Knollwood Club v. United States, L-303.
| Decision Date | 06 April 1931 |
| Docket Number | No. L-303.,L-303. |
| Citation | 48 F.2d 971 |
| Parties | KNOLLWOOD CLUB v. UNITED STATES. |
| Court | U.S. Claims Court |
Clarence N. Goodwin, of Chicago, Ill., for plaintiff.
Charles B. Rugg, Asst. Atty. Gen. (Ralph C. Williamson, of Washington, D. C., on the brief), for the United States.
Argued before BOOTH, Chief Justice, and WHALEY, WILLIAMS, LITTLETON, and GREEN, Judges.
The defendant demurs to plaintiff's petition. The suit is one for the recovery of taxes alleged to have been illegally assessed and collected by the Commissioner of Internal Revenue. The facts are as follows:
The plaintiff, an Illinois corporation, was incorporated for the purpose of maintaining a country club. It is a nonprofitable organization and owns and possesses all the facilities essential for its purposes. The membership of the club is limited to 300 members and eligibility is dependent upon the individual ownership of certificates of membership, which it is alleged endow the owner with a beneficial interest in the property of the club. Admission into the club is in some cases brought about by a purchase and in other cases by a gift of a certificate of membership, but prior to becoming a member it is absolutely essential that title to a certificate of membership become vested in the applicant for membership, and upon the transfer of such a certificate from one person to another the transferee becomes a member of the club without the payment of any amount other than the purchase price of the certificate to the transferor. From June 28, 1928, to November 19, 1929, twenty-five such certificates were sold at the uniform price of $2,500 each to twenty-five persons, who thereby became members of the club, the plaintiff alleging that the club itself was not concerned about the price for which the same were sold.
The Commissioner of Internal Revenue, acting under section 413 of the Revenue Act of 1928, levied and collected from the plaintiff a tax equivalent to 10 per centum of the amount paid by the transferee for said certificates, a total of $6,250, and it is for the refund of this amount the suit is brought. A refund claim was seasonably filed, and no jurisdictional issue is involved. Section 413 of the Revenue Act of 1928, c. 852, 45 Stat. 791, 864 (26 USCA § 872, and § 872 note) provides as follows:
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