Chesed Shel Emeth Soc. v. Unemployment Compensation Commission

• Decision Date: 09 June 1947
• Docket Number: 40001
• Citation: 203 S.W.2d 454,356 Mo. 726
• Parties: Chesed Shel Emeth Society, a Corporation, Appellant, v. Unemployment Compensation Commission of Missouri, and Carl J. Henry, Harry P. Drisler and Elmer J. Keitel, Members of the Unemployment Compensation Commission of Missouri
• Court: Missouri Supreme Court

203 S.W.2d 454

356 Mo. 726

Chesed Shel Emeth Society, a Corporation, Appellant, v. Unemployment Compensation Commission of Missouri, and Carl J. Henry, Harry P. Drisler and Elmer J. Keitel, Members of the Unemployment Compensation Commission of Missouri

No. 40001

Supreme Court of Missouri

June 9, 1947

Rehearing Denied July 14, 1947.

Appeal from Cole Circuit Court; Hon. Sam C. Blair, Judge.

Affirmed.

Dubinsky & Duggan, Carl M. Dubinsky, Ragland, Otto, Potter & Embry James A. Potter, Leon P. Embry, and Forrest P Carson for appellant.

(1) The Court, and the Commission, erred in not holding that the services performed for the appellant are excluded from "employment" under the Missouri Unemployment Compensation Law by Sec. 9423 (i) (6) (F), R.S. 1939, as amended. It appears that, for a corporation to come within the exclusion of said section it must be both organized and operated for the purposes therein referred to. Murphy v. Concordia Pub. House, 348 Mo. 753, 155 S.W.2d 122. (2) This is not a case in which appellant cannot be heard to say that it is a religious organization so that it must stand or fall on the question of whether or not it is exclusively a charitable organization, as was the situation in Evangelical Lutheran Synod of Mo. v. Hoehn, 196 S.W.2d 134; Y.W.C.A. v. Baumann, 344 Mo. 898, 130 S.W.2d 499. (3) And the term "operated exclusively" in said section has reference to the primary -- as distinguished from mere secondary and incidental -- objectives. Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826; Northeast Osteopathic Hospital v. Keitel, 197 S.W.2d 970; Y.W.C.A. v. Baumann, 344 Mo. 898, 130 S.W.2d 499. (4) The Commission's special representative did not find as a fact that the appellant is not a type of organization -- religious or charitable -- embraced in said section of the statute. This fact should have some weight in a determination of the character of the organization. Northeast Osteopathic Hospital v. Keitel, 197 S.W.2d 970; Kresge v. Commission, 162 S.W.2d 838. (5) The primary, if not the only, objectives for which the Society is both organized and operated are religious and charitable. Northeast Osteopathic Hospital v. Keitel, 197 S.W.2d 970; Salvation Army v. Hoehn, 354 Mo. 107, 188 S.W.2d 826; Rockhill Tennis Club v. Volker, 331 Mo. 947, 56 S.W.2d 9; State ex rel. Henderson v. Leseuer, 99 Mo. 552; International Reform Fed. v. Unemployment Comp. Board, 131 F.2d 337; Parsons v. Childs, 345 Mo. 689, 136 S.W.2d 327; Mo. Historical Society v. Academy of Science, 94 Mo. 459, 8 S.W. 346; 14 C.J.S., sec. la, p. 410. (6) The only claims that any part of the net earnings of the Society inures to any individual appear to be based by the Commission's special representative, and by the Commission, on the so-called "token" payments to the president and certain other officers. These payments are not found or shown to be so great that it should be inferred that they were in effect a part of the Society's net earnings. Northeast Osteopathic Hospital v. Keitel, 197 S.W.2d 970. (7) They were payments for services rendered, based on the services rendered and ability of the Society to pay. These payments do not constitute an inurement of net earnings to any individual. Northeast Osteopathic Hospital v. Keitel, 197 S.W.2d 970; Family Aid Assn. v. United States, 36 F.Supp. 1017; Allen v. Armstrong, 68 N.Y.S. 1079. (8) The phraseology of said Section 9423 (i) (6) (F) of the Missouri Statutes, excluding the organizations therein referred to, is very similar to the exemption provisions of the Federal Income Tax Law. U.S.C.A., Title 26, Sec. 103 (6). (9) The Federal Internal Revenue Department, after an investigation, held that the appellant Society was exempt under the Federal Social Security Act. The Federal and State Acts constitute a cooperative legislative effort by the State and National governments for carrying out a public purpose common to both. Meyer & Co. v. Unemployment Comp. Comm., 348 Mo. 147, 152 S.W.2d 184. (10) Weight should therefore, be given to the interpretation of the law as made by the Federal Department. American Natl. Ins. Co. v. Keitel, 353 Mo. 1107, 186 S.W.2d 447. (11) The appellant is not seeking exemption from a tax. The rule of strict construction against appellant would therefore, not apply. The Unemployment Compensation Law includes a taxing statute. Appellant's contention is that it is excluded from and therefore, not subject to the law. The rule of strict construction against the taxing authority, therefore, applies. Meyer & Co. v. Unemployment Comp. Comm., 348 Mo. 147, 152 S.W.2d 184.

