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Wynne v. Eureka Cereal Beverage Co.

February 20, 1932

WYNNE, SUPERVISOR OF PERMITS, ET AL.
v.
EUREKA CEREAL BEVERAGE CO., INC.



Appeal from the District Court of the United States for the District of New Jersey; Guy L. Fake, Judge.

Author: Woolley

Before WOOLLEY and DAVIS, Circuit Judges, and DICKINSON, District Judge.

WOOLLEY, Circuit Judge.

On the bill of the Beverage Company to review the action of the Supervisor of Permits in refusing it a permit, the court held that his decision was not supported by evidence and accordingly ordered him to issue a permit. The Supervisor appealed on eleven grounds, of which only four call for discussion. The other seven are really conclusions from these four.

(1) The Supervisor charges error to the court in failing to hold the applicant's method of doing business entirely for cash might be considered by the Supervisor as an indication of bad faith on the part of the applicant.

We think, under Bernstein v. Doran (C.C.A.) 33 F.2d 897 and National Grain Yeast Corporation v. Mitchell (C.C.A.) 51 F.2d 500, the manner in which a permittee does business may properly be "considered" and, under some circumstances, may be an ingredient in the evidence of bad faith. But, standing alone, the mere doing business for cash instead of by check or on credit does not constitute evidence of bad faith and therefore evidence to support a refusal of a permit. The applicant's story of doing business exclusively for cash sounds honest. Business done in this manner may be honest or dishonest. There is no evidence that in this case it was dishonest in the sense of violating the law.

(2) The Supervisor next charges error to the court in holding the failure of the applicant to produce its treasurer for examination could not be considered by the Supervisor as an indication of bad faith on the part of the applicant.

The court did not so hold. The fact is the court itself considered the matter and doubtless would have allowed the Supervisor to consider it, but held that, in the circumstances, it would not alone support the Supervisor's decision.The treasurer was indeed a hazy figure. He may have been an honest dummy, or he may have been a crooked backer. There was evidence that he was the former and no evidence that he was the latter; nor was there evidence that the active members of the company were lax in their efforts to find and produce him.

(3) The third error charged to the court was in failing to hold that the real parties in interest in the application had not been disclosed.

This arises out of a loan transaction which, as explained, was very different from the loan transaction in National Grain Yeast Corporation v. Mitchell, supra. By itself, this does not constitute evidence sufficient to sustain the Supervisor's order.

Having held that each of these unrelated things would not alone sustain the order, we are of opinion that, without relation to anything else, they together do not sustain it.

We have been more concerned about the fourth question in reference to a matter which, if established by the evidence as broadly as the Supervisor has stated it in his brief, would be itself sustain the order.

(4) The question in the words of the Supervisor is: Whether or not the court "erred in failing to hold that the possession by the applicant at all times of a large amount of carbonated high powered beer might be considered as an indication of bad faith."

It is carbonic gas that gives life to beer. Carbonated low powered beer of the prescribed alcoholic content may be lawfully sold. High powered beer, whether carbonated or not, cannot be lawfully sold. To be salable, lawfully or unlawfully, beer must be palatable. To make it palatable, beer of either power must be carbonated. If the only purpose of carbonating high powered beer were to make it salable, the presence in a brewery of a large quantity of carbonated high powered beer would carry its own implication and could be considered as evidence of an intended diversion into unlawful channels. But the facts on which this question is predicated give it a different color. They concern (1) the quantity of high powered beer and (2) the quantity of carbonated high powered beer which the brewery normally kept on hand, and their uses. On the first point the Supervisor says ...


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