[722]*722OPINION.
ARundell:
At the outset we are confronted with the contention that petitioner is not an association, within the meaning of that term as used in section 1 of the Eevenue Act of 1918, and, therefore, is not subject to the income and profits taxes imposed upon corporations. The part of the statute pertinent to this proposition reads as follows:
Section 1. That when used in this Act—
*******
The term “corporation” includes associations, joint-stock companies, and insurance companies; * * *
The word “ association ” appears to be used in the Act in its ordinary meaning. “In the United States this term is used to signify a body of persons united without a charter but upon the methods and forms used by incorporated bodies for the' prosecution of some enterprise.” 1 Bouvier’s Law Diet. (Eawle’s 3d Eev.) 269. Other definitions are: “In the United States, as distinguished from a corporation, a body of persons organized, for the prosecution of some purpose, without a charter, but having the general form and mode of procedure of a corporation.” Webster’s New Int. Diet. “The [723]*723term ‘ association ’ usually means an unincorporated organization composed of a body of men, partaking in its general form and mode of procedure of the characteristics of a corporation.” 1 Words & Phrases 584, (from Pratt v. Roman Catholic Orphan Asylum, 46 N. Y. S. 1035; 20 App. Div. 352). See Malley v. Bowditch, 259 Fed. 809; Chicago Title & Trust Co. v. Smietanka, 275 Fed. 60; also United Mine Workers v. Coronado Co., 259 U. S. 344, in which unincorporated labor .unions were held" to be associations within the meaning of the Anti-Trust Law.
We have no doubt that petitioner is an “ association ” within the meaning of the Revenue Act, and, unless otherwise exempt from taxation, is subject to the income and profits taxes imposed upon corporations. Its affairs are managed by executive officers, whose duties are comparable to those with which corporate officers are usually charged; its Advisory Committee exercises executive supervision over its entire affairs, as does a board of directors of a corporation, and it generally conducts its business in corporation form.
The second proposition urged by petitioner is that it is exempt from income and profits taxes, under the provisions of section 231(3), (6), and (10), and section 304 of the Revenue Act of 1918. The statute in its parts pertinent to this situation reads as follows:
Sec. 230. (a) That, in lieu of the taxes imposed by section 10 of the Revenue Act of 1916, as amended by the Revenue Act of 1917, and by section 4 of the Revenue Act of 1917, there shall be levied, collected, and paid for each taxable year upon the net income of every corporation a tax at the following rates: * * *
Section 1. That when used in this Act— *******
The term “ corporation ” includes associations, joint-stock companies, and insurance companies; * * *
Sec. 231. That the following organizations shall be exempt from taxation under this title [Title II]—
*******
(3) Fraternal beneficiary societies, orders, or associations, (a) operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and (b) providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents;
*******
(6) Corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to.children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual;
* * * * * * jfc
(10) Farmers’ or other mutual hail, cyclone, or fire insurance companies, mutual ditch or irrigation companies, mutual or cooperative telephone companies, or like organizations of a purely local character, the income of which consists solely of assessments, 'dues, and fees collected from members for the sole purpose of meeting expenses; * * *
[724]*724Sec. 304. (a) That the corporations enumerated in section 231 shall, to the extent that they are exempt from income tax under Title II, be exempt from taxation under this title.
If the petitioner is exempt from income taxes under the provisions of either of the three subdivisions of section 231 quoted .above, then, under the provisions of section 304, it is also exempt from the profits taxes. It is' for us then to determine whether the character of petitioner’s organization and the nature of the business carried on by it is such that it qualifies either as a fraternal beneficiary association, operating under the lodge system, and providing for the payment to its members of the benefits enumerated in subdivision (3) of section 231, or an association organized and operated exclusively for charitable purposes, or a purely local organization like those enumerated in subdivision (10) of section 231.
