United States v. Isham
ON certificate of division in opinion between the judges of the Circuit Court for the Eastern District of Michigan; the case being thus:
The act of June 30th, 1864, 'to provide internal revenue to support the government,' &c.,  requires certain instruments, specified in a schedule which it contains, to be stamped. The schedule is as follows:
BANK-CHECK, draft, or order for the payment of any sum of money whatever, drawn upon any bank, banker, or trust company, or for any sum exceeding $10 drawn upon any other person or persons, companies or corporations, at sight or on demand, 2 cents.
Bill of exchange (inland), draft, or order for the payment of any sum of money not exceeding $100, otherwise than at sight or on demand, or any promissory note (except bank notes issued for circulation, and checks made and intended to be forthwith presented, and which shall be presented to a bank or banker for payment), or any memorandum, check, receipt, or other written or printed evidence of an amount of money to be paid on demand, or at a time designated, for a sum not exceeding $100, 5 cents.
And for every additional $100, or fractional part thereof in excess of $100, 5 cents.
This statute being in force, the United States filed, in 1871, a criminal information in the court below against E. B. Isham, for issuing without a stamp and with intent to evade the provisions of the above-quoted act, a paper in the form of a draft drawn upon one C. J. Canda. The paper, which was attached to and made part of each count of the information, was in this form:
It appeared from the testimony offered by the government, that the Iron Cliffs Company was a corporation of Michigan, situated at Negaunee, in the State just named, and engaged in mining iron-ore and in manufacturing pigiron. It had an office at Negaunee, where its business was carried on, and a head office in New York, where its board of directors met, and its funds were kept. Isham was superintendent of the works at Negaunee, and resided there. Canda was treasurer of the company, and resided in New York. The company had been in the practice of issuing paper like the instrument above set forth, in payment for labor or other debts due at the mine since January, 1868, nearly all payments of balances due for labor having been made since that time and up to 1871, when the information was filed, in it. The amount issued annually since that time had been about $100,000. The blanks were sent to Isham from New York, and signed by him as drawn. The denominations issued were of $1, $2, $3, $5 and $10. When the Iron Cliffs Company began to issue this paper, there were hardly any facilities for getting currency into the country, except taking it through one hundred and twenty miles of staging, and through a wilderness chiefly; and when it was issued, it, to some extent, went into circulation, and answered the purpose of a local currency. It was taken at a store, in which the company was interested, in payment for goods; and by all the banks and banking-houses in that region, and sometimes paid out by them on checks. But when in the course of business it came into the hands of a bank or banker, or a merchant, it was generally retained until a considerable amount of it was on hand-say from $1000 to $2000-and then either sent to New York by express for redemption, or Isham took it up and gave to the holder a draft on New York for the amount. When Isham took this paper in this way, by giving the holder a large draft for it, he frequently reissued it, or paid it out again in the course of the company's business at the mine; but when it was finally paid in New York, it was cancelled and destroyed.
On this and similar evidence the following questions arose, concerning which the defendant requested the court to instruct the jury in his favor, and for a verdict of acquittal:
'1st. Whether the instrument was on its face subject to be stamped?
'2d. Whether the evidence tending to prove that Isham was superintendent of the Iron Cliffs Company, and drew the instrument in that capacity, or that Canda was the treasurer of the said company, and the instrument was drawn upon him in that capacity, or that the said paper was drawn in the course of the company's business, was relevant and admissible?
'3d. Whether, if the paper in question was made and issued with the design that it should be used as a local circulating medium, and was actually used by the holders as such, it thereby became subject to be stamped, and whether the evidence given by the prosecution, tending to prove these facts, was relevant and admissible?
'4th. Whether, assuming every fact which the evidence in support of the prosecution tended to prove, the defendant was guilty of the offence charged?
'5th. Whether the information in this case sufficiently charged any offence under the laws of the United States?'
