Some, at least, of the “leisure activities” said to be characteristic of a club1 seem to have been devoted to tax litigation. So wel find the member-taxpayers taking a broad view of the scope of “pleasure, recreation, etc.'” 2 and a narrow view of the meaning of “initiation fees” and “membership dues and fees”. They first whittled at initiation fees.3 Next, they succeeded in exempting assessments.4 Clubs responded to this by lowering dues and increasing assessments. So the device did not affect their economy, but did effect a tax saving. Congress naturally plugged both leaks.5
The principal case is one of a series arising out of their third move. Having failed to tip the anti-tax balance by calling dues assessments, they now wishfully call them “commuted greens fees”. In other words, the general dues are still lowered but the resulting deficit is met by the creation of a “playing” membership. We may say that this second method of distributing operating costs has received the cooperation of considerable judicial hairsplitting. There are many decided cases and they may be found collected in 13 Words and Phrases, Perm. Ed., 599 and 3 Prentice-Hall Federal Tax Service, 1940, Para. 29,544, and cited and discussed in two excellent law review notes.6
It is clear that Congress might well have taxed any payments to clubs. Such an excise would be the simplest kind of a tax on the sale of luxuries.7 On a principle of de minimis and probably to save accounting intricacy, it selected the larger and more easily detectable. These are: “initiation fees”, “assessments”, and “membership dues and fees”. As the term “dues” has been long in use in this country (the corresponding word in England is “sub*579scription” 8), it might well be said to have acquired a “trade usage”. So testimony on that meaning might have been offered.9 It has not been presented either to us or, so far as we know, to any other court. We think, however, that it sufficiently appears from the “common ground” of the sociological and legal structure of social clubs. The latter has been adverted to in the text books and essays.10
The name itself is significant. It derives from the Anglo-Saxon “cleofan” and indicates a division of the reckoning.11 The theory is one of joint expenditure.12 Some clubs carry this theory to its logical conclusion and divide the entire cost of running the club among the whole membership. The glutton and toper eat and drink at the expense of their more abstemious brethren. The more athletic or enthusiastic golfer lives off his weaker or less zealous colleagues. Most clubs, however, do not carry this companionship idea to such lengths of sharing. They except and apportion to the particular recipients certain supplies and services. What remains comes from the members generally and the names and forms of their payments have always been those of “initiation fees” and “dues”. It behooves us, then, to examine the basis of the difference and so to determine the distinction.
Club facilities may be for common and repeated use or they may be for single and individual enjoyment. It is possible, although difficult, and may be unjust cost accounting (i. e. per divot) to divide that common use among the users. Such a division overlooks one element. The facility must be available irrespective of use (this applies to certain categories, perishables for instance, of the individual and single). For that reason, the apportionment must be general and cannot be allotted. A golf course is just as typical as a club-house. You consume a drink and you enjoy the special attention of a caddy, but you share the use of fairways that always await anxiously for your drives.
The argument for the “commuted green fee” is then an attempt to extend a false analogy by disguised phrasing. The green fee is not an attempt to charge the appropriate fraction of a general cost. It is an arbitrary amount billed to non-members for the privilege of playing. Its character has been well described by a judge speaking in the hotne of golf. He says: “ * * * The revenue of the committee is to consist — in addition to a fixed contribution of 6s. per member payable by the golf clubs and a similar fixed charge payable by residents who use the links for playing golf — of fees levied on visitors and members of the general public who use the links for the game.” Carnoustie Golf Course Committee v. Commissioners of Inland Revenue, 1929 S.L.T. 366, 368, 369.13 It is, in fact, more closely related to calendar than to cost.14 Obviously nothing is added to an inaccurate description by the application of the common term for a collective payment.
The cases have attempted a further confusing refinement. They suggest some budgeting principle. It is easier to run a club, or anything else for that matter, if one can dispense with prophecy. The courts have allowed this greater ease to assist not only the managers but the taxpayer-members, *580and have made exemption turn upon recurring certainty.15 Such a view lacks logic. The budget would be even more assisted by life memberships or by deposits to cover the purchase of consumables. Furthermore, the club with the best crystal-gazers or the most loyal members would escape the most taxes. In point of fact, the principal case 'falls inside even the questioned classification.
The judgment of the District Court is affirmed.
Clubs, 3 Ency. of the Social Sciences, pp. 573-577.
26 U.S.C.A. Internal Revenue Code, § 101 (9); What is a social club within statute imposing tax on dues or membership fees, 80 A.L.R. 1296; Construction and application of provision of income tax statutes exempting clubs, 130 A.L.R. 107; Taxation of Individuals as Members of Social Clubs, 26 Virginia Law Review 941 (note), sub-heading, Social, Sporting or Athletic Club?, at p. 942.
Masonic Country Club v. Holden, 6 Cir., 18 F.2d 553.
Garden City Club v. Corwin, 2 Cir., 62 F.2d 246. Cf. Fresh Meadow Country Club v. United States, D.C., 17 F.Supp. 400, 401.
26 U.S.C.A. Internal Revenue Code, § 1712 (a) and § 1712 (b).
Taxation — Federal Excise Tax on Club Dues or Membership Fees, 24 Minnesota Law Review 713 (note); Taxation of Individuals as Members of Social Clubs, 26 Vii-ginia Law Review 941 (note).
Green, Theory and Practice of Modern Taxation (2d Ed. 1938) 196.
Wise v. Perpetual Trustee Co., 1903 A.C. 139, 149; Carlisle and Silloth Golf Club v. Smith [1912] 2 K.B. 177, 189, 190, affirmed, [1913], 3 K.B. 75, 82-83.
7 Wigmore on Evidence, 3d Ed., § 1955; 9 Wigmore on Evidence, 3d Ed., § 2556.
“It is well known that clubs exist which limit the number of the members and select them with great care, which own considerable property in common, and in which the furnishing of food and drink to tlie members for money is but one of many conveniences which the members enjoy.” 4 Amer.Jur. p. 457.
See also Escott, Club Makers and Club Members.
“The word signifies uniting to divide”, Timbs, Clubs and Club Life in London, p. 2.
Timbs, above cited, p. 4.
Cf.; “ * * * It is said that the green foes alone would not nearly keep up the course and the club-house which the visitors enjoy, nor would the members’ subscriptions without the visitors’ green fees keep up the course and the club-house; that in either of those aspects the club would every year have a heavy deficit. By combining the two there is a less deficit, though there is still a deficit, because the difference between the receipts and expenditure has to bo made good by members’ subscriptions.” Carlisle and Silloth Golf Club v. Smith, [1912] 2 K.B. 177, 189, 190.
It is common knowledge that most golf clubs scale their green fees according to the probabilities of congestion.
Contrast: Winchester Country Club v. White, D.C., 30 F.Supp. 142, affirmed, 1 Cir., 117 F.2d 146; Philadelphia Cricket Club v. United States, D.C., 30 F.Supp. 141; Foran v. McLaughlin, 9 Cir., 59 F.2d 158, certiorari denied, 287 U.S. 637, 53 S.Ct. 87, 77 L.Ed. 552; Hardt v. McLaughlin, D.C., 25 F.Supp. 684.