Chance v. United States, M-18.

• Citation: 80 Ct. Cl. 692,9 F. Supp. 1011
• Decision Date: 04 March 1935
• Docket Number: No. M-18.,M-18.
• Parties: CHANCE v. UNITED STATES.
• Court: Court of Federal Claims

9 F. Supp. 1011

80 Ct. Cl. 692

CHANCE v. UNITED STATES.

No. M-18.

Court of Claims.

March 4, 1935.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Maurice D. Rosenberg and Harvey D. Jacob, both of Washington, D. C., for plaintiff.

Joseph H. Sheppard, of Washington, D. C., and Frank J. Wideman, Asst. Atty. Gen., for the United States.

Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.

WILLIAMS, Judge.

The plaintiff, receiver of the City Club of Washington, D. C., sues to recover taxes paid on dues and admission fees of the club's members for the period from June, 1924, to April, 1930, amounting to $40,015.25. The taxes involved were collected under the provisions of section 801 of the Revenue Acts of 1918 and 1921, 40 Stat. 1121, 42 Stat. 291, section 501 of the Revenue Acts of 1924 and 1926 (26 USCA § 872 note), or section 413 (a) of the Revenue Act of 1928 (26 USCA § 872). These acts and the applicable Treasury Regulations have been considered by the court in numerous cases. We do not deem it necessary to review the decisions in these cases at length. The rule by which it must be determined whether a club seeking exemption from the tax is or is not a social club within the meaning of the taxing acts is clearly stated in the case of Army & Navy Club of America v. United States, 53 F.(2d) 277, 282, 72 Ct. Cl. 684:

"It is contended on behalf of the plaintiff that the predominant purpose of the club is patriotic and professional and not social. This may be conceded, but this fact is not necessarily controlling. We think it quite clear that the numerous and varied social features of the club show that they are a material part of its activities and not merely incidental to the patriotic work of the club, which could be carried on without them. The evidence shows that they are made an inducement to bring additional members into an organization that needs their financial aid in order to continue its existence, and in this way have become an essential part of those elements which go to determine whether or not a club is a social organization within the meaning of the law. * * *

"It appears that the predominant purpose of the club was to further the interests of the Army and Navy and to advocate and create a public sentiment in favor of `preparedness.' Had the social element been merely incidental to this purpose, the club would have been exempt from the tax. But, as we have already shown, the social features became an essential element of its activities for the purpose of increasing its membership, aiding in its financial support, and thus helping to...