Murdock Acceptance Corporation v. United States

PETITIONER:Murdock Acceptance Corporation
RESPONDENT:United States
LOCATION:

DOCKET NO.: 56
DECIDED BY: Warren Court (1955-1956)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

ARGUED: Feb 27, 1956
DECIDED: Mar 26, 1956

Facts of the case

Question

Audio Transcription for Oral Argument – February 27, 1956 in Murdock Acceptance Corporation v. United States

Earl Warren:

Number 56, Murdock Acceptance Corporation versus United States of America.

Now, Mrs. Grayson, you may proceed.

Elizabeth Hulen Grayson:

May it please the Court.

This case is before this Court on certiorari from the Fifth Circuit Court of Appeals.

It arises out of the seizure of an automobile as violating the statute against a vehicle transporting whiskey without tax on it which is Section 26 U.S.C.A. 3321.

A petition was — for remission was filed by the Murdock Acceptance Corporation under Section 18 U.S.C.A. 3617.

The position being taken and it now being admitted that Murdock Acceptance Corporation was a good faith lienor, that it acquired its lien on this automobile in good faith with no knowledge that it would be used for the transportation of — of liquor in any form.

And that it inquired its lien after an investigation and inquiry as required by the statute at the proper place and from the proper Federal law-enforcement office of the Alcohol Tax Unit.

That it had received form the Alcohol Tax Unit its standard form reply always used when the subject had no reputation or record for violating the liquor laws of the State — of any state of the United States.

It, therefore, filed its petition as now admitted that it has complied to that extent with every phase of the statute.

Its petition for remission was denied by the District Judge in the Eastern District of Louisiana where the car was seized.

In his opinion, the District Judge stated and took the position that he had discretion regardless of the fact that the claimant had complied with the requirements of the statute as to inquiry and regardless of being a good faith lienor, that he had discretion to deny the remission.

An appeal was taken to the Court of Appeals for the Fifth Circuit and was — there, the decision of the District Judge was almost summarily affirmed.

Now, of our own petition for rehearing, Mr. Justice Tuttle wrote a strong dissenting opinion.

As late as the — as the briefs in this Court on petition for certiorari, the Government has taken the position that the discretion of that District Judge is not reviewable by this Court.

We have an illustration in this case of our great democracy at work and that we have here a case involving One 1951 Chevrolet which after three years of storage and the passage of time could not be worth over $500.

We have, however, in this case, the Murdock Acceptance Corporation which indirectly is standing before this Court on behalf of our finance company.

We all realized that our economy is bottomed on credit buying, that our manufacturing industry is bottomed on the continuance of that large credit buying.

We also realized that credit selling to continue in the course in which it is now progressing must be also bottomed on stability of its security on the knowledge that its right in two (Inaudible) will be determined by a court of law according to established principles with the right of review, not merely as done before 1936 by mercy and justice.

The facts in this case are quite simple.

It was tried on an agreed statement of facts which is only two pages in length.

This car was sold by — the paper was purchased by Murdock Acceptance Corporation which is a Tennessee corporation operating in surrounding state.

At its Jackson, Mississippi office, it was tendered to Murdock Acceptance Corporation by a dealer and prior to acquiring the — the paper, Murdock Acceptance Corporation made inquiry of the proposed purchaser.

There is no question in this case as to the type of inquiry or the wording of the inquiry.

The inquiry is made as to both record and reputation.

There is no question in this case as to the location of the inquiry.

The inquiry was made of the highest Federal law-enforcement office in the State of Mississippi.

It was made at the proper place and that it is admitted and agreed that the Jackson office, which was a statewide office, had statewide jurisdiction and the inquiry could have been made at no other place in the State of Mississippi, that had it been made in any other of the — what they call the “field offices” which might have been a little closer to the residence of the — of purchaser that they would have immediately been referred to the Jackson office.

And therefore, no question is raised by the Government as to the place of inquiry or as to — or the office has made.

It is admitted that the inquiries made of the only Federal law-enforcement officer that where inquiry could have been made.

Elizabeth Hulen Grayson:

Then the paper was purchased upon the receipt of the following answer from the Alcohol Tax Unit.

And that answer was a form answer rather in the nature of bureaus and administrative bodies.

It was stamped on the bottom of the letter of inquiry.

The only blank in the answer was for the date and for the signature of the officer signing it.

It was the form answer admittedly used in every case where there was no record or reputation for violation of liquor laws.

It was — therefore, the only answer which the Murdock could have gotten where there was no record or reputation or for violation of liquor laws, that answer contained the following languages and stated it was a stamp.

No record or reputation as of blank date period.

This office does not have a complete file of our local and state arrest and prosecutions nor does it have knowledge of what reputation that kept — prospect might have among state officers (Voice Overlap) —

Sherman Minton:

But that was the only language on that rubber stamp but if they don’t use that now, they could have another office stamp, couldn’t they?

Elizabeth Hulen Grayson:

Sir, they could now.

Sherman Minton:

They could then, couldn’t they?

I mean —

Elizabeth Hulen Grayson:

They had — no, it is admitted, Mr. — just the — that that was the only one they would or could use at that time where they had no record or reputation.

Sherman Minton:

That’s the only one they did use but there’s nothing on earth that prevented them from having a different form.

Elizabeth Hulen Grayson:

No, sir.

They could have — could have prescribed and in fact we are informed now.

We — though, we do not know that since this case has arisen, they have changed that form, whether it would continue, we don’t know what the — but at that time that form had been in use for we know — I don’t know how long but I know since before 1936.

Because that same reply had been approved by the Treasury Department and our remission had been granted by the Treasury Department on that exactly the same reply before the new statute in 1936, giving the courts exclusive jurisdiction of remission.

And the — the Treasury Department, had for many years before then as — as admitted by the Government, held that that form reply was satisfactory and sufficient and that that was — was a reply that they had no record or reputation.

Sherman Minton:

There was a standard form but — but — that there was standard form but it made it just as vague as — as if it hadn’t been a standard form.

I mean the — it is not — it — it didn’t cover the whole field in the answer and then apparently on purpose it didn’t — didn’t cover the field.

Elizabeth Hulen Grayson:

Well, it didn’t cover the field so the Government says, “Now, that is the point that we wish to discuss with Your Honor.”

Of course they could have used another form but it is admitted that that is the only one that — that the ATU you would give them.

And it is a form that they used in every case regardless whether there was no record.

Now, if there was a record or reputation at that office or with that headquarters, they would write, “So and so has a record in such and such a court and we understand that he — or we think at this office that he has a reputation.”