Under the provisions of section 38 (First) of the Corporation Tax Act of August 5,1909, fraternal beneficiary, associations, operating under the lodge system, and providing for the payment of benefits to members, were exempt from the excise tax. A similar provision was adopted in the Act of October 3, 1913, and the exempting language found in Section II, G. (a) [2] of that Act was carried forward into all of the later Revenue Acts. Sec. 11 (a) Third, of Revenue Act of 1916; section 11(a) Third of the Revenue Act of 1917; and sections 231(3) of the Revenue Acts of 1918, 1921, 1924, and 1926. Long prior to the passage of the Corporation Tax Act of August 5, 1909, several of the States had written into their statutes a definition of what constitutes a fraternal beneficiary association. We have noticed Conn. Pub. Acts 1895, p. 595; Ky. Stats., section 64-1; Mich. Pub. Acts 1893, No. 119; Mo. Rev. Stats., 1889,, ch. 42, art. 10; New Hampshire Pub. Stats., 1901, p. 578; Ohio Gen. Code, section 9462; Okla. Rev. Stats., 1903, section 3236; and the Act of April 29, 1874, Penna. Laws 1874, p. 73. Undoubtedly, other States to which our investigation has not extended have similar provisions. The term “ fraternal beneficiary associations ” had been defined, judicially and by statute, long before 1909. Berry v. Knights Templars' & Masons' Life Indemnity Co., 46 Fed. 439; Knights Templar & Masons’ Life Indemnity Co. v. Berry (C. C. A., Eighth Circuit), 50 Fed. 511; National Union v. Marlow, 74 Fed. 775; and Corley v. Travelers' Protective Association, 105 Fed. 854. The Board will assume then that Congress used the term according to its legal significance at the time the several taxing statutes were passed.
That the petitioner qualifies as a beneficiary association under the Act of the Pennsylvania Legislature, passed April 29, 1874, is apparent beyond all doubt. Its'whole purpose and design is to accumulate a fund from the contributions of its members and such other contributions, gifts or legacies as may be made for the use of said fund, [725]*725for beneficial or protective purposes, to be used in the aid or relief of members in case of sickness, injurjq or death. It has no capital stock; and it yields no profit to any private stockholder or individual. But the exemption granted by the provisions of section 231(3) of the Revenue Act of 1918 does not extend to an association of this type unless it is a fraternal organization, operating under the lodge system. The absence of profit in the operation of the association, a point upon which petitioner so strongly relies, is not the criterion, but the want of a fraternal side and object which it is in some measure organized to promote. Commercial Travelers' Life & Accident Association v. Rodway, 235 Fed. 370.
Perhaps the leading judicial pronouncement as to what constitutes a “ fraternal beneficiary association ” is found in the case of National Union v. Marlow, 74 Fed. 775, where Judge Thayer, in speaking for the United States Circuit Court of Appeals, Eighth Circuit, and in disposing of the question as to whether the plaintiff was a fraternal beneficiary association and, therefore, exempt from the Missouri insurance laws, stated as follows:
We must accordingly assume that the words “ fraternal-beneficial ” were used in their ordinary sense — to designate an association or society that is engaged in some work that is of a fraternal and beneficial character. According to this view, a fraternal-beneficial society, within the purview of the. Missouri statute, would be one whose members have adopted, the same, or a very similar, calling, avocation, or profession, or who are working in unison to accomplish some worthy object, and who for that reason have banded themselves together as an association or society to aid and assist one another, and to promote the common.cause. The term “fraternal” can properly be applied to such an association, for the reason that the pursuit of a common object, calling, or profession usually has a tendency to create a brotherly feeling among those who are thus engaged. It is a well-known fact that there are at the present time many voluntary or incorporated societies which are made up exclusively of persons who are engaged in the same avocation. As a general rule such associations have been formed for the purpose of promoting the social, moral, and intellectual welfare of the members of such associations, and their families, as well as for advancing their interests in other ways and in other respects. The Brotherhood of Locomotive Engineers may be instanced as one of the class of societies or associations to which we have referred, and many others of a like character- might be mentioned. Many of these associations make a practice of assisting their sick and disabled members, and of extending substantial aid to the families of deceased members. Their work is at the same time of a beneficial and fraternal character, because they aim to improve the condition of a class of persons who are engaged in a common pursuit, and to unite them by a stronger bond of sympathy and interest. Such associations may well be described, .in the language of the statute, as “ organizations formed for * * * fraternal-beneficial * * * purposes.” We think, therefore, that the legislature had this class of organizations in mind when it provided for the incorporation of fraternal-beneficial associations, * * *. It declared, in effect, or intended to so declare, that when a certain number of persons, among whom some natural bond of sympathy or interest existed, should form, an association for self-improvement, or [726]*726for tlie purpose of aiding one another and strengthening the bond of union, such association might be consolidated into a corporation, and incidentally, to further the ends of its creation, might provide for the relief of members and their families, in case of sickness or death, * * *.