And the following further question, upon which the district attorney requested the court to charge in favor of the prosecution:'6th. Whether if the instrument set forth in the information and adduced in evidence was issued with the design and intent to secure time for the payment of the debt it represented, it was therefore subject to stamp duty?'
Which questions (the judges being divided in opinion upon them) were now certified to this court for its opinion.
Mr. S. F. Phillips, Solicitor-General, for the United States:
The schedule of instruments required by the act of 1864 to be stamped, includes in its second paragraph (as quoted supra, p. 496), 'any memorandum, check, &c., or other written or printed evidence of an amount of money to be paid on demand.'
The instrument under consideration is a 'check.' If not a 'check,' it is a 'memorandum, or other written or printed evidence of an amount of money to be paid on demand.' This would be the ordinary and popular view of the instrument, and if either a 'memorandum' or 'check,' 'or other written or printed evidence for a sum of money to be paid on demand,' &c., it must be stamped.
In legal view, however, instruments which assume the form of drafts, but which are drawn by a party upon himself, although loosely and for general purposes, as we have said, styled drafts or checks, are, in essence, promissory notes. The case is the same where the drawer and the drawee are apparently different persons, but in truth mere agents of one person known to all parties, and acknowledged as the only debtor in the transaction. In such cases the paper is accepted from its origin, and the contingent liability of the drawer, so characteristic of mere checks, never arises, being merged before issue in the absolute liability of the same person, as acceptor. That such instruments are promissory notes, was decided in England in the leading case of Miller v. Thomson,  and has been sustained in several cases in this country; notably by the high commercial authority of the Court of Appeals of New York in Fairchild v. The Ogdensburgh Railroad Company. 
Now, here the evidence shows, that the drawer (Isham), payee (Isham again), and drawee (Canda) were agents of one corporation, the only debtor; and indeed that Isham himself, the drawer, redeemed the bills when they had got in considerable amounts ($1000 to $2000) in the hands of a bank, banker, or merchant.
Independently of the evidence the character of the instrument is disclosed on its face. It is there numbered 1190. It is shown to be one of a large number, of like sort, issued by a company in the region of the iron mines, engaged in dealing in iron. Isham, the drawer and payee, is styled 'sup't,' superintendent. Canda, designated as of New York, the source of capital, no one could doubt was a treasurer.
Alike visibly and by proofs, the transaction was a device to avoid the payment of a stamp duty, and its operation was a fraud on the internal revenue act.
Messrs. C. P. James and J. Hubley Ashton, for the prisoner, argued contra:
1st. That doubtless the words 'memorandum, check,' printed in the statute-book with a comma between them, were, in respect of the comma, incorrectly printed; that statutes as engrossed had no punctuation in them; that, as this court has said,  punctuation is 'a most fallible standard' by which to interpret an instrument, and that the act as passed was doubtless 'memorandum check.' Aided by the printer, the words should have appeared 'memorandum-check.' This quite altered the sense.
As for the rest of the phrase, 'other written or printed evidence,' &c., the preceding part of the schedule having, by exclusion, specifically described this instrument, the general words would not apply.
2d. That the instrument was, in form, a draft or order for the payment of money drawn upon a person other than 'a bank, banker, or trust company,' and it was for less than $10; that the stamp duty was to be regulated by the form of the paper; and that not being in form a promissory note, the stamp requisite for instruments which were in that form was unnecessary.
The paper, therefore, required no stamp, and the prosecution must fail.
Mr. Justice HUNT delivered the opinion of the court.
^1 13 Stat. at Large, § 158, p. 298, amended by the act of July 13th, 1866; 14 Id. 144.
^2 3 Manning & Granger, 576.
^3 15 New York, 337; and see Hasey v. The White Pigeon Beet Sugar Company, 1 Douglass, Michigan, 193.
^4 Ewing v. Burnett, 11 Peters, 54; and see Ex parte Irvine, 1 Pennsylvania Law Journal, 292 and 300, where the observation was applied to a statute.