*1 Judgment merits is now vacated on the jurisdiction. re- This
for lack of cause instruc- court with
manded to the district it to the state court to remand tions proceedings.
further
Judgment vacated; remanded. cause BOTTLERS’ ASSOCIA
PEPSI-COLA INC., Plaintiff-Appellee, TION, America,
UNITED STATES Defendant-Appellant.
No. 15547.
United States Court of Circuit. Seventh
Nov. Atty., Hanrahan, V. U. S. Roberts,
Chicago, Ill., Richard M.
Asst.
Silk, Jr.,
Atty. Gen.,
Thomas
Lee
*2
Pepsi-Cola Company per
Baum, Attys., Dept.
Jackson, Harry
of
from
chased
year)
Pepsi-Cola
C.,
appel
Justice, Washington,
The
D.
for
and interest.
Company franchises bottlers on certain
lant.
conditions.
Olfson,
Hatton,
B.
H.
Herbert
Raymond,
implement-
Chicago, Ill.,
question
appellee.
The statute in
for
Ill.,
Regulations
Block, Chicago,
Treasury
Mayer,
on Income
Jenner
ed
&
1.501(c)
(1954 Code),
(6)-l
which
§
counsel.
organization
exempt
an
as
define
HASTINGS,
Judge, and
Chief
Before
ing
improve-
activities directed to the
Judges.
KILEY,
and
ENOCH
Circuit
conditions of one
ment
lines
business as
Judge.
KNOCH, Circuit
performance
serv-
America, defend
The
States
for
ices
ant-appellant,
appeal from
has taken this
government
position
The
takes the
Dis
of the United States
“a
that
fails to
holding
plaintiff-
trict Court
appellee,
business,”
the Commissioner
Pepsi-Cola
Bottlers’ Associa
past having
or-
to
denied
tion, Inc.,
exempt
payment of
was
ganizations
partic-
with one
associated
league and
tax as a
income
government
ular brand
The
refund of taxes
hence was entitled to
appropriate
sees the
“line of business”
paid for
after the Internal Revenue
embracing
here as one
drinks.
soft
grant
exemp
had refused to
Service
which
There
a soft drink association to
tion.
belong.
many
plaintiff’s
of the
largely undisputed. The
The
government argues
plain-
case was submitted to the Trial
solely as a con-
tiff serves its members
stipulation.
aon
economy in
and
venience
their
Internal
Code of
Revenue
giving
only to its members.
benefits
provides
for
an
government particularly
*3
reports
Find-
Leather & Shoe
See also National
Committee which studies
types
available;
(3)
Commissioner,
121
a
9 T.C.
ers Assn. v.
of insurance
Young Management
(1947).
program
conducts a
of conferences
engages
in no
younger personnel
potential
who
Unlike
National Automo-
the
executives.
(1943)
Assn., T.C.M. 291
bile Dealers’
2
no income
its
the
derives
auditing, by-laws, nom-
There are also
operate
les-
can
even to
activities which
inating and
resolutions committees.
sen dues.
meetings
periodic
Association conducts
and issues a news bulletin. Non-member
plaintiff Association can
bottlers of
the
receive
bul-
merely
disqualified
its
because
be
letin,
reports.
questionnaires
particular
a
bottle
or
The Association renders no service
is unreasonable
any activity
conducts
for individual bot-
regulations a
the statute and
write into
groups
tlers
limited
of bottlers.
by
wholly unsupported
limitation
legislative history.
falls
within
the District
regu
scope
501(c) (6)
is affirmed.
lations mentioned above. To be a busi
league
ness
it need not be devoted en
Affirmed.
general
tirely
Its
welfare.
operations
improve
do contribute to the
Judge (dissenting).
KILEY, Circuit
my opinion,
respectfully
In
I
dissent.
public consumers,
hence to the
unlike the
taxpayer
Association is not entitled
operations
in
Ex
considered
Produce
under
section
change
Clearing Ass’n, Inc. v.
Stock
leagues,
“Business
which includes:
Helvering,
1934,
142,
Cir.,
71 F.2d
commerce,
real-estate
chambers
merely provide
which did
the conven
trade,
organized
boards, or
boards of
clearing
ience
house
for a
facilities
profit
earn-
and no
group
limited
of individual
traders
ings
which inures to
expressly
securities. The Court
distin
private
or individual.”
guished that case from Crooks v. Kan
is not a chamber of
Cir.,
sas
commerce, real
or board of
estate board
83, 85,
plain
37 F.2d
on which the
trade,
nor is it like
one
them.
tiff relies.
organized
Therefore,
it is not
This Association
is not
profit
a
it is business
is irrelevant unless
None
inure
of its net
league.
league
To
a business
directly
indirectly.
to the members
general
possess
character-
it must
v.
Commissioner of Internal Revenue
real
istics of chambers
Cir.,
Chicago Graphic
Arts
under
estate boards and boards
trade
128 F.2d
sociis. Prod-
the doctrine of noscitur a
Exchange
Clearing Ass’n v.
In
Stock
Associated Industries of Cleveland uce
(2d
Helvering,
Commissioner,
contribute service, City. The claim of through advancement interests, competitive business
bers’ in this made rejected ZINK, Plaintiff-Appellant, Dale N. Exchange case, 144. F.2d at solely real sense Jr., RADEWALD, Defendant- Edwin dealers. Appellee. league’s A No. 15612. 1.501(c)(6)-!1 Treasury Regulation § Appeals States Court of improvement of should be directed to Seventh Circuit. of “one or lines of busi- June distinguished services ness” as persons. Crooks hay busi- a “line of volved business”—the ness, did not and the association there compete F.2d at Similarly, of In- Commissioner Chicago Graphic Arts
ternal Revenue v. 1942), (7th F.2d holding of the court affirmed
this Board United States of Tax Arts,
Graphic
printing plant owners, form combined printing
an association to In that —a league is 1. A an association as a chamber of commerce or board having Thus, di- some common business should be trade. pro interest, of which is to rected one or of busi- such common interest conditions of more lines mote engage perform- kind ness as ordinarily for individual carried ance of class . same notes leagues prof- improvement of ethical standards it, no where plaintiff, that not a was function of any private inures to deliberately being to function left individual. aforementioned trade association organiza- Membership soft a whole. serves the Further, in the government firms, individuals, contends that is limited tion corporations engaged to plaintiff provides valuable inuring only Pepsi-Cola. As of sale the end way bookkeep- Pepsi-Cola advice on bers free about of the bot- 83% manage- ing accounting country and methods and Dur- tlers in this were members. training younger of- executives about the members 90% financ- members—for of which the much also bottled other drinks. soft procured Pepsi-Cola was from the purposes of the Company. further, promote, protect, extend, organized in and business of bot- problems tling selling Pepsi-Cola. to solve certain common Each mem- 1949 Pepsi-Cola some of whom bottlers is free to ber conduct his business with- Pepsi-Cola Company no accountability that the took felt out to the Association problems. in their or other of dis- members. the event solution, plaintiff are the assets of the Plaintiff’s directors and officers re- to be distributed to the Red Cross compensation. is an no ceive organizations. other charitable Secretary salaried Executive who is a plaintiff’s represents from employee. income comes (calculated upon number of dues members vis-a-vis pur- Company. units of concentrate num- The Association has a good example, (1) committees, directed to the activities faith ber conditions, which issues of business Standardization questionnaires engaged infor- business carried and disseminates commonly profit, procedures on used mation par- performance of equipment, usable not is also confined much which drinks; Insurance for individual members. ticular services other