Haswell v. United States, No. 818-71.

CourtCourt of Federal Claims
Writing for the CourtPER CURIAM
Citation500 F.2d 1133
PartiesAnthony HASWELL v. The UNITED STATES.
Docket NumberNo. 818-71.
Decision Date19 July 1974

500 F.2d 1133

Anthony HASWELL
v.
The UNITED STATES.

No. 818-71.

United States Court of Claims.

July 19, 1974.


500 F.2d 1134
COPYRIGHT MATERIAL OMITTED
500 F.2d 1135
Charles W. Schoeneman, Washington, D. C., attorney of record, for plaintiff

Allan C. Lewis, Washington, D. C., with whom was Asst. Atty. Gen. Scott P. Crampton, for defendant. Gilbert E. Andrews, Jr. and Joseph Kovner, Washington, D. C., of counsel.

Before NICHOLS, KASHIWA and BENNETT, Judges.

OPINION

PER CURIAM:

This case comes before the court on plaintiff's exceptions to the recommended decision filed on October 10, 1973, by Trial Judge Kenneth R. Harkins pursuant to Rule 134(h), having been submitted on the briefs and oral argument of counsel. Upon consideration thereof, since the court agrees with the decision, as hereinafter set forth,* it hereby adopts the same as the basis for its judgment in this case.** Therefore, plaintiff is not entitled to recover and the petition is dismissed.

OPINION OF TRIAL JUDGE

HARKINS, Trial Judge:

Plaintiff seeks a refund of income taxes paid in 1967 and 1968 on the theory that his payments to the National Association of Railroad Passengers (NARP) were charitable contributions as then defined in Section 170(c)(2) of the Internal Revenue Code of 1954.1 In 1967 and 1968, plaintiff timely paid income taxes of $7,783.67 and $23,059.96, respectively,

500 F.2d 1136
but did not claim a deduction for payments to NARP, which had totaled $41,864.23 in 1967 and $90,000 in 1968. On April 13, 1971, a refund of $2,765.95 was claimed for 1967 and $9,840.06 for 1968. These refund claims were disallowed on December 17, 1971

To be deductible, a charitable contribution must satisfy section 170(c)(2), which, among other requirements, specifies that the payment be made to an organization "organized and operated exclusively" for certain purposes, and "no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation."2 Plaintiff contends that no substantial part of NARP's activities during 1967 and 1968 was the proscribed carrying on of propaganda or otherwise attempting to influence legislation and that NARP's legislative program is properly characterized as the making available of the results of nonpartisan analysis, study, or research which section 170(c)(2) does not proscribe.

In the event section 170(c)(2) is construed, or its application is interpreted, to prevent a deduction because of NARP's legislative efforts, plaintiff contends such application would violate plaintiff's first amendment rights to freedom of speech and peaceably to petition the legislature for redress of grievances. Further, such application of section 170(c)(2) would infringe plaintiff's rights to equal protection under the due process clause of the fifth amendment.

As will be shown, in 1967 and 1968, NARP was not operated exclusively for the purposes required by section 170(c)(2)(B) and a substantial part of its activities involved attempts to influence legislation within the limitation of section 170(c)(2)(D). Disallowance of plaintiff's payments to NARP in 1967 and 1968 as charitable contributions under Section 170 of the Internal Revenue Code of 1954 does not violate plaintiff's rights under the first or fifth amendment to the Constitution.

I

Summary of Facts

In 1967, plaintiff's concern over discontinuances of passenger trains in the United States caused him to undertake a program to preserve, improve, and expand railroad passenger service. As part of this program, plaintiff caused NARP to be incorporated on May 18, 1967, under the "General Not For Profit Corporation Act" of Illinois. The purposes for which NARP was organized were to act as a focal point for, and to undertake, programs designed to encourage and promote maintenance and improvement of passenger services, operations, and facilities of American railroads.3

