That's the return line (non-pressure) from the oil filter. It can be run into the pan. The way it is set up now on your '40 was the proper way from about April, 1940 through the end run of the model year. Prior to that the return line was run to a special bolt that replaced the left fuel pump to pump stand bolt. Sometime in (I believe 1946) the routing was changed to a boss on the oil pan. The later pans had a threaded hole in the boss for that purpose. A '40 oil pan does not.