If he had a record or reputation that was written on — on the bottom of the letter, if not, the stamp was used which what they intended and felt was a complete denial as complete as they would make or could make in any case.

If a member of this Court should happen to have bought a car on time then the inquiry would have had to be made of a member of this Court.

Sherman Minton:

But there is a difference between saying that there is no — there is no reputation in saying, there is no reputation that — that we know of and we don’t know what reputation he may have somewhere else.

Elizabeth Hulen Grayson:

That is correct, Your Honor.

The first statement in the reply was, “No record or reputation as of this day.”

Elizabeth Hulen Grayson:

This office does not have a complete file of state arrest and we do not know what reputation the purchaser may have with state (Inaudible)

May we examine that — that answer just a moment and that’s what Murdock did phrase in — in receiving the first answer.

These answers have been given or stated for 25 or 35 years and they’ve always been received in the same form.(Voice Overlap) —

Earl Warren:

And the question that I want — the question I wanted to ask, Ms. Grayson.

Was this used nationally or —

Elizabeth Hulen Grayson:

Yes, sir, nationally.

Earl Warren:

It — it was.

Not just a local —

Elizabeth Hulen Grayson:

No — no, sir.

Nationally used and used for at least 35 years and the only answer that would be used.

You couldn’t have gotten another answer out of the bureau because that was their rule and regulation.

Now, let’s look at that answer for just a moment.

It merely told the claimant what he already knew.

He knew that no one office or headquarters could possibly have a record of every arrest and prosecution and every justice of this Court in the State of Mississippi and everywhere — anywhere in the United States.

It —

Harold Burton:

Well, didn’t the law require you — if you made an inquiry in the community in which the purchaser lived as to his credit that you should inquire there at the officers as to his law which violates the record?

Elizabeth Hulen Grayson:

Yes, sir.

You must make —

Harold Burton:

And you didn’t do that?

Elizabeth Hulen Grayson:

Yes, sir.

Oh, yes, sir.

Harold Burton:

You didn’t — you didn’t do that, did you?

Elizabeth Hulen Grayson:

Yes, sir.

Harold Burton:

You made inquiry of the sheriff —

Elizabeth Hulen Grayson:

(Voice Overlap) —

Harold Burton:

— with — in the community, in the police officers in the community where he lived?

Elizabeth Hulen Grayson:

If Your Honor please, the sheriff is in the alternative as to the officers that you must make it.

But accumulative as to the place that you must make it, you must make it in the place of residence in the place where the transaction is closed and the sale is made and in the place where credit references were made.

In this instance, the credit references were all in Jackson-Hinds County.

The sale was consummated in Hinds County but the purchaser lived outside of Hinds County about 30 or 40 miles.

Elizabeth Hulen Grayson:

Now, the inquiry should have been made at each of these places.

However, when the inquiry is made — can be made at any one of three and that is admitted by the Government in its brief several times and it’s been held that it does not have to be made of our three officers.

It can be made either of the sheriff at his headquarters —

Sherman Minton:

But if you —

Elizabeth Hulen Grayson:

— or the city officials —

Sherman Minton:

— if you make one — if you make an inquiry as to credit in the community in which the purchaser lives, you also must make inquiry of the officers there?

Elizabeth Hulen Grayson:

Yes, there’s no doubt about that.

But here the inquiry was made in an office to which it had jurisdiction of all three places.

Sherman Minton:

Yes, but it said it didn’t have information as to all the reputations in all the state communities and so forth.

Elizabeth Hulen Grayson:

That’s right.

It said it did not have a complete file, if Your Honor please, of all state arrest.

In other words, it didn’t have some files of state arrest and it did not have information as to reputation among state officers.

If Your Honors please, reputation is a matter of the mind.

If they had — if the ATU office had known that he had a reputation with state officers then that would have consisted or constituted a reputation at that office or with that office there.

Reputation is purely a matter of the mind.

That answer not only told them what they already knew but it was the only truthful office answer that any officer anywhere can give.

What you — what you say then as to entities that if this had been spelled out to say, “We know in this office of no federal or state violation.”

That would have been a full compliance to the statute?

Elizabeth Hulen Grayson:

I think — I think that is what they have changed to now.

We — at least they used the word liquor law violator, no record or reputation as a liquor law violator and stop there.

I think the Government now admits that that is sufficient.

That we didn’t have to make the inquiry anywhere except the ATU that the location was sufficient, that we didn’t have to then make the shot.

But they — the Government takes the position that that qualifying language is sufficient that it was not a negative language, if Your Honors please, and not only told them nothing we do not know anyway, is not only as Judge — Mr. Justice Tuttle pointed out so brilliantly in his dissenting opinion, the only truthful answer that any officer could make.

Otherwise, you cannot have an officer guarantee.

The statute does not require that you have an officer guarantee to you.

He has — and to say to you, he has no record or reputation with this office or with us and any that we know of, but we — we know that he has none with no office or anywhere in the world with no other office.

No officer can be expected to guarantee that or to make such a statement.

Therefore, the silence at the end of the answer was merely a general statement known to the person who inquired and the only truthful statement he can make.

But not only that, Murdock Acceptance Corporation knew and it is admitted they knew that there were long line of cases going clear back to 1937, where the courts of every Court of Appeals where it has arisen, beginning in United States versus One Dodge in Court of Appeals of the Second Circuit, 88 F.2d.

That inquiry only needed to be made of any one of the officers, either the sheriff’s office or the ATU office or the city office.

Elizabeth Hulen Grayson:

And that if they had — that purchaser had no record or reputation of liquor law violator with that office or at that office that then it was immaterial whether or not he had record or reputation with any other officers or at any other location or among any other officers.

That being true, what he was told by the ATU, the courts have said was immaterial that we had — he has no record or reputation with us as a liquor law violator.

We just don’t know what he may have — don’t guarantee that we know everything about him and that we cannot guarantee that he has none anywhere and that’s all it said and under the decisions of every Court of Appeals at the time this inquiry was made, there were — there were at least 15 or 20 decisions to that effect, then the inquiry was absolutely satisfactory and sufficient.But not only that, if the Court please, then we’ve come to the most outstanding, I think, admissions of the Government in this case.

They not only admit that — that Murdock Acceptance Corporation was a good faith lienor with no knowledge or information whatsoever detrimental beyond that answer if that could be called detrimental.

That they received the only answer that would be given to them by the ATU if there was no record and the only answer that they could get from the highest Federal enforcement officer where there was no record.

But they also admitted that the ATU interpreted that answer as being a flat denial of any record or reputation that they intended it to be.

That they intended that answer to protect a claimant making an inquiry.

