dissenting: The case of Roche’s Beach, Inc. v. Commissioner (C. C. A., 2d Cir.), 96 Fed. (2d) 776, was decided in 1938. Since then, it has been cited favorably or actually relied upon by numerous courts in more than a dozen decisions.1 In several other instances that also occurred in rulings of the Bureau of Internal Revenue, G. C. M. 20853, 1938-2 C. B. 166; G. C. M. 21610, 1939-2 C. B. 103, and G. C. M. 22116, 1940-2 C. B. 100. €5 The rule uniformly followed in the Tax Court is stated in Estate of Louise v. Simpson, 2 T. C. 963, 966:
Respondent’s argument has been answered in principle by the Second Circuit Court of Appeals in Roche's Beach, Inc. v. Commissioner, 96 Fed. (2d) 776, where the taxpayer was engaged in business with the general public but turned over its income to a charitable organization. * * *
Until a recent date the Government accepted the rule laid down in the quoted case. It followed it in G. C. M. 20853, C. B. 1938-2, p. 166, holding that an association which held title to and operated a cemetery for the benefit of several religious organizations was itself entitled to exemption under section 101 (6) of the Revenue Act of 1936. Though the position has now been taken that Roche’s Beach, Inc. v. Commissioner, supra, is no longer to be followed by the Bureau, G. C. M. 23063, C. B. 1942-1, p. 103, we have quoted it with approval, see West Side Tennis Club, 39 B. T. A. 149, 156; affd., 111 Fed. (2d) 6; certiorari denied, 311 U. S. 674; American Society of Cinematographers, Inc., 42 B. T. A. 675, 680, and think it furnishes the proper answer to the case at bar.
To paraphrase the language of the Second Circuit’s opinion with respect to the instant facts, we can see no reason why Congress should wish to deny a deduction for a gift to a corporation operated exclusively to “feed” or serve an educational purpose when the deduction undoubtedly would be permissible if the corporation actually administered or “dispensed” the education. The Foundation meets all the other tests of the Code. No part of its earnings inures to the benefit of private shareholders or individuals, it is not engaged in propaganda or the influencing of legislation, and it was organized for educational purposes. We hold that it has also been operated exclusively for educational purposes.
Against this unbroken line of repeated and identical adjudications there is cited only the case of Universal Oil Products Co. v. Campbell (C. A., 7th Cir.), 181 Fed. (2d) 451, which is not and can not be relied upon for a contrary principle, but stands merely for the propo - sition, as the present opinion correctly states, that the test of the purposes of a corporation’s organization appears from the circumstances of its original formation. And see Underwriters’ Laboratories v. Commissioner (C. C. A., 7th Cir.), 135 Fed. (2d) 371; certiorari denied, 320 U. S. 756. Even if that be a correct statement of law, it has no application here, where petitioner was from the beginning organized as a corporation devoted exclusively to charitable purposes.
During this period the revenue act has been reenacted or reexamined by Congress on numerous occasions. As the court’s opinion in this case recognizes, Congress “has more recently had in mind this question, but, so far, has made no change in the law.” It seems to me that a judicial precedent so firmly imbedded in the history of legislation should be accorded more weight than is presently being given it.
It appears to be conceded that the Roche's Beach case is indistinguishable from the one now before us. The suggestion that the statutory scheme envisages exemption only under section 101 (14) is not new nor different from that made and discarded twelve years ago in the Roche’s Beach case and since then in all the cases which have followed it.2
The nightmare of wholesale tax avoidance is an understandably difficult one for the tax collector to escape. But it seems to me that section 101, with the interpretative gloss placed upon it by judicial' and administrative precedent, was intended to guard against the unreal cliarity, the masquerading educational institution, the qualified or conditional gift, and not, as here, a forthright financial transaction by a genuine and respected institution of learning. Cf. Scholarship Endowment Foundation v. Nicholas (C. C. A., 10th Cir.), 106 Fed. (2d) 552; certiorari denied, 308 U. S. 623; Underwriters’ Laboratories, Inc. v. Commissioner, supra; Edward Orton, Jr., Ceramic Foundation, 9 T. C. 533; affd. (C. A., 6th Cir.), 173 Fed. (2d) 483; Universal Oil Products Co. v. Campbell, supra; A. W. Mellon, 36 B. T. A. 977, 1064.
Being of the view that any change in existing legislation is a matter for Congress and not for the Tax Court, I respectfully dissent.
“The Roche’s Beach decision has been followed, or the same principles declared, in the following cases: Bohemian Gymnastic Association v. Higgins, 147 Fed. (2d) 774, Second Circuit, decided March 8, 1946; Debs Memorial Radio Fund v. Commissioner, 148 Fed. (2d) 947, decided April 2, 1945, wherein the court said it would ‘continue to do so until instructed otherwise by final authority’; Commissioner v. Orton, 173 Fed. (2d) 483, decided March 28, 1949, Sixth Circuit; Borne Oil Mill v. Willingham, 68 Fed. Supp. 525, July 26, 1945, District Court, Alabama, of Fifth Circuit.” (Willingham v. Borne Oil Mill (C. A., 5th Cir.). 181 Fed. (2d) 9).
“* * * Subdivision 14 relates to corporations which hold title and collect income for any tax exempt organization, and such organizations include many which are not embraced within subdivision 6. Hence, the fact that subdivision 14, as we have construed it, does not include corporations which operate a business, should not lead to the conclusion that subdivision 6, which does refer to operating corporations, includes only those which directly dispense their funds for the limited purposes there stated. No reason is apparent to us why Congress should wish to deny exemption to a corporation organized and operated exclusively to feed a charitable purpose when it undoubtedly grants it if the corporation itself administers the charity. * * *” (Roche’s Beach, Inc. v. Commissioner, supra 779). Cf. G. C. M. 19836, 1938-2 C. B. 163.