government. The acts of the register were not wholly 'Ultra vires. He had ample authority to sell and convey the land to H. & L., and the <:ertijicate under which he held showed a legal title, or one translative of property in them. He exceeded his authority only in the fact that he, in his error as to the class of lands conveyed to H. & L., took $1.2,15, instead of $2.50, per acre. This error did not of itself invalidate the sale. Notwithstanding it, the purchasers, at any rate so far as the defendants herein are concerned, held and possessed the land under an authentic, genuine act which they rightfully considered and treated as tantamount to a legal title in H. & L. Considering that the register had ample authority to sell and convey the land to H. & L. for $2.50 per acre, and keeping in view the circumstances and facts attending the transactions, and which show the relation of defendants to H. & L., and the dealings of the latter with the government, I do not think it violates either one of the two rules of law relied on by plaintiff's counsel to bold that the government is forbidden by law as well as equitable dealing to recover against defendants. The government allowed a condition (j)f things to exist at the time H. & L. sold the timber to defendants, and for several years afterwards, which were misleading to the defendants. They, as third persons, were, under the laws of Louisiana, authorized to construe the certificate and other evidences of the transactions on record at :Natchitoches, as vesting in H. & L. a legal title to, if not complete ownerspipof, the lands. As the case now presents itself, one of the two parties to this ,guit has to suffer a loss. The government having become again possessed of the land, must lose the value of the timber cut by defend,ants, or the defendants have to be made to pay a second time for what they once paid for in good faith to H. & L. Under the law, as wellin equitable fair dealing, I think the loss should fall on the governJ;l1ent, rather than on the defendants. On the statement of facts agreed to the defendants are entitled to relief.
et al. v.
(Oircuit Court, D. Kentucky. April 9, 1889.)
lKTERNAL REVENUE-DISTILLED SPIRITS.
. Plaintiffs deposited distilled spirits in their bonded warehouse in December. 1880, an·a gave bond under Rev. St. § 3293 to pay the tax within three yellrs frow entry. The tax was not paid within three years. and on February.24. 1884. the Collector gave them notice to pay the tax as required by section 3184. stating, as in the section r.rovided, that unless the tax was paid within: 10 da,ys it would be the collector s duty to collect a penalty of 5 per centuw :in addition, and interest. By section 3248 the tax attaches as soon as the spirits come into oxistence. Betel, that the tax and penalty were due and payable before March 5, 1884. Plainti1l's did not pay the tax within the 10 days. and on March 15th the col.lector.gave notice that the tax and penalty were due and unpaid, a.nd unless
::LAY II. aWOPE.
paid within 10 he would distrain and sell the spirits. Tb,e penalty was afterwards paid. After March 5th permission to plaintiffs to export the spirits was given. and they gave their bond. and afterwards the spirits were exported. Held, that the penalty is imposed on the person for default, and is not a tax or duty on spirits which have been exported, and that the penalty was not discharged by the exportation.
A.s the statute creates a lien on all other property of the delinquent, and the same. with a certain exception, may be seized therefor. there is no presumption that plaintiffs were coerced into.payment of the penalty by reason of the lien claimed on the spirits about to be exported, .
At Law. On demurrer to answer. Action by Clay & Co. against A. M. Swope, collector of internal ravenue. Chua. H. SWU and George Du Belle, for plaintiffs. J. a. Wickliffe and Thomas C. Bell, for defendant.
BARR, J. The plaintiffs, Clay & Co., were distillers of whisky hi this state, and were compelled to pay, and did pay under protest, to the defendant, Swope, who was then the collector of internal revenue for the district in which the distillery was run, the SUID of $174.90 on the 24th of March, 1884, which was 5 per cent. penalty on the tax due on whisky distilled by plaintiffs, and which was exported by them after thl:' tax had been assessed and the notice given of such listing and assessment. This suit is to recover the'money thus paid, and the .defendant has swered. ThIS answer has been demurred to, and this is the question submitted. The answer alleges that the defendant was the collector of internal from April 16, 1877, to July 5, 1884, of the district in which plaintiffs, Clay & Co., were distillers; that during the month of December, 1880, they (Clay & Co.) distilled and placed iQ-: their bonded warehouse 3,888 prpof gll1lons of spirits, for which a ,ta.; of 90 cents per gallon was to be paid, and for which they were liable on their bond executed to the United States under section 3293, Rev. St.; that the condition of this bond was to pay said tax within three years from the date of the entry of deposit in the bonded warehouse, and thatsaJ,d entry was not later than December 31,1880. The answer further allege", that, the plaintiffs having failed to pay the said tax on the spirits within three years from the date of the entry of deposit in bonded warehouse, the commissioner of internal revenue assessed said spirits for the tax of90 cents a gallon, amounting to $3,499.20, according to law, and forwarded the list to the defendant as collector, of internal revenue, to collect of said he, in accordance with Clay & Co.; that on the 23d of February, as "No. 17," sent by mail to said firm the law, and under form of Clay & Co. a notice, informing them that said tax of. $3,499.20 was due and unpaid, and that unless said tax was paid within 10 days from the mailing of said notice, it would become his duty to collect said tax, with a penalty of 5 per centum aqditional, and also interest at the rate of 1 per centum per month until paid; that said firm failed to pay said tax within 10 days after the mailing of said notice, and thereby a penalty of 5 per cent. on said tax of $3,499.20 accrue.dand became due
FEDERAL': REi'oiWER,vol. 38.
