IGOE, District Judge.
Findings of' Fact
1. , The club duly filed a claim for refund, on December 31, 1946, on behalf of Albert Will, a member of the club who had paid during the tax period in question taxes in the total amount of $32 and whose power of attorney was attached to the claim. (Stip. Exs. A, B.) The claim for refund was disallowed November 2, 1948. (Stip. Ex. I.)
2. On October 31, 1949, 775 other members filed powers of attorney. Taxes collected by the club from those members in the total amount of $6,726 were paid to the Collector of Internal Revenue within the period of October 31, 1945, through December 1946. No other powers of attorney have been filed. (Stip. Exs. B, C.)
3. The club was incorporated as a nonprofit organization under Illinois law in 1937. (Tr. 12; Stip. Ex. F, 1, 10.) Its objects, as stated in its charter and by-laws have been, from the beginning, “To promote and maintain an organization for the mutual advancement and welfare of its members, the industries with which they are concerned, and the city of Chicago, the State and the Nation.” (Tr. 35; Stip. Ex. F, 10.) A further aim of the club was “to provide a friendly setting that would serve as a meeting place and a clearing house for those engaged in the mercantile and manufacturing world”, and the club was successful in “advancing the interests of its members”. (Stip. Ex. F, 1.)
3%. The club occupied quarters with a total floor space of 35,000 square feet in the north east portion of the second floor of the Merchandise Mart at 222 North Bank Drive, Chicago, the entrance to the club being off the lobby in front of the central bank of elevators. (Tr. 11, 22.)
4. The material provisions of the bylaws relating to membership are as follows: “The membership * * * shall consist of any male or female white person of legal age and in good standing in the community in which said person resides or conducts his or her business”. Members are classified as regular, resident, honorary, press and privileged. Honorary members must have rendered “unusual services or achievements in the advancement of the interests and purposes of” the club “or in either the manufacturing or retailing field”. The press classification consists of “certain specified members of the Press”. The privileged members were representatives of the “Government, City, County, State and Federal — Clergymen, teachers, librarians and Foreign Consuls”. All applicants for membership must be sponsored by two members, recommended by the admissions committee and elected by a majority vote of the Board of Governors. A regular membership is transferrable to anyone approved by the Board of Governors. For regular members the initiation fee is $100 and the annual dues $60, for nonresident members, $25 and $20 respectively. An additional charge of $8.50 a month is made for the privilege of using the athletic department. “Any member may be dropped for conduct injurious to the interest or welfare of the club or its members”. (By-laws Arts. IV, VI; Tr. 109.)1
4Among the standing committees is an athletic committee of not less than five members. The by-laws provide that “The Athletic Committee shall originate and formulate plans for athletic activities, these activities to be in keeping with the wants and desires of the membership, and said committee shall introduce rules and regulations governing the athletic activities and the prices to be charged”.
[800]*800Another standing committee is the membership committee which “shall effect all possible means of securing and expanding the membership of the club”. (By-laws Art. XV.)
5. During the tax period in question the club had a total of 905 members, grouped as follows with respect to occupation and sex:
6. Residents of Chicago and vicinity can enjoy the privileges of the club as guests •of members if accompanied by a member. The same guest may not be introduced of tener than once in thirty days except in private dining rooms. Privileges of the club may be extended to nonresident guests, who may be given privilege cards for a period of two weeks (once every ninety days). (Stip. Ex. F. p. 12.) Guests, who may be either men or ladies, have full privileges of the club on the same basis •as a member and may introduce guests, either men or ladies, if accompanied by the member. Guest cards are issued on the same basis as by “other clubs”. Ladies have the same use of the club as men, except that they cannot use the athletic department. (Tr. 97-100, 103.)
6%. The House Rules provide that “The main dining room, cafe and private ■dining rooms are for the use of members and their guests. Restaurant privileges may not be extended to organizations unless sponsored by a member of the club, who is also a member of the organization desiring to use these privileges”. The House Rules also provide as follows: “Members •and their guests are requested to wear suit coats when coming to the club. This rule will be strictly enforced. * * * All members and their guests must check their overcoats and hats at the entrance before using the club”. (Stip. Ex. F. p. 12.)
