Aspetuck Valley Country Club, Inc. v. Tax Com'r

• Court: Supreme Court of Connecticut
• Citation: 180 Conn. 5,428 A.2d 328
• Parties: ASPETUCK VALLEY COUNTRY CLUB, INC. v. TAX COMMISSIONER of the State of Connecticut.
• Decision Date: 04 March 1980

Page 328

428 A.2d 328 180 Conn. 5 ASPETUCK VALLEY COUNTRY CLUB, INC.
v.
TAX COMMISSIONER of the State of Connecticut. Supreme Court of Connecticut. Argued Nov. 15, 1979.
Decided March 4, 1980.

Robert J. Berta, Bridgeport, for appellant (plaintiff).

Robert L. Klein, Asst. Atty. Gen., with whom, on the brief, were Carl R. Ajello, Atty. Gen., and Ralph G. Murphy, Asst. Atty. Gen., for appellee (defendant).

Before COTTER, C. J., and BOGDANSKI, SPEZIALE, PETERS and HEALEY, JJ.

[180 Conn. 6] SPEZIALE, Associate Justice.

The plaintiff appealed to the Superior Court from a determination by the defendant tax commissioner that the payment made by newly elected members of the plaintiff club to obtain membership certificates is subject to the tax on initiation fees under § 12-543(a) of the General Statutes. The trial court affirmed the decision of the defendant and dismissed the appeal. From the judgment of the Superior Court the plaintiff, after certification was granted, appealed to this court.

The case was presented by the parties on a written stipulation of facts, which reveals, inter alia, the following: The plaintiff is a social, athletic, or sporting club or organization organized under the laws of this state. According to the plaintiff's bylaws, each member of the plaintiff club is required to own a membership certificate which represents, in the event of dissolution, a pro rata share in the club. Payments for the certificates are deposited in an account denominated by the plaintiff as the "Equity Fund Account," which is separate from the plaintiff's operating funds and account. The plaintiff receives neither interest income nor any other monetary benefit from this account. All funds accumulated in the "Equity

Page 329

Fund Account" are paid to "resigned or deceased" members. According to article V of the plaintiff's certificate of incorporation, ¹ upon the resignation or death of a member, the club acts as "agent" to sell the certificate for [180 Conn. 7] him to a newly elected member of the same class. Under its bylaws, the club retains possession of all these certificates and has a lien upon any such certificate in order to secure the payment of all dues, assessment charges, and indebtedness. In addition to purchasing a certificate, incoming members are required to pay a nonrefundable "initiation fee," which the plaintiff concedes is taxable.

Section 12-543(a) of the General Statutes provides, in relevant part: "There is hereby imposed a tax equivalent to ten per cent of any amount paid as dues or initiation fees to any social, athletic or sporting club or organization. Such tax shall be imposed upon the club or organization receiving such amounts. Reimbursement for such tax shall be collected by the club or organization from the member. Such reimbursement, termed 'tax,' shall be paid by the member to the club or organization charging the dues or initiation fees...." The term "initiation fees" is defined in § 12-540(6) of the General Statutes as including "any payment, contribution or loan required as a condition precedent to membership whether or not any such payment, contribution or loan is evidenced by a certificate of interest or indebtedness or share of stock."

The plaintiff club claims that the payments for the certificates are not taxable under § 12-543 as initiation fees. The first argument advanced by the plaintiff is that because it was acting only as "agent" for deceased or resigned members of the club,...