Article XII (p. 22) of said agreement sets forth the authority which the New York Central Railroad Co. has in regard to the collection of debts, obligations, etc., of the consolidating corporations. Article II (p. 8) of said agreement sets forth that the name of the consolidated corporation shall be the New York Central Railroad Co. Administrative officers of the Treasury Department directing travel or the movement of freight over the New York Central & Hudson River Railroad Co. and the Lake Shore & Michigan Southern Railway Co. will hereafter use the name of the New York Central Railroad Co. on transportation requests and bills of lading. By direction of the Secretary: BYRON R. NEWTON, Assistant Secretary of the Treasury. (T. D. 2200.) Narcotic law. The quantity of narcotic drugs that may be dispensed or prescribed by physicians, dentists, and veterinary surgeons registered under the provisions of the act of December 17, 1914. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 11, 1915. To collectors and other officers of internal revenue: The act of December 17, 1914, provides that a physician, dentist, or veterinary surgeon registered under the provisions of the law may dispense or prescribe any of the narcotic drugs coming within its scope to patients upon whom he shall "personally attend" and "in the course of his professional practice only." This office construes the words "dispensed," "distributed," or "prescribed," used in the act, as synonymous, and that a physician, dentist, or veterinary surgeon "dispenses" within the meaning of the law when he writes a prescription calling for any of the narcotic drugs to be filled by a registered dealer. While the law does not limit or state the quantity of any of the narcotic drugs that may be so dispensed or prescribed at one time, it does provide that it shall be unlawful to obtain by means of order forms any of the aforesaid drugs for any purpose other than the use, sale, or distribution thereof in the "conduct of a lawful business in said drugs or in the legitimate practice of his profession. Further, that all preparations and remedies containing narcotic drugs coming within the scope of this act are "sold, distributed, given away, dispensed, or possessed as medicines and not for the purpose of evading the intentions and provisions of this act," and it is further provided that it shall be unlawful for any person not registered to have in his possession or under his control any of the drugs, preparations, or remedies "which have not been prescribed in good faith by a physician, dentist, or veterinary surgeon registered under the act." Therefore where a physician, dentist, or veterinarian prescribes any of the aforesaid drugs in a quantity more than is apparently necessary to meet the immediate needs of a patient in the ordinary case, or where it is for the treatment of an addict or habitué to effect a cure, or for a patient suffering from an incurable or chronic disease, such physician, dentist, or veterinary surgeon should indicate on the prescription the purpose for which the unusual quantity of the drug so prescribed is to be used. In cases of treatment of addicts these prescriptions should show the good faith of the physician in the legitimate practice of his profession by a decreasing dosage or reduction of the quantity prescribed from time to time, while, on the other hand, in cases of chronic or incurable diseases such prescriptions might show an ascending dosage or increased quantity. Registered dealers filling such prescriptions should assure themselves that the drugs are prescribed in good faith for the purpose indicated thereon, and, if there is reason to suspect that the prescriptions are written for the purpose of evading the intentions of the law, such dealers should refuse to fill same. W. H. OSBORN, Commissioner of Internal Revenue. (T. D. 2201.) Income tax-Bad debts. Bad debts which, if collected, would constitute income in their entirety, are no deductible in a return of annual net income unless the amount of such items has been entered on the books of the taxpayer as income and such entry has been made within the year for which such amount is sought to be deducted as a bad debt. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: Washington, D. C., April 28, 1915. Debts on account of unpaid wages, salaries, rents, or items of a similar character which, if collected, would be properly included in gross income in returns of annual net income will not constitute an allowable deduction from gross income as bad debts in ascertaining taxable net income unless the amount representing such debts has been entered on the books of the taxpayer and included as income in his income tax return for the year in which the deduction is claimed, and has also been charged off, as required by law, it being specifically provided that only such debts due to the taxpayer actually ascertained to be worthless and charged off within the year may be deducted as bad debts. An entry of the item on the books and its inclusion in gross income must, therefore, precede the charging off of such item and its deduction as a bad debt. Revoking the paragraph headed "Drugs, exportation of," in T. D. 2172 of March 9, 1915. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 12, 1915. To collectors of internal revenue and others concerned: The attention of this office has been called to the fact that the paragraph headed "Drugs, exportation of," in T. D. 2172, dated March 9, 1915, issued under authority of act of December 17, 1914, is in conflict with prior T. D. 34221, dated March 3, 1914, issued by the Division of Customs, under provision of the act of February 9, 1909, relative to the importation and exportation of opium and cocaine, their salts and derivatives. The paragraph indicated is, therefore, revoked and the provisions of T. D. 34221 are in full force and effect. Regulations No. 24, Supplement No. 1. Regulations concerning the exportation with benefit of drawback of tax of articles mentioned in Schedule B, act of October 22, 1914. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 12, 1915. To further facilitate the exportation of tax-paid articles with benefit of drawback under the provisions of section 22, act of October 22, 1914, the inspection of such articles by an internal-revenue officer, in addition to the inspection required by the customs officer superintending the lading of the articles, is hereby waived where the amount of drawback, as to any one shipment, does not exceed $25; and articles 16, 17, 18, and 19 of Regulations No. 24, revised February 2, 1915, are hereby amended accordingly. Act of December 17, 1914, relative to the production, importation, manufacture, compounding, sale, dispensing, or giving away of opium or coca leaves, their salts, derivatives, or preparations, held to be constitutional. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 15, 1915. The appended decision of the United States District Court, Western District of Washington, in the case of United States of America v. Kenneth Brown, is published for the information of internal-revenue officers and others concerned. W. H. OSBORN, Commissioner of Internal Revenue. UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF WASHINGTON, NORTHERN DIVISION. No. 2988. APRIL 21, 1915. United States, plaintiff, v. Kenneth Brown, defendant. ON demurrer to indictment-Demurrer overruled. NETERER, District Judge: It is charged by the indictment that the defendant, at the time therein stated Did willfully, knowingly, unlawfully and feloniously have in his possession and under his control a certain compound, manufacture, derivative, and preparation of opium, to wit, about three drams of yen shee, a more particular description of the quantity and quality of said opium derivative and preparation herein referred to as yen shee being to the grand jurors unknown, he, the said Kenneth Brown, alias Kenneth Cummings, not having theretofore registered with the collector of internal revenue of the United States in and for the collection district of Washington, all as required under the provisions of the act of Congress of December 17, 1914, and not having theretofore paid the special tax provided for by said mentioned act; contrary to the form of the statute in such case made and provided, and against the peace and dignity of the United States of America. A demurrer is filed on the ground that the indictment does not state facts sufficient to constitute an offense under any valid or constitutional law of the United States. It is contended that the support of the indictment, if any, must come from section 8 of the act referred to, and that this section is unconstitutional in that it is an attempt on the part of Congress to encroach upon the police power of the several States; that the only right Congress has to control the sale of a commodity within the provisions of the constitution is (a) to regulate commerce; (b) the right of taxation; and neither of these rights are invoked by section 8. Counsel quotes excerpts from the opinions of several of the justices in the license cases (5 How., 504; Magler v. Kansas, 123 U. S., 623; Loisey v. Hardin, 135 U. S., 100, and Austin v. Tennessee, 179 U. S., 343). In the license cases a statute of Massachusetts regulating the sale of foreign liquors within the State was held unconstitutional. In Magler v. Kansas a prohibition statute, so-called, was held unconstitutional. In Loisey v. Hardin an "original package" case, the court held that unbroken and unopened packages brought from another State could not be prohibited as violative of interstate commerce. In Austin v. Tennessee a statute prohibiting the sale of cigarettes within the State was sustained. No fault can be found with these cases; nor do I think that they throw much, if any, light upon the issue here. The purpose of the drug act in issue is expressed in its title: An act to provide for the registration of, with collectors of internal revenue, and to impose a special tax upon all persons who produce, import, manufacture, compound, deal in, dispense, sell, distribute, or give away opium or coca leaves, their salts, derivatives, or preparations, and for other purposes. I think we may assume, and that the court will take judicial notice of the fact that no opium is grown or produced in this country, and that the purpose of the act is to prohibit the importation of opium. The laws with relation to such importations have become more stringent with each succeeding enactment. Section 1 of the act in question provides, among other things That on and after the first day of March, 1915, every person who produces, imports, manufactures, compounds, deals in, dispenses, sells, distributes, or gives away any opium or coca leaves or any compound, manufacture, salt, derivative, or preparation thereof, shall register with the collector of internal revenue of the district, his name, or style, place of business, * And further provides * At the time of such registry and on or before the first day of July annually thereafter, every person who produces, imports, manufactures, compounds, deals in, dispenses, sells, distributes, or gives away any of the aforesaid drugs, shall pay to the said collector a special tax at the rate of $1 per annum. Section 2 provides a lawful and legal method of acquisition by any person entitled to have possession of these drugs. Section 8 provides That it 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 the violation of this section and also of the violation of the provisions of section 1 of this act * The purpose of Congress was to prohibit the importation, manufacture, or sale of the drugs described. The drug being an "outlaw" in the country, its presence Congress has the right to trace, and has the power to punish any person in whose possession this "outlawed" article may be found. The possession of such drug or control thereof is made presumptive evidence of the unlawful importation, manufacture, etc., as well as an obligation to pay the special tax provided by the act, and a failure to register and pay the tax as provided in section 1 would be a fraud upon the United States in that it deprived the Government of the revenues provided by the act. 78411°-VOL 17-15-12 |