*1 ENGINEER’S CLUB OF PHILADELPHIA v. UNITED STATES.
No. 44568.
Court of Claims.
Nov. 3. 1941. 2, 1942. Amended Feb.
As
18o *4 more $10, than or if the dues or member- ship fees, fees, not including initiation an active resident annual are in member per year. excess of $25 “ ‘(b) Such paid by per- taxes shall be * * * paying son or dues fees. Int.Rev.Code, U.S.C.A. §§ Article Regulations 43, first promulgated that and in effect since time, is as follows: “Art. 36. Any Social organi- Clubs.— zation which quarters maintains or ar- ranges periodical dinners meetings, or purpose of affording its members an opportunity of for social congregating in- * * * *5 tercourse, is a ‘social club or organization’ within meaning of the Act, unless its social features are not a paid— lent which were levied assessed, collected, 413(a) enue Act of any AKER, or tive resident annual member are in ex- LITTLETON, on it ganization, if the cess of liam C., (Robert “ “‘(1) As dues or membership fees to “(a) Section “§ The section is as follows: MADDEN, Judge. “ ‘(2) As initiation fees to such a Plaintiff Before Fred John organization, ‘Sec. 501. on the brief), social, athletic, Samuel O. 413. Club pursuant Cogger, Washington, of the $25 E. K. JJ. N. WHALEY, sues brief), Hughes, for per year; amended to read as follows: Dyar, Anderson, per Revenue Act of 1928. to Section 501 of the Rev- plaintiff. (a) Clark, to recover taxes MADDEN, Dues if such fees centum of for defendant. dues or- or or sporting club There shall by of amended Jr., Washington, or J.,C. Tax Chicago, paid or the Revenue Act Asst. Washington, fees of an ac- defendant and WHIT- and JONES, any tax by amount D. Atty. paid by be Ill. amount Section they equiva- D. C., levied, (Wil Gen. club period up- C., D. (cid:127)other trict of one tem, tion were rendered of mercial interests ligion the advancement of the business or com- its exclusive or ganization, then refund of the social empt. ty) or zations are in effect tion, sity, payments to them are States merce, of the Act. An for among club or incidental social tax does not attach to dues or a religious organization, chamber of com- pie, religion, predominant 1938. Plaintiff material features are a material the active furtherance of a different and are subordinate and The organization.’ is against [*] or are local fraternal are or the against clearly not period January 1932 or District Court for the District Court the students commercial claim organization,’ Pennsylvania. in connection with two purpose philanthropic operating paid [*] purpose, such like, merely for one taxes, an was filed a features, but, organization predominant purpose which defendant, aof it is of the Rothensies, a ‘social Most fraternal arts, opinion [*] under July asserting as merely within the February 1935, purpose or business. The That city social the taxes timely college favor of organization 1935 to trade ‘social because [*] as, * * * expressly or communi- covering organizations clubs, Eastern Dis- incidental to opinion Collector if the social service lodge sys- for examT or univer- claim for of the or-' organiza- decisions plaintiff, meaning [*] in January * * * has for fees organi- " but if ques- basis was' has ex- (or re- of taxes, plaintiff apart all period setting from thus Revenue, covering Internal taxpayers court the other to this case who resort In each March to June plain- with similar paid cases. by taxes held that the Court here of the statute the section under tiff judicata The doctrine of res should by recovered could be involved because it was application be so extended. Any periods, not, during those taxpayer doctrine cases to relieve a tax Plaintiff’s purposes. a social club tax of, of, payment subject or to him to the in- here taxes for refund of claim litigation year a tax later because denied Commissioner volved year, an reference to earlier has been this suit. brought criticized.2 learned A commentator pointed out that the invocation of doc whether question is Our first litigation trine in promoted cases has tax or whether to determine free are peace, instead of producing doc pe during a social supposed trine do.3 instant Plain question. here in to 1938 riod 1935 example. case is an trying In addition to not; question that the says arewe tiff plaintiff’s facts operations judicata rea res club vel non is social years question, three here in it has been decisions. Court the District son of necessary again try the facts which operations for plaintiff’s opinion In our were tried before District cov January period July the were, years, ering period another order a social purposes, those determine they whether were so substan res question of Laying aside club. tially similar judi doctrine of res opin follow judicata, it would cata would have to be considered. The properly collect taxes ion that ed, learned cited authority suggests above *6 may recovered. That be not and approach question: following to the many decisions in accord with opinion is years “Where different taxable are in us, urged upon how *Itis court.1 of this cases, judicata volved in the two res opinion we ever, regardless of that that applied be narrowly should than much more be conclude, not we do to what bound