U.S. Supreme Court
UNITED STATES v. CALAMARO, 354 U.S.
351 (1957)
354 U.S. 351
UNITED STATES v. CALAMARO.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT.
No. 304.
Argued March 4, 1957.
Decided June 17, 1957.
A so-called "pick-up man"
in a type of lottery called the "numbers game," who has no
proprietary interest in the enterprise and acts merely as a messenger
transmitting records of wagers from the "writer" (an agent who
accepts wagers from the bettors) to the "banker" (the principal for
whom the wagers are accepted), is not "engaged in receiving wagers for or
on behalf of any person" within the meaning of Subchapter B of Chapter 27
A of the Internal Revenue Code of 1939, 26 U.S.C. (1952 ed.) 3290, and,
therefore, is not subject to the annual $50 special occupational tax imposed by
that Subchapter. Pp. 351-360.
236 F.2d 182, affirmed.
Leonard B. Sand argued the cause for
the United States. On the brief were Solicitor General Rankin, Assistant
Attorney General Olney, Beatrice Rosenberg and Julia P. Cooper.
Raymond J. Bradley argued the cause
for respondent. With him on the brief was Edwin P. Rome.
MR. JUSTICE HARLAN delivered the
opinion of the Court.
The question before us is whether
the respondent, a so-called "pick-up man" in a type of lottery called
the "numbers game," is subject to the annual $50 special occupational
tax enacted by Subchapter B of Chapter 27A (Wagering Taxes) of the Internal
Revenue Code of 1939, 65 Stat. 530, 26 U.S.C. 3285 et seq. [354 U.S. 351, 352]
As will be seen from the statute,
whose material parts are printed in the margin, 1 this Chapter of the 1939 Code enacts two kinds
of wagering taxes: (1) An excise tax, imposed by 3285 (d) on persons
"engaged in the business of accepting wagers," and (2) a special
occupational tax, imposed by 3290 not only on persons who are subject [354 U.S. 351, 353] to the excise tax, being "engaged in the
business," but also on those who are "engaged in receiving
wagers" on behalf of one subject to the excise tax. By definition the
"numbers game" is among the wagering transactions included in the
statute.
At the outset we must understand
some professional gambling terminology which has been given us by the parties.
A numbers game involves three principal functional types of individuals: (1)
the "banker," who deals in the numbers and against whom the player
bets; (2) the "writer," who, for the banker, does the actual selling
of the numbers to the public, and who records on triplicate slips the numbers
sold to each player and the amount of his wager; and (3) the "pick-up
man," who collects wagering slips 2 from the writer and delivers them to the banker.
If there are winnings to be distributed, the banker delivers the required
amount to the writer, who in turn pays off the successful players.
The respondent here was a pick-up
man for a Philadelphia banker, receiving for his services a salary of $40 a
week, but having no proprietary interest in this numbers [354 U.S. 351, 354] enterprise.
He was convicted, after a jury trial in the United States District Court for
the Eastern District of Pennsylvania, of failing to pay the 3290 occupational
tax, and was fined $1,000. 3 The Court of Appeals reversed by a divided
court, 236 F.2d 182, and upon the Government's petition we granted certiorari, 352
U.S. 864 , to resolve the conflict between the decision below and that of
the Court of Appeals for the Fifth Circuit in Sagonias
v. United States, 223 F.2d 146, as to the scope of 3290. For reasons given
hereafter we consider that the Court of Appeals in this case took the correct
view of this statute.
The nub of the Court of Appeals'
holding was put in the following language, with which we agree:
"In
normal usage of familiar language, `receiving wagers' is what someone on the
`banking' side of gambling does in dealing with a bettor. Placing and receiving
a wager are opposite sides of a single coin. You can't have one without the
other. [The court here referred to the definition of "wager"
contained in 3285 (b) (1) (C); note 1, supra.] Before the pick-up man enters
the picture, in such a case as we have here, the wager has been received
physically by the writer and, in legal contemplation, by the writer's principal
as well. The government recognizes - and in an appropriate case no doubt would
insist - that what the writer does in relation to the bettor amounts to
`receiving a wager.' Thus, the government has to argue that the wager is
received a second time when the writer hands the yellow slip to the pick-up
man. But we think this ignores the very real difference between a wager and a
record of a wagering transaction. It is the banking record and [354 U.S. 351, 355] not
the wager which the pick-up man receives from the writer and transmits to the
bank. The pick-up man no more receives wagers than a messenger, who carries
records of customer transactions from a branch bank to a central office,
receives deposits." 236 F.2d ___, at 184-185.
