Wilmette Park Dist v. Campbell

• Decision Date: 12 December 1949
• Docket Number: No. 75,75
• Citation: 94 L.Ed. 205,70 S.Ct. 195,338 U.S. 411
• Parties: WILMETTE PARK DIST. v. CAMPBELL
• Court: U.S. Supreme Court

338 U.S. 411

70 S.Ct. 195

94 L.Ed. 205

WILMETTE PARK DIST.

v CAMPBELL.

No. 75.

Argued Nov. 15, 16, 1949.

Decided Dec. 12, 1949.

Mr. Henry J. Brandt, Chicago, Ill., for petitioner.

Mr. Lee A. Jackson, Washington, D.C., for respondent.

Mr. Justice CLARK delivered the opinion of the Court.

Section 1700(a)(1) of the Internal Revenue Code, as amended, 26 U.S.C.A. § 1700(a)(1), provides for the imposition, except as to certain classes of persons under circumstances not important here, of 'A tax of 1 cent for each 10 cents or fraction thereof of the amount paid for admission to any place, including admission by season ticket or subscription.'¹ Paragraph (2) of the subsection declares that the tax 'shall be paid by the person paying for such admission.' And § 1715 requires that 'Every person receiving any payments for admission * * * subject to the tax imposed by section 1700 * * * shall collect the amount thereof from the person making such payments.'

This suit, brought to recover penalties paid by petitioner for noncollection of federal admissions tax, presents two questions for determination: Whether § 1700(a) is applicable to paid admittances to a bathing beach operated without purpose of gain by a local park district of Illinois; and, if the Code provision is to be so inter- preted, whether the imposition of admissions tax in connection with such state activity is within the constitutional power of Congress.

Petitioner is Wilmette Park District, a body politic and corporate located within the Village of Wilmette, Cook County, Illinois. Organized and administered pursuant to Illinois statutes, the District includes within its jurisdiction four park areas. The largest, Washington Park, extends for approximately three-fourths of a mile along Lake Michigan and was acquired partly by grant from the State of Illinois, partly by purchase, and partly by exercise of the power of eminent domain. At the north end of Washington Park, petitioner has operated a public bathing beach during the summer months for many years, under authority conferred by the Illinois Legislature. The beach has been used primarily by residents of the District, but also has been open to nonresidents.

Among the facilities which the District provided at the beach during the period under review were a bath house, automobile parking area, life-saving equipment, flood lighting, drinking fountains, showers, spectator benches, bicycle racks, first aid, and supplies. The operation and maintenance of the area and its various services were solely by the District, which employed the necessary personnel.

Petitioner charged all persons for admittance to the beach. Its charges were of two types: a daily fee of fifty cents on weekdays and one dollar on Saturdays, Sundays and holidays, for which no ticket was issued; and a flat rate for a season ticket which could be purchased on an individual or family basis. These charges were made to cover the expense of maintenance and operation of the beach and of some capital improvements. Over the years the charges were intended merely to approximate these costs and not to produce net income or profit to petitioner; during the period 1940—1944 the accounts of the beach maintained on a cash receipts and disbursements basis, reflected an excess of receipts over expenditures of $42.11.

In July 1941 the Collector notified petitioner to collect a tax of 10 per cent on all tickets to the beach sold on or after July 25 of that year. Petitioner had not previously collected such taxes, and it refused to do so after the Collector's notice. Subsequently the Commissioner under § 1718 of the Code assessed over petitioner's protest penalties in the amount of the tax which the Commissioner claimed should have been collected under § 1700(a) from July 25, 1941 through 1945, plus interest and sums due under § 3655(b) of the Code for failure to pay the tax on demand. These penalties amounted to $6,139.93 and were paid out of petitioner's general funds raised by property taxes.

Petitioner filed timely claims for refund which were rejected, and in 1946 brought this suit against the Collector. The District Court entered judgment for petitioner. 76 F.Supp. 924.² The Court of Appeals for the Seventh Circuit reversed. 172 F.2d 885. Because the questions presented have importance in the administration of the admissions tax sections of the Code, we granted certiorari. 337 U.S. 937, 69 S.Ct. 1517.

First. The Government raises no issue as to petitioner's standing to sue for refund. As recovery is here sought of penalties paid from petitioner's general revenue fund after its failure to collect the tax, we deem petitioner's financial interest clearly sufficient.³

Second. Section 1700(a) is applicable if the charge made by petitioner for admittance to the beach was within the meaning of the statutory language, an 'amount paid for admission to any place.'

