Opinion
No. 4249.
January 14, 1930.
Appeal from the District Court of the United States for the Eastern District of Pennsylvania; William H. Kirkpatrick, Judge.
Suit by Ethelburt De Long Burns against James M. Doran, Prohibition Commissioner, and another, to review the action of the Prohibition Administrator revoking a permit to manufacture cereal beverages. The order revoking the permit was affirmed, and the appeal dismissed, and complainant appeals. Affirmed.
The opinion of Kirkpatrick, District Judge, in the court below, follows:
This is a bill to review the action of the prohibition administrator revoking the permit of the complainant to manufacture cereal beverages.
The opinion of the Supreme Court in Ma-King Products Co. v. Blair, 271 U.S. 479, 46 S. Ct. 544, 70 L. Ed. 1046, and that of the Circuit Court of Appeals for the Third Circuit in Yudelson v. Andrews, 25 F.2d 80, announce the principles of law controlling a review of an administrator's action in a permit case. Both of those cases were reviews of refusals of original permit applications, but in Blair v. Graupner, 29 F.2d 815, 816, the Circuit Court of Appeals, applying the principle of the Ma-King Case, held that a revocation was also an administrative matter, and that the sole function of the court upon a review was to find whether on the facts and law the decision of the administrator was based upon error of law, or was wholly unsupported by the evidence or clearly arbitrary or capricious. It is to be noted that in the case of a revocation the National Prohibition Act (27 USCA) provides for a hearing as a condition precedent to the Commissioner's action. No such hearing is required in the case of a refusal of an original application. The effect of this distinction is to make the review in the case of a revocation the review "of a fact finding made under all the evidence, and the review of it follows the analogue of the appellate review of a finding made by any trier of the facts." Fox v. Blair (D.C.) 20 F.2d 235, 236. In Blair v. Graupner, supra, the Circuit Court of Appeals said: "As no question of law was raised the sole question before the trial court was not whether the permit should be revoked but whether there was any evidence that sustained the Commissioner's exercise of discretion in revoking it." This precisely defines our function in the case now before us.
The National Prohibition Act in title 2, § 9 (27 USCA § 21), provides that, "if the commissioner has reason to believe, that any person who has a permit is not in good faith conforming to the provisions of this Act," he shall issue a citation which is to be followed by a hearing. If it be found that the permittee "* * * has not in good faith conformed to the provisions of this Act," such permit shall be revoked. The act does not require proof of a willful violation of the National Prohibition Act as a condition for the revocation of a permit. This point is emphasized by the definiteness with which it does require proof of willful violation in case the ground for revocation is violation of a state law. The permittee may incur the penalty of revocation if, even though conforming to the letter of the law, he violates the spirit of it. Thus, if a permittee acting in exact conformity with the regulations sells his finished product to persons whom he knows will ultimately divert it to illegal uses, his permit could be revoked.
The National Prohibition Act in title 2, section 1 (27 USCA § 4) further provides that cereal beverages may be produced if made in accordance with section 37, and title 2, section 37 (27 USCA § 58), provides that cereal beverages may be manufactured under a permit by dealcoholizing high-powered beer "under such rules and regulations as the commissioner may prescribe." If made by the dealcoholizing process, it may not be made except in accordance with the regulations.
The first question is: May a permit be revoked if the permittee, by any means, delays or hinders agents in the inspection of a brewery? The regulations in force at the time involved in this case provide, in section 103, that "any * * * agent * * * has authority to inspect * * * premises described in the permit, * * * at any and all times not inconsistent with the proper conduct of the business." Section 104 provides that "failure * * * to promptly allow inspection to be made as provided in section 103, upon proper request therefor, may be sufficient ground for citation and revocation of permit."
The importance of the regulations quoted need hardly be pointed out. As was stated in the report of the administrator's review: "In these days * * * it is notorious that breweries are so equipped, that they can dispose of illegal product to prevent detection as though by magic when it is learned that prohibition agents are either in the brewery or in the vicinity of the brewery." The right of inspection reserved by the permit would be perfectly useless if permittees could without risk of loss of permit impede inspections long enough to allow them to remove evidence of violations. The conclusion is that any refusal or intentional failure on the part of a permittee to allow prompt inspection of brewery premises, resulting in a substantial delay, may be sufficient ground for revoking his permit.
The second question is: Does this record present any competent evidence that the permittee intentionally delayed or impeded the agents in their inspection of the brewery? Whether or not there is any evidence that a violation was taking place at the time of the inspection is immaterial. In considering the question we shall confine ourselves to the visit of Agents Marvin and Sheffer to the brewery in March 29, 1928.
The racking room of a brewery is the place where the beer is run into containers for immediate distribution. This is the point where, if the brewery is illegally operated, the violations take place, for up to that time the mere possession of high-powered beer is lawful under the permit. Therefore, in making an inspection of a brewery for the purpose of finding out whether it has been operating illegally, the racking room must be visited promptly. Immediate access to this part of the brewery is essential to any effective inspection, and the regulations are designed to insure it.
In the case now before the court, the arrangement of the Chester Brewery was such that, in order to reach the racking room from the office, it was necessary to traverse successively four rooms; the mash room, the generator room, the engine room, and the wash room, passing through five doors in all. The exact distance does not appear, but, even assuming that it is three or four hundred feet, it should not take more than a minute to cover it, assuming that the doors were not locked.
When the agents entered the office of the brewery at 11:30 in the morning of March 29th, they found Lengel, who was the manager and in control of the brewery, seated behind a grille. As soon as they announced themselves, they saw him touch a push botton located close at hand. It appears that this button does not operate any sounding instrument in the racking room, but it does not appear that whatever signal is produced cannot be heard there.
