Opinion · United States Court of Claims
BUILDERS'CLUB OF CHICAGO v. United States
BUILDERS'CLUB OF Chi. v. United States, 58 F.2d 503 (Ct. Cl. 1932)
- Type
- Opinion
- Court
- United States Court of Claims
- Jurisdiction
- Federal
- Date
- 1932-05-02
- Topic
- bankruptcy
GREEN, Judge. This action is brought to recover $9,196.55 taxes paid by the Builders’ Club of Chicago on dues of its members. The only question in the case is whether the plaintiff is a soeial club within the meaning of the law. The findings show that the principal purpose of the club is to co-operate in a business way to offset the influence of the labor unions of Chicago. It has a dining room, a kitehen, a large lounge, a card room, and a billiard room, with some other smaller rooms used for various purposes connected with the club.
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BUILDERS' CLUB OF CHICAGO v. UNITED STATES,58 F.2d 503(Ct.Cl. 1932)
BUILDERS' CLUB OF CHICAGO v. UNITED STATES.
No. L-514.
Court of Claims.
May 2, 1932.
Judgment for plaintiff.
This case having been heard by the Court of Claims, the court, upon the evidence adduced, makes the following special findings of fact:
1. Plaintiff is now, and was during all of the times hereinafter mentioned, a membership corporation, incorporated under and by virtue of the laws of the state of Illinois in the year 1895, and has its office and place of business at 228 North La Salle street, Chicago, Ill., known as the Builders' Building, of which the principal tenants are builders and members of trades allied to the building trade.
2. From July 20, 1925, to July 20, 1929, plaintiff paid to the collector of internal revenue in the city of Chicago, Ill., $9,196.55 for taxes on initiation fees and dues under section 501 of the Revenue Act of 1926Page 504(26 USCA § 872note) and section 413(a) of the Revenue Act of 1928 (26 USCA § 872). Said taxes were paid in the following amounts and on the following dates:
================================================= Period | Tax | Date paid ---------------------|-----------|--------------- June ............... | $25.00 | July 20, 1925 July ............... | 178.20 | Aug. 20, 1925 August ............. | 43.35 | Sept. 25, 1925 September .......... | 18.75 | Oct. 20, 1925 October ............ | 236.15 | Nov. 20, 1925 November ........... | 34.60 | Dec. 19, 1925 December ........... | 42.10 | Jan. 20, 1926 January ............ | 211.95 | Feb. 26, 1926 February ........... | 38.75 | Mar. 20, 1926 March .............. | 9.40 | Apr. 20, 1926 April .............. | 196.96 | May 20, 1926 May ................ | 55.85 | June 21, 1926 June ............... | 36.25 | July 20, 1926 July ............... | 216.35 | Aug. 24, 1926 August ............. | 58.35 | Sept. 20, 1926 September .......... | 49.60 | Oct. 22, 1926 October ............ | 213.80 | Nov. 19, 1926 November ........... | 55.00 | Dec. 30, 1926 December ........... | 36.25 | Jan. 19, 1927 January ............ | 236.35 | Feb. 19, 1927 February ........... | 277.55 | Mar. 22, 1927 March .............. | 183.00 | Apr. 20, 1927 April .............. | 487.40 | May 23, 1927 May ................ | 505.70 | June 20, 1927 June ............... | 258.05 | July 25, 1927 July ............... | 631.10 | Aug. 19, 1927 August ............. | 149.40 | Sept. 21, 1927 September .......... | 108.75 | Oct. 20, 1927 October ............ | 340.04 | Nov. 21, 1927 November ........... | 97.50 | Dec. 21, 1927 December ........... | 49.85 | Jan. 25, 1928 January ............ | 475.75 | Feb. 20, 1928 February ........... | 181.60 | Mar. 21, 1928 March .............. | 181.90 | Apr. 24, 1928 April .............. | 480.05 | May 21, 1928 May ................ | 106.30 | June 15, 1928 June ............... | 87.50 | July 24, 1928 July ............... | 471.35 | Aug. 22, 1928 August ............. | 120.45 | Sept. 19, 1928 September .......... | 37.55 | Oct. 30, 1928 October ............ | 508.25 | Nov. 22, 1928 November ........... | 96.50 | Dec. 27, 1928 December ........... | 63.35 | Jan. 23, 1929 January ............ | 484.00 | Feb. 18, 1929 February ........... | 107.95 | Mar. 23, 1929 March .............. | 109.00 | Apr. 23, 1929 April .............. | 468.85 | May 22, 1929 May ................ | 101.10 | June 25, 1929 June ............... | 33.75 | July 19, 1929 |-----------|--------------- Total .............. | $9,196.55 |............... -------------------------------------------------
The payment of $25 made on July 20, 1925, is barred by the statute of limitations and is waived by plaintiff in this action.
3. On July 26, 1929, there was filed by plaintiff a claim for the refund of said taxes and interest thereon. The basis set forth in the claim for refund was that plaintiff was not a social club or organization within the meaning of the revenue acts referred to. Said claim for refund was denied by the Commissioner of Internal Revenue on November 22, 1929, and the commissioner refused to refund the taxes paid as aforesaid.