500 F.2d 1137

Although it was incorporated as a membership corporation and, by December 31, 1968, NARP had approximately 3,000 members, the major source of its income was plaintiff's personal funds. In 1967, plaintiff's payments to NARP were equal to 83.2 percent of its total expenditures, and in 1968 were equal to 86.7 percent. After NARP was formed, plaintiff devoted full time to its affairs. Plaintiff has been NARP's only chairman and, in 1967 and 1968, was its executive director. Plaintiff received no salary and was reimbursed for NARP's entertainment and travel expenses only. NARP's staff during 1967 and 1968, in addition to plaintiff, was a full-time secretary and a clerical helper.4

Plaintiff's ideas as to the best way to assert the interests of the users and consumers of rail passenger transportation were implemented through NARP. The conditions sought to be achieved through NARP were (1) adequate legal controls over train discontinuances; (2) fair and equal governmental treatment of the rail passenger; and (3) a national transportation policy in which rail passenger service was an essential element. In 1967 and 1968, NARP's program involved educational activities, litigation before the Interstate Commerce Commission or other regulatory agencies to oppose specific proposals for discontinuances of passenger train service, and attempts to influence legislation.

NARP's educational and informational activities to inform the public on problems that affected rail passenger consumers, in 1967 and 1968, included publication of a report, a brochure, a survey of passenger train operations, information made available in NARP's press releases, and speeches made by plaintiff to such organizations as the Passenger Club of Chicago and the Washington Chapter of the Transportation Research Forum.

NARP's litigation activities were limited in 1967, but were expanded substantially in 1968. In 1967, NARP sent two or three letters to the Interstate Commerce Commission to protest discontinuances of passenger trains. In 1968, NARP retained counsel for representation in seven discontinuance proceedings at the ICC, as well as in the ICC "adequacies" case, an investigation to determine whether the ICC had jurisdiction to regulate the adequacy of passenger train service. In addition, in 1968, NARP retained counsel for a case before the Ohio Public Utilities Commission relative to the Penn Central's curtailment of passenger service in Ohio. As part of its litigation effort, NARP also secured, as needed, services of a cost expert and a marketing consultant.

From the start of his program, plaintiff recognized that attainment of the goal to preserve, improve, and expand railroad passenger service would require political action at the national level. On May 9, 1967, prior to the incorporation of NARP, plaintiff explored his proposed program with a senior partner of National Counsel Associates (NCA), a Washington consulting firm that specialized in lobbying. In his correspondence with NCA, plaintiff indicated that he expected NCA to represent NARP in legislative matters before Congress and to promote its interests within the executive departments. Plaintiff emphasized that NARP's objectives "will require substantial legislative action by the Congress." NARP's contract with NCA was signed

500 F.2d 1138
on June 5, 1967, 18 days after NARP was incorporated

In 1967 and 1968, NARP's legislative activities involved participation in proceedings in both Houses of the United States Congress in connection with legislation proposed by the Interstate Commerce Commission to amend Section 13a of the Interstate Commerce Act. As executive director of NARP, plaintiff testified four times before subcommittees of the Senate Committee on Commerce or of the Senate Committee on Banking and Currency. In addition to these appearances as executive director of NARP, plaintiff submitted four written statements or letters to the House of Representatives' Interstate and Foreign Commerce Committee or its subcommittees.

Each appearance as a witness or written submission by plaintiff on behalf of NARP was an activity that involved an attempt to influence pending legislation or to secure legislation sought by NARP. Each appearance as a witness or submission of written materials by plaintiff on behalf of NARP was in response to an invitation from the committee that had been arranged by NCA, NARP's Washington representative. In each instance that plaintiff testified, or submitted written materials, the testimony or materials stated NARP's position on behalf of the consumer rail passenger. No part of plaintiff's testimony before, or submissions to, legislative committees in 1967 and 1968 was partisan from the standpoint of identification with any particular political party. NARP has never participated in, or contributed to, a political campaign, and materials produced by NARP were not partisan from the standpoint of identification with any particular political party.

