(265.) Use of the penalty envelope. The right to use penalty envelopes is confined to the Departments and Bureaus of the Government, and officers connected therewith, for transmitting mailable matter relating exclusively to Government business. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE. Washington, D. C., January 16, 1901. SIR: Yours of the 12th instant is received, stating that it having come to your notice that a certain wholesale dealer in oleomargarine had forwarded his monthly report in one of the Department penalty envelopes without a postage stamp thereon you wrote him for an explanation. He answered that the envelope was given him by a former deputy collector for the purpose for which it was used. You suggest that taxpayers have no right to use penalty envelopes, and ask a ruling in regard to the matter, that you may instruct your deputies. In reply, you are advised that the right to use penalty envelopes is confined to the Departments and Bureaus of the Government, and officers connected therewith, for transmitting letters and packages relating exclusively to the business of the Government. Any Department, office, or officer entitled to use them may inclose a penalty envelope with return address to any person from or through whom official infor mation is desired, the addressed envelope to be used only to cover such official information. A person not an officer of the Government writing to an official of the Government concerning the business of the writer, or forwarding a monthly or other return, required by the internal-revenue laws to be made by the writer, can not use the penalty envelope without incurring liability to the penalty of $300, under section 5 of the act of March 3, 1877. (See Circular No. 344, 36 Int. Rev. Rec., 149; circular letter relative to the abuse of official frank, dated November 25, 1895, 41 Int. Rev. Rec., 489.) Respectfully, J. W. YERKES, Commissioner. Mr. JAMES D. GILL, Collector Third District, Boston, Mass. (266.) Legacy tax. A State inheritance tax a proper deduction from a legacy as an expense. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 17, 1901. SIR: In reply to your letter of the 9th instant, relative to a protest filed by Mr. J. N. Young, attorney for a legatee in the estate of Cecelia A. Higgins, deceased, in which a certain legacy is reduced to a sum of less than $10,000 on account of the deduction of the State inheritance tax, you are advised that the State inheritance tax is a proper deduction from the legacy as an expense. As the law provides "where the person or persons entitled to any beneficial interest in such property * * * for each and every one hundred dollars of the clear value of such inter est in such property," such a beneficial interest is the amount that the legatee receives. No tax accrues on such a legacy unless the beneficial interest exceeds the sum of $10,000. Any ruling of this office conflicting herewith is hereby revoked. Respectfully, Mr. JOHN C. LYNCH, Collector First District, San Francisco, Cal. (267.) Legacy tax. A legacy to a partnership is considered a legacy to each partner that comprises the firm. The firm is not to be treated as an entity. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 17, 1901. SIR: Your letter of the 10th instant, stating that "one Larken Dunton made a will in which he bequeathed to the firm of C. H. Dunton & Co., of which his son C. H. was an equal partner with one W. J. Gardner, a stranger in blood, notes amounting to $18,000, which notes, made by the firm, he held for money loaned them," and asking for instructions as to legacy tax to be paid, has been received. In reply, you are advised that the legacy is a legacy to C. H. Dunton and W. J. Gardner. A partnership is not, as a general rule, considered as a body distinct from the members composing it, although there have been decisions to the effect that a partnership or joint-stock company is a distinct entity in the eye of the law, the same as a corporation (17 Amer. and Eng. Ency. of Law, 918). In the matter of the legacy to the firm in question, I am of the opinion that the firm should not be treated as an entity, and that no tax accrues, unless by the terms of the will these legatees are to receive in addition certain other amounts which would bring the aggregate amount of their respective interest to a sum exceeding $10,000. Respectfully, J. W. YERKES, Commissioner. JAMES D. GILL, Collector Third District, Boston, Mass. (268.) Stamp tax on plasters. Decision of United States circuit court in the case of J. Ellwood Lee Company v. P. A. McClain, collector.-Plasters put up in style or manner similar to that of patent, trade-mark, or proprietary medicines in general, and advertised as remedies, or as having a special claim to merit, are subject to stamp tax, under Schedule B, act of June 13, 1898.—The word "compounded" in section 20 of the act is not employed in a peculiar or technical sense, but is used in its ordinary sense. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 21, 1901 To collectors of internal revenue and others: The appended decision of the United States circuit court, eastern district of Pennsylvania, in the case of J. Ellwood Lee Company v. P. A. McClain, collector, is published for the information of all concerned. J. W. YERKES, Commissioner. IN THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA. No. 30. April session, 1900. J. Ellwood Lee Company v. Penrose A. McClain, collector of internal revenue. No. 31. April session, 1900. J. Ellwood Lee Company v. Penrose A. McClain, collector of internal DALLAS, J.: revenue. These actions were tried together, and by the court without the intervention of a jury, in pursuance of a stipulation filed in accordance with sections 649 and 700 of the Revised Statutes. They were brought to recover the sums paid by the plaintiffs to the defendant, collector of internal revenue for the first district of Pennsylvania, for stamps affixed by the plaintiffs to certain plasters manufactured by them. The question to be decided is whether those plasters were subject to stamp tax under section 20 and Schedule B of the act of Congress of June 13, 1898, which are as follows: "SEC. 20. That on and after the first day of July, eighteen hundred and ninety-eight, any person, firm, company, or corporation that shall make, prepare, and sell, or remove for consumption or sale, drugs, medicines, preparations, compositions, articles, or things, including perfumery and cosmetics, upon which a tax is imposed by this Act, as provided for in Schedule B, without affixing thereto an adhesive stamp or label denoting the tax before mentioned shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not more than five hundred dollars, or be imprisoned not more than six months, or both, at the discretion of the court: Provided, That no stamp tax shall be imposed upon any uncompounded medicinal drug or chemical, nor upon any medicine sold to or for the use of any person which may be mixed or compounded for said person according to the written recipe or prescription of any practicing physician or surgeon, or which may be put up or compounded for said person by a druggist or pharmacist selling at retail only. The stamp taxes provided for in Schedule B of this Act shall apply to all medicinal articles compounded by any formula, published or unpublished, which are put up in style or manner similar to that of patent, trademark, or proprietary medicine in general, or which are advertised on the package or otherwise as remedies or specifics for any ailment, or as having any special claim to merit, or to any peculiar advantage in mode of preparation, quality, use, or effect." SCHEDULE B. "Medicinal proprietary articles and preparations: For and upon every packet, box, bottle, pot, or phial, or other inclosure, containing any pills, powders, tinctures, troches or lozenges, sirups, cordials, bitters, anodynes, tonics, plasters, linaments, salves, ointments, pastes, drops, waters, (except natural spring waters and carbonated natural spring waters), essences, spirits, oils, and all medicinal preparations or compositions whatsoever, made and sold, or removed for sale, by any person or persons whatever, wherein the person making or preparing the same has or claims to have any private formula, secret, or occult art for the making or preparing the same, or has or claims to have any exclusive right or title to the making or preparing the same, or which are prepared, uttered, vended, or exposed for sale under any letters patent, or trade-mark, or which, if prepared by any formula, published or unpublished, are held out or recommended to the public by the makers, venders, or proprietors thereof as proprietary medicines, or medicinal proprietary articles or preparations, or as remedies or specifics for any disease, diseases, or affection whatever affecting the human or animal body, as follows: Where such packet, box, bottle, pot, phial, or other inclosure, with its contents, shall not exceed, at the retail price or value, the sum of five cents, one-eighth of one cent. "Where such packet, box, bottle, pot, phial, or other inclosure, with its contents, shall exceed the retail price or value of five cents and shall not exceed, at the retail price or value, the sum of ten cents, two-eighths of one cent. 66 Where such packet, box, bottle, pot, phial, or other inclosure, with its contents, shall exceed the retail price or value of ten cents and shall not exceed at the retail price or value the sum of fifteen cents, three-eighths of one cent. "Where each packet, box, bottle, pot, phial, or other inclosure, with its contents, shall exceed the retail price or value of fifteen cents and shall not exceed the retail price or value of twenty-five cents, five-eighths of one cent. And for each additional twenty-five cents of retail price or value or fractional part thereof in excess of twentyfive cents, five-eighths