·when asoortained. The law gave the distiller, 10 days after noticewithin which'topay the tax, and declared if he did not pay' within that time he would be su to a penalty of per ceptum on the amount thereof; together with interest at the rate ofl per centum amonthbn tbe amount of the taxes. But the question remains, what is the effect of the subsequent order of the commissioner of internal revenue, the execution by plaintiffs of the proper transportation bond, and the actual exportation of this whisky out of tpeUnited States upon this 5 percent. penalty? Another part of the statutes in regard to internal revenue' provides how distllledspirits upon which all taxes. have been paid may be exported out of the United States, and a drawback of 90 cents per proof gallon be obtained. Section 3329, Rev. St., and amendment of May 28, 1880. 'rhe AElJft section (3330) provides the mode of withdrawing distilled spirits from distillery bonded warehouses for export out of the United . The transportation bond executed by Clay & Co. was under the provisipps of this section, and the whisky actually exported out of the United States. of There is no provision of the s'tatute authorizing either the · the treasury or the cOD'\mission6l' of internal revenue to remit the tax or any penalty for thereof. The whisky,having been actually exported ,mIt of the United States, was no longer.subject to the tax becauseofthe constitution of the UnitedStates; Which e prohibited it, but undoubtedly congress has the 'constitutional 'right and authority to enact laws which it may 9-eem and propertosecure the collection of the internal taxes whi6h it lDay constitutionally impose. It may enact laws' declaring the mode and mannei- in which distilled spirits shall be exported, and the time within which the exportation must be made to escape taxation here; this, of course, being ·a regulati6n, alldnot a tax upon'spirits exported. In this congresshas, declared that the tax on distilled spirits distilled in the, United :States shall be paid within three years after the date of the entry in the 'bonded warehouse, and, if the tax is not paid within that time by the distiller who has given bond for the payment; the commissioner of internal revenue shall ascertain and list the amount of taxes due thereon, and that the collector of internal revenue shall ,thereafter notify the distiller ofthe amount of taxes due thereon, and if the tax is not paid within 10 days after the service of the notice, or day of mailing it, then there shall be a penalty collected, in addition to the tax due, of 5 per centum · on the amount of tax. This penalty is imposed on the person who is liable for the taxes, because of his personal default in not paying the tax , within the time required by law, and it is neither a tax nor duty upon · the distilled spirits which were exported out of the United States, and was not discharged by the fact of the exportation. This penalty was not collectedby enforcing a lien on the spirits about to be exported, and the question of whether such a lien could be enforced does not arise in this case. The statute in express terms creates a lien on all otPer property belonging to a person owing these taxes after they become due, and ,he is notified to pay, and hts entire property, except certain exemptioIfs
FEDERAL nEPORTER, vol. 38.
named,may, be seized, and sold by the collector to pay Buch taxes; hencethereis no presumption that plaintiffs were coercE!d into the payment. of this penalty by reMon of the lien claimed upon the spirits .which 'Welle about to be exported. Demurrer should be overruled, and it is so ordered.
RISING STAn TEA, ETC.
(01:rcq,it Oourt, 'N.D. Oalifornia. April 1, 1889.)
hmuNs-TRADING IN INDIAN COUNTRY-KLAMATH RESERVATION.
Act AprilS, 1864, provides that there shall be set apart by the president, at his discretion, not exceeding four tracts of land, in California; for Indian reservations; that "said tracts to be set apart as aforesaid," mayor may not, in his discretion. include existing reservations. and that the reservations which shall not be retained, shall be surveyed and sold as therein provided. Four tracts were set apart, none. of them including the previously existiDg Klamath reservation. Held, that 'such Klamath reservation was not "Indian country," within the meaning of Rev. St. § 2133, prescribing the penalty for Qnauthorlzedtrading in the Indjan country. Affirming 35 Fed. Rep. 408.
On appeal district court. 35 Fed. Rep. 403. Seizure for violation of Rev. St. § 2133. Libel dismissed, and the United States appeal. John T. Carey, for U.S. appellants. J. E. McElrath and D. T. Sullivan, for respondent. Before SAWYER, Circuit Judge. SAWYER, J. The only question in this case, is, whether the country within the,Klamath Indian reservation, as set apart in 1855, is "Indian country," or "any Indian reservation," within the meaning of section 2133, oithe Revised Statutes, as amended July 31,1882, (22 St. 179.) Section 2 of the act of congress of April 8, 1864, (13 St. 40,) provides "that there shall be set apart by the president, and at his discretion, "not exceeding four tracts of land within the limits" of the state of California for Indian reservations; and it further provides that the said tracts to be set apart as aforesaid may, or may not, as in the discretion of the president may be deemed for the best interest of the Indians t() ,e; provided for, include any of the Indian reservations heretofore set apart in said state," etc. 'This statute contemplates future action by liDepresident, as is. manifest by the words, "shall be set apart," and the :words subsequently used, "said tracts to be set apart as aforesaid." Sec. tion3 provides" that the several Indian reservations in California which shall not be retained for Indian reservations under the provisions of the preceding section of this act" shall be surveyed and sold as tMreinafter provided. The president. did thereafter act from time to Wne, and he did set off four tracts in different parts of the state for the purposes provided for, and he did not include in anyone of them the "Klamath