afforded, because if persons choose to put themselves in such a position they must take the legal consequences. As a matter of administration, it would obviously be impossible for the revenue officers in such cases to constitute themselves a chancery court and take testimony as to secret trusts. Decision of the United States circuit court, ninth circuit, northern district of California, in the case of J. Waldere Kirk v. The Western Union Telegraph Company. It is the duty of the maker and signer of the telegram to affix and cancel the stamp. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 20, 1899. The appended decision of the United States circuit court, ninth circuit, northern district of California, is hereby promulgated for the information of all officers of the Internal-Revenue Service. G. W. WILSON, Acting Commissioner. [In the circuit court of the United States, ninth circuit, northern district of California.] J. Waldere Kirk, plaintiff, v. Western Union Telegraph Company (a corporation), defendant. (No. 12689.) Action at law to recover damages in the sum of five thousand dollars, for the alleged neglect of the defendant to transmit a certain telegraphic message presented to the defendant by the plaintiff on the 11th day of August, 1898. January 3, 1899-Opinion on demurrer. MORROW, circuit judge: This is an action to recover damages for the alleged neglect of the defendant to transmit a certain telegraphic message presented to the defendant by the plaintiff on the 11th day of August, 1898. The defendant has interposed a demurrer to the complaint on the ground that it does not appear from the complaint that the telegram alleged therein to have been offered to the defendant for transmission and delivery had upon its face or elsewhere the internal-revenue stamp required by section 7 of the act of Congress, approved June 13, 1898, entitled "An act to provide ways and means to meet war expenditures, and for other purposes.' Section 6 of the act referred to provides as follows: "That on and after the first day of July, eighteen hundred and ninety-eight, there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this Act, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, shall be written or printed by any person or persons, or party who shall make, sign, or issue the same, or for whose use or benefit the same shall be made, signed, or issued, the several taxes or sums of money set down in figures against the same, respectively, or otherwise specified or set forth in the said schedule." (30 Stats., 451.) Section 7 provides: "That if any person or persons shall make, sign, or issue, or cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, without the same being duly stamped for denoting the tax hereby imposed thereon, or without having thereupon an adhesive stamp to denote said tax, such person or persons shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not more than one hundred dollars, at the discretion of the court, and such instrument, document, or paper, as aforesaid, shall not be competent evidence in any court." (30 Stats., 452.) Section 9 provides: "That in any and all cases where an adhesive stamp shall be used for denoting any tax imposed by this Act, except as hereinafter provided, the person using or affixing the same shall write or stamp thereupon the initials of his name and the date upon which the same shall be attached or used, so that the same may not again be used." (30 Stats., 453.) Section 18 provides: "That on and after the first day of July, eighteen hundred and ninety-eight, no telegraph company or its agent or employee shall transmit to any person any dispatch or message without an adhesive stamp, denoting the tax imposed by this Act, being affixed to a copy thereof, or having the same stamped thereupon, and in default thereof shall incur a penalty of ten dollars: Provided, That only one stamp shall be required on each dispatch or message, whether sent through one or more companies: Provided, That the messages or dispatches of the officers and employees of any telegraph company or telephone company concerning the affairs and service of the company, and like messages or dispatches of the officials and employees of railroad companies sent over the wires on their respective railroads shall be exempt from this requirement: Provided further, That messages of officers and employees of the Government on official business shall be exempt from the taxes herein imposed upon telegraphic and telephonic messages." (30 Stats., 456.) In section 25 of this same act it is provided, under the head of Schedule A, stamp duties: "Dispatch, telegraphic: Any dispatch or message, 1 cent." It is contended in support of the demurrer that it was the duty of the plaintiff to affix and cancel the internal-revenue stamp provided in the last section, before tendering the dispatch to the defendant for transmission, and that negligence can not be charged against the defendant for its refusal to transmit a message which was not stamped by the plaintiff as required by law. 13442- -16 The real question submitted to the court for decision is this: Upon whom does the law impose the burden of paying the stamp tax-the sender of the message or the telegraph company? The document being subject to tax under Schedule A, the fine or penalty imposed for the omission to affix and cancel the proper stamp is, under section 7, imposed upon the person who makes, signs, or issues the document. The statute is in the disjunctive, and reaches not only the omission of the person who issues a document subject to the tax, but the maker and signer of the instrument. The law for this purpose takes notice, therefore, of the person who writes out and signs a dispatch, and makes him liable for the omission to stamp the instrument he creates. By the terms of the stamp schedule the tax of 1 cent is placed upon this instrument as prepared by the sender, without reference to any act of the telegraph company in transmitting the message to its destination. The instrument described is a "dispatch, telegraphic: any dispatch or message.' Had it been intended to impose this tax upon the telegraph company, Congress could certainly have identified the subject of taxation as the document transmitted by the telegraph company; and it