Document: 59 L.Ed.2d 519 99 S.Ct. 1304 440 U.S. 472 NATIONAL MUFFLER DEALERS ASSOCIATION, INC., Petitioner,v.UNITED STATES. No. 77-1172. Argued Nov. 27, 1978. Decided March 20, 1979. Syllabus Petitioner is a trade organization for muffler dealers but it has confined its membership to franchised by Midas International Corporation and activities Midas' business. In suit seeking federal income tax refund, petitioner claimed the "business league" exemption provided § 501(c)(6) of Internal Revenue Code 1954. Treas.Reg. 1.501(c)(6)-1 states that business league "an same general class as chamber commerce or board trade," exempt league's "should be directed improvement conditions one more lines business." The District Court held franchisees do not constitute "line business" was within meaning thus entitled refund. Appeals affirmed, applying maxim noscitur sociis holding petitioner's purpose too narrow satisfy test Regulation. Held: 501(c)(6). Pp. 1306-1313. 2nd Cir., 565 F.2d 845, affirmed. Myron P. Gordon, New York City, petitioner. Stuart A. Smith, Washington, D. C., respondent. Mr. Justice BLACKMUN delivered opinion Court. 1 Petitioner, National Muffler Dealers Association, Inc. (Association), name indicates, dealers. issue in this case whether which (Midas), business, "industrywide," from 1954, 26 U.S.C. 501(c)(6).1 2 * 1971, during contest control Midas, organized Association under Not-for-Profit Law. Association's establish group negotiate unitedly with management. Its principal activity been serve bargaining agent members dealing Midas. It enrolled most members.2 successful negotiating new form franchise agreement prevents termination 20-year life except cause. also persuaded eliminate requirement customer pay service charge when guaranteed replaced. And sponsors insurance programs, holds an annual convention, publishes newsletter members. 3 sought provides league." Treasury Regulation 1.501(c)(6)-1, CFR (1978), business."3 view requirement, Service initially rejected application, stating "would apply industry wide."4 4 then (in October 1972) amended bylaws eliminated franchisees. Despite amendment, despite announced promote interests individuals "engaged dealers,"5 neither recruited nor acquired member who franchisee.6 5 1974, after had issued final rejection filed returns fiscal years 1972, 1973, and, thereafter, claims refund taxes paid those returns. 1972 claim formally denied. Subsequent denial, than six months passed since filing 1971 1973 claims, see 6532(a)(1) 1954 Code, 6532(a)(1), brought United States Southern asserting entitlement three years. found: "There no evidence [the Association] confers benefit on whole upon group." App. Pet. Cert. 11a. concluded "Midas 'line business,' " 501(c)(6), at 13a-14a. 6 Second Circuit 845 (1977). confronted what called "lexicographer's task deciding meant 'business league'." Id., 846. Finding direct guidance statute, court applied ("[i]t known associates," Black's Law Dictionary 1209 (Rev. 4th ed. 1968)), looked "at characteristics organizations" leagues were grouped is, chambers boards trade. agreed Service's determination, regulations, "organization trade." Reasoning "manifest intention" Congress statute "to provide organizations some aspect economic welfare rather support particular private interests," set forth regulations "well suited assuring organization's efforts indeed sufficiently broad segment community." F.2d, 846-847. noted any success might have improving franchisees, advantage gain through exemption, would come expense rest industry, line-of-business test. 7 court, id., 847 n. 1, explicitly refused follow decision Pepsi-Cola Bottlers' Assn. v. States, 369 250 (CA7 1966). There, Seventh Circuit, divided vote, upheld status association composed solely bottlers single brand soft drink. did so ground unreasonably narrowed statute. 8 We granted certiorari resolve conflict. 436 903, 98 2230, 56 400 (1978). II 9 statute's term well-defined common usage outside perimeters "so . render interpretive regulation appropriate." Helvering Reynolds Co., 306 110, 114, 423, 425, 83 L.Ed. 536, 540 (1939). such situation, customarily defers regulation, which, "if found 'implement congressional mandate reasonable manner,' must upheld." Cartwright, 411 546, 550, 93 1713, 1716, 36 528, 532 (1973), quoting Correll, 389 299, 307, 88 445, 449, 19 537, 543 (1967). 10 because "Congress delegated [Secretary his delegate, the] Commissioner [of Revenue], courts, prescribing 'all needful rules enforcement' Code. 7805(a)." U.S., 449. That delegation helps ensure "this area limitless factual variations," ibid., like cases will treated alike. guarantee written "masters subject," Moore, 95 760, 763, 24 588, 589 (1878), responsible putting into effect. 