Opinion
March 1, 1930.
Lewis Landes, of New York City, for plaintiff.
Charles H. Tuttle, U.S. Atty., of New York City (Ulysses S. Grant, Asst. U.S. Atty., of New York City, of counsel), for defendants.
In Equity. Suit by Wally A. Holman, doing business under the firm name and style of Ammonal Products Company, against Maurice Campbell, Federal Prohibition Administrator for the Second District of New York, and another.
Decree for defendants dismissing the bill.
Plaintiff, who was engaged in the manufacture of toilet preparations at 248 Water street, in the borough of Manhattan, on August 17, 1925, applied for a permit to use specially denatured alcohol in the manufacture of his products. On August 20, 1925, a permit (Form 1481) issued, effective until surrendered by the holder or cancelled by the Commissioner. On November 14, 1925, the Commissioner, with the approval of the Secretary of the Treasury, issued a regulation declaring that all basic permits under titles 2 and 3 of the National Prohibition Act (27 USCA § 4 et seq.) should expire on December 31, 1925. T.D. 3773. On November 19, 1925, the Commissioner, with the approval of the Secretary, issued a supplemental regulation declaring that all outstanding permits for the sale or use of denatured alcohol should, unless sooner revoked or the application therefor acted upon before that time, continue in effect until the 31st day of March, 1926, and requiring that all applications for renewal of such permits should be submitted by December 31, 1925. T.D. 3774. Plaintiff made application for a renewal of his permit on December 28, 1925, and on March 25, 1926, the Prohibition Administrator issued to plaintiff a permit effective until December 31, 1926. Prior to this date, and on September 1, 1926, the Commissioner, with the approval of the acting Secretary of the Treasury, issued a regulation declaring that permits to use specially denatured alcohol "will continue to operate until surrendered by the permittee or there is failure of the required bond or revocation on citation and hearing." T.D. 3925. Plaintiff continued to conduct his business under his permit of March 25, 1926, and made applications for the amendment thereof which were from time to time granted by the Administrator, the latest amendment being dated July 19, 1928. On August 31, 1928, plaintiff made application for a renewal permit to use specially denatured alcohol "without prejudice to original permit," and on December 31, 1928, a permit issued effective until December 31, 1929. On August 31, 1929, plaintiff again applied for a renewal permit "without prejudice to the rights granted under the permit issued on or about January 12, 1922, without surrendering any rights thereunder." There is no permit bearing date January 12, 1922, and it may be assumed that reference was intended to be made to a permit dated February 20, 1922, which is in the administrative files and is marked "Surrendered." A hearing was granted by the Administrator upon the last renewal application and full opportunity was given to the plaintiff to be heard upon certain charges of misconduct, and also with respect to the merits of the application generally. Plaintiff was represented upon this hearing by counsel, and witnesses were called and examined at length, but not under oath. Upon conclusion of the hearing, the Administrator disapproved the application and has refused to issue a renewal of the permit held by the plaintiff, which expired December 31, 1929.
Plaintiff complains of the termination of his old permit and of the refusal to issue a new one.
The attempted revival of the permit of February 20, 1922, must, of course, fail. The only evidence of its existence is its production from the files of the Administrator with its surrender indorsed upon the face thereof. Furthermore, plaintiff acted under the permit of March 25, 1926, until the permit of December 31, 1928, issued. His acceptance of the former permit and his applications to amend its terms leave no room for the contention that either of the prior permits was still outstanding. Doran v. Bay State Dist. Corp. (C.C.A. 1st Cir.) 36 F.2d 657, December 23, 1929. The permit of March 25, 1926, by its own terms expired December 31, 1926, and the legal effect of the regulation of September 1, 1926, was to extend it to December 31, 1927. Lion Laboratories v. Campbell, 34 F.2d 642 (C.C.A.2d). From this it follows, although neither the Administrator nor the plaintiff so understood the law, that plaintiff had no valid permit to use denatured alcohol during the year 1928. Consequently, the permit issued December 31, 1928, having expired December 31, 1929, the issue of a renewal permit pursuant to the application of August 31, 1929, was requisite to authorize the use of specially denatured alcohol in the manufacture of permittee's products during the year 1930. Revocation proceedings under title 2, section 9 (27 USCA § 21) were therefore unnecessary.
Here, as in American Denaturing Corp. v. Campbell (C.C.A.) 34 F.2d 648, the bill speaks with a double voice, first, to enjoin the defendants from interfering with its permit of 1926, and, second, under section 6 of title 2 of the National Prohibition Act (27 USCA § 16), to review the Administrator's refusal of the application for a permit for 1930. What has already been said disposes of the first point. As to the second, the administrative record discloses that the associations and business connections of the plaintiff were such that the Administrator was plainly under a duty to refuse the application. Ma-King Products Co. v. Blair, 271 U.S. 479, 46 S. Ct. 544, 70 L. Ed. 1046.