
    CHICAGO CHEESE & FARM PRODUCTS COMPANY v. THE UNITED STATES
    
    [No. E-287.
    Decided June 6, 1927]
    
      On the Proofs
    
    
      Tawes; filled cheese; “Daisy Food Product.” — Plaintiff's product, sold under the designation of “Daisy Pood Product,” made of wet casein or curd, obtained from milk, and into which is introduced coconut oil, held taxable as filled cheese.
    
      The Reporter's statement of the case:
    
      Mr. Willis D. Nanee for the plaintiff. Kirkland, Patterson <& Fleming were on the briefs.
    
      Mr. Joseph U. Sheppard, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      Mr. Frank R. Pentlarge as amicus cwrim.
    
    The court made special findings of fact, as follows:
    I. The plaintiff herein is, and was during the period involved, a corporation organized and existing under the laws of the State of Illinois and engaged in the manufacturing and jobbing of cheese and other food products.
    II. For the year beginning July 1, 1924, a manufacturer’s tax of $400 was assessed by the defendant against the plaintiff as a manufacturer of “filled cheese.” A special tax stamp was issued to and paid for by the plaintiff March 20, 1925.
    For the sale of a product known as “ Daisy ” during the period March 1, 1925, to March 14, 1925, a sales tax of $490.13 was assessed. This latter tax was assessed against plaintiff’s product as a “ filled cheese ” and was paid by the plaintiff March 19, 1925.
    These two sums were paid under protest and a claim for refund made by the plaintiff. Under date of April 10, 1925, plaintiff’s claims were rejected by the Commissioner of Internal Revenue.
    III. Plaintiff’s product “ Daisy ” was during said period prepared in the following manner: Wet casein or wet curd, the two being for purposes herein synonymous, was purchased by the plaintiff from factories manufacturing the same. Casein is a chemical product contained in milk and obtained therefrom by treatment of the milk when skimmed with rennet or acid to coagulate it. From this coagulation water is pressed, the resulting product being wet curd or wet casein.
    When this curd was received by the plaintiff it was placed in containers with perforated bottoms and water added for the purpose of washing away any of the remaining acids or flavors. This water was then pressed out and the curd placed in a vat. To this curd was then added coconut oil and a small percentage of vegetable coloring and salt. The coconut oil and curd were mixed by the use of a device similar to the ordinary form of meat chopper and the mixture was afterwards chilled. Chilling at this stage in the manufacture is necessary to keep the coconut oil from separating from the curd. After chilling, it was again passed through the chopper, stuffed into linen bags, and pressed into shape, so as to make a commercial package of about four pqunds.
    The resulting product was soft and had the outward appearance and texture of soft cheese. Under temperatures ranging around sixty degrees, the product would hold up for about a week, but in warmer temperatures would disintegrate in some three or four days, the oil separating itself from the rest of the mass and the product generally becoming moldy in condition. It was therefore necessarily sold to a market which could be reached by not more than an overnight’s journey and even in such markets experienced a high percentage of returns.
    Because of its texture, any branding as required under the filled cheese law of 1896 would not remain legible for more than a few moments, the ink spreading rapidly and becoming absorbed.
    IV. When this product was first manufactured by the plaintiff, it was denominated “ Daisy Brand Farmers Cheese,” and “ Daisy Brand Dutch Cheese,” but under advice from the Department of Agriculture administrating pure-food regulations, the labels attached to this product were changed so as to eliminate the reference to the product as a.cheese and during the period March 1 to March 14, 1925; labels calling this product a cheese were not used by the-plaintiff, and it was designated as “ Daisy Food Product.”
