voked."

The portion of section 5 of title 2 (Comp. St. Ann. Supp. 1923, § 101382bb) referred to in section 9 is quoted as follows:

"The manufacturer may by appropriate proceeding in a court of equity have the action of the commissioner reviewed, and the court may affirm, modify, or reverse the finding of the Commissioner as the facts and law of the case may warrant, and during the pendency of such proceedings may restrain the manufacture, sale, or other disposition of such article."

The apparent purpose of the law was to provide a convenient mode of enforcing prohibition by intrusting it to the Commissioner of Internal Revenue. At the same time, it was thought wise to provide against arbitrary action of that department by granting to the persons whose permits were so revoked a right of review by the courts under their equity jurisdiction. The very language of this provision indicates a desire on the part of the lawmaker to allow the very widest latitude in such investigations, to the end that justice may be done. No more appropriate forum could have been selected for that purpose than the equity side of the courts, with the broad powers which such a proceeding affords. However, I do not believe that it was the intention to impose upon the courts the duty of deciding these questions and administering the law, except where there appears a clear abuse of the powers of the Commissioner or his agents.

The Commissioner has prepared an elaborate set of rules and regulations, which attempts to give an opportunity for full hearing to both sides, in a simple and fair proceeding; and while neither the Commissioner nor his agents are required to be lawyers, nor has there been provided the full processes of court for compelling the attendance of witnesses, etc., nevertheless the witnesses are required to be sworn and a record made, upon which a reasonable review may be had. Notice or citation is provided, with opportunity to be heard and for

2 F. (2d)-5

[2] In these circumstances, I believe the reasonable intendment was that the court should take the record as made up by the Commissioner, and, if there appears therein a showing of arbitrary action on his part in the matter of permitting a proper defense, or if the permittee, through no fault or laches of his own, failed to present his full case, a court of equity may afford whatever relief may be required. If a witness could not be had, either because of the want of power to compel his attendance or otherwise, or if evidence, for any reason, after due diligence, has been denied, the court may either receive it on the review, as in case of any other trial in equity, or appoint a commissioner to take it and report back, as fully as if the matter had originated within its own jurisdiction. However, I think the burden is upon the permittee to lay the basis, in the manner indicated, for such action. In this way the duty of administering the law is placed primarily where Congress intended it, and at the same time the aggrieved party is fully protected against erroneous or arbitrary rulings.

This disposition of the matter will indicate the extent to which the court thinks the complainant may go in presenting his case.

SHREVEPORT DRUG CO. v. JACKSON, Prohibition Director, et al.

(District Court, W. D. Louisiana. September 4, 1924.)

No. 203.

1. Corporations 1-One person may own all stock of corporation, and yet that entity be entirely responsible for its affairs, as distinguished from individual.

One person may own all the stock of a corporation, and yet that entity be entirely responsible for its affairs, as distinguished from the individual, though certain corporate action could not be taken without more stockholders.

DAWKINS, District Judge. The Shreveport Drug Company, as a result of reports made by the field agents of the prohibition director for the state of Louisiana, was, on the 18th day of February, 1924, in accordance with the provisions of section 9 of title 2 of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 101382dd), cited to appear before the said director and show cause why its permit to dispense intoxicants as a druggist should not be revoked. The grounds of complaint set forth in the notice were as follows:

"(1) Permittee is not in good faith conforming to the provisions of the National Prohibition Act and regulations promulgated thereunder, in that permittee, through carelessness of its management and inadequate protection, permitted the loss of 17 bottles of wine; the said loss having occurred between December 24, 1923, and January 9, 1924.

"(2) That on November 30, 1923, permittee's president, Mr. John P. Scott, took from their place of business a bottle of wine containing one-fifth of a gallon, without a prescription.

"(3) That the said John P. Scott, manager and president of the permittee, then

caused one of its employees, Mr. Reece Epperson, to obtain a prescription for the aforesaid bottle of wine from Dr. V. Simmons, in order to cover the shortage made through his taking aforesaid bottle of wine; said prescription being from Book No. B-8881, blank No. 53.

"(4) That said John P. Scott placed in charge of the prescription department an employee named Harley L. Vivian, about 19 years old, with orders to fill ordinary medicinal prescriptions written by qualified physicians, which prescriptions frequently call for the use of alcohol; the same being contrary to the following excerpt from section 6, paragraph 2, National Prohibition Act: No permit shall be issued to anyone to sell liquor at retail, unless the sale is to be made through a pharmacist designated in the permit and duly licensed under the laws of his state to compound and dispense medicine prescribed by a duly licensed phy. sician.'

