Santiam Fish & Game Ass'n v. Ellis

• Decision Date: 17 January 1962
• Citation: 368 P.2d 401,229 Or. 506
• Parties: The SANTIAM FISH & GAME ASSOCIATION, a non-profit Oregon corporation, Respondent, v. Dean ELLIS, Charles Mack and F. H. W. Hoefke, as the State Tax Commission of the State of Oregon, Appellants.
• Court: Oregon Supreme Court

Page 401

368 P.2d 401

229 Or. 506

The SANTIAM FISH & GAME ASSOCIATION, a non-profit Oregon corporation, Respondent, v. Dean ELLIS, Charles Mack and F. H. W. Hoefke, as the State Tax Commission of the State of Oregon, Appellants.

Supreme Court of Oregon, In Banc.

Argued and Submitted Nov. 1, 1961.

Decided Jan. 17, 1962.

Richard Rink, Salem, argued the cause for appellants. With him on the briefs were Robert Y. Thornton, Atty. Gen., Gerald F. Bartz, and Carlisle B. Roberts, Asst. Attys. Gen.

Melvin Goode, Albany, argued the cause for respondent. On the brief were Goode & Goode, Albany.

Before McALLISTER, C. J., and ROSSMAN, WARNER, PERRY, SLOAN, O'CONNELL and GOODWIN, JJ.

WARNER, Justice.

This is an appeal by the Oregon State Tax Commission, hereinafter referred to as the Commission, from a decree of the circuit court of Linn county, holding petitioner Santiam Fish & Game Association, hereinafter called the Association, exempt from corporation excise taxes under ORS 317.080 for the years 1953, 1954, 1955 and 1956.

The Association had appealed to the circuit court from the Commission's order No. 1-57-35, denying its request for abatement. In the circuit court the matter was tried as a suit in equity.

Following an order overruling the Commission's demurrer to the petition for want of sufficient facts, the Commission answered over and a stipulation was thereafter made setting forth the basic facts. At the trial the only evidence presented, in addition to the stipulation, were the bylaws of the Association and its articles of incorporation.

The basic stipulation sets for the following facts:

'1. The Santiam Fish & Game Association is a corporation duly incorporated under ORS chapter 61 providing for the incorporation of nonprofit corporations.

'2. The Association if exempt from corporation excise tax is exempt pursuant to either of subsections (6) or (7) of ORS 317.080.

'3. The Association is operated partially for the promotion of social welfare, regarding its various conservation activities, and partially as a social club, regarding its activities engaged in for pleasure and recreation. Some persons join the club solely for its civic functions, others join the Association solely for its pleasure and recreation functions, and still others join for both functions.

'4. The actual activities of the corporation consist of holding business and social meetings of members, making recommendations to the State Game Commission concerning fishing and hunting regulations, maintenance of field secretaries to report to the members and directors of the corporation concerning fishing and game problems on the Santiam River, Willamette and Calapooia watersheds, operating and maintaining under lease from the United States Department of Agriculture a resort consisting of a number of cabins, store, boats and accommodations at Clear Lake, Linn County, Oregon, open to the public; the ownership and development for a boat moorage and landing for its members at the mouth of Canal Creek on the Alsea River in Lincoln County, Oregon; cooperation with the State Police and game enforcement; establishment of game refuges for pheasants and upland birds by cooperation with the State Game Commission and farmers; active participation in legislative and initiative measures relating to fish, game, wildlife and fire arms.

'5. The sources of income of said corporation are membership fees from the members, sums received for cabin, boat and other services furnished to members and the public at the Clear Lake resort, sums received for entertainment at public and membership meetings.

'6. The total receipts for 1955 were as follows:

                'Clear Lake Resort receipts  $7,855.65
                Membership fees               1,872.50
                Miscellaneous returns from
                  programs, etc.,             1,041.35
                                             ---------
                TOTAL                                   $10,769.50
                

'The total expenditures for 1955 were as follows:

                'Clear Lake expense  $6,031.95
                General expense       2,587.09
                Alsea Property        4,500.00
                                     ---------
                TOTAL                           $13,119.99
                

'7. With the exception of the $4,500 expenditure for the Alsea property in 1955, the receipt and expenditure figures for the other years in question are substantially the same.

'8. The receipts from the Clear Lake resort arise from the rental, of cabins and boats, to members as well as the general public. The cabins are rented to the members at one-half price plus $.50, i. e., a $5 cabin would cost a member $2.50 plus $.50 or $3. A boat which would be rented to the general public for $1.50 would be rented to a member for $1.