Now, the Government stands before this Court and makes those admissions.

We thought it did.

We intended it to do it.

They also go further and admit that for 20 years since the new statute was passed in 1936, giving the courts jurisdiction, the sufficiency of that answer has never been challenged in any court.

That there has been any number of District Courts who have held — held the claimant entitled to remission, where exactly the same answer was given.

But after justice — Department of Justice ever challenging the sufficiency and the answer and without it ever being questioned that they also admit that that fact was known to the — to the Murdock Acceptance Corporation.

In fact, they do not deny the effectiveness of this — certified copies we have attest in our brief of cases from the State of Mississippi where the identical answer came up in decisions not challenging that answer but where some other question was involved and where that answer was the one that was received and where the Court held that — again and again that they were entitled to remission.

And where Mr. Wimbish, the Director of the Mississippi Department of the ATU, testified on the stand that that was — and four years before this paper was accepted that that was the answer by which they meant they had no record or reputation.

It therefore says it admitted that they intended it that they interpreted it in that way.

That the Department of Justice had never challenged it but the District Courts had held it sufficient for 20 years.

And as they go further and admit that the Treasury Department prior to 1936, when enforcing the old statute by which they — they were given discretion only to grant remissions or where there had not been any willful fraud — willful negligence on the purpose of fraud, that the Department of Treasury interpreted that answer as sufficient not to constitute willful negligence for intent — or purpose of fraud.

Therefore —

Stanley Reed:

Do you — do you mean with that, Ms. Grayson, that the District Judge would be compelled to grant the remission that this answer was filed?

Elizabeth Hulen Grayson:

If there where no other circumstances whatsoever.

No bad faith.

No other set of facts or circumstance which — with which they are not admittedly here, which would give a bad complexion to the case which would —

Stanley Reed:

Well, I —

Elizabeth Hulen Grayson:

— really show bad thing.

Stanley Reed:

— I understand the Government says that there is something here that makes it bad complexion to the case?

Elizabeth Hulen Grayson:

I — I think, if Your Honor please, we’ll look at the Government’s brief, you’ll see that their position is that there’s nothing except this answer.

Stanley Reed:

Yes.

That’s what —

Elizabeth Hulen Grayson:

That this answer alone is — is all that they can say.

Elizabeth Hulen Grayson:

That outside of this answer it was a good faith purchase with no knowledge or information of any kind that would lead them to believe that our vehicle would be ever be used.

Stanley Reed:

But if — if the judge should decide that whatever answer came in, including this answer here that that answer put the finance company unnoticed.

That would be sufficient, wouldn’t it?

He would then have the power to refuse him if he properly decided that (Voice Overlap) —

Elizabeth Hulen Grayson:

If he — well, yes, sir.

I’ve read this over.

Stanley Reed:

— this whether —

Elizabeth Hulen Grayson:

I — I submit that it is for review by this Court and the test is whether that answer and that accepting of that answer constituted willful negligence.

They admit that it did not constitute fraud.

That there’s no element of bad faith or fraud involved whatsoever.

Now, then the fundamental question on that issue is before this Court.

Stanley Reed:

Is there some virtue to the phrase “willful negligence?”

Elizabeth Hulen Grayson:

Sir?

Stanley Reed:

Some — you used the phrase “willful negligence.”

Elizabeth Hulen Grayson:

The word — the phrase “willful negligence and purpose of fraud” goes back to the Act of 1866 and it’s been continued throughout until the new Act of 1936.

The Treasury Department was granted discretion to allow remission where there had not been willful negligence or purpose of fraud.

It was advanced forward in the Act of — and which is now — which is 19 U.S.C.A. 1618 which was the Act of 1922 made applicable to the Internal Revenue Department which said that the Treasury Department could grant remission where there was no purpose of fraud or willful negligence.

Now, our position here is that the judge had no — the judge below had no discretion that — arbitrary discretion.

One judge couldn’t say on that answer to — it was nothing — no other facts and circumstance that that answer is sufficient to allow remission and another one say that answer and nothing else, there’s not.

But it is a matter of review for the Court and a question before this Court whether or not that answer alone, standing alone, was approved of evidence whatsoever of any willful, not negligence but willful negligence which has come down in the statute since 1866.

How could it be willful negligence when the courts for 20 years had told them that if the officers that they inquired of had no record or no — they had no record or reputation with those officers then what — some other office — officer, you don’t need to go to all like they.

If the officers inquired of they have no record or reputation with them or that office that’s enough.

How could it be willful negligence when the department itself for 20 years had told publicly on the stand, we mean that as a complete denial, we intended as a complete denial and we interpreted it as being a complete denial.

How could it be willful negligence on the part of Murdock when the District Courts and the Justice Department had gone for 20 years and allowed remission after remission on that answer and that answer alone, no other inquiry?

And then you could say that that was willful negligence for them to stand and accept that answer.

How could it be willful negligence when that is the very —

Stanley Reed:

But willful — willful negligence is now, as I read it, we had at no time and in knowledge or reason to believe that it was being or would be used in violation of the law.

Elizabeth Hulen Grayson:

Yes, sir.

That’s the second requirement of the statute.

There are three, of course, requirements of the statute.

Elizabeth Hulen Grayson:

The first two are admitted here except — except unless they contend that this answer gives them something to stand on.

The first one is good faith.

It must be approved of good faith lienor which is admitted.

The second that he had no reason to believe that the vehicle would be used for the violation of the — of laws of any state of the United States.

The only thing they knew, which is admitted here, was this answer which was received from the ATU Then the third requirement is the making of the inquiry which they — what we must make of only one — we make of only one of the three officers in the ATU as the profit officer and get a negative reply.

Now, the statute — this Honorable Court has held that it should be interpreted according to the test laid down by the Department of the Treasury — the Secretary of the Treasury before the statute was enacted.

The statute was enactedclearly insofar as I see to take from the Treasury Department the pure discretion which was not reviewable by the Court and to give it to — exclusive jurisdiction to the Court.

But under that statute, which this Court in United States versus One 1939 Ford, stated should be the basis of determination of its construction of that statute.

Well, it should be that those tests in what — and the acts of the Treasury Department before the statute was enacted.

It is admitted here and stated that the Treasury Department, before it became a judicial matter, granted remissions consistently without questioning it whether this answer was received and interpreted it as being a sufficient answer.

The question is, what did — does the statute mean by inquiring, which we did, and getting an answer that he had no record or reputation.

Does the statute demand that you get an answer from that one place, the only place you have to go and make the inquiry that we know he has no record or reputation anywhere or does the statute merely say you need only to go to one officer?

