Hazen v. National Rifle Ass'n of America

• Decision Date: 05 December 1938
• Docket Number: No. 7090.,7090.
• Citation: 69 App. DC 339,101 F.2d 432
• Parties: HAZEN et al., Commissioners of District of Columbia, v. NATIONAL RIFLE ASS'N OF AMERICA, Inc.
• Court: U.S. Court of Appeals — District of Columbia Circuit

69 App. DC 339, 101 F.2d 432 (1938)

HAZEN et al., Commissioners of District of Columbia, v. NATIONAL RIFLE ASS'N OF AMERICA, Inc.

No. 7090.

United States Court of Appeals for the District of Columbia.

Decided December 5, 1938.

Elwood H. Seal, Corp. Counsel, Vernon E. West, Principal Asst. Corp. Counsel, and James W. Lauderdale, Asst. Corp. Counsel, all of Washington, D. C., for appellants.

Charles V. Imlay and John R. Reed, both of Washington, D. C., for appellee.

Before GRONER, Chief Justice, and STEPHENS and MILLER, Associate Justices.

MILLER, Associate Justice.

Appellants filed a petition in the lower court for a writ of mandamus¹ to compel appellee to file with the Assessor of the District of Columbia returns for the fiscal years ending June 30, 1934 to 1937, inclusive, of the personal property, tangible and intangible, owned and held by it in its private capacity or as a fiduciary, for the purpose of assessment for taxation.² The court overruled appellants' demurrer to appellee's answer; appellants elected to stand on the demurrer; the petition was thereupon dismissed and the rule to show cause, theretofore issued, was discharged. This appeal is from the order dismissing the petition and discharging the rule.

Appellee, the National Rifle Association of America, is a nonstock corporation organized under the laws of the State of New York, and, since about 1912, has maintained its sole office in the District of Columbia. In its answer in the lower court it alleged that it was a benevolent, charitable and scientific institution incorporated under the laws of the United States and consequently that its property was exempt from taxation because of the provisions of Section 755, Title 20 of the D.C.Code, 1929 (Act of July 1, 1902, 32 Stat. 620, c. 1352, § 6, par. 10).³ This contention has been abandoned on appeal and it is not necessary for us to consider it in either phase. Appellants conceded on argument that appellee is not required to file a return if its property is exempt from taxation. Whether some of appellee's property is exempt or otherwise not subject to taxation is also immaterial, in view of the nature of the present case. If any of it is liable to taxation, appellee is obliged to make the return required by law and, in the event of its failure, may be compelled to comply.⁴

Appellee assumes on this appeal that appellants' demurrer admitted the conclusion, pleaded in its answer, that all its property was used for educational purposes, with the resulting necessary conclusion that such property is exempt from taxation under Section 713, Title 20 of the D.C.Code, 1929 (Act of July 1, 1902, 32 Stat. 616, c. 1352, § 5).⁵ But the assumption is unsound and the conclusion does not follow. The answer, after setting out with particularity those parts of its certificate of incorporation and by-laws which disclosed its purposes, alleged: "... respondent appellee is therefore advised ... that the property of respondent corporation is all used for `educational purposes' within the meaning of T. 20, § 713 of said Code." This is a conclusion of law as to the effect and purpose of the statute, and for that reason was not admitted by the demurrer.⁶

Moreover, the conclusion of the pleader was not admitted by demurrer, in the present case, for a further reason, i. e., because it is a conclusion contrary to the specific facts alleged and from which it purports to be drawn,⁷ to say nothing of the purpose-revealing title of the New York Act under which appellee was incorporated, and which also appears in its answer.⁸ It is certainly not usual for societies and clubs, which are organized for social and recreative purposes, to be so engaged that all their property is used for educational purposes. The certificate of incorporation⁹ and the by-laws¹⁰ of appellee, which are set out in its answer, list the following objects and purposes of the association: (1) to educate the youth of the nation in marksmanship; (2) to improve the marksmanship of its members; (3) to provide a suitable range or ranges in the vicinity of the City of New York; (4) to secure the issuance of arms and ammunition to those practicing on ranges; (5) to encourage competition in marksmanship between teams and individuals in all parts of the United States; (6) to promote the introduction of the system of aiming drill and rifle practice as part of the military drill of the National Guard in all the states; (7) to encourage marksmanship throughout the United States, particularly among civilians, both as a sport and for the purpose of qualifying as finished marksmen those individuals who may be called upon to serve in time of war; (8) to create a public sentiment for the encouragement of rifle practice both as a sport and as a necessary means of national defense; and (9) to encourage legislation for the establishment and maintenance of suitable ranges. On argument, appellee stated that it engaged in lobbying activities not merely to encourage legislation for the establishment and maintenance of ranges but also (10) to prevent the passage of certain legislation concerning the regulation of manufacture and distribution of firearms.¹¹

