United States v. McIntyre, 7535.

Citation253 F.2d 728
Decision Date27 March 1958
Docket NumberNo. 7535.,7535.
PartiesUNITED STATES of America, Appellant, v. Robert J. McINTYRE and Clare McIntyre, Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

David O. Walter, Attorney, Dept. of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson and A. F. Prescott, Attys., Dept. of Justice, Washington, D. C., Leon H. A. Pierson, U. S. Atty., and John R. Hargrove, Asst. U. S. Atty., Baltimore, Md., on brief) for appellant.

Ralph R. Sachs, Washington, D. C., for appellees.

Before SOBELOFF and HAYNSWORTH, Circuit Judges, and STANLEY, District Judge.

HAYNSWORTH, Circuit Judge.

This is an appeal from a judgment ordering the refund of excise taxes paid with respect to a "life membership" fee collected by the Twinbrook Swimming Pool Corporation. The District Court held that, while the "life membership" fee was an "initiation fee" within the meaning of § 4241 (26 U.S.C.A. § 4241), the Twinbrook Swimming Pool Corporation was not a "social, athletic, or sporting club or organization," and, hence that no excise tax was due or collectible. McIntyre v. United States, D.C. Md., 151 F.Supp. 388.

Residents of Twinbrook, a residential section in Rockville, Maryland, near the District of Columbia, had become concerned over the lack of adequate recreational facilities for their children. They decided to construct and operate a swimming pool. With a commendable sense of community responsibility, it was planned from the outset that the pool, upon occasion, would be made available for use by certain municipal agencies and charitable organizations working with handicapped and underprivileged children in the Rockville area.

A nonstock corporation, Twinbrook Swimming Pool Corporation, was organized under the laws of Maryland for the purpose of providing "a swimming pool or pools and other facilities to its members." The charter leaves to the By-Laws the qualification of members and restrictions upon the transfer of memberships, but limits memberships to one class, known as "life membership."

The By-Laws limit the membership to 600 members, each of whom must be a bona fide resident of defined residential sections of Rockville or the owner of a house or proprietor of a business within the defined areas. Transfer of memberships, subject to certain restrictions and procedures, is authorized by the By-Laws, and expulsion of members and the refund of the membership fee to an expelled member is contemplated. Except as noted below, use of the facilities of the corporation is limited to such of the "life members" as shall have currently paid annual dues of $10., members of their households and their guests. Employees of the household, except a governess, tutor or companion, are excluded from use of the facilities of the corporation. No one, who lives within those sections of Rockville whose residents are eligible for membership, may come as a guest, and the Board of Directors is authorized to further restrict, regulate and limit guest privileges. In exercising its power over use of the guest privilege, the Board is instructed to "consider the paramount interest of the members and their immediate families in their enjoyment of the Corporation's facilities and shall also consider the importance of reasonable guest privileges for members and occupants of their households * *."

The 600 members were soon obtained, and the corporation proceeded to construct a large pool and dressing rooms, with parking facilities, upon a tract of land, containing 5.641 acres, which it had acquired for the purpose.

The Board of Directors was also authorized by the By-Laws to permit others to use the pool. Pursuant to this authority, the Board, in the first full year of operation, made the pool available on certain days and at specified times to children receiving treatment at the Crippled Children's Rehabilitation Center, to children sponsored by the City Recreation Center and, during a two-week period, to boys attending a camp under the sponsorship of the American Legion. These special admissions accounted for an aggregate of 2,000 admissions out of an aggregate total of 54,000 admissions during the season.

The excise tax is laid upon dues, membership and initiation fees and assessments paid to "any social, athletic, or sporting club or organization." 26 U.S. C.A. § 4241. The taxpayers, characterizing this pool as a "recreational facility," seek to draw a distinction between things recreational and things social or athletic. Because the pool is enjoyed by adults and their children in a friendly and informal atmosphere, the corporation is said to be unlike those social clubs which sponsor or encourage more formal social events and social intercourse among adults. Because there had been no organized contests in diving or swimming, the corporation is said to be unlike those athletic clubs which provide facilities for competitive sports.

Doubtless, many individuals find recreation in things done alone, things which are neither social nor athletic, but most social events and occasions and most athletics are recreation for those who enjoy them. A social club does not fall without the statutory definition because it is enjoyed by children as well as by adults, nor because it affords facilities for events which are happy, friendly, informal and comparatively inexpensive. In short, our inquiry is not answered by a finding that this is a "recreational facility"; conceding that it is, we must determine whether it is a social or athletic organization within the meaning of the statute.

The documents and testimony offered by the taxpayers contain the following language as descriptive of the organization and the use of its facilities:

"* * * the total picture at the pool is that of a great big family gathering as may be distinguished by (sic) the atmosphere found in most country clubs, with their air of exclusion and removal."
"* * * `recreation\' means healthful activity that contributes to health and well being; and, in my mind, at least, it is just as much social, emotional, and mental, as it is physical; and I think that what we would try to establish, here, was a recreational facility, in that sense."
* * * * * *
"There is no question that there is a great deal of social activity, communication between people. I think it is generally conceded that one place to meet your friends and get information, and so on, is the community pool; and I dare say that there have been informal committee meetings on other subjects held on the banks of the pool, so to speak."
"* * * It looks to me just like plain social splashing in the water."
"* * * In this case, you are meeting with
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7 cases
  • Ball v. United Parcel Service, Inc.
    • United States
    • Maryland Court of Appeals
    • September 1, 1991
    ...communication, recreation, and leisure activities. Although presented in a different statutory context, the court in United States v. McIntyre, 253 F.2d 728 (4th Cir.1958), considered whether an incorporated community pool was, within the coverage of a federal internal revenue statute, a "s......
  • United States v. One 1956 Ford Tudor Sedan, 7564.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • April 2, 1958
  • Down Town Ass'n of City of New York v. United States
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 2, 1960
    ...that any organization, regardless of its compelling purpose for existence, provides the means of social intercourse, United States v. McIntyre, 4 Cir., 253 F.2d 728, 729. In Tidwell v. Anderson, 2 Cir., 72 F.2d 684, 687, it is "The test of taxability is not whether a club has any social fea......
  • United States v. Riverlake Country Club, Inc.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • August 14, 1962
    ...a sum paid for the privilege of joining the club but an investment. This case on its facts is distinguishable from United States v. McIntyre, 4 Cir., 1958, 253 F.2d 728 and Fisher v. McCrory, (D.Neb.), 1958, 163 F.Supp. 132, both of which applied the tax to the sole method of obtaining memb......
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