of one cent." The requests for findings of fact, which have been submitted by counsel, are annexed hereto for the purpose of exhibiting their respective contentions as to the effect of the evidence, but they need not be separately considered. They are, I think, sufficiently answered in the following finding of the court upon the facts: FINDING OF FACTS. The plasters in question are "medicinal articles," not "medicinal drugs or chemicals." They are made by mixing several substances, including, in many instances, more than one medicinal drug, but in others a single medicinal drug is mixed with a "base," which is composed of drugs having either no medicinal effect, or none which is designed or is important. They are prepared from formulas, which are "private," in the sense of being owned by the plaintiffs, who do not make them public; but they are not, and are not held out as being, proprietary; and the plaintiffs do not have or use, nor claim to have or use, any “secret or occult art” in making them; and other manufacturers make, or can make, with some slight variation, plasters of the same kinds. The plaintiffs'.plasters are, however, "put up in style or manner similar to that of patent, trade-mark or proprietary medicine in general," and are advertised as having "special claim to merit, or to * * peculiar advantage in mode of prepa 66 * ration, use, or effect," and some of them " as remedies or specifics for (any) some ailment. Whether they are or are not 'compounded by any formula published or unpublished" depends upon the meaning to be ascribed to the word “compounded” as was used by Congress. But although the intent of that body is really matter of fact, yet the interpretation of the language of a statute has always been regarded as matter of law, and as such the question here suggested will presently be considered. it As per tinent to that subject, however, I further find that, while it is true, as claimed by the plaintiffs, that the plasters in suit are not known or designated as medicinal articles compounded," it is also true that neither "medicinal articles compounded," nor "medicinal articles compounded by any formula published or unpublished," is a trade expression, or has been in any way defined by common or commercial use in the business of druggists and among pharmacists." OPINION. 66 * * * Section 20 makes the omission to stamp articles upon which a tax is imposed by the act, as provided in Schedule B, a misdemeanor; and the plasters in question-not being "medicinal drugs or chemicals "- --are not excepted by the proviso of that section, but (if compounded) are plainly covered by its immediately following statement, that the stamp taxes provided for in Schedule B "shall apply to all medicinal articles compounded by any formula," etc. I can not sustain the plaintiffs' contention respecting the effect which should be given to the word "compounded." I can not agree that it was employed in this act in a peculiar or technical sense. It does not appear to have in the trade any meaning other than "mixed," which is its common and ordinary one. It certainly has no special meaning with pharmacists, which is generally understood and established, for those of them who have testified in this case have not agreed as to its proper application. It seems that they sometimes apply it to a medicine composed of several drugs, but not to a composite medicinal article, such as a plaster. Conse-. quently it must have been used in this statute in its ordinary sense, for when related to such articles-and the statute plainly so relates it-it could have no other. I am, therefore, of opinion that all of these plasters are medicinal articles compounded, and that, being put up and advertised as has been heretofore stated, they are, under the last clause of section 20, subject to the tax in question. But notwithstanding the provision of that clause, that "the stamp tax provided for in Schedule B * *shall apply to all medicinal articles compounded," etc., it has been insisted that the terms of the schedule itself are exclusive of the particular articles involved in this controversy; but, in my opinion, they are not so. The schedule expressly mentions "plasters," and the disjunctive qualifying phrases which follow are, with respect to the facts of this case, not operativé. Judgment for defendant. * (269.) Vouchers of deputy collectors. [Int. Rev. Circular No. 589.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: To avoid disallowances in their disbursing accounts, and to protect them from loss by reason of improper payments on account of expenses of deputy collectors, the attention of collectors is especially called to the following: When a driver is necessarily hired, the expense for meals, lodging, or salary of such driver must be paid by the liveryman from whom the livery is obtained and included in the bill for the livery. In no case will the expense of a driver be allowed in any other manner in the |