Congress knowing quite well that one officer would not know whether he had a record or reputation anywhere in the world and would not know what his reputation might be in some other place, but you only have — the Congress said, you only have to go to one office and get a negative reply.

And what Congress meant was that a negative reply as far as that office was concerned.

The Government has taken a position that we should have made the same inquiry as you do of critic of — of the credit and that we wouldn’t stop for the credit investigation unless they guaranteed.

If Your Honor please, if — if a credit — any credit agency ever said, “We guarantee that this person has — is good — a good credit risk.”

Then it would have been a most unusual credit agency.

In fact, the Associated Credit Bureau of America use a form in making their credit reports and they — it contains this language, “This report is given simply as an aid in determining the propriety of extending credit of the value or condition of the — of an existing credit and it’s based upon information obtained from sources deemed reliable, the accuracy of which hour is in no matter guaranteed.”

And that in effect was all that the ATU was saying and all that any truthful officer could say.

In our opinion he — he has no record or reputation with us as a liquor law violator.

Insofar as we know he has none.

But we do not guarantee that we cover the well and that we can cover everything that might have happened in any court or in any office of the United States.

We are submitting to Your Honors that this administrative interpretation concurred in by other courts over a period of 20 to 30 years is — if reasonable whatsoever is binding.

And it’s binding on this Court under the authority of Bowles versus Seminole Rock & Sand Company.

That also the same result is reached by a liberal construction of this highly penal statute.

This forfeiture of property or property rights by a liberal construction of that statute would be that the — the statute does not require that a claimant, before he can buy a paper, must go find some officer who will say, “I guarantee and I know of it.

I have — I have a record of every arrest and prosecution in the United States and I guarantee that he has no record or reputation.”

That the statute couldn’t less — should not be in construe as required —

The statute — going out to construe the statute liberally to arrive at that result here, the statute by putting it in the alternative obligation.

Elizabeth Hulen Grayson:

I — I agree with, Your Honor, and thoroughly.

Elizabeth Hulen Grayson:

By putting it in the alternative that the Congress knew that it would have been impossible for any officer to have known and if it had wanted a further or require any further inquiry of — except the one officer would have made so.

Now, we submit that the Federal Government should not, in all justice and fair play, stand before this Court and say, “We’re here as a good faithful lienor.”

He made the inquiry at the right place, the only place he needed to.

He got the only answer he could get.

He got an answer that the Government, through his Justice Department with the ATU, that the courts has for 20 or 30 years interpreted as being a sufficient answer that it is admitted that the Murdock knew those facts and found those facts and then stand before this Court and say that there has been willful negligence on the part of Murdock.

We submit that that would not be fair play or judgement.

Earl Warren:

Mr. Davis.

John F . Davis:

If the Court please.

As Mrs. Grayson has said the facts in this case are supremely simple.

Leon Oatis was driving his 1951 Chevrolet along in Louisiana in April of 1953.

Investigators of the Internal Revenue Service stopped him and found 20 gallons of unpaid whiskey — untaxed, unpaid whiskey in the automobile.

We don’t know what happened to Mr. Oatis and we don’t know what happened to the whiskey, but we are interested in the 1951 Chevrolet.

When Oatis had purchased this car in the preceding November at a price of $2200 which seems a rather extraordinarily large sum to pay for a car which was at least one year old and maybe two, he borrowed on it —

Hugo L. Black:

What kind of car was it?

John F . Davis:

It was a two-door Chevrolet.

Hugo L. Black:

When — when did he buy it?

John F . Davis:

He bought it in 1952, November of 1952.

It was a 1951 car.

So that it was at least one year old and since the model is changed in November it could have been two years old.

It was a used car at the time he purchased it.

He borrowed on this car $1590, the conditional sales contract.

In that contract, it was transferred to Murdock Acceptance Corporation, the petitioner here.

After the car was seized with the whiskey in it, the United States Attorney filed a libel of information in the District Court asking for forfeiture of the car to the United States.

This is provided by the statute.

And Murdock Acceptance Corporation filed an answer asserting its interest on the basis of the conditional sales contract and asking for mitigation or remission of the forfeiture.

Now, this procedure of course arises under a statute, 18 U.S.C. 3617, which is quoted on pages 2 and 3 of our brief.

It provides three conditions which a finance company must fulfill in order to be successful in its petition for mitigation.

It must have shown in the first place that it inquired its interest in good faith.

It must show that it had no reason to believe the car was going to be use for illegal purposes.

And it must show that proper inquiry has been made at the headquarters of the sheriff, the chief of police, of the federal revenue agent at — at three places, one, the place where the purchaser live, two, the place where the purchaser bought the car, and three, any other place where the finance corporation makes investigation as to credit.

John F . Davis:

And it must receive a reply from — in response to these inquiries that the purchaser has no record or reputation as a liquor violator either of state or federal law.

Now, the Murdock Acceptance Corporation before it acquired —

Stanley Reed:

Well, you say the statute required them to make in three places?

John F . Davis:

In — in these three places, yes.

In this case, there’d be only two because there was no credit investigation made except in the place where it was purchased so that that coincides with the place of purchase.

But under the law, they have to make inquiry at the place of residence, the place of purchase and if there is any additional inquiry as to credit, they must make this inquiry coextensive with their credit investigation.

Stanley Reed:

And here they didn’t make it at the place of residence, it was —

John F . Davis:

They technically — I think we can say they did make it at the place of — of residence.

There was only one inquiry made but the office at which they inquired covered both the place of residence and the place of business so that there is no issue before this Court as to whether they made the inquiry at the proper places.

Well, I understood your brief that there was no question that you — that the inquiry — scope of the inquiry was added in compliance to the statute.

John F . Davis:

There’s no question that it was made in the proper place.

Proper place, you don’t question that at all?

John F . Davis:

No.

That is right.

I would — I would call to the attention of the Court and it isn’t mentioned in our brief but it appears in the record and I think it’s a fact that should be called to the attention of the Court because it may give the — maybe the reason that no reply was received that the inquiry was made in the wrong name apparently.It was made in the name of Leon Oatis, O-T-I-S instead of O-A-T-I-S.

And it’s possible that the revenue office had it out — undoubtedly they had them out alphabetically and they may not have checked under O-A-T-I-S, they may have only checked under O-T-I-S.

Well, that might excuse the revenue office but you can’t lay that on the doorstep of the plaintiffs.

John F . Davis:

We — we — certainly it would be a matter to take into consideration in the question of — of discretion because they had the duty to make the inquiry.

They had the conditional sales contract and they knew who the man was and they apparently made an inquiry under the wrong name.

