For other cases see Fidelity Trust Co. v. U, S., (1910) 45 Ct. Cl. 362; Union Trust Co. v. Lynch, (1906) 148 Fed. 49; Westhus v. Union Trust Co., (C. C. A. 1908) 164 Fed. 795; Chouteau v. Allen, (C. C. A. 1909) 170 Fed. 412.

Vested in enjoyment but not in possession. - Where legatees had full and absolute control of the disposition of their share of the residue, and each was entitled to all the income accruing therefrom after the testator's death, the legacies were vested in " enjoy. ment," though not in possession. Ward v. Sage, (C. C. A. 1911) 185 Fed. 7.

Contingent interest. Where the interest of certain legatees in the corpus of the estate was contingent only, terminable by death before reaching thirty-five years of age, with no power to designate a successor, the shares of the corpus of legatees who had not reached the required age at testator's death on June 23, 1902, were not subject to internal revenue tax imposed by War Revenue Act June 13, 1898, ch. 448, secs. 29, 30, under the rule that any interests vested in possession or enjoyment were saved from the repeal of the Act by Act Cong. April 12, 1902, ch. 500, secs. 7, 8, 32 Stat. L. 97. Ward v. Sage, (C. C. A. 1911) 185 Fed. 7.

In Land Title, etc., Co. v. McCoach, (1904) 129 Fed. 901, 64 C. C. A. 333, reversing 127 Fed. 381, it appeared that a testator who died in March, 1901, by his will bequeathed his residuary estate in trust, the income to be paid to his wife during her life, with remainder to his children living at the time of her death, and the lawful issue of any deceased child or children; such issue taking only the share their parent would have taken if living. It was held that the remainder so created was not vested, not being limited to "persons in esse and ascertained" but was contingent, being limited to persons who could not be ascertained until the death of the wife, and that such bequests were not subject to the legacy tax imposed by section 29 of the War Revenue Act of June 13, 1898, ch. 448, since repealed, the wife being still living at the time of the taking effect of the amendment, by section 3 of this Act, exempting from the tax any contingent beneficial interest not absolutely vested in possession or enjoyment" prior to July 1, 1902.

The interest of an heir in personal prop

Vol. III, p. 793, sec. 1.

The necessity of protest or notice to sustain the recovery of a stamp tax illegally collected on manifests of cargoes on vessels bound to foreign ports is not removed by the provisions of this section authorizing the Commissioner of Internal Revenue to redeem or make allowance for internal revenue stamps in any manner wrongfully collected." U. S. t. New York, etc., Mail Steamship Co., (1906) 200 U. S. 488, 26 S. Ct. 327, 50 U. S. (L. ed.) 569.

66

Stamps destroyed because sale enjoined by state court. - Where the manufacturer destroyed the stamps on boxes of cigars in his own warehouse because he was enjoined from

erty left by an intestate is wholly contingent until the estate becomes distributable under the laws of the state by the expiration of the time for the proving and payment of claims, and where such time did not expire until after July 1, 1902, the share of an heir was not subject to legacy tax provided for by War Revenue Act June 13, 1898, ch. 448, sec. 29. imposed on any contingent beneficial interest which should not become absolutely vested in possession or enjoyment prior to said July 1, 1902. Farrell v. U. S., (1909) 167 Fed. 639.

The interest of a daughter in her father's estate, which, by the terms of his will, she was not to take unless she survived her mother, was contingent, and not vested, and did not become subject to legacy tax, under section 29 of the War Revenue Act of June 13, 1898, ch. 448, where her mother was living July 1, 1902, after which time contingent beneficial interests vested in possession or enjoyment were exempted from the tax by this section. Philadelphia Trust, etc.. Co. r. MeCoach, (C. C. A. 1904) 129 Fed. 906, reversing 127 Fed. 386.

"Imposed." A legacy tax under War Revenue Act June 13, 1898, ch. 448, sec. 29, was not "imposed" within the meaning of the saving clause of the repealing Act of April 12, 1902, ch. 500, sec. 8, 32 Stat. L. 97, until its assessment, and there remained no power to make a valid assessment after July 1, 1902, when the repealing act took effect. Farrell v. U. S., (1909) 167 Fed. 639.

Limitation of action. - R. S. sec. 3228. 3 Fed. Stat. Annot. 603, limiting the time for presenting claims for the refunding of internal revenue taxes illegally collected, has no application to a claim for the refunding of legacy taxes paid on contingent interests. which did not become vested prior to July 1. 1902, which are required to be refunded by this section, irrespective of their legality or whether they were voluntarily paid or not: and a failure to present the claim within the time limited by such section will not bar an action thereon. Thacher r. U. S., (1906) 149 Fed. 902. See also (1907) 26 Op. Atty. Gen. 194.

