#### UNION LEAGUE CLUB OF CHICAGO, A CORPORATION, v. THE UNITED STATES

[No. M-123.

Decided November 6, 1933]

*Mr. 'William P. Sidley*for the plaintiff. *Mr. J. Dwight Dickerson*was on the briefs.

*Mr. Fred K.*Dyar, with whom was *Mr. Assistant Attorney General Frank J.*~Wideman, for the defendant.

*364Green, Judge,

delivered the opinion of the court:

As the name of the plaintiff indicates, it is a club, and during the period from August 26, 1924, to and including July 23, 1928, paid taxes on dues and initiation fees collected from its members in the amount of $178,916.24. It now brings suit for this amount with interest, alleging that these taxes were unlawfully collected. The issue in the case is whether the plaintiff was subject to tax as a social or athletic club, the determination of which depends partly upon the construction of the statute imposing taxes on social or athletic clubs and partly upon whether the facts in the case bring it within the proper construction of the statute.

It is insisted on behalf of the plaintiff that the evidence shows that the predominant purpose of the club- is not social but civic and philanthropic, and that this fact is sufficient to show that it is exempt from the tax. This contention is in effect that the regulations laid down by the Bureau of Internal Revenue stating under what circumstances a club may be regarded as subject to- the tax are not authorized by the statute which imposes it.

We think it is too late now to raise this objection. These regulations were promulgated in 1917, when the statute first went into force. Ever since they have been applied by the courts as laid down, and no court has even intimated that they were not authorized under a proper construction of the statute. More than fifteen years have elapsed since the regulations were first announced. During all this period the regulations have remained substantially the same, and Congress, although well aware of the construction which was being placed on the statute by the Bureau and by the courts, has several times reenacted the law imposing the tax. *365It is well settled that where there has been a long-continued construction of a statute by an executive department charged with its administration which has been approved by the courts, repeated reenactment of a statute without substantial change may be treated as implied approval of this construction and purpose on the part of Congress to continue the law in force as so construed. The authorities directly or indirectly supporting this rule are so numerous that without citing the decisions we shall hold that the rule applies to the case at bar.

Article 36 of the regulations states:

> “ The tax does not attach to dues or fees * * * merely because it [the club] has incidental social features, but, if the social features are a material purpose of the organization, then it is a ‘ social * * * club or organization ’ within the meaning of the act.”

This court has taken this regulation for its guidance in all of the cases which come before it, and for the reasons stated above we shall continue to apply it as a correct construction of the statute. The effect of its application is to make the decision in the cases which have come before the court turn on the question of whether the social features of the club involved were merely incidental or whether, on the other hand, they are a material purpose of the organization. This is largely a question of fact, although it depends to some extent upon the construction of the word “ incidental ” as used in the regulations.

We doubt whether there is much to be gained by attempting to define the word “ incidental ”, especially when under some definitions we come back to the original Avord. For example, one of the dictionary definitions of “ incidental ” is *“*casual ” and one of the dictionary definitions of “ casual ” is “ incidental.” Nevertheless, Ave think the meaning of the word “ incidental ” as used in the regulations is Avell understood and not difficult to apply. An examination of the cases which we have decided will show that in all instances where the social features Avere few and insignificant, or immaterial to its purposes, as shown by its activities, the social features have been held to be merely incidental and the club not subject to the tax. In cases where it appeared *366that the club did not conduct, promote, or facilitate any activities of a social nature, or for social purposes, it would seem manifest that the organization could not be held to be a social club and the court so ruled. On the other hand, where the social features were numerous and important to the club and especially where they were necessary to its existence or prosperity, we have uniformly held the club to be taxable as a social club. As often happens, it is possible to cite instances where expressions contained in the opinions of this court detached from the body of the opinion might seem not to be uniform, but when the case as a Avhole is considered, and especially the facts upon which the judgment was rendered, a consistent application of the rule laid down in the regulations will always be found.

