125 Cal. App. 2d 19 | Cal. Ct. App. | 1954
The Department of California, Veterans of Foreign Wars of the United States appeals from a judgment holding that it was not exempt from the payment of contributions under the Unemployment Insurance Act (3 Deering’s Gen. Laws, Act 8780d, herein further called the Act) and liable for assessments of such contribution from October 1, 1945, to December 31, 1949, with penalties and interest. Following an audit made, assessment for contributions was levied on appellant (who had failed to register with the Department of Employment as required by § 36 of the Act) for the first time in the year 1948, retroactive so far as not barred by the statute of limitations, to wit, from October 1, 1945, to September 30, 1948. The California Unemployment Insurance Appeals Board denied appellant’s petition for reassessment September 8, 1949, Tax Decision 785.
In this action respondents denied that appellant was exempt from contribution, denied that appellant was entitled to a judicial decision as to the principle of the exemption without having first paid all assessments imposed, and cross-complained for the amount of all assessments until and including the year 1949 with penalties and interest.
Although payment under protest and claim of refund seems to be the only manner in which an employment unit could institute a court action as to the legality of an assessment (§ 45.11(d) of the Act; Scripps etc. Hospital v. California Emp. Com., 24 Cal.2d 669, 673 [151 P.2d 109, 155 A.L.R. 360]) respondents do not indicate any provision of the statute which prevents the application of such procedure to one separate assessment only. If such a court decision as to one later assessment only would not affect the validity of earlier assessments not paid, such would not be decisive of the situation in this case because respondents themselves submitted the matter of the prior assessments to the decision of the court in their cross-actions under section 45.1 of the Act. Such action is considered a normal civil action (California Emp. Com. v. Sutton, 69 Cal.App.2d 181 [158 P.2d 949]) and respondents do not cite any authority for the contention that in such action the defense that the employment unit was exempt from contribution could not be presented. In such an action the certificate of respondents is, according to the provisions of section 45.1 of the Act, prima facie evidence only. Appellant does not deny that it has the burden of proving the exemption.
There is no finding as to the character of the purposes for which appellant is organized. Appellant’s contention that on this point a finding favorable to it is implied in the finding that it is a nonprofit corporation, no part of the earnings of which inure to the benefit of any individual is incorrect. Under section 593, Civil Code old, now section 9200, Corporations Code, a nonprofit corporation may be formed for any lawful purposes, among which “social” purposes are expressly named, and therefore not only for such purposes as would cause them to be exempt from unemployment contribution. In this case a finding that appellant was organized for charitable and educational purposes exclusively could not have been made. Its articles, received in evidence, include the following which show without dispute that the purposes for which it is organized are in part recreational, social and fraternal :
“Article III.”
“That this corporation and association is organized and operates exclusively for charitable, scientific, educational and recreational purposes and not for profit. That the corporation intends to provide for the perpetuity and continuity of its existence and that said corporation will have no capital stock but that rights therein shall be limited to members; that the source of its income is from per capita tax and social activities of its members and all funds devoted to the pur*23 poses herein set forth and for the benefit of its members as a body.
“Article V.”
“That the purposes for which this Corporation is formed are:
“Fraternal, patriotic, historical and educational.
“To preserve and strengthen comradeship among its members.
“To assist worthy comrades.
“To perpetuate the memory and history of our dead, and to assist their widows and orphans.
“To maintain true allegiance to the Government of the United States of America, and fidelity to its constitution and laws.
“To foster true patriotism.
“To maintain and extend the institutions of American freedom.
“To preserve and defend the United States from all her enemies, whomsoever. ’ ’
Fraternal purposes, mentioned in the first place, are not charitable or educational. “ Fraternal or social organizations are not exempt from mating unemployment insurance contributions.” (81 C.J.S. 186.) “An association or organization, in order to be exempt on the ground that it is engaged in charitable, benevolent, educational, or scientific work, has been required to be both organized and operated exclusively for such purposes; if either element fails, the exemption does not apply.” (81 C.J.S. 181-182; Chamber of Commerce v. Unemployment Comp. Com., 356 Mo. 323 [201 S.W.2d 771, 772]; Northeast Osteopathic Hospital v. Keitel, 355 Mo. 740 [197 S.W.2d 970, 974]; American Medical Assn. v. Board of Review, 392 Ill. 614 [65 N.E.2d 350, 352-353]; In re American Agriculturist, Inc., 264 App.Div. 971 [37 N.Y.S.2d 98]; Murphy v. Concordia Pub. House, 348 Mo. 753 [155 S.W.2d 122, 126, 136 A.L.R. 1461].) These cases also hold that the question whether the purpose for which an organization is organized entitled it to exemption is judged according to its articles or charter. However in Bohemian Gymnastic Assn. Sokol of City of N. T. v. Higgins, 147 F.2d 774, cited by appellant, a judgment holding plaintiff exempt as organized and operated exclusively as an educational organization was affirmed notwithstanding the fact that its charter mentioned over and above clearly educational and
With respect to appellant’s operation, the main witness, appellant’s quartermaster adjutant Hermann, testified that appellant is a department of the national organization “Veterans of Foreign Wars of the United States” and as such a clearing house for payments from the California posts to the national organization; it does not conduct any social activities itself. Its main activity is the rehabilitation of veterans in connection with the federal Veterans Administration under contract with the Veterans Welfare Board of the State of California, in which work 82.2 per cent of appellant’s employees are employed, and 75 per cent of the costs of which are paid by the state. The work of the 17.8 per cent of the employees not exclusively so employed still contributes for a large percentage to the rehabilitation work. This service is open to all veterans, not only to members. Further activities relate to obtaining members, an educational program to educate the veterans of California “to their rights and entitlements” and a hospital program. No capital is built up. No
Appellant’s contention that it is exempt as an instrumentality of the state (§7 (f) of the Act) because it furthers a public purpose, the assisting of veterans in presenting and pursuing claims under contract with the state (Mil. & Vet.
Judgment affirmed.
Dooling, J., and Kaufman, J., concurred.
A petition for a rehearing was denied June 2, 1954, and appellant’s petition for a hearing by the Supreme Court was denied June 30, 1954. Shenk, J., and Schauer, J., were of the opinion that the petition should be granted.