We do not think that either the
language or purpose of this statute, as revealed by its legislative history,
supports the position of the Government. When the phrase "receiving
wagers" is read in conjunction with 3285 (b) (1), which defines
"wager" in terms of the "placing" of a bet in connection
with any of the kinds of wagering transactions embraced in the statute, 4 it seems evident that the Court of Appeals was
quite correct in regarding the "placing" and "receiving" of
a wager as being "opposite sides of a single coin." 5 In other words, we think that as used in 3290
the term "receiving" a wager is synonymous with "accepting"
a wager; 6 that it is the making of a gambling contract,
not the transportation of a piece of paper, to which the statute refers; and
hence that, in such a case as this, it is the writer and not the pick-up man
who is "engaged in receiving wagers" within the meaning of 3290. [354 U.S. 351, 356]
We consider the legislative history
of the statute, such as it is, to be fully consistent with this interpretation
of 3290. In the Senate and House Reports on the bill, it is stated:
".
. . A person is considered to be in the business of accepting wagers if he is
engaged as a principal who, in accepting wagers, does so on
his own account. The principals in such transactions are commonly referred to
as `bookmakers,' although it is not intended that any technical definition of
`bookmaker,' such as the maintenance of a handbook or other device for the
recording of wagers, be required. It is intended that a wager be considered as
`placed' with a principal when it has been placed with another person acting
for him. Persons who receive bets for principals are sometimes known as
`bookmakers' agents' or as `runners.' . . .
.
. . . .
"As
in the case of bookmaking transactions, a wager will be considered as `placed'
in a pool or in a lottery whether placed directly with the person who conducts
the pool or lottery or with another person acting for such a person." H.
R. Rep. No. 586, 82d Cong., 1st Sess. 56; S. Rep. No. 781, 82d Cong., 1st Sess.
114 (emphasis added).
Again, in the case of a numbers
game, this indicates that Congress regarded the "placing" of a wager
as being complemented by its "receipt" by the banker or by one acting for him in that transaction, that is, the
writer and not the pick-up man.
Nor, contrary to what the Government
contends, can we see anything in the registration provisions of 3291 which
points to the pick-up man as being considered a "receiver" of wagers.
Those provisions simply provide that one liable for any tax imposed by the
statute must [354 U.S. 351, 357] register
his name and address with the collector of the district, and require in
addition, (a) as to those subject to the 3285 excise tax, the registration of
the name and address "of each person who is engaged in receiving wagers
for him or on his behalf," and (b) as to those subject to the 3290 occupational
tax, the registration of the name and address of each person for whom they are
"engaged in receiving wagers." 7 It is doubtless true that these provisions, as
well as the occupational tax itself, 8 were designed at least in part to facilitate
collection of the excise tax. It is likewise plausible to suppose, as the
Government suggests, that the more participants in a gambling enterprise are
swept within these provisions, the more likely it is that information making
possible the collection of excise taxes will be secured. The fact remains, however,
that Congress did not choose to subject all employees of gambling enterprises
to the tax and reporting requirements, but was content to impose them on
persons actually "engaged in receiving wagers." Neither we nor the
Commissioner may rewrite the statute simply because we may feel that the scheme
it creates could be improved upon. 9 [354 U.S. 351, 358]
We can give no weight to the Government's
suggestion that holding the pick-up man to be not subject to this tax will
defeat the policy of the statute because its enactment was "in part
motivated by a congressional desire to suppress wagering." 10 The statute was passed, and its
constitutionality was upheld, as a revenue measure, United States v. Kahriger, 345
U.S. 22 , and, apart from all else, in construing it we would not be
justified in resorting to collateral motives or effects which, standing apart
from the federal taxing power, might place the constitutionality of the statute
in doubt. See id., at 31.
