Century Ass'n v. Anderson
| Citation | 10 F. Supp. 1005 |
| Parties | CENTURY ASS'N v. ANDERSON. |
| Decision Date | 10 May 1935 |
| Court | U.S. District Court — Southern District of New York |
Lord, Day & Lord, of New York City (Allan B. A. Bradley and Woodson D. Scott, both of New York City, of counsel), for plaintiff.
Martin Conboy, U. S. Atty., and Ralph E. Stone, Asst. U. S. Atty., both of New York City, for defendant.
This is an action brought by the plaintiff for the recovery of taxes collected during the period from May 1, 1927, to March 31, 1931, in the aggregate sum of $46,381.28, under the authority of the provisions of 26 USCA § 872.
The parties stipulated for trial by a jury of one, and at the close of the evidence each side moved for a directed verdict. This procedure makes a detailed finding of facts unnecessary. Nothwithstanding, a general statement of the considerations which have controlled my decision may serve a useful purpose.
The applicable statute has been construed by Treasury Regulations 43, Article 36, the validity of which is unquestioned. Under this Regulation, I cannot direct a verdict for the plaintiff without finding that "its social features are not a material purpose of the organization but are subordinate and merely incidental to the active furtherance of a different and predominant purpose" — in this case, art and literature. Such a finding I cannot reach on the record in this case.
The record includes the plaintiff's year books for each year falling within the taxable period. These year books include character sketches of members recently deceased, and from these sketches it is fully apparent that the club sheltered a social life which was a prized end in itself. To be sure, in this social life the vivid colors in the art gallery may have blended with the mellow background of the library. Its pattern may have been woven on the loom of the arts. But for present purposes it is its existence, rather than its source, that has importance. And the charm of its quality cannot serve to deny the reality of its existence.
The presence of this social feature in the life of the club is also attested in more tangible ways. Space in the club building was generously allocated for social activities. And from the revenues of the club available from dues and endowment, the direct expenditures to support social activities such as the restaurant, etc., substantially exceed the expenditures directly devoted to the service of art and literature.
To be sure, the club has a library in size and quality surpassing that to be expected in a...
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