22 F.2d 891

FOX v. MILLS, Federal Prohibition Administrator, et al.

Circuit Court of Appeals, Second Circuit.

December 12, 1927.

No. 83.

*892Lewis Landes, of New York City, for appellant.

Charles H. Tuttle, U. S. Atty., of New York City (U. S. Grant, of New York City, of counsel), for appellees.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge

(after stating the facts as above). We reserve the question whether under section 4 a manufacturer of extracts may use whisky. The term “liquor,” used generally in the body of that section, would, if not controlled, include whisky. Section 1 (27 USCA §§ 4, 5). But the defendant argues that the use of the word “alcohol,” in the sentence, “No more alcohol shall be used in the manufacture of any extract,”, limits its meaning, whenever extracts are in question. On that question we do not pass, assuming for argument that the plaintiff is right.

Under section 6 the Commissioner is authorized to prescribe “the form of all permits and applications and the facts to be set forth therein,” and, if he has the power to prescribe what facts shall be stated, he has the power ^to decide whether they are true. Ma-King Products Co. v. Blair, 271 U. S. 479, 46 S. Ct. 544, 70 L. Ed. 1046. Moreover, the review of the District Court under section 6 is limited to the inquiry whether there is any evidence justifying his conclusions. In the case at bar it cannot be disputed that, so far as concerned the issue whether the use of whisky was in fact advantageous in the manufacture of the extract, his finding is final. There was ample evidence for so believing, and the District Court was not to determine the issue as in an ordinary suit in equity.

The question is more debatable whether, assuming as much, there was any basis for his added conclusion that the plaintiff’s application was not made in good faith. If it was not, he was certainly justified in refusing it; and this is equally true, whether he concluded that the plaintiff did not intend to use the whisky in question in his manufacture, or whether, though in this instance he did so intend, he was bent upon establishing a precedent under which other manufacturers, or he himself later, might secure whisky which should be diverted to unlawful uses.

The grounds for the Commissioner’s conclusion are that extracts had hitherto been always manufactured with alcohol, that whisky was (allowing for its alcoholic proof) ten *893times as expensive as alcohol, and that all the manufacturing pharmacists were against the plaintiff. An exception should be made of the plaintiff’s witness, Reeves, who had had an early experience as a practicing pharmacist. Even he, however, had never used whisky, and formed his opinion entirely on theoretical grounds. It was, of course, possible, even assuming that whisky in fact added nothing, that the plaintiff might have been honestly mistaken, and truly have believed that Ms proposed formula had advantages over the established practice. Obviously a conclusion that he did not must in nearly all cases rest upon inference, just as so often happens in eases of crimes. All we can ask is that the evidence be such that reasonable people might find against him.

The circumstances were beyond question suspicious, and the difference between suspicion and belief is one of degree. People will differ, not only upon where to draw that line, but still more upon where reasonable men may draw it. We cannot ignore the situation created by the Prohibition Law itself— the difficulty of securing good, pure whisky, its value when got, and the obstacles to any successful detection of its diversion. Given so strong an incentive, the Commissioner was justified in scrutinizing the plaintiff’s grounds narrowly. His belief in the advantages of Ms formula was baseless in fact, and was not shared by any one else then in the business. He had himself had an experience of 25 years, during all'of which whisky was available, had he wanted it. He hit upon Ms discovery at a time when not only was whisky extremely costly, if used, but immediately profitable, if abused. It is, of course, possible that in spite of all this the plaintiff had no other motive than he admitted; but to say that no reasonable person could have justly found the contrary seems to a majority of us unwarranted.

Decree affirmed.

MANTON, Circuit Judge

(dissenting). Appellant seeks relief through the aid of section 4, title 2, of the National Prohibition Act (27 USCA § 13). It provides that, when manufactured, flavoring extracts and syrups shall not be subject to the provisions of the Prohibition Act; also that a person “who manufactures any of the articles mentioned in this section may purchase and possess liquor for that purpose, but he shall secure permits to manufacture such articles and to purchase such liquor, give the bonds, keep the records, and make the reports specified in this Act and as directed by the Commissioner.”

Appellant had a lawful right to apply for a permit, if he wished to use liquor in the manufacture of his product. Section 1 of the act defines liquor as including whisky as well as alcohol. He could only be refused a permit if acting in bad faith- — such as a planned desire to divert the whisky for other and unlawful purposes. Because experts of the government differ with the appellant as to the value of whisky for the manufacture of his product, no issue of bad faith was raised. It should not create even a suspicion in a reasonable mind; at least, in one who has faith in his strength of integrity against wrongdoing. Bad faith and fraud are too serious to be thus lightly inferred. The fact that whisky costs more does not justify it, for its use may be more beneficial in the ultimate product of flavoring extracts or syrups, as the appellant said. The prevailing opinion bases the charge of bad faith upon an inference, and builds an inference upon an inference, in reaching the conclusion that there was evidence to support the action of the Commissioner. The courts have the right to interfere where there is no evidence whatever to support the finding of bad faith. MaKing Products Co. v. Blair, etc., 271 U. S. 479, 46 S. Ct. 544, 70 L. Ed. 1046.

Because I think the appellant should have the relief sought, I dissent.

Fox v. Mills
22 F.2d 891

Case Details

Name
Fox v. Mills
Decision Date
Dec 12, 1927
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22 F.2d 891

Jurisdiction
United States

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