Charles F. Moseley for respondents; Michael J. Carroll of counsel.

(1) Exemptions from taxation must be strictly construed against the applicant for the exemption. Murphy v. Concordia Publishing House, 348 Mo. 753, 155 S.W.2d 122; Northeast Osteopathic Hospital v. Keitel, 355 Mo. 740, 197 S.W.2d 970; Lexington Cemetery Co., Inc. v. Commonwealth of Kentucky ex rel. Unemployment Comp. Comm., 181 S.W.2d 699; Kansas City Exposition Driving Park v. Kansas City, 174 Mo. 425, 74 S.W. 977; State ex rel. Y.M.C.A. v. Gehner, 320 Mo. 1172, 11 S.W.2d 30; St. Louis Y.M.C.A. v. Gehner 329 Mo. 1007, 47 S.W.2d 766; Wymann v. St. Louis, 17 Mo. 335; Hudgins v. Mooresville Consolidated School Dist., 312 Mo. 1, 278 S.W. 769; State ex rel. Laundry, Inc., v. Public Service Comm., 327 Mo. 93, 34 S.W.2d 37; Sec. 9423(i), R.S. 1939, as amended; 2 Cooley on Taxation, (4th Ed.) p. 1403; Endlich on Interpretation of Statutes, p. 142, sec. 108; Chamber of Comm. of North Kansas City v. U.C.C., 201 S.W.2d 771. (2) The fact that other governmental agencies may have administratively exempted the appellant from certain taxes is not controlling in considering the status of the appellant under the Unemployment Compensaton Law. Northeast Osteopathic Hospital v. Keitel, 355 Mo. 740, 197 S.W.2d 970; American Medical Assn. v. Board of Review of Dept. of Labor, 392 Ill. 614, 65 N.E.2d 350; Hassett v. Associated Hospital Service Corp. of Mass., 126 F.2d 611. (3) The Commission's findings of fact were proper and were supported by competent and substantial evidence in the record. (4) The law was correctly applied to the facts found and the appellant was properly held, both by the Commission and by the Court, to be an employer subject to the Missouri Unemployment Compensation Law and not to be "a corporation . . . organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, . . . no part of the net earnings of which inures to the benefit of any private shareholder or individual." Murphy v. Concordia Publishing House, 348 Mo. 753, 155 S.W.2d 122; Northeast Osteopathic Hospital v. Keitel, 355 Mo. 740, 197 S.W.2d 970; Better Business Bureau v. United States, 326 U.S. 279, 66 S.Ct. 112; Proprietors of the Cemetery of Mount Auburn v. Unemployment Comp. Comm., 305 Mass. 288, 25 N.E.2d 759; Lexington Cemetery Co., Inc., v. Commonwealth of Kentucky ex rel. Unemployment Comp. Comm., 181 S.W.2d 699; Christgau v. Woodlawn Cemetery Assn., 208 Minn. 263, 293 N.W. 619; Industrial Commission of Wisconsin v. Woodlawn Cemetery Assn., 232 Wis. 527, 287 N.W. 750. Constitutional Government League, Matter of, 23 Wash. (2d) 792, 162 P.2d 453; Sec. 9423(i) (6) (F), R.S. 1939, as amended; 26 U.S.C.A., Sec. 101(5) (6); Chamber of Comm. of North Kansas City v. U.C.C., 201 S.W.2d 771.

OPINION

Tipton, J.

The question presented on this appeal is whether, under the unemployment compensation act, appellant is required to make contributions with reference to wages paid its employees. The Unemployment Compensation Commission of Missouri (hereafter referred to as the Commission) held appellant was liable. The Commission's decision was affirmed by the circuit court of Cole County, and that judgment was duly appealed to this court.

Appellant contends that it is organized and operated exclusively for charitable and religious purposes, and that no part of its earnings inure to the benefit of any private shareholder or individual. For these reasons it contends that it is exempt from making contributions under the unemployment compensation act by virtue of Section 9423, R.S. Mo., 1939, as amended by Laws of Missouri, 1943, pages 920 and 921. Subsection 6 and paragraph F of that section read:

"(6) Shall not include: . . .

"(F) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual."

The Commission adopts the facts as stated in appellant's brief. We will do likewise without quotation marks.

The appellant, Chesed Shel Emeth Society, was incorporated by pro forma decree of the circuit court of the city of St. Louis in 1889 under the statute providing for thus incorporating benevolent, religious, scientific, educational and miscellaneous associations. Its objects were for mortuary purposes, providing a proper and decent funeral and burial for deceased members owning and managing a burial ground for that purpose, for decently and properly burying deceased members at the expense of the Society, and for buying and maintaining a suitable hearse and horses and other proper paraphernalia for carrying out such purposes. At the time the Missouri unemployment compensation law was enacted, the charter powers of the Society had been, by decree of the circuit court of the city of St. Louis, enlarged to provide for owning and maintaining a synagogue for the purpose of holding service for deceased members in accordance with the laws of the Orthodox...