is due to what they call bad legislation.
We must remember that 'bad' legislation in economic effect can still be the exercise of proper legislative power. Nowhere is it more difficult or more necessary for an individual judge to exercise judicial restraint then when he is interpreting the constitutionality of what he individually may feel is unwise legislation. The question he must determine is whether Congress has the power, either express or implied, under the Constitution to act, and if so has it legally exercised that power. This is the keystone of our theory of separation of powers; this restraint is the hope of our continued constitutional government.
One of our great contributions to the science of government is this system of checks and balances including the right of judicial review. But nowhere is the thought expressed that the courts should become super-legislatures. While, of course, they must adapt the law to social realities, they must be ever vigilant that each of the three great departments of our Government remains within its own proper sphere. It may be trite but, nevertheless, true that the proper function of the legislature is to make the laws, the executive to enforce the laws, and the judicial to interpret the laws. Let it remain so.
Congress was aware of the situation facing the producers of whiskey and amended the law so as to permit the distiller to either destroy the whiskey or to redistill it without payment of the tax. This was all the relief that Congress determined to grant the industry. They did consider extending the 8-year period of bond to as high as 20 years, but decided not to change the law to that extent. The plaintiffs urge that they are at a competitive disadvantage with foreign producers; however, whether this be true or not we do not see how the Court can do anything to remedy that situation for it is fundamental that Congress has the power to control foreign commerce and it is not a question for the courts.
Whether or not the Treasury is losing revenue because of the force-out provision does not justify the Court in striking down the law. If the desired effects are not resulting, then Congress may amend the law to bring about the results, or Congress may refuse to amend the law feeling that the results are not desirable.
We must interpret the law as it is written and cannot speculate into matters of legislative policy. The 8-year bonding provision sets the period of limitation at which the internal revenue tax must be paid. Congress may well have thought when they enacted this provision that this was the maximum period of time that the Government should wait to collect its revenues.
'Punctuality is important to the fiscal system, and these are sanctions to assure punctual as well as faithful performance of these duties.' Spies v. United States, 1943, 317 U.S. 492, 63 S. Ct. 364, 367, 87 L. Ed. 418; United States of America v. Litman, 3 Cir., 1957, 246 F.2d 206.
We hold that the force-out provision is a constitutional exercise of the taxing powers of the United States. Accordingly, the plaintiffs first claim for relief does not state a cause of action and should be dismissed.
The taxpayers urged that they should be able to recover under the second count of their complaint because the additional tax of $ 1.50 is an unapportioned direct tax on property; and if it is not such a tax the basic tax is a distillation tax, and the additional tax would have to be a tax on distillation and is so retroactive as to be unconstitutional.
The Government on the other hand maintains that the additional $ 1.50 tax per gallon is an additional excise that can be levied under the authority of Patton v. Brady, 1902, 184 U.S. 608, 22 S. Ct. 493, 46 L. Ed. 713.
In Patton v. Brady, the Supreme Court pointed out that an excise is a tax laid without rule or principle upon consumable articles upon the process of their manufacture and upon license to sell them. In determining whether this additional $ 1.50 is an excise or direct tax, we have as a guide the fact that taxes on whiskey have traditionally been held to be excises since the foundation of our Government and formerly in Great Britain. We have the decisions of our Supreme Court who have judicially held the tax on distilled spirits to be an excise, and finally we can apply the common meaning of the term, 'excise', to the situation that we have before us and find that it is an excise.
The tax here is a tax on distilled spirits and is imposed by the statute at a period intermediate of the commencement of manufacture and the final consumption of the article. By the clear wording of the statute, there is a tax levied on the keeping of the distilled spirits in bond. What Congress has done has been to levy a tax of $ 10.50 on all distilled spirits in bond. Congress in effect has raised the excise tax on distilled spirits from $ 9 to $ 10.50 by charging a tax of $ 1.50 per gallon for the privilege of keeping the distilled spirits in a bonded warehouse where they may age if the owner so desires. It is true that the basic tax is a distillation tax which was $ 9 when the distilled spirits were produced. However, when the plaintiffs determined to place their spirits in a bonded warehouse for the purpose of aging and storage, and for the purpose of not paying the tax until the spirits were removed or not before 8 years, they obtained an advantage under the revenue laws. At that moment they knew that during the long history of an excise tax on whiskey that the rate of tax had been subject to change. History had also shown the necessity of these taxes applying to all whiskey to prevent windfall profits. In fact, the very nature of the article necessitated, for the benefit of the industry, that these increases and reductions apply to both spirits to be distilled and whiskey already in bond. Congress had the authority to levy an excise on this privilege and determined to tax that privilege. The tax is not a direct tax on property, nor is it a retroactive tax on distillation. It is merely another excise intermediate of the commencement of manufacture and the final consumption of the article. Accordingly, the plaintiffs' second cause of action must be dismissed as they failed to state a claim upon which relief can be granted.
In our determination of this case and consideration of the arguments advanced by counsel for the plaintiffs, we fully recognize that the plaintiffs have distinct problems, perhaps problems that were not envisioned or could not be foreseen when Congress originally enacted the internal revenue laws. The effect of the laws today and especially the so-called force-out provision may place the plaintiffs in an unfortunate situation in which they cannot compete with foreign producers and in effect are being discriminated against. However, if there be any discrimination against them, the orderly way to eliminate this would be by legislation and not a court decision. Action by Congress would be more accommodative, would afford the whole industry an opportunity to be heard, and an opportunity to assist in the formulation of any new legislation that might be necessary. The result of any new legislation by Congress would be more likely to protect the industry and the public as a whole. Congressional action would be known in advance, and the industry could adjust to meet the changes in the law. While plaintiffs may have a complaint, their grievance should again be brought to the attention of the Congress who may in its wisdom adjust the internal revenue laws to meet the change of conditions. It is obvious that Congress has been previously alerted to the difficulties complained of by plaintiff. The existing laws we feel are constitutional. It follows then that since this tax is within the lawful power of Congress that any change must be made by Congress and not this Court.
And now, to wit, this 22nd day of July, 1957, it is Ordered and Directed that the motion of the defendant to dismiss the complaint should be and hereby is granted.