This statement, in part, was quoted with approval in the case of Commercial Travelers' Life & Accident Association v. Rodway, supra, by the United States District Court, Northern District of Ohio, which was a case involving the application of the provisions of section 38 (First) of the Corporation Tax Act of August 5, 1909, granting exemption to fraternal beneficiary associations.
In dealing with cases coming under section 231 of the Revenue Act of 1918, the character of the organization must be judged by its articles of incorporation, constitution, and by-laws, or by what other instrument it is governed. Corley v. Travelers' Protective Association, supra; Berry v. Knights Templars' & Masons' Life Indemnity Co., supra. Search the petitioner’s governing regulations as we may, (it is the only instrument which has been offered to us), we are unable to discover, even in a remote degree, a single fraternalistic feature in' its organization. It is entirely without any social features. Its membership is made up of individuals whose vocations are as numerous and diverse as the classifications of employment of a great railway system; the section hand, the freight hustler, the brakeman, the conductor in charge of a fast trans-continental train, the locomotive engineer, the train dispatcher, the clerk in the office, all are entitled to membership in the Association for the mere asking, expressed in written application, provided no disability exists; and yet none of these look to the petitioner for any betterment in social and laboring conditions. There is no fraternal object which moves them to seek membership in the Association, but rather the motive is mercenary. The petitioner has neither lodges, rituals, ceremonial, or regalia; and it owes no allegiance to any other authority or jurisdiction. It is not a “ fraternal beneficiary association ” operating under the lodge system, within the meaning of section 231(3) of the Revenue Act of 1918, and, therefore, is not entitled to exemption under the provisions of that section.
Is the petitioner a corporation or association organized and operated exclusively for charitable purposes, within the purview of section 231(6) of the Revenue Act of 1918? A society whose principal income is derived from a fixed regular compulsory contribution from its members, which is to constitute a fund to be used exclusively for the benefit of its members, is not a charitable society. Young Men's Protestant Temperance & Benevolent Society v. Fall River, 36 N. E. 57. “There is a species of organization, sometimes called a ‘private charity,’ which is not a public or general charity, * * * and that is an association for the mutual benefit of the [727]*727contributors and of no other persons. But such a case wants the essential element of indefiniteness in the immediate, objects, if not-that of gratuity in the contribution.” Saltonstall v. Sanders, 11 Allen (Mass.) 446. Similar societies have been regarded in the law, not as charitable institutions, but as in the nature of mutual insurance societies or mutual benefit societies. Dolan v. Court Good Samaritan, 128 Mass. 437; Coe v. Washington Mills, 21 N. E. 966; Yowng Men's Protestant Temperance & Benevolent Society v. Fall River, supra. Charity, in its legal sense, has its origin in gift and bounty. In the Girard Will case, the leading counsel for the will thus defined charity: “ Whatever is given for the love of God, or the love of your neighbor, in the catholic and universal sense,— given from these motives and to these ends, free from the stain or taint of every consideration that is personal, private' or selfish.” Ould v. Washington Hospital, 95 U. S. 303, 311. “£It is the source whence the funds are derived, and not the purpose to which they are dedicated, which constitutes the use charitable.’ * * * Where a fund is wholly derived from rates and assessments, being in no respect derived from bounty or charity, it is not charitable.” St. Clement v. L'Institut Jacques Cartier, 95 Me. 493; 50 Atl. 376; Saltonstall v. Sanders, supra; Coe v. Washington Mills, supra. In Babb v. Reed, 5 Rawle (Pa.) 151, it was held that a voluntary association of individuals, formed for the purpose of employing certain funds for the mutual benefit of the members and their families, can not be deemed to be an association for charitable purposes under the law of Pennsylvania. In Swift's Executors v. Beneficial Society, 73 Pa. St. 362, the court stated in part as follows:
The plaintiffs in this case are a beneficial society, both in name and by the provisions of their charter, and their benevolence and benefits are exclusively confined to contributing members of the association. The members must be regularly admitted, must not be infirm, must be citizens and between the ages of twenty-one and forty-five years of age; and no person shall be entitled to any benefits from this society until he shall have been one year a member. Each person, on being admitted a member of their society, shall pay such entrance-money and monthly dues and contributions as the society may by their by-laws from time to time declare. A member is not in full standing if in arrears for fines, contributions or monthly dues; and not entitled to benefits in sickness if in arrears for dues, contributions, or fines, for three successive stated meetings, and may be expelled for arrears of dues or fines. The amount to be paid in case of death of a member or his wife is fixed. There are other provisions showing that the benevolence is strictly a matter of contract, and may be enforced in a court of justice. The object of this society shall be the relief of its respective members when sick, or disabled by bodily infirmities to pursue their ordinary avocations. Its benevolence begins and ends at home. In Babb v. Reed, 5 Rawle 155, it was held that an association for the purposes of mutual benevolence among its members only, is not an association for charitable uses.