No one of these objects and activities is necessarily or exclusively educational in character. The promotion, propaganda and lobbying activities implicit in the eighth, ninth and tenth are definitely not educational.¹² The first to seventh may be in some small measure educational; they may be purely for sport and recreation; they may involve promotion, propaganda and lobbying, as in the case of the eighth, ninth and tenth. It is idle to urge by way of analogy that because the officers of an educational institution or association may engage occasionally in lobbyist or propagandist activities, such an institution should be regarded in the same light as one which engages casually or incidentally or occasionally in educational activities.¹³ It is the primary use made of the property which determines whether it is exempt. School of Domestic Arts and Science v. Carr, 322 Ill. 562, 568, 153 N.E. 669, 671.

Assuming, therefore, solely for the purpose of argument, that the allegation concerning educational use is a conclusion of fact; reading it in connection with the particular allegations of objects and purposes; and giving to them all the most favorable possible interpretation under the authorities which define educational use, it is clear, in our view, that at most the educational phase of appellee's activities is incidental and collateral to the social, recreative, promotional and propaganda phases which constitute its major reasons for existence. It does not, therefore, in any real sense relieve the government of its burden of public education.¹⁴ In fact, if appellee should succeed to any large extent in teaching the youth of the nation to shoot, without at the same time inculcating the discipline of military training, which is a fundamental part of the curriculum of colleges and academies maintained and approved by the government to provide such training, it is much more probable that the result would be, instead, a tremendous increase in the governmental burden of crime control. Even well recognized methods of youth-training, such as physical education, when distorted and diverted from their legitimate uses, may cease to have educational character. And this may be true, even though such distortion and diversion occurs under the direction of educational institutions such as colleges and universities.¹⁵ No admission of performance, or even of capacity to perform the difficult task of military training, resulted from appellants' demurrer, in spite of the conclusion of law pleaded in appellee's answer.

For all these reasons, therefore, the necessity for governmental subsidy or immunity which is implicit in tax exemption — upon the theory that the government is relieved of its burdens¹⁶ — fails in the present case.

Appellee contends further that its personal property is exempt under the provisions of Section 713, Title 20 of the D. C.Code, 1929, which is the second paragraph of Section 5, Chapter 1352 of the Act of July 1, 1902, 32 Stat. 616. As appellee's contention that its property is all being used for educational purposes must be rejected, it is unnecessary for us to decide whether the language in question was intended to have general application to all property or whether it should be limited to real estate. In any event, it refers only to property used for educational purposes.

Appellee also contends that its intangible personal property is exempt from taxation under the provisions of Section 754, Title 20 of the D.C.Code, 1929 (Act of September 1, 1916, 39 Stat. 717, c. 433, § 11, as amended),¹⁷ on the theory that it is neither a resident nor engaged in business within the District. The principle has long been settled that a corporation is a resident of the state in which it was incorporated.¹⁸ As appellee was incorporated under the laws of New York, its legal residence is in that State even though its principal office is located in the District of Columbia. On the other hand, it is clear that appellee enjoys and exercises within the District the privilege of a situs¹⁹ for carrying on its activities, whatever they may properly be called, as well as capacity to sue and be sued, to be served with process, to maintain offices and a staff of employees, to collect, expend, invest and reinvest large sums of money. However, it contends that it is not engaged in business within the meaning of the code section. It urges that its aims are like those of a chamber of commerce or club,²⁰ even apart from the matter of educational activities; that it distributes no dividends and that its funds come from contributions of members, not from commercial relations with either the public or its own members.

What then is the meaning of the term "engaged in business" as employed in the statute? Webster's Dictionary defines "business" ...