Porter v. United States

• Citation: 303 F.2d 67
• Decision Date: 17 May 1962
• Docket Number: No. 19371.,19371.
• Parties: Randon PORTER, Jr., Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

303 F.2d 67 (1962)

Randon PORTER, Jr., Appellant, v. UNITED STATES of America, Appellee.

No. 19371.

United States Court of Appeals Fifth Circuit.

May 17, 1962.

Dwight H. Austin, Houston, Tex., Liddell, Austin, Dawson & Sapp, John H. Marshall, Houston, Tex., of counsel, for appellant.

Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., Woodrow B. Seals, U. S. Atty., Houston, Tex., Robert N. Anderson, Arthur E. Strout, and Melva M. Graney, Attys., Dept. of Justice, Washington, D. C., William B. Butler, Asst. U. S. Atty., for the United States.

Before TUTTLE, Chief Judge, and HUTCHESON and WISDOM, Circuit Judges.

JOSEPH C. HUTCHESON, Jr., Circuit Judge.

This is an appeal from a judgment in an excise tax case heard on stipulated and undisputed facts. The district court filed findings of fact and law in the form of a written opinion.¹ The excise taxes paid by the plaintiff for which refund is sought in this case were assessed and paid during the first half of the year 1958 in respect to certain boat slip rental charges made by the Houston Yacht Club of which he was a member. They were assessed as dues to the Club upon the basis of Sections 4241 and 4242 of the Internal Revenue Code of 1954, 26 U.S. C.A. §§ 4241, 4242.²

As shown in the opinion, the taxpayer was a regular dues paying member of the Houston Yacht Club, a social or sporting club within the meaning of Sec. 4241 I.R.C. of 1954. Club facilities include a club house, swimming pool, dining room, sleeping rooms, and a harbor with adjacent wharves and boat slips. These boat slips are of various sizes, and some are open while others are covered. All club members may use the available facilities, but any member who uses a slip for mooring his boat is charged for such use over and above regularly monthly dues. Rates for slips vary because of differences in size, covering, and location. Under arrangements between club members the charge made for use of slips is on a day-to-day basis at a daily rate and members are billed at the end of each month at a daily rate for the number of days the slip is used in that month.

The taxpayer began to use one of the club's slips on February 14, 1958. The charge was $1.22 per day. Except for occasional outings, none overnight, the taxpayer's boat was moored continuously at the slip from February 14, 1958, to June 30, 1958, a period of 106 consecutive days. The amount for the final 30 days, charged on June 30, 1958, was not paid during the quarters herein litigated

On August 7, 1959, excise taxes in the amount of $25.86 were assessed on the above charges for slip fees, and the taxpayer paid $27.60 under protest, the amount of the tax assessed plus interest. Suit for refund was filed in the United States District Court for the Southern District of Texas on August 8, 1960, and the court determined that the payments to the Yacht Club for the use of the boat slip were taxable as "dues" under the provisions of Sections 4241 and 4242 of the Internal Revenue Code of 1954. It is from this decision that the taxpayer has appealed to this court.

It is quite clear, we think, that only if Section 4241(1) the controlling statute, is to be construed literally may the result reached by the district judge be sustained. That it is not to be construed literally is settled by the clear, logical and forthright opinion of Mr. Justice Jackson in White v. Winchester Club, 315 U.S. 32, where at page 41, 62 S.Ct. 425, 86 L.Ed. 619, it is said:

"Consideration of the nature of club activity is a necessary preliminary to the formulation of a test of what constitutes a `due or membership fee.\' So far as finances go, the fundamental notion of club activity is that operating expenses are shared without insistence upon equivalence between the proportion of an individual\'s contributions and the proportion of the benefits he receives. Thus, on the one hand, payment of the price of an individual dinner at the club dining room or of a single round of golf lacks the element of making common cause inherent in the idea of club activity. But, on the other hand, payment for the right to repeated and general use of a common club facility for an

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