pose by the Commissioner of Internal Revenue, and in case of the acceptance of such order shall preserve such duplicate for said period of two years in such a way as to be readily accessible to inspection by the officers, agents, employees, and officials hereinbefore mentioned. Nothing contained in this section shall apply—

(a) To the dispensing or distribution of any of the aforesaid drugs to a patient by a physician, dentist, or veterinary surgeon registered under this act in the course of his professional practice only:-Provided, That such physician, dentist, or veterinary surgeon shall keep a record of all such drugs dispensed or distributed, showing the amount dispensed or distributed, the date, and the name and address of the patient to whom such drugs are dispensed or distributed, except such as may be dispensed or distributed to a patient upon whom such physician, dentist, or veterinary surgeon shall personally attend; and such record shall be kept for a period of two years from the date of dispensing or distributing such drugs, subject to inspection, as provided in this act.

(b) To the sale, dispensing, or distribution of any of the aforesaid drugs by a dealer to a consumer under and in pursuance of a written prescription issued by a physician, dentist, or veterinary surgeon registered under this act: Provided, however, That such prescription shall be dated as of the day on which signed and shall be signed by the physician, dentist, or veterinary surgeon who shall have issued the same: And provided further, That such dealer shall preserve such prescription for a period of two years from the day on which such prescription is filled in such a way as to be readily accessible to inspection by the officers, agents, employees and officials hereinbefore mentioned.

(c) To the sale, exportation, shipment, or delivery of any of the aforesaid drugs by any person within the United States or any Territory or the District of Columbia or any of the insular possessions of the United States to any person in any foreign country, regulating their entry in accordance with such regulations for importation thereof into such foreign country as are prescribed by said country, such regulations to be promulgated from time to time by the Secretary of State of the United States. (d) To the sale, barter, exchange, or giving away of any of the aforesaid drugs to any officer of the United States Government or of any State, Territorial, District, county, to municipal or insular government lawfully engaged in making purchases thereof for the various departments of the Army and Navy, the Public Health Service, and for Government, State, Territorial, District, county, or municipal or insular hospitals or prisons.

The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall cause suitable forms to be prepared for the purposes above mentioned, and shall cause the same to be distributed to collectors of internal revenue for sale by them to those persons who shall have registered and paid the special tax as required by section one of this act in their districts, respectively; and no collector shall sell any of such forms to any persons other than a person who has registered and paid the special tax as required by section one of this act in his district. The price at which such forms shall be sold by said collectors shall be fixed by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury, but shall not exceed the sum of $1 per hundred. Every collector shall keep an account of the number of such forms sold by him, the names of the purchasers, and the number of such forms sold to each of such purchasers. Whenever any collector shall sell any of such forms, he shall cause the name of the purchaser thereof to be plainly written or stamped thereon before delivering the same; and no person other than such purchaser shall use any of said forms bearing the name of such purchaser for the purpose of procuring any of the aforesaid drugs, or furnish any of the forms bearing the name of such purchaser to any person with intent thereby to procure the shipment or delivery of any of the aforesaid drugs. It shall be unlawful for any person to obtain by means of said order forms any of the aforesaid drugs for any purpose other than the use, sale, or distribution thereof by him in

the conduct of a lawful business in said drugs or in the legitimate practice of his profession.

The provisions of this act shall apply to the United States, the District of Columbia, the Territory of Alaska, the Territory of Hawaii, the insular possessions of the United States, and the Canal Zone. In Porto Rico and the Philippine Islands the administration of this act, the collection of the said special tax, and the issuance of the order forms specified in section two shall be performed by the appropriate internal-revenue officers of those governments, and all revenues collected hereunder in Porto Rico and the Philippine Islands shall accrue intact to the general governments thereof, respectively. The courts of first instance in the Philippine Islands shall possess and exercise jurisdiction in all cases arising under this act in said islands. The President is authorized and directed to issue such Executive orders as will carry into effect in the Canal Zone the intent and purpose of this act by providing for the registration and the imposition of a special tax upon all persons in the Canal Zone who produce, import, compound, deal in, dispense, sell, distribute, or give away opium or coca leaves, their salts, derivatives, or preparations.