It is undisputed that from the time when the agents entered the office until they finally gained access to the racking room a period of 19 minutes elapsed. This delay would have provided ample time to allow employees in the racking room to eliminate evidence of violation there, if there had been such violation. It could have been due to one or more of only three causes: (a) Delay on the part of the agents themselves, due to ignorance of the surroundings, or stupidity; (b) intentional delay and misleading directions given to the agents by Lengel; (c) locked and barred doors in the way which made it impossible for Lengel, even with the best of intentions, to let them into the racking room sooner.
We may take the account given by Agent Sheffer, which was accepted as true by the hearer and the administrator, and see to which of these conclusions it leads.
As soon as Lengel had touched the electric bell referred to, he stepped around and opened the door leading from the office to the mash room, and Sheffer asked him at once to show him the racking room. Sheffer then went through the mash room, trying a door at the side on his way, and, finding it locked and barred, he went on through the generator room into the engine room. The two remaining doors opening out of the engine room were secured. Lengel apparently followed Sheffer into the engine room. Sheffer testified, "after considerable delay in trying to get through the two doors, Mr. Lengel told me that I possibly could get into the yard and into the racking room by going to the gate on Second Street." Lengel did not make any effort to open the doors, although he testified that he had the keys in his pocket. Acting upon Lengel's suggestion, Sheffer went back through the office and around outside of the brewery to the gate on Second street, which he found locked. He came back to the office, found the door from the office into the brewery had snapped shut with an automatic catch, and was compelled to force it open. He then telephoned from the office to Col. Wynne, the prohibition administrator. After this he returned to the engine room, and found Lengel still there with Marvin, and the door leading to the engine room and the wash room open. All three went into the wash room. There were two doors leading from the wash room to the racking room; one, an ordinary door, and the other a low door eight feet by ten feet wide, used for rolling barrels and kegs from one room into the other. The smaller door was locked, and later proved to have been barred on the inside. Access to the long door was impossible, because there were a number of kegs or barrels placed in front of it. These barrels were piled in front of the door so that a person passing through the wash room would not notice that there was a door there. On finding that they were unable to open the regular door into the racking room, and not seeing any other means of access, the agents went out on the loading platform and forced an entrance into the racking room by means of one of three doors leading from it to the platform, all of which were closed and barred.
Lengel's explanation of his part in assisting the agents in getting into the racking room was, "I done everything in my power to get them into the racking room." He also said that, if they had stayed a moment or so in the wash room instead of going out upon the platform and breaking in, he thought they would have gotten into the racking room more quickly by rolling away the barrels in front of the long door which was not locked. There is no satisfactory explanation of why the long delay in opening the door from the engine room into the wash room occurred, except evidence that there was a sharp controversy there between Lengel and the agents. This hardly excuses Lengel, in view of his testimony that he had the keys in his pocket. It was probably impossible for him to open the regular door from the wash room to the racking room because that was barred. He denies flatly that he told Sheffer to go around outside and try to get in by the gate. On this point, however, the hearer accepted Sheffer's testimony. As to the delay in the wash room, Lengel says that he told them to give him just a few minutes time until he and some workmen who were there moved several kegs.
Accepting the testimony of the agents, and rejecting that of Lengel (which the hearer had the right to do), it is impossible to find that the delay was caused by the agents themselves. Marvin wasted some time in going upstairs, and attempting to force two doors which did not give access to the racking room, but this did not affect Sheffer, who did neither of these things. Sheffer's only delay was when he telephoned to Col. Wynne. In view of the fact that he had just found himself confronted by two locked doors in the engine room which Lengel had failed to open on demand, and that he had been sent by Lengel on a fool's errand around on the outside of the brewery, it can hardly be said that his act in telephoning for instructions was wholly unjustified. At any rate, it could not have taken a great deal of time. It is also questionable, in view of what had transpired, whether he would have gained any time by waiting for Lengel and the brewery employees to remove the barrier of kegs and barrels from in front of the long door into the wash room.
As to Lengel's attitude, both the agents testified that he appeared to be trying to delay them. It would be hard to reach any other conclusion, in view of the fact that, with the keys of the door in his pocket, he not only failed to open the door from the engine room to the wash room, but directed Sheffer to go around and try to get in by a locked gate on the outside of the brewery.
If, however, Lengel was in good faith trying to get the agents into the racking room quickly, then it must be that the locked and barred condition of the doors prevented him from doing so. There can be no good reason for the manager of a brewery, operating under a permit, with his staff of employees on the premises, to keep the interior means of access to the racking room so thoroughly and completely closed and barred. Lengel's explanation was that there had been a bomb explosion a short time before at the front part of the brewery, and that he had received a number of threatening telephone calls. This might explain the locked gate, but it would not furnish any reasonable excuse for keeping the interior of the brewery in the condition in which it was, in the daytime, with the employees on the premises.
Whether the delay was due to the deliberate act of Lengel, or to the impossibility of getting through the various locked doors, or partly to both, the hearer had the right to take it as evidence that the permittee was not in good faith conforming to the act. To hold that this record does not present any evidence on which such a conclusion can be based would be to give to permit holders carte blanche to arrange their premises so as to delay inspections of the racking room for a period of nearly 20 minutes. This is quite long enough to do away with all traces of violations in that room. The consequence would be to render inspections entirely useless.
The order of the Commission revoking the permit is affirmed, and the appeal may be dismissed.
J. Borton Weeks and Paul Lane Ives, both of Chester, Pa., for appellant.
Calvin S. Boyer, Acting U.S. Atty., and Richard H. Woolsey, both of Philadelphia, Pa., for appellees.
Before WOOLLEY and DAVIS, Circuit Judges, and JOHNSON, District Judge.
Affirmed on the findings and reasoning in the opinion of Kirkpatrick, District Judge, sur pleadings and proofs.