The jurisdiction of the Secretary of the Treasury, under this Act, is not exclusive. Fidelity Trust Co. v. U. S., (1910) 45 Ct. Cl. 363.

selling the same in those boxes by a state court for infringement of trademark, his case does not come within the statute. American West Indies Trading Co. v. U. S., (1910) 45 Ct. Cl. 488.

Finality of decision of commissioner. Where there is no disputed question of fact, and a decision of the Commissioner of Internal Revenue rests entirely upon his construction of the statute, it is not final; and if adverse to the claimant, the court has jurisdiction of a case seeking a refund for internal revenue stamps destroyed. American West Indies Trading Co. v. U. S., (1910) 45 Ct. CI. 488.

Vol. III, p. 795, sec. 3449.

Construction of statute. This section is highly penal in character and should be strictly construed. U. S. v. Twenty Boxes Corn Whisky, (1904) 133 Fed. 910, 67 C. C. A. 214, affirming (1902) 123 Fed. 135.

Intent. In a prosecution for the violation of this section no question of fraud or fraudulent intent is involved. U. S. v. Liquor Dealers' Supply Co., (1907) 156 Fed. 219.

False designation. When spirituous liquors contained in bottles are packed in barrels and shipped and the barrels are marked "groceries," such shipment is a violation of section 3449. U. S. v. Liquor Dealers' Supply Co., (1907) 156 Fed. 219.

Concealing name or brand. This section applies solely to shipments of liquors under other than the proper name or brand known to the trade, as designating the kind and quality of the liquor, and not to a shipment concealing the name or brands required by the regulations of the Internal Revenue Department to be put upon all vessels containing liquors. U. S. v. Sandefuhr, (1906) 145 Fed.

49.

The remedy given by this section is not exclusive. Blacklock v. U. S., (1908) 208 U. S. 75, 28 S. Ct. 228, 52 U. S. (L. ed.) 396.

Vol. III, p. 795, sec. 3450.

Repeal as to oleomargarine. -- This section and section 3453 were repealed, so far as concerns the tax on oleomargarine, by Act Aug. 2, 1886, ch. 840, sec. 17, 24 Stat. L. 209, 3 Fed. Stat. Annot. 126, providing a more limited forfeiture for attempts to defraud the government of the oleomargarine tax. U. S. r. One Bay Horse, (1904) 128 Fed. 207.

Time of forfeiture. - Under the provision of this section declaring that animals used for the removal of spirits with intent to de

Vol. III, p. 799, sec. 3455.

Addition of nontaxable articles. -Substances which are not in themselves taxable under the laws of the United States are not embraced in the words "anything else," as used in this section, providing for a seizure, forfeiture, and penalty for selling packages which contain, at the time of sale, anything else than the contents when the same were lawfully stamped by a revenue officer, even where there is no intent to defraud, and for a much heavier penalty where there is such fraudulent intent. Thus the sale of a barrel of whiskey to which has been added, after such barrel has been properly stamped by a revenue officer, burnt sugar or caramel, as coloring matter, does not authorize its seizure and forfeiture to the United States. U. S. v. A. Graf Distilling Co., (1908) 208 U. S. 198, 28 S. Ct. 264, 52 U. S. (L. ed.) 452.

Evidence of changing contents after stamping. Where, on an information to forfeit certain liquors on the ground that distilled spirits of a different quality had been put into the barrels after they were originally stamped F. S. A. Supp.-74

Acquittal of criminal offense as bar. Where a defendant was acquitted in a criminal prosecution for causing to be transported certain casks containing bottled beer falsely marked as containing bottled soda water, such acquittal was held to be a bar to the subsequent maintenance of an action by the United States to forfeit the property and recover a penalty imposed for the same act imposed by R. S. sec. 3449. U. S. v. Seattle Brewing, etc., Co., (1905) 135 Fed. 597.

Marks by government officers. This section has no application to marks or brands placed on packages by government officers. Woolner . Rennick, (1908) 170 Fed. 662.

This statute does not apply to all persons. -U. S. r. Twenty Boxes Corn Whisky, (1904) 133 Fed. 910, 67 C. C. A. 214, affirming (1902) 123 Fed. 135, set out in the original note.

