Weitzel v. Rabe/Opinion of the Court

We think the court below was right in holding that the producing capacity of the distillery was not in law reduced so as to make the distiller liable for material used in excess of the reduced capacity, until May 4. The original capacity, as estimated according to law, was 416.90 bushels of grain each twenty-four hours, but the spirits could not be properly developed and separated until the expiration of forty-eight hours from the time the grain was put into the mash,-that being the fermenting period allowed. According to the rulings of the Commissioner of Internal Revenue, grain has been used when the spirits have been properly developed and separated by distillation; and in determining, under the requirements of sect. 3309 of the Revised Statutes, whether a distiller has accounted for all grain used by him in a month, the practice has been to take the quantity of mash and beer on hand at the beginning of the month, add to it the quantity put into mash during the month, and from the total deduct the quantity of mash and beer on hand at the end of the month. The remainder is the quantity used. Under the law the distiller must pay a tax equal to eighty per cent of his estimated producing capacity, whether the spirits are actually produced or not. Consequently, to save himself from taxation beyond his actual production, he must keep his distillery running all the time within twenty per cent of its full capacity.

The application in this case, under sect. 3311 of the Revised Statutes, for a reduction of capacity, was made when the distillery was in full operation, and when mash or beer equal to the full producing capacity was in the process of distillation. The spirits could not be properly developed and separated from this material until the expiration of forty-eight hours from that time. This both the government officers and the distiller knew. Under these circumstances, the application for the reduction of capacity was evidently made with the intention of having the reduced capacity date from the time when it could go into effect without subjecting the distiller to a tax on excess of material used, by reason of the further distillation of what was then in mash. To accomplish this purpose a practice had grown up in the collection district where this distillery was situated to give three notices and close tubs on successive days after they had remained empty twenty-four hours. Forms seem to have been prepared by the revenue officers for such notices; and when the application for reduction was made in this case, the notices were signed in blank and left with the collector to be filled up by him in a way that would, according to the practice which prevailed, bring about the reduction at the proper time. The reduction was made. The distiller reported his actual product, and paid the taxes thereon in full. The amount now sued for was evidently paid on account of a constructive and not an actual use of material in excess of capacity. There is no pretence of bad faith. The distiller did what was required of him to get a reduction of capacity while his distillery was in operation. Under such circumstances he was entitled to have the capacity estimated while the reduction was going on, in such a way as not to charge him with material in mash when the change was applied for, as material used in excess of capacity.

Judgment affirmed.

NOTE.-In Weitzel v. Kayser and Weitzel v. Caldwell, error to the same court and submitted at the same time as the preceding case, MR. CHIEF JUSTICE WAITE remarked that they were in all material respects like it, and, upon its authority, the judgments were affirmed.