So —

Earl Warren:

The Acceptance Company made the inquiry under the wrong name?

John F . Davis:

That’s — well, no, the — the wrong spelling of the name at least let’s say.

Earl Warren:

(Voice Overlap)

John F . Davis:

The — the — this — the inquiry appears, it’s printed at page 9 of the record and — and it appears that they ought — Leon O-T-I-S.

Earl Warren:

Well, did the — did the Revenue — Internal Revenue Department or the Liquor Department have a record of any kind of O-A-T-I-S?

John F . Davis:

On — of — O-A — I have no — no — I have no way of knowing, Your Honor.

It doesn’t appear in the record.

I merely present this as an example of the — the type of inquiry was made.

They inquired — they made a mistake in the spelling.

If they had — had a record, they might have missed it.

John F . Davis:

I do not know if they had it or not.

But when you agree, your stipulation of the facts, you certainly didn’t rely on that.You say that an inquiry regarding the record and or reputation of Leon Oatis, spelled O-A-T, was made?

John F . Davis:

That is right.

And —

John F . Davis:

That’s right.

And neither of the courts below has made any — any mention of this fact.

The only reason I mentioned it at all is that it’s transparent here on the record.

It is a fact that they made this inquiry in this way, for what it maybe worth.

Earl Warren:

Well, is it worth anything in view of your stipulation from the fact that you didn’t raise it below?

John F . Davis:

I — I — I don’t think — I think it’s worth something.

I think it is an indication to this Court that the Court cannot overlook as to what the nature of the inquiry was, whether the Court wants to give any weight to it or whether they wouldn’t say that it’s been waived because it wasn’t raised below.

I don’t know but it’s — it’s here.

Felix Frankfurter:

Does it — does it bear on what is the crux of this business, namely, whether the qualified answer served as notice with the inquiry made (Voice Overlap) —

John F . Davis:

It doesn’t — it doesn’t bear on that element of it —

Felix Frankfurter:

Isn’t that —

John F . Davis:

— but it made there on whether there was an abuse of discretion once you’ve got a compliance with the minimum requirements.

Felix Frankfurter:

By the Court?

John F . Davis:

By the Court.

Felix Frankfurter:

That — that may bear — it can’t bear on that if it doesn’t bear on the other one because (Voice Overlap) —

John F . Davis:

The Court didn’t mention it.

Felix Frankfurter:

— judicial discretion isn’t exercised out to the end.

John F . Davis:

That’s right.

That’s the real reason you’re injecting that point, isn’t it?

Because wouldn’t you agree that if this — if we hold that this is a sufficient compliance that the discretionary point is out of the case, there’s no evidence to justify the —

John F . Davis:

No, I think the discretionary element is still in the case, Your Honor.

Because of what?

John F . Davis:

Because on the — on the whole facts there’s a — there’s a showing that there was one inquiry made and only one inquiry made and even if that meets the minimum requirements, still the Court in its discretion might well feel that this is not a basis on which a finance company should make — should take the paper.

But the Court went on the premise that (Voice Overlap) —

John F . Davis:

The Court went on the basis —

— the — the absence of a full inquiry resulted from this answer of the revenue people, of the — of the federal people and in response to this inquiry.

John F . Davis:

Well, the District Court went on two bases.

First, they said there was not a negative reply and then the District Court went —

Felix Frankfurter:

There’s not a what?

John F . Davis:

There wasn’t an — an outright negative reply.

And then they went on and say, but even if we construe this as a negative reply, still we think that when this language is put before a finance company, they put enough on — on the one sufficiently so that we — I, the District Court, I’m going to exercise my discretion to say that they didn’t do the reasonable thing.

They should have gone further with this information that they didn’t have a complete picture.

Felix Frankfurter:

Are you (Voice Overlap) —

John F . Davis:

That’s what the District Court says.

Well —

Felix Frankfurter:

Are you saying —

— that’s what the District Court says.

John F . Davis:

Yes.

Felix Frankfurter:

All right.

I was going to say, so far as the District Court is concerned, the only predicate, the only premise for its alternate holding, namely, the exercise of the Court’s discretion is the — is the reply from the revenue people itself, isn’t that right?

John F . Davis:

That’s right.

They make no reference to —

Now —

John F . Davis:

— this factor that I —

— you’re saying here that if you are driven to that second point, you got some other things in the record that the Court didn’t rely on, is that right?

John F . Davis:

That’s right.

They’re here.

All right.

Felix Frankfurter:

Well, let’s see if I understand it.

Are you saying — are you saying that although the revenue people maybe satisfied with the sufficiency of the inquiry, the Court doesn’t — of the Chief Justice as I understand it, any of it.

I mean Cardozo is on the Court of Appeals, he indicated that the courts have a higher standard of — a more fastidious standard or shall I say morals the — the businessmen have, officers in Treasury offenses and therefore that as a judiciary, we can set the bars more — higher.

We can set the bar higher then that would satisfy his revenue agent or pursuant reading of Secretary of the Treasury.

John F . Davis:

Well, that is precisely the position we must take in this case.

The District Court — well, I don’t know what was shown to the District Court but to the Court of Appeals at any rate, it was shown to the District — to the Court of Appeals that this form of reply was intended to be a clearance from the Treasury Department and the Court of Appeals still affirmed a position of the — of the District Court that even so Congress has said that there must be a certain kind of reply made to this kind of inquiry.

And even though the Treasury Department thought they were giving that kind of reply, reasonable people receiving this paper shouldn’t read it as giving them that clearance.

It didn’t — it didn’t — the — the District Court and the Court of Appeals felt that it puts them on notice so that they should make some other inquiry.

John F . Davis:

And they said Congress is the one that’s legislating this matter, not — not the Treasury Department and we will — we will make our own judgment as to whether this meets with the statutory requirement.

Felix Frankfurter:

What you’re saying is that the Court is having a standard for the Treasury instead of the Treasury for the Court?

John F . Davis:

That is precisely it.

And I may say in this that I must — by no means agree with Mrs. Grayson and it is incumbent on us to establish the term willful negligence — willful negligence.

All that — all that we feel in this case is that that there must be a showing that whether or not there was — there was an absolute negative whether this is an absolute negative.

To be sure —

How many years has this form of reply been utilized by the Bureau of Internal Revenue?

John F . Davis:

Well, I —

(Voice Overlap) —

John F . Davis:

— I don’t — I do not know.

This statute — this statute was passed in — in 1935 so that it’s in the neighborhood of 20 years that they can (Voice Overlap) —

And all during that 20 years, the department has been making remissions on the basis of this kind of answer, has it not?

John F . Davis:

Has been making — pardon?