may be said that the penalty of $10 provided in section 18 for the default of the telegraph company in transmitting a dispatch or message without the stamp denoting the tax imposed by law is such an identification of the subject intended to be taxed. But the difficulty with this interpretation of the statute is that it does not relieve the sender from the fine of not more than $100 for his omission to affix the proper stamp to the dispatch or message as made and signed by him and delivered to the telegraph company for transmission. Two penalties are clearly imposed upon parties engaged in making and transmitting an unstamped dispatch or message-a fine of not more than $100 upon the party who makes, signs, or issues the document, and a penalty of $10 upon the telegraph company for transmitting it to its destination, the first being intended to secure the payment of the tax and the latter the attention and service of the telegraph company in the enforcement of the law. It follows, therefore, that the instrument set forth in the complaint was subject to a stamp tax, and that it was the duty of the plaintiff, as the maker and signer of the instrument, to affix to it and cancel the stamp required by law before he can charge the defendant with neglect in failing to transmit the message to its destination. The demurrer will be sustained. TELEPHONE COMPANIES. (20983.) Telephone messages and conversations. The person, firm, or corporation starting the message or conversation on its course should make return on Form 424. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., April 6, 1899. SIR: Your letter of January 20, 1899, concerning the making of returns of telephone messages on Form 424, has been received. You ask, in effect, which firm or corporation is liable to make the return (Form 424) where a message upon which the tax of 1 cent is required passes over more than one line owned or operated by more than one firm or corporation. In reply, you are informed that the person, firm, or corporation owning or operating the telephone line or lines who or which transmits the message or conversation from the owner of the message to be sent is the person, firm, or corporation liable to make the return (Form 424). It is held that not all the lines over which the message or conversation passes are liable, but only the line which starts the message or conversation on its course. Respectfully, yours, G. W. WILSON, Commissioner. Mr. J. C. LYNCH, Collector First District, San Francisco, Cal. THEATERS. (See EXHIBITIONS AND SHOWs.) TOBACCO, CIGARS, AND SNUFF. (See also DECISIONS 20592, p. 91; 20603, p. 48.) (20480.) Storage of leaf tobacco by manufacturers. In case manufacturers of tobacco or cigars have not sufficient room in which to store their material, the Commissioner, upon application and for sufficient cause, will permit outside storage, provided the makers of the bond will indorse thereon their assent to be bound for transactions at the place where the tobacco is stored. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 3, 1899. SIR: This office has received a letter, dated the 24th ultimo, from Messrs. F. & M. Herbs, proprietors of tobacco factory No. 5 and cigar factory No. 58, at Hudson, N. Y., in your district, in which they state that they have been informed by Deputy Collector Coffin that they "must store all their tobacco, both stemmed and unstemmed, on the factory premises; that any bacco, either stemmed or unstemmed, that is found outside of such factory premises will be liable to seizure and forfeiture," and they ask whether they have the right to store their material off the factory premises. 66 You are advised that under date of October 11 this office, in a parallel case, advised the collector that manufacturers of tobacco would be permitted to store leaf tobacco off their bonded premises provided they would enter the same on their manufacturer's books, forms 73 and 74, and monthly return 62 and 72, respectively; but that it was desired by the office that the tobacco should be stored on the factory premises when possible, and that if stored elsewhere there would be a chance at the close of the calendar year of it being overlooked and not correctly reported, either on the manufacturer's book or on his annual inventory, and that this would afford the manufacturer an opportunity, if he desired it, to falsify his accounts and would render proposed assessments uncertain and unsatisfactory. Therefore, manufacturers would be required to store their tobacco on their bonded factory premises unless there was a good and reasonable cause shown why they could not so store it, and, in such case, the facts should be reported to this office, and if found necessary and expedient, the Commissioner would grant manufacturers permission to store their material off the factory premises with the understanding that the makers of the bond should indorse thereon their assent to such outside storage and their willingness to be bound for the manufacturer's transactions at the place where the tobacco is so stored. Respectfully, yours, N. B. SCOTT, Commissioner. Mr. JOHN G. WARD, Collector Fourteenth District, Albany, N. Y. (20482.) Leaf tobacco. Under existing law the farmer or grower of tobacco has the right to sell tobacco of his own growth and raising to any person and in any quantity which may be desired, provided its condition has not been changed in any manner. This is a personal privilege and can not be delegated by him to another person.The farmer can not employ another person to travel from place to place to sell and deliver tobacco to consumers, nor has he the right to place the tobacco in the hands of another person to be sold for him to consumers, but he may place it in the hands of a qualified dealer in leaf tobacco to be sold on commission to other qualified dealers, or to manufacturers of tobacco or cigars, or to persons who buy leaf tobacco in packages for export. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 3, 1899. SIR: In reply to your letter of the 22d ultimo, asking for a copy of decision 19877,1 relating to the sale of leaf tobacco by the farmer, 1 Compilation of Decisions Rendered by the Commissioner of Internal Revenue under the War-Revenue Act of June 13, 1898 (January, 1899), page 277. |