National Muffler Deals Assn., Inc. v. United States, 440 U.S. 472 (1979)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

Petitioner is a trade organization for muffler dealers, but it has confined its membership to dealers franchised by Midas International Corporation and its activities to Midas’ muffler business. In a suit seeking a federal income tax refund, petitioner claimed the "business league" exemption provided by § 501(c)(6) of the Internal Revenue Code of 1954. Treas.Reg. § 1.5’1(c)(6)-1 states that a business league is "an organization of the same general class as a chamber of commerce or board of trade," and that a tax exempt business league’s activities "should be directed to the improvement of business conditions of one or more lines of business." The District Court held that Midas muffler franchisees do not constitute a "line of business," and that petitioner was not a "business league" within the meaning of § 501(c)(6), and thus was not entitled to the claimed refund. The Court of Appeals affirmed, applying the maxim noscitur a sociis and holding that petitioner’s purpose was too narrow to satisfy the "line of business" test of the Regulation.

Held: Petitioner is not entitled to the tax exemption as a "business league" within the meaning of § 501(c)(6). Pp. 476-489.

565 F.2d 845, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, WHITE, MARSHALL, and POWELL, JJ., joined. STEWART, J., filed a dissenting opinion, in which REHNQUIST and STEVENS, JJ., joined, post, p. 489.