the collection of said taxes is by the affixing of stamps to instruments, papers, or documents, and for this reason the stamps issued for the payment of taxes under Schedule A are called "documentary stamps."

In section 6 of the war-revenue act it is provided—

"That on and after the first day of July, eighteen hundred and ninety-eight, there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this act, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, shall be written or printed by any person or persons, or party who shall make, sign, or issue the same." * * *

It will be seen that by this provision, the tax is levied in respect of the things described themselves, or of the vellum, parchment, or paper upon which they are written or printed. I see no provision which indicates that any tax is imposed upon anything which is not written or printed, and, the tax being collectible through the instrumentality of adhesive stamps, the statute contemplates that such stamps shall be affixed to the vellum, parchment, or paper upon which the instruments are written or printed.

And further, in section 7, it is enacted

"That if any person or persons shall make, sign, or issue, or cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, without the same being duly stamped for denoting the tax hereby imposed thereon, or without having thereupon an adhesive stamp to denote said tax, such person or persons shall be deemed guilty of a misdemeanor," etc.

Now, what constitutes the offense under this section? Undoubtedly, it is the making, signing, or issuing, or causing to be made, signed, or issued, of instruments, documents, or papers without the same being duly stamped, or without having thereupon-that is, on the instrument, document, or paper-an adhesive stamp to denote the tax.

Section 14 of the act provides that—

"no instrument, paper, or document required by law to be

stamped, which has been signed or issued without being duly shall be recorded or admitted, or used

stamped,

* * *

as evidence in any court, etc.;"

and section 15 forbids the recording or registration of any instrument or paper or document required to be stamped unless the stamp is affixed and canceled. Section 16 is to the effect that no instrument, paper, or document required. by law to be stamped shall be deemed or held invalid and of no effect for the want of a particular kind or description of stamp designated for and denoting the tax on such instrument, paper, or document, provided a legal documentary stamp or stamps denoting the necessary tax shall have been duly affixed and used thereon.

There are certain transactions upon which a tax is imposed under the provisions of the war-revenue act in which the act itself requires the making of the instrument or paper to which the stamp is to be affixed. For instance, as to common carriers, the law provides that when goods are accepted for transportation, a bill of lading shall be given by the carrier, and upon this bill of lading a 1-cent stamp shall be affixed; and it is made a misdemeanor not to give the bill of lading, and also a misdemeanor to give the bill of lading without the stamp. Also in case of sales, or agreements of sale, or agreements to sell, any products or merchandise at any exchange or board of trade or any similar place, the seller is required to make and deliver to the buyer a bill, memorandum, agreement, or other evidence of such sale, agreement of sale, or agreement to sell, and the stamp denoting the payment of the tax is to be affixed to this. A similar provision will be found in the case of an agreement to sell stock, or where the transfer is by the delivery of the certificate assigned in blank. The seller is required to deliver to the buyer a bill or memorandum of the sale with stamp affixed.

There is a further provision in regard to the sale of stocks, that where the transfer is made upon the books of the company, then the stamp must be placed upon the transfer entry on the book, and where the change of ownership is evidenced by the transfer certificate, the stamp shall be affixed to the certificate.

I have cited these various provisions and requirements in the war-revenue act in order to show that wherever a documentary tax, to be paid by the use of an adhesive stamp, is provided for, it contemplates the making, signing, or issuing of some instrument or paper to which the stamp can be attached.

There are certain instruments and papers required by the war-revenue act to be stamped, if such instruments or papers are made or executed; but there is no provision of the law requiring them to be made. For example, if A loans B $1,000, and B gives a note for it, he is required to affix revenue stamps to the value of 20 cents. But if A lends him the money and does not elect to take a note, then B does not have to pay the tax. The same may be said of a lease or contract for the hire of land. If the lease is in writing, then a documentary stamp must be placed upon it; but there is no law which requires the lessor to put the lease in writing. He can make an oral lease if he sees proper and thereby escape the payment of the tax.

I therefore conclude that no tax collectible by the use of an adhesive documentary stamp can be imposed, unless an instrument, paper, document, or writing, falling within some one of the descriptions given in the act, is executed, made, signed, or issued, to which the stamp denoting the payment of the tax is to be affixed. The paper under consideration does not, in my opinion, meet the requirements necessary to constitute a mortgage or pledge such as is taxable under that head in the war-revenue act. It does not convey or pledge any property capable of identification from the paper itself, nor is any property, so far as appears in the paper, made security for the payment of any definite and certain sum of money lent at the time or previously due and owing or forborne to be paid, being payable.

In your second question you inquire whether stock pledged as security for a loan may not properly be taxed under the first paragraph of Schedule A, which is as follows:

"Bonds, debentures, or certificates of indebtedness issued after the first day of July, anno Domini eighteen hundred and ninety-eight, by any association, company, or corporation, on each hundred dollars of face value or fraction

thereof, five cents, and on each original issue, whether on organization or reorganization, of certificates of stock by any such association, company, or corporation, on each hundred dollars of face value or fraction thereof, five cents, and on all sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares or certificates of stock in any association, company, or corporation, whether made. upon or shown by the books of the association, company, or corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale whether entitling the holder in any manner to the benefit of such stock, or to secure the future payment of money or for the future transfer of any stock, on each hundred dollars of face value or fraction thereof, tro cents: Provided, That in case of sale where the evidence. of transfer is shown only by the books of the company the stamp shall be placed upon such books; and where the change of ownership is by transfer certificate the stamp shall be placed upon the certificate; and in cases of an agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers." * * *

The Commissioner in his letter calls particular attention to the following language in the above paragraph:

**or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale whether entitling the holder in any manner to the benefit of such stock, or to secure the future payment of money or for the future transfer of any stock, on each hundred dollars of face value or fraction thereof, two cents;"

and asks if the delivery of certificates of stock to secure the future payment of money is not a taxable transaction under this provision.

My opinion is that it would be if the delivery of the stock were accompanied by any paper or agreement or memoran

dum or other evidence of transfer such as contemplated by the statute. But I can not construe this act to mean that the mere hypothecation of certificates of stock by depositing the same without any written or printed instrument of hypothecation, although the same may be held as security for the payment of a loan or taken as a basis of credit, is subject to stamp tax.

The language of this paragraph is involved, and presents difficulties of construction which are insurmountable if we attempt to give a clear and precise meaning to every clause. The rule of construction in tax laws is that if there is doubt as to the liability of any instrument or other thing to taxation, the construction is in favor of the exemption, because a tax can not be imposed without clear and express words for that purpose. (United States v. Isham, 17 Wall., 503.) An analysis of the language under consideration reduces. the provision which is supposed to cover the deposit of stock certificates as security for loans to this:

*

* made

* *

*

"On all sales * by any delivery *** to secure the future payment of money on each hundred dollars of face value

* *

two cents." The subsequent language of the proviso indicates that the kind of sales intended is such only as possess the incident of a definite price:

"And in cases of an agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers."

This would not be applicable to mere deposits of stocks to remain as collateral for indebtedness, where no price is fixed, and where there is in no sense a sale effected. There is nothing in the act requiring an appropriate memorandum of a mere deposit of that kind, and in the absence of such a memorandum in writing, there is no subject of taxation clearly and definitely indicated by the act, and hence the transaction will not, under the rule above cited, be taxable.