested in him. If such right became vested when the information was given by the informer which led to the seizure, the amount of his share must be determined by the law then in force. If such right became vested only by judgment and payment of the forfeiture thereunder, then the amount of his share must be determined by the law in force at the time of such payment. By section 41 of the internal revenue act of June 30th, 1864 [13 Stat. 239], and section 179 of the same act, as amended by section 1 of the act of March 3d, 1865 [Id. 469], which was the law in force at the time the information was given by the informer, the informer was entitled to a in. r.-iy of the forfeiture, on distribution. By section 9 of the act of July 13th, 1860, which took effect August 1st, 1800, the law was amended, so as to give to the informer such share as the secretary of the treasury should, by general regulations, provide, not exceeding one moiety, nor more than $5,000 in any one case. Under this amendment and the regulations made thereunder, the share of the informer in this ease would be $5,000. Section 9 of the act of July 13th, 1800, also provides as follows: “It is hereby declared to be the true intent and meaning of the present and all previous provisions of internal revenue laws, granting shares to informers, that no right accrues to or is vested in any informer, in any ease, until the fine, penalty, or forfeiture in such case is fixed by judgment or compromise, and the amount or proceeds shall have been paid, when the informer shall become entitled to his legal share of the sum adjudged or agreed upon and received.”

The informer claims that his share of the proceeds in this case is to be determined by the law which was in force when he gave the information which led to the seizure; that, under that law, he is entitled to one-half of the proceeds of the forfeiture; that his right vested at the time he gave the information. subject to the result of a suit; that the decree relates back to the time of the seizure; and that, after the decree of forfeiture in Mareh, 1866, no subsequent consent bf the United States opening the decree could change the vested rights of the informer.

It has been uniformly held, under all revenue laws, that the title of the seizor or in* former is liable to be divested by the government, until the money is actually paid over for distribution. Opinion of Attorney-General Berrien. 2 Op. Attys. Gen. p. 331; U. S. v. Morris, 10 Wheat. [23 U. S.] 290; Norris v. Crocker, 13 How. [54 U. S.] 440. When the money representing the forfeited property is actually paid oyer and is ready for distribution, then, and then only, does the interest of the informer become vested in the money. In this particular, the special provision, before cited, in section nine of the act qf July 13th. 1806, as to the time when a right accrues to or is vested in an informer, is merely declaratory of what the general law was before that provision was enacted. Until the money is paid over for distribution, the United States have complete control over the suit brought to enforce the forfeiture, and over the forfeiture itself. They can remit the forfeiture and control the suit, at their pleasure. The suit is, by law. brought in the name of the United States, and there is nothing in the statutes applicable to this ease, through which alone the informer acquires a right to any share at any time, to indicate that congress did not intend that the United States, as magister litis, should exercise complete control over the suit and its management, until the proceeds of the forfeiture should be ready for' distribution.

In the present case, although the $15,000 were paid into court before the entering of the decree of March 10th, 1866, yet it was paid in merely as representing the property of which it was the appraised value; and then the decree of March 10th. 1S66, was entered, condemning the spirits and the $15,000 as forfeited to the United States, and ordering a writ of sale, and further ordering that, on the return of the writ, the clerk retain the proceeds, together with the $15,000 to [419]*419await the further order of the court. The writ of sale was issued, but, before it was executed as to the spirits, it was set aside, by the order of April 26th, 1866. The $15,-OOÜ, although in court, cannot be regarded as having been ready for distribution, any more than if it had been in the shape of the property which it represented, or as having been beyond the control of the court, so far as respected any vested right of the informer in it. Then came the order of April 26th, 1866, setting aside the first decree and opening the whole matter. This decree the court had a right to make, without the consent of the informer. The result is, that the case stands wholly on the decree of December 17th, 1866, and the informer is entitled only to such share as is given to him by the act of July 13th, 1866, and the treasury regulations made thereunder, as respects the $15,-.000, as well as the proceeds of the spirits, and that he is entitled to only the sum of $5,000.

This decision was affirmed bv the circuit court, on appeal. [Case No. 16,564.]

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BLATCHFORD, District Judge.

The first exception is allowed, and the second -exception is disallowed.