7. The quarters of the club consist of the following rooms: Lobby and lounge, cafe and bar, called the Trading Post, main dining robm with seventeen sliding doors by the use of which the area can be divided into six separate rooms, athletic department, kitchen, shower' bath and change rooms for men, and, presumably rest rooms for ladies and for men. (Ex. F. pp. 3-4, 6-9; Tr. 84, 102.) The rooms are air conditioned throughout. (Tr. 73.)
8. The lobby or lounge has an area of 1444 square feet and contains five large lounges, five or six easy chairs, all upholstered, two writing desks and chairs, two reading tables, an office, and a cigar counter. The room is done in two color schemes. The carpet is colored to match the furniture, the walls are of cement and the ceiling has modern acoustic properties. (Tr. 67, 69, 70-73.) This room, its facilities and the service available there are described in the club booklet (Ex. F. p. 3), as follows:
“Upon entering, the Club, the lobby and spacious lounge afford a feeling of comfort and warm welcome. Pleasantly decorated in shades of green, the lounge has become extremely popular as a meeting place for luncheon and dinner engagements and affords a pleasant atmosphere for an afternoon or pre-dinner cocktail. It is also a pleasant and quiet place to catch up on the news or rest for a short time.
“The larger front office was designed to aid members and guests to obtain service of various kinds incidental to daily needs. A large assortment of cigars and cigarettes, carefully chosen for their popularity among the members, fulfills the requirements of the most discerning. The popular staff of the office is ready to help' with telephone calls, messages, train or plane reservations, and theater tickets.”
9. In the cafe and bar, which the club calls the Trading Post, are a long bar'across one side of the room and two rows of tables with chairs, seating from 60 to 75 at one time. During the luncheon hour the tables [801]*801are usually filled twice. Between five and six thirty some 50 people usually patronize the cafe. Dinner is served there but most members and guests have dinner in the dining rooms. (Tr. 78-81.)
The cafe is decorated in “modern gray and coral”. There “members gather for refreshments,' luncheon, dinner, business talks and discussions, or to watch television shows during the day or evening”. (Stip. Ex. F. p. 3.)
9%. .
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IGOE, District Judge.
Findings of' Fact
1. , The club duly filed a claim for refund, on December 31, 1946, on behalf of Albert Will, a member of the club who had paid during the tax period in question taxes in the total amount of $32 and whose power of attorney was attached to the claim. (Stip. Exs. A, B.) The claim for refund was disallowed November 2, 1948. (Stip. Ex. I.)
2. On October 31, 1949, 775 other members filed powers of attorney. Taxes collected by the club from those members in the total amount of $6,726 were paid to the Collector of Internal Revenue within the period of October 31, 1945, through December 1946. No other powers of attorney have been filed. (Stip. Exs. B, C.)
3. The club was incorporated as a nonprofit organization under Illinois law in 1937. (Tr. 12; Stip. Ex. F, 1, 10.) Its objects, as stated in its charter and by-laws have been, from the beginning, “To promote and maintain an organization for the mutual advancement and welfare of its members, the industries with which they are concerned, and the city of Chicago, the State and the Nation.” (Tr. 35; Stip. Ex. F, 10.) A further aim of the club was “to provide a friendly setting that would serve as a meeting place and a clearing house for those engaged in the mercantile and manufacturing world”, and the club was successful in “advancing the interests of its members”. (Stip. Ex. F, 1.)
3%. The club occupied quarters with a total floor space of 35,000 square feet in the north east portion of the second floor of the Merchandise Mart at 222 North Bank Drive, Chicago, the entrance to the club being off the lobby in front of the central bank of elevators. (Tr. 11, 22.)