4. The object of the Builders' Club, plaintiff herein, is set forth in article 2 of its by-laws as follows: "Its object shall be to maintain clubrooms, and for the cultivation of friendly and social relations among its members, and to advocate the establishment of a uniformity of action upon general principles as applied to building trades and allied industries."
The club occupies part of the twenty-second and twenty-third floors of the building located at 228 North La Salle street, Chicago, Ill. On the twenty-second floor there is a lounge about 50 by 35 feet furnished with leather chairs, a large magazine table, and a few pictures on the walls. There is a large fireplace in the room. There is a directors' room at the end of the lounge about 10 by 10 feet, furnished with a large table and chairs. In the lounge is a cigar counter. There are also a secretary's office, telephone booths, and a rest room furnished with three cots. On the twenty-third floor, connecting by a private stairway with the lounge on the twenty-second floor, is a main dining room about 70 by 30 feet, containing about thirty tables. On the same floor there are two private dining rooms; one about 15 by 10 feet and the other about 10 by 10 feet. On this same floor there is a club kitchen. There is a piano in the dining room. On this floor there is also a card room about 16 by 20 feet, two large tables seating about eight or ten men; also a billiard room about 40 by 20 feet containing three billiard tables, one pool table, and six card tables.
Luncheon is served in the dining room, and members may have a meal there at any time up to 8 p.m.
In the clubrooms there are no magazines or literature except publications pertaining to the building industry.
The members of the club often transact business during luncheon.
There are no sleeping rooms in the club, but there is one cot in an emergency bedroom.
The club gives an annual banquet to its members, which is usually given in a Chicago hotel. No dances are given. The original purpose of the banquet was to gather the builders together to listen to a speech or lecture on a matter of interest to the building industry. When the members meet their conversation is generally for the betterment of their particular interest in the line of the building industry in which they are engaged.
The principal purpose of the club at the time it was organized was to co-operate in aPage 505business way to offset the influence of the labor unions of Chicago. Labor was organized in unions, and the builders deemed it necessary to organize in order to meet organization with organization.
5. The club usually has a membership of about one hundred and forty.
Article 5, section 1, of the by-laws provides: "No person shall be eligible as a member unless he be a citizen of the United States, at least twenty-one years of age; of reputable standing in society; of good moral character, and engaged in the building trades or its allied interests. The membership of the club shall consist of three classes: Resident members, nonresident members, and honorary members."
In the selection of its members the club has adhered strictly to the provisions of its by-laws, as to qualifications.
6. The annual dues of the club are now $50 per year for each member. Formerly the dues were $100 per year, but three or four years ago they were reduced to $50 per year.
7. The club does not serve breakfast. The principal meal is luncheon, which is usually attended by fifty or sixty members of the club. These members gather at luncheon for the purpose of meeting and coming in contact with other builders and other men engaged in building activities or allied interests. It frequently happens that some few members remain after luncheon and play billiards and cards. Occasionally some of the members (comparatively few in number) bring their wives with them and eat an a la carte dinner at the club before going to a theater or some other entertainment. The restaurant is usually operated at a loss, but the cigar counter and billiard room show a small profit without deducting anything for overhead. The club rents the rooms that it occupies and owns no property other than the furnishings in the same.
8. The predominant purpose of the club was not social and such features as pertained to it were merely incidental to carrying out the main purpose of the club.
Fred K. Dyar, of Washington, D.C., and Charles B. Rugg, Asst. Atty. Gen., for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
The findings show that the principal purpose of the club is to co-operate in a business way to offset the influence of the labor unions of Chicago. It has a dining room, a kitchen, a large lounge, a card room, and a billiard room, with some other smaller rooms used for various purposes connected with the club. It gives an annual banquet to its members in some hotel, the original purpose of which was to gather the builders together to listen to a speech or lecture on a matter of interest to the building industry. The club has no meetings that are purely social in their nature. The members gather at luncheon for the purpose of meeting and coming in contact with other men engaged in building activities or allied interests, and a few members may remain after luncheon and play billiards or cards.
Without repeating all of the facts stated in the findings, we think it quite clear that no one would join this club for social purposes, and while the by-laws state that one of the objects of the club is "for the cultivation of friendly and social relations among its members," it appears from the evidence that such social relations were merely incidental to the predominant purpose of the club and that the predominant purpose of the organization was not social. Under the bureau regulations it was not subject to the tax.
It is urged in argument on behalf of the defendant that the word "incidental" means casual or accidental. But it also means, according to the dictionary, "subordinate" on "collateral." We think this meaning was intended by the regulations, and the court has always used the word in this sense in the opinions rendered with reference to prior cases. There is something of a social nature that pertains to a lunch at which members of a club meet, but, as said in the Army and Navy Club v. United States,53 F.2d 277,282, 72 Ct. Cl. 684: "* * * the mere fact that a club has some social activities does not necessarily make it a social club within the meaning of the law, for no club can exist without having something social in its nature, and this must have been well understood by Congress."
The contention made on behalf of the defendant would make every club that served luncheons to its members and permitted themPage 506to remain afterwards in the clubrooms for purposes or reasons not connected with the predominant object of the club, subject to the tax. We do not think Congress had any such intention in enacting the law.
The plaintiff is entitled to recover the amount prayed in its petition, less $25 admitted to be barred by the statute of limitations, with interest as provided by law. Judgment will be rendered accordingly.