The main question arising on the facts in this case is as to the share of the proceeds to which McDonald is entitled. This depends on the question as to when his right to a share in such proceeds became vested in him. If such right became vested when the information was given by the informer which led to the seizure, the amount of his share must be determined by the law then in force. If such right became vested only by judgment and payment of the forfeiture thereunder, then the amount of his share must be determined by the law in force at the time of such payment. By section 41 of the internal revenue act of June 30th, 1864 [13 Stat. 239], and section 179 of the same act, as amended by section 1 of the act of March 3d, 1865 [Id. 469], which was the law in force at the time the information was given by the informer, the informer was entitled to a in. r.-iy of the forfeiture, on distribution. By section 9 of the act of July 13th, 1860, which took effect August 1st, 1800, the law was amended, so as to give to the informer such share as the secretary of the treasury should, by general regulations, provide, not exceeding one moiety, nor more than $5,000 in any one case. Under this amendment and the regulations made thereunder, the share of the informer in this ease would be $5,000. Section 9 of the act of July 13th, 1800, also provides as follows: “It is hereby declared to be the true intent and meaning of the present and all previous provisions of internal revenue laws, granting shares to informers, that no right accrues to or is vested in any informer, in any ease, until the fine, penalty, or forfeiture in such case is fixed by judgment or compromise, and the amount or proceeds shall have been paid, when the informer shall become entitled to his legal share of the sum adjudged or agreed upon and received.”

The informer claims that his share of the proceeds in this case is to be determined by the law which was in force when he gave the information which led to the seizure; that, under that law, he is entitled to one-half of the proceeds of the forfeiture; that his right vested at the time he gave the information. subject to the result of a suit; that the decree relates back to the time of the seizure; and that, after the decree of forfeiture in Mareh, 1866, no subsequent consent bf the United States opening the decree could change the vested rights of the informer.

It has been uniformly held, under all revenue laws, that the title of the seizor or in* former is liable to be divested by the government, until the money is actually paid over for distribution. Opinion of Attorney-General Berrien. 2 Op. Attys. Gen. p. 331; U. S. v. Morris, 10 Wheat. [23 U. S.] 290; Norris v. Crocker, 13 How. [54 U. S.] 440. When the money representing the forfeited property is actually paid oyer and is ready for distribution, then, and then only, does the interest of the informer become vested in the money. In this particular, the special provision, before cited, in section nine of the act qf July 13th. 1806, as to the time when a right accrues to or is vested in an informer, is merely declaratory of what the general law was before that provision was enacted. Until the money is paid over for distribution, the United States have complete control over the suit brought to enforce the forfeiture, and over the forfeiture itself. They can remit the forfeiture and control the suit, at their pleasure. The suit is, by law. brought in the name of the United States, and there is nothing in the statutes applicable to this ease, through which alone the informer acquires a right to any share at any time, to indicate that congress did not intend that the United States, as magister litis, should exercise complete control over the suit and its management, until the proceeds of the forfeiture should be ready for' distribution.

In the present case, although the $15,000 were paid into court before the entering of the decree of March 10th, 1866, yet it was paid in merely as representing the property of which it was the appraised value; and then the decree of March 10th. 1S66, was entered, condemning the spirits and the $15,000 as forfeited to the United States, and ordering a writ of sale, and further ordering that, on the return of the writ, the clerk retain the proceeds, together with the $15,000 to [419]*419await the further order of the court. The writ of sale was issued, but, before it was executed as to the spirits, it was set aside, by the order of April 26th, 1866. The $15,-OOÜ, although in court, cannot be regarded as having been ready for distribution, any more than if it had been in the shape of the property which it represented, or as having been beyond the control of the court, so far as respected any vested right of the informer in it. Then came the order of April 26th, 1866, setting aside the first decree and opening the whole matter. This decree the court had a right to make, without the consent of the informer. The result is, that the case stands wholly on the decree of December 17th, 1866, and the informer is entitled only to such share as is given to him by the act of July 13th, 1866, and the treasury regulations made thereunder, as respects the $15,-.000, as well as the proceeds of the spirits, and that he is entitled to only the sum of $5,000.

This decision was affirmed bv the circuit court, on appeal. [Case No. 16,564.]

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24 F. Cas. 416, 1 Ben. 367, Counsel Stack Legal Research, https://law.counselstack.com/opinion/twenty-five-thousand-gallons-of-distilled-spirits-nysd-1867.