the banks thousands of unstamped checks issued by drawers in ignorance of the law. The law being now generally understood, there is no further need of such permission. Respectfully, yours, Mr. JOHN C. ENTREKIN, G. W. WILSON, Commissioner. Collector Eleventh District, Chillicothe, Ohio. (21708.) Stamp tax-Grain and cotton tickets. Grain and cotton tickets cashed by a regular employee of company issuing same, or from buyer's own money in hands of third parties, not taxable. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 30, 1899. SIR: I have the honor to acknowledge receipt of your letter of October 18, 1899, in which you call attention to Treasury decisions 202391 and 20375,1 and ask to be informed whether under the above decisions it is lawful for parties not in the banking business to take deposits from buyers of produce and pay their tickets without attaching revenue stamps to the weigh bills or orders, when banks who have paid their license are prohibited from doing the same thing without the stamp being attached to the ticket or order. I have to advise you that grain and cotton tickets and the like may be cashed by a regular employee of the company issuing same, and directly to the parties to whom they are issued, without liability to the stamp tax, and they may also be cashed by a person not a regular employee of the company issuing same, provided the company deposits money with said person for the specific purpose of cashing these tickets, and providing the tickets are cashed out of the buyer's own money and no other. Under the above ruling a bank would be allowed to cash grain or cotton tickets without requiring stamp on said tickets, providing the party issuing the tickets deposits funds with the bank for the specific purpose of paying these tickets, which funds the bank must keep separate and distinct from its general deposit funds, and providing the tickets are paid directly to the parties to whom they were originally issued. It must be understood that the funds so deposited are for the specific purpose of cashing grain or cotton tickets and the like, and for no other purpose. Any previous ruling inconsistent with the above is hereby modified to conform therewith. Respectfully, yours, G. W. WILSON, Commissioner. Hon. J. W. BABCOCK, Necedah, Wis. 1 Compilation of Decisions Rendered by the Commissioner of Internal Revenue under the War-Revenue Act of June 13, 1898 (January, 1899), pages 107 and 108. (21815.) Stamp tax-Promissory notes. Promissory notes under seal taxable same as other promissory notes, and not as bonds.-Treasury decision 21691 revoked. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., December 4, 1899. SIR: In reply to your letter of the 8th ultimo, with reference to the taxation of a judgment note under seal, an instrument in common use in your State, which this office ruled under date of October 24, 1899, was taxable as a bond in addition to a tax as power of attorney, I have to advise you that I have carefully reconsidered the ground of that ruling, with the following result: The instrument in question is as follows: after date promise to pay to the order of 189-. dollars, with out defalcation, value received, with interest. And further do hereby empower any attorney of any court of record, within the United States or elsewhere, to appear for cations filed, confess judgment against and, after one or more defalas of any term for the above sum, with costs of suit and attorney's commission of per cent, for collection, and release of all errors, and without stay of execution, and inquisition and extension upon any levy on real estate is hereby waived, and condemnation agreed to. and the exemption of personal property from levy and sale on any execution hereon is also hereby expressly waived, and no benefit of exemption be claimed under and by virtue of any exemption law now in force or which may be hereafter passed. Witness · hand- and seal-. No. [L. S.] -. [L. S.] This document contains, in addition to a promise to pay, a power of attorney and a waiver of exemption rights on execution. The whole paper is usually called a judgment note, and sometimes a single bill or bill obligatory. It is said by Daniel on Negotiable Instruments (vol. 1, p. 28) that "if a seal be affixed to a paper in the ordinary form of a note its character as such is destroyed; it is thereby converted into the deed or bond of the maker who is then termed the obligor;" and Bouvier's Law Dictionary defines a bill obligatory as "a bond absolute for the payment of money." This was undoubtedly so at common law; but it is believed that the strictness of this doctrine has yielded to commercial usage, and it is no longer common to regard a promissory note under seal as a bond. Under the act of July 1, 1862, this office ruled that a bill single or a bill obligatory-i. e., an instrument in the form of a promissory note under seal-was taxable at the same rate as other promissory notes, and, after a review of all the facts, I have arrived at the conclusion that it was not the intention of the law makers to tax promissory notes under seal other than as ordinary promissory notes not under seal, and it is so ruled. The above instrument is, therefore, taxable at the rate of 2 cents for each $100 or fractional part thereof, and in addition thereto requires a 25-cent stamp for the power of attorney embodied therein. Ruling contained in Treasury decision 21691 to the contrary is hereby revoked. Respectfully, yours, G. W. WILSON, Commissioner. Mr. P. A. MCCLAIN, Collector First District, Philadelphia, Pa. (3.) Stamp-tax orders for the payment of money. Orders for the payment of money are required to be stamped, although intended merely as receipts or vouchers.—The drawer of the order is liable for the stamp, but, besides this, the maker, or party for whose use or benefit the order shall be made, signed, or issued, is liable also. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., December 30, 1899. To collectors of internal revenue and others: The appended decision of the United States circuit court, district of South Carolina, is published for the information of all concerned. G. W. WILSON, Commissioner. THE UNITED STATES OF AMERICA-DISTRICT OF SOUTH CAROLINA-IN THE CIRCUIT COURT, FOURTH CIRCUIT. The Granby Mercantile Company v. E. A. Webster, as collector of internal revenue for the district of South Carolina. The question presented in this case, lying as it does in a very narrow compass, is nevertheless important. The Granby Mercantile Company had an understanding with the Granby Mills, whether put into formal contract or not does not appear. Under this contract or understanding the mercantile company sold goods to the operatives of the mills on credit. When the accounts for such sales were presented to the treasurer of the mills they were paid out of the moneys due to the operatives making them, for wages in the mills, the mercantile company guaranteeing the mills company the correctness of the several accounts. To protect itself, and as vouchers for each transaction, the mercantile company at each sale took from the purchaser an order in this form: COLUMBIA, S. C., GRANBY COTTON MILLS, pay to the Granby Mercantile Company cents, for my account. dollars Witness: The Granby Mercantile Company never presented these orders to the mills, but filed them away as vouchers, probably to be presented in case the maker disputed the account. The collector of internal revenue, discovering this mode of dealing, called upon the Granby Mercantile Company to affix the 2-cent revenue stamp upon each of these orders. He insisted upon this demand, and the Commissioner of Internal Revenue, upon an appeal to him, sustained the decision of the collector. The mercantile company paid the demand, 2 cents upon 15,847 orders, in all $316.94, and now brings suit for its repayment. (Section 3226, Revised Statutes of the United States.) The collector proceeded under section 6 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," passed in second session Fifty-fifth Congress. The section is in these words: 66 "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 and 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." Schedule A, referred to in this section, requires a stamp of 2 cents on "bank check, draft, or certificate of deposit not drawing interèst, or order for the payment of any sum of money, drawn upon or issued by any bank, trust company, or any person or persons, companies, or corporations at sight or on demand." The collector requires a stamp upon instruments referred to in the case at bar because they are orders for the payment of money. There can be no doubt that they are orders for the payment of money and nothing else. The language used can have no other interpretation. The plaintiff, however, says that whatever may be their form, they were not intended for presentation, were never, in fact, presented, but were taken, kept, and fled by the mercantile company as vouchers for each sale. The case of United States v. Isham (17 Wall., 496) says: "The liability of an instrument to a stamp, as well as the amount of such duty, is determined by the form and face of the instrument, and can not be affected by proof of facts artside the instrument itself." And this rule commends itself. Were it necessary to inquire into all the circumstances attending the execution of an order for the payment of money, before it can be ascertained whethe it ha Falls to the stamp tax, endless delay would be occasioned. The purpose of the tax-the prompt relief of the Treasury-would be defeated. The important question, however, is this: Who is liable for the stamp? The drawer of the order unquestionably is. He comes within the words of the act, being the person "who makes, signs, or issues" the order. But, besides this, the payment must be made by the maker or by the party "for whose use or benefit the order shall be made, signed, or issued." In the case at bar, "for whose use or benefit" were these orders made or signed or issued? The transaction is this: The operative makes the purchase. He can not, or does not desire to, pay cash. But the mercantile company is unwilling, or at least does not intend, to rely on the personal credit of the operative. It takes from him an order on the mills company payable out of the account of the operative with the mills company. That is the security which the mercantile company takes, and it is taken for its benefit. Whether it be presented then, or is kept for presentation at some time in the future if needed, or whether it be retained simply as a voucher, a verification of the account, it is taken for the use of the mercantile company. So that company comes within the words of the statute. It can not be said that these words "or for whose use or benefit the same shall be made, signed, or issued" apply to the drawer of the order. If this were so, the words quoted would be entirely superfluous, mere surplusage, nor would the disjunctive "or" have been used to connect these words with the words preceding. This seems conclusive of the question. Let an order be taken dismissing the complaint. DECEMBER 27, 1899. CHARLES H. SIMONTON, Circuit Judge. CIGARS. (See TOBACCO, CIGARS, AND Snuff.) COLLATERAL SECURITIES, PLEDGING OF. (See also DECISIONS 21152, p. 12; 21497, p. 277.) Stamp tax-Note secured by pledge. Stamping of a note secured by a pledge of collateral under amendment approved February 28, 1899, to the act of June 13, 1898. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., April 1, 1899. SIR: This office is in receipt of your letter of March 16, 1899, submitting form of collateral note, and asking how same should be stamped. You are advised that the form of note submitted by you, if signed and delivered subsequent to July 1, 1898, but prior to February 28, 1899, is subject to taxation at the rate of 2 cents per $100 or fraction thereof of the face value as a promissory note, and, in addition, inasmuch as specific collateral is pledged for the payment of a certain and definite sum, stamps should be affixed because of the pledge of collateral embodied therein at the rate of 25 cents for each $500 in excess of $1,000 of the amount secured. |