Finally, the Government points to
the fact that the Treasury Regulations relating to the statute purport to
include the pick-up man among those subject to the 3290 tax, 11 and argues (a) that this constitutes an
administrative interpretation to which we should give weight in construing the
statute, particularly because (b) section 3290 was carried over in haec verba into 4411 of the
Internal Revenue Code of 1954. We find neither argument persuasive. In light of
the above discussion, [354 U.S. 351, 359] we cannot but regard this Treasury
Regulation as no more than an attempted addition to the statute of something
which is not there. 12 As such the regulation can furnish no
sustenance to the statute. Koshland v. Helvering, 298
U.S. 441, 446 -447. Nor is the Government helped by its argument as
to the 1954 Code. The regulation had been in effect for only three years, 13 and there is nothing to indicate that it was
ever called to the attention of Congress. The re-enactment of 3290 in the 1954
Code was not accompanied by any congressional discussion which throws light on
its intended scope. In such circumstances we consider the 1954 re-enactment to
be without significance. Commissioner v. Glenshaw Glass Co., 348
U.S. 426 ,431.
In conclusion, we cannot accept the
alternative reasoning of the dissenting judge below who, relying on that part
of the opinion in Daley v. United States, 231 F.2d 123, 128, relating to the
trial court's charge to the jury in a prosecution for failing to pay the 3285
excise tax, 14 [354 U.S. 351, 360] regarded
the respondent's conviction here as sustainable also on the theory that he was
a person "engaged in the business of accepting wagers" within the
meaning of 3285 (d). The Government disclaims this ground for upholding the
respondent's conviction, as indeed it must, in light of the unambiguous
legislative history showing that the excise tax applies only to one who is
"engaged in the business of accepting wagers" as a "principal .
. . on his own account." 15 In this instance, that means the banker, as the
Government concedes.
We hold, therefore, that the
occupational tax imposed by 3290 does not apply to this respondent as a pick-up
man, and that the judgment below must accordingly be
Affirmed.
MR. JUSTICE WHITTAKER took no part in the consideration or
decision of this case.
Footnotes
[ Footnote 1 ] "SUBCHAPTER A - TAX ON WAGERS
"SEC. 3285. TAX. "(a)
WAGERS. - There shall be imposed on wagers, as defined in subsection (b), an
excise tax equal to 10 per centum of the amount thereof. "(b)
DEFINITIONS. - For the purposes of this chapter - "(1) The term
`wager' means (A) any wager with respect to a sports event or a contest placed
with a person engaged in the business of accepting such wagers, (B) any wager
placed in a wagering pool with respect to a sports event or a contest, if such
pool is conducted for profit, and (C) any wager placed in a lottery conducted
for profit. "(2) The term `lottery' includes the
numbers game . . . . . . . . . "(d) PERSONS LIABLE FOR
TAX. - Each person who is engaged in the business of accepting wagers
shall be liable for and shall pay the tax under this subchapter on all wagers
placed with him. Each person who conducts any wagering pool or lottery shall be
liable for and shall pay the tax under this subchapter on all wagers placed in
such pool or lottery. . . . . . "SUBCHAPTER B -
OCCUPATIONAL TAX "SEC. 3290. TAX. "A
special tax of $50 per year shall be paid by each person who is liable for tax
under subchapter A or who is engaged in receiving wagers for or on behalf of
any person so liable. "SEC. 3291. REGISTRATION. "(a) Each person required to pay a
special tax under this subchapter shall register with the collector of the
district - "(1) his name and place of residence; "(2) if he is liable
for tax under subchapter A, each place of business where the activity which
makes him so liable is carried on, [354 U.S. 351, 353] and the name and place of residence
of each person who is engaged in receiving wagers for him or on his behalf; and
"(3) if he is engaged in receiving wagers for or on behalf of any person
liable for tax under subchapter A, the name and place of residence of each such
person. . . . . . "SEC. 3294. PENALTIES.
