Court Opinion

ID: 6875002
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:06:30.398109+00
Date Added: 2024-06-11T16:05:28.749327
License: Public Domain

BIGGS, Circuit Judge
(dissenting).
I am constrained to dissent from the opinion of the majority in the case at bar. My reasons for doing so are as follows:
The learned District Judge found as a fact that the appellant “ * * * was a social club as defined by the Revenue Jaws of the United States.” In my opinion this finding was correct and is supported by ample evidence.
Briefly enumerated that evidence is as follows: The appellant was incorporated in 1903, and the incorporators asserted in their petition to the judges of the Court of Common Pleas of Allegheny County, Pennsylvania, that they “ * * * associated themselves together for the purpose of social enjoyments * * *” and that the purpose for which the corporation was to be formed was “ * * * the maintenance of a club for social enjoyments, in particular, encouraging social intercourse among its members by providing dining facilities, a reading room and place where its members may meet for the discussion of their social and business affairs.”
The appellant was incorporated under the laws of Pennsylvania embodied in the Laws of the Session of 1895 (Pennsylvania Laws 1895, pp. 314, 315). The law sets up thirteen classes of non-profit corporations. The. sixth class of non-profit corporations thus created is described as “the maintenance of a club for social enjoyments.” The eleventh class includes corporations “for the encouragement and protection of trade and commerce.” I therefore cannot concur in the ruling of the majority opinion that the appellant at the time of its creation in 1903, if it was in fact a business club or corporation, could not have béen incorporated under the eleventh class created by the statute rather than under the sixth class.
The nature and purposes of the appellant were reiterated in a booklet entitled “Roots Thrust Deep”, used by it in a membership drive. This booklet states that the appellant “ * * * became at once, and has remained, a strong social force; while the variety of interests in its close-knit membership has made it a civic force as *264well.” The booklet makes numerous other references to the social life of the club and in fact compares it favorably to the Coffee House of Addison’s time.
Details of the manner in which the appellant was conducted bear out the finding of the court below. The club served both lunch and dinner to its members. It offered facilities for playing cards; it provided a ladies’ dining room. It had a lounge, and a room for pool and billiards. It had lockers for the storage of members’ liquor, and it gave an annual New Year’s Eve party. Though its membership consisted principally of business men, none the less, it was predominently a social club within the meaning of the applicable statutes and regulations.1 Its social features, as stated by the court in Fleming v. Reinkcke, 7 Cir., 52 F.2d 449, 80 A.L.R. 1293, “ * * _ * were not subordinate or merely incidental to the active furtherance of a different and predominant purpose, but were a material purpose of the organization.”1 See, also, Block Hall v. United States, Ct.Cl., 57 F.2d 918, 924; Army and Navy Club v. United States, Ct.Cl., 53 F.2d 277, 282, certiorari denied 285 U.S. 548, 52 S.Ct. 405, 76 L.Ed. 939; The Lambs v. United States, Ct.Cl., 8 F.Supp. 737; Union League of Chicago v. United States, Ct.Cl., 4 F.Supp. 929.
The learned District Judge in his opinion stated the following: “We are further of the opinion that the plaintiff has waived any right to be considered a non-social club by its claiming itself exemption from income taxes because of the fact that it is a social club. It cannot be a social club to exempt it from one tax and a non-social club to exempt it from another tax.”
I cannot find the basis for such waiver or estoppel. The appellant correctly contends that exemption from income tax was properly granted it under the appropriate sections of the applicable Revenue Acts,2 which provide that clubs organized and operated exclusively for pleasure and other non-profitable purposes, no part of the earnings of which enure to any private shareholder, are exempt from income tax. It is thus apparent that exemption from income tax was granted because the club was formed and operated for non-profit purposes.
The fact remains, however, that upon March 29, 1918, the appellant filed with the Collector of Internal Revenue a claim for exemption from income tax and therein stated that the character and purpose of the appellant was the “ * * * maintenance of a club for social enjoyments, in particular, encouraging social intercourse among its members by providing dining facilities, a reading room and a place where its members may meet for the discussion of their social and business affairs”, and that the income of the appellant was “ * * * used exclusively for the promotion of the purposes for which the said The Union Club of Pittsburgh was organized * * It is stipulated that neither the Commissioner of Internal Revenue nor the appellee has required the appellant to file income tax returns or has assessed any income taxes against it throughout the period of eighteen years following the year 1918. It must be inferred from such circumstances that the appellant was not taxed throughout the period referred to because both the appellant and the appellee considered the status of the appellant as a non-taxable to have remained unchanged.
As I have stated previously, though this will not serve as the basis for waiver or estoppel, none the less it affords further evidence, if such is needed, to support the finding of the., court below that the appellant is in fact a social club.
The decision of the court below should be affirmed.

 Revenue Act of 1926, c. 27, 44 Stat. 92, Section 501, 26 U.S.C.A. §§ 950, 951, 952, and the Revenue Act of 1928, c. 852, 45 Stat. 864, Section 413(a), 26 U.S.C.A. §§ 950, 951 and 952; and of Articles 35 and 36 of Treasury Regulations 43.

 Section 11 of the Revenue Act of 1916, 39 Stat. 766, Section 231 of tie Revenue Acts of 1918, 1921, 1924 and 1926, 40 Stat. 1076, 42 Stat. 253, 43 Stat. 282, 44 Stat. 39, Section 103 of the Revenue Acts of 1928 and 1932, 26 U.S. O.A. § 103, and Section 101 of the Revenue Act of 1934, 26 U.S.C.A. § 103.