4. The material provisions of the bylaws relating to membership are as follows: “The membership * * * shall consist of any male or female white person of legal age and in good standing in the community in which said person resides or conducts his or her business”. Members are classified as regular, resident, honorary, press and privileged. Honorary members must have rendered “unusual services or achievements in the advancement of the interests and purposes of” the club “or in either the manufacturing or retailing field”. The press classification consists of “certain specified members of the Press”. The privileged members were representatives of the “Government, City, County, State and Federal — Clergymen, teachers, librarians and Foreign Consuls”. All applicants for membership must be sponsored by two members, recommended by the admissions committee and elected by a majority vote of the Board of Governors. A regular membership is transferrable to anyone approved by the Board of Governors. For regular members the initiation fee is $100 and the annual dues $60, for nonresident members, $25 and $20 respectively. An additional charge of $8.50 a month is made for the privilege of using the athletic department. “Any member may be dropped for conduct injurious to the interest or welfare of the club or its members”. (By-laws Arts. IV, VI; Tr. 109.)1
4Among the standing committees is an athletic committee of not less than five members. The by-laws provide that “The Athletic Committee shall originate and formulate plans for athletic activities, these activities to be in keeping with the wants and desires of the membership, and said committee shall introduce rules and regulations governing the athletic activities and the prices to be charged”.
[800]*800Another standing committee is the membership committee which “shall effect all possible means of securing and expanding the membership of the club”. (By-laws Art. XV.)
5. During the tax period in question the club had a total of 905 members, grouped as follows with respect to occupation and sex:
6. Residents of Chicago and vicinity can enjoy the privileges of the club as guests •of members if accompanied by a member. The same guest may not be introduced of tener than once in thirty days except in private dining rooms. Privileges of the club may be extended to nonresident guests, who may be given privilege cards for a period of two weeks (once every ninety days). (Stip. Ex. F. p. 12.) Guests, who may be either men or ladies, have full privileges of the club on the same basis •as a member and may introduce guests, either men or ladies, if accompanied by the member. Guest cards are issued on the same basis as by “other clubs”. Ladies have the same use of the club as men, except that they cannot use the athletic department. (Tr. 97-100, 103.)
6%. The House Rules provide that “The main dining room, cafe and private ■dining rooms are for the use of members and their guests. Restaurant privileges may not be extended to organizations unless sponsored by a member of the club, who is also a member of the organization desiring to use these privileges”. The House Rules also provide as follows: “Members •and their guests are requested to wear suit coats when coming to the club. This rule will be strictly enforced. * * * All members and their guests must check their overcoats and hats at the entrance before using the club”. (Stip. Ex. F. p. 12.)
7. The quarters of the club consist of the following rooms: Lobby and lounge, cafe and bar, called the Trading Post, main dining robm with seventeen sliding doors by the use of which the area can be divided into six separate rooms, athletic department, kitchen, shower' bath and change rooms for men, and, presumably rest rooms for ladies and for men. (Ex. F. pp. 3-4, 6-9; Tr. 84, 102.) The rooms are air conditioned throughout. (Tr. 73.)
8. The lobby or lounge has an area of 1444 square feet and contains five large lounges, five or six easy chairs, all upholstered, two writing desks and chairs, two reading tables, an office, and a cigar counter. The room is done in two color schemes. The carpet is colored to match the furniture, the walls are of cement and the ceiling has modern acoustic properties. (Tr. 67, 69, 70-73.) This room, its facilities and the service available there are described in the club booklet (Ex. F. p. 3), as follows:
“Upon entering, the Club, the lobby and spacious lounge afford a feeling of comfort and warm welcome. Pleasantly decorated in shades of green, the lounge has become extremely popular as a meeting place for luncheon and dinner engagements and affords a pleasant atmosphere for an afternoon or pre-dinner cocktail. It is also a pleasant and quiet place to catch up on the news or rest for a short time.
“The larger front office was designed to aid members and guests to obtain service of various kinds incidental to daily needs. A large assortment of cigars and cigarettes, carefully chosen for their popularity among the members, fulfills the requirements of the most discerning. The popular staff of the office is ready to help' with telephone calls, messages, train or plane reservations, and theater tickets.”