"(a) FAILURE TO PAY TAX. - Any person who does
any act which makes him liable for special tax under this subchapter, without
having paid such tax, shall, besides being liable to the payment of the tax, be
fined not less than $1,000 and not more than $5,000." 65
Stat. 530, 26 U.S.C. 3285-3294.
[ Footnote 2 ] The pick-up man collects the "yellow" copy. The
"tissue" copy is given to the player when he places his bet, and the
"white" copy is retained by the writer.
[ Footnote 3 ] 137 F. Supp. 816.
[ Footnote 4 ] See note 1, supra.
[ Footnote 5 ] That the "placing" and "receiving" of
a wager should be regarded as simply complementing one another is recognized by
Treasury Regulations 132, 325.24 (a) of which states: ". . . Any wager or contribution
received by an agent or employee on behalf of such person [one in the business
of accepting wagers or operating a wagering pool or lottery] shall be
considered to have been accepted by and placed with such person." 26 CFR, 1957 Cum. Pocket Supp., 325.24 (a).
[ Footnote 6 ] Indeed, the information filed against the respondent,
which charged him with failing to pay the 3290 occupational tax, alleged that
he "did accept," not that he "did receive," wagers. 137 F. Supp., at 817, n. 1.
[ Footnote 7 ] See note 1, supra.
[ Footnote 8 ] H. R. Rep. No. 586, 82d Cong., 1st Sess. 60; S. Rep. No.
781, 82d Cong., 1st Sess. 118 (1951).
[ Footnote 9 ] We do not consider as illuminating, on the issue before
us, the statement in the House and Senate Reports cited in note 8, supra, to
the effect that "Enforcement of a tax on wagers frequently will
necessitate the tracing of transactions through complex business relationships,
thus requiring the identification of the various steps involved." This
general statement, not necessarily referring to the numbers game or to mere
delivery systems, as distinguished from arrangements for the
"lay-off" of bets by gambling principals, is not helpful in
interpreting 3290 in relation to the numbers game and "pick-up men."
Cf. Federal Communications Commission v. Columbia Broadcasting System of
Calif., Inc., 311
U.S. 132, 136 . We think the same is true of the
statements of Representative Reed, 97 [354 U.S. 351, 358] Cong.
Rec. 6896, and of Senator Kefauver, 97 Cong. Rec. 12231-12232, relied on by the
Government. The significance of Senator Kefauver's statement is further limited
by the fact that he was an opponent of the bill. See Mastro
Plastics Corp. v. Labor Board, 350
U.S. 270, 288 .
[ Footnote 10 ] See 97 Cong. Rec. 6892, 12236, referred to in United
States v. Kahriger, 345
U.S. 22, 27 , n. 3.
[ Footnote 11 ] Treas. Reg. 132, 325.41, Example 2 (26 CFR, 1957 Cum.
Pocket Supp.), which was issued on November 1, 1951 (16 Fed. Reg. 11211,
11222), provides as follows: "B operates a numbers game. He has an
arrangement with ten persons, who are employed in various capacities, such as
bootblacks, elevator operators, news dealers, etc., to receive wagers from the
public on his behalf. B also employs a person to collect from his agents the
wagers received on his behalf. "B, his ten agents, and the employee who
collects the wagers received on his behalf are each liable for the special
tax."
[ Footnote 12 ] Apart from this, the force of this Treasury Regulation as
an aid to the interpretation of the statute is impaired by its own internal
inconsistency. Thus, while Example 2 of that regulation purports to make the
pick-up man liable for the 3290 occupational tax, Example 1 of the same
regulation provides that "a secretary and bookkeeper" of one
"engaged in the business of accepting horse race bets" are not liable
for the occupational tax "unless they also receive wagers" for the
person so engaged in business, although those who "receive wagers by
telephone" are so liable. Thus in this instance a distinction seems to be
drawn between the "acceptance" of the wager, and its
"receipt" for recording purposes. But if this be proper, it is not
apparent why the same distinction is not also valid between a writer, who
"accepts" or "receives" a bet from a numbers player, and a
pick-up man, who simply "receives" a copy of the slips on which the
writer has recorded the bet, and passes it along to the banker.