Shipments of unmarked packages. — U. S. 1. Twenty Boxes Corn Whisky, (1904) 133 Fed. 910, 67 C. C. A. 214, affirming (1902) 123 Fed. 135, set out in the original note.

"Glass; this side up with care."-U. S. t. Twenty Boxes Corn Whisky, (1904) 133 Fed. 910, 67 C. C. A. 214, affirming (1902) 123 Fed. 135, set out in the original note.

fraud the government shall be forfeited, etc., forfeiture takes place immediately upon commission of the act, though the title of the United States is not perfected until judicial condemnation, but upon such condemnation the completed title of the United States relates back to the time of the commission of the prohibited act, and avoids all intermediate sales, even to purchasers in good faith. Pilcher v. Faircloth, (1903) 135 Ala. 311, 33 So. 545.

and branded, in violation of this section, it was conceded that the claimant was entitled to reduce the proof by the addition of water, and the uncontradicted evidence showed that the spirits contained in the packages had been reduced in proof between twelve and fourteen degrees, after they had been gauged and stamped, by the addition of water, in conformity with the law and in the presence of a government gauger, it was held that the discrepancy in the percentage of the alcohol contained in the liquor was insufficient to form a basis for an inference that the change was occasioned by the addition of "other spirits of a different quality." Three Packages Distilled Spirits v. U. S., (1904) 129 Fed. 329, 63 C. C. A. 263, reversing (1903) 125 Fed. 52. Product made under similar conditions as evidence. In a proceeding by the United States under this section for the forfeiture of whiskey contained in the distiller's origi nal barrels, but alleged to be other than that contained in such barrels when they were branded and marked by the gauger, it was

competent for the government to introduce in evidence tabulated analyses of samples of the whiskey in such barrels showing the per cent. of its congeneric properties and for comparison similar analyses of whiskey taken from a large number of barrels produced by the same distillery under the same process, out of material in the same proportions, and of substantially the same grade, placed in barrels of the same character of wood, treated in the same manner, and stored in the same warehouse under practically the same condi tions as to moisture and temperature, much of such whiskey having been made in the same year, some in different years, and a portion on the same day as some of the seized whiskey, and the testimony being given by expert chemists who made the analyses. Corbin v. U. S., (C. C. A. 1910) 181 Fed. 296.

Burden of proof. In a proceeding by the United States under this section for the forfeiture of whiskey contained in the original distiller's barrels, but in which it is alleged that the whiskey is other than that contained in the barrels when they were branded and marked by the gauger, and that the claimants in whose possession the barrels were found received the same in such substituted condition with intent to defraud, the burden rests on the government to prove that they were

Vol. III, p. 802, sec. 3459.

Notice. Where goods, seized by a collector for violation of R. S. sec. 3453, 3 Fed. Stat. Annot. 797, are attached while in his hands by the marshal on process issued in proceedings for their forfeiture, and a bond for their release is thereafter given by the claimant under this section, the proviso to the section requiring notice of the pendency of the proceedings in court to be given to the parties executing the bond, is inapplicable,

Vol. III, p. 803, sec. 3460.

in that condition when so received, and such fact cannot be inferred from the fact that they were in such condition when seized. Corbin v. U. S., (C. C. A. 1910) 181 Fed. 296. Information. An information for a forfeiture of distilled spirits for violation of this section was held to be bad on demurrer, as not sufficiently definite to disclose to the court or claimant the precise nature of the act charged to be a violation of the statute. U. S. . Three Packages Distilled Spirits, (1907) 152 Fed. 580.

Variance. Where an information for the forfeiture of certain packages of liquors alleged that, after the barrels had been inspected, gauged, and stamped, something else than the contents which were therein when said barrels and packages were so lawfully stamped, branded, and marked, to wit, distilled spirits of a different quality, had been placed therein in violation of this section, it was held that evidence that at the time the proof of the liquors was reduced by the addition of water, after the packages had been stamped, some caramel matter had been put into the packages to deepen the color, was not within the information, and therefore inadmissible. Three Packages Distilled Spirits v. U. S., (1904) 129 Fed. 329, 63 C. C. A. 263, reversing (1903) 125 Fed. 52.

such notice being intended to take the place of an actual seizure by the marshal where the goods have been returned to the claimant under the bond before such seizure has been made, and unnecessary where the attachment has been made, and the proceeding in rem is pending when the bond is given. U. S. v. 59,650 Cigars, (1906) 146 Fed. 130, 76 C. C. A. 556, affirming (1905) 138 Fed. 166.

the phrase "goods, wares, and merchandise " is sufficiently broad to include a team of mules used for the removal of spirits with intent to defraud the government, in violation of section 3450, 3 Fed. Stat. Annot. 795. Pilcher . Faircloth, (1903) 135 Ala. 311, 33 So. 545.

fully engaged in manufacturing oleomargarine on the premises described, and praying the issuance of a warrant, is fatally defective for failure to state facts from which the officer issuing the warrant might determine the existence of probable cause. Ripper v. U. S., (C. C. A. 1910) 178 Fed. 24.

drawn from bonded warehouses without payment of internal reverue tax. (1905) 25 Op. Atty. Gen. 449.

