The net income for both kinds of taxes and for both periods of the year being ascertained in exactly the same manner, but one return covering the entire calendar year 1913 is required. That return will show the entire net income ascertained in accordance with the provisions of the income tax law, and no specific exemption whatever being authorized, such net income as returned for the entire year will be the amount upon which the tax is computed. W. H. OSBORN, Commissioner of Internal Revenue. (T. D. 1938.) Extension of time to April 1, 1914, for the use of Forms 1001, 1003, and 1004, as provided in T. D. 1907 of November 26, 1913. TREASURY Department, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 29, 1914. Notice is hereby given that Forms 1001, 1003, and 1004, as adapted to the use of foreign organizations, foreign partnerships, and foreign fiduciaries, when properly filled in and signed, and giving the information required by regulations, may be accepted by debtors or withholding agents until March 31, 1914. Approved: JOHN SKELTON WILLIAMS, W. H. OSBORN, Commissioner of Internal Revenue. Acting Secretary of the Treasury. (T. D. 1939.) Blank forms of certificates and other forms required in connection with the collection of income tax and making of returns by taxpayers will be furnished on application to the Commissioner of Internal Revenue. Forms may be printed by corporations and others, provided they conform strictly to department requirements as to size, print, and contents. In making requisition on the department for forms no more should be requested than the absolute needs of the office make necessary. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: You are instructed that the department will furnish blank forms of certificates and other forms required to be used in connection with the collection of the income tax and the making of their returns by taxpayers to such parties as may make application for the same. Private corporations and others desiring to have these forms printed for themsleves may do so if they will strictly observe the requirements of the department as to size, print, and contents of the forms and certificates as prescribed by the regulations. In pursuance of the desire of the department to furnish every possible facility to aid taxpayers in complying with the law, requisition should be made for such quantity of the various forms as may be found necessary in each collection district, and these forms will be forwarded immediately upon application. Attention is called, however, to the fact that a large stock of these forms should not be accumulated in any office, and that for the present, particular caution should be exercised so as not to make requisition for more than the absolute needs of each office. It is contemplated that in the near future a combination of certain forms of certificates may be arranged for, and these consolidated or combined certificates will be furnished as soon as practicable. When such combined certificates shall be furnished, the use of the older or original certificates—that is, those now in use should be discontinued at the earliest possible date. ROBT. WILLIAMS, Jr., Approved: Acting Commissioner of Internal Revenue. JOHN SKELTON WILLIAMS, Acting Secretary of the Treasury. (T D. 1940.) Opium-Act of January 17, 1914. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 31, 1914. The appended act of Congress, approved January 17, 1914, is published for the information of internal-revenue officers and others concerned. W. H. OSBORN, Commissioner of Internal Revenue. AN ACT Regulating the manufacture of smoking opium within the United States, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That an internal-revenue tax of $300 per pound shall be levied and collected upon all opium manufactured in the United States for smoking purposes; and no person shall engage in such manufacture who is not a citizen of the United States and who has not given the bond required by the Commissioner of Internal Revenue. Every person who prepares opium suitable for smoking purposes from crude gum opium, or from any preparation thereof, or from the residue of smoked or partially smoked opium, commonly known as yen shee, or from any mixture of the above, or any of them, shall be regarded as a manufacturer of smoking opium within the meaning of this Act. SEC. 2. That every manufacturer of such opium shall file with the collector of internal revenue of the district in which his manufactory is located such notices, inventories, and bonds, shall keep such books and render such returns of material and products, shall put up such signs and affix such number to his factory, and conduct his business under such surveillance of officers and agents as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulation require. But the bond required of such manufacturer shall be with sureties satisfactory to the collector of internal revenue, and in a penal sum of not less than $100,000; and the sum of said bond may be increased from time to time and additional sureties required, at the discretion of the collector or under instructions of the Commissioner of Internal Revenue. SEC. 3. That all opium prepared for smoking