11 determining carries out proper manner, we look harmonizes plain language origin, purpose. A may force if substantially contemporaneous construction presumed aware intent. If dates later period, manner evolved merits inquiry. Other relevant considerations are length time effect, reliance placed it, consistency Commissioner's interpretation, degree scrutiny devoted subsequent re-enactments See South Texas Lumber 333 496, 501, 68 695, 698, 92 831, 836 (1948); Winmill, 305 79, 83, 45, 46, 52, 55 (1938). III 12 history much supports Government's tied community industrywide, should exempt. leagues" genesis inception modern system enactment Tariff Act 3, 1913, 38 Stat. 172. response House bill exempted, among others, "labor, agricultural, horticultural organizations," Senate Finance Committee urged add cover nonprofit groups. Both Chamber Commerce American Warehousemen's warehouse operators,7 submitted statements Committee. Chamber's spokesman said: 13 "The commercial present day selfish purposes, performs patriotic civic functions. Indeed, potent forces each physical social conditions. While original reason being advancement, sense individual, building up ." (Emphasis added.) Briefs H.R. 3321 Finance, 63d Cong., 1st Sess., 2002 (1913) (hereinafter Statements). submission added: 14 "These receive their dues men they all other communities industries benefits cooperative study local development, affairs, industrial resources, local, national, international 2003.8 15 receptive idea, proposed exempted "commercial profit." Instead, Committee, ultimately Congress, 16 leagues, trade, profit part net inures stockholder individual." Oct. G(a), 17 preserved language, few modifications, succeeding Act.9 18 little difficulty "chambers commerce" trade" Those terms commonly understood meanings before enacted.10 "Business league," however, usage, 1919 undertook define regulation. initial definition following: "A persons having interest, limits work interest does engage regular kind ordinarily carried profit. need similar Treas.Regs. Art. 518 (1919). 20 This proved expansive identify precision intended began cut back last sentence material just quoted when, 1924, Solicitor invoked deny requested stock exchange. He reasoned that, while exchange conceivably could definitions "board lacked "chamber commerce," share basis exemption. used terms, he said, indicate class, primary promotion welfare." exchange, contrast, afford facilities limited people transaction L.O. 1121, III-1 Cum.Bull. 275, 280-281 (1924). specifically exclude exchanges. T.D. 3746, IV-2 77 (1925).11 21 1927, Board Tax Appeals, reviewed dissents, principle denied corporation associations companies printing services companies. Uniform Printing & Supply Co. Commissioner, B.T.A. 251, aff'd, 33 445 (CA7), cert. denied, 280 591, 50 38, 74 639 (1929). 1928, revised real estate revenue agents tried tax.12 exclusion exchanges, allowed remain. 22 1929, incorporated itself. sentence, "Its dropped replaced following qualification: 23 "It Thus, objects distinguished performance individual persons." 74, 528 stood almost without change half century13 several amendment 25 During courts phrase employed True representation made Commerce, statement received "in industries," supra, 478, interpreted mean either entire see, e. g., Plywood 267 F.Supp. 830 (WD Wash.1967); Leather Shoe Finders T.C. 121 (1947), components geographic area, Chicago Graphic Arts Federation, Inc., 128 424 1942); Crooks Kansas City Hay Dealers' Assn., 37 (CA8 1929); Washington State Apples, 46 64 (1942).14 Most fall these two categories.15 consistently groups whose purposes narrower. failed meet test, include businesses market automobile,16 licenses patented product,17 bottle type drink.18 designed better "line," but, instead, product others industry.19 27 short, reading perhaps only possible one, bear fair relationship reflects views enactment, matches articulated. administered attempted give content reflect design. years, infrequently industrywide. therefore serious deference. B 28 contends, unreasonable unduly narrows argument aspects: First, argues defer because, instead actually contrary first 1929. Second, addition 1966 professional football statutory list makes appropriate. Third, contends applies here, reach beyond take account fact function labor 501(c)(5). consider arguments turn. 29 1. As above, "need (1919) (emphasis added). differs latter "contemporaneous construction" defer, Bingler Johnson, 394 741, 749-750, 89 1439, 1444-1445, 703-704 (1969), arbitrary narrowing said earlier rejects rule sociis, truly authoritative. 30 Contemporaneity, many counsel administrative interpretation here. Nothing law, Produce Exchange Stock Clearing Helvering, 71 142 (CA2 1934), directly explains regulatory shift. know, 1929 thought necessary match intent.20 reluctant adopt rigid agency alter light experience. Wilshire Oil 308 90, 101, 60 18, 24, 84 107 (1939), acknowledged flexibility taxpayer even though acted opposite Here, where there ever relied prior view, accepting authoritative stronger. 31 2. 1966, adding "professional (whether administering pension fund players)." 8, Pub.L.89-800, 6(a), 80 1515. character appropriate, This, course, complement argument. 32 legislative indicates objected endeavored position included 501(c)(6).21 forestall plan considered inurement individual. Congressman Mills stated flatly "no inference application section types organizations." 