[728]*728Here, for definite contributions, paid by its members at regular recurring periods, the Association undertakes to pay its members certain definite sums in the event of sickness, accident, or death. Whatever it may be called, the scheme is that of insurance. The relation of the Association to its members is contractual, rather than charitable. Nor is it a benevolent institution. No aid is furnished from generosity or liberality. None such is pretended. On the contrary, for a pecuniary consideration the Association agrees to pay a definite sum in the cases specified. If it fails to perform its contracts with its members, they may be enforced in the courts by suit. Certainly, under circumstances such as we have present in this case, it can not be successfully maintained that petitioner is a corporation or association, organized and operated exclusively for charitable purposes, and, hence, it is not entitled to exemption from tax under the provisions of section 231(6) of the Eevenue Act of 1918.
It is also evident that petitioner does not come within the “like organizations of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting expenses,” as set out in subdivision (10) of section 231 of the Eevenue Act of 1918. It is significant that, in the enumeration, in subdivision (10) of section 231, of the mutual insurance companies to be exempted from the tax, Congress did not include life insurance companies along with “farmers’ or other mutual hail, cyclone, or fire insurance companies.” That Congress did not intend to include mutual life insurance companies, or all organizations organized and conducted on a mutual basis, within the term “ like organizations ” is evident from other provisions of the statute. While the meaning of the term “like” varies with the connection and the intent with which it is used, Etna Life Insurance Co. v. Coulter, 74 S. W. 1050, 1052; Wynn v. Wabash R. R. Co., 86 S. W. 562, 564; it has been judicially defined to mean analogous, In re Rugheimer, 36 Fed. 369, 373; exactly corresponding, Webster’s Int. Diet.; having the same, or nearly the same, appearance, qualities, or characteristics, Haverstraw v. Eckerson, 108 N. Y. S. 506, 507; resembling, Lincoln Center v. Linker, 53 Pac. 787, 788; Munford v. Keet, 55 S. W. 271; similar to, Lincoln Center v. Linker, supra; and Haverstraw v. Eckerson, supra. As we have previously pointed out, whatever the petitioner’s business may be called, the scheme is that of insurance. The relation of the petitioner to its members is contractual. For definite contributions the petitioner has contracted to pay specified benefits in the event of sickness, accident, or death. Its business has the same characteristics as that of. a mutual life insurance company, and is. analogous to a mutual life insurance business. Life and health insurance is too well known and important to suppose that Congress would detail hail, cyclone, [729]*729and fire insurance, and intend life and health' insurance to be included in the general expression of “ like organizations.” Bankers’ & Planters' Mutual Insurance Association v. Walker, 279 Fed. 53.
There is no doubt in our minds that petitioner is liable for tax under the Revenue Act of 1918, and we so decide.
