Fresh Meadow Country Club v. United States, 6144.

• Decision Date: 04 December 1936
• Docket Number: No. 6144.,6144.
• Citation: 17 F. Supp. 400
• Parties: FRESH MEADOW COUNTRY CLUB, Inc., v. UNITED STATES.
• Court: U.S. District Court — Eastern District of New York

17 F. Supp. 400

FRESH MEADOW COUNTRY CLUB, Inc., v. UNITED STATES.

No. 6144.

District Court, E. D. New York.

December 4, 1936.

Baar, Bennett & Fullen, of New York City (Emil N. Baar and John P. Hurley, both of New York City, of counsel), for plaintiff.

Leo J. Hickey, U. S. Atty., and John G. Dalton, Asst. U. S. Atty., both of Brooklyn, N. Y., Robert H. Jackson, Asst. Atty. Gen., and Andrew D. Sharpe and Francis I. Howley, Sp. Assts. to the Atty. Gen.

GALSTON, District Judge.

The plaintiff, a corporation organized under the membership law of the state of New York, sets forth in its complaint that in February, 1929, Walter E. Corwin, then collector of internal revenue for the First collection district of New York, acting under section 501(a) of the Revenue Act of 1926 (26 U.S.C.A. § 950 note) demanded that the plaintiff pay over to him a tax at the rate of 10 per cent. upon the money paid by the members in response to a request for contribution made by the finance committee of the club. To avoid distraint, but under protest, the plaintiff on March 6, 1929, paid the collector the sum of $2,925, representing 10 per cent. of the amount thus contributed. This action brought by the plaintiff is based on a claim for a refund of that sum and for the refund of $10 paid in the nature of an offer of compromise for any accrued penalty.

It is alleged by way of defense that the sums paid by the members were not voluntary contributions but an assessment.

The Revenue Act of 1926, c. 27, 44 Stat. 92, § 501, provides: "Sec. 501. On and after the date this title takes effect there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 501 of the Revenue Act of 1924, a tax equivalent to 10 per centum of any amount paid on or after such date, for any period after such date, (a) as dues or membership fees (where the dues or fees of an active resident annual member are in excess of $10 per year) to any social, athletic, or sporting club or organization; or (b) as initiation fees to such a club or organization, if such fees amount to more than $10, or if the dues or membership fees (not including initiation fees) of an active resident annual member are in excess of $10 per year; such taxes to be paid by the person paying such dues or fees: Provided, That there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system, or to any local fraternal organization among the students of a college or university. In the case of life memberships a life member shall pay annually, at the time for the payment of dues by active resident annual members, a tax equivalent to the tax upon the amount paid by such a member, but shall pay no tax upon the amount paid for life membership."

On March 31, 1927, at a regular meeting of the board of governors of the club, the following resolution was adopted: "On motion of Mr. Julius J. Kauder, member of the Finance Committee, it was unanimously resolved, that the Finance Committee be authorized to request each member to make a voluntary contribution of the sum of $100.00 payable in two instalments of $50.00 each on May 1st and September 1st, with the understanding that if any member declined to make said contribution, no charge be made against him therefor."

The minutes of a special meeting held on April 11, 1927, record that:

"Mr. Latner reported in behalf of the Finance Committee as follows:—They had given careful consideration to the question of raising additional funds in accordance with the resolution adopted at the last regular meeting of the Board, namely on the basis of $100. from each regular member, and in cooperation with the...