Remissions of forfeiture.

John F . Davis:

Well, the — the remissions made by the Treasury Department, by the Secretary of Treasury are made under a different statute so that they are not — there isn’t this requirement in the — in the — as far as the administrative remissions are concerned.

What has been happening is that during that 20 years where there have been forfeiture procedures in the Court so that it’s — got before the Court, remission has not been opposed by the United States Attorney.

So that people who were entitled to — regard that as being an adequate compliance at least so far as the Treasury was concerned, an adequate in — in compliance with the — the statute?

John F . Davis:

I think that’s right.

I think that it has generally been thought and the United States Attorneys who had not raised this point in forfeiture proceedings have felt that it was.

And as far as I can make out an assistant United States Attorney down in –in New Orleans suddenly was stricken with this idea.

This doesn’t appear to meet the terms of the statute, why don’t I try it out and he went and tried it out and — and the Court agreed with him.

And that is — I agree with Mrs. Grayson that’s a handicap we have to get over.

I mean that’s — that’s an argument, a very valid argument against the interpretation which is followed.

But we, nevertheless, have to meet this question, “Did or did not the Court properly interpret the — interpret the statute?”

And I don’t —

But you don’t have it up again because the Treasury has eliminated this ambiguity by its change and form of answer.

So, you don’t have it up (Voice Overlap) —

John F . Davis:

That will not come up again.

And that’s right —

(Voice Overlap) —

John F . Davis:

— this is — this is the only case [Laughs]

So, you just want to visit it on this company and so on.

John F . Davis:

No.

Well — well, we didn’t want to visit it on this company.

Well —

Well —

John F . Davis:

— I — we — we did as a — as a Government visit it on this company.

Although, may I say this, when the form was changed in this case, when the form of reply was changed, an opportunity was given to this company to compromise this particular case so there wouldn’t be prejudice against this particular company.

And they felt that this particular issue was important enough to litigate so that they refused to make any — any offering — compromise to settle this particular case.

The case itself is — is therefore not important, it’s the issue and the issue was not important because of the fact that we have changed the form.

Earl Warren:

Mr. Davis, suppose the same inquiry was made of that same office today under the same facts of this case.

What — what answer would — would the acceptance company get?

John F . Davis:

They would get an answer which is just the first sentence of this answer that — which is here.

Earl Warren:

And what is that?

John F . Davis:

They’d say no record or reputation as a liquor law violator as of blank case.

Earl Warren:

Very well.

John F . Davis:

Signed J.B. investigator in charge, alcohol tax (Inaudible)

Earl Warren:

Now, suppose they acted on that —

John F . Davis:

Yes, sir.

Earl Warren:

— what is the position of the department administratively at the present time, would that be good?

John F . Davis:

We would not oppose remission in that situation.

Earl Warren:

Well, then aren’t you — aren’t you making a fetish of the form rather than in the substance of it?

John F . Davis:

Well, I —

Earl Warren:

What is the difference if they — if they would give another — use another form now to — to give the same information to the Acceptance Corporation and you say that one isn’t good and the other one is.

John F . Davis:

There was a warning contained in the previous form.

There was the — the investigator said, “Warn this people.”

He said, “This is the answer we give you, but you should know that we do not have complete information.”

Now —

Earl Warren:

Well —

John F . Davis:

— maybe they knew it, maybe they didn’t.

John F . Davis:

The investigator felt that it was necessary to give them that warning.

And the Court said, “With that warning you no longer have an unqualified negative.”

Earl Warren:

And now, you — you’re just going to make them bind to anything else and — and make the form good?

John F . Davis:

Well, maybe that needs some explanation.

Earl Warren:

I — it does for me.

John F . Davis:

The — the purpose of this statute is of course to encourage finance companies to make a reasonable investigation before they provide the money for who — like its cars.

Now, in order to encourage a — the — the best possible type of — of practical investigation they said you must go to officials and they named the state officials and they named the federal officials.

Now, actually as a matter of fact, the best records the most complete records of violation are kept by the federal officials and if this statute is to be as effective as possible in preventing the financing of — like its cars, it’s very advisable that the finance companies make the inquiry at the place where they will get the most information which is of the Alcohol Tax Unit which keeps an alphabetical list of the entire business.

So, the Alcohol Tax Unit was — would be disturbed by the fact that they would no longer come to them because it wouldn’t give them protection.

They would go to a sheriff, they’d go to a police chief, they’d go to somebody else.

And that is the reason for changing the form, it’s — it’s now a form which is neutral as to what it covers, it just says we have no record of any reputation as a liquor law violator.

That presumably will — will satisfy the statute and at the same time it will give the finance companies the protection when they come to the place where the most information —

Felix Frankfurter:

What is the —

John F . Davis:

— is contained.

Felix Frankfurter:

I — I must — I’m troubled by all of these.

If the Alcohol Unit now can give no more complete and absent the negative, if they haven’t — any records and for all they know there might be records elsewhere.

Why do they not — why do they not continue the agnostic qualification?

John F . Davis:

Well, in the first place, they do have the most complete records that are available including some records of state violations.

So, they — they have the most — they have the most that there is available.

Felix Frankfurter:

And yet a new form gives them a complete clearance.

John F . Davis:

It — it gives them a clearance under the statute, yes.

I would —

Felix Frankfurter:

Well —

John F . Davis:

— I would hold, but I don’t know.

Maybe the — maybe the — the Court (Voice Overlap) —

Felix Frankfurter:

What I’m saying is if they have no more knowledge about state records than they had at the time of this form.

Why do they not in conformity and with complete truth just say that?

Why was the — why was the form changed?

John F . Davis:

The form —

Felix Frankfurter:

If you happen to know.

John F . Davis:

— the form was changed because no one would come to them any longer for information.

They would be driven to the lesser sources of supply if they gave a form —

Felix Frankfurter:

But why would that —

John F . Davis:

— which didn’t comply with the statute.

Felix Frankfurter:

But why would that satisfy the statute if with knowledge and the facts that you go to a less reliable source, if you do not go to the most reliable source, I could be entering just for the reason (Voice Overlap) —

John F . Davis:

But Congress —

Felix Frankfurter:

— for not satisfying the —

John F . Davis:

— Congress — Congress in passing this felt that there was a limit to what they could impose on finance companies.

I — I don’t know why but Congress felt that there was this limit.

And so, they put this in the alternative.

They said, “You shall go to the local sheriff or the chief of police or the —

Felix Frankfurter:

I understand that but if they now wouldn’t go to the Alcohol Unit and go to the local person, then in view — in view of what you said and what you might bring to the attention of the District Court, the District Court would be justified in saying, when the sheriff says, “We’ve got no record on this fellow,” implied they said, “For all I know the Alcohol Unit has.”

