Town Club of St. Louis v. United States, 9179.

• Decision Date: 18 July 1932
• Docket Number: No. 9179.,9179.
• Citation: 60 F.2d 628
• Parties: TOWN CLUB OF ST. LOUIS v. UNITED STATES. SAME v. BECKER, Collector of Internal Revenue.
• Court: U.S. District Court — Eastern District of Missouri

60 F.2d 628 (1932)

TOWN CLUB OF ST. LOUIS v. UNITED STATES.

SAME v. BECKER, Collector of Internal Revenue.

No. 9179.

District Court, E. D. Missouri, E. D.

July 18, 1932.

Marion C. Early and Myrtle B. Wood, both of St. Louis, Mo., for the Town Club.

Bryan Purteet, Asst. U. S. Atty., of St. Louis, Mo., for Louis J. Becker, Collector.

FARIS, District Judge.

Plaintiff sues in two separate actions at law to recover a total amount of $16,803.98. Of the latter sum $6,281.84 is sought to be recovered for taxes paid to a collector of the United States, who is not now in office, for taxes alleged to have been illegally collected, and which accrued between April 9, 1924, and December 19, 1925, both inclusive.

The sum of $10,522.14 hereby sought to be recovered is for taxes alleged to have been illegally collected from the plaintiff, and which accrued between January 16, 1926, and March 3, 1928.

The above sums were paid by plaintiff to the respective collectors in office at the time of such payments. Demand for refund thereof was made, and refund refused.

The controlling facts in the two cases being precisely similar, the two actions were by consent consolidated for trial and a jury being waived, were submitted to the court on the pleadings and proof.

The taxes whereof refund is here sought, were assessed and collected under the provisions of section 801 of the Revenue Act of 1921 (42 Stat. 291), which reads as follows: "That from and after January 1, 1922, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 801 of the Revenue Act of 1918, a tax equivalent to 10 per centum of any amount paid on or after such date, for any period after such date, (a) as dues or membership fees (where the dues or fees of an active resident annual member are in excess of $10 per year) to any social, athletic, or sporting club or organization; or (b) as initiation fees to such a club or organization, if such fees amount to more than $10, or if the dues or membership fees (not including initiation fees) of an active resident annual member are in excess of $10 per year; such taxes to be paid by the person paying such dues or fees: Provided, That there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system. In the case of life memberships a life member shall pay annually, at the time for the payment of dues by active resident annual members, a tax equivalent to the tax upon the amount paid by such a member, but shall pay no tax upon the amount paid for life membership."

The above-quoted section of the taxing statutes was carried into the Revenue Acts of 1924 and 1926 (section 501), without any material changes (see 26 USCA § 872 and note). So, the law of the case is found in section 801, supra, above quoted.

The sole question presented, in the view I take of the case, is whether plaintiff was, during the times and periods wherein the taxes were exacted, a "social, athletic or sporting club or organization," or whether its functions were civic and/or educational. If the former, it is conceded the taxes collected from it are legal and cannot be recovered; if the latter, these taxes were unlawfully exacted and collected and plaintiff may recover. There is, or should be, but little dispute about the law. It seems to be fairly well settled, in the cases of Fleming v. Reinecke (C. C. A.) 52 F.(2d) 449; Women's University Club v. United States (Ct. Cl.) 50 F.(2d) 469; Women's University Club of Seattle v. Poe (D. C.) 52 F.(2d) 447; Army and Navy Club v. United States (Ct. Cl.) 53 F.(2d) 277.

The above cases dealt with facts which induced the conclusion that the several organizations were entities wherein social features and activities constituted material parts of their activities. Per contra, the cases of Cosmos Club v. United States (Ct. Cl.) 42 F.(2d) 321; City Club of Los Angeles v. Welch (D. C.) 44 F.(2d) 239; Houston Club v. United States (Ct. Cl.) 58 F.(2d) 487; Builders' Club of Chicago v. United States (Ct. Cl.) 58 F.(2d) 503, were cases wherein the facts warranted the conclusion of law reached, that the activities of the respective organizations were predominantly business, commercial, artistic, or educational, and that the social features, though present, were not a material part of such activities.

The oral evidence in the case at bar preponderantly disclosed that the activities of plaintiff were predominantly civic and educational, as contra distinguished from social. But this evidence came, for the most part, from officers of plaintiff who have had occasion to be wholly and closely familiar with plaintiff's activities only since 1928, or later; whereas, the period from April 9, 1924, and up to March 3, 1928, is the period involved in these controversies.

To make out its contentions respecting the activities during the period between April 9, 1924, and March 3, 1928, the defendant offered many, if not all, of the issues of "The Informant" (plaintiff's official publication), as also many — perhaps all — programs embodying plaintiff's activities between the dates last above mentioned. None of these publications by plaintiff, subsequent to March, 1928, was offered, for the very simple reason that the club's activities for the latter period were not in dispute, nor in issue here. I have, however, carefully examined the programs of the club as issued by it between the years 1924 and 1928. These show that within the period named there were given, or seemingly fostered by the club, that is, given under its auspices, ten dances, five musicales, two picnics, nine swimming parties, five teas, fourteen card parties, two shows, five miscellaneous parties, luncheons, and so forth, and eleven other function which may or not have been either educational or social, or mixed.

During the same period there were a total of ninety-seven functions which, in my opinion, were educational, artistic, or civic.

So, the totals stand, fifty-two clearly social, ninety-seven clearly educational or civic or artistic, and eleven doubtful or mixed.

The club had a lounge, used also as a library; a piano, perhaps three; a swimming pool; and maintains, and maintained, large and well-furnished quarters, including a kitchen and dining rooms, wherein meals are served to members and their guests. These latter things are, of course, not decisive here either way, and not...