are has true in been some cases in the true, plaintiff’s activities be that lieve to past. Not should only it be confined to because a social those of not were cases, are issues which identical in the two cases, in other decided Court the District the ‘identical’ rigidly word should be par same between the which was one of apply only construed to to situations plaintiff between and the other and ties applicable the unchanged where statute is Revenue, that of Internal collector controlling of and all the events occurred plaintiff’s January to activities from 1932 the earlier of the years.”4 before tax not a social those of 1935 were February suggestion This seems to us be to wise. club. As suit to in the District Court the period, in the activities latter Plaintiff’s Collector, period the against the not the were those of question, in here 1935, immediately preced to March ing June They litigated. period, previously earlier period present suit, covered comparable We and similar. have were Supreme of the in the conclusion Court substantially were they found Burnet, Coal Bankers’ Pocahontas Co. v. they But and extent. in nature same 308, 150, Commissioner, U.S. 287 53 S.Ct. events, different set of completely awere 325, in judgment a suit L.Ed. 77 the set events lit- were not of they and judicata res in a against a collector not asked, cases. are earlier We igated in the against the suit Commissioner or later eyes and to the then, close our minds States, because of a lack of iden us, actually give before and to facts parties. of tity we not judgment which would plaintiff a Court, case in the District the other cause In any other whose give to present identical with parties were merit. are equal We asked had action were, facts we have regard parties. But discriminate thus to said, They were differ- duty, pay identical. duty recurring public and Cases, 3 Griswold, infra, 1 in Tax Res Judicata note 7. cases cited See (1937). Report 2 Tax Yale 1320 Federal 46 L.J. Committee Association, Bar the American ation 4 op. p. A.B.A.Rep. Griswold, (1936). cifc at 821 61 188 ent, They though similar, conclude, therefore, events. set We that we are consisted of course a whole of conduct free to plaintiff’s determine whether ac- day an day from enterprise all its details of year in tivities for the question those They scope. of considerable of a social club. As already indicated which, though were similar, kind events opinion, this they were. The think vary might easily period to findings of fact show that social fea- period enough change judgment tures tal, merely of the club were not inciden- though same tribunal it held the same purpose but were a material applicable of the view meaning important and an and substantial statute. part of its activities. This court fre- quently held that such clubs are taxable. apply The decided res cases do judicata principle In situations. In of our view as to conclusions the non- Maryland Ry. the case of Tait Western applicability judicata, of res and as to Co., L.Ed. 53 S.Ct. U.S. being a social it is not neces- 1405, the events were as Two follows: sary question for us to re-examine predecessors had, railway company whether requiring before 1908 and sold issued and powers to file of attorney from mem- its mortgage at a discount their bonds. In bers in connection with the claim for re- newly company railway formed fund valid. therefore We state no recognized these bonds outstanding upon question. conclusion obligation. It de- claimed to a petition Plaintiff’s be dismissed. will It gross duction from its income for income is so ordered. purposes tax an proportion amortized the discount. WHALEY, J.,C. and LIT- Commissioner Internal Revenue JONES TLETON, deduction, JJ., concur. disapproved litiga- but on through Appeals tion the Board of Tax Appeals, Circuit WHITAKER, Judge. position Company’s sustained. The reached, concur the result but for Company later claimed and sued for re- reasons. different years 1920-1925, funds *7 statute, regulations the question I think decision District and at issue Supreme the Court for Eastern District of Penn- the same. The being that the Court held sylvania, holding taxpayer principle ap- that this judicata res was of was club, judicata a social is res plicable. In that the in this sought case events precludes and inquir- us proceeding to tried in the second suit be were the or not in fact a social ing club. identical historical events whether was which had been required we are application the The think to so hold tried in first. the of by Supreme judicata of in the decision of the Court in doctrine is not res such a case Co., precedent application Maryland a Railway Tait for its here. Western v. 623, 620, 706, Supreme Other Court cases have not 289 U.S. 53 S.Ct. 77 L.Ed. any tendency in scope testimony shown to extend 1405. The this case un- the is 5 principle purposes in cases. contradicted that the and activi- Nor have applied year the Federal ties of club in the prin- other Courts the the now before ciple comparable year fairly in cases same as the this us were the in before to true, being case.6 the District Court. This
Club
1013; Bankers’ Pocahontas Coal
274 U.S.
H.,
a case
Burnet,
the
recently
S.Ct.