    V. Generally speaking there are two types of cheese — hard and soft. Hard cheese, as a commercial article, was introduced into this country early in the nineteenth century and conformed to a process developed at Cheddar, England, the resultant name of that type of cheese being, therefore, “ Cheddar cheese.” This general- name was continued in use in this country. “ Cheese,” when spoken of unqualifiedly during the period 1895-96 and prior thereto, usually signified a hard or Cheddar type cheese. Soft cheese, while made-abroad and to a limited extent in this country as early as 1872, was until about 1900 manufactured in such small quantities as to be almost negligible in amount in comparison with hard cheese. Since that date, however, it has become increasingly popular. It is now given the general name of “ cream cheese,” which name had for many years been used only in connection with a hard type of cheese.
    . YI. Cheddar, or the hard type of cheese, is manufactured from whole milk. This mill?: is heated to about 85 degrees temperature and rennet in sufficient quantity is introduced to coagulate the milk in from 20 to 25 minutes. The mass is then heated to about 102 degrees; the whey is drawn off; it is matted, milled, and rematted, salted, and put through a press. This procedure consumes approximately six hours. The product is then set away for curing. This curing process varies in accordance with the strength or sharpness of taste desired and may extend over several months’ period.
    In the making of soft cheese the same process obtains except that the milk is not heated to such a high degree of temperature before the rennet is introduced, and a comparatively small quantity of rennet is used. This smaller quantity of rennet, together with the lower temperature, results in coagulation being retarded, so that it is not completed until the expiration of approximately 12 hours. After coagulation it is again not subjected to such a high degree of temperature as in the case of the making of the hard cheese, and it is allowed to settle and set in this soft condition. A soft cheese necessarily must be placed upon the market as soon as manufactured, for because of its nature it will not keep in the same manner as does a hard cheese.
    Hard cheeses were made in cylindrical form and in weight varied from approximately 10 to 85 pounds, the greater amount being in the larger forms. Soft cheese has always been marketed in smaller weights, because its nature would cause it to fall apart if made in the form and weight customary for firm types of cheeses. A soft cheese can not be made so as to hold a brand for more than a few minutes, nor can it be made large enough and hold it own weight if made of sufficient size to contain twelve letters to contain the branding required under the filled cheese act of 1896.
    VII. Casein as it exists in milk or skimmed milk is a soluble calcium compound. It can not be seen except by the help of an ultramicroscope. It exists in practically a dissolved state or colloidal condition. When it is taken out of milk its chemical name is calcium paracaseinate; its common name is then wet solid casein or wet curd. When removed it becomes denatured in that it loses the physical properties which it had when it existed in the parent substance. It is then a clot which has imbibed a considerable amount of moisture and is mushylike and slimy. Casein, when once removed from milk, can not be returned to the same state in which it existed previously in the milk, because it has of its nature then changed its properties.
    Butterfat in milk is in a purely suspended condition in the form of oil globules. The particles of dissolved casein surround each small globule of butterfat. When clotted by the use of rennet or acid the casein changes its condition and becomes a smooth clot surrounding each of these small globules of butterfat and presenting a covering to such globules in such form that the oil can not work itself out nor any foreign substance work themselves in. Such a mass can subsequently be worked into the smooth consistency of cheese. If, however, butterfat is first taken away from the milk and the skimmed milk then clotted or coagulated, the casein changes its physical properties and forms a clot of a solid nature which has water imbibed in it. If at that period it is attempted to return the butterfat or add other fats to the mixture, it is found to be impossible to mix such fats into the same form as they appeared before, because the oil can not then penetrate the clot. The mixture will, therefore, remain purely distinct particles; that is, butterfat particles and casein particles. Such a product has more of a granular than a smooth consistency.
    The court decided that plaintiff was not entitled to recover.
    
