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Keywords

trustcorporation
corporationappellantappellee

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North Gates Elks Club v. Garner, 496 S.W.2d 887

Facts

The North Gates Elks Club, chartered in Tennessee, filed suit against the county trustee and assessor for the recovery of taxes paid after delinquency for the year 1970. The club claimed its property was used exclusively for charitable and educational purposes, which would qualify it for tax exemption under Tennessee law. However, the club's income statement revealed that a significant portion of its income came from bar receipts, and it made minimal charitable donations, indicating that the property was mainly used for social activities and lodge meetings.

The record indicates that the appellant holds title to real and personal property situated in Shelby County. The property is improved by a lodge building consisting of a recreation lobby, kitchen, secretary's office, game room, refreshment bar, rest rooms, lounge, and lodge meeting hall.

Issue

Whether the North Gates Elks Club's property qualifies for tax exemption under Section 67-502, T.C.A., based on its use for charitable and educational purposes.

The sole issue for our determination is whether this corporation qualifies as a tax exempt organization under Section 67—502, T.C.A.

Rule

The property of a corporation is exempt from taxation only if it is held and used exclusively for religious, charitable, scientific, literary, or educational purposes, as outlined in Section 67-502, T.C.A.

The property of a corporation for which exemption is claimed must be held and Used for purposes purely or exclusively religious, charitable, scientific, literary, or educational in order to be exempt.

Analysis

The court analyzed the club's use of its property and determined that it was primarily utilized for social functions rather than for the exempt purposes claimed. The income generated from bar operations significantly outweighed the charitable contributions made by the club, leading the court to conclude that the property did not meet the criteria for tax exemption.

A review of the stipulated facts as set out above demonstrate the property was used primarily, if not solely, for social functions.

Conclusion

The court affirmed the Chancellor's dismissal of the complaint, ruling that the North Gates Elks Club's property was subject to taxation due to its primary use for social activities.

We therefore affirm the Chancellor's holding.

Who won?

County Trustee and County Assessor prevailed because the court found that the Elks Club's property was not used exclusively for charitable or educational purposes, thus disqualifying it from tax exemption.

The appellees maintain that the Elks Club is not entitled to a tax exempt status because its property was not occupied and used exclusively for religious, charitable or education purposes, but to the contrary was used primarily for social activities.

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