The words of the provision when taken in their ordinary and familiar meaning reflect a legislative purpose of comprehensive application. By its terms the section embraces every payment made in order to secure admittance to a specific location. And this purpose of broad application is not less certain because of anything in the legislative history of the initial adoption of that language. ⁴ In this view it is unnecessary to consider whether petitioner's beach area can be distinguished from a 'spectator entertainment,' for we are unable to accept petitioner's argument that Congress intended in § 1700(a) to tax only admissions to such events.⁵

We think it clear that a beach area may be a 'place' in the sense of § 1700(a) (1). Petitioner's beach park, including the adjacent shoal waters, was policed and lighted; the land area was defined, and entrance was through gates. A payment was made by patrons of the beach as the condition of admittance to a specific area with definite physical limits. Thus the fee which petitioner charged was 'paid for admission' to a 'place' as those terms are used in § 1700(a)(1).⁶

We cannot agree with petitioner's suggestion that Congress intended to exempt from tax admissions to any activity not conducted for gain. Section 1701 of the Code did allow certain exemptions prior to their termination on October 1, 1941 pursuant to the Revenue Act of 1941, § 541(b), 55 Stat. 687, 710, 26 U.S.C.A. § 1701 note. In § 1701 Congress exempted admissions to certain classes of events and admissions all the proceeds of which inured exclusively to the benefit of designated classes of persons or organizations. But since Congress did not exempt all activities not for profit as it readily might have done, it appears that admissions to such activities are not for that reason outside the admissions tax scheme. Exmoor Country Club v. United States, 7 Cir., 1941, 119 F.2d 961.

Nor is there greater force in petitioner's contention that the admissions tax was not intended to apply in the case of activities conducted by a municipality. In interpreting federal revenue measures expressed in terms of general application, this Court has ordinarily found them operative in the case of state activities even though States were not expressly indicated as subjects of tax. See concurring opinion in State of New York v. United States, 1946, 326 U.S. 572, 584 and n. 3, 66 S.Ct. 310, 312, 315, 90 L.Ed. 326. And in Allen v. Regents of the Univer- sity System of Georgia, 1938, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448, it was decided that the admissions tax law was applicable in connection with activities carried on by an agency of a State, although it does not appear that the issue of legislative purpose was there disputed. However, we are unable to discover that there has been any design to exempt admissions to municipally conducted activities.⁷ We regard the interpretative issue as controlled by a long continued administrative construction, expressly denying such exemption,⁸ which has been followed by repeated reenact- ment of the relevant language without change.⁹ Cf. Helvering v. Winmill, 1938, 305 U.S. 79, 59 S.Ct. 45, 83 L.Ed. 52.

Finally, § 1700(a)(1) is not rendered inapplicable because beach patrons make use of a beach and its facilities, thus affording characterization of the admission fee as a 'use charge.' Few if any admissions taxable under § 1700(a) are not accompanied by a use of the property or equipment to which the admittee's license extends. Although table accommodations for which a charge is made are usually thought of as objects of a patron's use, yet Congress in § 1704 of the Code has declared that for purposes of the admissions tax law a charge for their use must be treated as a charge for admission and not as a rental charge. A similar result must obtain when payment is prerequisite, as it was at petitioner's beach, to both admission to and use of a specific area. Chimney Rock Co. v. United States, 1927, 63 Ct.Cl. 660, certiorari denied 1927, 275 U.S. 552, 48 S.Ct. 115, 72 L.Ed. 421; Twin Falls Natatorium v. United States, D.C.S.D.Idaho 1927, 22 F.2d 308.¹⁰

The trial court, in allowing judgment for petitioner in view of the use made of the beach, considered the fee a 'use tax.' But if there is no tax exemption for admissions to a municipally conducted activity, then a municipality may not escape tax by claiming that its admission fee is a 'use tax' when a similar private business could not advance such claim. Nor does it matter that petitioner's authority to make any charge to beach patrons is derived from a statute which contemplates a charge for 'use.' Ill.Rev.Stat. c. 105, § 8—7d (1947). The application of the federal admissions tax statute is not controlled by the characterization of petitioner's fee by local law. Cf. Morgan v. Commissioner of Internal Revenue, 1940, 309 U.S. 78, 81, 626, 60 S.Ct. 424, 426, 84 L.Ed. 585.

We conclude that § 1700(a) is applicable.

Third. The constitutionality of admissions tax levied in connection with an activity of a state...