Lake of the Forest Club v. United States, 2695

• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)
• Writing for the Court: PHILLIPS, HUXMAN, and WILLIAMS, Circuit
• Citation: 137 F.2d 843
• Parties: LAKE OF THE FOREST CLUB v. UNITED STATES (two cases).
• Docket Number: No. 2695,2696.,2695
• Decision Date: 27 August 1943

137 F.2d 843 (1943)

LAKE OF THE FOREST CLUB
v.
UNITED STATES (two cases).

Nos. 2695, 2696.

Circuit Court of Appeals, Tenth Circuit.

August 27, 1943.

Alfred B. Page, of Kansas City, Mo. (Perry W. Shrader, of Kansas City, Mo., Frank L. Bates, of Kansas City, Kan., and Gage, Hillix, Shrader, Hodges & Cowherd, of Kansas City, Mo., on the brief), for appellant.

S. Dee Hanson, of Washington, D. C. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and Samuel H. Levy, Sp. Assts. to Atty. Gen., on the brief), for appellee.

Before PHILLIPS, HUXMAN, and WILLIAMS, Circuit Judges.

137 F.2d 844

HUXMAN, Circuit Judge.

These actions were brought by the Lake of the Forest Club, a corporation, under power of attorney from its members, to recover for them club dues collected under the provisions of Section 413 of the Revenue Act of 1928, 45 Stat. 791, 26 U.S.C.A. Int. Rev.Acts, page 441. The club has appealed from an adverse decision. The dues for which recovery was sought were collected over a number of years, and were substantial in amount. The ground relied upon for reversal is that the trial court erred in finding and concluding that the purpose of the club was the maintenance of a club for social enjoyment.

Section 413 of the Act in question provides for the payment of a tax of ten per cent on any amount paid "as dues or membership fees to any social, athletic, or sporting club or organization * * *." The club has been operated from its inception under a charter which defines the purpose of the organization as "maintenance of a club for social enjoyment. To purchase, own, manage and control and dispose of such personal property as may be necessary for its use and benefit. To purchase, hold, own, manage, control and dispose of such real estate as may be necessary for its use and benefit. To erect the necessary buildings and improvements thereon in order to provide suitable accommodations for its members, for the transaction of its business and the carrying out of its purposes and objects * * *."

Appellant acquired 179 acres adjacent to a main highway on which is located a lake covering approximately thirty-five acres. The lake has been stocked with fish at all times. Around this lake are located 235 lots. The club also leased 640 acres to the north for the purpose of preventing soil erosion and for the protection of the lake. Since 1929, it has also leased 153 acres on the east side of its property, on which is located a nine hole, sand green golf course. During the early years, there were no accommodations for members on the club property. They ordinarily came out over the week end, and lived largely in tent houses. In more recent years, however, substantial houses have been built by the members, and a building approximately 120' × 70', known as the clubhouse, is now located on the premises. The members of the club hold approximately ten dances a year in the clubhouse. A privately owned grocery store is operated in the basement of the clubhouse. The proprietor of this store serves meals on Thursday nights to a limited number of the members. Members have about twenty privately owned row boats on the lake. Spring boards and rafts are provided, and swimming is permitted in the lake. During the summer months the ladies hold meetings in the clubhouse, which are generally addressed by someone from Kansas City, who ordinarily gives a book review. A comparatively small number...