1909 Supp., p. 248, sec. 1.

The term "alcohol," as used in this section, embraces the various grades of alcohol as reclassified in Internal Revenue Circular No.

1909 Supp. Appendix, p. 829, sec.

Due process of law. - Property is not taken without due process of law by the imposition, under this section, of an excise, measured by the net corporate income, upon the doing or the carrying on of business in a corporate or quasi-corporate capacity. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Excise or direct tax. An excise upon the carrying on or the doing of business in a corporate or quasi-corporate capacity is what was imposed by this section. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Inequality of application, owing to different local conditions, does not invalidate the excise imposed by this section upon the doing or carrying on of business in a corporate or quasi-corporate capacity. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Discrimination. There is such a substantial difference between the carrying on of business by corporations and the conducting of the same business by a private firm or individual as would justify -even were the principles of the Fourteenth Amendment to the Federal Constitution applicable - the excise imposed by this section. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Uniformity. - Taxing a business when carried on by a corporation, and exempting a similar business when carried on by a partnership or by a private individual, as is done by this section, does not invalidate the tax, since the only limitation upon the power of Congress is uniformity in laying the tax, and this is a geographical uniformity, which does not require the equal application of the tax to all persons or corporations who may come within its operation. Flint . Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Apportionment. The tax imposed by this section being an excise, and not a direct tax, is not invalid because not apportioned among the several states according to population. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 342, 55 U. S. (L. ed.) 389. Possible effect on powers of state. - The possibility that the rights of the several states to create corporations may practically be destroyed by the exercise of the power assumed by Congress in this section furnishes no ground for judicial interference with the tax. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Federal taxation of state agencies. The excise imposed by this section upon the carrying on or the doing of business in a corporate or quasi-corporate capacity is not invalid be

723, and referred to therein as pure, neutral, or cologne spirits, and as commercial alcohol. (1909) 27 Op. Atty.-Gen. 226.

38.

cause the business taxed is done in pursuance of the authority granted by a state, in the creation of private corporations. Flint . Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

"Doing business."- Corporations organized for and actually engaged in such activities as leasing property, collecting rents, managing office buildings, making investments of profits, or leasing ore lands and collecting royalties, managing wharves, dividing profits, and in some cases investing the surplus, are engaged in business within the meaning of this section. Flint r. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55, Ü. S. (L. ed.)

389.

Taxicab corporation. - A corporation own. ing and leasing taxicabs and collecting rents therefrom is engaged in business within the meaning of this section. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Corporation owning and renting office building. A corporation organized for the purpose of owning and renting an office building, but which has wholly parted with the control and management of the property, and by the terms of a reorganization has disqualified itself from any activity in respect to it, its sole authority being to hold the title subject to a lease for 130 years, and to receive and distribute the rentals which may accrue under the terms of the lease, or the proceeds of any sale of the land, if it shall be sold, is not doing business within the meaning of this section. Zonne v. Minneapolis Syndicate, (1911) 220 U. S. 187, 31 S. Ct. 361, 55 U. S. (L. ed.) 428.

Real estate trusts created by deed for the purchasing, improving, holding, or selling lands and buildings for the benefit of the shareholders, which do not derive any benefit from, and are not organized under, any statute of the state, and which, by their terms, end with lives in being and twenty years thereafter, are not subject to the excise imposed by this section. Eliot v. Freeman, (1911) 220 U. S. 178, 31 S. Ct. 360, 55 U. S. (L. ed.) 424. Exemptions.

Exempting corporations whose net annual incomes are under five thousand dollars from the excise imposed by this section does not invalidate the tax. Flint v. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.

Labor, agricultural, and horticultural organizations, fraternal and benevolent societies, and organizations for religious, charitable, or educational purposes, could be excepted from the operation of the excise imposed by this section without invalidating the tax. Flint r. Stone Tracy Co., (1911) 220 U. S. 107, 31 S. Ct. 343, 55 U. S. (L. ed.) 389.