      
       Petition for writ of certiorari dismissed.
    
   Booth, Judge,

delivered the opinion of the court:

The plaintiff is an Illinois corporation engaged in manufacturing what it designates as a food product. The Commissioner of Internal Eevenue levied and collect a manufacturer’s and a sales tax upon plaintiff’s business under the act of June 6, 1896. The manufacturer’s tax amounted to $100 per annum and the sales tax amounted to $490.73, extending over a period from March 1,1925, to March 14,1925, a total tax exaction of $890.73, and it is for the recovery of this amount, with interest thereon from date of payment, that this suit is brought. No jurisdictional .question is involved.

The act of June 6, 1896, 29 Stat. 253, is in terms as follows:

Be it enacted by the Senate a/nd House of Bepresenatives of the United Statees of America in Congress assembled. That for the purposes of this act, the word ‘ cheese ’ shall be understood to mean the food product known as cheese, and which is made from milk or cream and without the addition of butter, or any animal, vegetable, or other oils or fats foreign to such milk or cream, with or without additional coloring matter.
“ Sec. 2. That, for the purposes of the act certain substances and compounds shall be known and designated as ‘filled cheese,’ namely; All substances made of milk or skimmed milk, with the admixture of butter, animal oils or fats, vegetable or any other oils, or compounds foreign to such milk, and made in imitation or semblance of cheese.
“ Sec. 3. That special taxes are imposed as follows:
“Manufacturers of filled cheese shall pay four hundred dollars for each and every factory per annum. Every person, firm, or corporation who manufactures filled cheese for sale shall be deemed a manufacturer of filled cheese. * * *
“ Sec. 6. That filled cheese shall be packed by the manufacturers in wooden packages only, not before used for that purpose, and marked, stamped, and branded with .the words ‘ filled cheese ’ in black-faced letters not less than two inches in length, in a circle in the center of the top and bottom of the cheese; and in black-faced letters of not less than two inches in length in line from the top to the bottom of the cheese, on the side in four places equidistant from each other; and the package containing such cheese shall be marked in the same maimer, and in the same number of places, and in the same description of letters as above provided for the marketing of the cheese; and all sales or consignments made by manufacturers! of filled cheese to wholesale dealers in filled cheese or to exporters of filled cheese shall be in original stamped packages. Retail dealers in filled cheese shall sell only from original stamped packages, and shall pack the filled cheese when sold in suitable wooden or paper packages, which shall be marked and branded in accordance with rules and regulations to be prescribed by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury. Every person who knowingly sells or offers to sell, or delivers or offers to deliver, filled cheese in any other form than in new wooden or paper packages, marked and branded as hereinbefore provided and as above described, or who packs in any package or packages filled cheese in any manner contrary to law, or who falsely brands any package or affixes a stamp on any package denoting a less amount of tax than that required by law, shall upon conviction thereof be fined for each and every offense not less than fifty dollars and not more than five hundred dollars or be imprisoned not less than thirty days! nor more than one year.
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“ Sec. 9. That upon all filled cheese which shall be manufactured there shall be assessed and collected a tax of one cent per pound, to be paid by the manufacturer thereof; and any fractional part of a pound in a package shall be taxed as a pound. The tax levied by this section shall be represented by coupon stamps; and the provisions of existing laws governing the engraving, issue, sale, accountability, effacement, and destruction of stamps relating to tobacco and snuff, as far as applicable, are hereby made to apply to stamps provided by this section.
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“ Sec. 11. That all filled cheese as herein defined imported from foreign countries shall, in addition to any import duty imposed on the same, pay an internal-revenue tax of eight cents per pound, such tax to be represented by coupon stamps; and such imported filled cheese and the packages containing the same shall be stamped, marked, and branded, as in the case of filled cheese manufactured in the United States.
Hi H« # % * H* H<
“ Sec. 15. That the Commissioner of Internal He venue is authorized to have applied scientific tests, and to decide whether any substances used in the manuiacture of filled cheese contain ingredients deleterious to health. But in case of doubt or contest his decision in this class of cases may be appealed from to a board hereby constituted for the purpose, and composed of the Surgeon General of the Army, the Surgeon General of the Navy, and the Secretary of Agriculture, and the decision of this board shall be final in the premises.
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“ Sec. 18. That the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make all needful regulations for the carrying into effect the provisions of this act.”

The commissioner collected the taxes above mentioned by classifying plaintiff’s product as “ filled cheese ” under section 2 of the statute. Plaintiff is now insisting that in this respect the commissioner was in error, and asserts that its product is not within the meaning and intent of the statute in any event.

