APPEAL OF UNITY SCHOOL OF CHRISTIANITY
| Decision Date | 23 April 1926 |
| Docket Number | Docket No. 1799. |
| Citation | 4 BTA 61 |
| Parties | APPEAL OF UNITY SCHOOL OF CHRISTIANITY. |
| Court | U.S. Board of Tax Appeals |
Arthur B. Foye, C. P. A., and J. F. Pflug, C. P. A., for the taxpayer.
Briggs G. Simpich, Esq., for the Commissioner.
Before STERNHAGEN, LANSDON, and ARUNDELL.
The Commissioner determined deficiencies for the fiscal years ended April 30, as follows: 1917, $399.09; 1918, $390.62; 1919, $17,394.70; and 1920, $14,280.29; a total of $32,464.70. The petitioner contends that it is exempt from tax under section 11 (a) (sixth) of the Revenue Act of 1916, section 201 (b) of the Revenue Act of 1917, and section 231 (6) of the Revenue Act of 1918; and, if it be not wholly exempt, it is nevertheless entitled to the exclusion from gross income of certain amounts received, as it contends, as gifts.
FINDINGS OF FACT.
The Unity School of Christianity is a corporation created on April 14, 1914, under the business corporation law of Missouri. The articles of incorporation contain the following:
Seventh — That the corporation is formed for the following purposes: The purposes of this corporation are to establish and maintain a School, Institute or College, for the instruction in and the promotion of Christianity and the principles and studies for the intellectual, moral, spiritual and physical development and improvement of mankind, and for the promotion of the harmony, health and happiness of mankind, and to apply such principles and teachings for such purposes, including the treating of diseases and ailments of persons anywhere; and also in connection therewith, to further carry out these objects, this corporation shall have power to establish and maintain a sanitarium for the treatment and healing of diseases and ailments of persons, and to receive and treat patients; to furnish food and other aids and necessaries recommended by this corporation; to use all lawful and usual methods and means of educating, aiding and treating its students and patients; to provide such instruction and aid to persons who personally attend the courses of study and instruction, as well to those who are at a distance; to grant diplomas and confer degrees on its students who are deemed proficient and fitted to receive them.
For the accomplishment of these objects it has power to establish branch organizations; to establish a library or libraries; to print, publish and bind and distribute such books, magazines, papers and other literature as will further carry out the objects of this corporation. To lease suitable buildings and equipment, and to acquire by purchase or gifts such personal and real property as may be necessary to carry out the objects of this corporation; and to receive subscriptions and donations of real and personal property to be applied to the uses and purposes of the corporation; to take, hold, and manage real and personal property conveyed to it in trust, the income from which is to be applied to the uses and purposes of this corporation, and to execute such trusts; to mortgage or otherwise encumber any of its property, or to sell and convey the same; to permit the use of any of its property for religious, educational, benevolent, or other lawful purposes.
On April 29, 1921, there was duly added to the first paragraph quoted the following:
Provided that no dividends shall ever be declared or paid but all profits and property of this organization shall be used to carry out the purposes of the organization or some part thereof.
The work of the corporation and the idea underlying it originated in 1886, when the founder, Charles Fillmore, and his wife, Myrtle, determined to devote themselves to spreading the belief that physical healing and spiritual elevation were inherent in what they regarded as right thinking as it had been revealed to them from a study of the Bible and the teachings of Jesus. They regarded all unhappiness and physical ailment as subject to being completely overcome by directing thought into the channels of love, justice, and righteousness. They regarded the teachings of Jesus, as found in the Bible, as expressing the fundamental religious truths, but they believed that these truths were equally effective to assist all persons irrespective of sect.
The prinicipal feature of the movement is what is called "silent unity," the underlying idea of which is the efficacy of silent prayer and devotion simultaneously made by persons in various places. For example, at 9 o'clock each evening everyone throughout the world is asked to join in prayer wherever they may be. As a result of this practice many people have expressed their belief in its effectiveness to bring them relief from bodily and other pain. To-day the membership in silent unity exceeds 100,000 persons throughout the world.
The means of communication and propaganda originally adopted was the publication of periodicals and tracts, and this has continued to be a substantial means of communication and expansion.
Long before the incorporation, the Fillmores and their two sons were occupied entirely with the Unity movement and had devoted their property to it. They organized the corporation because they believed that by so doing the work would be carried on more conveniently and more impersonally. They then transferred their property, including real estate, to the corporation in exchange for its entire 50 shares of stock of $5,000 par value, which was divided equally among the four. The corporation was organized under the business corporation law instead of that for religious and charitable corporations, because they were advised that their desire to print literature made this necessary. They did not intend to pay dividends to the stockholders; no dividends have been declared or paid, and all earnings have been used for the purposes of the movement.
On August 3, 1918, the four Fillmores, who owned all the stock, made and published the following declaration of trust:
Whereas, the undersigned are the legal owners and holders of all the capital stock of Unity School of Christianity, and corporation of Missouri; and,
Whereas, we have by good management largely increased the number of members and adherents of the School, and have also made material progress and gains for the corporation; and in accomplishing this result have been aided and encouraged by the many members enrolled and adherents of the School.
Now, therefore, Know All Men By These Presents, that we, Charles Fillmore, Myrtle Fillmore, Lowell Fillmore and Royal Fillmore, the undersigned, being desirous of firmly establishing, further promulgating and of perpetuating the principles and teachings of Unity School of Christianity as the same now are established and taught by us and expressed in the printed books, magazines and pamphlets issued under our direction or with our approval, and as these principles and teachings may be added to or corrected from time to time; and desirous of being helpful generally in all matters pertaining to education and in fixing high and broad ideals and standards of correct living and thinking for all persons, and more particularly for all persons who are now or may be hereafter enrolled on our books as members or adherents of the School aforesaid.
DO NOW DECLARE that we hold all our right, title and interest in said corporation (represented by said capital stock) in trust, and dedicate same to be used to carry out the purposes herein expressed and referred to, so that all persons who now are or may hereafter be members and adherents may, while so enrolled and upon proper application, receive the benefits of all the principles and teachings and other help that the School can give; reserving, however, to ourselves and our successors the right to manage and control the business and properties, and to a reasonable compensation for our time and services, and to name our successors who will carry out the purposes herein declared.
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 3rd day of August, 1918, at Kansas City, Missouri.
This was published in an attempt to put the property entirely out of the hands of the Fillmores as personal owners and to make it clear to others that they did not regard it as belonging to them personally.
The amendment to the articles of incorporation, which was made on April 27, 1921, to the effect that no dividends would ever be declared or paid, was adopted because the Fillmores wanted that fact to be made plain. They had never declared any dividends and they wanted to fix it so that none of their successors could declare any dividends.
On June 22, 1923, the following declaration of trust was made, signed and published by the Fillmores:
DECLARATION OF TRUST
WHEREAS, the undersigned claim no right or private property in the shares of stock of said corporation, but hold the same in trust for the purposes set forth in said articles of incorporation;
Now, THEREFORE, the undersigned, and each of them, do herein and hereby, jointly and severally, for themselves, their heirs and assigns, disclaim any right of private property in and to the shares of stock of said corporation and publicly declare that the same are now, and shall be at all times held in trust by the undersigned and their successors as Trustees for the purpose of carrying out the purposes for which this corporation was organized as...
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