Chaffee v. United States/Opinion of the Court

ERROR to the Circuit Court for the Southern District of Ohio; the case being thus:

The forty-eighth section of the act of June 30th, 1864, 'To provide internal revenue to support the government,' &c., thus enacts:

'All goods, wares, merchandise,. . . on which duties are imposed by the provisions of law, which shall be found in the possession or custody, or within the control of any person. . . for the purpose of being sold or removed by such person. . . in fraud of the internal revenue laws, or with design to avoid payment of said duties, may be seized by any collector. . . who shall have reason to believe that the same are possessed, had, or held for the purpose or design aforesaid, and the same shall be forfeited to the United States.

'And also all articles of raw materials found in the possession of any person. . . intending to manufacture the same for the purpose of being sold by them in fraud of said laws, or with design to evade the payment of said duties, and also all tools, implements, instruments, and personal property whatsoever, in the place or building, or within any yard or inclosure where such articles on which duties are imposed, as aforesaid, and intended to be used by them in the fraudulent manufacture of such raw materials, shall be found, may also be seized by any collector or deputy collector, as aforesaid, and the same shall be forfeited as aforesaid.

'''And any person who shall have in his custody or possession any such goods, wares, merchandise,. . . subject to duty as aforesaid, for the purpose of selling the same with the design of avoiding payment of the duties imposed thereon, shall be liable to a penalty of $500, or not less than double the amount of duties fraudulently attempted to be evaded, to be recovered in any court of competent jurisdiction.''

'And the goods, wares, merchandise, which shall be so seized by any collector, may, at the option of the collector, during the pendency of such proceedings, be delivered to the marshal of said district, and remain in his care and custody and under his control until final judgment in such proceeding shall be rendered.'

This statute being in force, Sidney Chaffee, Highland Chaffee, and Rue Hutchins, trading as Chaffee & Co., were distillers, at Tippecanoe, a small town upon the Miami Canal, a canal which traverses the State of Ohio from Cincinnati on the south line of the State, by a course north and south, to Toledo in the north. The custom of Chaffee & Co. was to ship whiskies in both directions; that is to say, northward towards Toledo and southward to Cincinnati. Going north such whiskies had to pass through a place called Piqua, which was the first place on the canal at which toll was payable when the vessel was going from Tippecanoe in the direction named. Going south, towards Cincinnati, the whiskies had to pass through Dayton, the first place at which toll was payable when the vessel was going from Tippecanoe south. There was no other distillery at Tippecanoe. There were, however, in the whole distance between Piqua and Dayton three others.

The Miami Canal, on which these whiskies were transported, had been made and for some years was managed by the State of Ohio. And a statute for 'the regulation of the navigation thereof and for the collection of tolls,' enacted that no boat should be permitted to pass on it unless the master had first obtained a clearance for each voyage from the collector of tolls, which clearance the collector nearest to the place at which the boat began her voyage was required to issue. To enable the collector to issue clearances that should truly represent what cargo was on board, the act made it obligatory on the master to exhibit to the collectors 'a just and true account or bill of lading' of 'each and every article of property on board,' when the boat should depart on her voyage, or which should be taken on board afterwards; and further, to insure accuracy, every collector receiving a bill of lading might require the master to verify it by his oath. The knowingly delivering any false bill was made an indictable offence, punishable with fine in three times the value of the property omitted or falsely stated in the bill. The bill of lading thus required was to be exhibited to the collector where any portion of the cargo should be unladen. The act proceeded:

'It shall be the duty of every collector to whom bills of lading are required to be presented, in order to obtain a clearance for any voyage, to make out from such bill or bills of lading, in a book, a certificate, containing a pertinent description of the articles composing the cargo of the boat, for which clearance is about to be issued, properly classified and designated with reference to the rates and amount of tolls chargeable thereon; which certificate shall be signed by the master, who shall also attest on oath or affirmation to the correctness thereof, if required by the collector, before the clearance shall be issued.

'In every case where a certificate is required to be made out and signed, the collector shall enter upon the clearance a correct list or statement of all articles of lading contained in such certificate, properly classified and designated, with the amount of tolls charged and received thereon, and shall sign his name thereto.

'On the arrival of any boat at the place of destination, or at any place in the course of the voyage where there is a collector's office, the master thereof shall immediately present to the collector the bill or bills of lading together with the clearance.

'No boat shall proceed on its voyage until the bill or bills of articles of lading on board thereof, together with the clearance and list of passengers, shall have been presented to the collector, nor until all necessary examinations and comparisons of such bills of lading, clearance, and cargo, shall have been made, nor until all tolls payable at such office shall have been paid; and the collector may detain both the bills of lading and clearance until the necessary entries shall be made on such clearance, and until all the requisitions of this section shall be complied with.

'No part of the cargo of any boat shall be unladen at the termination of any voyage until the clearance, together with the bill or bills of lading of the whole cargo, shall have been presented to the proper collector, and a permit obtained from such collector for such unlading, which permit such collector is hereby required to grant, after a reasonable time shall have elapsed for the examination of such clearance, bills of lading and cargo, and on the payment of all tolls which shall remain due.'

Though, as already said, the canal had been originally managed by the State, it was not so managed at the time when the whiskies of Chaffee & Co. were transported. The State had leased it, the lease containing this provision:

'Such rights, privileges, and franchises now exercised by the State as may be necessary to manage, control, and keep in repair the public works, and collect collect tolls for the navigation of the same, together with the right to appoint superintendents, collectors, &c., who shall have and exercise the same power and authority in the collection of tolls and water rents, and the levy of fines, as can now by law be exercised by similar officers and agents appointed by the State; and said lessee or lessees shall be governed by the rules and regulations for navigating the canals now in force, subject to such alterations and additions as may hereafter be established by law,' &c.

The purpose of the company, which had now leased the canal, apparently was to follow the rules about clearances that the statute had prescribed. But whether the rules had been followed with statutory rigor was less clear. Captains would come, it appeared, to the collector's office and report for a clearance; the collectors generally, though not always, knowing them. The bills of lading were usually produced, but occasionally a captain would happen to have left his bills behind, and in such case, if he was a person known to the collector, and a person whose word the collector thought he could safely take as to what was on board the boat, he would sometimes dispense with the production of the bills, and make out the clearance from the captain's verbal report; though this would not be done ordinarily with any master, and never in the case of 'new men' whom the collectors did not know. Captains were never interrogated upon their oaths; nor did the collector ever overhaul and make personal inspection of cargoes, or in this way or in any way have actual and personal knowledge whether the representation of the captains or of the bills was strictly accurate. But however made, the captain would always certify the representation on which the clearance was granted to be true. When, however, arriving at its destination, the boat came to be unladen, it was testified 'to be the duty of the collector at such place of unlading to see, when the boat is unloading, that the captain has given in his freight correctly; and if he sees any freight that is not on the clearance, he then brings the captain to an account for it.'

The certificates which the captains signed on the books of the collector would be in this form:

'COLLECTOR'S OFFICE,

DAYTON, December 2d, 1865.

'I, H. U. French, master of the boat A. Hopkins, do certify that the following is a full and true statement of all the cargo taken on board said boat for transportation on her present passage, and that I have paid toll thereon as follows, to wit, to Piqua, for original cargo, on clearance No. 893, viz.:

The Boat. From. To. Miles. Tolls.

900 bushels barley    "     " 43,200 " 21

To Dayton.

50 barrels high wines, Tippecanoe. Cincinnati 18,000 ... 7

1645.29 bushels oats,    Troy. " 51,314 86 18