The next proposition raised by the petitioner is that it is not liable for the profits taxes imposed by section 301 of the Revenue Act of 1918. On this point the petitioner rests its case entirely upon the decision of the United States District Court, New Jersey, in the case of Mutual Benefit Life Insurance Co. v. Duffy, 295 Fed. 881, in which the court stated as follows:
Tlie government next contends that .this reserve is not within that part of section 207 (paragraph [a]), which declares what shall be “invested capital” for like tax purposes. This paragraph declares, as noted, that in the case of corporations such capital includes—
“(1) Actual cash paid in; (2) the actual cash value of tangible property paid in other than cash, for stock or shares in such corporation * * * at the time of such payment, * * *• and (3) paid in or earned surplus and undivided profits used or employed in the business, exclusive of undivided profits earned during the taxable year.” ■ ■
All three subdivisions of this paragraph are readily applied to corporations having capital stock, but their wording is inept to mutual corporations, which have no such stock. Subdivision (2) concededly is not applicable. As applied to a stock corporation, subdivision (1) includes only cash paid for capital stock, as cash paid in to surplus is made eapital by subdivision (3), and this latter subdivision, similarly applied, is restricted to cash'paid in to surplus and earned surplus or undivided profits used or employed in the business. But, inept as the language of these subdivisions is, when applied to mutual life insurance companies having no capital stock, the government insists that such companies are subject to the excess profits tax provisions of this act, and further that, unless this legal reserve can be brought within one or the other of these subdivisions, it cannot be treated as invested capital, and still further that such reserve is not comprehended within any of such subdivisions. As noted, section 200 of the same title (War Excess Profits Tax), declares that the term “ corporation,” as used in that title, includes “ insurance companies.” Except for such inclusion, there seemingly would not be even a plausible ground for the effort to include income derived from life insurance business within the grásp of the excess profits tax provisions of the act; but as there are capital stock insurance companies that insure against fire and marine, as well as life, risks, something more than this definition is needed to bring mutual life insurance companies within the tax provisions of this title.
The very ineptness of the language of paragraph (a) of section 207 tends to support the plaintiff’s contention that Congress had no purpose to subject mutual insurance companies to this war excess profits tax, and that the insurance companies embraced in the definition of section 207 were confined to stock insurance companies. ■ . . •
However, the question before the court for decision in the case above referred to' was not whether the plaintiff • was subject to the profits tax imposed by section 200 of the Revenue Act of 1917, but rather, whether the plaintiff was entitled to include in its invested capital the legal reserves the net additions to which were [730]*730deductible in computing the net income subject to the tax, which the Commissioner had excluded. That the above quoted statement oí the court as to the liability of the plaintiff for excess profits taxes was mere obiter dietwro is evident from the court’s further statement that—
However, as mutual life insurance companies are not expressly excluded from the excess profits tax provisions of the act, and assuming for the sate of argument that Congress had no intention of so excluding or exempting them, it must be further assumed that Congress did not intend to exclude them from the benefit of paragraph (a) of this section, notwithstanding its ineptness, if they had capital, the income from which was subject to the excess profits tax provisions of the act.
While much may be said for the views expressed by the court as to the ineptness of section 207 of the Revenue Act of 1917 when applied to mutual life insurance companies, we find no considerable difficulty in applying the provisions of section 326 of the Revenue Act of 1918 (a similar section) to this petitioner. It is true that the petitioner has no capital stock, and that the provisions of subdivisions (1) and (2) of section 326 of the Revenue Act of 1918 are, therefore, inapplicable in its case. But if all that the petitioner has, and which it is entitled to include in invested capital, has been acquired without consideration or out of its earnings, then its invested capital is comprised entirely of its paid-in or earned surplus. There appears no good reason to assume that Congress intended to limit the application of subdivision (3) of section 326 to corporations or other organizations having capital stock. On the other hand, we think it applies to every corporation or other organization subject to the profits tax; and if the petitioner’s entire capital was acquired through paid-in or earned surplus, ’ then its invested capital must be computed under the provisions of subdivision (3) of section 326.