SEC. 3. That any person who shall be registered in any internal-revenue district under the provisions of section one of this act shall, whenever required so to do by the collector of the district, render to the said collector a true and correct statement or return, verified by affidavit, setting forth the quantity of the aforesaid drugs received by him in said internal-revenue district during such period immediately preceding the demand of the collector, not exceeding three months, as the said collector may fix and determine; the names of the persons from whom the said drugs were received; the quantity in each instance received from each of such persons, and the date when received.

SEC. 4. That it shall be unlawful for any person who shall not have registered and paid the special tax as required by section one of this act to send, ship, carry, or deliver any of the aforesaid drugs from any State or Territory or the District of Columbia or any insular possession of the United States, to any person in any other State or Territory or the District of Columbia or any insular possession of the United States: Provided, That nothing contained in this section shall apply to common carriers engaged in transporting the aforesaid drugs, or to any employee acting within the scope of his employment, or any person who shall have registered and paid the special tax required by section one of this act, or to any person who shall deliver any such drug which has been prescribed or dispensed by a physician, dentist, or veterinarian required to register under the terms of this act, who has been employed to prescribe for the particular patient receiving such drug, or to any United States, State, county, municipal, District, Territorial, or insular officer or official acting within the scope of his official duties. SEC. 5. That the duplicate-order forms and the prescriptions required to be preserved under the provisions of section two of this act, and the statements or returns filed in the office of the collector of the district, under the provisions of section three of this act, shall be open to inspection by officers, agents, and employees of the Treasury Department duly authorized for that purpose; and such officials of any State or Territory, or of any organized municipality therein, or of the District of Columbia, or any insular possession of the United States, as shall be charged with the enforcement of any law or municipal ordinance regulating the sale, prescribing, dispensing, dealing in, or distribution of the aforesaid drugs. Each collector of internal revenue is hereby authorized to furnish, upon written request, certified copies of any of the said statements or returns filed in his office to any of such officials of any State or Territory or organized municipality therein, or the District of Columbia, or any insular possession of the United States, as shall be entitled to inspect the said statements or returns filed in the office of the said collector, upon the payment of a fee of $1 for each one hundred words or fraction thereof in the copy or copies so requested. Any person who shall disclose the information contained in the said

statements or returns or in the said duplicate-order forms, except as herein expressly provided, and except for the purpose of enforcing the provisions of this act, or for the purpose of enforcing any law of any State or Territory or the District of Columbia, or any insular possession of the United States, or ordinance of any organized municipality therein, regulating the sale, prescribing, dispensing, dealing in, or distribution of the aforesaid drugs, shall, on conviction, be fined or imprisoned as provided by section nine of this act. And collectors of internal revenue are hereby authorized to furnish upon written request, to any person, a certified copy of the names of any or all persons who may be listed in their respective collection districts as special-tax payers under the provisions of this act, upon payment of a fee of $1 for each one hundred names or fraction thereof in the copy so requested.

SEC. 6. That the provisions of this act shall not be construed to apply to the sale, distribution, giving away, dispensing, or possession of preparations and remedies which do not contain more than two grains of opium, or more than one-fourth of a grain of morphine, or more than one-eighth of a grain of heroin, or more than one grain of codeine, or any salt or derivative of any of them in one fluid ounce, or, if a solid or semisolid preparation, in one avoirdupois ounce; or to liniments, ointments, or other preparations which are prepared for external use only, except liniments, ointments, and other preparations which contain cocaine or any of its salts or alpha or beta eucaine or any of their salts or any synthetic substitute for them: Provided, That such remedies and preparations are sold, distributed, given away, dispensed, or possessed as medicines and not for the purpose of evading the intentions and provisions of this act: The provisions of this act shall not apply to decocainized coca leaves or preparations made therefrom, or to other preparations of coca leaves which do not contain cocaine. SEC. 7. That all laws relating to the assessment, collection, remission, and refund of internal-revenue taxes, including section thirty-two hundred and twenty-nine of the Revised Statutes of the United States, so far as applicable to and not inconsistent with the provisions of this act, are hereby extended and made applicable to the special taxes imposed by this act.

