York County Fair Ass'n v. South Carolina Tax Commission, 18634

• Decision Date: 24 April 1967
• Docket Number: No. 18634,18634
• Citation: 154 S.E.2d 361,249 S.C. 337
• Parties: YORK COUNTY FAIR ASSOCIATION, Inc., Appellant, v. SOUTH CAROLINA TAX COMMISSION, Respondent.
• Court: South Carolina Supreme Court

Page 361

154 S.E.2d 361

249 S.C. 337

YORK COUNTY FAIR ASSOCIATION, Inc., Appellant, v. SOUTH CAROLINA TAX COMMISSION, Respondent.

No. 18634.

Supreme Court of South Carolina.

April 24, 1967.

Nolen L. Brunson, of Hayes, Hayes & Brunson, Rock Hill, for appellant.

Daniel R. McLeod, Atty. Gen., Asst. Atty. Gen., J. C. Coleman, Columbia, for respondent.

LIONEL K. LEGGE, Acting Justice.

York County Fair Association, Inc., appeals from a circuit court order rejecting its claim of exemption from South Carolina income tax.

Appellant is a South Carolina corporation engaged in the business of promoting and holding fairs in York County for the exhibition of livestock and poultry and agricultural and commercial products. Since 1934 all of appellant's capital stock has been owned by Frank Roach Post No. 34 of the American Legion. During the period with which this action is concerned, appellant's surplus income was paid, as authorized in its by-laws, to said Post No. 34.

In 1963, following a report of its examiner, respondent assessed against appellant income taxes plus interest, aggregating $3,947.75, for the period November 1, 1949, through October 31, 1962, under the provisions of the South Carolina Income Tax Law, Code, 1962, Sections 65--221 et seq. Appellant, claiming exemption under Section 65--226(8), paid the assessment under protest and brought this action to recover the amount so paid.

Section 65--226(8) exempts from income tax '(l)abor, agricultural or horticultural organizations no part of the net earnings of which inures to the benefit of any private stockholder or member.' Post No. 34, appellant's sole stockholder, is a corporation. In order to bring itself within the statutory exemption, then, appellant must show that Post No. 34 is a non-private, i.e., a public, corporation.

'Those corporations are public which are created for public purposes only, connected with the administration of the government, and the interests and franchises of which are the exclusive property and domain of the government itself. * * *

'Private corporations are created for private as distinguished from purely public purposes, and they are not in contemplation of law public because it may have been supposed by the legislature tht their establishment would promote either directly or consequentially the public interest.' 18 Am.Jur. (2d), Corporations, Section 8, pp. 553, 554.

'A 'public corporation' is an instrumentality of the state, founded and owned in the public interest, supported by public funds, and governed by those deriving their authority from the state, while a 'private corporation' may be one organized by permission of the legislature, supported largely by voluntary contributions, and managed by officers and directors who are not representatives of the state or any political subdivision, although the corporation is engaged in charitable work or performs duties similar to those of public corporations.' Edson v. Griffin Hospital, 21 Conn.Sup. 55, 144 A.2d 341, 343, cited in Words and Phrases, Private Corporations, and Pocket Parts.

In State v. Heyward, 3 Rich.L. (37 S.C.L.) 389, the court, discussing the status of the Medical College in Charleston said:

'The division of corporations into public and private will be more simple and easily understood as political and private. Whatever belongs to the public, or people composing a government, is a public or political corporation. Private corporations are such as are instituted for the benefit of certain persons as individuals, or for the purpose of applying private funds or enterprise or skill to the public good. 'Public corporations are such as exist for public political purposes only, such as counties, cities, towns and villages. They are founded by the government for public purposes, and the whole interest in them belongs to the public. But if the foundation be private, the corporation is private, however extensive the uses may be to which it is devoted by the founder, or the nature of the institution' * * * 'a hospital, founded...