6
[5]
[7]
Fisler
United
See
par.
Western
authorities.
v.
150,
130 A.L.R.
like the
Bell,
9368.
declined
Commissioner,
v. United
189 party proper is not that that proceeding, judgment in the former bring this action.” is con- not a social was Maryland Tait here. v. Western clusive case Later, regulation quoted in that Co., supra, Railway so holds. adopted in- changed, was there was requir- in force proceeding regulation stead the now the defendant this But by attorney ing powers case of filing in the of interposes not raised a defense this After do Court, may the club. this it members of in the District of change, also case supra. there came before See us authority cited under the United Inc., Chicago v. v. Builders’ Properties, Club Twin Cities United States, supra, in which the Commissioner States, 119; Harvey Corp. Coal 90 Ct.Cl. to refund States, 756, refused F.Supp. Revenue 92 Internal Ct. been er- alleged have plain club the defense that taxes Cl. That reason for the same roneously this suit collected to maintain tiff is not entitled wit, case, that this comply ar now advanced because of its failure with (re powers of attor- Treasury failed to file Regulation the club had ticle 54 authorizing by its members requires seeking a executed ney vised), which agent. ques- This to act as their paid of taxes on initiation fees refund court, carefully by considered tion powers attorney file executed dues to club was entitled the re and held that by on whose behalf the members an action for the refund of sought. question was not maintain This fund taxes, it had the fact that for the by notwithstanding the District considered attorney. Pennsylvania. powers of We filed District of Eastern pow- requirement that such said that an ac- club maintain attorney “legislation be filed was ers of paid on in- tion for the refund taxes regulation and there- guise of a in the and dues has been before itiation fees 1022, F.Supp. Ct. fore invalid.” [14 In Alliance court twice before. this Cl. 556]. States, Country 62 Ct.Cl. Club v. United upon plain- 579, entitled to demand was made we held that club was When paid recover taxes case maintain a suit to tiff this Commissioner imposed upon furnishing and dues Internal initiation fees Revenue attorney, powers insisted members. In court proceeding that so, required express- to do section 801 of that was not had under consideration 23, 1921, upon decision ly it relied our stating the act of November Stat. 291, provisions Chicago act v. United in Builders’ Club replied States, supra. The are the same the act here con- defendant under sideration, Act nevertheless still of the Revenue sec. compliance 9, 92, upon as amended force and insisted Stat. *8 1928, plaintiff’s attention was later sec. 413 of the Revenue Act 45 it. A month powers 864, of at- 791, the fact that the Stat. insofar as material here. called to pro- and it was torney and the us had not been received Both that act act before paid by in within are that must be sent they vide that the taxes to “be the notified expiration days. of this person such dues or fees.” Before the paying thirty After it regula- stating defendant provision plaintiff the of a time wrote having quoted powers impossible to secure the of- by tion issued Commissioner In- would be 1,000 28, 1919, pro- all of its members on March from attorney ternal Revenue requested time, an exten- viding precedent a that and that as condition to within 1939, 3, period a right January the to claim a refund the club must sion until months, within which to do so. no claim about two furnish a sworn statement that plaintiff members, by request refused and was had been filed its was for refund This powers on such as were requested to send this court said: Apparently this was then on hand. Treasury Depart- the that “So it seems done, a half later the a month and and recognizes ment and treats the club rejected this omission. for claim was proper taxpayer, party to the both as the correctly case pay the Builders’ Club the and also as entitled to tax recover Was under consideration The Act illegally if been or the tax the same has decided? provided expressly that and here paid. are of the same there erroneously We paid by person the opinion, were “to be and there is noth- the taxes therefore think The was or fees.” Club of the dues paying in the contention Government ing required mem- 92 Ct.Cl. from its defendant, that case to collect the tax 93. The sought bers but to and the recover to remit it to taxes on admissions is, recovery, say- that the taxpayer, boxing member was bouts. We denied person levied, ing and “But though on even had in tax was whom Therefore, tax, a fact any not the refund of borne the club. burden it never- paid taxpayer; tax due theless was a a refund not the no taxes by