Gem State Academy Bakery, In re, 7608
Decision Date | 06 April 1950 |
Docket Number | No. 7608,7608 |
Citation | 70 Idaho 531,224 P.2d 529 |
Parties | In re GEM STATE ACADEMY BAKERY. |
Court | Idaho Supreme Court |
Willis C. Moffatt, Boise, Doane & Furey, Boise, for appellant.
Robert E. Smylie, Atty. Gen., John W. Gunn, Asst. Atty. Gen., for respondent.
Following a hearing the Industrial Accident Board affirmed a determination by the Employment Security Agency, to the effect that the Gem State Academy Bakery is liable for the payment of contributions to the employment security fund, upon remuneration paid to truck drivers, engaged in the sale and delivery of bakery products, and to the manager of the bakery. The facts are not in dispute and are succinctly stated in the findings of the board:
denominational parlance, the same as the Conference pays to its other workers and teachers. According to the financial statements, in its book-keeping, half of the manager's salary is charged as 'selling expense.'
'A local sales-room is maintained, presumably with student help, where products are sold at retail to the public.
'No commercial advertising of the bakery is carried on over the radio or in the newspapers.
The question presented is whether or not the employment involved is exempt from the operation of the Employment Security Law by the terms of section 72-1316(a)((7), I.C.: 'Service performed in the employ of a corporation, community chest, fund, foundation, or association organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for 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, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation.'
It is agreed that the Idaho Conference of Seventh Day Adventists is an association organized and operated for religious and educational purposes, and that no part of its net earnings inures to the benefit of any private shareholder or individual. All the earnings of the bakery, including those resulting from the sales made by the employees in question, are used by the conference in promotion of its religious and educational purposes. It also appears from the record that charity is one of its purposes, at least as an adjunct of its religious and educational activities.
In its rulings of law the board said: It is apparent that the board has adopted a rule of strict construction of the exemption, with particular emphasis upon the word 'exclusively.' When this law was first adopted in Idaho (Ch. 12, 1936, 3rd Ex. Session), under an exemption practically identical in terms with that quoted above, the following Administrative interpretation was adopted: 'For the purpose of the exclusion the nature of the service is immaterial; the statutory test is the character of the organization for which the service is performed.' 3 C.C.H. Unemployment Insurance Service, page 15,033. On the face of it quite the opposite of the rule stated by the board.
The language of our exemption was taken from the federal Social Security Act of 1935, 42 U.S.C.A. § 301 et seq., which in turn was taken by the Congress from its own Internal Revenue Code, Rev. Code, section 101(6), 26 U.S.C.A. § 101(6), the language of the exemption having been carried down from 1913. We also copied it in our income tax law. Property Relief Act of 1931, 63-3029(4), I.C. The general rule is that the construction of a statute of another state by its courts, if reasonable, will be followed by us, upon the subsequent adoption of the statute by our legislature. State v. Taylor, 59 Idaho 724, 87 P.2d 454; Bishop v. Morrison-Knudsen Co., 64 Idaho 806, 137 P.2d 963. As to our income tax law, the legislature made this rule of construction mandatory. Section 63-3085, I.C.; John Hancock Mut. Life Ins. Co. v. Haworth, 68 Idaho 185, 191 P.2d 359. And in our Employment Security Law itself the legislature tacitly recognizes the applicability of the rule to the construction of that law in the provisions for state cooperation with the administration of the federal act. Sections 72-1302(b) and 72-1341, I.C., as amended. Therefore, the construction of the exemption here considered, as found in the federal decisions, is quite compelling.
Trinidad v. Sagrada Orden De Predicadores, 263 U.S. 578, 44 S.Ct. 204, 205, 68 L.Ed. 458, is a decision concerned with the application of the same exemption to the income of a religious organization. It was rendered in 1924. The organization was possessed of large holdings of real estate, stocks of private corporations, and money loaned at interest, from which it derived the bulk of its income in rents, dividends and interest. It also received income from the sale of stocks, wine, chocolate and other articles. No part of the income inured to the benefit of any private stockholder or individual. The collector contended that it was not 'operated exclusively' for the stated purposes, but was also operated for business and commercial purposes. The court said:
* * *'
The court observed that sales referred to were not made to the public in competition with others, and further said: The fact that the goods were not sold to the public does not appear to be an important factor. This is the view taken of the case by the C.C.A. First Circuit, in Santee Club v. White, 87 F.2d 5, 8.
With some exceptions the rule of liberal construction in favor of exemption suggested in the Trinidad case has since been followed by the federal courts under both the income tax and social security act. Cochran v. Commissioner, 4 Cir., 78 F.2d 176; Koon Kreek Klub v. Thomas, 5 Cir., 108 F.2d 616; International...
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