John F . Davis:

Well, then they would — I think in rewriting the statute —

Felix Frankfurter:

If — if the — if the sheriff said, “I have no record, but I don’t I know with the Alcohol Unit,” would that satisfy (Voice Overlap) —

John F . Davis:

No, that obviously would be the same as the case here.

Felix Frankfurter:

Well, but I — isn’t that from what you’re saying implied in fact?

John F . Davis:

It — if there — there is — it — it maybe implied in fact as things turnout.

Actually, the Federal Alcohol Unit does have more complete records than just convictions.

And there may be other sources that have more complete records in some States too.

Felix Frankfurter:

Is that on — in common knowledge?

John F . Davis:

But —

Felix Frankfurter:

Certainly, common knowledge among the financing corporation and I should think it eventually would trigger through the District Courts, those innocents that they went to the least voluminous, the least dependable source of information —

John F . Davis:

And —

Felix Frankfurter:

— therefore, if I were a district judge, I wouldn’t allow initial (Voice Overlap) —

John F . Davis:

Well, on the basis of discretion which is the second basis which this judge acted upon, I think that a judge would have a right to do that.

But when the statute itself places these officers in the alternative, I don’t think that we can argue here that it is necessary to go to all of those officers.

I think if they give a negative reply or negative reply from anyone of these officers is sufficient.

Felix Frankfurter:

My — my question merely says that it’s obscure, fake language that in the situation, the context of knowledge to indicate a sheriff doesn’t give a complete negative reply and say, “I’ve got the information but implied the Alcohol Unit have to see that.”

John F . Davis:

Well, that is possible — that is a possible interpretation but it would — it would mean that the statute was pretty meaningless in using what the alternatives are.

It would appear that Congress intended them to be able to get a negative reply from anyone of these three officers.

Felix Frankfurter:

Now, the diversity as arguing of course is that — and that was here.

John F . Davis:

Well, and that is the question before — that’s the first question before this Court whether this is a negative reply or when you say no, but and then go on to explain but take my answer with caution.

Stanley Reed:

Well, why — why do say you have to have — you only have to have a reply one.

You think the statute says that?

John F . Davis:

It says in the alternative.

The statute says and there are quite a few —

Stanley Reed:

I’m — I’m looking on page 3.

John F . Davis:

Yes, sir.

“Was informed in answer to his inquiry at the headquarters of the sheriff, chief of police, principal Federal Internal Revenue officer engaged in the enforcement of the liquor laws or other principal, local, or Federal law-enforcement officer.”

Stanley Reed:

Well now, the sheriff or other principal, local officer.

John F . Davis:

Yes.

Stanley Reed:

The principal Federal Internal Revenue officer or Federal law-enforcement officer of the locality.

John F . Davis:

Yes.

And we believe those are as running through — throughout.

There’s no end anywhere.

Stanley Reed:

No, no, but since they — they must make their inquiry at the headquarters of the sheriff, chief of police, the principle Federal Internal Revenue officer?

John F . Davis:

I think there would be an end in that, sir, if it meant a law phrase.

That has been the — the uniformed interpretation by the Courts of Appeal.

Earl Warren:

Well, Mr. Davis, if — if this people would now get a complete negative under the same facts under which they — they got to qualify negative as you say and you — you recognized this latter situation as complying with the statute.

Haven’t you got a distinction without a difference so far as those two forms are concerned?

John F . Davis:

Well, you — you have this.

I — I think there’s no difference in this that the Internal Revenue people intended the first form and they intended this form, they intended both of them to meet the statute.

The Court has held that the form did not meet the — didn’t meet the requirements in the statute.

I — we wouldn’t — we wouldn’t raise the question with respect to the new form if it were raised by the Court.

I don’t know what they would decide.

I would think, however, that they would say Congress has made this — made this decision that you can make the ultimate inquiries of these various people and that if you get an absolute negative, you’re entitled to rely on it that when you add — when they add something else there meaning to warn you, when they don’t add anything else, they’re not meaning to warn you.

Hugo L. Black:

Well, if this law is supplant to no law which provided for complete and absolute forfeiture of a car that had a liquor?

John F . Davis:

No, not quite.

Before this law was passed in 1935, there was — the power was — an administrative power to — to remit.

The Treasury Department remitted the — the forfeiture.

John F . Davis:

Under the prohibition law, the courts remitted forfeitures of — they — they gave the finance company their lien.

But under the other laws, under this — the liquor law, the Secretary of Treasury had discretion and it was unreviewable by the courts.

Felix Frankfurter:

That — our time was brought up under that statute.

Would you please tell my why it was changed from administrative to — to judicial?

I’m going to agree (Voice Overlap) —

John F . Davis:

I — I don’t know why it was changed, Your Honor.

There was a feeling, I believe, that — that they might — they ought to have a right.

They — the — the administrative law wasn’t reviewable and maybe they found they were being too strict and they wanted to have the courts review the situation.

Anyway, it was in 1935, let’s say, at the time of the repeal of the — of the liquor law that they said the courts rather than just the Treasury Department should make this determination.

Hugo L. Black:

Several years after, wasn’t it?

John F . Davis:

It was 1935 and I think that was in the liquor repeal law.

Hugo L. Black:

I thought that maybe — am I wrong about the history of it that there was a considerable opposition to the idea of forfeiting people to cars who may have sold them without any knowledge or the guilt for the purchaser and that —

John F . Davis:

Well —

Hugo L. Black:

— it was passed to supplant the old remedy?

John F . Davis:

Well, way back, the — the first case upholding that — well, not the first case but — but the very important case was the Goldsmith and the Grant case which — let’s see — I’m sorry, I don’t remember the date of that case but it was a case which was decided 4-to-3 by this Court in which — no, it wasn’t decided 4-to-3, it was decided 8-to-1 with Justice McReynolds feeling that you couldn’t forfeit the right of a — of a finance company and the rest of the Court saying it was — it was constitutional.

It was — there was power to — to forfeit the right of the — of the finance company even they were entirely innocent.

Justice McReynolds dissented in that case and it was —

Hugo L. Black:

That has been done for a long time, hasn’t it, —

John F . Davis:

Oh, yes.

Hugo L. Black:

— with reference to the liquor carried to any —

John F . Davis:

Yes, sir.

Felix Frankfurter:

Although (Voice Overlap) —

John F . Davis:

Oh, yes, that was the —

Felix Frankfurter:

(Voice Overlap) — to them at the beginning of (Voice Overlap) —

John F . Davis:

Oh, yes.