[ Footnote 13 ] See note 11, supra.
[ Footnote 14 ] See the dissenting judge's opinion below, 236 F.2d 182,
185-186. The sufficiency of the instructions to the jury in Daley apparently [354 U.S. 351, 360] was
not challenged on appeal. In any event, the Daley case was not concerned with a
pick-up man, nor was the legislative history quoted at p. 356, supra, brought
to the court's attention. The court in the Sagonias
case, supra, which accepted the Government's contention as to the meaning of
"receiving wagers," rejected the construction of the statute embodied
in the instructions to the jury quoted in Daley.
[ Footnote 15 ] See p. 356, supra.
MR.
JUSTICE BURTON, dissenting.
For the reasons stated in Sagonias v. United States, 223 F.2d 146, I believe that the
respondent pickup man was "engaged in receiving wagers for and on
behalf" of the banker, within the meaning of 3290 and 3291 (a) (3), and
therefore was required to pay the occupational tax and to register not only his
name and place of residence, but that of the banker. [354 U.S. 351, 361]
The language of 3290 does not limit
the occupational tax to persons "accepting wagers" in a contractual
sense. Instead, it imposes the tax on "each person . . . who is engaged in
receiving wagers for or on behalf of any person so liable [for the excise
tax]." Those words readily include a pickup man for he is engaged in
receiving for the banker the slips which provide the banker with the sole
evidence of the wagers made.
The legislative history contains
specific references that indicate that the section was to apply to bookmakers'
agents or runners. 1 It shows that the occupational tax was enacted
not only as a revenue measure on its own account, but as a measure to help
enforce the much larger excise tax placed by 3285 upon the principal operator
of the gambling enterprise. 2 To this end, 3291 (a) (1) and (3) requires each
person who is subject to the occupational tax to register not only his own name
and place of residence, but also that of the person for whom he is receiving
wagers. Registration of the pickup man aids the Government in tracking these
gambling operations to their headquarters and is essential to the enforcement
of the excise tax. Since the "receiving wagers" phrase in the
registration provisions includes the pickup man, it must have the same meaning
in the identical provisions imposing the occupational tax.
Furthermore, the administrative
interpretation of 3290 is significant. Since the enactment of the section [354 U.S. 351, 362] in
1951, there has been in effect the following explanation of its scope in
Treasury Regulations 132:
"Example (2).
B. operates a numbers game. He has an arrangement with ten persons, who are
employed in various capacities, such as bootblacks, elevator operators, news
dealers, etc., to receive wagers from the public on his behalf. B also employs
a person to collect from his agents the wagers received on his behalf.
"B,
his ten agents, and the employee who collects the wagers received on his behalf
are each liable for the special tax." (Emphasis supplied.) 26 CFR, 1957 Cum. Pocket Supp., 325.41.
This regulation should not be
disregarded unless shown to be plainly inconsistent with the statute.
Commissioner v. Wheeler, 324
U.S. 542, 547 ; Brewster v. Gage, 280
U.S. 327, 336 . Moreover, Congress re-enacted 3290 in 1954 as 26 U.S.C.
(Supp. II) 4411. It thus impliedly accepted this established interpretation of
the scope of the section. Corn Products Refining Co. v. Commissioner, 350
U.S. 46, 53 ; Helvering
v. Winmill, 305
U.S. 79, 83 .
[ Footnote 1 ] H. R. Rep. No. 586, 82d Cong., 1st Sess. 56; S. Rep. No.
781, 82d Cong., 1st Sess. 114; 97 Cong. Rec. 6896 (Representative Reed); id.,
at 12231-12232 (Senator Kefauver). In this connection, it should be noted that
the opinion of the court below states that "The `numbers banker', even as
bankers and brokers in reputable commerce, employs salaried runners and
messengers. These couriers are called `pick-up men.'" (Emphasis supplied.)
236 F.2d 182, 184.
[ Footnote 2 ] H. R. Rep. No. 586, 82d Cong., 1st Sess. 60; S. Rep. No.
781, 82d Cong., 1st Sess. 118. [354 U.S. 351, 363]