SEC. 8. That is shall be unlawful for any person not registered under the provisions of this act, and who has not paid the special tax provided for by this act, to have in his possession or under his control any of the aforesaid drugs; and such possession or control shall be presumptive evidence of a violation of this section, and also of a violation of the provisions of section one of this act: Provided, That this section shall not apply to any employee of a registered person, or to a nurse under the supervision of a physician, dentist, or veterinary surgeon registered under this act, having such possession or control by virtue of his employment or occupation and not on his own account; or to the possession of any of the aforesaid drugs which has or have been prescribed in good faith by a physician, dentist, or veterinary surgeon registered under this act; or to any United States, State, county, municipal, District, Territorial, or insular officer or official who has possession of any said drugs, by reason of his official duties, or to a warehouseman holding possession for a person registered and who has paid the taxes under this act; or to common carriers engaged in transporting such drugs: Provided further, That it shall not be necessary to negative any of the aforesaid exemptions in any complaint, information, indictment, or other writ or proceeding laid or brought under this act; and the burden of proof of any such exemptions shall be upon the defendant.

SEC. 9. That any person who violates or fails to comply with any of the requirements of this act shall, on conviction, be fined not more than $2,000 or be imprisoned not more than five years, or both, in the discretion of the court.

SEC. 10. That the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, is authorized to appoint such agents, deputy collectors, inspectors, chemists, assistant chemists, clerks, and messengers in the field and in

the Bureau of Internal Revenue in the District of Columbia as may be necessary to enforce the provisions of this act.

SEC. 11. That the sum of $150,000, or so much thereof as may be necessary, be, and hereby is, appropriated, out of any moneys in the Treasury not otherwise appropriated, for the purpose of carrying into effect the provisions of this act.

SEC. 12. That nothing contained in this act shall be construed to impair, alter, amend, or repeal any of the provisions of the act of Congress approved June thirtieth, nineteen hundred and six, entitled "An act for preventing the manufacture, sale, or transportation of adulterated or misbranded, or poisonous, or deleterious foods, drugs, medicines, and liquors, and for regulating traffic therein, and for other purposes," and any amendment thereof, or of the act approved February ninth, nineteen hundred and nine, entitled “An act to prohibit the importation and use of opium for other than medicinal purposes," and any amendment thereof.

Approved, December 17, 1914.

(T. D. 2103.)

Distilled spirits-Suit on a warehousing bond.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., December 23, 1914.

The appended decision of the United States Circuit Court of Appeals, Fourth Circuit is published for the information of all concerned. W. H. OSBORN,

1. TAX ON SPIRITS.

Commissioner of Internal Revenue.

The tax on spirits becomes due as soon as the same is produced, and the Government has a first lien thereon until tax is paid.

2. SPIRITS STOLEN AFTER SEIZURE.

Where spirits in warehouse are stolen after seizure it does not affect the status of the obligors on the warehousing bond.

3. WAREHOUSING BOND.

The obligation on the warehousing bond is unconditional and continuing. 4. REMEDIES CUMULATIVE.

The right of the Government to proceed to collect the tax by forfeiture does not affect its right to resort to other remedies for its collection.

UNITED STATES CIRCUIT COURT OF APPEALS, FOURTH CIRCUIT. No. 1308. United States Fidelity & Guaranty Co. of Baltimore, Md., a corporation, plaintiff in error, v. United States and Columbus F. Cheshire, defendants in error.

