Bd. of Assessors of Boston v. Boston Pilots' Relief Soc.

• Decision Date: 31 March 1942
• Parties: BOARD OF ASSESSORS OF BOSTON v. BOSTON PILOTS' RELIEF SOC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

311 Mass. 232

40 N.E.2d 889

BOARD OF ASSESSORS OF BOSTON

v.BOSTON PILOTS' RELIEF SOC.

Supreme Judicial Court of Massachusetts, Suffolk.

March 31, 1942.

Appeal from Appellate Tax Board.

Proceeding by the Boston Pilots' Relief Society for the abatement of a tax assessed by the Board of Assessors of Boston. From a decision of the Appellate Tax Board abating the tax, the Board of Assessors of the City of Boston appeals.

Petition for abatement dismissed.

Before FIELD, C. J., and DONAHUE, QUA, DOLAN, and RONAN, JJ.

J. W. Kellher, Asst. Corp. Counsel, of Boston, for appellant.

G. L. Barnes, of Boston, for Boston Pilots' Relief Soc.

DOLAN, Justice.

This is an appeal, by the board of assessors of the city of Boston, from a decision of the Appellate Tax Board abating a tax for the year 1938, assessed upon two pilot boats owned by the Boston Pilots' Relief Society, a Massachusetts corporation.

The relevant facts are as follows: The taxpayer, hereinafter referred to as the society, was duly incorporated by St. 1866, c. 91, entitled ‘An Act to incorporate the Boston Pilots' Relief Society.’ Section 1 sets forth that the purpose for which the society was founded is that ‘of furnishing aid and relief to the pilots of Boston and their families, as occasion may require; with all the rights and privileges, and subject to all the duties, restrictions and liabilities set forth in the general laws which now are or may hereafter be in force relating to such corporations.’

The society adopted rules and regulations to govern the conduct of its affairs. Its officers include a committee of relief and visitation consisting of three members. The eligibility requirements for membership in the society are fixed by its rules and regulations, under which only an acting pilot who holds a license from the board of pilot commissioners may become a member, and then only after he files his application, pays his admission fee, and receives the unanimous vote of all the members present and voting at the next annual or special meeting of the society.

The admission fee is $25, and the dues are $100 a year. The rules and regulations provide that ‘A pilot upon becoming a member shall also, as an initial assessment, pay to the treasurer a sum equal to such pilot's proportionate share of $107,500 apportioned among all the members of said society.’ There having been at the time of the hearing before the Appellate Tax Board twenty-four members of the society, a new member would be required to pay one twenty-fourth of $107,500, or approximately $4,400. Upon his retirement he, or upon his death his estate, would be entitled to have that sum repaid without interest. This assessment does not become a part of the fund but is divided among members who have at some time previous contributed to the repayment, to a retired member or to the estate of one deceased, or the amount of his initial assessment. Apparently this fund thus remains constant. It is commingled with the general funds of the society and invested, and the income from all investments is used for the ‘support and aid of the beneficiaries.’

Under its rules and regulations members of the society who by age, sickness, or accident are prevented from pursuing their calling as pilots, are to be paid a sum not less than $125 payable monthly by the society. A member's right to these payments does not accrue until he had been idle for a month owing to the causes just referred to, and such payments cease upon his return to work.

The rules and regulations further provide that, upon the death of a member, his widow shall receive an annual sum not exceeding $300, as determined by vote of the society, and that each of his surviving children shall receive annually a sum not exceeding $200, until such child arrives at the age of sixteen years, provided that the income of the society is sufficient therefor. Further provision is made for the payment of $300 for the funeral expenses of a deceased member. Provision is also made for a floral tribute and two carriages.

The funds of the society accumulated since its formation amount to $222,279.78. It also owns the two pilot boats before referred to. They are carried on the society's books at a value of $35,000. The society has no capital stock and no part of its capital funds has been used for its purpose, nor has any of its income or profits ever been distributed among its members or their families except as before recited. Its rules and regulations make no provision for the distribution of income or profits except for aid and relief to beneficiaries. Many years ago the society received a gift of $80,000, probably from a ship owner. Since the records of the society were destroyed by fire in 1925, the Appellate Tax Board was unable to find what if any conditions were attached to this gift. It has been treated and used, however, as an outright, unconditional gift for the purposes for which the society was organized. It ‘is to be so considered.’

In the year 1938, approximately $11,000 of the income of the society from its invested funds was distributed among six retired pilots and eleven widows of deceased pilots. No payments were made to children of deceased pilots in that year, the income being insufficient therefor.

The society has owned pilot boats since 1901. The two boats now owned by it are called ‘The Pilot’ and the ‘Northern Light’ respectively. These boats are leased by the society to ‘those individuals who now or hereafter from time to time compose the pilots of Boston Harbor as duly licensed and commissioned by the Pilot Commissioner of Massachusetts,’ at a rental of $840 a month. Expenses of operation, repairs to sails and rigging and other minor expenses are borne by the lessees. The income derived from the rental of the boats is commingled with the society's general funds. The lessees' profits from the use of the boats are divided among them by an arrangement to which the society is not a party, and it does not ‘participate in the business in any way.’

In 1938, the board of assessors of the city of Boston valued ‘The Pilot’ at $15,000 and assessed a tax thereon of $619.50. At the same time at valued the ‘Northern Light’ at $30,000 and assessed a tax thereon of $1,239. This was the first time that a tax had been assessed upon any property of the society. The ‘commissioner of corporations and taxation has always classified the society as a charitable corporation within the meaning of G.L. c. 180, and * * * has never assessed a tax on its property or income.’ Nor have the Federal authorities so done. The society paid the taxes in question on July 26, 1939, duly applied to the assessors for an abatement, and upon its denial appealed to the Appellate Tax Board.

The Appellate Tax Board, hereinafter referred to as the board, further found as ‘facts' that all net income of the society is used for the purposes specified in its charter, that its beneficiaries comprise a class indefinite as to number, that the purposes of the society are benevolent and charitable, and that none of its income is divided among its members or is used or appropriated for other than benevolent and charitable purposes, and ruled that the ‘Society is a charitable corporation of the...