Holding Court is a series by retired Rye City Court Judge Joe Latwin. Latwin retired from the court in December 2022 after thirteen years of service to the City.
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By Joe Latwin
The U.S. Supreme Court granted certiorari on an intoxicating question last week. The Supreme Court controls the cases it hears by permitting certain cases to be put on their calendar. An appealing party can petition the Court to be heard. This is a petition for a writ of certiorari. A writ of certiorari is an order by which a higher court reviews a case tried in a lower court. It says, “send us your case for review.” The Supreme Court usually grants certiorari where: (1) there is an issue of national importance; or (2) there is a split of rulings among the several U.S. Circuit Courts of Appeals, for instance where one Circuit Court rules one way on question, and a different Circuit Court rules the opposite way on that question. To allow conflicting rulings to co-exist would mean that the same law within one circuit might permit something, but it would be impermissible in the other circuit.
The Supreme Court just granted certiorari in a case that could decide whether your bathtub could be filled with bubbles or booze.
“For much of American history, evading excise taxes on liquor has been nearly a national pastime. At the time of the Revolution, one historian has written, “nearly every farmer distilled his own whiskey and deemed it his inalienable right to evade the tax, and resist the collector whenever a favorable opportunity presented itself for doing so.” Soon after the Constitution’s ratification, in western Pennsylvania, this evasion came by force of arms—in the Whiskey Rebellion, which President Washington put down only after assembling “an army larger than any he had commanded during the Revolution.” Just after the Civil War, in 1867, a select committee of the House of Representatives heard more than a month of testimony, and concluded: “in the manufacture and sale of tobacco, cigars, and spirits, and especially the latter, the most stupendous frauds are practiced against the government in the collection of its revenue.” The following year Congress enacted comprehensive legislation to end those frauds, which among many other provisions included a ban on distilling spirits in one’s home. The law imposes an excise tax attaches the moment a distilled spirit comes into “existence as such,” generally “at the rate of $13.50 on each proof gallon” – one gallon of 100 proof liquor. As the proof increases or decreases, so does the tax.
All of us familiar with the Dukes of Hazzard know that the Duke boys (and Daisy) were constantly trying to evade the Sheriff and the Revenooers. NASCAR was formed by rum runners who modified their cars to outrun the Treasury agents. Eliot Ness chased down those who brewed bathtub gin in his quest to dry up the supply.
The petitioner worked as an aerospace engineer in Seattle, before he started brewing beer at home. Nine years later, he opened his own brewery and taproom. He wants to distill whiskey at home. Yet if he were to distill whiskey at home—or even possess a still there for that purpose—he would face a felony conviction and up to five years in prison, plus a substantial fine. He brought suit, claiming that the 1868 ban on possessing a still in a “dwelling house” was beyond Congress’s power to enact.
The Sixth Circuit said, “Taxing Clause vests Congress with the “Power to lay and collect Taxes, Duties, Imposts and Excises.” U.S. Const. art. I, § 8, cl. 1. “Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more.” The home-distilling ban exceeds that boundary: rather than require payment to the Federal Treasury, it proscribes conduct. The only proper justification of the law was to prevent fraud in getting the revenue for the federal government. Put otherwise, preventing activity lest it give rise to tax evasion places no limit whatsoever on Congress’s power under the taxation clause.
The petitioner contended, the ban on home distilling reduces revenue rather than raises it since he could pay the tax on his home-distilled whiskey, and that the ban prevents him from doing so. No booze – no tax; defeating the revenue raising purpose of the law. Th ban was not necessary to collect federal excise taxes on spirits.
Thus, Fifth Circuit ruled that the federal ban against home whiskey distilleries is unconstitutional.
However, a separate appeals court, the Sixth Circuit, issued an opposite decision, upholding the 150 year-old federal law. The Sixth Circuit ruling questioned whether the courts should second guess Congress on a long-standing law. “We should not be so eager to police the limits of Congress’s power, that we exceed the limits of our own,” the appeals court ruling said.
The Supreme Court granted certiorari. When the Supreme Court decides, we’ll know whether our bathtubs can be filled with booze or bubbles.
