Osborne v. United States

1. A distiller's bond taken in pursuance of the act of July 20th, 1868, imposing taxes on distilled spirits, and which enacts “that a distiller shall on filing with the assessor notice of an intention to commence business, make a bond with sureties, to be approved by the assessor, and that no bond of a distiller shall be approved unless he is the owner in fee, unincumbered, of the land on which the distillery is, or unless he files with the assessor, in connection with his notice, the written consent of the owner of the fee, and of any person having a lien thereon, that the premises may be used for tbe purpose of distilling spirits, subject to the provisions of law, and stipulating that tbe lien of the United States for taxes and penalties shall have priority of such incumbrance, and that in cose of the forfeiture of the distillery premises, the title of tho same shall vest in the United States, discharged from such incumbrance,” is not void, oven as against sureties to the bond, because the ground was incumbered, and because it being so tbe bond was approved without tbe consent of the incumbrancers to postpone their liens; tbe bond not having been delivered as an escrow simply. 2. This is not altered by the fact that if tbe consent of the incumbrancers had been got to postpone their Hens, the ground on which the distillery stood was of sufficient value to discharge the taxes due by the distiller and so relieve the sureties from their personal obligations.

Error to the Circuit Court for the Eastern District of Pennsylvania. The United States brought suit in the court below against Ann Osborne, administratrix of Joseph Osborne, deceased, upon a distillers bond, executed by Samuel McMillan as principal, and by Robert Fletcher and the decedent., tbe said Joseph Osborne, as sureties, in pursuance of the provisions of the seventh section of the act of July 20th, 1868,* “Imposing taxes on distilled spirits, and for other purposes.” This section enacts: “That every distiller shall, on filing his notice of intention to continue or commence business, make and execute a bond in form prescribed by the commissioner of internal revenue, with at least two sureties, to be approved by the assessor of the district.” The eighth section of the act further enacts: “That no bond of a distiller shall be approved unless be is the owner in fee, unincumbered by any mortgage, judgment, or other lien, of the lot or tract of land on which the distillery is situated, or unless he files with the assessor, in connection with his notice, the written consent of the owner of the fee and of any mortgagee, judgment creditor, or other person having a lien . thereon, duly acknowledged, that the premises may be used for the purpose of distilling spirits subject to the provisions of law, and expressly stipulating that the lien of the United States for taxes and penalties shall have priority of such mortgage, judgment, or other incumbrance, and that in case of the forfeiture of the distillery premises or any part thereof, the title of the same shall vest in the United States, discharged from any such mortgage, judgment, or other incumbrance.” When the bond upon which this action was brought was delivered to and approved by the assessor, the distillery premises were .incumbered by certain judgment liens, and the bond was approved and McMillan permitted to commence and continue his business without their release or a-stipulation for their postponement. The distillery and the ground on which it was would have been of sufficient value to secure the claim now set up by the government (which was for unpaid internal revenue taxes), if the claim for the government taxes had had priority of the judgment liens; but, postponed by them, it was insufficient. The defendant pleaded these facts, but none others, in bar to a recovery against her. To the plea thus made the United States demurred. The court below sustained the demurrer, and gave judgment upon the bond. To reverse this judgment this writ of error was prosecuted.