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December 4, 1956


The opinion of the court was delivered by: Campbell, District Judge.

The question presented is whether the North Shore Sportsman's Club is a corporation organized and operated exclusively for scientific, educational or charitable purposes within the meaning of Section 812(d) of the Internal Revenue Code of 1939, 26 U.S.C. § 812(d). If it is, then the decedent's estate is entitled to an estate tax deduction since the amount bequeathed to that club would not be included in the decedent's net estate as that concept is used in the Internal Revenue Code of 1939.

The evidence has been submitted to the Court on a stipulation of facts and on the depositions of Jay Webb Lowell and Stanley H. Eppelheimer. The conclusions to be drawn from the facts and the law applicable thereto have been argued in written briefs.

Plaintiff is the executor under the last will and codicil thereto of Robert S. Clarke who died testate on October 17, 1950 at Chicago, Illinois. In his will, the decedent bequeathed a one-fifth interest in his residuary estate, amounting to $18,639.61, to the North Shore Sportsman's Club of Chicago. On December 28, 1951 plaintiff, as executor, filed his estate tax return in which he claimed that the North Shore Sportsman's Club, hereinafter referred to as the "Club", was a scientific, educational and charitable corporation within the meaning of Section 812(d), Title 26 United States Code.

On February 19, 1953, the District Director of Internal Revenue assessed a deficiency tax against plaintiff, $5,010.13 of which was assessed on the ground that the Club did not qualify for the exemption provided by Section 812(d) and that its one-fifth residuary share should be included and taxed as part of the decedent's net estate for estate tax purposes.

Plaintiff paid such deficiency tax and the interest thereon and on May 27, 1953 filed a claim for refund with the District Director, said claim being denied on October 21, 1953.

The Club was founded in 1939 by Robert S. Clarke, plaintiff's decedent. On October 10, 1942 the Club was incorporated under the laws of the State of Illinois as a corporation not for pecuniary profit. The purpose of the Club, as stated in its charter, is as follows:

    "The object for which it is formed is to encourage,
  foster, promote and perpetuate out-door activities
  and aid in the conservation of wild life."

The by-laws of the Club, which were adopted upon the incorporation of the Club in 1942 and which were in force and effect on the date of the decedent's death, state the Club's objects and purposes to be the following:

"1. Good fellowship among its members.

    "2. Educational programs in the interest of the
  conservation of wild life.

"3. The rehabilitation of polluted waters.

"4. The proper and safe use of firearms.

    "5. The care, training and use of sporting dogs to
  further conservation by recovery of wounded game.
    "6. The restocking of hunting areas by the release
  of suitable game birds."

At the time of Robert S. Clarke's death the membership of the Club was divided into three classes, i.e. regular, life and honorary members; and at this time the Club had a total membership of 148, consisting of 93 regular members and 55 honorary and life members.

The parties have stipulated that the Club is not operated for profit and that no part of its receipts, earnings or assets are or ever have been distributed to or for the use or benefit of any individual or member of the Club. The Club's principal source of revenue is derived from annual membership dues of $2 and from gifts and donations. At the monthly meetings members also pay an admission charge of $1.10 to aid in the cost of films and lectures, program materials and refreshments.

It is also stipulated that neither the Club nor any of its members, as such, have engaged in the carrying on of propaganda, or have otherwise attempted to influence legislation.

Since its organization, the Club has held regular monthly meetings on the second Tuesday of each month during an eight-month season of each year. Each season commences with October of one year and extends through May of the following year. These regular monthly meetings were, at the time of the testator's death and for several years prior and subsequent thereto, held in rented premises located at 1710 Cornelia Ave., Chicago, Illinois. Following each regular meeting, which would last from 1 to 2 hours, there was a social period usually lasting a half hour to 45 minutes; during these social periods, light refreshments, consisting usually of sandwiches and pretzels, and whiskey, beer and light drings were served; and during this period the members and guests exchanged their experiences in hunting, fishing and the conservation of wild game and fish and discussed questions raised by the evening's program. These refreshments were provided by the Club at no cost to the members, with the exception of the beer and whiskey, which was purchased by the Club and sold to the members and guests at cost.

Prior to 1951 complete records concerning such programs as were held by the Club were not kept but the parties have stipulated that typical programs offered at such meetings have included one or more of the following subjects:

1. Films and lectures by outstanding and well-known authorities on conservation work in all ...

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