"(5) That a shortage of two quarts of wine, found by Mr. Reece Epperson, on or about September 4, 1923, was covered by the obtainance of two prescriptions for a quart of wine each, by Mr. Reece Epperson, from Dr. Ruffin Paine, being from prescription Book No. B-8550, blanks Nos. 11 and 12. In issuing these two prescriptions, two employees of the store permitted their names to be used, the same being Frank M. Dugan and R. A. Porter. That such action was done with the knowledge and consent of Mr. John P. Scott.

"(6) That on December 24, 1923, John P. Scott took a quart of wine out of the locker of permittee, without first obtaining a prescription and without having it properly labeled; that about 45 minutes later he returned with a prescription issued by Dr. Ruffin A. Paine in the name of Mrs. P. Youree, said prescription being from Book No. B-9094, blank No. 57; that in fact Mrs. Youree was not a patient of Dr. Paine, a fact well known to Mr. Scott, and the prescription was obtained to cover the illegal taking of the aforesaid bottle of wine.

"(7) That the permittee is not legally incorporated under the laws of the state of Louisiana, and was organized contrary to Act 267 of 1914, Louisiana Legislature, and the permit for said drug company was obtained through an evasion of the National Prohibition laws, and was obtained for the purpose of permitting the management of said drug company to operate under a per

mit, without any personal responsibility or liability.

"(8) That in this connection Mr. John P. Scott filed an application for renewal of permit, dated August 15, 1923, in which application it was stated that Mr. Reece Epperson was at that time the secretary-treasurer of the permittee, which application was sworn to by the said Mr. Scott on said date as being a statement of facts; that said Reece Epperson was in fact not an officer of the permittee and had no stock whatever in the corporation.

"(9) That promiscuous drinking of alcoholic preparations has been going on in the prescription department of the permittee's store, and consequently false reports covering the use of alcohol have necessarily been filed.

"(10) That Mr. Paul S. Lane, pharmacist for permittee on November 1, 1923, obtained a prescription from Dr. Ruffin A. Paine, which was canceled on the same date by Reece Epperson, also pharmacist of the permittee, said pint of whisky issued by permittee on said prescription, all of the parties well knowing that said whisky was to be used and was used by Dr. Ruffin A. Paine."

The Shreveport Drug Company, hereafter referred to as the permittee, answered each specification of the complaint as follows:

"Now comes the defendant in rule, the Shreveport Drug Company, Limited, through its president, John P. Scott, and for answer to the rule to show cause why its permit should not be revoked and canceled, specially denies each and every charge set forth in the grounds on which said rule issued, as follows:

"(1) This charge is denied, and permit tee shows that it has in good faith endeavored to conform to all of the provisions of the National Prohibition Act, and regulations promulgated thereunder, and that in the conduct of its business, it has diligently endeavored to secure pharmacists and employees of the highest integrity and that the said employees and pharmacists have been especially enjoined by permittee, through its president, John P. Scott, to carry out strictly all of the regulations and provisions of the National Prohibition Act. "(2) In this connection permittee admits the loss of 17 bottles of wine between December 24, 1923, and January 9, 1924, but avers that it was through no carelessness of permittee that the said loss occurred, and

that, immediately on discovery of the said loss, permittee promptly reported the same, and since said loss has diligently endeavored to discover the cause of the same.

"(3) It is admitted that permittee's president, John P. Scott, ordered a bottle of wine on November 30, 1923, on Reece Epperson's suggestion that said Epperson would obtain a prescription for the same, but shows that said bottle of wine was taken away in good faith from the place of business of permittee at least ten (10) days following the date on which the same was ordered, and after a prescription for same had been regularly issued and canceled.

"(4) This charge is denied, but permittee admits that John P. Scott permitted Reece Epperson to obtain a prescription for the aforesaid bottle of wine from Dr. V. Simmons, and in this connection defendant avers that the said Mr. Reece Epperson prepared the said bottle of wine for delivery to John P. Scott, the day after he had returned from the office of Dr. V. Simmons, and that the said John P. Scott permitted the said bottle of wine so prepared to remain in the narcotic locker of the said Shreveport Drug Company for at least ten (10) days after he was advised that the same had been prepared for him, and that he removed the same in good faith and after the said Epperson had obtained a prescription for the same, as directed by the said John P. Scott, and in this connection permittee avers that the said John P. Scott is now, and has been for a long time, suffering from a mitral regurgilar valve of the heart, and requires at times a light stimulant as a tonic for said condition, and that the said bottle of wine was obtained by the said John P. Scott and issued by permittee in good faith and as a remedy for the condition of the said John P. Scott.

