Girard Trust Co. v. Commissioner of Internal Revenue , 122 F.2d 108 ( 1941 )

GOODRICH, Circuit Judge.

This case, as it comes to us presents one problem. That problem is the correctness of the conclusion of the Board of Tax Appeals which disallowed a deduction from the estate tax of a bequest by a testatrix to the Board of Temperance, Prohibition and Public Morals of the Methodist Episcopal Church. The testatrix, Ida Simpson, died in 1933. The statute applicable is the Revenue Act of 1926, c. 27, 44 Stat. 9, § 303(a) (3), 26 U.S.C.A. Int.Rev.Acts, page 234, which authorizes the deduction from the value of the gross estate of “The amount of all bequests * * * to * * * any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes * * *.”¹ The beneficiary in question was incorporated in 1917 in the District of Columbia under the statute dealing with “benevolent, charitable, educational, * * * religious, or missionary” societies. D.C.Code 1929, T. 5, § 121 et seq. The objects stated in the certificate of incorporation are: “To promote the cause of temperance by every legitimate means; to prevent the improper use of drugs and narcotics; to render aid to such causes as in the judgment of the board of trustees, tend to advance the public welfare.” While the Commissioner suggests significance in the fact that the Board of Temperance is separately organized, any possible significance disappears when it is seen (as is shown) that its relation to the General Conference of the Church is the same as that of such bodies as its Board of Foreign Missions and Board of Home Missions.

In determining whether the bequest to the Board of Temperance qualifies for deduction the Board’s relationship to the Methodist Episcopal Church is relevant. So, also, is the position of the governing body of the Church with regard to both the use and sale of intoxicating liquor. It appears that the General Conference is the sole law making body of the Church and each of its Boards and also constitutes its Supreme Court. The first General Conference of the Methodist Church was held in 1784. In the first General Rules there are statements dealing with and condemning the liquor traffic. This attitude has remained unchanged. The General Rules state the expectation that those subject to the discipline of the Church shall continue to evidence their desire of salvation by avoiding evil, such as “drunkenness, buying or selling spirituous liquors or drinking them, unless in cases of extreme necessity”. Paragraph 74 of the Discipline declares the Church’s policy: “We therefore regard voluntary total abstinence from all intoxicants as the obligation of the citizen and the complete legal prohibition of the traffic in alcoholic drinks as the duty of civil government.” The Board of Temperance has never adopted any by-laws and operates under the Articles of Discipline of the General Conference.²

We do not understand that either the Commissioner or our dissenting brother would question the application of the deduction here if the purpose of the activity of the Board of Temperance stopped short of any possible attempt to influence or otherwise affect legislation. Reference to the law of charitable trusts we believe in point, as does the dissent, although counsel for neither side has pressed the analogy. It is clear that a trust for the advancement of religion is charitable. Scott on Trusts, § 371.³ It is clear, too, from the facts of this case that the Methodist Episcopal Church has, since its organization in 1784, regarded personal practices of its members with regard to the use of intoxicating liquors as an inherent part of its religious practices. It is not the business of the court either to approve or disapprove of such inclusion or exclusion so long as no violation of secular law is involved. The law is well settled, also, that while a charitable trust cannot be created for a purpose which is illegal, Scott on Trusts, § 377, the object of the trust does not have to be the advancement of a majority view. It must not, of course call for violation of the law nor must it be “irrational”. It is only when the court is convinced that the purpose of the trust can serve no rational object that the court will declare it invalid. Restatement, Trusts, § 374; Scott on Trusts, § 370.4. Indeed, aside from the added point of the prohibition of the use of intoxicants as a religious practice, numerous cases have upheld, as a charitable trust, one for the promotion of temperance in the use of intoxicating liquors.⁴ Directly upon the point, a contribution to the World League Against Alcoholism was held deductible from gross income under a clause in the Revenue Act of 1928 similar to that here in question. Cochran v. Commissioner of Internal Revenue, 4 Cir., 1935, 78 F.2d 176.