manufactured in the United States shall be duly stamped in such a permanent manner as to denote the payment of the internalrevenue tax thereon. SEC. 4. That the provisions of existing laws covering the engraving, issue, sale, accountability, effacement, cancellation, and the destruction of stamps relating to tobacco and snuff, as far as applicable, are hereby made to apply to stamps provided for by the preceding section. SEC. 5. That a penalty of not less than $10,000 or imprisonment for not less than five years, or both, in the discretion of the court, shall be imposed for each and every violation of the preceding sections of this Act relating to opium by any person or persons; and all opium prepared for smoking wherever found within the United States without the stamps required by this Act shall be forfeited and destroyed. SEC. 6. The provisions of the Act of October first, eighteen hundred and ninety Twenty-sixth Statutes, page fifteen hundred and sixty-seven), in so far as they relates to the manufacture of smoking opium, are hereby repealed. Approved, January 17, 1914. (T. D. 1941.) Corporation tax-Building and loan associations Decision of court. 1. CONSTRUCTION OF CLAUSE. The words "no part of the net income of which inures to the benefit of any private stockholder or individual ” do not apply to domestic building and loan associations operated for the mutual benefit of members. 2. EXEMPTION. Building and loan associations operated exclusively for the mutual benefit of their members are exempt. 3. ISSUANCE OF PREPAID STOCK. The issuance of prepaid stock does not destroy mutuality (affirming 203 Fed., 876). TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 31, 1914. The appended decision of the United States Circuit Court of Appeals for the Third Circuit, in the case of Herold, collector of internal revenue, v. Park View Building and Loan Association, is published for the information of internal-revenue officers and others concerned. W. H. OSBORN, Commissioner of Internal Revenue. 27776°- VOL 16-14- -2 UNITED STATES CIRCUIT COURT OF APPEALS, THIRD CIRCUIT. 1913. No. 1801. OCTOBER TERM, Herold, collector, v. Park View Building and Loan Association. ERROR to the District Court of the United States for the District of New Jersey. Before GRAY, Buffington, and MCPHERSON, Circuit Judges. MCPHERSON, Circuit Judge: The Park View Building and Loan Association was taxed under section 38 of the act of August 5, 1909 (Supplement of 1911 to Rev. Stats., p. 946), and was compelled to pay $71.04, tax and penalty for the year 1909. This suit, which seeks to recover that sum from the collector, was removed from a State court of New Jersey to the District Court, where the parties agreed upon a statement of facts. The court entered judgment for the association (203 Fed., 876)-Judge Orr presiding specially-and we refer to his opinion with general approval. On two or three branches of the subject something more may, perhaps, be said without extending the discussion unduly. We do not think it necessary to rely on the rule that words imposing a tax should be clear, doubtful language being construed in favor of the citizen. There is force in the Government's contention that the words in question do not impose a tax at all; that the tax is not laid by the proviso, but by the first clause of the section, which includes "every corporation," etc.; and therefore that the court is asked to construe not language that lays a tax but language that exempts. The Government insists that a different rule should be applied in such a situation and that a doubt must be resolved against a claim of exemption. We lay the subject aside, however, for we do not think the questions presented are doubtful enough to require the aid of either rule. Let us consider first the question Judge Orr did not decide—namely, what effect should be given to the words hereafter italicized in the proviso to the first paragraph of section 38. After imposing a special excise tax upon "every corporation, joint stock company, or association organized for profit and having a capital stock represented by shares, etc., the paragraph proceeds to state certain exceptions to the generality of this clause: Provided, however, That nothing in this section contained shall apply to labor, agricultural, or horticultural organizations, or to fraternal beneficiary societies, orders, or associations operating under the lodge system and providing for the payment of life, sick, accident, and other benefits to the members of such societies, orders, or associations, and dependents of such members, nor to domestic building and loan associations, organized and operated exclusively for the mutual benefit of their members, nor to any corporation or association organized and operated exclusively for religious, charitable, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. The Government's argument on this branch of the case is based upon the contention that the words in italics qualify the whole proviso and apply to every organization or association named therein, including a building association, like the plaintiff, that issues what is known as prepaid stock. (This is not preferred stock, as will appear in a few moments.) We