The statute defines cheese first by designating it as “the food product known as cheese ” and then by its ingredients, viz, “ Made from milk or cream and without the addition of butter, or any animal, vegetable, or other oils or fats foreign to such milk or cream, with or without additional coloring matter.” Obviously Congress by this procedure was referring to a known food product made by a process which utilized the natural ingredients of milk and cream, and eliminated the introduction of foreign ingredients in its composition. Section 2 manifestly takes up the identical subject and seeks to handicap its manufacture when the same resultant product is obtained by the use of foreign ingredients and the latter imitates the former. Clearly there can be little doubt that the mischief to be corrected by the statute was a growing and expanding attempt to utilize skimmed inilk or milk from whicli the animal fats had been extracted and replace them by foreign fats or oils and produce a product capable of being marketed as cheese. Congress was attempting to preserve the pure-cheese industry and maintain its marketable stability by imposing a tax burden upon the cheaper commodity made by the employment of foreign substances, and which in competition with the natural product would materially supplant it in the trade. Much expert .testimony has been adduced, and a record of rather great pro.portions has been built up; but in reconciling conflicts and giving effects to its weight there is no doubt that the plaintiff’s product is made from casein, a by-product of skimmed milk, with which coconut oil is mixed for the express purpose of supplying the animal fats absent in skimmed milk. This, in our opinion, is the very thing the statute was seeking to tax. 'The language used could not make it plainer— “all substances made of milk or slummed milk, with the admixture of butter * * * or compounds foreign to such milk, and made n imitation or semblance of cheese.” Plain-, tiff’s product has the outward appearance and texture of soft cheese, and the fact is conceded that it is not made from the natural ingredients of milk or cream.

Plaintiff seeks to escape the tax upon the theory that casein is not milk or skimmed milk. This contention we regard as untenable. The vital ingredient, aside from animal fats, in whole milk or cream to cheese making is casein. If allowed to remain in the milk, as in pure cheese making, it surrounds the globules of butterfat, and when clotted furnishes the combined mass which is subsequently worked into the consistency of cheese. Milk from which the cream and casein have been extracted would be utterly worthless in cheese making. Therefore, plaintiff utilizes the cheese-making qualities of skimmed milk in so far as they are available •and supplies the deficiencies by the introduction of unnatural and foreign substances, creating a product of the texture and appearance of soft cheese. If the plaintiff purchased skimmed milk and produced its own casein, the result would be exactly the same. Plaintiff could not make its . product from skimmed milk alone. It is the casein in the milk, to which is added the foreign fats or oils, that brings forth what plaintiff sells at present as a food product. Obviously this is doing indirectly what the statue intends to reach. Casein is nothing more nor less than skimmed-milk curd. It is true that plaintiff purchased casein from outside parties and did not extract it from its own skimmed milk; but clearly the distinction is one of form and not of substance. The only ingredient of skimmed milk available to plaintiff in its manufacturing process was casein, and it might just-as well have purchased its own skimmed milk directly and precipitated the casein therefrom. One may not escape a statutory provision by resorting to an outside source for the convenient and economical supply of an ingredient which, of itself, is the basic factor in a manufacturing process which the statute regulates and defines. Plaintiff uses skimmed milk to the very same extent it would have used the same if it had been impossible to purchase casein from others. Resort to purchasing casein was a mere convenience and doubtless cheaper than producing its own from skimmed milk.

Stress is put upon the contemporaneous condition of the cheese industry in 1896 when the statute was passed, and from the record a contention is made that the statute was intended to reach only imitations of hard or Cheddar cheese; that soft or cream cheese was practically unknown in 1896 and imitations of Cheddar cheese were influencing the foreign market and mailing serious inroads upon the domestic trade. The statute is not ambiguous. Its provisions are plain and the intent apparent. Section 2 defines “ filled cheese.” If plaintiff’s product falls within the definition the tax attaches, notwithstanding the fact that in 1896 similar products may not have been manufactured.

While we have given the plaintiff the benefit of Finding V, in our opinion the scope and plain intent of the act were to prevent imitations of natural cheese and save the public from purchasing imitations thereof, unless duly informed to that effect by proper brands and marking. To restrict the application of legislation of this character, legislation affecting the food supply to the narrow limits of form and technical names applied to the industry in 1896 is, we believe,, without warrant of law. Congress was striking at. the perversion of the usual and natural processes of making pure cheese. Substitutes for the natural ingredients of milk and cream in the industry were the primary factors of its concern, both the practices then extant, or those which the future might develop.

The petition will be dismissed. It is so ordered.

Moss, Judge; Hat, Judge; and Campbell, Chief Justice, concur.

GRAham, Judge, took no part in the decision of this case..  