As far as forfeiture goes there’s no question that forfeiture goes way back in the customs laws, way back to —

Felix Frankfurter:

(Inaudible)

John F . Davis:

— one stamp —

Hugo L. Black:

And this —

John F . Davis:

— one stamp.

Hugo L. Black:

And this statute changed that to provide a system, did it not, whereby they could —

John F . Davis:

Well, it — it changed —

Hugo L. Black:

— so that they can exempt themselves that they had shown that they had done certain things whatever they are.

John F . Davis:

It changed it with respect to the Internal Revenue law.

There has been changes made before with respect to the customs law and there had been changes with respect to the prohibition law itself and there had been other — other cutting away of this absolute forfeiture but this was transferring really.

It wasn’t a new thing.

It was really transferring from administrative rule to the Court rule the right to remand.

Felix Frankfurter:

Not only that but the old original statute just allows the Secretary of Treasury to remit and without anything by a lien, you could just submit an honest brief.

John F . Davis:

Well, if the —

Felix Frankfurter:

(Inaudible)

John F . Davis:

Oh, yes.

Well, even now he can compromise, I mean the remission statute is — is definitely cut across the right to compromise.

Sherman Minton:

Under you present practice, Mr. Davis, the Government gets an answer.

It really isn’t an absolute negative but they accepted it as being absolute enough, isn’t that so?

They know it’s not absolute.

John F . Davis:

Well, what — that’s the intent, as I say this is the —

Sherman Minton:

And if you accept it, then don’t you say that the statute doesn’t mean absolute negative, it means this much negative or nearly negative?

John F . Davis:

Well, the present one is an absolute negative in form.

Sherman Minton:

But you know it’s not absolute because you know (Voice Overlap) —

John F . Davis:

It — it contains no warning to this man that he ought to investigate further.

It just uses in effect the language of the statute and it says no — no record, no reputation for liquor violation.

Earl Warren:

Well, if you believe that this is a matter of discretion with — with a judge even though the insurance company does inquire of the liquor department, why do you change your form so as to just give a denial?

Why don’t you — why don’t you change your form so as to say this is a denial so far as we’re concerned but in order to satisfy the statute, you must search other places and satisfy yourself.

You’re trying to avoid that, aren’t you?

John F . Davis:

Well, the result of that would be, if we made that statement which would be — would be — there’d be nothing wrong with the statement except that no one would come to the best source of information to get the information before they finance the — the purchase of automobiles because it wouldn’t do them any good.

Earl Warren:

So, you’re willing to have a defective affidavit in order to get more business for the alcohol department?

John F . Davis:

If — no — no.

If the —

Earl Warren:

Well, how do you figure it out?

I don’t understand it.

John F . Davis:

It isn’t a defective affidavit.

It’s — it’s a statement that we have no record or knowledge of his reputation as a liquor violator —

Felix Frankfurter:

(Inaudible)

John F . Davis:

— which is apparently what the — what the Congress contemplated would be replied in — in this — in this situation.

Felix Frankfurter:

Well, is this taken on your initiative or is this an independent action originating at the Treasury, would change?

You didn’t draft a new provision.

John F . Davis:

No, we didn’t draft a new provision.

It’s their —

Felix Frankfurter:

(Voice Overlap) —

John F . Davis:

— it’s their intent.

And actually it isn’t in the record in this case and what was referred to in our briefs.

It’s something which happened after the — the decision was made.

In — in their attempt to — to keep the finance companies from underwriting the bootleg business, they decided that they would give the best information they could to these people which would give them the protection and that’s the form they deal it — do it in.

It’s not — it’s not an attempt to conceal anything.

It doesn’t — it doesn’t state any — any facts which are not so.

It merely doesn’t add — add a warning which the commissioner had previously thought was a proper warning for which the courts have said prevented his warnings, his statement from being adequate to — to protect the insurance company — the finance company.

Earl Warren:

In the nature of things, it’s implicit in the — in the form, your second one, isn’t it that they don’t keep all the state records and therefore don’t know everything that all the — all the state officers know?

Isn’t that implicit in it when they say so far as we’re concerned, there is no reputation or record?

John F . Davis:

But they do keep more — they do keep some state records.

They attempt to keep as full a record as they can of all of the violations.

So that it’s — let’s — they’re — they’re trying to give as much information as they can on this thing.

And the only reason for dropping this is that they have no intention, they — they would just drive people away from getting the best information they could gather.

I may say it too that when we say that there’s discretion in this — in the District Court to deny remission, we’re not claiming any unreviewable discretion, we’re not claiming absolute right as there was in the administration — in the Secretary of Treasury and make a decision which isn’t reviewable.

We merely say that when there is this type of single inquiry made of one office and nothing more then they may if they wish deny remission.

Elizabeth Hulen Grayson:

(Inaudible)

Earl Warren:

I think you have one minute, Ms. — Ms. Grayson [Laughs]

Elizabeth Hulen Grayson:

If the Court please.

There is just question that I felt maybe had not been completely answered.

That was the statement of first the warning.

There was no warning, if Your Honor please, to this answer.

Elizabeth Hulen Grayson:

If it had been given as to one purchaser, yes, it might have been.

But when each and every purchaser was given — you were given the same answer then it’s not possible for each and every person to have a record of reputation much less probable.

So, there was no warning as to this particular individual.

It’s — it was warning as to everybody regardless where any inquiry is made.

The question was raised as to whether now the courts are turned to interpret the statute now rather than the Treasury Department.

If Your Honors please, yes, the courts are now — maybe perhaps for the first time having this presented, although the District Courts all over the country have had it presented and it decided that they were entitled to remission.

But the rule in interpretation of the kind of answer that is required by the statute that should be effective here is of where, over a period of 30 years, those officers, given the duty of enforcing the statute, have interpreted that statute in one way for 20 to 30 years, concurred in by the judiciary, concurred in by the Department of Justice that then that method of interpretation of the statute is controlling on this Court if it is at all reasonable, if it is subject whatsoever to that construction.

So, we are asking this Court to construe it liberally as a highly forfeited penalize — penal statute and to construe it in accordance with this long established departmental or administrative construction which is they admit it’s reasonable.

That so far as they go in their briefs as to say it’s possible for it have another construction.

And as this Court said in U.S. versus One 1939 Ford, the forfeiture acts are exceedingly drastic.

They were intended for the protection of the revenues not to punish without fault.

It would require unclouded language to compel the conclusion that Congress abandoned the equitable policy observed for a very long time of relieving those who act in good faith and without negligence.

Earl Warren:

Thank you.