"(5) This charge is denied, and in this connection permittee avers that the said Harley L. Vivian was at no time directed to fill prescriptions calling for the use of alcohol; that he did not have access to the locker in which alcohol and intoxicating liquors were kept by permittee, and if the said Harley L. Vivian did fill such prescriptions, it was without the knowledge or consent of permittee, and against its expressed directions.

"(6) Permittee has no knowledge of the matters and things set forth in this charge, except as have been brought to light by an investigation recently made concerning this matter on information received by John P.

Scott from Messrs. Acosta and Turner, prohibition agents, which said information was received on or about January 15, 1924, and, if the said two (2) quarts of wine were lost or stolen, permittee avers that the same occurred through the fault of the said Epperson, and without the knowledge or consent of permittee, or any of its officers, and permittee further avers that it did not countenance, authorize, or have any knowledge of issuing of prescriptions to cover said shortage, and if the said shortage was so covered, as alleged, it was done by the said Epperson without permittee's knowledge or consent.

"(7) Permittee denies that John P. Scott took a quart of wine out of the locker of permittee as alleged, and on the contrary avers that the said John P. Scott in good faith obtained from Dr. Ruffin A. Paine a prescription for said wine in the name of Mrs. P. Youree, the aunt of said John P. Scott, an esteemed and reputable lady, 80 years of age, residing in the city of Shreveport, and suffering with a malady that requires the use of said wine; that the prescription was issued in good faith, and that the said quart of wine was delivered to the said Mrs. Youree for the purpose set forth hereinabove.

"(8) This charge is denied.

"(9) This charge is denied for lack of sufficient [evidence], and in the alternative permittee shows that, [if] its said application stated that the said Epperson was the secretary-treasurer of permittee, the said statement was falsely made by the said Epperson, and that permittee's president, Mr. Scott, signed the said statement on the representations of the said Epperson, that it was properly made out for the purpose of obtaining a renewal of the permit, and, if the application contained the statement that the said Epperson was secretary-treasurer at the time the said Scott signed the same, it was signed by the said Scott through error and inadvertence, and through reliance and trust imposed by him in the said Epperson, and without the knowledge of false representation.

"(10) Permittee denies that promiscuous drinking of alcoholic preparations has been going on in its prescription department, but avers that it has just learned that the said Epperson, who was employed by permittee in good faith, and with utter reliance on his business and moral integrity, at various times did prepare alcoholic preparations and dispense the same among his

friends during the absence of permittee's president, John P. Scott, from permittee's place of business, and permittee avers that the said alcoholic preparations were dispensed by the said Epperson without the knowledge or consent of permittee, and against the direct orders of permittee, and that permittee is therefore not responsible for the same.

"(11) This charge is denied, and permittee avers that since the service of the rule on permittee in this cause it has made an investigation of facts in this connection, and learned that the prescription referred to in this charge was fraudulently obtained by the said Epperson, without the knowledge or consent of Paul S. Lane, who was named as the patient in said prescription, and that the said pint of whisky was issued fraudulently by the said Epperson, without the knowledge or consent of permittee of the manner in which the same was obtained, or the purpose for which same was used.

"Further answering, permittee shows that the said Reece Epperson left its employ in the month of December, 1923, and that permittee had no knowledge or intimation of the fraudulent action of the said Epperson during the time he was employed by permittee, and that permittee has secured, to the best of its ability, an honest and efficient successor for the said Reece Epperson, and has discharged such employees as permittee has any reason to suspect of violation of the National Prohibition Act, and is endeavoring to comply with the provisions of the same in utter good faith."

Hearing was had before the director; the department being represented by its regular counsel, and the permittee by its own attorneys. After full hearing, there was a finding sustaining all counts of the complaint and revoking the permit for a period of one year. Thereupon the permittee brought this proceeding, as authorized by the said statute, to have the action of the commissioner, through his director, reviewed by the court.

After a careful reading of the record in this case I am not impressed that there was a willful and deliberate purpose on the part of the complainant (complainant here; defendant before the director), through its managing officer and directing head, to evade or violate the terms and conditions under which the permit is allowed to be issued by the Commissioner of Internal Rev