Opinion
No. 7472.
November 26, 1940.
Appeal from the District Court of the United States for the Western District of Pennsylvania; Frederic P. Schoonmaker, Judge.
Proceeding by the United States of America for the forfeiture of a Ford Truck, Motor and Serial No. BB18-3749639, registered in the name of Pittsburgh Parking Garages, Inc., 555 Sixth Avenue, Pittsburgh, Pa., wherein Pittsburgh Parking Garages, Inc., filed petition for remission of forfeiture. From an adverse decree, the United States of America appeals.
Reversed and remanded, with directions.
George Mashank, of Pittsburgh, Pa., for appellant.
David M. Kaufman, of Pittsburgh, Pa., for appellee.
Before BIGGS, MARIS, and CLARK, Circuit Judges.
The petitioner, Pittsburgh Parking Garages, Inc., filed its petition for remission of forfeiture of a Ford truck. The United States filed an answer alleging that the petitioner had not complied with Section 204(b), Chapter 740, Act of August 27, 1935, 49 Stat. 878, 27 U.S.C.A. § 40a(b), which provides, inter alia, that "In any * * * proceeding [for forfeiture] the court shall not allow the claim of any claimant for remission * * * (3) if it appears that the interest asserted by the claimant arises out of or is in any way subject to any contract or agreement under which any person having a record or reputation for violating laws of the United States or of any State relating to liquor has a right with respect to such vehicle * * * [unless] before such claimant acquired his interest, or such other person acquired his right under such contract or agreement * * *, the claimant, * * * 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 of the locality * * * in which such other person then resided, and of each locality in which the claimant has made any other inquiry as to the character or financial standing of such other person, that such other person had no such record or reputation."
The petitioner had leased the truck on May 19, 1938, to Paul Taormina by a written lease. The manager of the petitioner has testified that he then had no knowledge or reason to know that Taormina intended to use the truck for violating the laws of the United States. This court held in Pittsburgh Parking Garages v. United States, 3 Cir., 108 F.2d 35, 36, that in proceedings for remission of forfeiture under Section 204(b) the burden of proving Taormina's "record or reputation" for violating the laws of the United States rested upon the United States, reversing the decision of the court below. The cause was remanded and came on for further hearing and the government proved by the testimony of agents of the Alcohol Tax Unit that Taormina had a reputation as a liquor law violator. The agents testifying did not live in the same community with Taormina. Taormina has no "record" as a liquor law violator.
The District Court held that the "reputation" which supplies the test of the statute is general reputation in the neighborhood in which the law violator lives, citing United States v. C.I.T. Corporation, 93 F.2d 469, 471. In that case the Circuit Court of Appeals for the Second Circuit held that the word "reputation" as used in the statute meant " * * * reputation in the usual sense, a prevalent or common belief, a general name, the opinion of a number of persons, a more or less extended and public attribution of the crime, likely to be spread about so as to reach the seller." A decree directing the remission of forfeiture was entered.
In the case of United States v. One Hudson Coupe, 110 F.2d 300, 303, a different interpretation was placed upon the statute by the Circuit Court of Appeals for the Fourth Circuit, that court stating, "The statute, subsection (b)(3), requires that inquiry as to a person's liquor reputation be made of a specified group, who would be most likely to know it. The inquirer can then insist that he be informed of the general reputation and not of chance reports to the informant. We do not think it was the intendment of this subsection to impose the duty of inquiry only when the person's reputation for illicit dealing in unlawful liquor transactions had achieved such a notoriety that it was known or should have been known by the claimant and others in ordinary business transactions. If such a situation had existed, claimant would have been barred by subsection (b)(2). Obviously, subsection (b)(3) was directed to reach a different situation." The case just cited can be distinguished from that at bar for the purchaser of the automobile in the cited case had a "record" as a violator of state liquor laws, but none the less we find the reasoning of the court to be most persuasive.
The actual principle was well expressed by the District Court for the Eastern District of Pennsylvania in the case of United States v. One Ford Coupe, 24 F. Supp. 74, 75, 76. The court stated, "The words `record' and `reputation' are given equal importance in the Act. The natural place to go for information about the existence of a record would be the enforcement officers. In fact, it would seem that the purpose was to relieve the claimant of the burdensome necessity of searching the court records of all the counties or federal districts in which the prospective purchaser had lived or been engaged in business. The same idea was undoubtedly in mind with regard to reputation. It is a lesser burden merely to inquire of these [law enforcement] officers than to trace a man's reputation through his various past activities, surroundings and domiciles. * * * The net result is that a finance company, in order to be safe, must inquire of the officers specified both as to record and reputation."
We are in accord with these views. We are of the opinion that the "reputation" of the statute is reputation among law enforcement officers, the duty having rested upon the claimant to make inquiry among such officers. When proof was made by the government of Taormina's bad reputation among law enforcement officers of the locality in which Taormina lived, the burden shifted to the petitioner to show that it had made inquiry of such officers as to Taormina's reputation and had been misled.
Assuming the statute to be ambiguous, our view is amply supported by Senate Report No. 1330, 74th Congress, First Session, which states in part: "Certain standards are given to the court to guide it in this determination. Thus, under subsection (b) the claimant must prove that he * * * had no knowledge or reason to believe that the vehicle * * * was being or would be used in violating Federal or State liquor laws, and that, if his interest arises out of * * * any agreement under which any person having a record or reputation for violating Federal or State liquor laws has a right with respect to the vehicle * * *, the claimant, * * * before the other person acquired his right, * * * inquired at the headquarters of the principal local or Federal law enforcement officer in the locality where such other person acquired his right, * * * whether the other person had such a record or reputation, and was informed he had not. This last requirement is predicated upon the recognition of the `bootleg hazard' as an element to be considered in investigating a person as a credit risk. As a matter of sound business practice, automobile dealers, finance companies, and prospective lien holders on automobiles examine records, and make inquiry of references and credit rating agencies as to the owner's or prospective purchaser's reputation for paying his debts and his ability to do so. This subsection merely requires that in making such inquiry, the `bootleg hazard' also be examined as one aspect of the credit risk."
The decree of the court below is reversed and the cause is remanded, with directions to proceed in accordance with this opinion.