9. In the cafe and bar, which the club calls the Trading Post, are a long bar'across one side of the room and two rows of tables with chairs, seating from 60 to 75 at one time. During the luncheon hour the tables [801]*801are usually filled twice. Between five and six thirty some 50 people usually patronize the cafe. Dinner is served there but most members and guests have dinner in the dining rooms. (Tr. 78-81.)
The cafe is decorated in “modern gray and coral”. There “members gather for refreshments,' luncheon, dinner, business talks and discussions, or to watch television shows during the day or evening”. (Stip. Ex. F. p. 3.)
9%. . The statement for the fiscal years, 1944 to 1948, inclusive, covering the operations of the bar (Stip. Ex. D) show figures for sales and profits, roughly as follows:
10. In the club booklet (Stip. Ex. F. p.
4) the main dining room is described as follows: “The dining area is separated from the lounge by means of movable, decorative modern-fold doors. The main dining room is spacious, capable of seating four hundred persons or more, but for the evenings when a smaller room with a more intimate atmosphere is desired, the room is reduced in size by closing the folding doors. Tastefully done in two tones of green, and enhanced by a tremendous colorful drape covering the north wall, the dining room is one of the outstanding rooms in the city.”
The main dining room can accommodate at one sitting 650 persons. If all seventeen of the sliding doors are used each of the six dining rooms so formed will seat 75 persons. (Tr. 84 — 85.) The manager of the club, who had wide experience over a long period of years said of this dining room arrangement, “It is the best set-up I have seen in any place”. (Tr. 30-32, 84.)
Of the dining facilities, the club, in its booklet (Stip. Ex. F. p. 4), says as follows: “Besides the dining room and Trading Post there are the private dining rooms, which are an important feature of the Club. By an ingenious use of folding doors and folding walls, the private rooms are capable of seating groups ranging from six persons to six hundred in tastefully decorated rooms which provide comfort and privacy to their occupants. All rooms are completely and efficiently air conditioned, as is the entire club, in order that meetings of various, types may be conducted under the best possible conditions. Many firms consider the private dining rooms indispensable for their sales meetings, displays, introduction of products to customers, social functions incidental to business, and effectiveness in advancing the business interests of the members and their guests. A telephone call to the Club is all that is needed for a member to reserve a room and arrange a luncheon or dinner for any particular type of function desired.”
The club can seat 1,200 persons for meals at one sitting and has • served as many as 3,400 for luncheon in a single day. (Tr.-109.) The operating figures for the restaurant, as a whole, that is all rooms in which food is served are, roughly, as follows (Stip. Ex. D):
11. Of the Athletic Department the club says (Stip. Ex. F. p. 9):
“The Merchants and Manufacturers Club has a modern athletic department for the convenience of its members. The various features of this department include: handball court, steam and massage rooms, exercise equipment and the latest in ultra-violet and infra-red lamps, as well as rooms available for resting between strenuous appointments.
“The panels on the walls of the rooms contain murals of the various types of athletics and exercises, which tend to' create an athletic atmosphere throughout. All' activities are conducted under the competent supervision of the athletic director.
[802]*802“You will find the department a splendid place to relax from the hurry and strain of everyday business.”
The athletic department is open from eleven in the morning till seven in the evening, three p. m. on Saturday, every day in the week except Sunday. (Tr. 61.) The charge for the privilege of using the department is $8.50 a month. (Tr. 110.) One hundred and forty members have that privilege. (Tr. 104.) About 50 members use the department frequently. (Tr. 105.) This department was installed with the hope that it would bring in four or five hundred new members and it did so. (Tr. 59-60.) In this department were the following facilities and equipment: handball court,
steam and massage rooms, resting rooms, ultra-violet and infra-red lamps, a locker room containing 115 lockers, two indian club sets, one rowing machine, four pulley machines, one exercise bicycle, shower room, steam seats, and steam cabinet. (Stip. Ex. F. pp. 8, 9; Tr. 63-64.)
The financial operating figures for this department were, roughly, as follows (Stip.