member is by member The club exacted and not the club. it the defendant is, therefore, re- and right given no If secures the there it. it no * * * fund, members, it pass under the it must it on to its it law recover. purchaser unless they paid was the- consent otherwise. the ticket who and, therefore, only the tax it is he who If correct, that this be then it follows has the right to maintain an action to re- Depart- Treasury cover.” precedent ment requiring as a condition This was in line the decision of the- filing by powers of attor- the. Fifth ney Appeals Regents Circuit Court of authorizing from its members .it System of University Page, v. Georgia act for regulation. them is a valid 81 F.2d 577. In this case the The Builders’ Club case followed brought suit recover admission taxes Alliance case, Country ten Club decided paid on admissions games to football held earlier, years in which it held that it, by on the theory that it a govern- taxpayer, ground was the agent and, mental Georgia of the State of the decision in the Builders’ Club case. therefore, could not be assessed a tax support decisions provi- found in the the Federal Government. This conten- sion that club was made liable for rejected by tion was the Fifth Circuit discharged tax whether it col- duty of Appeals on the ground that the not; lecting it or there can be but think purchaser taxpayer of the ticket was the member, no doubt that it is on the and not plaintiff. and The court said on club, and, on the therefore, the tax is levied “* * * page 580' of 81 F.2d: While member, that it is the and not vigorously any at all denying times club, who, taxpayer, is the who and due, admission is. the appellant tax first therefore, is to the entitled refund. paid sought through to recover it This is consistent we with what said on administrative channels. effort, This motion trial new case payable failed because the on admis- Country Bunker Hill States, Club sions is an excise which added to the F.Supp. 52, F.Supp. 159, price paid by pur- admission In Ct.Cl. that case suit was chaser ticket. In' the absence of a brought paid to recover taxes on initia- burden of showing the taxes was tion and dues fees collected the Club actually by it, appellant borne has no inter- from its members remitted to the subject-matter est the controver- Government, theory on the that was not sy and cannot recover either by adminis- concern. In profit-making trative claim refund or action at law. opinion our on motion new trial United States v. Mfg. Electric 443, Jefferson contrary, said: “On the tax Co., U.S. S.Ct. 78 L.Ed. paid corporation merely dues was 859; Shannopin Country Club v. Heiner agent an paid remit the amount so *9 393; Lafayette 2 (D.C.) F.2d Worsted findings the government. to The show Page 399, (D.C.) 400; Co. 6 F.2d v. plaintiff tax, the that ‘collected’ en- the Country Hill Bunker Club v. United separate it its books under tered a on ac- F.Supp. (Ct.Cl.) 52; States 9 Wourdack payable States, as to the count United and Cir.], 840, v. Becker F.2d 55 certiorari [8 the same the remitted to collector. What- 501, 548, denied 286 52 S.Ct. U.S. 76 L.Ed. may of ever take the of view we relation The admission (44 tax statute Stat. corporation, the the members to no club 91, 500, amended as U.S.C.A. Int. [26 § paid by dues was the corpora- on the tax Rev.Acts, page provides 269]) that the tax funds, its out own and tion no cause person paid the by paying is ‘to be for against it accrued to the gov- of action provides admission.’ It further (44 ernment.” 9, 2) “taxpayer” that ‘the term Stat. § subject consistent any person This is also with our deci- to means a im- tax Century by in Twentieth posed Act Sporting sion v. Club this U.S.C.A. Int.Rev. [26 States, 1021, Code, F.Supp. 1023, 3797(14)].’” 34 §
191 re- Heiner, required as a a seeking 1920 it club v. Shannopin Club Country In fund to a statement that no file sworn brought suit 393, D.C., the club F.2d 2 any filed by refund been claim had membership cer- paid on collect taxes to members, 15 in in article its and 1926 on the filed was demurrer A tificates. “ * * * 43, 2, regulation part it said: taxpayer. the not was the club ground that on and initia- Inasmuch as the dues tax laws of revenue “The said: The court pays paid by person tion the who fees is tax States, which this under the United it Act) the (sec. the dues and fees 501 plaintiff, the by collected and assessed was any taxes can members, follows that refund of the and upon the impose this tax be legally only to the club member made Section itself. the upon club not imposes up- paid who tax. The the law (42 U.S.Statutes of 1921 Act Revenue tax 1923, duty 6309%b]). collecting [Comp.St.Ann.Supp. § it primary paying and it over to the collector but law, mon- is no