Union League Club v. Johnson

EDMONDS, J.

The State Treasurer complains that the superior court in rendering a judgment for the amount of taxes paid by the respondent under protest, improperly construed the Retail Sales Tax Act (Stats. 1933, p. 2599; Deering’s Gen. Laws, Act 8493). The taxpayer was allowed to recover upon the theory that this act, as in effect at the time the assessment was made, does not include a

bona fide

social club.

The respondent is a non-profit corporation, organized for social and political purposes. It occupies a building in San Francisco in which it maintains all the facilities of a modern club, including dining rooms and a bar. The building is open only to members, which number between five and six hundred, and their guests. Apparently the operations of the dining rooms and bar are carried on at a loss, the deficit

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being made up from the fixed dues paid by members and assessments made upon them. In 1936 and to September 30, 1937, the club furnished liquor and meals to its members and their guests in an amount which required the payment of the sum sued for in this action if it was at that time a “retailer” engaged in “business,” as these terms were defined by the Retail Sales Tax Act,

supra,

as then in effect.

The State Treasurer declares that the respondent is included within the definitions of these terms as stated in the act, and if the statute is ambiguous, it should be construed in the light of the administrative interpretation of it by the Board of Equalization. The respondent contends that a

bona fide

social club with a limited and selected membership, which incidentally furnishes food to its members, is not engaged in business in a commercial and trade sense, and therefore is not a retailer within the scope of the act. More specifically, it declares that there is no sale by such a club when food or liquor is served because the transaction is not the transfer of title or possession “of tangible personal property” for a consideration by one “engaged in the business of making sales at retail . . . with the object of gain, benefit or advantage, either direct or indirect”, which are the requirements of the tax law. (Secs. 2c, 2d, 2e.) It also relies upon the fact that in 1939 the statute was amended so as to expressly include social clubs in the definitions of persons and sales and no administrative interpretation of the provisions of the act, insofar as social organizations are concerned, had theretofore been made.