ERROR to the District Court of the United States for the Eastern District of Virginia, at Norfolk. [Decided November 28, 1914.]

Before PRITCHARD, KNAPP, and Woods, Circuit Judges.

PRITCHARD, Circuit Judge: This is an action instituted in the United States District Court for the Eastern District of Virginia, at Norfolk, in February, 1914, against Columbus F. Cheshire and the United States Fidelity & Guaranty Co. upon a warehousing bond in the penalty of $5,000, in which the former is principal and the latter is surety.

The plaintiff in error will be referred to as defendant and the defendant in error as plaintiff, such being the relative positions the parties occupied in the court below.

This case was heard upon a stipulation as to the facts.

The court instructed the jury to return a verdict in favor of the Government for $3,221.79, with interest from the 30th day of May, 1913, at the rate of 6 per cent per annum until paid, said amount being the full claim of the Government as presented in such action. Judgment was accordingly entered by the court upon this verdict.

The circumstances are as follows:

Columbus F. Cheshire was a distiller owning distillery warehouse No. 3 near Portsmouth, Va. The warehousing bond given by him upon which this suit was brought was conditioned

To pay the full amount of tax, at the rate imposed by an act of Congress of August 28, 1894, on all spirits so deposited in said distillery warehouse before removal therefrom and within eight years from the date of entry of such spirits for deposit in said warehouse.

Because of alleged offenses against the Government proceedings were begun by it, before the institution of this suit against Cheshire, in which was obtained a judgment forfeiting to the Government the distillery, the land whereon it was located, and 64 barrels of spirits upon which taxes amounting to $3,221.79 were then unpaid. The agreed statement of facts contains the following:

Fourth. On May 30, 1913, subsequent to the seizure and forfeiture of the distillery in these proceedings described, and while said distillery and whisky was in the possession of the United States Government to be sold by the marshal under the order of this court in said libel proceedings, the whisky in the warehouse was stolen therefrom before said sale and has never been recovered or sold.

Upon the trial the court refused certain instructions asked for by the defendant and, at the request of the Government, charged the jury as follows:

The jury are charged that the United States tax on spirits distilled attaches to the same as soon as it comes into existence, and continues as a first lien thereon until the tax is paid or the whiskey is sold by the United States, and defendants are not relieved from the payment of the tax thereon because the same was stolen before the sale thereof, while in the possession of the Government, notwithstanding it may have been declared forfeited to the Government in the proceedings instituted for such forfeiture. The jury are accordingly directed to find a verdict for the Government for the sum of $3,221.79 with interest thereon from the 30th day of May, 1913, at the rate of 6 per cent per annum until paid.

In accordance with such charge, the jury rendered the following verdict:

We, the jury, upon issue joined, find for the Government for the sum of ($3,221.79) thirty-two hundred and twenty-one 79/100 dollars, with interest thereon from the 30th day of May, 1913, at the rate of 6 per centum per annum until paid. John W. Starke, foreman. June 12th, 1914.

The surety excepted to the ruling of the court below, and the case comes here on writ of error.

The only question involved in this controversy is as to whether the court below erred in holding that under the facts of this case the surety was not relieved of its obligation to pay the taxes on the amount of spirits placed in the warehouse in pursuance of the execution of the bond in question. That portion of the obligation material to the issue is as follows:

* * *

* * *

The principal shall well and truly pay or cause to be paid the full amount of tax on all spirits so deposited at said distillery warehouse before the removal therefrom and within eight years from the date of entry of such spirits for deposit in said warehouse.

It should be borne in mind that in the enforcement of the revenue laws it is the prime object of the Government to safeguard its rights to collect all the tax on spirits produced. Therefore when spirits are entered for deposit in a warehouse, the Government, in addition to requiring a bond for the payment of the taxes thereon, also retains possession of the warehouse, and the key to the same is kept at all times in the custody of a storekeeper and gauger.