there this Under taxpayer is pay this tax. not the the meaning within upon plaintiff liability ey acting Consequently, no burden, as the law. has than other It had no collecting right government legal in to a on its own behalf refund agent imposed paid by of taxes on dues and fees mem- taxes the amount of collecting of 1921. bers.” Act the Revenue by 801 of section by section duty is made clear This departure There has been no this from (42 U.S.Stat- Act of 1921 the Revenue provision. regulations pro- The today “ * (cid:127)* * p. [Comp.St.Ann.Supp. utes the members and not vide.: lia- clearly fixes 6309%c]), which § are taxpayers. clubs actual * ** plaintiff bility responsibility of and Regulations 43, ”. (Sec. 101.56 Re- is taxes con- collection of these far 1940.) vised no paid part has The itself cerned. contrary, know of no decision I seeking to re- now which is of the taxes except opinion our own. I am the cover, permitted to were recover if it erroneously the Builders’ case was Club action, not it would our judgment this decided and should be overruled. members opinion bar another action In this the Builders’ Club case said parties themselves, in in- real who are the regulation powers clubs file requiring plain- in the If the taxes involved terest. attorney in- from their members was illegally as- claim were statement of tiff’s complied be valid and need not with. collected members sessed and taxpayer This on what we said and relied they par- plaintiff corporation, are comply did not with it. us It now asks entitled to re- injured, and are the ones ties deny relief because relief. Can we in the statement of nothing is cover. There regulation comply failed to with with it- discloses that claim which comply? which we it need not said paid any taxpayer and has self resort, a court last Were this to re- now seeks which it Government say should be inclined to cover.” right rely on our had a former decision appeal taken from this decision. No complying and would be excused from Appeals Circuit Court of The Seventh with a we had held to be in- Lodge Blacklidge, F. Wing v. Wild valid. court of last re- But this taxpayer per held the 2d be disagree may sort. Other courts our dues, initiation fees paying son law, They and sometimes view do. they paid. to which not the club thereby. They may are not bound decide cases various courts following In the precisely opposite issue an identical recognized that the club member was have way, right complain and no one has a although in them taxpayer, none of they did our follow decision. directly question involved: Munn this Treasury Department is not bound our 204; Cir., Bowers, Fleming 47 F.2d decisions. It in other cases *10 Cir., Reinecke, 52 F.2d 80 A.L. v. persist its the law and to view Cir., McLaughlin, 1293; v. Foran R. to have views sustained undertake its Williams, 158; MacLaughlin Cir., F.2d right persist It has the other courts. F.2d 724. rejected by is finally until it view its Department Supreme Treasury It has the has consist- Court. member, come before us and undertake to held that not back ently taxpayer. wrong far we were was the As back demonstrate to us that prior And, our regulation, only decision. convinced it could refuse to do so error, duty our it. plain peril. it is our at correct The decision of this court gave it no absolute reg- assurance that the All of to the this must have been known ulation was invalid and could be en- plaintiff; charged with that least it at is forced. If appealing so, was it en- knowledge. That being some court, other prior our decision would rely in the Build- titled on our decision not afford protection. It follow must not, If it cannot com- ers’ case? Club that it is not protection here, entitled to plain it. if we refuse follow should because the law before us is the same as it is before other courts. law, opinion make an That opinion did not dif- may Courts Supreme have would fer in their is, view of what the law dispositive case in done. It was when the determined, law finally been rendered, but, precedent, as a which it was applied law must be uniformly. It advisory only. did not settle It cannot be one court, thing before this ultimate, controlling had no law. It another before thing some other court. The final declaration of law force. (cid:127) Supreme prior Until having to the Court. Our committed decision been errone- ous, think, acts, litigants on the rely can that court I and the plaintiff having ' prius or nisi been plied opinions of intermediate valid and having com- peril. it, only their at I think courts that it not entitled to recover.. plaintiff was confronted when So insistence of the Treas- continued concur in the result reached by the comply Department majority that it with this for the ury foregoing reasons.