Syllabus.

UNITED STATES v. ONE 1936 MODEL FORD V-8

DE LUXE COACH, COMMERCIAL CREDIT COMPANY, CLAIMANT.*

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH CIRCUIT.

No. 10. Reargued May 1, 1939-Decided May 22, 1939.

1. Upon the facts, held that claimants for remission of forfeitures of automobiles seized for unlawful transportation of tax unpaid liquors, had complied with the conditions imposed by § 204 (b) of the Liquor Law Repeal and Enforcement Act of August 27, 1935, and that the courts below properly remitted the forfeitures. Pp. 224 et seq.

2. A claimant (automobile finance company) who in good faith purchased from a dealer a conditional sale contract covering the sale of an automobile; who believed that the vendee named therein was the real purchaser and owner of the automobile; and who had no knowledge, information or suspicion of facts to the contrary until the car was later seized for violation of the revenue laws, had an "interest in such vehicle . . . acquired in good faith," within § 204 (b) (1) of the Liquor Law Repeal and Enforcement Act. P. 224.

3. Where such claimant, before acquiring such sale contract, investigated the person named therein as purchaser and found that he had no record or reputation for violation of liquor laws; and believed that such person was the real purchaser; and had no knowledge, information, or suspicion that he was merely a "straw" purchaserthis was a sufficient showing under § 204 (b) (2) that the claimant had no reason to believe that the car would be used in violation of liquor laws. The contention that, since claimant knew that automobiles were frequently used for violation of liquor laws, he had reason to believe that the car in question would be so used, is rejected. P. 224.

4. Subsection (b) (3) of § 204 of the Liquor Law Repeal and Enforcement Act does not require, as a condition to remission of for

*Together with No. 627, United States v. Automobile Financing, Inc. On writ of certiorari to the Circuit Court of Appeals for the Fifth Circuit. Argued May 1, 1939.-Decided May 22, 1939.

feiture by the court, that the claimant shall have investigated, at his peril, every person with record or reputation for violating the liquor laws who in fact, although wholly unsuspected, had acquired some right to the vehicle. The subsection was intended to prevent remission to a claimant who had failed to make inquiry when he should have done so, to one chargeable with willful negligence or purpose of fraud. P. 235.

5. Forfeitures are not favored; they should be enforced only when within both the letter and the spirit of the law. P. 226.

93 F. 2d 771, 19 F. Supp. 470, affirmed.

99 F. 2d 498, 22 F. Supp. 507, affirmed.

CERTIORARI, 303 U. S. 633; 306 U. S. 625, to review the affirmances of judgments in two cases in which the District Courts ordered remission of forfeitures under the Liquor Law Repeal and Enforcement Act. In No. 10, the judgment below was previously affirmed here by an equally divided Court, 305 U. S. 564; a rehearing was subsequently granted, 305 U. S. 666. No. 627 was assigned for argument immediately following the reargument in No. 10.

Mr. Gordon Dean, with whom Solicitor General Jackson, Assistant Attorney General McMahon, and Messrs. Mahlon D. Kiefer and W. Marvin Smith were on the brief, on the reargument and on the original argument in No. 10, and on the argument in No. 627, for the United States.

Messrs. Duane R. Dills and Eugene E. Heaton, on the reargument and on the original argument, for Commercial Credit Co., claimant in No. 10. Mr. Duane R. Dills argued the cause, and Mr. James F. Kemp was on a brief, for respondent in No. 627.

MR. JUSTICE MCREYNOLDS delivered the opinion of the Court.

In each of these causes the District Court, proceeding under the "Liquor Law Repeal and Enforcement Act"

of August 27, 1935 (c. 740, 49 Stat. 872, 878, Title 27 U. S. C. § 40a), mitigated the forfeiture of an automobile seized for unlawful transportation of distilled spirits upon which the federal tax had not been paid. (One was seized December 3, 1936; the other, March 15, 1937.) The forfeiture was decreed in a proceeding based upon § 3450 R. S. (Title 26 U. S. C. § 1441). The Circuit Courts of Appeals rightly approved and their judgments must be affirmed.

The facts, undisputed, are essentially alike in both causes. The points of law are the same. A statement based on Record No. 10 will suffice.

The Repeal Enforcement Act provides

"Sec. 204. (a) Whenever, in any proceeding in court for the forfeiture, under the internal-revenue laws, of any vehicle or aircraft seized for a violation of the internalrevenue laws relating to liquors such forfeiture is decreed, the court shall have exclusive jurisdiction to remit or mitigate the forfeiture.

"(b) In any such proceeding the court shall not allow the claim of any claimant for remission or mitigation unless and until he proves (1) that he has an interest in such vehicle or aircraft, as owner or otherwise, which he acquired in good faith, (2) that he had at no time any knowledge or reason to believe that it was being or would be used in the violation of laws of the United States or of any State relating to liquor, and (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 or aircraft, that, before such claimant acquired his interest, or such other person acquired his right under such contract or agreement, which ever occurred later, the claimant, his officer or agent, 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 lawenforcement officer of the locality in which such other person acquired his right under such contract or agreement, 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 following findings by the District Court, it is agreed, correctly set out "the facts in this case"

The Ford automobile in question was sold by the Greenville Auto Sales, Incorporated (the dealer) October 3, 1936, through its agent, Elrod, to Guy Walker, who in part payment exchanged an old car paid for by him, but registered in his wife's name. He was given terms for payment under a conditional sales contract, drawn by an agent of the dealer, in the name of his brother, Paul Walker, who formally executed the agreement. Guy Walker had the conditional sales contract drawn and executed in the name of his brother in order to place the title "where his wife could not reach it." Paul Walker had no interest in the transaction except to comply with his brother's request. Guy Walker made the transaction with the dealer. He selected the car, made the agreement and handled the transaction himself. Paul Walker drove the car from the dealer's place of business. Guy Walker at the time, and for two or three weeks after the purchase, was living at his brother's house. Only one payment was made on the conditional sales contract before the seizure, and that by Guy Walker to the dealer.

It was admitted that Guy Walker had a previous record and reputation for violating both state and federal laws relating to liquor. Paul Walker was convicted of violating the National Prohibition Act in 1929, and was duly

sentenced therefor, but his record and reputation since serving the sentence were good.

On the date when the sale was consummated the dealer submitted the contract to the Commercial Credit Company, the claimant here, who accepted by telephone, and subsequently on October 5th, in the usual course of business the dealer assigned the contract to the claimant and received a check therefor.

The claimant before accepting assignment of the sales contract made an investigation of Paul Walker by inquiring at the headquarters of the Sheriff of Greenville County, and at the headquarters of the Chief of Police of Greenville, the County and City where the interest was acquired and the locality where Paul Walker resided, as to his record and reputation for violation of the liquor law. Information was received from these offices that he had no such record or reputation. Information was given, however, from the Sheriff's office that Guy Walker had both record and reputation as violator of state and federal laws relating to liquor. No inquiry or investigation was made at the headquarters of the principal federal internal-revenue officer engaged in the enforcement of the liquor laws in that locality, or at the headquarters of any other principal local or federal law enforcement officer of the locality as to Paul Walker, and no inquiry or investigation whatsoever was made of Guy Walker, the admitted real owner and purchaser of the automobile.

The claimant had Paul Walker investigated in August, 1936, by the Business Service Bureau of Greenville, South Carolina, in connection with the purchase of a refrigerator. No investigation at that time was made as to his reputation or record for violating the liquor laws; the investigation did disclose that he had a good reputation in the community where he lived, and this was the reputation given him by his employer at that time.

The claimant purchased the conditional sales contract in good faith, believing that Paul Walker was the pur