'9. The Association holds an annual banquet open to the public for which charges are made.

'10. The Association does not pay cash dividends to its members.'

It is the Association's contention that it is either a 'civic league or organization' within the purview of section (6) of ORS 317.080 or a 'club' within the scope of section (7) of the same statute. It also intimates that having some attributes of both types, it should nonetheless be declared exempt.

The pertinent portions of ORS 317.080, upon which the Association lays its claims, read:

'The following corporations are exempt from the taxes imposed by this chapter:

* * *

* * *

'(6) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employes, the membership of which is limited to the employes of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes, and no part of the net earnings of which inures to the benefit of any private stockholder or individual.

'(7) Clubs organized and operated exclusively for pleasure, recreation and other nonprofitable purposes, no part of the net earnings of which inures to the benefit of any private stockholder or individual.'

These sections will sometimes be referred to herein as section (6) and section (7).

ORS 317.080(6) was taken from the federal Internal Revenue Code of 1924, § 231(8), 43 Stat. 282, 26 U.S.C.A.Int.Rev. Acts. However, the concluding phrase of the Oregon statute that 'no part of the net earnings of which inures to the benefit of any private stockholder or individual,' is not included in the federal act. Oregon Physicians' Service v. State Tax Comm., 220 Or. 487, 493, 349 P.2d 831 (at times hereinafter called O.P.S.).

The current section (7) of ORS 317.080, dealing with 'clubs,' has remained unchanged since 1929, and was drawn almost verbatim from section 11(a) of the Internal Revenue Act of 1916 (ch. 463, § 11(a), 39 Stat. 766).

These federal counterparts of subsections (6) and (7), ORS 317.080, now appear in § 501, Internal Revenue Code of 1954, 26 U.S.C.A. § 501(c)(4) and (7).

The foregoing comparison of ORS 317.080(6) and (7) with § 501(c)(4) and (7) of the federal Internal Revenue Code is particularly pertinent because this court has for many years followed the rule that when an Oregon statute has been copied from a federal law, it will adopt the interpretation given the corresponding federal act by the federal courts. Pacific Supply Coop. v. State Tax Comm., 224 Or. 556, 560, 356 P.2d 939 (1960); State v. Burke, 126 Or. 651, 677, 269 P. 869, 270 P. 756, appeal dismissed 279 U.S. 811, 49 S.Ct. 262, 73 L.Ed. 971.

We have but once had occasion to construe subsection (6) of ORS 317.080 and never before subsection (7). It was in Oregon Physicians' Service v. State Tax Comm., supra (220 Or. at 494-495, 349 P.2d 831) that subsection (6) received our attention. There we applied the rule declared in State v. Burke, supra, and Pacific Supply Coop. v. State Tax Comm., supra, and followed the interpretation given to the like language found in the federal code, as applied in Hanover Imp. Soc., Inc. v. Gagne, 92 F.2d 888 (1st Cir.1937). It was therein held that all the modifying language following the phrase 'local association of employees' refers only to such associations and in no way modifies the exemption granted to 'civic leagues or organizations.' We recognize the foregoing to be a correct construction of the statute and are also in accord with the O.P.S. decision, wherein it also found that such a statutory construction is largely unimportant since it is also true that 'an organization operated exclusively for the promotion of social welfare could not have any part of its net earnings inuring to the benefit of any private stockholder or individual.' (220 Or. at 495, 349 P.2d at 834.)

The Association was incorporated on May 15, 1937, under the Oregon nonprofit statute, ORS ch. 61. At that time it held property valued at $3,000. Membership in the organization is open to any bona fide resident of Linn, Benton and a portion of Marion counties. The facts concerning the Association can best be summarized by reviewing them under headings signifying, first, its corporate objectives and actual operations and, second, its financial set-up.

OBJECTIVES AND OPERATIONS

Without reciting in full the corporate purposes as contained in its articles of incorporation, it is sufficient to say that they fall within two broad general groupings: (1) to contribute to the development of its members' physical and mental capacities and promote better acquaintance and closer association between such members and among sportsmen, generally; and (2) to engage in the propagation, protection, preservation and conservation of wildlife and to cooperate with all others engaged in such activities, and to use its influence to see that fish and game laws are directed toward such ends. In connection with the foregoing purposes, the Association is authorized 'to maintain, lease, own or otherwise acquire, use, enjoy and operate such resorts and accommodations for the members of the association and general public as it may deem proper, advisable or expedient.' (Subparag...