112 Cong.Rec. 28228 (1966). Nor necessarily entitle applied. teams depend mutual cooperation They uniform play. franchisee, another franchisee order bargain franchisor, joint make them powerful. Also, significance large package paved way merger created "industrywide" league. can hardly read evince intent industrywide afforded tax-exempt status. 34 3. says apply, sound policy reasonableness searching socii confines draws comparison organizations, particularly unions union, exists redress unequal power market-place. Some special legislation protecting associations.22 Employer deal leagues." Rev.Rul. 65-14, 1965-1 236, 238. argued meets regulation's requirements test.23 Applying thin logic discourage action improve shared yield scant Treasury. concludes appropriate now expand embrace phenomenon unknown 1913. 35 These unlike business-league 1913 bill. Statements 2002-2003. Perhaps find forceful today. needs plausible prevail Just Term, Fulman 434 841, 846, "reasonable basis" history, taxpayer's challenge "logical force." 534, (dissenting opinion). choice interpretations courts. Certainly, compel draw comparisons go text Senate's bill, drafting proposal modeled wishes incorporate. sum, limitation well grounded origin enforcement over long period time. distinction drawn available aid competition manifestation established administration. Because shown fails "implement manner," 450, judgment ordered. 39 STEWART, whom REHNQUIST STEVENS join, dissenting. 40 I reverse reasons expressed Additionally, note Regulations exactly urged. Ante, 480. strong understanding law enacted. exempts: commerce, real-estate boards, players), earnings shareholder trial focusing ended November 290 Association. 18a. about 50% By 1975, 80% 49a. reads: persons. commodity league, tax. Letter dated 28, Director (New York), Service, Complaint Exhibit C, Record Document Certificate Incorporation ¶ 41a. According survey, 21% replacement major metropolitan markets. 1977). letter sent president members, contained greeting, "Dear Fellow Dealer." letter, endeavor program," stated, "I loyal our country." Proceedings Twenty-Third Annual Meeting (1913). submission, 2040, assume importance here usually documents statutes. reasons. submissions amendment's discussed floor Senate, J. Seidman, Legislative History Federal Income Laws 1002, 1003 (1938), Reports state text, S.Rep.No.80, 25-26 (1913); H.R.Conf.Rep.No.86, parallels submissions. 1916, 11(a), Seventh, 766 (punctuation added); 1918, 231(7), 1076; 1921, 42 253; 43 282; 1926, 44 40; 103(7), 45 813 (real 1932, 47 193; 1934, 101(7), 48 700; 1936, 49 1674; 1938, 52 481; 1939, 53 33; 68A 164. Pub.L.No.89-800, 1515 (reference Webster's 245, 366 (1913), defined follows: trade: "In body appointed advancement protection interests. Cf. commerce." commerce: "[A] protect chosen merchants traders city. distinctively bodies intrusted interests, esp. connection foreign primarily Retailers Credit 90 47, 51 (CA9 1937), additional explanation difference between offered: "Although 'chamber commerce' 'board trade' nearly synonymous, slight meanings. former relates location, relate all." (1924), approach encompassed "organizations conveniences certain buying, selling, exchanging goods." 69, (1926). incorporates denial 1121 eventually declared obsolete. 68-207, 1968-1 577, 578. Leslie Salt 350 383, 393-394, 12, 76 416, 422-423, 100 441, 449-450 (1956), approved use defining "certificate indebtedness." 909, Sales Rulings, 85 (1920). 813. Hearings Revision 1927-1928, Ways Means, Interim 69th-70th Cong. 235-239, 268 (1927); H.R.Rep.No.2, 70th (1927). 77, (under 1932 Act); 86, 101(7)-1 1934 Act) ("or objects" dropped); 94, 1936 1938 103, 19.101(7)-1 1939 Code); 111, 29.101(7)-1 (same); 118, 39.101(7)-1 6301, 1958-2 197, 203-204, Code). 142, 144 1934) (organization "[n]othing done advance standards trade"); Note, Ford.L.Rev. 738, 741 Department "a nonprofit, cooperative, voluntarily-joined, competitors assist problems." Judkins, Associations viii (1949) 67-77, 1967-1 138, superseding I.T. 4053, 1951-2 (to effect law). 55-444, 1955-2 258 (industrywide advertising program exempt). 58-294, 1958-1 244. 68-182, 263 (announcing nonacquiescence 1966)). 76-400, 1976-2 153, 154. 61-177, 1961-2 117 members' competitive standing various lobbying represent separate merely illustrative normally repeatedly characterized met allowed. 138; Oklahoma 331 328, (CA10 1964); Associated Industries Cleveland 1449, 1466 (1946). plausibility otherwise free determine how construed. word company keeps, inescapable rule, often wisely capable avoid giving unintended breadth Acts Congress." Jarecki G. Searle 367 303, 81 1579, 1582, 859, 862 (1961). H.R.Conf.Rep.No.2308, 89th 9-10 (1966); Summary Temporarily Suspending Investment Limiting Use Accelerated Depreciation, Joint Taxation, 26882-26887, 28226, See, Franchise Practices Act, N.J.Stat.Ann. 56:10-7 (West Supp.1978-1979); Protection Wash.Rev.Code 19.100.180 (1976). Government contend engages profit, fee-for-service sense. does, exclusively.

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