Young v. United States (119 F.2d 399, 1941)

STEPHENS, Circuit Judge.

Appellant, to whom we shall hereinafter refer as defendant, was convicted of violation of the Harrison Anti-Narcotic Act, U.S. Internal Revenue Code, §§ 2551 and 2557, 26 U.S.C.A. Int.Rev.Code, §§ 2551, 2557, formerly 26 U.S.C.A. § 1041 and 1047. The indictment contained ten counts, two of which were dismissed upon motion of the defendant. The jury brought in a verdict of guilty upon each of the remaining eight counts, and the present appeal is from the judgment rendered in pursuance of said verdict.

The counts of the indictment are substantially the same, the only difference being that they charge dispensation of different amounts and kinds of drugs. All drugs alleged to have been dispensed contain opium, but less than two grains per fluid ounce Count III charges that the defendant, “a physician who had duly registered and paid his special tax, as required by law, and who is entitled as a physician to sell, distribute, dispense and give away preparations and remedies which do not contain more than two grains of opium in one fluid ounce in the course of his professional practice, provided that he keeps a record of all sales, exchanges and gifts of such preparations and remedies for a period of two years in such a way as to be readily accessible to inspection by any officer, agent or employee of the Treasury Department duly authorized for that purpose; that said defendant, from August 26, 1937, to July 21, 1939, at Honolulu, City and County of Honolulu, Territory of Hawaii, and within the jurisdiction of this Court, did sell, distribute, dispense and give away seventy-two (72) gallons and four (4) pints of a preparation and remedy which did not contain more that two grains of opium in one fluid ounce, to-wit: paregoric, and that said defendant did knowingly, willfully, unlawfully and feloniously fail to keep a record of the sales, exchanges and gifts of said amount of such paregoric which had been sold, distributed, dispensed and given away by said defendant during the period aforesaid so that such record was readily accessible to inspection by any officer, agent or employee of the Treasury Department duly authorized for that purpose; 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.”

Twenty-nine alleged errors are assigned by defendant, which fall into two general groups. The first group relate to the sufficiency of the indictment and the evidence presented in support thereof, and the second group relate to the Court’s charges to the jury.

Defendant urges that failure of a physician to keep a record of his dispensation of non-taxable preparations is not a crime against the United States. We quote from his opening brief: “ * - * * such failure * * * * * * but a violation of condition precedents of the Statutory provisions, the fulfilment and compliance of which conditions precedent would render said exempt narcotics non-taxable, and therefore exempt, that the mere failure to comply with the conditions precedent, as alleged in all the counts of the Indictment destroys the privilege or exemption of taxation and subjects said exempt drugs to the tax of said Act as provided in Section 1 of the Act, and that the said exempt drugs become taxable in the same respect as the heroic or true narcotics, because the defendant merely failed to keep written records of the dispensations of said exempt drugs.” [Italics the defendant’s.]

For a clear understanding of defendant’s position we summarize or quote the applicable sections of the Act [section numbers refer to U. S. Internal Revenue Code]:

Section 2550 provides for a tax on designated narcotics sold in the United States.

Section 2551 is entitled “Exemptions”, and provides “The provisions of this subchapter * * * shall not be construed to apply to the manufacture, sale, distribution, giving away, dispensing, or possession of preparations and remedies which do not contain more than two grains of opium * * * in one fxuid ounce * * : Provided, That such remedies and preparations are manufactured, sold, distributed, given away, dispensed, or possessed as medicines and not for the purpose of evading the intentions and provisions of this subchapter * * * : Provided, further, That any manufacturer, producer, com-pounder, or vendor (including dispensing physicians) of the preparations and remedies mentioned in this section lawfully entitled to manufacture, produce, compound, or vend such preparations and remedies, shall keep a record of all sales, exchanges, or gifts of such preparations and remedies in such manner as the Secretary shall direct. Such record shall be preserved for a period of two years in such a way as to be readily accessible to inspection * * *, and every such person so possessing or disposing of such preparations and remedies shall register * *

Other exemptions are contained in section 2551, which are not material to the case before us.

Section 2553 provides in subsection (a) that it shall be unlawful for any person to purchase, sell, dispense, or distribute any of the drugs mentioned in section 2550(a) except in the original stamped package or from the original stamped package. Subsection (b) of section 2553 contains an exception in the case of registered practitioners, and reads, so far as here applicable: “The provisions of subsection (a) shall not apply * * * (2) To the dispensing, or administration, or giving away of any of the aforesaid drugs to a patient by a registered physician, dentist, veterinary surgeon, or other practitioner in the course of his professional practice, and where said drugs are dispensed