City Athletic Club v. United States
| Decision Date | 08 March 1957 |
| Citation | 148 F. Supp. 96 |
| Parties | CITY ATHLETIC CLUB, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Kaye, Scholer, Fierman & Hays, New York City, Jay O. Kramer, New York City, of counsel, for plaintiff.
Paul W. Williams, U. S. Atty., for Southern Dist. of New York, New York City, Foster Bam, Asst. U. S. Atty., Pelham Manor, N. Y., of counsel, for defendant.
Judgment Affirmed March 8, 1957. See 242 F.2d 43.
Plaintiff, on behalf of its individual members, seeks a refund of the club dues imposed, pursuant to section 1710 of the Internal Revenue Code of 1939, 26 U.S.C.A. (I.R.C.1939) § 1710, upon a particular assessment collected by it in 1948. Both parties move for summary judgment.
In order to raise additional funds for repairs, replacements and improvements of the Club's property, plaintiff assessed its members for an amount over and above the regularly collected dues. The assessment was voted by the membership at an annual meeting of the Club after advance notice had been given that this proposal would be voted upon. All of the acts of the Club and its members assumed that the Club had power to compel the collection of such an assessment and that it was taxable under the dues tax. Thus, the letter to the members giving notice of the proposal stated that the members would be assessed for a particular amount plus the Federal tax of twenty percent. No pledge cards or acceptances were solicited from the individual members as would have been the case if the contribution were thought voluntary. Each individual member was billed for the assessment and rebilled each month for the balance owing until it was fully paid, the members having been given the option of paying off the assessment at $5 per month.
Plaintiff relies upon Garden City Golf Club v. Corwin, 2 Cir., 62 F.2d 246, but that case is distinguishable. There the contribution by the members was not collected under color of right. It was clearly voluntary; it was described as a "permissive assessment"; its acceptance was "requested" by the president without any form of obligatory imposition by the Club or the board of governors. Some members contributed less than the recommended amount; others did not contribute at all; no effort was made to compel collections. In the present case the defendant did not choose to risk reliance upon individual gifts. Instead the assessment was imposed under color of right; it was asserted as obligatory.
Although in New York, as in some other states, there is authority that a membership corporation has no power to levy assessments, as distinguished from regular dues unless expressly granted in its certificate of incorporation, Thompson v. Wyandanch Club, 70 Misc. 299, 127 N.Y.S. 195, it is unnecessary to decide that question. There is no proof that...
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Louisville Country Club, Inc. v. Gray, 14109.
...as no attempt was made to modify the law by amendment to provide for taxation of such assessments. However, when City Athletic Club v. United States, D.C.N.Y., 148 F. Supp. 96, affirmed 2 Cir., 242 F.2d 43, reversed the Garden City Golf case, Congress immediately amended the statute to spec......