do not agree with this position. As we construe the proviso, it excepts four groups of corporations: Labor, agricultural, or horticultural organizations. Fraternal beneficiary societies, orders, or associations operating under the lodge system, and providing for the payment of life, sick, accident, and other benefits to the members of such societies, orders, or associations, and dependents of such members. Domestic building and loan associations organized and operated exclusively for the mutual benefit of their members. Any corporation or association organized and operated exclusively for religious, charitable, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. The character of the first three groups is well known. In none of them (as normally conducted) does the net income inure to the benefit of private stockholders or individuals, and it would have been superfluous to add that feature to the description. But there is a large and a more indeterminate class-"religious, charitable, and educational" corporations or associations and this class contains some members whose precise character may not be altogether easy to define. For example, a church is, no doubt, organized and operated exclusively for religious purposes; but is this true of a camp-meeting association also? Such an association sometimes has net income that inures, at least in part, to the benefit of private stockholders or individuals. A hospital is usually organized and operated exclusively for charitable purposes; but there are private hospitals operated by associations whose net income goes to the benefit of individuals. The exclusive purpose of a school is educational, but the income of many schools operated by associations is devoted to private profit. Indeed, everyone acquainted with the problems of State taxation know how often the courts have been called on to determine the scope and application of statutes exempting charitable and educational institutions from taxation, and we see no reason to doubt that Congress intended to avoid such disputes as far as possible by establishing both a positive and a negative test for the restricted membership in the fourth group. Positively (although the use of the word "exclusively" makes this test partly negative also) the test is that the corporations and associations must be organized and operated exclusively for religious, charitable, and educational purposes, and negatively the test is that none of such corporations and associations shall devote its net income, in whole or in part, to the benefit of any private stockholder or individual. As pointed out in the association's brief, section 2 of the income tax provisions of the act of October 3, 1913, lends force to the construction that confines the italicized clause to the fourth group. Section 2 in clause 3 of the act of 1913 repeals section 38 of the act of 1909, the reason being that an earlier clause (G) is, in effect, a substitute for section 38 and that Congress did not intend to impose two taxes of the same nature at the same time, one by the act of 1913 and the other by the act of 1909. Being a substitute, therefore, clause G also contains an excepting proviso, and this is as follows: Provided, however, That nothing in this section shall apply to labor, agricultural, or horticultural organizations, or to mutual savings banks not having a capital stock represented by shares, or to fraternal beneficiary societies, orders, or associations operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system and providing for the payment of life, sick, accident, and other benefits to the members of such societies, orders, or associations and dependents of such members, nor to domestic building and loan associations, nor to cemetery companies, organized and operated exclusively for the mutual benefit of their members, nor to any corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual, nor to business leagues, nor to chambers of commerce or boards of trade not organized for profit or no part of the net income of which inures to the benefit of the private stockholder or individual, nor to any civic league or organization not organized for profit, but operated exclusively for the promotion of social welfare. We think it is clear that the repeated use here made by Congress of the negative clause, “no part of the net income of which inures to the benefit of any private stockholder or individual,” throws light upon the previous use of the same clause in the act of 1909 and strengthens the construction we have adopted. We agree that the argument is somewhat weakened by the possibility of supposing that Congress was trying to make more clear in the act of 1913 what may have been thought obscure in the act of 1909, and we wish to avoid even the appearance of evading this consid eration; but certainly both constructions are available, and one seems as likely to be correct as the other. We believe the view we have indicated should be adopted. But there is another reason for believing that the clause in italics could not have been intended to apply to the group of "domestic building and loan associations organized and operated exclusively for the mutual benefit of their members." And the reason |