The difficult part of this case comes with regard to that part of the activity of the Board of Temperance which has to do with the attempt to influence legislation. A bright line between that which brings conviction to one person and its influence on the body politic cannot be drawn. Mr. Justice Holmes forcefully puts it: “If you * * * want a certain result with all your heart you naturally express your wishes in law and sweep away all opposition”.⁵ Religion includes a way of life as well as beliefs upon the nature of the world and the admonitions to be “Doers of the word and not hearers only” (James 1:22) and “Go ye therefore, and teach all nations, * * *” (Matthew 28:19) are as old as the Christian Church. The step from acceptance by the believer to his seeking to influence others in the same direction is a perfectly natural one, and it is found in countless religious groups. The next step, equally natural, is to secure the sanction of organized society for or against certain outward practices thought to be essential. Thus we had Sunday observance laws long before prohibition of alcohol became an important issue. The advocacy of such regulation before party committees and legislative bodies is a part of the achievement of the desired result in a democracy. The safeguards against its undue extension lie in counter-pressures by groups who think differently and the constitutional protection, applied by courts, to check that which interferes with freedom of religion for any.

Nor has the law sought to draw such a bright line between the exercise of private and public influence. Judge Hand has pointed out⁶ that the promoters of a charity are not unclassed when the charity seeks a special charter or when a society to prevent cruelty to children seeks positive support of law to accomplish its ends or when a university seeks legislation to provide its appropriations. Surely a church would not lose its exemption as a religious institution if, pending a proposal to repeal Sunday observance laws, the congregation held a meeting on church property and authorized a committee to appear before a legislative body to protest against the repeal. The majority of the charitable trust cases recognize the validity of a gift to prohibit or minimize manufacture and sale of intoxicating liquor.⁷ They are not directly controlling, of course. But they furnish a strong analogy. The activities of the Board fell within the type which have been regarded as religious by the Methodist Church for a century and a half. A limitation, if any, upon the deduction granted in general terms of bequests to religious bodies is for Congress to make and Congress has since made it in the 1934 statute. Such limitation not having been imposed by legislation, it is not for a court or administrative officer to impose it.

The decision of the Board of Tax Appeals is reversed.

1 The Act was amended in 1934, 26 U. S.O.A. Int.Rev.Acts, page 230, by the addition of the phrase “and no substantial part of 'the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation”.

Treasury Regulations 80, promulgated under the Act of 1826 so amended provided :

“Art. 45. Religious, charitable, scientific, and educational corporations. — A corporation or association to which such a transfer was made must meet four tests: (1) It must be organized and operated for one or more of the specified purposes ; (2) it must be organized and operated exclusively for such purpose or purposes ; (3) no part of its net earnings shall inure to the benefit of private stockholders or individuals; and (4) no substantial part of its activities shall be carrying on propaganda, or otherwise attempting, to influence legislation.”

2 Article 478 of the Discipline of 1932, under which the Board was operating at the time of the death of the decedent in this ease provides:

“Section 2. Article 1. The object of this Board is to promote voluntary total abstinence from all intoxicants and narcotics, to promote observance and enforcement of all existing constitutional provisions and statutory enactments that suppress the liquor traffic and the traffic in narcotic drugs, to promote the speedy enactment of such legislation throughout the world, and to defend and maintain established civil and religious liberties.”

3 Mr. Scott points out:

“It is true that the Statute of Charitable Uses made no mention of this purpose in its enumeration of charitable purposes, the only reference to religion in any form being ‘repair of bridges, forts, havens, causeways, churches, seabanks and highways.’ Indeed, Sir Francis Moore, the draftsman of the act, explained that religious purposes were omitted intentionally ‘lest the gifts intended to be employed upon purposes grounded upon charity, might, in change of times (contrary to the minds of the givers) be confiscate into the King’s treasury. For religion being variable, according to the pleasure of succeeding princes, that which at one time is held for orthodox, may at another, be accounted superstitious, and then such lands are confiscate.’ ”

4 Scott on Trusts § 374.1 and authorities cited.

5 From bis dissenting opinion in Abrams v. United States, 1919, 250 U.S. 616, 40 S.Ct. 17, 22, 63 L.Ed. 1173.

6 Slee v. Commissioner of Internal Revenue, 2 Cir., 1930, 42 F.2d 184, 72 A.L.R. 400. This case which involved a gift to the American Birth Control League had no connection with a religious purpose.

7 See collections of authorities in Scott on Trusts § 374.1, 73 A.L.R. 1361.