12. The kitchen is described by the club as follows: “The kitchen has been enlarged and completely modernized with the latest equipment and is an exceedingly efficient unit. Located in the center of the Club, adjacent to all dining rooms, it provides swift efficient service for individuals and groups of all sizes.”
13. The club has a total annual budget of around $750,000. (Tr. 44-45.) Ever since its organization it has employed a manager at a salary of $20,000 a year. In recent years and during the tax period involved he also acted in the capacity of treasurer and assistant secretary. (Tr. 30, 32.) Before going to the club in 1937, he had served as manager of the Union League Club and the University Club of Chicago and as steward of the University Club of New York, all social clubs under the tax law, and the New York Athletic Club and the Penn Athletic Club in Philadelphia, both taxed as athletic clubs. (Tr. 11, 30-31.)
14. The club booklet (Stip. Ex. F) was sent out to attract and secure new members and its purpose was attained.. (Tr. 34.)
15. The club quarters are open to members and guests from 8 a. m. to 1 a. m. the following day every day but Sunday. (Tr. 61.) The kitchen closes about 8:30 p. m. (Tr. 62.)
16. Very few of the members belong to other clubs. (Tr. 102.)
17. A large number of guests have used the club quarters and facilities who were members of other organizations, at least 50 in number, including colleges, professional groups, athletic associations, charities and business groups of various kinds. Those guests had many luncheons, dinners and conferences there. (Tr. 15-18; Stip. Ex. F. p. 12.) On all those occasions meals were served to members and guests, who sometimes had as many as 4,000 meals in a single day. On about half of those occasions liquor was served to those who desired it. Those guests consisted of both men and ladies. (Tr. 29, 37-39.)
18. The club has 80 employees, including three bartenders, two in the office, 60 to 65 in the restaurant department and an athletic supervisor. (Tr. 101-102.)
19. In the larger floor area “part of the floor is surfaced for dancing” (Tr. 6-7), and there is a good deal of dancing, mostly by guests who are members of other organizations, especially college groups. (Tr. 113-115.)
20. Conversation by members and guests in the club is not restricted to any particular subject but is of a very general nature. (Tr. 91-92.)
21. In the merchandise mart are many other restaurants, and, at least, two of them, Thompsons’ and Henrici’s, were large and their eating facilities were comparable [803]*803to those of the club, but members of the club are willing to pay $5 a month for the privilege of eating there, the club being a much better place and a la carte service being available in the club at all times. (Tr. 93-96.)
In addition to enjoying dancing and television shows on occasions, a few of the members or guests play gin rummy. (Tr. 76-78, 100-101, 113-115; Stip. Ex. F. pp. 3, 6, 7.) There are no card parties, golf tournaments, glee club concerts or similar activities. (Tr. 22.)
22. “There were no facilities * * * in the adjacent territory that could have housed the members of the club in their various conferences or functions or meetings”. (Tr. 13.)
22%. The owners of the premises expect the club quarters to be used for business purposes and the lease provides that the occupancy shall be for “the conducting of a business club and for no other use or purpose,” but it is understood that there should be adherence to the objectives of the club as stated in its charter. (Tr. 22, 133, Ex. 1.)
23. The rent reserved in the lease is $1 a year plus seven per cent of the gross receipts of the club which is considerably less, per square foot, than the rent charged other tenants, the owners feeling that the club is a source of increased business. (Tr. 22, 27, 113, Ex. 1.)
24. The club has no reciprocal arrangement with other clubs. (Tr. 103.)
Conclusions of Law
1. Upon the foregoing special findings of fact, the court concludes as a matter of law,
A. That the plaintiff was, during the tax period in question, a social, athletic, or sporting club or organization within the meaning of section 1710(a) (1) and (2) of the Internal Revenue Code, as amended by section 543 of the Revenue Act of 1941, c. 412, 55 Stat. 687 and section 302 of the Revenue Act of 1943, c. 63, 58 Stat. 21, 26 U.S.C.A. § 1710(a) (1, 2).
B. That judgment be rendered for the defendant with costs.