In its attempts to influence legislation, NARP advocated the interest of the consumer railroad passengers of the United States. Testimony by plaintiff and the written materials submitted did not represent nonpartisan analysis, study, or research in that the testimony or the materials were not the type of full and fair objective expositions that would enable the public to reach an independent conclusion on the subject. Plaintiff's testimony on behalf of NARP and the written materials submitted advocated a particular position and were partisan on the issue of the necessity to continue rail passenger service. In view of the complexities of rail industry operations and of its regulation, much of NARP's testimony and written materials necessarily included technical advice and assistance.5

500 F.2d 1139

NARP's legislative activities were not limited to direct testimony or written submissions to congressional committees. Through NCA or through plaintiff as executive director, NARP made presentations of its views on pending legislation by personal...

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15 practice notes
  • Standards of conduct: Labor organization officer and employee reports,
    • United States
    • Federal Register August 29, 2005
    • August 29, 2005
    ...surrounding facts and circumstances, including the articles and activities of the organization, are to be considered); Haswell v. U.S., 500 F.2d 1133, 1146 (Ct. Cl. 1974) (although finding percentage test inappropriate, court determines that where 20.5% of association's expenditures in 1967......
  • Part III
    • United States
    • Federal Register August 29, 2005
    • August 29, 2005
    ...surrounding facts and circumstances, including the articles and activities of the organization, are to be considered); Haswell v. U.S., 500 F.2d 1133, 1146 (Ct. Cl. 1974) (although finding percentage test inappropriate, court determines that where 20.5% of association's expenditures in 1967......
  • Bob Jones University v. United States, Civ. A. No. 76-775.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • December 26, 1978
    ...Whether an organization is created and operated exclusively for exempt purposes is a question of fact. Haswell v. United States, 500 F.2d 1133, 1142 (Ct.Cl.1974). The Court has found as a fact that the principal activity of the plaintiff rests in the instruction, advancement, and propagatio......
  • Riggs v. Home Builders Institute, No. 01CV0412.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 18, 2002
    ...use tax-deductible contributions to lobby to promote the private interests of their members); Haswell v. United States, 205 Ct.Cl. 421, 500 F.2d 1133, 1140 (1974) ("The limitations in sections 501(c)(3) and 170(c)(2) of the 1954 Code stem from the policy that the United States Treasury......
  • Request a trial to view additional results
13 cases
  • Bob Jones University v. United States, Civ. A. No. 76-775.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • December 26, 1978
    ...Whether an organization is created and operated exclusively for exempt purposes is a question of fact. Haswell v. United States, 500 F.2d 1133, 1142 (Ct.Cl.1974). The Court has found as a fact that the principal activity of the plaintiff rests in the instruction, advancement, and propagatio......
  • Riggs v. Home Builders Institute, No. 01CV0412.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 18, 2002
    ...use tax-deductible contributions to lobby to promote the private interests of their members); Haswell v. United States, 205 Ct.Cl. 421, 500 F.2d 1133, 1140 (1974) ("The limitations in sections 501(c)(3) and 170(c)(2) of the 1954 Code stem from the policy that the United States Treasury......
  • Taxation with Representation of Washington v. Regan, No. 79-1464
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • March 26, 1982
    ...Id. at 1182-83. 25 See Big Mama Rag, Inc. v. United States, 631 F.2d 1030, 1034 & n.7 (D.C. Cir. 1980); Haswell v. United States, 500 F.2d 1133, 1147-48 (Ct.Cl.1974), cert. denied, 419 U.S. 1107, 95 S.Ct. 779, 42 L.Ed.2d 803 (1975). Similarly, in Community-Service Broadcasting of Mid-Am......
  • Bronner v. Duggan, Civil Action No.: 16-0740 (RC).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 31, 2017
    ...The boycott resolution was not an attempt to influence legislation in any meaningful sense of the term. See Haswell v. United States , 500 F.2d 1133, 1140 (Ct. Cl. 1974) (citing Cammarano v. United States , 358 U.S. 498, 512, 79 S.Ct. 524, 3 L.Ed.2d 462 (1959) ) (tracing "the developme......
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