Section 230(a) of the Revenue Act of 1918 imposes an income tax, and section 301 of the same Act a profits tax, upon the net income of “ every corporation.” Section 231 specifies what organizations shall be exempt from the income tax and section 304(a) provides that such organizations shall, to the extent that they are exempt from the income tax, be exempt from the profits tax. Section 1 provides that the term “ corporation,” wherever used in the Act, shall include “ associations, joint-stock companies, and insurance companies.” It is evident then that, unless petitioner can qualify as one of those organizations exempt from tax under the provisions of section 231 of the Revenue Act of 1918, it is subject to both the income and the profits taxes. That it can not qualify for exemption under the provisions of subdivisions (3), (6), and (10) of section 231, we have already decided; that it can not qualify for exemption under any of [731]*731the other subdivisions of section 231 is evident from a mere reading of their provisions, and exemption has not been claimed under them.
Petitioner’s next proposition is that the amounts contributed to the relief fund in 1919 and 1920 by the Associated Companies and the United States Railroad Administration represent property “ acquired by gift,” within the purview of section 213(b)(3) of the Revenue Act of 1918, and, therefore, are to be excluded in computing its taxable income. The Philadelphia & Reading Railroad Co. was a party to petitioner’s organization.- There appears to have been some sort of an agreement between the Railroad Company and the petitioner, but this was not put in evidence. Counsel for Commissioner offered in evidence a copy of the resolution adoptéd by the board of directors of the Philadelphia & Reading Railway Co. on November 18, 1896, and at the same time petitioner’s counsel stated that this resolution embodied everything contained in the agreement. The resolution is set out in our findings of fact.’ The Commissioner lays great stress upon that part of the resolution which states “WiieREas, the operation of the said association has been to' the mutual advantage of the Company and of the said employees,” accepting this statement as an indication that the contributions of the Associated Companies were made as a purely business arrangement and in consideration of some benefit flowing directly to them. Upon this theory the Commissioner proposes to include the amount of these contributions in the petitioner’s taxable net income. In this we believe the Commissioner to be right. The amount contributed by the Reading Company to this fund is in no proper sense a charitable contribution. It is a purely business enterprise in which the Reading Company is participating. That membership in the Association tended to keep down damage suits and otherwise to keep employees contented we have no doubt, even though there may have been no direct provision that the receiving of relief from the Association would appear as a bar to the recovery of a judgment secured as a result of a suit at law. In the case of Johnson v. Philadelphia & Reading R. R. Co., 29 Atl. 854, the court held specifically that the acceptance of benefits from the taxpayer Association by an employee injured in line of duty constituted a release to the Reading Company. It is not necessary for us to accept this holding of the court as a correct statement of the law in order to be satisfied that the amounts contributed are not donations in any proper meaning of that term. In our opinion the contributions made by the Reading Company are income to the petitioner, and, accordingly, subject to tax.
The fifth and last proposition is whether, in computing its taxable net income, the petitioner is entitled, under the provisions of section 234(a) (11) of the Revenue Act of 1918, to deductions representing [732]*732net additions (not required by law) to its reserve fund for the protection of its members. The section referred to reads as follows:
Sec. 234. (a) That in computing the net income of a corporation subject to the tax imposed by section 230 there shall be allowed as deductions:
)j! !¡í Í¡1 * sje - sfc *
(11) In the case of corporations issuing policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan continuing for life and not subject to cancellation, in addition to the above, such portion of the net addition (not required by law) made within the taxable year to reserve funds as the Commissioner finds to be required for the protection of the holders of such policies only.
Granting for the moment, but entirely reserving decision in this respect, that the membership certificates, of which the governing regulations form a part, are policies within the meaning of the above quoted provisions of the statute, we do not believe that the foregoing provisions of the statute are applicable to the petitioner. The contributions of the members are not on the weekly payment plan, but are on the monthly basis; and the health and accident benefits are available to members only so long as they continue in the active service of one of the Associated Companies.
Counsel with some force argues that the petitioner is of such a character and fulfills such functions as to justify its inclusion within the series of exempt organizations set forth in section 231. This may indeed be true, and it may very well be that Congress would have provided exemption had the petitioner here been given specific consideration in the enactment of the exemption legislation. As to this we are given no power'to consider. The wisdom or unwisdom of the legislation is not a consideration upon which our decision may be founded. Our consideration is restricted to determining whether the language employed in the statute, when fairly construed, includes the organization now under consideration, and, thus restricted, we are constrained to hold that the petitioner is not within the exemption.
. Judgment for the Commissioner.
TRXtssell dissents.