In the *Aldine Club*case, 65 C.Cls. 315, it appeared that the club was merely a luncheon club and that it carried on no activities in the way of entertainment or recreation. The nearest approach to anything of the kind was some lectures given on instructional topics by distinguished public men. Athletics and sports were entirely ignored. The *Bankers Club*case, 69 C.Cls. 121, involved another organization for restaurant purposes having no activities for recreation or entertainment. In neither of these cases were there any activities for purely social purposes. In the Chemists’ *Club*case, 64 C.Cls. 156, and the *Cosmos Club*case, 70 C.Cls. 366, it was found that the club had some slight facilities for recreation, but whatever social features there were, were immaterial to and remote from the predominant purpose. In the *Washington Club*case, 69 C.Cls. 621, it appeared that there were a few social features, but in the opinion, from which one judge dissented, it ivas said that the social features were clearly incidental and subordinate to the predominant purposes of the club. The *Builders Club*case, 74 C.Cls. 595, was another in which it appeared that although the club had some facilities for recreation and places where the members met and conversed with each other it held no meetings and conducted no activities for purely social purposes, and it was held that the social relations were merely incidental to the predominant purpose of the club which ivas not social. The *Houston Club*case, 74 C.Cls. 640, was much the same. *367The club carried on no social activities. The club maintained a dining room, but its activities were restricted to the business welfare of the community. It conducted no entertainments nor did it have any meetings for social purposes.

It is also contended on behalf of plaintiff that its corporate character and nature for the purpose of applying the tax must be determined by its predominant or primary purpose, and some cases are cited with reference to altogether different tax provisions which support this view. For example, it is held that in classifying imported articles for the purpose of applying a tariff act the predominant use thereof should determine whether they come within the enumerations of the act. But it will be observed that as respects the taxing act in question this construction is not in accordance with the regulations which, for reasons stated above, we think must be followed. Moreover, in applying customs duties, or, as they are sometimes called “ tariff taxes ”, an article must be in one class or the other, otherwise the tax would be in some cases levied twice because the article belonged to two different classes, or it would be in part exempted and in part taxable, which manifestly is not the intention of the law.

It is clear that under the regulations a club may be held to be social for the purposes of the act, although its predominant purpose is something else. Or, in other words, a club may be both social and civic or philanthropic.

The decision in the *Army & Navy Club*case, 72 C.Cls. 684, is criticized because it held in effect that if the social features were an “ essential ” element of the activities of the club they were not merely “ incidental ” to its predominant purpose, but the terms “ essential ” and “ incidental ” are so inconsistent in their meaning that we think this criticism is not well founded.

Our conclusion that the social features were a material purpose of the organization is based upon the fact that the club held many dances and other meetings solely for social purposes, that it conducted various kinds of entertainments and sporting contests, had and used elaborate facilities for recreation and entertaining ladies, together with other mat*368ters too numerous to set out here, and finally, as said in the case of *Fisler*v. *United States,*66 C.Cls. 220, with reference to the social activities of the club:

> “ It is probable that there are few clubs of a purely social nature anywhere in this country that make such elaborate provisions for social enioyments.”

We have not mentioned specifically the luxurious appointments and elaborate facilities of the club which must to some extent have contributed to the enjoyment of its members, for while much stress is laid thereon by counsel for defendant it is not necessary to determine the weight to be given these matters except to say that to some extent they explain and amplify the evidence as to other matters. In order that the argument made on behalf of plaintiff might be fully understood, we have set out in the findings more of the details established by the evidence than is usual and perhaps more than is proper in view of the rule that the decision of the case must depend upon the ultimate fact which, as shown by the findings, is that the social features were not merely incidental but were material, important, and necessary to the prosperity of the club.

Part of the dues which are sought to be recovered back were paid while the club was in its temporary quarters aivait-ing the construction of the new building. While the club had during this period some facilities for recreation the testimony to which we have referred, concerning the social activities of the club, pertains to the period after it had occupied its new building. It is not urged on behalf of plaintiff thaj; there should be any separation of dues on this account, probably because the evidence shows clearly the purpose for which the new building was erected, which purpose was formed when the new building was planned and there is no specific date that could be selected for such separation.

The Union League Club of Chicago is a great organization. Its main or predominant purposes are not social but civic, philanthropic, charitable, and highly commendable, but in our opinion it cannot carry on all or nearly all of the social activities of a purely social club which provides social functions in a very extensive manner, without making itself *369liable to tlxe tax, especially when its social activities constituted such an exceedingly important and material part of the life of the organization.

It follows from what has been stated above the plaintiff’s petition must be dismissed, and it is so ordered.

Whaley, *Judge-;*Williams, *Judge;*Littleton, *Judge;*and Booth, *Chief*Justice, concur.